[House Report 109-673]
[From the U.S. Government Publishing Office]





109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-673

======================================================================



 
                    PILOT PROGRAMS FOR PATENT JUDGES

                                _______
                                

 September 21, 2006.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5418]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 5418) to establish a pilot program in certain United 
States district courts to encourage enhancement of expertise in 
patent cases among district judges, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. PILOT PROGRAM IN CERTAIN DISTRICT COURTS.

  (a) Establishment.--
          (1) In general.--There is established a program, in each of 
        the United States district courts designated under subsection 
        (b), under which--
                  (A) those district judges of that district court who 
                request to hear cases under which one or more issues 
                arising under any Act of Congress relating to patents 
                or plant variety protection must be decided, are 
                designated by the chief judge of the court to hear 
                those cases;
                  (B) cases described in subparagraph (A) are randomly 
                assigned to the judges of the district court, 
                regardless of whether the judges are designated under 
                subparagraph (A);
                  (C) a judge not designated under subparagraph (A) to 
                whom a case is assigned under subparagraph (B) may 
                decline to accept the case; and
                  (D) a case declined under subparagraph (C) is 
                randomly reassigned to one of those judges of the court 
                designated under subparagraph (A).
          (2) Senior judges.--Senior judges of a district court may be 
        designated under paragraph (1)(A) if at least 1 judge of the 
        court in regular active service is also so designated.
          (3) Right to transfer cases preserved.--This section shall 
        not be construed to limit the ability of a judge to request the 
        reassignment of or otherwise transfer a case to which the judge 
        is assigned under this section, in accordance with otherwise 
        applicable rules of the court.
  (b) Designation.--The Director of the Administrative Office of the 
United States Courts shall, not later than 6 months after the date of 
the enactment of this Act, designate not less than 5 United States 
district courts, in at least 3 different judicial circuits, in which 
the program established under subsection (a) will be carried out. The 
Director shall make such designation from among the 15 district courts 
in which the largest number of patent and plant variety protection 
cases were filed in the most recent calendar year that has ended, 
except that the Director may only designate a court in which--
          (1) at least 10 district judges are authorized to be 
        appointed by the President, whether under section 133(a) of 
        title 28, United States Code, or on a temporary basis under 
        other provisions of law; and
          (2) at least 3 judges of the court have made the request 
        under subsection (a)(1)(A).
  (c) Duration.--The program established under subsection (a) shall 
terminate 10 years after the end of the 6-month period described in 
subsection (b).
  (d) Applicability.--The program established under subsection (a) 
shall apply in a district court designated under subsection (b) only to 
cases commenced on or after the date of such designation.
  (e) Reporting to Congress.--
          (1) In general.--At the times specified in paragraph (2), the 
        Director of the Administrative Office of the United States 
        Courts, in consultation with the chief judge of each of the 
        district courts designated under subsection (b) and the 
        Director of the Federal Judicial Center, shall submit to the 
        Committee on the Judiciary of the House of Representatives and 
        the Committee on the Judiciary of the Senate a report on the 
        pilot program established under subsection (a). The report 
        shall include--
                  (A) an analysis of the extent to which the program 
                has succeeded in developing expertise in patent and 
                plant variety protection cases among the district 
                judges of the district courts so designated;
                  (B) an analysis of the extent to which the program 
                has improved the efficiency of the courts involved by 
                reason of such expertise;
                  (C) with respect to patent cases handled by the 
                judges designated pursuant to subsection (a)(1)(A) and 
                judges not so designated, a comparison between the 2 
                groups of judges with respect to--
                          (i) the rate of reversal by the Court of 
                        Appeals for the Federal Circuit, of such cases 
                        on the issues of claim construction and 
                        substantive patent law; and
                          (ii) the period of time elapsed from the date 
                        on which a case is filed to the date on which 
                        trial begins or summary judgment is entered;
                  (D) a discussion of any evidence indicating that 
                litigants select certain of the judicial districts 
                designated under subsection (b) in an attempt to ensure 
                a given outcome; and
                  (E) an analysis of whether the pilot program should 
                be extended to other district courts, or should be made 
                permanent and apply to all district courts.
          (2) Timetable for reports.--The times referred to in 
        paragraph (1) are--
                  (A) not later than the date that is 5 years and 3 
                months after the end of the 6-month period described in 
                subsection (b); and
                  (B) not later than 5 years after the date described 
                in subparagraph (A).
          (3) Periodic reporting.--The Director of the Administrative 
        Office of the United States Courts, in consultation with the 
        chief judge of each of the district courts designated under 
        subsection (b) and the Director of the Federal Judicial Center, 
        shall keep the committees referred to in paragraph (1) 
        informed, on a periodic basis while the pilot program is in 
        effect, with respect to the matters referred to in 
        subparagraphs (A) through (E) of paragraph (1).
  (f) Authorization for Training and Clerkships.--In addition to any 
other funds made available to carry out this section, there is 
authorized to be appropriated not less than $5,000,000 in each fiscal 
year for--
          (1) educational and professional development of those 
        district judges designated under subsection (a)(1)(A) in 
        matters relating to patents and plant variety protection; and
          (2) compensation of law clerks with expertise in technical 
        matters arising in patent and plant variety protection cases, 
        to be appointed by the courts designated under subsection (b) 
        to assist those courts in such cases.
Amounts made available pursuant to this subsection shall remain 
available until expended.

                          PURPOSE AND SUMMARY

    The purpose of H.R. 5418, a bill to ``establish a pilot 
program in certain United States district courts to encourage 
enhancement of expertise in patent cases among district 
judges'' is to authorize the creation of a patent specialists' 
pilot program at the U.S. district court level, which is 
intended to improve the adjudication of patent disputes. The 
bill's sponsors intend for the periodic and final results of 
this ten year study to be used to identify and pursue 
additional improvements in the trial level adjudication of 
patent cases. The ultimate goal of H.R. 5418 is to make the 
resolution of patent issues at the trial level more efficient, 
predictable, and reliable.

                  BACKGROUND AND NEED FOR LEGISLATION

    ``One of the most significant problems facing the United 
States patent system is the spiraling cost and complexity 
associated with enforcement of patent rights.'' (The Advisory 
Commission on Patent Law Reform, Report to the Secretary of 
Commerce 75 (1992))

    As the above quote indicates, the problems associated with 
providing efficient, stable, and predictable adjudication of 
patent disputes present issues of long-standing concern. The 
complex and dynamic nature of patent law along with the 
increasing sophistication of technologies, which tend to 
underlie determinations of prior art and whether material is 
patentable, present unique challenges to those responsible for 
adjudicating these disputes. These are particularly acute at 
the trial court level where judges tend to be generalists and 
lay jurors tend to be unfamiliar with patent law concepts and 
untrained in the sophisticated technologies that frequently lie 
at the heart of litigation.
    Over the years, judges, patent professionals and patent 
owners have identified a number of judicial and litigation 
reforms without endorsing one proposal to the exclusion of 
others. Still, the vast majority of structural reforms have 
something in common: they share a widespread perception that 
patent litigation has become too expensive, too time-consuming, 
and too uncertain.

The value of a United States patent

    The five rights traditionally associated with owing a 
patent are the right to make, use, sell, import, and offer to 
sell the patented invention. Most of the value of a patent is 
derived not from the conveyance of a positive right to make or 
use the invention; rather, it is derived from the ability to 
exercise the right to sue an infringer, to obtain damages for 
infringement, and to obtain injunctions against further 
infringement. These rights are frustrated and/or effectively 
denied when the judicial system is unable to efficiently 
process and correctly resolve patent cases.
    One measure of the value of patents is the increasing role 
that intellectual property, especially patents, plays in the 
valuation of American corporations. As recently as 1978, 
intangible assets, such as intellectual property, accounted for 
20 percent of corporate assets with the vast majority of value 
(80 percent) attributed to tangible assets such as facilities 
and equipment. By 1997, the trend reversed: 73 percent of 
corporate assets were intangible and only 27 percent were 
tangible.
    An increased recognition that the majority of a company's 
value resides in the ownership and management of intellectual 
property has raised the stakes for litigants and public 
officials. It is in the interests of consumers and competitors 
that invalid patents not be issued. To the extent a patent is 
invalid, it should not be given effect. It is in the interests 
of patent owners that they be allowed to benefit from the full 
value of their industry and creativity.

Characteristics of the United States Patent Dispute Adjudicative System

    U.S. district courts are trial courts that possess general 
civil and criminal jurisdiction. Title 28 of the United States 
Code grants U.S. district courts exclusive, original 
jurisdiction of ``any civil action arising under any Act of 
Congress relating to patents.''
    Within the United States, the adjudication of patent 
interpretation and enforcement disputes typically commences 
with the filing of a case in an appropriate U.S. district 
court. Patent cases constitute an insubstantial number of the 
total cases filed. Of that amount, the overwhelming majority of 
cases are typically settled or decided by motion with the rest, 
approximately 100 cases, going to trial in a given year. Due to 
their novelty and complexity, the cases that are tried tend to 
be resource-intensive and account for a disproportionate share 
of district court judges' time and effort. As with other civil 
and criminal cases, the standard practice is to randomly assign 
patent cases to the various judges within a district.
    Given this background--the relative infrequency of patent 
litigation, early settlement of most suits, and random 
assignment of cases--district court judges generally receive 
little exposure to actual patent claim trials. One judge from 
the U.S. District Court in Chicago, historically one of the top 
five busiest district courts in terms of patent case filings, 
reported his personal patent case workload never exceeded five 
percent of his calendar.
    In the United States, the right of a patent litigant to 
demand a jury trial is well-established. Indeed, the 7th 
Amendment to the U.S. Constitution guarantees that right. 
Nevertheless, fewer than three percent of all U.S. patent cases 
are actually decided by jury. Congress established the Court of 
Appeals for the Federal Circuit (CAFC) in 1982, motivated, in 
large part, by the desire to restrict the practice of forum 
shopping in order to achieve a standardized patent practice 
across the nation. As a result, all appeals of patent cases 
litigated in federal district courts are now directed to the 
CAFC as opposed to the twelve circuit courts of appeals, as was 
the prior practice. While some commentators have taken issue 
with what they regard as a pro-patent holder inclination by the 
CAFC, there can be little doubt that the CAFC has succeeded in 
the objective of ameliorating many of the negative effects of 
forum shopping. The CAFC's practice is to apply a de novo 
review standard in claim construction.

Problems

    It has been noted the right of exclusivity, which is 
critical to protecting the economic benefit and inherent value 
of a patent, can be protected only ``if patent owners have 
effective and inexpensive access to an efficient judicial 
system'' to enforce their patent. There is substantial evidence 
that the adjudication of patent cases is neither effective nor 
inexpensive. The Honorable James F. Holderman of the District 
Court in Chicago has written of what he perceives to be 
``institutional ineptitude'' in the manner that district courts 
enforce patent rights.
    According to Kimberly A. Moore,\1\ Associate Professor of 
Law at George Mason University, and the author of an article 
entitled, ``Are District Court Judges Equipped to Resolve 
Patent Cases?,'' ``district court judges improperly construe 
patent claim terms in 33 percent of the cases appealed to the 
Federal Circuit.'' This national reversal rate contrasts 
dramatically with the less than 10 percent overall reversal 
rate for all other types of cases, both civil and criminal, 
which are reviewed by the regional Courts of Appeals.
---------------------------------------------------------------------------
    \1\On May 18, 2006, Kimberly A. Moore was nominated by President 
George W. Bush to serve as a United States Circuit Judge for the 
Federal Circuit. On September 5, 2006, she was confirmed to the court.
---------------------------------------------------------------------------
    Further, Professor Moore has reported that her ``data show 
that errors in district court claim constructions require 
reversing or vacating judgments in 81 percent of these cases.'' 
She goes on to suggest that the adjudication system would be 
improved if an expedited appeal of claim construction issues 
could be provided to the CAFC rather than requiring district 
judges to proceed with a lengthy and expensive patent 
litigation that is premised on a ``frequently erroneous claim 
construction.''
    There is a growing perception that non-traditional small 
litigants (commonly derided as ``patent trolls'') have begun to 
use increasingly aggressive litigation tactics to assert 
tenuous but expensive patent claims. A September 14, 2005, 
article in the Wall Street Journal described a speculative 
environment that has resulted in some patent cases having their 
litigation expenses financed by outside investors. The report 
stated, ``[l]ured by the potential returns, hedge funds and 
other institutional investors now are bankrolling businesses 
that buy up patent portfolios. More law firms, including some 
branching out from product-liability and malpractice work, are 
taking cases on a contingency basis.''\2\
---------------------------------------------------------------------------
    \2\``Aggressive Patent Litigants Pose Growing Threat To Big 
Business,'' WSJ, A1, September 14, 2005.
---------------------------------------------------------------------------

Support for H.R. 5418

    The Judicial Conference has expressed no formal position on 
the case assignment mechanism proposed in H.R. 5418. 
Nevertheless, the amendment in the nature of a substitute 
reported by the Committee contained changes intended to ensure 
the continued random assignment of cases among judges in 
participating districts and to prevent forum-shopping by 
litigants. A number of patent related trade associations, which 
include AIPLA, IPO, BSA, CEA, ACT, BIO, and PhRMA have 
expressed support for the enactment of H.R. 5418, as amended by 
the Committee.

                                HEARINGS

    On October 6, 2005, the Subcommittee on Courts, the 
Internet, and Intellectual Property conducted an oversight 
hearing entitled ``Improving Federal Court Adjudication of 
Patent Cases.'' The subject of that hearing was a draft bill 
authored by Rep. Darrell Issa. Testimony was received from four 
witnesses who testified as individuals and not as 
representatives of an organization. The witnesses included a 
Federal district court judge, a professor of law, and two 
private attorneys, one who possessed extensive experience in 
patent litigation and a second that had unique institutional 
insight into the structural considerations impacted by various 
reform proposals. H.R. 5418 was subsequently introduced by 
Reps. Darrell Issa and Adam Schiff on May 18, 2006.

                        COMMITTEE CONSIDERATION

    On July 27, 2006, the Subcommittee on Courts, the Internet, 
and Intellectual Property met in open session and ordered 
favorably reported the bill, H.R. 5418, without amendment by 
voice vote, a quorum being present. On September 13, 2006, the 
Committee met in open session and ordered favorably reported 
the bill, H.R. 5418 with an amendment by voice vote, a quorum 
being present.

                         VOTE OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee notes there were no 
recorded votes during the consideration of H.R. 5418.

                      COMMITTEE OVERSIGHT FINDINGS

    In compliance with clause 3(c)(I) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               NEW BUDGET AUTHORITY AND TAX EXPENDITURES

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 5418, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                                September 20, 2006.
Hon. F. James Sensenbrenner Jr.,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5418, a bill to 
establish a pilot program in certain United States district 
courts to encourage enhancement of expertise in patent cases 
among district judges.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 5418--A bill to establish a pilot program in certain United States 
        district courts to encourage enhancement of expertise in patent 
        cases among district judges

    Summary: H.R. 5418 would authorize the appropriation of $5 
million per year to create a pilot program within the federal 
court system to increase the expertise of district judges 
presiding over patent and plant variety protection cases. CBO 
estimates that implementing H.R. 5418 would cost $23 million 
over the 2007-2011 period, subject to appropriation of the 
necessary amounts. Enacting H.R. 5418 would have no effect on 
direct spending or revenues.
    H.R. 5418 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no direct costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the bill is shown in the following table. 
The cost of this legislation falls within budget function 750 
(administration of justice).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                  2007      2008      2009      2010      2011
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level...........................................         5         5         5         5         5
Estimated Outlays.............................................         4         4         5         5         5
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: Assuming that H.R. 5418 is enacted near 
the beginning of fiscal year 2007 and that the authorized 
amounts will be appropriated for each year, CBO estimates that 
implementing this bill would cost $4 million in 2007 and $23 
million over the 2007-2011 period.
    H.R. 5148 would authorize the appropriation of $5 million 
per year to educate judges who accept patent and plant variety 
protection cases. Appropriated amounts could also be used to 
hire additional staff with expertise in such matters. The bill 
would direct the Administrative Office of the U.S. Courts to 
establish a pilot program, in at least five U.S. district 
courts, that would allow judges to request cases involving 
alleged violations of patent or plant variety protection law. 
CBO estimates that this procedural change would have no 
significant effect on the federal budget.
    Intergovernmental and private-sector impact: H.R. 5418 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Daniel Hoople. Impact 
on State, Local, and Tribal Governments: Melissa Merrell. 
Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, H.R. 5418 will require the Director 
of the Administrative Office of the Courts to select five 
district courts to participate in a 10-year pilot program that 
is intended to provide enhanced expertise among designated 
judges in the trial-level adjudication of patent cases.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to rule XI, clause 2(l)(4) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, section 8 of the Constitution.

               SECTION-BY-SECTION ANALYSIS AND DISCUSSION

    The Committee reported H.R. 5418, a bill ``[t]o establish a 
pilot program in certain United States district courts to 
encourage enhancement of expertise in patent cases among 
district judges,'' with an amendment in the nature of a 
substitute that included non-controversial agreed-upon changes.
    The following three paragraphs describe the bill as 
introduced and reported, without amendment, by the Subcommittee 
on Courts, the Internet, and Intellectual Property on July 27, 
2006.
    The succeeding two paragraphs describe specific changes 
included in the substitute amendment reported favorably by the 
Committee on September 13, 2006.
    Sec. 1. Pilot Program In Certain District Courts. This 
section requires the Director of the Administrative Office of 
the Courts to designate not fewer than five U.S. district 
courts to participate in a 10-year pilot program that would 
permit district judges to request assignment of patent-related 
cases, permit the Chief Judge to designate requesting judges to 
hear such cases, allow ``undesignated'' judges to decline such 
cases, and require random assignment of such cases to either 
all of the judges of the district court or only the designated 
judges in certain instances.
    This section authorizes not less than $5,000,000 for each 
of the 10 fiscal years to be expended for the educational and 
professional development of designated judges and to compensate 
law clerks who possess expertise in technical matters that 
arise in patent cases. The section also requires the Director 
of the Administrative Office of the Courts to compile 
information on the pilot program and to provide periodic 
reports to the Judiciary Committees of the House of 
Representatives and the Senate.
    To mitigate the concern that pilot districts might become 
attractive as magnets for forum-shopping litigants, the 
amendment in the nature of a substitute included changes to 
section 1(b) of the introduced version of this legislation. 
Specifically, section 1(b) was divided into two subsections: 
section 1(b)(1) conditions pilot district designation on a 
requirement the district be authorized ``at least 10 district 
judges . . . to be appointed by the President while section 
1(b)(2) requires ``at least three judges of the court'' to make 
the request to be designated as patent specialists pursuant to 
the bill.
    Additional refinements were made to the reporting 
requirements contained in the legislation as introduced. 
Specifically, section 1(e) of the amendment in the nature of a 
substitme adopted by the Committee added language that was 
included in the Class Action Fairness Act.\3\ This language 
requires the Director of the Administrative Office of the 
Courts to consult with the Director of the Federal Judicial 
Center in addition to consulting with the chief judge of each 
participating district in preparing the required reports for 
Congress. The amendment also adds elements to the report, 
including comparisons of: (a) the rate of reversal by the 
Federal Circuit on issues of claim construction and substantive 
patent law among designated and non-designated judges; (b) the 
time to final disposition by trial or summary judgment among 
designated and non-designated judges; and (c) whether any 
evidence indicates that litigants have sought to ``ensure a 
given outcome'' by the use of forum-shopping in the pilot 
districts.
---------------------------------------------------------------------------
    \3\P.L. No. 109-2.
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            CHANGES IN EXISTING LAW BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, the Committee notes H.R. 3509 
makes no changes to existing law.

                           Markup Transcript




                            BUSINESS MEETING

                     WEDNESDAY, SEPTEMBER 13, 2006

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:10 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable F. 
James Sensenbrenner, Jr. (Chairman of the Committee) presiding.
    Chairman Sensenbrenner. The Committee will be in order. And 
a working quorum, but not a reporting quorum, is present.
    Before starting up, let me say that it is not the intention 
of the Chair to call up the FISA bill today, but we will do 
three bills: the ``Firearms Corrections and Improvements Act,'' 
the ``Patent Expertise Among District Judges Act,'' and the 
``Wright Amendment Modernization Act.''
    Since we do not have a reporting quorum present, the Chair 
now says the next item on the agenda is H.R. 5418, to establish 
a pilot program in certain United States District Courts to 
encourage enhancement of expertise in patent cases among 
District judges.
    The Chair recognizes the Chair of the Subcommittee on 
Courts, the Internet, and Intellectual Property, the gentleman 
from Texas, Mr. Smith, for a motion.
    Mr. Smith. Mr. Chairman, the Subcommittee on Courts, the 
Internet, and Intellectual Property reports favorably the bill, 
H.R. 5418, and moves its favorable recommendation to the full 
House.
    Chairman Sensenbrenner. Without objection, H.R. 5418 will 
be considered as read and open for amendment at any point.
    [The bill, H.R. 5418, follows:]
    
    
    Chairman Sensenbrenner. And the Chair recognizes the 
gentleman from Texas, Mr. Smith, to strike the last word.
    Mr. Smith. Thank you, Mr. Chairman. I do move to strike the 
last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Smith. Mr. Chairman, patent litigation is too 
expensive, too time consuming and too unpredictable. H.R. 5418 
addresses these concerns by authorizing the establishment of a 
pilot program in certain U.S. District Courts to encourage the 
development of expertise in patent cases among District judges. 
On average, less than 1 percent of all cases in U.S. District 
Courts are patent cases and District Court judges have a patent 
case to through trial only once every 7 years.
    Nevertheless, these cases account for nearly 10 percent of 
complex cases and demand a disproportionate share of attention 
and judicial resources. Not surprisingly, the rate of reversal 
at the Federal circuit remains uncomfortably high. The idea 
behind H.R. 5418 is simple: Practice makes perfect, or at least 
better.
    Judges who are able to focus more attention on patent cases 
are more likely to render decisions that will not be reversed 
on appeal. This bill is a product of an extensive oversight 
hearing on proposals to improve patent litigation that was 
conducted by the Subcommittee last fall. Introduced by 
Representatives Issa and Schiff, the bill was unanimously 
reported by the Subcommittee on July 27.
    H.R. 5418 will require the director of the Administrative 
Office of the Courts to select five District Courts to 
participate in the 10-year program. It contains provisions 
designed to ensure the continued random assignment of cases 
among the specialized courts so as to prevent the pilot 
districts from becoming magnets for forum-shopping litigants.
    The legislation also would provide the Committee and the 
courts with the opportunity to assess on a periodic basis: one, 
whether the program succeeds in developing greater expertise 
among participating District judges; two, the extent the 
program contributes to improving judicial efficiency in 
deciding these cases; and three, whether the program should be 
extended, expanded or made permanent.
    Mr. Chairman, I understand the sponsors have continued to 
work with the stakeholders on the bill and that Representative 
Issa plans to offer an amendment that contains agreed-upon 
changes. H.R. 5418 is a good bill and one that I believe 
deserves our support, Mr. Chairman. I want to thank Mr. Issa 
and Mr. Schiff again for introducing this legislation.
    Mr. Chairman, I yield back the balance of my time.
    Chairman Sensenbrenner. The gentleman from California, Mr. 
Berman, is recognized for 5 minutes for an opening statement.
    Mr. Berman. Thank you, Mr. Chairman. I am sorry I didn't 
get here to hear my Chairman's opening statement.
    Chairman Sensenbrenner. The Subcommittee Ranking Member is 
recognized.
    Mr. Conyers. No, I yield to Mr. Berman of the Subcommittee.
    Chairman Sensenbrenner. Then I will re-set the clock for 
your benefit, too.
    Mr. Berman. Thank you, Mr. Chairman.
    Let me make it quick. I think this is a very interesting 
idea that Mr. Issa has come up with. He and Mr. Schiff have 
introduced and adapted the legislation to deal with some of our 
concerns about this becoming a way of forum-shopping in terms 
of amendments that they are going to propose. It is a pilot 
program to try and enhance the quality of judicial decision-
making in complicated patent cases.
    My biggest reservation about the bill is that it is not 
part of comprehensive patent reform legislation. While I think 
this is a good idea or an interesting idea and it should be 
tried, I think the Committee's primary responsibility should 
be, and still is, marking up a comprehensive patent reform 
legislation which deals with many of the problems that now 
exist in the patent system.
    With that, I will yield back. Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Without objection, all Members' 
opening statements may be placed in the record at this point.
    Are there amendments? The gentleman from California, Mr. 
Issa?
    Mr. Issa. Mr. Chairman, I have an amendment at the desk in 
the form of a substitute.
    Chairman Sensenbrenner. The clerk will report the amendment 
in the nature of a substitute.
    The Clerk. ``Amendment in the nature of a substitute to 
H.R. 5418, offered by Mr. Issa of California and Mr. Schiff of 
California. Strike all after the enacting clause and insert the 
following''----
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read. The gentleman from California, Mr. Issa, is 
recognized for 5 minutes.
    Mr. Issa. Thank you, Mr. Chairman.
    I want to reiterate my thanks to the Chairman of the 
Subcommittee, Mr. Smith; certainly, the Ranking Member, Mr. 
Berman; and my partner in this piece of legislation, Mr. Schiff 
of California.
    This was an idea that came out of our hearings, came out of 
experience, came out of the problems we heard both from the 
industry and from District Court judges throughout the country, 
but it became a worthwhile piece of legislation through the 
cooperative effort on a bipartisan basis, and the input of 
District Court judges, of the American Intellectual Property 
Law Association, of the BIO organization, of the Business 
Software Alliance, of the California Health Care Institute, the 
Consumer Electronics Association, the Information Technology 
Industry Council, the Intellectual Property Owners Association, 
the Pharmaceutical Research and Manufacturers Association, the 
Software Information Research Association, and many, many 
others.
    So I am proud to say that this is something that got better 
as it went along. The substitutes today, the amendment in the 
form of a substitute today deals in two primary areas. One is 
that in order to ensure that this not end up being forum-
shopped or that it not end up being in small districts, the 
change will require that in order to be a member of the patent 
pilot program, you must be a district that has at least 10 
judges and at least three opting in.
    Thus, even if hypothetically all of the cases went to those 
three, you would have a 33 roughly percent, recognizing that 
there is no requirement in this legislation that bills or that 
litigation be sent to any of these judges. It would undoubtedly 
be a number lower than that, but high enough to begin to show 
us the effectiveness of this augmentation.
    Additionally, the study language was much further refined 
in order to work with the VAO on their challenges and also to 
reflect the Congress's desire to have continued jurisdiction 
over this pilot as it goes along.
    With that, Mr. Chairman, seeing that there is no, as far as 
I know, no opposition to the bill, I would simply yield back, 
while encouraging all of you to vote for it and move it along 
to the Senate.
    Mr. Chairman, today the Senate will be dropping the 
companion bill of what we pass here today.
    I yield back.
    Chairman Sensenbrenner. The Chair advises the gentleman 
from California, it is in violation of the rules to refer to 
actions in the other body, even when there are actions.
    [Laughter.]
    Mr. Issa. Noted, Mr. Chairman.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from California, Mr. Schiff, seek recognition?
    Mr. Schiff. Mr. Chairman, briefly to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Schiff. Thank you, Mr. Chairman.
    I wanted to compliment my colleague, Mr. Issa, for his work 
and leadership on this bill. I was pleased to join him because 
I think this is a worthy proposal that is narrowly drafted and 
will provide us with valuable and important insight on the 
operation of patent litigation in the Federal system.
    The pilot program is designed to enhance expertise in 
patent cases among District judges, provide District Courts 
with resources and training to reduce the error rates in patent 
cases and help reduce the high cost and lost time associated 
with patent litigation. It has broad support and we consulted 
very closely with the Administrative Office of the Federal 
Courts, the representatives of the judiciary. The discussions 
led to a number of amendments that address concerns over the 
creation of a specialized court, the need to maintain 
generalist judges, random case assignment, and other issues.
    I do join my colleague, Mr. Berman, in acknowledging that 
this does not mitigate the need to have more comprehensive 
reform, which I know we all support, but I think this is a step 
in the right direction and I urge support for the substitute.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on agreeing to the 
amendment in the nature of a substitute.
    Those in favor will say ``aye.''
    Opposed, ``no.''
    The ayes appear to have it. The ayes have it. The amendment 
in the nature of a substitute is agreed to.
    A reporting quorum is not present. We are one short of a 
reporting quorum. The Chair will instruct the staff on both 
sides of the aisle to get the dragnet out so that we can finish 
our work and be gone.
    [Intervening business.]
    Chairman Sensenbrenner. The unfinished business is the 
motion to report favorably the bill H.R. 5418, to establish a 
pilot program in certain United States District Courts to 
encourage enhancement in expertise in patent cases among 
District judges.
    The amendment in the nature of a substitute offered by Mr. 
Issa had been adopted. A reporting quorum is present. The 
question occurs on the motion to report the bill, H.R. 5418, 
favorably as amended.
    All in favor say ``aye.''
    Opposed, ``no.''
    The ayes appear to have it. The ayes have it, and the 
motion to report favorably is agreed to.
    Without objection, the bill will be reported favorably to 
the House in the form of a single amendment in the nature of a 
substitute, incorporating the amendments adopted here today.
    Without objection, the staff is directed to make any 
technical and conforming changes, then all Members will be 
given 2 days as provided by the House rules in which to submit 
additional dissenting, supplemental or minority views.
    The purpose for this markup having been completed, without 
objection, the Committee stands adjourned.
    [Whereupon, at 10:46 a.m., the Committee was adjourned.]

                                  
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