Patent Reform Act of 2011

Floor Speech

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Mr. COONS. Mr. President, I rise today to speak to the America Invents Act. To put it simply, this bill, the America Invents Act, is about creating jobs. It is about protecting and promoting American ingenuity and giving American ideas the opportunity to become American products. The America Invents Act is about restoring American competitiveness and leadership in our global economy.

America has been at the forefront of global innovation throughout our Nation's great history. We invented the lightning rod, the cotton gin, the mechanical reaper and thresher. Thomas Edison, perhaps the most noted American inventer, invented the electric light, electric power transmission, the motion picture camera, the phonograph, and x-ray photography. The transistor, carbon fiber, GPS, Kevlar, recombinant DNA, the personal computer, and the Internet are all American inventions as well. Even more recently, American companies have invented the iPod and the iPhone and the Segway.

Inventors in Delaware and across America are right now working on critical advances in wind turbines, fuel cell technology, and electric cars. These technical innovations and so many others have improved our standard of living and spurred job growth, giving rise to entire industries that would not have been possible without the advancements of applied science.

I believe innovation will be key to reigniting the American manufacturing sector as well.

As low-skilled jobs have moved offshore, the only solution is to create highly skilled jobs here to replace them. These jobs will be founded on American ideas and advancements.

In today's high tech world, however, the cost of innovation can be high. In my home State of Delaware, DuPont invests about $1.3 billion annually in research and development. Nationwide, according to the Organization for Economic Cooperation and Development, U.S. companies invest over $370 billion in R&D each year. In the pharmaceutical industry, which is also important to my home State, experts estimate that each new drug requires an initial investment of between $800 million and $2 billion.

Innovation is absolutely critical to the continued growth of our Nation.

Our Founding Fathers recognized that investment in innovation will not occur without a system of patent rights to allow inventors to reap the fruits of their labor, and they placed with the Congress the authority to provide for the issuance of patent rights.

Article 1, section 8, clause 8 states that Congress shall have the power:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

However complicated applied sciences were in 1836, when Congress established the forerunner to the U.S. Patent and Trademark Office, they are infinitely more complicated today. Never has PTO been more central to ensuring that the system of nationwide patents contemplated by our Founding Fathers is possible today. PTO must have clear, objective guidelines that enable an applicant to predict whether his or her application will be approved. That application process must move expeditiously. At the end of that process, when PTO issues a patent, the inventor and the industry must have confidence that the patent is of good quality and will provide good defense against future challenges.

In recent years, however, PTO has fallen short of these objectives. Today, a patent applicant must wait over 2 years before an examiner first picks up that application. Two years. At this moment, more than 700,000 applications simply sit at PTO awaiting consideration. Each one of those applications represents an idea that could create a job or 10 jobs or 100 or 1,000. If you file a patent application at PTO today, you can expect to wait just over 3 1/2 years for an initial disposition. Should PTO make an error in their examination, it would take about 3 more years to appeal it.

In a world in which startup companies depend on patents to secure venture capital and other funding, these times are just too long. While PTO Director Kappos has achieved some success and has begun to right the ship at PTO, he simply cannot accomplish acceptable reform without our action.

The America Invents Act takes a number of steps to improve the efficiency with which this country handles patents, all of them designed to make the U.S. more competitive in the global economy.

First, the America Invents Act will give PTO the tools it needs to address the unacceptably long backlog of patent applications. In February 2009, despite an increasing need for qualified patent examiners, PTO instituted a hiring freeze. PTO is a user-fee supported organization and so it should be able to pass through the costs of staffing needs to patent applicants. This bill would finally give the PTO the authority to set its own fees rather than having to wait for an act of Congress to do so.

Another source of the backlog is the issue of patent fee diversion. Currently, the fees paid by applicants for the purpose of funding the costs of patent examination can be diverted away from PTO to the Treasury without justification. Patent fee diversion cripples the ability of PTO to do its job and is essentially a tax on innovation. In the past 20 years, more than $800 million have been diverted from PTO and though in recent years almost no money has been diverted thanks to the determined leadership of my colleague, Senator Mikulski, PTO funding should never depend on shifting political fortunes. Even in times of political favor, the mere possibility of fee diversion is harmful because it robs PTO of the ability to plan with confidence that a varying workload will be matched by funding.

This bill does not currently address the issue of patent fee diversion, but that is something that I and others are working to change. Ending fee diversion is perhaps the single most effective thing that we can do to empower PTO to reduce the patent backlog over the long term. That is why I look forward to supporting Dr. COBURN's amendment, which would ensure that PTO has access to the fees that it charges, subject to continuing congressional oversight, of course.

The second thing the America Invents Act does to make the United States more competitive is to improve the predictability and accuracy of the patent examination process. By transitioning to a ``first to file'' system, this bill brings the U.S. into line with the rest of the world. Under ``first to file,'' PTO's task of determining the priority of a patent application will be more straightforward because patent priority will depend on objective, public facts, rather than on secret files. To smaller inventors who are concerned that ``first to file'' will allow large companies to beat them out in a race to the patent office, this bill contains important protections for all inventors. Even under ``first to file,'' an inventor's patent priority is protected for a year if he or she is the first to publicly disclose an invention.

Not only does the America Invents Act make the patent process fairer to inventors, but it will actually improve the quality of patents issued by the PTO by leveraging the knowledge of outside parties. This bill permits third parties to provide submissions regarding prior art before a patent is issued, enhancing the ability of examiners to determine whether an application is for a truly innovative idea worthy of the protection of a patent.

The bill takes another step toward improving patent quality by changing the way the issuance of patents can be challenged. The America Invents Act introduces a 9-month post-grant review process during which third parties can challenge a patent on any grounds. When you combine the new pre-issuance submission process and the new post-grant review process, what you get is a more rigorous and more thorough vetting of patent applications.

We will get stronger, higher quality patents because of the America Invents Act.

Chairman Leahy, along with his Republican cosponsors Senators Hatch, Kyl and Sessions, deserve enormous credit for the bill that was reported unanimously by the Judiciary committee just 4 weeks ago. The America Invents Act reflects years of hard-fought negotiations between the affected stakeholders.

At a time when bipartisanship is too frequently a platitude than actual process, it should be noted that the America Invents Act shares wide bipartisan support. Senators from both parties worked together on the bill we consider today, and both sides of the aisle should be proud of what we accomplished.

I applaud Leaders Reid and McConnell for their commitment to the open amendment process. Despite the broad agreements that have been reached so far, the Senate can and should consider suggestions to change the bill. I know that I will support Dr. Coburn's amendment on fee diversion. I also hope that the Senate will accept an amendment that I have filed which would remove the section of the bill dealing with venue.

While venue-shopping is a serious problem, the current language in the bill risks stunting the development of case law, which has begun to address the problem of plaintiffs' manufacturing venue in districts that have a reputation of being hospitable for patent suits. In fact, companies such as Oracle and HP, while they initially supported legislative reform of venue, now fear that this provision will do more harm than good. I look forward to debating all of these amendments in the future.

Let me conclude my remarks on S. 23 by renewing my call to my fellow Senators to carefully consider and support this legislation. The America Invents Act is complicated and the subject matter may seem daunting, but I believe it is critical to protecting American innovation and defending American competitiveness.

The playing field for economic innovation has never been more crowded. The United States faces rivals growing in strength and number, which is why our government should be encouraging innovation, not stifling it.

The America Invents Act will create jobs in Delaware and throughout the United States by removing some of the administrative roadblocks currently preventing inventors from becoming successful entrepreneurs. This bill will improve the speed, quality and reliability of the Patent and Trademark Office and it will ensure that America retains its place in the world as the leader of invention and innovative thinking.

I yield the floor and suggest the absence of a quorum.

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