Statement Of Senator Patrick Leahy, Hearing On: "Pride In Patent Ownership: The Value Of Knowing Who Owns A Patent"

. . . . Intellectual Property Subcomittee

The most fundamental underpinning of our patent system is transparency.  In exchange for limited exclusive rights, inventors disclose their invention to the public, benefitting our society as a whole.  This same fundamental principle of disclosure should extend to ownership information about a patent.  But today, there is no requirement that ownership information be publicly available after a patent issues.  Senator Tillis and I both agree that our patent system would be improved by requiring more transparency in patent ownership, which is why we introduced the Pride in Patent Ownership Act.

Our bill is simple and straightforward.  It requires a patent owner to record updated ownership information with the Patent Office when a patent changes hands.  This information would be made publicly available and searchable in a database maintained by the Patent Office.  To ensure compliance, the bill provides that patent owners who fail to record ownership information in a timely manner cannot obtain enhanced damages for the period in which the information was not recorded.  Our bill also requires the disclosure of government funding of patent application and maintenance fees, language that came at the suggestion of one of our witnesses today, former Patent Office Director Dave Kappos.

This is important legislation for a number of reasons.  Many of us on this Subcommittee have heard horror stories about small businesses and entrepreneurs being forced to engage in costly litigation just to discover who exactly is accusing them of patent infringement and other claims. This shouldn’t be the case. You shouldn’t have to drain resources into expensive litigation just to discover who is suing you.  The lack of clarity about patent ownership information also results in inefficient licensing discussions.  Those are important issues to solve, but they are not the only reason why we should pass this bill.  We are increasingly seeing evidence that the competitiveness of American companies is at stake.

Today, we know that 52 percent of U.S. patents are issued to foreign entities.  What we don’t know is what happens to patents after they issue.  This is critical information because competitors like China are making serious efforts to increase their holdings of U.S. patents.  China recently directed its centrally owned enterprises to double their holdings of U.S. and other foreign patents by 2025.  Over the last two years, Huawei received an estimated $1.2 to $1.3 billion in patent licensing fees from an unknown number of patents covering an unknown array of technologies.  As America positions itself to compete with China over the technologies that will drive our future, such as 5G, we simply need to know how much of our intellectual property is in the hands of foreign countries.

Greater transparency in patent ownership can play a vital role in illuminating the efforts our competitors are undertaking to gain an economic edge over us.  That is why Senator Tillis and I first proposed this legislation as an amendment to the U.S. Innovation and Competition Act earlier this year.  At the time, we worked with members of this Subcommittee and Chair Durbin to reach an agreement on language that was ultimately cleared for inclusion in that bill’s manager’s package.

While that package was not adopted, I appreciate the good faith efforts of the Chair and others to work with us to find a solution that would result in greater transparency.  Since that time, we have continued to work with stakeholders to make improvements to the bill, resulting in the legislation that we introduced last month.  As we consider this legislation going forward, I continue to welcome input from the patent community, whose thoughts are always valuable, and from the members of this Subcommittee.  In fact, hearing from stakeholders is part of the reason I was able yesterday to release appropriations language to ensure that the Patent Office will be able to access all of the fees it collects, after an unfortunate proposed reduction in the Patent Office’s budget for the coming Fiscal Year.  Our goal here is to ensure that we arrive at an end product that, like providing the Patent Office access to all of the fees it collects, garners strong support on both sides of the aisle and will shine more light on patent ownership.

I look forward to hearing the perspectives of the witnesses today.  I have long believed that transparency is a core tenet of not just our patent system, but our democracy itself. And I have worked with Republicans and Democrats over the years to improve and expand transparency into issues affecting the public.  I’m hopeful that this Subcommittee can help bring a little more transparency into our patent system with this hearing and our bipartisan legislation.  I know Senator Tillis was looking forward to being here today to discuss the bill we introduced together.  I appreciate his and Ranking Member Grassley’s willingness to let us move forward in his absence.  Senator Tillis’s statement will be made a part of the Record. 

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