Leahy-Smith America Invents Act

Floor Speech

Mr. DURBIN. I would like to clarify an issue with my colleague from New York, who is the author of Section 18. Legislative history created during earlier consideration of this legislation makes clear that the business method patent problem that Section 18 is intended to address is fundamentally an issue of patent quality. Does the Senator agree that poor quality business method patents generally do not arise from the operation of American companies who use business method patents to develop and sell products and employ American workers in doing so?

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Mr. SCHUMER. My friend from Illinois is correct. I have previously inserted into the Record a March 3 letter from the Independent Community Bankers of America which stated that ``Under the current system, business method patents of questionable quality are used to force community banks to pay meritless settlements to entities that may have patents assigned to them, but who have invented nothing, offer no product or service and employ no one. ...... The Schumer-Kyl amendment is critical to stopping this economic harm.''

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Mr. DURBIN. I thank the Senator. I want to point out that there are a number of examples of companies that employ hundreds or thousands of American workers in developing and commercializing financial sector products that are based on business method patents. For example, some companies that possess patents categorized by the PTO as class 705 business method patents have used the patents to develop novel software tools and graphical user interfaces that have been widely commercialized and used within the electronic trading industry to implement trading and asset allocation strategies. Additionally, there are companies that possess class 705 patents which have used the patents to manufacture and commercialize novel machinery to count, sort, and authenticate currency and paper instruments. Are these the types of patents that are the target of Section 18?

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Mr. DURBIN. Madam President, I rise to speak about the Leahy-Smith America Invents Act. This is bipartisan legislation that will enhance and protect innovation in our country. I want to commend Senator Leahy, the chairman of the Judiciary Committee, for his leadership and tireless work on this bill. I also want to commend my Republican colleagues on the Judiciary Committee, particularly Senators GRASSLEY, KYL, and HATCH, who have worked diligently with Chairman Leahy in this effort to reform our patent system.

In this country, if you have a good idea for a new and useful product, you can get a patent and turn that idea into a thriving business. Millions of good American jobs are created in this way. The goals of today's legislation are to improve the operations of the Patent and Trademark Office and to help inventors in this country better protect their investments in innovation. By protecting innovations, we will help grow our economy and help businesses create jobs for American workers.

I regret that after the Senate passed a version of this legislation in March in a broadly bipartisan vote of 95-5, the House of Representatives modified the Senate-passed legislation. Not all of those changes improved the bill. Today, we voted on several amendments that responded to changes made by the House. I voted in support of an amendment that sought to strike Section 37, which the House had added to the bill. This section unnecessarily interferes with a matter that is currently being considered on appeal in the federal courts. I also voted reluctantly to table an amendment to restore the Senate-passed language regarding funding of the Patent and Trademark Office. I supported the tabling motion because of the significant risk that the bill would fail if the Senate sent it back to the House with that amendment included. It is unfortunate that disagreement between the House and Senate has prevented the PTO funding issue from being more clearly resolved in the current legislation, and I believe Congress must work diligently in the future to ensure PTO has the funding and resources it needs to effectively carry out its mission.

I also voted against an amendment relating to section 18 of the bill which creates a transitional review process for certain business method patents. I cast this vote after receiving assurances from my colleagues that the scope and application of section 18 would be appropriately constrained, as it is critically important that this section not be applied in a way that would undermine the legislation's focus on protecting legitimate innovation and job creation.

I want to note specifically that there are companies in many states, including my state of Illinois, that employ large numbers of American workers in bringing to market legitimate, novel and non-obvious products that are based on and protected by business method patents. Examples of such patent-protected products include machinery that counts, sorts or authenticates currency and paper instruments, and novel software tools and graphical user interfaces that are used by electronic trading industry workers to implement trading or asset allocation strategies. Vibrant industries have developed around the production and sale of these tangible inventions, and I appreciate that patents protecting such job-creating products are not understood to be the target of section 18.

I also note that there is an exemption in section 18 for patents for technological inventions. House Judiciary Chairman Smith provided useful clarification with respect to the scope of that exemption in the June 23, 2011, Record, stating that:

Patents for technological inventions are those patents whose novelty turns on a technological innovation over the prior art and are concerned with a technical problem which is solved with a technical solution. The technological innovation exception does not exclude a patent simply because it recites technology. Inventions related to manufacturing and machines that do not simply use known technology to accomplish a novel business process would be excluded from review under Section 18.

Section 18 would not cover patents related to the manufacture and distribution of machinery to count, sort, and authenticate currency. It is the intention of Section 18 to not review mechanical inventions related to the manufacture and distribution of machinery to count, sort and authenticate currency like change sorters and machines that scan currency whose novelty turns on a technological innovation over the prior art. These types of patents would not be eligible for review under this program.

I agree with Chairman Smith, and would note again that vibrant and job-creating industries have developed around the types of mechanical inventions he describes that deal with the counting, sorting, authentication and scanning of currency and paper instruments. I am confident that the PTO will keep this in mind as it works to craft regulations implementing the technological invention exception to section 18. I also expect the PTO to keep in mind as it crafts these regulations Congress's understanding that legitimate and job-creating technological patents such as those protecting the novel electronic trading software tools and graphical user interfaces discussed above are not the target of section 18.

Overall, I am pleased that the Congress has passed patent reform legislation with strong bipartisan support and has sent the legislation to the President's desk. It has been a long time in the making, and I again want to congratulate Chairman Leahy for his leadership and hard work on this issue.

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