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 hightechnology 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 cuttingedge 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 theres 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 steves 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 oneonone 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 realtime. 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 system i urge you to pass this so our patent system can support lifechanging 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 hightech Innovators Alliance for critical technologies. 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 to be problematic. Number three, what alternative solutions might be considered. Section one 01 reforms are unnecessary because of current law. That is in our view 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 wellestablished 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 entirely unprecedented. 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 claims, you are necessarily using a 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 approach 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 standard that is exclusively tethered 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 for the opportunity 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. Im 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 to find 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 dont know what they will do without appeal, ib 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 thats been sent that says dont invest any in this whole area of rnd to all companies in the field, and you got exactly what we dont 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. Weve 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, its really just a statement 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, its the right thing. They figured how to judgment proof or reversal proof their 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 reopening a now welltraveled ground, if you could just illustrate with an example acclaim 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 someones 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 use of a article of manufacture. In both those cases, there is a practical way to perform the invention, if it were an invention. So i reject the notion that these silly claims would become eligible. I also hope that we can step back a little bit and recognize that its absolutely terrible policy to guide our patent laws, something that is very serious to the health and future of our country, by reducing 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 you another example, the bilski Supreme Court decision decided ineligible, likely 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. How would 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, theres 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 to go into, we just wont go 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. That would 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 . Thank you for your question and for raising that, wh