Washington, D.C. — House Judiciary Committee Chairman Bob Goodlatte (R-Va.) today delivered the following remarks during the Courts, Intellectual Property, and the Internet Subcommittee’s hearing on “Sovereign Immunity and the Intellectual Property System“.

Chairman Goodlatte: Sovereign immunity is a legal doctrine that has existed since the beginning of our Republic.  It is a privilege of sovereign entities, such as state governments and Native American tribes, which are responsible for the well-being of those they govern.  In recent years, however, it has become apparent that in some circumstances, sovereign immunity is being used, not on the activities of constituents of state and tribal governments, but in a way that harms the intellectual property system all Americans depend on.

There is no doubt that the IP system is vital to the health and competitiveness of the U.S. economy.  A strong IP system helps the U.S. maintain its place as the world’s leader in technological innovation and creative expression.  The IP system is weakened, however, when some participants of the IP system do not play by the same rules as the rest.

I share the concern about the recent instances of private companies paying to “rent” the sovereign immunity of Native American tribes to protect their intellectual property.  Tribal sovereign immunity was never intended to serve the interests of private companies unrelated to the tribes.  If successful, these private companies will be able to enforce their patents against others, while exploiting the tribes’ sovereign immunity to prevent legitimate challenges to those patents at the Patent and Trademark Office.  In effect, these companies will not be playing on a level playing field.

That is similar to the situation before Congress acted to restore fairness to the patent system by passing the America Invents Act, or AIA.  This bipartisan measure passed both chambers of Congress by overwhelming margins because of the broad recognition that the patent system had become unbalanced by abusive litigation conduct and low-quality patents issued by an overworked Patent Office.

Inter partes reviews, or IPRs, are a critical part of the AIA’s reforms because they provide the Patent Office an opportunity to correct mistakes it made when issuing patents.  IPRs allow the Patent Office to weed out low-quality patents that should not have been granted in the first place, leaving in place stronger patents that cover real innovations.  If questionable deals with sovereign entities can extend immunity to artificially protect low-quality patents, the entire IP system is harmed.

The facts demonstrate that IPRs and other AIA procedures are effective and accurate.  For example, last year, the U.S. Court of Appeals for the Federal Circuit affirmed decisions of the Patent Trial and Appeal Board in AIA cases about three-fourths of the time, which was roughly the same affirmance rate as for district court patent cases.  In 2015, the affirmance rate was even higher, at about 85%.  As a district court recently noted when considering the very issues presented at this hearing, the entire system of AIA post-issuance review may be in peril if the practice of private companies paying for sovereign immunity continues.

I thank Chairman Issa for convening this hearing, and I thank the witnesses for their participation.  I look forward to delving into this very important issue.