[Congressional Record Volume 162, Number 113 (Wednesday, July 13, 2016)]
[Senate]
[Page S5066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               VENUE ACT

  Mr. FLAKE. Mr. President, I come to the floor to speak in support of 
legislation I introduced, the Venue Equity and Non-Uniformity 
Elimination Act, or VENUE Act, that addresses patent venue reform.
  Patents are an important part of our economy and are vital to 
promoting innovation and spurring growth, but the patent system is at 
risk. There is an ever-increasing problem of patent lawsuits brought by 
nonpracticing entities, also known as patent trolls. This problem is 
exacerbated by plaintiffs being able to handpick friendly judicial 
venues that are otherwise unrelated to the alleged infringement. An 
article in the Harvard Business Review states that ``patent trolls cost 
defendant firms $29 billion per year in direct out-of-pocket costs'' 
and ``in aggregate, patent litigation destroys over $60 billion in firm 
wealth each year.''
  It is clear these types of abuses impose substantial costs on the 
economy and simply cannot be ignored any longer.
  Additionally, according to a 2013 White House patent report, the bulk 
of patent troll suits target small and investor-driven companies. This 
is a real threat to innovation.
  The VENUE Act addresses this issue and ensures that patent cases are 
litigated where there is a connection to the patent dispute. Under the 
VENUE Act, in order for a case to be properly litigated, it must be 
brought where either, No. 1, the defendant has a principal place of 
business or, No. 2, the alleged infringing act occurred or, No. 3, 
where the inventor conducted research and development that led to the 
patent.
  In addition to the provisions relating to proper venue, the VENUE Act 
provides a more streamlined avenue for those seeking review of 
erroneous venue determinations. I believe my legislation strikes the 
right balance for determining when venue is proper, but I also 
understand that addressing venue is just one piece of the puzzle when 
we are talking about overall patent reform.
  There are a number of ways patent reform can be achieved, and that is 
why I support the principles of the PATENT Act and believe it goes a 
long way in combatting this growing problem. The PATENT Act includes 
much needed reforms, such as fee shifting, heightening pleading 
standards, and customer stays that would provide relief to retailers, 
small businesses, and startups that are constantly under assault by 
these nonpracticing entities.
  I commend Chairman Grassley for ushering that legislation out of the 
Judiciary Committee. However, one piece missing from that comprehensive 
package is venue reform. Such a reform was included in the House 
version of the patent bill, and I believe it needs to be added to the 
Senate bill as well. All one has to do is look at the numbers and the 
problem surrounding venue becomes clear.
  In 2009, 9 percent of all U.S. patent cases were filed in one 
particular Federal district. By comparison, in 2015, that number 
increased to just over 44 percent. That is an increase of over 400 
percent. Again, the increase went from 9 percent in 2009 to 44 percent 
in 2015. In addition, of the cases brought in that Federal district in 
2015, 95 percent of those cases were brought by nonpracticing entities. 
Such a distortion in case distribution is problematic, especially when 
the venue has no real connection to the alleged infringement at issue.
  One hope for relief was the Federal circuit case in TC Heartland, but 
after the court's decision on April 29 declined to impose more 
stringent venue restrictions in patent cases, it appears judicial 
relief will have to wait. Therefore, this decision has only made the 
need for congressional action on venue even more important. I hope it 
will bring renewed attention to patent venue reform and the VENUE Act 
in the Senate.
  While there are a number of solutions to the overall patent troll 
problem, venue reform is of the utmost importance and must be central 
to any larger reform effort.
  I urge my colleagues to support the reforms contained in the VENUE 
Act, and I yield back.
  The PRESIDING OFFICER. The Senator from Iowa.

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