[Congressional Record Volume 160, Number 142 (Wednesday, November 19, 2014)]
[Senate]
[Pages S6124-S6126]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                INNOVATION AGENDA FOR THE 114TH CONGRESS

  Mr. HATCH. Madam President, I rise today to emphasize the importance 
of keeping our technology industry in the forefront of our global 
economy. America has made extraordinary strides in innovation. For 
decades we have been the world's leader in developing new technologies 
and advancing the Internet age, but we are not the only nation in this 
hunt.
  Across the globe, and particularly in China and other parts of Asia, 
our international competitors are working furiously to catch up. If the 
United States is to enjoy continued success in the technology arena, 
the policymakers must ensure that we have a legal and regulatory 
landscape that will enable our innovators to thrive.
  As chairman of the Senate Republican High-Tech Task Force, I have 
been working with colleagues and stakeholders to develop an innovation 
agenda for the coming Congress. Today I would like to highlight several 
bipartisan initiatives that we should prioritize early next year to 
help ensure the continued success of our high-tech economy.
  First, Congress must act to protect America's innovation and 
inventiveness. An essential part of fostering innovation is protecting 
legitimate intellectual property rights. In particular, we must enact 
legislation to combat abusive patent litigation.
  Patent trolls--which are often shell companies that do not make or 
sell anything--are crippling innovation and growth across all sectors 
of our economy. It is estimated that abuse of patent litigation costs 
our economy over $60 billion every year. With so much on the line, how 
can we afford not to act? Yet the current Senate did exactly that and 
ignored the very real opportunity we had, to follow the House of 
Representatives and pass bipartisan legislation that would be supported 
by the White House.
  Why would anyone walk away from the opportunity to enact pro-
innovation policies that would do so much good for our economy?
  It is no secret that trial lawyers and others told the current 
majority leader not to bring patent troll reform up for a vote. We all 
know when the trial lawyers say ``jump,'' the only answer for some of 
my Democratic colleagues is ``how high.''
  While I am disappointed the Senate failed to act during this 
Congress, I intend to help ensure we pass legislation next year. 
Fortunately, combating patent trolls is a priority for incoming Senate 
Judiciary Committee Chairman Chuck Grassley and House Judiciary 
Committee Chairman Bob Goodlatte.
  I look forward to working with them and others who are committed to 
making long overdue reforms to our patent laws--including mandatory fee 
shifting, heightened pleading and discovery standards, demand letter 
reforms, and a mechanism to enable recovery of fees against shell 
companies or those who are behind them.
  In addition, we must improve the quality of patents issued by the 
U.S. Patent and Trademark Office. Low-quality patents are essential to 
a patent troll's business model. I am optimistic we can reach agreement 
on how best to improve our patent process.
  We also need a high-functioning and well-funded USPTO. A fully funded 
patent office would, at the very least, mean more and better trained 
patent examiners, more complete libraries of prior art, and greater 
access to modern information technologies to address the Agency's 
growing needs. All of these improvements would lead to higher quality 
patents that are granted more quickly. The good news is we can make 
these changes at no cost to taxpayers since the USPTO is a fee-
generating agency.
  Now, there are some who argue here that patent troll legislation is 
not necessary in light of the Supreme Court's decisions in the Octane 
Fitness and Highmark cases. Ms. Charlene Morrow and Mr. Brian Lahti, 
however, writing in the BNA's Patent, Trademark & Copyright Journal 
confirm that ``nothing in these cases addresses the proposed reforms to 
make the real parties in interest who are managing patent assertion 
entities responsible for fees and costs.'' This is something I worked 
on for quite a few months. As these experienced practitioners 
acknowledge such legislation is essential to address fee-collection 
concerns faced by defendants in present patent litigation. One of the 
legislative approaches Ms. Morrow and Mr. Lahti proposed is to make 
bonding more readily available at an early stage of litigation. I could 
not agree more.
  We must ensure that those who defend against abusive patent 
litigation

[[Page S6125]]

and are awarded fees will actually get paid. Even when a patent troll 
structured as a shell company has no assets, there are other parties 
with an interest in the litigation. These parties are often 
intentionally beyond the jurisdiction of the courts. They stand to 
benefit if their plaintiff shell company forces a settlement and are 
protected from any liability if they lose.
  It is a win-win situation for them and a lose-lose situation for 
America's innovators. Since we cannot force parties outside of a 
court's jurisdiction to join in a case, we must incentivize those 
interested parties to do the right thing.
  That is the whole purpose behind my recovery-of-award provision. 
Under this provision, those who are deemed interested parties may 
either voluntarily submit to the court's jurisdiction and become liable 
for any unsatisfied fees awarded in the case or they may opt out by 
renouncing any meaningful interest in the litigation. If interested 
parties stand aside and do nothing, the original plaintiff must post a 
bond to ensure that any shifted fees are paid.
  Bottom line: Without such bonding measures, all defendants have is a 
toothless joinder provision that can be easily circumvented by bad 
actors with no intention of paying the court-awarded fees for their 
abusive lawsuits.
  I have said this before but it bears repeating. Fee shifting without 
such a recovery provision is like writing a check on an empty account. 
You are purporting to convey something that isn't there. Only fee 
shifting coupled with this recovery provision will stop patent trolls 
from litigating-and-dashing.
  The House has already demonstrated that Members from both sides of 
the aisle can come together to craft and pass commonsense legislation 
to combat abusive patent lawsuits. President Obama supports such 
efforts. It is past time the Senate does its part. We ought to get rid 
of this phony attitude of obeisance to the personal injury lawyers and 
trial lawyers in this country.
  I am determined to make such patent reform a priority early next year 
and to make sure we send the President a bill that he can sign into law 
for the good of all American innovation.

  In addition to patent troll legislation, there is strong bipartisan, 
bicameral support for creating a harmonized, uniform Federal standard 
for protecting trade secrets.
  Here in the Senate, Senator Chris Coons and I introduced the Defend 
Trade Secret Act on April 29, 2014. In the House of Representatives, 
Representative George Holding introduced the Trade Secrets Protection 
Act on July 29, 2014. Through our collective efforts we have shed light 
on an often overlooked form of intellectual property.
  Trade secrets, such as customer lists, formulas, and manufacturing 
processes are an essential form of intellectual property. Yet trade 
secrets are the only form of U.S. intellectual property where misuse 
does not provide its owner with a Federal private right of action. 
Currently trade secret owners must rely on State courts or Federal 
prosecutors to protect their rights.
  The multi-State procedural and jurisdictional issues that arise in 
such cases are costly and complicated, and the Department of Justice 
lacks the resources to prosecute many such cases. These systemic issues 
put companies at a great disadvantage, since the victims of trade 
secret theft need to recover information quickly before it crosses 
State lines or leaves the country.
  Unfortunately, in today's global information age, there are endless 
examples of how easy and rewarding it can be to steal trade secrets. 
While the maximum penalty for trade secrets theft is 10 years in prison 
and a $250,000 fine, few of these thefts actually result in Federal 
prosecutions. While $250,000 may sound like a steep penalty, most 
stolen trade secrets amount to tens or even hundreds of millions of 
dollars in lost profits and sales. Even when thefts are prosecuted, 
victim companies rarely recover the full extent of their losses.
  We have made some progress in moving forward trade secret 
legislation. Earlier this year, the Senate Judiciary Subcommittee on 
Crime and Terrorism held a hearing on the importance of creating a 
private right of action for trade secret theft. The House Judiciary 
Committee reported its bill--by voice vote--on September 17. Although 
we did not get the bill across the finish line this Congress, we are 
well positioned to move the trade secret legislation early next year.
  It is past time to enable U.S. companies to protect their trade 
secrets in Federal court.
  Another bipartisan initiative ready for congressional action relates 
to our privacy laws. I speak about the need to update the Electronic 
Communications Privacy Act or ECPA to require a warrant for all email 
content within the United States and to safeguard data stored abroad 
from improper government access.
  Enacted in 1986, ECPA prohibits communication service providers from 
intercepting or disclosing email, telephone conversations or data 
stored electronically, unless such disclosure is authorized. Virtually 
everyone agrees that Americans should enjoy the same privacy 
protections in their online communications that they do in their 
offline communications.
  But Congress has not adequately updated the law since its enactment, 
and technological developments have resulted in disparate treatment. As 
currently written, ECPA requires law enforcement to obtain a warrant 
for emails that are less than 6 months old but only a subpoena to 
access older electronic communications.
  Think about your own email account. You may have hundreds of emails 
that you have received over many years. Additionally, ECPA has allowed 
law enforcement to access emails that have been opened with just a 
subpoena, even though a search warrant would be required for a printout 
of the same communication sitting on your desk.
  Those conflicting standards should cause great concern to everyone 
who values personal privacy. Now to make matters more complicated, ECPA 
is silent on the privacy standard for accessing data stored abroad. 
Storing digital information around the world, a practice that did not 
exist when ECPA became law, is now routine. Moreover, the Federal 
Government has taken advantage of this statutory silence to apply its 
own standard, requiring access to data abroad if the company storing it 
has a presence in the United States.
  For that reason alone, Congress should amend the law. That is why, 
together with Senators Chris Coons and Dean Heller, I introduced the 
Law Enforcement Access to Data Stored Abroad Act. The LEADS Act would 
require a warrant when the government demands customer communications 
from third-party service providers. Such a warrant would only apply to 
data stored in the United States, unless the data is owned by a U.S. 
corporation, citizen or lawful permanent resident.
  To provide additional protections, the bill requires courts to modify 
or vacate such warrants if they would require the service provider to 
violate the laws of a foreign country. The practice of extending 
warrants extraterritorially presents unique challenges for a number of 
industries which increasingly face a conflict between American law and 
the laws of the countries where the electronic data is stored.
  Additionally, if the United States expects to extend its warrants 
extraterritorially, we should not be surprised if other countries, 
including China and Russia, seek to do the same for the emails of 
Americans and others stored in this country.
  Congress must ensure that law enforcement has the tools to execute 
search warrants where necessary so long as officials comply with the 
laws of the foreign country where the electronic data is stored.
  The LEADS Act also provides needed improvements to the mutual legal 
assistance treaty process, which are formal agreements for sharing 
evidence between the United States and foreign countries in 
international investigations. Currently, the MLAT process is slow and 
unreliable, sometimes taking several months to access data held by 
foreign jurisdictions.
  The Department of Justice not only needs additional funds to hire 
more people to handle MLAT requests, but reforms to the underlying 
program are needed to improve transparency and efficiency. The 
legislation recognizes, through a sense of Congress, that data

[[Page S6126]]

providers should not be subject to data localization requirements. Such 
requirements are incompatible with the borderless nature of the 
Internet----
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HATCH. I ask unanimous consent that I be permitted to finish my 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Such requirements are incompatible with the borderless 
nature of the Internet. They are an impediment to online innovation and 
they are unnecessary to meet the needs of law enforcement. It is time 
to act to update our electronic communications privacy laws.
  Finally, there is widespread consensus and real opportunity for 
bipartisan bicameral reform of our outdated visa system for 
economically essential high-skilled immigrants. For too long our 
country has been unable to meet the ever-increasing demand for workers 
trained in the science, technology, engineering, and mathematics or 
STEM fields.

  As a result, some of our Nation's top technology markets are in 
desperate need for qualified STEM workers. We face a high-skilled 
worker shortage that has become a national crisis. In April, for the 
second year in a row, the Federal Government reached its current H-1B 
quota just 5 days after it began accepting applications.
  Employers submitted 172,500 petitions for just 85,000 available 
visas, meaning American companies were unable to hire nearly 90,000 
high-skilled workers essential to help grow their domestic businesses, 
develop innovative technologies at home rather than abroad, and compete 
internationally. This is one of the principal reasons why I, together 
with Senators Amy Klobuchar, Marco Rubio, and Chris Coons, introduced 
the bipartisan Immigration Innovation or I-Squared Act.
  To date the legislation has 26 bipartisan cosponsors. Among other 
things, the I-Squared Act provides a thoughtful, lasting legislative 
framework that would increase the number of H-1 visas based on annual 
market demand to attract highly skilled workers and innovators. The 
bill also reforms fees on H-1B visas and employment-based green cards 
for funding a grant-based State program to promote STEM education and 
worker retraining.
  The I-Squared Act addresses the immediate short-term needs to provide 
American employees with greater access to high-skilled workers, while 
also addressing long-term needs to invest in America's STEM education. 
I am confident this two-step approach will enable our country to thrive 
and help us compete in today's global economy. No doubt, a concrete 
legislative victory, when there is already considerable consensus, 
would help build trust and good will among those who disagree sharply 
over other areas of immigration policy. It would mark a critical first 
step along the path to broader reform.
  I look forward to working with my Senate colleagues in introducing I-
Squared early next year. As Senators can see, there is a lot we can 
agree on and much we can and must accomplish. Looking ahead to the next 
Congress, I intend to do everything in my power to enact protechnology, 
pro-innovation policies that will ensure the continued success of our 
high-tech economy.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.

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