[Congressional Record (Bound Edition), Volume 147 (2001), Part 8]
[Extensions of Remarks]
[Pages 11811-11812]
[From the U.S. Government Publishing Office, www.gpo.gov]



        PATENT REEXAMINATION ENHANCEMENT ACT OF 2001--H.R. 2231

                                 ______
                                 

                            HON. ZOE LOFGREN

                             of california

                    in the house of representatives

                         Monday, June 25, 2001

  Ms. LOFGREN. Mr. Speaker, the high-technology industries based in 
Silicon Valley need effective patent protection for their inventions. 
Patents, in particular, are integral components of the valuation and 
structure of many companies, whether they are startups trying to 
attract venture capital or other funding, or established companies.
  The value of these rights, however, is dependent on the patents being 
valid and enforceable. What we recognize is that an invalid patent--a 
patent that either should never have been issued or which confers 
protection beyond what is entitled--can cause significant damage not 
only to individual companies but to competitors. Those individuals who 
rely on their patent and discover a defect, or those who face the 
threat of litigation on the basis of a patent that is invalid each have 
a substantial interest in having a mechanism to ``fix'' the problem 
with the patent.
  This is why I am calling for an enhancement of our patent 
reexamination system. The patent reexamination system was designed to 
be an efficient and fair procedure for reviewing the validity of 
patents when there is a substantial reason to call that validity into 
question. It was set up originally as an ``ex parte'' process that only 
the patent office and the patent owner could use. Congress tried to 
expand that system to allow more participation for third parties in 
1999 in the American Inventors Protection Act. Unfortunately, these 
efforts fell short in making reexamination the system it should be.
  I believe a modest set of changes to the law will further our goal of 
providing a cost-effective and fair procedure for reviewing patent 
validity. Some of the changes have already been addressed in 
legislation introduced by Chairman Howard Coble and supported 
unanimously by the Subcommittee on Courts, the Internet and 
Intellectual Property. Those bills, H.R. 1866 and H.R. 1886 address 
specific concerns with the AIPA inter partes system.
  The additional changes that I believe must be made address two 
general concerns.
  First, I am proposing to expand the grounds upon which one may 
initiate a patent reexamination. Under current law, reexaminations may 
be based only on patents or printed publications. In a number of fast-
moving technologies, such as business methods and software, there is 
often a substantial body of information that is not formally published 
or found in patents, so that other information is not considered when 
making the determination to issue a patent. The Patent and Trademark 
Office has demonstrated its competence when evaluating other aspects of 
patentability beyond defects based on prior patents or printed 
publications available for review. I am proposing that we allow parties 
to start a reexamination proceeding on the basis of evidence, for 
example, an affidavit from an expert in the relevant field of study or 
expertise, showiing that a patent is invalid due to prior public 
disclosure or that there is a defect in the disclosure that is not 
apparent from the source material available to the patent office in the 
present procedure.
  Second, I believe the original sanctions that would apply to parties 
who initiate reexamination procedures were too onerous. The instant the 
Patent Office issues its order to consider the matter, under the 
present system, the party requesting the reexamination is barred from 
going to court. For this reason, I am proposing to adjust the bar, the 
estoppel as it's called, until there is a final determination and that 
final determination would bar those parties who unsuccessfully 
participate in this reexamination procedure. Thus, a third party who 
participates in a reexamination procedure would, under my bill, at the 
conclusion of that proceeding be barred (estopped) from challenging the 
patent in any other judicial or PTO

[[Page 11812]]

proceeding. Any issue actually raised or that could have been raised 
based on the evidence presented by that party and before the Patent 
Office will still be barred under my amendments. Thus, the adjustments 
to the law are fairly minor but, I think, fairly important as to the 
timing of the estoppel. These changes make the process fair and also 
perceived as fair.
  Let me emphasize that the legislation I am offering is not designed 
to preclude or substitute for the possibility of litigation over 
important and valuable patents. It also will not make reexamination a 
substitute for situations where complex factual or legal issues must be 
resolved to reach a conclusion on validity of the patent. Instead, the 
legislation makes important but carefully measured enhancements to the 
system without undermining either the current structure of the process 
or its balance.
  Indeed, this bill would ensure that the reexamination procedure 
retains important safeguards to prevent third parties from using the 
procedure to harass patent owners who hold valid patents. First, as 
noted, the estoppel imposed on unsuccessful challengers should prevent 
frivolous challenges. Those who challenge the patent in the PTO will 
not be able to challenge the patent later in a court on validity 
issues. Second, the PTO will still be required in every proceeding to 
first make an independent finding that there is a substantial question 
of patentability before it will start the proceeding. This is an 
essential component of the structure of the current law and any future 
system. Third, under the proposed system, no discovery or hearings will 
be allowed--meaning that a third party will not be able to conduct 
proceedings that will place the patent owner in a compromised 
situation.
  In short, the legislation removes some of the shortcomings of the 
current inter partes system, and should present a viable and beneficial 
option for addressing the validity of some patents without the 
necessity of costly and complex litigation in a court.
  Finally, I am honored that Chairman Howard Coble has agreed to be the 
principle co-sponsor of this legislation.

                          ____________________