[Congressional Record (Bound Edition), Volume 157 (2011), Part 9]
[Senate]
[Pages 13159-13201]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    LEAHY-SMITH AMERICA INVENTS ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of H.R. 1249, which the clerk will report by 
title.
  The assistant legislative clerk read as follows:

       An Act (H.R. 1249) to amend title 35, United States Code, 
     to provide for patent reform.


                           Amendment No. 600

  Mr. SESSIONS. Mr. President, I ask unanimous consent to call up my 
amendment No. 600, which is at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Alabama [Mr. Sessions], for himself, Mr. 
     Manchin, Mr. Coburn, and Mr. Lee, proposes an amendment 
     numbered 600.

  Mr. SESSIONS. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:


                           AMENDMENT NO. 600

 (Purpose: To strike the provision relating to the calculation of the 
        60-day period for application of patent term extension)

       On page 149, line 20, strike all through page 150, line 16.

  Mr. SESSIONS. Mr. President, the amendment that I have offered is a 
very important amendment. It is one that I believe is important to the 
integrity of the U.S. legal system and to the integrity of the Senate. 
It is a matter that I have been wrestling with and objecting to for 
over a decade. I thought the matter had been settled, frankly, but it 
has not because it has been driven by one of the most ferocious 
lobbying efforts the Congress maybe has seen.
  The House patent bill as originally passed out of committee and taken 
to the floor of the House did not include a bailout for Medco, the 
WilmerHale law firm, or the insurance carrier for that firm, all of 
whom were in financial jeopardy as a result of a failure to file a 
patent appeal timely.
  I have practiced law hard in my life. I have been in court many 
times. I spent 12 years as a U.S. Attorney and tried cases. I am well 
aware of how the system works. The way the system works in America, you 
file lawsuits and you are entitled to your day in court. But if you do 
not file your lawsuit in time, within the statute of limitations, you 
are out.
  When a defendant raises a legal point of order--a motion to dismiss--
based on the failure of the complaining party to file their lawsuit 
timely, they are out. That happens every day to poor people, widow 
ladies. And it does not make any difference what your excuse is, why 
you think you have a good lawsuit, why you had this idea or that idea. 
Everyone is required to meet the same deadlines.
  In Alabama they had a situation in which a lady asked a probate judge 
when she had to file her appeal by, and the judge said: You can file it 
on Monday. As it turned out, Monday was too late. They went to the 
Alabama Supreme Court, and who ruled: The probate judge--who does not 
have to be a lawyer--does not have the power to amend the statute of 
limitations. Sorry, lady. You are out.
  Nobody filed a bill in the Congress to give her relief, or the 
thousands of others like her every day. So Medco and WilmerHale seeking 
this kind of relief is a big deal. To whom much has been given, much is 
required. This is a big-time law firm, one of the biggest law firms in 
America. Medco is one of the biggest pharmaceutical companies in the 
country. And presumably the law firm has insurance that they pay to 
insure them if they make an error. So it appears that they are not 
willing to accept the court's ruling.
  One time an individual was asking me: Oh, Jeff, you let this go. Give 
in and let this go. I sort of as a joke said to the individual: Well, 
if WilmerHale will agree not to raise the statute of limitations 
against anybody who sues their clients if they file a lawsuit late, 
maybe I will reconsider. He thought I was serious. Of course WilmerHale 
is not going to do that. If some poor person files a lawsuit against 
someone they are representing, and they file it one hour late, 
WilmerHale will file a motion to dismiss it. And they will not ask why 
they filed it late. This is law. It has to be objective. It has to be 
fair.
  You are not entitled to waltz into the U.S. Congress--well 
connected--and start lobbying for special relief.
  There is nothing more complicated about that than this. So a couple 
of things have been raised. Well, they suggest, we should not amend the 
House patent bill, and that if we do, it somehow will kill the 
legislation. That is not so. Chairman Leahy has said he supports the 
amendment, but he

[[Page 13160]]

doesn't want to vote for it because it would keep the bill from being 
passed somehow.
  It would not keep it from being passed. Indeed, the bill that was 
brought to the House floor didn't have this language in it. The first 
vote rejected the attempt to put this language in it. It failed. For 
some reason, in some way, a second vote was held, and it was passed by 
a few votes. So they are not going to reject the legislation if we were 
to amend it.
  What kind of system are we now involved in in the Senate if we can't 
undo an amendment? What kind of argument is it to say: Jeff, I agree 
with your amendment, and I agree it is right that they should not get 
this special relief, but I can't vote for it because it might cause a 
problem? It will not cause a problem. The bill will pass. It should 
never have been put in there in the first place.
  Another point of great significance is the fact that this issue is on 
appeal. The law firm asserted they thought--and it is a bit unusual--
that because it came in late Friday they had until Monday. We can count 
the days to Monday--the 60 days or whatever they had to file the 
answer. I don't know if that is good law, but they won. The district 
court has ruled for them. It is on appeal now to the court of appeals.
  This Congress has no business interfering in a lawsuit that is 
ongoing and is before an appeals court. If they are so confident their 
district court ruling is correct, why are they continuing to push for 
this special relief bill, when the court of appeals will soon, within a 
matter of months, rule?
  Another point: We have in the Congress a procedure to deal with 
special relief. If this relief is necessary at all, it should go 
through as a special relief bill. I can tell you one reason it is not 
going there now: you can't ask for special relief while the matter is 
still in litigation, it is still on appeal. Special relief also has 
procedures that one has to go through and justify in an objective way, 
which I believe would be very healthy in this situation.
  For a decade, virtually--I think it has been 10 years--I have been 
objecting to this amendment. Now we are here, I thought it was out, and 
all of a sudden it is slipped in by a second vote in the House, and we 
are told we just can't make an amendment to the bill. Why? The Senate 
set up the legislation to be brought forward, and we can offer 
amendments and people can vote for them or not.
  This matter has gotten a lot of attention. The Wall Street Journal 
and the New York Times both wrote about it in editorials today. This is 
what the New York Times said today about it:

       But critics who have labeled the provision ``The Dog Ate My 
     Homework Act'' say it is really a special fix for one drug 
     manufacturer, the Medicines Company, and its powerful law 
     firm, WilmerHale. The company and its law firm, with hundreds 
     of millions of dollars in drug sales at stake, lobbied 
     Congress heavily for several years to get the patent laws 
     changed.

  That is what the Wall Street Journal said in their editorial. The 
Wall Street Journal understands business reality and litigation 
reality. They are a critic of the legal system at times and a supporter 
at times. I think they take a principled position in this instance. The 
Wall Street Journal editorial stated:

       We take no pleasure in seeing the Medicine Company and 
     WilmerHale suffer for their mistakes, but they are run by 
     highly paid professionals who know the rules and know that 
     consistency of enforcement is critical to their businesses. 
     Asking Congress to break the rules as a special favor 
     corrupts the law.

  I think that is exactly right. It is exactly right. Businesses, when 
they are sued by somebody, use the statute of limitations every day. 
This law firm makes hundreds of millions of dollars in income a year. 
Their partners average over $1 million a year, according to the New 
York Times. That is pretty good. They ought to be able to pay a decent 
malpractice insurance premium. The New York Times said WilmerHale 
reported revenues of $962 million in 2010, with a profit of $1.33 
million per partner.
  Average people have to suffer when they miss the statute of 
limitations. Poor people suffer when they miss the statute of 
limitations. But we are undertaking, at great expense to the taxpayers, 
to move a special interest piece of legislation that I don't believe 
can be justified as a matter of principle. I agree with the Wall Street 
Journal that the adoption of it corrupts the system. We ought not be a 
part of that.
  I love the American legal system. It is a great system, I know. I 
have seen judges time and time again enter rulings based on law and 
fact even if they didn't like it. That is the genius and reliability 
and integrity of the American legal system. I do not believe we can 
justify, while this matter is still in litigation, passing a special 
act to give a wealthy law firm, an insurance company, and a health care 
company special relief. I just don't believe we should do that. I 
oppose it, and I hope my colleagues will join us.
  I think we have a real chance to turn this back. Our Congress and our 
Senate will be better for it; we really will. The Citizens Against 
Government Waste have taken an interest in this matter for some time. 
They said:

       Congress has no right to rescue a company from its own 
     mistakes.

  Companies have a right to assert the law. Companies have a right to 
assert the law against individuals. But when the time comes for the 
hammer to fall on them for their mistake, they want Congress to pass a 
special relief bill. I don't think it is the right thing to do.
  Mr. President, let's boil it down to several things. First, if the 
company is right and the law firm is right that they did not miss the 
statute of limitations, I am confident the court of appeals will rule 
in their favor, and it will not be necessary for this Senate to act. If 
they do not prevail in the court of appeals and don't win their 
argument, then there is a provision for private relief in the Congress, 
and they ought to pursue that. There are special procedures. The 
litigation will be over, and they can bring that action at that time.
  That is the basic position we ought to be in. A bill that comes out 
of the Judiciary Committee ought to be sensitive to the legal system, 
to the importance of ensuring that the poor are treated as well as the 
rich. The oath judges take is to do equal justice to the poor and the 
rich.
  How many other people in this country are getting special attention 
today on the floor of the Senate? How many? I truly believe this is not 
good policy. I have had to spend far more hours fighting this than I 
have ever wanted to when I decided 10 years ago that this was not a 
good way to go forward. Many battle this issue, and I hope and trust 
that the Members of the Senate who will be voting on this will allow it 
to follow the legitimate process. Let the litigation work its way 
through the system.
  If they do not prevail in the litigation, let a private relief bill 
be sought and debated openly and publicly to see if it is justified. 
That would be the right way to do it--not slipping through this 
amendment and then not voting to remove it on the basis that we should 
not be amending a bill before us. We have every right to amend the 
bill, and we should amend the bill. I know Senator Grassley, years ago, 
was on my side. I think it was just the two of us who took this 
position.
  I guess I have more than expressed my opinion. I thank the chairman 
for his leadership. I thank him and Senator Grassley for their great 
work on this important patent bill. I support that bill. I believe they 
have moved it forward in a fair way.
  The chairman did not put this language into the bill; it was put in 
over in the House. I know he would like to see the bill go forward 
without amendments. I urge him to think it through and see if he cannot 
be willing to support this amendment. I am confident it will not block 
final passage of the legislation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, I will speak later about the comments made 
by the distinguished Senator from Alabama. He has been very helpful in 
getting this patent bill through. He is correct that this amendment he 
speaks to

[[Page 13161]]

is one added in the other body, not by us. We purposely didn't have it 
in our bill. I know Senator Grassley will follow my remarks.
  There is no question in my mind that if the amendment of the Senator 
from Alabama were accepted, it in effect will kill the bill. 
Irrespective of the merits, it can come up on another piece of 
legislation or as freestanding legislation. That is fine. But on this 
bill, after 6 years of effort to get this far, this bill would die 
because the other body will not take it up again.


                            Hurricane Irene

  Mr. LEAHY. Mr. President, I will use my time to note some of the 
things happening in my own very special State of Vermont, the State in 
which I was born.
  As Vermonters come together and continue to grapple with the 
aftermath of storm damage from Irene, I wish to focus today on the 
agriculture disaster that has hit us in Vermont and report to the 
Senate and our fellow citizens across the Nation about how the raging 
floodwaters wreaked havoc on our farming lands and infrastructure in 
Vermont.
  It was 12 days ago now that this enormous, slow-moving storm hit 
Vermont and turned our calm, scenic brooks and creeks into raging 
gushers. In addition to our roads and historic covered bridges that 
were destroyed or carried away, we had barns, farmhouses, crops, parts 
of fields, and livestock washed away in the rising floodwaters. I 
recall the comments of one farmer who watched his herd of cows wash 
down the river, knowing they were going to die in the floodwaters.
  Now the cameras have begun to turn away, but the cleanup and urgent 
repairs are underway. For major parts of Vermont's economy, the worst 
effects of this storm are yet to come. For our dairy farmers, who are 
the bedrock of our economy and keystones of our communities, the toll 
of this disaster has been heavy and the crises has lasted longer as 
they have struggled to take care of their animals while the floodwaters 
recede.
  This is a photograph of East Pittsford, VT, taken by Lars Gange just 
over a week ago. The water we see is never there. It is there now. Look 
at this farm's fields, they are destroyed. Look at homes damaged and 
think what that water has done.
  As I went around the state with our Governor and Vermont National 
Guard General Dubie the first couple of days after the storm hit, we 
went to these places by helicopter and I cannot tell you how much it 
tore at my heart to see the state, the birthplace to me, my parents, 
and grandparents. To see roads torn up, bridges that were there when my 
parents were children, washed away. Historic covered bridges, mills, 
barns, businesses just gone and what it has done to our farmers, it is 
hard, I cannot overstate it.
  Our farmers have barns that are completely gone, leaving no shelter 
for animals. They are left struggling to get water for their animals, 
to rebuild fencing, to clean up debris from flooded fields and barns, 
and then to get milk trucks to the dairy farms. Remember, these cows 
have to be milked every single day. We also have farmers who do not 
have any feed or hay for their animals because it all washed away. As 
one farmer told me, the cows need to be milked two or three times every 
day, come hell or high water. This farmer thought he had been hit with 
both, hell and high water.
  While reports are still coming in from the farms that were affected, 
the list of damages and the need for critical supplies, such as feed, 
generators, fuel, and temporary fencing is on the rise. As we survey 
the farm fields and communities, we know it will be difficult to 
calculate the economic impacts of this violent storm on our agriculture 
industry in Vermont.
  Many of our farmers were caught by surprise as the unprecedented, 
rapidly rising floodwaters inundated their crops, and many have had to 
deal with the deeply emotional experience of losing animals to the 
fast-moving floodwaters. We have farms where whole fields were washed 
away and their fertile topsoil sent rushing down river. The timing 
could not have been worse. Corn, which is a crucial winter feed for 
dairy cows, was just ready for harvest, but now our best corn is in the 
river bottoms and is ruined. Other farms had just prepared their ground 
to sow winter cover crops and winter greens; they lost significant 
amounts of topsoil.
  River banks gave way, and we saw wide field buffers disappear 
overnight, leaving the crops literally hanging on ledges above rivers, 
as at the Kingsbury farm in Warren, VT. Vegetable farming is Vermont's 
fastest growing agricultural sector, and, of course, this is harvest 
season. Our farmers were not able to pick these crops, this storm 
picked many fields clean.
  Many Vermonters have highly productive gardens that they have put up 
for their families to get through the winter by canning and freezing. 
Those too have been washed away or are considered dangerous for human 
consumption because of the contaminated floodwaters. Vermont farmers 
have a challenging and precarious future ahead of them as they look to 
rebuild and plan for next year's crops, knowing that in our State it 
can be snowing in 1\1/2\ or 2 months.
  I have been heartened, however, by the many stories I have heard from 
communities where people are coming together to help one another. For 
instance, at the Intervale Community Farm on the Winooski River, 
volunteers came out to harvest the remaining dry fields before the 
produce was hit by still rising floodwaters.
  When the rumors spread that Beth and Bob Kennett at Liberty Hill Farm 
in Rochester had no power and needed help milking--well, people just 
started showing up. By foot, on bike, all ready to lend a hand to help 
milk the cows. Fortunately for them and for the poor cows, the Vermont 
Department of Agriculture had managed to help get them fuel and the 
Kennetts were milking again, so asked the volunteer farm hands to go 
down the road, help somebody else and they did.
  Coping with damage and destruction on this scale is beyond the means 
and capability of a small State such as ours, and Federal help with the 
rebuilding effort will be essential to Vermont, as it will be to other 
States coping with the same disaster. I worry the support they need to 
rebuild may not be there, as it has been in past disasters, when we 
have rebuilt after hurricanes, floods, fires and earthquakes to get 
Americans back in their homes, something Vermonters have supported even 
though in these past disasters Vermont was not touched.
  So I look forward to working with the Appropriations Committee and 
with all Senators to ensure that FEMA, USDA and all our Federal 
agencies have the resources they need to help all our citizens at this 
time of disaster, in Vermont and in all our states. Unfortunately, 
programs such as the Emergency Conservation Program and the Emergency 
Watershed Protect Program have been oversubscribed this year, and USDA 
has only limited funds remaining. We also face the grim fact that few 
of our farms had bought crop insurance and so may not be covered by 
USDA's current SURE Disaster Program.
  But those are the things I am working on to find ways to help our 
farmers and to move forward to help in the commitment to our fellow 
Americans. For a decade, we have spent billions every single week on 
wars and projects in far-away lands. This is a time to start paying 
more attention to our needs here at home and to the urgent needs of our 
fellow citizens.
  I see my friend from Iowa on the floor, and I yield the floor.
  The PRESIDING OFFICER. The senior Senator from Iowa.


                           Amendment No. 600

  Mr. GRASSLEY. Mr. President, I rise to rebut the points Senator 
Sessions made, and I do acknowledge, as he said on the floor, that 2 or 
more years ago I was on the same page he is on this issue. What has 
intervened, in the meantime, that causes me to differ from the position 
Senator Sessions is taking? It is a district court case giving justice 
to a company--as one client--that was denied that sort of justice 
because bureaucrats were acting in an arbitrary and capricious way.
  Senator Sessions makes the point you get equal justice under the law

[[Page 13162]]

from the judicial branch of government and that Congress should not try 
to override that sort of situation. Congress isn't overriding anything 
with the language in the House bill that he wants to strike because 
that interest was satisfied by a judge's decision; saying that a 
particular entity was denied equal justice under the law because a 
bureaucrat, making a decision on just exactly what counts as 60 days, 
was acting in an arbitrary and capricious way. So this language in the 
House bill has nothing to do with helping a special interest. That 
special interest was satisfied by a judge who said an entity was denied 
equal justice under the law because a bureaucrat was acting in an 
arbitrary and capricious manner.
  This amendment is not about a special interest. This amendment is 
about uniformity of law throughout the country because it is wrong--as 
the judge says--for a bureaucracy to have one sort of definition of 
when 60 days begins--whether it is after business hours, if something 
goes out, or, if something comes in, it includes the day it comes in. 
So we are talking about how we count 60 days, and it is about making 
sure there is a uniform standard for that based upon law passed by 
Congress and not upon one judge's decision that applies to one specific 
case.
  I would say, since this case has been decided, there are at least 
three other entities that have made application to the Patent Office to 
make sure they would get equal justice under the law in the same way 
the entity that got help through the initial decision of the judge. So 
this is not about special relief for one company. This is about what is 
a business day and having a uniform definition in the law of the United 
States of what a business day is, not based upon one district court 
decision that may not be applied uniformly around our Nation.
  So it is about uniformity and not about some bailout, as Senator 
Sessions says. It is not about some ferocious lobbying effort, as 
Senator Sessions has said. It is not just because one person was 1 hour 
late or 1 day late, because how do you know whether they are 1 hour 
late or 1 day late if there is a different definition under one 
circumstance of when 60 days starts and another definition under other 
circumstances of when a 60-day period tolls?
  Also, I would suggest to Senator Sessions that this is not Congress 
interfering in a court case that is under appeal because the government 
lost this case and the government is not appealing. Now, there might be 
some other entity appealing for their own interests to take advantage 
of something that is very unique to them.
  But just in case we have short memories, I would remind my colleagues 
that Congress does sometimes interject itself into the appeal process, 
and I would suggest one time we did that very recently, maybe 6 years 
ago--and that may not be very recent, but it is not as though we never 
do it--and that was the Protection of Lawful Commerce Act of 2005, when 
Congress interjected itself into an issue to protect gun manufacturers 
from pending lawsuits. It happens that 81 Senators supported that 
particular effort to interject ourselves into a lawsuit.
  So, Mr. President, in a more formal way, I want to repeat some of 
what I said this past summer when I came to the Senate floor and 
suggested to the House of Representatives that I would appreciate very 
much if they would put into the statutes of the United States a uniform 
definition of a business day and not leave it up to a court to maybe 
set that standard so that it might not be applied uniformly and, 
secondly, to make sure it was done in a way that was treating everybody 
the same, so everybody gets equal justice under the law, they know what 
the law is, and they don't have to rely upon maybe some court decision 
in one part of the country that maybe they can argue in another part of 
the country, and also to tell bureaucrats, as the judge said, that you 
can't act in an arbitrary and capricious way. But bureaucrats might act 
in an arbitrary and capricious way, in a way unknown to them, if we 
don't have a uniform definition of what a business day is.
  So I oppose the effort to strike section 37 from the patent reform 
bill for the reasons I have just given, but also for the reasons that 
were already expounded by the chairman of this committee that at this 
late date, after 6 years of trying to get a patent reform bill done--
and we haven't had a patent reform bill for over a decade, and it is 
badly needed--we shouldn't jeopardize the possible passage of this bill 
to the President of the United States for his signature by sending it 
back to the other body and perhaps putting it in jeopardy. But, most 
important, I think we ought to have a clear signal of what is a 
business day, a definition of it, and this legislation and section 37 
makes that very clear.
  This past June, I addressed this issue in a floor statement, and I 
want to quote from that because I wanted my colleagues to understand 
why I hoped the House-passed bill would contain section 37 that was not 
in our Senate bill but that was passed out of the House Judiciary 
Committee unanimously. Speaking as ranking member of the Senate 
Judiciary Committee now and back in June when I spoke, I wanted the 
House Judiciary Committee to know that several Republican and 
Democratic Senators had asked me to support this provision as well.
  Section 37 resulted from a recent Federal court case that had as its 
genesis the difficulty the FDA--the Food and Drug Administration--and 
the Patent Office face when deciding how to calculate Hatch-Waxman 
deadlines. The Hatch-Waxman law of the 1980s was a compromise between 
drug patent holders and the generic manufacturers. Under the Waxman-
Hatch law, once a patent holder obtains market approval, the patent 
holder has 60 days to request the Patent Office to restore the patent 
terms--time lost because of the FDA's long deliberating process eating 
up valuable patent rights.
  The citation to the case I am referring to is in 731 Federal 
Supplement 2nd, 470. The court found--and I want to quote more 
extensively than I did back in June. This is what the judge said about 
bureaucrats acting in an arbitrary and capricious way and when does the 
60 days start.

       The Food and Drug Administration treats submissions to the 
     FDA received after its normal business hours differently than 
     it treats communications from the agency after normal 
     business hours.

  Continuing to quote from the decision:

       The government does not deny that when notice of FDA 
     approval is sent after normal business hours, the combination 
     of the Patent and Trademark Office's calendar day 
     interpretation and its new counting method effectively 
     deprives applicants of a portion of the 60-day filing period 
     that Congress expressly granted them . . . Under PTO's 
     interpretation, the date stamped on the FDA approval letter 
     starts the 60-day period for filing an application, even if 
     the Food and Drug Administration never sends the letter . . . 
     An applicant could lose a substantial portion, if not all, of 
     its time for filing a Patent Trademark Extension application 
     as a result of mistakes beyond its control . . . An 
     interpretation that imposes such drastic consequences when 
     the government errs could not be what Congress intended.

  So the judge is telling us in the Congress of the United States that 
because we weren't precise, there is a question as to when Congress 
intended 60 days to start to toll. And the question then is, If it is 
treated one way for one person and another way for another person, or 
if one agency treats it one way and another agency treats it another 
way, is that equal justice under the law? I think it is very clear that 
the judge said it was not. I say the judge was correct. Congress 
certainly should not expect nor allow mistakes by the bureaucracy to 
up-end the rights and provisions included in the Hatch-Waxman Act or 
any other piece of legislation we might pass.
  The court ruled that when the Food and Drug Administration sent a 
notice of approval after business hours, the 60-day period requesting 
patent restoration begins the next business day. It is as simple as 
that.
  The House, by including section 37, takes the court case, where 
common sense dictates to protect all patent holders against losing 
patent extensions as a result of confused counting calculations. 
Regrettably, misunderstandings about this provision have

[[Page 13163]]

persisted, and I think you hear some of those misunderstandings in the 
statement by Senator Sessions.
  This provision does not apply to just one company. The truth is that 
it applies to all patent holders seeking to restore the patent term 
time lost during FDA deliberations--in other words, allowing what 
Hatch-Waxman tries to accomplish: justice for everybody. In recent 
weeks, it has been revealed that already three companies covering four 
drug patents will benefit by correcting the government's mistake.
  It does not cost the taxpayers money. The Congressional Budget Office 
determined that it is budget-neutral.
  Section 37 has been pointed out as maybe being anticonsumer, but it 
is anything but anticonsumer. I would quote Jim Martin, chairman of the 
60-Plus Association. He said:

       We simply can't allow bureaucratic inconsistencies to stand 
     in the way of cutting-edge medical research that is so 
     important to the increasing number of Americans over the age 
     of 60. This provision is a commonsense response to a problem 
     that unnecessarily has ensnared far too many pharmaceutical 
     companies and caused inexcusable delays in drug innovations.

  We have also heard from prominent doctors from throughout the United 
States. They wrote to us stating that section 67 ``is critically 
important to medicine and patients. In one case alone, the health and 
lives of millions of Americans who suffer from vascular disease are at 
stake . . . Lives are literally at stake. A vote against this provision 
will delay our patients access to cutting-edge discoveries and 
treatments. We urgently request your help in preserving section 37.''
  So section 37 improves our patent system fairness through certainty 
and clarity, and I urge my colleagues to join me in voting to preserve 
this important provision as an end in itself, but also to make sure we 
do not send this bill back to the House of Representatives and instead 
get it to the President, particularly on a day like today when the 
President is going to be speaking to us tonight about jobs. I think 
having an updated patent law will help invention, innovation, research, 
and everything that adds value to what we do in America and preserve 
America's greatness in invention and the advancement of science.
  In conclusion, I would say it is very clear to me that the court 
concluded that the Patent and Trademark Office, and not some company or 
its lawyers, had erred, as is the implication here. A consistent 
interpretation ought to apply to all patent holders in all cases, and 
we need to resolve any uncertainty that persists despite the court's 
decision.
  I yield the floor.
  The PRESIDING OFFICER. The senior Senator from Vermont is recognized.
  Mr. LEAHY. Mr. President, I thank the distinguished Senator from Iowa 
for his words, and I join with the Senator from Iowa in opposing the 
amendment for two reasons. First, as just simply as a practical matter, 
the amendment would have the effect, if it passed, of killing the bill 
because it is not going to be accepted in the other body, and after 6 
years or more of work on the patent bill, it is gone. But also, on just 
the merits of it, the provision this amendment strikes, section 37 of 
H.R. 1249, simply adopts the holding of a recent district court 
decision codifying existing law about how the Patent and Trademark 
Office should calculate 5 days for the purpose of considering a patent 
term extension. So those are the reasons I oppose the amendment to 
strike it.
  The underlying provision adopted by the House is a bipartisan 
amendment on the floor. It was offered by Mr. Conyers, and it has the 
support of Ms. Pelosi and Mr. Berman on the Democratic side and the 
support of Mr. Cantor, Mr. Paul, and Mrs. Bachmann on the Republican 
side. I have a very hard time thinking of a wider range of bipartisan 
support than that.
  The provision is simply about how they are calculating filing dates 
for patent extensions, although its critics have labeled it as 
something a lot more. A patent holder on a drug is entitled by statute 
to apply for an extension of its patent term to compensate for any 
delay the Food and Drug Administration approval process caused in 
actually bringing the drug to market. The patent holder not only has to 
file the extension within 60 days beginning on the date the product 
received permission for marketing, but there is some ambiguity as to 
when the date is that starts the clock running.
  Only in Washington, DC, could the system produce such absurd results 
that the word ``date'' means not only something different between two 
agencies--the PTO and the FDA--but then it is given two different 
constructions by the FDA. If this sounds kind of esoteric, it is. I 
have been working on this for years and it is difficult to understand. 
But the courts have codified it. Let's not try to change it yet again.
  What happens is that the FDA treats submissions to it after normal 
hours as being received the next business day. But the dates of 
submissions from the FDA are not considered the next business day, even 
if sent after hours. To complicate matters, the PTO recently changed 
its own method of defining what is a ``date.''
  If this sounds confusing even in Washington, you can imagine how it 
is outside of the bureaucracy. Confusion over what constitutes the 
``date'' for purposes of a patent extension has affected several 
companies. The most notable case involves the Medicines Company's 
ANGIOMAX extension application request.
  The extension application was denied by the PTO because of the 
difference in how dates are calculated. MedCo challenged the PTO's 
decision in court, and last August the federal district court in 
Virginia held the PTO's decision arbitrary and capricious and MedCo 
received its patent term extension.
  Just so we fully understand what that means, it means PTO now abides 
by the court's ruling and applies a sensible ``business day'' 
interpretation to the word ``date'' in the statute. The provision in 
the America Invents Act simply codifies that.
  Senator Grassley has spoken to this. As he said a few weeks ago, this 
provision ``improves the patent system fairness through certainty and 
clarity.''
  This issue has been around for several years and it was a 
controversial issue when it would have overturned the PTO's decision 
legislatively. For this reason Senator Grassley and others opposed this 
provision when it came up several years ago. But now that the court has 
ruled, it is a different situation. The PTO has agreed to accept the 
court's decision. The provision is simply a codification of current 
law.
  Is there anyone who truly believes it makes sense for the word 
``date'' to receive tortured and different interpretations by different 
parts of our government rather than to have a clear, consistent 
definition? Let's actually try to put this issue to bed once and for 
all.
  The provision may solidify Medco's patent term extension, but it 
applies generally, not to this one company, as has been suggested. It 
brings common sense to the entire filing system.
  However, if the Senate adopts the amendment of the Senator from 
Alabama, it will lead to real conflict with the House. It is going to 
complicate, delay, and probably end passage of this important 
bipartisan jobs-creating legislation.
  Keep in mind, yesterday I said on the floor that each one of us in 
this body could write a slightly different patent bill. But we do not 
pass 100 bills, we pass 1. This bill is supported by both Republicans 
and Democrats across the political spectrum. People on both sides of 
the aisle have been working on this issue for years and years in both 
bodies. We have a piece of legislation. Does everybody get every single 
thing they want? Of course not. I am chairman of the Senate Judiciary 
Committee. I don't have everything in this bill I want, but I have 
tried to get something that is a consensus of the large majority of the 
House and the Senate, and we have done this.
  In this instance, in this particular amendment, the House expressly 
considered this matter. They voted with a bipartisan majority to adopt 
this provision the amendment is seeking to strike. With all due respect 
to the distinguished Senator from Alabama, who contributed immensely to 
the bill as

[[Page 13164]]

ranking member of the committee last Congress, I understood why he 
opposed this provision when it was controversial and would have had 
Congress override the PTO. But now that the PTO and court have resolved 
the matter as reflected in the bill, it is not worth delaying enactment 
of much-needed patent reform legislation. It could help create jobs and 
move the economy forward.
  We will have three amendments on the floor today that we will vote 
on. This one and the other two I strongly urge Senators, Republicans 
and Democrats, just as the ranking member has urged, to vote them down. 
We have between 600,000 and 700,000 patents applications that are 
waiting to be taken care of. We can unleash the genius of our country 
and put our entrepreneur class to work to create jobs that can let us 
compete with the rest of the world. Let's not hold it up any longer. We 
have waited long enough. We debated every bit of this in this body and 
passed it 95 to 5. On the motion to proceed, over 90 Senators voted to 
proceed. It has passed the House overwhelmingly. It is time to stop 
trying to throw up roadblocks to this legislation.
  If somebody does not like the legislation, vote against it. But this 
is the product of years of work. It is the best we are going to have. 
Let us get it done. Let us unleash the ability and inventive genius of 
Americans. Let us go forward.
  We have a patent system that has not been updated in over a half 
century, yet we are competing with countries around the world that are 
moving light years ahead of us in this area. Let's catch up. Let's put 
America first. Let's get this bill passed.
  I yield the floor.


                           Amendment No. 595

  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Washington.
  Ms. CANTWELL. Madam President, I call up Cantwell amendment No. 595.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Washington [Ms. Cantwell] proposes an 
     amendment numbered 595.

  Ms. CANTWELL. Madam President, I ask unanimous consent the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To establish a transitional program for covered business 
                            method patents)

       On page 119, strike line 21 and all that follows through 
     page 125, line 11, and 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 section 6(f)(2)(A) 
     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.

  Ms. CANTWELL. Madam President, simply my amendment restores section 
18 of the language that was passed out of the Senate. Basically it 
implements the Senate language.
  I come to the floor today with much respect for my colleague Chairman 
Leahy, who has worked on this legislation for many years, and my 
colleagues on the other side of the aisle who have tried to work on 
this important legislation and move it forward. I am sure it has been 
challenging. I mean no offense to my colleagues about this legislation. 
It simply is my perspective about where we need to go as a country and 
how we get there.
  I am excited that we live in an information age. In fact, one of the 
things that I count very fortunate in my life is that this is the age 
we live in. I often think if I lived in the agrarian age, maybe I would 
be farming. That is also of great interest, given the State of 
Washington's interests in agriculture. Maybe I would live in the 
industrial age when new factories were being built. That would be 
interesting. But I love the fact that whether you are talking about 
agriculture, whether you are talking about automotive, whether you are 
talking about health care, whether you are talking about software, 
whether you are talking about communications, whether you are talking 
about space travel, whether you are talking about aviation, we live in 
an information age where innovation is

[[Page 13165]]

created every single day. In fact, we are transforming our lives at a 
much more rapid pace than any other generation because of all that 
transformation.
  I love the fact that the United States has been an innovative leader. 
I love the fact that the State of Washington has been an innovative 
leader. If there is one thing I pride myself on, it is representing a 
State that has continued to pioneer new technology and innovations. So 
when I look at this patent bill, I look at whether we are going to help 
the process of making innovation happen at a faster rate or more 
products and services to help us in all of those industries I just 
mentioned or whether we are going to gum up the wheels of the patent 
process. So, yes, I joined my colleagues who have been out here on the 
Senate floor, such as Senator Feinstein and others who debated this 
issue of changing our patent system to the ``first to file,'' which 
will disadvantage inventors because ``first to file'' will lead to big 
companies and organizations getting the ability to have patents and to 
slow down innovation.
  If you look at what Canada and Europe have done, I don't think 
anybody in the world market today says: Oh, my gosh, let's change to 
the Canadian system because they have created incredible innovation or 
let's look to Europe because their ``first to file'' has created such 
innovation.
  In fact, when Canada switched to this ``first to file'' system, that 
actually slowed down the number of patents filed. So I have that 
concern about this legislation.
  But we have had that discussion here on the Senate floor. I know my 
colleague is going to come to the floor and talk about fee diversion, 
which reflects the fact that the Patent Office actually collects money 
on patents. That is a very viable way to make the Patent Office 
effective and efficient because it can take the money it collects from 
these patents and use it to help speed up the process of verifying 
these patents and awarding them. But the Senate chose good action on 
this issue, and good measure, and simply said that the money collected 
by the Patent Office should stay in the Patent Office budget.
  But that is not what the House has done. The House has allowed that 
money to be diverted into other areas of appropriations, and the 
consequence will be that this patent reform bill will basically be 
taking the economic engine away from the Patent Office and spreading it 
out across government. So the reform that we would seek in patents, to 
make it a more expeditious process, is also going to get down.
  I could spend my time here today talking about those two things and 
my concerns about them, but that is not even why I am here this 
morning. I am here to talk about how this legislation has a rifleshot 
earmark in it for a specific industry, to try to curtail the validation 
of a patent by a particular company. That is right, it is an earmark 
rifleshot to try to say that banks no longer have to pay a royalty to a 
particular company that has been awarded a patent and that has been 
upheld in court decisions to continue to be paid that royalty.
  That is why I am here this morning. You would say she is objecting to 
that earmark, she is objecting to that personal approach to that 
particular industry giveaway in this bill. Actually, I am concerned 
about that, but what I am concerned about is, given the way they have 
drafted this language to benefit the big banks of America and screw a 
little innovator, this is basically drafted so broadly that I am 
worried that other technology companies are going to get swept up in 
the definition and their patents are also going to be thrown out as 
invalid. That is right. Every State in the United States could have a 
company that, under this language, could now have someone determine 
that their patent is no longer viable even though the Patent Office has 
awarded them a patent. Companies that have revenue streams from 
royalties that are operating their companies could now have their bank 
financing, everything pulled out from under them because they no longer 
have royalty streams. Businesses could lay off people, businesses could 
shut down, all because we put in broad language in the House version 
that exacerbates a problem that was in the Senate version to begin 
with.
  Now I could say this is all a process and legislation follows a 
process, but I object to this process. I object to this language that 
benefits the big banks but was never debated in the committee of 
jurisdiction, the Judiciary Committee. It was not debated. It was not 
voted on. It was not discussed there. It was put into the managers' 
amendment which was brought to the Senate floor with little or no 
debate because people wanted to hurry and get the managers' amendment 
adopted.
  Now, I objected to that process in driving this language because I 
was concerned about it. I sought colloquy at that point in time and was 
not able to get one from any of my colleagues, and I so opposed this 
legislation. Well, now this legislation has been made even worse in the 
House of Representatives by saying that this language, which would 
nullify patents--that is right. The Senate would be participating in 
nullifying patents that the Patent Office has already given to 
companies, and it can now go on for 8 years--8 years is what the 
language says when it comes back from the House of Representatives.
  All I am asking my colleagues to do today is go back to the Senate 
language they passed. Go back to the Senate language that at least says 
this earmark they are giving to the big banks so they can invalidate a 
patent by a company because they don't like the fact they have to pay a 
royalty on check imaging processing to them--I am sorry you don't like 
to pay the royalty. But when somebody innovates and makes the 
technology, they have the right to charge a royalty. You have been 
paying that royalty. I am sorry, big banks, if you don't like paying 
that royalty anymore. You are making a lot of money. Trying to come to 
the Senate with an earmark rifle shot to X out that competition because 
you don't want to pay for that technology--that is not the way the 
Senate should be operating.
  The fact that the language is so broad that it will encompass other 
technologies is what has me concerned. If all my colleagues want to 
vote for this special favor for the big banks, go ahead. The fact that 
my colleagues are going to basically pull us in to having other 
companies covered under this is a big concern.
  The section I am concerned about is business method patents, and the 
term ``covered business method patent'' means patents or claims or 
method or corresponding apparatus for performing data processing or 
other operations. What does ``or other operations'' mean? How many 
companies in America will have their patents challenged because we 
don't know what ``or other operations'' means? How many? How many 
inventors will have their technology basically found null and void by 
the court process or the Patent Office process because of this 
confusing language?
  I am here to ask my colleagues to do a simple thing: revert to the 
Senate language. It is not a perfect solution. If I had my way, I would 
strip the language altogether. If I had my way, I would have much more 
clarity and predictability to patent lawyers and the Patent Office so 
the next 3 or 4 years will not be spent in chaos between this change in 
the patent business method language and the whole process that is going 
to go on. Instead, we would be moving forward with predictability and 
certainty.
  I ask my colleagues to just help this process. Help this process move 
forward by going back to the Senate language. I know my colleagues 
probably want to hurry and get this process done, but I guarantee this 
language with the Senate version could easily go back to the House of 
Representatives and be passed. What I ask my colleagues to think about 
is how many companies are also going to get caught in this process by 
the desire of some to help the big banks get out from under something 
the courts have already said they don't deserve to get out of.
  I hope we can bring closure to this issue, and I hope we can move 
forward

[[Page 13166]]

on something that gives Americans the idea that people in Washington, 
DC, are standing up for the little guy. We are standing up for 
inventors. We are standing up for those kinds of entrepreneurs, and we 
are not spending our time putting earmark rifle shot language into 
legislation to try to assuage large entities that are well on their way 
to taking care of themselves.
  I hope if my colleagues have any questions on this language as it 
relates to their individual States, they would contact our office and 
we would be happy to share information with them.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SCHUMER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. Madam President, I rise today to urge this body to 
complete the extensive work that has been done on the Leahy-Smith 
America Invents Act and send this bill to the President for signature.
  The America Invents Act has been years in the making. The time has 
come to get this bill done once and for all.
  The importance of patent law to our Nation has been evidenced since 
the founding. The Constitution sets control over patent law as one of 
the enumerated powers of the Congress. Specifically, it gives the 
Congress the power ``To promote the Progress of Science and useful 
Arts, by securing for limited Times to Authors and Inventors the 
exclusive Right to their respective Writings and Discoveries.''
  Today we take an important step toward ensuring that the 
constitutional mandate of Congress is met as we modernize our patent 
system. This bill is the first major overhaul of our patent laws in 
literally decades.
  My colleagues have spoken at length about the myriad ways the America 
Invents Act will bring our patent law into the 21st century. What I 
want to focus on, of course, is jobs.
  The America Invents Act is fundamentally a jobs bill. Innovation and 
intellectual property has always been and always will be at the heart 
of the American economy. By rewarding innovators for inventing newer 
and better products, we keep America's creative and therefore economic 
core healthy.
  Over the last few decades, however, innovation has outpaced our 
patent system. We have an enormous backlog at the PTO. The result of 
this backlog is that it is much harder for creators to obtain the 
property rights they deserve in their inventions. That challenge in 
turn makes it harder for inventions to be marketed and sold, which 
reduces the incentive to be innovative. Eventually, this vicious cycle 
becomes poisonous.
  The America Invents Act cuts this cycle by making our patent system 
more efficient and reliable. By providing the Patent and Trademark 
Office the resources it needs to reduce the backlog of nearly 700,000 
patent applications, the bill will encourage the innovation that will 
create and protect American jobs. In addition, the bill streamlines 
review of patents to ensure that the poor-quality patents can be weeded 
out through administrative review rather than costly litigation.
  I am especially pleased that H.R. 1249 contains the Schumer-Kyl 
provisions that we originally inserted in the Senate to help cut back 
on the scourge of business method patents that have been plaguing 
American businesses. Business method patents are anathema to the 
protection that the patent system provides because they apply not to 
novel products or services but to abstract and often very common 
concepts of how to do business. Often business method patents are 
issued for practices that have been in widespread use for years, such 
as check imaging or one-click checkout. Imagine trying to patent the 
one-click checkout long after people have been using it.
  Because of the nature of the business methods, these practices aren't 
as easily identifiable by the PTO as prior art, and bad patents are 
issued. Of course, this problem extends way beyond the financial 
services industry. It includes all businesses that have financial 
practices, from community banks to insurance companies to high-tech 
startups. Section 18, the Schumer-Kyl provision, allows for 
administrative review of those patents so businesses acting in good 
faith do not have to spend the millions of dollars it costs to litigate 
a business method patent in court.
  That is why the provision is supported not only by the Financial 
Services Roundtable and the Community Bankers, but by the Chamber of 
Commerce, the National Retail Foundation, and in my home State by the 
Partnership for a Greater New York.
  Madam President, I ask unanimous consent that letters in support of 
section 18 from all of these organizations be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                             Independent Community


                                           Bankers of America,

                                    Washington, DC, June 14, 2011.
     House of Representatives,
     Washington, DC.
       Dear Member of Congress: On behalf of ICBA's nearly 5,000 
     community bank members, I write to voice strong support for 
     Section 18 of the America Invents Act (H.R. 1249), which 
     addresses the issue of poor-quality business-method patents. 
     I strongly urge you to oppose efforts to strike or weaken the 
     language in Section 18, which creates a program to review 
     business-method patents against he best prior art.
       Poor-quality business-method patents represent an extremely 
     problematic aspect of the current system for granting, 
     reviewing and litigating patents. The problems with low-
     quality patents are well documented and beyond dispute. On an 
     escalating basis, financial firms are the target of meritless 
     patent lawsuits brought by non-practicing entities. Such 
     entities exploit flaws in the current system by bringing 
     action in friendly venues, where they wring money from 
     legitimate businesses by asserting low-quality business-
     method patents.
       Section 18 addresses this problem by establishing an 
     oppositional proceeding at the United States Patent and 
     Trademark Office (PTO), where business-method patents can be 
     re-examined, using the best prior art, as an alternative to 
     costly litigation. This program applies only to business-
     method patents, which are defined using suggestions proffered 
     by the PTO. Concerns about the scope of the definition have 
     been addressed by exclusion of technological innovations. 
     Additionally, it has been well-settled law for over 25 years 
     that post-grant review of patent validity by the PTO is 
     constitutional. The Federal Circuit explained that a 
     defectively examined and therefore erroneously granted patent 
     must yield to the reasonable Congressional purpose of 
     facilitating the correction of governmental mistakes. This 
     Congressional purpose is presumptively correct and 
     constitutional. Congress has given the PTO a tool to ensure 
     confidence in the validity of patents. Section 18 furthers 
     this important public purpose by restoring confidence in 
     business-method patents.
       I urge you to oppose changes to Section 18, including 
     changes that would create a loophole allowing low-quality 
     business-method patent holders to wall off their patents from 
     review by the PTO. Congress should ensure that final patent-
     reform legislation addresses the fundamental, and 
     increasingly costly, problem of poor-quality business-method 
     patents.
           Sincerely,
                                                   Camden R. Fine,

     President and CEO.
                                  ____


                                               Chamber of Commerce


                              of the United States of America,

                                    Washington, DC, June 14, 2011.
       To the Members of the U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing the interests of more than three 
     million businesses and organizations of every size, sector, 
     and region, supports H.R. 1249, the ``America Invents Act,'' 
     which would encourage innovation and bolster the U.S. 
     economy. The Chamber believes this legislation is crucial for 
     American economic growth, jobs, and the future of U.S. 
     competitiveness.
       A key component of H.R. 1249 is section 22, which would 
     ensure that fees collected by the U.S. Patent and Trademark 
     Office (PTO) fund the office and its administration of the 
     patent system. PTO faces significant challenges, including a 
     massive backlog of pending applications, and this backlog is 
     stifling domestic innovators. The fees that PTO collects to 
     review and approve patent application are supposed to be 
     dedicated to PTO operation. However, fee diversion by 
     Congress has hampered PTO's efforts to hire and retain a 
     sufficient number of qualified examiners and implement 
     technological improvements necessary to ensure expeditious

[[Page 13167]]

     issuance of high quality patents. Providing PTO with full 
     access to the user fees it collects is an important first 
     step toward reducing the current backlog of 1.2 million 
     applications waiting for a final determination and pendency 
     time of 3 years, as well as to improve patent quality.
       In addition, the legislation would help ensure that the 
     U.S. remains at the forefront of innovation by enhancing the 
     PTO process and ensuring that all inventors secure the 
     exclusive right to their inventions and discoveries. The bill 
     shifts the U.S. to a first-inventor-to-file system that we 
     believe is both constitutional and wise, ending expensive 
     interference proceedings. H.R. 1249 also contains important 
     legal reforms that would help reduce unnecessary litigation 
     against American businesses and innovators. Among the bill's 
     provisions, Section 16 would put an end to frivolous false 
     patent marking cases, while still preserving the right of 
     those who suffered actual harm to bring actions. Section 5 
     would create a prior user right for those who first 
     commercially use inventions, protecting the rights of early 
     inventors and giving manufacturers a powerful incentive to 
     build new factories in the United States, while at the same 
     time fully protecting universities. Section 19 also restricts 
     joinder of defendants who have tenuous connections to the 
     underlying disputes in patent infringement suits. Section 18 
     of H.R. 1249 provides for a tailored pilot program which 
     would allow patent office experts to help the court review 
     the validity of certain business method patents using the 
     best available prior art as an alternative to costly 
     litigation.
       The Chamber strongly opposes any amendments to H.R. 1249 
     that would strike or weaken any of the important legal reform 
     measures in this legislation, including those found in 
     Sections 16, 5, 19 and 18. The Chamber supports H.R. 1249 and 
     urges the House to expeditiously approve this necessary 
     legislation.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____



                                   National Retail Federation,

                                    Washington, DC, June 21, 2011.
     Hon. Lamar S. Smith,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
     Hon. John Conyers, Jr.,
     Ranking Member, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Chairman Smith and Ranking Member Conyers: I am 
     writing in support of Section 18 of H.R. 1249, the American 
     Invents Act of 2010. This provision would provide the Patent 
     and Trademark Office (PTO) the ability to re-examine 
     qualified business method patents against the best prior art.
       As the world's largest retail trade association, the 
     National Retail Federation's global membership includes 
     retailers of all sizes, formats and channels of distribution 
     as well as chain restaurants and industry partners from the 
     U.S. In the U.S., NRF represents the breadth and diversity of 
     an industry with more than 1.6 million American companies 
     that employ nearly 25 million workers and generated 2010 
     sales of $2.4 trillion. Retailers have been inundated by 
     spurious claims, many of which, after prolonged and expensive 
     examination, are subsequently found to be less than 
     meritorious.
       Increasingly, retailers of all types are being sued by non-
     practicing entities for infringing low-quality business 
     method patents which touch all aspects of our business: 
     marketing, payments, and customer service to name a few 
     aspects. A vast majority of these cases are brought in the 
     Eastern District of Texas where the statistics are heavily 
     weighted against defendants forcing our members to settle 
     even the most meritless suits.
       Section 18 moves us closer to a unified patent system by 
     putting business method patents on par with other patents in 
     creating a post-grant, oppositional proceeding that is a 
     lower cost alternative to costly patent litigation. The 
     proceeding is necessary to help ensure that the revenues go 
     to creating jobs and bringing innovations to our customers, 
     not paying litigation costs in meritless patent infringement 
     litigation.
       We appreciate the opportunity to support this important 
     section and oppose any efforts to strike or weaken the 
     provision. Please do not hesitate to contact me with any 
     questions.
           Best regards,

                                                 David French,

                                            Senior Vice President,
                                             Government Relations.

  Mr. SCHUMER. A patent holder whose patent is solid has nothing to 
fear from a section 18 review. Indeed, a good patent will come out of 
such a review strengthened and validated. The only people who have any 
cause to be concerned about section 18 are those who have patents that 
shouldn't have been issued in the first place and who were hoping to 
make a lot of money suing legitimate businesses with these illegitimate 
patents. To them I say the scams should stop.
  In fact, 56 percent of business patent lawsuits come in to one court 
in the Eastern District of Texas. Why do they all go to one court? Not 
just because of coincidence. Why do people far and wide seek this? 
Because they know that court will give them favorable proceedings, and 
many of the businesses that are sued illegitimately spend millions of 
dollars for discovery and everything else in a court they believe they 
can't get a fair trial in, so they settle. That shouldn't happen, and 
that is what our amendment stops. It simply provides review before 
costly litigation goes on and on and on.
  Now, my good friend and colleague, Senator Cantwell, has offered an 
amendment that would change the section 18 language and return to what 
the Senate originally passed last March. Essentially, Senator Cantwell 
is asking the Senate to return to the original Schumer-Kyl language. Of 
course, I don't have an inherent problem with the original Schumer-Kyl 
language. However, while I might ordinarily be inclined to push my own 
version of the amendment, I have to acknowledge that the House made 
some significant improvements in section 18.
  First, H.R. 1249 extends the transitional review program of section 
18 from 4 to 8 years in duration. This change was made to accommodate 
industry concerns that 4 years was short enough, that bad actors would 
just wait out the program before bringing their business method patent 
suits. The lying-in-wait strategy would be possible under the Cantwell 
amendment because section 18 only allows transitional review 
proceedings to be initiated by those who are facing lawsuits.
  On a 20-year patent, it is not hard to wait 4 years to file suit and 
therefore avoid scrutiny under a section 18 review. It would be much 
harder, however, to employ such an invasive maneuver on a program that 
lasts 8 years.
  Second, the Cantwell amendment changes the definition of business 
method patents to eliminate the House clarification that section 18 
goes beyond mere class 705 patents. Originally, class 705 was used as 
the template for the definition of business method patents in section 
18. However, after the bill passed the Senate, it became clear that 
some offending business method patents are issued in other sections. So 
the House bill changes the definition only slightly so that it does not 
directly track the class 705 language.
  Finally, the Cantwell amendment limits who can take advantage of 
section 18 by eliminating access to the program by privies of those who 
are sued. Specifically, H.R. 1249 allows parties who have shared 
interests with a sued party to bring a section 18 proceeding. The 
Cantwell amendment would eliminate that accommodation.
  All of the House changes to section 18 of the Senate bill are 
positive, and I believe we should keep them. But to my colleagues I 
would say this in closing: The changes Senator Cantwell has proposed do 
not get to the core of the bill, and the most profound effect they 
would have is to delay passage of the bill by requiring it to be sent 
back to the House, which is something, of course, we are all having to 
deal with on all three of the amendments that are coming up.
  I urge my colleagues to remember that this bill and the 200,000 jobs 
it would create are too important to delay it even another day because 
of minor changes to the legislation. I urge my colleagues to vote 
against the amendment of my good friend Maria Cantwell and move the 
bill forward.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Madam President, I rise to express my continued support 
for the America Invents Act. We have been working on patent reform 
legislation for several years now--in fact, almost the whole time I 
have been in the Senate--so it is satisfying to see the Senate again 
voting on this bipartisan bill.
  It is important to note that this bill before us is the same one that 
was passed by the Republican-controlled House of Representatives in 
June. I commend House Judiciary chairman Lamar Smith for his leadership 
on this monumental legislation. He has worked hard on this for many 
years,

[[Page 13168]]

and I wish to pay a personal tribute to him.
  I also wish to recognize the efforts of my colleague from Vermont, 
Senate Judiciary Committee chairman Patrick Leahy. Over the years, he 
and I have worked tirelessly to bring about long overdue reform to our 
Nation's patent system, and I personally appreciate Pat for his work on 
this matter.
  I also wish to recognize the efforts of Senate Judiciary Committee 
ranking member Chuck Grassley of Iowa, as well as many other Senate 
colleagues who have been instrumental in this legislative process.
  The Constitution is the supreme law of the land and the shortest 
operating Constitution in the world. America's Founders put only the 
most essential provisions in it, listing the most essential rights of 
individuals and the most essential powers the Federal Government should 
have. What do we think made it on to that short list? Raising and 
supporting the Army and maintaining the Navy? No question there. 
Coining money? That one is no surprise. But guess what else made the 
list. Here is the language: The Founders granted to Congress the power 
``To promote the Progress of Science and useful Arts, by securing for . 
. . Authors and Inventors the exclusive Right to their Respective 
Writing and Discoveries.''
  In other words, the governance of patents and copyrights is one of 
the essential, specifically enumerated powers given to the Federal 
Government by our Nation's Founders. In my view, it is also one of the 
most visionary, forward-looking provisions in the entire U.S. 
Constitution.
  Thomas Jefferson understood that giving people an exclusive right to 
profit from their inventions would give them ``encouragement . . . to 
pursue ideas which may produce utility.'' Yet Jefferson also recognized 
the importance of striking a balance when it came to granting patents--
a difficult task. He said:

       I know well the difficulty of drawing a line between the 
     things which are worth to the public the embarrassment of an 
     exclusive patent and those which are not.

  As both an inventor and a statesman, he understood that granting a 
person an exclusive right to profit from their invention was not a 
decision that should be taken lightly.
  This bill is not perfect, but I am pleased with the deliberative 
process that led to its development, and I am confident that Congress 
followed Jefferson's lead in striking a balanced approach to patent 
reform.
  There can be no doubt that patent reform is necessary, and it is long 
overdue. Every State in the country has a vested interest in an updated 
patent system. When patents are developed commercially they create 
jobs, both for the company marketing products and for their suppliers, 
distributors, and retailers. One single deployed patent affects almost 
all sectors of our economy.
  Utahns have long understood this relationship. Ours is a rich and 
diverse and inventive legacy. In the early 1900s, a young teenager 
approached his teacher after class with a sketch he had been working 
on. It was a drawing inspired by the rows of dirt in a potato field the 
teenager had recently plowed. After examining the sketch, the teacher 
told the young student that he should pursue his idea, and he did. That 
teenager was Philo Farnsworth, a Utah native who went on to patent the 
first all-electronic television.
  Farnsworth had to fight for many years in court to secure the 
exclusive rights to his patent, but he continued to invent, developing 
and patenting hundreds of other inventions along the way.
  Another Utah native developed a way to amplify sound after he had 
trouble hearing in the Mormon Tabernacle. His headphones were later 
ordered by the Navy for use during World War I. His name was Nathaniel 
Baldwin.
  William Clayton, an early Mormon pioneer, grew tired of manually 
counting and calculating how far his wagon company had traveled each 
day. So, in the middle of a journey across the plains, he and others 
designed and built a roadometer, a device that turned screws and gears 
at a set rate based on the rotation of the wagon wheel. It worked based 
on the same principles that power modern odometers.
  John Browning, the son of a pioneer, revolutionized the firearm, 
securing his inventions through a patent. He is known all over the 
world for the work he did.
  Robert Jarvik, who worked at the University of Utah--a wonderful 
doctor whom I know personally--invented the first successful permanent 
artificial heart while at the University of Utah.
  These and countless other stories illustrate the type of ingenuity 
that was required by the men and women who founded Utah, the type of 
ingenuity that has been exemplified in every generation since.
  Last year, Utah was recognized as one of the most inventive States in 
the Union. Such a distinction did not surprise me, especially since the 
University of Utah recently logged the university's 5,000th invention 
disclosure and has over 4,000 patent applications filed to date. This 
impressive accomplishment follows on the heels of news that the 
University of Utah overtook MIT in 2009 to become America's No. 1 
research institution for creating startup companies based on university 
technology.
  A group of students at Brigham Young University recently designed a 
circuit that was launched with the shuttle Endeavour, and another group 
developed a prosthetic leg that costs $25 versus the $10,000 a 
prosthetic leg may typically cost. Utah inventors contribute to 
everything from electronic communications, to biotechnology, to 
computer games.
  Like my fellow Utahns, citizens across the country recognize that 
technological development is integral to the well-being of our economy 
and the prosperity of our families and communities. As technology 
advances, it is necessary at times to make adjustments that will ensure 
Congress is promoting the healthy progress of science and useful arts.
  The America Invents Act will improve the patent process, giving 
inventors in Utah and across the country greater incentives to 
innovate. Strengthening of our patent system will not only help lead us 
out of these tough economic times, but it will help us maintain our 
competitive edge both domestically and abroad. Take, for example, the 
transition to a first-inventor-to-file system and the establishment of 
a post-grant review procedure. These changes alone will decrease 
litigation costs so that small companies and individuals will not be 
dissuaded from protecting their patent rights by companies with greater 
resources.
  This bill provides the USPTO with rulemaking authority to set or 
adjust its own fees for 7 years without requiring a statutory change 
every time an adjustment is needed. Providing the USPTO with the 
ability to adjust its own fees will give the agency greater flexibility 
and control, which, in the long run, will benefit inventors and 
businesses.
  The legislation enables patent holders to request a supplemental 
examination of a patent if new information arises after the initial 
examination. By establishing this new process, the USPTO would be asked 
to consider, reconsider, or correct information believed to be relevant 
to the patent.
  Further, this provision does not limit the USPTO's authority to 
investigate misconduct or to sanction bad actors. I am confident this 
new provision will remove the uncertainty and confusion that defines 
current patent litigation, and I believe it will enhance patent 
quality.
  The America Invents Act creates a mechanism for third parties to 
submit relevant information during the patent examination process. This 
provision will provide the USPTO with better information about the 
technology and claimed invention by leveraging the knowledge of the 
public. This will also help the agency increase the efficiency of 
examination and the quality of patents.
  This bill would create a reserve fund for user fees that exceed the 
amount appropriated to the USPTO. I prefer the language in the Senate-
passed bill, which created a new revolving fund for

[[Page 13169]]

the USPTO separate from annual appropriations. Certainty is important 
for future planning, but the appropriations process is far from 
reliable.
  While conceptually I understand why our House counterparts revised 
the Senate-passed language--and I am in agreement about maintaining 
congressional oversight--I believe this is one area that should be 
reconsidered. It is just that important. That is why I support Senator 
Tom Coburn's amendment. If passed, his amendment will preserve 
congressional oversight and give the USPTO the necessary flexibility to 
operate during these critical times.
  The House-passed compromise language is a step in the right 
direction, especially since the chairman of the House Appropriations 
Committee has committed that all fees collected by the USPTO in excess 
of its annual appropriated level will be available to the USPTO. 
However, I remain concerned that the budget uncertainties that exist 
today may negatively impact the USPTO and its ability to implement many 
of the new responsibilities required by the America Invents Act.
  I remain concerned about some provisions the House either expanded or 
added. On balance, however, the positives of this legislation far 
outweigh the negatives, and I am confident it will contribute to the 
greater innovation and productivity our economy demands. It provides 
essential improvements to our patent system, such as changes to the 
best mode disclosure requirement; expansion of the prior user rights 
defense to affiliates, with an exemption for university-owned patents; 
incentives for government laboratories to commercialize inventions; 
restrictions on false marking claims; removal of restrictions on the 
residency of Federal circuit judges; clarification of tax strategy 
patents; providing assistance to small businesses through a patent 
ombudsman program and establishing additional USPTO satellite offices.
  We all know every piece of legislation has its shortcomings. That is 
the reality of our legislative process. However, taken as a whole, the 
America Invents Act further builds upon our country's rich heritage of 
intellectual property protections--a cornerstone provided by article I, 
section 8 of the Constitution.
  Passage of the America Invents Act will update our patent system, 
help strengthen our economy, and provide a springboard for further 
improvements to our intellectual property laws. I urge all of my 
colleagues to join in this monumental undertaking, and I appreciate 
those who have worked so hard on these programs. Again, I mentioned 
with particularity the Congressman from Texas, Lamar Smith, and also my 
friend and colleague, Senator Leahy, and others as well, Senator 
Grassley especially. There are others as well whom I should mention, 
but I will leave it at that for this particular time.
  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. HOEVEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Coons). Without objection, it is so 
ordered.


                              The Economy

  Mr. HOEVEN. Mr. President, I rise today to speak on a matter of great 
importance to our country, and that is jobs and our economy. I know the 
President will be speaking this evening. I want to emphasize the 
importance that we focus on a long-term strategy to get our economy 
going. By that I mean a pro-jobs, progrowth economic strategy for our 
country.
  The things that go into that include building the best possible 
business climate. We have got to have a business climate that will 
stimulate private investment, that will stimulate entrepreneurship, 
ingenuity, that will stimulate job creation by businesses small and 
large across our economy. We need to build a strong business climate. 
We need a long-term, progrowth economic strategy to do that.
  We also need to control our spending and live within our means. We 
need a comprehensive energy policy. All three of these things go into 
the right kind of long-term comprehensive approach this country needs 
to get our economy growing and get people back to work.
  I wish to start by taking a minute to look at our current situation, 
to talk about where we are. If you look at unemployment, unemployment 
is more than 9 percent, and it has been more than 9 percent for an 
extended period of time. Weekly jobless claims: more than 400,000. We 
have more than 14 million people who are out of work. That does not 
include people who are underemployed or people who are no longer 
looking for work because they have been discouraged and are not 
included in the workforce--14 million people we need to get back to 
work.
  We also have a tremendous deficit problem. If you look at our 
revenues today, we have revenues of about $2.2 trillion. Our spending 
is at a rate of $3.7 trillion. That is a $1.5 trillion deficit. That is 
adding up to more than a $14 trillion dollar debt--a $14 trillion debt 
that weighs on our economy. If we do not deal with it, it is a debt our 
children will have to pay. That is not acceptable for us and we have to 
deal with it at the same time we get this economy going.
  If you look at our current situation, we are borrowing 40 cents of 
every dollar we spend, and deficit and our debt is growing at $4 
billion a day. I brought some graphs so we can look at it graphically. 
Here you see revenues and spending.
  Unfortunately, the spending line is the red line along the top here. 
Spending is more than $3.7 trillion a year. At the same time, our 
revenues are $2.2 trillion. That gap is a $1.5 trillion budget deficit 
we are accumulating on an annual basis. As I say, it is now leading to 
a debt that is more than $14 trillion.
  If you look at this next chart, we talk about unemployment. Here you 
see annual unemployment. Currently we are at 9.1 percent. We have been 
there for an extended period of time. Again, that represents more than 
14 million people who are unemployed that we need to get back to work.
  The other thing you will notice on this chart is the blue line. This 
blue line is the chart for my home State. There you will see our 
unemployment is about 3.2 to 3.3 percent. For the last decade in our 
State, we have focused on a progrowth, pro-jobs economic strategy. By 
that I mean building the best possible business climate, making sure we 
live within our means, and building a comprehensive energy approach to 
develop all of our energy resources. There is no reason we cannot do 
the same thing at the Federal level. In fact, we need to do exactly 
that at the Federal level. So I am here today to talk about some of the 
things we need to do to make that happen.
  The first is that I emphasize by building a good business climate, I 
mean a legal, tax, and regulatory certainty so businesses know the 
rules of the road so they can invest. They can invest shareholders' 
dollars so entrepreneurs can start new businesses, so existing 
businesses can expand. But to do that, they need to know the rules of 
the road. They need to know what our tax policy is. Right now we have a 
tax policy that expires at the end of the next year. So how do you as a 
business person go out there and start making investments when you do 
not know what the tax policy is going to be beyond the end of next 
year? We need tax reform.
  How about regulation? We have an incredible regulatory burden. How do 
you go out there and make an investment, get a business going, hire 
people, if you do not know what the regulatory requirements are? We 
need to reduce that regulatory burden.
  We need to pass trade agreements so our companies can sell not just 
here in the United States but they can sell globally. If you look at 
the history of our country, that is how we have grown this economy, how 
we have become the most dynamic economic engine in the world. It is 
through that private investment, that entrepreneurship, that American 
ingenuity.
  The role of government is to create a business climate that unleashes 
that

[[Page 13170]]

potential. We have got to roll back the regulatory burden. We have got 
to create clear, understandable rules and tax policy to follow so these 
companies can make these investments, get those 14-plus million people 
back to work, get a growing economy, at the same time that we get a 
grip on our spending and start living within our means. That is how we 
not only raise our standard of living and our quality of life, but we 
make sure we do not pass on a huge debt to our children and our 
grandchildren.
  Let me talk about some of the kinds of laws and legislation we need 
to pass to make sure that happens.
  Not too long ago, President Obama issued an Executive order. I hope 
it is something he talks about this evening in his address to the joint 
session of Congress. In that Executive order, he said all of the 
agencies--all of the Federal agencies--need to look at their 
regulations, at their existing regulations and any regulations they are 
putting out, and make sure that if those regulations are costly, 
burdensome, if they do not make sense, if they are outmoded or 
outdated, they are eliminated, they are stripped away, so we empower 
people and companies throughout this great country to do business. He 
said in that Executive order make sure all of our agencies look at 
their regulations and eliminate those that do not make sense, that are 
costly, and that are burdensome, so we can stimulate economic activity 
and job creation in this country. I think we need to do exactly that. 
In fact, let's make it a law. Let's make it the law that all of the 
regulatory agencies need to look at their existing regulations and any 
regulations they are looking at putting out, to make darn sure they are 
clear, straightforward, understandable, that they are workable, and not 
only that our regulations are clear and understandable, that the 
regulators work with Americans and American companies to make sure they 
understand them and they are able to meet them so they can pursue their 
business plans, their business growth, their business investment, and 
that they hire and put people back to work. That is how it is supposed 
to work.
  Together, Senator Pat Roberts of Kansas, myself, and others have put 
forward the Regulatory Responsibility for Our Economy Act. That is just 
what it says. How much more bipartisan can we get than that? The 
President puts out an Executive order saying we need to roll back some 
of these regulations that are burdening our business base, and we as 
Republican Senators say: Okay, here is an act to put that Executive 
order into law. Let's work together in a bipartisan way to reduce this 
regulatory burden that is stifling economic growth and job creation in 
our country.
  That is what Congress is supposed to do. That is what we need to do. 
That is what the people of this country want us to do on a bipartisan 
basis.
  When the President comes to the Capitol this evening and talks about 
how we get business going, let's get it going by reducing this 
regulatory burden so private investment can get people back to work in 
this country. It is not about more government spending, it is about 
private investment and initiative. We have to create the framework to 
make it happen. We can do it, and we can do it on a bipartisan basis.
  Another example is that the United States has been the leader in 
aviation throughout its history. Throughout the history of aviation, 
since Kitty Hawk, the United States has led the world in aviation, in 
invention, development, and innovation, and all the things that have 
gone into the development of aviation. Again, throughout its history, 
the United States has been the leader. One of the key areas for growth 
in aviation right now is UAS, unmanned aerial systems or unmanned 
aircraft. They call them remotely piloted aircraft. Our military uses 
them to tremendous benefit in Iraq, Afghanistan, and around the world.
  Even though our military flies UAS all over the globe, we can't fly 
them here in the United States together with manned aircraft. Yet if we 
are going to continue to lead the world in aviation innovation, we have 
to find a way to fly both manned and unmanned aircraft together in our 
airspace in the United States.
  Others and I have been talking to the FAA and working with the FAA, 
saying that you have to promulgate rules, set the rules of the road--
or, in this case, the rules of the air--so we can fly both manned and 
unmanned aircraft together in the U.S. airspace. The FAA has been 
working on this for I don't know how long but a long period of time. As 
of yet, they have not come out with those rules so we can fly both 
manned and unmanned aircraft in our airspace. But we need to, because 
if we don't, other countries will, and they will move ahead of us--
maybe not in military aviation, where we are flying unmanned aircraft 
all over the world, but how about in commercial and general aviation 
and all the other applications it will have for unmanned aircraft.
  The FAA bill, which we are now working to complete--a version was 
passed in the House and a version was passed in the Senate, and we are 
trying to reconcile the two versions. Again, we need to do this in a 
bipartisan way. I have included language that authorizes--in fact 
requires--that the FAA set up airspace in the United States so that 
manned and unmanned aircraft can be flown concurrently. Again, it is 
about making sure that we not only maintain our lead in aviation but 
create those exciting, good-paying jobs of the future. If the agency 
isn't going to take that step, we as the Congress have to make sure we 
take that step and move the aviation industry forward.
  Another example is how we have to create the environment, the forum 
that encourages that type of innovation, entrepreneurship, and 
investment in job creation. That is our role, our responsibility, in 
this most important of all issues, which is getting the economy going 
and getting people back to work.
  On the free trade agreements, we have three of them pending--one with 
South Korea, the U.S.-South Korea Free Trade Agreement, another is the 
Panama Free Trade Agreement, and the other is with Colombia. Those 
trade agreements have been negotiated for some time. For three years 
those trade agreements have been pending. It is time to take them from 
pending to being passed. We need the administration to bring those free 
trade agreements to the Senate and to the House and we will pass them. 
We have worked across the aisle in a bipartisan way to make sure that 
whatever issues needed to be dealt with to bring them to the Congress--
whether it is trade adjustment authority or whatever, we have worked 
together in a bipartisan way to say, look, we have addressed the 
issues. Now the administration needs to bring the free trade agreements 
to the Senate floor. We will pass them.
  With just one of those free trade agreements--for example, if we take 
the South Korea free trade agreement--we are talking about more than 
$10 billion in trade every year for our U.S. companies.
  These free trade agreements reduce tariffs on the order of 85 
percent. We are talking more than a quarter of a million jobs that will 
be created if we pass these agreements. For every 4-percent increase in 
trade, we are talking about 1 million American jobs that we can create. 
Again, it is about creating the environment that empowers investment, 
empowers our entrepreneurs in this country, and empowers businesses 
large and small to invest and get our economy going.
  At the same time we get this economy growing, we have to start living 
within our means. Right now, as I indicated, we have a $1.5 trillion 
deficit and a debt that is closing in on $14.5 trillion. So at the same 
time we get the economy growing, which will grow our revenues--not 
higher taxes, but grow revenues from a growing economy, and with tax 
reform that empowers that economic growth, at the same time, we have to 
get control of our spending and live within our means.
  Along with some fellow Senators, we have sponsored a number of pieces 
of legislation that I believe we can pass in a bipartisan way to make 
sure we get spending under control. The first is a balanced budget 
amendment. I come from a State where I was Governor for 10 years. We 
have a balanced budget

[[Page 13171]]

amendment. Every year, we are required by our Constitution to balance 
the budget. States have a balanced budget requirement, and businesses 
and families and communities all have to live within their means. Our 
Federal Government has to live within its means.
  If you think about it, a balanced budget amendment gets everybody 
involved. We not only have to pass it in the Senate and in the House 
with a two-thirds majority, but then it goes out to the States for 
ratification. What better way to get everybody throughout the country 
directly involved in making sure that we control our spending. Every 
State has to deal with a balanced budget amendment. So it is all of us 
working together as Americans, and it is the Congress going to the 
people of this great country and saying: Here is a balanced budget 
amendment, you tell us what you think. Again, what a great way to get 
everybody involved, the way we should get everybody involved in making 
sure we live within our means not only today but tomorrow and 
throughout future generations.
  At the same time, we need to pass other tools that can help us get 
control of our spending. For example, the Reduce Unnecessary Spending 
Act. This is a bipartisan act that I think was originally sponsored by 
Senator Tom Carper, a former Governor, a Democrat from Delaware, and 
Senator John McCain. I am proud to be a cosponsor. One of the key 
provisions is to give the President a line-item veto. Reaching across 
the aisle, we are giving our President a tool--a line-item veto--to 
make sure we cut out waste, fraud, and abuse, and that we control our 
spending. As a Governor, the most effective tool I had was the line-
item veto. We need to make sure our President has it as well.
  I think we also need to look at a biennial budget, so that we pass a 
budget on a two-year cycle--make sure we get it passed and the next 
year we can come back and make the adjustments we have to make; but at 
the same time we have time for oversight and making sure spending is 
going in accordance with the directive of the Congress, and whether it 
is waste, fraud, abuse, or duplication, that we cut it out. Again, this 
is absolutely what the American people want us to do.
  The third area I will touch on for a minute--and I will go to the 
next chart--is building the right kind of energy plan, a comprehensive 
energy policy that will help this country develop all of its energy 
resources. We did it in North Dakota. I know we can do it at the 
Federal level.
  If you think about it, energy development in this country is an 
incredible opportunity. It is an opportunity to produce more energy 
more cost effectively, with better environmental stewardship that will 
enable all of our industries to compete in a global high-tech economy. 
In addition, what a great opportunity it is to create high-paying jobs. 
Again, I go back to what I said before. For our energy companies 
looking to invest hundreds of millions and billions of dollars, they 
need to know the rules of the road. It comes back to creating a 
comprehensive energy policy that sets up those rules of the road so 
they know what their tax situation is and what the regulation and 
regulatory requirements are. When they make those investments to 
produce more energy more cost effectively, with good environmental 
stewardship, they have to know they are going to be able to get a 
return. They have to know they can meet the regulatory requirements. 
Those investments may last 40 and 50 years, and they know they are 
going to have to be able to recoup those investments.
  This first chart gives an example of some of the energy development 
in our State. Out West, there is oil and gas. North Dakota is now the 
fourth largest oil-producing State in the country. We have passed 
Oklahoma and Louisiana, and people don't realize it. Every State has 
some kind of energy. If you look at this map, we have oil, gas, coal, 
and wind. We are in the top 10 wind producers. We have biofuels, 
biomass, solar--we have all of them. Different States have different 
strengths. A lot of States have oil, gas, coal, or certainly wind, or 
they can develop the biofuels.
  It comes down to creating that environment that stimulates private 
investment so companies will come in and do exactly what I am talking 
about--at the Federal level, as well as at the State level.
  This next chart shows what is actually happening at the Federal 
level. This chart is the cost of major new regulations. What it shows 
over the last three decades is the cost of regulation by year, over the 
last 30 years. When the cost of regulation is high, if you go back and 
check, you will see our economy wasn't doing very well. When the cost 
of regulation was low, you will see that it was doing much better. Look 
at the cost of regulation today. It was $26.5 billion in 2010, the cost 
of meeting the regulatory requirements. That is what I am talking 
about. That is what is impeding job growth and economic growth and 
business investment. We have to address that. We have to roll back the 
regulatory burdens our companies and entrepreneurs face today.
  This last chart gives one example of some of the new regulations EPA 
is putting out that somebody who wants to develop energy has to meet. 
If you are an energy company or a young person with a good idea to 
develop a new type of energy, or existing type of energy with a new 
technology, can you meet all of these requirements? Can you even begin 
to understand them? Do you have a big enough legal team and scientific 
team, or a deep enough wallet to try to figure that all out before you 
put your money or your shareholders' money at risk? That is what is 
impeding economic growth in our country, and we have to deal with it. 
Congress has to deal with it.
  Again, this is not rocket science, and it is not about spending more 
Federal dollars. We have to create an environment that will encourage, 
stimulate, and empower private investment. It is that private 
investment throughout this land that will get our economy going and get 
people back to work. We can do it. It has to be a long-term strategy. 
It can't be a few stopgap measures that we put into place now for the 
next 90 days or for 1 year at a time. It has to be on a long-term 
sustained basis. I believe that is what the people want to hear this 
evening. I think they want to hear that kind of commitment to a long-
term strategy, a progrowth, pro-jobs economic strategy that will get 
this economy going now, tomorrow, and for the long term. It has to be 
done in a bipartisan way to get it through this Congress and signed by 
the President. But it is that kind of vision we need for our country.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BARRASSO. Mr. President, U.S. job creation in this country, as 
you know, has come to a halt. The Labor Department reported last Friday 
that zero jobs were created in August. The economic recovery that was 
hoped for failed to materialize, and unemployment remains at 9.1 
percent.
  Hope is not enough. Our economy is stagnant. The President's latest 
pivot to jobs is anchored on blaming the previous administration, which 
is now nearly 3 years past. Yet, despite repeated assurances of 
improvement, President Obama's own economic policies have failed. The 
President's stimulus plan failed to produce the 3.5 million jobs he 
promised. His ``green jobs'' initiative gave us more red ink but never 
came close to the 5 million new jobs he predicted it would. All the 
while the Federal bureaucracy he controls churns out expansive and 
expensive new regulations that amount to an assault on private sector 
job creation.
  The facts are inescapable. Since President Obama took office, America 
has lost approximately 2.3 million jobs. We are in an economic crisis--
a crisis that extends to America's confidence in the President to do 
anything that will change the current course. What the American people 
want is a plan, a plan that will yield results. They want leadership, 
and they have rejected the President's insistence that the only way 
forward is through more spending.
  Today, western Members of the Senate and House are calling on the 
President to accept a new way--a progrowth

[[Page 13172]]

plan to create jobs in the West that will lead to broader economic 
recovery all across the country. The western caucus Jobs Frontier 
report was produced by Members of the Senate and congressional western 
caucuses. It contains legislative proposals already introduced in both 
Houses of Congress, and these are proposals that create jobs now.
  The proposals we support speak largely to the economic challenges 
faced by Western States. They are also aimed at ruinous regulations and 
reliance on foreign energy and lawsuit abuse that continues to stifle 
our entire economy. These bills are ready to pass. They are ready to 
create jobs today.
  Any serious job creation proposal has to start with serious steps to 
increase affordable American energy. For decades, westerners have 
worked in high-paying energy jobs, and these jobs have good benefits. 
Since taking office, the Obama administration has consistently pushed 
extreme policies and heavy-handed regulations that make it harder to 
develop American energy. Very simply: Fewer energy projects mean fewer 
American jobs. Members of the Senate and House western caucuses have 
proposed a wide range of proposals to increase the number of red, 
white, and blue jobs all across the country.
  Encouraging the development of all-of-the-above energy resources will 
create thousands of jobs in the West and make our country less 
dependent on foreign energy. This administration has consistently shut 
down offshore energy exploration. It has arbitrarily canceled existing 
leases, and it continues to try to impose additional hurdles to onshore 
production, such as redundant environmental reviews, burdensome 
permitting review requirements, and delays in processing of 
applications.
  Our bills--the ones in this report--will streamline the permitting 
process and break down the barriers imposed by President Obama. This 
will make it cheaper and easier--cheaper and easier--for the private 
sector to create jobs.
  Westerners recognize we cannot pick and choose which forms of energy 
to support. When it comes to energy, we need it all, and we need it 
now. That is why we need a bill that will let energy producers tap 
existing resources of American oil and natural gas. Our plan has a bill 
that will do that. It is called the Domestic Jobs, Domestic Energy, and 
Deficit Reduction Act. It has been introduced by both Representative 
Rob Bishop of Utah and Senator David Vitter of Louisiana.
  This bill would force the Department of the Interior to stop blocking 
offshore energy exploration. That department's stall tactics have gone 
so far that even President Bill Clinton has called them ridiculous. The 
Domestic Jobs, Domestic Energy, and Deficit Reduction Act would force 
the Obama administration to quit stalling.
  The barrage of new regulations coming out of Washington continues to 
be a big wet blanket--a big wet blanket--thrown over the job creators 
in our country. In July of 2011, this administration issued 229 rules, 
and it finalized 379 additional rules that are going to cost our job 
creators over $9.5 billion. That is in July alone.
  Our plan includes a bill I have introduced, called the Employment 
Impact Act. This bill forces Washington regulators to look before they 
leap when it comes to regulations that could hurt American jobs. Under 
the bill I have introduced, every regulatory agency would be required 
to prepare a jobs impact statement. They would have to do it with every 
new rule they propose. That statement would include a detailed 
assessment of the jobs that would be lost or gained or sent overseas by 
any given rule. It would consider whether new rules would have a bad 
impact on our job market in general.
  The administration has also attempted to drastically increase 
wilderness areas, to expand Washington's jurisdiction on private 
waters, and to misuse the Endangered Species Act. Western lawmakers are 
proposing to reassert congressional authority to ensure a proper 
balance between job creation and conservation. Our bills in this report 
will increase transparency and stop any administration from issuing 
regulations without considering the local economic impact.
  Throughout our Nation's history, American farmers and ranchers have 
provided an affordable, abundant, and safe domestic supply of food and 
energy. In recent years, America's agricultural and forestry industries 
have been increasingly threatened by the surge of regulations coming 
from Washington--especially those from the Environmental Protection 
Agency. Our plan is going to push back. We will strengthen these 
industries and their ability to meet the world's growing food and 
energy needs.
  Westerners also recognize the mining sector is vital to our economic 
recovery. We know manufacturing jobs cannot be created without the raw 
materials needed to produce goods. Since the Obama administration will 
not break down barriers to American minerals, our Nation is growing 
increasingly dependent on foreign minerals--countries such as China and 
Russia. This inaction is unacceptable and it is inexcusable.
  Our plan includes Senator Murkowski's bill, the Critical Minerals 
Policy Act, which will ensure long-term viability of American mineral 
production. Her bill requires the U.S. Geological Survey to establish a 
list of minerals critical to the U.S. economy and then provide a 
comprehensive set of policies to address each economic sector that 
relies upon those critical minerals. It also creates a high-level 
interagency working group to optimize the efficiency of permitting in 
order to facilitate increased exploration and production of domestic 
critical minerals.
  These are just some of the ideas included in our jobs frontier plan. 
As it says: ``Breaking Down Washington's Barriers to America's Red, 
White and Blue Jobs.'' We eliminate back-door cap-and-tax regulations. 
Finally, we will take on excessive lawsuits against Federal agencies 
that have increased dramatically and destroyed jobs in the West.
  Every single one of the bills in the Republican jobs plan has been 
written and introduced in one or both Houses of Congress. This is a 
plan that can be implemented now. This is a plan that will work to 
create jobs. This is a plan that will reduce the cost of energy and 
restart the economy.
  There is a lot that needs to be done to fix our ailing economy. These 
are some ideas--western ideas--that come from the lawmakers that know 
best how our rural communities are suffering and how we can get folks 
back to work. Many of these proposals come from the States. They have 
the support of our western Governors and legislators. These are ideas 
not born in Washington.
  Recent jobless numbers confirm the current approach from Washington 
has failed. If the President is serious about incorporating the ideas 
of every American in every part of the country, then he needs to look 
beyond Washington.
  I thank every Member of the Senate and congressional western caucuses 
for their work and their expertise on this report. I look forward to 
turning these ideas into policies and in that way putting all of 
America back to work.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.


                    Afghanistan and Aid to Pakistan

  Mr. KIRK. Mr. President, I want to take some time today to talk about 
my views on Afghanistan and why we should rethink aid to Pakistan.
  I just completed my third 2-week reserve assignment in Afghanistan. 
While many Members of Congress get a firsthand look at the situation on 
factfinding missions, my time provided me a more indepth view, with a 
focus on the counternarcotics objectives of NATO's ISAF mission.
  Now, first, the good news. The work of our soldiers, marines, sailors 
and airmen is nothing short of amazing. Serving in one of the poorest, 
roughest, and most remote parts of the globe, they have crushed al-
Qaida's training bases, they have driven the Taliban from government, 
they have fostered a new elected government, and welded 47

[[Page 13173]]

allies into a force for human rights, development, and education--
especially for girls.
  Now, 42 percent of Afghans live on just $1 a day. Only one in four 
can read. Malnutrition is a serious problem, and infant mortality is 
the third highest of any country. According to the United Nations, 
nearly 40 percent of Afghan children under 3 are moderately or severely 
underweight, and more than 50 percent of children under 3 experience 
stunted growth. Afghanistan has more than twice the population of 
Illinois, but its electricity generation for the entire year is less 
than 2 percent of the electricity generated in Illinois just for the 
month of May.
  The nearly 30 million people of Afghanistan are victimized by a 
number of terrorist groups beyond just the Taliban, such as the HIG, 
the ETIM, and a new threat called the Haqqani network, which I will go 
into detail about. But the Afghans are mostly victimized by their 
neighbors, the Pakistanis.
  I served as a reservist in Afghanistan for the first time in 2008, 
and I believed then that Pakistan was complicated; that we have many 
issues there and that we should advance our own interests 
diplomatically. I no longer agree with that.
  Pakistan has now become the main threat to Afghanistan. Pakistan's 
intelligence service is the biggest danger to the Afghan Government. 
Pakistan also poses a tremendous threat to the lives of American 
troops. Let me be clear: Many Americans died in Afghanistan because of 
Pakistan's ISI.
  Sitting in our commander's briefs for 2 weeks and talking to our 
headquarters' leaders and spending a few days in the field, it became 
clear to me if we were working in Afghanistan alone we would have had a 
much better chance to turn that country around more quickly, restoring 
it to its status as an agricultural economy with a loose government and 
a high degree of autonomy given to each tribe or region. But we are not 
alone.
  While our military reduced al-Qaida in Afghanistan to a shadow of its 
former self, a new force is emerging. On the 10th anniversary of 9/11, 
al-Qaida, I must report, is still armed and dangerous, but it is far 
less numerous or capable than it once was. But al-Qaida is not the most 
potent force that is arrayed against us.
  The new face of terror is called the Haqqani network. Built around 
its founder Jalaluddin Haqqani and his son Siraj, it has become the 
most dangerous, lethal, and cancerous force in Afghanistan.
  One other thing. As much as Pakistani officials claim otherwise, the 
Haqqanis are backed and protected by Pakistan's own intelligence 
service. Statements by Pakistani Government officials to the contrary 
are direct lies. The Haqqani network kills Americans, it attacks the 
elected Government of Afghanistan, and remains protected in its 
Pakistani headquarters of Miriam Shah. Without that Pakistani safe 
haven, the Haqqani network would suffer the same fate as al-Qaida. 
Afghan and U.S. special operations teams take out many Taliban and al-
Qaida commanders, and these operators operate each night also against 
numerous Haqqani leaders. But the Haqqanis are able to spend all day 
planning attacks on Afghans and Americans and then sleeping soundly in 
their beds in Pakistan.
  In such an environment, with our deficits and debt, military aid to 
Pakistan seems naive at best and counterproductive at worst. I am 
seriously thinking we should reconsider assistance to the Pakistani 
military.
  Recently, our President chose to withdraw 33,000 American troops from 
the Afghan battle. General Petraeus and Admiral Mullen did not choose 
this option. Nevertheless, I think our new commander, General Allen, 
can withdraw the first 10,000 American troops by Christmas without 
suffering a military reversal in Afghanistan. Afghanistan's Army and 
police are growing in size--now numbering over 300,000--and capability. 
Despite recent reports of desertions, Afghan security forces will soon 
reach a level where some of our troops may safely leave the country. As 
we withdraw, we should consider enablements, such as a pay raise for 
Afghan troops, to improve their retention and morale.
  I spoke with General Allen about a commander's assessment that should 
be delivered at the end of the year. After withdrawing 10,000 troops, I 
hope he will clearly define when the next 23,000 can come out.
  In the United States, politically there is little difference between 
withdrawing at the end of the year and withdrawing at the end of the 
fiscal year, but militarily there is a world of difference. The 
fighting season in Afghanistan runs through October. If General Allen 
is ordered to withdraw his troops by September 30, then many of his 
forces will disappear during the Taliban's key offensive months. But if 
the troops leave in November-December, we will guarantee another bad 
military year for the Taliban and the Haqqanis and an even stronger 
Afghan Army in the long term.
  I hope the President sets an end-of-year deadline rather than an end-
of-fiscal-year deadline. It is right to do militarily and politically. 
If he does this, he reduces the chance of a radical Islamic extremist 
victory on the Afghan battlefield in 2012.
  While in Afghanistan, I worked to help update and rewrite ISAF's 
counternarcotics plan. Afghanistan is the source of over 80 percent of 
the world's heroin and opium. The drug economy fuels the insurgency and 
corruption of the Afghan Government itself. From 2001-09, Secretary 
Rumsfeld and then-Ambassador Holbrooke blocked ISAF from doing much 
about narcotics. This left a huge funding source for the insurgency 
untouched.
  ISAF was able to change direction slightly in 2009 and 2010 by 
supporting interdiction and eradication and alternative livelihoods for 
Afghan farmers. While commendable, these programs didn't work and the 
size of the Afghan poppy crop is likely to go up.
  The plan I worked on advocates a shift in ISAF to apply its military 
strength of intelligence, helicopters, and special operations to 
support Afghan decisions to arrest the top drug lords of Afghanistan, 
starting with the ones who heavily financially back the insurgency. We 
joined in 2005 to arrest bin Laden's banker Haji Bashir Noorzai, and we 
should do it again.
  I strongly back the Afghan Counternarcotics Ministry idea to announce 
a top 10 drug lord list to emulate the early success of J. Edgar Hoover 
when he established the reputation of the FBI. In our remaining 2 years 
in Afghanistan, we can do a lot to cripple the insurgency and help the 
2014 elections by removing a number of key bad actors from the 
battlefield.
  What about the future? The President says our formal current mission 
will end in 2014. Much of his vision will be approved at the Chicago 
NATO summit in May of 2012. By 2014, I believe Afghans will be able to 
do nearly all of the conventional fighting, with some U.S. special 
operations support remaining.
  But remember, while the Afghan Army is likely to win, its budget for 
this year is $11 billion. The Afghan Government collected only $1 
billion in tax revenue in 2010. We will have to help. Without regular 
U.S. combat troops, we risk a Taliban-Haqqani-ISI alliance winning 
unless we do help that Afghan military.
  On the 10th anniversary of 9/11, we should all agree that Afghanistan 
should never become a major threat to American families again. Should 
Pakistan not change its ways, we can do one other thing: an American 
tilt toward India, to encourage the world's largest democracy to 
bankroll an Afghan Government that fights terror and the ISI. Given the 
outright lying and duplicity of Pakistan, it appears a tilt toward 
India will allow us to reduce our forces in Afghanistan, knowing India 
will help bankroll an Afghan Government. This would allow us to reduce 
our troops while also reducing the possibility of Afghanistan once 
again becoming a terrorist safe haven.
  Pakistanis would object to this pro-Indian outcome, but they will 
only have their own ISI to blame. September 11 teaches us that neither 
the United States nor India can tolerate a

[[Page 13174]]

new formal Afghan terror state. It is too bad Pakistan has chosen to 
back the losing side--the terrorists--against the Afghan people and the 
two largest democracies on Earth.
  Finally, a word about our troops. Each night they combat the most 
dangerous narco-insurgents on Earth, and many 19- and 20-year-old 
Americans volunteer to serve over 7,000 miles from home. Their 
generation is named after September 11, but these Americans in uniform 
not only carry their generation's label, they are personally employed 
in risking their lives to ensure that all Americans will never again 
witness another September 11.
  They are America's best hope, and I hope to God when I am older some 
of them run for President. From my own nursing home, I know the country 
would be in good hands if one of these young Americans were to guide 
our Nation's destiny.
  I am lucky to know many of their names. MAJ Fred Tanner, U.S. Army; 
LT Doug McCobb, Air Force; MG Mick Nicholson, Army; and our allies, Wg 
Cdr Howard Marsh, Royal Air Force; GEN Renee Martin, French Army; RADM 
Tony Johnstone-Brute, Royal Navy; and COL Robin Vickers, British Army. 
I honor them and their younger comrades, wishing all the military 
personnel of ISAF's 47 nations a very good day as they awake in 
Afghanistan tomorrow morning for another hard day's work on one of the 
toughest battlefields in the world.
  I yield back.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. COBURN. Mr. President, I wish to talk about an amendment, but 
also I had one of my colleagues who was sitting in your position as 
President pro tempore notice an error I made on July 27. Senator 
Whitehouse questioned my numbers and, in fact, he was right. I said 
$115 million in regard to the savings on limousines. It was $11.5 
million per year, not $115 million. It was $115 million over 10 years. 
So I wish to stand to put that in the Record that I was in error and 
Senator Whitehouse as a cordial colleague questioned me on it and I 
thank him for his accountability.
  We have before the Senate now a patent bill. There is no question 
there is a lot of work we need to do on patents. I know the President 
pro tempore sits on the committee that I do and we have spent a lot of 
time on this. But I am very concerned, I have to say, about what we are 
hearing in the Senate about why we wouldn't do the right thing that 
everybody agrees we should be doing because somebody doesn't want us to 
do that in the House, and I think it is the worst answer we could ever 
give the American people.
  When we have a 12-percent approval rating, and the Republicans have 
worse than that, why would we tell the American people we are not going 
to do the right thing for the right reason at the right time because 
somebody in the House doesn't want us to and that we are going to say 
we are not going to put these corrections into a patent bill that are 
obviously important and we are going to say it is going to kill the 
bill when, in fact, it is not going to kill the bill? But that is what 
we use as a rationalization. So let me describe for a minute what has 
gone on over the years and what has not happened.
  The first point I would make is there has not been one oversight 
hearing of the Patent Office by the Appropriations Committee in either 
the House or the Senate for 10 years. So they haven't even looked at 
it. Yet the objection to, and what we are seeing from an appropriations 
objection is--and even our chairman of our Committee on the Judiciary, 
who is an appropriator, supports this amendment but isn't going to vote 
for it because somebody in the House is going to object to it.
  But the point is, we have money that people pay every day. From 
universities to businesses to individual small inventors, they pay 
significant dollars into the Patent Office. Do you know what has 
happened with that money this year? Eighty-five million dollars that 
was paid for by American taxpayers for a patent examination and first 
looks didn't go to the Patent Office. Yet we have over 1 million 
patents in process at the Patent Office, and over 700,000 of those 
haven't ever had their first look.
  So when we talk about our economy and we talk about the fact that we 
want to do what enhances intellectual property in our country--which is 
one of our greatest assets--and then we don't allow the money that 
people actually pay for that process to go for that process and we have 
backlogged for years now patent applications, we have done two things. 
One is we have limited the intellectual property we can capture. No. 2 
is we have allowed people to take those same patents, when we have 
limited ability, especially some of our smaller organizations, and 
patent them elsewhere. So the lack of a timely approach on that is 
lacking.
  The process is broken. Since 1992, almost $1 billion has been taken 
out of the Patent Office. So we wonder, why in the world is the Patent 
Office behind?
  The Patent Office is behind because we will not allow them to have 
the funds the American taxpayers who are trying to get ideas and 
innovations, copyrights, trademarks, and patents done--we will not 
allow the Patent Office to have the money.
  The amendment I am going to be offering--and I have a modification on 
it that is trying to be cleared on the other side, and I will not 
actually call up the amendment at this time until I hear whether that 
has been accepted. The amendment I have says we will no longer divert 
the money that American businesses, American inventors, American 
universities pay to the Patent Office to be spent somewhere else; that 
it has to be spent on clearing their patents.
  I ask unanimous consent to have printed in the Record--and I will 
submit a copy at this time--a letter I received August 1 from the head 
of the Patent Office.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                     United States


                                  Patent and Trademark Office,

                                     Alexandria, VA, Aug. 1, 2011.
     Hon. Tom Coburn,
     U.S. Senate,
     Washington, DC.
       Dear Senator Coburn: Per your request, I am writing today 
     to follow up on our discussion last week regarding United 
     States Patent and Trademark Office (USPTO) funding.
       As you know, the House-passed version of the America 
     Invents Act (H.R. 1249) replaces a key funding provision that 
     would have created the USPTO Public Enterprise Fund--
     effectively sheltering the USPTO from the uncertainties of 
     the appropriations process and ensuring the agency's ability 
     to access and spend all of the fees it collects--with a 
     provision creating the Patent and Trademark Reserve Fund. 
     This provision keeps the USPTO in the current appropriations 
     process, but requires that all fees collected in excess of 
     the annual appropriated amount be deposited into the Reserve 
     Fund, where they will be available to the extent provided for 
     in appropriations acts. In a June 22, 2011 letter to Speaker 
     Boehner, House Appropriations Committee Chairman Rogers 
     committed to ensuring that the Committee on Appropriations 
     carry language providing that all fees collected in excess of 
     the annual appropriated amount would be available until 
     expended only to the USPTO for services in support of fee-
     paying patent and trademark applicants. I was pleased to see 
     that the fiscal year 2012 appropriations bill reported by the 
     Committee did in fact carry this language.
       I would like to reiterate how crucial it is for the USPTO 
     to have access to all of the fees it collects. This year 
     alone, we anticipate that the agency will collect 
     approximately $80 million in fees paid for USPTO services 
     that will not be available for expenditure in performing 
     those services. Quite clearly, since the work for which these 
     fees were paid remains pending at USPTO, at some point in the 
     future we will have to collect more money in order to 
     actually perform the already-paid-for services. If USPTO had 
     received the authority to expend these funds, we would have 
     paid for activities such as overtime to accelerate agency 
     efforts to reduce the backlog of nearly 700,000 patent 
     applications, as well as activities to improve our decaying 
     IT systems, which are a constant drag on efficiency. As 
     history has demonstrated, withholding user fees from USPTO is 
     a recipe for failure. Effecting real reforms at the USPTO 
     requires first and foremost financial sustainability. 
     Ensuring that the agency has consistent access to adequate 
     funding is a key component of achieving this.
       Further, the unpredictability of the annual appropriations 
     cycle severely hinders

[[Page 13175]]

     USPTO's ability to engage in the kind of multi-year, 
     business-like planning that is needed to effectively manage a 
     demand-driven, production-based organization. The only way we 
     will be able to effectively implement our multi-year 
     strategic plan, and achieve our goals of reducing the patent 
     backlog and pendency to acceptable levels, is through an 
     ongoing commitment to ensuring the USPTO has full access to 
     its fee collections--not just in fiscal year 2012, but for 
     each and every year beyond FY 2012. Only this assurance will 
     enable the agency to move forward with the confidence that we 
     are basing critical multi-year decisions about staffing 
     levels, IT investment, production, and overtime on an 
     accurate and reliable funding scenario.
       Along these lines, if America is to maintain its position 
     as the global leader in innovation, it is essential that 
     American businesses and inventors not suffer the adverse 
     effects of drawn-out continuing resolutions (CR), which have 
     become common in recent years. The constant stops and starts 
     associated with the CR cycle can have disastrous 
     consequences, especially for a fee-based agency with a 
     growing workload, as is the case for USPTO. The challenges 
     presented by the pending patent reform legislation will be 
     particularly difficult to undertake if the agency is not 
     allowed to grow along a steady path to address our increasing 
     requirements. As such, we must be assured that the USPTO will 
     have full access to its fees throughout the year--not just 
     after a full year appropriations act is enacted. Therefore, a 
     commitment to include language in future continuing 
     resolutions that will address the USPTO's unique resource 
     needs is paramount.
       As outlined in our Strategic Plan and in our FY 2012 budget 
     submission, USPTO has a multi-year plan in place to reduce 
     patent pendency to 10 months first action and 20 months final 
     action pendency, and to reduce the patent application backlog 
     to 350,000. During the next three to four years, we will 
     continue and accelerate implementation of a series of 
     initiatives to streamline the examination process, including 
     efforts to improve examination efficiency and provide a new, 
     state-of-the-art end-to-end IT system, which will support 
     each examiner's ability to process applications efficiently 
     and effectively.
       While efficiency gains are essential, we will not reach our 
     goals without also increasing the capacity of our examination 
     core. As outlined in the FY 2012 budget, we plan to hire an 
     additional 1,000 patent examiners in FY 2012, with another 
     1,000 examiner hires planned for FY 2013. This added 
     capacity, combined with full overtime, will allow us to bring 
     the backlog and pendency down to an acceptable level.
       Let me also be clear that while these enhancements are 
     necessary to allow the USPTO to tackle the current backlog, 
     the agency is not planning to continue growing indefinitely. 
     An important part of our multi-year plan is an eventual 
     moderation of our workforce requirements, once we have 
     achieved a sustainable steady state.
       At the same time that USPTO is working to achieve these 
     goals, we will also be working to restructure our fees to 
     ensure that the agency is recovering adequate costs to 
     sustain the organization. Once our fees have been set, we 
     will continually monitor our collections over the next 
     several years to ensure that our operating reserve does not 
     grow to unacceptably high levels at the expense of USPTO's 
     stakeholders.
       Thank you again for your support and your superb leadership 
     on this important issue. With the continued commitment of the 
     House and Senate Committees on Appropriations to ensuring the 
     USPTO's ongoing ability to utilize its fee collections, we 
     can put the agency on a path to financial sustainability, and 
     enable it to deliver the services paid for and deserved by 
     American innovators.
           Sincerely,
                                                  David J. Kappos,
                                     Under Secretary and Director.

  Mr. COBURN. I must tell you that we are so fortunate that we have 
Director Kappos. We have a true expert in patents, with great 
knowledge, who has made tremendous strides in making great changes at 
our Patent Office. But he requires a steady stream of money, and he 
requires the ability to manage the organization in a way where he can 
actually accomplish what we have asked him to do.
  Frankly, I have spent a lot of time working with the Patent Office--
not with everybody else who wants an advantage in the patent system but 
with the Patent Office--and I am convinced we have great leadership 
there.
  In his letter, he talks about their inability to update their IT 
because the money is not there because we will not let him have the 
money--their money, the money from the American taxpayers.
  Let me give a corollary. If, in fact, you drive your car into the gas 
station, you give them $100 for 25 or 28 gallons of gas, and they only 
give you 12 gallons of gas and they say: Sorry, the Appropriations 
Committee said you couldn't have all the gas for the money you paid, 
you would be outraged. If you go to the movie, you pay the fee to go to 
the movie and you buy a ticket, you walk in, and halfway through the 
movie they stop the projection and say: Sorry, we are not going to give 
you the second half of the movie even though you paid for it--inventors 
in this country have paid the fees to have their patents examined and 
evaluated and reviewed. Yet we, because of the power struggle, have 
decided we are not going to let that money go to the Patent Office. The 
amendment I have says we are going to allow that to happen. If money is 
paid and it goes into a proper fund that is allocatable only to the 
Patent Office, it cannot be spent anywhere else and has to go to the 
Patent Office.
  Some of the objections, especially from the House Appropriations 
Committee, are that there is no oversight. The reason there is no 
oversight is because they have not done any oversight and neither have 
we, so you cannot claim that as an excuse as to why you are afraid. 
This patent bill will give an authorization for 7 years for the fees. 
We can change that if we want, but the fact is that we are never going 
to know if we need to change it if we never do oversight, which we have 
not done. Nobody has done oversight on patents. I am talking aggressive 
oversight: What did you start? What was your end? How much did you 
spend? Where did you spend the money? What is your employee turnover? 
What is your employee productivity? What should we expect?
  None of that has been asked. I believe it is probably pretty good 
based on the fact that I have a lot of confidence in the management at 
the Patent Office, especially what I have seen in terms of performance 
for the last couple of years versus before that, but the fact is that 
oversight has not been done.
  It is not just the Patent Office. It hasn't been done anywhere. Very 
little oversight has been done by the Senate, and it is one of the 
biggest legitimate criticisms that can be made of us as a body, that we 
are lazy in our oversight function. Of the $3.7 trillion that is going 
to be spent, we are going to have oversight of about $100 billion of 
the total.
  The amendment does a couple of things. Let me kind of detail that for 
a moment. One of the things is that by returning the money to the 
Patent Office, the Director thinks he can actually cut the backlog in 
half. In other words, we have over 700,000 patents that have never been 
looked at sitting at the Patent Office now, and he believes that in a 
very short period of time they could cut that to 350,000.
  From 1992 through 2011, $900 million has been taken from the PTO. In 
2004 Congress diverted $100 million, in 2007 it diverted $12 million, 
last year it diverted $53 million, and it is $80 million to $85 million 
that is going to be diverted this year. In 4 years out of the last 10, 
Congress gave the Patent Office all the money because it was so slow, 
so lethargic in terms of meeting the needs of inventors. The only thing 
we have in the current bill is the promise of a Speaker and the promise 
of a chairman that they will do that. There is nothing in law that 
forces them to do it. There is nothing that will make sure the money is 
there. No matter how good we fix the patent system in this country, if 
there is not the money to implement it, we will not have solved the 
problems.
  In June of 2000, the House debated the PTO funding, and an 
interesting exchange took place between Representative Roybal-Allard 
and Representative Rogers, who was a cardinal at the time. 
Representative Allard discussed the problem of PTO fee diversion and 
the need for user fees to pay for the work of the agency. She asked--in 
the documentation of the Congressional Record, she asked Chairman 
Rogers if 100 percent of the user fees would go to the PTO, and Mr. 
Rogers stated that the fees would not be siphoned off for any other 
agency or purpose and remain in the account for future years. But 
according to the PTO, in fiscal year 2000, $121 million was, in fact, 
diverted. So when we have

[[Page 13176]]

the chairman of the committee say we should not doubt the word of the 
Appropriations Committee, yet we have in the Record the exact opposite 
of what the Appropriations Committee said was going to happen, we 
should be concerned and we should fix it to where the money for patent 
examination goes for patent examination. So we have a clear record of a 
statement that says it was not going to happen, and, in fact, $121 
million was diverted from the Patent Office.
  Finally, from 1992 to 2007, $750 million more in patent and trademark 
fees was collected than was allowed to be spent by the Patent and 
Trademark Office. Had they had that money, we would have a backlog of 
about 100,000 patents right now, not 750,000. We would have 
intellectual property as a greater value in our country, with greater 
advantage over our trading partners because that money would have been 
effectively used.
  On July 12, former CBO Director Douglas Holtz-Eakin wrote to Senators 
Reid and McConnell noting:

       The establishment of the Patent and Trademark reserve fund 
     in H.R. 1249 would be ineffective in stopping the diversion 
     of the fees from the U.S. Patent Office.

  In other words, what is in this bill now will not stop the diversion 
of the fees.
  Just so people think I am not just picking on one area, this is a bad 
habit of Congress. It is not just in the Patent and Trademark Office 
that we tell people to pay a fee to get something done and we steal the 
money and use it somewhere else. For example, in the Nuclear Waste Fund 
at the Department of Energy, utility payments by individual consumers 
pay for a nuclear waste fee. That money has been spent on tons of other 
things through the years rather than on the collection and management 
of nuclear waste. To the tune of $25 billion has been spent on other 
things.
  The Securities and Exchange Commission is a fee-based agency. Since 
the SEC was established, it has collected money via user fees, charged 
for various transactions in order to cover the cost of its regulation. 
The primary fees are for sales of stock, registration of a new stock, 
mergers, tender offers. It also collects fees for penalty fines, for 
bad behavior. They go into the Treasury's general fund, and amounts 
collected above the SEC budget were diverted to other government 
programs.
  In 2002, Congress changed the treatment of the fees of the SEC so 
they would only go to a special appropriation account solely for the 
SEC. SEC would not have access to the fees, however, should it collect 
more than its appropriation.
  In the Dodd-Frank bill, Congress again changed the treatment of the 
fees and required some of the fees to go to the General Treasury and 
others to the reserve fund. As a result, lots of complaints with the 
SEC, and they still do not have access to their funds. Thus, like the 
PTO, if Congress chooses not to provide all the funds in the initial 
appropriation, they will not have them.
  In the 2012 budget justification from the Securities and Exchange 
Commission, they noted it had significant challenges maintaining a 
staffing level sufficient to carry out its core mission. From 2005 to 
2077, SEC had frozen or reduced budgets that forced reduction of 10 
percent of their staff and 50 percent of technology investment. What 
happened in 2007 in this country? What were the problems? So the 
diversion of the money from the SEC actually contributed to the 
problems we had in this country. So it does not work.
  Finally, one that is my favorite and that I have fought against every 
year that I have been here is the Crime Victims Fund, and that is a 
fund where people who are criminals actually have to pay into a fund to 
do restitution for criminal victims, and we have stolen billions of 
dollars from that fund. They are not taxes, they are actually 
restitution moneys, but the Congress has stolen it and spent it on 
other areas. The morality of that I don't think leads anybody to 
question that that is wrong.


                     Amendment No. 599, as Modified

  Now, if I may, let me call up amendment 599. I ask that the pending 
amendment be set aside and ask that the amendment be modified with the 
changes at the desk.
  The PRESIDING OFFICER (Mr. Sanders). Is there objection?
  Mr. LEAHY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The Senator from Oklahoma has the floor.
  Is there objection?
  Mr. LEAHY. Reserving the right to object, the Senator from Oklahoma 
knows that the basic thing he is trying to do is something I had 
supported. As he knows, I put it in the managers' package. He also is 
aware that my belief is--obviously we disagree--my belief is that the 
acceptance of his amendment will effectively kill the bill. Even today 
the leadership in the House told me they would not accept that bill 
with it. I say this only because tactically it would be to my advantage 
to object to the amendment. But the distinguished Senator is one of the 
hardest working members of the Judiciary Committee. He is always there 
when I need a quorum. Out of respect for him, I will not object.
  Mr. COBURN. I thank the Senator for this. This is a minor technical 
correction.
  The PRESIDING OFFICER. Without objection, the clerk will report.
  The bill clerk read as follows:

       The Senator from Oklahoma [Mr. Coburn], for himself, Mr. 
     DeMint, Mrs. Feinstein, Mrs. Boxer, Mr. Udall of Colorado, 
     Mr. Enzi, and Mr. Burr, proposes an amendment (No. 599), as 
     modified.

  The amendment is as follows:

  (Purpose: To amend the provision relating to funding the Patent and 
 Trademark Office by establishing a United States Patent and Trademark 
         Office Public Enterprise Fund, and for other purposes)

       On page 137, line 1, strike all through page 138, line 9, 
     and insert the following:

     SEC. 22. 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 [and recorded as offsetting recipts] 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).

[[Page 13177]]

       (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.
       (h) Surcharge.--Notwithstanding section 11(i)(1)(B), 
     amounts collected pursuant to the surcharge imposed under 
     section 11(i)(1)(A) shall be credited to the United States 
     Patent and Trademark Office Public Enterprise Fund.

  Mr. COBURN. I thank the chairman of the Judiciary Committee. I noted 
earlier, before I came to the floor, he supported it in principle and 
we have a difference in principle about what would happen to the bill. 
This is a minimal technical correction that was recommended to us, and 
I appreciate the Senator for allowing that to be considered.
  Let me spend a moment talking about the chairman and his belief that 
this will not go anywhere. This is a critical juncture for our country, 
when we are going to make a decision to not do what is right because 
somebody is threatening that they do not agree with doing what is right 
and that they will not receive it. In my life of 63 years, that is how 
bullies operate, and the way you break a bully is you challenge a 
bully.
  The fact is, I have just recorded into the history of the House the 
statements by the chairman of the Appropriations Committee in the House 
in terms of his guarantee for protecting the funds for PTO, which he 
turned around and took $121 million out of the funds that very same 
year that he guaranteed on the floor that he wouldn't do. So what I 
would say is we ought not worry about idle threats. What we ought to be 
worried about is doing what is best and right for our country. What is 
best and right is to give the money to the Patent Office that people 
are paying for so the patents will get approved and our technological 
innovations will be protected. I don't buy the idea the House is not 
going to take this if we modify it.
  Actually, what 95 percent of the people in this country would agree 
to is that the Patent Office ought to get the money we are paying for 
patent fees, just as the FDA should get the money paid by drug 
companies for new applications, just as the Park Service should put the 
money for the camping sites--the paid-for camping sites--back into the 
camping sites. Why would we run away from doing the right thing?
  I find it very difficult when we rationalize down doing the correct 
thing that everybody agrees should be done but we will not do it for 
the right reasons. That is why we have a 12-percent approval rating. 
That is why people don't have confidence in Congress--because we walk 
away from the tough challenges of bullies who say they won't do 
something if we do what is right. I am not going to live that way. I am 
not going to be a Senator that way. I am going to stand on the position 
of principle.
  This is a principle with which 95 Senators in this body agree. We are 
going to have several of our leaders try to get them not to do that on 
the basis of rationalization to a bully system that says: We will not 
do the oversight, but we still want to be in control.
  In fact, in the process of that, America loses because we have 
750,000 patents that are pending right now, and there should only be 
about 100,000.
  The bullies have won in the past, and I am not going to take it 
anymore. I am going to stand up and challenge it every time. I am going 
to make the argument that if a person pays a fee for something in this 
country for the government to do, that money ought to be spent doing 
what it was paid to the government to do. It is outside of a tax; it is 
a fee. It is immoral and close to being criminal to not correctly spend 
that money from that fee.
  If our body decides today we are going to table this amendment, the 
question the American people have to ask is, Where is the courage in 
the Senate to do what is best for our country? Why are the Senators 
here if they are not going to do what is best for the country? Why are 
they going to play the game of rationalization and extortion on 
principles that matter so much to our future? I will not do that 
anymore. Everybody knows this is the right thing to do. We are 
babysitting some spoiled Members of Congress who don't want to carry 
out their responsibilities in an honorable way and do the oversight 
that is necessary. What they want to do is complain that they do not 
have control.
  Well, this bill authorizes funds for 7 years. We can change that 
number of years. We can actually change the actual amount of fees if, 
in fact, they are not doing a good job. But right now, as already put 
in the Record, there is no history of significant oversight to the 
Patent Office, so they would not know in the first place. So what we 
are asking is to do what is right, what is transparent, what is morally 
correct and give the Patent Office the opportunity to do for America 
what it can do for them instead of handcuffing us and handicapping us 
where we cannot compete on intellectual property in our country.
  I have said enough. I will reserve the remainder of my time when I 
finish talking about one other item.
  There is an earmark in this patent bill for The Medicines Company. It 
ought not be there. This is something that is being adjudicated in the 
courts right now. Senator Sessions has an amendment that would change 
it. I believe it is inappropriate to specify one company, one situation 
on a drug that is significant to this country, and we are fixing the 
wrong problem. We probably would not win that amendment. I think it is 
something the American people ought to look at and say: Why is this 
here? Why is something in this big bill that is so important to our 
country?
  I agree with our chairman. He has worked months, if not years, over 
the last 6 years trying to get to this process, and now we have this 
put in. We did not have it in ours. The chairman did not have it in 
ours. It came from the House.
  We ought to ask the question Why is it there? Why are we interfering 
in something that is at the appellate court level right now? Why are we 
doing that? None of us can feel good

[[Page 13178]]

about that. None of us can say it is the right thing to do. Why would 
we tolerate it?
  It is this lack of confidence in America; it is about a lack of 
confidence in us. When people know and find out what has happened here, 
they are going to ask the question. The powerful and the wealthy 
advantage themselves at the expense of everybody else. They have 
access. Those who are lowly, those who are minimal in terms of their 
material assets do not. It is the type of thing that undermines the 
confidence we need to have.
  I just wanted to say I am a cosponsor of Senator Sessions' amendment. 
I believe he is accurate. I think they have won this in court. It is on 
appeal. They will probably win it on appeal. This will end up being 
necessary, and there is a way for us to fix it if, in fact, they lose, 
if it is appropriate to do that. I believe it is inappropriate at this 
time.
  I yield the floor and reserve the remainder of my time.
  Mr. McCAIN. Mr. President, I rise in support of the Sessions 
amendment which seeks to remove an egregious example of corporate 
welfare and blatant earmarking, to benefit a single interest, in the 
otherwise worthwhile patent reform bill before the Senate. Needed 
reform of our patent laws should not be diminished nor impaired by 
inclusion of the shameless special interest provision, dubbed ``The Dog 
Ate My Homework Act'' that benefits a single drug manufacturer, 
Medicines & Company, to excuse their failure to follow the drug patent 
laws on the books for over 20 years.
  The President tonight will deliver another speech to tell us that 
unemployment is too high and that we need to get America back to work 
to turn around our near stagnant economy. While it may end up being 
more of the same policies that have not worked for the last 2\1/2\ 
years, I look forward to hearing what he has to say. But, look at what 
is going on here today, just a couple hours before the President tells 
us how he proposes to fix the economy, there are 14 million Americans 
out of work and a full day of the Senate's time is being spent debating 
a bailout of a prominent law firm and a drug manufacturer. I think the 
American people would be justified in wondering if they were in some 
parallel universe.
  Patent holders who wish to file an extension of their patent have a 
60-day window to make the routine application. There is no ambiguity in 
this timeframe. In fact, there is no reason to wait until the last day. 
A patent holder can file an extension application any time within the 
60-day period. Indeed, hundreds and hundreds of drug patent extension 
applications have been filed since the law was enacted. Four have been 
late. Four!
  Why is this provision in the patent reform bill? One reason: special 
interest lobbying to convince Congress to relieve the company and its 
law firm from their mistakes. Millions of dollars in branded drug 
profits are at stake for a single company who will face generic 
competition much earlier than if a patent extension would have been 
filed on time.
  Let me read from the Wall Street Journal Editorial page today:

       As blunders go, this was big. The loss of patent rights 
     means that generic versions of Angiomax might have been able 
     to hit pharmacies since 2010, costing the Medicines Co. 
     between $500 million and $1 billion in profits.
       If only the story ended there.
       Instead, the Medicines Co. has mounted a lobbying offensive 
     to get Congress to end run the judicial system. Since 2006, 
     the Medicines Co. has wrangled bill after bill onto the floor 
     of Congress that would change the rules retroactively or give 
     the Patent Office director discretion to accept late filings. 
     One version was so overtly drawn as an earmark that it 
     specified a $65 million penalty for late filing for ``a 
     patent term extension . . . for a drug intended for use in 
     humans that is in the anticoagulant class of drugs.''
       . . . no one would pretend the impetus for this measure 
     isn't an insider favor to save $214 million for a Washington 
     law firm and perhaps more for the Medicines Co. There was 
     never a problem to fix here. In a 2006 House Judiciary 
     hearing, the Patent Office noted that of 700 patent 
     applications since 1984, only four had missed the 60-day 
     deadline. No wonder critics are calling it the Dog Ate My 
     Homework Act.

  The stakes are also high for patients in our health care system. Let 
me read an excerpt from the Generic Pharmaceutical Association letter 
dated July 20, 2011:

       The Medicines Company amendment adopted during House 
     consideration of H.R. 1249 modifies the calculation of the 
     60-day period to apply for a patent term extension and 
     applies that new definition to ongoing litigation. We are 
     deeply concerned about the precedent of changing the rules of 
     the patent extension process retroactively, which appears to 
     benefit only one company--The Medicines Company, which missed 
     the filing deadline for a patent extension for its patent on 
     the drug Angiomax.
       If enacted into law, this provision would change the rules 
     to benefit one company that, by choice, waited until the last 
     minute to file a simple form that hundreds of other companies 
     have filed in a timely manner since the enactment of the 
     Hatch-Waxman Act in 1984. In doing so, the amendment would 
     ultimately cost consumers and the government hundreds of 
     millions of dollars by delaying the entry of safe, affordable 
     generic medications. . . .
       The rules and regulations that govern patents and 
     exclusivity pertaining to both generic and brand drugs are 
     important public policy. While it is Congress's prerogative 
     to change or clarify statutory filing deadlines, we strongly 
     urge you to do so in a manner that does not benefit one 
     company's litigating position. GPhA urges you to strike 
     section 37 from H.R. 1249.

  Passing the Sessions amendment and removing the provision from the 
bill is not detrimental to passing the patent reform bill. The bailout 
provision was not included in the Senate-passed patent bill earlier 
this year. It was added in the House. The provision can and should be 
stripped in this vote today. The House can easily re-pass the bill 
without the bailout provision and send it to the President.
  Support the Sessions amendment and send a loud signal to the American 
public, who are watching what we do, that laws matter and that this 
kind of business has no place in Congress.
  Mr. LEAHY. Mr. President, this is an amendment that can derail and 
even kill this bill--a bill that would otherwise help our recovering 
economy, unleash innovation and create the jobs that are so desperately 
needed. I have worked for years against Patent Office fee diversion, 
but oppose this amendment at this time. Its formulation was rejected by 
the House of Representatives, and there is no reason to believe that 
the House's position will change. Instead, for ideological purity, this 
amendment can sink years of effort and destroy the job prospects 
represented by this bill. So while I oppose fee diversion, I also 
oppose the Coburn amendment.
  I kept my commitment to Senator Coburn and included his preferred 
language in the managers' amendment which the Senate considered last 
March. The difference between then and now is that the Republican 
leadership of the House of Representatives rejected Senator Coburn's 
formulation. They preserved the principle against fee diversion but 
changed the language.
  The language in the bill is that which the House devised and a 
bipartisan majority voted to include. It was worked out by the House 
Republican leadership to satisfy House rules. The provision Senator 
Coburn had drafted and offers again with his amendment today apparently 
violates House Rule 21, which prohibits converting discretionary 
spending into mandatory spending. So instead of a revolving fund, the 
House established a reserve fund. That was the compromise that the 
Republican House leadership devised between Chairmen Smith, Rogers and 
Ryan. Yesterday I inserted in the Record the June letter for 
Congressmen Rogers and Ryan to Chairman Smith of the House Judiciary 
Committee. Today I ask consent to insert into the Record the commitment 
letter from Chairman Rogers to Speaker Boehner.
  The America Invents Act, as passed by the House, continues to make 
important improvements to ensure that fees collected by the U.S. Patent 
and Trademark Office (USPTO) are used for Patent and Trademark Office 
activities. That office is entirely fee-funded and does not rely on 
taxpayer dollars. It has been and continues to be subject to annual 
appropriations bills. That allows Congress greater opportunity for 
oversight.
  The legislation that passed the Senate in March would have taken the 
Patent and Trademark Office out of

[[Page 13179]]

the appropriations process, by setting up a revolving fund that would 
have allowed the office to set fees and collect and spend money without 
appropriations legislation and congressional oversight. Instead of a 
revolving fund, the House formulation against fee diversion establishes 
a separate account for the funds and directs that they be used for U.S. 
Patent and Trademark Office. The House Appropriations Chairman has 
committed to abide by that legal framework.
  The House forged a compromise. Despite what some around here think, 
that is the essence of the legislative process. The Founders knew that 
when they wrote the Constitution and included the Great Compromise. 
Ideological purity does not lead to legislative enactments. This House 
compromise can make a difference and make real progress against fee 
diversion. It is something we can support and there are many, many 
companies and organizations that do support this final workout in order 
to get the bill enacted without further delay, as do I.
  The America Invents Act, as passed by the House, creates a new Patent 
and Trademark Fee Reserve Fund (the ``Reserve Fund'') into which all 
fees collected by the USPTO in excess of the amount appropriated in a 
fiscal year are to be deposited. Fees in the Reserve Fund may only be 
used for the operations of the Patent and Trademark Office. Through the 
creation of the Reserve Fund, as well as the commitment by House 
appropriators, H.R. 1249 makes important improvements in ensuring that 
user fees collected for services are used by the Patent and Trademark 
Office for those services.
  Voting for the Coburn amendment is a vote to kill this bill. It could 
kill the bill over a formality--the difference between a revolving fund 
and a reserve fund. It would require the House to reconsider the whole 
bill again. They spent days and weeks working out their compromise in 
good faith. And it was worked out by the House Republican leadership. 
There is no reason to think they will reconsider and allow the original 
Coburn language to violate their rules and avoid oversight. They have 
already rejected that language, the very language proposed by the 
Coburn amendment.
  We should not kill this bill over this amendment. We should reject 
the amendment and pass the bill. The time to put aside individual 
preferences and ideological purity is upon us and we need to legislate. 
That is what the American people elected us to do and expect us to do. 
The time to enact this bill is now. Vote no on the Coburn amendment.
  I have listened to the Senator from Oklahoma, and no matter what we 
say about it, his is an amendment that can derail and even kill this 
bill. He expresses concern as to why the bill should be sought because 
somebody objects to the bill. I sometimes ask myself that question. Of 
course, the distinguished Senator from Oklahoma has objected to many 
items going forward on his own behalf, but this is an amendment that 
could derail or even kill the bill. This is a bill that would otherwise 
help our recovering economy to unleash innovation, create the jobs so 
desperately needed.
  I probably worked longer in this body than anybody against Patent 
Office fee diversion. As the Senator from Oklahoma knows, I put a 
provision in the managers' package to allow the fees to go to the 
Patent Office. Now it is a lobby to keep that in in the other body. Its 
formulation was rejected by the House of Representatives.
  There is no reason to believe the House position will change. I 
checked with both the Republican and Democratic leaders over there. 
There is no reason to believe their position will change, but we insist 
on ideological purities--including something I would like. The 
amendment would take years of effort, destroy the job prospects 
represented by this bill. While I oppose the fee diversion, I also 
oppose this amendment.
  Does this bill have every single thing in it I want? No. We could 
write 100 patent reform legislations in this body where each one of us 
has every single thing we want, and we would have 100 different bills. 
We only have one. It does not have all the things I like, but that is 
part of getting legislation passed.
  I did keep my commitment to Senator Coburn. I kept his language in 
the managers' amendment, and I caught a lot for doing that--I am a 
member of the Appropriations Committee--but I kept it in there. The 
difference between then and now is that the Republican leadership of 
the House of Representatives rejected Senator Coburn's formulation. 
They preserved the principle against fee diversion but changed the 
language. In doing that, however, it is not a total rejection. They 
actually tried to work out a compromise. The language of the bill, 
which the House devised--a bipartisan majority voted to include--was 
worked out by the House Republican leadership to satisfy the House 
rules.
  The provision that Senator Coburn has drafted and offers, again, with 
his amendment today apparently violates House rule 21 which prohibits 
converting discretionary spending into mandatory spending.
  What the House did--and actually accomplished what both Senator 
Coburn and I and others want--instead of a revolving fund was to 
establish the reserve fund. That was the compromise that the Republican 
House leadership devised between Chairman Smith, Chairman Rogers, and 
Chairman Ryan.
  Yesterday, I inserted into the Record the June letter from 
Congressmen Rogers and Ryan to Chairman Smith to the House Judiciary 
Committee.
  I ask unanimous consent to have printed in the Record the commitment 
letter from Chairman Rogers to Speaker Boehner.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                  Committee on Appropriations,

                                    Washington, DC, June 22, 2011.
     Hon. John Boehner,
     Speaker of the House, House of Representatives, Washington, 
         DC.
     Hon. Eric Cantor,
     Majority Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Boehner and Leader Cantor: I write regarding 
     provisions in H.R. 1249, The America Invents Act, affecting 
     funding of the Patent Trademark Office (PTO). Following 
     constructive discussions with Chairman Smith of the Judiciary 
     Committee, this legislation now includes language that will 
     preserve Congress' ``power of the purse,'' under Article I, 
     Section 9, Clause 7 of the Constitution. The language 
     ensures: the PTO budget remains part of the annual 
     appropriations process; all PTO collected fees will be 
     available only for PTO services and activities in support of 
     the fee paying community; and finally, this important agency 
     will continue to be subject to oversight and accountability 
     by the Congress on an annual basis.
       To assure that all fees collected for PTO remain available 
     for PTO services, H.R. 1249 provides that if the actual fees 
     collected by the PTO exceed its appropriation for that fiscal 
     year, the amount would continue to be reserved only for use 
     by the PTO and will be held in a ``Patent Trademark Fee 
     Reserve Fund''.
       At the same time, consistent with the language included in 
     H.R. 1249, the Committee on Appropriations will also carry 
     language that will ensure that all fees collected by PTO in 
     excess of its annual appropriated level will be available 
     until expended only to PTO for support services and 
     activities in support of the fee paying community, subject to 
     normal Appropriations Committee oversight and review.
       I look forward to working with the relevant stakeholders in 
     efficiently implementing this new process.
       I believe this approach will help U.S. innovators remain 
     competitive in today's global economy and this in turn will 
     contribute to significant job creation here in the United 
     States, while holding firm to the funding principles outlined 
     in the Constitution.
           Sincerely,
                                                    Harold Rogers,
                      Chairman, House Committee on Appropriations.

  Mr. LEAHY. I would note that it has been suggested somehow the 
Appropriations chairman is not going to keep his word. Well, Chairman 
Rogers is a Republican. I have worked with him a lot. He has always 
kept his word to me, just as we have the most decorated veteran of our 
military serving in either body as chairman of the Senate 
Appropriations Committee, the only Medal of Honor recipient now 
serving, Senator

[[Page 13180]]

Inouye. Both he and the ranking Republican, Senator Cochran, have 
always kept their word to me certainly in more than the third of a 
century I have served on that committee.
  The America Invents Act, as passed by the House, continues to make 
important improvements. It ensures the fees collected by the U.S. 
Patent and Trademark Office are used for Patent and Trademark Office 
activities. The one thing in there is that we in the Congress at least 
have a chance to make sure they are using it the way they are supposed 
to.
  The office is entirely fee funded. It does not rely on taxpayer 
dollars. It has been and continues to be subject to the annual 
appropriations bill which allows the oversight that we are elected and 
paid for by the American people to do.
  The legislation we passed in March would have taken the Patent 
Trademark Office out of the appropriations process by setting up a 
revolving fund. Instead of a revolving fund, the House formulation 
against fee diversion established a separate account and directs that 
account be used only by the U.S. Patent and Trademark Office. The House 
Appropriations chairman is committed to abide by that legal framework. 
The Speaker is committed to that. The House forged a compromise. That 
is the essence of the legislative process.
  The Founders knew when they wrote the Constitution to include the 
Great Compromise. Ideological purity does not lead to legislative 
enactments. Ideological purity does not lead to legislative enactments.
  The House compromise can make a difference. It made real progress 
against fee diversion, which is something we can support. There are 
many companies and organizations that do support this in order to get 
the bill enacted without delay. After 6\1/2\ years, let's not delay any 
more.
  This is going to create jobs. We have 600,000 to 700,000 patents 
sitting there waiting to be processed. Let's get on with it. For all of 
these fees and the reserve fund can only be used for the operations of 
the Patent and Trademark Office. I don't know what more we can do. But 
I would say I am perfectly willing to accept what the House did because 
it assures that the fees go to the Patent Office.
  I am also well aware that voting for this amendment kills the bill. 
It could kill the bill over a formality--the difference between a 
reserve fund and a revolving fund.
  I think the House Republican leadership worked out their compromise 
in good conscience, and I agree with it.
  The U.S. Patent and Trademark Office is funded entirely by user fees, 
and the Leahy-Smith America Invents Act will ensure the PTO has access 
to the fees it collects. We have heard from a number of organizations 
which agree with that, and I ask unanimous consent that a sample of 
these letters from the Business Software Alliance, the Small Business 
and Entrepreneurship Council, DuPont, and other financial organizations 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   Business Software Alliance,

                                                    June 29, 2011.
     Hon. Harry Reid,
     Majority Leader,
     Washington, DC.
     Hon. Mitch McConnell,
     Minority Leader,
     Washington, DC.
       Dear Senator Reid and Senator McConnell: We urge you to 
     bring H.R. 1249 to the Senate floor as soon as the Senate's 
     schedule permits.
       The Business Software Alliance (BSA) strongly supports 
     modernizing our patent system. An efficient and well-
     operating patent system is necessary to promote healthy and 
     dynamic innovation. Innovation is critically important to 
     software and computer companies' ability to provide new and 
     better tools and technologies to consumers and customers.
       BSA member companies believe H.R. 1249 establishes a 
     transparent and efficient patent system. It will make the 
     Patent and Trademark Office more accessible and useful to all 
     inventors, large and small. In addition, the provisions of 
     H.R. 1249 on Patent and Trademark Office funding will ensure 
     that the user fees paid to the USPTO will be available to the 
     Office for processing patent applications and other important 
     functions of the Office.
       H.R. 1249 and S. 23 are the products of many years of 
     skillful and difficult legislative work in both the House and 
     the Senate. H.R. 1249 represents a thoughtful and balanced 
     compromise that is endorsed by virtually all stakeholders. We 
     urge the Senate to adopt H.R. 1249 as acted upon by the House 
     and pass it without amendment as soon as possible.
           Sincerely,
                                              Robert W. Holleyman,
     President and CEO.
                                  ____



                                                  SBE Council,

                                        Oakton, VA, June 29, 2011.
       Dear Chairman Leahy and Ranking Member Grassley: The Small 
     Business & Entrepreneurship Council (SBE Council) has been a 
     leading advocate for patent reform within the small business 
     community, and we urge you to work with the leadership of the 
     Senate to bring the America Invents Act (H.R. 1249) to the 
     Senate floor for approval.
       H.R. 1249 would improve the patent system in key ways. For 
     example, the U.S. patent system would be brought in step with 
     the rest of the world. The U.S. grants patents on a first-to-
     invent basis, rather than the first-inventor-to-file system 
     that the rest of the world follows. First-to-invent is 
     inherently ambiguous and costly, and that's bad news for 
     small businesses and individual inventors.
       A shift to a ``first-inventor-to-file'' system creates 
     greater certainty for patents, and amounts to a far simpler 
     and more transparent system that would reduce costs in the 
     rare cases when conflict exists over who has the right to a 
     patent. By moving to a first-inventor-to-file system, small 
     firms will in no way be disadvantaged, as some claim, while 
     opportunities in international markets will expand.
       In addition, an Associated Press report, for example, noted 
     ``that it takes an average of three years to get a patent 
     approved and that the agency has a backlog of 1.2 million 
     pending patents, including more than 700,000 that haven't 
     reached an examiner's desk.'' Part of the problem here is 
     that revenues from patent fees can be drained off by Congress 
     to be spent elsewhere.
       The agreement reached in the House on USPTO funding will 
     assure that the fees paid to the USPTO by inventors will not 
     be diverted elsewhere, but instead be made available for 
     processing patent applications. While the Senate's approach 
     in S. 23 to prevent diversion of USPTO funds would have been 
     a better choice, the House bill still provides an effective 
     option.
       Patent reform is needed to clarify and simplify the system; 
     to properly protect legitimate patents; and to reduce costs 
     in the system, including when it comes to litigation and the 
     international marketplace. All of this, of course, would aid 
     small businesses and the overall economy.
       H.R. 1249, like S. 23, is a solid bill, and the opportunity 
     for long overdue and much-needed patent reform should not be 
     lost.
       Thank you for considering the views of the small business 
     community. Please feel free to contact SBE Council with 
     questions or if we can be of assistance on this important 
     issue for small businesses.
           Sincerely,
                                                   Karen Kerrigan.
     President & CEO.
                                  ____



                                                       Dupont,

                                     Wilmington, DE, July 6, 2011.
     Hon. Patrick J. Leahy,
     Chairman, Committee on the Judiciary, Washington, DC.
     Hon. Charles E. Grassley,
     Ranking Member, Committee on the Judiciary, Washington, DC.
       Dear Chairman Leahy and Ranking Member Grassley: As a world 
     leader in science and innovation, including agriculture and 
     industrial biotechnology, chemistry, biology, materials 
     science and manufacturing, DuPont recognizes the nation's 
     patent system is a cornerstone in fostering innovation and 
     creating jobs. Patents continue to be one of the engines for 
     innovation and a process for discovery that leads to rich, 
     new offerings for our customers and gives our company the 
     edge to continue transforming markets and society. Our stake 
     in the patent system is significant--in 2010, DuPont filed 
     over 2,000 patent applications and was awarded almost 700 
     U.S. patents. Given the importance of its patents, DuPont has 
     been a strong supporter of efforts to implement patent reform 
     legislation that will improve patent quality and give the 
     U.S. Patent and Trademark Office the resources it needs to 
     examine and grant patents in a timely manner.
       We believe that any changes to the patent system need to be 
     made in a way that strengthens patents and supports the 
     important goals of fostering innovation and creating jobs. In 
     our view, the Leahy-Smith America Invents Act, H.R. 1249, 
     achieves these objectives, and we urge you to consider 
     adoption of this bill.
       The agreement reached in the House on USPTO funding will 
     assure that the fees paid to the USPTO by inventors will not 
     be diverted and will be made available to the Office for 
     processing patent applications and other important functions 
     of the Office.

[[Page 13181]]

     While we would have preferred the Senate's approach in S. 23 
     to prevent diversion of USPTO funds, we believe that 
     acceptance of the House bill provides an effective and the 
     most immediate path forward to address problems of the patent 
     office. H.R. 1249, like S. 23, is an excellent bill. These 
     bills are the product of many years of skillful and difficult 
     legislative work in both the House and the Senate. We believe 
     the time has now come for the Senate to take the final 
     legislative act required for enactment of these historic 
     reforms.
       We look forward to patent reform becoming a reality in the 
     112th Congress, due in significant measure to your 
     leadership, and we thank you for your efforts in this 
     critical policy area.
           Very truly yours,
     P. Michael Walker,
       Vice President, Assistant General Counsel and Chief 
     Intellectual Property Counsel.
                                  ____

                                                    June 29, 2011.
     Hon. Harry Reid,
     Majority Leader, U.S. Senate,
     Washington, DC.
     Hon. Mitch McConnell,
     Republican Leader, U.S. Senate,
     Washington, DC.
       Dear Leaders Reid and McConnell: We are writing to 
     encourage you to bring H.R. 1249, the ``Leahy-Smith America 
     Invents Act,'' to the Senate floor at your earliest possible 
     convenience and send the bill to the President's desk to be 
     signed into law. H.R. 1249 closely mirrors the Senate bill 
     that passed earlier this year by an overwhelming 95-5 vote.
       Patent reform is essential legislation: enactment will spur 
     innovation creating jobs and ensure that the Patent and 
     Trademark Office (PTO) has the tools necessary to maintain 
     our patent system as the best in the world. We strongly 
     support the improved re-examination procedures in H.R. 1249, 
     which will allow the experts at PTO to review low-quality 
     business-method patents against the best prior art. Equally 
     important, the bill provides the PTO with increased and 
     predictable funding. This certainty is absolutely critical if 
     the PTO is to properly allocate resources and hire and retain 
     the expertise necessary to benefit the entire user-community.
       This bill has been nearly a decade in the making and is 
     supported by a vast cross-section of all types of inventors 
     and businesses. It is time to send patent reform to the 
     President for signature, and we strongly encourage the Senate 
     to take up and pass H.R. 1249 without delay.
           Sincerely,
         American Bankers Association, American Council of Life 
           Insurers, American Financial Services Association, 
           American Insurance Association, The Clearing House 
           Association, Consumer Bankers Association, Credit Union 
           National Association, The Financial Services 
           Roundtable, The Independent Community Bankers of 
           America, Mortgage Bankers Association, National 
           Association of Mutual Insurance Companies, Property 
           Casualty Insurers Association of America, Securities 
           Industry and Financial Markets Association.

  Mr. LEAHY. Mr. President, I ask unanimous consent that I be allowed 
to reserve the remainder of my time, and 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. COBURN. 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. COBURN. Mr. President, I wish to respond to my chairman's 
comments. First of all, what we have proposed came out of the Judiciary 
Committee in the House 32 to 3. In other words, only three people on 
the Judiciary Committee in the House objected to this.
  The other point I wish to make is the letter from Chairman Rogers 
does not bind the next Appropriations Committee chairman. I think 
everybody would agree with that. It only binds him and it only binds 
him as long as he honors his commitment. I have no doubt he will honor 
his commitment as long as he is chairman.
  The third point I wish to make is what the House has set up doesn't 
make sure the funds go to the PTO, it just means they can't go 
somewhere else. That is what they have set up. They do not have to 
allow all the funds collected to go to the PTO. So they can reserve 
$200 million or $300 million a year and put it over there in a reserve 
fund and send it to the Treasury which will cause us to borrow less, 
but the money won't necessarily go to the PTO. There is nothing that 
mandates the fees collected go to the Patent and Trademark Office.
  I understand my chairman. I understand his frustration with trying to 
get this bill through, and I understand that he sees this as a 
compromise. I don't. I understand we are going to differ on that and 
agree to disagree.
  With that, I yield the floor to allow the chairman to speak, and I 
reserve the remainder of my time.
  Mr. LEAHY. I thank the Senator. I reserve the remainder of my time 
and 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. SANDERS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Leahy). Without objection, it is so 
ordered.


                          Flooding in Vermont

  Mr. SANDERS. Mr. President, I wish to pick up on a point the senior 
Senator from Vermont made earlier today. Both he and I have had the 
opportunity to travel throughout the State of Vermont to visit many of 
our towns which have been devastated by one of the worst natural 
disasters in our State's history.
  We have seen in the southern part of the State--in Wilmington, for 
example--the entire business district severely damaged. I have seen in 
central Vermont a mobile home park almost completely wiped out, with 
people who are in their eighties and are now having to look to find new 
places in which to live. I have seen a public housing project for 
seniors in Brattleboro severely damaged. A lot of seniors there are now 
having to find new places to live. We have seen the State office 
complex in Waterbury--the largest State office building in the State, 
housing 1,700 Vermont workers, the nerve center of the State--
devastated. Nobody is at work there today.
  We have seen hundreds of bridges and roads destroyed, and right now, 
as we speak, there are rains coming in the southern part of the State, 
causing more flooding, more damage. We have seen a wonderful gentleman 
from Rutland lose his life because he was doing his job to make sure 
the people of that area were protected. So we have seen damage the 
likes of which we have never seen in our lifetime.
  What I would say--and I know I speak for the senior Senator from 
Vermont as well--is that our country is the United States of America--
the United States of America. What that means is we are a nation such 
that when disaster strikes in Louisiana or Mississippi in terms of 
Hurricane Katrina--I know the Presiding Officer remembers the 
outpouring of support from Vermont for the people in that region. All 
of our hearts went out to the people in Joplin, MO, when that community 
suffered an incredible tornado that took 150 or so lives and devastated 
that city. What America is about and what a nation is about is that 
when disaster hits one part of the country, we unite as a nation to 
give support to help those communities, those businesses, those 
homeowners who have been hurt get back on their feet.
  I know the senior Senator from Vermont has made this point many 
times: Right now we are spending billions of dollars rebuilding 
communities in Afghanistan and Iraq. Well, I think I speak for the vast 
majority of the people in this country and in my State of Vermont that 
if we can spend billions rebuilding communities in Iraq and 
Afghanistan, we surely can rebuild communities in Vermont, New Jersey, 
North Carolina, and other parts of the United States of America that 
have been devastated by Hurricane Irene.
  I think as a body, as a Congress, the House and Senate have to work 
as expeditiously as we can to come up with the funds to help rebuild 
all of the communities that have been so severely damaged by this 
terrible flood. I look forward to working with my colleagues to make 
that happen.
  With that, I yield the floor and note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.

[[Page 13182]]

  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 (Mr. Sanders). Without objection, it is so 
ordered.
  Mr. LEAHY. Mr. President, when the America Invents Act was first 
considered by the Senate last March, I spoke about the contributions 
Vermonters have made to innovation in America since the founding of our 
Nation. The distinguished Presiding Officer and I know about what 
Vermont has done. I wish to remind everybody that from the first patent 
ever issued by our government to cutting-edge research and inventions 
produced today Vermonters have been at the forefront of innovation 
since the Nation's birth.
  Many may think of our Green Mountain State as being an unlikely 
hotbed of innovation, but we have actually over the last few years 
issued the most patents per capita of any State in the country--
actually more patents than a lot of States that are larger than we are. 
It is a small State, to be sure, but it is one that is bursting with 
creativity.
  The rich history of the inventive spirit of Vermont is long and 
diverse. Vermonters throughout have pursued innovations from the time 
of the Industrial Revolution to the computer age. Vermont inventors 
discovered new ways to weigh large objects as well as ways to enjoy the 
outdoors. They have perfected new ways to traverse rivers and more 
environmentally friendly ways to live in our homes. Over the years, as 
America has grown and prospered, Vermont's innovative and creative 
spirit has made the lives of all Americans better and possibly made 
them more productive. The patent system in this country has been the 
catalyst that spurred these inventors to take the risks necessary to 
bring these ideas to the marketplace.
  The story of innovation in Vermont is truly the American story. It 
has been driven by independent inventors and small businesses taking 
chances on new ideas. A strong patent system allowed these ideas to 
flourish and brought our country unprecedented economic growth. These 
same kinds of inventors exist in Vermont today, as they do throughout 
our great country.
  But these inventors need to be assured that the patent system that 
served those who came before them so well can do the same today. The 
America Invents Act will provide that assurance for years to come.
  My distinguished colleague from Vermont and I have both spoken 
several times on the Senate floor since the Senate came back in session 
about the devastation in Vermont. I cannot help but think of the 
devastation that Irene has caused in so many of our communities at 
home. Just as Senator Sanders and Congressman Welch and Governor 
Shumlin, I have seen the damage and heartbreak firsthand. But I also 
saw the fruits of innovation that will help bring recovery to 
communities throughout Vermont: the heavy machinery that helped to 
clear debris and that will build our roads and our bridges and our 
homes; the helicopters that brought food and water to stranded 
residents; and the bottles that allowed safe drinking water to reach 
them.
  The American patent system has helped to develop and refine countless 
technologies that drive our country in times of prosperity but also in 
times of tragedy. It is critical we ensure that this system remains the 
best in the world.
  Vermont and the rest of the country deserve the world's best patent 
system. The innovators of the past had exactly that, but we can ensure 
that the innovators who are among us today and those who will come in 
succeeding generations will have it as well by passing the America 
Invents Act.
  I am proud of the inventive contributions that Vermonters have made 
since the founding of this country. I hope to honor their legacy. I 
hope to inspire the next generation by securing the passage of this 
legislation.
  I have been here for a number of years, but this is one of those 
historic moments. The patent system is one of the few things enshrined 
in our Constitution, but it is also something that has not been updated 
for over half a century. We can do that. We can do that today with our 
vote. We can complete this bill. We can send it to the President. The 
President has assured me he will sign it. We will make America 
stronger. We will create jobs. We will have a better system. And it 
will not cost American taxpayers anything. That is something we ought 
to do.
  Mr. President, the America Invents Act is supported by dozens of 
businesses and organizations, large and small, active in all 50 States.
  The America Invents Act is the product of more than 6 years of debate 
and compromise. The stakeholders have crossed the spectrum--from small 
businesses to high-tech companies; financial institutions to labor 
organizations; life sciences to bar associations.
  More than 180 companies, associations, and organizations have 
endorsed the Leahy-Smith America Invents Act. I ask unanimous consent 
that a list of these supporters be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             List of Supporters of the America Invents Act

       3M; Abbott Adobe Systems Incorporated; Advanced Micro 
     Devices; Air Liquide; Air Products; American Bar Association; 
     American Bankers Association; American Council of Life 
     Insurers; American Council on Education; American Financial 
     Services Association; American Institute of Certified Public 
     Accountants; American Insurance Association; American 
     Intellectual Property Law Association; American Trucking 
     Association; Apple, Inc.; Applied Materials, Inc.; Aruba 
     Networks, Inc.; Assoc. for Competitive Technology; Assoc. of 
     American Medical Colleges.
       Association of American Universities; Association of Public 
     and Land-grant Universities; Association of University 
     Technology Managers; AstraZeneca; Atheros Communications, 
     Inc.; Autodesk, Inc.; Avaya Inc.; Avid Technology, Inc.; Bank 
     of America; Baxter Healthcare Corporation; Beckman Coulter; 
     Biotechnology Industry Organization; Borealis Ventures; 
     Boston Scientific; BP; Bridgestone American Holdings, Inc.; 
     Bristol-Meyers Squibb; Business Software Alliance; CA, Inc.; 
     Cadence Design Systems, Inc.; California Healthcare 
     Institute.
       Capital One; Cardinal Intellectual Property; Cargill, Inc.; 
     Caterpillar; Charter Communications; CheckFree; Cisco Systems 
     Citigroup; The Clearing House Association; Coalition for 
     Patent and Trademark Information Distribution; Collexis 
     Holdings, Inc.; Computer & Communications Ind. Assoc.; 
     Computing Technology Industry Association; Consumer Bankers 
     Association; Corning; Council on Government Relations; 
     Courion; Credit Union National Association; Cummins, Inc.; 
     Dell; The Dow Chemical Company.
       DuPont; Eastman Chemical Company; Eastman Kodak; eBay Inc.; 
     Electronics for Imaging; Eli Lilly and Company; EMC 
     Corporation; EnerNOC; ExxonMobil; Facebook; Fidelity 
     Investments; Financial Planning Association; FotoTime; 
     General Electric; General Mills; Genzyme; GlaxoSmithKline; 
     Google Inc.; Hampton Roads Technology Council; Henkel 
     Corporation.
       Hoffman-LaRoche; HSBC North America; Huntington National 
     Bank; IAC; IBM; Illinois Technology Association; Illinois 
     Tool Works; Independent Community Bankers of America; 
     Independent Inventors; Infineon Technologies; Information 
     Technology Council; Integrated DNA Technologies; Intel; 
     Intellectual Property Owners Association; International 
     Trademark Association; International Intellectual Property 
     Institute; Intuit, Inc.; Iron Mountain; Johnson & Johnson; 
     Kalido.
       Lexmark International, Inc. Logitech, Inc.; Massachusetts 
     Technology Leadership Council; Medtronic; Merck & Co, Inc.; 
     Micron Technology, Inc.; Microsoft; Millennium 
     Pharmaceuticals; Milliken and Company; Molecular; 
     Monster.com; Motorola; Mortgage Bankers Association; National 
     Association of Federal Credit Unions; National Association of 
     Manufacturers; National Assoc. of Mutual Insurance Cos.; 
     National Association of Realtors; National Semiconductor 
     Corporation; National Retail Federation; National Treasury 
     Employees Union; Native American IP Enterprise Council; Net 
     Coalition; Netflix, Inc.; Network Appliance, Inc.; Newegg 
     Inc.; News Corporation; Northrop Grumman; Novartis; Numenta, 
     Inc.; Nvidia OpenAir, Inc.; Oracle; Overstock.com; 
     Partnership for New York City; Patent Cafe.com, Inc.; 
     PepsiCo, Inc.; Pfizer; PhRMA; Procter & Gamble Company; 
     Property Casualty Insurers Association of America; Red Hat.
       Reed Elsevier Inc.; RIM; Salesforce.com, Inc.; SanDisk 
     Corporation; San Jose Silicon Valley Chamber of Commerce; SAP 
     America, Inc.; SAS Institute; Seagate Technology,

[[Page 13183]]

     LLC; Sebit, LLC; Securities Industry & Financial Markets 
     Association; SkillSoft; Small Business and Entrepreneurship 
     Council; Software Information and Industry Association; Sun 
     Microsystems, Inc.; Symantec Corporation; Tax Justice Network 
     USA; TECHQuest Pennsylvania; Teradata Corporation; Texas 
     Instruments; Texas Society of CPAs.
       The Financial Services Roundtable; Toyota Trimble 
     Navigation Limited; The United Inventors Association of 
     America; United Steelworkers; United Technologies; U.S. 
     Chamber of Commerce; USG Corporation; VeriSign Inc.; Verizon; 
     Visa Inc.; Visi-Trak Worldwide, LLC; VMware, Inc.; Vuze, 
     Inc.; Western Digital Technologies, Inc.; Weyerhaeuser; 
     Yahoo! Inc.; Ze-gen; Zimmer; ZSL, Inc.

  Mr. LEAHY. I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. McCaskill). The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. KERRY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Madam President, regarding the parliamentary situation, 
how much time remains for Senator Cantwell?
  The PRESIDING OFFICER. Thirteen minutes remains.
  Mr. KERRY. It is my understanding that Senator Cantwell wants to 
preserve a component of that, so I would, on behalf of Senator 
Cantwell, yield myself 5 minutes at this time.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 600

  Mr. KERRY. Madam President, I appreciate the comments of our friend 
from Alabama, Senator Sessions, regarding his amendment to strike 
section 37 of the patent reform bill, but I disagree with him on 
substantive terms, and I ask our colleagues to look carefully at the 
substance of this amendment and the importance of this amendment with 
respect to precedent not for one company from Massachusetts or for one 
entity but for companies all over the country and for the application 
of patent law as it ought to be applied.
  The only thing section 37 does--the only thing--is it codifies what a 
Federal district court has already said and implements what the U.S. 
Patent and Trademark Office is already doing. There is no breaking of 
new ground here. This is codifying a Federal district court, codifying 
what the Patent Office has done, and, in fact, codifying common sense. 
It is putting into effect what is the right decision with respect to 
how we treat patents in our country.
  Section 37 is, in fact, a very important clarification of a currently 
confusing deadline for filing patent term extension applications under 
the Hatch-Waxman Act. Frankly, this is a clarification, I would say to 
the Senator from Alabama, that benefits everybody in the country. In 
fact, this is a clarification which has already been put into effect 
for other types of patents that were once upon a time treated with the 
same anomaly. They rectified that. They haven't rectified it with 
respect to this particular section of patent law.
  So all we are doing is conforming to appropriate law, conforming to 
the standards the Patent Office applies, and conforming for all 
companies in the country, for any company that might be affected 
similarly. If this were a bailout for a single firm or a pharmaceutical 
company, as some have tried to suggest it might be, why in the world 
did a similar provision previously get reported out of the Senate 
Judiciary Committee by a vote of 14 to 2? How in the world could this 
provision have then passed the House of Representatives as it did? And 
why would many House Republicans have supported it as they did? The 
answer is very simple: Because it is the right thing to do under the 
law and under the common sense of how we want patents treated in the 
filing process.
  The law as currently written, frankly, was being wrongly applied by 
the Patent and Trademark Office. And you don't have to take my word for 
that; that is what a Federal court has said on more than one occasion. 
Each time, the court has ruled that it was the Patent and Trademark 
Office, not an individual firm called WilmerHale or Medicines Company--
not those two--that made a mistake.
  Let me make that very clear so the record is as clear as it can be. 
The current law as it is written says that ``to obtain an extension of 
the term of a patent under this section, the owner of record of the 
patent or its agent shall submit an application to the Director. . . . 
Such an application may be only submitted within the sixty-day period 
beginning on the date the product received permission'' under the 
appropriate provision of law.
  Now, the FDA reasonably interprets this language to mean that if 
something is received after the close of business on a given business 
day, it is deemed to be received the next business day. Under this 
interpretation, the filing by the Medicines Company was indisputably 
timely.
  So my colleagues should not come to the floor and take away from 
entities that are trying to compete and be in the marketplace over some 
technicality: the suggestion that because something was filed 
electronically on a particular given day at 5 o'clock in the afternoon 
when people had gone home--they weren't open--that somehow they deem 
that not to have been appropriately filed.
  But rather than accept that commonsense interpretation, the Patent 
and Trademark Office told the Medicines Company it was late. They just 
decided that. They said: You are late, despite the fact that 
interpretation contradicted the same-business-day rule the FDA uses 
when interpreting the very same statute. So as a result, the issue went 
to court, and guess what. The court told the PTO it was wrong. A 
Federal judge found that the Patent Office and FDA had been applying 
inconsistent interpretations of the exact same statutory language in 
the Hatch-Waxman Act. The FDA uses one interpretation that has the 
effect of extending its own internal deadlines, but the PTO insisted on 
using a different interpretation. The result was a ``heads I win, tails 
you lose.''
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KERRY. Madam President, I ask unanimous consent to speak for 1 
additional minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. For companies investing in innovative medicines, the court 
found that the PTO failed to provide any plausible explanation for this 
inconsistent approach. It further found that the PTO's interpretation 
had the effect of depriving applicants of a portion of their time for 
filing an application.
  After considering all the relevant factors, the court adopted the 
FDA's interpretation. So the court told the PTO that they were wrong 
and it was they, and not the Medicines Company, who made a mistake.
  So this is not an earmark. It isn't, as Senator Sessions contends, a 
single-company bailout. It is a codification of a court ruling. It is a 
clarification. It is common sense. It puts a sensible court decision 
into legislative language, and it is legislative language that applies 
to all companies across the country equally. It doesn't single out any 
particular company but amends the patent law for the benefit of all 
applicants.
  I ask my colleagues to oppose the Sessions amendment on the merits. 
More importantly, we need to move forward with this important bill on 
which Chairman Leahy and Senator Grassley have worked so hard. Passing 
the Sessions amendment would stop that. It would require a House-Senate 
conference on the bill, and it would at best seriously delay and at 
worst make it impossible to exact patent reform during this Congress. 
So this is, on the merits, for all companies. This is common sense. 
This is current law. This is current practice. So I ask my colleagues 
accordingly to vote appropriately.
  Madam President, I ask unanimous consent that at 4 p.m. the Senate 
proceed to the votes in relation to the amendments and passage of H.R. 
1249, the America Invents Act, with all other provisions of the 
previous order

[[Page 13184]]

remaining in effect; that the final 10 minutes of debate be equally 
divided between the chairman and ranking member of the Judiciary 
Committee or their designees, with the chairman controlling the final 5 
minutes; further, that there be 4 minutes equally divided between 
proponents and opponents prior to each vote.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. KERRY. Madam President, I reserve the remainder of Senator 
Cantwell's time.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. CORNYN. May I inquire of the Chair how much time remains for me 
to speak before getting to the last order?
  The PRESIDING OFFICER. There is 4\1/2\ minutes remaining.


                            Texas Wildfires

  Mr. CORNYN. Madam President, I wish to speak for about 4\1/2\ minutes 
on the natural disasters that have been confronting our Nation and in 
particular Texas, where the State has had about 3\1/2\ million acres of 
land burned, with many people now finding themselves literally homeless 
as a result of fires that many of my colleagues have seen on TV or 
watched on the Internet but which, frankly, do not capture the scale of 
the devastation.
  Just to give you an idea of the scope of this natural disaster, so 
far, in 2011, more than 18,000 wildfires have been reported in the 
State. As I mentioned, it has burned an area roughly the size of 
Connecticut. Nearly 2,900 structures have been lost and, unfortunately, 
there has also been a loss of life in these fires, as well as 5,000 
Texans have now been evacuated from their homes. Unfortunately, these 
fires have been a feature of life in parts of Texas for most of the 
year because we are in the middle of a historic drought where, because 
of La Nina, the weather pattern, we have had an abnormally dry year, 
and, indeed, it has caused more than $5 billion of agricultural losses 
alone as a result of that drought.
  I have not only seen some of the devastation myself before I left 
Austin, but I have also talked to a number of people on the ground who 
are well informed.
  Representative Tim Kleinschmidt, who represents the Texas district 
east of Austin in sort of the Bastrop area, told me that as many as 
1,000 people have been evacuated from their homes in that area and have 
been living in shelters since Sunday. Water and electricity are also 
down in many areas, and the wind has unfortunately swept the fire into 
other areas and now is only about 30 percent contained.
  I have also talked to some of our other local leaders, our county 
judges, such as Grimes County judge Betty Shiflett, who told me that 
while they have no unmet needs right now, they are very concerned about 
the threat to life and property and are working as hard as they can to 
contain the fires.
  I have also talked to our outstanding chief of the Texas Department 
of Emergency Management and the Director of the Texas Forest Service 
who tell me that as many as 2,000 Americans from places other than 
Texas have come to the State to help fight these fires and help protect 
property and life.
  We have had a good Federal response to one extent, and that is the 
U.S. Forest Service has provided planes, bulldozers, and other 
equipment. Unfortunately, we have seen the White House so far not 
extend the disaster declaration beyond the original 52 counties 
approved for FEMA assistance on May 3. I should say that assistance ran 
out on May 3, more than 4 months ago. Suffice it to say, the disaster 
declaration should be extended to cover the rest of the State, at least 
200 more Texas counties that need Federal assistance.
  I am informed from reading the newspaper that President Obama reached 
out to Governor Perry yesterday to extend his condolences. But, 
frankly, more than condolences, what we need are the resources to help 
fight these fires to deal with the disaster and to help get people back 
into their homes as soon as possible.
  I would just say in conclusion, Madam President, that the majority 
leader has raised the question of whether disaster relief should be 
paid for or whether it should be borrowed money. I come down on the 
side of believing that we can't keep borrowing money we don't have. 
That is what the American people keep telling us. That is what the last 
election was all about. That is what the financial markets are telling 
us, and I believe the American people believe we have plenty of money 
in the Federal Government for Congress to do its job by setting 
priorities and funding those priorities.
  I believe emergency assistance to the people who have been hit 
hardest by these natural disasters is one of those priorities. We 
should fund it instead of funding wasteful spending and duplicative 
programs and engaging in failed Keynesian stimulus schemes.
  I yield the floor.


                               Section 5

  Mr. BLUNT. Madam President, a significant change contained in H.R. 
1249 from S. 23, the version of the bill debated and overwhelmingly 
passed by the Senate earlier this year, is the inclusion of the defense 
of prior commercial use against infringement of a later granted patent. 
Specifically, section 5 of H.R. 1249 creates a prior user right for 
processes, or machines, or compositions of matter used in a 
manufacturing or other commercial process, that would otherwise 
infringe a claimed invention if: (1) the person commercially used the 
subject matter in the United States, either in connection with an 
internal commercial use or an actual arm's length sale or other arm's 
length commercial transfer of a useful end result of such commercial 
use; and (2) the commercial use occurred at least one year before the 
earlier of either the effective filing date of the claimed invention or 
the date on which the claimed invention was disclosed to the public in 
a manner that qualified as an exception from prior art.
  As the distinguished chairman of the Committee on the Judiciary 
knows, such prior user rights, if properly crafted and understood, can 
be of great benefit to keeping high paying jobs in this country by 
giving U.S. companies a realistic option of keeping internally used 
technologies as trade secrets.
  Mr. LEAHY. Madam President, my colleague and friend from Missouri is 
correct Prior user rights, if properly crafted and asserted, can be of 
great benefit to keeping high-paying jobs here at home.
  Mr. BLUNT. I thank my good friend. A robust prior user right is not 
needed in today's first-to-invent regime. This is because, if a prior-
user was sued for infringement, the patent could be invalidated under 
section 102(g)(2) because the prior-user was the first-to-invent. 
However, should H.R. 1249's first-to-file system become law, the prior 
invention bar to patentability under section 102(g)(2) will be 
eliminated. This switch to first-to-file then presents the question of 
whether a non-patent-filing manufacturer should be given some prior 
user rights that would continue to allow these non-patented internal 
uses. Section 5 of H.R. 1249 attempts to settle the question by 
granting prior user rights but only when the prior use is for certain 
``commercial'' uses.
  The prior user rights provided under section 5 of H.R. 1249 will 
allow developers of innovative technologies to keep internally used 
technologies in-house without publication in a patent. This will help 
U.S. industry to keep jobs at home and provide a basis for restoring 
and maintaining a technology competitive edge for the U.S. economy. For 
these reasons, I believe the Senate should support this valuable 
addition to the America Invents Act and I applaud the leadership of my 
friend from Vermont.
  Mr. LEAHY. I thank the Senator.
  Mr. BLUNT. However, as noted a moment ago, the utility of the prior 
user defense is linked to its clarity surrounding its scope and its 
limitations. Many innovative companies may be reticent to opt for the 
protection of prior user rights for fear that the defense may not stand 
against a charge of infringement by a later patent owner who sues for 
infringement. Many innovators may feel the need to rush to the patent 
office in order to assure their long term freedom to operate. I

[[Page 13185]]

do not need to belabor my colleagues with the attendant benefit the 
publication of patents provides to global competitors who are not 
respectful of intellectual property rights.
  The reason for this detrimental reliance on patents for internal 
technology is that the utility and reliability of section 5 is 
dependent on the prior use being an ``internal commercial use''--a term 
for which there is no readily available judicial precedent. Should 
section 5 of H.R. 1249 become law, an innovator and his legal counsel 
need some reasonable assurance that an internal use will, in fact, be 
deemed to be a commercial use protectable under the law. These 
assurances are all the more important for U.S. companies in the 
biotechnology field with extraordinarily long lead times for 
commercialization of its products. Does my colleague from Vermont 
understand the concern I am raising?
  Mr. LEAHY. Madam President, I will say to my good friend that he is 
not the first to raise this issue with me and the other Members of the 
House and Senate Judiciary Committees who have worked on this bill. I 
have discussed section 5 at length with the distinguished House 
Judiciary Committee Chairman Lamar Smith. Perhaps I can help provide 
some of the needed clarity for my colleague concerning what we intend 
to be within the confines of the definition of ``internal commercial 
use'' as it is used in section 5 of the bill.
  Mr. BLUNT. I thank my colleague for his willingness to discuss this 
matter here on the floor of the Senate. It is my reading of the bill's 
language under section 5 that prior use rights shall vest when 
innovative technology is first put into continuous internal use in the 
business of the enterprise with the objective of developing 
commercializable products. Does the chairman of the Judiciary Committee 
share this understanding?
  Mr. LEAHY. Yes. My colleague and I are in agreement that it is our 
intention, as the sponsors of this comprehensive measure, that the 
prior use right set forth in section 5 of H.R. 1249 shall vest when 
innovative technology is first put into continuous internal use in the 
business of an innovator's enterprise with the objective of making a 
commercializable product.
  Mr. BLUNT. I thank my colleague from Vermont. If he would permit me 
to clarify this matter further. Am I correct in understanding that, so 
long as that use begins more than 1 year prior to the effective filing 
date of a subsequent patent or publication by a later inventor, the 
initiation of continuous internal use by an original innovator in a 
manufacturing of a product should guarantee the defense of prior use 
regardless of whether the product is a prototype with a need for 
quality improvements?
  Mr. LEAHY. I thank my colleague for the question. His understanding 
is correct. So long as the prior use begins more than 1 year prior to 
the effective filing date of a subsequent patent or publication by a 
later inventor, the initiation of continuous internal use in the 
manufacture of products should guarantee the defense of prior use.
  Mr. BLUNT. I thank my colleague. Let me illustrate by showing the 
impact of the ambivalence of the statutory language on agricultural 
research which is a major industry not only in Midwestern States like 
Missouri, Iowa, Kansas, Nebraska, Illinois, but in States ranging from 
California to Connecticut from Texas to Minnesota from North Carolina 
to Idaho. Virtually every State in this Union has an investment in 
agricultural research. The productivity of U.S. farmers provides a 
significant positive input to the U.S. balance of trade due in large 
part to the high technology adopted by U.S. farmers. That high 
technology is provided from multiple sources ranging from research at 
land grant universities, the USDA and private for-profit companies all 
of whom have internal technology that provides a competitive edge for 
maintaining agricultural competitive advantage for the U.S. economy.
  To specifically illustrate let us consider that U.S. researchers are 
leading the world in discovering genetic markers that are associated 
with important agronomic traits which serves as breeding production 
tools. Instead of teaching foreign competitors these production tools, 
a preferred alternative may be to rely on prior user rights for such 
innovative crop breeding technology which is used in the manufacture of 
new plant varieties although the use may only occur once a year after 
each growing season and for many years to selectively manufacture a 
perfected crop product that is sold.
  As another example let us consider an innovation in making potential 
new genetically modified products all of which need years of testing to 
verify their viability, repeatabilty and commercial value. Of the 
thousands of new potential prototype products made, only a few may 
survive initial screening to begin years of field trials. We should 
agree that a continuously used process qualifies as internal commercial 
use despite the fact that many prototypes will fail to have commercial 
merit.
  As my examples illustrate, for section 5 to have its intended 
benefit, internal commercial use must vest when an innovator reduces 
technology to practice and takes diligent steps to maintain continuous, 
regular commercial use of the technology in manufacturing operations of 
the enterprise.
  Mr. LEAHY. My colleague is correct in his reasoning and his 
understanding of what is intended by section 5. The methods used by 
Edison in producing multiple failures for electric light bulbs were no 
less commercial uses before the ultimate production of a commercially 
successful light bulb. Let us agree that internally used methods and 
materials do qualify for the defense of prior user rights when there is 
evidence of a commitment to put the innovation into use followed by a 
series of diligent events demonstrating that the innovation has been 
put into continuous--into a business activity with a purpose of 
developing new products for the benefit of mankind.
  Mr. BLUNT. I thank my colleague.


                               Section 5

  Mr. KOHL. Madam President, I have long supported reforming our patent 
system and was pleased with the bill the Senate passed in March. It was 
not what everyone wanted, but it was an effective compromise that would 
spur innovation and economic growth. I am disappointed with changes the 
House made to the bill, specifically the expansion of the ``prior user 
rights'' defense a provision which raises serious concerns for the 
University of Wisconsin's patent licensing organization which fosters 
innovative discoveries, spawning dozens of small businesses and 
spurring economic growth in Wisconsin.
  Let me explain why. A patent grants an innovator the right to exclude 
others from using an invention in exchange for making that invention 
public. The publication of patents and the research behind them advance 
further innovation and discovery. Anyone who uses the invention without 
permission is liable for infringement, and someone who was using the 
invention prior to the patent has only a limited defense for 
infringement. The purpose of limiting this defense to infringement is 
to encourage publication and disclosure of inventions to foster 
innovation. So by expanding the prior user defense we run the real risk 
of discouraging disclosure through the patent system. This is 
concerning to the University of Wisconsin because they depend on 
publication and disclosure to further research and innovation.
  I appreciate the inclusion of a carve-out to the prior user rights 
defense provision so that it does not apply to patents owned by a 
university ``or a technology transfer organization whose primary 
purpose is to facilitate the commercialization of technologies 
developed by one or more such institutions of higher education.'' 
However, I have some concerns about how the carve out will work in 
practice and I would like to clarify its application.
  It is my understanding that the term ``primary purpose'' in this 
exception is intended to be consistent with and have a similar scope as 
the ``primary functions'' language in the Bayh-Dole Act. In particular, 
if a nonprofit entity is entitled to receive assignment of inventions 
pursuant to section 207(c)(7) of

[[Page 13186]]

title 35 because one of its primary functions is the management of 
inventions, presumably it falls under the primary purpose prong of the 
prior user rights exception. Is that the Senator's understanding of the 
provision?
  Mr LEAHY. The senior Senator from Wisconsin is correct. That is also 
my view of the exception. I understand the Senator has consistently 
opposed the expansion of prior user rights, but I agree with his 
analysis of the scope of the exception in section 5 of H.R. 1249.


                               Section 18

  Mr. PRYOR. I would like to ask my colleague from Vermont, the 
Chairman of the Judiciary Committee and lead sponsor of the America 
Invents Act before us today, to further clarify an issue relating to 
Section 18 of that legislation. Ideally, I would have liked to modify 
the Section 18 process in accordance with the Cantwell amendment. It is 
of crucial importance to me that we clarify the intent of the process 
and implement it as narrowly as possible.
  As I understand it, Section 18 is intended to enable the PTO to weed 
out improperly issued patents for abstract methods of doing business. 
Conversely, I understand that Section 18 is not intended to allow 
owners of valid patents to be harassed or subjected to the substantial 
cost and uncertainty of the untested review process established 
therein. Yet I have heard concerns that Section 18 would allow just 
such harassment because it enables review of patents whose claims have 
been found valid both through previous reexaminations by the PTO and 
jury trials. In my mind, patent claims that have withstood multiple 
administrative and judiciary reviews should be considered presumptively 
valid. It would not only be unfair to the patent holder but would be a 
waste of both PTO's time and resources to subject such presumptively 
valid patent claims to yet another administrative review. It would be 
particularly wasteful and injurious to legitimate patent holders if the 
``transitional review'' only considered prior art that was already 
considered in the previous administrative or judicial proceedings. Can 
the Chairman enlighten me as to how the PTO will ensure that the 
``transitional process'' does not become a tool to harass owners of 
valid patents that have survived multiple administrative and judicial 
reviews''?
  Mr. LEAHY. The proceeding created by Section 18 is modeled on the 
proposed post-grant review proceeding under Section 6 of the Act. As in 
other post-grant proceedings, the claims should typically be evaluated 
to determine whether they, among other things, meet the enablement and 
written description requirements of the act, and contain patentable 
subject matter under the standards defined in the statutes, case law, 
and as explained in relevant USPTO guidance. While the program will 
generally otherwise function on the same terms as other post-grant 
proceedings, the USPTO should implement Section 18 in a manner that 
avoids attempts to use the transitional program against patent owners 
in a harassing way. Specifically, to initiate a post issuance review 
under the new post grant or transitional proceedings, it is not enough 
that the request show a substantial new question of patentability but 
must establish that ``it is more likely than not that at least 1 of the 
claims challenged in the petition is unpatentable.'' The heightened 
requirement established by this bill means that these proceedings are 
even better shielded from abuse than the reexamination proceedings have 
been. In fact, the new higher standard for post issuance review was 
created to make it even more difficult for these procedures to be used 
as tools for harassment. Therefore, the rule that bars the PTO from 
reconsidering issues previously considered during examination or in an 
earlier reexamination still applies. While a prior district court 
decision upholding the validity of a patent may not preclude the PTO 
from considering the same issues resolved in that proceeding, PTO 
officials must still consider the court's decision and deviate from its 
findings only to the extent reasonable. As a result, I expect the USPTO 
would not initiate proceedings where the petition does not raise a 
substantial new question of patentability than those that had already 
been considered by the USPTO in earlier proceedings. Does that answer 
my colleague's question?''
  Mr. PRYOR. I thank my colleague for that explanation.


                               Section 18

  Mr. DURBIN. I would like to clarify an issue with my colleague from 
New York, who is the author of Section 18. Legislative history created 
during earlier consideration of this legislation makes clear that the 
business method patent problem that Section 18 is intended to address 
is fundamentally an issue of patent quality. Does the Senator agree 
that poor quality business method patents generally do not arise from 
the operation of American companies who use business method patents to 
develop and sell products and employ American workers in doing so?
  Mr. SCHUMER. My friend from Illinois is correct. I have previously 
inserted into the Record a March 3 letter from the Independent 
Community Bankers of America which stated that ``Under the current 
system, business method patents of questionable quality are used to 
force community banks to pay meritless settlements to entities that may 
have patents assigned to them, but who have invented nothing, offer no 
product or service and employ no one.  . . . The Schumer-Kyl amendment 
is critical to stopping this economic harm.''
  Mr. DURBIN. I thank the Senator. I want to point out that there are a 
number of examples of companies that employ hundreds or thousands of 
American workers in developing and commercializing financial sector 
products that are based on business method patents. For example, some 
companies that possess patents categorized by the PTO as class 705 
business method patents have used the patents to develop novel software 
tools and graphical user interfaces that have been widely 
commercialized and used within the electronic trading industry to 
implement trading and asset allocation strategies. Additionally, there 
are companies that possess class 705 patents which have used the 
patents to manufacture and commercialize novel machinery to count, 
sort, and authenticate currency and paper instruments. Are these the 
types of patents that are the target of Section 18?
  Mr. SCHUMER. No. Patent holders who have generated productive 
inventions and have provided large numbers of American workers with 
good jobs through the development and commercialization of those 
patents are not the ones that have created the business method patent 
problem. While merely having employees and conducting business would 
not disqualify a patent-holder from Section 18 review, generally 
speaking, it is not the understanding of Congress that such patents 
would be reviewed and invalidated under Section 18.
  Mr. COBURN. Madam President, today, I rise to discuss section 18 of 
H.R. 1249, the Leahy-Smith America Invents Act. Consistent with the 
statement in the Record by Chairman Lamar Smith on June 23, 2011, I 
understand that section 18 will not make all business method patents 
subject to review by the U.S. Patent and Trademark Office. Rather, 
section 18 is designed to address the problem of low-quality business 
method patents that are commonly associated with the Federal circuit's 
1998 State Street decision. I further understand that section 18 of the 
bill specifically exempts ``patents for technological inventions'' from 
this new review at USPTO.
  Patents for technological inventions are those patents whose novelty 
turns on a technological innovation over the prior art and are 
concerned with a technical problem which is solved with a technical 
solution. The technological innovation exception does not exclude a 
patent from section 18 simply because it recites technology. Inventions 
related to manufacturing and machines that do not simply use known 
technology to accomplish a novel business process would be excluded 
from review under section 18.
  For example, section 18 would not cover patents related to the 
manufacture and distribution of machinery to count, sort, and 
authenticate currency.

[[Page 13187]]

It is the intention of section 18 to not review mechanical inventions 
related to the manufacture and distribution of machinery to count, 
sort, and authenticate currency like change sorters and machines that 
scan paper instruments, including currency, whose novelty turns on a 
technological innovation over the prior art. These types of patents 
would not be eligible for review under this program.
  American innovation is an important engine for job growth and our 
economic revitalization. To this end, the timely consideration of 
patent applications and the issuance of quality patents are critical 
components and should remain the primary goal of the U.S. Patent and 
Trademark Office.
  Mr. KYL. Madam President, I rise today to say a few words about 
aspects of the present bill that differ from the bill that passed the 
Senate in March. I commented at length on the Senate bill when that 
bill was before this body. Since the present bill and the Senate bill 
are largely identical, I will not repeat what I said previously, but 
will simply refer to my previous remarks, at 157 Cong. Rec. 1368-80, 
daily ed. March 8, 2011, which obviously apply to the present bill as 
well.
  As I mentioned earlier, Mr. Smith negotiated his bill with Senators 
Leahy, Grassley, and me as he moved the bill through the House of 
Representatives. The final House bill thus represents a compromise, one 
which the Senate supporters of patent reform have agreed to support in 
the Senate. The provisions that Mr. Smith has added to the bill are 
ones that we have all had an opportunity to consider and discuss, and 
which I fully support.
  Section 19(d) of the present bill adds a new section 299 to title 35. 
This new section bars joinder of accused infringers as codefendants, or 
consolidation of their cases for trial, if the only common fact and 
transaction among the defendants is that they are alleged to have 
infringed the same patent. This provision effectively codifies current 
law as it has been applied everywhere outside of the Eastern District 
of Texas. See Rudd v. Lux Products Corp., 2011 WL 148052. (N.D. Ill. 
January 12, 2011), and the committee report for this bill at pages 54 
through 55.
  H.R. 1249 as introduced applied only to joinder of defendants in one 
action. As amended in the mark up and in the floor managers' amendment, 
the bill extends the limit on joinder to also bar consolidation of 
trials of separate actions. When this change was first proposed, I was 
skeptical that it was necessary. A review of legal authority, however, 
reveals that under current law, even if parties cannot be joined as 
defendants under rule 20, their cases can still be consolidated for 
trial under rule 42. For example, as the district court held in Ohio v. 
Louis Trauth Dairy, Inc., 163 F.R.D. 500, 503 (S.D. Ohio 1995), 
``[e]ven when actions are improperly joined, it is sometimes proper to 
consolidate them for trial.'' The same conclusion was reached by the 
court in Kenvin v. Newburger, Loeb & Co., 37 F.R.D. 473 (S.D.N.Y. 
1965), which ordered severance because of misjoinder of parties, 
concluding that the claims against the defendants did not arise out of 
single transaction or occurrence, but then suggested the desirability 
of a joint trial, and expressly made its severance order without 
prejudice to a subsequent motion for consolidation under rule 42(a). 
Similarly, in Stanford v. TVA, 18 F.R.D. 152 (M.D. Tenn. 1955), a court 
found that the defendants had been misjoined, since the claims arose 
out of independent transactions, and ordered them severed. The court 
subsequently found, however, that a common question existed and ordered 
the defendants' cases consolidated for trial.
  That these cases are not just outliers is confirmed by Federal 
Practice and Procedure, which comments as follows at Sec. 2382:

       Although as a general proposition it is true that Rule 
     42(a) should be construed in harmony with the other civil 
     rules, it would be a mistake to assume that the standard for 
     consolidation is the same as that governing the original 
     joinder of parties or claims. . . . [M]ore than one party can 
     be joined on a side under Rule 20(a) only if there is 
     asserted on behalf of or against all of them one or more 
     claims for relief arising out of the same transaction or 
     occurrence or series of transactions or occurrences. This is 
     in addition to the requirement that there be some question of 
     law or fact common to all the parties. But the existence of a 
     common question by itself is enough to permit consolidation 
     under Rule 42(a), even if the claims arise out of independent 
     transactions.

  If a court that was barred from joining defendants in one action 
could instead simply consolidate their cases for trial under rule 42, 
section 299's purpose of allowing unrelated patent defendants to insist 
on being tried separately would be undermined. Section 299 thus adopts 
a common standard for both joinder of defendants and consolidation of 
their cases for trial.
  Another set of changes made by the House bill concerns the 
coordination of inter partes and postgrant review with civil 
litigation. The Senate bill, at proposed sections 315(a) and 325(a), 
would have barred a party or his real party in interest from seeking or 
maintaining an inter partes or postgrant review after he has filed a 
declaratory-judgment action challenging the validity of the patent. The 
final bill will still bar seeking IPR or PGR after a declaratory-
judgment action has been filed, but will allow a declaratory-judgment 
action to be filed on the same day or after the petition for IPR or PGR 
was filed. Such a declaratory-judgment action, however, will be 
automatically stayed by the court unless the patent owner countersues 
for infringement. The purpose of allowing the declaratory-judgment 
action to be filed is to allow the accused infringer to file the first 
action and thus be presumptively entitled to his choice of venue.
  The House bill also extends the deadline for allowing an accused 
infringer to seek inter partes review after he has been sued for 
infringement. The Senate bill imposed a 6-month deadline on seeking IPR 
after the patent owner has filed an action for infringement. The final 
bill extends this deadline, at proposed section 315(b), to 1 year. 
High-technology companies, in particular, have noted that they are 
often sued by defendants asserting multiple patents with large numbers 
of vague claims, making it difficult to determine in the first few 
months of the litigation which claims will be relevant and how those 
claims are alleged to read on the defendant's products. Current law 
imposes no deadline on seeking inter partes reexamination. And in light 
of the present bill's enhanced estoppels, it is important that the 
section 315(b) deadline afford defendants a reasonable opportunity to 
identify and understand the patent claims that are relevant to the 
litigation. It is thus appropriate to extend the section 315(b) 
deadline to one year.
  The final bill also extends intervening rights to inter partes and 
post-grant review. The bill does not allow new matter to be introduced 
to support claims in IPR and PGR and does not allow broadening of 
claims in those proceedings. The aspect of intervening rights that is 
relevant to IPR and PGR is section 252, first paragraph, which provides 
that damages accrue only from the date of the conclusion of review if 
claim scope has been substantively altered in the proceeding. This 
restriction applies even if the amendment only narrowed the scope of 
the claims. See Engineered Data Products, Inc. v. GBS Corp., 506 
F.Supp.2d 461, 467 (D. Colo. 2007), which notes that ``the Federal 
Circuit has routinely applied the intervening rights defense to 
narrowing amendments.'' When patent-defeating prior art is discovered, 
it is often impossible to predict whether that prior art will be found 
to render the entire invention obvious, or will only require a 
narrowing amendment. When a challenger has discovered such prior art, 
and wants to practice the invention, intervening rights protect him 
against the risk of gong forward--provided, of course, that he is 
correct in his judgment that the prior art at least requires a 
substantive narrowing of claims.
  The final bill also adds a new subsection to proposed section 257, 
which authorizes supplemental examination of patents. The new 
subsection provides that the Director shall refer to the U.S. Attorney 
General any ``material fraud'' on the Office that is discovered during 
the course of a Supplemental Examination. Chairman

[[Page 13188]]

Smith's explanation of this addition, at 157 Cong. Rec. E1182-83 (daily 
ed. June 23, 2011), clarifies the purpose and effect of this new 
provision. In light of his remarks, I find the addition 
unobjectionable. I would simply add to the Chairman's remarks that, in 
evaluating whether a fraud is ``material'' for purpose of referral, the 
Director should look to the Federal Circuit's decision in Therasense, 
Inc. v. Becton, Dickinson and Co., __F.3d__, 2011 WL 2028255 (May 25, 
2011). That case holds, in relevant part, that:

       [T]he materiality required to establish inequitable conduct 
     is but-for materiality. When an applicant fails to disclose 
     prior art to the PTO, that prior art is but-for material if 
     the PTO would not have allowed a claim had it been aware of 
     the undisclosed prior art. Hence, in assessing the 
     materiality of a withheld reference, the court must determine 
     whether the PTO would have allowed the claim if it had been 
     aware of the undisclosed reference.

  Finally, perhaps the most important change that the House of 
Representatives has made to the America Invents Act is the addition of 
a prior-commercial-use defense. Current law, at section 273, creates a 
defense of prior-user rights that applies only with respect to 
business-method patents. The final bill rewrites section 273, creating 
a PCU defense that applies to all utility patents.
  University researchers and their technology-transfer offices had 
earlier objected to the creation of such a defense. Their principal 
concern was that the defense would lead to a morass of litigation over 
whether an infringer was entitled to assert it, and the expense and 
burden of this litigation would ultimately prevent universities and 
small companies from enforcing valid patents. The compromise reached in 
the House of Representatives addresses university concerns by requiring 
a defendant to show that he commercially used the subject matter that 
infringes the patent at least 1 year before the patent owner either 
filed an application or disclosed the invention to the public. The 
House compromise also precludes assertion of the defense against most 
university-owned patents.
  The PCU defense is similar to the prior-user right that exists in the 
United Kingdom and Germany. The defense is a relatively narrow one. It 
does not create a general license with respect to the patented 
invention, but rather only allows the defendant to keep making the 
infringing commercial use that he establishes that he made 1 year 
before the patentee's filing or disclosure. The words ``subject 
matter,'' as used in subsection (a), refer to the infringing acts of 
the defendant, not to the entire patented invention. An exception to 
this limit, which expands the defense beyond what would be allowed in 
the United Kingdom, appears in subsection (e)(3), which allows the 
defendant to increase the quantity or volume of the use that he 
establishes that he made of the invention. Subsection (e)(3) also 
confirms that the defendant may improve or otherwise modify his 
activities in ways that do not further infringe the patent, although 
one would think that this would go without saying.
  The PCU defense is principally designed to protect the use of 
manufacturing processes. For many manufacturing processes, the patent 
system presents a catch-22: if the manufacturer patents the process, he 
effectively discloses it to the world. But patents for processes that 
are used in closed factories are difficult to police. It is all but 
impossible to know if someone in a factory in China is infringing such 
a patent. As a result, unscrupulous foreign and domestic manufacturers 
will simply use the invention in secret without paying licensing fees. 
Patenting such manufacturing processes effectively amounts to giving 
away the invention to competitors. On the other hand, if the U.S. 
manufacturer does not patent the process, a subsequent party may obtain 
a patent for it, and the U.S. manufacture will be forced to stop using 
a process that he was the first to invent and which he has been using 
for years.
  The prior-commercial-use defense provides relief to U.S. 
manufacturers from this Catch-22, allowing them to make long-term use 
of a manufacturing process without having to give it away to 
competitors or run the risk that it will be patented out from under 
them.
  Subsection (a) expands the defense beyond just processes to also 
cover products that are used in a manufacturing or other commercial 
process. Generally, products that are sold to consumers will not need a 
PCU defense over the long term. As soon as the product is sold to the 
public, any invention that is embodied or otherwise inherent in that 
product becomes prior art and cannot be patented by another party, or 
even by the maker of the product after the grace period has expired. 
Some products, however, consist of tools or other devices that are used 
only by the inventor inside his closed factory. Others consist of 
substances that are exhausted in a manufacturing process and never 
become accessible to the public. Such products will not become prior 
art. Revised section 273 therefore allows the defense to be asserted 
with respect to such products.
  The defense can also be asserted for products that are not used to 
make a useful end result that is sold to others, but that are used in 
an internal commercial process. This would include, for example, 
customized software that is used to run a company's human-resources 
system. So long as use of the product is integrated into an ongoing 
commercial process, and not merely fleeting or experimental or 
incidental to the enterprise's operations, the PCU defense can be 
asserted with respect to that product.
  The present bill requires the defendant to commercially use the 
invention in order to be able to assert the defense. Chairman Smith has 
suggested, at 157 Cong. Rec. E1219 (daily ed. June 28, 2011), that in 
the future Congress should expand the defense so that it also applies 
when a company has made substantial preparations to commercially use an 
invention. Some have also suggested that the defense should be expanded 
to cover not just using, but also making and selling an invention if 
substantial preparations have been made to manufacture the invention. 
This would expand the defense to more fully compensate for the repeal 
of current section 102(g), which allows a party to invalidate a patent 
asserted against it if the party can show that it had conceived of the 
invention earlier and diligently proceeded to commercialize it.
  On the one hand, universities and others have expressed concern that 
a ``substantial preparations'' predicate for asserting the PCU defense 
would lead to expensive and burdensome litigation over whether a 
company's activities reflect conception and diligent commercialization 
of the invention. Some argue that it is often the case that different 
companies and researchers are working on the same problem, and it is 
easy for the unsuccessful parties to later recharacterize their past 
efforts as capturing or diligently implementing the successful 
researcher's invention. Questions have also arisen as to how tentative 
preparations may be and still qualify as ``substantial preparations.'' 
For example, if a company had not broken ground for its factory, but 
had commissioned an architect to draw up plans for it, would that 
qualify? Would taking out a loan to build the factory qualify as 
substantial preparations?
  On the other hand, proof of conception and diligent commercialization 
are currently used to apply section 102(g)(2), and I have not heard 
complaints that the current defense has resulted in overly burdensome 
litigation.
  In the end, however, a substantial-preparations predicate is not 
included in this bill simply because that was the agreement that was 
struck between universities and industry in the House of 
Representatives last summer, and we are now effectively limited to that 
agreement. Perhaps this issue can be further explored and revisited in 
a future Congress, though I suspect that many members will want a 
respite from patent issues after this bill is completed.
  The final bill also drops the requirement of a showing of a reduction 
to practice that previously appeared in subsection (b)(1). This is 
because the use of a process, or the use of product in a commercial 
process, will always constitute a reduction to practice.

[[Page 13189]]

  One change made by the original House bill that proved contentious is 
the expansion of the personal nature of the defense, now at subsection 
(e)(1)(A), to also include uses of the invention made by contractors 
and vendors of the person asserting the defense. The House bill 
originally allowed the defendant to assert the defense if he performed 
the commercial use or ``caused'' its performance. The word ``caused,'' 
however, could be read to include even those uses that a vendor made 
without instructions or even the contemporaneous knowledge of the 
person asserting the defense. The final bill uses the word 
``directed,'' which limits the provision only to those third-party 
commercial uses that the defendant actually instructed the vendor or 
contactor to use. In analogous contexts, the word ``directed'' has been 
understood to require evidence that the defendant affirmatively 
directed the vendor or contractor in the manner of the work or use of 
the product. See, for example, Ortega v. Puccia, 75 A.D. 54, 59, 866 
N.Y.S.2d 323, 328 (N.Y. App. 2008).
  Subsection (e)(1)(A)'s reference to entities that ``control, are 
controlled by, or under common control with'' the defendant borrows a 
term that is used in several federal statutes. See 12 U.S.C. 1841(k), 
involving bank holding companies, 15 U.S.C. 78c(a)(4)(B)(vi), involving 
securities regulation, 15 U.S.C. 6809(6), involving financial privacy, 
and 49 U.S.C. 30106(d)(1), involving motor vehicle safety. Black's Law 
Dictionary 378 (9th ed. 2009) defines ``control'' as the ``direct or 
indirect power to govern the management and policies of a person or 
entity, whether through ownership of securities, by contract, or 
otherwise; the power or authority to manage, direct, or oversee.''
  A few other aspects of the PCU defense merit brief mention. 
Subsection (e)(5)(A), the university exception, was extended to also 
include university technology-transfer organizations, such as the 
Wisconsin Alumni Research Foundation. Subparagraph (B), the exception 
to the university exception, is only intended to preclude application 
of subparagraph (A) when the federal government is affirmatively 
prohibited, whether by statute, regulation, or executive order, from 
funding research in the activities in question.
  In the course of the recodification of former subsection (a)(2) as 
new (c)(2), the former's subparagraph (B) was dropped because it is 
entirely redundant with subparagraph (A).
  Finally, subsection (e)(4), barring assertion of the defense if use 
of the subject matter has been abandoned, should not be construed to 
necessarily require continuous use of the subject matter. It is in the 
nature of some subject matter that it will be used only periodically or 
seasonally. If such is the case, and the subject has been so used, its 
use has not been abandoned.
  I would also like to take a moment to once again address the question 
of the grace period created by this bill. During the House and Senate 
debates on the bill, opponents of the first-to-file system have 
occasionally asserted that they oppose the bill's move to first to file 
because it weakens the grace period. See 157 Cong. Rec. S1094, S1096, 
S1112 (daily ed. March 2, 2011), and 157 Cong. Rec. H4424, H4430 (daily 
ed. June 22, 2011).
  Some of these arguments are difficult to understand, in part because 
opponents of first to file have used the term ``grace period'' to mean 
different things. Some have used the term to mean the period between 
the time when the inventor conceives of the invention and the time when 
he files a full or even provisional application. Obviously, if the 
``grace period'' is defined as the first-to-invent system, then the 
move to first to file eliminates that version of the grace period. 
Others, however, have suggested that public uses, sales, or ``trade 
secrets'' will bar patenting under new section 102(b), even if they 
consist of activities of the inventor during the year before filing.
  This is not the case, and I hope that courts and executive officials 
interpreting this act will not be misled by arguments made by opponents 
of this part of the bill. The correct interpretation of section 102 and 
the grace period is that which has been consistently advanced in the 
2007 and 2011 committee reports for this bill, see Senate Report 110-
259, page 9, and House Report 112-98, page 43, as well as by both 
Chairman Smith and Chairman Leahy, see 157 Cong. Rec. S1496-97 (daily 
ed. March 9, 2011), and 157 Cong. Rec. H4429 (daily ed. June 22, 2011). 
These two chairmen are the lead sponsors and authorizing chairmen of 
this year's bills, which are identical with respect to section 102. As 
Chairman Smith most recently explained in his June 22 remarks, 
``contrary to current precedent, in order to trigger the bar in new 
102(a) in our legislation, an action must make the patented subject 
matter `available to the public' before the effective filing date.'' 
Therefore, ``[i]f an inventor's action is such that it triggers one of 
the bars under 102(a), then it inherently triggers the grace period in 
section 102(b).''
  When the committee included the words ``or otherwise available to the 
public'' in section 102(a), the word ``otherwise'' made clear that the 
preceding items are things that are of the same quality or nature. As a 
result, the preceding events and things are limited to those that make 
the invention ``available to the public.'' The public use or sale of an 
invention remains prior art, thus making clear that an invention 
embodied in a product that has been sold to the public more than a year 
before an application was filed, for example, can no longer be 
patented. Once an invention has entered the public domain, by any 
means, it can no longer be withdrawn by anyone. But public uses and 
sales are prior art only if they make the invention available to the 
public.
  In my own remarks last March, I cited judicial opinions that have 
construed comparable legislative language in the same way. Since that 
time, no opponent of the first-to-file transition has identified any 
caselaw that reads this legislative language any other way, nor am I 
aware of any such cases. I would hope that even those opponents of 
first to file who believe that supporters of the bill cannot rely on 
committee reports and sponsors' statements would at least concede that 
Congress is entitled to rely on the consistent judicial construction of 
legislative language.
  Finally, I would note that the interpretation of 102 that some 
opponents appear to advance--that nondisclosing uses and sales would 
remain prior art, and would fall outside the 102(b) grace period--is 
utterly irrational. Why would Congress create a grace period that 
allows an invention that has been disclosed to the world in a printed 
publication, or sold and used around the world, for up to a year, to be 
withdrawn from the public domain and patented, but not allow an 
inventor to patent an invention that, by definition, has not been made 
available to the public? Such an interpretation of section 102 simply 
makes no sense, and should be rejected for that reason alone.
  Let me also address two other misstatements that have been made about 
the bill's first-to-file system. In remarks appearing at 157 Cong. Rec. 
S1095 (daily ed. March 2, 2011), it was suggested that a provisional 
application filed under the first-to-file system will be vulnerable to 
an attack that the inventor failed to disclose the best mode of the 
invention. This is incorrect. Section 15 of this bill precludes the use 
of the best-mode requirement as a basis for cancelling a claim or 
holding it invalid. It was also suggested, at the same place in the 
record, that discovery would not be allowed in the derivation 
proceedings created by section 3(i) of the bill. That is incorrect. 
Section 24 of title 35 allows discovery in any ``contested case.'' The 
Patent Office's regulations, at 37 CFR 41.2(2), indicate that contested 
cases included Board proceedings such as interferences. It is not 
apparent to me why these laws and regulations would suggest anything 
other than that discovery will be allowed in derivation proceedings.
  Finally, let me close by commenting on section 18 of the bill. Some 
legitimate interests have expressed concern that non-business-method 
patents will be subject to challenge in this proceeding. I have been 
asked to, and am

[[Page 13190]]

happy to, reiterate that technological inventions are excluded from the 
scope of the program, and that these technological inventions include 
inventions in the natural sciences, engineering, and computer 
operations--and that inventions in computer operations obviously 
include software inventions.
  This does not mean that a patent is ineligible for review simply 
because it recites software elements or has been reduced to a software 
program. If that were the case, then very few of even the most 
notorious business-method patents could be reviewed under section 18. 
Rather, in order to fall within the technological-invention exclusion, 
the invention must be novel as software. If an invention recites 
software elements, but does not assert that it is novel as software, or 
does not colorably appear to be so, then it is not ineligible for 
review simply because of that software element. But an actual software 
invention is a technological invention, and is not subject to review 
under section 18.
  Mr. LEVIN. Madam President, I support the America Invents Act.
  Right now, as our economy struggles to recover, this legislation is 
needed to help create jobs and keep our manufacturers competitive. It 
will further strengthen and expand the ability of our universities to 
conduct research and turn that research into innovative products and 
processes that benefit Michigan and our Nation.
  Because of this legislation, we will be able to see that boost up 
close in my home State of Michigan, where a new satellite Patent and 
Trademark Office will be established in Detroit. This office will help 
modernize the patent system and improve the efficiency of patent review 
and the hiring of patent examiners.
  In addition, in an important victory after years of effort to address 
the problem, section 14 of the act finally bans tax patents, ending the 
troubling practice of persons seeking patents for tax avoidance 
strategies.
  Issuing such patents abuses the Tax Code by granting what some could 
see as a government imprimatur of approval for dubious tax strategies, 
while at the same time penalizing taxpayers seeking to use legitimate 
strategies. The section makes it clear that patents can still be issued 
for software that helps taxpayers prepare their tax returns, but that 
provision is intended to be narrowly construed and is not intended to 
authorize patents for business methods or financial management 
software.
  The bill will put a halt to both new and pending tax patent 
applications. Although it does not apply on its face to the 130-plus 
tax patents already granted, if someone tries to enforce one of those 
patents in court by demanding that a taxpayer provide a fee before 
using it to reduce their taxes, I hope a court will consider this 
bill's language and policy determination when deciding whether such 
efforts are consistent with public policy.
  This legislation is an important step forward and I urge my 
colleagues to support it.
  Mr. SCHUMER. Madam President, I would like to clarify the record on a 
few points related to section 18 of the America Invents Act. Section 
18, of which Senator Kyl and I were the authors, relates to business 
method patents. As the architect of this provision, I would like to 
make crystal clear the intent of its language.
  It is important that the record reflect the urgency of this 
provision. Just today, while the Senate has been considering the 
America Invents Act, Data Treasury--the company which owns the 
notorious check imaging patents and which has already collected over 
half a billion dollars in settlements--filed suit in the Eastern 
District of Texas against 22 additional defendants, primarily community 
banks. These suits are over exactly the type of patents that section 18 
is designed to address, and the fact that they continue to be filed 
highlights the urgency of signing this bill into law and setting up an 
administrative review program at the PTO.
  I would like to elucidate the intent behind the definition of 
business method patents. Other Members have attempted to suggest a 
narrow reading of the definition, but these interpretations do not 
reflect the intent of Congress or the drafters of section 18. For 
example, in connection with the House vote on the America Invent Act, 
H.R. 1249, Congressman Shuster submitted a statement in the Record 
regarding the definition of a ``covered business method patent'' in 
section 18. 157 Cong. Rec. H4497 (daily ed. June 23, 2011).
  In the statement, Mr. Shuster states: ``I would like to place in the 
record my understanding that the definition of `covered business method 
patent' . . . is intended to be narrowly construed to target only those 
business method patents that are unique to the financial services 
industry.'' Mr. Shuster's interpretation is incorrect.
  Nothing in the America Invents Act limits use of section 18 to banks, 
insurance companies or other members of the financial services 
industry. Section 18 does not restrict itself to being used by 
petitioners whose primary business is financial products or services. 
Rather, it applies to patents that can apply to financial products or 
services. Accordingly, the fact that a patent is being used by a 
company that is not a financial services company does not disqualify 
the patent from section 18 review. Conversely, given the statutory and 
regulatory limitations on the activities of financial services 
companies, if a patent is allegedly being used by a financial services 
company, the patent will qualify as a ``covered business method 
patent.''
  The plain meaning of ``financial product or service'' demonstrates 
that section 18 is not limited to the financial services industry. At 
its most basic, a financial product is an agreement between two parties 
stipulating movements of money or other consideration now or in the 
future. Types of financial products include, but are not limited to: 
extending credit, servicing loans, activities related to extending and 
accepting credit, leasing of personal or real property, real estate 
services, appraisals of real or personal property, deposit-taking 
activities, selling, providing, issuing or accepting stored value or 
payment instruments, check cashing, collection or processing, financial 
data processing, administration and processing of benefits, financial 
fraud detection and prevention, financial advisory or management 
consulting services, issuing, selling and trading financial instruments 
and other securities, insurance products and services, collecting, 
analyzing, maintaining or providing consumer report information or 
other account information, asset management, trust functions, 
annuities, securities brokerage, private placement services, investment 
transactions, and related support services. To be eligible for section 
18 review, the patent claims must only be broad enough to cover a 
financial product or service.
  The definition of ``covered business method patent'' also indicates 
that the patent must relate to ``performing data processing or other 
operations used in the practice, administration, or management'' of a 
financial product or service. This language makes it clear that section 
18 is intended to cover not only patents claiming the financial product 
or service itself, but also patents claiming activities that are 
financial in nature, incidental to a financial activity or 
complementary to a financial activity. Any business that sells or 
purchases goods or services ``practices'' or ``administers'' a 
financial service by conducting such transactions. Even the notorious 
``Ballard patents'' do not refer specifically to banks or even to 
financial transactions. Rather, because the patents apply to 
administration of a business transactions, such as financial 
transactions, they are eligible for review under section. To meet this 
requirement, the patent need not recite a specific financial product or 
service.
  Interestingly, Mr. Shuster's own actions suggest that his 
interpretation does not conform to the plain meaning of the statute. In 
addition to his statement, Mr. Shuster submitted an amendment to the 
Rules Committee that would exempt particular types of business-method 
patents from review under section 18. That amendment was later 
withdrawn. Mr. Shuster's subsequent statement in the Record appears

[[Page 13191]]

to be an attempt to rewrite through legislative history something that 
he was unable to change by amendment.
  Moreover, the text of section 18 further demonstrates that section 18 
is not limited to patents exclusively utilized by the financial 
services industry. As originally adopted in the Senate, subsection 
(a)(1)(B) only allowed a party to file a section 18 petition if either 
that party or its real parties in interest had been sued or accused of 
infringement. In the House, this was expanded to also cover cases where 
a ``privy'' of the petitioner had been sued or accused of infringement. 
A ``privy'' is a party that has a direct relationship to the petitioner 
with respect to the allegedly infringing product or service. In this 
case, it effectively means customers of the petitioner. With the 
addition of the word ``privy,'' a company could seek a section 18 
proceeding on the basis that customers of the petitioner had been sued 
for infringement. Thus, the addition of the ``privy'' language clearly 
demonstrates that section 18 applies to patents that may be used by 
entities other than the financial services industry.
  The fact that a multitude of industries will be able to make use of 
section is evident by the broad based support for the provision, 
including the U.S. Chamber of Commerce and the National Retail 
Federation, among many others.
  Mr. KIRK. Madam President, I support H.R. 1249, the Leahy-Smith 
America Invents Act, because this long-overdue patent reform will spur 
innovation, create jobs and strengthen our economy.
  In particular, I am proud that this legislation contains a provision 
I worked to include in the Senate companion, S.23, that would establish 
the US Patent and Trademark Office Ombudsman Program to assist small 
businesses with their patent filing issues. This Ombudsman Program will 
help small firms navigate the bureaucracy of the patent system. Small 
businesses are the economic engine of our economy. According to the 
Small Business Administration, these companies employ just over half of 
all private sector employees and create over fifty percent of our 
nonfarm GDP. Illinois alone is home to over 258,000 small employers and 
more than 885,000 self-employers. Small businesses are also helping to 
lead the way on American innovation. These firms produce thirteen times 
more patents per employee than large patenting firms, and their patents 
are twice as likely to be the most cited among all patents. Small 
business breakthroughs led to the development of airplanes, FM radio 
and the personal computer. It is vital that these innovators spend 
their time developing new products and processes that will build our 
future, not wading through government red tape.
  However, I vote for this legislation with the understanding that 
Section 18, which establishes a review process for business-method 
patents, is not too broadly interpreted to cover patents on tangible 
products that claim novel and non-obvious software tools used to 
execute business methods. H.R. 1249 seeks to strengthen our patent 
system in order to incentivize and protect our inventors so that 
Americans can grow our economy and bolster our global competiveness. 
Thus, it would defy the purpose of this bill if its authority were used 
to threaten the viable patents held by companies that employ hundreds 
of Americans by commercializing software products they develop and 
engineer.
  Our Founding Fathers recognized the importance of a strong patent 
system. I am proud to support H.R. 1249, which will provide strong 
intellectual property rights to further our technological advancement.
  Mr. DURBIN. Madam President, I rise to speak about the Leahy-Smith 
America Invents Act. This is bipartisan legislation that will enhance 
and protect innovation in our country. I want to commend Senator Leahy, 
the chairman of the Judiciary Committee, for his leadership and 
tireless work on this bill. I also want to commend my Republican 
colleagues on the Judiciary Committee, particularly Senators Grassley, 
Kyl, and Hatch, who have worked diligently with Chairman Leahy in this 
effort to reform our patent system.
  In this country, if you have a good idea for a new and useful 
product, you can get a patent and turn that idea into a thriving 
business. Millions of good American jobs are created in this way. The 
goals of today's legislation are to improve the operations of the 
Patent and Trademark Office and to help inventors in this country 
better protect their investments in innovation. By protecting 
innovations, we will help grow our economy and help businesses create 
jobs for American workers.
  I regret that after the Senate passed a version of this legislation 
in March in a broadly bipartisan vote of 95-5, the House of 
Representatives modified the Senate-passed legislation. Not all of 
those changes improved the bill. Today, we voted on several amendments 
that responded to changes made by the House. I voted in support of an 
amendment that sought to strike Section 37, which the House had added 
to the bill. This section unnecessarily interferes with a matter that 
is currently being considered on appeal in the federal courts. I also 
voted reluctantly to table an amendment to restore the Senate-passed 
language regarding funding of the Patent and Trademark Office. I 
supported the tabling motion because of the significant risk that the 
bill would fail if the Senate sent it back to the House with that 
amendment included. It is unfortunate that disagreement between the 
House and Senate has prevented the PTO funding issue from being more 
clearly resolved in the current legislation, and I believe Congress 
must work diligently in the future to ensure PTO has the funding and 
resources it needs to effectively carry out its mission.
  I also voted against an amendment relating to section 18 of the bill 
which creates a transitional review process for certain business method 
patents. I cast this vote after receiving assurances from my colleagues 
that the scope and application of section 18 would be appropriately 
constrained, as it is critically important that this section not be 
applied in a way that would undermine the legislation's focus on 
protecting legitimate innovation and job creation.
  I want to note specifically that there are companies in many states, 
including my state of Illinois, that employ large numbers of American 
workers in bringing to market legitimate, novel and non-obvious 
products that are based on and protected by business method patents. 
Examples of such patent-protected products include machinery that 
counts, sorts or authenticates currency and paper instruments, and 
novel software tools and graphical user interfaces that are used by 
electronic trading industry workers to implement trading or asset 
allocation strategies. Vibrant industries have developed around the 
production and sale of these tangible inventions, and I appreciate that 
patents protecting such job-creating products are not understood to be 
the target of section 18.
  I also note that there is an exemption in section 18 for patents for 
technological inventions. House Judiciary Chairman Smith provided 
useful clarification with respect to the scope of that exemption in the 
June 23, 2011, Record, stating that:

       Patents for technological inventions are those patents 
     whose novelty turns on a technological innovation over the 
     prior art and are concerned with a technical problem which is 
     solved with a technical solution. The technological 
     innovation exception does not exclude a patent simply because 
     it recites technology. Inventions related to manufacturing 
     and machines that do not simply use known technology to 
     accomplish a novel business process would be excluded from 
     review under Section 18.
       Section 18 would not cover patents related to the 
     manufacture and distribution of machinery to count, sort, and 
     authenticate currency. It is the intention of Section 18 to 
     not review mechanical inventions related to the manufacture 
     and distribution of machinery to count, sort and authenticate 
     currency like change sorters and machines that scan currency 
     whose novelty turns on a technological innovation over the 
     prior art. These types of patents would not be eligible for 
     review under this program.

  I agree with Chairman Smith, and would note again that vibrant and 
job-

[[Page 13192]]

creating industries have developed around the types of mechanical 
inventions he describes that deal with the counting, sorting, 
authentication and scanning of currency and paper instruments. I am 
confident that the PTO will keep this in mind as it works to craft 
regulations implementing the technological invention exception to 
section 18. I also expect the PTO to keep in mind as it crafts these 
regulations Congress's understanding that legitimate and job-creating 
technological patents such as those protecting the novel electronic 
trading software tools and graphical user interfaces discussed above 
are not the target of section 18.
  Overall, I am pleased that the Congress has passed patent reform 
legislation with strong bipartisan support and has sent the legislation 
to the President's desk. It has been a long time in the making, and I 
again want to congratulate Chairman Leahy for his leadership and hard 
work on this issue.
  The PRESIDING OFFICER. The Senator from Iowa has 5 minutes.
  Mr. GRASSLEY. Madam President, I urge my colleagues to oppose all 
three amendments to the patent bill so we can send this important jobs 
bill to the President of the United States for his signature.
  I then urge my colleagues to support final passage of the Leahy-Smith 
America Invents Act. This is a strong bipartisan bill that will enhance 
America's innovation and give us economic growth. It will protect 
inventors' rights and improve transparency and third-party 
participation in the patent review process. It will strengthen patent 
quality and reduce costs and will curb litigation abuses and improve 
certainty for investors and innovators.
  The Leahy-Smith America Invents Act will also help small entities 
with their patent applications and provide for reduced fees for micro 
entities and small businesses. It will help companies do business more 
efficiently both here and abroad.
  The bill includes a provision that will prevent patents from being 
issued on claims of tax strategies. These strategies can add 
unwarranted fees on taxpayers for attempting to comply with the Tax 
Code.
  Finally, the bill will enhance the operations of the Patent and 
Trademark Office with administrative reforms, give the Patent and 
Trademark Office fee-setting authority which we hope will then lead to 
a reduction of backlog and improve the ability of the Patent and 
Trademark Office to manage its affairs.
  I thank Chairman Leahy and Senator Hatch, the lead sponsors of this 
legislation, for the tremendous amount of work they put into this 
America Invents Act, not only for this Congress but over the past 3 to 
4 years that this bill has been worked on. This has been a long process 
spanning those several Congresses, and without the leadership of these 
two Senators on patent reform we wouldn't be ready to cross the finish 
line today.
  In addition, I thank the staff of the Judiciary Committee: Bruce 
Cohen, Aaron Cooper, Curtis LeGeyt of Chairman Leahy's staff, Matt 
Sandgren of Senator Hatch's staff, and Joe Matal of Senator Kyl's 
staff. I would like to thank the floor staff for their help in 
processing this bill in an efficient manner, and I would like to 
especially thank Kolan Davis and Rita Lari Jochum of my staff for their 
hard work on the bill.
  So for a third time I urge my colleagues to vote for the Leahy-Smith 
America Invents Act and to oppose the three amendments we are going to 
be voting on so we can keep the bill clean and send it to the President 
without delay.
  Senator Leahy has made it very clear to all 100 Senators that, if we 
support this bill, it is a gamble to say it will be law if we have to 
move it beyond the Senate to the House. This bill will help American 
inventors create innovative new products and services and stimulate job 
creation. The bill will upgrade and strengthen our patent system and 
keep America competitive in an increasingly global economy. This is a 
good bill, and I urge all of my colleagues to support it.
  Madam President, how much time do I have?
  The PRESIDING OFFICER. There is 1 minute remaining.
  Mr. GRASSLEY. I would urge my colleagues--because I rebut Senator 
Sessions' amendment--to keep in mind that when somebody tells us this 
is to bail out one company, understand that one company has gotten 
justice from the judicial branch of our government because a judge has 
said for that company that they were denied their rights under the 60-
day rule to file for an extension of patent. So what that judge said 
was bureaucrats in our agencies acted in an arbitrary and capricious 
manner by not having the same rules that designate when the 60-day 
period of time starts.
  So we have a judge that says so, so maybe people can refer to that 
opinion and get what they want. But we ought to have it in the statute 
of what is uniform, and that is what the bill does, and the Sessions 
amendment would strike that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont has the remainder of 
the time until 4 p.m.
  Mr. LEAHY. Madam President, I thank the distinguished Senator from 
Iowa for his strong support of this bill.
  In a few moments the Senate is going to have the opportunity to make 
significant reforms to our Nation's patent system for the first time in 
more than half a century.
  The America Invents Act is the product of extensive consideration. We 
have worked on this for four Congresses. We have had dozens of 
hearings, weeks of committee debate, and I have lost count of the 
hundreds of other meetings we have had. This bill is an opportunity to 
show the American people that Democrats and Republicans can come 
together to enact meaningful legislation for the American people. The 
time to do that is now.
  The only remaining issues that stand in the way of this long overdue 
reform are three amendments. Each of them carries some merit. In the 
past, I might have supported them. But this is a compromise. No one 
Senator can have everything he or she may want.
  The underlying issues have been debated. The bill as written 
represents a bipartisan, bicameral agreement that should be passed 
without changes. Any amendment to this bill risks killing it.
  I would urge all Senators, Republicans and Democrats alike, to join 
me and join Senator Grassley in opposing these amendments. They are the 
final hurdles standing in the way of comprehensive patent reform.
  I ask unanimous consent to have printed in the Record letters from 
businesses and workers representing the spectrum of American industry 
and labor urging the Senate to pass the America Invents Act without 
amendment.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    The Coalition for 21st Century


                                                Patent Reform.

     Hon. Patrick J. Leahy,
     Chairman, Committee on the Judiciary, Washington, DC.
     Hon. Charles E. ``Chuck'' Grassley,
     Ranking Member, Committee on the Judiciary, Washington, DC.
       Dear Chairman Leahy and Ranking Member Grassley: We urge 
     you to work with the leadership of the Senate to bring H.R. 
     1249 to the Senate floor as soon the Senate's schedule might 
     permit and pass the bill as is.
       Our Coalition believes that this legislation will fully 
     modernize our patent laws. Indeed, it will give the world the 
     first truly 21st century patent law--creating patentability 
     standards that are transparent, objective, predictable and 
     simple in their application. It will enhance the inventor-
     friendly and collaboration-friendly features of our existing 
     patent law. At the same time, it will increase public 
     participation in the patenting process, while maintaining 
     strong protections for inventors in the provisions that do 
     so.
       The agreement reached in the House on USPTO funding will 
     assure that the fees paid to the USPTO by inventors will not 
     be diverted and will be made available to the Office for 
     processing patent applications and other important functions 
     of the Office. While we would have preferred the Senate's 
     approach in S. 23 to prevent diversion of USPTO funds, we 
     believe that acceptance of the House bill provides an 
     effective and the most immediate path forward to address 
     problems of the patent office. H.R. 1249, like S. 23, is an 
     excellent bill. These bills are the

[[Page 13193]]

     product of many years of skillful and difficult legislative 
     work in both the House and the Senate. We believe the time 
     has now come for the Senate to take the final legislative act 
     required for enactment of these historic reforms.
           Sincerely,
     Gary L. Griswold.
                                  ____



                                Coalition for Patent Fairness,

                                                    June 27, 2011.
     Hon. Patrick J. Leahy,
     Chairman, U.S. Senate, Committee on the Judiciary, 
         Washington, DC.
     Hon. Charles E. Grassley,
     Ranking Member, Committee on the Judiciary, Washington, DC.
       Dear Chairman Leahy and Ranking Member Grassley: After 
     years of effort, both houses of Congress have now 
     successfully passed patent reform by impressive margins. On 
     behalf of the high tech community, we congratulate you, as 
     well as your House colleagues, on this achievement.
       The Coalition for Patent Fairness supports Senate 
     acceptance of H.R. 1249 as passed by the House. While neither 
     bill is as we would have written it, we believe that the 
     House passed bill represents the best opportunity to improve 
     the patent system at the present time. We are also quite 
     aware that House leaders worked very hard to take into 
     account the views of the Senate during their deliberations.
       H.R. 1249, as passed, offers us a chance of consensus and 
     we believe it should be passed and signed into law. We are 
     looking forward to advancing other policy matters that boost 
     innovation and growth in this country.
           Sincerely,
     Coalition for Patent Fairness.
                                  ____

                                        Chamber of Commerce of the


                                     United States of America,

                                Washington, DC, September 6, 2011.
       To the Members of the United States Senate: The U.S. 
     Chamber of Commerce, the world's largest business federation 
     representing the interests of more than three million 
     businesses and organizations of every size, sector, and 
     region, strongly supports H.R. 1249, the ``America Invents 
     Act,'' which would encourage innovation and bolster the U.S. 
     economy. The Chamber believes this legislation is crucial for 
     American economic growth, jobs, and the future of U.S. 
     competitiveness.
       A key component of H.R. 1249 is section 22, which would 
     help ensure that fees collected by the U.S. Patent and 
     Trademark Office (PTO) fund the office and its administration 
     of the patent system. PTO faces significant challenges, 
     including a massive backlog of pending applications, and this 
     backlog is stifling domestic innovators. The fees that PTO 
     collects to review and approve patent applications should be 
     dedicated to PTO operation. However, fee diversion by 
     Congress has hampered PTO's efforts to hire and retain a 
     sufficient number of qualified examiners and implement 
     technological improvements necessary to ensure expeditious 
     issuance of high quality patents. Though the PTO funding 
     compromise embodied in the House-passed bill could be 
     strengthened to match the fee diversion provision originally 
     passed by the Senate, as crafted, Section 22 represents a 
     meaningful step toward ensuring that PTO has better access to 
     the user fees it collects, and would better allow the agency 
     to address the current backlog of 1.2 million applications 
     waiting for a final determination and pendency time of three 
     years, as well as to improve patent quality.
       In addition, the legislation would help ensure that the 
     U.S. remains at the forefront of innovation by enhancing the 
     PTO process and ensuring that all inventors secure the 
     exclusive right to their inventions and discoveries. The bill 
     shifts the U.S. to a first-inventor-to-file system that the 
     Chamber believes is both constitutional and wise, ending 
     expensive interference proceedings. H.R. 1249 also contains 
     important legal reforms that would help reduce unnecessary 
     litigation against American businesses and innovators. Among 
     the bill's provisions, Section 16 would put an end to 
     frivolous false patent marking cases, while still preserving 
     the right of those who suffered actual harm to bring actions. 
     Section 5 would create a prior user right for those who first 
     commercially use inventions, protecting the rights of early 
     inventors and giving manufacturers a powerful incentive to 
     build new factories in the United States, while at the same 
     time fully protecting universities. Section 19 also restricts 
     joinder of defendants who have tenuous connections to the 
     underlying disputes in patent infringement suits. Section 18 
     of H.R. 1249 provides for a tailored pilot program which 
     would allow patent office experts to help the court review 
     the validity of certain business method patents using the 
     best available prior art as an alternative to costly 
     litigation.
       The Chamber strongly opposes any amendments to H.R. 1249 
     that would strike or weaken any of the important legal reform 
     measures in this legislation, including those found in 
     Sections 16, 5, 19 and 18.
       The Chamber strongly supports H.R. 1249. The Chamber may 
     consider votes on, or in relation to, H.R. 1249--including 
     procedural votes, and any weakening Pamendments--in our 
     annual How They Voted scorecard.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____



                                          United Steelworkers,

                                    Pittsburgh, PA, July 15, 2011.
     Hon. Patrick J. Leahy,
     Chairman, Committee on the Judiciary,
     U.S. Senate, Washington, DC.
       Dear Chairman Leahy: On behalf of the United Steelworkers, 
     I am writing to urge you to consider support for the recently 
     passed House bill, H.R. 1249. Over the past several years the 
     USW has been deeply involved in discussions concerning 
     comprehensive patent reform. We were principally concerned 
     with issues dealing with how damages are calculated for 
     infringed patents, new post-grant review procedures, and 
     publication requirements for pending patents. H.R. 1249, as 
     did S. 23 which passed earlier this year, satisfactorily 
     addresses these issues and has our support. While we prefer 
     the provision in the Senate bill dealing with USPTO funding, 
     we nevertheless believe that the House bill moves in the 
     right direction and will help insure that the patent office 
     has the appropriate and necessary resources to do its 
     important work.
       Certainly, no bill is perfect. But H.R. 1249 goes a long 
     way toward balancing different interests on a very difficult 
     and contentious issue. We believe it warrants your favorable 
     consideration and enactment by the Senate so that it can be 
     moved to the President's desk and signed into law without 
     undue delay.
       We worked closely with your office, and others in the 
     Senate, in finding a consensus approach that would promote 
     innovation, investment, production and job creation in the 
     U.S. We believe that H.R. 1249, which builds on your work in 
     the Senate, strikes a proper balance.
       The U. S. economy remains in a very fragile state with high 
     unemployment and stagnant wages. Patent reform can be an 
     important part of a comprehensive approach to getting the 
     economy moving again and I urge its enactment.
           Sincerely,
                                                    Leo W. Gerard,
     International President.
                                  ____

                                                    June 27, 2011.
     Hon. Patrick Leahy,
     Chairman, Senate Committee on the Judiciary, Washington, DC.
     Hon. Chuck Grassley,
     Ranking Member,
     Senate Committee on the Judiciary, Washington, DC.
       Dear Chairman Leahy and Ranking Member Grassley: We write 
     on behalf of six university, medical college, and higher 
     education associations to encourage you to work with the 
     leadership of the Senate to bring H.R. 1249 before the Senate 
     as soon as possible for a vote on passage of the bill as is.
       The patent system plays a critical role in enabling 
     universities to transfer the discoveries arising from 
     university research into the commercial sector for 
     development into products and processes that benefit society. 
     H.R. 1249 closely resembles S. 23; both bills contain 
     provisions that will improve patent quality, reduce patent 
     litigation costs, and provide increased funding for the 
     USPTO. Although we preferred the USPTO revolving fund 
     established in S. 23, we believe that the funding provisions 
     adopted by the House in the course of passing H.R. 1249 
     provide an effective means of preventing fee diversion. 
     Together with the expanded fee-setting authority included in 
     both bills, H.R. 1249 will provide USPTO with the funding 
     necessary to carry out its critical functions.
       We very much appreciate the leadership of the Senate 
     Judiciary Committee in crafting S. 23, which brought together 
     the key elements of effective patent reform and formed the 
     basis for H.R. 1249. These bills represent the successful 
     culmination of a thorough, balanced effort to update the U.S. 
     patent system, strengthening the nation's innovative capacity 
     and job creation in the increasingly competitive global 
     economic environment of the 21st century. Senate passage of 
     H.R. 1249 will assure that the nation secures these benefits.
           Sincerely,
     Hunter R. Rawlings III,
       President, Association of American Universities.
     Molly Corbett Broad,
       President, American Council on Education.
     Darrell G. Kirch,
       President and CEO, Association of American Medical 
     Colleges.
     Peter McPherson,
       President, Association of Public and Land-grant 
     Universities.
     Robin L. Rasor,
       President, Association of University Technology Managers.
     Anthony P. DeCrappeo,

[[Page 13194]]

       President, Council on Governmental Relations.
                                  ____

                                                    June 25, 2011.
       Dear Chairman Leahy and Ranking Member Grassley: As an 
     independent inventor and someone who has personally 
     interacted with thousands of other independent inventors and 
     entrepreneurs, we urge you to work with the leadership of the 
     Senate to bring H.R. 1249 to the Senate floor as soon the 
     Senate's schedule might permit and pass the bill as is.
       Over the past few months, my enthusiasm and belief in the 
     legislative process has grown as I have participated in the 
     debate over patent reform. I believe that this legislation 
     will fully modernize our patent laws. It will give 
     independent inventors and entrepreneurs the speed and 
     certainty necessary to go out and commercialize their 
     inventions, start companies, and create jobs.
       There has been a great deal of compromise amongst 
     industries to balance the unique needs of all constituents. 
     The independent inventor has been well represented throughout 
     this process and we are in a unique situation where there is 
     overwhelming support for this legislation.
       The fee diversion debate has been important, since it has 
     shed light on the fact that nearly a billion dollars has been 
     diverted from the USPTO. These are dollars that inventors 
     have paid to the USPTO expecting the funds to be used to 
     examine applications as expeditiously as possible. While I 
     would have preferred the Senate's approach in S. 23 to 
     prevent diversion of USPTO funds, I believe that acceptance 
     of the House bill provides the best way to ensure that the 
     funds paid to the patent office will be available to hire 
     examiners and modernize the tools necessary for it to operate 
     effectively.
       H.R. 1249 is the catalyst necessary to incentivize 
     inventors and entrepreneurs to create the companies that will 
     get our country back on the right path and generate the jobs 
     we sorely need. I hope that you will take the needs of the 
     ``little guy'' into consideration and move this legislation 
     forward and enact these historic reforms.
           Sincerely,
                                                 Louis J. Foreman,
                                                              CEO.

  Mr. LEAHY. The bill is important for our economy. It is important for 
job creation. It is a product of bipartisan and bicameral 
collaboration. It is the way our system is supposed to work. I look 
forward to passing the bill and sending it directly to the President's 
desk for his signature.
  I know my friends both on the Republican side and Democratic side 
have amendments to this bill, but they are not amendments that should 
pass. I mentioned the one earlier. I talked about the amendment that 
would put all our--well, Madam President, which amendment is the first 
in order?
  The PRESIDING OFFICER. Sessions amendment No. 600.
  Mr. LEAHY. Madam President, I yield the floor. I know both Senator 
Sessions and Senator Grassley wish to speak to that.
  The PRESIDING OFFICER. The Senators will have 4 minutes equally 
divided.
  The Senator from Alabama.
  Mr. SESSIONS. Madam President, the oath that judges take is to do 
equal justice, and it says for the poor and the rich.
  Every day statutes of limitations require that a litigant file a 
lawsuit within so many days and file petitions in so many days. I see 
Senator Cornyn, a former justice on the Texas Supreme Court and 
attorney general of Texas. He fully understands that. I know he 
supports my view of this issue; that is, that the rules have to be 
equally applied.
  It is just not right to the little widow lady, it is not right that 
somebody with a poor lawyer, or whatever, misses a deadline and a judge 
throws the case out. And they do. Big law firms such as WilmerHale file 
motions every day to dismiss cases based on delay in filing those 
cases. Big insurance companies file lawsuits, file motions to dismiss 
every day against individuals who file their claims too late--and they 
win. So when this big one has a good bit of risk, presumably they have 
a good errors and omissions policy--that is what they are supposed to 
do.
  One reason they get paid the big bucks--and the average partner makes 
$1 million-plus a year--is because they have high responsibilities, and 
they are required to meet those responsibilities and be responsible.
  So I believe it is improper for us, while this matter is on appeal 
and in litigation, to take action driven by this continual lobbying 
pressure that would exempt one company. They can say it is others 
involved, but, look, this is always about one company. I have been here 
for 10 years. I know how it is played out. I have seen it. I have 
talked to the advocates on their behalf. I just haven't been able to 
agree to it because I see the average person not getting the benefit 
they are due.
  So I urge my colleagues to join in support of this amendment. The 
Wall Street Journal and others have editorialized in favor of it, and I 
urge my colleagues to support it.
  Mr. GRASSLEY. How much time do I have?
  The PRESIDING OFFICER. Two minutes in opposition to the amendment.
  Mr. GRASSLEY. I think the Senator from Alabama has given me a reason 
to suggest the importance of the language of the bill he wants to 
strike because he said that law ought to be equally applied.
  The law for this one company is that they were not given justice by 
bureaucrats who acted in an arbitrary and capricious manner and they 
were denied their rights under the law. So that company is taken care 
of because there was an impartial judge who believed they had been 
abused in their rights under Hatch-Waxman to be able to extend their 
patent.
  You might be able to argue in other places around the country when 
you are likewise denied your right that you have this court case to 
back you up, but we cannot have one agency saying when a 60-day period 
of time starts for mail going in or mail going out to exercise your 60-
day period, and for another agency to do it another way. That is 
basically what the judge said, that Congress surely could not have 
meant that.
  The language of this section 37 does exactly what Senator Sessions 
wants, which is to guarantee in the future that no bureaucrat can act 
in an arbitrary and capricious way when they decide when does the 60-
day period of time start. We put it in the statute of the United States 
so the courts look at it and the bureaucrats look at it in exactly the 
same way.
  If you are a citizen of this country, you ought to know what your 
rights are. You ought to know that a bureaucrat treats you the same way 
they treat, in like situations, somebody else. You cannot have this 
sort of arbitrary and capricious action on the part of faceless 
bureaucrats that denies the rights. This puts it in statute and 
solidifies it so everybody knows what the law is, rather than relying 
upon one judge or in the future having to rely upon the court someplace 
else. I ask my colleagues not to support the Sessions amendment because 
it would deny equal rights to some people in this country, as this 
judge said those equal rights were already denied.
  The PRESIDING OFFICER (Ms. Klobuchar). The time has expired. The 
Senator from Vermont.
  Mr. LEAHY. Madam President, I ask unanimous consent that after the 
first vote--we have several more votes--the remaining votes be 10-
minute votes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Vermont.
  Mr. LEAHY. Have the yeas and nays been ordered?
  The PRESIDING OFFICER. They have not.
  The question is on agreeing to the Sessions amendment No. 600.
  Mr. SESSIONS. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Rockefeller) is necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Indiana (Mr. Coats).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 47, nays 51, as follows:

[[Page 13195]]



                      [Rollcall Vote No. 126 Leg.]

                                YEAS--47

     Alexander
     Ayotte
     Barrasso
     Baucus
     Boozman
     Boxer
     Cantwell
     Casey
     Chambliss
     Coburn
     Conrad
     Corker
     Cornyn
     Crapo
     DeMint
     Durbin
     Enzi
     Hatch
     Heller
     Hoeven
     Hutchison
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kirk
     Lee
     Manchin
     McCain
     McCaskill
     McConnell
     Moran
     Murkowski
     Paul
     Portman
     Risch
     Rubio
     Sessions
     Shelby
     Snowe
     Stabenow
     Tester
     Thune
     Toomey
     Udall (CO)
     Vitter
     Wicker

                                NAYS--51

     Akaka
     Begich
     Bennet
     Bingaman
     Blumenthal
     Blunt
     Brown (MA)
     Brown (OH)
     Burr
     Cardin
     Carper
     Cochran
     Collins
     Coons
     Feinstein
     Franken
     Gillibrand
     Graham
     Grassley
     Hagan
     Harkin
     Inouye
     Johnson (SD)
     Kerry
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lugar
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Roberts
     Sanders
     Schumer
     Shaheen
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                             NOT VOTING--2

     Coats
     Rockefeller
       
  The amendment was rejected.
  Mr. LEVIN. Madam President, I move to reconsider the vote.
  Mr. KERRY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 595

  The PRESIDING OFFICER. There will now be 4 minutes equally divided 
prior to a vote in relation to the Cantwell amendment.
  The Senator from Washington.
  Ms. CANTWELL. Madam President, I encourage my colleagues to support 
the Cantwell amendment. The Cantwell amendment is the reinstatement of 
section 18 language as it passed the Senate. So casting a vote for the 
Cantwell amendment will be consistent with language previously 
supported by each Member.
  The reason we are trying to reinstate the Senate language is because 
the House language broadens a loophole that will allow for more 
confusion over patents that have already been issued. It will allow for 
the cancellation of patents already issued by the Patent Office, 
throwing into disarray and legal battling many companies that already 
believe they have a legitimate patent.
  The House language, by adding the word ``other,'' broadens the 
definition of section 18 and extends it for 8 years, so this chaos and 
disarray that is supposedly targeted at a single earmark for the 
banking industry to try to get out of paying royalties is now so 
broadened that many other technology companies will be affected.
  I urge my colleagues to support the Cantwell amendment and reinstate 
the language that was previously agreed to.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Madam President, I rise in opposition to the amendment 
of my dear friend, Senator Cantwell.
  Business method patents are a real problem. They never should have 
been patented to begin with. Let me give an example: double click. We 
double click on a computer or something such as that and after it 
becomes a practice for awhile, someone files a patent and says they 
want a patent on double clicking. Because of the way the Patent Office 
works, the opponents of that never get a chance to weigh in as to 
whether it should be a patent. The Patent Office has gone way overboard 
in allowing these business method patents.
  One might say: Then you get your day in court. That is true, except 
56 percent--more than half--of all the business method patent 
litigation goes to one district, the Eastern District of Texas, which 
is known to be extremely favorable to the plaintiffs. It takes about 10 
years to litigate. It costs tens of millions of dollars. So the people 
who are sued over and over for things such as double clicking or how to 
photograph a check--common things that are business methods and not 
patents--settle. It is a lucrative business for a small number of 
people, but it is wrong.
  What this bill does is very simple. What the bill does, in terms of 
this amendment, is very simple. It says the Patent Office will make an 
administrative determination before the years of litigation as to 
whether this patent is a legitimate patent so as not to allow the kind 
of abuse we have seen. It applies to all financial transactions, 
whether it be a bank or Amazon or a store or anybody else, and it makes 
eminent sense.
  So as much respect as I have for my colleague from Washington, I must 
strongly disagree with her argument and urge that the amendment be 
voted down.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  Ms. CANTWELL. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. PAUL (when his name was called). Present.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Rockefeller) is necessarily absent.
  The result was announced--yeas 13, nays 85, as follows:

                      [Rollcall Vote No. 127 Leg.]

                                YEAS--13

     Boxer
     Cantwell
     Coburn
     DeMint
     Hatch
     Johnson (WI)
     Lee
     McCaskill
     Murray
     Pryor
     Sessions
     Udall (CO)
     Vitter

                                NAYS--85

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

                        ANSWERED ``PRESENT''--1

       
     Paul
       

                             NOT VOTING--1

       
     Rockefeller
       
  The amendment was rejected.


                     Amendment No. 599, as Modified

  The PRESIDING OFFICER. There is now 4 minutes equally divided prior 
to the vote in relation to the Coburn amendment.
  The Senator from Oklahoma is recognized.
  Mr. COBURN. Madam President, this is a straightforward amendment that 
says if you pay into the Patent Trademark Office to have a patent 
evaluated, that money ought to be spent on the process. We have now 
stolen almost $900 million from the Patent Office. We have almost a 
million patents in arrears. We have fantastic leadership in the Patent 
Office, and we will not send them the money to do their job. It is 
unconscionable that we will not do this.
  I understand the arguments against it, and I reserve the remainder of 
our time.
  Mrs. FEINSTEIN. Madam President, I rise today in support of Senator 
Coburn's amendment to prevent the diversion of patent and trademark 
fees to other purposes.
  I am pleased to be a cosponsor of this amendment. I believe this 
amendment is critical for this bill to have the innovation-encouraging, 
job-creating effects that its proponents say it will.
  Prior to 1990, taxpayers supported the operations of the Patent and 
Trademark Office, or PTO. In 1990, this was

[[Page 13196]]

changed through a 69 percent user fee ``surcharge,'' so that the PTO 
became funded entirely through fees paid by its users, the American 
inventors who seek to protect the genius of their inventions from those 
who would copy these innovations for their own profit.
  In short order, Congress began using the funds that inventors paid to 
protect their inventions for other purposes. In 1992, $8.1 million in 
user fees were diverted. In 1993, $12.3 million was diverted. In 1994, 
$14.7 million. And so it continued, escalating every year, until what 
started as a trickle became a flood in 1998, with $200.3 million in PTO 
user fees diverted. All told, since 1992, an estimated $886 million in 
fees that were paid for the efficient and effective operation of the 
Patent and Trademark Office have been diverted to other uses, according 
to the Intellectual Property Owners Association.
  Meanwhile, at the same time that these fees were being taken away, 
the length of time that it takes to get a patent out of the Patent 
Office has steadily increased. In fiscal year 1991, average patent 
pendency was 18.2 months. By fiscal year 1999, it had increased to 25 
months. By fiscal year 2010, average patent pendency had increased all 
the way to 35.3 months.
  These are not just numbers. This is innovation being stifled from 
being brought to market. The longer it takes to get a patent approved, 
the longer a new invention, a potential technological breakthrough, 
sits on the shelf gathering dust instead of spurring job growth and 
scientific and economic progress.
  Ultimately, this hurts the competitiveness of the American economy. 
America has a stunning record of leading the world in innovation, which 
has provided us a competitive edge over the decades and even centuries. 
By stifling the progress of our innovation within the PTO, we are 
dulling that competitive edge.
  Obviously, there is a direct relationship between fee diversion and 
patent pendency. The more fees that are diverted away from the PTO, the 
fewer patent examiners they can hire, the more patents each examiner 
has to process, and the longer it takes them to get to any individual 
patent--a longer patent pendency.
  The manager of this bill, the distinguished chairman of the Judiciary 
Committee, has argued that ``the bill will speed the time it takes for 
applications on true inventions to issue as high quality patents, which 
can then be commercialized and used to create jobs. . . . The America 
Invents Act will ensure that the PTO has the resources it needs to work 
through its backlog of applications more quickly. The bill accomplishes 
this objective by authorizing the PTO to set its fees . . .''
  But what this bill gave with the one hand, in authorizing the PTO to 
set its fees, the House of Representatives took away with the other 
hand, by striking the strong antifee diversion language that the Senate 
included in its patent bill earlier this year. Setting higher fee 
levels to reduce patent pendency does no good if those fees are simply 
diverted away from the PTO, and not used to hire additional patent 
examiners. Indeed, requiring the payment of higher patent fees which 
are then used for general government purposes really amounts to a tax 
on innovation--which is the last thing we should be burdening in 
today's technology-driven economy.
  The chairman argues that the bill ``creates a PTO reserve fund for 
any fees collected above the appropriated amounts in a given year--so 
that only the PTO will have access to these fees.'' However, with all 
due respect, the language that the House put into the bill is not 
really different from previous bill language that proved ineffective to 
prevent diversion.
  The 1990 law that authorized the patent user surcharge provided that 
the surcharges ``shall be credited to a separate account established in 
the Treasury . . .; '' and ``shall be available only to the Patent and 
Trademark Office, to the extent provided in appropriation Acts. . . .''
  However, notwithstanding this language, the Congressional Budget 
Office found in 2008 that $230 million had been diverted from the 
surcharge account.
  Similarly, the House changed the bill before us today to 
``establish[] in the Treasury a Patent and Trademark Fee Reserve Fund . 
. .; '' and ``to the extent and in the amounts provided in 
appropriations Acts, amounts in the Fund shall be made available until 
expended only for obligation and expenditure by the Office . . .''
  The key language is the same--``to the extent provided in 
appropriation Acts.'' Calling it a ``fund'' rather than an ``account'' 
should not lead anyone to expect a different result.
  Indeed, the Senate bill that we passed earlier this year explicitly 
struck the existing statutory language, ``To the extent and in the 
amounts provided in advance in appropriations Acts . . .'' And the 
House specifically restored that language, omitting only the words ``in 
advance.'' The Coburn amendment would restore the changes we made 
earlier this year, eliminating that language again.
  The Coburn amendment, like the Senate bill, contains other key 
language, providing that amounts in the fund it establishes ``shall be 
available for use by the Director without fiscal year limitation.'' The 
bill before us today provides no such protection against diversion.
  In short, this bill will permit the continued diversion of patent 
fees, to the detriment of American inventors and innovation.
  But don't just take my word for this. The Intellectual Property 
Owners Association, which includes more than 200 companies, just 
yesterday said:

       The greatest disappointment with the House-passed patent 
     reform bill H.R. 1249 . . . is its failure to stop USPTO fee 
     diversion. The House-passed patent reform bill creates 
     another USPTO account, a ``reserve fund,'' but nothing in the 
     proposed statutory language guarantees the USPTO access to 
     the funds in this new account. The language of H.R. 1249 
     defers to future appropriations bills to instruct the USPTO 
     on how to access fees in the new USPTO account. Therefore, 
     despite some claims to the contrary, the creation of this new 
     account, alone, will not stop diversion.

  The Innovation Alliance, a major coalition of innovative companies, 
and CONNECT, an organization dedicated to supporting San Diego 
technology and life science businesses, among others, also believe that 
the House language is insufficient to prevent fee diversion.
  Without this protection from fee diversion, this bill could well make 
our patent system worse, not better. Many of the changes made by this 
bill will impose additional burdens on the PTO. For example, the CBO 
found that the new post-grant review procedure would cost $140 million 
to implement over a 10-year period; the new supplemental review 
procedure would cost $758 million to implement over that period; and 
the changes to the inter partes reexamination procedure would cost $251 
million to implement.
  All told, these changes would impose additional duties on the PTO 
costing over $1 billion to implement over a 10-year period. If the PTO 
is not permitted to keep the fees it needs to meet these obligations, 
patents will take even longer to be issued, and the promised 
improvements in patent quality may prove to be ephemeral. We won't 
encourage innovation; we won't create new jobs.
  Therefore, I urge my colleagues to support the amendment by the 
Senator from Oklahoma, to support the strong antidiversion language 
that we passed this Spring, and to end fee diversion once and for all.
  Ms. MIKULSKI. Madam President, I rise in opposition to the amendment 
to the America Invents Act offered by the Senator from Oklahoma.
  I, along with my fellow members of the Appropriations Committee, 
share the Senator from Oklahoma's goal of ensuring that all fees paid 
by inventors to the U.S. Patent and Trademark Office, PTO, are used 
only for the operations of the PTO. The PTO fosters American innovation 
and job creation by providing protections for ideas and products 
developed by our entrepreneurs, businesses and academic institutions.
  As the chairwoman of the Appropriations Subcommittee that funds the 
PTO, I have worked to ensure that PTO

[[Page 13197]]

receives every dollar it collects from inventors. But, while I share 
the Senator's goal, I oppose his amendment for three reasons.
  First, the amendment is unnecessary. It is a solution in search of a 
problem. The underlying America Invents Act before the Senate today 
ensures that PTO can keep and spend all of the fees collected. This 
legislation establishes a Patent and Trademark Fee Reserve Fund. Any 
fees collected in excess of annual appropriations would be deposited 
into the fund, and those fees would remain available until expended 
solely for PTO operations.
  The creation of this fund is not a new idea. Provisions of several 
bills reported out of the Senate Appropriations Committee in prior 
years allowed PTO to keep and spend fee revenue in excess of 
appropriations levels. I can assure my colleagues that the committee 
will continue to support such language.
  Second, the amendment would significantly reduce oversight of the 
PTO. The Senator from Oklahoma's amendment would establish a new, off-
budget revolving fund for PTO fees. This would put the PTO on 
autopilot, without the oversight of an annual legislative vehicle to 
hold the agency accountable for progress and wise use of taxpayer 
funding.
  Since fiscal year 2004, funding for PTO has increased by over 70 
percent. At the same time, however, the backlog of patent applications 
has climbed to more than 700,000. It now takes over three years for PTO 
to make a decision on a patent application. This is unacceptable. While 
America's inventors are waiting in line, their ideas are being stolen 
by other countries.
  Through annual appropriations bills, the Appropriations Committee has 
succeeded in forcing management reforms that have slowed the growth of 
PTO's backlogs and improved employee retention. While further 
accountability is needed, the America Invents Act keeps PTO on budget 
and on track for continued oversight by the Appropriations Committee 
each year.
  Finally, the Senator's amendment could have unintended consequences. 
If PTO were permitted to operate on autopilot, the agency could face 
fee revenue shortfalls and the Appropriations Committee would not be 
poised to assist. The committee continually monitors the agency's fee 
projections to ensure the agency can operate effectively. It is not 
widely known, but over the past 6 years, PTO has actually collected 
nearly $200 million less than the appropriated levels.
  In fact, I recently received a letter from the Director of the PTO 
informing my Subcommittee that fee estimates for fiscal year 2012 have 
already dropped by $88 million. I will ask consent to have this letter 
printed in the Record. If PTO was put on autopilot as proposed by the 
Senator's amendment, the committee would no longer have the tools to 
provide the necessary funding to keep our patent and trademark system 
operating should a severe funding gap occur.
  The PTO's full access to fee revenue is critical to American 
innovation and job creation. I commend Chairman Leahy for his efforts 
to improve the patent system and ensure that PTO funding is spent 
wisely and effectively. I support the funding provisions of the America 
Invents Act and oppose the Coburn amendment. I urge my colleagues to do 
the same.
  Madam President, I ask unanimous consent to have printed in the 
Record the letter to which I referred.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                              United States Patent


                                         and Trademark Office,

                                Alexandria, VA, September 1, 2011.
     Hon. Barbara A. Mikulski,
     Chairwoman, Subcommittee on Commerce, Justice, Science, and 
         Related Agencies, Committee on Appropriations, U.S. 
         Senate, Washington, DC.
       Dear Madam Chair: This letter provides you with the United 
     States Patent and Trademark Office's (USPTO) current, revised 
     fee collection estimates for fiscal year (FY) 2012, as 
     requested in the report accompanying H.R. 3288 (Pub. L. No. 
     111-117).
       The President's FY 2012 Budget supports an aggressive 
     approach to improving operations at the Agency, reducing the 
     patent backlog and contributing to economic recovery efforts. 
     The fee collection estimate submitted with the FY 2012 
     President's Budget earlier this year was $2,706.3 million, 
     including a 15% interim increase to certain patent user fee 
     rates. This increase will help fund efforts to reduce the 
     backlog of unexamined patent applications. Using more recent 
     information, outcomes of events, and projections of demand 
     for USPTO services, we now expect fee collections for FY 2012 
     to be in the $2,431.9 million to $2,727.6 million range, with 
     a working estimate of $2,618.2 million (a decrease of $88.1 
     million from the FY 2012 President's Budget estimate).
       The projected decrease is attributable to factors both 
     internal and external to the USPTO; namely, a change in 
     strategic direction resulting in the Office not pursuing a 
     cost recovery regulatory increase to Request for Continued 
     Examination fee rates (this was estimated to generate about 
     $70 million in patent application fees), the decision not to 
     pursue a Consumer Price Index increase to patent statutory 
     fees, and the decrease in demand for USPTO services as a 
     result of processing reengineering gains from compact 
     prosecution. The USPTO bases these revisions on current 
     demand as well as discussions with our stakeholders about 
     expected trends. The USPTO also reviews filing trends in 
     foreign patent offices, which have experienced similar 
     difficulties in estimating demand.
       In closing, the USPTO would like to thank the subcommittee 
     for their support of the Leahy-Smith America Invents Act. We 
     are especially grateful for the subcommittee's support in 
     ensuring all fees collected by the USPTO will be made 
     available for the USPTO to use in examination and 
     intellectual property activities supporting the fee paying 
     community.
       If you or your staff have any questions, please contact Mr. 
     Anthony Scardino, the USPTO's Chief Financial Officer, at 
     (571) 272-9200. Thank you for your continued support of the 
     United States Patent and Trademark Office.
           Sincerely,
                                                  David J. Kappos,
                                     Under Secretary and Director.
     Identical Letters sent to:
       The Hon. Kay Bailey Hutchison, Ranking Member, Subcommittee 
     on Commerce, Justice, Science and Related Agencies, Committee 
     on Appropriations, U.S. Senate, Washington, DC.
       The Hon. Frank R. Wolf, Chairman, Subcommittee on Commerce, 
     Justice, Science, and Related Agencies, Committee on 
     Appropriations, House of Representatives, Washington, DC.
       The Hon. Chaka Fattah, Ranking Member, Subcommittee on 
     Commerce, Justice, Science and Related Agencies, Committee on 
     Appropriations, House of Representatives, Washington, DC.

  The PRESIDING OFFICER. Who yields time?
  The Senator from Vermont is recognized.
  Mr. LEAHY. Madam President, I understand what the Senator from 
Oklahoma says, but the Coburn amendment can derail and even kill this 
bill. So, as I have told the Senator, I will move to table in a moment. 
But this bill would otherwise help our recovering economy. It would 
unleash innovation and create jobs.
  I have worked for years against Patent Office fee diversion, but I 
oppose this amendment. Its formulation was already rejected by the 
House of Representatives. They have made it very clear. There is no 
reason they will change. This amendment can sink years of efforts by 
both Republicans and Democrats in this body and the other body to pass 
it. Actually, this amendment could kill the bill over a mere formality: 
the difference between a revolving fund and a reserve fund.
  We have worked out a compromise in good faith. The money, the fees--
under the bill as it is here--can only be spent at the PTO, but the 
only thing is, we actually have a chance to take a look at what they 
are spending it on, so they could not buy everybody a car or they could 
not have a gilded palace. They actually have to spend it on getting 
through the backlog of patents. It will not go anywhere else. It will 
only go to the Patent Office.
  So we should not kill the bill over this amendment. We should reject 
the amendment and pass the bill. It is time for us to legislate. That 
is what the American people elected us to do. That is what they expect 
us to do. Let's not kill the bill after all this work over something 
that will really make no difference in the long run. So I therefore 
will move to table the Coburn amendment.
  The PRESIDING OFFICER. All time has not yet expired.
  Mr. COBURN. Madam President, I think I have reserved my time.

[[Page 13198]]

  The PRESIDING OFFICER. The Senator from Oklahoma has reserved his 
time. He has 1\1/2\ minutes.
  Mr. COBURN. Madam President, I will make the following points, and I 
would ask for order before I do that.
  The PRESIDING OFFICER. Could we please have order so the Senator from 
Oklahoma can speak.
  Mr. COBURN. It is true that the House bill moves the money to where 
it cannot be spent elsewhere, but there is no requirement that the 
money be spent in the Patent Office. There is a written agreement 
between an appropriations chairman and the Speaker that is good as long 
as both of them are in their positions. This is a 7-year authorization. 
It will not guarantee that the money actually goes to the Patent 
Office.
  This bill, with this amendment in it, went out of the House Judiciary 
Committee 32 to 3 in a strong, bipartisan vote. It was never voted on 
in the Senate because the appropriators objected because of a technical 
error, which has been corrected in this amendment. So it violates no 
House rules, it violates no condition and, in fact, will guarantee that 
the Patent Office has the funds it needs to have to put us back in the 
place we need to be.
  This bill will not be killed because we are going to make sure the 
money for patents goes to the Patent Office. Anybody who wants to claim 
that, ask yourself what you are saying. We are not going to do the 
right thing because somebody says they will not do the right thing? We 
ought to do the right thing.
  I yield back the remainder of my time.
  Mr. LEAHY. Madam President, because this amendment would kill the 
bill, I move to table the amendment and ask for the yeas and nays.
  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 legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Rockefeller) is necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Florida (Mr. Rubio).
  The PRESIDING OFFICER (Mr. Franken). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 50, nays 48, as follows:

                      [Rollcall Vote No. 128 Leg.]

                                YEAS--50

     Akaka
     Baucus
     Bennet
     Bingaman
     Blumenthal
     Brown (MA)
     Brown (OH)
     Cardin
     Carper
     Casey
     Cochran
     Collins
     Coons
     Durbin
     Franken
     Gillibrand
     Grassley
     Hagan
     Harkin
     Hoeven
     Inouye
     Johnson (SD)
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lugar
     Manchin
     Menendez
     Merkley
     Mikulski
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Sanders
     Schumer
     Shaheen
     Shelby
     Stabenow
     Udall (NM)
     Webb
     Whitehouse

                                NAYS--48

     Alexander
     Ayotte
     Barrasso
     Begich
     Blunt
     Boozman
     Boxer
     Burr
     Cantwell
     Chambliss
     Coats
     Coburn
     Conrad
     Corker
     Cornyn
     Crapo
     DeMint
     Enzi
     Feinstein
     Graham
     Hatch
     Heller
     Hutchison
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kirk
     Klobuchar
     Lee
     McCain
     McCaskill
     McConnell
     Moran
     Paul
     Portman
     Risch
     Roberts
     Sessions
     Snowe
     Tester
     Thune
     Toomey
     Udall (CO)
     Vitter
     Warner
     Wicker
     Wyden

                             NOT VOTING--2

     Rockefeller
     Rubio
       
  The motion was agreed to.
  The PRESIDING OFFICER. The majority leader.
  Mr. REID. Mr. President, we have one more vote. We will have 4 
minutes of debate and then a vote on final passage. This is important 
legislation.
  The President's speech is at 7 o'clock. We will gather here at 6:30 
to proceed to the House Chamber.
  When the President's speech is over, we will come back here, and I 
will move to proceed to the debt ceiling vote that we know is coming. 
If that motion to proceed fails, then we will be through for the week 
as far as votes go. If the vote to proceed is affirmative in nature, we 
will be back tomorrow, and there will be 10 hours allowed, but we don't 
have to use it all.
  We will have to finish this matter tomorrow. I think it is clear that 
I hope we don't proceed to that, but we will have to see. I am here 
tomorrow. That vote will start very quickly tonight, as soon as the 
speech is over. We will be in recess subject to the call of the Chair. 
The vote will start quickly.
  Also, I have talked to the Republican leader about how we are going 
to proceed next week. We don't have that defined, but I am waiting to 
hear from the Speaker, either tonight or tomorrow, to make more 
definite what we need to do next week.
  Again, we have one more vote after the President's speech tonight.
  Mr. President, I move to reconsider the last vote.
  Mr. KERRY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. There will now be 4 minutes of debate equally 
divided prior to the vote on passage of the measure. Who yields time?
  The Senator from Vermont is recognized.
  Mr. LEAHY. Mr. President, 6 months ago, the Senate approved the 
America Invents Act to make the first meaningful, comprehensive reforms 
to the Nation's patent system in nearly 60 years. Today, the Senate has 
come together once again, this time to send this important, job-
creating legislation to the President to be signed into law.
  Casting aside partisan rhetoric, and working together in a bipartisan 
and bicameral manner, Congress is sending to President Obama the most 
significant jobs bill of this Congress. The bill originated 6 years ago 
in the House of Representatives, when Chairman Smith and Mr. Berman 
introduced the first patent reform proposals.
  After dozens of congressional hearings, markup sessions, and 
briefings, and countless hours of Member and staff meetings, through 
two Presidential administrations, and three Congresses, patent reform 
is finally a reality.
  The Leahy-Smith America Invents Act is a bipartisan bill and a 
bipartisan accomplishment. This is what we in Washington can do for our 
constituents at home when we come together for the benefit of the 
country, the economy, and all Americans.
  I especially thank Senator Kyl for his work in bringing this bill to 
the floor of the Senate--twice--and Senator Grassley for his commitment 
to making patent reform the Judiciary Committee's top priority this 
year. Chairman Smith, in the other body, deserves credit for leading 
the House's consideration of this important bill. I look forward to 
working with him on our next intellectual property priority--combating 
online infringement.
  I thank the members of the Senate Judiciary Committee, who worked 
together to get quorums and get this passed. I thank them for their 
contribution.
  Mr. President, I acknowledge several members of my Judiciary 
Committee staff, specifically Aaron Cooper, who sits here beside me. He 
spent more hours than I even want to think about, or his family wants 
to think about, working with me, other Senators, Members of the House, 
other staff, and stakeholders to preserve the meaningful reforms 
included in the America Invents Act, as did Susan Davis before him. Ed 
Pagano, my chief of staff, kept everybody together. I also thank Bruce 
Cohen, my chief counsel on the Judiciary Committee, who every time I 
thought maybe we are not going to make it would tell me ``You have to 
keep going,'' and he was right. Erica Chabot, Curtis LeGeyt, and Scott 
Wilson of my Judiciary Committee staff have also spent many hours 
working on this legislation.
  I also commend the hard-working staff of other Senators, including 
Joe Matal, Rita Lari, Tim Molino, and Matt Sandgren for their 
dedication to this legislation. Chairman Smith's dedicated staff 
deserves thanks as well,

[[Page 13199]]

including Richard Hertling, Blaine Merritt, Vishal Amin, and Kim Smith.
  I would also like to thank the majority leader for his help in 
passing this critical piece of legislation.
  The America Invents Act is now going to be the law of the land. I 
thank all my colleagues who worked together on this.
  In March, the Senate passed its version of the America Invents Act, 
S. 23, by a 95-5 vote. One of the key provisions of the legislation 
transitions the United States patent system from a first-to-invent 
system to a first-inventor-to-file system. The Senate considered and 
rejected an amendment to strike this provision, with 87 Senators voting 
to retain the transition.
  When this body first considered the America Invents Act, some 
suggested that along with the first-inventor-to-file transition, the 
legislation should expand the prior user rights defense. The prior user 
rights defense, in general, is important for American manufacturers 
because it protects companies that invent and use a technology, whether 
embodied in a process or product, but choose not to disclose the 
invention through the patenting process, and instead rely on trade 
secret protection. The use of trade secrets instead of patenting may be 
justified in certain instances to avoid, for example, the 
misappropriation by third parties where detection of that usage may be 
difficult. These companies should be permitted to continue to practice 
the invention, even if another party later invents and patents the same 
invention.
  In the United States, unlike in our major trading partners, prior 
user rights are limited to inventions on methods of doing or conducting 
business. The Senate bill included only a very limited expansion of 
this defense, and required the Director of the Patent and Trademark 
Office, ``PTO'', to study and report to Congress on the operation of 
prior user rights in other countries in the industrialized world, and 
include an analysis of whether there is a particular need for prior 
user rights given the transition to a first-inventor-to-file system.
  The House-originated bill, the Leahy-Smith America Invents Act, which 
the Senate is considering today, makes important improvements to expand 
prior user rights beyond just methods of doing business. These 
improvements will be good for domestic manufacturing and job creation. 
I agree with the chairman of the House Committee on the Judiciary that 
inclusion of expanded prior user rights is essential to ensure that 
those who have invested in and used a technology are provided a defense 
against someone who later patents the technology.
  I understand that there is some confusion regarding the scope of the 
defense in the bill. The phrase ``commercially used the subject 
matter'' is intended to apply broadly, and to cover a person's 
commercial use of any form of subject matter, whether embodied in a 
process or embodied in a machine, manufacture, or composition of matter 
that is used in a manufacturing or other commercial process. This is 
important particularly where businesses have made substantial 
investments to develop these proprietary technologies. And if the 
technology is embedded in a product, as soon as that product is 
available publicly it will constitute prior art against any other 
patent or application for patent because the technology is inherently 
disclosed.
  The legislation we are considering today also retains the PTO study 
and report on prior user rights. I again agree with the chairman of the 
House Committee on the Judiciary, that one important area of focus will 
be how we protect those who make substantial investments in the 
development and preparation of proprietary technologies. It is my hope 
and expectation that Congress will act quickly on any recommendations 
made by the PTO.
  Section 27 of the Leahy-Smith America Invents Act requires a study by 
the United States Patent and Trademark Office, USPTO, on effective ways 
to provide independent, confirming genetic diagnostic test activity 
where gen patents and exclusive licensing for primary genetic 
diagnostic tests exist. I support this section, which was championed by 
Ms. Wasserman Schultz, and look forward to the USPTO's report.
  I want to be clear that one of the reasons I support section 27 is 
that nothing in it implies that ``gene patents'' are valid or invalid, 
nor that any particular claim in any particular patent is valid or 
invalid. In particular, this section has no bearing on the ongoing 
litigation in Association for Molecular Pathology v. Myriad Genetics, 
___ F.3d ___, 2011 WL 3211513 (Fed. Cir. July 29, 2011).
  In Kappos v. Bilksi, ___ U.S. ___, 130 S. Ct. 3218 (2010), the Court 
found that the fact that a limited defense to business method patents 
existed in title 35 undermined the argument that business method 
patents were categorically exempt from patentability. Specifically, the 
Court held that a ``conclusion that business methods are not patentable 
in any circumstances would render Sec. 273 [of title 35] meaningless.'' 
Bilski, 130 S. Ct. at 3228. But the section 27 study is readily 
distinguishable from the substantive prior user rights defense codified 
in title 35 referenced in Bilski. A ``gene patent'' may or may not be 
valid, and that has no impact on the USPTO study, which mentions the 
existence of gene patents issued by the USPTO (but still subject to a 
validity challenge), but focuses on the effect of patents and exclusive 
licensing of genetic diagnostic tests, regardless of whether there are 
relevant patents. This study will be useful and informative for 
policymakers no matter how section 101 of title 35 is interpreted by 
the courts.
  There has been some question about the scope of patents that may be 
subject to the transitional program for covered business method 
patents, which is section 18 of the Leahy-Smith America Invents Act. 
This provision is intended to cover only those business method patents 
intended to be used in the practice, administration, or management of 
financial services or products, and not to technologies common in 
business environments across sectors and that have no particular 
relation to the financial services sector, such as computers, 
communications networks, and business software.
  A financial product or service is not, however, intended to be 
limited solely to the operation of banks. Rather, it is intended to 
have a broader industry definition that includes insurance, brokerages, 
mutual funds, annuities, andan array offinancial companies outside of 
traditional banking.
  Section 34 of the Leahy-Smith America Invents Act requires a study by 
the Government Accountability Office, GAO, on the consequences of 
patent infringement lawsuits brought by non-practicing entities under 
title 35, United States Code. The legislation requires that GAO's study 
compile information on (1) the annual volume of such litigation, (2) 
the number of such cases found to be without merit, (3) the impact of 
such litigation on the time to resolve patent claims, (4) the related 
costs, (5) the economic impact, and (6) the benefit to commerce.
  Following the House passage of H.R. 1249, the Comptroller General 
expressed concern that Section 34 may require it to answer certain 
questions for which the underlying data either does not exist, or is 
not reasonably available. Where that is the case, I want to make clear 
my view that GAO is under no obligation to include or examine 
information on a subject for which there is either no existing data, or 
that data is not reasonably obtainable. Further, GAO is not required to 
study a quantity of data that it deems unreasonable.
  In my view, GAO can satisfy its requirements under section 34 by 
compiling reasonably available information on the nature and impact of 
lawsuits brought by non-practicing entities under title 35 on the 
topics outlined in section 34(b). Where it deems necessary, GAO may use 
a smaller sample size of litigation data to fulfill this obligation. 
GAO should simply note any limitations on data or methodology in its 
report.
  I ask unanimous consent to have printed in the Record a letter from 
Gene L. Dodaro, Comptroller General of the United States, detailing 
GAO's

[[Page 13200]]

possible limitations in complying with section 34.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                     United States


                              Government Accountability Office

                                Washington, DC, September 7, 2011.
     Hon. Patrick J. Leahy, Chairman,
     Hon. Charles E. Grassley, Ranking Member,
     Committee on the Judiciary, U.S. Senate.
     Hon. Lamar S. Smith, Chairman,
     Hon. John Conyers, Jr., Ranking Member,
     Committee on the Judiciary, House of Representatives.
     Hon. Jason Chaffetz,
     House of Representatives.
       I am writing to express our concern regarding a provision 
     relating to GAO in H.R. 1249, the Leahy-Smith America Invents 
     Act. Section 34 of the bill would require GAO to conduct a 
     study of patent litigation brought by so-called non-
     practicing entities, that is, plaintiffs who file suits for 
     infringement of their patents but who themselves do not have 
     the capability to design, manufacture, or distribute products 
     based on those patents. As the Supreme Court and Federal 
     Trade Commission have noted, an industry of such firms has 
     developed; the firms obtain patents not to produce and sell 
     goods but to obtain licensing fees from other companies.
       The GAO study required by H.R. 1249 would mandate a review 
     of: (1) the annual volume of such litigation for the last 20 
     years; (2) the number of these cases found to be without 
     merit after judicial review; (3) the impacts of such 
     litigation on the time required to resolve patent claims; (4) 
     the estimated costs associated with such litigation; (5) the 
     economic impact of such litigation on the economy; and (6) 
     the benefit to commerce, if any, supplied by such non-
     practicing entities.
       We believe this mandate would require GAO to undertake a 
     study involving several questions for which reliable data are 
     not available and cannot be obtained. In the first instance, 
     the mandate would require identification of non-practicing 
     entities that bring patent lawsuits. While some information 
     about these entities may be obtainable, a definitive list of 
     such entities does not exist and there is no reliable method 
     that would allow us to identify the entire set from court 
     documents or other available databases. Moreover, quantifying 
     the cases found to be meritless by a court would produce a 
     misleading result, because we understand most of these 
     lawsuits are resolved by confidential settlement. Similarly, 
     there is no current reliable source of information from which 
     to estimate the effects of litigation by such entities on 
     patent claims, litigation costs, economic impacts, or 
     benefits to commerce. Further, because GAO does not have 
     legal access to these private parties, we would have to rely 
     on voluntary production of such information, a method we 
     believe would be unreliable under these circumstances and 
     would yield information that is not likely to be comparable 
     from entity to entity.
       Finally, empirical estimates of the effects of patent 
     litigation on various economic variables would likely be 
     highly tenuous. Measures of the cost of litigation or other 
     variables related to quantifying patents or litigation would 
     be highly uncertain and any relationships derived would 
     likely be highly sensitive to small changes in these 
     measures. Such relationships are likely to lead to 
     inconclusive results, or results so heavily qualified that 
     they likely would not be meaningful or helpful to the 
     Congress. In that regard, we understand recent regulatory 
     efforts to determine the economic and anti-competitive 
     effects of such litigation have not been successful.
       We appreciate your consideration of this matter and we 
     would be happy to work with your staff regarding potential 
     alternatives. GAO could, for example, identify what is 
     currently known about each of the specific elements 
     identified in Section 34. Managing Associate General Counsel 
     Susan Sawtelle, at (202) 512-6417 or [email protected], or 
     Congressional Relations Assistant Director Paul Thompson, at 
     (202) 512-9867 or [email protected], may be contacted 
     regarding these matters.
           Sincerely yours,
                                                   Gene L. Dodaro,
                         Comptroller General of the United States.

  Mr. LEAHY. The America Invents Act is now going to be the law of the 
land. I thank all my colleagues who worked together on this.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Ms. CANTWELL. Mr. President, rising in opposition, this is not a 
patent reform bill, this is a big corporation patent giveaway that 
tramples on the rights of small inventors. It changes ``first to 
invent'' to ``first to file,'' which means if you are a big corporation 
and have lots of resources, you will get there and get the patent.
  Secondly, it doesn't keep the money where it belongs. It belongs in 
the Patent Office. Yet, instead of having reforms that will help us 
expedite patents, it is giving away the money that is needed to make 
this kind of innovation work.
  Third, the bill is full of special giveaways to particular industry 
corporations, as we have just witnessed with votes on the floor.
  Fourth, by taking away the business patent method language, you will 
make it more complicated and have years and years of lawsuits on 
patents that have already been issued. If this is job creation, I have 
news for my colleagues; in an innovation economy, it is siding with 
corporate interests against the little guy. I urge a ``no'' vote.
  Mr. LEAHY. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on the third reading and 
passage of the bill.
  The bill (H.R. 1249) was ordered to a third reading and was read the 
third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Rockefeller) is necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Florida (Mr. Rubio).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 89, nays 9, as follows:

                      [Rollcall Vote No. 129 Leg.]

                                YEAS--89

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

                                NAYS--9

     Boxer
     Cantwell
     Coburn
     DeMint
     Johnson (WI)
     Lee
     McCain
     McCaskill
     Paul

                             NOT VOTING--2

     Rockefeller
     Rubio
       
  The bill (H.R. 1249) was passed.
  Mr. McCAIN. Mr. President, today I voted against passage of the 
patent reform bill because it contained an egregious example of 
corporate welfare and blatant earmarking. Unfortunately, this special 
interest provision was designed to benefit a single interest and was 
tucked into what was otherwise a worthwhile patent reform bill. As I 
noted earlier today when I spoke in support of the amendment offered by 
my colleague from Alabama, Senator Sessions, needed reform of our 
patent laws should not be diminished nor impaired by inclusion of the 
shameless special interest provision, dubbed ``The Dog Ate My Homework 
Act'' that benefits a single drug manufacturer, Medicines & Company, to 
excuse their failure to follow the drug patent laws on the books for 
over 20 years.
  Again, as I said earlier today, patent holders who wish to file an 
extension of their patent have a 60-day window to make the routine 
application. There is no ambiguity in this timeframe. In fact, there is 
no reason to wait until the last day. A patent holder can file an 
extension application anytime within the 60-day period. Indeed, 
hundreds and hundreds of drug patent extension applications have been 
filed since the law was enacted. Four have been late. Four.
  I remind my colleagues of what the Wall Street Journal had to say 
about this provision:


[[Page 13201]]

       As blunders go, this was big. The loss of patent rights 
     means that generic versions of Angiomax might have been able 
     to hit pharmacies since 2010, costing the Medicines Co. 
     between $500 million and $1 billion in profits.
       If only the story ended there.
       Instead, the Medicines Co. has mounted a lobbying offensive 
     to get Congress to end run the judicial system. Since 2006, 
     the Medicines Co. has wrangled bill after bill onto the floor 
     of Congress that would change the rules retroactively or give 
     the Patent Office director discretion to accept late filings. 
     One version was so overtly drawn as an earmark that it 
     specified a $65 million penalty for late filing for ``a 
     patent term extension . . . for a drug intended for use in 
     humans that is in the anticoagulant class of drugs.''
       . . . no one would pretend the impetus for this measure 
     isn't an insider favor to save $214 million for a Washington 
     law firm and perhaps more for the Medicines Co. There was 
     never a problem to fix here. In a 2006 House Judiciary 
     hearing, the Patent Office noted that of 700 patent 
     applications since 1984, only four had missed the 60-day 
     deadline. No wonder critics are calling it the Dog Ate My 
     Homework Act.

  This bailout provision was not included in the Senate-passed Patent 
bill earlier this year. It was added by the House of Representatives. 
The provision should have been stripped by the Senate earlier today. 
The fact that it wasn't required me to vote against final passage.
 Mr. RUBIO. Mr. President, due to health concerns of my mother, 
I was absent for the motion to table amendment No. 599 offered by 
Senator Coburn to H.R. 1249, the America Invents Act, final passage of 
H.R. 1249, and on S.J. Res. 25.
  Had I been present for the motion to table amendment No. 599 offered 
by Senator Coburn to H.R. 1249, I would have opposed the motion in 
support of the underlying amendment, and would have voted ``nay'' on 
final passage of the America Invents Act. H.R. 1249 is significantly 
different than the original Senate bill that I supported, and will 
ultimately not accomplish the goal of modernizing the patent process in 
the United States in the most effective manner.
  The patent process in our country is painfully slow and inefficient. 
It takes years from the time an invention is submitted to the Patent 
and Trade Office, PTO, to the time that the patent is granted and the 
holder of the patent gains legal rights to their invention. Currently, 
there are over 700,000 patents waiting for their first review by the 
PTO. I supported the original Senate bill, S.23, which would have 
ensured that the PTO was properly funded, reducing the time between the 
filing of a patent and the granting of the same. This bill, which 
passed the Senate by a 95-5 margin on March 8, 2011, included critical 
provisions that would have ensured that user fees paid to the PTO would 
stay within the Office to cover its operating costs, rather being 
diverted to fund unrelated government programs.
  Unfortunately, the House of Representatives removed these important 
provisions, which were critical to securing my support for patent 
reform. A modernized patent process that restricted ``fee diversion'' 
would have spurred innovation and job creation. Small inventors have 
raised concerns about the new patent processes that the bill sets 
forth, and without adequate protections against fee diversion, I am 
unable to support this bill. Additionally, I have concerns about House 
language that resolves certain legal issues for a limited group of 
patent holders. I support the underlying goals of this bill, but for 
the aforementioned reasons, I would have voted ``nay'' on H.R. 1249 had 
I been present.
  Had I been present for the rollcall vote on S.J. Res. 25, I would 
have voted ``yea.'' I strongly disapprove of the surge in Federal 
spending that has pushed our national debt to $14.7 trillion, and 
firmly believe that Congress must cut spending immediately and send a 
strict constitutional balanced budget amendment to the States for 
ratification. We must also give job creators the certainty they need to 
hire new workers and expand operations, growing the economy and 
increasing revenue in the process. Instead of pretending that more 
debt-financed spending will create prosperity, Congress should take 
job-destroying tax hikes off the table, overhaul our burdensome 
regulatory system, and immediately pass the pending free trade 
agreements with South Korea, Colombia, and Panama.
  Mr. BENNET. Mr. President, I rise to explain my vote on one amendment 
today. But I would first like to commend Chairman Leahy for his long 
years of work on patent reform, which culminated in final passage this 
evening of the America Invents Act. I proudly supported this 
legislation, and I am sure it's gratifying for the senior Senator from 
Vermont that the Senate overwhelmingly voted to send this bill to the 
President's desk.
  But like most bills that the Senate considers, this legislation is 
not perfect, as I know the chairman himself has said. There is one 
major way that the bill we approved today could have been improved, and 
that is if we had retained language in the original Senate bill that 
guaranteed that the U.S. Patent and Trademark Office would be able to 
maintain an independent funding stream. For that reason, I commend 
Senator Coburn for his effort to amend the bill to revert back to that 
better funding mechanism. For years, we have asked the PTO to do more 
than its funding levels have allowed it to do well. And while the bill 
we passed today takes important steps towards committing more resources 
to the PTO, I did prefer the independent funding stream approach.
  Senator Coburn's amendment may have been the better approach, but I 
voted to table the amendment because it could well have permanently 
sunk this enormously important legislation. Sending the bill back to 
the House with new language that the House has rejected and says it 
would reject again would have, at best, substantially delayed the 
reform effort and, at worst, stymied the bill just when we were 
reaching the finish line. And this bill is important it can help our 
economy at a critical juncture and can even result in my state of 
Colorado getting a satellite PTO office, which would be a major jobs 
and economic driver. I also worked with colleagues on both sides of the 
aisle to include important provisions that will help small businesses. 
None of this would have been possible if we amended the bill at this 
late stage.
  I remain committed to working with colleagues in the coming months 
and years to make sure that PTO gets the resources it needs to do the 
job that Congress has asked it to do.
  Mr. REID. Mr. President, I move to reconsider the vote by which the 
bill was passed, and I also move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________