Prepared Floor Statement of Senator Chuck Grassley

S. 23, The America Invents Act

Monday, February 28, 2011

Mr. President, at this time I want to speak in support of S. 23, the America Invents Act.  I appreciate all the hard work that Chairman Leahy, Senator Hatch, Senator Sessions, Senator Kyl and others have put into this bipartisan bill.

Over the past 5 or so years that the Senate Judiciary Committee has been considering comprehensive patent reform, Chairman Leahy has engaged Senators on both sides of the aisle as well as a wide range of groups.  His efforts have been pivotal in bringing together diverse views and crafting a reasonable compromise bill.  In fact, the bill is supported by a large number of industries and other stakeholders from the United States patent community.  I commend the leadership of Chairman Leahy, as well as the leadership of Senator Hatch, for getting us to where we are now.

Intellectual property rights are extremely important to our nation's economy.  An effective and efficient patent system will help promote innovation and technological advancements in America, and make life better for us all.  An effective and efficient patent system also will help provide a stimulus for businesses and generate new jobs.

Everyone agrees - we need a well functioning Patent and Trademark Office so that it can complete its work in a timely manner.  We should find ways to help the Patent and Trademark Office speed up the patent application process and eliminate the current backlog it is experiencing.  We should reduce costs and decrease abusive litigation, and improve certainty in the patent process and strengthen patent quality.

The America Invents Act will help do all these things.  The bipartisan bill before us will update and upgrade the United States patent system.  It will enhance transparency and patent quality.   And, it will ensure that the Patent and Trademark Office has the tools and funding to cut its backlog and process patent applications more quickly.  The improvements to the patent system contained in our bill will help spur economic prosperity and job creation.  I'm pleased to support it.

Specifically, the bill would improve patent quality by establishing the opportunity for third parties to submit prior art and other information related to a pending application for consideration by a patent examiner.  By allowing prior art to be submitted earlier in the process and explained to the Office, patent examiners will be able to issue higher quality patents.

The bill would create a "first window" post-grant opposition proceeding open for 9 months after the grant of a patent.  This would allow the Patent and Trademark Office to weed out patents that shouldn't have been issued in the first place.  This new post grant review process - which was recommended in a 2004 Report issued by the National Academy of Sciences - would enable early challenges to patents, but also protect the rights of inventors and patent owners against endless litigation.  The reason we want to ensure that the Patent and Trademark Office issues high quality patents is to incentivize investment in truly innovative technological advances and provide more certainty for investors in these inventions.

In addition, the bill would improve the current inter partes administrative process for challenging the validity of a patent.  It would establish an adversarial inter partes review, with a higher threshold for initiating a proceeding and procedural safeguards to prevent a challenger from using the process to harass patent owners.  It also would include a strengthened estoppel standard to prevent petitioners from raising in a subsequent challenge the same patent issues that

were raised or reasonably could have been raised in a prior challenge.  The bill would significantly reduce the ability to use post-grant procedures for abusive serial challenges to patents.  These new procedures would also provide faster, less costly alternatives to civil litigation to challenge patents.

The bill would institute a gate keeping role for the court to assess the legal basis for damages and jury instructions.  This would provide more certainty in damages calculation and promote uniformity and fairness.  The bill also would transition the United States to a first-inventor to file system, simplifying the application process and coordinating it with our trading partners.  This change will reduce costs and help improve the competitiveness of American inventors abroad.

Further, the bill would provide fee setting authority for the Patent Trademark Office Director to ensure that the Patent and Trademark Office is properly funded and can reduce its current backlog of patent applications.

The bill also would mandate a reduction of fees by 50% for small entities and 75% for micro-entities.

I want to particularly thank Chairman Leahy for working with me and Senator Baucus on a provision that would curtail patents on tax strategies.  These patents encumber the ability of taxpayers and their advisors to use the tax law freely, interfering with the voluntary tax compliance system.  Tax strategy patents undermine the fairness of the Federal tax system by removing from the public domain ways to satisfy a taxpayer's legal obligations.  If firms or individuals hold patents for these strategies, some taxpayers could face fees simply for complying with the tax code.  Moreover, tax patents provide windfalls to lawyers and patent holders by granting them exclusive rights to use tax loopholes, which could provide some businesses with an unfair advantage.

Our provision would ensure that all taxpayers will have equal access to strategies to comply with the tax code.

This provision was carefully drafted with the help of the Patent and Trademark Office not to cover software preparation and other software, tools or systems used to prepare tax or information returns or manage taxpayer's finances.

In conclusion, the America Invents Act will protect inventors' rights and encourage innovation and investment in our economy.  The bill will improve transparency and third party participation in the patent application review process.  This, in turn, will strengthen patent quality and result in more fairness for both patent holders and patent challengers.  The bill will institute beneficial changes to the patent process to curb litigation abuses and improve certainty for investors and innovators.  It will help companies do business more efficiently on an international basis.

The bill also will enhance operations of the Patent and Trademark Office with administrative reforms and will give the Office fee setting authority to reduce backlogs and better manage its business.

I'm pleased to support this hard fought bipartisan legislation, and I urge my colleagues to support it as well.



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