PTAB and district court dual litigation is common and used by big tech to abuse new market entrants by forcing expensive and long cases. Decks small startup innov.

So you know more than half the time patent owners are winning if they fight. So now that we're a decade in, I think it's a good time to do exactly what you're doing here on this committee, which is let's take a look and see what's working and what's not working. You know, to be consistent with the AIA's purposes of having a faster, more efficient system, there are a few areas where I think you can make some tweaks and get a lot of value.

And so I'll bring up a couple here in my comments today. So one issue that I think everyone will agree on is the duplicative litigation. So when there is litigation in district court, there is usually an IPR or a PGR running in parallel. So what you effectively have are the same parties litigating the same issues at the same time in two different courts and that's wonderful for the lawyers, but it's not really wonderful for everybody else.

So there's two thoughts right now. So what the district courts sometimes are doing is they're staying the case to prevent that duplication and the PTAB has also adopted policies where they will discretionary deny if they feel that the district court is going to hear the issue. First and a jury will decide validity.

But both of these approaches are not implemented systematically and they've been very controversial. I mean, nobody's really happy with any of this. So the proposed amendment in the bill to section 315 which provides that if the IPR is instituted, a party can't maintain the same challenge in another proceeding that would absolutely reduce that duplicative litigation cost.

And the Second Amendment, which I'll highlight, which we've already discussed is the burden of proof. So right now at the PTAB, which is an administrative agency, the burden of proof is clear and -- or a preponderance of the evidence and the bill would change that to clear. And convincing evidence, which is the standard that the jury is supposed to apply in the district court.

And this will solve the problem that the Supreme Court recognized in Cuozzo [Ph] which is that in the system under the AIA you have these two different standards. So you can have the PTAB and the district court and they can reach different results on the same patent. So I'd like to thank the committee for carefully considering patent reform at this junction and I welcome any questions you may have.

CHRISTOPHER COONS: And thank you so much to all of our four witnesses for your testimony. I appreciate the diverse perspectives you shared on how AIA reviews at the PTAB have in some ways fallen short of the AIA's intent and how Congress might address those shortfalls. I'll start my questioning by exploring expectations and goals of the AIA when enacted more than a decade ago and how the PTAB was envisioned and then a second round to explore provisions that PREVAIL and solicit your continued feedback.

Congressman Smith, as you testified earlier today, the AIA established post issuance reviews at the PTAB with the intent that those reviews would be an alternative path, quick, cost effective alternatives to litigation. Have the reviews under the AA at the PTAB lived up to this intent? If not, why not?

LAMAR SMITH: Mr. Chairman, thank you for the question. You're exactly right. The original intent of PTAB was to be an alternative to litigation, not an add on to litigation as it has become. Going back to the intent, it was very simple. We aim to make sure that valid patents could be approved more quickly and we wanted to achieve a balance if we could between the lone inventor, the small business, the startup and the large companies and between the patent holder and the patent challenger.

And over the years that balance, I'm afraid, has not always been achieved. And part of the reason as you just said has been PTAB and it has been used in ways we did not envision. And that's why I'm encouraged by your willingness to take a look to see how we might tweak the AIA to make sure that we can return to the original intent and we can achieve that balance.

Oftentimes, the PTAB and the multiple challenges that are filed are, to me, it seems to be almost in order to harass a company rather than to achieve some good and I associate my -- would like to be associated with the comments by Mr. Kiani. I read his testimony, I heard what he said today. The situation he described is exactly the situation we wanted to avoid.

Here in my judgment and I'm sure in his was clearly harassed. He felt like he was being beaten down by a large company. They filed multiple petitions, cost him. I think I've just heard $13 million or thereabouts. That was not what the original purpose of AIA was. And to the extent that PREVAIL Act can correct that and can make sure that we get back to the original intent.

I think it is a good piece of legislation and I wish you well.

CHRISTOPHER COONS: Thank you, Congressman. In fact, if I understand correctly, one of the things you said during the effort to pass the AIA with our friend Senator Leahy was that the reviews were not to be used as tools for harassment, something from that.

LAMAR SMITH: Right, right.

CHRISTOPHER COONS: What do you think of the fact that most of the -- the most frequent users of the PTAB are ten large, well-established tech companies using it in addition to litigation?

LAMAR SMITH: That apparently, as I mentioned, the largest ten petitioners are account for something like 80 percent of the challenges that are filed. And if I may started to quote from what we had is a statement or we put in the record back in the days where we considered the AIA. This is the committee, a House committee judiciary report that the PDA was not to be used as tool for harassment or means to prevent market entry through repeated litigation and administrative attacks on the validity of a patent.

Doing so would frustrate the purpose of providing quick and cost effective alternatives to litigation. Further such activity would divert resources from the research and development of invention. I can get into that a little bit more later on, but that's simply to concur with what you said. And I think the PREVAIL Act will take us a long way to restoring the original intent and finding the balance that we aim for.

CHRISTOPHER COONS: Thank you, congressman. Ms. Armond, as you just testified, you have extensive experience as a patent litigator, both district court and PTAB. You had a decade in when the AIA was enacted and you've had the decades since. What were your expectations as the -- as the legislation was being debated and developed and as it was passed?

About how the reviews in front of the PTAB would work? And what aspects of those reviews have worked well and what aspects have fallen short in your [Off-mic]?

MICHELLE ARMOND: So in terms of making litigation more efficient, the PTAB is very good for what it does, which is it's supposed to be a very limited proceeding. They're only looking at invalidity based on patents and printed publications for anticipation and obviousness which were generally kind of the defenses. You wouldn't want to try to a jury anyway because it's really technical and kind of boring.

So they do well and they're very quick. You have an answer in 18 months, a lot of our clients really, really like it. I think the one thing that is bothersome is a lot of clients on both sides are frustrated that they're spending money in district court and on at the PTAB. At the same time, on the same defenses because people need to press forward on both until they know which court is going to take control of the football on these defenses.

So clarity would be helpful.

CHRISTOPHER COONS: So in your view, there's a burden of duplicative litigation and having some clarity, not just discretionary stays, but a mandatory state would help.