Senator Hatch Highlights Innovation Agenda for the 114th Congress
Washington, D.C. — Senator Orrin Hatch, R-Utah, took to the Senate floor today
to identify pro-innovation policy priorities for the 114th Congress. His speech outlined a series of bipartisan legislative initiatives he will help advance early in the next congress.
Below are select exerpts:
On Patent Trolls:
Patent trolls – which are often shell companies that do not make or sell anything – are crippling innovation and growth across all sectors of our economy. It is estimated that abusive patent litigation costs our economy over $60 billion each year. With so much on the line, how can we afford not to act? Yet, the current Senate did exactly that, and ignored the very real opportunity we had to follow the House of Representatives and pass bipartisan legislation that was supported by the White House.
Now, there are some who argue that patent troll legislation is not necessary in light of the Supreme Court’s decisions in the Octane Fitness and Highmark cases. Ms. Charlene Morrow and Mr. Brian Lahti, however, writing in the BNA Patent, Trademark & Copyright Journal, confirm that “nothing in these cases addresses the proposed reforms to make the real parties in interest who are managing patent assertion entities responsible for fees and costs.” As these experienced practitioners acknowledge, such legislation is essential to address fee-collection concerns faced by defendants in patent litigation. One of the legislative approaches Ms. Morrow and Mr. Lahti propose is to make bonding more readily available at an early stage of litigation.
It is past time that the Senate does its part. I’m determined to make such patent reform a priority early next year, and to make sure we send the President a bill he can sign into law for the good of American innovation.
On Trade Secrets:
We have made some progress in moving forward trade secret legislation. Earlier this year, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing on the importance of creating a private right of action for trade secret theft. And the House Judiciary Committee reported its bill, by voice vote, on September 17th. Although we didn’t get the bill across the finish line this Congress, we are well positioned to move trade secret legislation early next year. It’s past time to enable U.S. companies to protect their trade secrets in federal court.
On the Electronic Communication Privacy Act:
To make matters more complicated, ECPA is silent on the privacy standard for accessing data stored abroad. Storing digital information around the world – a practice that did not exist when ECPA became law – is now routine. Moreover, the federal government has taken advantage of this statutory silence to apply its own standard, requiring access to data abroad if the company storing it has a presence in the United States. For that reason alone, Congress should amend the law.
That is why – together with Senators Chris Coons and Dean Heller – I introduced the Law Enforcement Access to Data Stored Abroad Act.
The LEADS Act would require a warrant when the government demands customer communications from third-party service providers. Such a warrant would only apply to data stored in the United States, unless the data is owned by a U.S. corporation, citizen, or lawful permanent resident. To provide additional protections, the bill requires courts to modify or vacate such warrants if they would require the service provider to violate the laws of a foreign country.
On High Skilled Immigration:
There is widespread consensus and real opportunity for bipartisan, bicameral reform of our outdated visa system for economically essential high-skilled immigrants. For too long our country has been unable to meet the ever-increasing demand for workers trained in the science, technology, engineering, and mathematics – or STEM – fields. As a result, some of our nation’s top technology markets are in desperate need for qualified STEM workers.
This is one of the principal reasons why I, together with Senators Amy Klobuchar, Marco Rubio, and Chris Coons, introduced the bipartisan Immigration Innovation (or I-Squared) Act. To date, the legislation has 26 bipartisan cosponsors. Among other things, the I-Squared Act provides a thoughtful, lasting legislative framework that would increase the number of H-1B visas, based on annual market demand, to attract highly skilled workers and innovators. The bill also reforms fees on H-1B visas and employment-based green cards to fund a grant state-based program to promote STEM education and worker retraining.
The full text, as prepared for delivery, is below:
Mr./Madam President: I rise today to emphasize the importance of keeping our technology industry at the forefront of the global economy.
America has made extraordinary strides in innovation. For decades, we have been the world’s leader in developing new technologies and advancing the Internet age. But we are not the only nation in the hunt. Across the globe, and particularly in China and other parts of Asia, our international competitors are working furiously to catch up. If the United States is to enjoy continued success in the technology arena, policymakers must ensure that we have a legal and regulatory landscape that will enable our innovators to thrive.
As chairman of the Senate Republican High-Tech Task Force, I have been working with colleagues and stakeholders to develop an innovation agenda for the coming Congress. Today, I would like to highlight several bipartisan initiatives we should prioritize early next year to help ensure the continued success of our high-tech economy.
First, Congress must act to protect America’s innovation and inventiveness. An essential part of fostering innovation is protecting legitimate intellectual property rights. In particular, we must enact legislation to combat abusive patent litigation.
Patent trolls – which are often shell companies that do not make or sell anything – are crippling innovation and growth across all sectors of our economy. It is estimated that abusive patent litigation costs our economy over $60 billion each year. With so much on the line, how can we afford not to act? Yet, the current Senate did exactly that, and ignored the very real opportunity we had to follow the House of Representatives and pass bipartisan legislation that was supported by the White House.
Why would anyone walk away from the opportunity to enact pro-innovation policies that would do so much good for our economy?
It’s no secret that trial lawyers and others told the current Majority Leader not to bring patent troll reform up for a vote. And we all know that when the trial lawyers sayjump, the only answer for some of my Democratic colleagues is how high.
While I am disappointed the Senate failed to act during this Congress, I intend to help ensure that we pass such legislation next year. Fortunately, combatting patent trolls is a priority for incoming Senate Judiciary Committee Chairman Chuck Grassley and House Judiciary Committee Chairman Bob Goodlatte.
I look forward to working with them and others who are committed to making long-overdue reforms to our patent laws, including: mandatory fee shifting, heightened pleading and discovery standards, demand letter reforms, and a mechanism to enable recovery of fees against shell companies.
In addition, we must improve the quality of patents issued by the U.S. Patent and Trademark Office. Low-quality patents are essential to a patent troll’s business model. I am optimistic that we can reach agreement on how best to improve the patent process.
We also need a high-functioning and well-funded USPTO. A fully funded patent office, would – at the very least – mean more and better trained patent examiners, more complete libraries of prior art, and greater access to modern information technologies to address the agency’s growing needs. All of these improvements would lead to higher-quality patents that are granted more quickly. And the good news is we can make these changes at no cost to taxpayers since the USPTO is a fee-generating agency.
Now, there are some who argue that patent troll legislation is not necessary in light of the Supreme Court’s decisions in the Octane Fitness and Highmark cases. Ms. Charlene Morrow and Mr. Brian Lahti, however, writing in the BNA Patent, Trademark & Copyright Journal, confirm that “nothing in these cases addresses the proposed reforms to make the real parties in interest who are managing patent assertion entities responsible for fees and costs.” As these experienced practitioners acknowledge, such legislation is essential to address fee-collection concerns faced by defendants in patent litigation. One of the legislative approaches Ms. Morrow and Mr. Lahti propose is to make bonding more readily available at an early stage of litigation.
I couldn’t agree more.
We must ensure that those who defend against abusive patent litigation and are awarded fees will actually get paid. Even when a patent troll structured as a shell company has no assets, there are other parties with an interest in the litigation. These parties are often intentionally beyond the jurisdiction of the courts. They stand to benefit if their plaintiff shell company forces a settlement, and are protected from any liability if they lose.
It’s a win-win situation for them. And a lose-lose situation for America’s innovators.
Since we cannot force parties outside a court’s jurisdiction to join in a case, we must incentivize those interested parties to do the right thing.
That’s the whole purpose behind my recovery-of-award provision.
Under this provision, those who are deemed interested parties may either voluntarily submit to the court’s jurisdiction and become liable for any unsatisfied fees awarded in the case, or they may opt-out by renouncing any meaningful interest in the litigation. If interested parties stand aside and do nothing, the original plaintiff must post a bond to ensure that any shifted fees are paid.
Bottom line: without such bonding measures, all defendants have is a toothless joinder provision that can be easily circumvented by bad actors with no intention of paying the court-awarded fees for their abusive lawsuits.
I’ve said this before, but it bears repeating: fee shifting without such a recovery provision is like writing a check on an empty account. You’re purporting to convey something that isn’t there. Only fee shifting coupled with this recovery provision will stop patent trolls from litigating-and-dashing.
The House has already demonstrated that members from both sides of the aisle can come together to craft and pass commonsense legislation to combat abusive patent lawsuits. President Obama supports such efforts. It is past time that the Senate does its part. I’m determined to make such patent reform a priority early next year, and to make sure we send the President a bill he can sign into law for the good of American innovation.
Mr./Madam President, in addition to patent troll legislation, there is strong bipartisan, bicameral support for creating a harmonized, uniform federal standard for protecting trade secrets.
Here in the Senate, Senator Chris Coons and I introduced the Defend Trade Secrets Act on April 29, 2014. In the House of Representatives, Representative George Holding introduced the Trade Secrets Protection Act on July 29, 2014. Through our collective efforts, we have shed light on an often overlooked form of intellectual property.
Trade secrets, such as customer lists, formulas, and manufacturing processes, are an essential form of intellectual property. Yet, trade secrets are the only form of U.S. intellectual property where misuse does not provide its owner with a federal private right of action. Currently, trade secret owners must rely on state courts or federal prosecutors to protect their rights.
The multistate procedural and jurisdictional issues that arise in such cases are costly and complicated, and the Department of Justice lacks the resources to prosecute many such cases. These systemic issues put companies at a great disadvantage, since the victims of trade secret theft need to recover information quickly before it crosses state lines or leaves the country.
Unfortunately, in today’s global information age, there are endless examples of how easy—and rewarding—it can be to steal trade secrets. While the maximum penalty for trade secrets theft is 10 years in prison and a $250,000 fine, few of these thefts actually result in federal prosecutions. And while $250,000 may sound like a steep penalty, most stolen trade secrets amount to tens or even hundreds of millions of dollars in lost profits and sales. Even when thefts are prosecuted, victim companies rarely recover the full extent of their loss.
We have made some progress in moving forward trade secret legislation. Earlier this year, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing on the importance of creating a private right of action for trade secret theft. And the House Judiciary Committee reported its bill, by voice vote, on September 17th. Although we didn’t get the bill across the finish line this Congress, we are well positioned to move trade secret legislation early next year.
It’s past time to enable U.S. companies to protect their trade secrets in federal court.
Mr./Madam President, another bipartisan initiative ready for congressional action relates to our privacy laws. I speak about the need to update the Electronic Communications Privacy Act—or ECPA—to require a warrant for all e-mail content within the United States and to safeguard data stored abroad from improper government access.
Enacted in 1986, ECPA prohibits communications service providers from intercepting or disclosing e-mail, telephone conservations, or data stored electronically, unless such disclosure is authorized. Virtually everyone agrees that Americans should enjoy the same privacy protections in their online communications that they do in their offline communications. But Congress has not adequately updated the law since its enactment and technological developments have resulted in disparate treatment.
As currently written, ECPA requires law enforcement to obtain a warrant for e-mails that are less than six months old, but only a subpoena to access older electronic communications. Think about your own e-mail account. You might have hundreds of e-mails that you’ve received over many years. Additionally, ECPA has allowed law enforcement to access e-mail that has been opened with just a subpoena, even though a search warrant would be required for a printout of the same communication sitting on your desk. These conflicting standards should cause great concern to everyone who values personal privacy.
To make matters more complicated, ECPA is silent on the privacy standard for accessing data stored abroad. Storing digital information around the world – a practice that did not exist when ECPA became law – is now routine. Moreover, the federal government has taken advantage of this statutory silence to apply its own standard, requiring access to data abroad if the company storing it has a presence in the United States. For that reason alone, Congress should amend the law.
That is why – together with Senators Chris Coons and Dean Heller – I introduced the Law Enforcement Access to Data Stored Abroad Act.
The LEADS Act would require a warrant when the government demands customer communications from third-party service providers. Such a warrant would only apply to data stored in the United States, unless the data is owned by a U.S. corporation, citizen, or lawful permanent resident. To provide additional protections, the bill requires courts to modify or vacate such warrants if they would require the service provider to violate the laws of a foreign country.
The practice of extending warrants extraterritorially presents unique challenges for a number of industries, which increasingly face a conflict between American law and the law of the countries where the electronic data is stored. Additionally, if the U.S. expects to extend its warrants extraterritorially, we should not be surprised if other countries—including China and Russia—seek to do the same for e-mails of Americans and others stored in this country.
Congress must ensure that law enforcement has the tools to execute search warrants where necessary, so long as officials comply with the laws of the foreign country where the electronic data is stored.
The LEADS Act also provides needed improvements to the mutual legal assistance treaty process, which are formal agreements for sharing evidence between the United States and foreign countries in international investigations. Currently, the MLAT process is slow and unreliable – sometimes taking several months to access data held by foreign jurisdictions. The Department of Justice not only needs additional funds to hire more people to handle MLAT requests, but reforms to the underlying program are needed to improve transparency and efficiency.
The legislation recognizes through a Sense of Congress that data providers should not be subject to data localization requirements. Such requirements are incompatible with the borderless nature of the Internet, they are an impediment to online innovation, and they are unnecessary to meet the needs of law enforcement.
It’s time to act to update our electronic communications privacy laws.
Finally, Mr./Madam President, there is widespread consensus and real opportunity for bipartisan, bicameral reform of our outdated visa system for economically essential high-skilled immigrants.
For too long our country has been unable to meet the ever-increasing demand for workers trained in the science, technology, engineering, and mathematics – or STEM – fields. As a result, some of our nation’s top technology markets are in desperate need for qualified STEM workers.
We face a high-skilled worker shortage that has become a national crisis. In April, for the second year in a row, the federal government reached its current H-1B quota just five days after it began accepting applications. Employers submitted 172,500 petitions for just 85,000 available visas, meaning American companies were unable to hire nearly 90,000 high-skilled workers essential to help grow their domestic businesses, develop innovative technologies at home rather than abroad, and compete internationally.
This is one of the principal reasons why I, together with Senators Amy Klobuchar, Marco Rubio, and Chris Coons, introduced the bipartisan Immigration Innovation (or I-Squared) Act.
To date, the legislation has 26 bipartisan cosponsors. Among other things, the I-Squared Act provides a thoughtful, lasting legislative framework that would increase the number of H-1B visas, based on annual market demand, to attract highly skilled workers and innovators. The bill also reforms fees on H-1B visas and employment-based green cards to fund a grant state-based program to promote STEM education and worker retraining.
The I-Squared Act addresses the immediate, short-term need to provide American employers with greater access to high-skilled workers while also addressing the long-term need to invest in America’s STEM education. I am confident that this two-step approach will enable our country to thrive and help us compete in today’s global economy.
No doubt, a concrete legislative victory where there is already considerable consensus would help build trust and goodwill among those who disagree sharply over other areas of immigration policy. And it would mark a critical first step along the path to broader reform. I look forward to working with my Senate colleagues in introducing I-Squared early next year.
Mr./Madam President, as you can see there is a lot we agree on and much we can—and must—accomplish.
Looking ahead to the next Congress, I intend to do everything in my power to enact pro-technology, pro-innovation policies that will ensure the continued success of our high-tech economy. I yield the floor.
