[Congressional Record (Bound Edition), Volume 157 (2011), Part 2]
[Senate]
[Pages 2861-2862]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          AMERICA INVENTS ACT

  Mr. SCHUMER. Mr. President, I rise to speak in support of the America 
Invents Act generally and about the managers' amendment specifically. 
The America Invents Act, also known as the patent reform bill, has been 
pending for many years and has been the subject of extensive debate, 
negotiation, and revisions. In its current draft, it does much needed 
good to help protect the American innovation economy by updating and 
modernizing our patent system.
  The patent system in the United States is designed to protect 
innovation and inventions and investment. But over the last several 
decades, the Patent and Trademark Office has become bogged down and 
overburdened by inefficient process and outdated law. The result is a 
heavy burden on the innovative work that is the engine of our economy.
  I wish to commend Senator Leahy. He has gone the extra mile for this 
bill for many years. I am proud and glad he is seeing his work come to 
fruition as we finally debate the bill on the floor. Passage of the 
bill is in sight. I also wish to commend the ranking member of the 
Judiciary Committee, Senator Grassley, who worked with him, as well as 
Senator Kyl, who has taken a leading role on the Republican side, for 
their hard work in crafting a bill that effectively modernizes the 
patent system, while paying attention to the many and varied demands 
different sectors of the economy exert upon it.
  I am particularly pleased the chairman has decided to adopt the 
Schumer-Kyl amendment on business method patents into the managers' 
amendment. It is a critical change that this bill finally begins to 
address the scourge of business method patents currently plaguing the 
financial sector. Business method patents are anathema to the 
protection the patent system provides because they apply not to novel 
products or services but to abstract and common concepts of how to do 
business.
  Often, business method patents are issued for practices that have 
been in widespread use in the financial industry for years, such as 
check imaging or one-click checkout. Because of the nature of the 
financial services industry, those practices aren't identifiable by the 
PTO as prior art and bad patents are issued. The holders of business 
method patents then attempt to extract settlements from the banks by 
suing them in plaintiff-friendly courts and tying them up in years of 
extremely costly litigation.
  This is not a small problem. Around 11,000 new applications for 
patents on business methods are filed every year, and financial patents 
are being litigated almost 30 times more than patents as a whole. This 
is not right, it is not fair, and it is taking desperately needed money 
and energy out of the economy and putting it into the hands of a few 
litigants. So I am very pleased Congress is going to fight it.
  The Schumer-Kyl amendment, which was included in the managers' 
package we just adopted, will allow companies that are the target of 
one of these frivolous business method patent lawsuits to go back to 
the PTO and demonstrate, with the appropriate prior art, that the 
patent shouldn't have been issued in the first place. That way bad 
patents can be knocked out in an efficient administrative proceeding, 
avoiding costly litigation.
  One of the most critical elements of this amendment has to do with 
the stay of litigation while review of the patent is pending at the 
PTO. The amendment includes a four-factor test for the granting of a 
stay that places a very heavy thumb on the scale in favor of the stay. 
Indeed, the test requires the court to ask whether a stay would reduce 
the burden of the litigation on the parties and the court. Since the 
entire purpose of the transitional program at the PTO is to reduce the 
burden of litigation, it is nearly impossible to imagine a scenario in 
which a district court would not issue a stay.
  In response to concerns that earlier versions of the amendment were 
too broad, we have modified it so it is narrowly targeted. We want to 
make sure to capture the business method patents which are at the heart 
of the problem and avoid any collateral circumstances.
  In conclusion, I believe the amendment takes an important step in the 
direction of eliminating the kinds of frivolous lawsuits the 
jurisprudence on business method patents have allowed. I am very 
grateful to the chairman and the ranking member, Senator Kyl, and I 
support the managers' amendment and the America Invents Act as a whole.
  Finally, I would like to say a few words about Senator Coburn's 
proposal on fee diversion. I think his idea, which is incorporated in 
the managers' amendment, makes a lot of sense; that is, to let the PTO 
keep the fees they charge so they are self-funded and we don't have to 
spend taxpayer money to fund them every year.
  Last year, when we were debating the Wall Street reform bill, Senator 
Jack Reed and I made a similar proposal for the SEC, which ultimately 
didn't make it into the final bill. I just wanted to take this time to 
make a few points about this commonsense proposal.
  First, for the last 15 years, the SEC hasn't spent a dime of taxpayer 
money. For 15 years, the SEC has had no impact on the deficit. This is 
because Congress, in 1996, amended the securities laws to provide that 
100 percent of the SEC's funding comes from registration and filing 
fees charged by the Commission.
  Second, even though the SEC collects more in fees every year than it 
spends, the amount of the SEC's annual budget is determined by 
Congress, which has

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continually shortchanged the SEC. The SEC's budget has been in the 
crosshairs for years, and their funding has been so inadequate that 
they have been compromised in their ability to pursue their core 
mission.
  Third, the budget proposal in the House would continue the 
shortchanging of the SEC, cutting $40 million from its existing budget 
at a time when it needs resources more than ever.
  Finally, a word about the current demands on the SEC. We gave that 
agency significant new responsibilities under the Dodd-Frank Act, in 
particular to oversee the previously unregulated derivative markets. 
That is an enormous undertaking that everybody agrees is necessary 
after seeing the role that unregulated derivatives played in the 
financial crisis.
  In closing, I would strongly suggest to my colleagues that if self-
funding makes sense for the PTO, it makes sense for the SEC. I am not 
going to call up my amendment now or my bill now, but I urge my 
colleagues to support this commonsense proposal Senator Reed and I are 
pushing and ensure it gets a full hearing in the Senate.
  I thank the Chair for his time and attention.

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