United States House of Representatives, Committee on the Judiciary
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Statement of House Judiciary Committee Chairman Bob Goodlatte
Markup of H.R. 3309, the “Innovation Act”

For Immediate Release
November 20, 2013

Contact: Kathryn Rexrode or Jessica Collins, (202) 225-3951

Statement of House Judiciary Committee Chairman Bob Goodlatte
Markup of H.R. 3309, the “Innovation Act”

Chairman Goodlatte: Today we are here to markup H.R. 3309, the “Innovation Act.” The enactment of this bill is something I consider central to U.S. competiveness, job creation, and our nation’s future economic security. 

This bill takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation.

During the last Congress we passed the America Invents Act (AIA). Many view the AIA as the most comprehensive overhaul to our patent system since the 1836 Patent Act.

However, the AIA was in many respects a prospective bill; the problems that the Innovation Act will solve are more immediate and go to the heart of current abusive patent litigation practices.

This bill builds on our efforts over the past decade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the Administration and the courts. To ensure an open, deliberative and thoughtful process, we held several hearings and issued two public discussion drafts in May and September of this year, which led to the formal introduction of the Innovation Act last month.  I strongly believe that the Innovation Act takes the necessary steps to address abusive patent litigation.

Abusive patent litigation is a drag on our economy. Everyone from independent inventors, to start-ups, to mid and large sized businesses face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital – wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies that “promote the progress of science and useful arts.”   

And that’s what innovation is really about, isn’t it? If you’re able to create something, invent something new and unique, then you should be allowed to sell your product, grow your business, hire more workers and live the American dream.

The Innovation act puts forward reasonable policies that allow for more transparency and brings fundamental fairness into the patent system and the courts.

Now the Innovation Act won’t be addressing this particular issue. But there has been a lot of misinformation surrounding how the PTO reviews certain non-technological patents. Under our WTO/TRIPS obligations we are required to provide patent protection for almost all fields of technology, but not non-technological subject matter. And so when Congress passed the America Invents Act we included a carefully crafted program that allowed the PTO to re-examine certain non-technological patents that have not been examined against the best prior art, patents that the PTO has itself identified as being the worst of the worst. And over the last 2 years, PTO has successfully implemented the program, in a manner that is in line with a plain reading of the statute, Congressional intent and Supreme Court precedent in Bilski. I thank the PTO for doing their job and reviewing patents which they believe are “more likely than not invalid” and I am confident that as their decisions are reviewed and the program continues that Congress, the Supreme Court, the Federal Circuit and the Executive Branch will support and affirm their good work.      

But that being said the Innovation Act is designed to deal with systemic issues surrounding abusive patent litigation as a whole and includes a number of provisions designed to ameliorate this significant problem.

Within the past couple years we have seen an exponential increase in the use of weak or poorly-granted patents against American businesses with the hopes of securing a quick payday. Many of these abusive practices are focused not just on larger companies but against small and medium-sized businesses as well. These suits target a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up. The patent system was never intended to be a playground for litigation extortion and frivolous claims.  

The Innovation Act contains needed reforms to address the issues that businesses of all sizes and industries face from patent troll-type behavior, while keeping in mind several key principles, including targeting abusive behavior rather than specific entities, preserving valid patent enforcement tools, preserving patent property rights, promoting invention by independents and small businesses, and strengthening the overall patent system.

Congress, the Federal Courts and the PTO must take the necessary steps to ensure that the patent system lives up to its Constitutional underpinnings. 

And let me be clear about Congress’ constitutional authority in this area. The Constitution grants Congress the power to create the federal courts and the Supreme Court has long recognized that the prescription of court procedure falls within the legislative function.

To that end, the Innovation Act includes heightened pleading standards and transparency provisions. Requiring parties to do a bit of due diligence up front before filing an infringement suit is just plain common sense. It not only reduces litigation expenses, but saves the courts’ time and resources. Greater transparency and information makes our patent system stronger.

The Innovation Act also provides for more clarity surrounding initial discovery, case management, fee shifting, joinder, the common law doctrine of customer stays, and protecting IP licenses in bankruptcy.  Further, the bill’s provisions are designed to work hand-in-hand with the procedures and practices of the Judicial Conference, including the Rules Enabling Act, and the courts, providing them with clear policy guidance while ensuring that we are not pre-determining outcomes and that the final rules and the legislation’s implementation in the courts will be both deliberative and effective.

Today in this committee, we are taking a pivotal step toward eliminating the abuses of our patent system, discouraging frivolous patent litigation and keeping U.S. patent laws up to date. The Innovation Act will help fuel the engine of American innovation and creativity, help create new jobs and grow our economy.