To improve the bill.

SA 121. Mr. LEAHY (for himself, Mr. Grassley, Mr. Kyl, and Mr.
Whitehouse) proposed an amendment to the bill S. 23, to amend title 35,
United States Code, to provide for patent reform; as follows:

On page 1, strike line 5, and insert the following: ``
`America Invents Act' ''.
On page 9, line 8, strike ``1 year'' and insert ``18
months''.
On page 32, strike line 12 and all that follows through
page 35, line 2, and insert the following:

SEC. 4. VIRTUAL MARKING AND ADVICE OF COUNSEL.

On page 37, line 1, strike ``(b)'' and insert ``(a)''.
On page 37, line 20, strike ``(c)'' and insert ``(b)''.
On page 38, line 3, strike ``(d)'' and insert ``(c)''.
On page 38, line 13, strike ``(e)'' and insert ``(d)''.
On page 57, strike lines 17 through 23, and insert the
following:
``(b) Preliminary Injunctions.--If a civil action alleging
infringement of a patent is filed within 3 months of the
grant of the patent, the court may not stay its consideration
of the patent owner's motion for a preliminary injunction
against infringement of the patent on the basis that a
petition for post-grant review has been filed or that such a
proceeding has been instituted.''.
On page 59, strike lines 13 through 19.
On page 59, line 20, strike ``(g)'' and insert ``(f)''.
On page 65, line 21, strike ``18 months'' and insert ``1
year''.
On page 66, line 3, strike ``18 months'' and insert ``1
year''.
On page 66, lines 4 and 5, strike ``and shall apply only to
patents issued on or after that date.'' and insert ``and,
except as provided in section 18 and in paragraph (3), shall
apply only to patents that are described in section
2(o)(1).''.
On page 66, line 8, after the period insert the following:
``During the 4 year period following the effective date of
subsections (a) and (d), the Director may, in his discretion,
continue to apply the provisions of chapter 31 of title 35,
United States Code, as amended by paragraph (3), as if
subsection (a) had not been enacted to such proceedings
instituted under section 314 (as amended by subsection (a))
or under section 324 as are instituted only on the basis of
prior art consisting of patents and printed publications.''.
On page 69, line 2, strike ``18 months'' and insert ``1
year''.
On page 69, line 14, strike ``18 months'' and insert ``1
year''.
On page 74, line 22, strike ``18 months'' and insert ``1
year''.
On page 75, line 16, strike ``18 months'' and insert ``1
year''.
On page 75, line 22, strike ``18 months'' and insert ``1
year''.
On page 76, line 5, strike ``18 months'' and insert ``1
year''.
On page 77, strike line 23 and all that follows through
page 78, line 6.
On page 78, line 7, strike ``(b)'' and insert ``(a)''.
On page 78, line 20, strike ``(c)'' and insert ``(b)''.
On page 79, strike lines 1 through 17, and insert the
following:
(1) In general.--The Director shall have authority to set
or adjust by rule any fee established, authorized, or charged
under title 35, United States Code, and the Trademark Act of
1946 (15 U.S.C. 1051 et seq.), notwithstanding the fee
amounts established, authorized, or charged thereunder, for
all services performed by or materials furnished by, the
Office, provided that patent and trademark fee amounts are in
the aggregate set to recover the estimated cost to the Office
for processing, activities, services, and materials relating
to patents and trademarks, respectively, including
proportionate shares of the administrative costs of the
Office.
On page 79, lines 19-21, strike ``filing, processing,
issuing, and maintaining patent applications and patents''
and insert: ``filing, searching, examining, issuing,
appealing, and maintaining patent applications and patents''.
On page 86, between lines 8 and 9, insert the following:
(i) Reduction in Fees for Small Entity Patents.--The
Director shall reduce fees for providing prioritized
examination of utility and plant patent applications by 50
percent for small entities that qualify for reduced fees
under section 41(h)(1) of title 35, United States Code, so
long as the fees of the prioritized examination program are
set to recover the estimated cost of the program.
On page 86, line 9, strike ``(i)'' and insert ``(j)''.
On page 91, between lines 14 and 15, insert the following:

[[Page S1072]]

(b) No Provision of Facilities Authorized.--The repeal made
by the amendment in subsection (a)(1) shall not be construed
to authorize the provision of any court facilities or
administrative support services outside of the District of
Columbia.
On page 91, line 15, strike ``(b)'' and insert ``(c)''.
On page 91, line 23, strike ``under either subsection'' and
all that follows through ``shall certify'' on page 92, line
2.
On page 92, line 7, before the semicolon insert the
following: ``, not including applications filed in another
country, provisional applications under section 111(b), or
international applications filed under the treaty defined in
section 351(a) for which the basic national fee under section
41(a) was not paid''.
On page 92, between lines 7 and 8, insert the following:
``(3) did not in the prior calendar year have a gross
income, as defined in section 61(a) of the Internal Revenue
Code (26 U.S.C. 61(a)), exceeding 3 times the most recently
reported median household income, as reported by the Bureau
of Census; and''.
On page 92, strike lines 8 through 25.
On page 93, line 1, strike ``(3) has not assigned, granted,
conveyed, or is'' and insert ``(4) has not assigned, granted,
conveyed, and is not''.
On page 93, lines 4 and 5, strike ``has 5 or fewer
employees and that such entity has'' and insert ``had''.
On page 93, line 7, strike ``that does'' and all that
follows through line 11, and insert the following:
``exceeding 3 times the most recently reported median
household income, as reported by the Bureau of the Census, in
the calendar year preceding the calendar year in which the
fee is being paid, other than an entity of higher education
where the applicant is not an employee, a relative of an
employee, or have any affiliation with the entity of higher
education.''.
On page 93, strike lines 12 through 17, and insert the
following:
``(b) Applications Resulting From Prior Employment.--An
applicant is not considered to be named on a previously filed
application for purposes of subsection (a)(2) if the
applicant has assigned, or is under an obligation by contract
or law to assign, all ownership rights in the application as
the result of the applicant's previous employment.
``(c) Foreign Currency Exchange Rate.--If an applicant's or
entity's gross income in the preceding year is not in United
States dollars, the average currency exchange rate, as
reported by the Internal Revenue Service, during the
preceding year shall be used to determine whether the
applicant's or entity's gross income exceeds the threshold
specified in paragraphs (3) or (4) of subsection (a).''.
On page 94, between lines 18 and 19, insert the following:
(c) Rule of Construction.--Nothing in this section shall be
construed to imply that other business methods are patentable
or that other business-method patents are valid.
On page 94, line 19, strike ``(c)'' and insert ``(d)''.
On page 103, between lines 11 and 12, insert the following:
``(c) Derivative Jurisdiction Not Required.--The court to
which a civil action is removed under this section is not
precluded from hearing and determining any claim in such
civil action because the State court from which such civil
action is removed did not have jurisdiction over that
claim.''.
On page 103, line 12, strike ``(c)'' and insert ``(d)''.
On page 105, between lines 22 and 23, insert the following:

SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS-METHOD
PATENTS.

(a) References.--Except as otherwise expressly provided,
wherever in this section language is expressed in terms of a
section or chapter, the reference shall be considered to be
made to that section or chapter in title 35, United States
Code.
(b) Transitional Program.--
(1) Establishment.--Not later than 1 year after the date of
enactment of this Act, the Director shall issue regulations
establishing and implementing a transitional post-grant
review proceeding for review of the validity of covered
business-method patents. The transitional proceeding
implemented pursuant to this subsection shall be regarded as,
and shall employ the standards and procedures of, a post-
grant review under chapter 32, subject to the following
exceptions and qualifications:
(A) Section 321(c) and subsections (e)(2), (f), and (g) of
section 325 shall not apply to a transitional proceeding.
(B) A person may not file a petition for a transitional
proceeding with respect to a covered business-method patent
unless the person or his real party in interest has been sued
for infringement of the patent or has been charged with
infringement under that patent.
(C) A petitioner in a transitional proceeding who
challenges the validity of 1 or more claims in a covered
business-method patent on a ground raised under section 102
or 103 as in effect on the day prior to the date of enactment
of this Act may support such ground only on the basis of--
(i) prior art that is described by section 102(a) (as in
effect on the day prior to the date of enactment of this
Act); or
(ii) prior art that--

(I) discloses the invention more than 1 year prior to the
date of the application for patent in the United States; and
(II) would be described by section 102(a) (as in effect on
the day prior to the date of enactment of this Act) if the
disclosure had been made by another before the invention
thereof by the applicant for patent.

(D) The petitioner in a transitional proceeding, or his
real party in interest, may not assert either in a civil
action arising in whole or in part under section 1338 of
title 28, United States Code, or in a proceeding before the
International Trade Commission that a claim in a patent is
invalid on any ground that the petitioner raised during a
transitional proceeding that resulted in a final written
decision.
(E) The Director may institute a transitional proceeding
only for a patent that is a covered business-method patent.
(2) Effective date.--The regulations issued pursuant to
paragraph (1) shall take effect on the date that is 1 year
after the date of enactment of this Act and shall apply to
all covered business-method patents issued before, on, or
after such date of enactment, except that the regulations
shall not apply to a patent described in the first sentence
of section 5(f)(2) of this Act during the period that a
petition for post-grant review of that patent would satisfy
the requirements of section 321(c).
(3) Sunset.--
(A) In general.--This subsection, and the regulations
issued pursuant to this subsection, are repealed effective on
the date that is 4 years after the date that the regulations
issued pursuant to paragraph (1) take effect.
(B) Applicability.--Notwithstanding subparagraph (A), this
subsection and the regulations implemented pursuant to this
subsection shall continue to apply to any petition for a
transitional proceeding that is filed prior to the date that
this subsection is repealed pursuant to subparagraph (A).
(c) Request for Stay.--
(1) In general.--If a party seeks a stay of a civil action
alleging infringement of a patent under section 281 in
relation to a transitional proceeding for that patent, the
court shall decide whether to enter a stay based on--
(A) whether a stay, or the denial thereof, will simplify
the issues in question and streamline the trial;
(B) whether discovery is complete and whether a trial date
has been set;
(C) whether a stay, or the denial thereof, would unduly
prejudice the nonmoving party or present a clear tactical
advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the
burden of litigation on the parties and on the court.
(2) Review.--A party may take an immediate interlocutory
appeal from a district court's decision under paragraph (1).
The United States Court of Appeals for the Federal Circuit
shall review the district court's decision to ensure
consistent application of established precedent.
(d) Definition.--For purposes of this section, the term
``covered business method patent'' means a patent that claims
a method or corresponding apparatus for performing data
processing operations utilized in the practice,
administration, or management of a financial product or
service, except that the term shall not include patents for
technological inventions. Solely for the purpose of
implementing the transitional proceeding authorized by this
subsection, the Director shall prescribe regulations for
determining whether a patent is for a technological
invention.
(e) Rule of Construction.--Nothing in this section shall be
construed as amending or interpreting categories of patent-
eligible subject matter set forth under section 101.

SEC. 19. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE
JUDGES.

(a) Authority to Cover Certain Travel Related Expenses.--
Section 2(b)(11) of title 35, United States Code, is amended
by inserting ``, and the Office is authorized to expend funds
to cover the subsistence expenses and travel-related
expenses, including per diem, lodging costs ,and
transportation costs, of non-federal employees attending such
programs'' after ``world''.
(b) Payment of Administrative Judges.--Section 3(b) of
title 35, United States Code, is amended by adding at the end
the following:
``(6) Administrative patent judges and administrative
trademark judges.--The Director has the authority to fix the
rate of basic pay for the administrative patent judges
appointed pursuant to section 6 of this title and the
administrative trademark judges appointed pursuant to section
17 of the Trademark Act of 1946 (15 U.S.C. 1067) at not
greater than the rate of basic pay payable for Level III of
the Executive Schedule. The payment of a rate of basic pay
under this paragraph shall not be subject to the pay
limitation of section 5306(e) or 5373 of title 5.''.

SEC. 20. PATENT AND TRADEMARK OFFICE FUNDING.

(a) Definitions.--In this section, the following
definitions shall apply:
(1) Director.--The term ``Director'' means the Director of
the United States Patent and Trademark Office.
(2) Fund.--The term ``Fund'' means the public enterprise
revolving fund established under subsection (c).
(3) Office.--The term ``Office'' means the United States
Patent and Trademark Office.
(4) Trademark act of 1946.--The term ``Trademark Act of
1946'' means an Act entitled ``Act to provide for the
registration and

[[Page S1073]]

protection of trademarks used in commerce, to carry out the
provisions of certain international conventions, and for
other purposes'', approved July 5, 1946 (15 U.S.C. 1051 et
seq.) (commonly referred to as the ``Trademark Act of 1946''
or the ``Lanham Act'').
(5) Under secretary.--The term ``Under Secretary'' means
the Under Secretary of Commerce for Intellectual Property.
(b) Funding.--
(1) In general.--Section 42 of title 35, United States
Code, is amended--
(A) in subsection (b), by striking ``Patent and Trademark
Office Appropriation Account'' and inserting ``United States
Patent and Trademark Office Public Enterprise Fund''; and
(B) in subsection (c), in the first sentence--
(i) by striking ``To the extent'' and all that follows
through ``fees'' and inserting ``Fees''; and
(ii) by striking ``shall be collected by and shall be
available to the Director'' and inserting ``shall be
collected by the Director and shall be available until
expended''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on the later of--
(A) October 1, 2011; or
(B) the first day of the first fiscal year that begins
after the date of the enactment of this Act.
(c) USPTO Revolving Fund.--
(1) Establishment.--There is established in the Treasury of
the United States a revolving fund to be known as the
``United States Patent and Trademark Office Public Enterprise
Fund''. Any amounts in the Fund shall be available for use by
the Director without fiscal year limitation.
(2) Derivation of resources.--There shall be deposited into
the Fund on or after the effective date of subsection
(b)(1)--
(A) any fees collected under sections 41, 42, and 376 of
title 35, United States Code, provided that notwithstanding
any other provision of law, if such fees are collected by,
and payable to, the Director, the Director shall transfer
such amounts to the Fund, provided, however, that no funds
collected pursuant to section 9(h) of this Act or section
1(a)(2) of Public Law 111-45 shall be deposited in the Fund;
and
(B) any fees collected under section 31 of the Trademark
Act of 1946 (15 U.S.C. 1113).
(3) Expenses.--Amounts deposited into the Fund under
paragraph (2) shall be available, without fiscal year
limitation, to cover--
(A) all expenses to the extent consistent with the
limitation on the use of fees set forth in section 42(c) of
title 35, United States Code, including all administrative
and operating expenses, determined in the discretion of the
Under Secretary to be ordinary and reasonable, incurred by
the Under Secretary and the Director for the continued
operation of all services, programs, activities, and duties
of the Office relating to patents and trademarks, as such
services, programs, activities, and duties are described
under--
(i) title 35, United States Code; and
(ii) the Trademark Act of 1946; and
(B) all expenses incurred pursuant to any obligation,
representation, or other commitment of the Office.
(d) Annual Report.--Not later than 60 days after the end of
each fiscal year, the Under Secretary and the Director shall
submit a report to Congress which shall--
(1) summarize the operations of the Office for the
preceding fiscal year, including financial details and staff
levels broken down by each major activity of the Office;
(2) detail the operating plan of the Office, including
specific expense and staff needs for the upcoming fiscal
year;
(3) describe the long term modernization plans of the
Office;
(4) set forth details of any progress towards such
modernization plans made in the previous fiscal year; and
(5) include the results of the most recent audit carried
out under subsection (f).
(e) Annual Spending Plan.--
(1) In general.--Not later than 30 days after the beginning
of each fiscal year, the Director shall notify the Committees
on Appropriations of both Houses of Congress of the plan for
the obligation and expenditure of the total amount of the
funds for that fiscal year in accordance with section 605 of
the Science, State, Justice, Commerce, and Related Agencies
Appropriations Act, 2006 (Public Law 109-108; 119 Stat.
2334).
(2) Contents.--Each plan under paragraph (1) shall--
(A) summarize the operations of the Office for the current
fiscal year, including financial details and staff levels
with respect to major activities; and
(B) detail the operating plan of the Office, including
specific expense and staff needs, for the current fiscal
year.
(f) Audit.--The Under Secretary shall, on an annual basis,
provide for an independent audit of the financial statements
of the Office. Such audit shall be conducted in accordance
with generally acceptable accounting procedures.
(g) Budget.--The Fund shall prepare and submit each year to
the President a business-type budget in a manner, and before
a date, as the President prescribes by regulation for the
budget program.
On page 105, line 23, strike ``SEC. 18.'' and insert ``SEC.
21.''.
At the end, add the following:

SEC. 22. BUDGETARY EFFECTS.

The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go-Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the Senate Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
______