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AMERICA INVENTS ACT
(Senate - April 25, 2013)

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[Page S3021]
                          AMERICA INVENTS ACT

  Mr. SCHUMER. Mr. President, In September of 2011 this body debated 
and passed landmark patent legislation which was subsequently signed by 
the President and is now law.
  The America Invents Act--AIA--updated, for the first time in many 
years, the way patents are issued and prosecuted, and in some instances 
the means by which businesses defend themselves against lawsuits filed 
by the ever-growing cottage industry of patent assertion entities.
  The AIA made many important improvements to our patent law. But more 
needs to be done. Even in just the short time since the bill passed, 
the problem of so-called ``patent trolls'' has continued to grow 
exponentially. In fact, patent trolls cost operating companies $29 
billion in 2011 alone. Many of these suits are the result of poor-
quality patents being asserted by highly litigious parties against 
ordinary businesses, large and small, who are left with only 
unacceptable options: pay a costly licensing fee, settle a court case 
to avoid litigation costs, or expend millions in litigation fees in 
hope of prevailing at the end of the day in court.
  This has been especially problematic in the universe of technology 
startups--a booming industry in New York in particular. These small 
businesses have everything going for them--good ideas, smart employees, 
and loyal customers. But they risk being entirely undercut by a clever 
patent troll who takes advantage of them in court. In fact, I have 
heard from businesses that actually had to fold as a result of a single 
poor-quality patent lawsuit. This is anathema not only to a pro-growth 
business culture, but also to the very principles of the intellectual 
property system.
  I believe we can address this problem, and I believe there is a clear 
and simple way to do so; in fact, we have a model in Section 18 of the 
AIA. Section 18, the Schumer-Kyl provision, established a post grant 
review by the experts at the PTO of covered business method patents--
the very patents which have been wreaking havoc in the courts and in 
boardrooms across the country. Section 18 allows a petitioner to 
request that the PTO review a covered patent and if they find it more 
likely than not to be invalid, to take a second look at it and return a 
decision promptly.
  During debate of Section 18, I took the opportunity to make clear 
that District Courts should stay proceedings in patent cases if the PTO 
is reviewing the same patents because the PTO decision regarding the 
patent's standing would prove dispositive in court and obviate the need 
for further court proceedings.
  I am pleased to note that district judges have been giving deference 
to the legislative history and that in at least 2 cases, have stayed 
their proceedings pending a PTO decision. Section 18 is not only 
providing patent holders and accused infringers with an alternative to 
court, but judges are able to better manage their dockets through the 
use of this new post-grant proceeding.
  In the approximately 6 months since the process authorized by Section 
18 began, around 20 patents have been challenged through it at the PTO. 
And those cases are being considered at the PTO in a more cost-
effective way than litigation.
  It is apparent that Section 18 is working the way we intended; the 
only problem with it is that it is too limited in two respects: first, 
it was only authorized as a temporary program and second the types of 
patents that are allowed to be considered under it are limited. For 
this reason, I will be introducing a bill when we return from recess to 
improve Section 18 by removing its temporary status and making more 
``likely invalid'' business-method patents eligible for review. I look 
forward to working with Chairman Leahy and my colleagues on the 
Judiciary Committee on legislation to improve further the patent 
granting and patent prosecution system. A great place to start is to 
make sure the experts at the PTO get a chance to review low-quality 
patents against relevant prior art so that they cannot be used as a 
weapon against legitimate business.

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