KENNEDY ON THE PATENT LAW REFORM BILL

(As Prepared for Delivery)

July 19, 2007

FOR IMMEDIATE RELEASE

    The patent system is vital to innovation in our economy.  Under the Constitution, Congress has the responsibility to protect the rights of inventors in order to encourage progress in the science and the arts.  

    The legislation that we consider today represents perhaps the most sweeping reform of the patent system since the 19th century.  Its provisions would have a broad impact on the procedures and incentives that underlie the protection of intellectual property.  

    Companies, universities, non-profit organizations, and individual inventors all depend on laws that protect their discoveries, and Congress must continue to ensure that clear laws exist to adequately protect – and enforce – patent rights.  

I represent a state with diverse industries whose economy is driven by the very innovation we seek to protect and encourage with this bill.  Patents are critical to the continued success of our biotechnology, pharmaceutical, life sciences, high tech and manufacturing industries.  I’m proud that Massachusetts is a leader in innovation in all of these main fields.  

    It’s home to large high-tech companies such as EMC which employs 8,700 workers in our state.  Global companies such as Microsoft, Intel, and Verizon have a strong presence as well.  We also have a vibrant high-tech community supported by universities like MIT.  In 2006 alone, MIT obtained 121 patents and announced 523 new inventions.  Such ingenuity is a driving force in the local, national and world economy today.  

We’re also home to life sciences, biological, and pharmaceutical leaders such as Boston Scientific, Alkermes, Athena, Genzyme, the Massachusetts Biotechnology Council and Biogen, all of whom drive innovation, employ our workers, and are leaders in their fields.   We also have the strongest financial sector in New England, with the highest concentration of Financial Services Roundtable member companies, including the headquarters for Affiliated Managers Group, Fidelity Investments, John Hancock Financial Services, MassMutual Financial Group, and State Street Corporation.  

Historically, our state encourages innovators of all sizes – from some of the biggest players to some of the newest companies.  As we all know, individual inventors and innovators provide some of the most important advances in the field.

Obviously, such diversity among innovators and across industries means that there will be differing perspectives on this bill.  Legitimate concerns have been raised on all sides, but we also have to recognize that reforms are needed to modernize our patent laws.  Simpler procedures, greater transparency and greater efficiency in protecting and encouraging innovation, and reducing the costs of litigation are essential for our economy and for individual inventors and large companies alike.

We certainly do not want to pass legislation that will weaken patent protection or make patent litigation more costly and unpredictable.   Reform should be consistent with individual entrepreneurship and innovation that have been a hallmark of our economy and the engine of our unprecedented growth.

I commend Chairman Leahy for his leadership in trying to strike the right balance on these issues.

The proposed legislation implements a first-to-file provision that reduces uncertainty in protecting property and aligns our regulations with the rest of our major trading partners.  It includes a provision for extra assistance for small or “micro” entities.  Overall it means a level playing field and greater efficiency in patenting, while preserving our commitment to individual inventors.

An amazing example is the four-year-old girl from Houston Texas who invented a mechanism to help the disabled open doors and drawers.  She’s the youngest patent holder in the nation, but she has the spirit of ingenuity that our founders believed in when they wrote the Constitution.  As we reform the patent system, we need to be sure that first-time inventors can deal with the system and obtain a patent for their inventions.  

I’ve introduced an amendment to ensure that the Patent Office has the flexibility and autonomy to provide more efficient and fair treatment for patent applicants.   It will help small inventors who are not as knowledgeable as large companies about the patent process.  

Unfortunately human error causes some to unintentionally miss an occasional deadline.  Hundreds of thousands of applications are filed every year.  The Director needs the authority to accept late filings in some circumstances, but they still have to file within 30 days of the missed deadline.

Numerous deadlines must be met throughout the patent process.  They occur not only while an application is pending, but even after a patent has issued, and the patent office needs the discretion to waive them.

The legislation also modifies damage awards, to reduce instances of overcompensation to patent holders while still protecting the real value of the innovation.  This provision is particularly relevant to our high-tech constituents whose products are packed with a number of patented individual components all of which contribute to the overall value of the product.

I’ve heard from a number of Massachusetts companies that have concerns about this section of the bill and further compromise may be necessary to accommodate these concerns.

This is especially important for industries whose products are generally driven by a single patent, I’m not persuaded that we should take away the ability of the courts to apply a flexible set of factors – such as the 15 outlined in the Georgia Pacific case to determine what the appropriate remedy should be for the facts of a specific case.  

    I’m also concerned about the views expressed about the new “second window” established in the Chairman’s bill, to reduce the costs of litigation and uncertainty for patent holders.  Perhaps the establishment of a new post-grant review process for patents will provide an opportunity to hear challenges to the patent without the expensive cost of litigating in court.  I hope that the intent of this new regime will be accomplished in a manner that will provide a fair and efficient process both for patent owners – and for those challenging the patent.  An effective new procedure could reduce uncertainty in patent rights and improve the quality of patents issued the administrative procedures to accomplish this goal must be up to the task.  We shouldn’t create perverse incentives for parties to avoid this process in favor of courts or allow time-consuming and frivolous challenges that would otherwise be dismissed by courts. The Chairman has made significant steps to improve this key provision in the bill, and I hope that he will continue to work with us as we move forward.  
    
    Looking ahead, the difficulty to achieve consensus on this legislation illustrates the challenge we face in enacting legislation that serves the primary goal of encouraging innovation for all of our constituents – and diverse industries.   As I’ve said it’s a tall order, but we need a bill that is good for both small and large inventors, and that improves innovation through greater efficiency and reduced litigation costs in all our cherished industries.

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