U.S. GOVERNMENT PUBLISHING OFFICE

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S. HRG. 114–899 

S.1137, THE ‘‘PATENT ACT’’—FINDING 

EFFECTIVE SOLUTIONS TO ADDRESS 

ABUSIVE PATENT PRACTICES 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 7, 2015 

Serial No. J–114–16 

Printed for the use of the Committee on the Judiciary 

( 

www.judiciary.senate.gov 

www.govinfo.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

CHARLES E. GRASSLEY, Iowa, Chairman 

ORRIN G. HATCH, Utah 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TED CRUZ, Texas 

JEFF FLAKE, Arizona 

DAVID VITTER, Louisiana 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

PATRICK J. LEAHY, Vermont, Ranking 

Member 

DIANNE FEINSTEIN, California 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

KOLAN L. DAVIS, Majority Staff Director 

KRISTINE LUCIUS, Minority Staff Director 
(III) 

C O N T E N T S 

MAY 7, 2015, 9:34 A.M. 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa ..................... 1 

prepared statement .......................................................................................... 125 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 3 

prepared statement .......................................................................................... 127 

WITNESSES 

Witness List ............................................................................................................. 47 

Chandler, Mark, senior vice president and general counsel for Cisco ................ 6 

prepared statement .......................................................................................... 48 

Hadad, Henry, senior vice president and deputy general counsel-intellectual 

property for Myers Squibb ................................................................................... 11 

prepared statement .......................................................................................... 63 

Lettelleir, Diane, senior managing counsel of litigation at J.C. Penney ............. 10 

prepared statement .......................................................................................... 76 

Rhodes, Kevin H., vice president and chief intellectual property counsel for 

3M Company, St. Paul, Minnesota ..................................................................... 8 

prepared statement .......................................................................................... 82 

Samuels, Julie, executive director and president of the board at Engine .......... 13 

prepared statement .......................................................................................... 116 

QUESTIONS 

Questions submitted to Mark Chandler by: 

Senator Grassley .............................................................................................. 129 

Questions submitted to Kevin Rhodes by: 

Senator Grassley .............................................................................................. 129 

Questions submitted to Diane K. Lettelleir by: 

Senator Grassley .............................................................................................. 130 

Questions submitted to Henry Hadad by: 

Senator Grassley .............................................................................................. 130 

Questions submitted to Julie P. Samuels by: 

Senator Grassley .............................................................................................. 130 

Questions submitted to Mark Chandler by: 

Senator Grassley .............................................................................................. 129 

ANSWERS 

Responses of Mark Chandler to questions submitted by: 

Senator Grassley .............................................................................................. 131 

Responses of Henry Hadad to questions submitted by: 

Senator Grassley .............................................................................................. 133 

Responses of Diane Lettelleir to questions submitted by: 

Senator Grassley .............................................................................................. 135 

Responses of Kevin Rhodes to questions submitted by: 

Senator Grassley .............................................................................................. 138 
Page

IV 

Responses of Julie Samuels to questions submitted by: 

Senator Grassley .............................................................................................. 144 

MISCELLANEOUS SUBMISSIONS FOR THE RECORD 

Submitted by Senator Grassley’s Office: 

Letter from Federal Circuit Bar Association dated April 13, 2015 .............. 149 

R Street letter dated April 29, 2015 ............................................................... 150 

Google letter dated April 29, 2015 .................................................................. 151 

JCPenny letter dated April 29, 2015 .............................................................. 153 

The Latino Coalition letter dated April 29, 2015 ........................................... 155 

National Association of Realtors letter dated April 29, 2015 ....................... 157 

National Council of Chain Restaurants (NCCR) letter dated April 29, 

2015 ................................................................................................................ 159 

National Restaurant Association letter dated April 29, 2015 ....................... 161 

NRF, The Voice of Retail letter dated April 29, 2015 ................................... 162 

Oracle Letter dated April 29, 2015 ................................................................. 164 

Redhat letter dated April 29, 2015 ................................................................. 166 

Samsung Electronics America, Inc. letter dated April 29, 2015 ................... 167 

SAS, The Power to Know letter dated April 29, 2015 ................................... 168 

Sprint letter dated April 29, 2015 ................................................................... 169 

Verizon News Release dated April 29, 2015 ................................................... 170 

Adobe Letter from Dana Rao dated April 29, 2015 ....................................... 172 

American Gaming Association (AGA) letter dated April 29, 2015 ............... 173 

Application Developers Alliance from Sarah Elliot dated April 29, 2015 .... 174 

Competitive Carriers Assocation (CCA) letter dated April 29, 2015 ............ 175 

Consumer Electronics Association (CEA) letter dated April 29, 2015 ......... 176 

Cisco letter dated April 29, 2015 ..................................................................... 178 

American Hotel and Lodging Association (AHLA) letter dated April 29, 

2015 ................................................................................................................ 179 

Intuit letter dated April 29, 2015 .................................................................... 182 

Coalition for Patent Fairness letter dated April 29, 2015 ............................ 183 

Microsoft letter from Kathryn Stack dated April 29, 2015 ........................... 184 

SAS Letter from John G. Bowell dated April 29, 2015 ................................. 185 

Computer & Communications Industry Aassocation (ccia) letter dated 

April 29, 2015 ................................................................................................ 186 

Biotechnology Industry Organization letter from George Goodno dated 

April 29, 2015 ................................................................................................ 187 

The Coalition for 21st Century Patent Reform letter from Brian Walsh 

dated April 29, 2015 ..................................................................................... 189 

United for Patent Reform letter dated April 29, 2015 .................................. 191 

America Trucking Association letter from Dave Osiecki dated April 30, 

2015 ................................................................................................................ 195 

Tyco letter from Judith A. Reinsdorf dated April 30, 2015 ........................... 197 

Food Marketing Institute letter dated April 30, 2015 ................................... 199 

Global Automakers letter dated April 30, 2015 ............................................. 200 

Internet Association letter dated May 1, 2015 ............................................... 202 

Merick Sharp & Dohme Corp. letter from William Krovatin dated May 

4, 2015 ............................................................................................................ 203 

National Association of Broadcasters (NAB) letter dated May 4, 2015 ....... 204 

International Trademark Association letter dated May 5, 2015 .................. 205 

Whataburger letter dated May 5, 2015 .......................................................... 206 

National Association of Convenience Stores (NACS) letter dated May 

6, 2015 ............................................................................................................ 208 

National Association of Home Builders letter dated May 6, 2015 ............... 210 

The Pharmaceutical Research and Manufacturers of America (PhRMA) 

letter from Charles M. Clapton dated May 6, 2015 ................................... 212 

Rackspace letter dated May 7, 2015 ............................................................... 213 

Sabre letter dated May 7, 2015 ....................................................................... 214 

SIIA letter dated May 7, 2015 ......................................................................... 215 

Statement for the Record by financial institutions dated May 7, 2015 ....... 216 

NRF, The Voice of Retail dated May 7, 2015 ................................................. 224 

Dell Applauds Senate PATENT Act ................................................................ 232 

Engine Statement of Engine Executive Director Julie Samuels re: Introduction of the PATENT Act ......................................................................... 233 

ETA Electronic Transactions Association letter dated April 29, 2015 ......... 234 
Page

V 

Submitted by Senator Grassley’s Office—Continued 

Facebook Supports PATENT Act .................................................................... 235 

Higher Education Asspcoatopm Statement dated April 30, 2015 ................ 236 

Letter from various institutions dated May 13, 2015 .................................... 237 

Statement by Dick O’Brien .............................................................................. 239 

Submitted by Senator Coon’s Office: 

Key Provisions Chart dated March 23, 2015 ................................................. 146 

National Venture Capital Association Letter dated May 7, 2015 ................ 147 

(1) 

S.1137, THE ‘‘PATENT ACT’’—FINDING 

EFFECTIVE SOLUTIONS TO ADDRESS 

ABUSIVE PATENT PRACTICES 

THURSDAY, MAY 7, 2015 

U.S. SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:34 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Charles E. Grassley, 

Chairman of the Committee, presiding. 

Present: Senators Grassley, Hatch, Cornyn, Lee, Flake, Perdue, 

Tillis, Leahy, Feinstein, Schumer, Durbin, Whitehouse, Klobuchar, 

Franken, Coons, and Blumenthal. 

OPENING STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. 

SENATOR FROM THE STATE OF IOWA 

Chairman GRASSLEY. Before I and Senator Leahy give our opening statements, we have a vote at 10:30, and this is such an important hearing that I hope that we can keep the meeting going by 

people going over and voting. Even though I am not here and, in 

fact, even if just the Democrats here, I hope you would feel free to 

go ahead and take use of the time in your turn to ask questions 

if I am not here. 

Senator SCHUMER. Can we move to change staff allocations? 

[Laughter.] 

Chairman GRASSLEY. I want to go even further than you. We 

want to make sure that that does not happen January 5, 2017. 

[Laughter.] 

Senator DURBIN. I understand your concern. 

Senator LEAHY. I am staying out of this one. 

Senator WHITEHOUSE. I would like to get involved. 

Chairman GRASSLEY. Just on a gentleman’s agreement, keep the 

questions going when we are voting. 

Good morning. We are here to discuss the problem of abusive 

patent practices and the solutions offered by the PATENT Act. 

Abusive patent litigation is having a serious impact on small companies, innovators, manufacturers, Main Street businesses, hightech firms, and consumers. The patent troll problem is being felt 

across every sector of the economy, from small town Iowa to Silicon 

Valley. It is critical that we enact reforms to prevent this from further stifling the innovation and entrepreneurship that our patent 

system is designed to protect. 
2 

The volume of abusive patent litigation has exploded in recent 

years. By some accounts it is costing the U.S. economy upwards of 

$80 billion annually. Bad actors are exploiting the high costs of 

patent litigation and using deceptive tactics to prey on businesses. 

Last week, several of us on the Judiciary Committee introduced 

the bipartisan PATENT Act. Since the process started in the last 

Congress, we have engaged stakeholders that have been targeted 

by patent abuse. In addition, we have sought to be responsive to 

concerns raised by other industries and constituencies. Because of 

this, we have made significant progress. As I have maintained from 

day one, patent holders have a very legitimate right to enforce 

their patents against infringement. Our efforts must strike the 

right balance. 

As a result of these efforts, the PATENT Act has received a tremendous positive response. The bill has the support of groups as 

diverse as hotels, retailers, tech companies, realtors, automakers, 

broadcasters, homebuilders, and restaurants. Further, other stakeholders such as the associations representing higher education and 

universities, the Coalition for 21st Century Patent Reform, and Biotechnology Industry Organization have recognized our commitment 

to finding effective solutions that do not produce unintended consequences or impinge upon the ability of good-faith actors to enforce patent rights. I ask unanimous consent to put several letters 

and statements in the record in support of the bill. 

[The letters follow as submissions for the record] 

Chairman GRASSLEY. The PATENT Act deters abusive litigation 

through a series of targeted reforms. I would like to state briefly 

some of the key provisions. The PATENT Act establishes clear uniform pleading standards in patent infringement lawsuits and gives 

defendants clear notice of the claims against them. It increases 

transparency of the parties bringing lawsuits. 

It places standards on demand letters and clarifies that the widespread sending of deceptive demand letters are covered by Section 

5 of the FTC Act. The bill also allows manufacturers—rather than 

end users—to litigate cases in order to protect consumers—customers who are targeted for patent infringement just because they 

buy a product off the shelf. 

Further, the bill deters frivolous suits and abusive litigation 

practices by allowing the award of attorney fees if a court determines that the position or conduct of a non-prevailing party that 

was not—was not objectively reasonable. It creates a mechanism 

for a court to recover fees where an abusive litigant is judgmentproof. Finally, in order to deal with the asymmetries in discovery 

burdens and litigation costs, the bill requires courts to stay discovery pending the resolution of certain preliminary motions such 

as dismissal or transfer venue. 

Because of the wide-ranging positive reactions to the PATENT 

Act, I am comfortable with where we are on the language contained 

in the bill. However, I am also aware of concerns about processes 

at the Patent and Trademark Office that have been recently raised 

by patent holders. They worry that administrative proceedings created by the America Invents Act—the inter partes review and postgrant review proceedings—are being abused and are stacked 

against patent holders. Other stakeholders, however, are of the 
3 

view that these new proceedings have been very effective at weeding out weak patents. 

I am committed to looking at these concerns, determining whether they are valid or not, and working with my colleagues, particularly all the cosponsors, to see what can be done to improve this 

process. 

We will be hearing from witnesses on where they stand on these 

proceedings, so we will be able to evaluate what should and can be 

done to ensure that they are fair to all parties. 

As we move forward with this legislation, it is important that we 

continue the collaborative process that has characterized its created—creation and best represented by the cooperation of the cosponsors of the bill. Again, I thank my colleagues for their dedication and constructive engagement on this bill. 

It is my friend Senator Leahy’s turn. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Senator LEAHY. Thank you, Mr. Chairman. 

Last week, we had seven bipartisan members of this Committee 

that came together, and we introduced legislation to address abusive [Video stopped as this point] conduct in our patent system. 

[Video started back up] We have been working on this issue for almost 2 years. Senator Lee and I introduced bipartisan legislation 

in the fall of 2013 that has been included in this package. Last 

Congress, Senators Cornyn and yourself and Senator Hatch and 

Senator Schumer and Senator Feinstein all had individual bills. 

Senator Klobuchar had her views. After long negotiations, we 

brought people together, and I think we have crafted a strong and 

fair compromise that will address abusive conduct while preserving 

the strength of our patent system, and I think legislation is needed. 

I hear this—I am home a number of times every month, and we 

are a small State and everybody knows everybody else. Just walking around the small businesses in Vermont, I hear what they have 

been threatened with. It is the same every Senator has, how they 

have been threatened with patent suits simply for using equipment 

they purchased off-the-shelf. Website owners have faced costly litigation for using basic software in e-commerce. Predatory conduct 

that takes advantage of the complexity of patent law does not serve 

the important goal for which our patent system was intended. It 

was intended to advance science and the useful arts. 

Writing legislation that involves our patent system requires care 

and balance. It can be a Rubik’s Cube. Congress spent years and 

years developing what ultimately became the Leahy-Smith America 

Invents Act of 2011. Throughout our negotiations on this patent 

abuse bill—and I see a number of the people that we have worked 

with on the Leahy-Smith bill and now worked on this bill—I have 

emphasized the need to work with manufacturers, universities, and 

other patent holders to ensure we get the right balance. The administration—in fact, a number of those groups have written to 

this Committee to welcome the changes we made in the Senate bill. 

The administration has praised this legislation. Yesterday, the 

New York Times Editorial Board came out in support of the bill. 
4 

As the legislation heads to markup, we should continue to work 

on reasonable amendments—reasonable amendments—to improve 

the bill. Some have raised concerns about unfair practices that are 

taking place in the post-grant review proceedings at the Patent and 

Trademark Office. I think we should look at that. Those proceedings are an important tool to improve patent quality, but if 

they are being misused, then let us address it. We are already 

working on those ideas, and I think we will discuss them today. 

Our patent system is a wonderful thing to have, and bad actors 

that use abusive practices, they discredit it. No one’s interest that 

they continue. Let us act on behalf of Main Street and the patent 

system alike. 

I welcome the witnesses that are here. Mr. Chairman, I thank 

you for having this hearing. I think it is extremely important. 

Chairman GRASSLEY. I thank you for your cooperation through 

all the weeks of negotiation on this bill. 

Senator LEAHY. There have been a lot of them. 

Chairman GRASSLEY. Yes. I am going to call on Senator Klobuchar because we have a Minnesota person here, but remember, 

this Minnesota person was born in Iowa. 

[Laughter.] 

Senator KLOBUCHAR. All right. Let me begin. Mr. Kevin Rhodes 

was born in Iowa, but there is just a little bit more to his resume, 

but really maybe I need to say nothing else. He is actually the vice 

president and the chief intellectual property counsel of 3M Company. Senator Franken and I are very proud of that company, and 

I think that their work is very—— 

Senator FRANKEN. What do the three M’s stand for? 

Senator KLOBUCHAR. Minnesota Mining and Manufacturing. 

Thank you. It is a company that has so many patents that it actually has more patents than it has employees, and it has a lot of 

employees. We like to say that it has a patent for every employee. 

They care very much about the topic today. 

Kevin is responsible for managing the global intellectual property 

assets of 3M Company and its worldwide affiliates. He serves as 

the chairman of the Steering Committee of the Coalition for 21st

Century Patent Reform. He is a member of the Board of Directors 

of the American Intellectual Property Law Association. He also 

serves on the Executive Committee of the Association of Corporate 

Patent Counsel. 

He has used his expertise as well as the expertise of all of the 

patent holder companies that are involved in 21st Century Patent 

Reform to make significant and constructive changes to this bill, 

and I just want to thank Senator Grassley, Senator Leahy, Senator 

Cornyn, Senator Schumer, Senator Hatch, and Senator Lee. We 

have all worked together to make this bill a balance—and we know 

that people will have different views on it, but a balance of not only 

going after the patent trolls and the lawsuits, but also making sure 

that we have made some changes to the bill that allow companies 

like 3M that have to assert their rights to protect patents to be 

able to continue to do that. 

I want to thank him for his constructive work, and thank you, 

Mr. Chairman. 

Chairman GRASSLEY. I am glad to do it. 
5 

Before I introduce the other people, I want to inform my colleagues from Minnesota that one of the reasons I am voting for 

Trade Promotion Authority is because the Knoxville plant of 3M 

exports about 40 percent of their product. 

Our first witness is Mark Chandler, senior vice president and 

general counsel, Cisco. Mr. Chandler joined Cisco in 1996 upon acquisition of StrataCom, Inc., where he had been general counsel. 

Prior to working at StrataCom, he worked as vice president of corporate development and general counsel of Maxtor Corporate, a 

manufacturer of hard disk drives. In 2010, the National Law Journal named Mr. Chandler one of the 40 Most Influential Lawyers 

of the Decade. In 2013, American Lawyer numbered him among 

the ‘‘Top 50 Big Law Innovators of the Last 50 Years.’’ Mr. Chandler holds a bachelor’s degree in economics summa cum laude from 

Harvard College and a juris doctor from Stanford Law School. 

I am going to pass over for obvious reasons Mr. Rhodes. 

Third on our panel is Diane Lettelleir, who is senior managing 

counsel—litigation at J.C. Penney, where she is responsible for all 

patent litigation matters. Prior to joining J.C. Penney, Ms. 

Lettelleir was a shareholder at Winstead PC, Dallas, and a member of the Intellectual Property and Commercial Litigation Practice 

Group. Ms. Lettelleir’s litigation experience includes complex patent, copyright, and trademark matters, including patent infringement, patent invalidity, copyright infringement, copyright in violation of technical—technology licensing agreements. She holds a 

bachelor’s degree from Indiana State University magna cum laude 

and a juris doctorate from Southern Methodist Dedman School of 

Law. 

Henry Hadad is senior vice president and deputy general counsel 

intellectual property, Bristol Squibb-Myers Squibb, where he is responsible for all aspects of patent and trademark procurement, 

counseling, litigation, and even policy. Mr. Hadad previously held 

positions as vice president and associate general counsel at Schering-Plough Corporation where he was chief IP counsel until 2009. 

Immediately prior to joining BMS in 2011, he was associate patent 

counsel at Johnson & Johnson. He is a member of the Board of Directors of the Intellectual Property Owners Association, American 

Intellectual Property Law Association Education Foundation. He 

holds a bachelor of science in biology from Haverford College and 

a juris doctor cum laude from American University Washington 

College of Law. 

Our fifth witness is Julie Samuels who is executive director and 

president of the board at Engine, a nonprofit focused on technology 

entrepreneurship and giving startups a seat at the table of policy 

debates. Ms. Samuels is a frequent commentator on technology and 

policy issues for national media, particularly the intellectual property space, and she has filed briefs with the Supreme Court and 

has testified before Congress. Ms. Samuels came to Engine by way 

of the Electronic Frontier Foundation, where she was senior staff 

attorney and Mark Cuban Chair to Eliminate Stupid Patents. That 

is what it says here. 

[Laughter.] 

Chairman GRASSLEY. I think I will stop there. 

[Laughter.] 
6 

Senator LEAHY. Tell us what is really on your mind. 

Chairman GRASSLEY. We will go left to right here. Start, Mr. 

Chandler. Then we will wait until everybody has testified before we 

have questions. 

STATEMENT OF MARK CHANDLER, SENIOR VICE PRESIDENT 

AND GENERAL COUNSEL, CISCO SYSTEMS INC., WASHINGTON, DC. 

Mr. CHANDLER. Mr. Chairman, Ranking Member Leahy, and 

members of the Committee, at Cisco we have over 25,000 engineers 

who have obtained over 12,000 U.S. patents—— 

Senator LEAHY. Is his microphone on? 

Chairman GRASSLEY. Is your microphone on? Is the red light on? 

Mr. CHANDLER. I have a red-green—— 

[Laughter.] 

Mr. CHANDLER. There we go. OK. Thank you. Sorry about that. 

Senator LEAHY. We get things done technically here. [Laughter.] 

With our low-tech machines. 

Senator KLOBUCHAR. Yes, just a little 3M technology over there. 

[Laughter.] 

Mr. CHANDLER. Chairman Grassley, Ranking Member Leahy, 

members of the Committee, at Cisco we have over 25,000 engineers 

who have obtained over 12,000 U.S. patents who are working hard 

to extend and secure the Internet. Our coalition, United for Patent 

Reform, includes thousands of companies in the automotive, retail, 

hospitality, and other industries. 

Mr. Chairman, Ranking Member Leahy, Senators Hatch, Klobuchar, and Lee—and I would like to thank Senator Cornyn and 

Senator Schumer as well—thank you for introducing the PATENT 

Act. You are addressing a fundamental systemic imbalance that is 

simple to illustrate. Last year, over 4,400 patent suits were filed, 

the third highest in history, and almost double the number 10 

years ago, with the pace rising this year. Sixty-three percent of 

those, or about 3,000, came from entities who do not make any 

product but seek only the reward of litigation gamesmanship, compared to only 20 percent of suits 10 years ago, a rate of about 400 

or 500 a year 10 years ago up to about 3,000 now. An astounding 

40 percent of the suits last year were filed in only two judicial districts, where less than 1.5 percent of Americans live. 

When plaintiffs and defendants pervasively believe, rightly or 

wrongly, that judicial results depend on where an action is 

brought, fundamental precepts of legal integrity and consistency of 

legal application are endangered. 

Behind these dry statistics, of course, are stories of abuse. In one 

recent case, a lawyer bought semiconductor patents related to WiFi that were close to expiration and set up a company he cynically 

called ‘‘Innovatio.’’ These standard-essential patents had previously 

been heavily licensed to other chip companies, so the majority of 

Wi-Fi devices did not need any new license at all. Innovatio and 

the Niro law firm sent over 14,000 letters to small businesses ranging from cafes to bakeries to children’s health clinics, anyone they 

thought might use Wi-Fi. They did not tell them that most devices 

were already licensed but demanded $2,000 to $3,000 per location. 

They did not tell the victims that Cisco had intervened to protect 
7 

its customers but, rather, told them that equipment manufacturers 

had not stepped in. 

They planned to extract $4 billion from the productive part of the 

American economy. Before we stopped them, they collected several 

million. We, with other companies, litigated aggressively, and a 

judge determined that the patents were, in fact, worth 3.2 cents 

per chip for the ones that were not licensed already. We got the 

right result, but we had to pay $13 million in legal fees to get 

there. 

This issue is hard because, while our cause is just—and who 

comes here to testify without saying that—the concerns of those 

who do not yet support the PATENT Act are also understandable. 

Both sides suffer from abuse. Yes, I am outraged by those who 

game the patent litigation system, forcing Cisco alone to spend a 

quarter of a billion dollars in the last decade on legal fees for cases 

that never should have been brought, or who shake down small 

businesses with misleading demand letters. I am equally outraged 

by the activity of hedge funds, often the same people who bring the 

suits against us, who use the inter partes review system to throw 

doubt on the legitimacy of innovative companies’ hard-won patents 

in order to short the stocks and make a quick buck. 

How do we get to yes? We can fix the problem by ensuring that 

patents that never should have been granted are invalidated by 

giving more transparency to the process and by limiting extortion 

litigation games that artificially raise costs. 

As to bad patents, while everyone supports patent quality, few 

raise their hands to have their own bad patents invalidated. Patent 

rights are not inalienable natural rights endowed by the Creator 

like life, liberty, and pursuit of happiness. They are a Governmentcreated tool designed, as our Constitution says, for an industrial 

policy purpose, to promote progress in science and the useful arts. 

They allow the patent holder to exclude from the market even 

those who innocently and independently arrive at similar results. 

For every entrepreneur who is given a monopoly right in order to 

promote innovation, others are precluded from exercising their 

God-given talents. 

I do urge you to directly address, such as through securities laws, 

the issue of the hedge funds I referred to. This legitimate issue 

should not be used to justify unrelated steps making it harder to 

invalidate bad patents like the misguided STRONG Act proposes to 

do. The IPR and covered business method programs, while limited 

in scope, are effective because they provide a consistent mechanism 

for review. 

Second, we support transparency efforts reflected in the heightened pleading standards and disclosure of true interests behind 

litigation, and we support ensuring that those benefiting from patent litigation cannot hide behind shell entities in egregious cases 

where attorneys’ fees are imposed. 

Third, the PATENT Act helps address procedural abuse. Provisions on pleading, customer stay, and fee shifting are strong steps 

in the right direction. We would prefer to have an absolute stay of 

discovery before the Markman ruling, understand the concerns of 

other industries, but we think tightening the venue rules and the 
8 

transfer rules and limiting discovery further prior to transfer would 

ameliorate our concerns. 

Thank you again for the opportunity to appear today and for 

your efforts to fix a national problem that each year sucks billions 

of dollars from the inventive and productive parts of our economy. 

[The prepared statement of Mr. Chandler follows as a submission 

for the record] 

Chairman GRASSLEY. Thank you, Mr. Chandler, for keeping 

within the time limit. 

Now, Mr. Rhodes. 

STATEMENT OF KEVIN H. RHODES, VICE PRESIDENT AND 

CHIEF INTELLECTUAL PROPERTY COUNSEL, 3M COMPANY, 

ST. PAUL, MINNESOTA 

Mr. RHODES. Chairman Grassley, Ranking Member Leahy, members of the Committee, thank you for the opportunity to testify here 

this morning, and thank you, Senator Klobuchar, for that very kind 

introduction this morning. 

Because of the longstanding importance of the patent system to 

3M and other member companies of the Coalition for 21st Century 

Patent Reform, we have been engaged with members of this Committee and your terrific staffs and many other stakeholders for 

years in discussions of patent law and policy. We bring a balanced 

perspective to these issues as 3M, like other 21C member companies, has diverse business interests in several industry segments, 

and we litigate patent disputes as both a plaintiff and as a defendant. We thus support measure reforms to curb the patent litigation 

abuses that undeniably do exist today, but balanced against the 

need to ensure that the ability of all patent owners to enforce their 

rights against infringers is not unduly undermined by unbalanced 

or overly broad reactions to litigation abuses by some patent owners. That is the elusive balance that we have been seeking in the 

patent reform legislation that was proposed last year and in this 

Congress, and we very much appreciate the opportunity to continue 

this dialog today. 

21C congratulates Chairman Grassley, Ranking Member Leahy, 

and the other cosponsors—Senators Cornyn, Schumer, Hatch, Klobuchar, and Lee—on the introduction of the PATENT Act. We do 

believe that the bill represents a significant, thoughtful, and constructive contribution to the patent reform effort. 

I will be pleased to explain further this morning, we appreciate 

that the language of the bill reflects a number of welcome compromises on such litigation issues as the way it balances pleadings 

and early disclosures, the customer stay, the stay of discovery 

pending early motion practice, calling upon the expertise of the Judicial Conference to develop in-court discovery and case management procedures for patent cases, and fee shifting and making sure 

that fees are recoverable against parties who ought to be paying 

them, as well as non-parties. 

21C does not believe that the PATENT ACT is ready to be reported out of this Committee just yet. The job of patent reform is 

not yet done. In our view, meaningful patent reform legislation 

must also include provisions to ensure that the so-called AIA review proceedings, the IPR and PGR proceedings that were ref-
9 

erenced in Senators Grassley’ and Leahy’s opening remarks, are 

balanced and fair to patent challengers and patent owners alike. 

We ask this Committee to prioritize reforms of these AIA review 

proceedings equally with litigation reforms. 

Let me be clear: AIA reviews are critical elements in the overall 

framework of a properly functioning patent system. They serve an 

essential role in providing faster and less expensive alternatives to 

litigation to determine the validity of issued patents. That is why 

we supported their creation in the first place in the Leahy-Smith 

America Invents Act. They should be conducted in a manner that 

is equitable to all participants, not so skewed against patent owners that they invite gamesmanship and abuse, which regrettably is 

the case today. I look forward to discussing this morning some common-sense changes to the way AIA reviews are handled that will 

address the concerns without undermining their effectiveness. 

It is a Rubik’s Cube, as Senator Leahy said this morning. There 

are a lot of moving parts. What we would propose is a comprehensive set of reforms that gets at these issues: 

First, reforming the procedures used when the PTO is considering petitions to institute reviews, to level the playing field in that 

process. 

Second, allowing patent owners to have issues raised in review 

proceedings first considered in reissue or reexamination proceedings where they can amend the claim and BRI is appropriate 

in that examination, and that would take place prior to IPR or 

PGR review. 

Third, applying the same standards in reviews that do take place 

then as are applied in court, including claim construction, burden 

of proof, and presumptions. 

As Mr. Chandler said just a minute ago, the validity of patents 

ought not to—or how patents are litigated ought not to depend on 

the court. The validity of patents ought not to depend on where it 

is determined either. These are intended to be faster, cheaper alternatives to district court litigation. They ought to apply the same 

standards and get generally the same results. 

These reforms will achieve increased fairness, balance, and consistency in adjudications of patent validity in PTO and in the 

courts. By addressing the questions and uncertainty that now exist 

concerning these reviews, Congress can reassure the innovation 

community that our patents can be relied upon to protect and support the investments in research, development, commercialization, 

technology transfer, and collaboration that are so essential to future innovation. 

As always, I, 3M, and 21C remain committed to working with 

members of this Committee, their staffs, and other stakeholders to 

couple the provisions in the PATENT Act as introduced with provisions to restore balance and fairness in AIA reviews. We look forward to lending our strong support for a bill that addresses both 

patent litigation and AIA review proceedings in an effective, balanced, and comprehensive fashion. 

I will be pleased to answer any questions or supply any additional information for the record today. Thank you very much. 

[The prepared statement of Mr. Rhodes follows as a submission 

for the record] 
10 

Chairman GRASSLEY. Thank you, Mr. Rhodes. 

Now, Ms. Lettelleir. 

STATEMENT OF DIANE K. LETTELLEIR, SENIOR MANAGING 

COUNSEL-LITIGATION, J.C. PENNEY CORPORATION, INC., 

PLANO, TEXAS 

Ms. LETTELLEIR. Chairman Grassley, Ranking Member Leahy, 

and members of the Judiciary Committee, I am Diane Lettelleir, 

senior managing counsel of litigation for J.C. Penney Corporation. 

I want to thank you for the opportunity to testify today about the 

devastating impact of abusive patent litigation on J.C. Penney. It 

is an honor to present the company’s perspective, and I can assure 

you that our views are shared by many other Main Street businesses around the country, including other retailers, grocers, homebuilders, convenience stores, advertisers, restaurants, realtors, and 

hoteliers. 

On behalf of J.C. Penney, I also want to thank the bipartisan 

sponsors of the PATENT Act for their commitment to tackling this 

very important issue. This legislation will make great strides toward addressing the abusive patent litigation facing J.C. Penney 

and other Main Street businesses. 

In 1902, James Cash Penney opened his first store in Wyoming. 

Since that humble beginning, J.C. Penney has grown to be one of 

the Nation’s largest retailers. Today J.C. Penney has over 1,000 

stores employing approximately 114,000 associates across 49 States 

and Puerto Rico. 

J.C. Penney’s business model is simple, but we use a complex 

array of technologies to enhance our customers’ shopping experience. J.C. Penney, like countless other Main Street businesses, has 

been ravaged by the exponential growth and aggressiveness of patent troll industries. 

While abusive patents initially targeted the high-tech industry, 

they expanded their focus to include Main Street businesses. In 

fact, in 2012, for the first time, non-practicing entities reportedly 

sued more Main Street companies than technology companies. The 

motivation for this strategy is easy to understand. Main Street 

businesses that only use technology are easy prey because they 

often lack the technical or legal expertise to fight patent infringement claims. Abusive patentees take advantage of these weaknesses and strategically offer settlements at a level set below the 

cost of defense. Faced with this calculus, many Main Street businesses have little choice but to pay. 

J.C. Penney’s experience provides a framework for understanding 

why this legislation is so important to Main Street businesses. J.C. 

Penney has been a defendant in 30 non-practicing entity lawsuits 

just in the last 6 years. In addition, J.C. Penney received countless 

threatening demand letters demanding settlements for what we 

consider to be very weak patents or invalid patents. None of these 

NPE lawsuits or demand letters relates to items we sell; every 

claim relates to the technology we use to operate. NPEs frequently 

seek tens of millions of dollars in damages in these cases. 

J.C. Penney agrees that innovation and the U.S. patent system 

are important to the U.S. economy, and J.C. Penney respects the 

intellectual property rights of others. While patent protection and 
11 

the right of enforcement are important components of the innovation ecosystem, so, too, is the adoption of innovation. Innovation 

without the opportunity for commercial adoption does not lead to 

economic growth or further innovation. The current patent infringement litigation environment is undercutting the opportunity 

for Main Street businesses to adopt innovation. 

In parallel to the direct costs of patent infringement allegations, 

the steady stream of claims has disrupted J.C. Penney’s adoption 

of innovation offered by small businesses. The disruption manifests 

itself in two ways. First, J.C. Penney knows that by adopting new 

technology, it becomes a target for abusive patent litigation. Second, the small technology company itself becomes a target by virtue 

of its efforts to commercialize its innovation. In both instances, J.C. 

Penney knows that the small company will not have the financial 

strength to defend itself or J.C. Penney against these threats. 

This dynamic has caused a shift in how J.C. Penney and many 

other Main Street businesses approach the adoption of innovation. 

J.C. Penney’s shift away from small companies has not been driven 

by concerns that the new technology actually infringes any patent. 

In most cases, the small companies themselves own patents covering the technologies they offered to J.C. Penney. Instead, J.C. 

Penney’s shift away from small technology companies is driven by 

the cost of defense of patent litigation. 

J.C. Penney and Main Street businesses fully support the rights 

inventors and patent holders to market their products and to bring 

claims to enforce their intellectual property rights. We believe that 

the thoughtful and balanced patent litigation reforms set forth in 

the PATENT Act will preserve these rights while curbing abusive 

patent litigation. 

Thank you once again, Chairman Grassley, Ranking Member 

Leahy, and members of the Committee, for holding this critical 

hearing. We urge this Congress to pass meaningful reform without 

delay. 

Thank you. 

[The prepared statement of Ms. Lettelleir follows as a submission 

for the record] 

Chairman GRASSLEY. Thank you, Ms. Lettelleir. 

Mr. Hadad. 

STATEMENT OF HENRY HADAD, SENIOR VICE PRESIDENT AND 

DEPUTY GENERAL COUNSEL-INTELLECTUAL PROPERTY, 

BRISTOL-MYERS SQUIBB, NEW YORK, NEW YORK 

Mr. HADAD. Chairman Grassley, Ranking Member Leahy, and 

members of the Committee, thank you for the opportunity to appear on this panel. 

Bristol-Myers Squibb is a global biopharmaceutical company with 

over 25,000 employees focused on our mission to discover, develop, 

and deliver innovative medicines that help millions of patients prevail over serious disease. In 2014 alone, BMS spent over $4.5 billion in research and development. BMS leads the industry with our 

ground-breaking immuno-oncology therapies and pipeline which 

harness the body’s own immune system to target and detect cancer 

cells. Given the extraordinary challenges, expense, and time it 
12 

takes to discover and develop a new drug, BMS depends on strong 

and predictable IP protection to justify this investment. 

BMS acknowledges the patent litigation concerns expressed by 

other members of this panel and appreciates the significant efforts 

by the bill’s sponsors and their staffs to strike a balance between 

curbing abuses of the patent litigation process and promoting innovation. 

Provisions around early disclosure of ownership information, Judicial Conference involvement in discovery and case management, 

and customer stay should improve the litigation process overall. 

Provisions around fee shifting appropriate focus on objectively unreasonable behavior by a non-prevailing party, while the fee recovery provisions reflect a balanced and improved approach. And the 

discovery stay and pleadings provisions include important concepts 

that should reduce potential abuse. 

Despite this significant progress, however, BMS strongly urges 

the Committee to strengthen the bill by addressing abusive litigation practices not only in the district courts but also in the context 

of IPR and PGR proceedings before the USPTO. We commend the 

USPTO and the PTAB for their efforts in professionally and diligently managing nearly 3,000 IPR filings. Unfortunately, in an effort to timely address the deluge of filings, these proceedings have 

been implemented in a manner that lacks due process protections 

and unfairly prejudices patent owners. 

Recent statistics show that the PTAB grants IPR petitions and 

finds at least some of the challenged claims invalid over 75 percent 

of the time. Moreover, 80 percent of the patents challenged in IPRs 

are also asserted in parallel district court proceedings. Given this 

data, it is not surprising to see increasing abuse of these proceedings, including IPR petitions filed by hedge funds that are 

short-selling stock based largely on investor anxiety around these 

proceedings, by parties primarily seeking to extract a financial settlement from patent holders, and by litigants presenting the same 

or substantially the same arguments that were presented in Federal court. 

The same challenges and serial harassment that confront other 

members of this panel regarding patent assertion entities are mirrored in the abuses of the IPR-PGR system. The stakes are high. 

If there is a reduced confidence in the patent system, the biopharmaceutical industry will innovate less, invest less, and employ 

fewer. To that end, there will be fewer ground-breaking therapies 

for patients. 

There are three procedural changes that, if enacted together, 

would more fairly balance these proceedings, aid in their efficient 

adjudication to the benefit of patent owners and challenges alike, 

and provide faith and predictability in the patent system. 

First, in IPR and PGR proceedings, the PTAB apply the same 

‘‘correct’’ claim construction standard as district courts rather than 

the ‘‘broadest reasonable’’ interpretation. 

Second, the PTAB also should respect the presumption of validity 

for granted patents and apply the same ‘‘clear and convincing’’ evidentiary standard as applied in district courts for establishing invalidity of the patent. By doing so, this would minimize incon-
13 

sistent results and duplicative proceedings between the courts and 

the PTAB and ultimately increase fairness and predictability. 

The second proposal would be that patent owners should be permitted to make minor amendments to claims during the proceeding 

and more substantial amendments through the filing of a reissue 

or reexamination application prior to the institution of any IPR or 

PGR. 

My third and last proposal is that the procedural rules governing 

IPR and PGR should be revised to ensure fairness and due process 

for patent owners, including equal opportunity to submit evidence, 

reducing potential bias by having someone other than the PTAB 

Merits Panel decide whether to institute the petition, and by permitting live testimony on key issues. 

I would be pleased to address these proposals in more detail if 

there are any questions. The PATENT Act, with the suggested 

modifications to USPTO post-grant proceedings, is a productive 

step that will curb abusive practices and minimize unintended consequences for legitimate patent owners. 

I thank you for the opportunity to appear today and look forward 

to answering any questions you may have. Thank you. 

[The prepared statement of Mr. Hadad follows as a submission 

for the record] 

Chairman GRASSLEY. Before I ask questions, I just got notice 

from the floor that the 10:30 vote will probably be now around 

1:30. If you have got any other information, let me know. 

I will start, and we are going to have 5-minute rounds-—I 

screwed up your introduction, so I might as well do that. Go ahead. 

[Laughter.] 

Ms. SAMUELS. No problem. 

STATEMENT OF JULIE P. SAMUELS, EXECUTIVE DIRECTOR 

AND PRESIDENT OF THE BOARD, ENGINE, NEW YORK, NEW 

YORK 

Ms. SAMUELS. Chairman Grassley, Ranking Member Leahy, and 

members of the Committee, I am Julie Samuels, executive director 

of Engine, an organization started several years ago to help advocate for high-tech, high-growth entrepreneurship. Using policy 

analysis and economic research, we represent startups nationwide. 

I am also a recovering patent lawyer. It is an honor to be here 

today, and I look forward to discussing effective solutions to the 

patent troll problem, especially because this problem disproportionately harms the community of high-tech, high-growth startups I 

represent. 

Today I am going to tell you about what the startup community 

needs from a functioning patent system—fairness and balance— 

and why the PATENT Act would help ensure those things. 

Patent trolls are armed with two weapons: low-quality, impossible-to-understand patents, on the one hand, and the outrageous 

costs, both in time and money, of patent litigation, on the other. 

Imagine you are a small startup, cash-strapped and hungry, and 

you get a patent demand from a company you have never heard of, 

claiming to own some basic technology. Your choices are: hire a 

lawyer and spend valuable time and limited resources fighting 
14 

back, or simply pay the troll to go away, which is why I want to 

talk today about fairness and balance. 

Right now we have a system that across the board favors patent 

holders who want to abuse that system. Those parties have exclusive access to all of the relevant information surrounding the patent, basic things such as who owns it, who else has rights to it, 

along with the ability to singlehandedly drive up the costs of litigation with motion practice and discovery. It is a system that essentially allows for legalized extortion, and that leaves startups nearly 

powerless to fight back without great personal risk and expense. 

Take the experience of Jump Rope, a Chicago startup founded by 

Peter Braxton. An Air Force veteran and former combat pilot, Peter 

found himself facing a troll suit less than 1 month after he 

launched Jump Rope. Peter’s lawyers advised him to settle, but he 

instead decided to fund the litigation himself. Ultimately the court 

found no infringement and that the plaintiff failed to conduct even 

due diligence before filing suit, but not before Peter was forced to 

spend more than $250,000 on his defense. 

Or take Life360, an app keeps over 55 million families safe and connected. After raising $50 million in capital early last year, the 

company was hit with a troll suit that it decided to fight. In spite 

of a jury finding the troll’s claims meritless, Life360 still had to 

spend over $1.5 million to defend itself, with no reasonable recourse to recover that money. 

Many of the startups—and this is incredibly important, I think. 

Many of the startups who support reform are also patent holders 

themselves, like Foursquare, which currently faces four rolls. This 

year’s legal budget set aside enough money for these cases alone 

that could otherwise have been enough to hire between six and ten 

engineers—good jobs that now do not exist. 

There are countless other companies in our network, too, who invest in the patent system, yet still support strong reform. Many 

asked that I not use their names because they are afraid of attracting more troll suits. 

One startup general counsel told me, and I quote, ‘‘The system 

is set up in such a way that it pretty much guarantees that the 

troll gets paid. It has nothing to do with the patent’s claims, but 

with the litigation fees. We were bombarded with letters, emails, 

discovery requests, and motions. It was all meaningless paper, but 

we still had to spend time and money to respond.’’ 

In each case, startups divert resources from innovating, growing 

their business, and creating new jobs to fight what are often 

meritless claims. To make matters worse, the bulk of this money 

never finds its way back to inventors or R&D departments. 

For a small startup, even one troll suit can ruin its business, and 

the mere threat can cause significant disruption. No small business 

owner should be forced to put her company at risk to defend what 

she knows is right, which is why we need the kind of comprehensive set of reforms that is the PATENT Act. The PATENT Act 

would bring much needed transparency to the system through 

heightened pleading and demand letter reform, giving startups 

tools to understand the scope of the threat they face, helping them 

decide how to respond. The bill creates the appropriate incentives 

for startups facing meritless suits to fight back. By shifting fees 
15 

and allowing for real recovery and by reforming discovery, the 

PATENT Act allows parties a fighting chance in court. 

Right now, a startup worried about its bottom line has almost no 

choice but to pay a troll to go away. The PATENT Act would dramatically change this calculation and keep the courthouse doors 

open to everyone. Taken together with the strong post-grant review 

procedures from the America Invents Act, the PATENT Act represents an important package of incentives that would rebalance 

and restore faith in a broken system. 

To be clear, no single reform in the bill can accomplish this task 

alone. It is only when they are all taken together that we can find 

the missing balance and fairness. 

Opponents of reform argue that proposed changes in the law 

would have the unintended consequence of making it harder to assert valid claims. In fact, nothing in the PATENT Act would hinder 

an inventor from monetizing, asserting, or enforcing valid patents, 

or making claims that are substantially justified or objectively reasonable. 

The freedom to innovate has always been a central part of the 

American dream. For the sake of our economy and our identity, we 

must not let innovation become a legal liability. A patent should 

be valued for what is covers and how it incentivizes innovation, not 

for its litigation value. The PATENT Act would go a long way to 

making that the case. 

Thank you, and I look forward to your questions. 

[The prepared statement of Ms. Samuels follows as a submission 

for the record] 

Chairman GRASSLEY. We will have 5-minute rounds. 

I am going to start with Mr. Chandler. We have heard concerns 

that the PATENT Act could have the unintended effect of undermining patent property rights. In your opinion, because Cisco, I 

have been told, has 12,000 patents, are you concerned that this bill 

would devaluate your company’s extensive patent portfolio? 

Mr. CHANDLER. Not at all. Our portfolio is used to stop others 

when they are infringing our patents. We also cross-license freely 

with other companies so that each of us can be empowered by each 

other’s patents when that makes sense for us to do so with other 

companies. 

The PATENT Act is a series of changes that will bring litigation 

fairness, that will allow for removing artificially imposed costs in 

the system that do not produce useful results. 

You know, the IPR process has been discussed a little bit this 

morning, and the IPR process is good for Cisco because it is good 

for the integrity of the patent system. We recently brought litigation against a company which systematically used our patented 

technology as well as word-for-word copying of our copyrighted materials. They have asked for IPR review at the Patent Office of our 

patents in the case. 

Of course, I do not want my patents invalidated, and I believe 

our patents are strong. If I do not like the result of the IPR, there 

is an appeal process. But at the end of the day, the patents need 

to be more than just a blank and unexamined check to bring litigation. It really needs to stand for true innovation. If some of my patents are invalidated after getting a closer look under the rules that 
16 

exist before I am able to enforce them, so be it. We will have a 

stronger, more credible patent system as a result, even if I do not 

like a particular short-run result. 

We strongly support the PATENT Act, and we do not buy the 

need to undermine the ability of the Patent Office to undertake the 

reviews that were created in the America Invents Act. 

Chairman GRASSLEY. I would have questions for Chandler, Samuels, and Lettelleir, hopefully a short answer: Do you believe that 

the PATENT Act is effective in addressing the patent troll problem? Would you in a short way say what you think is the most important reform in the bill? I will start with Chandler. 

Mr. CHANDLER. I think the most—the answer is yes, and the 

most important reform in the bill is the fee-shifting, fee recovery 

provisions that ensure that people with weak lawsuits and weak 

patents think twice before bringing them. 

Chairman GRASSLEY. Ms. Samuels. 

Ms. SAMUELS. I would also answer yes to the first—sorry. Sorry 

about that. Yes, I think it is effective, and I actually have a hard 

time saying that there is one most effective provision. I think the 

most effective characteristic of the bill is that it is comprehensive 

and that, when taken together, we have a package of incentives 

that can rebalance the system. 

Chairman GRASSLEY. Ms. Lettelleir. 

Ms. LETTELLEIR. I agree with Ms. Samuels. I think that it is a 

very important piece of legislation and will be a powerful tool for 

those that are the victims of abusive patent litigation tactics. I feel 

like the most important attribute of the PATENT Act is the fact 

that the provisions complement each other, and one provision 

makes another provision more effective, more meaningful, as it is 

applied to individual scenarios. I think the fact that they work together, they complement each other, and they strengthen each 

other—if you start picking apart one aspect, one provision, it weakens another provision. It is a very carefully crafted piece of legislation, and we think that has been very well crafted, and we support 

all the provisions as they work together. 

Chairman GRASSLEY. A short question for Mr. Rhodes. Do you 

believe that the PATENT Act’s litigation provisions strike the right 

balance between patent holders and petitioners? 

Mr. RHODES. Yes, thank you for the question, Chairman Grassley. Yes, we think a lot of very welcome compromises have been 

made to the provisions that get it to that balance and really address the concerns that we have heard about on the panel this 

morning, while still providing balance and for the ability of patent 

owners to assert their rights against true infringement and to attain effective and prompt and expeditious relief. We think that the 

improvements that I mentioned in my opening statement are welcome advances in that regard. 

Chairman GRASSLEY. I am skipping over a question here because 

my time is running out. For Ms. Samuels, as you note in your testimony, patent abuse is a problem that disproportionately targets 

startups and small businesses, so legislation trying to put a stop 

to these predatory practices is something that companies should 

welcome. However, at the same time, concerns have been expressed 

that some of the proposed patent reform bills will negatively im-
17 

pact the ability of these same startups and small businesses to attract investment. 

Since you are someone that deals with startups on a daily basis, 

do you believe that the PATENT Act will have an adverse impact 

on venture capital investment for small companies and startups? 

Ms. SAMUELS. Thank you for the question, Chairman Grassley. 

I absolutely do not think this will have any impact on the venture 

capital as opposed to startups. 

Chairman GRASSLEY. OK. Senator Leahy? 

Senator LEAHY. Thank you, Mr. Chairman. 

Mr. Rhodes, you are a chief of intellectual property counsel for 

3M, but you also wear another hat, the chair of 21C. Let me ask 

you, you have been involved in this. An important part of the PATENT Act was the customer stay provision. Those who are not familiar with that, it allows end users and retailers to stay a lawsuit 

against them when the manufacturer is available to litigate the 

case instead. 

Some have criticized this for not focusing on end users. They 

have said, and I believe incorrectly, that the provision would leave 

patent owners without redress for infringement by foreign manufacturers outside of the jurisdiction of U.S. courts. 

Senator Lee and I authored this provision in our original bill last 

Congress. I hate to think of the number of hours and months we 

spent reworking it to address those exact concerns. As a patent 

holder and a manufacturer, can you share your views of the concerns that have been raised? 

Mr. RHODES. Yes, thank you for the question, Ranking Member 

Leahy. I have heard those concerns. I do not share them. I think 

the customer stay provision is a very carefully crafted compromise 

among many different stakeholder groups, some of whom are sitting at this table this morning. We are really talking, with respect 

to customer stay, about a three-part negotiation balancing the interests of the patent holder, the manufacturer, and the customer. 

I will assure you that we looked very carefully at the issues that 

you talked about in reaching those compromises. 

In particular, with respect to retailers and end users, we did define ‘‘covered customer’’ to only encompass those entities, not entities who either manufacture products or who modify the products 

in a way that gives rise to the charge of infringement. Those are 

the parties that should be defending against the infringement 

charge. 

As to foreign, if you would like me to answer that question, the 

stay is only available if the manufacturer is either a party to the 

case in U.S. court with the covered customer or a party to another 

case in U.S. Federal district court. We added that language into 

the bill to address the exact concern you mentioned, so it is just 

not possible that a manufacturer beyond the jurisdiction of U.S. 

courts could—its customer could avail itself of the stay. That is just 

not possible. 

Senator LEAHY. I assumed that was going to be your answer, but 

after all the time that Senator Lee and I spent on that, I am glad 

to have that answer. 

Mr. Hadad, you raised concerns about abuses of post-grant review programs created by the America Invents Act, and I am trou-
18 

bled by the behavior you described. It is vital, I think we would all 

agree, that PTO programs remain a strong tool for patents to be 

reviewed in an efficient setting. Of the reforms you are suggesting, 

what is most important? Can you assure us that those reforms 

would not undermine the law as it is now, the America Invents 

Act? 

Mr. HADAD. Thank you for the question, Ranking Member Leahy. 

I think the three proposals I set out are somewhat interconnected, 

and I think they all serve to make it a fair, more balanced proceeding. I think—— 

Senator LEAHY. You would make them of equal importance? 

Mr. HADAD. I do, but I would say the first one, though, I think 

really sets the tone for the rest, which is the standards that the 

claims are reviewed by, whether it is a claim construction standard 

that is used in district court, which takes into account the extensive examination record of the patent that took place before the 

USPTO; whether it is the clear and convincing evidentiary standard for establishing invalidity; or the presumption of validity. 

What those things do, when you think about it, is make a patent 

the property right that it is. When you diminish that, it undermines the strength and, frankly, the predictability of whether that 

patent right can be invested in in the future. 

I think that piece of it, coupled with if the standards were the 

same, you would actually have decreased duplicative proceedings 

because then the courts and the USPTO would acknowledge each 

other’s determinations as being of equal weight. 

Senator LEAHY. My time is almost up, and if anybody wants to 

add anything for the record, either in agreement or disagreement 

to what Mr. Hadad said, please do so. I did want to ask Ms. Samuels, you talked about the abusive letters, and, man, I hear that 

all the time in Vermont. We address it by making clear that it is 

a deceptive trade practice to send misleading demand leaders and 

the power of the FTC to give civil penalties. Does that make sense? 

And do you have examples from your own experience why we have 

got to have Federal legislation here? 

Ms. SAMUELS. Thank you for the question, Senator Leahy. I 

think that definitely makes sense, and I applaud what this bill, 

this piece of legislation does to address the demand letter problem. 

The demand letter problem is such a big problem, and we cannot 

even know the scope because it is all pre-complaint, right? There 

is no public record. I think when you empower the FTC, what you 

do is you really get at the worst actors, and those are the people 

who are sending the abusive demand letters. I think that that is 

a great step in the right direction. 

Senator LEAHY. Thank you. Thank you very much, Mr. Chairman. 

Chairman GRASSLEY. Thank you, Senator Leahy. 

Now, Senator Hatch. 

Senator HATCH. We are happy to have all of you here. This is a 

really, really important hearing. All of us have worked for a long 

time to try and get a patent bill that had pretty much great success. 

Let me ask you this, Ms. Samuels: As you know, especially over 

the past year, I have been working on a fee recovery provision to 
19 

ensure that those who defend against abusive patent litigation and 

are awarded fees will actually get paid for them, and I am pleased 

that the PATENT Act includes this provision. 

From the small inventor startup point of view, can you explain 

how important the recovery provision would be in stopping patent 

trolls from litigating and dashing? 

Ms. SAMUELS. Yes, thank you, Senator Hatch, and thank you so 

much for making sure that recovery language was in the bill, because as you say, if we are going to have any kind of fee shifting, 

without an effective way to actually recover those fees, the fee 

shifting would be meaningless. We think that fee shifting is a core 

principle that is so important for small startups and for anyone facing abusive patent litigation, because right now, when you are a 

startup facing a patent demand, facing a lawsuit, you are looking 

at years of litigation and millions—potentially millions of dollars in 

legal fees. That is untenable. When there is no real expectation 

that you might see some of that money back, there is no incentive 

to fight back. If there is no incentive to fight back, then we are 

just, you know, emboldening the trolls’ continued behavior. 

What you are doing is you are giving these tools to these small 

companies to really push back, and there are really important safeguards in the recovery language. I am not worried about any 

abuse. I mean, it has to be objectively reasonable, the case that is 

brought. I think we are in really good shape with the language as 

it is. 

Senator HATCH. Thank you. 

Mr. Chandler, the PATENT Act includes a provision to stay discovery if the defendant files certain motions like a motion to transfer venue. The provision also allows courts to order the exchange 

of information such as infringement intentions. 

What type discovery is typically required to create infringement 

contentions? With respect to motions to transfer venue, do you 

think that infringement contentions and any subsequent discovery 

should be postponed until the case is actually transferred to the appropriate court? 

Mr. CHANDLER. Yes, Senator, we do believe that the—all discovery should be stayed pending the resolution of the transfer motion, and there should be pressure on the judges to rule quickly on 

the transfer motion. Infringement and invalidity contentions can 

involve voluminous discovery. In fact, the invalidity contentions 

could end up implicating the majority of the discovery that would 

happen in the case. Costs typically can exceed $1 million to proceed 

with that discovery. The proposed legislation refers to the district 

court or local rules in terms of what would be required for discovery, and we see no reason to permit that discovery to proceed 

pending a transfer motion. The judge should rule quickly on the 

transfer motion. There should be an interlocutory appeal available 

on that, and the case should get going as quickly as possible in the 

appropriate court. 

Senator HATCH. Well, thank you. 

Mr. Rhodes, for several months now I have heard a great deal 

about what many stakeholders argue is an unanticipated abuse of 

the inter partes review process we established in the America Invents Act. I am committed to working to address any illegitimate 
20 

instances of what some now refer to as ‘‘reverse trolling.’’ I was 

looking for realistic reforms that address the problem, but also ensure that the IPR process remains an effective option for ridding 

the system of invalid patents. 

Do you have any thoughts on what might fit that description? 

Mr. RHODES. Yes, thank you very much for the question, Senator 

Hatch. The patent system is a Rubik’s Cube. The patent ecosystem 

is very complex. We have heard here this morning the proponents 

for litigation reform saying it is interlocking, you know, multiple 

provisions are needed. We have heard those concerns. We have 

worked in good faith and constructively to address them on the litigation side. We think the mirror, the reverse, the converse is true 

with respect to PGR and IPR reforms in the Patent Office. 

I listed to three big buckets in my opening statement, and I 

think, you know, more fairness in reviewing petitions so both parties can submit the same evidence, different bodies consider it initially within the PTAB, and then at the end of the day, there is 

an obligation to disclose evidence at the outset. We think the hybrid approach which will make the right to amend real and put 

BRI in its proper place in the reexamination and reissue of claims, 

and then the fairness in burdens and presumptions that Mr. Hadad 

mentioned. 

We think just as the litigation reforms that we have listened to 

and responded to are interlocking, so, too, are our reforms that we 

are asking for in IPR and PGR interrelated and interlocking. 

Senator HATCH. Mr. Chairman, my time is up. I will submit the 

rest of my questions. 

Chairman GRASSLEY. Yes. 

[The questions of Senator Hatch follow as a submission for the 

record] 

Chairman GRASSLEY. Senator Schumer—well, she came after— 

yes, Senator Schumer, and then Senator Durbin. 

Senator FEINSTEIN. He came after me. 

Senator SCHUMER. No. I was here earlier. 

Chairman GRASSLEY. No. He was here at—— 

Senator WHITEHOUSE. Ladies first. 

Senator FEINSTEIN. OK. 

Senator SCHUMER. Would you like to go? 

Senator FEINSTEIN. No. 

Senator HATCH. Typical of—— 

Senator SCHUMER. Chauvinism is dead. 

Chairman GRASSLEY. We are wasting—— 

Senator KLOBUCHAR. Senator Grassley says you are wasting—— 

Chairman GRASSLEY. We are wasting time. Go ahead. 

Senator SCHUMER. Excuse me. Do you want to go? 

Senator FEINSTEIN. No. You go. 

Senator SCHUMER. OK. She was busy showing me the terrible 

thing that ISIS puts out, which people should look at, called ‘‘Inspire.’’ 

Senator DURBIN. Another patent troll. 

Senator SCHUMER. They could be. 

I want to thank Chairman Grassley and Ranking Member Leahy 

for organizing this hearing and for your leadership and partnership 

on this issue. I really want to thank Senator Cornyn, whom we 
21 

have worked closely with on this, as well as Senators Klobuchar, 

Lee, and Hatch, our cosponsors who have done a great job on this 

legislation. 

I am grateful that the Committee has the opportunity to hear 

today about the incredible strides we have been crafting in coming 

to a meaningful solution to the scourge of patent trolls without 

damaging the rights of legitimate patent holders. 

It is clear, based on what we are hearing today, that this is not 

yesterday’s patent bill. This bill is different, and we are going to 

get it done. There will be patent legislation along the lines of what 

we proposed on the President’s desk this year. I truly believe that. 

I think the panel, which last year, if all of you came, there would 

have been a much wider disparity. The consensus is growing 

around this bill, and we thank you for that, particularly our 21C 

friends who are helping us and being very constructive. Thank you. 

I want to make sure everyone watching this hearing understands 

what a breakthrough we have before us. Today’s hearing marks the 

first time Congress is hearing a unified chorus that legislation we 

have drafted balances the interests of traditional patent holders 

and businesses that are only on the receiving end of infringement 

accusations. 

Have we made everybody happy? Of course not. That is literally 

impossible in the patent space, as we learned during the debate 

over the AIA. But I feel confident we have taken tremendous steps 

toward the goal that my colleagues and I all identified: solve the 

problem of frivolous, expensive lawsuits without damaging the legitimate claimants. I am committed to working with those who 

have opposed previous iterations of reform, especially those in the 

life science industry, to identify workable solutions to the problems 

they perceive in the PTO system. 

I do want to sound a note of caution. Just as we have said for 

years that it is important that patent litigation reform not undermine the legitimate rights of patent holders, it is similarly critical 

that the reforms to the post-grant system not undermine the ability 

of the PTO to provide cost-effective, efficient alternatives to litigation for the consideration of poor-quality patents. 

I have said many times, my lodestars in this debate are the 

small New York startups. These are the seed corn of New York’s 

economy and similar companies throughout the country of America’s economy. These are the companies, the future Googles and the 

future Facebooks and the future Oracles, that are going to create 

thousands and thousands of jobs and export so much materials. 

They are snuffed out by these parasitic trolls, and we cannot allow 

that to happen. 

The post-grant proceedings at the PTO are particularly important to those companies who simply do not have the resources to 

litigate or who benefit from the collective efforts of others who have 

been hit by the same troll to invalidate bad patents. 

I will not be able to support any deal on post-grant that does not 

preserve the viability of the process for these little startups. I do 

have to say that, again, we are making good progress here. There 

are ways we can all come together. 

My questions: First, to Mr. Samuels—Ms. Samuels, you represent exactly the kind of startup companies I care about in New 
22 

York and elsewhere. Do you think that this bill solves their problems? You can give a short answer? 

Ms. SAMUELS. I will be very short. I think, yes, it mostly does. 

Obviously, there are some things we can discuss, but it is a good 

compromise bill, and it will allow those companies to do what they 

do, which is innovate and create jobs, in New York and all across 

the country. 

Senator SCHUMER. I know Mr. Chandler and Ms. Lettelleir, because Senator Grassley asked the question, feel the same about 

problems faced by Cisco and J.C. Penney. It is amazing. One of the 

reasons we are gaining support is Main Street is being hit by these 

trolls. A restaurant owner said to me in New York that, ‘‘They are 

going to sue me because they say they patented the spoon.’’ 

OK. Now, to Mr. Rhodes, last question, to Mr. Rhodes and Mr. 

Hadad. Both of you represent companies that have had substantial 

concerns about previous versions of patent reform legislation. Do 

you feel like the sponsors of this bill have listened to you, been responsive to the concerns you have raised? You may answer any 

way you choose. Mr. Rhodes? 

Mr. RHODES. Yes, I am happy to go first. Thank you, Senator 

Schumer. We do think we have been listened to. We think many 

of our concerns have been addressed, and that is why in the context of an overall bill that addresses our additional concerns about 

IPR and PGR, we would look forward to supporting the bill as a 

whole moving forward. 

Senator SCHUMER. We have been mindful of your concerns, because you have a lot of expertise in your organization. 

Mr. Hadad, who represents retailers who have just all of a sudden been right in the cross hairs of these horrible trolls. 

Mr. HADAD. I represent Bristol-Myers Squibb, and I agree 

with—— 

Senator SCHUMER. Sorry. Represents pharmaceuticals. 

[Laughter.] 

They retail pharmaceutical drugs. 

Mr. HADAD. In the interest of time, I agree with Mr. Rhodes’ 

characterization. 

Senator SCHUMER. Right. J.C. Penney, a retailer, agrees as well. 

That is who I was referring to. 

OK, Mr. Chairman. My time has expired. 

Chairman GRASSLEY. Senator Lee. 

Senator LEE. Thank you, Mr. Chairman, and thanks to all of you 

for your help and for your insight today. 

I would like to thank all of the other original cosponsors—Senators Leahy, Cornyn, Schumer, Hatch, and Klobuchar—for their 

work in putting together this really important legislation. 

In the last Congress, Senator Leahy and I proposed legislation to 

deal with abusive patent practices directed at small businesses: 

sending demand letters, extorting money, and filing expensive patent infringement lawsuits filed against retailers and other end 

users of products instead of against the manufacturers of those 

products. We are pleased to report that in the PATENT Act, with 

the support of a bipartisan array of cosponsors, we will finally be 

able to enact these reforms. It has been a pleasure working with 
23 

this great bipartisan group and with so many people in the industry who have provided such valuable insight. 

I would like to start with you, Ms. Lettelleir. You said in your 

testimony that you support a statutory customer stay. I just want 

to make sure that everyone understands why that is important. 

J.C. Penney is in the retail sales business. You all do not manufacture technology or design complex software for a living, right? You 

sell clothing and you sell other merchandise. You do not know anything about the microprocessors in the bar code reader or some 

other technology that you use in order to get on with your business. 

When you get slapped with a patent infringement lawsuit over 

some product that you did not design, that you did not manufacture, you are not going to be able to evaluate the merits of that 

suit. The manufacturer has to do that. Yet, according to your testimony, district courts are currently somewhat reluctant to stay litigation against retailers or against end users, even when the manufacturer is already defending its patent litigation. 

Can you tell us a little bit more about that and about how you 

think the customer stay language in this bill will help in the industry? 

Ms. LETTELLEIR. Yes, thank you for your question, Senator Lee. 

We have been called upon to defend various aspects of technology 

we have acquired from other companies, companies like Cisco, companies like Oracle, intel processors, the whole array of technology 

that you can imagine we have been called upon to try and defend. 

You can imagine when J.C. Penney is sued on the premise that an 

intel chip that resides in its point-of-sale terminal in its store, that 

we are at a severe disadvantage in terms of even beginning to defend that technology. We do not have access to the evidence that 

would even be required to defend that. 

A customer stay is very important to us with respect to those 

particular types of suits. It is not all the suits that we see, but it 

is a good percentage of them. I think the customer stay provision 

is really geared toward getting to the truth. Does the chip infringe? 

It addresses the issue of who is the best party to defend that issue, 

and we feel it is the manufacturer, and we think that the language 

that has been carefully crafted to balance all the different interests 

of the different stakeholders is the best way to get to that result. 

It does not absolve us of liability, but it does shift the burden of 

proving and addressing the infringement allegations to the manufacturer who actually supplied the technology. 

Senator LEE. Thank you. 

Mr. Rhodes, you have been focused, and appropriately so, on ensuring balance in our litigation reform proposals. You have been an 

honest broker in this process, and I hope you know how much we 

appreciate that. 

Are you satisfied that under our proposal eligibility for a customer stay is sufficiently far down the chain of distribution? 

Mr. RHODES. Yes, thank you for the question, Senator Lee. I do 

think that we took careful pains, as I mentioned earlier, in the definition of who a ‘‘covered customer’’ is to limit it to retailers and 

end users who are reselling products from covered customers who 

are in a position to defend the case. They have not manufactured, 

they have not modified the product in a way that gives rise to the 
24 

charge of infringement. They are well positioned if they have done 

that to defend based on their modifications. 

I think with those protections in place, we are not talking about 

absolving people of liability. I think that is an important principle 

on which I agree. We are talking about, in the first instance at 

least, having the parties well positioned to defend the case have 

the first and foremost role in defending it. 

Senator LEE. Thank you very much. 

I see my time has expired. Thank you, Mr. Chairman. 

Chairman GRASSLEY. Thank you. 

Senator Durbin. 

Senator DURBIN. Thank you, Mr. Chairman. 

Chairman GRASSLEY. Senator Durbin, and then it will be Senator 

Perdue. I am going to go to Agriculture for a few minutes. 

Senator DURBIN. Thank you, Senator. Let me thank the panel. 

Throughout the morning we have heard the word ‘‘balanced’’ 

used repeatedly. I thank you for coming here to testify, but it appears that this panel is divided between those who love the bill and 

those who really love the bill. 

There are some people who may not be in that category. They include the National Venture Capital Association, which said of this 

bill, ‘‘We think as presently worded it will raise the cost and risk 

of patent litigation for startups that need to defend their intellectual property against much larger incumbents and will discourage 

investment in any new company that wants to enter lines of business where patents are important.’’ 

The U.S. Alliance for Startups and Inventors for Jobs said of this 

bill, ‘‘It will make it far more difficult for small companies to protect and enforce their patented technologies against larger competitors.’’ 

There is another side to this story which has not been given a 

chance to speak this morning, and I hope that during the course 

of considering this bill we can reflect on it. 

Let me also say to Mr. Chandler from Cisco, I do not think you 

started with your strongest argument, your strong argument that 

you spent $50 million in legal fees defending against these nuisance lawsuits. The revenues of Cisco last year were $47 billion; 

$50 million represents one-tenth of 1 percent of your revenues. It 

is as if a $1 million corporate making $20,000 a week had to spent 

$20 a week in legal fees. Let me ask you, since both you and Mr. 

Rhodes represent companies that have patents, how many patent 

lawsuits did you file to protect your patent lawsuits last year? 

Mr. CHANDLER. We filed one lawsuit last year. 

Senator DURBIN. Only one? 

Mr. CHANDLER. Only one. 

Senator DURBIN. Mr. Rhodes? 

Mr. RHODES. We filed—over the last 5 years, 60 percent of our 

patent lawsuits have been patent—when we have asserted our patents against others. We currently have a dozen of those suits pending and only three cases that we are defending. 

Senator DURBIN. This is what it gets down to is Large corporations either filing one or more lawsuits have the resources to play 

under this new law as proposed, because it takes quite an effort 

under the proposed law to assert your rights under a patent. You 
25 

have the requirement of detailed pleadings. You have the reduction 

of opportunities for discovery. You have fee shifting, and in a great 

number of cases at least leads to the possibility of fee shifting, 

which could discourage the small patent holder. 

One small business witness said in the Small Business Committee, ‘‘If you need to pay $5 million in order to assert your patent 

rights, that is not petty cash for me. It is taking my house, my 

spouse, and my children.’’ 

This responsibility that is put into the law makes it much more 

difficult than it might for Cisco or for 3M. 

Ms. Samuels, the case that you referred to here, the Jump Rope 

case, where a patent troll called Smart Options sued them, you are 

aware of the fact that the court awarded fees after finding that 

Smart Options, the patent troll, failed to perform even minimal due 

diligence before suing. 

Ms. SAMUELS. That is right, Senator Durbin, but then the patent 

troll came back and sued again under new patents, and they have 

just recovered a small fraction. What I would like to—— 

Senator DURBIN. Do you know what percentage of cases now recover fees for this type of nuisance litigation under patent law? 

Ms. SAMUELS. I understand it is still a very, very low percentage, 

and in certain districts it has not happened at all since the—— 

Senator DURBIN. It turns out, according to the Federal Circuit 

Court Bar Association, defendants have a 50-percent chance of winning these fees. It is not as if we are dealing with a remote possibility. Under the current law, a 50-percent chance of winning these 

fees. 

Ms. SAMUELS. Fees are not granted in 50 percent of patent litigation. 

Senator DURBIN. This is the Federal Circuit Court Bar Association. You are welcome to look at their report. 

May I ask the panel here, particularly those who are representing the larger corporations, there are exemptions built into 

this law, exemptions from fee shifting, pleadings, and discovery. 

One of the exemptions relates to bill—patent infringement lawsuits 

between generic and brand-name drug companies. In other words, 

the bill protects this one type of patent litigation from the burdens 

and risks the bill would impose on all other patent holders. 

I am not saying that drug patent cases should not be exempt. 

Maybe they should. Why does the bill draw the line there? 

Shouldn’t we also protect original inventors in the bill? They are 

not trolls. They earned their patent. What about small businesses 

and universities? Can you tell me why we have carved out one 

group in this bill to say that they would be exempt from the more 

demanding procedural requirements than these other categories? 

Would anyone like to—— 

Mr. HADAD. Senator Durbin, I will, since I am in the industry. 

As you know, with cases under 271(e), or the so-called Hatch-Waxman procedure, these cases have to get done within a 30-month period—that is sort of a statutory mandate—because that is the period where the FDA is stayed from approving any products while 

a litigation is pending. Anything that would delay the case would 

somehow maybe derail, I think, the balance of that statute, and 

that is, I believe, why those exemptions are in there. 
26 

When it comes to the fee shifting, I have to say I have a bit of 

mixed feelings about that one myself, because I believe that the 

standards for behavior in cases should be applied equally in all 

cases, and so I do not see the need to necessarily differentiate here. 

Senator DURBIN. I may come to a different conclusion as to fee 

shifting, but I would say that since we are dealing with patent 

trolls, which, according to the GAO, represent 20 to 25 percent of 

all the patent litigation, this new proposed law applies to all patent 

litigation, I think—except for the ones that I mentioned, the expectation that was made. 

I yield back to whoever is presiding. I think it may be Senator 

Lee at this point. 

Chairman LEE. [Presiding.] Thank you. 

Senator Perdue. 

Senator PERDUE. Thank you, Mr. Chairman, and thank you, panelists, this morning for your testimony. 

You know, in my experience—I have been on both sides of this 

in my career—the economic boom of the last 70 years is really attributable, in my opinion, to three things: one is innovation; two is 

our ability to form capital; and, three, the rule of law. Unfortunately, today we face abuses in several of those areas, and I have 

got a real concern that we find the right balance that does not 

hinder our ability to form capital. 

Ms. Samuels, I think you mentioned this earlier, particularly as 

it relates to the fee shifting part of this bill. Can you give us your 

views? You are the closest to—I do not know how many rounds you 

have been through. I am part of a little startup—have been part 

of a little startup. We went through four rounds, and I know what 

impact this can have on small companies’ abilities to raise capital. 

I share Senator Durbin’s concern about the small player, the 

young player, getting from that angel stage into the venture capital 

stage, and then being hit by a fraudulent or problematic lawsuit 

that is totally frivolous. 

Ms. SAMUELS. Thank you for the question, Senator Perdue. As a 

preliminary matter, the VC community—and particularly the venture capital community that invests in high-tech, high-growth entrepreneurship, that invests in software companies—by and large 

supports this kind of comprehensive legislation. I can happily provide lots of examples. I have some written down, but I would rather just get to the meat of what is going on here. I think what we 

see is that those venture capitalists who are investing in small 

startups, their interests are so closely aligned with the small 

startups, of course. It is in their benefit to see those startups succeed. 

When a patent troll comes after that company, you run into a lot 

of problems because a small company, even backed by venture capital, does not have a lot of resources to fight back. That is incredibly problematic. 

I think, you know, to address some of the things that Senator 

Durbin said that play into this, there is some concern that this 

kind of legislation makes it harder to attract investment. I do not 

think that is true at all. This legislation is a compromise piece of 

legislation. It is really measured. 
27 

The kinds of things that this bill wants a company to do before 

filing suit, like basic due diligence, are the kinds of things anyone 

should do before they take advantage of the Federal court system 

in our country. 

Senator PERDUE. Right. Thank you very much. 

Ms. SAMUELS. Thank you. 

Senator PERDUE. Ms. Lettelleir, I competed with Penney and I 

also sold to Penney, but welcome this morning. I just have a question about balance. We have heard that mentioned several times 

today. The balance I am concerned about is between, you know, the 

focus on pleading and the initial disclosure provisions of the bill. 

Can you speak from your perspective about have we found that balance? Or do you still have concerns? 

Ms. LETTELLEIR. I think the bill has done—it presents a very 

finely crafted compromise position between all the stakeholders, 

and I think that it achieves what we will need to make meaningful 

changes to the system. You know, as a target of this type of litigation, we receive just ridiculously broad assertions. 

For example, I just received one last month that they list a patent number and then beside it they have only the word ‘‘e-commerce,’’ and that constitutes my notice of what they are alleging. 

I do not even know where to start in terms of analyzing the potential risk, whether, in fact, I should seek a license, or if I think that, 

in fact, we do not actually practice the invention. 

I think that the pleading requirements that are set forth will be 

very helpful, I think the requirements in the demand letters will 

be very helpful, in terms of moving the ball down the path in a less 

expensive way for all the parties. 

Senator PERDUE. Thank you. 

Mr. Rhodes, relating to demand letters, in your written testimony I think you suggested that provisions of the bill on abusive 

demand letters may encourage a ‘‘sue now, talk later’’ approach. I 

would like to give you an opportunity to expand on that, because 

we are really trying to make sure that these provisions will actually—well, basically you are saying that this increases the likelihood of litigation. Is that correct? Is that a correct observation from 

your testimony? 

Mr. RHODES. Thank you, Senator Perdue, and that is the concern. I think the risk is if companies that want to put others on 

notice of their patent rights confront the current landscape that we 

are dealing with, with demand letters, the risk may be too high, 

and we may be incented into a ‘‘sue first, talk later’’ strategy—not 

because we do not want to get the information out there, but because the risks of doing so under the current regime are too high. 

What I mean by that is two problems and two proposed solutions. 

One is if it is not clear what the rules of the road are with respect to a particular demand letter, you might not know what you 

should or should not put in the demand letter. And people just 

want clear rules of the road. We do not have that today because 

different States have different rules now where they have legislated demand letter provisions. What we would like is national uniformity, consistency. We are asking that the U.S. FTC be allowed 

to enforce the uniform standard. If they do not, State Attorneys 

General would be empowered to step in and enforce that uniform 
28 

standard. But it would be uniform so we would not have to wonder, 

you know, what we put in a letter in this State or that State. 

We also think the addition of a bad-faith requirement, as is in 

the bill proceeding in the House Energy and Commerce Committee, 

would be helpful to help really distinguish the truly bad-faith assertion letters that we heard about from some of the panelists this 

morning, from parties legitimately trying to put others on notice of 

their rights or promote licensing discussions, who may, for whatever reason, make a mistake. 

Senator PERDUE. Thank you. 

I will now yield to Senator Klobuchar, who I think is next. 

Senator KLOBUCHAR. Very good. Thank you very much. Thank 

you to all the witnesses. I know we have mentioned all of the cosponsors of this bill many times, but I also want to thank Senator 

Coons for his work. He knows a little bit, having been a counsel 

in the past, about how important it is to protect the rights of patent holders, as well as in a previous life in the private sector, as 

well as the work of Senator Durbin. I know people have some differing views here, but I think this is very important, and I really 

came around to working with our patent holder companies and 

making sure that there were provisions in the bill, as Mr. Rhodes 

has expressed, that make sure that we can differentiate some between legitimate assertions of patents and then the troll situation. 

I do not know if anyone has brought out this stat, but there were 

more cases filed by patent trolls in 1 month, in January 2015, than 

in the entire year of 2004—250 compared to 234, just to give a 

sense of this changing problem and why we are doing something 

about it today. 

I also believe that we need to make some—look at some of the 

additional needs with this bill, and I deeply appreciate everyone’s 

willingness to work on this issue. 

I thought I would start with one of the most poignant examples 

that I heard when I did a roundtable with 50 patent lawyers in 

Minnesota. It was a lot of fun. I heard at the roundtable the story 

about an infusion pump used to administer critical medicines to patients, including premature babies. The maker of the pumps has 

been sued by a patent troll who is claiming that the patent on 

the—that the infusion pump infringes on a fuel delivery system 

that is intended for the use in tractor-trailers. The litigation reforms in the PATENT Act are aimed at stopping, of course, these 

kinds of abuses. 

I have also heard, of course, from small inventors who are concerned about how this legislation might affect them, so I guess I 

would start with you, Ms. Samuels, and how you balance that, the 

small inventor’s interest and then the effect on so many businesses 

across the country. 

Ms. SAMUELS. Thank you for the question, Senator Klobuchar. 

For starters, we have in our network of startups people who strongly support this reform and are patent holders themselves, and I 

think it is because we have crafted the kind of compromise here 

that I really do not believe puts much of a burden on a small patent holder. I mean, you are talking about, before you file a lawsuit 

in Federal court, doing certain due diligence. The fee-shifting 

standard, for instance, that you bring an objectively reasonable 
29 

case, that is the kind of behavior we want to incentivized, right? 

And ‘‘objectively reasonable case’’ does not mean you have to win. 

You can lose and not get your fee shifted, right? You just need to 

give some thought before you go and sue someone in Federal court. 

I think—you know, to take a quick step back, I think part of the 

problem here is there is this knee-jerk reaction in a lot of what we 

are discussing, where people just assume that a patent is, as someone else said, some kind of God-given right to make money, and it 

is not. A patent exists to incentivize innovation, the progress of 

science and useful arts. And that is what we are talking about 

here. 

I actually think, to answer your question, that the balancing act 

that this bill does both protects small businesses who are targeted 

by trolls, but it also protects small businesses who have patents 

and want to assert them. 

Senator KLOBUCHAR. OK. Thank you. 

Mr. Rhodes, as I mentioned in your introduction, innovation has 

been key to your company. You brought the world the Post-it Note, 

as we know, and as you point out in your testimony, some stakeholders continue to claim that the customer stay provision is subject to abuse that will harm legitimate patent rights. Do you agree 

with this concern? 

Mr. RHODES. Thank you for the question, Senator Klobuchar. I 

do not. As I mentioned earlier, I think really the trick there was 

that delicate three-part negotiation: the patent holder, the covered 

manufacturer, and the covered customer. We really focused at the 

end of the supply chain so that the stay would be available for retailers or end users who really should be in the position of obtaining a stay. 

Senator KLOBUCHAR. When you and I talked yesterday, you 

talked about some of the additional reforms that you thought could 

be helpful here. Do you want to enumerate those? 

Mr. RHODES. Yes, and certainly I mentioned those this morning 

with the post-grant review procedures and inter partes review procedures in the Patent Office. I mentioned, you know, three buckets 

of interlocking reforms that we would like to see added to the bill: 

at the institution phase, leveling the playing field there; having 

sort of the hybrid approach where claim amendments could be considered if a patent owner elected to take the patent into a reexamination or reissue proceeding; and then for those claims that are 

examined—or, I am sorry, are adjudicated under IPR and PGR proceedings, making those consistent with the court. 

I would just like to emphasize that on the litigation pieces we 

have listened to the concerns of those who have called for changes 

to litigation practice to address imbalance and unfairness. We 

would now ask for the same attention and concerns on our side to 

what we perceive to be imbalance and unfairness to be brought to 

real solutions on the IPR and PGR front. Thank you. 

Senator KLOBUCHAR. Thank you very much. 

Chairman GRASSLEY. [Presiding.] Now, we have Senator Tillis. 

Senator TILLIS. Thank you, Mr. Chair. 

Mr. Hadad, I had a question for you. I have heard from a lot of 

pharmaceutical companies about maybe one of the unintended consequences of the America Invents Act is some of this economic espi-
30 

onage that is going on with manipulating stock prices. I think you 

mentioned some of that in your opening testimony. 

Do you believe in the bill’s current form that it adequately address those threats going forward? 

Mr. HADAD. No, it does not. 

Senator TILLIS. Can you give me some idea of what we could potential look at that would improve our standing in that area? 

Mr. HADAD. Absolutely. Today I enumerated three proposals 

modifying the U.S. PTO’s post-grant review proceedings which 

would make them more fair. What we are asking for is—and I just 

want to make it clear. BMS and other industry members are on 

both sides of this issue. Yes, we are patent holders, but we are also 

defendants at times. What we are looking for is a proceeding which 

is fair, which is a faster, cheaper, and analogous proceeding to 

what is going on in district court, but one that does not arrive at 

greatly different results every time, which is what we are seeing 

right here. 

The things that you mentioned about hedge funds trying to torpedo patents and take advantage of the stock market anxiety 

around this are really a symptom of an underlying condition. The 

underlying condition is these proceedings are at least perceived to 

be slanted against the patent holder, and they just need to be balanced. 

I also just want to follow-up, too. We have talked a lot about 

startups today and concerns of startups around patent assertion 

entities, but I would also want to point out that there are a lot of 

startups in the biotech area, and those startups, when bigger companies are looking to do deals with them, they have to have IP protection, meaningful IP protection for that investment and for that 

drug to be developed. I do not want that to be lost in the mix as 

well. Thank you. 

Senator TILLIS. I talked with a pharmaceutical company down in 

North Carolina, the CEO, and we were talking about, because of 

this uncertainty, the long-term impact it has on very important 

business decisions. This particular company is in the middle of getting an Alzheimer’s treatment drug ready. It is about 4 years out. 

They have to start making decisions about manufacturing capability today, billion dollar investments. With this level of uncertainty, it really changes the matrix for them in terms of making 

those sorts of capital expenditures, which are delaying good outcomes that the pharmaceutical industry is poised to provide. 

I do have another question. Mr. Rhodes, this may go to you because you mentioned, I think, a case for preemption. Generally 

speaking, I do not like the Federal Government preempting States’ 

efforts. I understand the complexity that comes from having different rules in different jurisdictions. 

Last year, when I was Speaker of the House, we actually passed 

a bill that I think actually goes further. It essentially created a 

cause of action against entities who assert a bad-faith patent infringement and claims or who made bad-faith infringement assertions and demand letters. 

Do you believe that—it sounds like you would be arguing for a 

position that this may be preempted. Do you believe that the bill 

right now preempts that sort of law in North Carolina? 
31 

Mr. RHODES. Thank you for the question, Senator Tillis. I do not 

believe there is a preemption in the bill as introduced, no. To be 

clear, you know, what I am seeking, I think what the overwhelming majority of patent holders in this country are seeking, 

are, as I said, clear rules of the road so there is no ambiguity or 

confusion as to what we should or should not put in our demand 

letters. We have no wish to send out false or deceptive demand letters. We just want to know what we can put in the letter in this 

State or that State. You know, much like we are trying to make 

sure that we have a level playing field outside the U.S. with our 

trading partners and their patent laws, within the U.S. we would 

like that same kind of level playing field and certainty and uniformity. 

Patent law has always been a creature of Federal statute. I think 

it is really up to Congress, the Federal courts, and Federal agencies 

to develop that policy, and there is certainly a role for concurrent 

enforcement, but I would like that to be a uniform standard for enforcement. 

Senator TILLIS. Ms. Lettelleir, the customer stay provision, the 

thing that concerns me is the way that that process could be gamed 

in terms of maybe technologies that have a 24-or 48-month cycle, 

components of products that may be a brand, and people could 

game the system to where it would be very difficult for someone 

who ultimately proves that their patent has been infringed upon 

actually collecting anything. Do you think there are safeguards in 

the proposed legislation against that? 

Ms. LETTELLEIR. I think that the very fact that the customer stay 

does not absolve the end user from liability, from the recovery potentially of damages, is the safeguard. It is just the way it mechanically would work. All it really would do would pause the 

cause of action against the end user while the manufacturer case 

proceeds on liability questions. Then at the conclusion of that, 

whatever may remain in terms of issues to be resolved with the 

end user simply picks back up, and you continue down that path. 

I do not see there—it does not really significantly delay or hinder 

their ability to be made whole if, in fact, there was infringement. 

Senator TILLIS. My question more is once they get to the original 

offending entity, whether or not there is anything there to help 

make them be made whole. My time has expired. We will followup with questions. Thank you. 

Chairman GRASSLEY. Thank you, Senator Tillis. 

Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. 

Mr. Rhodes, I appreciate that you are here to offer 3M’s perspective, and I know that abusive tactics have harmed 3M, as well as 

other Minnesota companies. I also understand that your business 

relies heavily on the continued strength of the United States patent 

system, and I remain hopeful that we can support that system with 

narrowly tailored legislation that targets bad actors while preserving our innovation economy. 

I know you have been involved in the discussions surrounding 

the PATENT Act, but you also wrote in your testimony,‘‘. . . we do 

not believe that the PATENT Act is ready to be reported out of this 

Committee just yet . . .’’ 
32 

Can you tell me how your perspective has changed over the last 

year overall, but also and specifically as it relates to the growing 

popularity of post-grant review proceedings? 

Mr. RHODES. Yes, thank you very much for the question, Senator 

Franken. I think my perspective over the last year has changed in 

two respects: one is I am very much appreciative of the work that 

has been done by the Committee and their staffs to address some 

of the imbalance and concerns that we had expressed with the bill 

that—or prior bills that had been introduced. I agree this is different and improved in many ways. 

I think concurrently with that, the concern has growing—has 

been growing with respect to the IPR and PGR proceedings in the 

Patent Office. We now have over 3,000 of those filed, we think 

under procedures that are not fair even beginning at the outset, 

where the challenger can put in all of its evidence to begin a review; the patent holder really has to respond with one hand tied 

behind its back and cannot put in testimony to rebut expert testimony put in by the challenger. The same body then decides on that 

incomplete record that it is more likely than not that one of the 

claims is invalid. That same body then carries through and is sort 

of in a position of justifying that initial decision in the final ruling. 

When you get into the proceedings, the right to amend claims 

that was codified in the AIA has effectively been negated. The way 

the rules have been set up, only a very small handful of amendments to claims have ever been granted. We think taking the 

amendment process out of perhaps what is not a good mix in the 

context of IPR and PGR and putting in a new hybrid process where 

you could have an effective ability to examine amended claims and 

BRI would make sense is a way to go. Then for those claims that 

really are adjudicated in IPR and PGR, those are supposed to be 

faster, more cost-effective alternatives to district court litigation. 

Let us make them that. 

You know, again, as was said this morning, we want to have consistent among courts. I think we ought to also have consistency 

among adjudicatory bodies when they are looking at patent claims. 

We ought not to have, as in the example I listed in my testimony, 

4 years of district court litigation and then all the way up to the 

Federal circuit, a patent claim is upheld, its validity is upheld, and 

then you turn around and get an IPR petition that expressly 

leverages the difference in claim construction between the two to 

start over from scratch? That is not what—I would submit that is 

not what Congress intended when it set up these procedures of the 

AIA. 

Senator FRANKEN. Thank you. 

Mr. Hadad, in your testimony you focus heavily on statistics that 

some in the pharmaceutical industry have argued demonstrate a 

pro-challenger bias in the post-grand review proceedings. What 

would you say to those on the opposite side who say that these statistics actually reflect the fact that the PTO has all too often issued 

overly broad patents? In other words, the people on the other side 

would say that these statistics demonstrate that these proceedings 

are serving the precise function they were intended to. What would 

you say to that? 

Mr. HADAD. Thank you, Senator Franken, for the question. 
33 

I think when you look at the analogous proceedings in district 

court, I think no one has thus far, in my mind, criticized the excellent work the district courts have been doing in adjudicating patents in terms of the merits. The procedure has been somewhat onerous, the discovery and the like. Those statistics, from what I understand, are far lower in terms of the overturning of patents, certainly around, I think, 40 percent or so from the last statistics I 

saw. When you look at the USPTO, that is about a 75-percent rate 

of invalidation. 

I think that delta tells a story that suggests that perhaps if there 

were level standards, as I mentioned earlier, Senator Franken, 

they would consider these things in a corresponding way. I do not 

think bad patents would survive more reasonable standards any 

more than they would under these current standards. I think bad 

patents will go down in either case. 

Senator FRANKEN. OK. Well, thank you. 

Thank you, Mr. Chairman. 

Chairman GRASSLEY. Senator Coons. 

Senator COONS. Thank you, Chairman Grassley, for calling this 

hearing. It is my hope that this will be the first of several hearings 

on the proposed reforms to the patent system and that we will 

have an opportunity to hear from as broad a range as possible of 

the folks who will be affected by the proposed changes, including 

some of the critical voices not on today’s panel, which I think essentially includes small businesses who rely on patent protection 

for attracting investment, especially in the bio and pharma and 

materials spaces and the venture capital community that invests in 

them. 

While I congratulate my colleagues on their bipartisan effort, 

this is not a bill that I can support. While it has made progress 

and is less bad than H.R. 9, currently under consideration in the 

House, there are still, in my view, two central concerns that I have 

in reviewing this act. 

First, the reforms in this bill that will make it harder to enforce 

patents are not targeted toward trolls but will affect all patent 

holders. What this will mean in practice is that small investors, 

small inventors, startup businesses taking the biggest risks will be 

potentially hit the hardest by the proposed litigation reforms. 

Second, the bill contains nothing to encourage the innovation 

that our patent system is designed to support. In particular, there 

is nothing in this bill to remedy the well-documented abuse of postgrant proceedings, and I greatly appreciate the comments of my 

colleagues Chairman Grassley and Senator Cornyn who have expressed a desire to incorporate improvements in these areas in 

markup. 

Allow me to briefly elaborate on both points, if I might. 

I am starting with the bill before us today. Our panelists have 

described some truly egregious conduct by trolls, including companies sending thousands of letters to small businesses or retailers 

and a company suing based on nearly expired patents. Yet none of 

those circumstances are limitations actually embedded in the provisions of this bill. Instead, it changes the rules for all patent holders. 
34 

Specifically the provisions in heightened pleading requirements, 

delayed discovery, enhanced fee shifting do not even attempt to distinguish between patent trolls and the startups and small businesses across America that are potentially creating jobs and making new discoveries and delivering life-saving cures. We can make 

that distinction, and we must. The patent system is simply too important to make speed the ultimate goal of our efforts rather than 

accuracy. 

Several of you have described it as a Rubik’s Cube, a complex 

system where there is a real risk of unintended consequences, and 

I think, frankly, the point about post-grant review makes that 

abundantly. 

Do not just take this from me. I have a letter—and, Mr. Chairman, I would ask permission to enter this into the record—from 

the National Venture Capital Association, which does—— 

Chairman GRASSLEY. Without objection, so ordered. 

Senator COONS. Thank you. 

[The letter follows as a submission for the record] 

Senator COONS. Which does speak on behalf of all of the venture 

capital community, that speaks to the significant unintended consequences that we may face, and I quote: ‘‘It is important to recognize a patent is only as strong as the owner’s ability to enforce it 

and the awareness of others of that ability. If the bill as written 

were to pass, NVCA believes both of these parameters would be impaired, making it more difficult to invest in early stage companies 

working on life-saving cures or significant breakthroughs.’’ 

To further understand these views, I encourage any of my colleagues or staff to watch the hearing and associated testimony from 

the recent Small Business and Entrepreneurship Committee hearing chaired by Senator Vitter. In that hearing, we heard from Rachel King, CEO of a small biotech company developing potentially 

life-saving treatments for blood cancers. She testified, quote ‘‘If the 

ability to enforce patents becomes limited due to excessive lawsuit 

filing requirements or undue delays, third parties would be less 

likely to invest in or license our technology, and major sources of 

R&D funding would dry up.’’ 

We also heard from Robert Schmidt, co-chair of the Small Business Technology Council, who expressed fear that weakening patent laws would only benefit large, dominant firms in maintaining 

their market power. 

On the second issue, there is nothing in this bill that helps inventors attract investment to find new cures or disrupt current 

technologies, and I am pleased to hear Mr. Chandler’s testimony in 

which he acknowledged that recent abuses of post-grant review is 

outrageous and the expressed concerns by Mr. Rhodes and Mr. 

Hadad that these need to be addressed. My STRONG Patents Act, 

which Senator Vitter has joined Senators Durbin and Hirono in cosponsoring, really would address IPR abuse, and I would be interested, if I might, Mr. Chairman, in hearing Mr. Hadad speak to 

what are the changes in IPR and PGR proceedings that you would 

like to see incorporated into the bill. Since Mr. Rhodes has already 

had an opportunity to address that, I would be interested, Mr. 

Hadad, in how you see the changes needed to really deal with this 

issue. 
35 

Mr. HADAD. Thank you, Senator Coons, and thank you for your 

concerns and considerations of these issues in your STRONG Patent Act. 

Many of the proposals that I brought up have analogous provisions in the existing text of the STRONG Patent Act. There are refinements, as thinking has continued, to really target this to the 

abusive conduct and really tailor it in a way that makes sense. As 

I mentioned, having the equivalent standards as the district court, 

giving an alternative to amending claims through this reissue or 

reexamination, and then providing some basic fairness and equity 

in terms of the type of information you can introduce, those three 

areas that I said—and I think Mr. Rhodes agrees with—are areas 

that would be areas of focus going forward, in my mind. 

Senator COONS. Thank you, Mr. Hadad. 

Thank you, Mr. Chairman. 

Chairman GRASSLEY. Now, Senator Whitehouse. 

Senator WHITEHOUSE. Thank you all. Let me begin by thanking 

the cosponsors and negotiators who worked so hard on this bill. I 

am at this point in undecided mode. I am waiting to let my Rhode 

Island universities have a chance to digest the bill a little bit more 

and to have a better sense from the small business and startup 

community in Rhode Island weigh in a little bit more with me. I 

echo Senator Coons’ suggestion that there should be more hearings 

on this that bring in a wider range of viewpoints. 

My concern is that among the different conflicts that inhabit this 

patent space includes the ones we have talked about, like patent 

holders versus patent infringers or alleged patent infringers; includes the difference between the pharmaceutical companies, which 

have a huge stake in a particular patent but want to defend it at 

all costs, and tech companies that may have a product that implicates potentially thousands of patents and that gives them very, 

very different motivation in this space. 

Behind all of that, as somebody who used to do a certain amount 

of litigation, is the conflict of big versus little and the advantage 

that our litigation system kind of systemically gives to big, particularly through the ability to just crush a small plaintiff with endless 

discovery, lots of paper blizzard litigation techniques and strategies 

that basically prevent the small plaintiff company from ever getting to the merits. If you are gigantic incumbent, then you have 

enormous power to crush potentially disruptive competition by 

climbing into their space and simply overpowering them in court. 

All of the moves that were made in this bill with respect to heightened pleading standards and discovery limits and adding a threat 

of a potentially game-ending fee-shift award into the equation seem 

to move in the direction of big versus little. 

I am going to need to hear a little bit more from my universities, 

which tend to represent smaller folks, and from small businesses. 

I do think that a lot of progress has been made. 

I do think it is also going to be important that we have a clear 

understanding, Mr. Chairman, as we go forward, that if we reach 

an agreement that is very solid in the Senate, that we have some 

reassurance that we will not just get rolled in the conference process and end up with a bill that looks like the House bill, which I 

think is really unacceptable to most of us and would do real wrong 
36 

as opposed to this, which I think is—you know, we are in the hunt 

on this bill, and the question is: Have we got it right yet? 

My basic question, I would like to ask it to each of you. If you 

want to expand a little bit, please feel free to, but I think it is a 

yes-or-no question. If you had to sit down and write a definition of 

what a troll was so that you could tell a troll apart from a legitimate patent holder, would you be able to do that? Mr. Chandler. 

Mr. CHANDLER. I have felt for a long time that the issue here is 

abuse of the litigation process by big and small alike potentially, 

by active companies and inactive, that certainly there has been a 

huge increase in the number of suits brought by companies that 

are basically investment vehicles for buying patents and litigation. 

The reforms we are looking at in this legislation should improve 

the patent system overall. 

Mr. WHITEHOUSE. My point is: Can you tell a troll apart from 

other litigants? Is there a way to define—we use the word a lot. 

Would you be capable of defining it if you had to? 

Mr. CHANDLER. Certainly—well, I do not use the term because 

I think the problem is systemic. 

Senator WHITEHOUSE. OK. 

Mr. CHANDLER. I think you have rats running through a 

maze—— 

Senator WHITEHOUSE. Mr. Rhodes—— 

Mr. CHANDLER [continuing]. because there is food at the end of 

it. 

Senator WHITEHOUSE [continuing]. Would you be able to define 

the term if you had to? 

Mr. RHODES. I do not use the term because I do not think there 

is any common or understood definition to it that people agree on, 

certainly that I am aware of, and I think it is important—— 

Senator WHITEHOUSE. Ms. Lettelleir? 

Mr. RHODES [continuing]. to identify behavior, not people. 

Ms. LETTELLEIR. I have to agree with my colleagues on that because I really think it—at one point it might have been more easily 

defined, say 10 years ago when this movement started. Over time 

the vortex of behavior has drawn in what previously might not 

have been—— 

Senator WHITEHOUSE. Two seconds left on my clock. Mr. Hadad? 

Mr. HADAD. No. 

Senator WHITEHOUSE. No. 

Ms. SAMUELS. I agree. It is trolling behavior, not troll as a party. 

Senator WHITEHOUSE. Got it. OK. Thank you very much. 

I yield back my time, and I guess that puts Senator Cornyn in 

charge. 

Chairman CORNYN. [Presiding.] 

Good morning. Thank you for being here today. I was just getting 

a little update on what has happened. We have a remarkable way 

of scheduling multiple meetings and hearings at the same time 

around the Senate. 

I understand there was some concern about the process leading 

up to today’s hearing, and I just would like to remind all of my colleagues, we got very close to actually bringing a bill from the Senate Judiciary Committee to the floor last year. Senator Reid, who 

then was Majority Leader, reportedly told the Chairman of the Ju-
37 

diciary Committee, ‘‘Do not bother because I am not going to schedule it for debate and votes.’’ We were unsuccessful bringing the bill 

to the floor then, but it has been a 2-year process, as many of you 

know, because we have consulted with each of you, and we have 

had intense involvement with stakeholders, an incredibly diverse 

array of stakeholders. This is the second hearing we have had on 

this issue this Congress. 

I just wanted to say that to remind all of my colleagues that we 

have worked very hard to get to where we are today, which is not 

to the finish line, but we are a lot closer. My thanks to each of you 

for your contribution to help us get to where we are today. I realize 

we are not done, but we are much closer. 

Mr. Chandler, I understand that Senator Durbin has some questions about the fee-shifting provisions. This is something that Senator Schumer and I worked hard to try to get right. As a former 

judge—State court judge, I had some concerns about the presumptive fee-shifting idea. I have seen a lot of people lose lawsuits that 

were not frivolous. They just lost. In cases where there is objective 

unreasonableness of the position, I think one of the things that is 

important is to have the fee-shifting mechanism that we have tried 

to put in this legislation to make sure that it acted as an additional 

deterrent and did justice to the people who were sued based on a 

frivolous claim. 

Could you talk about the importance of fee shifting a little bit 

more and explain why the Supreme Court’s decision in Octane Fitness was not enough? 

Mr. CHANDLER. Thank you, Senator Cornyn, and thank you for 

your sponsorship of the PATENT Act. 

The Supreme Court decisions are based on a statute that still refers to exceptional cases and have been very spottily applied. In 

fact, in one district a judge has indicated that he felt it was a suggestion, not mandatory law. The number of fee awards still based 

on the principle of exceptionality has been very low and we do not 

think serves as a sufficient disincentive to unmeritorious litigation. 

We do—we would prefer the presumptive language in the Innovation Act in the House but understand the process of crafting this 

bill and are comfortable with the way the language is presented in 

the PATENT Act to address this and to provide the district judges 

with a uniform national standard, which has not been the result 

from the Supreme Court decisions last year. 

Chairman CORNYN. I thought it was important to have—to require a hearing and to require evidence be introduced at that hearing and then to have an opportunity for appellate review to keep 

the district judges doing what Congress intended them to do when 

it comes to considering this matter. 

Mr. Rhodes, thank you for your contribution to this effort and 

working with us. Can you explain why this fee-shifting provision 

is an improvement over current law in your view? 

Mr. RHODES. Yes, thank you for the question, Senator Cornyn. I 

do believe that the interests of uniformity are important. As Mr. 

Chandler said, you know, we currently have the Supreme Court 

opinions. We have long supported more frequent fee shifting in patent cases to drive the right behavior. The Supreme Court in giving 

district courts more discretion is still working within the confines 
38 

of existing Section 285, which is an exceptional case. The Supreme 

Court defined that as cases that stand out from others, but, you 

know, there is still a lot of ambiguity in that. 

I would submit that having the protections, the safeguards that 

you mentioned, as well as making it clear that fees are not automatically shifted—that has been one of our core principles. It really 

should target bad behavior, not parties, got to go both ways and 

be premised on, as the bill says, you know, behavior or conduct 

that is not objectively reasonable. There is an interest-of-justice exception at the end. 

I think there is actual protection as compared to current law that 

this statute would provide to those who are concerned about more 

frequent fee shifting. 

Chairman CORNYN. I’ve heard—on a different topic, I have heard 

from life sciences industries and other concerns about inter partes 

review that was created by the 2011 America Invents Act, and I 

would like to hear from people on both sides of that discussion 

here. Mr. Hadad, you have testified your belief that reforms to IPR 

are necessary, in part because of what you view as a high rate of 

invalidation of patents after they have been issued, and I can understand the uncertainty that that might create, and particularly 

if there are different legal standards that apply to litigation as opposed to the IPR process. Could you share your views with us on 

that? 

Mr. HADAD. Thank you, Senator Cornyn. Yes, I do believe the 

IPR proceedings, as they have been implemented—and I think they 

have been implemented in the best of intentions by the USPTO, 

but there is a considerable deluge of these IPRs, and they have to 

be managed. I think to some degree lost in the mix a little bit have 

been some of the procedural safeguards to ensure a fair and level 

playing field between parties. 

You mentioned the standards, and I had mentioned them earlier. 

I think what they would do would be to give basically analogous 

type of decisionmaking to the district courts and the USPTO. We 

are looking for the USPTO to be a more efficient forum, not to be 

a different forum in terms of the level of invalidations.I think what 

we are seeing is an increased lack of confidence in patent—for patent holders in terms of investment when you consider that there 

is effectively a 75-percent chance that your patent at one point will 

go down in a USPTO proceeding, at least based on current statistics. 

Mr. CHANDLER. Senator, may I address that as well? 

Chairman CORNYN. Certainly. 

Mr. CHANDLER. Thank you. I think first we ought to get a grip 

on the statistics. There are 2.48 million outstanding and in-force 

patents in the United States. There have been 3,000 petitions for 

IPR review. The PTO has granted about 1,300 out of those 3,000, 

and that has resulted in 391 patents having some or all of their 

claims eliminated. 

I can understand why that is painful for the people who have 

that happen. I also understand that they are going to petition Congress for redress. 

The fundamental issue, though, that we see is things like this 

hedge fund activity that is initiating IPRs and then trying to short 
39 

stocks. We ought to address that directly through securities laws, 

for instance. That is not acceptable behavior, in our view. 

The reforms that are being proposed to the IPR process would 

basically force the Patent Office to use standards that were set for 

the district court rather than taking a fair look at whether a patent 

was granted in the first place. The types of standards that the PTO 

uses where they use broadest reasonable interpretation to figure 

out what the scope of a patent should be, where they do not apply 

a clear and convincing evidence standard that we put in the district courts because they are not the experts the way the Patent 

Office is. All that does is roll back the ability of the PTO, which 

was a fundamental part of the process that was implemented in 

the America Invents Act, to take a fair look, should this patent 

have been granted in the first place, using the same standards that 

were used when the patent was looked at in the first place. If a 

mistake was made, let us fix it. There is no excuse for letting a 

mistaken patent grant result in a 20-year monopoly that raises 

costs to customers and keeps other entrepreneurs out of the marketplace. 

We think there are targeted reforms that should be implemented, 

but rolling back the standards the PTO uses is not the right answer. 

Chairman CORNYN. I know there are different views on the 

panel—— 

Mr. CHANDLER. There sure are. 

Chairman CORNYN [continuing]. and that is the reason for the 

hearing in the first place so we can flesh this out and we can hopefully make better decisions. 

Mr. Rhodes. 

Mr. RHODES. Yes, I think that, you know, these states that there 

are 2 million patents and only 3,000 IPRs have been file so far, 

that misses the point that this is not a representative sampling of 

the 2 million patents that are in force. 

What patents do you think are being challenged right now? The 

most important ones, the most valuable ones, the ones that are either in litigation or that others would like to be able to practice. 

Therein lies the problem. 

There is less confidence than has ever been, and this goes beyond 

the life sciences sector that we heard from Mr. Hadad. There is less 

confidence now, when I am talking to business decisionmakers, 

about whether we can safely put investments in commercializing 

patented technology and building products based on that technology, can we assure investments by knowing that we have patent 

rights that can protect them. That is a less certain question than 

it has ever been. It is because of the uncertainty, the perception of 

unfairness, the reality of unfairness that I mentioned in several respects this morning, and that directly drives business decisions, 

and it is beyond the life sciences sector. 

We have proposed a series of reforms. You know, we hope that 

our ask is listened to. The same way those who said there was imbalance in litigation that needed to be addressed, we hope our concerns are listened to as well in terms of the post-issuance proceedings. 
40 

Chairman CORNYN. Ms. Lettelleir, I should have recognized you 

first since you are a constituent, but welcome to today’s hearing. 

We have heard testimony on the alignment or we should not align 

the IPR standards with those in district courts. What is your view 

of that? 

Ms. LETTELLEIR. I think the one thing that is very important for 

the Committee to keep in mind as it considers these requests for 

changes is that the post-grant review proceedings that were adopted as part of the AIA was part of a carefully structured provision, 

and if you now go in and try and pick just one element of that or 

two elements of that, you disrupt the balance of what was accomplished in the AIA. 

While I have heard the arguments that there is an imbalance between the district court standards and the PTO standards, the reality is that throughout the rules governing IPR and PGR that 

have been adopted and applied, there are imbalances. If you just 

start looking to making one element of those proceedings line up 

with district courts, then you have changed fundamentally the balance between challengers and patent holders. We are very concerned of disrupting the balance that was achieved when AIA was 

accomplished. 

As challengers of patents before the PTO in the context of these 

post-grant review proceedings, we are seeing unfairness as to the 

challenger as well. There may be a broader discussion that needs 

to be had down the road, but as part of this, I do not think you 

can just take one element and disrupt the entire balance that was 

achieved in the AIA. 

Chairman CORNYN. I have gone over my time for now. I will recognize Senator Blumenthal, who I think is next. 

Senator BLUMENTHAL. Thanks, Senator Cornyn, and thank you 

all for being here. Thank you for the excellent testimony. I had to 

step out to attend one of the numerous conflicting hearings and 

meetings that we find we have in the Senate. 

I am very, very interested in this dilemma. For me it is a dilemma. I have wrestled with it for quite some time. I recently 

heard, for example, from a Connecticut Navy veteran names Michael Skelps whose photography company was, in fact, sued by a 

patent troll. The troll claimed to have patented the idea of taking 

pictures at a finish line and selling them to racers. I am a runner. 

I know about these photographs at finish lines. They are done commonly. Michael Skelps was threatened with this lawsuit. In fact, he 

was sued, and the troll’s demand letter contained no information 

about his supposed patent. It made the case to Mr. Skelps that it 

would be cheaper to settle than to litigate, and it announced that 

the troll had already forced nine businesses to settle with much the 

same kind of claim. 

Mr. Skelps fought it as hard as he could. He spent $100,000 and 

ultimately all three of the troll’s patents were invalidated. He won 

the battle. He lost the war. I learned last night that Mr. Skelps 

will file Chapter 13 bankruptcy this month, and within 60 days his 

business will be gone. 

I have heard from innovators who are afraid what could happen 

if patent reform goes too far, but I am convinced that there are 

ways to focus and target legislation to help not only big companies 
41 

and very well resourced entrepreneurs, but also the Michael 

Skelpses of the world, of America. He happens to be a veteran who 

obviously was not going to give up without a fight, and he fought 

and he won. Ultimately, though, he lost. 

I am hopeful that we will have a result here that vindicates the 

legal rights of people in America generally, both the entrepreneurs 

and the innovators, the business people, and our veterans. I want 

to thank all the bill’s sponsors. I am not one of them. I hope that 

we can improve even more on what has been done already, which 

leads to the question that I have for you, and I will accept volunteers. Do you think there are parts of the bill that can and should 

be improved? What would you do to make it better and—what always troubles me, especially in an area that is so complex and 

challenging—to avoid unintended consequences? 

Ms. SAMUELS. I can answer that. Thank you, Senator 

Blumenthal, for the question. I think that this bill represents a 

really good compromise, which means, of course, that I do not think 

it is perfect. Right? That is the definition of compromise. Some of 

the things that I wish we saw in there were—I wish that we were 

dealing with quality, like we talked about last year, 2 years ago, 

with an expanded covered business method review; that we more 

directly were talking about improving patent quality, which for 

people in my industry, in the small startups in the tech space and 

not unlike the photographer, Mr. Skelps—if I got that correctly. 

Senator BLUMENTHAL. You did. 

Ms. SAMUELS. That is what would really help. That is the core 

of this problem. I—actually the discovery provisions have been 

dialed back some during compromise, and I wish that were not the 

case, because I was so glad to hear your story and I will be quick 

just to say that there has been a lot of talk today about small businesses and they hurt on both sides of the equation, and I think 

that is probably always true. In this instance, we are so worried 

about small businesses having access to the courthouse, and that 

just does not mean plaintiffs, but it really means defendants in 

these cases, so that you do not have to spend $100,000, $200,000, 

$1 million to defend yourself, but you can go to court and make 

your case. So thank you for the question. 

Senator BLUMENTHAL. Thank you. 

Mr. CHANDLER. We would—thank you, Senator. We would support making sure that the discovery stay in the case of transfer motions, motions to dismiss, motions to sever be more robust. Right 

now it allows for local rules that could impose a significant amount 

of discovery while a transfer motion is being considered, and we 

would hope there would be an interlocutory appeal on the transfer 

motions as well. As we noted, 40 percent of the patent litigation is 

now brought in two judicial districts where only 1.5 percent of 

Americans live. That imbalance forces people to bring large numbers of witnesses and travel to places that are very, very inconvenient, but cases are brought there for reasons that are obscure to us. 

Mr. RHODES. We would certainly hope that any of the welcome 

compromises that we mentioned would not be dialed back in the 

bill. We think that would be a big step backward. 

Beyond that, I have mentioned two areas where we think improvement should be had this morning—no surprise to those of you 
42 

who have been here the whole morning—AIA reviews as well as 

the demand letter section. We think if we could couple changes to 

those with what is in the bill today, at that point we would be in 

a position where we could support the overall package. 

Ms. LETTELLEIR. Senator Blumenthal, from the Main Street perspective, we recognize the balance that has been struck, and we accept that. While we would always hope to have stronger provisions, 

we accept the balance that has been struck. However, any further 

erosion of the critical provisions of the PATENT Act would greatly 

challenge our continued support for the PATENT Act as introduced. 

Mr. HADAD. To finish it up, we appreciate the compromises in 

the current existing bill. We do remain concerned about these postgrant proceedings and believe a comprehensive bill addressing abusive litigation procedures would also include those as well. Thank 

you. 

Senator BLUMENTHAL. Thank you. I want to thank you all. As 

my colleague Senator Schumer remarked at the very beginning, the 

witnesses that we have before us today reflect a consensus, but it 

also may be without some of the disagreeing views, some of the 

other views, which may not be reflected simply because others have 

not been invited for whatever reason. I think that this Committee 

has an obligation to reach out for views that represent the diversity 

and continue to work to improve it without necessarily disrupting 

the compromise that has been struck. Even with a compromise, I 

think there may be room for improvement. 

Thank you, Mr. Chairman. 

Chairman CORNYN. Thank you, Senator Blumenthal. 

I agree with Senator Blumenthal, there is always room for improvement. But we—— 

Senator BLUMENTHAL. I want to thank the Chairman for his role 

in forging this compromise, along with our colleagues Senator 

Leahy, Senator Grassley, Senator Schumer, and Senator Klobuchar. 

Chairman CORNYN. We have learned, even with consensus legislation, which this is not yet, it is still hard to pass legislation in 

the Senate. We are going to keep at it. We are trying to make sure 

that we do get the views of stakeholders, and we have worked very 

hard at that, and, again, I will thank you once more for your sharing that with us and working with us in good faith. 

This to me is the sort of important piece of legislation—maybe 

it is not important on a global scale, but it is to a lot of people. 

I have heard from everybody from restaurant owners to hotel/motel 

owners to operators, to people in the building trades that they are 

somehow swept up by the patent trolls litigation, and it is just incredibly destructive and unfair. 

Ms. Samuels, I think you had a great phrase: ‘‘defendants access 

to justice.’’ Sometimes we focus on the plaintiffs’ access to justice 

in a lawsuit but do not give adequate recognition to the defendants’ 

access to justice as well. 

I might just cover with you—and I apologize if you have talked 

about this before when I was not able to be here and I was at one 

of those other conflicting meetings and hearings that Senator 
43 

Blumenthal alluded to. How would the pleading rule in this proposal help small businesses? 

Ms. SAMUELS. Thank you for the question, Senator Cornyn, and 

I have to thank you so much for your leadership on this effort. 

I think the heightened pleading provision is actually one of the 

most important parts, particularly for startups, for small businesses, for individuals who face threats from patent trolls, because 

you need to be able to understand the scope of the threat you face 

before you can make appropriate decisions about how to proceed, 

and without basic information, you cannot make those decisions. 

I think this is especially true when we are talking about a patent 

system—a patent system that is a system of public notice. That is 

the point of the patent system, and right now it does not operate 

like that. When we talk about property, we are talking about metes 

and bounds. If you want to grow a company, make some innovation, put something out there, it is literally impossible right now 

to know the scope of your rights because there is no information 

out there to help delineate that. The heightened pleading requirement would help fix that problem. 

Chairman CORNYN. Mr. Rhodes, you testified to the safeguards 

and the pleading rule. Would you describe those and perhaps explain those a little more? 

Mr. RHODES. Yes, thank you for the question, Senator Cornyn. I 

think the trick with pleadings is to achieve, as in so many other 

areas of the bill, the right balance between putting all parties, both 

plaintiffs and defendants, on fair notice of the claims and the defenses at issue in the case without making the requirements too 

high or onerous that there is an access-to-justice issue or that the 

pleading targets do not just become a motion to dismiss—that it 

does not become a target for motions to dismiss. I think, you know, 

that is a balance we are trying to strike here. 

I was encouraged that some of the initial information that is not 

required to establish a claim for relief was moved to initial disclosures, so that cannot serve as the basis for a motion to dismiss. 

There is also an ability to plead matters generally, consistent 

with the Plaintiff’s Rule 11 obligation, but more generally if information is not available to the plaintiff at the time the complaint 

is file. 

In addition, there is confirmation within the heightened pleadings requirement of the right to amend pleadings consistent with 

the standards in Rule 15(a) of the Federal Rules of Civil Procedure. 

I think those safeguards are important. 

Chairman CORNYN. If we can turn to the issue of discovery, if I 

worry about—the two things I worry about the most about our civil 

justice system is the costs and the delays necessary to resolve disputes. Not everybody can afford a high-priced lawyer or the discovery costs associated with protracted litigation. One of the things 

we tried to address here is a way to deal with this in an appropriate way. It is an item of consensus because you have plaintiffs 

who complain about discovery, and you have defendants who complain about discovery, too. But some, especially those with little to 

produce, rely upon the high cost of discovery to extract settlements 

regardless of the merits of the case. 
44 

Since the introduction of the Patent Abuse Reduction Act 2 years 

ago, which included a discovery stay, I have heard a lot from both 

sides about the right way to address discovery costs. 

Ms. Samuels, would you please tell us how you view the discovery stay in the PATENT Act and its impact on startup companies? 

Ms. SAMUELS. Of course, Senator Cornyn. Thank you for the 

question. You know, I think that a lot of what I said about heightened pleading is also true with regard to the discovery reforms in 

the early stays. What you are allowing startup small companies 

without a lot of resources to do is really take the necessary time 

with the necessary information to understand the scope of what 

they are facing, to understand as they make these decisions whether they should pay a lawyer and continue to fight, whether they 

should settle. These are the kinds of things we need to give these 

folks so that they, like we have talked about, have access to the 

courthouse. 

To be honest, while I am glad that the stay is in here, I wish 

it went farther. I wish it were to Markman. I understand we have 

a compromise and that is life, so we just think that anything that 

allows these people to get into the courthouse is a good thing. 

Chairman CORNYN. Mr. Rhodes, I think you touched on this, but 

let me just ask you again. Do you think we have reached a balanced approach on deterring frivolous litigation without unduly 

burdening patent holders who need to assert their rights when it 

comes to discovery? 

Mr. RHODES. Yes, I think with respect to the discovery stay, that 

was a major area of concern for 3M and for 21C. As the original 

proposal that you referenced was drafted, it would stay discovery 

pending claim construction, and that is a complex and often protracted procedure that takes place in every case, nearly every patent case before the claims are construed. We were very concerned, 

as a company that makes investments based on our patent rights 

and, unfortunately, sometimes has to enforce those patents to prevent infringement, that staying all discovery in a case pending the 

claim construction process might delay our ability to get fast, expeditious, and effective relief. 

I think walking that back to preliminary motions does address 

concerns. The discovery proceeds while motions to transfer, for example, are not ruled upon. It does address some of that concern 

about discovery taking place in a court where maybe the case is not 

even going to proceed, while balancing the risk—against the risk 

of a protracted delay of that discovery stay as pending claim construction. 

I do disagree strongly with the pushback that we have heard this 

morning about the exception for initial disclosures. I think if you 

look across the country at the patent courts that have done the 

best job of—at the district courts that have done the best job of 

managing patent cases, a common denominator that you see are 

initial disclosure requirements, local patent rules that provide for 

an early exchange of information that helps narrow the issues in 

dispute. It helps identify opportunities on issues for early resolution. It helps identify early settlement opportunities. I think allowing that process to proceed in an orderly fashion, drawing upon the 
45 

experience and the expertise of the Federal judiciary that has 

adopted that process is very important, even if we stay more intrusive discovery pending those preliminary motions. 

Chairman CORNYN. Thank you. I know Senator Blumenthal mentioned some concern about people who are not represented at today’s hearing. I just wanted to note for the record that at the last 

hearing one of the universities were engaged, and I am pleased 

that as a result of the work we have done reaching out to the various university groups, we have welcomed both their input, and I 

think we were in a pretty much better place as far as their concerns and the compromise that we have reached, which is, as we 

have all said, is not perfect, but seems to be a consensus—we have 

reached a consensus, by and large, with some notable exceptions on 

the IPR and other areas where we need to continue to work. 

Senator Blumenthal, do you have any other questions you would 

like to ask? 

Senator BLUMENTHAL. I do not. Thank you. 

Chairman CORNYN. OK. Thank you. Well, since we have run out 

of Senators and questions, thank you for your patience and your 

time, and thanks for continuing to work with us and get this right. 

Thanks. The hearing is adjourned. 

[Whereupon, at 11:54 a.m., the Committee was adjourned.] 

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