Hearings to examine S.4840, to amend title 35, United States Code, to establish a rebuttable presumption that a permanent injunction should be granted in certain circumstances, focusing on restoring America's status as the global IP leader.
Patents, Copyrights and Trademarks
2024-12-18
Source: Congress.gov
Summary
This Senate Judiciary Committee hearing focuses on the Restore Patent Rights Act, a bipartisan bill proposing a rebuttable presumption that patent owners should receive permanent injunctions when their valid patents are infringed. Witnesses, including a startup CEO, industry advocates, and patent law professors, debate whether the 2006 eBay decision undermined the patent system by shifting the burden of proving injunctive relief to patent holders. Testimony highlights rising predatory infringement—where larger firms exploit weak patent rights by infringing now and paying later—and expresses concern that small inventors, universities, and startups face disproportionate risks due to legal uncertainty. Key topics include the reduction in injunctions post-Ebay, the role of patent assertion entities, and the impact on innovation and venture capital investment. The hearing explores whether a one-sentence bill could restore fairness and balance, with advocates arguing it would protect inventors and incentivize innovation, while others caution against unintended consequences and call for targeted, industry-specific solutions.
Participants
Transcript
This hearing of the Intellectual Property Subcommittee of the Senate Judiciary Committee will come to order. I'd like to thank all four of our witnesses for participating today, and I'd like to especially thank my colleague, Ranking Member Tom Tillis, and his staff for putting this hearing together, again, on a consensus basis. This is our 10th. Our 10th. intellectual property subcommittee hearing of this Congress, the most of any of the subcommittees of the full committee. We have conducted oversight on the PTO and the Copyright Office, analyzed and worked through five different bipartisan bills had a hearing on the intersection of AI and IP, and probed foreign threats to American IP. We've actually been doing the work our constituents sent us to Washington to do, legislating. And at every step, Senator Tillis, you and your team have been fantastic partners. Thank you, and I look forward, God willing, to continuing our work together in the next Congress. I expect other members of this subcommittee will be joining us today. Today's hearing examines the Restore Patent Rights Act, a bill I currently cosponsor with Senator Cotton of Arkansas. This one-sentence bill would restore the presumption that a patent owner should receive an injunction when she demonstrates that a defendant has infringed her valid patent. This is in no way a new or novel idea. Our founding fathers made it clear that inventors should have exclusive rights to their inventions. In other words, the Constitution in its script guarantees to inventors the ability to prevent others from using or selling their inventions without their permission. For more than 200 years, our federal courts recognized this exclusive right, and in nearly 100% of cases, courts issued permanent injunctions against patent infringers when patent owners sought them. This system was predictable and orderly. Parties who wanted to use patented technology negotiated with patent owners to pay for licenses rather than infringing upfront and then risking a costly injunction shutting down manufacturing and distribution operations.
That changed in 2006 with the Supreme Court's decision In eBay versus Merck Exchange, in that case, the Supreme Court held injunctions were not the per se remedy for patent infringement. Instead, courts were to apply the traditional four-factor equitable test before deciding whether to award either money damages or injunctive relief. As you can guess, after eBay, courts have much more frequently concluded money damages rather than injunctions are sufficient to compensate a patent owner for infringement. Studies conducted since eBay have shown the number of injunctions sought and the number of injunctions granted have decreased substantially. The relative decrease in requests for permanent injunctions was 65% for operating companies and 90% for non-practicing entities. And even when parties did seek injunctive relief, they were awarded it less frequently. So grants of injunctions to patent holders who had proven validity and infringement dropped from 100% to about 70%. Putting these trends together means courts are simply issuing far fewer permanent injunctions against infringers than they were before this decision. These numbers don't capture the full impact of the eBay decision. Predatory infringement, an infringe now pay later model, is broadly on the rise. It stands to reason why should a potential licensee negotiate with a patent owner in good faith when they can infringe now for free and maybe at some point later pay a court determined licensing fee. Or better yet, maybe the infringer can wear the patent owner down with years of repeated litigation and with injunctive relief uncertain, extract licensing concessions. Individual inventors, universities, and startups are especially vulnerable because they often lack the significant financial resources to sustain prolonged litigation. As a result, in my view, the value of a patent has diminished. If a patent owner can't be confident that they can exclude infringers from practicing the invention, how can they sell a high-value license?
They can't, and the post eBay data show a huge increase in lower value, non-exclusive licenses, meaning patent owners have a tougher time recovering their investment, which leads to abandoning innovative ideas or reducing R&D investment in the kind of ideas that can propel our economy. It's for these reasons I introduced the Restore Patent Rights Act. And as I've said before, in a single sentence, this would restore the rebuttable presumption and undo the harmful effects of eBay. In all four of our previous hearings examining specific bipartisan bills, we have witnesses who both support and oppose the legislation. We try to hear all sides on this. This hearing's no different. With Senator Tillis's cooperation, we have a panel with diverse views and perspectives both on the challenge and the operational impact of eBay and this bill and its potential consequence. We want to hear from you about whether you think this bill is needed, whether it's crafted the right way, although at one sentence there's not a lot of details to work through and tell us what you like and what you don't and how to make it better. Before I introduce the panel of witnesses, I'd like to turn it to my friend and colleague, Senator Tillis, for any opening remarks. Thank you, Chair Coons, and thank you for holding the hearing on the Restore Patent Rights Act. Before I make a few comments and we hear from the witnesses, I just want to thank you for another... great session of Congress working together, 10 hearings, but what you may not know is how much work goes into those hearings, for which I think we both are very grateful to the staff who do the lion's share of the work. But I also think it's important to mention on the broader subject of intellectual property, how many meetings, work groups, the work of this committee, I would put up against any subcommittee in the US Senate for the past couple of Congresses, and a lot of that
Sign up for free to see the full transcript
Accounts help us prevent bots from abusing our site. Accounts are free and will allow you to access the full transcript.