[Congressional Record Volume 157, Number 130 (Tuesday, September 6, 2011)]
[Senate]
[Pages S5319-S5321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMERICA INVENTS ACT
Mr. KYL. Mr. President, I rise today to urge my colleagues to support
H.R. 1249, the Leahy-Smith America Invents Act. Some other
responsibilities may take me from the Senate floor during this coming
week when we will be debating the act and therefore I wanted to lay out
my views at this time, strongly urging my colleagues to support the
bill.
Although the present bill originates in the House of Representatives,
it is actually based on and is substantially identical to the bill that
passed the Senate in March by a vote of 95 to 5. Also, before Chairman
Smith brought his bill to the House floor, he negotiated final changes
to the bill with the lead supporters of the measure in the Senate
Judiciary Committee. The House and Senate have now been working on
patent reform for 6 years. The present bill is a good bill. It reflects
a genuine compromise between the House and the Senate. It is a bill
that will provide substantial benefits to the U.S. economy in the
coming years, so I hope that, as I said, the Senate will adopt this
legislation and be able to pass it on directly to the President for his
signature.
The overarching purpose and effect of the present bill is to create a
patent system that is clearer, fairer, more transparent, and more
objective. It is a system that will ultimately reduce litigation costs
and reduce the need to hire patent lawyers. The bill will make it
simpler and easier to obtain valid patents and to enforce those
patents, and it will cure some very clear litigation abuses that have
arisen under the current rules, abuses that have done serious harm to
American businesses.
By adopting the first-to-file system, for example, the bill creates a
rule that is clear and easy to comply with and that avoids the need for
expensive discovery and litigation over what a patent's priority date
is. By adopting a simple definition of the term ``prior art,'' the bill
will make it easier to assess whether a patent is valid and cheaper for
an inventor to enforce his patent. By recognizing a limited prior user
right, the bill creates a powerful incentive for manufacturers to build
factories and create jobs in this country. By allowing post-grant
review of patents, especially low quality, business method patents, the
bill creates an inexpensive substitute for district court litigation
and allows key issues to be addressed by experts in the field. By
eliminating the recent surge of false-marking litigation, the bill
effectively repeals what amounts to a litigation tax on American
manufacturing.
Let me take a few moments to describe how the provisions of this bill
will provide concrete benefits to American inventors, both large and
small, and to the American manufacturing economy. First, prior
commercial use defense.
A new provision of the present bill that was added by the House of
Representatives will provide important advantages to U.S.
manufacturers. Section 5 of the bill creates a new defense to patent
infringement of prior commercial use. This new defense will ensure that
the first inventor of a new process, or of a product used in a
manufacturing process, can continue to use the invention in a
commercial process even if a subsequent inventor later patents the
idea. For many manufacturing processes the patent system presents a
Catch-22. If the manufacturer patents the process, he effectively
discloses it to the world. But patents for processes that are used in
closed factories are difficult to police. It is all but impossible to
know if someone in a factory in China, for example, is infringing such
a patent. As a result, unscrupulous foreign and domestic inventors will
simply use the invention in secret without paying licensing fees.
Patenting such manufacturing processes effectively amounts to giving
away the invention to foreign manufacturers.
On the other hand, if the U.S. manufacturer does not patent the
process, a subsequent party may obtain a patent on it and the U.S.
manufacturer will be forced to stop using a process that he was the
first to invent and which he has been using for years.
The prior commercial use defense provides relief to U.S.
manufacturers from this Catch-22, allowing them to continue to use a
manufacturing process without having to give it away to competitors or
running the risk that it will be patented out from under them. To
establish a right to this defense, however, the America Invents Act
requires the manufacturer to use the process in the United States. As a
result, the AIA creates a powerful incentive for manufacturers to build
their factories and plants in the United States. Currently, most
foreign countries recognize some prior user rights that encourage
manufacturers to build facilities in those countries. This bill
corrects this imbalance and creates a strong incentive for businesses
to create manufacturing jobs in this country.
Second, something called supplemental examination. A provision of
this bill that will particularly benefit small and startup investors is
section 12, which authorizes supplemental examination of patents. It is
one of the reasons the bill has such strong support in the small
business community. Currently, even minor and inadvertent errors in the
patent application process can lead to expensive and very unpredictable
and very inequitable conduct litigation. It is often the case that
startup companies or university researchers cannot afford to hire the
very best patent lawyers. Their patents are prosecuted by an in-house
attorney who does a good enough job but who is unfamiliar with all of
the sharp corners and pitfalls of the inequitable conduct doctrine,
such as the need to present cumulative studies and prior art. Later,
when more legally sophisticated investors evaluate the patent for
potential investment or purchase, these minor flaws in prosecution can
deter the investor from purchasing or funding the development of the
invention. An investor would not risk spending hundreds of millions of
dollars to develop a product if a potential inequitable conduct attack
may wipe out the whole investment.
Parties on both sides of these exchanges report that investors
routinely walk away from inventions because of their inability under
current law to resolve uncertainties whether a flaw in prosecution was,
in fact, inequitable conduct. These decisions not to invest in a new
invention represent important new cures never tested and brought to
market and other important inventions that are never developed.
The America Invents Act provides a solution to this problem by
authorizing supplemental examination of patents. This new proceeding
will allow inventors or patent purchasers to return to the Patent
Office with additional material and have the Patent Office reevaluate
the patent in light of that material. If the patent is invalid in light
of the new material, the Patent Office will cancel the claims. But if
the office finds that the patent is valid, the parties will have a
patent that they can be legally certain will be upheld and enforced.
The authorization of supplemental examination will result in path-
breaking inventions being developed and brought to market that
otherwise would have lingered on the shelf because of legal uncertainty
over the patent. It will ensure that small and startup companies with
important and valid patents will not be denied investment capital
because of legal technicalities.
Let me talk about what I think is undoubtedly the most important
among
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the bill's changes to current law, and that is its transition to the
first-to-file system. This long overdue reform will create a system for
establishing a patent's priority date that is official, simple,
transparent, and fair. Priority dates not only establish priorities
between competing patent applications for the same invention but are
also used to measure a patent against potentially invalidating prior
art.
Currently, establishing a priority date requires expensive litigation
and discovery into what the inventor's notebooks show and when they
show it and whether the inventor diligently perfected his invention
after he conceived of it.
Also, for businesses seeking legal certainty, our current system can
be a nightmare. A company hoping to bring a new product to market in a
particular field of technology has no way of knowing whether a
competitor that belatedly sought the patent on its new product will
succeed in securing a valid patent on the product. It all depends on
the invention date the competitor will be able to prove relative to the
company that the company developing the product can prove.
Given that both the product developer and competitor can rely on
their own secret documents that the other side will not see until
litigation over the patent commences, neither of these two parties can
gain a clear picture of whether a patent is valid without years of
litigation and millions of dollars of discovery and other litigation
costs. Under first to file, by contrast, inventors will file informal
and inexpensive provisional applications. These applications need only
disclose what the invention is and how to make it, information the
inventor already needs to have in his possession anyway in order to
establish a priority date under the current system. Under first to
file, once the inventor files this information with the Patent Office,
he has a priority date that is both secure and public. The application
is a government document. There is no need to litigate over its
priority date. We know that.
Other industry participants will be able to easily determine the
patent's priority date, allowing them to measure the patent against
prior art and determine if it is valid. There will be no opportunity to
fraudulently backdate the priority date. That date will depend on a
government document, not privately held files.
Most U.S. businesses already effectively operate under the first-to-
file system. They file applications promptly because it is difficult
and risky to rely on proof of invention dates to defeat a competing
application that was filed earlier. Also, because the rest of the world
uses first to file, U.S. investors need to secure first-to-file
priority if they want their patents to be valid anywhere outside of
this country.
For many U.S. businesses the America Invents Act does not change the
system under which they operate. Rather, it simply allows American
businesses to comply with just one set of rules rather than being
forced to operate under two different systems.
Another one of the bill's clear improvements over current law is its
streamlined definition of the term ``prior art.'' Public uses and sales
of an invention will remain prior art, but only if they make the
invention available to the public. An inventor's confidential sale of
his invention, his demonstration of its use to a private group, or a
third party's unrestricted but private use of the invention will no
longer constitute private art. Only the sale or offer for sale of the
invention to the relevant public or its use in a way that makes it
publicly accessible will constitute prior art.
The main benefit of the AIA public availability standard of prior art
is that it is relatively inexpensive to establish the existence of
events that make an invention available to the public. Under current
law, depositions and litigation discovery are required in order to
identify all of the inventor's private dealings with third parties and
determine whether those dealings constitute a secret offer for sale or
third party use that invalidates the patent under the current law's
forfeiture doctrines. The need for such discovery is eliminated once
the definition of ``prior art'' is limited to those activities that
make the intention accessible to the public. This will greatly reduce
the time and cost of patent litigation and allow the courts and the PTO
to operate much more efficiently.
Both of these last two changes--the first to file and the new
definition of ``prior art''--will also protect American inventors
against theft of their invention both at home and abroad. Under current
law, if an American inventor sells or otherwise discloses his
invention, there is a risk that an unscrupulous third party will steal
the idea and file a U.S. patent for it. If the thief claims he himself
made the invention before the U.S. inventor, then the U.S. inventor
will need to prove the invention was stolen from him. Current law even
allows activities that occur in a foreign country to establish a
priority date for a U.S. patent. Thus, if a U.S. inventor who has been
a victim of theft is unable to prove that activities alleged to have
occurred in China or India, say, never actually took place, he not only
loses his patent but the foreign thief can obtain a U.S. patent and
block the U.S. inventor from practicing his own invention.
Finally, under current law, even if the U.S. inventor files a patent
application right away, his rights still are not secure. Under current
law, an early filing date can be defeated by another applicant's claim
that he conceived of the invention earlier. Thus a foreign thief can
claim he came up with the idea in his overseas laboratory, and the U.S.
inventor would bear the burden of proving that a fraud had been
perpetrated in a foreign country.
Under the America Invents Act, by contrast it will be much harder for
thieves, both foreign and domestic, to steal a U.S. inventor's
invention. Under this bill, if a U.S. inventor publicly discloses his
invention, no third party's application filed after that date can be
valid because the filing date is what will determine priority, not a
purported date of conception. Nor can a third party easily
contrive fake prior art to defeat the patent. Under the AIA, only those
actions that made the invention publicly available will constitute
prior art, and these are much harder to fake than are claims of having
secretly made the invention in a private laboratory, again, say, in
China. Under new section 102(b)(1)(B), once the U.S. inventor discloses
his invention, no subsequent prior art can defeat the invention. The
U.S. inventor does not need to prove that the third party disclosures
following his own disclosures are derived from him. He can thus take
full advantage of the grace period and disclose his invention in
academic papers and at trade shows without worrying that such
disclosures will lead to theft or fraudulent invalidation of his
patent.
Similarly, under the America Invents Act, once the U.S. inventor
files even a provisional application, his rights will be secured. Under
this bill, no one can file a later application but claim an earlier
priority date because the priority date is set by the filing date. The
provisional application also constitutes section 103 prior art as of
its filing date. As a result, a third party's patent for a trivial or
obvious variation of the patent will be invalid and will not crowd out
the original inventor's patent rights.
Finally, validating prior art will depend on publicly accessible
information, not private activities that take place, for example, in a
foreign land. As a result, it will be impossible for a third party who
derived the invention from a U.S. inventor's public disclosure or
patent application to steal the invention or sabotage the U.S.
inventor's patent. The only way to obtain priority or invalidate the
invention would be to file or publicly disclose the invention before
the U.S. inventor has done so--something that will obviously be
impossible for the deriver to do.
Finally, I would like to talk about false marking for a moment. I
would like to describe the bill's important reforms to the false
marking statute. The America Invents Act reins in abuses that are
reflected in a recent surge in false marking litigation. It allows such
suits to be brought only by those parties who have actually suffered a
competitive injury as a result of false marking.
Currently, such suits are often brought by parties asserting no
actual competitive injury from the marking--or who do not even patent
or manufacture anything in a relevant industry. Many cases have been
brought by patent lawyers themselves claiming the right to enforce a
fine of $500 for every marked product. One manufacturer of plastic cups
who stamped his patent number on his cups was recently sued by a lawyer
for $500 for each disposable
[[Page S5321]]
cup that was sold, for a gargantuan total of $9 trillion.
In reality, the bulk of these suits settle for their nuisance value,
the costs of continuing to litigate. They represent a tax that patent
lawyers are imposing on domestic manufacturing--a shift in wealth to
lawyers that comes at the expense of manufacturing jobs. Well, this
bill prevents such abuses by repealing the statute's qui tam action
while still allowing parties who have separate actual injury from false
marking to sue and allowing the United States to enforce a $500-per-
product fine where appropriate. Qui tam statues are a relic of the 19th
century and generally produce far more litigation than is in the public
interest. Almost all of these statutes have been repealed.
The America Invents Act continues this trend. By repealing the false
marking qui tam statute, the AIA will allow American companies to spend
money hiring new workers rather than fighting off frivolous false
marking suits.
In conclusion, the America Invents Act will provide important
benefits to U.S. inventors of all sizes, to startup companies, to
domestic manufacturing, and to the U.S. economy generally. I look
forward to its passage by the Senate and its enactment into law.
As the majority leader stated in his remarks in leader time, I hope
those who may have amendments will immediately file those amendments so
the Senate can take them up in good order, have plenty of time to
debate them, and dispose of them in the appropriate way. It would be my
hope the Senate will end up passing the bill adopted by the House of
Representatives so our action can result in sending the bill directly
to the President for his signature. That is an accomplishment that
could be achieved with cooperation between the House and the Senate,
between Democrats and Republicans, between the legislative and
executive branches, and I think it would certainly begin to mark the
time when the American people could see their legislative
representatives begin to work together on their behalf.
Mr. President, I note the absence of a quorum.
The ACTING PRESIDENT pro tempore. 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 (Mr. Franken). Without objection, it is so
ordered.
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