[Congressional Record (Bound Edition), Volume 157 (2011), Part 2]
[Senate]
[Pages 2841-2859]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  PATENT REFORM ACT OF 2011--Continued

  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. TOOMEY. Mr. President, it is a great privilege and honor for me 
to be able to represent the big, wonderful, diverse Commonwealth of 
Pennsylvania in the Senate. Pennsylvania is a wonderful State. It has a 
terrific range of great attributes. It has big, bustling cities such as 
Philadelphia and Pittsburgh at opposite ends; has all throughout the 
Commonwealth beautiful, historical boroughs such as Emmaus and 
Gettysburg. We go from the banks of the Delaware all the way to the 
shores of Lake Erie.
  In a State this big, of course, we have a wide range of very vital 
industries. We have old industries that we have had for a long time and 
are still very important employers: agriculture, coal, steel, and many 
others. We are a big manufacturing State, manufacturing goods of all 
kinds. We have a huge service sector, especially in the fields of 
education, medicine, finance, tourism, and many others. We have some 
relatively new and very exciting industries in our Commonwealth that I 
am very hopeful will lead to an acceleration of job growth soon. I am 
thinking in particular of the natural gas and the Marcellus shale. I am 
thinking of the life sciences, all across the Commonwealth, especially 
in greater Philadelphia and greater Pittsburgh as well as in points in 
between. The medical device sector and pharmaceutical industries are 
offering some of the most exciting opportunities for economic growth 
anywhere in the Commonwealth.
  So when I think about the diversity and the strength of our 
Commonwealth, I am convinced that Pennsylvania's best days are ahead of 
us.
  That said, despite all of the underlying strengths and advantages we 
have, we have an economy that is struggling. We have job creation that 
is far too slow. As I said repeatedly throughout my campaign for the 
Senate seat and as I have said since then, I think there are two vital 
priorities that we need to focus on first and foremost here in 
Washington. The first is economic growth and the job creation

[[Page 2842]]

that comes with it, and the second is restoring fiscal discipline to a 
government that has lost all sense of fiscal discipline. These two, of 
course, are closely related. We will never have the kind of job growth 
we need and we deserve until we get our fiscal house in order.
  But I look at them as separate issues. I think they should be at the 
top of our priority list. I am absolutely convinced we can have 
terrific economic growth, terrific job growth. We can have the 
prosperity we have been looking for.
  In fact, it is actually inevitable if the Federal Government follows 
the right policies, remembering first and foremost that prosperity 
comes from the private sector, it does not come from government itself, 
but that government creates an environment in which the private sector 
can thrive and create the jobs we so badly need. I would argue that the 
government does that by doing four things and doing them well.
  The first is to make sure we have a legal system that respects 
property rights, because the clear title and ownership and ability to 
use private property is the cornerstone of a free enterprise system.
  It requires, second, that the government establish sensible 
regulations that are not excessive, because excessive regulation--and 
frankly we have seen a lot of excessive regulation recently--too much 
regulation always has unintended consequences that curb our ability to 
create the jobs we need.
  A third thing a government always needs to do is provide a stable 
currency, sound money, because debasing one's currency is the way to 
ruin, not the way to prosperity.
  Fourth, governments need to live within their means. They cannot be 
spending too much money and they cannot have taxes at too high a level.
  It is so important that government spending remain limited and, 
frankly, much less than we have today, for several reasons. One, of 
course, government spending is the political allocation of capital 
rather than the allocation of free people and a free economy. The 
political allocation is always less efficient than that of men and 
women engaging in free enterprise.
  Secondly, the reason too much spending is problematic is because it 
ultimately always has to be paid for with higher taxes. Higher taxes 
clearly impede economic growth and prevent job creation. They do that 
in many ways, not the least of which is diminishing the incentives to 
make investments, to take risks, to launch new enterprises, to hire new 
workers.
  I would argue that of these four priorities, the government is not 
doing such a great job. The failure is most egregious when it comes to 
the level of spending that has recently developed in this town. The 
recent surge in spending amounts to about a 25-percent increase in the 
size of the government virtually overnight.
  The government is now spending--this Federal Government alone--fully 
25 percent of our entire economic output. Frankly, this huge surge in 
spending has not worked. The unemployment rate has stayed near to 10 
percent, our deficits are now over $1\1/2\ trillion in a single year. 
That is more than 10 percent of our entire economy.
  Of course, when you run annual deficits where you are spending more 
than you bring in, that shortfall is made up for with new borrowings. 
So we have been adding to our debt at what I think is an alarming pace. 
I would argue that this mounting debt is already today costing us job 
growth. It is costing us jobs because it creates a tremendous 
uncertainty in our economic future when we are not on a sustainable 
fiscal path. That uncertainty itself discourages entrepreneurs and job 
creators from doing the kinds of things we need.
  The risks are very real. History is replete with examples of 
countries that have accumulated too much debt. Frankly, it never ends 
well. Very often it leads to very high rates of inflation. It can lead 
to much higher interest rates, which can have a crippling effect on job 
growth. It can even lead to financial disruptions which can be very 
harmful, as we have recently seen.
  With the recent acceleration in the size of our deficits and the 
increase in our debts, we are now rapidly closing in on the statutory 
limit to the amount of money that the Federal Government is permitted 
to borrow under law. That is an amount of over $14 trillion, but the 
truth is we are rapidly closing in on that limit. We will get there 
fairly soon.
  The administration has suggested that we ought to, here in Congress, 
vote to raise that limit with no conditions attached. I have to tell 
you I think it is a very bad idea. This brings to mind the case of a 
family that is routinely living beyond their means. They routinely are 
spending more than their income and making up for the difference by 
running up to the limit on their credit cards. When this family reaches 
the limit on all of the credit cards they have, who thinks it is a good 
idea to give them another credit card?
  I think most folks in Pennsylvania think it is probably time to 
reexamine the spending and look at the real problem that has gotten the 
family in this situation. I think that is where we are as a government. 
I think we need to fundamentally reexamine the spending we have been 
engaged in.
  I will say clearly, I think failure to raise the debt limit promptly 
upon reaching it is not optimal and it would be very disruptive. I hope 
that does not come to pass. But I happen to think the most 
irresponsible thing we could do is simply raise this debt limit and run 
up even more debt without making changes to the problems that got us 
into this fix.
  Specifically what I think we need to do is have real cuts in 
spending--now, not later, not at some distant hypothetical point in 
time in the future but now. That is one.
  Second, I think we need real reform in the spending process, reform 
in the way Congress goes about its business, because the process is 
part of what has gotten us here.
  I wish to see a balanced budget amendment, one with real teeth, one 
that requires our books to be balanced, one that limits the total 
spending to a reasonable percentage of our economy, and one that makes 
it harder to raise taxes. I think that would be a very good 
development. But that will take several years, at best, if we can get 
that implemented. Of course, all of the States have to agree.
  In the meantime, I would hope we could have statutory spending caps, 
limits to how much the Federal Government can spend, and a mechanism 
that would redress the problem if for some reason we exceeded those 
limits.
  As we have had this debate over whether we should attach these 
conditions to raising the debt limit, some have suggested this is a 
very dangerous discussion to have, because failure to immediately raise 
the debt limit, some have suggested, amounts to a default on our 
Treasury securities, on the borrowings we have already incurred.
  That is not true. I think it is irresponsible to suggest that. The 
fact is the ongoing revenue from taxes that will be collected whether 
or not we immediately raise the debt limit--the ongoing revenue is more 
than 10 times all the money needed to stay current on our debt service. 
In fact, in the last 20 years, there have been four occasions when we 
have reached the debt limit without immediately raising it, and we 
never defaulted on our debt. This country never will. So I do not think 
we should have a discussion about something that is not going to 
happen. But since some in the administration have raised the specter of 
a default, I have introduced legislation that would clearly take that 
risk off the table entirely. My bill is called the Full Faith and 
Credit Act. It simply says, in the event we reach the debt limit 
without having raised it, it instructs the Treasury to make sure the 
debt service is the top priority. This guarantees that we would not 
default on our Treasuries, we would not create a financial crisis of 
any kind, and maybe, more importantly, it would be a great reassurance 
to the millions of Americans who have lent this government their money, 
the millions of Americans who hold Treasury bonds in their IRAs, their 
401(k)s, their pension plans.
  The retirees who live in Allentown, PA, who have lived modestly, 
saved

[[Page 2843]]

money, and with their retirement savings have invested in the U.S. 
Treasury, I think those folks deserve the peace of mind of knowing that 
the first priority is going to make sure we honor the obligations and 
stay current on our debts.
  I want to take a moment to thank Senator Vitter, because yesterday he 
came down to the floor and introduced my legislation as an amendment to 
the current patent reform bill. I hope we will be able to soon pass my 
amendment. I hope we will soon get to a vote here on the Senate floor. 
The real reason is, I want to remove this false specter of a default on 
our debt, so we can have an honest debate over how we are going to get 
spending under control--what kind of spending cuts we are going to have 
right now, and what kind of reforms we are going to make to the process 
going forward.
  I do not think we can kick this can down the road anymore. We have 
been doing that for a long time. As I said earlier, it never ends well 
when governments continue taking on too much debt. Nobody here that I 
know wants to see a government shutdown. Nobody wants to see the 
disruption that would come from failing to raise the debt limit at some 
point. But nor can we proceed with business as usual.
  All across Pennsylvania I hear every day when I am back home how 
important it is that this government learn to live within its means as 
Pennsylvania businesses and families have done.
  Let me close by saying I still remain absolutely convinced we can 
have a terrific economic recovery. We can have a booming economic 
growth and the tremendous job creation that goes with it. It is 
overdue, but it can still arrive if we pass the kind of policies that 
create the right environment.
  I am convinced the 21st century will be another great American 
century and Pennsylvania will be at the forefront.
  I yield the floor.
  The PRESIDING OFFICER. The Republican leader.
  Mr. McCONNELL. Mr. President, I want to extend my congratulations to 
the Senator from Pennsylvania for his initial speech, including his 
comments about his important amendment, which is actually pending to 
the patent bill which hopefully we will have an opportunity to vote on 
in the very near future.
  I yield the floor.
  Mr. ALEXANDER. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. LEAHY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LEAHY. Mr. President, I am soon going to ask for a vote on the 
Leahy-Grassley-Kyl managers' amendment. It resolves a number of issues 
in the bill, including fee diversion and business method patents 
damages, venue issues. Senators Coburn, Schumer, Bennet, Whitehouse, 
Coons, and others worked with us on those issues. I would like to vote 
on that and then go to the amendment offered yesterday by Senator 
Bennet on satellite patent offices, with a modification, as well as the 
modified amendment offered by Senator Kirk and Senator Pryor on 
ombudsman. If we can do that, we can get much of this finished. But 
while I am waiting for the--just so everybody will know, I am going to 
ask for a vote on that very soon. But I am waiting for the ranking 
member to come back.
  I see the distinguished senior Senator from Minnesota, and I yield to 
her.
  Ms. KLOBUCHAR. Mr. President, first, I commend Chairman Leahy and the 
entire Judiciary Committee for their work on this bill. The chairman 
has endured so many ups and downs and different versions, and we would 
not be here today if not for him.
  I rise to speak in support of the America Invents Act, a bill to 
overhaul our patent system, which plays such a critical role in our 
economy. It is one of the main reasons America has been able to 
maintain its competitive edge.
  The Commerce Department estimates that up to 75 percent of the 
economic growth in our Nation since World War II is due to 
technological innovation--innovation made possible by a patent system 
that protects the rights to that innovation.
  I have seen the importance and success of the patent system firsthand 
in Minnesota, which has brought the world everything from the pacemaker 
to the Post-it note. In Minnesota, we know how important the patent 
system is to our economy. We rank sixth in the Nation in patents per 
capita and have the second highest number of medical device patents 
over the last 5 years. Companies such as 3M, Ecolab, and Medtronic are 
well-known leaders in innovation, but Minnesota also supports 
innovative small businesses such as NVE Corporation and Arizant 
Healthcare. We are now first per capita, in fact, for Fortune 500 
companies in our State, and that is in large part because of 
innovation. So many of these companies started small, invented 
products, and got patents which were protected. People weren't copying 
their products, and they were able to grow and produce jobs in our 
country.
  Having a patent system that works for small business is particularly 
critical to creating jobs in America. But our patent laws haven't had a 
major update since 1952. The system is outdated and has become a burden 
on our innovators and entrepreneurs. Because of these outdated laws, 
the Patent and Trademark Office faces a backlog of over 700,000 patent 
applications and too often issues low-quality patents. One of these 
700,000 patents may be the next implantable pacemaker or new therapy 
for fighting cancer, but it just sits in that backlog.
  Our current system also seems stacked against small entrepreneurs. I 
have spoken to small business owners and entrepreneurs across our State 
of Minnesota who are concerned with the high cost and uncertainty of 
protecting their inventions. For example, under the current system, 
when two patents are filed around the same time for the same invention, 
the applicants must go through an arduous and expensive process called 
an interference to determine which applicant will be awarded the 
patent. Small inventors rarely, if ever, win interference proceedings 
because the rules for interference are often stacked in favor of 
companies with deep pockets. This needs to change.
  Our current patent system also ignores the realities of the 
information age in which we live.
  In 1952, back when the patent bill came about, the world wasn't as 
interconnected as it is today. There was no Internet. People didn't 
share information the way they do in this modern age. They had party 
telephone lines then. In 1952, most publicly available information 
about technology could be found in either patents or scientific 
publications. So patent examiners only had to look to a few sources to 
determine if the technology described in a patent application was both 
novel and nonobvious.
  Today, as we all know, there is a vast amount of information readily 
available everywhere you look.
  It is unrealistic to believe a patent examiner would know all of the 
places to look for this information, and even if the examiner knew 
where to look, it is unlikely he or she would have the time to search 
all of these nooks and crannies. The people who know where to look are 
the other scientists and innovators who also work in the field. But 
current law doesn't allow participation by third parties in the patent 
application process despite the fact that third parties are often in 
the best position to challenge a patent application. Without the 
benefit of this outside expertise, an examiner might grant a patent for 
technology that simply isn't a true invention--it is simply not an 
actual invention--and these low-quality patents clog the system and 
hinder true innovation.
  Our Nation can't afford to slow innovation anymore. While China is 
investing billions in its medical technology sector, we are still 
bickering about regulations. While India encourages invention and 
entrepreneurship, we are still giving our innovators the runaround, 
playing a game of red light/green light with the R&D tax credit.

[[Page 2844]]

  America can no longer afford to be a country that churns money and 
shuffles paper, a country that consumes, imports, and spends its way 
through huge trade deficits. We need to be a nation that makes things 
again, that invents stuff, that exports to the world, a country where 
you can walk into any store on any street in any neighborhood, purchase 
the best goods, and be able to turn it over and see the words ``Made in 
the USA.''
  In the words of New York Times columnist and Minnesota native Tom 
Friedman, we need to be focusing on ``nation building in our own 
Nation.'' Well, as innovators and entrepreneurs across Minnesota have 
told me, our country needs to spawn more of them. The America Invents 
Act would do just that.
  First, the American Invents Act increases the speed and certainty of 
the patent application process by transitioning our patent system from 
a first-to-invent system to a first-inventor-to-file system. This 
change to a first-inventor-to-file system will increase predictability 
by creating brighter lines to guide patent applicants and Patent Office 
examiners. By simply using the filing date of an application to 
determine the true inventor, the bill increases the speed of the patent 
application process, while rewarding novel, cutting-edge innovations.
  To help guide investors and inventors, this bill allows them to 
search the public record to discover with more certainty whether their 
idea is patentable, helping eliminate duplication and streamlining the 
system. At the same time, the bill still provides a safe harbor of a 
year for inventors to go out and market their inventions before having 
to file for their patents. This grace period is one of the reasons our 
Nation's top research universities, such as the University of 
Minnesota, support this bill. The grace period protects professors who 
discuss their inventions with colleagues or publish them in journals 
before filing their patent application. The grace period will encourage 
cross-pollination of ideas and eliminate concerns about discussing 
inventions with others before a patent application is actually filed.
  Moreover, this legislation helps to ensure that only true inventions 
receive protection under our laws. By allowing third parties to provide 
information to the patent examiner, the America Invents Act helps 
bridge the information gap between the patent application and existing 
knowledge.
  The legislation also provides a modernized, streamlined mechanism for 
third parties who want to challenge recently issued, low-quality 
patents that should never have been issued in the first place. 
Eliminating these potentially trivial patents will help the entire 
patent system by improving certainty for both users and inventors.
  The legislation will also improve the patent system by granting the 
U.S. Patent and Trademark Office the authority to set and adjust its 
own fees. Allowing the Office to set its own fees will give it the 
resources to reduce the current backlog and devote greater resources to 
each patent that is reviewed to ensure higher quality patents.
  The fee-setting authority is why IBM, one of the most innovative 
companies around--by the way, the host of the ``Jeopardy''-winning 
Watson--well, the IBM facility there that actually developed Watson was 
in Rochester, MN. In fact, IBM, which has its facilities in Rochester 
and the Twin Cities, as well as many other places in this country, was 
granted a record 5,896 patents in 2010. IBM supports this bill. It 
allows the Patent Office to set its own fees and run itself like a 
business, and that is good for companies such as IBM, as well as for 
small entrepreneurs.
  Mr. President, as chair of the Subcommittee on Competitiveness, 
Innovation, and Export Promotion, I have been focused on ways to 
promote innovation and growth in the 21st century. Stakeholders from 
across the spectrum agree that this bill is a necessary step to ensure 
that the United States remains a world leader in developing innovative 
products that bring prosperity and happiness to those in our country. 
Globalization and technological advancement have changed our economy. 
This legislation will ensure that our patent system truly rewards 
innovation in the 21st century. Our patent system has to be as 
sophisticated as those who are inventing these products and those who 
at times are trying to steal their ideas. That is what this is about.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.


                     Amendment No. 121, as Modified

  Mr. LEAHY. Mr. President, we have the Leahy-Grassley managers' 
amendment at the desk. I have a modification to it. I ask that the 
amendment be so modified.
  The PRESIDING OFFICER. The amendment will be so modified.
  The amendment, as modified, is as follows:

       On page 1, strike line 5, and insert the following: 
     ```America Invents Act'''.
       On page 9, line 8, strike ``1 year'' and insert ``18 
     months''.
       On page 32, strike line 12 and all that follows through 
     page 35, line 2, and insert the following:

     SEC. 4. VIRTUAL MARKING AND ADVICE OF COUNSEL.

       On page 37, line 1, strike ``(b)'' and insert ``(a)''.
       On page 37, line 20, strike ``(c)'' and insert ``(b)''.
       On page 38, line 3, strike ``(d)'' and insert ``(c)''.
       On page 38, line 13, strike ``(e)'' and insert ``(d)''.
       On page 57, strike lines 17 through 23, and insert the 
     following:
       ``(b) Preliminary Injunctions.--If a civil action alleging 
     infringement of a patent is filed within 3 months of the 
     grant of the patent, the court may not stay its consideration 
     of the patent owner's motion for a preliminary injunction 
     against infringement of the patent on the basis that a 
     petition for post-grant review has been filed or that such a 
     proceeding has been instituted.''.
       On page 59, strike lines 13 through 19.
       On page 59, line 20, strike ``(g)'' and insert ``(f)''.
       On page 65, line 21, strike ``18 months'' and insert ``1 
     year''.
       On page 66, line 3, strike ``18 months'' and insert ``1 
     year''.
       On page 66, lines 4 and 5, strike ``and shall apply only to 
     patents issued on or after that date.'' and insert ``and, 
     except as provided in section 18 and in paragraph (3), shall 
     apply only to patents that are described in section 
     2(o)(1).''.
       On page 66, line 8, after the period insert the following: 
     ``During the 4 year period following the effective date of 
     subsections (a) and (d), the Director may, in his discretion, 
     continue to apply the provisions of chapter 31 of title 35, 
     United States Code, as amended by paragraph (3), as if 
     subsection (a) had not been enacted to such proceedings 
     instituted under section 314 (as amended by subsection (a)) 
     or under section 324 as are instituted only on the basis of 
     prior art consisting of patents and printed publications.''.
       On page 69, line 2, strike ``18 months'' and insert ``1 
     year''.
       On page 69, line 14, strike ``18 months'' and insert ``1 
     year''.
       On page 74, line 22, strike ``18 months'' and insert ``1 
     year''.
       On page 75, line 16, strike ``18 months'' and insert ``1 
     year''.
       On page 75, line 22, strike ``18 months'' and insert ``1 
     year''.
       On page 76, line 5, strike ``18 months'' and insert ``1 
     year''.
       On page 77, strike line 23 and all that follows through 
     page 78, line 6.
       On page 78, line 7, strike ``(b)'' and insert ``(a)''.
       On page 78, line 20, strike ``(c)'' and insert ``(b)''.
       On page 79, strike lines 1 through 17, and insert the 
     following:
       (1) In general.--The Director shall have authority to set 
     or adjust by rule any fee established, authorized, or charged 
     under title 35, United States Code, and the Trademark Act of 
     1946 (15 U.S.C. 1051 et seq.), notwithstanding the fee 
     amounts established, authorized, or charged thereunder, for 
     all services performed by or materials furnished by, the 
     Office, provided that patent and trademark fee amounts are in 
     the aggregate set to recover the estimated cost to the Office 
     for processing, activities, services, and materials relating 
     to patents and trademarks, respectively, including 
     proportionate shares of the administrative costs of the 
     Office.
       On page 79, lines 19-21, strike ``filing, processing, 
     issuing, and maintaining patent applications and patents'' 
     and insert: ``filing, searching, examining, issuing, 
     appealing, and maintaining patent applications and patents''.
       On page 86, between lines 8 and 9, insert the following:
       (i) Reduction in Fees for Small Entity Patents.--The 
     Director shall reduce fees for providing prioritized 
     examination of utility and plant patent applications by 50 
     percent for small entities that qualify for reduced fees 
     under section 41(h)(1) of title 35, United States Code, so 
     long as the fees of the

[[Page 2845]]

     prioritized examination program are set to recover the 
     estimated cost of the program.
       On page 86, line 9, strike ``(i)'' and insert ``(j)''.
       On page 91, between lines 14 and 15, insert the following:
       (b) No Provision of Facilities Authorized.--The repeal made 
     by the amendment in subsection (a)(1) shall not be construed 
     to authorize the provision of any court facilities or 
     administrative support services outside of the District of 
     Columbia.
       On page 91, line 15, strike ``(b)'' and insert ``(c)''.
       On page 91, line 23, strike ``under either subsection'' and 
     all that follows through ``shall certify'' on page 92, line 
     2.
       On page 92, line 7, before the semicolon insert the 
     following: ``, not including applications filed in another 
     country, provisional applications under section 111(b), or 
     international applications filed under the treaty defined in 
     section 351(a) for which the basic national fee under section 
     41(a) was not paid''.
       On page 92, between lines 7 and 8, insert the following:
       ``(3) did not in the prior calendar year have a gross 
     income, as defined in section 61(a) of the Internal Revenue 
     Code (26 U.S.C. 61(a)), exceeding 3 times the most recently 
     reported median household income, as reported by the Bureau 
     of Census; and''.
       On page 92, strike lines 8 through 25.
       On page 93, line 1, strike ``(3) has not assigned, granted, 
     conveyed, or is'' and insert ``(4) has not assigned, granted, 
     conveyed, and is not''.
       On page 93, lines 4 and 5, strike ``has 5 or fewer 
     employees and that such entity has'' and insert ``had''.
       On page 93, line 7, strike ``that does'' and all that 
     follows through line 11, and insert the following: 
     ``exceeding 3 times the most recently reported median 
     household income, as reported by the Bureau of the Census, in 
     the calendar year preceding the calendar year in which the 
     fee is being paid, other than an entity of higher education 
     where the applicant is not an employee, a relative of an 
     employee, or have any affiliation with the entity of higher 
     education.''.
       On page 93, strike lines 12 through 17, and insert the 
     following:
       ``(b) Applications Resulting From Prior Employment.--An 
     applicant is not considered to be named on a previously filed 
     application for purposes of subsection (a)(2) if the 
     applicant has assigned, or is under an obligation by contract 
     or law to assign, all ownership rights in the application as 
     the result of the applicant's previous employment.
       ``(c) Foreign Currency Exchange Rate.--If an applicant's or 
     entity's gross income in the preceding year is not in United 
     States dollars, the average currency exchange rate, as 
     reported by the Internal Revenue Service, during the 
     preceding year shall be used to determine whether the 
     applicant's or entity's gross income exceeds the threshold 
     specified in paragraphs (3) or (4) of subsection (a).''.
       On page 94, between lines 18 and 19, insert the following:
       (c) Rule of Construction.--Nothing in this section shall be 
     construed to imply that other business methods are patentable 
     or that other business-method patents are valid.
       On page 94, line 19, strike ``(c)'' and insert ``(d)''.
       On page 103, between lines 11 and 12, insert the following:
       ``(c) Derivative Jurisdiction Not Required.--The court to 
     which a civil action is removed under this section is not 
     precluded from hearing and determining any claim in such 
     civil action because the State court from which such civil 
     action is removed did not have jurisdiction over that 
     claim.''.
       On page 103, line 12, strike ``(c)'' and insert ``(d)''.
       On page 105, between lines 22 and 23, insert the following:

     SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS-METHOD 
                   PATENTS.

       (a) References.--Except as otherwise expressly provided, 
     wherever in this section language is expressed in terms of a 
     section or chapter, the reference shall be considered to be 
     made to that section or chapter in title 35, United States 
     Code.
       (b) Transitional Program.--
       (1) Establishment.--Not later than 1 year after the date of 
     enactment of this Act, the Director shall issue regulations 
     establishing and implementing a transitional post-grant 
     review proceeding for review of the validity of covered 
     business-method patents. The transitional proceeding 
     implemented pursuant to this subsection shall be regarded as, 
     and shall employ the standards and procedures of, a post-
     grant review under chapter 32, subject to the following 
     exceptions and qualifications:
       (A) Section 321(c) and subsections (e)(2), (f), and (g) of 
     section 325 shall not apply to a transitional proceeding.
       (B) A person may not file a petition for a transitional 
     proceeding with respect to a covered business-method patent 
     unless the person or his real party in interest has been sued 
     for infringement of the patent or has been charged with 
     infringement under that patent.
       (C) A petitioner in a transitional proceeding who 
     challenges the validity of 1 or more claims in a covered 
     business-method patent on a ground raised under section 102 
     or 103 as in effect on the day prior to the date of enactment 
     of this Act may support such ground only on the basis of--
       (i) prior art that is described by section 102(a) (as in 
     effect on the day prior to the date of enactment of this 
     Act); or
       (ii) prior art that--

       (I) discloses the invention more than 1 year prior to the 
     date of the application for patent in the United States; and
       (II) would be described by section 102(a) (as in effect on 
     the day prior to the date of enactment of this Act) if the 
     disclosure had been made by another before the invention 
     thereof by the applicant for patent.

       (D) The petitioner in a transitional proceeding, or his 
     real party in interest, may not assert either in a civil 
     action arising in whole or in part under section 1338 of 
     title 28, United States Code, or in a proceeding before the 
     International Trade Commission that a claim in a patent is 
     invalid on any ground that the petitioner raised during a 
     transitional proceeding that resulted in a final written 
     decision.
       (E) The Director may institute a transitional proceeding 
     only for a patent that is a covered business-method patent.
       (2) Effective date.--The regulations issued pursuant to 
     paragraph (1) shall take effect on the date that is 1 year 
     after the date of enactment of this Act and shall apply to 
     all covered business-method patents issued before, on, or 
     after such date of enactment, except that the regulations 
     shall not apply to a patent described in the first sentence 
     of section 5(f)(2) of this Act during the period that a 
     petition for post-grant review of that patent would satisfy 
     the requirements of section 321(c).
       (3) Sunset.--
       (A) In general.--This subsection, and the regulations 
     issued pursuant to this subsection, are repealed effective on 
     the date that is 4 years after the date that the regulations 
     issued pursuant to paragraph (1) take effect.
       (B) Applicability.--Notwithstanding subparagraph (A), this 
     subsection and the regulations implemented pursuant to this 
     subsection shall continue to apply to any petition for a 
     transitional proceeding that is filed prior to the date that 
     this subsection is repealed pursuant to subparagraph (A).
       (c) Request for Stay.--
       (1) In general.--If a party seeks a stay of a civil action 
     alleging infringement of a patent under section 281 in 
     relation to a transitional proceeding for that patent, the 
     court shall decide whether to enter a stay based on--
       (A) whether a stay, or the denial thereof, will simplify 
     the issues in question and streamline the trial;
       (B) whether discovery is complete and whether a trial date 
     has been set;
       (C) whether a stay, or the denial thereof, would unduly 
     prejudice the nonmoving party or present a clear tactical 
     advantage for the moving party; and
       (D) whether a stay, or the denial thereof, will reduce the 
     burden of litigation on the parties and on the court.
       (2) Review.--A party may take an immediate interlocutory 
     appeal from a district court's decision under paragraph (1). 
     The United States Court of Appeals for the Federal Circuit 
     shall review the district court's decision to ensure 
     consistent application of established precedent, and such 
     review may be de novo.
       (d) Definition.--For purposes of this section, the term 
     ``covered business method patent'' means a patent that claims 
     a method or corresponding apparatus for performing data 
     processing operations utilized in the practice, 
     administration, or management of a financial product or 
     service, except that the term shall not include patents for 
     technological inventions. Solely for the purpose of 
     implementing the transitional proceeding authorized by this 
     subsection, the Director shall prescribe regulations for 
     determining whether a patent is for a technological 
     invention.
       (e) Rule of Construction.--Nothing in this section shall be 
     construed as amending or interpreting categories of patent-
     eligible subject matter set forth under section 101.

     SEC. 19. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE 
                   JUDGES.

       (a) Authority to Cover Certain Travel Related Expenses.--
     Section 2(b)(11) of title 35, United States Code, is amended 
     by inserting ``, and the Office is authorized to expend funds 
     to cover the subsistence expenses and travel-related 
     expenses, including per diem, lodging costs ,and 
     transportation costs, of non-federal employees attending such 
     programs'' after ``world''.
       (b) Payment of Administrative Judges.--Section 3(b) of 
     title 35, United States Code, is amended by adding at the end 
     the following:
       ``(6) Administrative patent judges and administrative 
     trademark judges.--The Director has the authority to fix the 
     rate of basic pay for the administrative patent judges 
     appointed pursuant to section 6 of this title and the 
     administrative trademark judges appointed pursuant to section 
     17 of the Trademark Act of 1946 (15 U.S.C. 1067) at not 
     greater than the rate of basic pay payable for Level III of 
     the Executive Schedule. The payment of a rate of basic pay 
     under

[[Page 2846]]

     this paragraph shall not be subject to the pay limitation of 
     section 5306(e) or 5373 of title 5.''.

     SEC. 20. PATENT AND TRADEMARK OFFICE FUNDING.

       (a) Definitions.--In this section, the following 
     definitions shall apply:
       (1) Director.--The term ``Director'' means the Director of 
     the United States Patent and Trademark Office.
       (2) Fund.--The term ``Fund'' means the public enterprise 
     revolving fund established under subsection (c).
       (3) Office.--The term ``Office'' means the United States 
     Patent and Trademark Office.
       (4) Trademark act of 1946.--The term ``Trademark Act of 
     1946'' means an Act entitled ``Act to provide for the 
     registration and protection of trademarks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946 
     (15 U.S.C. 1051 et seq.) (commonly referred to as the 
     ``Trademark Act of 1946'' or the ``Lanham Act'').
       (5) Under secretary.--The term ``Under Secretary'' means 
     the Under Secretary of Commerce for Intellectual Property.
       (b) Funding.--
       (1) In general.--Section 42 of title 35, United States 
     Code, is amended--
       (A) in subsection (b), by striking ``Patent and Trademark 
     Office Appropriation Account'' and inserting ``United States 
     Patent and Trademark Office Public Enterprise Fund''; and
       (B) in subsection (c), in the first sentence--
       (i) by striking ``To the extent'' and all that follows 
     through ``fees'' and inserting ``Fees''; and
       (ii) by striking ``shall be collected by and shall be 
     available to the Director'' and inserting ``shall be 
     collected by the Director and shall be available until 
     expended''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on the later of--
       (A) October 1, 2011; or
       (B) the first day of the first fiscal year that begins 
     after the date of the enactment of this Act.
       (c) USPTO Revolving Fund.--
       (1) Establishment.--There is established in the Treasury of 
     the United States a revolving fund to be known as the 
     ``United States Patent and Trademark Office Public Enterprise 
     Fund''. Any amounts in the Fund shall be available for use by 
     the Director without fiscal year limitation.
       (2) Derivation of resources.--There shall be deposited into 
     the Fund on or after the effective date of subsection 
     (b)(1)--
       (A) any fees collected under sections 41, 42, and 376 of 
     title 35, United States Code, provided that notwithstanding 
     any other provision of law, if such fees are collected by, 
     and payable to, the Director, the Director shall transfer 
     such amounts to the Fund, provided, however, that no funds 
     collected pursuant to section 9(h) of this Act or section 
     1(a)(2) of Public Law 111-45 shall be deposited in the Fund; 
     and
       (B) any fees collected under section 31 of the Trademark 
     Act of 1946 (15 U.S.C. 1113).
       (3) Expenses.--Amounts deposited into the Fund under 
     paragraph (2) shall be available, without fiscal year 
     limitation, to cover--
       (A) all expenses to the extent consistent with the 
     limitation on the use of fees set forth in section 42(c) of 
     title 35, United States Code, including all administrative 
     and operating expenses, determined in the discretion of the 
     Under Secretary to be ordinary and reasonable, incurred by 
     the Under Secretary and the Director for the continued 
     operation of all services, programs, activities, and duties 
     of the Office relating to patents and trademarks, as such 
     services, programs, activities, and duties are described 
     under--
       (i) title 35, United States Code; and
       (ii) the Trademark Act of 1946; and
       (B) all expenses incurred pursuant to any obligation, 
     representation, or other commitment of the Office.
       (d) Annual Report.--Not later than 60 days after the end of 
     each fiscal year, the Under Secretary and the Director shall 
     submit a report to Congress which shall--
       (1) summarize the operations of the Office for the 
     preceding fiscal year, including financial details and staff 
     levels broken down by each major activity of the Office;
       (2) detail the operating plan of the Office, including 
     specific expense and staff needs for the upcoming fiscal 
     year;
       (3) describe the long term modernization plans of the 
     Office;
       (4) set forth details of any progress towards such 
     modernization plans made in the previous fiscal year; and
       (5) include the results of the most recent audit carried 
     out under subsection (f).
       (e) Annual Spending Plan.--
       (1) In general.--Not later than 30 days after the beginning 
     of each fiscal year, the Director shall notify the Committees 
     on Appropriations of both Houses of Congress of the plan for 
     the obligation and expenditure of the total amount of the 
     funds for that fiscal year in accordance with section 605 of 
     the Science, State, Justice, Commerce, and Related Agencies 
     Appropriations Act, 2006 (Public Law 109-108; 119 Stat. 
     2334).
       (2) Contents.--Each plan under paragraph (1) shall--
       (A) summarize the operations of the Office for the current 
     fiscal year, including financial details and staff levels 
     with respect to major activities; and
       (B) detail the operating plan of the Office, including 
     specific expense and staff needs, for the current fiscal 
     year.
       (f) Audit.--The Under Secretary shall, on an annual basis, 
     provide for an independent audit of the financial statements 
     of the Office. Such audit shall be conducted in accordance 
     with generally acceptable accounting procedures.
       (g) Budget.--The Fund shall prepare and submit each year to 
     the President a business-type budget in a manner, and before 
     a date, as the President prescribes by regulation for the 
     budget program.
       On page 105, line 23, strike ``SEC. 18.'' and insert ``SEC. 
     21.''.
       At the end, add the following:

     SEC. 22. BUDGETARY EFFECTS.

       The budgetary effects of this Act, for the purpose of 
     complying with the Statutory Pay-As-You-Go-Act of 2010, shall 
     be determined by reference to the latest statement titled 
     ``Budgetary Effects of PAYGO Legislation'' for this Act, 
     submitted for printing in the Congressional Record by the 
     Chairman of the Senate Budget Committee, provided that such 
     statement has been submitted prior to the vote on passage.

  Mr. LEAHY. Mr. President, we are prepared to go to a rollcall vote on 
this right now. I don't see the ranking member. As a courtesy, I am 
willing to wait a few more minutes before calling for the vote. While 
we are waiting for my friend, the distinguished Senator from Iowa, I 
will note that what we are talking about is bipartisan legislation; it 
is supported by both business and labor.
  People ask whether Congress can work together and whether, with all 
the problems facing America, Republicans and Democrats can come 
together to get work done, make things work, and do things that can 
make America stronger and more competitive in the world. This is a bill 
that does that. That is why we have a broad group of cosponsors in both 
parties across the political spectrum. It enables us to actually do 
something.
  We have a decades-old patent system, which may have made sense in the 
time when you had patents that might not be superseded by new 
inventions for years. Now they can be superseded the day they come in. 
That is why we have 700,000 patents applications waiting to be 
processed. It is also why countries such as China and others are 
beginning to surpass us in their innovation, because we have been slow 
to catch up. We are in a situation where we are unable to compete with 
the rest of the industrialized nations. Their patent laws are ahead of 
ours. So this is a case where we in America have a chance to catch up. 
We do it without adding a cent to the deficit, but we also create jobs. 
Every major manufacturer in this country and inventors have said this 
is where we will create jobs.
  I look at it, of course, with the point of view that my little State 
of Vermont on a per capita basis has more patents than any other State. 
We even had more than some States larger than ours. The distinguished 
Presiding Officer comes from a State that has spent a great deal of 
time and effort on innovation and is one of the leaders in the number 
of patents, especially in the high-tech area, in this country. But the 
patents don't help us compete unless we are able to move with them. We 
in Vermont have a long history of innovation and invention. The first 
patent in the United States was signed by George Washington after being 
cleared by Thomas Jefferson and granted to a Vermonter.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LEE. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Franken). Without objection, it is so 
ordered.
  Mr. LEE. Mr. President, I rise to speak on an issue that is very 
important to me. The immediate subject I am going to address is an 
amendment I am going to propose to our pending patent reform 
legislation. This amendment calls upon the Senate to get the sense of 
the Senate that we need a balanced budget amendment to the U.S. 
Constitution.
  As I prepared for this day, I reviewed the maiden speeches of a 
number of

[[Page 2847]]

Senators who served in this august body, and I have seen a consistent 
theme in the speeches that have been given over the course of the last 
50 or 60 years. Over and over, they address spending. These issues have 
spilled over, Congress after Congress, until the point we have reached 
today, the point at which our national debt stands at an astounding 
figure, close to $15 trillion.
  As I like to say, $15 trillion is a lot of money. A lot of people do 
not make $15 trillion in a whole year. Even when you divide $15 
trillion by 300 million Americans, you are left with a figure of about 
$50,000 a head. This is not an inconsequential number.
  This is not a problem any of us created. It is a problem each of us 
inherited. Yet it is a problem I think none of us wants to leave to our 
successors. It is a problem that requires us to do something different 
than we have done in the past, and by this I mean I think we need 
procedural, structural, and indeed constitutional reform. We need to 
put Congress in a straitjacket because we have been unwilling or unable 
in the past to make the difficult spending decisions that have to be 
made.
  In the past, there has been a great debate between, on the one hand, 
some Republicans who have been unwilling to cut some programs, to 
consider in any context cuts in the area of, say, national defense; you 
have had others, perhaps from the other party, who have been unwilling 
to consider any cuts to any entitlement program. But we are now faced 
with a scenario in which both sides of the aisle can understand that 
our perpetual deficit spending habit places in jeopardy every single 
aspect of the operations of the Federal Government.
  To paint one scenario, I would like to point out that the budget 
projections produced by the White House just a couple weeks ago 
predicted, based on a fairly optimistic set of projections, that over 
the next 10 years we will acquire enough new debt that, when added to 
our existing debt, will cause us to be spending almost $1 trillion 
every single year just on interest on our national debt. To put that in 
perspective, $1 trillion is more than we currently spend on Social 
Security in an entire year. It is more than we currently spend on 
Medicare and Medicaid combined in an entire year. It is significantly 
more than we spend on national defense in any year. This $1 trillion 
number is one that could actually be much larger if some of these 
projections turn out not to be correct.
  We now face a moment when both liberals and conservatives, 
Republicans and Democrats, regardless of what they most want to protect 
in their Federal Government, have to realize that what we most want to 
protect is placed in grave jeopardy by our current spending practices.
  I am troubled by the fact that as we approach debate surrounding a 
continuing resolution this week, a continuing resolution that is likely 
to operate for just a few weeks to keep the Government funded, we are 
still talking about adding, on an annualized basis, to our national 
debt at a rate exceeding $1.5 trillion a year. I think the American 
people deserve better. I know they demand better.
  Some of the things we saw in the 2010 election cycle portend 
something much greater for what we are going to see in the 2012 
election cycle. The polls support the fact that what we can see from 
the 2010 election cycle is that Americans want Congress to balance its 
budget. They want us to do something more than just talking about it. 
They want us to put ourselves in a straitjacket.
  Benjamin Franklin used to say: He will cheat without scruple who can 
without fear. I think the congressional corollary to that might be that 
Congress, which can continue to engage in perpetual deficit spending, 
will continue to do so unless or until they are held accountable by the 
people or required by that Congress to put itself in a straightjacket. 
That is the straightjacket we need. That is why I am proposing this 
amendment so, at a minimum, before this patent reform legislation, 
which I support wholeheartedly, moves forward, we can all agree as 
Members of this body that we need a constitutional amendment to keep us 
from doing what is slowly killing the economy of the United States and 
gradually mounting a severe challenge, an existential threat to every 
Federal program that currently exists.
  I invite each of my colleagues to vote for and support this amendment 
and to support S.J. Res. 5, a constitutional amendment I along with 
Senator Kyl have proposed that would put Congress in this type of 
straitjacket.
  Here is, in essence, what S.J. Res. 5 says: If adopted by Congress by 
the requisite two-thirds margins in both Houses and approved by the 
States, three-fourths of them as required by article V of the 
Constitution, it would tell Congress it may not spend more than it 
receives in a given year, it may not spend more than 18 percent of GDP 
in a year, it may not raise taxes, and it may not raise the national 
debt ceiling without a two-thirds supermajority vote in both Houses of 
Congress. That is the kind of permanent binding constitutional measure 
I think we need in order to protect the government programs we value so 
highly and upon which 300 million Americans have come to depend, in one 
way or another.
  I urge each of my colleagues to support this amendment and to support 
S.J. Res. 5.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. KYL. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KYL. Mr. President, I rise today to speak on the Patent Reform 
Act of 2011, which I understand will be retitled as the ``America 
Invents Act.''
  When this bill was marked up in the Judiciary Committee in 2007 and 
again in 2009, I voted against it, and I submitted minority views to 
the committee report for the bill. In the 2009 committee report, 
Senators Russ Feingold and Tom Coburn joined me in identifying a set of 
issues that we felt needed to be addressed before the bill was ready 
for consideration by the full Senate. Chief among these were concerns 
about the bill's system of postissuance administrative review of 
patents. Senior career staff at the Patent Office had expressed deep 
misgivings about the office's ability to administer this system. In 
response, at the conclusion of the 2009 mark up, Chairman Leahy pledged 
to invite the Patent Office to work with the committee to address these 
concerns and to try to develop a system that the office would be able 
to administer.
  Chairman Leahy carried through on his pledge and held those meetings 
later that year. As a result, important changes were made to the bill, 
eventually resulting in a managers' amendment that was announced in 
2010 by Chairman Leahy and then-Ranking Member Sessions. The 2010 
managers' amendment, which is also the basis of the present bill, 
substantially addressed all of the concerns that Senators Feingold and 
Coburn and I raised in the 2009 Minority Report. As a result, I became 
a cosponsor of that amendment, and am proud to cosponsor and support 
the bill that is before us today.
  I will take a few moments today to describe the key changes that led 
to the 2010 breakthrough on this bill. But first, I would like to 
address an important aspect of the bill that has recently become the 
subject of some controversy. This is the bill's change to a first-
inventor-to-file patent system.
  About two-thirds of the present bill has never been controversial and 
has been included in all of the various iterations of this bill ever 
since the first patent reform act was introduced in 2005 by Mr. Lamar 
Smith, who was then the chairman of the House Intellectual Property 
Subcommittee. Mr. Smith's 2005 bill, H.R. 2795, included the following 
proposals: it switched the United States from a first-to-invent patent 
system to a first-inventor-to-file system. The Smith bill enacted 
chapter 32 of title 35, creating a first-window, post-grant opposition 
procedure. It authorized third parties to submit and explain relevant 
prior art to the Patent Office with respect to an application before a 
patent is issued. The

[[Page 2848]]

Smith bill amended the inventor's oath, and expanded the rights of 
assignees to prosecute a patent application under section 118. And it 
also eliminated subjective elements from the patent code, and included 
the first proposal for creating derivation proceedings. All of these 
elements of Mr. Smith's original 2005 bill are retained in the bill 
that is before us today, and are, in fact, the most important parts of 
the bill. And, until recently, these provisions had not proven 
controversial.
  After the announcement of the 2010 managers' amendment, however, 
members of the Judiciary Committee began to hear more from critics of 
the bill's move to a first-to-file system. Under current law's first-
to-invent system, a patent applicant or owner has priority against 
other patents or applications, or against invalidating prior art, if he 
conceived of his invention before the other inventor conceived of his 
invention or before the prior art was disclosed. Under the first-to-
file system, by contrast, the same priority is determined by when the 
application for patent was filed. Whichever inventor files first has 
priority, and third-party prior art is measured against the filing 
date, and is invalidating if it disclosed the invention before the date 
when the application was filed, rather than the date when the invention 
was conceived.
  In commentary that was published on Sunday, February 27, Mr. Gene 
Quinn, the writer of the IP Watchdog Web site, made some worthy points 
about the present bill's proposed move to a first-to-file system. 
Responding to critics of first to file, Mr. Quinn first noted that: in 
practical effect, we already have a first inventor to file system. For 
example, since the start of fiscal year 2005 on October 1, 2004, there 
have been over 2.9 million patent applications filed and only 502 
Interferences decided. An Interference Proceeding occurs when multiple 
inventors file an application claiming the same invention, and is the 
hallmark of a first to invent system . . . . On top of the paltry 502 
Interferences over nearly 7 years, a grand total of 1 independent 
inventor managed to demonstrate they were the first to invent, and a 
grand total of 35 small entities were even involved in an Interference.
  In other words, as Mr. Quinn notes, although the first-to-invent 
system is supposed to help the little guy, over the last seven years, 
only one independent inventor has managed to win an interference 
contest and secure the benefits of the first to invent system. And 
again, this is out of nearly 3 million patent applications filed over 
this period.
  Mr. Quinn's comments also debunk the notion that an interference 
proceeding is a viable means of securing first-to-invent rights for 
independent and other small inventors. He notes that:

       On top of this, the independent inventors and small 
     entities, those typically viewed as benefiting from the 
     current first to invent system, realistically could never 
     benefit from such a system. To prevail as the first to invent 
     and second to file, you must prevail in an Interference 
     proceeding, and according to 2005 data from the AIPLA, the 
     average cost through an interference is over $600,000. So 
     let's not kid ourselves, the first to invent system cannot be 
     used by independent inventors in any real, logical or 
     intellectually honest way, as supported by the reality of the 
     numbers above. . . . [F]irst to invent is largely a ``feel 
     good'' approach to patents where the underdog at least has a 
     chance, if they happen to have $600,000 in disposable income 
     to invest on the crap-shoot that is an Interference 
     proceeding.

  Obviously, the parties that are likely to take advantage of a system 
that costs more than half a million dollars to utilize are not likely 
to be small and independent inventors. Indeed, it is typically major 
corporations that invoke and prevail in interference proceedings. The 
very cost of the proceeding alone effectively ensures that it is these 
larger parties that benefit from this system. In many cases, small 
inventors such as start ups and universities simply cannot afford to 
participate in an interference, and they surrender their rights once a 
well-funded party starts such a proceeding.
  Mr. Quinn's article also responded to critics who allege that the 
present bill eliminates the grace period for patent applications. The 
grace period is the one-year period prior to filing when the inventor 
may disclose his invention without giving up his right to patent. Mr. 
Quinn quotes the very language of this bill, and draws the obvious 
conclusion:

       Regardless of the disinformation that is widespread, the 
     currently proposed S. 23 does, in fact, have a grace period. 
     The grace period would be quite different than what we have 
     now and would not extend to all third party activities, but 
     many of the horror stories say that if someone learns of your 
     invention from you and beats you to the Patent Office, they 
     will get the patent. That is simply flat wrong.

  Mr. Quinn is, of course, referring to the bill's proposed section 
102(b). Under paragraph (1)(A) of that section, disclosures made by the 
inventor, or someone who got the information from the inventor, less 
than 1 year before the application is filed do not count as prior art. 
And under paragraph (1)(B), during the 1-year period before the 
application is filed, if the inventor publicly discloses his invention, 
no subsequently disclosed prior art, regardless of whether it is 
derived from the inventor, can count as prior art and invalidate the 
patent. This effectively creates a ``first to publish'' rule that 
protects those inventors who choose to disclose their invention. An 
inventor who publishes his invention, or discloses it at a trade show 
or academic conference, or otherwise makes it publicly available, has 
an absolute right to priority if he files an application within one 
year of his disclosure. No application effectively filed after his 
disclosure, and no prior art disclosed after his disclosure, can defeat 
his application for patent.
  These rules are highly protective of inventors, especially those who 
share their inventions with the interested public but still file a 
patent application within a year. These rules are also clear, 
objective, and transparent. They create unambiguous guidelines for 
inventors. An inventor who wishes to keep his invention secret must 
file an application promptly, before another person discloses the 
invention to the public. And an inventor can also share his invention 
with others. If his activities make the invention publicly available, 
he must file an application within a year, but his disclosures also 
prevents any subsequently disclosed prior art from taking away his 
right to patent. The bill's proposed section 102 also creates clear 
guidelines for those who practice in a technology. To figure out if a 
patent is valid against prior art, all that a manufacturer needs to do 
is look at the patent's filing date and figure out whether the inventor 
publicly disclosed the invention. If prior art disclosed the invention 
to the public before the filing date, or if the inventor disclosed the 
invention within a year of filing but the prior art predates that 
disclosure, then the invention is invalid. And if not, the patent is 
valid against a prior-art challenge.
  Some critics of the first-to-file system also argue that it will be 
expensive for inventors because they will be forced to rush to file a 
completed application, rather than being able to rely on their 
invention date and take their time to complete an application. These 
critics generally ignore the possibility of filing a provisional 
application, which requires only a written description of the invention 
and how to make it. Once a provisional application is filed, the 
inventor has a year to file a completed application. Currently, filing 
a provisional application costs $220 for a large entity, and $110 for a 
small entity.
  One of Mr. Quinn's earlier columns, on November 7, 2009, effectively 
rebuts the notion that relying on invention dates offers inventors any 
substantial advantage over simply filing a provisional application. As 
he notes:

       If you rely on first to invent and are operating at all 
     responsibly you are keeping an invention notebook that will 
     meet evidentiary burdens if and when it is neces-
     sary to demonstrate conception prior to the conception of the 
     party who was first to file. . . .
       [Y]our invention notebook or invention record will detail, 
     describe, identify and date conception so that others skilled 
     in the art will be able to look at the notebook/record and 
     understand what you did, what you knew, and come to the 
     believe that you did in fact appreciate what you had. If you 
     have this, you have provable conception. If you have provable 
     and identifiable conception,

[[Page 2849]]

     you also have a disclosure that informs and supports the 
     invention. . . . [And] [i]f the notebook provably 
     demonstrates conception, then it can be filed as a 
     provisional patent application at least for the purpose of 
     staking a claim to the conception that is detailed with 
     enough specificity to later support an argument in a first to 
     invent regime.

  In other words, the showing that an inventor must make in a 
provisional application is effectively the same showing that he would 
have to make to prove his invention date under the first-to-invent 
system. A small inventor operating under first-to-invent rules already 
must keep independently-validated notebooks that show when he conceived 
of his invention. Under first-to-file rules, the only additional steps 
that the same inventor must take are writing down the same things that 
his notebooks are supposed to prove filing that writing with the Patent 
Office, and paying a $110 fee.
  Once the possibility of filing a provisional application is 
considered, along with this bill's enhanced grace period, it should be 
clear that the first-to-file system will not be at all onerous for 
small inventors. And once one considers the bill's clean, clear rules 
for prior art and priority dates, its elimination of subjective 
elements in patent law, its new proceeding to correct patents, and its 
elimination of current patent-forfeiture pitfalls that trap legally 
unwary inventors, it is clear that this bill will benefit inventors 
both large and small.
  Allow me to also take a moment to briefly describe the concerns that 
Senators Feingold and Coburn and I raised in our 2009 Minority Report, 
and how the present bill addresses those concerns.
  Senators Feingold and Coburn and I proposed that the bill impose a 
higher threshold showing for instituting an inter partes, or post-grant 
review. This had long been a top priority for the Patent Office, both 
under the previous administration and under the current one. The Patent 
Office made clear that a higher threshold is necessary to weed out 
marginal challenges and preserve the office's own resources, and that a 
higher threshold would also force parties to front-load their cases, 
allowing these proceedings to be resolved more quickly. The present 
bill imposes higher thresholds, requiring a reasonable likelihood of 
invalidity for inter partes review, and more-likely-than-not invalidity 
for post-grant review.
  Senators Feingold and Coburn and I also recommended that the Patent 
Office be allowed to operate inter partes reexamination as an 
adjudicative proceeding, where the burden of proof is on the challenger 
and the office simply decides whether the challenger has met his 
burden. The present bill makes this change, repealing requirements that 
inter partes be run on an examinational model and allowing the PTO to 
adopt an adjudicative model.
  The 2009 Minority Report also recommended that the bill restrict 
serial administrative challenges to patents and require coordination of 
these proceedings with litigation. We also called for limiting use of 
ex parte reexamination to patent owners, noting that allowing three 
different avenues for administrative attack on patents invites serial 
challenges. The present bill does coordinate inter partes and post-
grant review with litigation, barring use of these proceedings if the 
challenger seeks a declaratory judgment that a patent is invalid, and 
setting a time limit for seeking inter partes review if the petitioner 
or related parties is sued for infringement of the patent. The present 
bill does not, however, bar the use of ex parte reexamination by third 
parties. The Patent Office and others persuaded me that these 
proceedings operate reasonably well in most cases and are not an undue 
burden on patent owners. The present bill does, however, impose limits 
on serial challenges that will also restrict the use of ex parte 
reexamination. The bill's enhanced administrative estoppel will 
effectively bar a third party or related parties from invoking ex parte 
reexamination against a patent if that third party has already employed 
post-grant or inter partes review against that patent. Also, the bill 
allows the Patent Office to reject any request for a proceeding, 
including a request for ex parte reexamination, if the same or 
substantially the same prior art or arguments previously were presented 
to the Office with respect to that patent.
  Senators Feingold and Coburn and I also recommended that the PTO be 
allowed to delay implementation of post-grant review if the office 
lacks the resources to implement that new proceeding. The present bill 
includes a number of safeguards that are the product of discussions 
with the PTO. Among other things, the present bill authorizes a ramp-up 
period, allowing the office to limit the number of proceedings that can 
be implemented during the first 4 years after the new proceeding 
becomes effective.
  The 2009 Minority Report also recommended that treble damages be 
preserved as a meaningful deterrent to willful or calculated 
infringement of a patent. The present bill does so, eliminating the 
restrictive three-buckets approach and broad safe harbors that appeared 
in the bill in 2009. The report also recommended that the bill remove 
subjective elements from patent law, such as the various deceptive-
intent elements throughout the code and the patent-forfeiture 
doctrines. The present bill effectively makes both changes. In fact, 
the 2007 bill had already been modified in mark up to eliminate the 
patent forfeiture doctrines, a point elucidated in that year's 
committee report and confirmed by a review of the relevant caselaw.
  This last point should also help address a question that Mr. Quinn 
raised in his column on Sunday regarding proposed section 102(b)'s use 
of the word ``disclosure,'' and whether it covers public use or sale 
activities of the inventor. I would have thought that the meaning of 
the word would be clear: a disclosure is something that makes the 
invention available to the public--the same test applied by section 
102(a) to define the scope of relevant prior art. And ``available to 
the public'' means the same thing that ``publicly accessible'' does in 
the context of a publication. Subject matter makes an invention 
publicly accessible or available if an interested person who is skilled 
in the field could, through reasonable diligence, find the subject 
matter and understand the invention from it. Obviously, Congress would 
not create a grace period that is narrower in scope than the relevant 
prior art. Thus for example, under this bill, any activity by the 
inventor that would constitute prior art under section 102(a)(1) would 
also invoke the grace period under section 102(b)(1). As a result, the 
inventor would be protected against his own activities so long as he 
files within a year, and under the bill's ``first to publish'' 
provisions, he would also be protected by any other person's disclosure 
of the invention, regardless of whether he could prove that the other 
person derived the invention from him.
  The present bill is the product of almost a decade of hard work, 
including three Judiciary Committee mark ups, and the untold hours of 
work by Mr. Smith and other members of the House of Representatives 
that led to the introduction of the Patent Reform Act of 2005, the 
foundation of today's bill. This is a bill that will protect our 
heritage of innovation while updating the patent system for the current 
century. It will fix problems with current administrative proceedings, 
create new means for improving patent quality, and will generally move 
us toward a patent system that is objective, transparent, clear, and 
fair to all parties. I look forward to the Senate's passage of this 
bill and its enactment into law.
  I ask unanimous consent that Mr. Gene Quinn's columns of February 27, 
2011, and November 7, 2009, with corrections of a few typos and 
enhancements of punctuation, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Senate To Vote on Patent Reform, First To File Fight Looms

(By Gene Quinn, President & Founder of IPWatchdog, Inc., Feb. 27, 2011)

       It appears as if the time has finally arrived for an up or 
     down vote on patent reform in the United States Senate. It 
     has been widely reported that the full Senate will take up 
     patent reform upon returning from recess this week, and it is 
     now believed by many on the inside that the Senate will take 
     up patent reform on Monday, February 28, 2011, the

[[Page 2850]]

     first day back. Some are even anticipating that the Senate 
     will vote on patent reform bill S. 23 late in the day on 
     Monday, February 28, 2011. See ``Crunch Time: Call Your 
     Senators on Patent Reform.'' That would seem exceptionally 
     quick, particularly given the rancorous issues and Amendments 
     still to be presented, but nothing will surprise me.
       As we get closer to a vote in the Senate the rhetoric of 
     those for and against patent reform is heating up to a fever 
     pitch. The big fight, once again, is over first to file, with 
     battle lines drawn that run extremely deep. Senator Diane 
     Feinstein (D-CA) is expected to file an Amendment stripping 
     the first to file provisions, which could be supported by 
     Senate Majority Leader Harry Reid (D-NV).
       Before tackling the first to file issue I would like to 
     point out that regardless of whether first to file is 
     supported or opposed, everyone, and I do mean everyone, 
     unanimously agrees that the USPTO should be allowed to keep 
     the fees it collects to reinvest in the agency and to do the 
     work promised. An overwhelming majority also seem to support 
     giving the USPTO fee setting authority. Fee setting authority 
     is present in S. 23 (see Section 9) and Senator Tom Coburn 
     plans to introduce an Amendment that would once and for all 
     eliminate fee diversion and let the USPTO keep the fees it 
     collects. So while there is argument about first to file, 
     hopefully we won't lose sight of the fact that most everyone 
     is on the same team relating to fixing the USPTO.
       With respect to first to file, in practical effect, we 
     already have a first inventor to file system. For example, 
     since the start of fiscal year 2005 on October 1, 2004, there 
     have been over 2.9 million patent applications filed and only 
     502 Interferences decided. An Interference Proceeding occurs 
     when multiple inventors file an application claiming the same 
     invention, and is the hallmark of a first to invent system 
     because it is possible in the United States to file a patent 
     application second and then be awarded the patent if the 
     second to file can demonstrate they were the first to invent. 
     On top of the paltry 502 Interferences over nearly 7 years a 
     grand total of 1 independent inventor managed to demonstrate 
     they were the first to invent, and a grand total of 35 small 
     entities were even involved in an Interference. A small 
     entity can be an independent inventor, university, non-profit 
     or a company with 500 or fewer employees. Thus, we have a de 
     facto first to file system and the ``first to invent'' system 
     that supposedly favors independent inventors is 
     overwhelmingly dominated by large companies with over 500 
     employees. See chart below.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      2005         2006         2007         2008         2009         2010        2011*        Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Filings.........................................       381797       417453       468330       496886       486499       509367       153997      2914329
Allowances......................................       151077       162509       184376       182556       190122       233127        93390      1197157
Interferences decided...........................           96          107           95           74           63           50           17          502
Junior party winners............................           18           15           21           25           14           17            3          113
Small entity winners............................            7            2            3            6            1            5            1           25
Independent Inventor winners....................            0            0            1            0            0            0            0            1
Small Entity losers.............................            1            2            2            2            1            2            0           10
--------------------------------------------------------------------------------------------------------------------------------------------------------

       On top of this, the independent inventors and small 
     entities, those typically viewed as benefiting from the 
     current first to invent system, realistically could never 
     benefit from such a system. To prevail as the first to invent 
     and second to file you must prevail in an Interference 
     proceeding, and according to 2005 data from the AIPLA the 
     average cost through an interference is over $600,000. So 
     let's not kid ourselves, the first to invent system cannot be 
     used by independent inventors in any real, logical or 
     intellectually honest way, as supported by the reality of the 
     numbers above. So first to invent is largely a ``feel good'' 
     approach to patents where the underdog at least has a chance, 
     if they happen to have $600,000 in disposable income to 
     invest on the crap-shoot that is an Interference proceeding.
       I will acknowledge, however, that one of the best arguments 
     I have seen against first to file was prepared by Hank 
     Nothhaft, President & CEO of Tessera and a frequent 
     contributor to IPWatchdog.com. In his op-ed in The Hill Hank 
     concludes by asking: ``Why risk that by weakening the 
     incentives for startups?'' As I can point to the fact that we 
     have a de facto first to file system already, Hank and others 
     can say--so why the need for change? I readily acknowledge 
     that the small ``c'' conservative thing to do, which I 
     normally promote, would be to do nothing and keep the status 
     quo. That is a fine argument, but it would keep the USPTO 
     devoting precious resources on a complex Interference system 
     that really mirrors a first to file system anyway. Of course, 
     if patent reform gives the USPTO fee setting authority and an 
     end to fee diversion, then the resources problem isn't nearly 
     the concern and Congress could layer on responsibilities for 
     the Patent Office and Team Kappos could deliver and still 
     reduce the backlog.
       Some others who challenge the first to file changes in the 
     patent reform bill say the Interference analysis above is 
     misplaced because first to file is not about whether the 
     first to invent will obtain the patent. As illogical as that 
     sounds, they have a point. Notice, however, that the 
     Interference data does clearly demonstrate there is no need 
     whatsoever for a first to invent system in the United States. 
     Thus, many who challenge the first to file system don't seem 
     to question that first to file is acceptable, but they do not 
     like the loss of the familiar 12 month grace period.
       The truth is, however, that relying on a 12 month grace 
     period is extremely dangerous, but it does have its place. As 
     Bryan Lord correctly explains in ``Crunch Time: Call Your 
     Senators on Patent Reform,'' many start-up companies rely on 
     the grace period, which is critical ``to companies that rely 
     upon external collaborations or have comparatively limited 
     resources.'' There is absolutely no argument with the fact 
     that a grace period does factor into the equation for small 
     businesses and start-up companies that are strapped for cash 
     and already need to make choices about how much, and which, 
     innovations to protect. I also like Lord's questioning the 
     rush to harmonize. I always like to point out that 
     harmonization is fine, but why can't we do what makes for a 
     good system and not just what everyone else does. Let's 
     harmonize what the world does better and let's lobby the 
     world to adopt what our system clearly gets right.
       Having said all of this, there is absolutely no reason why 
     we cannot move from a first to invent system to a first 
     inventor to file system that would still retain a real and 
     substantial grace period and still retain the right for 
     patent applicants to swear behind references to demonstrate 
     an earlier date of invention, at least with respect to pieces 
     of prior art that are not the progeny of earlier filed patent 
     applications.
       Regardless of the disinformation that is widespread, the 
     currently proposed S. 23 does, in fact, have a grace period. 
     The grace period would be quite different than what we have 
     now and would not extend to all third party activities, but 
     many of the horror stories say that if someone learns of your 
     invention from you and beats you to the Patent Office, they 
     will get the patent. That is simply flat wrong.
       As it stands now, the currently proposed 102 in S. 23 says, 
     in relevant part:

     Sec. 102. CONDITIONS FOR PATENTABILITY; NOVELTY

       (a) Novelty; Prior Art.--A person shall be entitled to a 
     patent unless--
       (1) the claimed invention was patented, described in a 
     printed publication, or in public use, on sale, or otherwise 
     available to the public before the effective filing date of 
     the claimed invention; or
       (2) the claimed invention was described in a patent issued 
     under section 151, or in an application for patent published 
     or deemed published under section 122(b), in which the patent 
     or application, as the case may be, names another inventor 
     and was effectively filed before the effective filing date of 
     the claimed invention.
       (b) Exceptions.--
       (1) Disclosures made 1 year or less before the effective 
     filing date of the claimed invention.--A disclosure made 1 
     year or less before the effective filing date of a claimed 
     invention shall not be prior art to the claimed invention 
     under subsection (a)(1) if--
       (A) the disclosure was made by the inventor or joint 
     inventor or by another who obtained the subject matter 
     disclosed directly or indirectly from the inventor or a joint 
     inventor; or
       (B) the subject matter disclosed had, before such 
     disclosure, been publicly disclosed by the inventor or a 
     joint inventor or another who obtained the subject matter 
     disclosed directly or indirectly from the inventor or a joint 
     inventor.
       Looking at the proposed 102(b), it becomes clear that 
     despite the claims of critics, there is a grace period within 
     S. 23. I find it sad, yet amusing, that some who challenge 
     the bill simply refuse to quote 102(b), and even outright 
     claim ``there is no grace period.'' Obviously, there is a 
     grace period.
       The proposed 102(b) seeks to eliminate from the universe of 
     prior art disclosures made by the inventor or which owe their 
     substance to the inventor. So if the inventor discloses his 
     or her invention less than a year before filing a patent 
     application, the patent can still be awarded. If someone 
     learns of the invention from the inventor and discloses less 
     than a year before filing a patent application, the patent 
     can likewise still be awarded. What is notably missing here 
     are several things. First, a definition for ``disclosure.'' 
     Second, an exception that

[[Page 2851]]

     applies to third-party activities where the third party acted 
     without learning of information from the inventor but yet did 
     not file a first application themselves. So the grace period 
     set up by proposed 102(b) excepts disclosures (whatever they 
     are) made by or through an inventor less than 1 year before 
     the inventor files, but does not extend to disclosures 
     (whatever they are) made by others less than 1 year before 
     the inventor files.
       The proposed 102(b) is a departure from the current law of 
     novelty. Nevertheless, it is simply wrong to claim there is 
     no grace period in an attempt to manipulate independent 
     inventors, small businesses and others to support elimination 
     of first to file.
       In any event, under the current 102(b), a patent applicant 
     is entitled to a patent unless--the invention was patented or 
     described in a printed publication in this or a foreign 
     country or in public use or on sale in this country, more 
     than one year prior to the date of the application for patent 
     in the United States . . .
       Under current 102(b) an inventor can create their own bar 
     to patentability as a result of activity such as publication, 
     public use in the U.S. or sale in the U.S. if it occurs more 
     than 1 year before a U.S. patent application is filed. A bar 
     can likewise be created if a third party, either known or 
     unknown to the inventor, engages in the same activity more 
     than one year before a U.S. patent application is filed. What 
     this necessarily means, and has long been interpreted to 
     mean, is that a patent can be awarded so long as the 
     invention has not been patented, published, on public use in 
     the U.S. or on sale in the U.S. for more than 1 year. The 
     current 102(b) provides a solid grace period that applies 
     across the board, the proposed 102(b) does not.
       Independent inventors and start-ups are rightly concerned 
     about whether they will be able to enjoy a grace period 
     relative to third party activities. They are rightly 
     concerned to wonder whether the term ``disclosure'' in 102(b) 
     would mean that the exception applied to their own public use 
     or sale activities, which is anything but clear. Inventors 
     and start-ups are also rightly concerned about whether they 
     will be able to swear behind and prove prior inventorship 
     relative to prior art not associated with an earlier filed 
     patent application. In short, I see no reason why we cannot 
     have a first inventor to file system that does away with 
     Interference proceedings, awards patents to the first 
     inventor who files a patent application, but which also 
     preserves a 12 month grace period under current law.
       Of course, if first to file as stated in 102(b) becomes the 
     law of the land, it will encourage independent inventors to 
     do exactly what they should do, which is file patent 
     applications earlier in the process. I hear the most 
     ridiculous strategies from independent inventors who almost 
     universally don't understand the requirements to prove they 
     were the first to invent, see ``Much Ado About Nothing,'' so 
     a simpler system that they can understand will no doubt 
     benefit them. Small businesses and start-ups should likewise 
     file earlier in the process, and frankly that is why there is 
     so much opposition to first to file.
       Small businesses and start-up companies do need a grace 
     period to try and figure out what to pursue, and the proposed 
     grace period should keep much of the law in its place [but] 
     will not be as widespread as currently enjoyed. While 
     resources are always limited with start-ups, I think they 
     incorrectly argue that there is an over-burdensome cost in 
     terms of both money and time associated with filing 
     provisional patent applications to preliminarily protect 
     rights. In fact, I have offered to demonstrate just how the 
     preparation and filing of streamlined provisional patent 
     applications can be accomplished to many of those making the 
     argument that it is too costly and time consuming to prepare 
     quality provisional patent applications. As yet I have had no 
     takers. So if cost and time are such concerns, why aren't 
     they willing to consider a better, faster, cheaper way?
       I think Bryan Lord's call to reach out to your Senators is 
     absolutely the right thing to do. Get involved and be heard!
                                  ____


               Much Ado About Nothing Over First To File

 (By Gene Quinn, President & Founder of IPWatchdog, Inc., Nov. 7, 2009)

       Just about 24 hours ago I posted an article relating to my 
     changing position with respect to first to file, and already 
     there is something of a firestorm. I understand there are 
     those who feel I have abandoned them and adopted a naive view 
     of the world. But excuse me for recognizing the new tone and 
     identifiable actions taking place at 600 Dulany Street. Yes, 
     I have been an ardent supporter of first to invent for years, 
     but I have been questioning my views for some time, as I 
     speak with attorneys, inventors and others. Then several 
     things recently caused me to realize the benefits of first to 
     file for the independent inventor community, and then I heard 
     USPTO Director David Kappos explain that in 2007 only 7 cases 
     were decided in favor of an individual who invented first and 
     filed second. Kappos explained, ``we already have a de facto 
     first to file system.'' All this arguing for 7 cases? Cases 
     where once the rule changes, behaviors will change to the 
     point where some, perhaps most, or even all of those 7 cases 
     will never happen again because everyone will know they need 
     to file rather than wait. On top of that, it is inarguably 
     good, correct, legally sound and business-appropriate advice 
     to file sooner rather than later.
       In a spirited comment chain associated with the 
     aforementioned first to file article many supporters of first 
     to invent are coming out in force, and they don't even 
     realize they are making arguments that hardly support their 
     position and in fact support the exact opposite position. I 
     would like to address several here.
       First, it seems that many believe it is not appropriate to 
     file provisional patent applications because many of the 
     applications that are filed are inadequate and insufficient. 
     It has been brought up that an appropriate and good 
     provisional patent application needs to be identical to a 
     nonprovisional patent application, perhaps without having 
     been spell-checked. Obviously this is a gross overstatement 
     of the law, and not correct. It is true that a provisional 
     patent application needs to be as complete as a 
     nonprovisional patent application in terms of disclosure, but 
     nothing more. There are no formalities that need to be met, 
     and it is the substance that matters. Nonprovisional patent 
     applications exalt form over substance in large part, but a 
     good provisional patent application needs to focus on 
     substance. Whatever someone of skill in the art would 
     understand to be described and disclosed has been described 
     and disclosed. So those who think they need to write a 
     nonprovisional patent application and file it as a 
     provisional are overstating, don't understand the law or have 
     not developed a sophisticated strategy. But don't vilify 
     those who do understand the law, business realities and have 
     developed fundamentally sound strategies.
       Second, there seems to be a belief that first to invent can 
     be relied upon while provisional patent applications are 
     inappropriate to rely upon if an invention matters. But what 
     exactly does this mean? If you rely on first to invent and 
     are operating at all responsibly you are keeping an invention 
     notebook that will meet evidentiary burdens if and when it is 
     necessary to demonstrate conception prior to the conception 
     of the party who was first to file. You are also keeping an 
     invention record that will demonstrate diligence as well, but 
     let's focus on the substance of what is in the notebook or 
     record for a moment. Appropriate notebooks and/or invention 
     records will be able to identify conception and when it 
     occurs. Of course you never want to box yourself in when you 
     present evidence to say a date certain was the date of 
     conception, but you had better have an appropriate record for 
     if and when it does matter, as it did in Oka v. Youssefyeh, 
     where the senior party and junior party both were able to 
     prove the same date of conception. Ultimately the Federal 
     Circuit said any ties go to the senior party, so it is not 
     fanciful to identify an oddball fact pattern where actual 
     dates matter. Here is a real case, and given the extremely 
     limited number of interference proceedings even one case is a 
     statistically relevant sample.
       Now, if you are relying on first to invent and keeping the 
     records that you should be keeping, your invention notebook 
     or invention record will detail, describe, identify and date 
     conception so that others skilled in the art will be able to 
     look at the notebook/record and understand what you did, what 
     you knew, and come to the believe that you did in fact 
     appreciate what you had. If you have this, you have provable 
     conception. If you have provable and identifiable conception, 
     you also have a disclosure that informs and supports the 
     invention. It is pure folly to suggest that a provisional 
     patent application, albeit perhaps not as formally structured 
     as a nonprovisional patent application, is a waste of time 
     but also believe that the cryptic notes of an engineer or 
     scientist are superior and even preferable. If the notebook 
     provably demonstrates conception then it can be filed as a 
     provisional patent application at least for the purpose of 
     staking a claim to the conception that is detailed with 
     enough specificity to later support an argument in a first to 
     invent regime.
       Finally, let me address the matter of what gets included in 
     a typical invention notebook or invention record. It is 
     almost unbelievable for me to hear patent attorneys state 
     that they prefer the notes of inventors, scientists and 
     engineers with respect to detailing and describing conception 
     over a provisional patent application. Every patent attorney 
     and patent agent knows the level of detail that is provided 
     by inventors, even those who work for large corporations. The 
     invention disclosures are as a rule laughably inadequate. One 
     paragraph passes for a ``complete'' explanation of the 
     invention. The truth is that patent attorneys are typically 
     given very little from an inventor at the beginning of the 
     process. In fact, inventors give such little information that 
     at times the true inventor on the patent application that is 
     actually filed should really be the patent attorney, not the 
     inventor. That is obviously not always the case, but this is 
     the big joke in the patent attorney community. Getting 
     information from inventors is a little like herding cats. 
     They are creative and they understand their invention, and

[[Page 2852]]

     they seem to universally believe that cryptic information 
     ought to suffice. Remember, the goal is not to explain the 
     invention so that the inventor understands, the goal is to 
     explain the invention so that those who are not the inventor 
     understand.
       It borders on the absurd to prefer cryptic invention notes 
     and invention records over provisional patent applications 
     that are drafted by an attorney or agent who understands the 
     legal requirements for providing an enabling disclosure that 
     also satisfies the written description requirement. It also 
     strikes me as particularly odd to say that those with nothing 
     more than an idea will not have any time to figure out the 
     particulars required to describe their invention. Why exactly 
     are we worried that those without an invention may be 
     impacted by first to file? They are already negatively 
     impacted under first to invent because they have not yet 
     invented and have no conception.
       Most are undoubtedly familiar with the 80-20 rule, which 
     goes something like this--it takes 20% of the time to 
     complete 80% of the project, and the remaining 20% of the 
     project takes 80% of the time to complete. That is true 
     certainly with respect to software, which is my area of 
     expertise, and it is true for many other areas of invention. 
     It also happens to be true for writing patent applications as 
     well, at least if you think outside the box and adopt a 
     business friendly approach to writing patent applications, 
     mining inventions, and identifying open space that can be 
     filed. I realize that somewhere between 70-80% of patent 
     attorneys and patent agents start by writing the claims, and 
     then write the specification. I do it the other way, and I 
     can't for the life of me understand those who write claims 
     first. It is not wrong, just a different approach, but not 
     the way I think.
       I write text and then translate into claim language, which 
     I find much easier to do. By doing this, and starting with a 
     thorough patent search, patentability assessment, some 
     mapping, and working with the inventor to continually refine 
     understanding of what is most unique compared with the prior 
     art, I am able to identify the base target, describe it in 
     English, layer on specifics that take the form of alternative 
     embodiments and versions and ultimately create an 
     extraordinarily detailed specification that will support a 
     multitude of claims. To do this takes about 20% of the time. 
     The remaining 80% of the time is spent explaining how hip 
     bone 15 is connected to thigh bone 18, writing sets of 
     claims, and going back to continue to expand upon the 
     disclosure to continually mine new areas and expand scope. I 
     do not support filing crappy provisional patent applications, 
     and it doesn't mean that a provisional patent application 
     cooperatively created between inventor and patent attorney is 
     ``easy to get around'' or at all inferior compared to an 
     invention notebook or invention record.
       Stop looking at first to file as a curse. It is an 
     opportunity for inventors, small businesses and start-ups 
     that are willing to see opportunity rather than obstacles. 
     Venture capitalists who are savvy and willing to explore new 
     methods and models for protecting early-stage technologies 
     will be handsomely rewarded. Savvy independent inventors, 
     closely held businesses and businesses that are ordered to 
     take direction from venture capitalists or lose funding will 
     clean up, and clean up big. And for crying out loud, when 
     only 7 cases out of nearly 500,000 applications a year change 
     as a result of first to file versus first to invent, there is 
     no way that first to file will cripple the economy or cost 
     jobs.

  Mr. KYL. I would urge my colleagues to fully participate in this 
debate, come to the floor with any questions or comments they have, and 
at the end of this process Chairman Leahy will finally be rewarded with 
a bill that will bear his imprimatur and support, a bill that will be 
extraordinarily important to the future well-being of the people of the 
United States of America.
  Mr. LEAHY. Mr. President, the Senator has been involved in this right 
from the beginning. We have worked at having a bill that would be in 
the best interests of the Senate under both Republicans and Democrats 
across the political spectrum. We have worked very closely together.
  We run the risk of countries in Asia and Europe out-innovating the 
United States, and the patent systems in other countries are well ahead 
of us. If we want to compete, as I know the Senator from Arizona does, 
and I know I do, we want to have the best tools to compete. I believe 
Americans can compete with any country in the world, but they should at 
least have the tools to do it and be able to play--it becomes almost a 
clich, but we have to play on a level playing field. This will allow us 
to do that.
  I compliment the Senator from Arizona for the way he has worked in 
his constant efforts in the committee, the public meetings, but that is 
the tip of the iceberg; it is the hundreds of hours of behind-the-
scenes working to reach where we are. So I hope sometime in the next 
few minutes or so we can at least vote on the managers' package and 
then get going with the bill, because this is something that can be 
voted on, can be passed. We have been working, as the Senator from 
Arizona knows, very closely with our counterparts in the other body. I 
know Chairman Smith would like to move quickly. We could have a bill on 
the President's desk in a relatively short time.
  I thank the Senator for his kind words.
  Mr. KYL. I thank the chairman of the committee.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana.


                           Amendment No. 112

  Mr. VITTER. Madam President, I ask for regular order on the Vitter 
amendment.
  The ACTING PRESIDENT pro tempore. The amendment is now pending.
  Mr. LEAHY. Madam President, I thought the amendment pending is the 
managers' amendment.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana has just 
called for the regular order with respect to his amendment.


                     Amendment No. 112, As Modified

  Mr. VITTER. Madam President, I now send a modification to the desk.
  The ACTING PRESIDENT pro tempore. The amendment is so modified.
  The amendment, as modified, is as follows:

       At the appropriate place, insert the following:

     SEC. ___. FULL FAITH AND CREDIT ACT.

       (a) Short Title.--This section may be cited as the ``Full 
     Faith and Credit Act''.
       (b) Prioritize Obligations on the Debt Held by the 
     Public.--In the event that the debt of the United States 
     Government, as defined in section 3101 of title 31, United 
     States Code, reaches the statutory limit, the authority of 
     the Department of the Treasury provided in section 3123 of 
     title 31, United States Code, to pay with legal tender the 
     principal and interest on debt held by the public shall take 
     priority over all other obligations incurred by the 
     Government of the United States.
       (c) Prioritize Payment of Social Security Benefits.--
     Notwithstanding subsection (b), in the event that the debt of 
     the United States Government, as so defined, reaches the 
     statutory limit, the authority described in subsection (b) 
     and the authority of the Commissioner of Social Security to 
     pay monthly old-age, survivors', and disability insurance 
     benefits under title II of the Social Security Act shall be 
     given equal priority over all other obligations incurred by 
     the Government of the United States.

  Mr. VITTER. Madam President, I will be happy to explain the context 
to the chairman of the committee.
  This modification simply merges what was previously a separate Toomey 
amendment and a separate Vitter amendment. We had hoped to have votes 
on those as a first-degree and second-degree amendment. That wasn't 
possible, so this is a merged amendment. Let me explain what this 
amendment does.
  The basis of this amendment is Senator Toomey's Full Faith and Credit 
Act. It is very important. It simply says if we ever as a country reach 
our debt ceiling, then even if we go beyond the debt ceiling, we will 
use all the tools available to the Treasury Secretary to continue for 
as long as possible to pay to make good on U.S. debt, we are not going 
to immediately default on U.S. debt.
  There have been a lot of scare tactics, in my opinion, suggesting 
that if we ever reach that day of bumping up against our statutory debt 
ceiling, the very next day, the very next hour, the United States would 
default on its debt--not make good on our obligations of the U.S. 
Treasury. That isn't true. It doesn't have to be true. This important 
reform will ensure that it is not true. We get far more revenue into 
the U.S. Treasury than has to be spent simply to service the debt. So 
the underlying Toomey bill, which is the heart of this amendment, says 
we will make good on those obligations. They will be the top priority.
  The original Vitter amendment, which is now merged together with the 
Toomey amendment, says the exact same thing with regard to Social 
Security payments. I am sure we would all agree that seniors on fixed 
incomes depend on their Social Security checks. So the Vitter part of 
this now merged Toomey-Vitter amendment says we

[[Page 2853]]

will honor Social Security payments in the same status as debt payments 
and we will use Federal revenues first for those purposes before we do 
anything else. What that means is, if we ever do bump up on the debt 
ceiling, we would not stop Social Security checks the next day. We 
would not stop Social Security checks the next month. We could have 
many weeks--probably a few months--honoring all of those commitments in 
the areas of Social Security and debt on U.S. Treasury notes.
  So that is the purpose of this now merged Toomey-Vitter amendment. We 
are not suggesting that it is necessarily a good idea to bump up the 
debt ceiling. We are saying, Let's all take a deep breath, let's not 
use scare tactics, let's not use hysteria, and let's plan ahead.
  What we hope will be the outcome is that we will not only deal with 
the debt ceiling in a responsible way, but before that, we will also 
deal with our underlying fiscal crisis in a responsible way. We will 
make real and serious budget reforms to get on a fiscally sustainable 
path which we are clearly not on right now.
  This morning Senator Toomey and I were in the Banking Committee 
hearing where Chairman Ben Bernanke of the Federal Reserve testified. 
Chairman Bernanke said again, as he has numerous times over the last 
year and more, that the fiscal path we are on as a Federal Government 
is completely unsustainable. He also said that is the single biggest 
long-term threat to our economy, and he also said while it is a long-
term problem, it could manifest itself in serious negative consequences 
in the short term. So this could rattle our economy and even begin to 
create an economic crisis--who knows when--possibly in the short term.
  So the clock is ticking and we need serious budget reform, and this 
combined Toomey-Vitter amendment would take the hysteria out of the 
discussion and hopefully urge us to take concrete action on that 
serious budget reform before it is too late.
  With that, I wish to yield to my distinguished colleague from 
Pennsylvania.
  Mr. LEAHY. Madam President, before he does that, would the Senator 
yield for a question?
  Mr. VITTER. Yes.
  Mr. LEAHY. The Senator from Louisiana has been talking about 
amendment No. 112. Does that mean you are withdrawing 113?
  Mr. VITTER. Yes. We will be seeking a single vote on the amendment, 
as modified.
  Mr. LEAHY. So am I correct that amendment No. 113 is withdrawn?
  The ACTING PRESIDENT pro tempore. It is not withdrawn at this time.
  Mr. VITTER. First of all, as I understand it, it has been modified, 
so it has become----
  Mr. LEAHY. You modified No. 112. I didn't know what you wanted to do 
with amendment No. 113.
  Mr. VITTER. If I could yield to my colleague from Pennsylvania, I 
think he can help answer the question. But to clarify from my point of 
view, we are seeking a vote--a single vote, which I think we are very 
close to locking in--on the new modified amendment, which is a 
combination of the separate Vitter and Toomey amendments.
  Mr. TOOMEY. Madam President, I thank my colleague for yielding. I 
would say that as soon as we can work out the specifics with the staff, 
that is exactly the intention that Senator Vitter and I came to. So a 
single vote on the merger of two amendments.
  I would take a moment to thank Senator Vitter for his help. Senator 
Vitter was kind enough to offer the text of my legislation as an 
amendment to the patent reform bill. What he is adding is suggesting 
that the legislation should require the Treasury to prioritize not only 
the debt service so we can avoid under all circumstances a default by 
the U.S. Government, but also making sure Social Security payments get 
the priority they deserve.
  The fact is, in the unlikely--and I would say certainly unfortunate--
event that we were to reach the debt limit without having raised it, 
the Federal Government would still take in more than enough revenue to 
pay all of the interest service on the debt and all Social Security 
benefits. It is entirely manageable from an operational and functional 
point of view. Total revenue to the government from taxes alone is on 
the order of 70 percent of all expected expenditures. Debt service is 
only about 6 percent.
  I appreciate the help of the Senator from Louisiana. By combining 
this, what we do--if we can pass this legislation, which I hope we 
will--is take off the table the specter of a default. We can take off 
the table the specter of any senior citizen not getting their Social 
Security payment. What we can then do is have an honest discussion 
about how are we going to reform a process that has gotten us into this 
fix--gotten us to the point where we are running a deficit of 10 
percent of GDP, where our total debt is screaming toward totally 
unsustainable levels.
  I can tell my colleagues, the folks in Pennsylvania know very well we 
cannot continue living beyond our means as this government has been. I 
see this as a very constructive, important opportunity to begin to have 
this discussion about how we are going to get this process under 
control.
  I appreciate the help from Senator Vitter, and I yield.
  Mr. VITTER. Madam President, I thank my distinguished colleague. 
Again, this amendment, as modified, simply says that if we were ever to 
reach the statutory debt limit for the Federal Government, then revenue 
coming in would go first to service two things: Social Security checks 
and interest on the Federal debt. So that would not be put in jeopardy 
for months down the line.
  The purpose of this amendment is to try to take, quite frankly, some 
of the scare tactics and some of the hysteria out of the debate and to 
urge us to act. None of us wants to bump up on the debt ceiling. None 
of us is advocating that. What we are advocating is to take action now, 
real serious budget reform, to put us on a more fiscally sustainable 
path. We need to do that now. That is why we came to the floor with 
these concerns on the patent bill. We need to do that now. We need to 
act now. We need to get on a fiscally sustainable path now. The clock 
is ticking, as Chairman Bernanke reminded us before the Banking 
Committee this morning.
  With that, I look forward to locking in a vote on this matter, and in 
the consent that establishes that, we will be happy to withdraw the 
other amendment and simply have one vote on the now combined Toomey-
Vitter amendment.
  With that, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. COBURN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. COBURN. Madam President, I wish to thank the chairman of the 
committee for his work on this patent bill. I still have a few small 
problems with it, but I am extremely grateful for his consideration of 
our amendment. Most people don't understand there are no tax dollars 
taken from the general fund for the Patent Office. It is all fees paid 
when you file a patent or a trademark or a copyright. Unfortunately, 
over the last 10, 15 years, $800 million of those fees have not been 
left at the Patent Office. They have been taken and used somewhere 
else. So when you pay a fee for a patent, that money isn't going to pay 
for the examination of the patent.
  Right now, we find ourselves with 718,000 patents waiting for first 
action. If I file a patent today, what we will see is that 26 months 
from now my patent will have first action--the first reading by an 
examiner.
  If we want to create jobs and stay on top of the world in terms of 
innovation, we cannot allow that process to continue. So what the 
amendment does is say we are not going to take the money people use to 
pay for a patent application and spend it somewhere else; we are 
actually going to spend it on patent applications. That is what it was 
set up for.

[[Page 2854]]

  Quite frankly, it is immoral to take money for a specific purpose for 
advantaging an American company or inventor or a university and not 
apply that money for the intended purpose under the statute. Although 
this is controversial, most Americans would think, if you are paying 
$10 on a toll road, the money is going to keep the toll road up. Yet we 
haven't been doing that with the Patent Office.
  We are in trouble not because of our Patent Office but because we 
have not enforced intellectual property rights owned by Americans 
around the world. So as we work on getting a patent bill and blending 
it with whatever the House passes, it is as important--again, I thank 
the chairman because he was kind enough to have a hearing on the 
intellectual property for us, in terms of its enforcement.
  There are two key points for American innovation to bring jobs to 
America. One is when you get a good idea and have an ability to get it 
patented and can defend the patent. The other side of that is to 
enforce that patent throughout the world with our own Justice 
Department, in terms of our State Department and in terms of the 
intellectual property rights.
  It is amazing how much of our intellectual property is being stolen 
by China today. I wish to relate a conversation I had with their 
Secretary of Commerce--their equivalent to ours--in China 3 years ago. 
I asked him about intellectual property rights. He was bold in his 
statement to say: We are not going to honor them. We are a developing 
nation and you would not have honored them either--even though they are 
a signatory to the World Trade Organization. It is important we 
understand whom we are dealing with--people who will cheat and steal 
intellectual property from America. Fixing the patent apparatus will 
help us get there, but it is just as important to have tough laws on 
our books that create sanctions on nations that do not honor 
intellectual property.
  Again, this is a simple, straightforward, moral response to an 
immoral act: collecting fees for something and not spending it on that, 
which has put us behind the curve. This will bring us back. We have a 
wonderful new Director, over the last 18 months, in the Patent Office. 
It is being run better than ever. They are catching up. But last year 
we took $53 million of the fees that were for patents and spent it 
elsewhere. What this amendment does is stop that.
  It may come to a time in this bill that we allow the Patent Office to 
set their fees. It will come to a time when we have to say: Wait a 
minute. You are charging too much. You have to be more efficient.
  We don't do anything with oversight. We still have the oversight 
capability of all the Appropriations Committees. We have the ability to 
change this in the future in terms of their fee setting. If we do the 
proper oversight, we will spring forward with tremendous new technology 
that is protected and enable that capital expenditure that was spent to 
get that technology to flourish in terms of American jobs.
  Again, I thank the chairman. He worked with me judiciously. It has 
been a pleasure to work with him. I thank him for his efforts on my 
behalf and that of the American inventors in this country.
  Mr. LEAHY. Madam President, the Senator raised some questions with 
me, both in committee and out of the committee, with respect to each 
other's positions. I appreciate his work in the committee to expedite 
getting the bill out of the committee. Like him, I believe it is 
extraordinarily important to level the playing to allow American 
innovators to compete in the world and within our country. I compliment 
the Senator and, as he knows, I have included his proposal in the 
managers' amendment because I thought it was a good proposal.
  Madam President, I ask unanimous consent that the time until 5 p.m. 
be for debate on the Leahy-Grassley amendment No. 121, as modified, 
which I believe is pending, and the Vitter for Toomey amendment No. 
112, as modified, en bloc, and divided between the two leaders or their 
designees; that upon the use or yielding back of time, the Senate 
proceed to a vote in relation to the Leahy-Grassley amendment No. 121, 
as modified; that upon disposition of the Leahy-Grassley amendment, the 
Senate vote in relation to the Vitter for Toomey amendment No. 112, as 
modified; that the motions to reconsider be considered made and laid 
upon the table with no intervening action or debate; and that there be 
no amendments in order to any of the amendments listed in this 
agreement prior to the vote; further, that the Vitter amendment No. 
113, as modified, be withdrawn.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. LEAHY. Madam President, I suggest the absence of a quorum, and I 
ask unanimous consent that the time be charged equally.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. LEAHY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The Senator from Iowa.
  Mr. GRASSLEY. Madam President, I would like to express my strong 
support for Senator Coburn's proposal to end Patent and Trademark 
Office fee diversion. It is a commonsense, entrepreneur friendly 
solution to many of the problems plaguing the Patent and Trademark 
Office.
  Over the years, we have heard numerous complaints from constituents 
about the long time it takes the Patent and Trademark Office to review 
patent applications and render a final disposition. It is my 
understanding that in most cases, it takes almost 3 years for the 
Patent and Trademark Office to make a final decision on an application 
which can be costly to the applicant.
  We have also heard from Patent and Trademark Office officials about 
the difficulties that have arisen because of their lack of control over 
the agency's funding model. There are 1.2 million patent applications 
currently pending at the Patent and Trademark Office but not enough 
resources to tackle the workload. The patent application backlog 
situation, while improving, is still a significant problem.
  Senator Coburn's proposal strikes at the heart of both of these 
concerns by creating a revolving fund at the Treasury Department where 
patent and trademark fees that are paid to the Patent and Trademark 
Office are directly allocated back to the office. That way those funds 
can be utilized in a fashion most beneficial to inventors, small 
businesses, and academic institutions.
  At his confirmation hearing in 2009, Patent and Trademark Office 
Director David Kappos told the Judiciary Committee that one of the most 
immediate challenges facing the office was ``the need for a stable and 
sustainable funding model.'' The financial crisis affecting the Patent 
and Trademark Office is a direct result of its current funding 
structure. The Patent and Trademark Office receives no taxpayer funds--
it is solely funded by patent and trademark user fees. Yet, those fees 
are not deposited within the Patent and Trademark Office. They are 
instead diverted to the Treasury Department, forcing the Patent and 
Trademark Office to ask for funds generated by their own office to be 
appropriated back to them.
  The Patent and Trademark Office often requests lower than the amount 
generated by patent and trademark fees, which results in any extra fees 
being diverted by Congress to address ``general revenue purposes.'' In 
fact, since 1992, Congress has diverted more than $750 million from the 
Patent and Trademark Office.
  For example, as recent as 2007, 12 million user-fee generated dollars 
were diverted from the Patent and Trademark Office for ``other 
purposes.'' With 1.2 million patent applications pending--735,000 of 
which are simply waiting for a patent examiner to take a first action--
it is clear that the Patent and Trademark Office is in dire need of

[[Page 2855]]

those funds. I believe those fees belong to the Patent and Trademark 
Office and are needed by their offices to make the patent and trademark 
process more accessible and efficient for America's innovators.
  By ending fee diversion and allowing the Patent and Trademark Office 
to structure its own funding model, resources would be directly 
allocated to areas of most concern for both the Patent and Trademark 
Office and American innovators. The Coburn proposal does both, and 
ensures that the ever expanding backlog of unexamined patent 
applications and the timeframe for actual examination would be 
addressed in an efficient manner. It is time for Congress to take 
action and allow the Patent and Trademark Office to control the user 
fees that we think they deserve so they can effectively serve our 
Nation's inventors and small businesses.
  Madam President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. GRASSLEY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. GRASSLEY. I ask unanimous consent that the quorum call be equally 
charged to both sides.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. GRASSLEY. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mrs. BOXER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                              Members' Pay

  Mrs. BOXER. Madam President, I think the managers are aware that I am 
going to make a unanimous consent request shortly on a bill that deals 
with Members' pay in the event of a government shutdown. I have been 
told we are waiting to see--there is apparently one objection on the 
Republican side. If we can clear it, then this will be passed. If not, 
then I will be back later to make the same request.
  I say to my friend from Vermont and my friend from Iowa that I 
support the managers' package. It is terrific. One of the things in 
there is a Coburn-Boxer amendment that would keep the patent fees in 
the Patent Office. I am so glad the chairman sees it that way because 
we have such a tremendous backlog.
  I will be happy to yield to my friend.
  Mr. LEAHY. Madam President, I wish to ask a question about the 
proposal that the Senator from California will make on pay, which is 
fine with me. Can we not have an alternative in the bill that we give 
the money to charity so somebody would actually see it? This would be 
one one-hundred thousandth of 1 percent, according to the Treasury. The 
last time we had a shutdown, I just voluntarily gave $4,000, $5,000 to 
charity. Would it not make a lot more sense, and actually people might 
get some benefit from it, especially places such as homeless shelters? 
They are going to be hurt by a government shutdown. Why not do 
something where they would get the money directly?
  Mrs. BOXER. That is a good idea. The reason I have done it this way 
is because I am trying to say that we in the Senate and in the House 
have an obligation to keep the government running, and we should be 
treated just like other Federal employees. That is the simplicity of 
this legislation. We cannot force a Member to give money to charity.
  Mr. LEAHY. We could, actually, by saying either return it to the 
Treasury or give an equal amount to charity and file with the Secretary 
of the Senate to which charity they gave it.
  Mrs. BOXER. Again, that is treating us differently than other Federal 
employees. That would be a tax writeoff.
  Mr. LEAHY. Not if one gives the full amount.
  Mrs. BOXER. It is a tax writeoff to give to charity. All I am saying 
is that is certainly another option if my friend wanted to change it.
  I just think it is simple. We just want to be treated the same as 
other Federal employees, and that is how I have structured it.
  I spoke about this issue this morning. I wrote this bill with the 
support of Casey, Manchin, Tester, Nelson of Nebraska, Bennet, Warner, 
Wyden, Coons, Harkin, Hagan, Menendez, Stabenow, Merkley, and 
Rockefeller. There is a growing consensus that we want to avoid a 
shutdown at any cost. I am hoping we will avoid it. There could come a 
moment where it is forced upon us. There are lots of stories--who will 
get the blame for this, that, and the other. To me, that is not 
important. What is important to me is that we sacrifice--we in the 
Senate and in the House as well.
  I am hopeful that if we get this done and send this over to Speaker 
Boehner that he will get it through his body over there, and we can get 
this done and send it to the President. It impacts the President too. 
We say the President cannot get paid either because the deal is we have 
to work with the President to come up with a compromise.
  Senator Leahy has a good suggestion. Some people might like that 
option better. I believe this should be kept very simple; that in the 
case of a government shutdown we are treated the same way as other 
Federal employees. The reason we have to do this is Members of Congress 
and the President are paid by separate statute rather than by the 
annual appropriations process. We have to pass a separate statute on 
this issue. It is a very simple bill.
  Again, I hope we never have to come to this, where we have any type 
of a shutdown. Maybe this bill will make some colleagues who believe 
they will be protected from sacrifice realize it is painful. It is 
painful for a lot of people. Certainly, it would be painful if somebody 
on Social Security or disability cannot get their payment. It is 
painful if veterans who are on disability do not get their check. It is 
certainly painful if a citizen is planning a trip and cannot get a 
passport. It is painful if Superfund sites cannot be cleaned up. It is 
painful if there is, God forbid, an oil well explosion because we did 
not have people there to inspect the oil well.
  For our business people who are government contractors it is painful 
if they do not get paid. Export licenses must be granted, and our 
troops should be paid. So there is no reason why we should shut down 
this government, and I am very hopeful we will have unanimous consent 
to do it.
  I have a parliamentary inquiry to ask the Chair: Is it true that we 
no longer have secret objections here; that a person has to identify 
themselves if they are objecting?
  The ACTING PRESIDENT pro tempore. There are provisions that address 
people objecting to unanimous consent requests.
  Mrs. BOXER. So would I be correct if I said that if someone objects, 
we would know who that individual is so we can speak with that 
individual? You said there are provisions. Could you be more specific 
about that?
  The ACTING PRESIDENT pro tempore. If the Senator will hold for a 
minute.
  Mrs. BOXER. Certainly.
  The ACTING PRESIDENT pro tempore. We will get the provision and read 
it to you.
  Mr. LEAHY. While the Senator is waiting for that, if I might ask the 
Senator a question.
  Article 2 of the Constitution says:

       The President shall, at stated times, receive for his 
     services, a compensation, which shall neither be increased 
     nor diminished during the period for which he shall be 
     elected.

  Would the Senator's amendment be constitutional under that provision? 
And remember that we voted to increase the pay of the President when 
President Clinton--if I could have the attention of the Senator--
  Mrs. BOXER. I know this issue, yes.

[[Page 2856]]


  Mr. LEAHY. Between the time when President Clinton was in office, but 
it did not take effect until President George W. Bush came in and it 
doubled the salary for President Bush but not President Clinton. How do 
you, by statute, change, even for a matter of days, a Presidential 
salary? Doesn't it violate article 2 of the Constitution?
  Mrs. BOXER. We did check this with legal counsel, and they told us 
that the legislation, as drafted, does not increase or diminish the 
annual salary of the President. It withholds pay during a shutdown or 
failure to raise the debt ceiling.
  There are definitely standing questions, and we are told that only 
the President would be able to challenge this legislation in a court of 
law.
  Mr. LEAHY. But you are saying that even though it goes directly 
against the Constitution, which says his compensation shall neither be 
increased nor diminished during the period for which he shall be 
elected, that unless he objected--well, by the same token, why couldn't 
we raise the pay of a President unless he objected?
  Mrs. BOXER. Well, I will repeat what I said. This legislation--
  Mr. LEAHY. It seems to be a total violation of the Constitution.
  Mrs. BOXER. This legislation, as drafted, does not increase or 
decrease the salary. If you withhold it, and if the President felt that 
was a violation, he himself would have to challenge it.
  Mr. LEAHY. But we have some responsibility in this body to actually 
pass laws that are constitutional. It would, if there were a shutdown, 
and if upon a per-diem basis his salary was decreased, why isn't that 
de facto a violation of the Constitution?
  Mrs. BOXER. Because we are not changing--diminishing--his salary.
  Mr. LEAHY. Of course you are.
  Mrs. BOXER. It is only in the case of an extraordinary event--a 
government shutdown.
  Mr. LEAHY. The Constitution doesn't say anything about an 
extraordinary event.
  Mrs. BOXER. The Senator may oppose it.
  Mr. LEAHY. That is not my question.
  Mrs. BOXER. I will repeat. We don't diminish, we withhold it during a 
period of a government shutdown or a failure to raise the debt ceiling. 
There is a reason we do it. It is very rare we have a government 
shutdown, but, in my view, and in the view of the cosponsors, this is a 
major function of our body and of the President--to avert a government 
shutdown. We don't think it is fair to treat some people differently 
than others. If other Federal employees are going to get their pay cut 
and your Social Security recipients don't get their checks, we think 
the Congress and the President ought to have a bite taken out of their 
pay as well.
  Mr. LEAHY. I don't disagree with anything the Senator is saying, but 
how do you get--it would be like reducing a judge's salary. The 
Constitution specifically prohibits that. You say it is not reducing, 
but of course it is. If you say we are shut down 5 days, take whatever 
percentage 5 days of the President's annual salary is, you withhold 
it--you are not going to give it back when the government comes back 
into service--you have decreased his salary.
  I am not suggesting not doing it for the Congress, but I don't see 
how--I am not sure what kind of example we set if we pass a piece of 
legislation which on the face of it violates the Constitution. I am not 
talking about Members of Congress. As I said, the last time we had a 
shutdown I took whatever was my amount and added it to the thousands 
and thousands of dollars I give every year to charity. I added it to 
that. But in this case, you go against article 2 by decreasing the 
President's salary.
  Mrs. BOXER. No, we do not.
  Mr. LEAHY. Of course you do.
  Mrs. BOXER. We are not changing a penny of the President's pay. What 
we are saying is, in the event of a government shutdown, he will be 
treated the same way other Federal employees are treated and be treated 
in the same way we are treated. He can determine if he wants to 
challenge this in a court of law.
  We hope we don't ever face this. So we are not in any way changing 
his salary. We hope never to have to use this.
  Mr. LEAHY. So is the Senator saying we set the right example by 
passing a bill which, on the face of it, violates the Constitution, but 
it is okay unless somebody challenges it?
  Mrs. BOXER. No, I am not. I will reiterate again what I said, which 
is this: We do not increase or decrease the President's pay.
  Mr. LEAHY. You just cut it for those days.
  Mrs. BOXER. Can I finish? I let you talk. Now I think I have a turn. 
I don't have a legal degree, my friend has. It is common sense. It 
seems to me it is a question of fairness. Those of us who are 
responsible for keeping this government open--
  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  Mrs. BOXER. Then I will finish this thought.
  We are responsible to keep this government open. If we fail to do 
that, we ought to be punished.
  I am going to make a unanimous consent request at this time, and I 
understand there is an objection.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  Mrs. BOXER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mrs. BOXER. Madam President, I have just been told a Republican 
colleague objects to this. I don't understand why. I don't think it is 
a constitutional objection. I don't know the reason.
  The ACTING PRESIDENT pro tempore. The Senator is out of time.
  Mrs. BOXER. Madam President, I ask unanimous consent to make my 
request.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana.
  Mr. VITTER. On behalf of Senator Coburn, I object.
  The ACTING PRESIDENT pro tempore. Objection is heard.
  Mrs. BOXER. Madam President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The Senator does not have enough 
time under her control to suggest the absence of a quorum.
  The Senator from Louisiana.
  Mr. VITTER. Madam President, I rise in strong support of the Toomey-
Vitter amendment, which we will vote on in the series of two votes 
starting at 5 p.m. The idea behind the Toomey-Vitter amendment is very 
simple. It says if we ever reach the debt ceiling, the government, as a 
top first priority, will use revenue to pay two things: first, proper 
interest payments on our U.S. Government debt; and secondly, Social 
Security checks to seniors.
  The motivation behind this amendment is simple. First, those two 
things should be legitimately a top priority. No one should want the 
U.S. Government to default on its debt and no one should want the 
immediate stoppage, or the stoppage at any time, of Social Security 
checks to seniors. So first, it is legitimate to rank those two 
functions as an absolute top priority.
  The second motivation behind this amendment is to take some of these 
scare tactics and hysteria out of this debate. Too many people, in my 
opinion, have been saying if we ever reach the debt ceiling, the next 
day all Social Security checks will stop and all payments will stop on 
U.S. Treasury bills--on government debt. That is not true. There is no 
reason it has to be true. This amendment, when passed into law, will 
ensure it is not true. It will ensure we look at this situation with 
focus and calmness and not hysteria and scare tactics.
  The goal, I am certain--and I know it is for Senator Toomey, my 
distinguished colleague from Pennsylvania--is not that we not default 
on our debt and not that we reach the debt ceiling, but it is that we 
take strong, responsible action well ahead of any threatened event to 
put us on a fiscally sustainable path.
  Just this morning, both Senator Toomey and I were in a hearing of the

[[Page 2857]]

Senate Banking Committee and the witness--the only witness--was Ben 
Bernanke, Chairman of the Board of Governors of the Federal Reserve. He 
said very clearly several things directly pertinent to this discussion. 
First, he said we are on a fiscally unsustainable path. Our budget 
situation is absolutely unsustainable. Second, he said that is the 
biggest long-term threat to our economy--the biggest threat. Third, he 
said that although it is a long-term problem, it could create a short-
term crisis. It could create a crisis that could hit immediately, at 
any time. So we need to act and we need to act strongly.
  Madam President, I yield time to the distinguished Senator from 
Pennsylvania.
  The ACTING PRESIDENT pro tempore. The Senator from California.
  Mrs. BOXER. Madam President, I want say I object to the Vitter-Toomey 
bill. I am not going to pay China before I pay people.
  The ACTING PRESIDENT pro tempore. The Senator has no time. The 
Senator's time has expired.
  Mrs. BOXER. I ask unanimous consent that the Homeland Security and 
Governmental Affairs Committee be discharged from--
  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  Mrs. BOXER. I ask unanimous consent to speak to make a unanimous 
consent request.
  Mr. VITTER. Madam President, I think I control the floor and I yield 
to the Senator from Pennsylvania.
  The ACTING PRESIDENT pro tempore. Is there objection to the Senator's 
request for unanimous consent to make a unanimous consent request?
  Mr. VITTER. I object.
  The ACTING PRESIDENT pro tempore. Objection is heard.
  Mrs. BOXER. I want an answer, please, to my question: Can people 
object to a unanimous consent request without saying who they are, No. 
1? And No. 2, what is the parliamentary procedure here?
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana objected 
to the unanimous consent request on behalf of the Senator from 
Oklahoma, Senator Coburn. The Senator from Louisiana objected to the 
extension of the unanimous consent request for additional time on his 
own behalf.
  Mrs. BOXER. So it is the Senator from Oklahoma, Senator Coburn, who 
objects to the bill we have that would say we don't get paid in the 
case of a shutdown; is that correct? Senator Coburn is objecting to 
that?
  The ACTING PRESIDENT pro tempore. That is the Chair's understanding.
  All time remaining is under control of the minority.
  Mrs. BOXER. Thank you.
  The ACTING PRESIDENT pro tempore. The Senator from Pennsylvania.
  Mr. TOOMEY. Madam President, I wish to thank Senator Vitter for 
yielding his time and for his help on this effort. I want to be very 
clear. First, I am not aware of anybody in this body or anybody I know 
who wants to see a government shutdown. I am not aware of anybody who 
wants to see the disruption that would result from failing to raise the 
debt ceiling at the appropriate time. But I also feel strongly it is 
critical we take this opportunity to begin to address the structural 
problems we have.
  The fact is we have a burden of debt right now that is costing us 
jobs in this country today. The uncertainty it creates, the cost of 
financing this, the question of whether and for how long we can roll 
this over, the extent to which inflation becomes a problem, all of 
these risk factors are already weighing on our economy and our ability 
to create jobs now. For the future, it is an even bigger risk.
  Senator Vitter and I have taken this step so we can have an honest 
discussion about how we are going to bring this spending under control 
and the process reforms we are going to make so we can hopefully get 
off this unsustainable path and get on a sustainable trajectory for the 
economic growth we need. That is ultimately what this measure is all 
about. It simply says that in the event we reach the debt limit without 
having raised it first--and let's face it, we have been there before. 
This has happened in the past. In the last 20 years, it has happened on 
several occasions. So it is entirely possible that, despite the best 
efforts of those of us who want to avoid it, it could happen again.
  If it were to happen again, we want to make sure that we have no 
default on our debt, that interest is paid, and that Social Security 
checks go to the recipients as they should. There will be plenty of 
resources from ongoing tax revenue to make sure that happens, and 
anything less would be very irresponsible.
  I urge my colleagues to vote in favor of this amendment.


                            Damages Language

  Mrs. FEINSTEIN. Madam President, I commend the chairman of the 
Judiciary Committee for his hard work in putting together this 
managers' amendment and building consensus for this bill. Part of the 
managers' amendment strikes most of section 4 of the bill, relating to 
damages. As the chairman knows, I worked very hard on the 
``gatekeeper'' damages language in this section of the bill. That 
language represented a compromise between high-technology companies, 
many located in my State of California, which believed that the law 
relating to patent damages needed reform, and other interests, 
including universities, biotech, pharmaceutical companies, and small 
inventors, who were greatly concerned that the preferred solution of 
the high-technology companies, namely apportionment of damages, would 
be destructive to the value of patents. However, since then, the courts 
have further developed the law relating to damages, so I understand 
that the chairman proposes to now strike the gatekeeper damages 
language from the bill.
  Mr. LEAHY. Yes, the Senator is correct. I thank her for her hard work 
in putting together the gatekeeper damages language with Senator 
Specter and myself in committee last Congress. It was instrumental in 
helping to move this bill forward. However, as the Senator from 
California recognizes, the courts have advanced the law regarding 
damages since then. For example, in Uniloc USA, Inc. v. Microsoft 
Corp., decided just this year, the Federal Circuit held that expert 
testimony regarding a ``rule of thumb'' for allocating profits between 
a patent user and a patent owner did not meet the Daubert test for 
expert testimony, and was inadmissible. And in Lucent Technologies 
Corp. v. Gateway, Inc., the Federal Circuit found that no rational jury 
could have concluded a ``tiny feature of one part of a much larger 
software program with numerous features . . . appear[ing] to account 
for the overwhelming majority of consumer demand'' was worth an 8% 
royalty.'' This represented a new, greater level of review for jury 
damages assessment. In light of cases like these, it no longer appears 
necessary for this bill to contain language regarding the assessment of 
damages.
  Mrs. FEINSTEIN. Yes, many businesses in my State agree. I also 
believe that if the bill remains silent on damages, as the managers' 
amendment would do, that no harm will be done to the value of patents, 
which is so important for encouraging innovation. Is it the chairman's 
intention, in future discussions with the House of Representatives, to 
continue to have the bill remain silent on damages?
  Mr. LEAHY. Yes, it is. The courts have been making good progress in 
developing the law in this area, and I do not believe patent reform 
legislation should interfere with this progress. Should the House 
propose or pass some language on damages, I will certainly consult with 
the Senator from California to obtain her views on that language.
  Mrs. FEINSTEIN. I thank the chairman, very much, for his 
consideration.
  The PRESIDING OFFICER (Mr. Casey). All time has expired.
  Mr. LEAHY. Mr. President, I ask for the yeas and nays on the Leahy-
Grassley-Kyl, et al., managers' amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the amendment.

[[Page 2858]]

  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Hawaii (Mr. Akaka) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 97, nays 2, as follows:

                      [Rollcall Vote No. 27 Leg.]

                                YEAS--97

     Alexander
     Ayotte
     Barrasso
     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Blunt
     Boozman
     Boxer
     Brown (MA)
     Brown (OH)
     Burr
     Cantwell
     Cardin
     Carper
     Casey
     Chambliss
     Coats
     Coburn
     Cochran
     Collins
     Conrad
     Coons
     Corker
     Cornyn
     Crapo
     DeMint
     Durbin
     Ensign
     Enzi
     Feinstein
     Franken
     Gillibrand
     Graham
     Grassley
     Hagan
     Harkin
     Hatch
     Hoeven
     Hutchison
     Inhofe
     Inouye
     Isakson
     Johanns
     Johnson (SD)
     Johnson (WI)
     Kerry
     Kirk
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Lee
     Levin
     Lieberman
     Lugar
     Manchin
     McCain
     McCaskill
     McConnell
     Menendez
     Merkley
     Moran
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Paul
     Portman
     Pryor
     Reed
     Reid
     Risch
     Roberts
     Rockefeller
     Rubio
     Sanders
     Schumer
     Sessions
     Shaheen
     Snowe
     Stabenow
     Tester
     Thune
     Toomey
     Udall (CO)
     Udall (NM)
     Vitter
     Warner
     Webb
     Whitehouse
     Wicker
     Wyden

                                NAYS--2

     Mikulski
     Shelby
       

                             NOT VOTING--1

       
     Akaka
       
  The amendment (No. 121) was agreed to.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. BAUCUS. I move to lay that motion on the table.
  The motion to lay upon the table was agreed to.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent for 1 minute 
equally divided for each side to explain this next amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, the next amendment is Vitter amendment No. 
112, which potentially says the United States must pay its interest 
debt and Social Security benefits before it makes any other government 
obligations. I think that is a bad idea. That would bring economic 
chaos to our country. If we default, we default.
  Just because the bondholders in China would get priority over our 
troops overseas or get priority over tax refunds does not mean we are 
not in default. Besides, it is bad policy anyway. This amendment would 
bring chaos. If we were ever to get to the point of being unable to 
raise our debt, it would bring chaos to pay the Chinese bondholders 
first before we pay anybody else. That is the wrong thing to do.
  I do not think we want to get into a situation where we are going to 
tell the American people they are second to foreign investors. I 
strongly urge that this amendment be defeated. At the appropriate time 
I will move to table the amendment.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. TOOMEY. Mr. President, if I can take the minute to rebut my 
colleague, first of all, it is true it would be very disruptive and 
there would be some chaos if we had a shutdown or if we eventually 
failed to raise the debt limit. This amendment, of course, does not 
cause that. This amendment, in fact, is designed precisely to prevent 
the kind of chaos that might otherwise ensue by simply ensuring that 
under no circumstances whatsoever would the United States Government 
default on its debt.
  I think we all agree that the last thing we should ever tolerate 
would be a situation in which the United States Government would 
default on our debt. The chaos that would result from that would be 
devastating. So this is an amendment that says, in the event the debt 
limit is not raised when we reach it--and, by the way, we have been 
there before, so it is not inconceivable--that we would make sure we, 
under no circumstances, would default on the debt.
  Because Senator Vitter offered a modification to this amendment, 
essentially the merger of these amendments ensures that Social Security 
payments would also go out. By the way, there is more than sufficient 
revenue from ongoing taxes to ensure that could be done. So in the 
interests of avoiding the chaos of an actual default, I think this 
absolutely should occur.
  By the way, I think it is also important to note that a majority of 
all of the debt issued by this government is held by Americans. They 
are held by senior citizens who live in Allentown, PA, and who have 
saved their whole life and invested that savings in U.S. Treasury 
securities.
  I think it is very important that we send the message to them that 
even if we are not able to get our work done and raise the debt limit, 
as I hope we will at the appropriate time, we certainly would not 
default on the debt they hold.
  I yield the floor.


                       Vote on Amendment No. 112

  Mr. BAUCUS. Mr. President, I move to table the Vitter-Toomey 
amendment No. 112, as modified, and ask for the yeas and nays on my 
motion to table.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Hawaii (Mr. Akaka) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other senators in the Chamber 
desiring to vote?
  The result was announced--yeas 52, nays 47, as follows:

                      [Rollcall Vote No. 28 Leg.]

                                YEAS--52

     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Boxer
     Brown (OH)
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Coons
     Durbin
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Inouye
     Johnson (SD)
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Manchin
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--47

     Alexander
     Ayotte
     Barrasso
     Blunt
     Boozman
     Brown (MA)
     Burr
     Chambliss
     Coats
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Ensign
     Enzi
     Graham
     Grassley
     Hatch
     Hoeven
     Hutchison
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kirk
     Kyl
     Lee
     Lugar
     McCain
     McConnell
     Moran
     Murkowski
     Paul
     Portman
     Risch
     Roberts
     Rubio
     Sessions
     Shelby
     Snowe
     Thune
     Toomey
     Vitter
     Wicker

                             NOT VOTING--1

       
     Akaka
       
  The motion was agreed to.
  Mr. LEAHY. I want to thank all Senators for supporting adoption of 
the Leahy-Grassley-Kyl managers' amendment. This consensus amendment is 
a compromise that resolves a number of the key outstanding issues in 
the bill, including fee diversion, business method patents, damages and 
venue. I want to take a moment to discuss the importance of these 
provisions.
  First, the provisions in this managers' amendment that end fee 
diversion from the PTO are supported by all corners of the patent 
community. Today, users fund 100 percent of the PTO's operations. The 
PTO does not take a dime of taxpayer money. For all of the improvements 
that this legislation makes to our patent system, the Patent Office 
will always be hindered if it cannot retain the funds it generates to 
more adequately plan for its future. Today, as we ask our Patent Office 
to unleash the best in innovation from our businesses, our Patent 
Office does not have the funding to do the same for itself. Ending fee 
diversion will better equip the patent office with the resources to 
tackle the complexities of the 21st century.

[[Page 2859]]

  Second, the managers' amendment creates a temporary proceeding at the 
Patent Office to reexamine certain business method patents. I 
appreciate the work that Senator Schumer has done on this issue, and 
the provisions included in the managers' amendment represents a middle-
ground that bridges a divide on this issue between the financial and 
tech communities that reside in all of our States.
  Third, the managers' amendment strikes provisions on damages and 
venue. Removing these provisions addresses recent concerns voiced by 
certain Members of the House, and raised by the high-tech community.
  Finally, this managers' amendment wraps in Senator Bennet's 
previously offered amendment to provide a 50-percent reduction in fees 
for small business accelerated patent applications at the PTO, as well 
as some technical amendments. This break for small businesses, which 
drive innovation and create jobs, will better enable them to compete 
with the demands of the 21st century.
  As we return to the America Invents Act, I encourage any Senator who 
has a germane amendment to come and debate it now. This is bipartisan 
legislation that our economy desperately needs. It will allow the PTO 
to function, and our inventors and innovators to flourish. If any other 
Senators have amendments, this is the time. We need to move on to other 
pressing matters as soon as we complete work on this bill.
  Mr. BENNET. Mr. President, I would like to speak briefly on my 
amendment to strike the damages and venue provisions from this 
legislation. I thank the chairman and committee for working with my 
office on this important amendment and incorporating it into the 
managers' amendment.
  I know the committee has been working tirelessly to address concerns 
with this bill, and I applaud their efforts for trying to build 
consensus.
  As I discussed yesterday, I believe a well-functioning patent system 
is critical for our economic growth. The reforms in this legislation 
will promote innovation and create jobs.
  In my State alone, nearly 20,000 patent applications have been 
granted between the years 2000 and 2009. These applications have 
created the foundation for our clean energy economy and emerging tech 
and bio industries.
  Small inventors start new Colorado companies, and more established 
companies are able to expand their operations in a very competitive, 
knowledge-based economy.
  An efficient and high-quality U.S. Patent and Trademark Office is 
essential to maintaining American leadership in innovation. The 
improvements to the patent system in this bill will help us grow new 
industries and will help cure the backlog and delay that has stunted 
the ability of inventors to patent their ideas.
  Right now, the average pendency period for a patent application is 36 
months. That is unacceptable if we are to compete with the rest of the 
world. This doesn't even account for those patents that have been tied 
up in years of litigation after they are granted.
  This is why we need to ensure that patent owners have certainty. 
Consistency, uniformity, and fairness are essential to innovation.
  Prolonged litigation and legal uncertainty only serve to stifle the 
incentive to innovate. We need clarity and efficient review by the 
courts to make sure we don't have a system where patents are tied up 
for years. Likewise, we also need to make sure there is a fair outcome 
where there is an infringement. Those whose rights are infringed have 
every right to take their case to court and receive the appropriate 
damages.
  This is why I introduced my amendment on damages and venue. We need 
more certainty for patent owners, and I think portions of the bill may 
not do enough in this regard, in the face of litigation. In fact, the 
venue and damages portions of the bill may actually generate more 
uncertainty, not less.
  The Federal Circuit Court of Appeals has made significant progress on 
damages and venue issues. The courts are moving in the right direction, 
and I believe it is wiser to allow this process to run its course than 
to add a new layer of laws that could only serve to confuse patent 
litigants. So in my view, congressional intervention on damages and 
venue is not needed at this time.
  I would like to close by again thanking the chairman for his 
leadership and willingness to take into account the views of others on 
these important issues.
  The PRESIDING OFFICER. The Senator from California is recognized.

                          ____________________