INNOVATION ACT HEARING BEFORE THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTEENTH CONGRESS FIRST SESSION ON H.R. 9 APRIL 14, 2015 Serial No. 114–20 Printed for the use of the Committee on the Judiciary ( Available via the World Wide Web: http://judiciary.house.gov U.S. GOVERNMENT PUBLISHING OFFICE 94–184 PDF WASHINGTON : 2015 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 COMMITTEE ON THE JUDICIARY BOB GOODLATTE, Virginia, Chairman F. JAMES SENSENBRENNER, JR., JOHN CONYERS, JR., Michigan Wisconsin JERROLD NADLER, New York LAMAR S. SMITH, Texas ZOE LOFGREN, California STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas DARRELL E. ISSA, California STEVE COHEN, Tennessee J. RANDY FORBES, Virginia HENRY C. ‘‘HANK’’ JOHNSON, JR., STEVE KING, Iowa Georgia TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico LOUIE GOHMERT, Texas JUDY CHU, California JIM JORDAN, Ohio TED DEUTCH, Florida TED POE, Texas LUIS V. GUTIERREZ, Illinois JASON CHAFFETZ, Utah KAREN BASS, California TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana TREY GOWDY, South Carolina SUZAN DelBENE, Washington RAU´ L LABRADOR, Idaho HAKEEM JEFFRIES, New York BLAKE FARENTHOLD, Texas DAVID N. CICILLINE, Rhode Island DOUG COLLINS, Georgia SCOTT PETERS, California RON DeSANTIS, Florida MIMI WALTERS, California KEN BUCK, Colorado JOHN RATCLIFFE, Texas DAVE TROTT, Michigan MIKE BISHOP, Michigan SHELLEY HUSBAND, Chief of Staff & General Counsel PERRY APELBAUM, Minority Staff Director & Chief Counsel (II) C O N T E N T S APRIL 14, 2015 Page THE BILL TEXT H.R. 9, the ‘‘Innovation Act’’ ................................................................................... 3 OPENING STATEMENTS The Honorable Bob Goodlatte, a Representative in Congress from the State of Virginia, and Chairman, Committee on the Judiciary ................................. 1 The Honorable Jerrold Nadler, a Representative in Congress from the State of New York, and Member, Committee on the Judiciary ................................. 19 The Honorable Darrell E. Issa, a Representative in Congress from the State of California, and Member, Committee on the Judiciary ................................. 20 WITNESSES The Honorable Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Oral Testimony ..................................................................................................... 22 Prepared Statement ............................................................................................. 25 Kevin T. Kramer, Vice President, Deputy General Counsel for Intellectual Property, Yahoo! Oral Testimony ..................................................................................................... 67 Prepared Statement ............................................................................................. 69 Robert A. Armitage, former Senior Vice President and General Counsel, Eli Lilly & Co. Oral Testimony ..................................................................................................... 81 Prepared Statement ............................................................................................. 83 David M. Simon, Senior Vice President, Intellectual Property, Salesforce.com Oral Testimony ..................................................................................................... 120 Prepared Statement ............................................................................................. 122 Hans Sauer, Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization Oral Testimony ..................................................................................................... 135 Prepared Statement ............................................................................................. 137 LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING Material submitted by the Honorable Bob Goodlatte, a Representative in Congress from the State of Virginia, and Chairman, Committee on the Judiciary ............................................................................................................... 33 Material submitted by the Honorable Steve King, a Representative in Con- gress from the State of Iowa, and Member, Committee on the Judiciary ....... 45 Material submitted by the Honorable Darrell E. Issa, a Representative in Congress from the State of California, and Member, Committee on the Judiciary ............................................................................................................... 58 Material submitted by the Honorable Scott Peters, a Representative in Con- gress from the State of California, and Member, Committee on the Judici- ary ......................................................................................................................... 170 (III) IV Page APPENDIX MATERIAL SUBMITTED FOR THE HEARING RECORD Prepared Statement of the Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, and Member, Committee on the Judiciary ............................................................................................................... 179 Prepared Statement of the National Retail Federation (NRF) ............................ 181 Response to Questions for the Record from the Honorable Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office .............................................. 190 Response to Questions for the Record from Kevin T. Kramer, Vice President, Deputy General Counsel for Intellectual Property, Yahoo! .............................. 195 Response to Questions for the Record from Robert A. Armitage, former Senior Vice President and General Counsel, Eli Lilly & Co. ....................................... 201 Response to Questions for the Record from David M. Simon, Senior Vice President, Intellectual Property, Salesforce.com ............................................... 203 Response to Questions for the Record from Hans Sauer, Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization ....... 205 INNOVATION ACT TUESDAY, APRIL 14, 2015 HOUSE OF REPRESENTATIVES COMMITTEE ON THE JUDICIARY Washington, DC. The Committee met, pursuant to call, at 2:18 p.m., in room 2141, Rayburn House Office Building, the Honorable Bob Goodlatte (Chairman of the Committee) presiding. Present: Representatives Goodlatte, Smith, Chabot, Issa, Forbes, King, Franks, Gohmert, Jordan, Marino, Labrador, Farenthold, Collins, DeSantis, Walters, Buck, Ratcliffe, Trott, Bishop, Conyers, Nadler, Lofgren, Jackson Lee, Johnson, Chu, Deutch, Bass, DelBene, Jeffries, Cicilline and Peters. Staff Present: (Majority) Shelley Husband, Chief of Staff & Gen- eral Counsel; Branden Ritchie, Deputy Chief of Staff & Chief Coun- sel; Allison Halataei, Parliamentarian & General Counsel; Vishal Amin, Senior Counsel, Subcommittee on Courts, Intellectual Prop- erty, and the Internet; Kelsey Williams, Clerk; (Minority) Perry Apelbaum, Staff Director & Chief Counsel; Danielle Brown, Parlia- mentarian; and Norberto Salinas, Counsel. Mr. GOODLATTE. Good afternoon. The Judiciary Committee will come to order, and without objection the Chair is authorized to de- clare recesses of the Committee at any time. We welcome everyone to this afternoon’s hearing on H.R. 9, the ‘‘Innovation Act.’’ And I will begin by recognizing myself for an opening statement. Today we are here to discuss H.R. 9, the ‘‘Inno- vation Act.’’ The enactment of this bill is something I consider cen- tral to U.S. competitiveness, job creation, and our Nation’s future economic security. This bill builds on our efforts over the past dec- ade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the Administration, and the courts. In February, I along with a large bipartisan group of Members, reintroduced the Innovation Act. This bill was the product of mul- tiple discussion drafts and hearings, passing the House last Con- gress with more votes than the landmark America Invents Act of 2011. Last week we recognized the 225th anniversary of the U.S. Pat- ent Act. When President Washington signed the bill that laid the foundation for our patent system, even he could not have foreseen the revolution in technology that was yet to come. During these (1) 2 past two centuries, America has been at the forefront of innovation, from the industrial revolution to the telegraph and telephone, to advances in medicine, modern computers and the Internet. To a whole new era of mobile computing and personal devices. American inventors have led the world for centuries in new innovations, from Benjamin Franklin and Thomas Edison to the Wright brothers and Henry Ford. But if we want to continue as leaders in the global economy, we must continue to encourage the innovators of today to develop the technologies of tomorrow. The fuel that powers the innovation engine that is America is its people. But the rules of the road require regular adjustment, and during the last 200 years we have seen our patent laws updated and modernized. The most significant reforms took place in 1836, 1952, and most recently in 2011 with the America Invents