[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
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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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