This transcript is from a CSIS and LeadershIP event hosted on December 12, 2023. Watch the full video here.
John J. Hamre: My name is John Hamre. I’m the president here at CSIS.
And I have a great privilege today to welcome one of the rising stars in the House of Representatives, Representative Kevin Kiley. And he’s a new member of Congress. He just was elected. This is his first term. But he’s already established a reputation, really coming partly from time before he came to the Congress and now in the Congress, thinking about intellectual property and the importance that plays in the American economy. We’re hosting this as part of the Renewing American Innovation Series, where intellectual property is a foundation for the American ecosystem. So really privileged to have the chance to talk with you today, Congressman, and it’s a real honor to have you with us.
You actually made some history on how you got interested in intellectual property. I think it had to do with Huawei. Would you share that story?
Representative Kevin Kiley (R-CA): Oh, sure. And thank you so much for the chance to be here and for the work that you do. I am really looking forward to the conversation.
But, yeah, so I had – I actually practiced law for a bit. I was at a law firm called Irell and Manella, which is based in Southern California, and I worked on a number of patent cases while I was there but then also was involved in a trade secrets theft case representing – our client was T-Mobile. And the allegations set forth in that case included the theft of intellectual property – of a testing robot, specifically – from T-Mobile’s testing facility in Washington. And that case, actually, you know, was kind of the foundation of the investigation that followed into that company’s rampant IP theft in the United States.
And so, you know, this, of course, is an issue that we’ve been dealing with for some time now, is the ways in which, you know, China has targeted U.S. intellectual property, has stolen it in any number of ways. But you know, that has kind of morphed into a broader threat where, you know, they have made it a priority to develop and invest in intellectual property in ways that the United States really is not doing anymore. And so I think that that is one of the reasons that I am very focused on this topic, is I see, you know, this as a crucial issue in terms of our competitiveness vis-à-vis China.
Dr. Hamre: Just again, so T-Mobile was developing a robot –
Rep. Kiley: Mmm hmm.
Dr. Hamre: – in the United States. A team from Huawei came and they tried to steal intellectual content about it so that they could bring it to their own operation? Is that what happened?
Rep. Kiley: Yes. I mean, the facts alleged in the complaints set forth that, you know, Huawei was an authorized vendor to test their phones using this robot that T-Mobile had developed. I believe it was called Tappy. And the idea was it simulated a human finger so that you could sort of test your device with a touchscreen rapidly without having, you know, to have a human user do it each time. And so, you know, there were various allegations as to Huawei employees actually, you know, taking the robot from the lab, trying to, you know, find a way to copy the technology.
Dr. Hamre: You framed this in a very significant way, that intellectual property, patents, patent protection is part of the foundation of our innovation system. Would you expand on that?
Rep. Kiley: Well, absolutely. I mean, this is the whole point of the patent clause in our Constitution, is that this is a form of protection that is provided in order to incentivize and propel innovation. And you know, that has been at the core of America’s global, you know, economic dominance over the course of, you know, our country’s history, is that we have really been at the forefront of invention and innovation and producing, you know, new technologies, devices that have changed the course of history and have been a(n) enormous source of American power in any number of ways. And so, you know, when we see that edge, that edge that we’ve had being lost in some ways, I think that’s a cause for major concern.
Dr. Hamre: Can I ask – and I’m afraid it will be a bit of an edgy question – you’re in California. Not all California companies seem to be as worried about spying as we are here in Washington. Should we be concerned about Chinese spying in California’s high-tech industry?
Rep. Kiley: Well, sure. I mean, it’s so well-documented that I think of course we need to be mindful of it. This is something – the China Initiative was started in the last administration to specifically try to combat, you know, intellectual property theft by the CCP. And so this is very well-documented. It’s sort of just part of their way of doing business. And I think that any company, you know, that might be at risk would be well advised to be vigilant about those sort of risks, you know, certainly from the CCP and more broadly.
Dr. Hamre: Are companies in California interested in hearing your message about this?
Rep. Kiley: I think there are certainly companies that have – yeah, that are very mindful of that and have taken measures against it. And you know, I think that certainly, you know, we’ve seen the – not only specific companies, but you know, the broader United States national security establishment that has been, you know increasingly mindful of these threats as well.
Dr. Hamre: You’re following the semiconductor issue. Do you have – do you have – have you been tracking that? And what are your thoughts about semiconductor restrictions on China?
Rep. Kiley: Well, I think that we’ve taken some really encouraging steps to try to catalyze our own industry and to become more self-reliant. And I think that, you know, frankly, getting to some of the policy challenges that we face, this is one area where we’ve really, you know, disadvantaged ourselves through the legal constraints that we’ve put in the way of innovation.
And so one of the issues that I’m working on right now is trying to strengthen patent protections so that we’re giving American inventors a greater incentive to innovate. And so semiconductor technology is one area where we’ve seen court decisions have essentially made it more difficult to get your invention patented, and that creates uncertainty, unpredictability, which serves to freeze or to – you know, to have less of an incentive to make pathbreaking innovations that could make us more self-reliant when it comes to that sort of technology.
Dr. Hamre: I’d love to hear more. What do you think – the legislation that you’re contemplating and thinking through, what would be the important things to do to strengthen intellectual property protection, patent protection?
Rep. Kiley: Well, there are a few things, but the one that I’m focused on right now is a bill called the Patent Eligibility Restoration Act, which, you know, is a bipartisan measure. And what it seeks to do is simply kind of restore the rules around what is an invention that can be patented that have governed our country for, you know, over two centuries and have only been, you know, unraveled to some extent over the last decade or so, really since the Supreme Court started wading into this in 2010.
And so, you know, strictly through the courts – not through Congress being involved or anything like that – you’ve seen these sort of categories of things that cannot be patented grow larger and larger. And we’re talking about biotechnology. We’re talking about artificial intelligence, semiconductor technology, and more. And you know, it’s kind of become a legal mess. There’s not a great deal of consistency in terms of how the different standards of what is patentable are applied. And it’s really served to be this really self-inflicted blow to America’s capacity to innovate in these absolutely crucial sectors.
And so the bill that I have – that I am working on, this Patent Eligibility Restoration Act, seeks to reform – or to really, as the – as the title says, to restore – the sense of certainty around what is eligible for a patent and for intellectual property protection.
Dr. Hamre:
Yes, very valuable.
Can I ask you about a concept – I’m pretty naïve about this, but something called injunctive relief? This is, as I understand it, if there is patent infringement and the company is being damaged, in the old days you would get an immediate cease-and-desist order directed at whoever was infringing on the patent, but that’s now clouded.
Rep. Kiley: That’s right.
Dr. Hamre: Can you explain that for our audience?
Rep. Kiley: Yeah. This is another way in which the courts have really, you know, gotten involved in ways that’s upended the system of patent protection that we have long had in the United States. And so this was another court decision that did effectively make it so, you know, an injunction does not issue upon a finding of infringement. And so, you know, when you don’t have that tool available, then, obviously, you have a much less powerful legal defense against infringement, a much less powerful means of protecting your invention if, you know, infringers can just go out and infringe and, you know, can just calculate, well, worst-case scenario, if we have an adverse judgment against us then we’ll, you know, pay some sort of royalty, damages in the form of some sort of calculated royalty. So, you know, having taken that sort of tool away I think has had a lot of negative ramifications in terms of the ability to restrict infringing activity, and thereby the incentive to invent in the first place.
Dr. Hamre: I would think that this would also – there would be a profound asymmetry of impact for small startup companies that don’t have the capacity to fight big legal battles.
Rep. Kiley: That’s right.
Dr. Hamre: And great big companies, if they’re an infringer on some little company, there is an asymmetry here that just doesn’t seem fair.
Rep. Kiley: That’s exactly right. And you know, that is really who loses out when we have this weakening of intellectual property protections. It is the – you know, the inventor, the little guy, you know, the person who has an idea and puts their, you know, toils, their sweat and blood into bringing this invention to reality, and then – and something that might offer extraordinary value to the world. But in order to, you know, derive the benefit of their invention, the patent is the one thing they have to make sure that someone can’t just go out and copy it and steal their idea. And so if you don’t protect that, then you’re really leaving these inventors defenseless. And especially, as you say, if it gets into some legal battle where the legal tests are very uncertain, where their rights are not very certain, then that – then, when they’re up against, you know, someone that’s a big company, has unlimited resources, then it puts them at an extreme disadvantage. And so that’s why it really is, you know – that asymmetry that you refer to is a very negative thing when it comes to the culture of innovation that we have in the country.
Dr. Hamre: Well, I would think, because if a company says, well, I don’t want to pay royalties, so I’ll just go ahead and steal it, and then if the courts make me pay, OK, I’ll – I pay in four or five years, a little company can’t endure that.
Rep. Kiley: That’s exactly right. And so that’s why, you know, the – intellectual property protection is the most valuable asset that they have in a lot of these cases. And to the extent that that asset is weakened, then, you know, it becomes a less, you know, promising investment, both in terms of the time and energy and inspiration of the inventor themselves as well as the funders who would potentially invest in the startup company and a small company that’s based upon a particular innovation. If they foresee, you know, infringing activity being able to happen without consequence, then that makes it a less, you know, promising investment for them – which serves, again, to limit the overall amount of invention and innovation in the United States.
Dr. Hamre: There’s something else that was created back in 2011 and it was called the Patent Trial and Appeals Board. And maybe it had some good objectives when it was created, but it looks like it has a downside. Can you – are you familiar with this?
Rep. Kiley: I am, yes.
Dr. Hamre: What do you think?
Rep. Kiley: Well, I think that, you know, that has sort of contributed to the overall, you know, adverse legal environment for inventors, as these other policy changes, as it’s become, you know, a way to invalidate a patent without necessarily the level of scrutiny that you might get through an actual trial or a full-fledged adjudication by the courts. And so I think that if you look at the outcomes in the PTAB since it has – it was stood up, you know, it really has, you know, served to, again, make patent protection less secure, less certain, and less valuable, and has thereby, you know, made innovation less or has served to discourage innovation.
Dr. Hamre: I’m told that in the review over 80 percent of their reviews they’ve not upheld the patent rights of individuals that brought forward and created the idea.
Rep. Kiley: That’s right. And you know, when a patent goes to that stage it’s a patent that’s already been, you know, granted. It’s been – and so it’s in your possession and that suddenly you can lose that protection.
So that’s an area where I think there’s certainly opportunities for reform as well.
Dr. Hamre: Yeah. It sounds like there’s just a great deal of work that needs to be done here.
Everything I’ve heard you say, Congressman, I’ve not heard that any of this would be a partisan issue one way or the other. Republicans and Democrats ought to join together on this.
What is the sense that you gain from your conversations with colleagues about this?
Rep. Kiley: Well, I think there is a broad bipartisan interest in appropriate reforms that bolster intellectual property protection and I think that if you look at the bill that I’m working on, the Patent Eligibility Restoration Act that seeks to, you know, put patent protection on more solid ground when it comes to what subject matters are eligible, that bill, you know, in the Senate right now has bipartisan authors – the chair and ranking member of the Intellectual Property Subcommittee in the Senate.
So I think that’s a sign that the potential, really, is there for bipartisan collaboration here and, you know, I would, again, just reiterate that on that particular bill we’re really just seeking to restore the innovation environment that prevailed for two-plus centuries and has only been unwound recently by court decisions.
And so, you know, the bill really makes things a lot more clear in terms of what can and cannot be patented and, honestly, you know, it’s that lack of certainty that might be the most poisonous thing of all when it comes to American innovation.
So it’ll create certainty and will put us back to where things were before these court decisions.
Dr. Hamre: Well, I think it’s – the uncertainty would show up really quickly when you get to the world of venture capital where they’re saying, OK, you want angel financing –
Rep. Kiley: That’s right.
Dr. Hamre: – to get this thing going, but I don’t know if my legal rights to the patents are going to hold. You know, you’ve got the biggest venture capital industry in the world out in California. You know, are they involved with you in thinking this through?
Rep. Kiley: Well, yes. I mean, you know, they’re making, you know, investments, right? They’re making bets and, obviously, if they see there being some chance that the patent that is behind the entire value of a company is going to fall at some point then they have to discount that possibility in terms of what level of investment they are willing to provide.
And so, you know, this might kind of sound like arcane legal issues in some sense but the consequences are truly profound if you don’t have solid protections in place to encourage innovation.
Dr. Hamre: Well, the reason I bring it up is that some people will think this is a little narrow technical issue that only involves small numbers of people. But it really gets to the core of how we invent new ideas and how we bring them into markets.
Rep. Kiley: Exactly.
Dr. Hamre: The venture capital community ought to be far more interested in what you’re trying to do to make a difference here.
Rep. Kiley: Yeah. I think that there is interest certainly and, you know, I think that there’s broad interest across a variety of sectors to, you know, try to make the reforms that are needed to make sure that our country can once again lead the world in innovation.
I think that we still have amazing innovation that happens here. But you can do a direct comparison of China versus the United States in key areas, key sectors, key industries, and even look at the number of patents, the number of scholarly articles published. We are falling behind in key areas in AI and quantum computing, in many others.
And, you know, these are the technologies of the future that are going to have, you know, enormous implications in terms of shaping geopolitics and, you know, the balance of power for years, decades to come. And so it’s hard to really overstate what is at stake here.
Dr. Hamre: OK. You’ve just touched on – we’ve got just a few minutes left before we have to let you get up for your votes. But this touches on something. I’m a defense guy. You know, I mean, that’s my background and I spent 25 years working on defense issues. I’ve come to see this as a defense issue.
Rep. Kiley: Oh, absolutely.
Dr. Hamre: This is a national security issue.
Rep. Kiley: Absolutely.
Dr. Hamre: And is that – does the community, the defense community, understand what’s at stake with what you’re trying to do?
Rep. Kiley: I think there is a growing understanding and, you know, we have, of course, in the House the Select Committee on the Chinese Communist Party as well which has been looking at some of these issues from that perspective.
But you’re absolutely right, when we’re talking about these technologies of the future whether it’s AI, whether it’s quantum computing, I mean, if we allow for China to get far ahead of us then that will have huge ramifications from a defense perspective as well.
Dr. Hamre: Well, you’re a strong voice in the Congress on a topic that doesn’t have a lot of leadership and we really need this, and I just want to say thank you for what you’re doing. I’m very mindful of the clock counting down and you needing to get to a vote.
Any final thoughts that you want to share with our audience about this agenda? And tell us again the name of the bill. Does it have a number and just so that people can start tracking it?
Rep. Kiley: Absolutely. It’s the Patent Eligibility Restoration Act. It has – you know, it’s been introduced in the Senate – Senators Tillis and Coons – and then we are on the verge of introducing a companion version of it in the House.
So we’re very hopeful that this will be given a hearing next year and we can go from there in terms of, you know, a bipartisan piece of legislation that really is geared towards goals that I think every member of Congress and every American shares.
And I think, again, this really goes to the core of who we are as a country. We’ve always, you know, thrived on the idea that America is leading the way when it comes to innovations, when it comes to new technologies that change the world and, you know, if we want that to continue to be the case we really need to get back to basics in a lot of ways and this bill will do that.
Dr. Hamre: You know, we’re in a giant competition with China and it’s very asymmetric. They have three times larger, you know, consumer base than we do. They – their government corporations don’t have to make a profit. There’s no cost of capital. Our guys are facing the market test every day.
The government steals intellectual property for them and gives it to them. We play by the rules and we play by the rules but it’s the role of the government to create a good solid foundational level playing field for our guys.
Rep. Kiley: That’s right.
Dr. Hamre: And I think that’s exactly what you’re talking about with this effort.
Rep. Kiley: That’s exactly right. Couldn’t have said it better.
Dr. Hamre: Well, we need your voice more than ever. This is a – you know, the substance of government is still what Congress is all about and not very many people – I totally agree with you that I think Senator Tillis and Senator Coons have been leaders on intellectual property protection in the Senate and – but we need a larger group and you’re a path finder for the House of Representatives. So we wish you well.
Any final words before we let you go and catch your vote?
Rep. Kiley: Well, I just want to thank you for the work that you’re doing. I look forward to partnering on these issues, and for any folks watching I would appreciate, you know, your input as well and not only on this particular piece of legislation but ways that we can protect intellectual property in the United States more broadly, promote innovation, protect inventors and small businesses, and enhance our competitiveness across the world.
Dr. Hamre: Well, thank you very much for being with us today. We’re really honored that you are here. We’ll let you get to your vote but we want you to stay in the fight to make this happen.
Rep. Kiley: Absolutely.
Dr. Hamre: Thank you so much.
Rep. Kiley: You bet. Thank you.
(END.)
