[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[House]
[Pages 16397-16399]
[From the U.S. Government Publishing Office, www.gpo.gov]



PROVIDING FOR APPEALS BY THIRD PARTIES IN CERTAIN PATENT REEXAMINATION 
                              PROCEEDINGS

  Mr. SENSENBRENNER. Madam Speaker, I move to suspend the rules and 
pass the bill (H.R. 1886) to amend title 35, United States Code, to 
provide for appeals by third parties in certain patent reexamination 
proceedings.
  The Clerk read as follows:

                               H.R. 1886

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. APPEALS IN INTER PARTES REEXAMINATION PROCEEDINGS.

       (a) Appeals by Third-Party Requester in Proceedings.--
     Section 315(b) of title 35, United States Code, is amended to 
     read as follows:
       ``(b) Third-Party Requester.--A third-party requester--
       ``(1) may appeal under the provisions of section 134, and 
     may appeal under the provisions of sections 141 through 144, 
     with respect to any final decision favorable to the 
     patentability of any original or proposed amended or new 
     claim of the patent; and
       ``(2) may, subject to subsection (c), be a party to any 
     appeal taken by the patent owner under the provisions of 
     section 134 or sections 141 through 144.''.
       (b) Appeal to Board of Patent Appeals and Interferences.--
     Section 134(c) of title 35, United States Code, is amended by 
     striking the last sentence.
       (c) Appeal to Court of Appeals for the Federal Circuit.--
     Section 141 of title 35, United States Code, is amended in 
     the third sentence by inserting ``, or a third-party 
     requester in an inter partes reexamination proceeding, who 
     is'' after ``patent owner''.

     SEC. 2. EFFECTIVE DATE.

       The amendments made by this Act apply with respect to any 
     reexamination proceeding commenced on or after the date of 
     the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentleman from California (Mr. 
Berman) each will control 20 minutes.
  The Chair recognizes the gentleman from Wisconsin (Mr. 
Sensenbrenner).


                             General Leave

  Mr. SENSENBRENNER. Madam Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks on H.R. 1886, the bill presently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, this bill also attempts to improve the patent 
reexamination system. It aims at closing an unfortunate administrative 
loophole and bridging a legal gap in the working of our patent system. 
The reform also comes out of two hearings that the Subcommittee on 
Courts, the Internet and Intellectual Property held earlier this year.
  While I strongly endorse the professionalism of the Patent and 
Trademark Office, I believe it is necessary to place a check on the 
PTO's actions by affording all participants judicial review before a 
Federal appeals court.

                              {time}  1545

  This check by a higher independent authority is an important 
safeguard and adds transparency to the process. Rest assured this 
appellate review will not impose additional burdens on patent-holders 
arising from Federal trials.
  This is an important and necessary amendment that is an overdue 
change to our intellectual property laws. I urge Members to support 
H.R. 1886.
  Madam Speaker, I reserve the balance of my time.
  Mr. BERMAN. Madam Speaker, I yield myself such time as I may consume.
  Mr. BERMAN. Madam Speaker, I rise in support of H.R. 1886 and urge my 
colleagues to vote for it. It is largely noncontroversial. The 
Committee on the Judiciary's Subcommittee on Courts, the Internet, and 
Intellectual Property passed it by a voice vote on May 22, and the full 
committee reported it favorably by voice vote on June 20.
  The bill represents a good, if small, step in improving the 
usefulness of the inter partes reexamination procedure for patents. 
Currently, the inter partes reexamination procedure places so many 
constraints on third-party requesters of such reexamination that, as 
some patent attorneys have stated, ``It would be legal malpractice to 
recommend a client initiate an inter partes reexamination.''
  Among those constraints is the prohibition against a third party 
appealing an adverse reexamination decision to Federal court or 
participating in an appeal brought by the patentee.
  H.R. 1886 would allow an authority requester to appeal a 
reexamination decision to Federal court and to participate in an appeal 
by an applicant. By doing so, H.R. 1886 may make inter partes 
reexamination a somewhat more attractive option for challenging a 
patent. A third party will, at the least, now feel comfortable that the 
courts can be accessed to rectify a mistaken reexamination decision.
  While H.R. 1886 may not cure all the defects of inter partes 
reexamination, I believe it is a good start, and I urge my colleagues 
to vote for it.

[[Page 16398]]

  Madam Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Madam Speaker, I yield 3 minutes to the gentleman 
from California (Mr. Rohrabacher).
  Mr. ROHRABACHER. Madam Speaker, I rise with a strong sense of 
concern, if not opposition, to what is being proposed here today.
  Two years ago, there was a compromise that was made on this very 
important matter. I, in fact, supported legislation with this wording 
in it; but only because it was part of a compromise that I felt was 
necessary to get the rest of the bill through. I thought the bill that 
we had come up with, and the gentleman from North Carolina (Mr. Coble) 
and I and Jim and others had worked so long and hard for, that it was 
worthy of that compromise.
  However, this piece of legislation undoes a compromise that was made 
with the gentleman from Illinois (Mr. Manzullo) to take this very 
language out of that bill, so we are, in effect, going back on a 
compromise made with the gentleman from Illinois (Mr. Manzullo).
  I might add that I was willing to support the legislation with this 
concept in it, even though I had reservations about it, if it was part 
of a bigger bill that was, I thought, a good bill that we had come up 
with.
  But now that we are bringing it up standing alone as part of an 
effort to basically go back on the compromise of the gentleman from 
Illinois (Mr. Manzullo), which he insisted on for his support of the 
legislation, I do not think that it stands alone and can stand on its 
own.
  We passed a sensible reform law 2 years ago, as I say, the American 
Inventors Protection Act of 1999. It has provided some very solid 
reform, which included, again, language that was inconsistent with what 
they are trying to accomplish here today.
  Many Members, including the gentleman from Illinois (Mr. Manzullo) 
and myself, have been very concerned about the ability of corporations 
and of foreign nationals to use the legal process to drag small 
entrepreneurs and inventors into very costly legal battles.
  What we are talking about today is, instead of letting the patent 
office make the decision, and we have granted judicial authority to 
patent examiners; that is why they have a very special place in this 
system, so we expect them to act responsibly.
  But what we are doing here is permitting a third party, we are 
expanding the ability of third parties to use the court system as a way 
to interfere with rights that have been granted to inventors by patent 
examiners.
  We want the patent system to work, and we want these patent 
examiners, who have proven themselves to be people of responsibility, 
that is why we give them this responsibility, to be honorable people 
and people of great talent, and we hope they will be paid more money in 
the future, in fact. But then to suggest that, after the Patent Office 
has made its decision with these experts in technology, that we are 
going to permit a third party to come in and use the court system to 
negate that, I think that is a reason we have to think about this.
  I would suggest that we hold off on this amendment and give the 
Congress a little chance to figure out what the effect of this will 
actually be on inventions in America.
  Mr. SENSENBRENNER. Madam Speaker, I yield 4 minutes to the gentleman 
from North Carolina (Mr. Coble), the distinguished subcommittee 
chairman.
  Mr. COBLE. Madam Speaker, I thank the chairman for yielding time to 
me.
  Madam Speaker, I say to my good friend, the gentleman from California 
(Mr. Rohrabacher), with whom I have had disagreements and agreements, 
the gentleman says that this undoes what was previously agreed to. I 
think that is clearly subject to interpretation. We are going to have 
to disagree agreeably on that, and we can do that at another time.
  I say, Madam Speaker, that, and pardon my incorrect grammar, but I am 
a pretty easy dog to hunt with. I am surprised that no one has come 
forward prior to today. We had a hearing April 4, the second hearing on 
May 10, a subcommittee markup on May 22, a full committee markup on 
June 20, a report filed on June 28. Now, one would think if concerns 
were being felt or if anxiety was the order of the day, that someone 
would have rattled my door. No knock.
  The gentleman from Wisconsin has already indicated this, and I will 
be brief. But as he said, H.R. 1886 consists of noncontroversial, in my 
opinion noncontroversial, amendments to the patent reexamination 
system. It is not a new idea, but one whose time has finally come. 
Fairness demands that inventors deserve their day in court should a 
controversy arise, but we should spare them the expense and the burdens 
of Federal litigation when we can. This bill achieves that important 
and equitable balance.
  Again, I want to thank the gentleman from California (Mr. Berman); 
and I want to thank my chairman, the gentleman from Wisconsin (Mr. 
Sensenbrenner), and all members of the subcommittee who worked very 
arduously in addressing this matter.
  Finally, and I say to my friend, the gentleman from California (Mr. 
Rohrabacher), and to my friend, the gentleman from Illinois (Mr. 
Manzullo), I have had several small independent inventors come to me 
thanking me for the work that the subcommittee has done. These small, 
independent inventors say, ``Now some folks claim they are on Capitol 
Hill representing the small inventors. We do not need anybody 
representing us. We are happy with what is being done at the 
subcommittee and full committee level.''
  So, Madam Speaker, I believe that the concerns that have been 
expressed thus far, I say to my friend from Wisconsin (Mr. 
Sensenbrenner), I believe they can be assuaged and resolved.
  Mr. BERMAN. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I would like to take a moment to try and address the 
arguments made by my friend, the gentleman from California (Mr. 
Rohrabacher), because I think that the thrust of his argument is 
actually served and met by our bill, not opposed.
  He is concerned, legitimately, about the likelihood that poorly 
financed independent inventors will have their patents challenged in 
expensive re-examinations requested by big corporations with deep 
pockets. The problem is, the way the law is now, those corporations do 
not go to reexamination. They ignore reexamination, because if they go 
to reexamination, their ability then to challenge in court on the 
issues they brought up in reexamination is eliminated.
  So they, instead of challenging the small, independent inventor in a 
relatively cheap, relatively quick, somewhat informal or more informal 
reexamination process, that is ignored and, instead, they wait until 
the patent is granted. Then they go into Federal court on lengthy, 
incredibly expensive litigation which can take years and years at 
enormous expense, which these corporations can afford if it is 
justified in the context of their own business plans, and grind that 
patent holder down in court.
  What we are trying to do, and it is really a small change, is to take 
away the roadblock that causes people who want to challenge the 
validity of a patent to ignore the reexamination procedure and go to 
court instead. That is to say that if they win in reexamination and the 
patent holder appeals to court to reestablish the validity of the 
patent and to throw out the reexamination decision to reverse the 
granting of the patent, that the person who filed for a reexamination 
or the third party who brought the reexamination request can 
participate in that appeal. If they cannot, they are not going to go to 
reexamination, they are just going to challenge the patent in court.
  H.R. 1886 in no way affects or enhances a challenger's ability to 
initiate a reexamination. It does not broaden the basis for doing this. 
The gentleman from Virginia (Mr. Boucher) and I have some legislation 
that would do that and provide actually a more fulsome kind of a 
hearing. But we have not been able to persuade a majority of the

[[Page 16399]]

subcommittee at this point that that is a good idea.
  All this bill does is leave the substantive law exactly the same, and 
maintain the requirement that the PTO director still find that a 
substantial new question of patentability has been raised before 
ordering a reexamination. It in no way lowers the barrier for 
requesting an inter partes reexamination; it just makes it a marginally 
more attractive option because they are no longer prejudiced from 
raising an issue in court, and are perhaps persuaded by the 
reexamination decision.
  Everyone in the patent world recognizes that a patent which has 
survived reexamination is a much stronger patent, much more likely to 
be upheld in court. I would contend that the small, independent 
inventor has an interest in a vital reexamination process, not one that 
just exists on the books and is never utilized because the person who 
wants to challenge that patent is afraid they are going to be estopped 
from ever going to court; if they lose or if they win, that they will 
not be able to participate in an appeal of the decision, of the PTO 
Office.
  So I understand where the gentleman is coming from, but I think if we 
look through this bill, it is really very, very modest. This was not at 
the heart of the negotiation that enabled the original patent reform 
bill to go through several years ago, and I think it is a bill worthy 
of support.
  Madam Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Madam Speaker, I yield 3 minutes to the gentleman 
from Illinois (Mr. Manzullo), the chairman of the Committee on Small 
Business.
  Mr. MANZULLO. Madam Speaker, I rise to address my concerns with this 
bill, H.R. 1886, which would alter the current process for third 
parties in a patent reexamination request.
  As the chairman of the Committee on Small Business, I have concerns 
that small inventors may be hurt under the proposed process allowed 
under this bill.
  I am grateful to the gentleman from Wisconsin (Mr. Sensenbrenner) of 
the Committee on the Judiciary and to the gentleman from North Carolina 
(Mr. Coble). The gentleman from Wisconsin met with me today, albeit at 
the 11th hour, to discuss my concerns. He very graciously agreed to 
hold a hearing this year on how the bill may affect the interests of 
the small inventor.
  The chairman and the chairman of the subcommittee are extremely fair 
people. They are very reasonable. They are the first ones that want to 
make sure that this bill would do no harm to the small inventor. I 
appreciate their concern on it.
  But I would like to put into the Record as I see it how the small 
inventor may be hurt. Patents are intellectual property rights. Patents 
allow inventors to keep others from using for monetary gain inventions 
they have created.
  The reexamination process brings a patent back through the process, 
essentially opening up the procedures that bring about a patent.
  Third-party reexamination allows any party, an individual, a company, 
or even a foreign Nation, the ability to officially request a reexam of 
a patent in the U.S. Patent and Trademark Office. If a third party 
requester does not succeed in convincing the experts of the PTO, they 
do not have the right to go into the Court of Appeals. That is 
important for the small inventor.
  I am of the opinion that this bill may open a whole host of problems, 
particularly for the small inventor. Let me explain. Under current law, 
a patent can be challenged as to its validity in a Federal district 
court only upon a party being charged with infringement or being sued 
for infringement by a patent owner.
  In the first case, the alleged infringer may file a declaratory 
judgment action to settle a dispute, thereby allowing them to go to 
court. In the latter case, the sued party, the alleged infringer, can 
challenge patent validity in an affirmative defense claim before the 
Federal appeals court.
  H.R. 1886 would allow any third party to question the validity of a 
patent without first being charged for infringement. This is critical 
because a bad actor, again, anyone from an individual company, 
corporation, or foreign Nation, could essentially bottle up a truly 
valid patent with frivolous claims, hurting the true inventor's ability 
to develop his ideas.
  There are concerns that this bill could cause a domino effect in the 
marketplace for these small inventors seeking financing to get a 
finished product, idea, concept, to the market. A legitimate inventor 
of a significant concept would be dramatically hindered from seeking 
venture capital for something that is tied up in the courts by a third 
party reexamination, as is allowed and envisioned under H.R. 1886.

                              {time}  1600

  It enables a third-party requester to challenge as many patents in 
the courts as it deems necessary at a much-reduced cost to them so as 
to gain or maintain a stronghold in any particular industry. Therefore, 
I am heartened that the chairman of the Committee on the Judiciary 
through his graciousness saw me today, expressed a willingness to work 
with the small inventor to make sure that the small inventor was 
protected and the fact that he is open to holding a hearing on this 
issue.
  Mr. SENSENBRENNER. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, I want to thank the gentleman from Illinois (Mr. 
Manzullo), the chairman of the Committee on Small Business. I want him 
to know how much I appreciate knowing of his concerns regarding the 
important role of our country's patent system, and I am prepared to 
work with him on this subject. In fact, I share his appreciation of the 
entrepreneurial spirit of America, whereby inventors apply their 
creativity and ingenuity to technology every day in this country.
  I want to reassure the gentleman from Illinois (Mr. Manzullo) that 
since this issue is squarely in the jurisdiction of the Committee on 
the Judiciary, it will fully get the proper attention it deserves.
  The bill we consider today, H.R. 1886, will not prejudice inventors, 
small businesses or anyone else connected with inventive activity. In 
fact, it will help level the playing field in this area regarding the 
patent code procedures. This will help us achieve our goals beyond 
patent reexamination, which include giving investors confidence in a 
patented invention so that doubts can be cast aside and that capital 
may be raised to help in the financing of entrepreneurial concern.
  Second, this bill does not create new tools for litigation to harass 
or abuse inventors. In the past I have opposed such legislation and 
will continue to do so in the future.
  Finally, I appreciate the concerns that the gentleman has raised. The 
Subcommittee on Courts, the Internet and Intellectual Property held two 
hearings on this subject earlier this year. In an effort to continue 
exploring this vital subject, I am directing my staff to schedule a 
third hearing on this subject and other issues of importance to 
inventors.
  I thank the gentleman and look forward to working with him on his 
issue.
  Mr. BERMAN. Madam Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. SENSENBRENNER. Madam Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore (Mrs. Biggert). The question is on the motion 
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the 
House suspend the rules and pass the bill, H.R. 1886.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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