Good Faith Exception to the Imposition of Certain Fines

Floor Speech

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Mr. ISSA. Madam Speaker, I move to suspend the rules and pass the bill (S. 3960) to amend title 35, United States Code, to provide a good faith exception to the imposition of fines for false assertions and certifications, and for other purposes.

The Clerk read the title of the bill.

The text of the bill is as follows: S. 3960

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. GOOD FAITH EXCEPTION TO THE IMPOSITION OF CERTAIN FINES.

Title 35, United States Code, is amended--

(1) in section 41(j), by inserting ``, unless the entity shows that the assertion was made in good faith,'' before ``be subject''; and

(2) in section 123(f), by inserting ``, unless the entity shows that the certification was made in good faith,'' before ``be subject''.

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Mr. ISSA. 3960.

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Mr. ISSA. Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, this bill is a win for small businesses and small inventors.

Small businesses may qualify for reduced application fees when applying at the United States Patent and Trademark Office. However, under 35 U.S.C. sections 41 and 123, a small business may claim small- entity or micro-entity status. For example, the standard cost of filing a utility patent is $320. A small entity, however, pays just one-half of that, $128; and a micro entity is charged only $64.

When Congress passed the Unleashing American Innovators Act in 2023, the law required the United States Patent and Trademark Office director to impose punitive fines on entities falsely asserting or certifying entitlement to these reduced fees. This was intended to deter unscrupulous actors from claiming the benefit for which they did not qualify.

However, in that bill, we granted no exceptions under existing laws for those who made an honest error in good faith. For example, if an employee is mistakenly categorized as a contractor rather than an employee, a good-faith mistake could cause them to claim the wrong status. Or if there is a mistake in information provided by another company that is a licensee, that could also result in that.

The impact of these punitive fines would be disproportionate to the honest mistake. These harsh fines may deter entities from seeking the benefit of small- or micro-entity status since the potential cost of the fine would far outweigh the benefit.

To ensure that small businesses can get these reduced fees, in concert with the House, S. 3960 gives the USPTO director the authority to waive punitive penalties when a business demonstrates that it acted in good faith.

Madam Speaker, I urge my colleagues to support S. 3960 which will ensure that small businesses, if claiming incorrectly, have an opportunity to make right their mistake, and I reserve the balance of my time.

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Mr. ISSA. Madam Speaker, I yield myself the balance of my time for the purposes of closing.

Madam Speaker, we often get chastised in the House for not admitting our mistakes, but when a technical error could potentially lead to damages to the private sector, it is one of those areas I am proud to say that the Judiciary Committee is bipartisan and quick to recognize. In concert with the Senate, we have done so today.

Madam Speaker, I urge all Members to vote for the bill, and I yield back the balance of my time.

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