[Congressional Record (Bound Edition), Volume 159 (2013), Part 12]
[House]
[Pages 18111-18120]
[From the U.S. Government Publishing Office, www.gpo.gov]




PROVIDING FOR CONSIDERATION OF H.R. 3309, INNOVATION ACT; AND PROVIDING 
 FOR CONSIDERATION OF H.R. 1105, SMALL BUSINESS CAPITAL ACCESS AND JOB 
                            PRESERVATION ACT

  Mr. NUGENT. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 429 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 429

       Resolved, That at any time after adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 3309) to amend title 35, United States Code, 
     and the Leahy-Smith America Invents Act to make improvements 
     and technical corrections, and for other purposes. The first 
     reading of the bill shall be dispensed with. All points of 
     order against consideration of the bill are waived. General 
     debate shall be confined to the bill and shall not exceed one 
     hour equally divided and controlled by the chair and ranking 
     minority member of the Committee on the Judiciary. After 
     general debate the bill shall be considered for amendment 
     under the five-minute rule. In lieu of the amendment in the 
     nature of a substitute recommended by the Committee on the 
     Judiciary now printed in the bill, it shall be in order to 
     consider as an original bill for the purpose of amendment 
     under the five-minute rule an amendment in the nature of a 
     substitute consisting of the text of Rules Committee Print 
     113-28. That amendment in the nature of a substitute shall be 
     considered as read. All points of order against that 
     amendment in the nature of a substitute are waived. No 
     amendment to that amendment in the nature of a substitute 
     shall be in order except those printed in part A of the 
     report of the Committee on Rules accompanying this 
     resolution. Each such amendment may be offered only in the 
     order printed in the report, may be offered only by a Member 
     designated in the report, shall be considered as read, shall 
     be debatable for the time specified in the report equally 
     divided and controlled by the proponent and an opponent,

[[Page 18112]]

     shall not be subject to amendment, and shall not be subject 
     to a demand for division of the question in the House or in 
     the Committee of the Whole. All points of order against such 
     amendments are waived. At the conclusion of consideration of 
     the bill for amendment the Committee shall rise and report 
     the bill to the House with such amendments as may have been 
     adopted. Any Member may demand a separate vote in the House 
     on any amendment adopted in the Committee of the Whole to the 
     bill or to the amendment in the nature of a substitute made 
     in order as original text. The previous question shall be 
     considered as ordered on the bill and amendments thereto to 
     final passage without intervening motion except one motion to 
     recommit with or without instructions.
       Sec. 2.  Upon adoption of this resolution it shall be in 
     order to consider in the House the bill (H.R. 1105) to amend 
     the Investment Advisers Act of 1940 to provide a registration 
     exemption for private equity fund advisers, and for other 
     purposes. All points of order against consideration of the 
     bill are waived. An amendment in the nature of a substitute 
     consisting of the text of Rules Committee Print 113-29 shall 
     be considered as adopted. The bill, as amended, shall be 
     considered as read. All points of order against provisions in 
     the bill, as amended, are waived. The previous question shall 
     be considered as ordered on the bill, as amended, and on any 
     further amendment thereto, to final passage without 
     intervening motion except: (1) one hour of debate equally 
     divided and controlled by the chair and ranking minority 
     member of the Committee on Financial Services; (2) the 
     further amendment printed in part B of the report of the 
     Committee on Rules accompanying this resolution, if offered 
     by Representative Carolyn Maloney of New York or her 
     designee, which shall be in order without intervention of any 
     point of order, shall be considered as read, shall be 
     separately debatable for 10 minutes equally divided and 
     controlled by the proponent and an opponent, and shall not be 
     subject to a demand for division of the question; and (3) one 
     motion to recommit with or without instructions.

  The SPEAKER pro tempore (Mr. Poe of Texas). The gentleman from 
Florida is recognized for 1 hour.
  Mr. NUGENT. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentleman from Colorado (Mr. Polis), 
pending which I yield myself such time as I may consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.


                             General Leave

  Mr. NUGENT. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.
  Mr. NUGENT. Mr. Speaker, I rise today in support of this rule, House 
Resolution 429.
  House Resolution 429 provides a structured rule for both H.R. 3309, 
the Innovation Act, and H.R. 1105, the Small Business Capital Access 
and Job Preservation Act. The rule gives the House the opportunity to 
debate a variety of important amendments offered by Members on both 
sides of the aisle.
  The Innovation Act seeks to address a growing problem of abusive 
patent litigation, commonly known as ``patent trolling.'' Patent trolls 
are nonpracticing entities. In other words, they don't make or sell 
products, and they don't supply services. Instead, they exist only to 
secure fees from businesses that use technologies covered by the 
patents they own. They do this by acquiring weak patents and then 
filing numerous patent infringement lawsuits or sending blanket demand 
letters to a business.
  The victims of these frivolous lawsuits are all too often small 
businesses or start-ups that are ill-equipped to protect themselves. 
They simply don't have the resources available to mount an adequate 
defense. It is, by definition, a lose-lose scenario for them. 
Defendants pay millions in damages if they lose and millions in legal 
fees if they win. More often, defendants are forced to settle, despite 
the merits of a case, in order to avoid expensive legal costs.
  Meanwhile, patent trolls are aided by law firms that operate on 
contingency fees. This means that, if nonpracticing entities lose their 
cases, there are no monetary consequences for them--none at all. They 
aren't on the hook for legal fees like their counterparts are.
  As you can see, for small companies, this system is inherently 
unfair. Our small businesses are our most important innovators in this 
country. They are largely responsible for the new products and services 
we, as consumers, enjoy. They are also a critical factor in growing our 
economy and creating jobs. We ought to provide fairness to them by 
leveling the playing field in the patent litigation process. We ought 
to ensure that our patent system isn't stifling innovation but 
encouraging it. Unfortunately, this just isn't the case right now.
  Patent trolling is a destructive practice that saps resources from 
small businesses and increases costs for consumers.

                              {time}  1245

  And its negative impact isn't limited to just the tech sector either. 
Patent trolling affects businesses and industries of all types, 
including the health industry and even grocers. It is absolutely a drag 
on our economy.
  An issue like this undoubtedly deserves to be debated by the House. 
This rule will ensure that a deliberative process takes place. The rule 
also allows for consideration of H.R. 1105, the Small Business Capital 
Access and Job Preservation Act.
  This legislation would remove the requirement that small private 
equity firms register with the Securities and Exchange Commission, the 
SEC. However, it would retain the option of registering if they choose 
to.
  Under current law, small private equity firms are being grouped by 
behemoths despite the fact that they played no contributing role in the 
financial crisis we just went through. Even the chairman of the SEC in 
a letter to Chairman Hensarling admitted that the private equity funds 
were not an underlying cause of the recent financial crisis.
  Furthermore, private equity does not pose a systemic risk to the 
economy. So why are we taking limited resources at the SEC away from 
their mission and shifting them to oversee firms that pose no systemic 
risk at all? Why are we burdening these small companies with SEC 
registration costs that, according to the Private Equity Growth 
Council, can exceed over $1 million per year?
  More money in unnecessary compliance costs means less money to invest 
in companies, particularly newer ones, which allow them to grow and 
create the jobs we desperately need.
  In my own State of Florida, there are over 1,000 private equity-
backed companies. Let me repeat that: there are over 1,000 private 
equity-backed companies in Florida alone. There are over 100 private 
equity firms within the State of Florida. These companies support more 
than 800,000 workers throughout the country.
  In fact, in 2012, Florida ranked fifth in the Nation in attracting 
private equity investment. That investment is a vital tool for growing 
companies, and we are needlessly handcuffing their ability to do just 
that.
  H.R. 1105 will help these smaller funds and increase the capital 
available for real companies so their businesses can thrive. Make no 
mistake, this is a jobs bill and it will help grow our economy.
  I support this rule that will allow us to consider these bills, and I 
hope that my colleagues on both sides of the aisle will do the same.
  With that, I reserve the balance of my time.
  Mr. POLIS. Mr. Speaker, I yield myself such time as I may consume.
  There are many things that my good friend from Florida said that I 
agree with. I will be discussing some of the merits of these bills, but 
it is worthwhile to bring forward before discussing what these bills 
are, what these bills are not.
  It has been 159 days and 14 hours since the Senate passed a 
comprehensive immigration reform bill. This body's failure to act on 
immigration reform has already cost our economy nearly $6 billion. Each 
additional day, each day that we delay action costs $37 million in 
revenue; hundreds of thousands of jobs lost; failure to secure the 
border; failure to restore the rule of law to our country; countless 
families torn apart.
  While the Judiciary Committee has found the time to move asbestos 
bills and patent reform bills to the floor

[[Page 18113]]

with ease, immigration reform remains stagnant. The Judiciary Committee 
has reported out four immigration reform bills: the Legal Workforce 
Act, the Agricultural Guestworker Act, the SAFE Act, and the SKILLS 
Visa Act. They reported these four bills out prior to the asbestos bill 
which was rushed immediately to the floor and prior to the patent bill 
which was rushed to the floor after a hearing in the Rules Committee 
yesterday.
  My question to the gentleman from Florida--and I will be happy to 
yield for a moment--is why we are giving such treatment to asbestos and 
patent reform when immigration reform would create so many more jobs 
and reduce our deficit by so much more?
  I would like to know if the gentleman from Florida has an answer to 
that question.
  I yield to the gentleman from Florida.
  Mr. NUGENT. I thank the gentleman from Colorado, but I will tell you 
this: the House is moving through the Judiciary Committee at a pace to 
make sure that we do this right in regards to immigration.
  Where the Senate has rushed through a bill that is so comprehensive 
and so large, it will be similar to ObamaCare before we actually----
  Mr. POLIS. Reclaiming my time, 68 Members of the Senate, including 
many Republicans, including former Presidential Republican nominee John 
McCain, supported the Senate immigration reform bill.
  I certainly understand the desire to get it right, but bills don't 
get right by themselves. These are four bills that have passed in the 
Judiciary Committee. We in Rules like to make them right by allowing 
good, thoughtful amendments from colleagues on both sides of the aisle. 
I hope that next week or when we are back, we will be able to move 
forward the immigration bills with the same alacrity that we have moved 
forward asbestos and patent reform.
  I hope the same thing happens that as these bills move through 
Judiciary that we do see them in the Rules Committee and that they 
ultimately come to this floor for debate.
  Mr. Speaker, I do support the underlying bills that are contained 
under this rule. I support H.R. 1105, the bipartisan Small Business 
Capital Access and Job Preservation Act. It exempts private equity 
funds which are very lightly leveraged in helping to grow companies and 
jobs from costly and unnecessary SEC registration and reporting 
requirements like venture capital firms that are already exempted and 
substantially have very similar business models to private equity 
firms. These registration requirements are an impediment to business 
and an impediment to job growth and have nothing to do with creating 
systemic risk in our economy.
  Importantly, this bill would only exempt private equity firms with 
low debt-to-equity ratios leveraged at a ratio of less than 2 to 1. 
Once you get to talking about much higher debt-to-equity ratios, there 
is potentially systemic risk if you are talking about funds in the 
multi-billions of dollars that are highly leveraged. It is still hard 
to see how that could happen. It had nothing to do with the financial 
meltdown of '08-'09. But in this case, we are being extremely safe in 
saying if they are leveraged 2 to 1, they are no systemic risk to the 
economy.
  My State and my district know firsthand the benefits that private 
equity provides to employees, to companies, to investors, including 
pensions, and our economy. There are nearly 500 private equity-backed 
companies headquartered in Colorado, many more that operate with 
employees, more than 124,000 workers in Colorado facilities. In 2012, 
there were 67 private equity investments in Colorado totaling over $26 
billion that were brought to our State because of this investment 
mechanism, placing Colorado third in the States receiving the most 
private equity investment.
  The underlying rule also makes in order H.R. 3309, the Innovation 
Act, which I also support. In 2011, ``patent assertion entities,'' some 
of whom are bad actors which are sometimes referred to as ``patent 
trolls,'' who often produce little or nothing and derive their revenue 
from litigation and licensing, cost significant overhang to other 
businesses and to consumers for whom many of these costs are passed 
along in the products or services that we all enjoy. The majority of 
the targets of patent trolls were start-ups--hospitals, restaurants, 
retailers, hotels, and other important job-creation engines in our 
economy.
  The reforms made in the America Invents Act, enacted 2 years ago, 
went a little ways in this regard, but did not do much to halt or put a 
stop to or reduce patent troll litigation or improve the quality of 
patents. In the case of software patents, growing patent backlogs, lack 
of training and resources available to PTO examiners, and ambiguity 
regarding patentability standards have led to approval of low-quality 
software patents that have not even stood up when brought to 
litigation.
  Thankfully, the momentum is growing to address patent reform. I want 
to be clear--and I discussed this with Chairman Goodlatte in the Rules 
Committee yesterday--this bill is not patent reform. I believe the 
gentleman, Mr. Goodlatte, agrees this is not patent reform. It may be a 
few steps in the right direction. It may be a good start. It doesn't 
fundamentally create an intellectual property protection system for the 
digital era in the 21st century.
  It continues to put, constructively, Band-Aids on a 1913 system, 
which I do believe it is high time to rethink. I look forward to an 
upcoming symposium in my district at the University of Colorado this 
Friday that we will be having on sort of ``blue sky'' intellectual 
property protection mechanisms for the 21st century in the digital 
economy to encourage growth and to protect inventors. This bill does 
not do that. However, it is a step forward in many regards.
  While I strongly support many of these patent system improvements, it 
won't fix our patent system. Patent trolls have targeted every form of 
business. It should come as no surprise that the Innovation Act enjoys 
support from Members from both sides of the aisle, from companies, from 
academics. I submitted a letter from 67 professors at law universities 
who practice in IP from a broad ideological perspective into the record 
in our Rules Committee yesterday expressing their support for this 
bill.
  This bill maintains protections for inventors' rights to enforce 
their patent claims. Specifically, this bill allocates the burden of 
patent litigation more fairly. It includes a provision that restores 
financial accountability to the patent system by making it easier for 
courts to impose sanctions on anyone who brings a frivolous patent 
suit.
  The bill also requires the disclosure of critical details when a 
patent-holder files a suit, such as what patent and claims are being 
infringed, so the person or entity receiving the letter can know what 
is being discussed so that defendants don't need to guess the nature of 
the allegations against them.
  The underlying legislation further requires patent-holders to 
disclose additional information to the PTO, the court, and the accused 
infringer, including the patent ownership, who owns the patent, and 
parties with financial interest in the patent. These provisions will 
help stop patent trolls who engage in illegitimate litigation campaigns 
and extortion against start-ups and small businesses.
  While I strongly support these patent reforms that are a modest step 
towards improving our patent system, the litigation reforms alone don't 
have enough to benefit start-ups and small companies that are targeted 
by patent trolls who send pre-litigation demand letters. I am very 
appreciative of the chairman's effort to allow, and the Rules 
Committee's effort to allow, for the discussion of my amendment, along 
with Mr. Chaffetz, Mr. Connolly, and Mr. Marino, who have been working 
in this regard to see stronger language on the issue of pre-litigation 
demand letters. And I am grateful that we have made in order an 
amendment to increase accountability in the demand letter process.
  We will be discussing that amendment in a more thorough basis 
shortly;

[[Page 18114]]

but, in brief, the problem is that before a patent troll even files a 
suit, it typically sends a demand letter, or many demand letters, 
demanding some form of payment. Under current law, the sender does not 
even have to disclose even the most basic information. As such, 
entities often hide behind numerous shell corporations or send vague or 
overbroad letters that don't even identify the owner of the patent or 
the basis of their legal claim, essentially leading particularly small 
companies to have to hire lawyers or attorneys at great expense. When 
you have a company that is a $300,000-a-year company, a $500,000-a-year 
company, and you receive one or more of these notices, you can imagine 
how that takes away from your growth, your margins, your ability to 
hire more people, if you have to retain professional counsel to even 
understand what is being alleged that your company did.
  Importantly, the underlying bill requires patent-holders seeking to 
bring willful infringement claims to provide their targets with a 
minimum level of disclosure information. The amendment enhances that 
and builds upon the language and would mandate that demand letters 
include information identifying the parent entity of the claimant. This 
language will help ensure that patent trolls can no longer hide under 
shell companies to conceal their true entity and their legitimacy from 
the demand letter recipient.
  I look forward to discussing these bills further, and I reserve the 
balance of my time.
  Mr. NUGENT. Mr. Speaker, first, I want to respond to my good friends 
from Colorado. I appreciate that he appreciates the approach that this 
House is taking, particularly as it relates to both of the bills that 
are the underlying aspect of this rule. It is about moving in a 
deliberative manner to make sure that we get it right. I thank Mr. 
Polis for pointing that out.
  I yield 3 minutes to the gentleman from Georgia (Mr. Collins).
  Mr. COLLINS of Georgia. Mr. Speaker, I appreciate the gentleman for 
yielding.
  I rise in strong support of the rule and the underlying legislation, 
particularly H.R. 3309, the Innovation Act.
  As a member of the Judiciary Committee, I have seen firsthand the 
diligent and deliberative effort put forth by Chairman Goodlatte and 
the rest of the committee to bring forth to this body a pro-business, 
pro-growth, pro-liberty bill to reform our patent laws. As my friend 
from Colorado stated, there is more that can be done, but this is a 
very positive step. I agree with him, and I appreciate that support. 
The committee vote speaks for that as well when it is 33-5 reported out 
of committee on final passage.
  In the time that I have been yielded, I would like to also talk about 
a misconception that some in the higher education community seem to 
have about a fee-shifting provision in this bill.
  Despite the claims of some, the bill language protects plaintiffs who 
bring a reasonable and good faith case and who do not engage in 
litigation misconduct. In fact, even if a plaintiff's case is rejected 
by a court, the plaintiff is still immune from a fee award if his case 
``had a reasonable basis in both law and fact.''
  I am a strong supporter of our universities and the incredible 
research they are doing. I believe our patent laws should protect them, 
just as they should protect the small businesses and start-ups that 
rely on our world-class patent system. The ability to enforce one's 
patent in court is essential to preserving the value of the patent and 
is the inherent right of the patent-holder.
  Nothing in the Innovation Act changes this. Ensuring fair and 
equitable access to our courts isn't done at the expense of 
universities, but at the benefit of all patent-holders.

                              {time}  1300

  As we move forward to general debate and the consideration of 
amendments made in order by this rule, I urge my colleagues to be very 
cautious in supporting amendments that would gut or upset the careful 
balance achieved by this bill.
  Many of the sections in H.R. 3309 are intertwined, and the result is 
a package of reforms that collectively will help American businesses 
and job creators, both large and small, combat a business model 
designed solely to benefit from exploitation of our patent system.
  And make no mistake, this isn't just a Silicon Valley problem. In my 
home State of Georgia, I hear from hotels, retailers and start-ups 
alike on the economically devastating impact that vague demand letters 
and the threat of costly and frivolous litigation has on their ability 
to do business.
  End-users are often attacked and often threatened for infringement of 
an unidentified patent they previously bought in a store. This is why 
the customer protections in section 5 of the bill are so important and 
should not be weakened or eliminated. As a strong conservative, I 
believe our government shouldn't be in the business of picking winners 
and losers in the marketplace. Innovation thrives when government takes 
a hands-off approach, but there are time when Congress must step in to 
ensure that our laws operate as they were intended. This is exactly why 
we need H.R. 3309.
  I urge my colleagues to support this rule and the underlying bills; 
and I also ask that each Member carefully consider any amendment that 
would weaken or compromise the provisions of H.R. 3309, and 
particularly section 5.
  But I will say this before I leave because I have come and spoken on 
many bills, and my dear friend from Colorado continues to bring up 
immigration. I just want to remind the Speaker that there was a time a 
few years ago when there was a golden era in which his party controlled 
the House, the Senate, and the Presidency.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NUGENT. I yield an additional 30 seconds to the gentleman.
  Mr. COLLINS of Georgia. I thank the gentleman.
  There were choices made, and there were plenty of choices you made, 
and even one to this day that we are talking about, health care 
legislation. One of those choices, from your point of view, sadly, was 
not taken, and that was immigration. Today we are dealing with bills 
that we both agree on, but let's not forget the fact that when you had 
a chance, you didn't do it.
  The SPEAKER pro tempore. Members are advised to direct their remarks 
to the Chair and not to individual Members in the second person.
  Mr. POLIS. And I certainly wish that we had acted on immigration 
reform. We did pass under Democratic control a DREAM Act, if the 
gentleman will recall, in the waning days of the 111th Congress, and 
did take at least one constructive step with an immigration bill that 
we brought to the full floor of this House and passed.
  I would like to yield 3 minutes to the gentleman from Colorado (Mr. 
Perlmutter), a member of the Financial Services Committee and a former 
member of the Rules Committee.
  Mr. PERLMUTTER. Mr. Speaker, first I want to address H.R. 3309, the 
Innovation Act, which is generally a good bill. It is trying to deal 
with issues of nuisance litigation where somebody is sued and the costs 
of litigation are so extreme that they pay money just to stay away from 
litigation. That is really the underlying purpose of the bill.
  Now, what we have got to make sure of as Members of this House and as 
Members of the legislature is that we don't advantage one party over 
another. And the gentleman from California (Mr. Rohrabacher) made a 
good point, Mr. Speaker, last night at the Rules Committee that you 
don't want to disadvantage small inventors who have come up with a good 
idea or a great product, something very novel, and some major 
corporation takes that idea or that product away and doesn't pay for 
it. That is the purpose of patent litigation.
  At the same time, you don't want to have some small company that buys 
a Wi-Fi service all of a sudden getting sued by some company they never 
heard of and they are saying wait a minute, we are not a patent 
infringer. I say all of this because the purpose is to have good 
litigation where there

[[Page 18115]]

isn't extortion and there isn't theft as the result of some patent 
infringement.
  What is done in this bill, I think, though, is micromanagement of the 
courtroom and its processes. Each of these cases stands and falls on it 
own merits, and the courts are best equipped to determine their own 
rules and their own procedures as to how these cases should move 
forward.
  I am generally going to support this. I offered an amendment which 
was not adopted by the Rules Committee last night to delay until 
December of 2015 the effect of section 6 of the bill so that the courts 
could create their own rules and not have the legislature do it; 100 
years ago we passed the Rules Enabling Act which allows the courts to 
set their own procedure which is then overseen by the legislature. That 
is sort of discarded in this bill, and we create some very specific 
rules, and I think that is a mistake, and I think we could have some 
real winners and losers. And I think the small guy, the small inventor, 
the small purchaser could be in trouble. So I would just suggest to the 
House and to the Rules Committee that we do look at delaying so that 
the courts can offer their own procedure.
  I do want to address two other things. It has been over 150 days 
since we started this legislature. We should be dealing with 
immigration reform. We are not doing that. And I want to finish my 
story about the Montez family who are from Arvada, Colorado, who could 
never get affordable insurance and now are able to under the Affordable 
Care Act.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. POLIS. I yield an additional 30 seconds to the gentleman.
  Mr. PERLMUTTER. They have three children. They work two jobs. Neither 
employer of the mom or dad provides health insurance. Finally, after 
all these years, they have been able to get health insurance at about 
$150 using the credits that are available under the Affordable Care Act 
and the children's health program that this Congress has passed. These 
people have health care for the first time in their marriage, which is 
a couple of decades, and they are very thankful. So this is a good 
Thanksgiving season for the Montez family of Arvada, Colorado.
  Mr. NUGENT. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Texas (Mr. Smith).
  Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Florida 
for yielding me this time.
  Mr. Speaker, I support H.R. 3309, the Innovation Act, and the rule we 
are debating now. This bipartisan legislation brings much-needed 
reforms to our patent litigation process, which continues to be plagued 
by patent trolls.
  Patent trolls use weak patents to extort millions of dollars from 
innocent business owners through demand letters and frivolous patent 
infringement lawsuits. Businesses are forced to decide between years of 
costly litigation or a settlement.
  The number of patent infringement claims has almost doubled in the 
past 3 years, and The New York Times reported that one lawyer filed 
patent lawsuits against 1,638 companies in the past 5 years. These 
lawsuits soak up capital that is better spent on investment, 
innovation, and job creation.
  In fact, a 2012 study by the Boston University School of Law found 
that patent trolls cost the American economy $80 billion annually. The 
study also found that defendants paid $29 billion to patent trolls in 
2011 alone.
  The Innovation Act targets abusive patent litigation while protecting 
legitimate patent infringement claims. It provides accountability on 
the front end of litigation by requiring parties to state exactly why 
they are filing suit. H.R. 3309 also requires parties who file 
meritless patent claims to pay the attorneys' fees of their victims as 
a disincentive to pursue their baseless claims.
  These reforms are vital to restore accountability and rein in 
abusive, frivolous, and costly patent lawsuits. I urge my colleagues to 
support this important legislation, and I thank Chairman Goodlatte for 
introducing this bipartisan bill.
  Mr. POLIS. I yield 1\1/2\ minutes to the gentlewoman from California 
(Ms. Chu), a member of the Judiciary Committee, one of the key 
architects and somebody who worked very hard on this bill.
  Ms. CHU. Mr. Speaker, I rise today in support of the Innovation Act. 
This bill will help curb abusive lawsuits brought by patent assertion 
entities, more commonly known as patent trolls.
  Rather than relying on patents to protect investments in new 
innovative technologies, these actors abuse our patent system. They 
threaten legitimate businesses and consumers with costly litigation for 
selling or using a product that falls under their overly broad patent.
  The patent system is nothing short of a net for them to cast in hopes 
of extorting settlement fees. Right now, this scheme is costing our 
economy $29 billion every year.
  While the bill is not perfect, the Innovation Act is a promising 
first step towards reining in these abusive tactics. I still have 
concerns with provisions that address fee shifting and the Federal 
judiciary, and we need to ensure that the Patent Office is fully 
funded. But this conversation will continue beyond today's vote, and my 
hope is to see these concerns addressed for the American people.
  Mr. NUGENT. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Rohrabacher).
  Mr. ROHRABACHER. Mr. Speaker, I rise reluctantly to favor the rule 
because it makes an extremely important amendment, my own and several 
others, it approves them to come on the floor; but I oppose final 
passage because even with those amendments, they do not do enough to 
make this bill worth supporting.
  One of the most important amendments is my amendment, as I stated, 
which would strike the section of this legislation which eliminates for 
the small inventor, for the independent inventor, the right of judicial 
review if his case is being mishandled by the patent system. And let me 
just note that if, indeed, this was to protect, if we were going to 
protect the little guy, if that was the purpose of this bill, there 
wouldn't be a question here. But here we are eliminating the little 
guy's right to even go to court if he is being mistreated by the patent 
system.
  Also, an amendment not made in order was Marcy Kaptur's amendment 
which would have, again, protected the little guy. We are being told 
this protects the little guy; yet they won't allow Marcy Kaptur's 
amendment, which is aimed at protecting the little guy, from even 
coming to a vote.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NUGENT. I yield an additional 30 seconds to the gentleman.
  Mr. ROHRABACHER. We hear over and over again that this is about 
patent trolls and hinting that there are illegitimate patents that we 
are talking about. We are talking about legitimate patents; and the 
patent troll, let us just note, who is he going against supposedly, it 
is multinational mega--mega--corporations that routinely infringe on 
the little guy. Yet Marcy Kaptur, while trying to protect the rights of 
the little guy against these giant corporations--like Google--instead, 
we have not permitted her amendment to come forward.
  This is the greatest attack, this bill, on the small inventor that I 
have ever seen in 25 years. I ask support for the rule, but oppose the 
bill itself.
  Mr. POLIS. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Cardenas).
  Mr. CARDENAS. Mr. Speaker, I rise today in support of H.R. 3309, the 
Innovation Act. This bill will allow businesses of all sizes and in all 
industries to devote their time and resources to job creation, research 
and development, and to continue to support the innovation that makes 
U.S. companies so competitive in our global market.
  I have heard from businesses and associations in a cross-section of 
industries asking for the passage of this bill so they can more fully 
dedicate themselves to building their businesses and the U.S. economy. 
I have heard for support for H.R. 3309 from the Motion Picture 
Association of America and movie

[[Page 18116]]

studios such as 20th Century Fox who are economic drivers in Los 
Angeles and all across the country. There are other widespread and 
bipartisan supporters, such as the U.S. Chamber of Commerce, the 
National Association of Realtors, the National Association of 
Broadcasters, which shows how essential patent reform is for American 
businesses and all industries.
  While we can all agree that this is not a perfect bill, its passage 
will allow our businesses to fuel the U.S. economic recovery rather 
than battle abusive litigation. I urge my colleagues to support 
innovation by voting ``yes'' on final passage of the Innovation Act.

                                        Chamber of Commerce of the


                                     United States of America,

                                Washington, DC, November 20, 2013.
     Hon. Bob Goodlatte,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Chairman Goodlatte: The U.S. Chamber of Commerce, the 
     world's largest business federation representing the 
     interests of more than three million businesses of all sizes, 
     sectors, and regions, as well as state and local chambers and 
     industry associations, and dedicated to promoting, 
     protecting, and defending America's free enterprise system, 
     commends you for advancing the patent litigation reform 
     debate by introducing and moving to markup H.R. 3309, the 
     ``Innovation Act.''
       The Chamber strongly supports the protection of legitimate 
     intellectual property rights. The patent system fosters 
     innovations and economic growth across a wide variety of 
     industries. The ability for legitimate patent holders to 
     defend their intellectual property is vital to keeping U.S. 
     businesses strong and competitive--both domestically and 
     globally.
       At the same time, however, the Chamber is acutely aware of 
     the problems associated with excessive and abusive patent 
     litigation. In too many instances, elements of the 
     plaintiffs' bar leverage the potentially astronomical cost of 
     patent litigation to force abusive and coercive settlements. 
     The Chamber is particularly concerned by the increasing 
     prevalence of third party litigation financing to fund 
     frivolous and abusive patent cases, the increased use of 
     procedural maneuvers designed to further escalate the cost of 
     litigation and force settlements, and the plaintiffs' bar's 
     use of patent demand letters to extract settlements from 
     innocent users and sellers of a product. H.R. 3309 seeks to 
     address these very real patent litigation problems.
       While the various concerns raised by elements of the 
     business community with H.R. 3309 will need to be addressed 
     through the overall legislative process, the Chamber is 
     pleased that you are moving this legislation forward. The 
     Chamber views this as a positive development and appreciates 
     your work on this important issue.
       The Chamber looks forward to working with you, your 
     congressional colleagues, and other interested stakeholders 
     as H.R. 3309 moves through the legislative process in order 
     to ensure that demonstrable patent litigation abuses are 
     addressed appropriately, while preserving America's strong 
     tradition of protecting intellectual property rights.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____

                                                 December 3, 2013.
     Hon. John Boehner,
     Speaker, House of Representatives.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives.
       Dear Speaker Boehner and Minority Leader Pelosi: The broad-
     ranging group of undersigned industries and main street 
     American businesses, responsible for tens of millions of U.S. 
     jobs and hundreds of billions of dollars in economic 
     activity, support passage of the Innovation Act of 2013 (H.R. 
     3309). We believe this legislation aims to address the 
     widespread abuses of the legal system by certain patent 
     assertion entities, commonly referred to as patent trolls.
       During this time of economic need, we believe enactment of 
     H.R. 3309 is integral to curbing frivolous and costly patent 
     litigation that currently hinders our ability to innovate, 
     create jobs and promote positive economic growth. Such 
     frivolous lawsuits by patent trolls are an expensive 
     distraction for many diverse, mainstream American industries, 
     and the staggering growth of patent troll activity in recent 
     years has caused our businesses to receive thousands of 
     threatening demand letters and forced more than 7,000 
     lawsuits (a 400% increase since 2006), costing the U.S. 
     economy more than $80 billion in 2011 alone.
       Simply, patent trolls do not innovate, create jobs or 
     promote economic growth. Our businesses do.
       To make clear, patent trolls no longer only threaten large 
     technology companies. In 2012, patent trolls filed more 
     lawsuits against small and medium-sized non-tech businesses 
     than against tech companies. The many targets of this abuse, 
     ranging from food providers, retail stores and media 
     companies to financial institutions, hotels, gaming 
     entertainment companies and other industries that drive the 
     U.S. economy, have been left with no choice but to defend 
     themselves through inefficient and burdensome processes, 
     rarely avoiding costly litigation. We believe American 
     businesses must be able to defend against these consequential 
     attacks more efficiently and less expensively.
       While we recognize there may be no single solution that 
     addresses all complexities surrounding our nation's patent 
     process, but one thing is clear: The Innovation Act of 2013 
     has significant bipartisan support on Capitol Hill and 
     throughout many sectors, small and large, of the American 
     business community. This broad support and willingness to 
     work together is a true testament to its importance and we 
     urge House passage of H.R. 3309.
           Sincerely:
         Alliance of Automobile Manufacturers; American Gaming 
           Association; American Hotel & Lodging Association; 
           Coalition for Patent Fairness; Competitive Carriers 
           Association; Footwear Distributors & Retailers of 
           America; International Franchise Association; MPA--The 
           Association of Magazine Media; National Association of 
           Broadcasters; National Cable and Telecommunications 
           Association; National Restaurant Association; Newspaper 
           Association of America; Online Publishers Association; 
           Overstock.com, Inc.; Printing Industries of America; 
           The R Street Institute; U.S. Travel Association.
                                  ____



                             National Association of Realtors,

                                 Washington, DC, December 2, 2013.
     Re Support H.R. 3309--Scheduled for Floor Vote This Week.

     Hon. John Boehner,
     Speaker, House of Representatives, U.S. Capitol, Washington, 
         DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, U.S. Capitol, 
         Washington, DC.
       Dear Speaker Boehner and Minority Leader Pelosi, On behalf 
     of the more than one million members of the NATIONAL 
     ASSOCIATION OF REALTORS' (NAR), I urge you to 
     support H.R. 3309, ``the Innovation Act'' (Goodlatte, R-VA), 
     scheduled for a vote on the House floor this week. Our 
     members view the reforms in this bill as an important step in 
     protecting innovators and main street businesses from broad 
     claims of patent infringement based on patents of 
     questionable validity, all brought by non-practicing 
     entities.
       NAR, whose members identify themselves as 
     REALTORS', represents a wide variety of real 
     estate industry professionals. REALTORS' have been 
     early adopters of technology and are industry innovators who 
     understand that consumers today are seeking real estate 
     information and services that are fast, convenient and 
     comprehensive. Increasingly, technology innovations are 
     driving the delivery of real estate services and the future 
     of REALTORS'' businesses.
       As technology users, NAR and several of its members 
     recently faced onerous patent infringement litigation over 
     questionable patents dealing with location based search 
     capabilities. These suits were brought by patent holding 
     companies and other non-practicing entities. They were 
     eventually settled in a multi-million dollar settlement. In 
     addition, our broker and agent members are increasingly 
     dealing with demand letters to license commonly used 
     technologies like scanner-copiers and online alert functions. 
     Our members know firsthand that ``patent trolls'' divert 
     significant time and money from their businesses.
       The Innovation Act will bring needed reforms to address the 
     troll problem by increasing transparency, and pleading 
     specificity among other things. Taken together, the reforms 
     in the Innovation Act will shift the burden of frivolous 
     litigation from small business defendants to the trolls 
     themselves.
       Without needed reforms that assure that asserted patent 
     rights are legitimate and frivolous litigation schemes are 
     curtailed, the ability of businesses owned by 
     REALTORS', many of which are small businesses, to 
     grow, innovate and better serve modern consumers will be put 
     at risk. NAR supports the reforms in the Innovation Act as a 
     way to rebalance a patent system that is increasingly a 
     target of uncertainty and abuse.
       Most REALTORS' are entrepreneurs and small 
     business owners, and we help to create new jobs in our 
     communities. We urge you to vote in favor of The Innovation 
     Act of 2013 so that the threat of patent trolls is mitigated 
     in the future, allowing us to return to our essential 
     mission: to serve our clients.
           Sincerely,

                                                  Steve Brown,

                                                   2014 President,
                     National Association of Realtors'.

  Mr. NUGENT. Mr. Speaker, I reserve the balance of my time.
  Mr. POLIS. Mr. Speaker, I would like to inquire if the gentleman has 
any other speakers.
  Mr. NUGENT. I do not.

[[Page 18117]]



                              {time}  1315

  Mr. POLIS. Mr. Speaker, I am prepared to close, so I yield myself 
such time as I may consume.
  The gentleman from Georgia (Mr. Collins), rightly asserted that the 
Democrats did not, in fact, when they were in charge of the legislature 
in both Chambers, fix our broken immigration system. However, we did 
pass the DREAM Act. And given that this is football season and I think 
that my friend, the gentleman from Georgia, perhaps shares affinity for 
football, that while we did not in fact score a touchdown and fix our 
broken immigration system, at least the Democrats got a field goal when 
we were in charge. We are still waiting for the Republicans to match 
our field goal here if we can't score a touchdown with comprehensive 
immigration reform, and we look forward to improving these bills that 
have passed out of the committee before the asbestos bill, before the 
patent reform bill, and need the work of the full membership of this 
body to improve them.
  Legislation is not like a fine wine, that when it sits in a barrel it 
improves itself. It needs to be actively worked upon to improve it, and 
I hope that it is a matter of days or hours or minutes until we can 
dust off these immigration bills that Chairman Goodlatte and the 
Judiciary Committee have worked on and improve upon them so that this 
body can actually move forward and score a field goal, a touchdown or 
more, and finally replace our broken immigration system with one that 
reflects our values as Americans, restores the rule of law, reduces our 
deficit by $200 billion, creates 6 million jobs for American citizens, 
secures our borders, and implements workplace enforcement of our 
immigration system. I am confident that we can do that working 
together, just as we are working together on these bills that are 
before us today.
  As I indicated earlier, that while the patent bill does harvest some 
low-hanging fruit, there remains a lot of work to be done to create a 
21st century intellectual property protection system for our country.
  One such effort was an amendment that I offered, Polis amendment 5, 
that was not allowed under this rule. This amendment reflects a bill 
that I sponsor with Mr. Marino that regards the Demand Letter 
Transparency Act. Depending on a start-up's resources, even the 
recipient of one demand letter can even be a death sentence for a small 
one-, two-, three-person company. The threat of a demand letter alone 
can jeopardize a company's ability to raise funds, can scare away 
potential customers, and, God forbid, actually defending a patent 
lawsuit can cost hundreds of thousands to millions of dollars in legal 
bills, which to a one-,
two-, or three-person company is simply a matter of shutting the doors 
because they cannot afford to do that.
  At the Rules Committee yesterday, I offered my bipartisan amendment 
based on legislation that I introduced with Representative Marino and 
Representative Deutch that would provide a comprehensive approach to 
increasing transparency and accountability in the demand letter 
process. While our amendment was not made in order, I am grateful we 
did include at least some slight provisions regarding who owns shell 
corporations, amendment 4 was allowed. We plan to continue to press 
forward on the need to address this issue through meaningful 
legislation.
  Our bill would require certain entities to provide additional 
disclosure information to the PTO and to the demand letter recipient so 
that these start-ups and mom-and-pop restaurant owners and stores will 
know who is sending these demand letters and whether the claims they 
are making are truthful or grounded at all or just a scam.
  Our bill would establish a searchable and accessible public registry 
of demand letters and clarify that the Federal Trade Commission could 
use its authority to impose civil penalties to go after patent trolls. 
While the FTC has announced its intent to investigate PAEs, our bill 
would clarify the FTC's role to use its enforcement powers against PAEs 
who engage in unfair and deceptive trade practices to find as a 
violation the provisions of our bill.
  Our amendment would prevent patent trolls from hiding behind 
anonymous shell companies and empower defendants to take collective 
action and share information and increase reporting so that the 
regulatory authorities and the PTL are on alert as to which patents are 
being frivolously asserted by whom.
  In conjunction with litigation reforms that are proposed in this 
underlying bill, our proposal would produce a more robust patent market 
and a more productive and predictable and competitive economy.
  Our proposal is supported by a diverse group of individuals and 
organizations, including DISH Network, Public Knowledge, the National 
Restaurant Association, the Electronic Frontier Foundation, the 
National Retail Federation, the Direct Marketing Association, the 
Mobile Marketing Association, the Association of American Advertising 
Agencies, and the Hotel & Lodging Association, among many others.
  Mr. Speaker, for once, this body is moving forward on bipartisan 
legislation that will help spur innovation and economic growth. The 
first bill that we are considering with regard to private equity will 
help increase job growth and job creation in our country by removing a 
regulatory burden that was put in without the proper justification. 
Private equity funds had nothing to do with the meltdown in 2008 and 
2009, nor do they represent any systemic risk to our economy. They 
simply allow people to aggregate their resources to buy stock equity in 
companies. We have a cap on the debt equity ratio of two to one, and 
they do what they do. People earn money and people lose money, and that 
is how the economy works, but there is absolutely no systemic risk.
  Some of these dollar amounts sound high, but what we talked about in 
the Rules Committee yesterday is that you might have a private equity 
fund that is $300 million. That sounds like a lot of money. That is the 
amount of money they have to invest over a period of years. With $300 
million, they invest that over 5, 6, or 7 years. That is not their 
operational budget. Their operational budget is 2 percent or less of 
that every year. So a $300 million private equity fund might have an 
annual budget of $6 million.
  Again, $6 million sounds like a lot of money. It certainly is. But 
when compliance with the SEC reform is $500,000, as has been estimated, 
you are talking about a sizeable percentage of your annual operating 
budget. So that means you have to hire a couple of people less. You 
might not be able to do that extra investment that you didn't have the 
ability to do the diligence in. You might not be able to invest in that 
additional company and help it grow and create jobs because of 
regulatory compliance that has nothing to do with systemic risk.
  Mr. Speaker, as this session of Congress comes to a close, the first 
session of the 113th Congress, there is much that this body has left 
undone. While the other Chamber across the way has acted on 
overwhelmingly bipartisan measures that help fix our immigration 
system, saving $200 billion, creating over 6 million jobs, securing our 
borders, restoring the rule of law, and uniting families, this body has 
not passed a single bill in that area.
  While the other body has passed a bill that would prevent companies 
from discriminating against gay and lesbian employees with strong 
bipartisan support, this body has not even brought such a bill to 
committee or the floor.
  While I am pleased to see the bipartisan Innovation Act and Small 
Business Capital Access and Job Preservation Act come to the floor 
today, although I would like to see them with a more open process that 
allowed more ideas from both sides of the aisle to be introduced as 
amendments, I only hope that a majority of this body sees fit to hold 
votes on other issues such as immigration reform and employment 
nondiscrimination, which I am confident would pass the floor of the 
House today.
  As I talk to many tech companies and small businesses in my district,

[[Page 18118]]

many of the purported beneficiaries of this modest patent reform bill, 
they support it, but they support immigration reform more. They say, 
Good job. Now get immigration reform done. That is what I am hearing 
from employers and businesses in my district. I hope that my colleagues 
on the other side of the aisle are hearing the same.
  Our Nation cannot afford to maintain a 20th century intellectual 
property protection system in a digital and biological era. This bill 
does not correct that. It does not change that. It is a modest step 
forward and an important part of reforming parts of the process that 
Democrats, Republicans, and many stakeholders can agree are broken.
  The measure contains bipartisan balanced proposals, just as H.R. 15 
does, the comprehensive immigration reform bill in the House, with over 
190 bipartisan sponsors. And just as this bill will continue to 
incentivize entrepreneurship, so too--times 10, times 100--would 
comprehensive immigration reform, which includes a start-up visa that 
allows entrepreneurs who have already received commitments of 
investment to come to this country and create their jobs here. We are 
turning jobs for Americans away every day we fail to act on immigration 
reform. We can bring H.R. 15 to the Rules Committee and to the floor of 
the House next week or we can stay the following week and give this 
body the opportunity to send a bill to President Obama's desk to 
finally replace our broken immigration system with one that works.
  Mr. Speaker, if we defeat the previous question, I will offer an 
amendment to the rule to bring up House Resolution 424, Ranking Member 
Slaughter's resolution, that prohibits an adjournment of the House 
until we adopt a budget conference report. This body should not adjourn 
until we have completed a budget conference report that could help 
prevent a second government shutdown and prevent a fiscal crisis.
  Mr. Speaker, I ask unanimous consent to insert the text of the 
amendment in the Record, along with extraneous material, immediately 
prior to the vote on the previous question.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. POLIS. Mr. Speaker, while I am actively encouraging Members on 
both sides of the aisle to get behind the Innovation Act and the Small 
Business Capital Access and Job Preservation Act, I must urge my 
colleagues to vote ``no'' and defeat the previous question, as well as 
a ``no'' vote on the restrictive rule.
  I hope that we can send the message that we need to bring immigration 
reform to the floor of this House, rather than let the four bills that 
have already emerged out of committee stay sitting and aging and not 
getting any better while we fast-track asbestos and while we fast-track 
modest patent reforms.
  The time has come to act on immigration reform. Please join me on 
voting ``no'' on the previous question and ``no'' on the rule.
  I yield back the balance of my time.
  Mr. NUGENT. Mr. Speaker, I yield myself such time as I may consume.
  I am speaking to some of the comments that were made, particularly as 
it relates to football. We talked about a field goal and 3 points, but 
here is the position that the majority has taken in the House as it 
relates to immigration. It is about first downs. It is about moving the 
ball forward in measured steps, about getting it right the first time, 
not going through what we have gone through with these huge bills.
  Mr. POLIS. Will the gentleman yield?
  Mr. NUGENT. I yield to the gentleman from Colorado.
  Mr. POLIS. It seems more like we have been in a timeout for 3 months 
since these bills have passed committee.
  Mr. NUGENT. Reclaiming my time, it takes time, as you know, to move 
meaningful legislation through and to get it right the first time.
  You have to live with some things when you have these megabills with 
thousands of pages, such as a 1,000-page immigration bill or 2,500 
pages for the Affordable Care Act. At the end of the day, let's do this 
in a reasonable approach, because we want immigration reform, because 
we know we have a broken immigration system. We absolutely know that. I 
think this House has taken the right approach in doing things in a 
measured way to get first downs until we get to the end zone where we 
all want to be.
  As we notice on this bill, even though there is strong bipartisan 
support on both of these pieces of legislation, we still have some that 
aren't happy because sometimes bills never get to exactly where 
everybody wants them to be. I get that. In a perfect world, we would 
get everything we want. It is not a perfect world. We don't get 
everything we want. But it is about moving the ball forward, and I 
think that my good friend from Colorado has talked eloquently about the 
issues as relate to patent reform and private equity because I know he 
has been part of that world. He speaks from experience in those areas.
  Is it everything that you want? Probably not. We have heard from the 
chairman of the committee that it is not everything he wants. But it is 
a step in the right direction. It is moving the ball forward. It is 
getting the first down. It is moving it so that we can win the game--
not a political party, but the American people. Consumers can win. The 
holders of patents can win. That is what this is all about.
  With regard to demand letters, I lived through this as a sheriff. We 
used to get demand letters that we were going to get sued, and the 
whole idea behind it was the fact that they thought we would settle for 
$30,000 or $40,000 to make them go away. Here is what happened.
  The sheriffs got smart, and they put together a consortium of 
sheriffs, 60 out of 67, in a sheriffs self-insurance fund. Guess what? 
We changed the tables and the dynamics in regard to it just as this 
bill will do. What we did was say, Guess what? We are no longer going 
to be blackmailed into giving money. On a legitimate case, you are 
going to settle; but on a case that is frivolous, we would say, No 
thanks. Let's go to trial. They never want to do that because it is 
expensive on their end, too, particularly when they could wind up 
paying for that.
  Mr. Speaker, a lot has been said today, and I think a lot more is 
going to be said after we pass this rule. As we talk about what I think 
is fair, that abusive patent litigation is a growing problem--we have 
heard that from both sides today.

                              {time}  1330

  Under current patent systems, small businesses and startups simply 
don't have the resources to compete with the patent trolls. They are 
easy targets. They routinely settle, regardless of the merits of the 
case, to avoid hefty legal costs.
  We understand that, therefore, it is important that we level the 
playing field for our innovators, our innovators that actually create 
something, an idea out of thin air, and create something that can be 
turned into jobs in the future.
  Regardless of where the Members of this body fall on the underlying 
legislation, it seems that we are all in agreement that we need to 
combat this destructive practice.
  We are also in agreement that we need jobs. The rule provides for 
consideration of a bill that will give small companies more access to 
capital, more opportunities to grow, more opportunities to create jobs. 
The rule makes in order important germane amendments addressing this.
  Mr. Speaker, we heard a call to vote ``no'' on the rule for other 
reasons. Let's talk about creating jobs in America. Let's talk about 
protecting our innovators.
  Let's not get caught up in the politics of the day. Let's do the 
right thing for the American people today, the thing that is going to 
be heard today in this House. Let's vote on a rule, and let's pass that 
rule. I support this rule, and I encourage my colleagues to vote 
``yes'' on the rule as well.
  The material previously referred to by Mr. Polis is as follows:

[[Page 18119]]



      An Amendment to H. Res. 429 Offered by Mr. Polis of Colorado

       At the end of the resolution, add the following new 
     section:
       Sec. 3. Immediately upon adoption of this resolution, the 
     House shall proceed to the consideration of the resolution 
     (H. Res. 424) prohibiting the consideration of a concurrent 
     resolution providing for adjournment unless the House has 
     adopted a conference report on the budget resolution by 
     December 13, 2013, if called up by Representative Slaughter 
     of New York or her designee. All points of order against the 
     resolution and against its consideration are waived.

        THE VOTE ON THE PREVIOUS QUESTION: WHAT IT REALLY MEANS

       This vote, the vote on whether to order the previous 
     question on a special rule, is not merely a procedural vote. 
     A vote against ordering the previous question is a vote 
     against the Republican majority agenda and a vote to allow 
     the Democratic minority to offer an alternative plan. It is a 
     vote about what the House should be debating.
       Mr. Clarence Cannon's Precedents of the House of 
     Representatives (VI, 308-311), describes the vote on the 
     previous question on the rule as ``a motion to direct or 
     control the consideration of the subject before the House 
     being made by the Member in charge.'' To defeat the previous 
     question is to give the opposition a chance to decide the 
     subject before the House. Cannon cites the Speaker's ruling 
     of January 13, 1920, to the effect that ``the refusal of the 
     House to sustain the demand for the previous question passes 
     the control of the resolution to the opposition'' in order to 
     offer an amendment. On March 15, 1909, a member of the 
     majority party offered a rule resolution. The House defeated 
     the previous question and a member of the opposition rose to 
     a parliamentary inquiry, asking who was entitled to 
     recognition. Speaker Joseph G. Cannon (R-Illinois) said: 
     ``The previous question having been refused, the gentleman 
     from New York, Mr. Fitzgerald, who had asked the gentleman to 
     yield to him for an amendment, is entitled to the first 
     recognition.''
       The Republican majority may say ``the vote on the previous 
     question is simply a vote on whether to proceed to an 
     immediate vote on adopting the resolution . . . [and] has no 
     substantive legislative or policy implications whatsoever.'' 
     But that is not what they have always said. Listen to the 
     Republican Leadership Manual on the Legislative Process in 
     the United States House of Representatives, (6th edition, 
     page 135). Here's how the Republicans describe the previous 
     question vote in their own manual: ``Although it is generally 
     not possible to amend the rule because the majority Member 
     controlling the time will not yield for the purpose of 
     offering an amendment, the same result may be achieved by 
     voting down the previous question on the rule . . . When the 
     motion for the previous question is defeated, control of the 
     time passes to the Member who led the opposition to ordering 
     the previous question. That Member, because he then controls 
     the time, may offer an amendment to the rule, or yield for 
     the purpose of amendment.''
       In Deschler's Procedure in the U.S. House of 
     Representatives, the subchapter titled ``Amending Special 
     Rules'' states: ``a refusal to order the previous question on 
     such a rule [a special rule reported from the Committee on 
     Rules] opens the resolution to amendment and further 
     debate.'' (Chapter 21, section 21.2) Section 21.3 continues: 
     ``Upon rejection of the motion for the previous question on a 
     resolution reported from the Committee on Rules, control 
     shifts to the Member leading the opposition to the previous 
     question, who may offer a proper amendment or motion and who 
     controls the time for debate thereon.''
       Clearly, the vote on the previous question on a rule does 
     have substantive policy implications. It is one of the only 
     available tools for those who oppose the Republican 
     majority's agenda and allows those with alternative views the 
     opportunity to offer an alternative plan.

  Mr. NUGENT. Mr. Speaker, with that I yield back the balance of my 
time, and I move the previous question on the resolution.

  Ms. JACKSON LEE. Mr. Speaker, as a senior member of the Judiciary 
Committee, I rise to speak on the rule governing debate for H.R. 3309, 
and about innovation in America--the great job creator. H.R. 3309 is a 
bill before its time as the America Invents Act was signed into law 
barely two years ago. Many of the major provisions of this landmark 
legislation which many on the Judiciary Committee and in this body 
voted for have not even been put into practice.
  It is well documented that our innovation ecosystem--founded on 
patents--drives economic growth and job creation in the United States. 
From the hustle and bustle of downtown Houston, Silicon Valley, 
Chicago, New York, and even here in Washington, DC, Americans want to 
keep our cherished system as strong as possible. For the future of our 
economy, we cannot risk jeopardizing it. And while the AIA was 
unquestionably pro-innovator legislation, its post-grant challenge 
provisions also unquestionably shifted the balance of rights toward 
implementers and away from patent holders. The question is--just how 
much has that balance shifted?
  Mr. Speaker, H.R. 3309 contains a provision that concerns me greatly. 
Section 3 of the bill directs a court to award attorney fees and costs 
to prevailing party in patent infringement cases.
  This provision, commonly called ``Loser Pays,'' is prevalent in 
England but has heretofore been unknown to the American legal system. 
And for good reason. Loser pays laws ensure that only the wealthiest 
members of society or large corporations can afford to undertake a 
civil action and also unnecessarily punishes individuals with serious 
and meritorious claims for seeking access to justice. Loser pays 
policies fail to recognize that a person or a business can have a 
legally legitimate dispute regarding fact and law, and yet still 
ultimately lose the case. Loser pays policy sets a dangerous precedent 
and may prevent individuals from pursuing even the most meritorious 
civil liability claims.
  If ``loser pays'' is implemented it could be a roadblock for people 
pursuing whistleblower, consumer mortgage, employment discrimination 
and other civil rights cases. The real losers under a ``loser pays'' 
system in patent cases is the individual inventor and small businesses 
seeking to vindicate their constitutional right to the exclusive use of 
the discoveries and inventions.
  Mr. Speaker, we should proceed with caution and engage in a 
deliberative process that takes the time to reach out and listen to all 
stakeholders.
  Many small innovators--today's Priceline.coms, Yahoo's, Google's, 
Facebook's, Eli Lilly's, Twitter's, akin to yesteryears Edisons--have 
not had time to make their views heard.
  I thank the Rules Committee for making in my amendment that modifies 
the Manager's Amendment to ensure that more small businesses are 
protected by providing that the customer stay exception applies to all 
small businesses with annual revenues under $25 million.
  A number of the provisions in this bill may be well-intentioned, but 
they have undesirable consequences for the patent system as a whole. 
They have the potential to undermine the enforceability of all patent 
rights, no matter how valuable the patent, and thus potentially 
incentivize infringement.
  That is why I offered three amendments in the Judiciary Committee and 
three in the Rules Committee yesterday.
  My first amendment would have modified section 9(a) of the bill to 
preserve the right of an applicant to file a civil action to obtain a 
patent in district court ``upon a showing of good cause or where 
justice so requires.'' I offered this amendment in response to 
information I received during my discussion with stakeholders, 
including the Chief Judge of the Federal Circuit, which hears all 
patent claims.
  I thank the Committee also for making in my amendment which requires 
the PTO Director, in consultation with other relevant agencies, and 
interested parties, to conduct a study to examine the economic impact 
of the litigation reforms contained in the bill (sections 3, 4, and 5 
of this Act) on the ability of individuals and small businesses owned 
by women, veterans, and minorities to assert, secure, and vindicate the 
constitutionally guaranteed exclusive right to inventions and 
discoveries by such individuals and small business. This amendment 
supplements and improves the bill, which requires PTO to conduct 4 
studies and submit reports to Congress. The required studies are:
  I also joined with Ranking Member Conyers of the Judiciary Committee 
on an amendment that strikes Section 3(b) which requires that courts 
reward attorney's fees and expenses to the prevailing party. I urge 
Members to support this amendment as well.
  Mr. Speaker, innovation is the engine that drives our economy. Let us 
not act rashly in passing legislation that will harm the ability or 
lessen the incentive of innovators to make the discoveries and create 
the products that will power our economy in the 21st century.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. POLIS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

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