Date: 2013-12-05
Speaker: JACKSON LEE (democrat)
Chamber: H

Mr. Chairman. I rise again to express my appreciation to Chairman GOODLATTE and to Ranking Member CONYERS. This is an unusual posture for us to be in. Again. all of us are for innovation and love the name of the legislation. but are raising concerns that would be worked out or could be worked out with a slower process. Again. I refer to the Constitution and to the aging that went on with the constitutional leaders in Philadelphia who meticulously designed how this great government would work. I noted earlier that they focused on innovation. competition. and inventiveness. My amendment builds on that of the gentleman from Kentucky . an inventor whom. I believe. we should listen to. He has chosen to strike the section dealing with small businesses or the covered customer issue. and mine narrowly focuses to hone in on helping small businesses. My point here on the floor of the House is that we cannot ignore that this bill skews the scales of justice against small investors. When my good friend from Virginia was explaining it. it was already too complicated. My bill is simple. It expands or provides the covered customer to small businesses making $25 million or less. So we are looking for the balance and the compromise that pointedly goes toward small businesses. It modifies that they are protected and that their litigation costs are down. Under my amendment. the definition of a "covered customer" is modified to be one who is accused of infringing a patent or patents on a covered product or process. and is a small business concern under section 3 that has revenue of $25 million or less. It is welldocumented that our innovation ecosystem. founded on patents. started with small businesses. This bill skews the justice system away from them. Why would we want to do so? As the bill is currently drafted. the provision applies to all entities. Momandpop shops at the end of the chain are. in essence. undermined. The legs have gone from underneath them. I know that all of us are committed to innovation. and I ask that the Jackson Lee amendment be accepted. I reserve the balance of my time. Mr. Chairman. I wish to thank the Rules Committee. particularly Chairman SESSIONS and Ranking Member SLAUGHTER. for making my amendment in order. Let me also express my appreciation to Chairman GOODLATE and Ranking Member CONYERS for their hard work on this legislation and for their shared commitment to ensuring that the American patent system remains the best in the world. My amendment modifies the bill to ensure that small businesses are protected and by expanding the amendment from what was offered in the Judiciary Committee markup so that businesses with revenue under $25 million are includedmy hope is that it will garner more support. Under my amendment. the definition of a covered customer is modified to be one who is accused of infringing a patent or patents on a covered product or process. and is a small business concern under Section 3 of the Small Business Act that has revenue of $25 million or less. I have modified this amendment from that offered in the Judiciary Committee markup in order to accommodate more businesses who feel they might benefit from the narrowed language while still maintaining the intended consequence of allowing for stays in proceedings. The expanded language might allow some businesses who are past the "mom and pop" growth phase but if this will provide mediumsized businesses from going bankrupt. or losing valuable revenues because of expensive patent litigation. it is a useful expansion. It is well documented that our innovation ecosystemfounded on patentsdrives economic growth and job creation in the United States. From the hustle and bustle of downtown Houston. Silicon Valley. Chicago. New York. and even here in Washington. D.C.. Americans want to keep our cherished system as strong as possible. For the future of our economy. we cannot risk jeopardizing it. Section 5 is no doubt the most overbroad proposal in this legislation. In the only Judiciary hearing none other than former Undersecretary of Commerce and USPTO Director David Kappos testified that the litigation stay provisions of H.R. 3309 would immunize from liability ALL parties and not just end users and retailers. provided they are located somewhere in a product channel downstream of the first component part maker. This grant of infringement immunity would include large commercial actors. such as manufacturers combining procured components into valueadded completed devices. as well as those who assemble. My amendment seeks to narrowly tailor the language in the bill so that it harms fewer inventors and legitimate patent licensing activity. We must act thoughtfully and with great caution as we pursue reforms to a system which took sixty years to changeand then in the batting of a Congressional eyelashlook to significantly modify once again. I was here during the long road that led to the path that became SmithLeahy. or the American Invents Act. That it took so long is somewhat perplexing but even more interesting is that the bill had a Republican House and a Democratic Senate. Yet we came together in a collaborative fashion and made lemonade out of sixty years of lemons while in the midst of some of the most jarring partisanship we have seen in this great body. A number of the provisions in this bill may be wellintentioned. but they have undesirable consequences for the patent system as a whole. They have the potential to undermine the enforceability of all patent rights. no matter how valuable the patent. and thus potentially incentivize infringement. When patent rights are weakened. the incentive for investing in innovation is diminished. We must guard against that at all costs. One such provision is the customersuit exception. Though wellintentioned. this provision is overbroad. Former USPTO Director David Kappos said this himself when he testified before us recently. As currently drafted. the provision applies to all entities in the chain of commerce of a good. not just the innocent mom and pop shops at the end of the chain. In fact. this provision is drafted so that it would protect the very companies that benefit the most from the sale of an infringing good. And the provision would require a patent holder to prove indirect infringementwhich requires a higher level of proofas well as direct infringement. Taken together. these changes would result in significantly more litigation. not less. My amendment modifies the Managers Amendment to ensure that all of those small businesses that motivated this provision are protected. Please support this amendment to protect innocent end users without jeopardizing the patent system as a whole and all of the benefits that it provides us. And Mr. Chairman. I quote from the Federalist Papers No. 18: It happened but too often. according to Plutarch. that the deputies of the strongest cities awed and corrupted those of the weaker. and that judgment went in favor of the most powerful party. And that is what is the underlying theme of this amendment: protecting the small business which might grow into the bigger business. Jeff Bezos of Amazon.com drove a Ford truck to make some of his earlier deliveriesbut now he could probably buy Ford. In the name of fairness to the little personthe Davids in the land of the Goliaths. commerciallyspeakingand I ask my colleagues to support the Jackson Lee Amendment.