Archive for May, 2015

International Corporate Elite Steamrolls Trade Promotion Authority Through Senate!

Tuesday, May 26th, 2015

Late Friday evening, May 22, 2015, the Senate voted to pass the Trade Promotion Authority (H.R. 1314) by a vote of 62 to 37 to give President Obama the authority to “fast-track” trade agreements through 2018, with an extension to 2021 possible. If this legislation also passes the House, this would mean that the Trans-Pacific Partnership Agreement (TPP) and the Trans-Atlantic Agreement may be negotiated and signed without any amendments by Congress and with only a majority vote rather than the supermajority vote required for treaties under the Constitution.

Of the Republican senators, 54 voted yes, four voted no and one did not vote. Fourteen Democrats joined the majority of Republicans in voting yes. According to the Roll Call, they are: Bennet (CO), Cantwell (WA), Cardin (MD), Coons (DE), Feinstein (CA), Heitkamp (ND), Kaine (VA), McCaskill (MO), Murray (FL) Shaheen (NH), Warren (VA), and Wyden (OR). The four Republicans who voted no are: Collins (ME), Paul (KY), Sessions (AL), and Shelby (AL).

Nearly every Democrat or Democrat-leaning organization from unions to the Sierra Club opposed the Trade Promotion Authority, so those fourteen Democrat Senators turned their back on their constituencies and the American working class they claim to support to follow lock-step with the Republicans they accuse of being in the pocket of “big business,” i.e. the large multinational corporations that comprise the membership of the U.S. Chamber of Commerce, the National Association of Manufacturers, etc.

There were over 100 amendments proposed, but only ten were allowed to reach the floor for a vote. Three were rejected for discussion or a vote because they were ruled as not being not germane to the topic: Inhofe (R-OK) # 1312 (AGOA), Shaheen (D-NH) SA #1227 (small business), and McCain (R-AZ) #1226 (catfish).

The Hatch (R-UT) (substitute) amendment #1221 was approved without any description or discussion by a vote of 62 yes to 37 no.

The Flake (R-AZ) amendment #1243 to strike the extension of the Trade Adjustment Assistance program (TAA) failed 35 yes to 63 no. The Trade Adjustment Assistance was originally a separate bill and was added to the Trade Promotion Authority to “sweeten” the deal to gain Democrat votes. Trade Adjustment Assistance is a federal program to reduce the damaging impact of imports. The current program features four components for workers, firms, farmers, and communities.

The Brown (D-OH) amendment #1251 purpose was to require the approval of Congress before additional countries may join the Trans-Pacific Partnership Agreement because the TPP is a “docking” agreement in which other countries may be added after it is signed and in effect. In his comments in support of this amendment, Senator Brown specifically mentioned the need for Congress to approve the addition of China to the Agreement. Unfortunately, the amendment failed by a vote of 47 yes to 52 no.

The Stabenow-Portman amendment #1299, whose purpose was, “To make it a principal negotiating objective of the United States to address currency manipulation in trade agreements,” failed by a vote of 48 yes to 51 no.

The Hatch amendment #1411 was agreed to by a vote of 70 yes to 29 No without any description or discussion.

Two Amendments had already been considered on May 21st:

  • Lankford SA 1237 passed by a vote of 92 to 0 to establish consideration of the conditions relating to religious freedom of parties to trade negotiations as an overall negotiating objective of the United States.
  • Brown SA #1242 failed by a vote 41 to 45 to restore funding for the trade adjustment assistance program to the level established by the Trade Adjustment Assistance Extension Act of 2011

Of equal importance, the Warren amendment #1327 failed to pass by a vote of 39 Yes to 60 No. Its purpose was “To prohibit application of the trade authorities procedures to an implementing bill submitted with respect to a trade agreement that includes investor-state dispute settlement” [ISDS].

This is the chapter of the TPP that allows foreign corporations to bypass the domestic legal system to use to fight laws they don’t like. International Tribunals, not U.S. courts, would decide on lawsuits between the U. S and “investor” companies in member countries. Foreign “investors” could file lawsuits against city, state, and federal agencies for laws and regulations they feel infringe on their “expected future profits.” They can also sue for compensation for the loss of these “expected future profits.”

In her comments to introduce the amendment, Senator Elizabeth Warren mentioned that over 100 law professors had sent a letter to Congress and the Obama administration urging them to not include the ISDS in the TPP. I discovered that she was quoting from the “Analysis of Leaked Trans-Pacific Partnership Investment Text by Lori Wallach of the Citizen’s Trade group” that was released on Wednesday, March 25, 2015. You can download the leaked chapter at https://wikileaks.org/tpp-investment/

This 13-page analysis includes this paragraph: “A March 2015 letter signed by 139 U.S. law professors urges congressional leaders and the Obama administration ‘to protect the rule of law and our nation’s sovereignty by ensuring ISDS is not included” in the TPP, stating, “ISDS threatens domestic sovereignty by empowering foreign corporations to bypass domestic court systems and privately enforce terms of a trade agreement. It weakens the rule of law by removing the procedural protections of the justice system and using an unaccountable, unreviewable system of adjudication.’ A May 2012 letter signed by former judges, law professors and other prominent lawyers from TPP nations warns: ‘the foreign investor protections included in some recent Free Trade Agreements (FTA) and Bilateral Investment Treaties (BIT) and their enforcement through Investor-State arbitration should not be replicated in the TPP. We base this conclusion on concerns about how the expansion of this regime threatens to undermine the justice systems in our various countries and fundamentally shift the balance of power between investors, states and other affected parties in a manner that undermines fair resolution of legal disputes.”

This analysis is well worth reading to become fully informed of the dangers of international tribunals adjudicating cases instead of our domestic legal system. Two of the most dangerous features of the ISDS chapter are:

  • “Foreign investors alone would be granted access to extrajudicial tribunals staffed by private sector lawyers who rotate between acting as “judges” and representing corporations in cases against governments, posing major conflicts of interest.”
  • “Foreign tribunals would be empowered to order governments to pay unlimited cash compensation out of national treasuries.”

Senator Warren also mentioned that even the CATO Institute, a champion of free trade, had recommended removal of ISDS from the Trade Promotion Authority legislation. The report she referenced is Free Trade Bulletin No. 57, “A Compromise to Advance the Trade Agenda: Purge Negotiations of Investor-State Dispute Settlement,” by Daniel J. Ikenson dated March 4, 2014. The CATO Institute is a well-known American libertarian think tank, so its recommendations should have had some influence on Republicans in the Senate, but evidently did not. Instead, the vast majority of them chose to follow their cue from the international corporate elite behind this treaty.

Ikenson wrote that there are “practical, economic, legal, and political reasons to expunge ISDS from current trade negotiations.” He presented “Eight Good Reasons to Drop ISDS from TPP and TTIP, which you can read in full at the above link.

Since there was very little information on the Trans-Pacific Partnership Agreement in the major media prior to its introduction in the Senate and the failure of the first cloture vote on May 12th, it is imperative that freedom-loving organizations make Democrat and Republican Representatives in the House aware of the facts about the damage the TPP would do to our country.

America now stands at a crossroads, whether Americans will remain in control of their destiny or will be forced to bow before foreign tribunals and have even more of their jobs shipped overseas. If we are to protect our national sovereignty and our jobs, we must stop this legislation in the House by flooding their switchboards!

Members of the manufacturing task force of the California chapter of the Coalition for a Prosperous America of which I am chair have done their part by visiting the offices of all 33 of the southern California Representatives in the past year. The final hour is near. Let your Representative hear your voice! If you don’t know who your Representative is, click here.

Posted in Jobs, Manufacturing, National security, Trade Policy | 1 Comment »

Which Patent Reform Bill Doesn’t Destroy the American Patent System?

Tuesday, May 19th, 2015

In 2011, the Leahy–Smith America Invents Act (AIA) changed our patent system from a “first to invent” to a “first to file.” It also created easier ways to invalidate patents, called Post Grant Opposition procedures (PGOs). These PGOs are now invalidating 76% of the patents at which they are directed. Now, there are three patent reform bills in consideration by the House and Senate that are all purporting to fix some of the problems generated by AIA Act. They are:

The PATENT Act, S.1137, sponsored by Senator Grassley (R-IA), was sent to the Judiciary Committee on April 29, 2015 and would “amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections…”

The Innovation Act, H. R. 9, sponsored by Rep. Bob Goodlatte (R-VA) was sent to the House Judiciary Committee on February 5, 2015 and would also “amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections…”

The Strong Patents Act of 2015, S. 632, sponsored by Senators Chris Coons (D-DL), Dick Durbin (D-IL) and Mazie Hirono (D-HI) to “Enact balanced reforms to reduce abuse while sustaining American leadership in innovation.”

The first two bills are the result of the expenditure of hundreds of millions of dollars to lobby Congress by large corporations such as Google, Microsoft, Oracle, etc. over the last 8 years to produce a “patent troll” narrative and then fix the fictional problem of “patent trolls” with these bills.

Many consider the worst provision of both bills the “Loser-Pays with Joinder clause,” which means that 1) a patent holder who tries to defend a patent and does not prevail is potentially liable for the infringer’s legal costs (easily $1,000,000+), and 2) interested parties are joined in the liability. This means that the inventor could be liable for millions of dollars if he is unsuccessful in defending his patent against infringement, and an investor could be personally liable as well. With the odds of losing so high, Loser-Pays makes it impossible for almost all inventors to enforce their patent rights against patent pirates or ever get outside investment.

Under The Innovation Act (H.R. 9), a university could be liable for millions of dollars if patents created and licensed through university research were unsuccessful in defending against infringement. The university could be held liable for the legal costs of the infringer if the patent holder did not prevail in the patent infringement case because of the Loser Pays with Joinder clause.

The PATENT Act (S. 1137) exempts universities and pharmaceutical companies from the Loser Pay with Joinder clause, but makes it worse for small inventors. There is now a requirement that a patent holder certify that he has the funds for the Loser Pays liability before he can sue for infringement (easily $1,000,000 plus). This will eliminate the ability of virtually every independent inventor to defend a patent. And, if an investor provides the funds, he will be personally liable for the Loser Pays (piercing the corporate veil and throwing away hundreds of years of corporate law).

Randy Landreneau, founder of Independent Inventors of America, states the following regarding the exemptions: “It is shameful that we have a political system where groups with political influence get favored while the rest of us suffer. Universities and drug companies will still have patent protection, but the independent inventor, the individual the American Patent System was created for, will be destroyed. This is an all-out attack on a most basic and important part of America. This is arguably the worst and most damaging legislation in American history.”

Both of these bills would do considerable damage to the patent system, specifically harming inventors and small patent-based businesses. If either of these bills becomes law, inventors and small businesses will not be able to enforce their patent rights against large corporations with deep pockets while corporations like Google, for example, would still be able to enforce their patents against small businesses with devastating consequences to those small businesses.

Paul Morinville, Founder of US Inventor stated, “For the last two years, inventors have lost the large majority of patent cases. Post grant opposition procedures (PGO) created in the America Invents Act (AIA) invalidate patents at rates above 75%. Article III courts invalidate patents at similar rates under the indefinable “abstract idea” category of subject matter ineligibility. Today, inventors are losing more cases than at any time in the 224-year history of the U.S. patent system.”

He added. “Patent litigation is about risk and cost versus reward. If risk or cost is too high in relation to reward, an inventor or a small business cannot enforce a patent. This bill creates enormous risk and cost, and consequently it creates a patent system without inventors. An infringement suit can cost millions of dollars for each side. Prior to the American Invents Act (AIA), it was possible to protect small inventions from patent infringement. But, with the huge increase in inventor losses due to the AIA and the indefinable “abstract idea,” only inventions with exceptionally large damages can be enforced. It’s simple math, damages must exceed the cost of the case plus the cost of risk. Thus, the high damages bar would make the vast majority of patents unenforceable by inventors.”

In an opinion article in The Hill, Robert Schmidt, co-chair of the Small Business Technology Council, wrote, “H.R. 9, purported to solve a patent troll problem, is instead the next step in crushing competition from new small firms, creating “Big Tech Patent Ogres” that can ignore smaller players and their patents. This new bill makes it almost impossible for small technology startups to enforce their patents… H.R. 9 will retard innovation and cost America jobs and wealth. H.R. 9 is contrary to the Founding Fathers’ Constitutional intent, contrary to the policies of 220 years of patent law, and contrary to stated intention of the President and Congress to stimulate innovation.”

In contrast, The Strong Patents Act, S.632 would be good for all inventors ? individual, small businesses, universities, and large corporations. It would “would effectively crack down on the abusive practices of so-called patent trolls without weakening the U.S. patent system” according to the Association of Public Land Grant Universities.

The Biotechnology Industry Organization (BIO) “supports the STRONG Patents Act of 2015 and will continue to advocate for passage of legislation to curbing abusive patent practices, while not undermining the ability of patent owners to defend their inventions and businesses against infringement.”

Landreneau states, “The Strong Patent Act would rein in the Post Grant Opposition procedures so that they are more like federal court procedures used in invalidating property rights, rather than administrative procedures designed so that 76% of patents they are directed at are invalidated.”

Another advantage of this bill is that it “Eliminates fee diversion through the establishment of a new USPTO revolving fund in the U.S. Treasury.” It also “Empowers the Federal Trade Commission to crack down on abusive patent-related demand letters.”

Senator Coons’ website makes the following convincing argument for the importance of preserving a strong patent system:

  • “IP-intensive industries comprise one-third of U.S. GDP ($5.5 trillion), generate 27 million jobs, and pay employees over 30% more than other industries.
  • 75% of venture capital investors consider the value of patents when making funding decisions in small businesses (97% in the biotech industry).
  • Patents inspire innovation in fields that require long-term investment in R&D: from life-saving therapies to new generations of wireless technologies.
  • Patents allow us to benefit from the genius of small inventors. With a strong patent right, individuals create inventions that disrupt dominant companies. 
  • U.S. leadership in innovation is due in no small part to an unrivaled patent system. Strong patents today provide for game-changing inventions tomorrow.”

There is no question in my mind that the Strong Patents Act is the only bill that truly protects American innovation. As a director of the newly incorporated San Diego Inventors Forum, I join our board President, Adrian Pelkus, in urging everyone to contact their Senators and Congressional representatives to urge them to oppose the House’s Innovation Act (H.R.9) and Senate’s PATENT Act (S.1137) and vote “yes” on the Strong Patents Act of 2015 (S. 632).

Pelkus said, “We could lose everything if either of the two bad bills were passed by Congress. It could usher in the end of innovation as we know it and make it impossible for individual inventors to raise the money they need from investors to get their new products into the marketplace.”

Now is the time to fight with us to keep innovation alive and well in America and not allow large corporations to squash individual inventors.

 

Posted in Innovation, Patent Reform, Technology | No Comments »

Would the Trans Pacific Partnership really be Free Trade?

Tuesday, May 5th, 2015

Free trade ? what does this mean? Businesdictionary.com defines it as “The interchange of goods and services (but not of capital or labor) unhindered by high tariffs, nontariff barriers (such as quotas), and onerous or unilateral requirements or processes.” By this definition, would the Trans Pacific Partnership really be free trade?

Last week, Congressman Tom McClintock (R-CA) gave a speech in support of passing the Trade Promotion Authority aka “Fast Track Authority” saying, “Every nation that engages in trade prospers from it. Every nation that fails to trade, fails to prosper…It is freedom that produces prosperity – the free exchange of goods between people and between nations for their mutual betterment. The greater the freedom, the greater the prosperity.”

This is only true if the nation benefits from the trade by exporting more than it imports. In 2014, the U. S. imported $2.34 trillion in goods compared to exporting $1.62 trillion in goods, resulting in a trade deficit of $721.6 billion. Because we have a surplus in exports of services, our total trade deficit was reduced to $505 billion. It seems to me that we are not benefitting from our current trade agreements as we should and that another trade agreement with 11 more countries would only make our trade deficit much worse.

Rep. McClintock argued that “…since the 1930’s, Congress has chosen to exercise its responsibility by establishing the broad terms of the agreement it seeks and then giving explicit instructions to our negotiators at the beginning of the process. IF, and only IF, these objectives are advanced in the agreement, Congress will then consider it as a whole package and either approve it or reject it.

McClintock said, “That process is now called ‘Trade Promotion Authority. It has stood the test of time, has been used to the great benefit of our nation in the past and has never been controversial until now… It is precisely because of this mistrust that the Trade Promotion Authority sets forth some 150 objectives that must be advanced before Congress will even consider the resulting agreement. And once those objectives are attained, a majority of the Congress must still approve it.”

What is wrong with this argument is that the Trans Pacific Partnership Agreement has been in negotiation for five years without any involvement by Congress; it is not at the beginning of the process. Rep. McClintock seems to mistakenly believe Congress retains the power to direct the President’s negotiations when in fact there is only one more round of negotiations scheduled.

Rep. McClintock wrongly asserts that Congress set forth 150 negotiating objectives in the TPA that the President “must” comply with. This statement is not true. None of the objectives are binding and most are simply vague aspirations of global goals. Indeed, the House Ways and Means Committee firmly rejected any efforts to make the negotiating objectives binding.

The President also is empowered to unilaterally draft “implementing legislation” that will change U.S. laws and regulations to comply with the agreement he negotiated. Through the TPA, Congress even limits its own ability to debate and prevents its ability to amend the implementing legislation.

The Obama Administration made the draft text of the agreement classified and has kept it hidden from public view, making it illegal for the press, experts, advocates, or the general public to review the text of this agreement. Even Congressional members can only view it at the office of the U. S. Trade Representative without pen, pencil, paper or a camera to take picture of any pages. They are also prohibited by law from discussing the specifics of the text in public.

This is why on April 25th Senators Sherrod Brown and Elizabeth Warren wrote President Obama a letter stating, “We write to request that you promptly declassify the latest bracketed negotiating text of the TPP and release it publicly before asking Congress to vote on “fast track” authority to facilitate the TPP’s ratification.”

They add, “Because the negotiations are largely complete, there is no reason the TPP must remain secret from the American people before Congress votes on fast track authority. In 2001, President George W. Bush made public a draft of the scrubbed bracketed text of the Free Trade Area of the Americans (“FTAA”) agreement several months before Congress granted partial fast track authority to facilitate ratification of that deal.”

They conclude, “We have an additional concern: the fast track legislation currently under consideration goes far beyond the TPP. Fast track, as currently written, would preclude Congress from amending or filibustering any trade agreement submitted to this Congress or any future Congress—potentially through 2021.”

Their concerns are shared by Congressman Dan Lipinski (D-IL) who has introduced “the Truth, Transparency, Accountability, and Fairness in Trade Act to protect American workers being harmed by foreign trade agreements.” His bill would require “the Executive Branch to review and report on the operation of existing trade agreements to determine whether American jobs and exports are being negatively impacted. If negative impact is found, any Member of Congress would have the right to submit a “termination bill,” which would have expedited consideration and allow for the cancellation of some or all of the trade agreement causing damage. After passage of a termination bill, any renegotiated agreement would be barred from being considered under Trade Promotion Authority (the fast-track process).”

It is not just Democrats that are opposed to the Trade Promotion Authority bill. Senator Jeff Sessions (R-AL) expressed his concerns about the Trade Promotion authority in an interview on the John Fredericks Radio Show on Thursday, 4/23. (WHKT, AM 1650, and a Network of AM Stations across Virginia.) He subsequently released a critical alert of his Top Five Concerns with Trade Promotion Authority.

“Conservatives like Reps. Walter Jones and Duncan Hunter have said they oppose the measure, wary of giving the White House any more authority. At the end of last year, 19 House Republicans signed a letter calling on their colleagues not to pass TPA in the lame-duck session.”

At www.obamatrade.com, you can listen to videos of several conservatives urging Republican Congressional Representatives to oppose the Trade Promotion Authority, including TV host Lou Dobbs, Frank Gaffney, President of Center for Security Policy, former UN Ambassador Alan Keyes, Niger Innis, Executive Director of TheTeaParty.net, Richard Manning, President of Americans for Limited Government, and Sandy Rios of American Family Association. The American Family Association is part of a broad coalition of conservative organizations urging Congress to reject granting President Obama so-called “fast track” power. Author, talk show host, and defender of the Constitution Mark Levin says no conservative should support Fast Track “Trade Promotion Authority.”

Michael Stumo, CEO of the Coalition for a Prosperous America, stated, “The minority staff of the House Ways and Means released a side by side comparison of this week’s Fast Track bill with the bill from January 2014. Basically it is more of the same. Will they never learn? From CPA’s perspective, the new bill is a failure.”

The new bill does not have any enforceable provision to address foreign currency manipulation. It does not address the foreign border adjustable taxes (VATs), which are tariffs by another name. It has insufficient language to address the problem of government subsidies to state owned enterprises. It allows the Investor State Dispute Resolution to be handled by the foreign tribunals without providing a rationale as to why the U. S. court systems are not good enough.

For these reasons and other reasons mentioned in my previous article, “What would be the Impact of the Trans Pacific Partnership Agreement,” this Agreement is the opposite of free trade. It is government controlled trade and is so overreaching on non-trade issues that it would control many aspects of the lives of all Americans, not just businesses.

The Trade Promotion bill passed the House Ways and Means Committee and the Senate Finance Committee on April 22nd and 23rd. It could be brought up for a vote in the full House and Senate any time after Congress gets back from this week’s recess. Time is of the essence! Don’t give up your freedom! Tell your representatives in Congress to vote NO on Fast Track.

Posted in Jobs, Trade, Trade Policy | No Comments »