and trump put us on the right track four years ago. and i would like to see us continue that way. also we have the crisis in the middle east, have china circling on taiwan, north korea and south korea. none of this stuff was happening when he was in office. so say what you will about him but i just want the country back to where it was four years ago. and every administration spends interim us -- a tremendous amount of money. that will not stop. but say what you will, we need to do this country back on track. host: do you pay much attention to the stock market? caller: i do, and my stocks, my 401(k) horrible, although the stock market hit a record high, 38,000, i believe. host: yesterday, advancing above 38,000 for the first time ever. caller: yeah, exactly. but yeah, my stocks, my 401(k),

have diminished tremendously under this administration. so i cannot wait until trump gets back into office and we can get the country back on track. i don't care about his personality, don't care about the tweets just want the country back on track. i want us to be energy independent, not getting our oil from the middle east or from venezuela. host: that is karen out of washington. kathleen in guilder lent, new york, line for democrats. >> you will leave this here to take you live to the senate hearing on intellectual property. live coverage on c-span. >> all of our witnesses on the first and second panel are participating today. i apologize for being a few minutes late. we were in the middle of a two vote series so all of us at some point will get up and go vote and come back in my hope is we will be able to use this hearing regardless. i would like to particularly thank my ranking member and friend, senator tillis, and his

staff for working so well together and putting this hearing together on a consensus basis. today we are examining the patent eligibility act, our second drive through this ticket, and i am looking forward to a return. to a reconsideration of the court issues. more than 70 years ago, congress passed the patent act, and that law defined patent law subject matter very clearly. congress intended to allow anything under the sun as made by man to be patentable. other provisions in the act require that it should be novel not obvious. written descriptions served as defined filters, and that all changed roughly a decade ago when the supreme court announced a new two step test for

determining patent eligibility. judges have to determine whether an invention is directed to a patent ineligible concept like the law of nature or abstract idea, and if so, the examiner or judge has to consider whether the patent claim contains an inventive concept. the results to my fewer inventions are patent eligible in the united states, particularly in rapidly advancing fields, medical diagnostics, software, artificial intelligence. those same inventions are still eligible for patent protection abroad, which means if innovators and investors don't have confidence in our ability to protect inventions in the united states, they may or will take their skills and investments elsewhere. this new test does not just with the u.s. at a competitive disadvantage, it is also quite difficult for judges to apply with any degree of certainty. here is how judges on the federal circuit described the

state of u.s. eligibility law. incoherent fraught unclear inconsistent, and confusing. things are so bad that the chief judge has made an unprecedented plea for guidance from the supreme court. multiple solicitors general of the u.s. have asked the court to clarify this law, and the patent trademark office has said the illegal uncertainty has caused unique challenges. in 2019, senator tillis and i had a marathon three days of hearing and heard from 45 witnesses on the issue of patentability. almost every witness agreed that eligibility law was a mess and needed further clarity and guidance. the supreme court has consistently refused to step in, denying every one of the roughly 100 petitions raising this question over the past decade.

with the supreme court unwilling come unlikely to act legislation is the best and may be the only path forward, which is why i was happy to once again join senator tillis in introducing something that will return patentability to important inventions. it will be clear what is not patent eligible, ideas discoveries of what already exists in nature, like unmodified human genes and social or cultural content things that everyone agrees is beyond the scope. to be able to a compass this in three ways, first abolish those set forth in the supreme court two step test. second, clarify eligibility determinations are made by considering every claim element of the patent as a whole and without regards to novelty nondisclosure requirements, and a list of excluded subject matter while maintaining the

existing statutory categories. i look forward to continuing this work with senator tillis and with the wide range of stakeholder groups presented by witnesses here today as we move forward. we have assembled two panels with diverse views and perspectives -- views and perspectives porro and con. i will introduce the first panel of witnesses in a moment, but first i will turn it over to senator tillis of north carolina. ranking member tillis: thank you, mr. chairman, and thanks everyone for being here. these are two of the most significant issues we must address within the patent community. today we focus on patent eligibility reform. while i do believe -- i don't always believe the best fix is allegedly to fix, but i think we

reached a point where legislation is needed. as a result of a series of u.s. supreme court decisions which created categories of judicial exceptions, patent eligibility law has become confused, constricted, unclear, and unclear over the years. inconsistent case decisions, and certainty innovation and investment communities, at unpredictable business outcomes. this lack of clarity threatens to hinder innovation and to unseat the united states as the world innovation leader especially in medicine, artificial intelligence, computing, and 5g wireless and beyond. this impacts individual inventors and businesses both large and small. furthermore, this lack of clarity has the potential to cripple our economic growth and will leave our country vulnerable to foreign bad actors primarily the chinese communist party who wish to

undermine ip rights. in 2021, i worked with david and a judge to file an amicus brief in the american axle case. i was disappointed to see the supreme court declined this opportunity to offer clarity on patent eligibility. there was another reason why -- this is another reason why congress must act and why i introduced the patent eligibility restoration act of 2023 along with senator coons. this will secure inventions across several key areas of technology. the existing categories of eligible subject matter worked well over two centuries and it addresses concerns regarding inappropriate eligibility constraints by enumerating a specific but extensive list of excluded subject matter. this reform will directly and meaningfully impact all stages of patent lifecycle from

prosecution to litigation. i look forward to continuing to work with stakeholders to develop a proposal that strikes the right balance and most importantly can pass the senate and become law. i encourage everyone to reach out and engage with my office regarding this bill, especially those who oppose it. and again, i will make my traditional disclaimer. just come at us with good arguments. don't try and undermine it behind-the-scenes. it never ends well. we have said many times before it is better to be at the table than on the table. let's get this right because often times when you come with a point of view with the data to back it, we will try to accommodate it. mr. chair, thank you again for holding the hearing. i look forward to continuing to work closely with you and your staff to move them through the senate together. now i look forward to hearing your testimony. thank you, mr. chair. chair coons: thank you, senator tillis.

thank you, senator, for joining us. today, we welcome two panels of witnesses to testify. our first witness this andrei iancu -- is andrei iancu. welcome. we second have richard blaylock an ip strategist for an genetic testing company. thank you, richard. we have courtenay c. brinckerhoff, a partner who has been advising life sizes clients for more than 25 years in obtaining and defending licensing and enforcing patents. finally, we were here from philip johnson. a coalition of patent owners from a wide range of industry sectors. mr. johnson has been a leading voice in patent law for more than 40 years. briefly about the mechanics after i swear in this panel of witnesses, you will each have

five minutes to make an opening statement. we will proceed to questions and each senator will have five minutes. we will likely have a second round of questions, then we will recess and bring in the second panel. but first to be sworn in. could all the witnesses please stand? please raise your right hand. do you swear and affirm the testimony you will give before this testimony will be the truth, the whole truth, and nothing but the truth, so help you god? thank you. mr. iancu, you may proceed. mr. iancu: thank you, mr. chairman, ranking member tillis, members of the subcommittee. good afternoon, and think it really to discuss -- and thank you for the opportunity to discuss. i want to thank the subcommittee for undertaking the task of modernizing the statute which in essence first appeared in the patent act of 1793, and when madison and jefferson were drafting patent laws.

a lot has changed in the world of technology since 1793, and courts will be forgiven for struggling to apply an 18th-century statute with 21st century technology. our founding fathers were brilliant. but even they did not anticipate dna processing or the internet. the current state of section 101 law is the result of many quick decisions over the many decades trying to determine whether these modern technologies fit into categories defined in 1793 or whether they are subject to certain exceptions courts have imposed since then. these quick decisions also have resulted in certain de facto rules such as diagnostic techniques for example generally not eligible for patent in the united states. this congress has never considered debated, or passed in the law. if the united states does not recognize patents for certain

categories of inventions, they would otherwise be part of categories outlined by congress, than it is up to congress to make that rule. in other words, congress defined the categories of invention that are eligible for patents. if there are to be exceptions to those categories, they must likewise come from congress. one of the biggest errors is the court decisions have recently poured into section 101 analysis other parts of patent law such as questions of novelty which are dealt with in section 102, questions addressed in section 103 questions of specificity and disclosure, which would be addressed in section 112 analysis. all of this has even sown confusion among the expert ranks of the hard-working patent examiners and the u.s. pto. to address this issue, the patent office for beleaguered guidelines in 2019 that

synthesize and provided a significantly improved framework for analyzing eligibility under 101. this is dramatically improving the analysis at the u.s. pto. for example, a study has shown that uncertainty of section 101 decisions for the relevant technologies decreased by 44% in just that first year following publication of the guidelines. it is working really well. courts however are independent and not bound by administered of guidelines so they persist. they persist in their approach, which has caused profound uncertainty in the lower courts and among inventors, investors and patent law practitioners alike. as a result, congressional action is needed to determine affirmatively which categories of invention should be deemed statutorily patentable or unpatentable.

here is the most important point. congress needs to create clear rules. whatever those rules may end up being after the legislative debate, at least the public deserves to know what the rules of the road are. fortunately, it provides a legislative vehicle for the united states to correct the state of the law. it outlines the correct three-step framework for analysis. first, it maintains the broad categories of what qualifies as an invention in the u.s. in other words, what is in the patent system. it then expressly outlines certain categories that are not considered to be eligible for patents. in other words, what is out of the patent system. and further indicates? not to create any other exceptions that are not in the statute. third, it clarifies the excluded matter does not automatically destroy eligibility.

specifically an invention that combines excluded matter with eligible matter into a useful, practical application, and that combination may still be eligible. in the end, once the categories of included and excluded matter after debate and adjustment is appropriate are settled on and passed into law, it will bring immediate certainty to section 101. i commend the subcommittee for holding this hearing to bring much-needed reform to section 101 and to set our nation on a path of innovation and success for the 21st century and beyond. thank you again for the opportunity to testify, and i look forward to your questions. chair coons: thank you for your testimony. mr. blaylock: members of the subcommittee, thank you for the opportunity to address the topic of patent subject matter eligibility. i am appearing on behalf of the corporation for whom i have been council since its formation in

2010. the clinical diagnostic community it serves is concerned the patent eligibility restoration act as introduced would stifle innovation and harm patient care in the field of diagnostic genetic testing and precision medicine. the company delivers information for both children and adults and has served over 4 million patients and its success in providing critical information has been fostered by the current patent eligibility jurisprudence in the united states. we have often heard the suggestion the publication of the human genome is rendered moot the need for concern relating to patents on human genes. the argument rests on the already had patented human genes have passed because the sequences of human genes are no longer new. this represented a fundamental misunderstanding of the risks to science and patient care caused by permitting natural phenomena to be patented. under current law, natural

phenomena are not patent eligible subject matter, nor are applications of conventional technology to natural phenomena. no person has the standard human genome. all of us have variants in our genetic sequences. some are clinically significant. a well-known example the brca genes that would present indicate a substantially elevated lifetime risk of breast cancer pancreatic cancer prostate cancer, or other types of cancer. variants such as these are natural biomarkers and this information, including its association with disease risk is in unpatentable natural phenomena. also technologies to detect the absence or presence is unpatentable permitted by contrast, nothing in the current lot patenting of new type gnostic techniques such as new tools for sequencing genes. while certain biomarkers have been discovered, the human

genome moves fast and far more important biomarkers are to be discovered. our sophistication in understanding these enter clinical relevance is substantial to the practice of personalized medicine. the patents on natural phenomena has not impaired innovation in the genetic diagnostics industry. quite the opposite is true. in the last decade, the genetic testing industry has thrived. the cost of genetic testing and genetic sequencing has fallen dramatically. there are no barriers to innovation with new, clinically relevant biomarkers. new biomarkers are being recognized on a routine basis. pera would permit the position of natural phenomena -- the privatization of natural phenomena such as those embodied by genetic -- pera which shut the door. a new patent covering newly

discovered biomarkers would appear and impede patient access to such basic information. because so many are engaged in identification of new biomarkers, a diverse group of new tutees stand in the way of clinicians efforts to conduct analysis of a patient's genetic information because state-of-the-art testing would require permission from all of them. none of them would be required to grant such permission. that was the reigning set of conditions before the decisions. pera would take us back, back to a time when the total charge for access to biomarkers in just the two brca genes was $4400. today, a test with more information cost a fraction of that amount. the patent system should afford the opportunity to afford the cure but not the disease. these natural biomarkers and this information including association with disease risk -- i'm sorry. the patent system is not now and should -- i'm sorry.

the patent system does now and should permit the protection of invention but not mere discoveries of innovation, and it does and should reward innovation in the form of new therapies and new tools for detecting biomarkers but not the biomarkers themselves. we urge the committee to recognize natural phenomena such as biomarkers as precompetitive information available to all. this can be accomplished by requiring natural phenomena natural materials, and abstract ideas be treated as prior to all patent applications. this would be the most efficient way to effectively codify the essence of current supreme work jurisprudence on patent subject matter eligibility. we stand ready to offer any assistance the subcommittee may request to approach patent law reform while preserving the vitality of the genetic testing industry innovation and reportedly patient access, the promise of >> thank you. >> chairman cans, ranking member

tellis, thank you for the opportunity to speak on this issue. i have many years of experience helping clients with patents on their convention. my testimony is personal to be -- to me. i want to touch on three issues. inconsistencies, the impact on mobile technologies, and ongoing absurd t. there are inventions that cannot be patented in the u.s. i can still be pat ted and other countries. these include products such as vaccines, and that are useful in commercial and industrial applications.

although some countries have limited exception, most sit -- still grabbed patents on methods of testing new diagnostic markers. because you have the disclosure invention to obtain a patent, this means that inventors have to disclose their inventions to the whole world but cannot protect them to the same extent in the u.s. pera would bring u.s. eligibility back in line with patents that can be granted in other countries. the current inbound and the quid pro quo for patents is -- technologies related to microorganism. that includes what -- bacteria, just to name a few examples. order to satisfy the written description for a patent, the

inventor has to deposit a sample of the bacteria with a facility such as the one in gaithersburg, maryland. then they have to make samples available to the public. the patent only covered a specific method of using the bacteria, samples have to be made available to the public. prior, it could be claimed -- made based on the bacteria but now it is more limited. this imbalance required -- requiring a specimen, this incentive i sixpack in this area and makes trade secret -- it is important that pera restore eligibility in this space to encourage continued investment in innovation. to the continued expansion and judicial exception i compare

two decisions. the 20 41 -- 21 decision invalidated claims on -- even though the claims require lenses and sensors. a year earlier, the federal circuit reversed the district court ruling claims to a device for detecting and reporting where components were detectors logic, and event generators. every useful invention has a purpose could be described by analogy to you. but most can be claimed as a subject matter as a whole. but how can stakeholders predict which approach will be taken? the patent office has interpreted myriad as permitting patenting of natural products that have been modified in a conventional way, such as claims

upheld by the supreme court, but some district courts feel compelled to apply the framework to all claims and search for a separate inventive concept but that approach becomes the law of the land. innovators may not be able to patent specific formulations of drugs derived from natural products, or any life sciences inventions that you not also involve a new scientific technique. when judicial exceptions are applied in an unpredictable manner, the validity of a patented value of technologies are also unpredictable. one-on-one issues are considered and potential deals. unpredictability can be a drag on valuations. it is imperative that legislative action like pera be taken. i thank you for your efforts in this regard. >> mr. johnson?

>> -- because otherwise it would sound like i somehow had gotten to see your opening remarks in advance. i appear here today in my capacity as chair of the committee for patent reform, which is a diverse coalition of american manufacturers who rely on is to protect our inventions develop and manufacture products but to protect them by those patents, licensed patents to them from others in furtherance of their business objectives and when necessary assert their patents against infringements and/or defend against patents asserted against them.

numbers of 21 c are therefore on both sides of these controversies. they are stuck in the middle. what they want to know is what is going to happen, what is predictable, and what is fair? they want fairness and predictability of all else, because to run their businesses, they need to know how to make important investments which make take take decade or more to come to fruition. as many others have state patent eligibility in this country is a mix. no one involved knows in any given situation whether the invention will be eligible or not eligible. as we have heard this comes from the supreme court's recent activity relating to laws of nature and abstract ideas, which was remarkable that they seized on that is the distinguishing

characteristic, because they at the same time recognized that everyone at the inventions that we have relies to some degree on natural phenomena, laws of nature, or an abstract idea. now the lower courts are denying eligibility to some of our best inventions including inventions that they themselves see as groundbreaking breakthroughs and, as you have heard, not just biotechnology and diagnostics many other important areas as well. it is important therefore that congress set in now, past pera - - pass pera or equivalent legislation, perhaps with change wording, but basically pass pera so others can understand what kinds of inventions can be

eligible and where their time and effort will be rewarded. pera accomplished this by prohibiting patentability in determinations. this is the most important area where people make mistakes. you will hear it when you hear people talk about it. just because a patent and invention is the kind that is eligible for opacity -- eligible for patenting does not mean it is patentable. an equation is reached where they are treated if they are the -- as if they are the same. there are a number of additional criteria which must be met. we need to maintain this dichotomy and understand this is an eligibility goal. when someone says this bill is allowing the patenting of x, y, or z, not necessarily.

i agree that it is essential that we are going to protect national security and maintain our role as world's technological leader. this area of patent law must be fixed. it is needed to restore critical incentives to the private sector to invest in development innovation, job growth. what is often overlooked is that consumers will be the ultimate beneficiaries of these reforms. they will not only benefit from the new innovations which come from this stimulated research, but when a new innovation is introduced into a marketplace it puts pressure on the existing alternatives and often prices would be lowered where other alternatives which are now somewhat outdated. we have seen this over and over in technology. as the next model comes out, the

prior model is discounted. this will help consumers for whom prior models are appropriate. we need to keep that in mind. and to pay attention to this, because this is something that needs to be fixed. i look forward to answering your questions. in my testimony, i have described this in far more detail. >> thank you, mr. johnson. i will begin our first round of questioning. mr. johnson your written testimony points to the supreme court's caution by interpreting the exclusionary principle too old bradley because all -- broadly, because all inventions at some level may embody laws of nature or abstract ideas. how have courts done at applying this? mr. johnson: very inconsistently

and unfortunately i think they have interpreted the supreme court decisions in a way which has caused them to overly apply in eligibility of deserving inventions. i pointed to a number of these. some are so plainly unpredictable, things like automotive transmissions and other things that have traditionally been patentable for a long time, including some of the things on diagnostics and edison -- medicines, such as naturally occurring materials which are not patentsa -- pass itable -- pa -- i think i cite hearing knowles's

testimony which provided an extensive list of naturally based drugs. if you look at the approvals you will see the approvals for these kinds of drugs for one reason or another dropped off starting about the same time as the supreme court cases. sen. coons: i agree that the law of eligibility is indeed a mess. but that is the purpose of our hearing, to make progress on this. the courts applied eligibility law more predictably since our 2019 hearings. have they made any significant progress since the guidelines that were propagated by the former pto director? >> the short answer is no, except the only predictability that we have is the diagnostic message are not patentable.

we believe that patents promote investment and innovation in these industries. literally every time a new decision comes out we read it with trepidation to see how it is going to be on digital cameras or digital devices show that even the federal circuit is not applying exceptions in a consistent manner. sen. coons: some have argued that current eligibility lot is sufficient because methods of using natural products are eligible. the agree? >> i disagree because when the inventor is the first person who discovered it and determined its usefulness, a patent on the specific method of use is not going to reflect or reward the contribution that person has made.

when you're patent only covers a specific message, it is difficult to detect infringement or enforce your patent. you cannot stop others from selling the products, so you have to police labeling, packaging, marketing materials to see if you're patent is being infringed. for process patents, it can be even more difficult. there are a number of practical and legal reasons why it can be challenging to claim specific scope of method claim protection. sen. coons: you have testified pera would impose effectively no limits on patents, genes and other natural materials. what about addressing non-novelties. with those filters work to avoid the harms you flagging your testimonies? >> they would not.

there is a reason why i concentrated on the concept of biomarkers. the biomarkers i am talking about are being discovered every day. they are therefore new nonobvious. and it is easy to describe them and how to enable someone to use them and even to describe the best way to implement them. the rest of the requirements for patentability are real but they do not address the concern that pera would change the current environment and make the patenting of information acknowledge the association between a genetic anomaly and it clinical significance. what would be patented would be merely the use of conventional everyday techniques in order to get that information. in short, unfortunately,+ pera

-- would make a dramatic change. sen. coons: do you agree? do you think we need additional legislative language to keep patentability separate? >> titus disagree with him. -- i disagree with him. pera addresses the fact that the pure, natural product itself and the statute says "as such" is not eligible. it is one of the exclusions. as soon as that is applied by human hand, the way practical application, such as diagnostic kits becoming a particular disease, that is human innovation and that should be eligible, whether it is patentable then we need to decide whether it overcomes

novelty, but it is really important to understand the fundamental concepts of what human invention is, all human invention. it is the manipulation of nature towards practical uses by humans on this planet. we can exclude nature itself, but any human intervention and manipulation that is what human innovation and engineering is. that should be eligible for patents. then we can apply the fine filters of 102, one of 3, 112 that sen. thillis: mr. blalock? >> what would be required if you were to proceed with pera would be to recognize that national, those ideas should -- one should

not be able to rely slowly on the novelty as a basis for privatizing that information and meditate -- obtaining a monopoly. sen. thillis: 15 seconds to rebut? >> that is why we have the rest of the codes. any time you apply a practical ingenuity to nature, you are already into the useful arts. it is not necessary to pull it out at this stage. section 10 three, we know how to do the analysis, how to create combinations and see if it is only a minor improvement or if it is using things we already know how to do. that is already there. you do not need to keep it out

of the section 101 level. sen. thillis: you will find that i do debate club in these hearings. if you happen to hear something that you take exception to, raise your pan and we will give you an exception -- a reply. a lot of people criticize pera as something that will impede scientific research and innovation. you may have characterized it is slamming the doors shut on innovation but it seems like too a certain extent it would be a lying ourselves -- aligning ourselves more with policy in europe where it seems like academic research is doing well and industry is out competing the u.s. tell me what i am missing about the policy in europe. >> we have done the experiments. we have lived with the current

patent eligibility law for over a decade. a generation of knowledge and innovation has not been forwarded. at the time that the male decision about some commentators that the sky was falling. the sky is not following. we are doing well. we continue to outcompete europe. we draw more investment. we are the leading market for new innovations in life sciences. european companies want to come here much more than the reverse. sen. thillis: does the current state in section 101 benefit or disadvantage larger or smaller companies? >> i think always the smaller companies will be more disadvantage.

first of all, inventors and small companies are not aware of the state of the law. they invest in technologies before they discover they are not patent eligible. the lines courts are drying do not make sense. but also smaller companies are not in a position to hedge their bets and spread their risks and they do not have market power to commercialize products without the investment. sen. thillis: doesn't that create a weak ecosystem in terms of smaller players or innovators? >> it is critical smaller players can get patents and count on them being upheld. if i could use two seconds of my time to respond to just one comment. sen. thillis: i saw your pan raise. >> we have had 10 years to see how this all plays out, but i disagree with that. we did not understand that that

sage cannot be patentable until barely five years ago. his been much shorter than 10 years. i am concerned about what we are going to see in the long-term once people recognize the fact that patents cannot longer be granted on this technology in the u.s. my clients are still able to protect their inventions in europe and japan. sen. thillis: that is some good work on guidance. but i do not think guidance alone is enough. do you agree that we really do have to move forward with pera to correct this? >> absolutely. the courts have made it clear that they will not respect the work they have done. they feel constrained by the supreme court decisions. until it is fixed by this body,

we are going to have trouble. thank you. >> senator hirono? >> i would like to start by thanking the chair man and ranking member thills for having this hearing. as everyone has acknowledged, the supreme court decisions have created a mess, leading to patent does ability and the hope is that this legislation will provide some level or a lot of deductibility to the patent system. nothing is ever particularly simple. mr. young co. said that the manipulation of nature by human

should be patentable. that sounds reasonable. mr. johnson i think you mentioned that in a lot of things can be eligible but that does not mean a patent would be forthcoming. -- would you say that that does not necessarily mean that a timed will ensue if it is eligible? mr. johnson: absolutely. it may mean that the manipulation is not new. it may mean that it is obvious or if a b that the invention is described pursuant to the requirements of section 112, it may fail for other reasons. sen. hirono: what is eligible to be found, and what make clear does not mean that a patent will ensue. mr. johnson: absolutely. question for ms. brinkerhoff and mr. blalock some critics of

this legislation, notably the aclu, argues it would allow patents for human beings and other natural materials. supporters of the bill -- on unmodified human genes and natural materials, but critics require that there is an exception making eligible any gene or natural material that has been isolated. a question to both of you -- what are some examples of genes are natural materials that you expect to be patent eligible under this legislation that are not eligible currently? >> i will start. examples, as i mentioned, are isolated when you discover a chemical from a plants that could have used as a therapeutic

agent, that would be a natural product that would be restored to eligibility under pera. other examples are the bacteria that i discuss where they may be found in certain areas of the world, cold tolerant bacteria may be found in the north pole. those have specific, useful properties that make them useful in industrial applications. as a be stored to eligibility under pera that cannot be patented now. sen. hirono: mr. blalock, do you think that that is reasonable that the items that ms. brinkerhoff has mentioned should be patentable. >> i do not. if i may, i would like to extend this to the concept of genes. to use that example that if one were to observe newly a particular genetic mutation with a disease risk that the question

is how would pera make that patentable? the only thing that is new is that knowledge. isolation, purification, and enrichment are ordinary aspects of conventional genetic sequencing technologies. one would take the blood sample from a human and it would isolate, purify, enrich the gene. pera would allow passaging that would stop the exploitation of that new knowledge. there is no other human involvement other than recognizing the knowledge. sen. hirono:'s brinkerhoff, would you like to respond? >> i think he underestimates the contribution of figuring out that there is a new gene with a new purpose, a new function that has not been discovered before. i think that is in inventive act that warrants patent protection.

sen. hirono: things are not for both. but i think we all agree that the current situation is a mess. thank you, mr. chairman. >> mr. jensen you seemed eager to engage in that last round of discussion. mr. johnson: listening to mr. blalock's discussion about the isolated gene, i heard a lot about conventional this unconventional that and so on, which with saving me that those are novelty or obvious concerns. it may very well be that the isolated gene and what is done with it turns out not to need this. that should be enough. it is not what we are worried about and what he has already acknowledged, there are some important things lurking in the

genome that could be incredibly important for our well-being in the future. we should want to incentivize people to look for at and to spend the time and energy and money that is needed in order to find it. these things do not announce themselves. this takes hard work and insight and real invention. we should recognize that. when that happens, those inventions are otherwise deserving, they should be patented. >> a logical extension of that back-and-forth is reflected in your written testimony. you said pera would prevent people from engaging in research. which you support this bill if it had a research use exemption to patent infringement? with that move you in a positive direction?

mr. johnson: no, it would not. we would still be concerned that pera would enable the privatization of information. there is a difference between discovery of facts about the world and inventions. nvite believes that inventions are and should be patentable, but the mere discovery of information relevant to human health should not be the sole point of novelty. sen. coons: would it still not prevent the passing of something that was mere knowledge? >> no, it would not because the hypothetical is newly apprehended knowledge about a

particular genetic variants of has clinical relevance. that discernment of what they have discovered is new. that is what the patent applicant would rely upon, because all of the other elements of the client, the sequencing, the drawing the blood, all of that, is old. the novelty and obvious hurdles would be overcome, relying solely on the discovery. that is the reason why if you were to proceed with pera nvite would urge the committee to consider the recognition of natural phenomenon, natural materials, abstract ideas in patents. sen. coons: will be the consequence -- what would be the

consequences? >> you are basically eliminating the patent system. i do not support that. again, think about this. thomas edison scoured the earth to find the materials that would create the lightbulb. he observed after loss of investment in research that if you take bamboo and you create a bamboo filament and you heat it up vacuum too, it creates light. that is the knowledge and information that he observed. mr. blalock says it is bad to give patents if you observe a genetic mutation associated with a risk such as cancer. and then you isolate it and create a diagnostic kits. human beings benefit greatly from that type of "observation." that is the essence of invention.

it takes time, money and investment to find that out. if we eliminate patents on observing how nature behaves when humans alter it and create new conditions for it, then you eliminate the patent system because that is what humans do. engineer use nature and they put them in different combinations to create new technologies. that is what patents are for. sen. coons: thank you. mr. johnson, you will get the last word in my round. mr. johnson: as to retarding the surge, i could not disagree more. the fact of the matter is first we have the exemption, which allows for free research as long as it is related to developing information for the eventual

submission to the fda, but the experience has shown that people who discover and have these inventions do not privatize them. they naturally would like to commercialize them or at least get them spread out and used widely. in fact, when there have been dramatic advances done in the biotechnology area, licensees have been made available because it takes a village to do all of the research that is needed in different applications. these are widely licensed, nonexclusive or product specific basis. that ability to become licensed, i want to develop product x using this, then you are willing to invest that money because you have the protection of the patent behind the license.

sen. coons: he and only forgive me. i'm going to run". i am leaving my very capable ranking member in charge of conducting debate. i will be back soon. >> i do not intend to go vote so we will just -- continue the discussion. mr. blalock, i appreciate you being there. i am neither attorney nor a patent expert. i am a business person trying to make sure that the united states is set to be innovation later that we already are. but not being a patent expert or an attorney that understands patent law, it would seem like director iancu's assertion would end the patent system. why is he wrong? mr. johnson: one, because what i am suggesting -- mr. blalock:

one, what i am suggesting is that right now, one cannot rely upon a natural phenomenon or an abstract idea is the point of novelty in a patent application. the patent system has not round to a halt. the patent office continues to turn out real patents. patents are held on a regular basis. i would say that there is a substantial degree of predictability that has settled into the patent system. as a consequence, it is a gross overstatement to suggest that that would be the end of the patent system. right now, things are operating well, not poorly. those who object have a different policy outcome. it is not a functional problem. it is a policy difference.

we would urge the subcommittee to take seriously the possibility that the status quo actually is both manageable and serving the country well. sen. thillis: i would like to note that we have the record from the 45 witness hearings. among those were testimony from the american association of universities, the general counsel of the mercy of michigan who detailed how devastating this was to their activities. we heard from another witness that they had given up looking into diagnostic methods. this is clearly hurting early-stage insights that lead to inventions. mr. johnson: we do not know what we do not know. with the status quo, to what extent are we missing out on opportunities because we do not have an environment that is

worth the investment? sen. thillis: you are right. we do not know what we do not know but we need could come from it. >> the current system is not working well. the fact of the matter is that the federal circuit has observed, we have the de facto rule that diagnostic techniques in the u.s. are not eligible for patent. that was not debated in any way and it was not decided by the united states that that should be the law. yes, that is what we in a de facto matter right now. we have a situation where an automobile axle has particular characteristics that engineers worked long and hard to determine whether it would reduce vibration under certain

conditions is not eligible for a patent. do not know what the course will hold for the next invention. the problem we have now, sure, patents are being issued, upheld. but the problem we have is that we have rate unpredictability in the court system. that stymies investment and innovation. what mr. blalock is suggesting that i was responding to is a further expansion of that to a large extent. codifying, it would apply across all industries. that is what i think is not a good idea. sen. thillis: i could go on forever. mr. blalock i appreciate you being in the mix here. i appreciate you taking my debate club in the manner intended. these hearings are good data

points but not where most of the work gets done. mr. blalock and those of you on the first panel, i hope that when you see an invitation for working sessions that you come forward. i do not want to impede any successful business that seems to think that the sensible is acceptable. but by the same token i do believe that we want to make sure that we modernize or provide clarity, so that we have more inventions, more creators so that we maintain and reinforce our ship position globally -- our leadership position globally. i look forward to your continued gauge meant. i would like to appreciate the other witnesses. mr. johnson, good to see you again. we will allow the staff to make a transition to the second panel. i will swear them in and we will begin with the opening testimony. if chair coons comes back, we

will let him take the gavel back.

sen. thillis: on behalf of the chair, i will turn to our witness panel productions. our first witness is professor of law at the antonin scalia school of law at george mason university. he has published extensively on ip law. next, mark dean, cofounder of a medical device incubator. mr. dean is a coinventor on two hundred 50 issued and pending u.s. patents. then we have david jones executive director of a coalition of innovative high-technology companies like google intel, microsoft and adobe. then we will hear from david cap .

he is director of the u.s. patent and trademark office. if you all will stand very briefly so we can swear you in. do you swear and affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth? saint -- thank you all. you may be seated. >> thank you ranking member tills and members of the subcommittee. in q4 this opportunity to speak with you today about the pressing need for reform of section 1 and why congress should pass01 the patent eligibility restoration. patent eligibility doctrine was converted into something never before seen coming turning what the supreme court once rightly called a threshold into a new

requirement to invalidate patents at rates never before seen in the 234 years since the first patent act of 1790. an empirical study found that court decisions applying section 101 jumped 730%. between 2014 and 2019, mr. socks found a 1056% increase in the number of ineligible claims and a 914% increase in eligible patents. these numbers are striking. a revolution in u.s. patent law in ways never seen by inventors or lawyers. these unprecedented high rates of use of section 101 to invalidate patents have created a quagmire for american innovators.

this has at best created uncertainty for inventors. at worst, it is predictable but only in the knowledge that innovations will be found ineligible for patent protection including health care treatments for cancer and diabetes and cutting-edge information. the alice mayo inquiry is regularly applied in most patent lawsuits. courts are invalidating patents long protected by the system. judges have concluded that an invention on a manufacturing process for making an automobile axle is ineligible for patent protection but there's more. even remote controlled garage door openers have been deemed not inventors. i have explained in many cases that is the same analysis were

applied to the historical patents confirmed as valid by the u.s. supreme court, such as the telegraph or the telephone the conclusion would be that there patents were invalid. this is not hyperbole. the oil drilling task that was invalidated as an abstract idea -- the patent claim on industrial profits for making rubber that the supreme court affirmed as valid in 1981. courts now say that this industrial process patent is an abstract idea and is excluded from the patent system. when supreme court decisions can no longer be relied on as guiding legal process -- legal precedent, this creates uncertainty. this shows innovation and undermines the function of the patent system. the united states has long been a world leader in promoting new

innovation with its gold standard patent system. when other countries hesitated the united states forged ahead and secured reliable and effective property rights in the growing innovation economy. today is a special anniversary the anniversary of steve's -- steve was receiving his patent for the first programmable computer, sold to steve jobs. under the alice mayor inquiry that patent would likely be invalidated today, as would many others in the computer and biotech revolutions that created massive economic growth and higher standards of living. today, the u.s. is close to the doors to his patent system for all innovators. the supreme court created this problem with the alice mayo inquiry.

quarks -- courts have been unwilling to fix it. it now falls on congress to reform the patent system. this was an important step in returning the u.s. to its old system. sen. tillis: mr. dean? mr. dean: i am an operating partner at light stone ventures a firm that invests in biotech and meditech companies. i am also a cofounder of an incubator in silicon valley. i cap started 20 medical device companies and hold patents. i would guess that many in this room have benefited of the lifesaving technologies. you will hear me mention patients a lot during this hearing. it feels everything that we do. our team at the foundry was

responsible for breakthroughs that help avoid major surgery. we also introduced a device that allow doctors to treat strokes. this restoration of a fuller lives would not be possible without patents. i know patent law is complex. i bring the perspective of an inventor, entrepreneur, and investor. wearing those hats, one is forced to make difficult decisions that will consume years of our lives. we evaluate a number of inputs when making these decisions. we need to be reasonably certain that the sands will work. we need a strong research leadership team. we need to understand the market and to know that our inventions can be protected by patents.

on this last point, i believe the u.s. is failing many inventors and startups. consider what we are facing. nearly all the top patent officials of the u.s. government and all active judges on the federal circuit -- confusion regarding patent eligibility. if these experts are confused, imagine the uncertainty that this is creating for the researchers and the investors who support us. this uncertainty is costing us curious, treatments, economic both and potentially lights. an example -- a number of companies are looking into it i tracking to diagnose autism, traumatic brain interest -- injury, and depression. i spoke to some colleagues. just last week, one received a one-on-one rejection, claiming

that i tracking can be done by the human. i ensure that this is not the case. imagine you are a cushion staring into the eyes of a veteran potentially suffering from ptsd. you must watch their facial expressions and physiological reactions while watching a triggering video. you must process that information in your brain and issue a diagnosis in real-time. could anyone in this room do that? i could not. but current passive losses that we could. the system being developed to do what we cannot is unpatenta ble. and nudge and being able to perform these diagnoses -- imagine being able to perform these diagnoses thousands of miles away. this is the problem we are solving for. we need to consider where the u.s. can and must lead by

personalized medicine, ai assistant therapeutics ai assistant diagnostics, and other things that will not be addressed if innovations cannot be patented. you cannot invest a decade of your life and a quarter of a billion dollars on an invention you cannot protect. i see pera not only addressing the current problem but unlocking future opportunities. my colleagues and i have made it our lives work to bring inventions into the lives of patients. we fight complex physiology, technological innovations, investment dollars. we fight to satisfy the fda and insurance companies. it seems that with alice/mayo we are also fighting the u.s. patent system. our patent systege you to pass this so our patent system can support life-changing breakthroughs. sen. tillis: mr. jones? mr. jones: thank you.

i appreciate this opportunity to support pera. my name is david jones executive and vector -- investor -- the rector of the high-tech innovators alliance each member collectively invests more than 100 $65 billion in r&d each year. they provide 1.3 million jobs, including some of the top 20 recipients of u.s. patents. today i will focus on three points. one, reforms necessary. two, why we consider pera be problematic. number three what alternative solutions might be considered. section one 01 reforms are unnecessary because of current law.

that what is taking place and what the evidence suggests. a 2020 study by the u.s. -- eligibility rejection rates and the variability are lowered now than before alice. if you are a patent applicant life got better since alice then before which i know seems counterintuitive. similarly, quality metrics -- determinations are compliant 98.3%. by way of comparison section 103 has an error rate that is four times higher. the application of 101 is the most accurate of any of the statutory moments. consistency and predictability,

a recent academic study on eligibility decisions for the past decade found that under one of the most well-established metrics for measuring the predictability of the law section 101 proved more protectable than areas of cost law. turning to my second point hda is concerned about the same things i touched on. we are worried that pera could make all human activity patent eligible. we are worried about the standards. one of the most important standards is the notion of cannot practically be performed without the use of a manufacture. that sort of practicality test is unlikely to be any more certain than the abstractions that we have now. we could debate that, but that is my opinion.

i think it would be problematic. the test is entirelyec no one at this point knows how it would be applied or has any experience in applying it believes it would lead to predictable outcomes. -- to extend eligibility to any process. under pera the process would normally be considered as a practical matter to require manufacture. it would be eligible. we also worry it could be gained. -- ga if you practice cl computer. if notmed. you are not actually performing the process. i will spare the two examples of football players. i remain committed that they would be patent eligible. the show the limits that this could go to if everything in

between we were concerned about. in terms of proposed alternatives i could imagine two ways forward, one would be a more targeted appro where we look and see where are the will problems and then fill in any of those gaps with sui geeris protections. the u.s. has done it including for things like semiconductor masks. the other way that i would propose looking at this is adopting a to an advance in technology. that is what my members care about, that every patent reflects an advance in technology. it is simple in that respect. those are the two alternatives that at least i can see. i do not know what my members would say. i could see those being useful going forward. thanks forortunity to testify. i look forward to any questions.

sen. tillis: director? >> good afternoon chairman coons raking member telus, numbers of the seventh -- telus, ranking members of the subcommittee. i'm going to go totally off script and just speak a bit about stepping back. first of all, on the question of whether the law is broken and whether it is still broken and whether various courts are doing a better job of interpreting it, you do not have to go back any further than just the last month toind yet another agreed just district court decision. this is in the bio case. in a situation where the invention is not at all abstract, does not preempt any part of science.

it results from many hundreds of billions of dollars of r&d. i do not fault the district court. they are doing the best they can found the invention ineligible under section 101. so what does that mean? i don't know what they will they will refer to recent history, but now you got a company that has no access to funding because it has no profit opportunity in the future to continue with bringing the product to market. you got a message that's been sent that says don't invest any in this whole area of rnd to all companies in the field, and you got exactly what we don't want in this country, which is investment in innovation, effort and dollars moving away from important areas of american innovation. so if you want to know whether

the system is broken, it clearly is, it clearly still is. the second thing i would mention, having to -- having listened to all the other witnesses so far is that there is a lot of agreement, a lot of common ground among most of the witnesses. we've got a few witnesses who have a very different point of view but mr. chairman and mr. ranking member, you are aware and your staff is aware that over a period of about five years now, a number of -- spent an enormous amount of energy working with you and your staff. the detractors have offered absolutely nothing to a step forward. as you mention, senator tillis it is time for folks who have issues to actually propose something, rather than just denying that there is a huge problem, which there clearly is. so that would be my second point. my third point would be that

pera does represent, despite any histrionics, a very practical, sensible approach, yet by definition, as required, includes some words that are words of principal and words that require some court interpretation. but, look, or judges in this country are very competent, they are very studious, they know how to interpret -- interpret words like practical. they have hundreds of years of experience doing that, and i have absolutely no doubt that they quickly will be able to make the interpretations on top of pera that are needed. one thing i would like to mention before moving on to questions is that any settling of federal circuit appeals or data in academic studies that shows that recently the federal

circuit is not using the district courts as much is it once did in this regard, it's really jent about a couple of things that have nothing to do with whether the current law 101 is really consistent and predictable, or whether it is correct. two different, very important issues in their own right, but the federal circuit reversal rate has to do with its deference, court deference, and what it has to do with his district courts that have figured out -- and district courts do this, and nothing against district courts, it's the right thing. they figured how to judgment proof decisions. the federal circuit, which has no basis to reverse and is dealing with complete mess of law does not reverse. so thank you for inviting me to be here and i look forward to

the questions. >> thank you to all the witnesses on the second panel. at the risk of now well-traveled ground, if you could just illustrate with an example currently ineligible that would be eligible under pera compared to a claim that would be ineligible both under pera and current law. it was argued that football plays and marriage proposals would be ineligible. >> of course not. the essence of pera is to provide in this area that an ineligible process, a proposal for example, does not become eligible because you add, put a ring on someone's finger. of football dancing the end zone does not become eligible because you add the spike of football at the end of it. that is the language that was included in the legislation that very clearly says that acclaim

claim does not become eligible unless there is no practical way to perform it without the useof manufacture. in both those cases, there is a practical way to perform the invention, if it were invention. so i reject the notion that these silly claims would become eligible. i also hope that we can step back a little recognize that it's absolutely terrible policy to guide our patent laws something that is very serious to the health and future of our discussion too trivial, silly examples. we should solve for the real issues involving our patent laws, which are claims like the ones going to truck axles and biomedical innovations. >> my first part of the question, an example of a claim

currently ineligible that would be eligible under pera. >> you can go back to some of the easy ones, some of the supreme court decisions that lead us to where we are now. so the claim in alice likely would become eligible. it is a claim involving a computer implemented financial machination, i will call it, that has to happen in essentially real time that is highly integrated into a computer that could not practically be performed without a computer. so it depends on the facts, the alice case would likely be eligible. not necessarily patentable, of course, giving another example, the bilski supreme court decision decided would still be ineligible. the reason there, in that case

the plaintiff actually stipulated that no computer was required to perform the invention. so they went right down the path of pera and said, look, this claim could be implemented entirely by human beings and therefore ineligible. >> you testified pera would clarify law by drawing clear lines for what is eligible and not eligible. ho this help the companies in which you invest? >> when i as an entrepreneur decide what to pursue, we have to weigh out the totality of the risks and the uncertainties. as i mentioned, there's a number of different areas that we have two way that out. when i look back in time prior to these decisions we kind of knew how to play the game. we kind of understood what was eligible and in -- then what are

other obligations work. with that as an additional area of uncertainty and certain of the most exciting, cutting edge areas of technology we want into them. that will be another uncertainty we can add on top of the clinical and the financial and everything else. we can certainly decide to stay to a more traditional, more mechanically obvious types of solutions and invest our time there. open up this area of technology, reduce that particular uncertainty and allow us to move forward. >> you identified more than 1300 inventions that were found eligible in china but not in the united states. do you have any sense for how those inventions might fare under pera and what effect that would have on our country and our economy? >> for your question and for raising that, which i did not talk about although i identified it in written testimony.

th based upon a data set that was collected by robert sachsen dave campos, patt applications that had been submitted, 17,000 patent applications. so they spent a lot of time on this. it identified of those 17,000, 1300 patent applications between 2014 and ultimately 2019had never faced an initial or final rejection based on 101 and then were abandoned by the patent applicant. this is very significant because what makes those 1300 applicants significant is, you mentioned these patent inventi china and america. the clear signal is the united states is closing its doors to cutting edge innovation. a lot of these patent applications were on health care discoveries and cancer

treatments diagnostic treatments, treatments of diabetes, breast cancer treatments and other types of lifesaving inventions. >> a question to you and mr. john's. you the 2019 revised guidelines brought some stability and uncertainty back to the examination. obviously that is not statutory. are there parts of that guidance that would be helpful for us to be adopting here? >> pera does adopt some aspects of the very important 20 patent eligibility guidelines were directed by uspto. i'm glad you asked that question because the 2020 study is based on the adoption of the 2019 patent eligibility guidelines, which show you that reform is possible and that reform should happen because it can have a positive effect. one of the important aspects of the patent eligibility guidelines is it requires examiners to distinguish between

101, 102 10 39 obvious and 112, disclosure requirements and it requires them to order and to have an explicit reason if they say something is justified -- that is actually what is occurring and continues to occur in most courts. >> mr. chair, i to my wife in the canned good section of a grocery store in chattanooga. i wou it. >> there is no response to that comment that you just made. but thank you. i want to thank you all, and the first panel, too, for the great hearing. here in tennessee, we have a lot of those health care patent holders, people who work in autos, some of the echo tech

type engines, batteries that we are seeing, also music. when you're talking about music production equipment and amplifiers and mics for concerts and road tours, we've got a lot of patent holders. i jokingly -- but seriously, a part of seriousness to say i can't go to the mailbox without seeing somebody at has some kind of patent that they are working on. but indeed, one of the things i is china. we hear a lot about how china has with patent applications. i think it was in 21 they had 1.50 9 million patent applications. and the other part that we hear about is the ptab system to come at us.

and our innovators, and our patent holders, and they are trying to leverage that and then validate our patents many times. so mr. campbell's, i want to come to yis a little bit in your opening remarks but talk for just a moment about how better patent protection will allow us to more effectively compete globally and hold on to those patents, and then the other thing is, when we look at the loss of rnd opportunities that have existed because of this, i think it's kind of a 1-2our innovators, and i'd like for you to bring that into your remarks also. >> thank you, senator blackburn and grt question. so starting with competing

globally what pera is about is encouraging inn u.s., by way of the u.s. once again having the strongest, most reliable most effect system which we no longer have because of the eligibility mess that we've been dealing with. so is it sent -- pera essentially about answering your question about enabling innovators in tennessee to be confident that they can put their talentsinnovation, and there treasure, that is their economics, to work to, in the u.s., rather than have to take them to europe or china where the very same innovations that are not now eligible for patenting in the u.s. are 100% eligible. so coming to the second part of your question, any simple i had to deal with that involved an innovator in tennessee actually, and this started with a client in senator tillis's

state, the great state of carolina, that called us for advice about investing in a company in tennessee, a small, startup company that could be -- that was creating the ability to retrofit automobiles that didn't have self-driving capabilities with self-driving capabilities. it sounds amazing this is lifesaving technology, it's exactly the kind of thing we want to develop in the u.s., highly based on software. when i looked at the patent involved, i had to conclude that were very vulnerable under section 101. in other to be found ineligible. so i advised my client from north carolina, invest in that tennessee company if you love their management, their trade secrets, but don't invest on the basis of their patent eligibility. >> i want to stay with that on

software because this affects a lot of the health-care industry. one thing we've also found out is it has an impact on quantum. in august, i did a quantum roundtable with some of our innovators. and this situation came up, because there seems to be an ambiguity around that. so when we talk about this bill and the impact that could have and really leading to some specificity, give me just a couple of seconds on that. >> quantum computing is obviously a transformational technology. it's all about taking an entirely new way of computing and applying them to the most abstract and difficult of problems, like artificial intelligence etc. that's exactly the kind of innovation that paradoxically

and so unfortunately gets found ineligible under current law because it is deemed to be too abstract. but under pera quantum computing will all be entirely eligible. >> thank you, mr. chairman. >> thank you, mr. chair. i appreciate you convening this important hearing. i have some follow-up with the witnesses in the first panel of questions, but thank you to the witnesses for the extensive testimony that you have all submitted. the understatement of the day is going to be the suggestion this is a complicated and complex issue. i think it would be helpful to -- not just for members of the committee, but the public that will be watching from home. i want to ask a couple of questions on particular impact of consumers. you both described very

different outcomes for consumers and innovation about pera should it become law. mr. jones, your members are those in high-tech and mr. dean, you are approaching this from venture capital. so the question is actually for both of you. what do you predict would be the impact of pera on consumers, and can you comment on your areas of -- >> senator, thanks for the question. the impact of pera on consumers one area to pick is in diagnostics and personal medicine. if you look at the future of personalized medicine and

diagnostics in general, we know that it is confused under today's guidance. that should be cleared up a lot by pera. but the impact on the consumer, one of my business associates had a condition where it could've been one of five relatively rigorous therapies they would've had to go through and because of some personalized medicine testing, they were able to rightfully decide -- they didn't have to shotgun and maybe go through four or five of those therapeutic regimens. i know a number of other technologies, a lot of it is biotech engine on mx. type of testing, but on the medical side we are seeing a lot of tha so this ability to treat better and at lower cost is >> a real benefit. >>the comment on the disagreement you have with this is -- i think we have very different industries, and i think you can legitimately

disagree about some impacts between relatively different industries. frankly, a lot of the arguments dip into areas that i'm not an expert on. >> before i apparently agree with what he said -- i just like to say, i would love to see him describe how you can run an offensive football play without a football. i'm not a foot guy, but as i understand it, is not just impractical, it's impossible. i actually agree with a lot of what mr. dean just said. one area that i covered in my testimony four years ago one area indicates a patent is really, really hard to get one area negatively r&d affecting is in diagnostics.

everywhere else is doing pretty well. i actually agree with what my new friend mark said. i think huge differences within that narrow subject matter -- >> you have less than a minute left. just a quick comment on consumer impact. consumer impact is very complicated, what -- but we believe it would drive up you would have higher prices just in general. >> in your testimony you have gories that your concerns would be ineligible should pera become law. in the interest of the folks watching at home, can you provide a single, concrete not hypothetical, real example would --

was deemed ineligible that pera would make eligible? >> i can provide several, but the easiest one to point to is the claim that is reproduced in director campos testimony. we disagree -- disagree completely on how the bill would be read. basically the claim as i remember it is more or less using automated -- electronic messages at different prices, and from the answer, how many people take those offers, -- i don't see how would be practically possible to send out electronic messages to digital devices without using a machine. i can do that without a machine. i don't know if others can. director campos might feel differently but that it would still somehow be ineligible under pera but i'm confident it

would be eligible. >> thank you very much. >> you mentioned i believe in your opening testimony, you are using an example of technology tracking eye movements. i think it had to do with either pts or tbi. i think you would disagree, but can you go back again and talk about why you think that that patent would be found ineligible? >> that's a very simple answer because it just was. >> could you go back, i followed it fairly closely. >> there was a whole area of technology that's coming out on the medical diagnostic side that choosing various types of eye tracking and using other physiologic parameters to do tracking, which could be done directly, locally, on a computer

with information there, and require very complex, high resolution cameras to do this tracking and measuring many other physiologic signals. they are comparing databases and eyes -- as i was preparing that thought, it's probably an area where we would be seeing trouble, i reached out to a few of my colleagues. the response i got back on thursday last week was, just received a 101 notice that we are following on this tracking system is ineligible. >> do you think that is a re it doesn't sound reasonable does it? my question, and we discussed this a little bit before the hearing, i looked at the outside counsel statement that was reproduced in the testimony, and the outside counsel said being ejected is an abstract idea. i would note that pera one of the exclusions under peracould you

do it entirely in the human mind? if examiners are reading current law that way pera, exclusively reproduced in pera it may have exactly the same problem -- per -- reproduced in pera. that is subject to misinterpretation. i would argue that it should be eligible, but it is not clear my big concern again, is that the literal language of pera seems to, a not necessarily help cases i am actually sympathetic to but b extend eligibility to things that in my view and many people's views just shouldn't be eligible. >> if you believe that the language is still ambiguous, i think we just get in there and fix it. just agree there's a fundamental

-- they seem like they should be ruled eligible. you can disagree with the language, we can work on tightening that up. >> i will tell you that i believe the carolina panthers ran several offensive plays in this season without having the ball in their hands, as evidenced by their record. what i worry about, not knowing innovation we are missing is a lot like trying to figure out or call the roll by having people who are absent raise their hand. i think mr. deen has been successful, he is probably annoyed wit he is going to move on and innovate another win and hopefully prevail on that one. the young mr. deens who are trying to get started, we have barriers to that innovation today, maybe even those who will someday challenge mr. d in his space. do you agree that we are missing

an opportunity, and do you have any sense of how profound the barrie it is to young innovators getting into the space? >> senator, that is an excellent question. one of the hallmarks of the u.s. patent system, is to define patent as property rights. we were the first country to thoroughly do this. once you get a patent and property rights and go into the market with the, you can u financing like early innovators like charles goodyear did. it gave birth to the franchise business model. in this respect, reliable and effective patent right serve the same function as reliable and effective property rights in all areas of the economy. when you tell people when you spend time investing in this whether you are a farmer, industrialist, or inventor, you can take that into the marketplace and commercialize it and get it in the hands of

consumers. that goes to the question of how consumers benefit from this. that is what drives successful innovation economies and that has been the entire history of the united states. e industrial revolution shifted to the united states because of our patent system. the biopharmaceutical revolution which began in germany shifted to the united states in the 20th century because of our patent system. by the end of the 20 century, we are not finishing other people's revolution, we are starting them . even the mobile revolution, where we are carrying supercomputers in our pocket and we share data on. ourones that is the most patent centric sector of the entire economy and we buy these devices for hundreds of dollars that are literally supercomputers. deny these types of protections to innovators and you create uncertainty what you

create is the lack of investment , the lack of willingness to actually go forward and create these new innovations. it goes to an earlier point that was made in the prior panel about how people thought the sky would fall after the alice mayo decisions. the problem here is that a lot of the time horizons on the r&d processes are measured in years if not decades. the average is 10-15 years between the initial discovery of a new molecule and the first sale of appeal to a patient. so we are waiting to see in the immediate years after a decision the impacts, but what we will see is in the follow-on years the lack of new innovations in medical discoveries and the lack of new high tech innovations. >> any final thoughts? >> thank you, senator tillis. coming back to a couple of things briefly, this consumer

question, it really boils down to creators of innovation versus consumers of innovation, right? creators versus recipients or implementers of innovation. ing of a consumer as a party that is taking innovation from another and implementing it, of course you want prices to be as low as possible. in the short-term, taking intellectual property rights away or diminishing intellectual property rights certainly will drive prices down, at the intellectual property in a patent system has never been about what is now, it is about what is next. it's about protecting innovation so that investment will occur for the future and consumers will benefit in the future. that's where the issue of consumer advantage needs to be put, i think, into a broader

perspective. ultimately, the innovation that is not created because the patent system isn't there to incent or reward it is the innovation -- you can get access no matter how much you are willing to pay. the last thing i would say is, i really do believe that you've put together an excellent piece of legislation here. it's practical into account the legitimate interests of those who are concerned. we are all concerned about not having overbroad patents. pera takes those into account. if there are remaining points of concern over individual words or disagreements about has some particular play might get analyzed, that's a perfect place for those who are concerned to now i'm a finally, come to the and make their specific suggestions in order to improve the legislation.

>> apparently there was actual redline language, i want to put that on the record. i've been involved with this for the past five years and have suggested all sorts of things that haven't been adopted. and that's neither here nor there, but i just wanted to put it out there. we have come forward with language, we have come forward with specific legislative language and we've spent a lot of time on this. so if there is some suggestion that we are not at the table that we are not providing suggestions, please talk to your staff, because they are probably very sick of hearing my ideasabout how to do this. >> two last questions, if i might. a lot of witnesses have said the current eligibility law is

unworkable. 40 of the 45 witnesses four years ago said it was unworkable, that it was a mess. not everyone needs to act. are there some stakeholders who benefit from the lack of clarity in the current deal? >> certainly some -- stakeholders would benefit with business models where they don't create innovation, but they were innovation that requires him not to protect long-term r&d investment. they get immediate access to inventions that are no longer protected as property rights. so there are of course commercial interests, very strong, large commercial interest that actually do benefit from this state of affairs. but the primary drivers of innovation, the drivers of the mobile revolution, 5g and 4g require patents to license those innovations in the marketplace just did, thomas

edison and samuel morse and many others in the 19th century. >> i appreciate the input of everyone who has come to the table and participated and testified. some stakeholders have said that pera doesn't define key terms substantially and practically and that depending on the meaning it may be unreasonably expanded or contracted. do you share those concerns? how do you think courts will handle language like practically or substantially? >> no, i don't have the same concerns. i think this is zach leave the f language that judges are extremely well suited to interpret. you don't want the legislation to be so tied down that there is no flexibility for judges to use judgment and using words like practical and substantial are very much designed to enable judges to build caselaw around the statute over a period of time as they have in many other places and specifically patent

laws. but i have absolutely no doubt that judges looking at pera in its totality will do a great job over a short period in putting the additional nuance to those specific words as needed. >> thank you to all of the witnesses on our two panels. my thanks to ranking member tillis and his staff for being great partners. i think today's hearing was and policymakers the supreme court's patent eligibility test is currently unworkable and has created uncertainty for innovators. i think it reinforces why the patent eligibility and restoration act is needed to restore, liability and predictability to our u.s. patent system. any member of this committee who wants to submit additional questions the record, for the witnesses, must do so by 5:00 p.m. one week from today on january 30. thanks to all those who participated. this hearing is adjourned.

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