S.Amdt. 143Senate112th Congress (2011-2013)

To include public institutions of higher education in the definition of a micro entity.

Text

Modified

Modified · Mar 8, 2011 Proposed · Mar 7, 2011 Submitted · Mar 3, 2011

This amendment's own text couldn't be picked out of its Congressional Record passage, so the passage is shown in full.

PATENT REFORM ACT OF 2011--Continued

Mr. LEAHY. Mr. President, since the Senate began this debate on the
American Invents Act more than a week ago, I have talked about American
ingenuity and innovation. As this debate comes to a close, I want to
emphasize that this is legislation that should promote innovation, help
create jobs, and help energize the economy as we continue our recovery.
This legislation can be a key part of a jobs agenda. We can help
unleash innovation an promote American invention, all without adding a
penny to the deficit. This is commonsense, bipartisan legislation.
Innovation has been a cornerstone of the American economy from the
time Thomas Jefferson examined the first patent to today. The Founders
recognized the importance of promoting innovation. A number were
themselves inventors. The Constitution explicitly grants Congress the
power to ``promote the progress of science and useful arts, by securing
for limited times to . . . inventors the exclusive right to their
respective . . . discoveries.'' The discoveries made by American
inventors and research institutions, commercialized by American
companies, and protected and promoted by American patent laws have made
our system the envy of the world. The President has spoken all year
about the need to win the future by out innovating our competition.
This bill can play a key role in that effort.
Yesterday, I commended Austan Goolsbee, the chair of the President's
Council of Economic Advisers, for his white board presentation this
week on the importance of patent reform to help America win the global
competition and create jobs. The creation of more than 220,000 jobs in
the private sector last month, the creation of 1.5 million jobs over
the last 12 months, and the unemployment rate finally being reduced to
8.9 percent are all signs that the efforts we have made over the last 2
years to stave off the worst recession since the Great Depression are
paying off and the economic recovery is taking hold. The almost full
percent point drop in the unemployment rate over the last 3 months is
the largest decline in unemployment since 1983. Despite interruptions
of economic activity in many parts of the country caused by winter
weather over the last months and in recent days, despite the
extraordinary rise in oil

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prices, the Dow Jones industrial average has climbed back to over
12,000 from a low point of 6,500. Passage of the America Invents Act
should help bolster our economic recovery and keep us on the right path
toward business development and job creation.
As we began this debate, I referred back to the President's State of
the Union address and his challenge to the Nation to out-innovate, out-
build and out-educate our global competitors. Enacting the America
Invents Act is a key to meeting this challenge. Reforming the Nation's
antiquated patent system will promote American innovation, create
American jobs, and grow America's economy. I thank the President and
his administration for their help and support for the Leahy-Hatch-
Grassley America Invents Act. Commerce Secretary Locke has been a
strong partner in our efforts, and Director Kappos of the Patent and
Trademark Office has been an indispensable source of wise counsel.
The America Invents Act will keep America in its longstanding
position at the pinnacle of innovation. This bill will establish a more
efficient and streamlined patent system that will improve patent
quality and limit unnecessary and counterproductive litigation costs,
while making sure no party's access to court is denied.
The America Invents Act is the product of eight Senate hearings over
the last three Congresses. Our bill is the product of years of work and
compromise. The Senate Judiciary Committee has reported patent reform
legislation to the Senate in each of the last three Congresses, this
year, unanimously. And the House has seen efforts over the same period
led by Congressmen Lamar Smith of Texas and Howard Berman of
California. The legislation we are acting on today, in fact, is
structured on the original House bill and contains many of the original
provisions.
From the beginning, we recognized the need for a more effective and
efficient patent system, one that improves patent quality and provides
incentives for entrepreneurs to create jobs. A balanced and efficient
intellectual property system that rewards invention and promotes
innovation through high quality patents is crucial to our Nation's
economic prosperity and job growth. That is how we win the future--by
unleashing the American inventive spirit. This bill, the America
Invents Act, will allow our inventors and innovators to flourish.
It is important to our country's continued economic recovery, and to
our successfully competing in the global economy. America needs a 21st
century patent system to lead. The last extensive reform of our patent
system was nearly 60 years ago. It is time.
While the Congress debates spending and budget measures in an often
too partisan manner, the American people are craving--and the American
economy is demanding--bipartisan legislation that can create jobs and
help our economy through common sense measures. That is what this bill
can do. It relies on not one dollar of taxpayer money. Let me
emphasize, not a dime in taxpayer money is spent on the Patent and
Trademark Office, PTO, reforms. They are all funded by patent fees, not
taxes.
Innovation drives the Nation's economy, and that entrepreneurial
spirit can only be protected by a patent system that promotes invention
and spurs new ideas. We need to reform our patent system so that these
innovations can more quickly get to market. A modernized patent
system--one that puts American entrepreneurs on the same playing field
as those throughout the world--is a key to that success. This is an
idea that cuts across the political spectrum.
During Senate debate over the last week our bill has been improved by
a number of Senators who have contributed amendments. Senators Bennet,
Coons, Schumer, Menendez, Pryor, Stabenow, Baucus, Bingaman, Coburn and
Kirk have all contributed, and I thank them for working with us.
Senator Cardin attempted to offer germane amendments, and I regret that
these were blocked.
I thank our ranking Republican on the committee and the comanager of
this measure, Senator Grassley, and his staff, Kolan Davis and Rita
Lari, for their dedication to this effort. I commend Senator Hatch for
sticking with it for these many years, and Senator Kyl for helping get
this done.
I also extend my personal thanks, as well, to Senator Klobuchar of
Minnesota who was active during committee consideration and helped
manage this legislation effort in the Senate. She has been outstanding.
The Senate's action today could not have been accomplished without
the hard work of many dedicated staffers. I would like to thank in
particular the steadfast work of Aaron Cooper of my Judiciary Committee
staff. Aaron has spent countless hours in meetings and briefings, with
Members, other staff, and interested parties, working to help me ensure
that the America Invents Act preserved the meaningful reforms we have
been working toward since 2005. I would also like to thank Ed Pagano,
my chief of staff, and Bruce Cohen, my chief counsel, who have worked
on this issue since the start, as well as Susan Davies who served as my
chief Intellectual Property counsel through the formative stages of
this legislative effort. Erica Chabot, Curtis LeGeyt and Scott Wilson
of my Judiciary Committee staff also deserve thanks for their committed
work on this legislation.
I also commend the hardworking Senate floor staff, Tim Mitchell and
Trish Engle, as well as Dave Schiappa, and the staffs of other
Senators, including Tim Molino, Joe Matal, and Matt Sandgren, for their
dedicated efforts.
I also thank the many individuals, companies, associations and
coalitions that have helped with this effort. This legislation has been
supported by both business and labor, including the National
Association of Manufacturers, the United Steelworkers, the AFL-CIO, the
Association of American Universities, the American Bar Association, the
Association of Public and Land-Grant Universities, the Association of
American Medical Colleges, the Association of University Technology
Managers, the American Council on Education, the Council on Government
Relations, PhRMA, BIO, the Intellectual Property Owners Association,
the American Intellectual Property Law Association, the Coalition for
21st Century Patent Reform, the Association for Competitive Technology,
the Coalition for Patent and Trademark Information Dissemination, IBM,
General Electric, Eli Lilly and Company, Bose Corporation, Johnson and
Johnson, 3M, General Mills, Honeywell, Monsanto, Motorola, Cargill,
Inc., Caterpillar, Enventys, Abbott, Astra Zeneca, AdvaMed, Air
Liquide, Bayer, Beckman Coulter, Boston Scientific, BP, Bridgestone
American Holdings, Inc., Bristol-Myers Squibb, the California
Healthcare Institute, the Colorado BioScience Association, Cummins, The
Dow Chemical Company, DuPont, Eastman Chemical Company, ExxonMobil,
Genentech, Genzyme, GlaxoSmithKline, the Healthcare Institute of New
Jersey, Henkel Corporation, Hoffman-LaRoche, Illinois Tool Works,
International Game Technology, Kodak, Medtronic, Merck & Co., Inc.,
Millenium Pharmaceuticals, Milliken and Company, Northrop Grumman,
Novartis, PepsiCo., Inc., Pfizer, Procter & Gamble, SanDisk
Corporation, Sangamo BioSciences, Inc., United Technologies, USG
Corporation, the Virginia Biotechnology Association, Weyerhaeuser, the
American Institute for CPAs, the American Institute of Certified Public
Accountants, the Tax Justice Network USA, the New Rules for Global
Finance, the American College of Tax Counsel, Consumer Action, The
American College of Trust and Estate Counsel, the Partnership for
Philanthropic Planning, Global Financial Integrity, the International
Association for Registered Financial Consultants, the National
Association of Enrolled Agents, USPIRG, the Certified Financial Planner
Board of Standards, the Financial Planning Association, the American
Association of Attorney-Certified Public Accountants, the Citizens for
Tax Justice, the National Treasury Employees Union, the Independent
Community Bankers of America, and numerous other organizations and
companies representing all sectors of the patent community that have
been urging action on patent reform proposals for years.
The America Invents Act will accomplish 3 important goals, which have
been at the center of the patent reform debate from the beginning: It
will improve and harmonize operations at the

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PTO; it will improve the quality of patents that are issued; and it
will provide more certainty in litigation. In particular, the
legislation will move this Nation's patent system to a first-inventor-
to-file system, make important quality enhancement mechanisms, and
provide the PTO with the resources it needs to work through its backlog
by providing it with fee setting authority, subject to oversight. The
America Invents Act provides the tools the PTO needs to separate the
inventive wheat from the chaff, which will help business bring new
products to market and create jobs.
Innovation has always been at the heart of America and American
success. From the founding of our Nation, we recognized the importance
of promoting and protecting innovation, and so the Constitution
explicitly grants Congress the power to ``promote the progress and
science and useful arts, by securing for limited times to . . .
inventors the exclusive right to their respective . . . discoveries.''
The patent system plays a key role in encouraging innovation and
bringing new products to market. The discoveries made by American
inventors and research institutions, commercialized by our companies,
and protected and promoted by our patent laws have made our system the
envy of the world.
High quality patents are the key to our economic growth. They benefit
both patent owners and users who can be more confident in the validity
of issued patents. Patents of low quality and dubious validity, by
contrast, enable patent trolls who extort unreasonable licensing fees
from legitimate businesses, and constitute a drag on innovation. Too
many dubious patents also unjustly cast doubt on truly high quality
patents.
After 6 years of debate and discussion, more than a dozen hearings
and mark up sessions, and countless hours of member and staff meetings
with two presidential administrations and interested parties across the
spectrum, the Senate is finally acting to make the first meaningful,
comprehensive reforms to the nation's patent system in nearly 60 years.
The Senate debate has now extended for more than a week. Passage of the
America Invents Act demonstrates what we can accomplish when we cast
aside partisan rhetoric, and focus on working together for the American
people and for our future.
It has been almost 6 years since Chairman Smith and Congressman
Berman introduced the first version of patent reform legislation in
2005, but the structure and guiding principles of the legislation
remain the same. The bill will speed the process by which the Patent
Office considers applications and should improve the quality of patents
it issues.
Innovation and economic development are not uniquely Democratic or
Republican objectives, so we worked together to find the proper balance
for America--for our economy, for our inventors, for our consumers.
Working together, we can smooth the path for more interesting--and
great--American inventions. That is what this bipartisan, comprehensive
patent reform bill will do. No one claims that ours is a perfect bill.
It is a compromise that will make key improvements in the patent
system. Having coordinated with the leaders in the House through this
process, I hope that the House will look favorably on our work and
adopt this measure so that it can be sent to the President without
delay and its improvements can take effect in order to encourage
American innovation and promote American invention.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant bill clerk proceeded to call the roll.
Mr. REID. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I ask unanimous consent the Reid amendment
No. 152 be withdrawn; that the Reid amendment No. 143 be modified with
the changes at the desk; the Senate proceed to vote on the amendment,
as modified, with no amendments in order prior to the vote; that there
then be 30 minutes of debate equally divided between the two managers
or their designees; that S. 23 be read a third time; that a budgetary
pay-go statement be read; the Senate then proceed to a vote on passage
of the bill, as amended; and the motions to reconsider be considered
made and laid upon the table with no intervening action or debate.
Further, I ask unanimous consent that at 12 noon Wednesday, March 9,
the Senate proceed to the consideration of Calendar No. 14, H.R. 1, the
Defense appropriations long-term continuing resolution for fiscal year
2011; that there be 3 hours of debate on H.R. 1 and the Democratic
alternative, the Inouye substitute amendment No. 149, with the time
equally divided between the two leaders or their designees prior to a
vote on passage of H.R. 1; that the vote on passage be subject to a 60-
vote threshold; that if the bill achieves 60 affirmative votes, the
bill be read a third time and passed; that if the bill does not achieve
60 affirmative votes, the majority leader be recognized to offer the
Inouye substitute amendment No. 149; the Senate then proceed to a vote
on the substitute amendment; that the substitute amendment be subject
to a 60-vote threshold; if the substitute amendment achieves 60
affirmative votes, the substitute amendment be agreed to; the bill, as
amended, be read a third time and passed; if the substitute amendment
does not achieve 60 affirmative votes, H.R. 1 be returned to the
calendar; that no motions or amendments be in order to the substitute
amendment or to the bill prior to the votes; further, that all of the
above occur with no intervening action or debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, with this agreement, I ask unanimous consent
that the cloture vote with respect to the motion to proceed to H.R. 1
be vitiated.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, even though there have been a few turns in
the road, we are at the place where we need to be. We need to be able
to show the American people where we are on these two measures. I
express my appreciation to my friend, the Republican leader. As I said,
things don't always work smoothly around here, but they usually work.
Now we are at a point where we can vote on these two measures which is
what we need to do.
The PRESIDING OFFICER. Under the previous order, amendment No. 152 is
withdrawn.
Under the previous order, amendment No. 143 is modified with the
changes at the desk.
The amendment, as modified, is as follows:

(Purpose: To include public institutions of higher education in the
definition of a micro entity)

On page 93, before line 18, insert the following:
``(d) State Institutions of Higher Education.--
``(1) In general.--For purposes of this section, a micro
entity shall include an applicant who certifies that--
``(A) the applicant's employer, from which the applicant
obtains the majority of the applicant's income, is a State
public institution of higher education, as defined in section
102 of the Higher Education Act of 1965 (20 U.S.C. 1002); or
``(B) the applicant has assigned, granted, conveyed, or is
under an obligation by contract or law to assign, grant, or
convey, a license or other ownership interest in the
particular application to such State public institution.
``(2) Director's authority.--The Director may, in the
Director's discretion, impose income limits, annual filing
limits, or other limits on who may qualify as a micro entity
pursuant to this subsection if the Director determines that
such additional limits are reasonably necessary to avoid an
undue impact on other patent applicants or owners or are
otherwise reasonably necessary and appropriate. At least 3
months before any limits proposed to be imposed pursuant to
this paragraph shall take effect, the Director shall inform
the Committee on the Judiciary of the House of
Representatives and the Committee on the Judiciary of the
Senate of any such proposed limits.''.

The PRESIDING OFFICER. The question is on agreeing to amendment No.
143, as modified.
The amendment (No. 143), as modified, was agreed to.
Mr. COBURN. I wish to express my opposition to Reid amendment No.
143, as modified. I do not believe public institutions of higher
education, or any entity, should be carved out of the definition of
micro entity in the underlying legislation. Had a rollcall vote
occurred, I would have voted no.

[[Page S1363]]

Mr. LEAHY. Mr. President, I suggest the absence of a quorum, with
unanimous consent that the time be equally divided.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will call the roll.
The assistant bill clerk proceeded to call the roll.
Mr. LEAHY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Check 21 Act Patents

Mr. PRYOR. I would like to clarify some concerns I have about the
Schumer-Kyl program that was included in the managers' amendment to the
America Invents Act, adopted on March 1. I am specifically concerned
that this provision revives an amendment that had been included in
previous versions of the bill--that amendment specifically targeted
patents related to the Check 21 Act and eliminated the ability of the
holder of such patents to collect damages. Is that the purpose of the
Schumer-Kyl language?
Mr LEAHY. No, the amendment is entirely different from the 2008
amendment related to patents that place on tax on implementation of the
Check 21 Act. The Schumer-Kyl program addresses certain business method
patents and does not target any specific patents. The Schumer-Kyl
program is intended to provide a cost-effective alternative to
litigation to examine business-method patents.
Mr. PRYOR. Am I correct then that the Schumer-Kyl program is simply
trying to address the problem of business method patents of dubious
validity that are commonly associated with the Federal Circuit's 1998
decision in State Street Bank v. Signature?
Mr. LEAHY. That is correct. It is still unclear whether the subject
matter of these patents qualifies as patentable subject matter under
current law. Patents of low quality and dubious validity, as you know,
are a drag on innovation because they grant a monopoly right for an
invention that should not be entitled to one under the patent law.
Mr. PRYOR. Can the Senator describe how the program would work in
practice?
Mr. LEAHY. Certainly. If a petitioner provides evidence to the PTO
and the PTO determines that the patent is on a ``covered business
method patent'' then the PTO would institute a post-grant review of
that patent. In this review, the PTO could consider any challenge that
could be heard in court.
Mr. PRYOR. Is it correct then that the Schumer proceeding would only
have an effect if the PTO determines it is more likely than not that a
claim of the patent is invalid and, even then, the proceeding would
have no effect on a patent unless the petitioner can demonstrate that
under current law the patent is not valid?
Mr. LEAHY. That is correct. The proceeding has a higher threshold
than current reexamination before the PTO will even undertake a review
of the patent. So as a practical matter, a patent without any serious
challenge to its validity would never be subject to a proceeding.
Mr. PRYOR. Would the Senator agree that in a case in which the
validity of the patent has been upheld by a district court but the case
remains on appeal, that this amendment would likely not affect the
pending appeal?
Mr. LEAHY. I would. The patent may still be subject to the
proceeding, but since the court did not hold the patent invalid or
unforceable, it would not likely have an effect on the pending appeal.
Mr. SCHUMER. Mr. President, I want to take the opportunity to explain
further a few elements of the Schumer-Kyl provision in the patent bill.
The Transitional Program for business method patents addresses a
critical problem in the patent world, and it is crucial that it be
administered and implemented appropriately by both the Patent and
Trademark Office and the courts.
Business method patents are the bane of the patent world. The
business method problem began in 1998 with the U.S. Court of Appeals
for the Federal Circuit decision in State Street Bank & Trust Co. v.
Signature Financial Group, Inc. State Street created a sea-change in
the patentability of business-methods, holding that any invention can
be patented so long as it produces a ``useful, concrete, and tangible
result'' and meets other requirements of the patent laws.
State Street launched an avalanche of patent applications seeking
protection for common business practices. The quality of these business
method patents has been much lower than that of other patents, as
Justice Kennedy noted in his concurring opinion in eBay Inc. v.
MercExchange. Justice Kennedy wrote about the ``potential vagueness and
suspect validity'' of some of ``the burgeoning number of patents over
business methods.'' Commentators like Rochelle Dreyfuss have also
lamented ``the frequency with which the Patent Office issues patents on
shockingly mundane business inventions.'' Malla Pollack pointed out
that ``[M]any of the recently-issued business method patents are
facially (even farcically) obvious to persons outside the USPTO.''
One of the main reasons for the poor quality of business method
patents is the lack of readily accessible prior art references. Because
business methods were not patentable prior to 1998 when the State
Street decision was issued, the library of prior art on business method
patents is necessarily limited--as opposed, say, to more traditional
types of patents for which there can be centuries of patents and
literature about them for the PTO to examine. Furthermore, information
about methods of conducting business, unlike information about other
patents, is often not documented in patents or published in journals.
This means a patent examiner has significantly less opportunity than he
might with a traditional patent to weed out undeserving applications.
Unfortunately, that means the burden falls on private individuals and
an expensive court process to clean up the mess.
The ability to easily obtain business method patents without a
rigorous and thorough review in the Patent Office has created a flood
of poor quality business method patents and a cottage industry of
business method patent litigation. The Federal courts have recognized
this problem, and indeed even the Supreme Court has begun to address
it. In KSR Intl Co. v. Teleflex, Inc. and Bilski v. Kappos, the Court
articulated a new standard for obviousness and made clear that abstract
business methods are not patentable. While these legal developments are
important, the leave in limbo the many patents that were issued by the
PTO since State Street that are not in fact valid.
Litigation over invalid patents places a substantial burden on U.S.
courts and the U.S. economy. Business-method inventions generally are
not and have not been patentable in countries other than the United
States. In order to reduce the burden placed on courts and the economy
by this back-and-forth shift in judicial precedent, the Schumer-Kyl
transitional proceeding authorizes a temporary administrative
alternative for reviewing business method patents.
It is important to clarify two elements of the Schumer-Kyl program's
operation in particular. First, there is the issue of how a district
court should treat a motion for a stay of litigation in the event the
PTO initiates a pilot program. Second, there is the issue of how the
Federal circuit will treat interlocutory appeals from stay decisions.
Finally, there is the issue of which patents should be considered to be
covered business method patents.
The transition program created by the Schumer-Kyl amendment is
designed to provide a cheaper, faster alternative to district court
litigation over the validity of business-method patents. This program
should be used instead of, rather than in addition to, civil
litigation. To that end, the amendment expressly authorizes a stay of
litigation in relation to such proceedings and places a very heavy
thumb on the scale in favor of a stay being granted. It is
congressional intent that a stay should only be denied in extremely
rare instances.
When Congress initially created ex parte reexamination, it did not
expressly provide for a stay of litigation pending the outcome of an ex
parte reexamination proceeding. Rather, Congress relied on the courts'
inherent power to grant stays and encouraged courts to liberally grant
stays. However, relying on the courts' inherent

[[Page S1364]]

power to grant stays did not result in courts liberally granting stays.
For example, one commentator who surveyed the grant rates on motions
for stay pending reexamination, Matthew A. Smith, found that numerous
district courts granted stays less than half the time. In fact, Eastern
District of Texas grants stays only 20 percent of the time. Due to low
grant rates for stays in several jurisdictions, this amendment
instructs courts to apply the four-factor test first announced in
Broadcast Innovation, L.L.C. v. Charter Communications when evaluating
stay motions.
The amendment employs the Broadcast Innovation test, rather than
other multifactor tests employed by other district courts, because this
test properly emphasizes a fourth factor that is often ignored by the
courts: ``whether a stay will reduce the burden of litigation on the
parties and on the court.'' Too many district courts have been content
to allow litigation to grind on while a reexamination is being
conducted, forcing the parties to fight in two fora at the same time.
This is unacceptable, and would be contrary to the fundamental purpose
of the Schumer-Kyl amendment to provide a cost-efficient alternative to
litigation.
Absent some exceptional circumstance, the institution of a business-
methods proceeding--which requires a high up-front showing and will be
completed in a relatively short period of time--should serve as a
substitute for litigation, and result in a stay of co-pending district
court litigation.
By adopting this four-factor test, rather than one of the three-
factor tests used by other courts, the amendment also precludes the use
of additional factors that are not codified here and that have
occasionally been used by some district courts. For example, a few
courts have occasionally employed a different de facto fourth factor:
whether the challenger offers ``to forgo invalidity arguments based on
prior art patents and/or printed publications considered during an ex
parte reexamination process.'' The proceeding authorized by this
amendment, at subsection (b)(1)(D), sets its own standard for
determining what issues may still be raised in civil litigation if a
patent survives PTO review. By codifying the exclusive set of factors
that courts are to consider when granting stays, the amendment
precludes courts from inventing new factors such as extra-statutory
estoppel tests.
Several unique features of this proceeding further make it
appropriate to grant stays in all but the most unusual and rare
circumstances. These proceedings will only be instituted upon a high
up-front showing of likely invalidity. The proceeding is limited to
certain business method patents, which, as noted above, are generally
of dubious quality because unlike other types of patents, they have not
been thoroughly reviewed at the PTO due to a lack of the best prior
art. And the proceeding will typically be completed within 1 year.
In summary, it is expected that, if a proceeding against a business
method patent is instituted, the district court would institute a stay
of litigation unless there were an extraordinary and extremely rare set
of circumstances not contemplated in any of the existing case law
related to stays pending reexamination. In the rare instance that a
stay is not granted, the PTO should make every effort to complete its
review expeditiously. We encourage the PTO Director to promulgate
regulations to this effect to ensure that petitioners know that in
extreme circumstance where a gay is not granted, the PTO will complete
its review in a compressed timeframe, such as within 6 months.
To ensure consistent and rigorous application of the Broadcast
Innovation standard, the amendment also allows the parties, as of
right, to have the Federal Circuit closely review the application of
this test in a manner that ensures adherence to these precedents and
consistent results across cases. As such, either party may file an
interlocutory appeal directly with the Federal Circuit. Because this
amendment provides an automatic right to an interlocutory appeal, the
district court does not need to certify the appeal in writing, as it
would ordinarily need to do under 28 U.S.C. Sec. 1292(b). Also, unlike
the discretion typically afforded an appellate court under 28 U.S.C.
Sec. 1292(b), under this amendment the Federal Circuit may not decline
to hear an interlocutory appeal.
Since the denial of a stay pending post-grant review under this
amendment is an extraordinary and extremely rare circumstance, the
filing of an interlocutory appeal should result in the stay of
proceedings in the district court pending the appeal. Staying the lower
court proceedings while the Federal Circuit reviews the question of
whether the case should be stayed pending the post-grant review will
help ensure that requests to stay are consistently applied across cases
and across the various district courts.
On appeal the Federal Circuit can and should review the district
court's decision de novo. It is expected that the Federal Circuit will
review the district court's decision regarding a stay de novo, unless
there are unique circumstances militating against a de novo review,
such as subsequent requests for an interlocutory appeal in the same
case. A de novo review is central to the purpose of the interlocutory
appeal provision in the Schumer-Kyl amendment, which is to ensure
consistent application of standards and precedents across the country
and to avoid one particular court with a favorable bench becoming the
preferred venue of business method patent plaintiffs.
The definition of covered business method patents in the transitional
program was developed in close consultation with the PTO to capture all
of the worst offenders in the field of business method patents,
including those that are creatively drafted to appear to be true
innovations when in fact they are not.
The amendment only applies to ``covered business method patents.'' If
the PTO determines that a patent is a ``covered business method
patent''--and the other applicable requirements of this amendment and
Chapter 32 are met--the patent will be subject to post-grant review
under this amendment regardless of whether the patent has been through
prior PTO proceedings, such as ex parte reexamination, or current or
prior litigation.
The definition of a ``covered business method patent'' includes ``a
method or corresponding apparatus.'' The phrase ``method or
corresponding apparatus'' is intended to encompass, but not be limited
to, any type of claim contained in a patent, including, method claims,
system claims, apparatus claims, graphical user interface claims, data
structure claims--Lowry claims--and set of instructions on storage
media claims--Beauregard claims. A patent qualifies as a covered
business method patent regardless of the type or structure of claims
contained in the patent. Clever drafting of patent applications should
not allow a patent holder to avoid PTO review under this amendment. Any
other result would elevate form over substance.
Not all business method patents are eligible for PTO review under
this amendment. Specifically, ``patents for technological inventions''
are out of scope. The ``patents for technological inventions''
exception only excludes those patents whose novelty turns on a
technological innovation over the prior art and are concerned with a
technical problem which is solved with a technical solution and which
requires the claims to state the technical features which the inventor
desires to protect. It is not meant to exclude patents that use known
technology to accomplish a business process or method of conducting
business--whether or not that process or method appears to be novel.
The technological invention exception is also not intended to exclude a
patent simply because it recites technology. For example, the
recitation of computer hardware, communication or computer networks,
software, memory, computer-readable storage medium, scanners, display
devices or databases, specialized machines, such as an ATM or point of
sale device, or other known technologies, does not make a patent a
technological invention. In other words, a patent is not a
technological invention because it combines known technology in a new
way to perform data processing operations.
The amendment covers not only financial products and services, but
also the ``practice, administration and management'' of a financial
product or service. This language is intended to

[[Page S1365]]

make clear that the scope of patents eligible for review under this
program is not limited to patents covering a specific financial product
or service. In addition to patents covering a financial product or
service, the ``practice, administration and management'' language is
intended to cover any ancillary activities related to a financial
product or service, including, without limitation, marketing, customer
interfaces, Web site management and functionality, transmission or
management of data, servicing, underwriting, customer communications,
and back office operations--e.g., payment processing, stock clearing.
The amendment also requires a patent to relate to a ``financial
product or service.'' To meet this requirement, the patent need not
recite a specific financial product or service. Rather the patent
claims must only be broad enough to cover a financial product or
service. For example, if a patent claims a general online marketing
method but does not specifically mention the marketing of a financial
product, such as a savings account, if that marketing method could be
applied to marketing a financial product or service, the patent would
be deemed to cover a ``financial product or service.'' Likewise, if a
patent holder alleges that a financial product or service infringes its
patent, that patent shall be deemed to cover a ``financial product or
service'' for purposes of this amendment regardless of whether the
asserted claims specifically reference the type of product of service
accused of infringing.
In conclusion, I am very pleased that the Senate has adopted the
Schumer-Kyl provision and trust that it will go a long way towards
addressing the havoc that frivolous business method patent litigation
has wreaked upon the courts and the economy. Indeed, Senator Kyl and I
received a letter of thanks and appreciation from the Independent
Community Bankers of America, who represent nearly 5,000 community
banks. As they point out, the money they are required to spend
defending litigation from business method patent trolls--and the
capital they must reserve against these contingent liabilities--is
money which ``cannot find its way into the hands of worthy borrowers,
retarding economic growth and job creation at the time such activity is
most needed.''
To that end, I would ask unanimous consent that the letter from the
Independent Community Bankers of America be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Independent Community

Bankers of America,

Washington, DC, March 3, 2011.
Hon. Charles E. Schumer,
U.S. Senate,
Washington, DC.
Hon. Jon Kyl,
U.S. Senate,
Washington, DC.
Dear Senators Schumer and Kyl: On behalf of the Independent
Community Bankers of America (ICBA) and the nearly 5,000
community banks that we represent, we thank you for your
efforts to improve S. 23 the Patent Reform Act of 2011
through your amendment to establish an oppositional
proceeding at the United States Patent and Trademark Office
(PTO) where business-method patents can be examined using the
best available prior art. Such patents have, unfortunately,
become the preferred method of extracting large settlements
from community banks and these practices threaten our
bankers' ability to provide banking and banking related
services to their local communities and to local small
businesses.
Under the current system, business method patents of
questionable quality are used to force community banks to pay
meritless settlements to entities that may have patents
assigned to them, but who have invented nothing, offer no
product or service and employ no one. In addition, all public
companies are required by accounting rules to reserve capital
against contingent liabilities. For community banks, this is
money which cannot find its way into the hands of worthy
borrowers, retarding economic growth and job creation as the
precise time such activity is most needed. The Schumer-Kyl
amendment is critical to stopping this economic harm.
We appreciate that you have worked hard with the Patent and
Trademark Office and other stakeholders to refine the
amendment and make compromises to enable the amendment to
move forward. We support those efforts and will continue to
push to ensure that business method patents cannot be used as
a weapon by those who seek to game the patent granting and
litigation system at the expense of legitimate businesses.
We are pleased to learn that the Senate has adopted much of
the Schumer-Kyl amendment into the base text of S. 23. We
encourage the Senate to only strengthen this provision, where
possible, for the good of our nation's community banks and
the countless neighborhoods and communities that they serve.
Thank you again.
Sincerely,

Stephen J. Verdier,

Executive Vice President,
Congressional Relations.

Mr. KYL. Mr. President, I ask unanimous consent to have printed in
the Record materials concerning the America Invents Act that were
distributed by the Republican Policy Committee last week. These consist
of a legislative notice describing the bill that was brought to the
Senate floor, and a summary of the Senate managers' amendment that was
adopted on Tuesday.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the Republican Policy Committee, U.S. Senate, Feb. 28, 2011]

Legislative Notice

S. 23--The Patent Reform Act of 2011

Calendar #6
Reported by the Judiciary Committee with amendments on
February 3, 2011 by a vote of 15-0. No written report.

Noteworthy

At 3:30 p.m. today, the Senate will begin consideration of
S. 23.
The Act adopts a ``First Inventor to File'' patent regime.
Currently the United States is the only country in the world
operating under a ``First to Invent'' regime.
The Act grants the U.S. Patent and Trademark Office (PTO)
authority to set its own fees to better ensure proper funding
for its operations.
The Act makes a variety of changes to improve the quality
of patents, including allowing for greater submission of
information by third parties while a patent application is
pending and establishing a post-grant review procedure for
promptly raised challenges to a patent.
Unlike prior patent reform bills, the Act does not disturb
substantive damages law; but it does take steps to improve
the consistency and predictability of the application of that
law.

Background/Overview

Innovation is a key facet of American economic power, as
our Founders recognized in the Constitution by giving
Congress the power to ``promote the progress of science and
useful arts'' by granting inventors time limited monopolies--
patents--on their discoveries. This basic framework set the
course for centuries of American innovation, but the law has
not been substantially updated since the Patent Act of 1952.
Responding to concerns about the quality and timeliness of
patents issued by the PTO, the last several Congresses have
considered substantial patent reform measures. [In the 109th
Congress Senators Hatch and Leahy introduced the Patent
Reform Act of 2006 (S. 3818). The next year, Senators Leahy
and Hatch introduced the Patent Reform Act of 2007 (S. 1145).
This bill was reported from the Judiciary Committee, as
amended, on January 24, 2008, with a Committee Report (S.
Rep. 110-259), but it was not considered by the full Senate.
On March 3, 2009, Senators Leahy and Hatch introduced the
Patent Reform Act of 2009, which was reported with amendments
on April 2, 2009, with a Committee Report (S. Rep. 111-18).
Again the bill was not considered by the full Senate. During
this time, the Senate Judiciary Committee has held eight
hearings on patent reform, and the House has held hearings on
the subject as well.]
Over the course of these Congresses the substance of the
reform proposals evolved. On January 25, 2011, Senator Leahy
and Senator Hatch introduced the current bill, the Patent
Reform Act of 2011 (S. 23), which was reported with
amendments on February 3, 2011. Significant features of the
legislation include: a transition to a ``First Inventor to
File'' patent regime consistent with other industrialized
countries; PTO fee setting authority to ensure proper
funding; and post-grant and supplemental review procedures to
improve patent quality.

Bill Provisions

Section 1. Title/Table of Contents
Section 2. First Inventor to File
The United States, alone among advanced economies,
currently operates under a ``First to Invent'' rather than a
``First Inventor to File'' patent regime in which the date of
filing with the patent office is the most important
determinant of who is the legitimate patent holder. Defenders
of the First to Invent regime claim that it has served
America well, that it favors small inventors by allowing them
to focus on inventing rather than paperwork, and that it
avoids overburdening the PTO with prematurely filed
applications.
However, the system poses challenges for American inventors
who must operate under one regime domestically and another if
they wish to profit from their innovation abroad. The First
to Invent system also results in less certainty about the
validity of patents and often leads to expensive and lengthy
litigation. Many commentators and organizations, including
the National Academy of Sciences, have urged the United
States to

[[Page S1366]]

adopt a First Inventor to File system. S. 23 moves the
United States to a First Inventor to File regime. As part
of that, it creates an administrative proceeding to ensure
that the first person to file is actually the true
inventor. It also preserves and strengthens current law's
grace period, by providing that disclosures made by the
true inventor, or someone who got the information from the
inventor, less than one year before the application is
filed will not be held against their application.
Additionally, during the one-year period before the
application is filed, if the inventor publicly discloses his
invention, no subsequently-disclosed ``prior art,''
regardless of whether it is derived from the inventor, can be
used to invalidate the patent. Prior art is a term of art in
intellectual property law. S. 23 defines ``prior art'' as
actions by the patent owner or another (such as publication,
public use, or sale) that make the invention available to the
public.] This effectively creates a ``first to publish'' rule
within the one year grace period. An inventor who publishes
his invention retains an absolute right to priority if he
files an application within one year of his disclosure. No
application effectively filed after his disclosure, and no
prior art disclosed after his disclosure, can defeat his
patent application.
Section 3. Inventor's Oath or Declaration
U.S. patent law requires oaths or declarations by inventors
as part of the application process. This can be challenging
when applications are pursued by company-assignees for whom a
variety of past and present employees may have played a role
in developing the invention. This section makes it easier for
assignees to file and prosecute a patent application where
the inventor is unable to do so or unwilling and
contractually obligated to do so.
Section 4. Damages
The current damage statute is vague, and juries must
evaluate up to 15 factors developed by the courts. This has
led to inconsistent and unpredictable damage awards. Section
4 does not upset the existing substantive law, but it makes
certain changes to increase predictability in damages by
authorizing courts to play a gatekeeper role, in which they
will provide detailed instructions to juries on what factors
are most relevant to the case before them.
Section 5. Post-Grant Review
This section establishes a new administrative procedure for
challenging the validity of granted patents within a nine-
month post-grant window, providing an early opportunity to
improve the quality of patents.
The bill also changes procedures for later challenges by
third parties to the validity of patents (the so-called
``inter partes reexamination'' process, under current law).
These reforms add additional procedural protections to the
process by converting the reexamination into an adjudicative
proceeding to be known as ``inter partes review.'' Inter
partes review must be completed within one year of being
instituted (though this deadline can be extended by six
months for good cause). The proceedings will take place
before a panel of three administrative judges whose decisions
are appealable directly to the Federal Circuit.
Section 6. Patent Trial and Appeal Board
This section renames the Patent Board the ``Patent Trial
and Appeal Board'' and clarifies its role in administering
the new proceedings established by the Act.
Section 7. Pre-Issuance Submissions by Third Parties
Current law restricts what third parties can file with the
PTO when they possess relevant information on pending patent
applications. This section would permit third parties,
typically another innovator in the same or a similar field,
to submit relevant information and make statements explaining
their submissions.
Section 8. Venue
Codifies the standard for transfers of venue established by
the Federal Circuit in the case In re TS Tech USA Corp and
applies it to patent cases generally. [551 F.3d 1315 (Fed.
Cir. 2008).] That standard provides for transfer to the
judicial district that is ``clearly more convenient'' for
both the parties and witnesses. The section also clarifies
that venue for litigation against the PTO is the Eastern
District of Virginia, where the PTO is headquartered, rather
than the District of Columbia, where it used to be based.
Section 9. Fee Setting Authority
In order to provide sufficient funding to the PTO's
operations, this section grants the office the ability, and
sets forth procedures, to set or adjust the fees it charges
applicants.
Section 10. Supplemental Examination
This provision authorizes a supplemental examination
process by which patent holders can correct errors or
omissions in past proceedings with the PTO. During the
process, additional information can be presented to the
office and, if it does not undermine the original patent
determination, the earlier omission of that information
cannot be later used in a lawsuit alleging inequitable
conduct.
Section 11. Residency Requirement for Federal Circuit Judges
This section repeals the requirement that judges on the
Federal Circuit reside within 50 miles of Washington, DC. The
duty station of Federal Circuit judges, however, will remain
in Washington.
Section 12. Micro-Entity Defined
Under current law, the PTO charges small businesses and
nonprofits lower fees than it charges large corporations.
This section establishes an even smaller category--truly
independent inventors--for which the PTO may make additional
accommodations.
Section 13. Funding Agreements
This section changes the formula for what universities,
nonprofits, and others may do with royalties or other income
generated by inventions developed using federal funds. Under
current law, if such royalties exceed the annual budget of
the entity, 75 percent of the excess is returned to the
government. In order to encourage innovation and
commercialization, this section allows the entity to retain
85 percent of that excess for further research. The remainder
would be paid to the government.
Section 14. Tax Strategies Deemed within Prior Art
This section ends the patentability of tax strategies. The
bill, as reported, does not change the patentability of other
forms of business method patents.
Section 15. Best Mode Requirement
As part of a patent application, an applicant must disclose
the ``best mode'' for carrying out his or her invention. In
subsequent litigation an accused infringer can offer as a
defense that the best mode was not properly disclosed by the
patent holder. This section eliminates that defense, which
many consider subjective and possibly irrelevant, as the best
mode may change over time. Best mode disclosure remains a
requirement for patentability.
Section 16. Technical Amendments
This section contains technical amendments to reorganize
the patent statute.
Section 17. Clarification of Jurisdiction
This section clarifies exclusive federal jurisdiction over
patent claims.
Section 18. Effective Date
Except where otherwise provided by specific provisions in
the Act, the effective date of the Act is 12 months after
enactment, meaning it would apply to all patents issued on or
after that date.

Administration Position

As of the publication of this Notice, no Statement of
Administration Policy (SAP) has been issued.

Cost

As of the publication of this Notice, no Congressional
Budget Office cost estimate for S. 23 has been issued.

Possible Amendments

At this time, there is no unanimous consent agreement with
respect to consideration of S. 23 or limiting the submission
of amendments.
____

Summary of the Managers' Amendment

The title is changed to the ``America Invents Act''.
The date of the repeal of statutory invention
registrations, which are used only in first-to-invent, is
changed to conform to the date of the switch to first to
file.
All remaining damages language--gatekeeper, sequencing, and
recodification of current law as subsection (a)--is struck.
The bill now makes no changes to section 284.
In PGR, the subsection imposing a six-month deadline on
filing after litigation is commenced is replaced with the
``shoot first'' provision requiring a court to consider a PI
request without taking a PGR petition or its institution into
account if the patent owner sues within 3 months of the
issuance of patent. The six-month deadline did not work well
here--PGR can only be requested within 9 months of patent
issuance anyway, and no suit can be brought until the patent
issues. Also, a much broader range of issues can be raised in
PGR than in IPR, justifying more time for filing.
PGR is limited to only FTF patents--no FTI patents can be
challenged in PGR. This is done because FTI patents raise
discovery-intensive invention-date and secret-prior-art
issues that would be difficult to address in an
administrative proceeding. This also effectively gives PTO a
much easier ramp up for PGR. In light of this change, the
time for implementing PGR is moved back to 1 year after
enactment, so that it is done at the same time as new IPR is
implemented, which is PTO's preference.
During the first four years after new IPR is implemented,
the Director has discretion to continue to use old inter
partes reexam. This is done because the Director believes his
reforms of the CRU have greatly improved old inter partes,
and it may actually work more efficiently than new IPR during
the ramp up. Old inter partes can also be used for PGR
proceedings that are instituted only on the basis of patents
and printed publications, which are the only issues that can
be raised in old inter partes (as well as new IPR).
The codification of the TS Tech transfer-of-venue rule is
struck. TS Tech already applies as a matter of caselaw in the
Fifth Circuit. (The Federal Circuit applies regional circuit
law to procedural matters, and reads Fifth Circuit law as
applying the transfer of venue rule.) Complaints about venue
generally focus on EDTX, so there is little need to apply TS
Tech nationally, and it seemed odd for Congress to regulate
such matters in any event.
A blue-slip fix to the Director's fee setting authority.
The revised language identifies

[[Page S1367]]

with great specificity the sources of authority to impose
patent and trademark user fees, in order to avoid a violation
of the Origination Clause.
A new provision requiring the Director to charge reduced
fees to small entities for use of accelerated examination.
Language is added making clear that the repeal of the
Baldwin rule (which rule requires Federal Circuit judges to
live within 50 miles of Washington, D.C.) shall not be
construed to require the AOC to provide judges office space
or staff outside of D.C.
A PTO-approved broadening of the definition of
``microentity,'' a status that entitles applicants to reduced
fees.
In the tax patents section, language is added: [(1)
clarifying that the language does not bar patenting of tax
software that is novel as software--i.e., where the
innovation is in the software] (this may be dropped); and (2)
establishing that making tax strategies unpatentable shall
not be construed to imply that other business methods are
patentable or valid. In Bilski v. Kappos, (2010), the Supreme
Court interpreted Congress's 1999 enactment of a prior-user
right that only applied against business-method patents as
implying that business methods qualify as patentable subject
matter under section 101, which was enacted in 1793.
Language is added to the part of the Holmes Group fix
allowing removal of patent cases from state to federal court
to clarify that derivative jurisdiction is not required in
such cases. Derivative jurisdiction is the doctrine that,
even if a federal district court would have had original
jurisdiction over an action, on removal, the district court
can only have jurisdiction if the state court from which the
action is removed properly had jurisdiction. (In other words,
the federal court's removal jurisdiction is regarded as
derivative of the state court's jurisdiction.) This silly
form-over-substance doctrine was abrogated by Congress, but
some courts have continued to read it into other parts of the
law, and thus it was thought best to also make clear here
that derivative jurisdiction is not required.
The Schumer-Kyl business-methods proceeding, as modified to
accommodate industry concerns and PTO needs. In its 1998
State Street decision, the Federal Circuit greatly broadened
the patenting of business methods. Recent court decisions,
culminating in last year's Supreme Court decision in Bilski
v. Kappos, have sharply pulled back on the patenting of
business methods, emphasizing that these ``inventions'' are
too abstract to be patentable. In the intervening years,
however, PTO was forced to issue a large number of business-
method patents, many or possibly all of which are no longer
valid. The Schumer proceeding offers a relatively cheap
alternative to civil litigation for challenging these
patents, and will reduce the burden on the courts of dealing
with the backwash of invalid business-method patents. The
proceeding has been limited since mark up so that: (1) only
defendants or accused infringers may invoke the proceeding;
(2) prior art is limited to old 102(a), which must be
publicly available, or prior art of old 102(a) scope that
shall be presumed to beat old 102(a) invention-date limits
but that falls outside the old 102(b) grace period (i.e.,
effectively, old 102(b) prior art but limited to old 102(a)'s
publicly-available prior-art scope); (3) the proceeding may
not be used to challenge a patent while it is eligible for a
PGR challenge (i.e., an FTF patent during the first 9 months
after its issue); (4) the proceeding is available only for
four years; (5) district courts decide whether to stay
litigation based on the four-factor Broadcast Innovation
test, and the Federal Circuit reviews stay decision on
interlocutory appeal to ensure consistent application of
established precedent; (5) the definition of business-method
patent, which tracks the language of Class 705, is limited to
data processing relating to just a financial product or
service (rather than also to an enterprise).
PTO is given greater flexibility in paying and compensating
the travel of APJs. A large number of APJs will need to be
recruited, trained, and retained to adjudicate PGR and new
IPR. This change's enhancements will be paid for out of
existing funds.
The Coburn end to fee diversion. Currently, PTO fees go
into a Treasury account and are only available to the Office
as provided in appropriations. In the last two decades, about
$800 million in PTO user fees has been diverted from PTO to
other federal spending. The Coburn amendment creates a
revolving fund, giving PTO direct access to its fees without
the need for enactment of an appropriations act.
Budget Committee paygo language is added at the end.

Mr. KOHL. Mr. President, I rise today in support of S. 23, the
America Invents Act. This bipartisan bill is the product of a great
deal of hard work and negotiation, and I congratulate Senators Leahy,
Hatch and Grassley on their accomplishment. This bill is a reasonable
compromise that will update and strengthen our U.S. Patent system so
that American businesses can better compete in the 21st Century.
The American system of patenting inventions has helped make our
country the center of innovation for more than two centuries. The
America Invents Act will ensure that inventors and those who invest in
their discoveries are able to rely on their most important asset--their
patent. Patents are vital components in the research and development
cycle that help create small businesses and jobs.
In my home State of Wisconsin, we have a strong tradition of
invention and innovation--from the invention of the first practical
typewriter in 1869 to a cure for Rickets disease in 1925 to cutting
edge drug therapies for the 21st Century. More than 50 Wisconsin based
startup companies have been fueled by patents that resulted from
research at the University of Wisconsin. And there are countless other
Wisconsin companies that rely on patents to sustain and grow their
business.
I am able to support the Patent Reform Act because of the
improvements made to the bill since it was first introduced. As is the
nature of compromise, I recognize that we cannot all get every change
we want. I thank Senator Leahy for making substantial changes to
accommodate many of my concerns.
Specifically, I appreciate your willingness to strike a major section
of the bill regarding prior user rights--which would have done serious
harm to the University of Wisconsin and its patent licensing business.
The bill incorporates additional changes that were important to
research universities, including provisions related to venue, grace
period for first inventor to file, oath, and collaborative research.
Patent protection will be stronger with the inclusion of ``could have
raised'' estoppel, strong administrative estoppel, and explicit
statutory authority for the Patent and Trademark Office, PTO, to reject
petitions by third parties and order joinder of related parties.
Improvements have also been made regarding damages. Finally, I am
pleased that we were able to address the PTO's funding needs in a way
that maintains Congress' duty to carefully oversee the PTO while
ensuring that it has the resources necessary to issue top quality
patents in a timely manner.
Again, I commend Senator Leahy for his many years of work on this
bill, and I look forward to the House taking up this legislation.
Mr. LEVIN. Mr. President, I thank my colleagues, Senator Leahy, who
is the chairman of the Judiciary Committee, and Senator Grassley, who
is the ranking Republican, for including in the Patent Reform Act a
provision that a number of us have been working on for several years to
stop the granting of tax strategy patents.
The key provision contains the text of legislation that Senators
Baucus, Grassley and I, as well as others, introduced earlier this
year, S. 139, the Equal Access to Tax Planning Act, to end the
troubling practice of persons seeking patents for tax-avoidance
strategies. Issuing such patents perverts the Tax Code by granting what
some could see as a government imprimatur of approval for questionable
or illegal tax strategies, while at the same time penalizing taxpayers
seeking to use legitimate strategies.
Since 1998, when Federal courts ruled that business practices were
eligible for patent protection, the Patent and Trademark Office has
issued more than 130 patents for tax strategies, with more than 150
applications pending. These patents are a terrible idea for two
reasons.
First, they may be providing unintended support for abusive tax
shelters. Some unscrupulous tax shelter promoters may claim that the
patent represents an official government endorsement of their tax
scheme and evidence that the scheme would withstand IRS challenge.
Given the well-documented problem we have with tax avoidance in this
country, allowing persons to patent tax strategies is not only a waste
of government resources needed elsewhere, but an invitation to
wrongdoers to misuse those government resources to promote tax
avoidance.
Second, the granting of tax patents threatens to penalize taxpayers
seeking to use legal tax strategies to minimize their tax bills. If a
tax practitioner is the first to discover a legal advantage and secures
a patent for it, that person could then effectively charge a toll for
all other taxpayers to use the same strategy, even though as a matter
of public policy all persons ought to be able to take advantage of the
law to minimize their taxes. Companies could even patent a legal method
to minimize their taxes and then

[[Page S1368]]

refuse to license that patent to their competitors in order to prevent
them from lowering their operating costs. Tax patents could be used to
hinder productivity and competition rather than foster it.
Federal patent law is supposed to encourage innovation, productivity,
and competition by encouraging inventors to innovate, secure in the
knowledge that they can profit from their efforts. In the tax arena,
there is already ample incentive for taxpayers to seek legitimate ways
of reducing their tax burden, as the wealth of advice and consulting in
this area demonstrates. Injecting patents into the mix encourages
abusive tax avoidance while raising the cost of legal tax planning at
the same time, both to society's detriment.
I introduced the first bill to ban tax patents back in 2007. Since
then, Senators on both sides of the aisle have been trying to get this
problem fixed. The language in the bill before us today is designed to
put a halt to the issuance of patents for tax strategies once and for
all, including for the 155 pending applications. Although the bill does
not apply on its face to the 130-plus tax patents already granted, if
someone tries to enforce one of those patents in court by demanding
that a taxpayer provide a fee before using it to reduce their taxes, I
hope a court will consider this bill's language and policy
determination and refuse to enforce the patent as against public
policy.
The tax patent provisions of this bill are significant, but they are
not the only reasons to support passage. This legislation will create
jobs, help keep our manufacturers competitive and strengthen and expand
the ability of our universities to conduct research and turn that
research into innovative products and processes that benefit Michigan
and our Nation. It also will assist the new satellite Patent and Trade
Office that will be established in Detroit by modernizing the patent
system and improving efficiency of patent review and the hiring of
patent examiners. One objective of the new office in Detroit is to
recruit patent examiners to reduce the backlog of patent applications.
This legislation is a huge step forward in that effort.
Mr. GRASSLEY. Mr. President, I want to discuss an important component
of the patent reform legislation that protects against frivolous and
vexatious litigation arising from qui tam suits for false patent
markings. The bill before the Senate abolishes this qui tam procedure
and I would like to discuss why I support doing so, even though I am
generally a strong proponent of using the qui tam mechanism to protect
American taxpayers.
The qui tam provisions of the False Claims Act specifically allow the
government to intervene and control litigation when the government has
been harmed through false or fraudulent billing. The qui tam provisions
of the patent law do not.
In fact, a recent Federal court decision struck down the qui tam
provisions of the patent law as unconstitutional because the false
patent marking statute does not give the executive branch sufficient
control over the litigation to ensure that the President can ``take
Care that the Laws be faithfully executed.''
As I mentioned, the False Claims Act is completely different. The
Justice Department has the right to intervene, to prosecute, or to
dismiss a False Claims Act qui tam. I was instrumental in ensuring such
controls on frivolous lawsuits were inserted into the False Claims Act
and the absence of similar controls in the false patent marking law is
problematic.
I would not want anyone watching the patent reform bill to conclude
that Congress will weaken or undermine the False Claims Act qui tam
statute because we have stricken a flawed qui tam provision in the
patent bill. I will vigorously defend the False Claims Act and urge my
colleagues to do the same. The False Claims Act is the Federal
Government's strongest weapon to protecting the taxpayer dollars from
fraud and abuse. It would be a serious miscalculation for anyone to
imply or attempt to characterize my support for the removal of the
patent qui tam as a starting point for striking or reforming the False
Claims Act qui tam provisions.
The False Claims Act qui tam provisions have helped the Federal
Government recover over $28 billion since I amended it to add the qui
tam provisions in 1986. With the recent amendments to the False Claims
Act that I, along with Senator Leahy, included in the Fraud Enforcement
and Recovery Act of 2009, the False Claims Act will continue to serve
as the Federal Government's most valuable tool to combat fraud in
government programs for decades to come.
Mr. KYL. Mr. President, I rise today to make a few comments about the
present bill, which has now been retitled the ``America Invents Act.''
This bill is almost identical to the managers' amendment that was
negotiated by Chairman Leahy and then-Ranking Member Sessions during
the last Congress and announced in March 2010. I cosponsored and
strongly supported that managers' amendment, which substantially
addressed all of the concerns that Senators Feingold, Coburn, and I
raised in our Minority Report to the 2009 committee report for the
bill, Senate Report 111-18, at pages 53 through 61. As the bill was
renegotiated in the fall of 2009 and early 2010, improvements and
corrections were made throughout the bill, and a number of new
provisions were added. I would like to take a moment to comment on some
of those changes and additions.
In section 2(a) of the bill, the definition of ``effective filing
date'' in section 100(i) has been modified in several ways. In
subparagraph (A), the word ``actual'' is added before ``filing date.''
When the word ``filing date'' is used in current law, it is sometimes
used to mean the actual filing date and sometimes used to mean the
effective filing date. Since section 100 is a definitional section, it
should be clear in its language, and thus the word ``actual'' is added
in order to avoid a lingering ambiguity. Also, the language of
subparagraph (B) is streamlined to clarify that a patent gets the
benefit or priority of an earlier application if it is entitled to such
benefit or priority as to the invention in question under the relevant
code sections, which require satisfaction of the requirements of
section 112(a), a specific reference to the prior application, and
copendency.
The new language makes it clear that the definition of effective-
filing date does not create new rules for entitlement to priority or
the benefit of an earlier filing date. Rather, the definition simply
incorporates the rules created by existing code sections. Also, since
those rules expressly require an enabling disclosure, there is no need
to separately require such disclosure in this definition, and thus the
reference at the end of subparagraph (B) to the first paragraph of
section 112 that appeared in earlier versions of the bill is dropped.
Keeping that citation would have created a negative implication that
unless such a requirement of section 120 was expressly incorporated
into the definition of effective-filing date, then such requirement
need not be satisfied in order to secure the benefit of an earlier
effective-filing date.
It should be noted that, for purposes of subparagraph (A) of section
100(i)(1), a patent or application for patent contains a claim to an
invention even if the claim to the particular invention was added via
an amendment after the application was filed. Of course, such an
amendment may not introduce new matter into the application--it may
only claim that which was disclosed in the application.
Finally, new section 100(i)(2) of title 35 governs the effective date
of reissued patents. Consistent with section 251, this new paragraph
effectively treats the reissue as an amendment to the patent, which is
itself treated as if it were a still-pending application. It bears
emphasis that the first paragraph of section 251, which is designated
as subsection (a) by this bill, bars the introduction of new matter in
an application for reissue. Moreover, paragraph (3) of section 251, now
designated as section 251(c), makes the rules governing applications
generally applicable to reissues. A reissue is treated as an amendment
to the patent, and the last sentence of section 132(a) bars the
introduction of new matter in an amendment. See In re Rasmussen, 650
F.2d 1212, 1214-15, CCPA 1981. Thus a claim that relies for its support
on new matter introduced in a reissue would be invalid.
Section 2(b) of the bill recodifies section 102 of title 35. In the
present bill, this recodification is reorganized by

[[Page S1369]]

consolidating all exceptions to the definition of prior art in section
102(b)--and excluding from subsection (b) provisions that do not define
exceptions to prior art, such as the CREATE Act and the definition of
the effective date of patents and applications cited as prior art. Thus
what previously appeared as section 102(a)(1)(B) in earlier versions of
the bill is now 102(b)(1)(A), and former paragraphs (3) and (4) of
subsection (b) are now subsections (c) and (d), respectively.
Also, the wording of subparagraph (B) of section 102(b)(2), which
appeared at the same place in earlier versions of the bill, is changed
so that it tracks the wording of subparagraph (B) of subsection (b)(1).
These two subparagraph (B)s are intended to operate in the same way,
and their previous differences in wording, although not substantive,
tended to create an implication that they were intended to operate in
different ways.
Under the first subparagraph (B), at section 102(b)(1)(B), if an
inventor publicly discloses his invention, no subsequent disclosure
made by anyone, regardless of whether the subsequent discloser obtained
the subject matter from the inventor, will constitute prior art against
the inventor's subsequent application for patent in the United States.
The parallel provision at section 102(b)(2)(B) applies the same rule to
subsequent applications: if the inventor discloses his invention, a
subsequently filed application by another will not constitute prior art
against the inventor's later-filed application for patent in the United
States, even if the other filer did not obtain the subject matter from
the first-disclosing inventor. And of course, the inventor's earlier
disclosure will constitute prior art that invalidates the other filer's
subsequent application.

In other words, under the regime of the two subparagraph (B)s, an
inventor's disclosure of his invention to the public not only
invalidates anyone else's subsequently filed application, but no one
else's subsequent disclosure or filing of an application during the 1-
year grace period will constitute prior art against that inventor's
application. The bill thus effectively creates a ``first to publish''
rule that guarantees patent rights in the United States to whoever
discloses the invention to the public first.
Of course, until the Europeans and the Japanese adopt a more
substantial grace period, an inventor's pre-filing disclosure will
prevent patenting in Europe and Japan. An inventor who is concerned
about protecting his invention from theft, but who also wants to
preserve his rights overseas, can instead file a provisional
application in the United States. This inexpensive alternative protects
the inventor's rights both in the United States and abroad.
Another change that this bill makes to chapter 10 is that the CREATE
Act, formerly at section 103(c) of title 35, has been moved to section
102(c). The present bill departs from earlier versions of the bill by
giving the CREATE Act is own subsection and making several clarifying
and technical changes. In particular, the citation at the end of the
chapeau is made more specific, and in paragraph (1) the words ``was
developed'' are added because subject matter is not always ``made,''
but is always ``developed.'' Also in the same paragraph, the reference
to ``parties'' is replaced with ``1 or more parties'', to further
clarify that not all parties to the joint research agreement need have
participated in developing the prior art or making the invention.
Finally, as noted previously, the definition of ``joint research
agreement'' is moved to section 100, which contains other definitions
relevant to CREATE. As section 2(b)(2) of this bill notes, these
changes are made with the same ``intent'' to promote joint-research
activities that animated the CREATE Act. None of the changes in this
legislation alter the meaning of the original law.
The present bill's new subsection 102(d) of title 35 makes several
changes to earlier bills' version of this provision. Specifically, the
chapeau of this subsection, which defines the effective date of patents
and applications cited as prior art, is modified in the first clause by
expressly stating the purpose of this subsection, and by otherwise
clarifying the language employed. In paragraph (1), a clause is added
at the outset to make clear that the paragraph applies only if
paragraph (2) does not apply. Paragraph (2) is unmodified save for the
nonsubstantive addition of a comma.
Though the language of section 102(d)(2) remains unchanged from
earlier versions of the bill, that language deserves some comment.
Paragraph (2) is intended to overrule what remains of In re Wertheim,
646 F.2d 527 (CCPA 1981), which appeared to hold that only an
application that could have become a patent on the day that it was
filed can constitute prior art against another application or patent.
See id. at 537, noting that:

If, for example, the PTO wishes to utilize against an
applicant a part of that patent disclosure found in an
application filed earlier than the date of the application
which became the patent, it must demonstrate that the
earlier-filed application contains sections 120/112 support
for the invention claimed in the reference patent. For if a
patent could not theoretically have issued the day the
application was filed, it is not entitled to be used against
another as `secret prior art,' the rationale of Milburn being
inapplicable.

Wertheim, however, was already almost completely overruled by the
American Inventors Protection Act of 1999, Public Law 106-113, which,
by making any published application prior art, effectively displaced
Wertheim's requirement that the application have been capable of
becoming a patent on the day that it was filed. Two recent BPAI
decisions, Ex parte Yamaguchi, 88 U.S.P.Q.2d 1606, BPAI 2008, and Ex
parte Jo Anne Robbins, 2009 WL 3490271, BPAI October 26, 2009, confirm
this overruling, holding that any application that is ultimately
published is prior art as of its filing date, and that provisional
applications--which typically cannot become patents as filed--also are
prior art. See Robbins at page *4, noting that ``[i]n our opinion, a
published patent application which is statutorily destined to be
published constitutes prior art for all that it discloses on its
earliest filing date,'' and Yamaguchi at page 9, noting that ``a
provisional application--like a regular utility application--
constitutes prior art for all that it teaches,'' and the same case at
page 13, Judge Torczon concurring that ``[i]f [the majority] is
correct, In re Wertheim is no longer tenable authority.'' Moreover,
these BPAI decisions' holding that a patent has a patent-defeating
effect as of the filing date of the provisional application to which it
claims priority was recently affirmed by the Federal Circuit in In re
Giacomini, 612 F.3d 1380 (Fed. Cir. 2010).
The caselaw also teaches that parent applications to the published
application set the effective date of the prior art if they describe
the invention and the invention is enabled before the filing of the
patent under review, even if that prior-art description, standing
alone, may not be adequate to show enablement. This point is
illustrated by Application of Samour, 571 F.2d 559, CCPA 1978, which
holds that prior art must be enabled before the effective filing date
of the application or patent under review, but this enablement need not
be disclosed at the same place and time as the primary reference relied
on as prior art--and can even come later than the primary reference, so
long as it still comes before the effective-filing date of the
application under review. Samour at page 563, notes that:

we do not believe that a reference showing that a method of
preparing the claimed subject matter would have been known
by, or would have been obvious to, one of ordinary skill in
the pertinent art, must antedate the primary reference. The
critical issue under 35 U.S.C. Sec. 102(b) is whether the
claimed subject matter was in possession of the public more
than one year prior to applicant's filing date, not whether
the evidence showing such possession came before or after the
date of the primary reference.

Technically, In re Wertheim still controls the prior-art effect of
the limited universe of applications that are not published before they
are patented, but the Office's examination guidelines ignore even this
vestigial effect, and extend prior-art effect to all prior applications
that describe an invention as of the date of their filing. MPEP
21360.03, part IV, which notes that:

For prior art purposes, a U.S. patent or patent application
publication that claims the benefit of an earlier filing date
under 35 U.S.C. 120 of a prior nonprovisional application
would be accorded the earlier filing date as its prior art
date under 35 U.S.C. 102(e), provided the earlier-filed
application properly supports the subject matter relied upon
in any rejection in compliance with 35 U.S.C. Sec. 112, first
paragraph.

[[Page S1370]]

A prior-art parent application, however, must be copendent, have some
continuity of disclosure, and be specifically referred to in the patent
or published application. The continuous disclosure must be a
description of the subject matter that is relied on as prior art. That
description can become narrower in the intervening applications. But so
long as there is still some description of the subject matter in the
intervening applications, the Office can rely on an earlier
application's fuller description as prior art.
The language of paragraph (2) is somewhat indirect in its imposition
of these requirements. They are mostly incorporated through the
paragraph's mandate that the prior-art application be ``entitled to
claim * * * priority or benefit'' under section 120 et al. In section
100(i), which defines the effective-filing date of the patent under
review, the patent must be entitled to the priority or benefit itself
under the relevant sections. Here again in section 102(d), however, the
application need only be entitled to claim the benefit or priority
under those sections. This difference in language, which offers an
excellent example of why people hate lawyers, distinguishes between the
core requirement of section 120 et al.--that the application include an
enabling disclosure--and the ministerial requirements of that section--
that the application be copendent and specifically referenced. In
effect, an application that meets the ministerial requirements of
copendency and specific reference is entitled to claim the benefit or
priority, but only an application that also offers an enabling
disclosure is actually entitled to the benefit or priority itself. The
language of paragraph (2) also expressly requires that the earliest
application ``describe'' the subject matter, and the Office has
traditionally required that this disclosure be continuous, as discussed
above.
Paragraph (2) can be criticized as codifying current BPAI common law
and examination practice without fully describing that practice.
However, a fully descriptive codification of the principles codified
therein would be unduly long, requiring repetition of the already
somewhat inelegant language of section 120.
Another aspect of the bill's changes to current section 102 also
merits special mention. New section 102(a)(1) makes two important
changes to the definition of non-patent prior art. First, it lifts
current law's geographic limits on what uses, knowledge, or sales
constitute prior art. And second, it limits all non-patent prior art to
that which is available to the public. This latter change is clearly
identified in Senate Report 110-259, the report for S. 1145, the
predecessor to this bill in the 110th Congress. The words ``otherwise
available to the public'' were added to section 102(a)(1) during that
Congress's Judiciary Committee mark up of the bill. The word
``otherwise'' makes clear that the preceding clauses describe things
that are of the same quality or nature as the final clause--that is,
although different categories of prior art are listed, all of them are
limited to that which makes the invention ``available to the public.''
As the committee report notes at page 9, ``the phrase `available to the
public' is added to clarify the broad scope of relevant prior art, as
well as to emphasize the fact that it [i.e., the relevant prior art]
must be publicly available.'' In other words, as the report notes,
``[p]rior art will be measured from the filing date of the application
and will include all art that publicly exists prior to the filing date,
other than disclosures by the inventor within one year of filing.''

The Committee's understanding of the effect of adding the words ``or
otherwise available to the public'' is confirmed by judicial
construction of this phraseology. Courts have consistently found that
when the words ``or otherwise'' or ``or other'' are used to add a
modifier at the end of a string of clauses, the modifier thus added
restricts the meaning of the preceding clauses. Strom v. Goldman, Sachs
& Co., 202 F.3d 138, 146-47, Second Cir. 1999, states that:

The position of the phrase `or any other equitable relief'
in the sentence in which it appears indicates that it
modifies one or both of the two specific remedies referred to
just before it in the same sentence * * * [T]he use of the
words `other' immediately after the reference to back pay and
before `equitable relief' demonstrated Congress'
understanding that the back pay remedy is equitable in
nature.

Strom construed the phrase ``may include * * * back pay, * * * or any
other equitable relief.'' Universal City Studios, Inc. v. Reimerdes,
111 F.Supp.2d 294, 325, S.D.N.Y. 2000, holds that:

The statute makes it unlawful to offer, provide or
otherwise traffic in described technology. To `traffic' in
something is to engage in dealings in it, conduct that
necessarily involves awareness of the nature of the subject
of the trafficking. * * * The phrase `or otherwise traffic
in' modifies and gives meaning to the words `offer' and
`provide.' In consequence, the anti-trafficking provision of
the DMCA is implicated where one presents, holds out or makes
a circumvention technology or device available, knowing its
nature, for the purpose of allowing others to acquire it.

Reimerdes construed the phrase ``offer to the public, provide, or
otherwise traffic in any technology.'' Williamson v. Southern Regional
Council, Inc., 223 Ga. 179, 184, 154 S.E.2d 21, 25 (Ga. 1967), noted
that:

The words `carrying on propaganda' in this statute must be
construed in connection with the words following it, `or
otherwise attempting to influence legislation.' The use of
the word `otherwise' indicates that `carrying on propaganda'
relates to `attempting to influence legislation.'

Williamson construed the phrase ``carrying on propaganda, or
otherwise attempting to influence legislation.''
In other words, the Judiciary Committee's design in adding the 2007
amendment to section 102(a)(1), as expressed in the relevant committee
report, is consistent with the unanimous judicial construction of the
same turn of phrase. It appears that every court that has considered
this question agrees with the committee's understanding of the meaning
of this language.
Moreover, the fact that the clause ``or otherwise available to the
public'' is set off from its preceding clauses by a comma confirms that
it applies to both ``public use'' and ``on sale.'' Finisar Corp. v.
DirecTV Group, Inc., 523 F.3d 1323, 1336, Fed. Cir. 2008, notes that
``when a modifier is set off from a series of antecedents by a comma,
the modifier should be read to apply to each of those antecedents.''
Thus new section 102(a)(1) imposes a public-availability standard on
the definition of all prior art enumerated by the bill--an
understanding on which the remainder of the bill is predicated.
Whether an invention has been made available to the public is the
same inquiry that is undertaken under existing law to determine whether
a document has become publicly accessible, but is conducted in a more
generalized manner to account for disclosures of information that are
not in the form of documents.

A document is publicly accessible if it has been
disseminated or otherwise made available to the extent that
persons interested and ordinarily skilled in the subject
matter or art, exercising reasonable diligence, can locate it
and recognize and comprehend therefrom the essentials of the
claimed invention without need of further research or
experimentation.

That is a quotation from Cordis Corp. v. Boston Scientific Corp., 561
F.3d 1319, 1333, Fed. Cir. 2009. That decision also states that ``[i]n
general, accessibility goes to the issue of whether interested members
of the relevant public could obtain the information if they wanted
to.'' See also In re Lister, 583 F.3d 1307, Fed. Cir. 2009.
Another important aspect of public availability or accessibility is
the doctrine of inherency. ``Under the doctrine of inherency, if an
element is not expressly disclosed in a prior art reference, the
reference will still be deemed to anticipate a subsequent claim if the
missing element is necessarily present in the thing described in the
reference, and that it would be so recognized by persons of ordinary
skill,'' a point noted in Rosco, Inc. v. Mirror Lite Co., 304 F.3d
1373, 1380, Fed. Cir. 2002. This doctrine applies to products sold to
the public as well as published references. Thus once a product is sold
on the market, any invention that is inherent to the product becomes
publicly available prior art and cannot be patented.

The present bill's elimination of the patent forfeiture doctrines in
favor of a general public availability standard also limits and
reconciles the various purposes that previously have been ascribed to
section 102's definition of prior art. Current 102(b), which imposes
the forfeiture doctrines, has been described as being ``primarily
concerned

[[Page S1371]]

with the policy that encourages an inventor to enter the patent system
promptly,'' a quotation from Woodland Trust v. Flowertree Nursery,
Inc., 148 F.3d 1368, 1370, Fed. Cir. 1998. And the ``overriding concern
of the on-sale bar'' has been described as ``an inventor's attempt to
commercialize his invention beyond the statutory term,'' as stated in
Netscape Communications Corp. v. Konrad, 295 F.3d 1315, 1323, Fed. Cir.
2002.
By adopting the first-to-file system, however, the present bill
already provides ample incentive for an inventor to enter the patent
system promptly. There is no need to also require forfeiture of patents
simply because the inventor has made some use of the invention that has
not made the invention available to the public. And the current on-sale
bar imposes penalties not demanded by any legitimate public interest.
There is no reason to fear ``commercialization'' that merely consists
of a secret sale or offer for sale but that does not operate to
disclose the invention to the public.
The current forfeiture doctrines have become traps for unwary
inventors and impose extreme results to no real purpose. In
Beachcombers International, Inc. v. Wildewood Creative Products, Inc.,
31 F.3d 1154, 1159-60, Fed. Cir. 1994, for example, an improved
kaleidoscope was held to be ``in public use'' within the meaning of
current section 102(b) because the inventor had demonstrated the device
to several guests at a party in her own home. And in JumpSport, Inc. v.
Jumpking, Inc., 2006 WL 2034498, Fed. Cir. July 21, 2006, the court of
appeals affirmed the forfeiture of a patent for a trampoline enclosure
on the ground that the enclosure had been in ``public use'' because
neighbors had been allowed to use it in the inventor's back yard.
Obviously, neither of these uses made the inventions accessible to
persons interested and skilled in the subject matter. The only effect
of rulings like these is to create heavy discovery costs in every
patent case, and to punish small inventors who are unaware of the
pitfalls of the current definition of prior art.
The present bill's new section 102(a) precludes extreme results such
as these and eliminates the use of the definition of prior art to
pursue varied goals such as encouraging prompt filing or limiting
commercialization. Instead, the new definition of prior art will serve
only one purpose: ``to prevent the withdrawal by an inventor of that
which was already in the possession of the public,'' as noted in
Bruckelmyer v. Ground Heaters, Inc., 335 F.3d 1374, 1378, Fed. Cir.
2006. The new definition is ``grounded on the principle that once an
invention is in the public domain, it is no longer patentable by
anyone,'' as stated in SRI International, Inc. v. Internet Security
Systems, Inc., 511 F.3d 1186, 1194, Fed. Cir. 2008.
The present definition thus abrogates the rule announced in Egbert v.
Lippman, 104 U.S. 333, 336 (1881), one of the more unusual patent cases
to come before the Supreme Court. That case held that:

whether the use of an invention is public or private does not
necessarily depend upon the number of persons to whom its use
is known. If an inventor, having made his device, gives or
sells it to another, to be used by the donee or vendee,
without limitation or restriction, or injunction of secrecy,
and it is so used, such use is public, even though the use
and knowledge of the use may be confined to one person.

Egbert v. Lippman is another case whose result can fairly be
characterized as extreme. The invention there was an improved corset
spring. The evidence showed only that the inventor had given the
improved corset spring to one lady friend, who gave it to no other, and
who used it in a corset, which of course was worn under her dress. The
U.S. Supreme Court deemed this to be a ``public use'' of the invention
within the meaning of section 102(b).
Justice Miller dissented. He began by noting that the word ``public''
in section 102(b) is ``an important member of the sentence.'' Justice
Miller went on to conclude:

A private use with consent, which could lead to no copy or
reproduction of the machine, which taught the nature of the
invention to no one but the party to whom such consent was
given, which left the public at large as ignorant of this as
it was before the author's discovery, was no abandonment to
the public, and did not defeat his claim for a patent. If the
little steep spring inserted in a single pair of corsets, and
used by only one woman, covered by her outer-clothing, and in
a position always withheld from public observation, is a
public use of that piece of steel, I am at a loss to know the
line between a private and a public use.

In this bill's revisions to section 102, vindication has finally come
to Justice Miller, albeit 130 years late.
I emphasize these points about the bill's imposition of a general
public availability standard and its elimination of secret prior art
because they are no small matter. A contrary construction of section
102(a)(1), which allowed private and non-disclosing uses and sales to
constitute invalidating prior art, would be fairly disastrous for the
U.S. patent system. First, the bill's new post-grant review, in which
any validity challenge can be raised, would be utterly unmanageable if
the validity of all patents subject to review under the new system
continued to depend on discovery-intensive searches for secret offers
for sale and non-disclosing uses by third parties. Only patents issued
under the new prior-art rules can be efficiently reviewed under chapter
32.
Second, a general public-availability standard is a necessary
accompaniment to this bill's elimination of geographic restrictions on
the definition of prior art. As unwieldy as the current rules may be,
at least those rules allow only those secret sales and private third-
party uses that occur in the United States to constitute prior art.
Under the new regime, however, sales and uses occurring overseas will
also constitute prior art. A sale or use that discloses an invention to
the public is relatively hard to falsify. If the invention truly was
made available to the public by sale or use, independent validation of
that sale or use should be readily available. By contrast, the
existence of a secret offer for sale, or a nondisclosing third-party
use, largely will turn on the affidavits or statements of the parties
to such an occurrence. Unfortunately, some foreign countries continue
to have weak business ethics and few scruples about bending the rules
to favor domestic interests over foreign competitors. A system that
allowed foreign interests to invalidate a U.S. patent simply by
securing statements from individuals that a secret offer for sale or
non-disclosing third-party use of the invention had occurred in a
foreign country would place U.S. inventors at grave risk of having
their inventions stolen through fraud. That is not a risk that Congress
is willing to accept.
In section 2(c), the present bill, for clarity's sake, changes the
previous bills' recodification of section 103 of title 35 by replacing
the word ``though'' with ``, notwithstanding that''. The modified text
reflects more conventional English usage. Also, in both the present
bill and earlier versions, former subsection (b) of section 103 has
been dropped, since it has already been subsumed in caselaw. And
subsection (c), the CREATE Act, has been moved to subsection (d) of
section 102.
In section 2(e) of the present bill, an effective date is added to
the repeal of statutory invention registrations. SIRs are needed only
so long as interferences exist. The bill repeals the authority to
initiate interferences 18 months after the date of enactment. The added
effective-date language also repeals SIRs 18 months after enactment,
making clear that preexisting SIRs will remain effective for purposes
of pending interferences, which may continue under this bill.
Section 2(e)(2) of the bill strikes the citation to section 115 from
section 111(b)(8)'s enumeration of application requirements that do not
apply to provisionals. This conforming change is made because, in
section 3 of the bill, section 115 itself has been amended so that it
only applies to nonprovisionals. In other words, there is no longer any
need for section 111(b)(8) to except out the oath requirement because
that requirement no longer extends to provisionals. There is no need
for an exception to a requirement that does not apply.
Sections 2(h) and (i) of the present bill make a number of changes to
the previous bills' treatment of remedies for derivation. These changes
are made largely at the Patent Office's suggestion. In particular, the
new section 135 proceeding is simplified, the Office is given authority
to implement the proceeding through regulations, the Office is
permitted to stay a derivation proceeding pending an ex parte

[[Page S1372]]

reexamintion, IPR, or PGR for the earlier-filed patent, and the Office
is permitted but not required to institute a proceeding if the Office
finds substantial evidence of derivation. In lieu of a section 135
proceeding, parties will be allowed to challenge a derived patent
through a civil action under a revised section 291.
New section 2(k) of the bill eliminates the qui tam remedy for false
marking, while allowing a party that has suffered a competitive injury
as a result of such marking to seek compensatory damages. Section 292
of title 35 prohibits false patent marking and imposes a penalty of
$500 for each such offense. Under current law, subsection (b) allows
``any person'' to sue for the penalty, and requires only that one half
of the proceeds of the suit shall go to the United States. Current
subsection (b) is, in effect, a qui tam remedy for false marking, but
without any of the protections and government oversight that normally
accompany qui tam actions.
The changes made by section 2(k) of the bill would allow the United
States to continue to seek the $500-per-article fine, and would allow
competitors to recover in relation to actual injuries that they have
suffered as a result of false marking, but would eliminate litigation
initiated by unrelated, private third parties.
In recent years, patent attorneys have begun to target manufacturers
of high-volume consumer products with section 292(b) actions. Since the
fine of up to $500 is assessed for each article that is falsely marked,
such litigants have an incentive to target products that are sold in
high volume. Though one might assume that section 292 is targeted at
parties that assert fictitious patents in order to deter competitors,
such a scenario is almost wholly unknown to false-marking litigation.
False-marking suits are almost always based on allegations that a valid
patent that did cover the product has expired, but the manufacturer
continued to sell products stamped with the patent, or allegations that
an existing patent used to mark products is invalid or unenforceable,
or that an existing and valid patent's claims should not be construed
to cover the product in question.
Indeed, a recent survey of such suits found that a large majority
involved valid patents that covered the products in question but had
simply expired. For many products, it is difficult and expensive to
change a mold or other means by which a product is marked as patented,
and marked products continue to circulate in commerce for some time
after the patent expires. It is doubtful that the Congress that
originally enacted this section anticipated that it would force
manufacturers to immediately remove marked products from commerce once
the patent expired, given that the expense to manufacturers of doing so
will generally greatly outweigh any conceivable harm of allowing such
products to continue to circulate in commerce.
Indeed, it is not entirely clear how consumers would suffer any
tangible harm from false marking that is distinct from that suffered
when competitors are deterred from entering a market. Patent marking's
primary purpose is to inform competitors, not consumers, that a product
is patented. I doubt that consumers would take any interest, for
example, in whether a disposable plastic cup is subject to a patent, to
take one case recently decided by the courts. Even less clear is how
the consumer would be harmed by such marking, absent a deterrence of
competition. Current section 292(b) creates an incentive to litigate
over false marking that is far out of proportion to the extent of any
harm actually suffered or the culpability of a manufacturer's conduct.
To the extent that false patent marking deters competition, the
bill's revised section 292(b) allows those competitors to sue for
relief. This remedy should be more than adequate to deter false marking
that harms competition. And to the extent that false marking somehow
harms the public in a manner distinct from any injury to competitors
and competition, revised section 292(a) would allow the United States
to seek relief on behalf of the public. The Justice Department can be
expected to be more judicious in its use of this remedy than is a
private qui tam litigant seeking recovery that will benefit him
personally. These revisions to section 292 should restore some
equilibrium to this field of litigation.
Finally, because the Federal Circuit's recent decision in Forest
Group, Inc. v. Bon Tool Co., 590 F.3d 1295, Fed Cir. 2009, appears to
have created a surge in false-marking qui tam litigation, the changes
made by paragraph (1) of section 2(k) of the bill are made fully
retroactive by paragraph (2). Because the courts have had difficulty
properly construing effective-date language in recent years, paragraph
(2) employs the language of section 7(b) of Public Law 109-366, the
Military Commissions Act of 2006, which recently was given an
authoritative construction in Boumediene v. Bush, 476 F.3d 981, 987,
D.C. Cir. 2007. As that court noted when construing effective-date
language identical to that of section 2(k)(2):

Section 7(b) could not be clearer. It states that ``the
amendment made by subsection (a)''--which repeals habeas
jurisdiction--applies to ``all cases, without exception''
relating to any aspect of detention. It is almost as if the
proponents of these words were slamming their fists on the
table shouting ``When we say `all,' we mean all--without
exception!''

It is anticipated that courts will find the same clarity in the
language of section 2(k)(2), and will apply the revised section 292(b)
to cases pending at any level of appeal or review.
Section 2(l) of the present bill modifies the statute of limitations
for initiating a proceeding to exclude an attorney from practice before
the Office. Under this provision, a section 32 proceeding must be
initiated either within 10 years of when the underlying misconduct
occurred, or within 1 year of when the misconduct is reported to that
section of PTO charged with conducting section 32 proceedings,
whichever is earlier.
It is not entirely clear how the time limitation applies under
present law. A recent D.C. Circuit case, 3M v. Browner, 17 F.3d 1461
D.C. Cir. 1994, effectively makes the 5-year statute of limitations
that generally applies to enforcement of civil penalties, at 28 U.S.C.
Sec. 2462, run from the date when a violation occurred, rather than
from the date when the enforcement agency first learned of the
violation or reasonably could have learned of it. A recent Federal
Circuit case, Sheinbein v. Dudas, 465 F.3d 493, 496, Fed. Cir. 2006,
applies the section 2462 5-year limitation to section 32 proceedings,
and applies 3M v. Browner's general rule, as described by Sheinbein,
that ``[a] claim normally accrues when the factual and legal
prerequisites for filing suit are in place.'' However, another court
case, S.E.C. v. Koenig, 557 F.3d 736, 739, 7th Cir. 2009, has recently
held that when a fraud has occurred, section 2462 only runs from when
the fraud ``could have been discovered by a person exercising
reasonable diligence.''
Although the Federal Circuit appears to be inclined to follow 3M v.
Browner, it is not entirely clear that it would reject Koenig's
exception for cases of fraud, Koenig having been decided subsequently
to Sheinbein. In any event, neither rule would be entirely satisfactory
for section 32 proceedings. On the one hand, a strict five-year statute
of limitations that runs from when the misconduct occurred, rather than
from when it reasonably could have been discovered, would appear to
preclude a section 32 proceeding for a significant number of cases of
serious misconduct, since prosecution misconduct often is not
discovered until a patent is enforced. On the other hand, a fraud
exception that effectively tolls the statute of limitations until the
fraud reasonably could have been discovered would be both overinclusive
and underinclusive. Such tolling could allow a section 32 proceeding to
be commenced more than two decades after the attorney's misconduct
occurred. This is well beyond the time period during which individuals
can reasonably be expected to maintain an accurate recollection of
events and motivations. And yet, a fraud exception would also be
underinclusive, since there is a substantial range of misconduct that
PTO should want to sanction that does not rise to the level of fraud,
which requires reliance on the perpetrator's misrepresentations.
Section 2(1) of the bill adopts neither 3M v. Browner nor Koenig's
approach, but instead imposes an outward limit of 10 years from the
occurrence of the misconduct for the initiation of a section 32
proceeding. A 10-year limit

[[Page S1373]]

would appear to allow a proceeding for the vast bulk of misconduct that
is discovered, while also staying within the limits of what attorneys
can reasonably be expected to remember.
Paragraph (2) of section 2(l) requires the Office to report to
Congress every two years on incidents of misconduct that it becomes
aware of and would have investigated but for the 10 year limit. By
providing a description of the character and apparent seriousness of
such incidents, these reports will alert a future Congress if there is
a need to revisit the 10-year limit. If the number and seriousness of
such incidents is substantial enough, it may outweigh the interest in
repose with regard to such matters.
Section 2(m) of the present bill requires the Small Business
Administration to report to Congress on the expected impact of the
first-to-file system on small businesses. On the one hand, some parties
have suggested that the first-to-file system will be relatively
burdensome for small businesses because it will require patent
applicants to file their applications earlier, and will require that
more applications be filed for a complex invention. On the other hand,
others have suggested that the first-to-file system will be far simpler
and cleaner to administer, that the ability to file provisional
applications mitigates the burden of filing earlier, and that by
inducing American patent applicants to file earlier, the first-to-file
system is more likely to result in American patents that are valid and
have priority elsewhere in the industrialized world.
Under current law, even if an American small business or independent
inventor is legally sophisticated enough to maintain the type of third-
party validation that will preserve his priority under the first-to-
invent system, if that American inventor relies on first-to-invent
rules to delay filing his application, he runs a serious risk that
someone in another country will file an application for the same
invention before the American does. Because the rest of the world uses
the first-to-file system, even if the American inventor can prove that
he was the first to have possession of the invention, the foreign filer
would obtain the patent rights to the invention everywhere outside of
the United States. In today's world, patent rights in Europe and Asia
are valuable and important and cannot be ignored.
Section 2(n) of the bill requires the Director to report on the
desirability of authorizing prior-user rights, particularly in light of
the adoption of a first-to-file system.
In section 2(o) of the bill, the time for implementing the first-to-
file system has been moved to 18 months, so that Congress might have an
opportunity to act on the conclusions or recommendations of the reports
required by subsections (m) and (n) before first-to-file rules are
implemented.
Subsection (o) generally adopts the Office's preferred approach to
transitioning to the first-to-file system. Under this approach, if an
application contains or contained a claim to an invention with an
effective-filing date that is 18 months after the date of enactment of
the Act, the entire application is subject to the first-to-file regime.
As a practical matter, this allows applicants to flip their
applications forward into the first-to-file system, but prevents them
from flipping backward into the first-to-invent universe once they are
already subject to first-to-file rules.

New section 100(i)(2) of title 35 ensures that reissues of first-to-
invent patents will remain subject to first-to-invent rules. Also,
continuations of first-to-invent applications that do not introduce new
matter will remain subject to first-to-invent rules. This last rule is
important because if a continuation filed 18 months after the enactment
of the Act were automatically subject to first-to-file rules, even if
it introduced no new matter, the Office likely would see a flood of
continuation filings on the eve of the first-to-file effective date.
Under subsection (o), an applicant who wants to add to his disclosure
after this section's 18-month effective date can choose to pull the
whole invention into the first-to-file universe by including the new
disclosure in a continuation of his pending first-to-invent
application, or he can choose to keep the pending application in the
first-to-file world by filing the new disclosure as a separate
invention.
Paragraph (2) of subsection (o) provides a remedy in situations in
which interfering patents are issued, one of which remains subject to
first-to-invent rules, and the other of which was filed earlier but has
a later date of conception and has transitioned into the first-to-file
system. Paragraph (2) subjects the latter patent to the first-to-invent
rule, and allows the other patent owner and even third parties to seek
invalidation of that later-conceived interfering patent on that basis.
In section 3(a) of the present bill, the language of section 115 of
title 35, the inventor's oath requirement, has been tidied up from that
appearing in earlier versions of the bill. A grammatical error is
corrected, an unnecessary parenthetical is struck, and stylistic
changes are made.
In the new section 115(g), a paragraph (2) has been added that allows
the Director to require an applicant claiming the benefit of an
earlier-filed application to include copies of previous inventor's
oaths used in those applications. The Office cannot begin examining an
application until it knows who those inventors are, since their
identity determines which prior art counts as prior art against the
claimed invention. However, a later-filed application is not currently
required to name inventors. Such information is included in an
application data sheet, but such data sheets are not always filed--the
requirement is not statutory. Moreover, a later-filed application often
will cite to multiple prior applications under section 120, each of
which may list several inventors. Thus unless the Office can require
the applicant to identify which oath or other statement applies to the
later-filed application, the Office may not be able to figure out who
the inventor is for that later application.
In new section 115(h)(2), the present bill replaces the word
``under'' with ``meeting the requirements of'' in order to conform to
the formulation used later in the same sentence.
In section 3(a)(3) of the bill, the changes to section 111(a) are
modified to reflect that either an oath or declaration may be
submitted.
In section 3(b), the present bill adds a new paragraph (2) that
modifies section 251 to allow an assignee who applied for a patent to
also seek broadening reissue of the patent within two years of its
issue. Notwithstanding the language of the fourth paragraph of current
section 251, the Office currently does allow assignees to seek
broadening reissue, so long as the inventor does not oppose the
reissue. The Office views such unopposed applications for reissue as
effectively being made ``in the name'' of the inventor. Expanding an
assignee's right to seek broadening reissue is consistent with the
bill's changes to sections 115 and 118, which expand assignees' rights
by allowing assignees to apply for a patent against the inventor's
wishes. If an assignee exercises his right to apply for a patent
against the inventor's wishes, there is no reason not to allow the same
assignee to also seek a broadening reissue within the section 251 time
limits.
Turning to the issue of damages, at the end of the 110th Congress, I
introduced a patent reform bill, S. 3600, that proposed restrictions on
the use of some of the factors that are used to calculate a reasonable
royalty. Discussions with patent-damages experts had persuaded me that
several of the metrics that are employed by litigants are unsound,
unduly manipulable and subjective, and prone to producing excessive
awards. The most significant of the restrictions that I proposed in S.
3600 were limits on the use of supposedly comparable licenses for other
patents to value the patent in suit, and limits on the use of
standardized measures such as the so-called rule of thumb. These
proposals are discussed in my statement accompanying the introduction
of S. 3600, at 154 Congressional Record S9982, S9984-85, daily ed.
September 27, 2008. I argued at the time that the only way to ensure
that courts and juries would stop using these metrics ``is for Congress
to tell the courts to disallow them.''
It appears that I underestimated the courts' ability and willingness
to address these problems on their own. And I certainly did not
anticipate the speed with which they might do so. Three recent
decisions from the Federal Circuit

[[Page S1374]]

have sharply restricted the use of licenses for supposedly comparable
patents to value the patent in suit. Lucent Technologies, Inc. v.
Gateway, Inc., 580 F.3d 1301, 1328, Fed. Cir. 2009, makes clear that
mere ``kinship'' in a field of technology is not enough to allow use of
evidence of licenses for other patents. Lucent bars the use of other-
patent licenses where there is no showing of the significance of such
other patented inventions to their licensed products, or no showing of
how ``valuable or essential'' those other licensed inventions are. In a
similar vein, ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 870, 872,
Fed. Cir. 2010, condemns the use of ``unrelated'' licenses for other
patents as a measure of value and makes clear that a supposedly
comparable license must have ``an economic or other link to the
technology in question.'' And Wordtech Systems, Inc. v. Integrated
Network Solutions, Inc., 609 F.3d 1308, 1320, Fed. Cir. 2010, recently
reiterated that ``comparisons of past patent licenses to the
infringement must account for the technological and economic
differences between them.''

And just two months ago, I was particularly pleased to see the
Federal Circuit announce, in Uniloc USA, Inc. v. Microsoft Corp.,____
F.3d____, 2011 WL 9738, Fed. Cir. 2011, that the ``court now holds as a
matter of Federal Circuit law that the 25 percent rule of thumb is a
fundamentally flawed tool for determining a baseline royalty rate in a
hypothetical negotiation.'' The court ruled that testimony based on the
rule of thumb is inadmissible under the Daubert standard.
The rule of thumb is a particularly arbitrary and inaccurate measure
of patent value. I am glad to see that it will no longer be used.
The Lucent case that I quoted earlier also struck down a damages
award that was based on the entire market value of the infringing
product. The court did so because there was no substantial evidence
that the patented invention was the basis for consumer demand for the
product. See Lucent, 580 F.3d at 1337-38. This holding addresses one of
the principal complaints that I have heard about patent-damages
calculations. And it effects a reform that Congress itself cannot
enact. Existing law already required that the invention be the basis
for consumer demand before damages can be assessed on the whole
product, and the law already required parties to support their
contentions with legally sufficient evidence. Congress can change the
underlying law, but it cannot make the courts enforce it. The Lucent
case did so.
The limits that I had proposed in S. 3600 on the use of metrics such
as the rule of thumb, and that bill's restrictions on the use of
licenses for comparable patents to value the patent in suit, are
rendered superfluous by these intervening judicial decisions. The
present bill appropriately leaves patent-damages law to common law
development in the courts.
The present bill also makes no changes to the standard for awards of
treble damages. As noted in the Minority Report to the committee report
for the 2009 bill, Senate Report 111-18 at pages 58-60, that bill's
grounds for allowing awards of treble damages were exceedingly narrow,
and its safe harbors were overly broad. That bill would have created
immunity from willfulness damages even for an infringer who was fully
aware of a patent and had no real doubts as to its validity. It also
created immunity, in some cases, even for infringers who had engaged in
wanton conduct such as deliberate copying.
Awards of enhanced damages play an important role in the U.S. patent
system. It is not uncommon that a manufacturer will find itself in a
situation where it feels great pressure to copy a competitor's patented
invention. In a typical scenario, the sales staff report that they are
losing sales because the competitor's product has a particular feature.
The manufacturer's engineers discover that the feature is protected by
a valid patent, and they find that they are unable to produce the same
feature without infringing the patent. The company then has two
choices. It can choose to continue to try to reproduce or substitute
for the patented feature, and as it does so, continue to lose market
share, and in some cases, lose convoyed sales of associated products or
services. Or it can choose to infringe the competitor's patent.
Treble damages are authorized in order to deter manufacturers from
choosing the second option. Absent the threat of treble damages, many
manufacturers would find that their most financially reasonable option
is simply to infringe patents. Lost-profits damages are often hard to
prove or unavailable. The patent owner is always entitled to a
reasonable royalty, but under that standard, the infringer often can
keep even some of the profits produced by his infringing behavior.
Without treble damages, many companies would find it economically
rational to infringe valid patents. Section 284's authorization of
treble damages is designed to persuade these companies that their best
economic option is to respect valid patents.
If patents were routinely ignored and infringed, the patent system
would cease to be of use to many companies and other entities that do
some of our nation's most important research and development. These
companies are profitable because people respect their patents and
voluntarily pay a license. They would not be viable enterprises if they
always had to sue in order to get paid for others' use of their
patented inventions.
By dropping the 2009 bill's restrictions on treble-damages awards,
the present bill preserves these awards' role as a meaningful deterrent
to reckless or wanton conduct. Ultimately, we want a treble-damages
standard that creates an environment where the most economically
reasonable option for a party confronted by a strong patent is to take
a license--and where no one thinks that he can get away with copying.
Section 4(c) of the present bill adds a new section 298 to title 35.
This section bars courts and juries from drawing an adverse inference
from an accused infringer's failure to obtain opinion of counsel as to
infringement or his failure to waive privilege and disclose such an
opinion. The provision is designed to protect attorney-client privilege
and to reduce pressure on accused infringers to obtain opinions of
counsel for litigation purposes. It reflects a policy choice that the
probative value of this type of evidence is outweighed by the harm that
coercing a waiver of attorney-client privilege inflicts on the
attorney-client relationship. Permitting adverse inferences from a
failure to procure an opinion or waive privilege undermines frank
communication between clients and counsel. It also feeds the cottage
industry of providing such opinions--an industry that is founded on an
unhealthy relationship between clients and counsel and which amounts to
a deadweight loss to the patent system. Some lawyers develop a
lucrative business of producing these opinions, and inevitably become
aware that continued requests for their services are contingent on
their opinions' always coming out the same way--that the patent is
invalid or not infringed. Section 298 reflects legislative skepticism
of the probative value of such opinions.
Section 298 applies to findings of both willfulness and intent to
induce infringement--and thus legislatively abrogates Broadcom Corp. v.
Qualcomm Inc., 543 F.3d 683, Fed. Cir. 2008. That case held, at page
699, that:

Because opinion-of-counsel evidence, along with other
factors, may reflect whether the accused infringer `knew or
should have known' that its actions would cause another to
directly infringe, we hold that such evidence remains
relevant to the second prong of the intent analysis.
Moreover, we disagree with Qualcomm's argument and further
hold that the failure to procure such an opinion may be
probative of intent in this context.

Section 5 of the bill has been substantially reorganized and modified
since the 2009 bill. In general, the changes to this part of the bill
aim to make inter partes and post-grant review into systems that the
Patent Office is confident that it will be able to administer. The
changes also impose procedural limits on post-grant administrative
proceedings that will prevent abuse of these proceedings for purposes
of harassment or delay.
Accused infringers, however, also will benefit from some of the
changes made by the present bill. The bill eliminates current law's
requirement, at section 317(b) of title 35, that an inter partes
reexamination be terminated if litigation results in a final judgment.
It also removes the bar on challenging pre-1999 patents in inter partes
proceedings. All patents can now be challenged in inter partes review.
In addition, the bill creates a new post-grant review in which a
patent

[[Page S1375]]

can be challenged on any validity ground during the first nine months
after its issue. Challengers who use this proceeding will be estopped
in litigation from raising only those issues that were raised and
decided in the post-grant review, rather than all issues that could
have been raised, the standard employed in inter partes reexamination.
The present bill also softens the could-have-raised estoppel that is
applied by inter partes review against subsequent civil litigation by
adding the modifier ``reasonably.'' It is possible that courts would
have read this limitation into current law's estoppel. Current law,
however, is also amenable to the interpretation that litigants are
estopped from raising any issue that it would have been physically
possible to raise in the inter partes reexamination, even if only a
scorched-earth search around the world would have uncovered the prior
art in question. Adding the modifier ``reasonably'' ensures that could-
have-raised estoppel extends only to that prior art which a skilled
searcher conducting a diligent search reasonably could have been
expected to discover.
Section 5(a) of the 2009 version of the bill, which would amend
section 301, has been modified and moved to section 5(g) of the bill.
This provision allows written statements of the patent owner regarding
claim scope that have been filed in court or in the Office to be made a
part of the official file of the patent, and allows those statements to
be considered in reexaminations and inter partes and post-grant reviews
for purposes of claim construction. This information should help the
Office understand and construe the key claims of a patent. It should
also allow the Office to identify inconsistent statements made about
claim scope--for example, cases where a patent owner successfully
advocated a claim scope in district court that is broader than the
``broadest reasonable construction'' that he now urges in an inter
partes review.
The present bill preserves the agreement reached in the 2009
Judiciary Committee mark up to maintain the current scope of inter
partes proceedings: only patents and printed publications may be used
to challenge a patent in an inter partes review.
One important structural change made by the present bill is that
inter partes reexamination is converted into an adjudicative proceeding
in which the petitioner, rather than the Office, bears the burden of
showing unpatentability. Section 5(c) of the previous bill eliminated
language in section 314(a) that expressly required inter partes
reexamination to be run as an examinational rather than adjudicative
proceeding, but failed to make conforming changes eliminating
provisions in section 314(b) that effectively would have required inter
partes reexamination to still be run as an examinational proceeding. In
the present bill, section 316(a)(4) gives the Office discretion in
prescribing regulations governing the new proceeding. The Office has
made clear that it will use this discretion to convert inter partes
into an adjudicative proceeding. This change also is effectively
compelled by new section 316(e), which assigns to the petitioner the
burden of proving a proposition of unpatentability by a preponderance
of the evidence. Because of these changes, the name of the proceeding
is changed from ``inter partes reexamination'' to ``inter partes
review.''
The present bill also makes changes to the petition requirements that
appear in new sections 312(a)(5) and 322(a)(5). These sections have
been modified to require petitioners to provide to the patent owner the
same identification of any real parties in interest or privies that is
provided to the Office. The Office anticipates that patent owners will
take the initiative in determining whether a petitioner is the real
party in interest or privy of a party that is barred from instituting a
proceeding with respect to the patent.
Language that previously appeared as the last sentences of what are
now sections 312(c) and 322(c), and which stated that failure to file a
motion to seal will result in pleadings' being placed in the record,
has been struck. At best this sentence was redundant, and at worst it
created an ambiguity as to whether material accompanying the pleadings
also would be made public absent a motion to seal.
Many of the procedural limits added to inter partes and post-grant
review by the present bill are borrowed from S. 3600, the bill that I
introduced in the 110th Congress. My comments accompanying the
introduction of that bill, at 154 Congressional Record S9982-S9993,
daily ed. Sept. 27, 2008, are relevant to those provisions of the
present bill that are carried over from S. 3600, particularly to the
extent that the comments disclose understandings reached with the
Patent Office, conscious use of terms of art, or the reasoning behind
various provisions. Relevant passages include page S9987's discussion
of the use of the adjudicative or oppositional model of post-grant
review and estoppel against parties in privity, and page S9988's
discussion of what is now section 324(b)'s additional threshold for
instituting a post-grant review, the expectation that the Director will
identify the issues that satisfied the threshold for instituting an
inter partes or post-grant review, the meaning of ``properly filed''
when used in the joinder provisions in sections 315(c) and 325(c), the
authorization to consolidate proceedings in sections 315(d) and 325(d),
and the standards for discovery in sections 316(a)(6) and 326(a)(5).
Also relevant is page S9991's discussion of the excesses and effects of
inequitable-conduct litigation, which informs this bill's provisions
relating to that doctrine.
Among the most important protections for patent owners added by the
present bill are its elevated thresholds for instituting inter partes
and post-grant reviews. The present bill dispenses with the test of
``substantial new question of patentability,'' a standard that
currently allows 95% of all requests to be granted. It instead imposes
thresholds that require petitioners to present information that creates
serious doubts about the patent's validity. Under section 314(a), inter
partes review will employ a reasonable-likelihood-of-success threshold,
and under section 324(a), post-grant review will use a more-likely-
than-not-invalidity threshold.
Satisfaction of the inter partes review threshold of ``reasonable
likelihood of success'' will be assessed based on the information
presented both in the petition for review and in the patent owner's
response to the petition. The ``reasonable likelihood'' test is
currently used in evaluating whether a party is entitled to a
preliminary injunction, and effectively requires the petitioner to
present a prima facie case justifying a rejection of the claims in the
patent.
Post-grant review uses the ``more likely than not invalid'' test.
This slightly higher threshold is used because some of the issues that
can be raised in post-grant review, such as enablement and section 101
invention issues, may require development through discovery. The Office
wants to ensure that petitioners raising such issues present a complete
case at the outset, and are not relying on obtaining information in
discovery in the post-grant review in order to satisfy their ultimate
burden of showing invalidity by a preponderance of the evidence.
Subsections (a) and (b) of sections 315 and 325 impose time limits
and other restrictions when inter partes and post-grant review are
sought in relation to litigation. Sections 315(a) and 325(a) bar a
party from seeking or maintaining such a review if he has sought a
declaratory judgment that the patent is invalid. This restriction
applies, of course, only if the review petitioner has filed the civil
action. These two subsections (a) do not restrict the rights of an
accused infringer who has been sued and is asserting invalidity in a
counterclaim. That situation is governed by section 315(b),
which provides that if a party has been sued for infringement and wants
to seek inter partes review, he must do so within 6 months of when he
was served with the infringement complaint.

Section 325(b) provides that if a patent owner sues to enforce his
patent within three months after it is granted, a court cannot refuse
to consider a motion for a preliminary injunction on the basis that a
post-grant review has been requested or instituted. A patent owner who
sues during this period is likely to be a market participant who
already has an infringer intruding on his market, and who needs an
injunction in order to avoid irreparable harm.

[[Page S1376]]

This provision strengthens and carries over to post-grant review the
rule of Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842,
Fed. Cir. 2008.
Sections 315(c) and 325(c) allow joinder of inter partes and post-
grant reviews. The Office anticipates that joinder will be allowed as
of right--if an inter partes review is instituted on the basis of a
petition, for example, a party that files an identical petition will be
joined to that proceeding, and thus allowed to file its own briefs and
make its own arguments. If a party seeking joinder also presents
additional challenges to validity that satisfy the threshold for
instituting a proceeding, the Office will either join that party and
its new arguments to the existing proceeding, or institute a second
proceeding for the patent. The Director is given discretion, however,
over whether to allow joinder. This safety valve will allow the Office
to avoid being overwhelmed if there happens to be a deluge of joinder
petitions in a particular case.
In the second sentence of section 325(d), the present bill also
authorizes the Director to reject any request for ex parte
reexamination or petition for post-grant or inter partes review on the
basis that the same or substantially the same prior art or arguments
previously were presented to the Office. This will prevent parties from
mounting attacks on patents that raise issues that are substantially
the same as issues that were already before the Office with respect to
the patent. The Patent Office has indicated that it currently is forced
to accept many requests for ex parte and inter partes reexamination
that raise challenges that are cumulative to or substantially overlap
with issues previously considered by the Office with respect to the
patent.
The second sentence of section 325(d) complements the protections
against abuse of ex parte reexamination that are created by sections
315(e) and 325(e). The estoppels in subsection (e) will prevent inter
partes and post-grant review petitioners from seeking ex parte
reexamination of issues that were raised or could have been raised in
the inter partes or post-grant review. The Office has generally
declined to apply estoppel, however, to an issue that is raised in a
request for inter partes reexamination if the request was not granted
with respect to that issue. Under section 325(d), second sentence,
however, the Office could nevertheless refuse a subsequent request for
ex parte reexamination with respect to such an issue, even if it raises
a substantial new question of patentability, because the issue
previously was presented to the Office in the petition for inter partes
or post-grant review.
Under paragraph (1) of sections 315(e) and 325(e), a party that uses
inter partes or post-grant review is estopped from raising in a
subsequent PTO proceeding any issue that he raised or reasonably could
have raised in the post-grant or inter partes review. This effectively
bars such a party or his real parties in interest or privies from later
using inter partes review or ex parte reexamination against the same
patent, since the only issues that can be raised in an inter partes
review or ex parte reexamination are those that could have been raised
in the earlier post-grant or inter partes review. The Office recognizes
that it will need to change its regulations and require that ex parte
reexamination requesters identify themselves to the Office in order for
the Office to be able to enforce this new restriction.
The present bill also incorporates S. 3600's extension of the
estoppels and other procedural limits in sections 315 and 325 to real
parties in interest and privies of the petitioner. As discussed at 154
Congressional Record S9987, daily ed. Sept. 27, 2008, privity is an
equitable rule that takes into account the ``practical situation,'' and
should extend to parties to transactions and other activities relating
to the property in question. Ideally, extending could-have-raised
estoppel to privies will help ensure that if an inter partes review is
instituted while litigation is pending, that review will completely
substitute for at least the patents-and-printed-publications portion of
the civil litigation. Whether equity allows extending privity estoppel
to codefendants in litigation, however, will depend in large measure
upon the actions of the patent owner, and whether he has made it
reasonably and reliably clear which patent claims he is asserting and
what they mean. If one defendant has instituted an inter partes review,
but other defendants do not have an opportunity to join that review
before it becomes reasonably clear which claims will be litigated and
how they will be construed, it would be manifestly unfair to extend
privity estoppel to the codefendants.
The Office also has the authority to address such scenarios via its
authority under section 316(a)(5), which gives the Office discretion in
setting a time limit for allowing joinder. The Office has made clear
that it intends to use this authority to encourage early requests for
joinder and to discourage late requests. The Office also has indicated
that it may consider the following factors when determining whether and
when to allow joinder: differences in the products or processes alleged
to infringe; the breadth or unusualness of the claim scope that is
alleged, particularly if alleged later in litigation; claim-
construction rulings that adopt claim interpretations that are
substantially different from the claim interpretation used in the first
petition when that petition's interpretation was not manifestly in
error; whether large numbers of patents or claims are alleged to be
infringed by one or more of the defendants; consent of the patent
owner; a request of the court; a request by the first petitioner for
termination of the first review in view of strength of the second
petition; and whether the petitioner has offered to pay the patent
owner's costs.

Sections 316(a)(6) and 326(a)(5) prescribe standards for discovery.
In inter partes review, discovery is limited to deposition of witnesses
submitting affidavits or declarations, and as otherwise necessary in
the interest of justice. In post-grant review, discovery is broader,
but must be limited to evidence directly related to factual assertions
advanced by either party. For commentary on these standards, which are
adopted from S. 3600, see 154 Congressional Record S9988-89, daily ed.
Sept. 27, 2008.
Sections 316(a)(12) and 326(a)(11) provide that inter partes and
post-grant reviews must be completed within 12 months of when the
proceeding is instituted, except that the Office can extend this
deadline by 6 months for good cause. Currently, inter partes
reexaminations usually last for 3 to 5 years. Because of procedural
reforms made by the present bill to inter partes proceedings, the
Patent Office is confident that it will be able to complete these
proceedings within one year. Among the reforms that are expected to
expedite these proceedings are the shift from an examinational to an
adjudicative model, and the elevated threshold for instituting
proceedings. The elevated threshold will require challengers to front
load their case. Also, by requiring petitioners to tie their challenges
to particular validity arguments against particular claims, the new
threshold will prevent challenges from ``mushrooming'' after the review
is instituted into additional arguments employing other prior art or
attacking other claims.
Although sections 316 and 326 do not regulate when and how
petitioners will be allowed to submit written filings once a review is
instituted, the Office has made clear that it will allow petitioners to
do so via the regulations implementing the proceedings. Sections 316
and 326 do clearly allow petitioners to obtain some discovery and to
have an oral hearing. Obviously, it would make no sense to do so if
petitioners were not also allowed to submit written arguments. The bill
conforms to the Office's preference, however, that it be given
discretion in determining the procedures for written responses and
other filings, in order to avoid the formalism of current chapter 31,
which adds substantially to the delays in that proceeding.
The bill also eliminates intermediate administrative appeals of inter
partes proceedings to the BPAI, instead allowing parties to only appeal
directly to the Federal Circuit. By reducing two levels of appeal to
just one, this change will substantially accelerate the resolution of
inter partes cases.
Sections 5(c)(2)(C) and 5(c)(3) of the bill provide for a transition
from current inter partes reexamination to new inter partes review. To
protect the Office from being overwhelmed by the

[[Page S1377]]

new inter partes and post-grant proceedings, sections 5(c)(2)(C) and
5(f)(2) allow the Director to place a limit on the number of post-grant
and inter partes reviews that will be instituted during the first four
years that the proceedings are in effect. It is understood that if the
Office rejects a petition during this period because of this numerical
limit, it will make clear that the rejection was made because of this
limit and not on the merits of the validity challenges presented in the
petition. Otherwise, even a challenger with strong invalidity arguments
might be deterred from using inter partes or post-grant review by fear
that his petition might be rejected because of the numerical limit, and
the fact of the rejection would then be employed by the patent owner in
civil litigation to suggest that the experts at the Patent Office found
no merit in the challenger's arguments.
Similarly, under subsection (a)(2) of sections 316 and 326, the
Office is required to implement the inter partes and post-grant review
thresholds via regulations, and under subsection (b) of those sections,
in prescribing regulations, the Office is required to take into
account, among other things, the Office's ability ``to timely complete
proceedings instituted under'' those chapters. It is expected that the
Office will include in the threshold regulations a safety valve that
allows the Office to decline to institute further proceedings if a high
volume of pending proceedings threatens the Office's ability to timely
complete all proceedings. The present bill's inclusion of this
regulations consideration in subsection (b) reflects a legislative
judgment that it is better that the Office turn away some petitions
that otherwise satisfy the threshold for instituting an inter partes or
post-grant review than it is to allow the Office to develop a backlog
of instituted reviews that precludes the Office from timely completing
all proceedings. Again, though, if the Office rejects a petition on the
basis of this subsection (b) consideration, rather than on the basis of
a failure to satisfy the substantive standards of the thresholds in
section 314 or 324, it is expected that Office will make this fact
clear when rejecting the petition.

Section 5(c)(3) of the present bill applies the bill's new threshold
for instituting an inter partes review to requests for inter partes
reexamination that are filed between the date of enactment of the bill
and one year after the enactment of the bill. This is done to ensure
that requesters seeking to take advantage of the lax standards of the
old system do not overwhelm the Office with requests for inter partes
reexamination during the year following enactment of the bill.
Finally, section 5(h)(2) of the bill addresses an issue raised by a
recent publication, Charles E. Miller & Daniel P. Archibald, The
Destructive Potential of the Senate Version of the Proposed Patent
Reform Act of 2010: The Abolition of de novo Review in Ex parte Patent
Reexaminations (circulated April 16, 2010). This article criticizes the
draft managers' amendment that Senators Leahy and Sessions circulated
in March 2010 on the ground that it eliminates authority for a patent
owner to have relief by civil action under section 145 from an adverse
decision in the BPAI on review of an ex parte reexamination. It is
fairly apparent, however, that this authority was intended to be
eliminated by the amendments made by section 4605 of the American
Inventors Protection Act of 1999, Public Law 106-113, to sections 134
and 141 of title 35. The 2010 managers' amendment simply maintained the
AIPA's changes to sections 134 and 141.
The AIPA neglected, however, to eliminate a cross reference to
section 145 in section 306 of title 35, which delineates the appeals
available from ex parte reexaminations. The maintenance of this cross
reference in section 306 created an ambiguity as to whether the AIPA
did, in fact, eliminate a patent owner's right to seek remedy in the
district court under section 145 from an adverse BPAI decision on
review of an ex parte reexamination. See Sigram Schindler
Beteiligungsgesellschaft mbH v. Kappos, 93 USPQ2d 1752, E.D. Va. 2009,
(Ellis, J.), notes that ``the fact that Sec. 306 continues to cross-
reference Sec. 141 to 145 following the AIPA's enactment appears to be
in tension with the AIPA amendment to Sec. 141.''
Section 5(h)(2) of the present bill eliminates this ambiguity by
striking the citation to section 145 from section 306 of title 35.
Section 6 of the bill includes all provisions of the bill addressing
the jurisdiction of the Patent Trial and Appeal Board and
administrative and judicial appeals. In section 6(a), the
recodification of section 6 of title 35 is modified so that all members
of the PTAB can participate in all proceedings. Also, subsection (d) is
added to the recodification of section 6 of title 35. By omitting this
provision, the 2009 bill would have effectively repealed the APJ
``appointments fix'' that had been enacted in 2008.
In section 6(c) of the bill, section 141 of title 35 is modified to
allow appeals of PTAB decisions in inter partes and post-grant reviews,
and the section is edited and reorganized. To address the continuing
need to allow appeals of pending interferences, language has been added
to section 5(f)(3) of the bill that deems references to derivation
proceedings in the current appeals statutes to extend to interferences
commenced before the effective date of the bill's repeal of
interferences, and that allows the Director to deem the PTAB to be the
BPAI for purposes of pending interferences and to allow the PTAB to
conduct such interferences.
In section 6(c)(2) of the bill, section 1295(a)(4)(A) of title 28 is
modified to authorize appeals of reexaminations and reviews.
Interestingly, current 1295(a)(4)(A) only gives the Federal Circuit
jurisdiction over appeals from applications and interferences. It
appears that Congress never gave the Federal Circuit jurisdiction over
appeals from reexaminations when it created those proceedings. The
language of subparagraph (A) is also generalized and clarified,
recognizing that the details of what is appealable will be in sections
134 and 141. Also, for logical consistency, language is added to
subparagraph (A) making clear that section 145 and 146 proceedings are
an exception to the Federal Circuit's otherwise exclusive appellate
jurisdiction over applications and interferences under that
subparagraph.
In section 6(c)(3) of the bill, section 143 of title 35 is modified
to allow the Director to intervene in the appeal of a decision of the
PTAB in an inter partes or post-grant review or a derivation
proceeding.
In the effective-date provision at the end of section 6, various
existing authorities are extended so that they may continue to apply to
inter partes reexaminations commenced under the old system, and the
apparent gap in current section 1295(a)(4)(A)'s authorization of
jurisdiction is immediately filled with respect to all inter partes and
ex parte reexaminations.
In section 7, the present bill makes several PTO-recommended changes
to previous bill versions' authorization to make preissuance
submissions of prior art. In paragraph (1) of new section 122(e) of
title 35, the word ``person'' has been replaced with ``third party,''
so that submissions may only be submitted by third parties. This
addresses the Office's concern that applicants might otherwise use
section 122(e) to submit prior art and thereby evade other examination
disclosure requirements.

In subparagraph (A) of section 122(e)(1), the word ``given'' has been
added. This has the effect of including email notices of allowances.
In clause (i) of section 122(e)(1)(B), the word ``first'' has been
added. This change was sought by the Office, which prefers to limit
submissions to the first publication for two reasons. First,
republications overwhelmingly only narrow the claims, and in such cases
anyone who would want to submit prior art could have done so at the
first publication. Second, and more importantly, most republications
occur only after the first office action, when there is usually rapid
back-and-forth action on the application between the applicant and the
Office. Allowing third parties to make prior-art submissions at this
point would require the Office to wait six months after the
republication in order to allow such submissions, and would otherwise
greatly slow down this otherwise relatively speedy final phase of
prosecution.
Also in clause (i) of section 122(e)(1)(B), the words ``by the
Office'' are added to ensure that only publication by the United States
Patent and Trademark Office begins the period for

[[Page S1378]]

making pre-issuance submissions. The Office sought this change because
a foreign publication can be deemed a publication under section 122,
and the Office wants to ensure that it is only required to collect
third-party submissions for an application if that application is
actually filed in the United States.
Section 8 of the present bill omits provisions appearing in prior
bills that would have created an expanded right to an interlocutory
appeal from claim-construction rulings. Even as revised in the 2009
Judiciary Committee mark up, previous section 8(b) gave the Federal
Circuit insufficient discretion to turn away such appeals and posed a
serious risk of overwhelming the court. The 2009 mark-up revisions
allowed the Federal Circuit to reject an interlocutory appeal if it
found clear error in the district court's certification that there is a
sufficient evidentiary record for an interlocutory appeal and that such
an appeal may advance the termination of the litigation or will likely
control the outcome of the case. It would be difficult in any case,
however, to reject a finding that an interlocutory appeal of claim-
construction rulings may lead to the termination of the litigation.
Moreover, if a district judge has certified a case for interlocutory
appeal, it is very unlikely that the record that he has created would
support a finding that his decision is clearly erroneous. And finally,
given the disdain for patent cases felt by a substantial number of
district judges, there is a serious likelihood that a large number of
judges would take advantage of a new authorization from Congress to
send away such cases to the Federal Circuit, with the hope that they do
not return. Current law's grant of discretion to the Federal Circuit to
entertain interlocutory appeals of claim-construction rulings strikes
the appropriate balance.
Section 10 of the present bill authorizes supplemental examination of
a patent to correct errors or omissions in proceedings before the
Office. Under this new procedure, information that was not considered
or was inadequately considered or was incorrect can be presented to the
Office. If the Office determines that the information does not present
a substantial new question of patentability or that the patent is still
valid, that information cannot be used as a basis for an inequitable-
conduct attack on the surviving patent in civil litigation. New section
257(c)(1) follows the usual practice of referring to inequitable-
conduct attacks in terms of unenforceability, rather than invalidity,
though courts have in the past used the terms interchangeably when
describing the effect of fraud or inequitable conduct on a patent. J.P.
Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1560, Fed.
Cir. 1984, notes that ``[w]hether the holding should be one of
invalidity or unenforceability has had no practical significance in
cases thus far presented to this court.'' The term should be considered
to be used interchangeably with ``invalidity'' in this bill as well.
Obviously, Congress would not create a procedure for reexamining
patents that allowed them to be protected against subsequent
inequitable-conduct challenges of unenforceability, only to allow the
same patents to be challenged on the same basis and declared invalid on
the basis of inequitable conduct.
While some critics of this proposal have suggested that it would
immunize misconduct by inventors and practitioners, I would note that
the Patent Office has ample authority to sanction such misconduct.
Under section 32 of title 35, the Office can bar an attorney from
appearing before the Office if he has engaged in misconduct in any
proceeding before the Office. In section 2(l) of this bill, we have
extended the statute of limitations for initiating such a proceeding.
Under current regulations, the Office also sanctions misconduct by
striking offending filings or reducing the weight that they are given.
And the Federal Circuit has recognized that the Office also ``has
inherent authority to govern procedure before the [Office],'' as noted
in In re Bogese II, 303 F.3d 1362, 1368, Fed. Cir. 2002, and that
inherent authority to sanction attorneys for misconduct is not
restricted to Article III courts, a point noted in In re Bailey, 182
F.3d 860, 864 n.4, Fed. Cir. 1999.
Given the Office's existing tools for sanctioning misconduct, there
is no need to make the courts into supervisors of attorney conduct in
Office proceedings. It is doubtful that a practitioner who is
discovered to have engaged in substantial misconduct in proceedings
before the Office would escape adequate and effective sanction by the
Office itself.

Section 11 of the bill repeals the so-called Baldwin rule, which
requires judges on the Federal Circuit to live within 50 miles of
Washington, D.C. Subsection (b) provides that the repeal of the Baldwin
rule shall not be construed to imply that the Administrative Office of
the Courts must provide court facilities or administrative support
services to judges who choose to reside outside of the District of
Columbia. This proviso does not affect the AOC's existing authority to
provide services to judges outside of the District of Columbia. Its
reference to ``court facilities'' means space within a courthouse or
federal building, and the reference to ``administrative support
services'' means those services that would be provided to judges within
a courthouse or federal building.
In section 15 of the bill, a conforming subsection (b) has been added
to ensure that the best-mode requirement cannot be used to challenge a
patent's entitlement to a right of priority or to the benefit of an
earlier filing date. In the new effective-date subsection, the section
is made applicable to all ``proceedings'' commenced after enactment of
the Act, in order to make clear that the section's changes to the law
will be immediately applicable not just in litigation but also in post-
grant reviews of patents under chapter 32.
At subsections (a) through (h), section 16 of the bill has been
modified by reinserting language that eliminates various deceptive-
intent requirements that relate to correcting the naming of the
inventor or a joint inventor, obtaining a retroactive foreign filing
license, seeking section 251 reissue, or enforcing remaining valid
claims if a claim is invalidated. See generally Kearney & Trecker Corp.
v. Giddings & Lewis, Inc., 452 F.2d 579, 596, 7th Cir. 1971. These
changes were first proposed in section 5 of the original Patent Reform
Act of 2005, H.R. 2795, 109th Congress, and have been advocated by
universities and their technology-transfer offices. For reasons that
are not entirely clear, subsequent bills maintained this section and
its addition of substructure and titles to the affected code sections,
but struck the substantive part of the section--i.e., its elimination
of the deceptive-intent requirements.
Eliminating the various deceptive-intent requirements moves the U.S.
patent system away from the 19th century model that focused on the
patent owner's subjective intent, and towards a more objective-
evidence-based system that will be much cheaper to litigate and more
efficient to administer.
Section 16(i) of the present bill corrects several errors and typos
throughout title 35 that are noted in the reviser's notes to the U.S.
Code.
Section 16(j) strikes unnecessary references to ``of this title''
that are sprinkled throughout title 35. The 1952 Act included such
unnecessary references, but more recent additions to the code have not,
and the current bill's changes omit such references. Because the
unnecessary references greatly outnumber the necessary references, the
provision is written to strike all references but then except out the
necessary references.
The present bill's new section 17 enacts the so-called Holmes Group
fix, H.R. 2955, 109th Congress, which was reported out of the House
Judiciary Committee in 2006. The committee report accompanying that
bill, House Report 109-407, explains the bill's reasons for abrogating
Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S.
826 (2002), and more fully precluding state court jurisdiction over
patent legal claims.
Section 17 makes two modifications to the reported version of H.R.
2955. The first modification, at subsection (c), limits the bill's
expansion of Federal Circuit jurisdiction to only compulsory
counterclaims asserting patent rights, rather than the original bill's
expansion of jurisdiction to include any counterclaim asserting patent
rights. Compulsory counterclaims are defined at Rule 13(a) and
basically consist of counterclaims that arise out of the same
transaction or occurrence and that do not require the joinder of
parties over whom the court would lack

[[Page S1379]]

jurisdiction. A compulsory counterclaim must be raised as a
counterclaim in the case in question, and cannot be asserted in a later
case. Without this modification, it is possible that a defendant could
raise unrelated and unnecessary patent counterclaims simply in order to
manipulate appellate jurisdiction. With the modification, a defendant
with a permissive patent counterclaim who wanted to preserve Federal
Circuit appellate review of that counterclaim could simply wait to
assert it in a separate action.
The second modification, in subsection (d), corrects an error in H.R.
2955 that would have required remand of patent and other intellectual-
property counterclaims after their removal. H.R. 2955's proposed
removal statute, at section 1454(c)(1) of title 28, required a remand
to the state court of all claims that are not within the original or
supplemental jurisdiction of the district court. Since the bill no
longer amends section 1338 to give district courts original
jurisdiction over patent counterclaims, however--and since, pursuant to
Holmes Group itself, patent counterclaims are not within the district
courts' original jurisdiction--then under paragraph (1), district
courts would be required to remand the patent counterclaims. Courts
would probably strain to avoid reading the paragraph this way, since
doing so defeats the only apparent purpose of the section, and the
amendments to section 1338 strip the state courts of jurisdiction over
patent counterclaims. But that is exactly what H.R. 2955's proposed
1454(c)(1) ordered the court to do. In the modified text of section
17(d) of this bill, the court is instructed to not remand those claims
that were a basis for removal in the first place--that is, the
intellectual-property counterclaims.
Section 18 of the bill creates an administrative mechanism for
reviewing the validity of business-method patents. In 1998, the U.S.
Court of Appeals for the Federal Circuit, in its decision in State
Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d
1368 (Fed. Cir. 1998), substantially expanded the patentability of
business-method inventions in the United States, holding that any
invention can be patented so long as it produces a ``useful, concrete,
and tangible result'' and meets other requirements of title 35. In
recent years, federal judicial decisions, culminating in the U.S.
Supreme Court's decision in Bilski v. Kappos, 561 U.S. __, 130 S.Ct.
3218 (2010), have overruled State Street and retracted the
patentability of business methods and other abstract inventions. This
judicial expansion and subsequent judicial retraction of U.S.
patentability standards resulted in the issuance, in the interim, of a
large number of business-method patents that are no longer valid.
Section 18 creates a relatively inexpensive administrative alternative
to litigation for addressing disputes concerning the validity of these
patents.
This section grew out of concerns originally raised in the 110th
Congress about financial institutions' inability to take advantage of
the authority to clear checks electronically pursuant the Check
Clearing for the 21st Century Act, at chapter 50 of title 12 of the
U.S. Code, without infringing the so-called Ballard patents, patents
number 5,910,988 and 6,032,137. See generally Senate Report 110-259 at
pages 33 through 34. Once the committee began to examine this issue in
greater depth, however, the question quickly turned from whether the
Ballard patents should be allowed to disrupt compliance with the Check
21 Act, to how it is that the Ballard patents were issued in the first
place. These patents consist of long recitations of technology created
by others to implement the supposed ``invention'' of transmitting and
processing checks and other business records electronically. The first
of these patents was assigned to the class of cryptography inventions,
but its specification itself concedes that the invention's
``controller'' will ``execute[] an encryption algorithm which is well
known to an artisan of ordinary skill in the field.'' The second patent
is assigned to Class 705, home to many of the most notorious business-
method patents. Both of these patents are obviously business-method
patents, and it is difficult to see how they were even novel and
nonobvious and otherwise valid under the more liberal State Street
standard, much less how they could survive the strictures of Bilski.

Section 18's definition of business-method patent, and its
authorization to raise prior-art challenges in the petition for review,
are designed to allow the Office to recognize a business-method patent
as such despite its recitation of technological elements that are not
colorably novel and nonobvious. This definition does not require the
Office to conduct a merits inquiry into the nonobviousness of a
technological invention, and should not be construed in a way that
makes it difficult for the Office to administer. But if a technological
element in a patent is not even assertedly or plausibly outside of the
prior art, the Office should not rely on that element to classify the
patent as not being a business-method patent. Thus when patents such as
the Ballard patents recite elements incorporating off-the-shelf
technology or other technology ``know to those skilled in the art,''
that should not preclude those patents' eligibility for review under
this program.
At the request of other industry groups, section 18's definition of
``covered business-method patent'' has been limited to those patents
that relate to a financial product or service. Given the protean nature
of many business-method patents, it often will be unclear on the face
of the patent whether it relates to a financial product or service. To
make such a determination, the Office may look to how the patent has
been asserted. Section 5(g) of the present bill modifies section 301 of
title 35 to allow any person to submit to the Office the patent owner's
statements in federal court or in any Office proceeding about the scope
of the patent's claims. With this and other information, the Office
should be able to determine whether the patent reads on products or
services that are particular to or characteristic of financial
institutions.
As the proviso at the end of the definition makes clear, business
methods do not include ``technological inventions.'' In other words,
the definition applies only to abstract business concepts and their
implementation, whether in computers or otherwise, but does not apply
to inventions relating to computer operations for other uses or the
application of the natural sciences or engineering.
One feature of section 18 that has been the subject of prolonged
discussion and negotiation between various groups during the last few
weeks is its subsection (c), which concerns stays of litigation. The
current subsection (c) reflects a compromise that requires a district
judge to consider fixed criteria when deciding whether to grant a stay,
and provides either side with a right to an interlocutory appeal of the
district judge's decision. The appeal right has been modified to
provide that such review ``may be de novo,'' and in every case requires
the Federal Circuit to ensure consistent application of established
precedent. Thus whether or not every case is reviewed de novo, the
court of appeals cannot simply leave the stay decision to the
discretion of the district court and allow different outcomes based on
the predilections of different trial judges.
It is expected that district judges will liberally grant stays of
litigation once a proceeding is instituted. Petitioners are required to
make a high threshold showing in order to institute a proceeding, and
proceedings are required to be completed within one year to 18 months
after they are instituted. The case for a stay is particularly
pronounced in a section 18 proceeding, given the expectation that most
if not all true business-method patents are abstract and therefore
invalid in light of the Bilski decision.
In pursuit of this congressional policy strongly favoring stays when
proceedings are instituted under this section, subsection (c)
incorporates the four-factor test for stays of litigation that was
first announced in Broadcast Innovation, L.L.C. v. Charter
Communications, 2006 WL 1897165, D. Colo. 2006. Broadcast Innovation
includes, and gives separate weight to, a fourth factor that has often
been ignored by other courts: ``whether a stay will reduce the burden
of litigation on the parties and on the court.''
In order to ensure consistency in decisions whether to stay,
regardless of the court in which a section 281 action is pending,
paragraph (2) of subsection (c) requires consistent application of

[[Page S1380]]

``established precedent.'' This particular requirement is based on
section 2245(d)(1) of title 28, which has been construed to require
lower courts to look only to a fixed body of caselaw when making
decisions under section 2254. Currently, district judge's decisions
whether to stay litigation when a reexamination has been ordered are
not appealable and therefore have never been reconciled by the Federal
Circuit. Unsurprisingly, the resulting district-court caselaw is a
dog's breakfast of different combinations of factors and different
meanings ascribed to those factors. Although the cases applying
Broadcast Innovation cite other opinions applying other tests as
sources for some of its factors, by requiring application of
``established precedent,'' subsection (c) limits the relevant precedent
to that applying the four factors of Broadcast Innovation in
combination. By requiring courts to apply this limited and relatively
consistent body of caselaw when determining whether to grant a stay,
subsection (c) should ensure predictability and stability in stay
decisions across different district courts, and limit the incentive to
forum shop. The existence of forum shopping is an embarrassment to the
legal system. Federal courts should apply equal justice, and give
federal law the same meaning, regardless of where they are located.
Mr. President, I will conclude by noting that the present bill is the
product of almost a decade of hard work. The path to this bill included
three Senate Judiciary Committee mark ups, as well as the untold hours
devoted by Chairman Smith and other members of the House of
Representatives to the development of the Patent Reform Act of 2005,
the foundation of today's bill. The present bill will protect our
heritage of innovation while updating the patent system for the current
century. It will create clear and efficient rules for defining prior
art and establishing patent priority. It will fix problems with current
administrative proceedings, and create new means for improving patent
quality. And it will move us toward a patent system that is objective,
transparent, clear, and fair to all parties. I look forward to the
Senate's passage of this bill and its enactment into law.
Mr. GRASSLEY. Mr. President, I urge my colleagues to support final
passage on the America Invents Act. The Judiciary Committee has held
numerous hearings on the need for patent reform, and has done a lot of
work over the past several Congresses. We have had a good process on
the floor. We adopted several amendments to improve the bill. We had
votes on amendments and a pretty good open process, which we have not
seen much of in the last few years. We have a good bipartisan bill--the
chairman of the Judiciary Committee has successfully brought Senators
and industry together to craft this compromise legislation. Now I urge
my colleagues to support final passage on this important bill so we can
conclude our work in the Senate.
The America Invents Act will protect inventors' rights and encourage
innovation and investment in our economy. It will improve transparency
and third party participation in the patent review process, which will
strengthen patent quality and reduce costs. The bill will institute
beneficial changes to the patent approval and review process, and will
curb litigation abuses and improve certainty for investors and
innovators. It will help companies do business more efficiently on an
international basis.
The America Invents Act will also help small entities in their patent
applications and provide for reduced fees for microentities and small
businesses. The bill will prevent patents from being issued on claims
for tax strategies, which can add unwarranted fees on taxpayers simply
for attempting to comply with the Tax Code.
Finally, the America Invents Act will enhance operations of the
Patent and Trademark Office with administrative reforms and will give
the Office fee setting authority to reduce backlogs. It will end fee
diversion, which will improve the ability of the Patent and Trademark
Office to manage its affairs and allocate resources where they are most
needed.
I thank Chairman Leahy and Senator Hatch for their hard work on this
bill. Without their leadership, we would not be where we are today. I
thank Senators Kyl, Sessions, and Coburn. They were instrumental in
making improvements to the bill. I also wish to acknowledge the Senate
Judiciary Committee staff for their efforts on this bill: in
particular, Bruce Cohen, Aaron Cooper, and Curtis LeGeyt of Chairman
Leahy's staff, Matt Sandgren of Senator Hatch's staff, Joe Matal of
Senator Kyl's staff, and Sarah Beth Groshart of Senator Coburn's staff.
I especially thank Kolan Davis and Rita Lari Jochum of my staff for
their good work on this bill.
In conclusion, I urge my colleagues to vote for the America Invents
Act. This is a bill that will spur inventions, create innovative new
products and services, and stimulate job creation. This bill will help
upgrade and strengthen our patent system so America can stay
competitive in an increasingly global environment. I urge my colleagues
to support this carefully crafted bill.
Mr. LEAHY. Mr. President, the managers' amendment to the America
Invents Act, adopted 97-2 on March 1, contained a rule of construction
that nothing in section 14 of the act should be construed to imply that
other business methods are patentable or that other business-method
patents are valid. This provision was included merely as a
clarification. No inference should be drawn in any way from any part of
section 14 of the act about the patentability of methods of doing
business.
Mr. President, I have discussed this with the Republican leadership,
and we are prepared to yield back all time on both the Democratic and
Republican sides.
The PRESIDING OFFICER. All time is yielded back.
Mr. LEAHY. Mr. President, I ask for the yeas and nays on the bill.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. The clerk will read the pay-go statement.
The bill clerk read as follows:

Mr. Conrad: This is the Statement of Budgetary Effects of
PAYGO Legislation for S. 23, as amended.

Total Budgetary Effects of S. 23 for the 5-year statutory
PAYGO Scorecard: net reduction in the deficit of $590
million.
Total Budgetary Effects of S. 23 for the 10-year statutory
PAYGO Scorecard: net reduction in the deficit of $750
million.

Also submitted for the Record as part of this statement is
a table prepared by the Congressional Budget Office, which
provides additional information on the budgetary effects of
this Act, as follows:

CBO ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS FOR S. 23, THE AMERICA INVENTS ACT, WITH AMENDMENTS APPROVED BY THE SENATE THROUGH MARCH 8, 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2011-2016 2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact. 0 -420 -90 -30 -20 -30 -30 -30 -30 -40 -30 -590 -750
Memorandum:
Changes in Outlays......... 0 2,060 2,600 2,800 2,940 3,070 3,200 3,320 3,450 3,570 3,700 13,470 30,710
Changes in Revenues........ 0 2,480 2,690 2,830 2,960 3,100 3,230 3,350 3,480 3,610 3,730 14,060 31,460
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding.
The legislation would give the Patent and Trademark Office permanent authority to collect and spend fees.
Sources: Congressional Budget Office.

[[Page S1381]]

The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill, as amended, pass?
The yeas and nays have been ordered.
The clerk will call the roll.
The bill clerk called the roll.
The result was announced--yeas 95, nays 5, as follows:

[Rollcall Vote No. 35 Leg.]

YEAS--95

Akaka
Alexander
Ayotte
Barrasso
Baucus
Begich
Bennet
Bingaman
Blumenthal
Blunt
Boozman
Brown (MA)
Brown (OH)
Burr
Cardin
Carper
Casey
Chambliss
Coats
Coburn
Cochran
Collins
Conrad
Coons
Corker
Cornyn
DeMint
Durbin
Enzi
Feinstein
Franken
Gillibrand
Graham
Grassley
Hagan
Harkin
Hatch
Hoeven
Hutchison
Inhofe
Inouye
Isakson
Johanns
Johnson (SD)
Johnson (WI)
Kerry
Kirk
Klobuchar
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Lee
Levin
Lieberman
Lugar
Manchin
McCain
McCaskill
McConnell
Menendez
Merkley
Mikulski
Moran
Murkowski
Murray
Nelson (NE)
Nelson (FL)
Paul
Portman
Pryor
Reed
Reid
Roberts
Rockefeller
Rubio
Sanders
Schumer
Sessions
Shaheen
Shelby
Snowe
Stabenow
Tester
Thune
Toomey
Udall (CO)
Udall (NM)
Vitter
Warner
Webb
Whitehouse
Wicker
Wyden

NAYS--5

Boxer
Cantwell
Crapo
Ensign
Risch

The bill (S. 23), as amended, was passed, as follows:

S. 23

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``America
Invents Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. First inventor to file.
Sec. 3. Inventor's oath or declaration.
Sec. 4. Virtual marking and advice of counsel.
Sec. 5. Post-grant review proceedings.
Sec. 6. Patent Trial and Appeal Board.
Sec. 7. Preissuance submissions by third parties.
Sec. 8. Venue.
Sec. 9. Fee setting authority.
Sec. 10. Supplemental examination.
Sec. 11. Residency of Federal Circuit judges.
Sec. 12. Micro entity defined.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Technical amendments.
Sec. 17. Clarification of jurisdiction.
Sec. 18. Transitional program for covered business-method patents.
Sec. 19. Travel expenses and payment of administrative judges.
Sec. 20. Patent and Trademark Office funding.
Sec. 21. Satellite offices.
Sec. 22. Patent Ombudsman Program for small business concerns.
Sec. 23. Priority examination for technologies important to American
competitiveness.
Sec. 24. Designation of Detroit satellite office.
Sec. 25. Effective date.
Sec. 26. Budgetary effects.

SEC. 2. FIRST INVENTOR TO FILE.

(a) Definitions.--Section 100 of title 35, United States
Code, is amended by adding at the end the following:
``(f) The term `inventor' means the individual or, if a
joint invention, the individuals collectively who invented or
discovered the subject matter of the invention.
``(g) The terms `joint inventor' and `coinventor' mean any
1 of the individuals who invented or discovered the subject
matter of a joint invention.
``(h) The term `joint research agreement' means a written
contract, grant, or cooperative agreement entered into by 2
or more persons or entities for the performance of
experimental, developmental, or research work in the field of
the claimed invention.
``(i)(1) The term `effective filing date' of a claimed
invention in a patent or application for patent means--
``(A) if subparagraph (B) does not apply, the actual filing
date of the patent or the application for the patent
containing a claim to the invention; or
``(B) the filing date of the earliest application for which
the patent or application is entitled, as to such invention,
to a right of priority under section 119, 365(a), or 365(b)
or to the benefit of an earlier filing date under section
120, 121, or 365(c).
``(2) The effective filing date for a claimed invention in
an application for reissue or reissued patent shall be
determined by deeming the claim to the invention to have been
contained in the patent for which reissue was sought.
``(j) The term `claimed invention' means the subject matter
defined by a claim in a patent or an application for a
patent.''.
(b) Conditions for Patentability.--
(1) In general.--Section 102 of title 35, United States
Code, is amended to read as follows:

``Sec. 102. Conditions for patentability; novelty

``(a) Novelty; Prior Art.--A person shall be entitled to a
patent unless--
``(1) the claimed invention was patented, described in a
printed publication, or in public use, on sale, or otherwise
available to the public before the effective filing date of
the claimed invention; or
``(2) the claimed invention was described in a patent
issued under section 151, or in an application for patent
published or deemed published under section 122(b), in which
the patent or application, as the case may be, names another
inventor and was effectively filed before the effective
filing date of the claimed invention.
``(b) Exceptions.--
``(1) Disclosures made 1 year or less before the effective
filing date of the claimed invention.--A disclosure made 1
year or less before the effective filing date of a claimed
invention shall not be prior art to the claimed invention
under subsection (a)(1) if--
``(A) the disclosure was made by the inventor or joint
inventor or by another who obtained the subject matter
disclosed directly or indirectly from the inventor or a joint
inventor; or
``(B) the subject matter disclosed had, before such
disclosure, been publicly disclosed by the inventor or a
joint inventor or another who obtained the subject matter
disclosed directly or indirectly from the inventor or a joint
inventor.
``(2) Disclosures appearing in applications and patents.--A
disclosure shall not be prior art to a claimed invention
under subsection (a)(2) if--
``(A) the subject matter disclosed was obtained directly or
indirectly from the inventor or a joint inventor;
``(B) the subject matter disclosed had, before such subject
matter was effectively filed under subsection (a)(2), been
publicly disclosed by the inventor or a joint inventor or
another who obtained the subject matter disclosed directly or
indirectly from the inventor or a joint inventor; or
``(C) the subject matter disclosed and the claimed
invention, not later than the effective filing date of the
claimed invention, were owned by the same person or subject
to an obligation of assignment to the same person.
``(c) Common Ownership Under Joint Research Agreements.--
Subject matter disclosed and a claimed invention shall be
deemed to have been owned by the same person or subject to an
obligation of assignment to the same person in applying the
provisions of subsection (b)(2)(C) if--
``(1) the subject matter disclosed was developed and the
claimed invention was made by, or on behalf of, 1 or more
parties to a joint research agreement that was in effect on
or before the effective filing date of the claimed invention;
``(2) the claimed invention was made as a result of
activities undertaken within the scope of the joint research
agreement; and
``(3) the application for patent for the claimed invention
discloses or is amended to disclose the names of the parties
to the joint research agreement.
``(d) Patents and Published Applications Effective as Prior
Art.--For purposes of determining whether a patent or
application for patent is prior art to a claimed invention
under subsection (a)(2), such patent or application shall be
considered to have been effectively filed, with respect to
any subject matter described in the patent or application--
``(1) if paragraph (2) does not apply, as of the actual
filing date of the patent or the application for patent; or
``(2) if the patent or application for patent is entitled
to claim a right of priority under section 119, 365(a), or
365(b), or to claim the benefit of an earlier filing date
under section 120, 121, or 365(c), based upon 1 or more prior
filed applications for patent, as of the filing date of the
earliest such application that describes the subject
matter.''.
(2) Continuity of intent under the create act.--The
enactment of section 102(c) of title 35, United States Code,
under the preceding paragraph is done with the same intent to
promote joint research activities that was expressed,
including in the legislative history, through the enactment
of the Cooperative Research and Technology Enhancement Act of
2004 (Public Law 108-453; the ``CREATE Act''), the amendments
of which are stricken by subsection (c). The United States
Patent and Trademark Office shall administer section 102(c)
of title 35, United States Code, in a manner consistent with
the legislative history of the CREATE Act that was relevant
to its administration by the United States Patent and
Trademark Office.
(3) Conforming amendment.--The item relating to section 102
in the table of sections for chapter 10 of title 35, United
States Code, is amended to read as follows:

``102. Conditions for patentability; novelty.''.

(c) Conditions for Patentability; Nonobvious Subject
Matter.--Section 103 of title 35, United States Code, is
amended to read as follows:

``Sec. 103. Conditions for patentability; nonobvious subject
matter

``A patent for a claimed invention may not be obtained,
notwithstanding that the

[[Page S1382]]

claimed invention is not identically disclosed as set forth
in section 102, if the differences between the claimed
invention and the prior art are such that the claimed
invention as a whole would have been obvious before the
effective filing date of the claimed invention to a person
having ordinary skill in the art to which the claimed
invention pertains. Patentability shall not be negated by the
manner in which the invention was made.''.
(d) Repeal of Requirements for Inventions Made Abroad.--
Section 104 of title 35, United States Code, and the item
relating to that section in the table of sections for chapter
10 of title 35, United States Code, are repealed.
(e) Repeal of Statutory Invention Registration.--
(1) In general.--Section 157 of title 35, United States
Code, and the item relating to that section in the table of
sections for chapter 14 of title 35, United States Code, are
repealed.
(2) Removal of cross references.--Section 111(b)(8) of
title 35, United States Code, is amended by striking
``sections 115, 131, 135, and 157'' and inserting ``sections
131 and 135''.
(3) Effective date.--The amendments made by this subsection
shall take effect 18 months after the date of the enactment
of this Act, and shall apply to any request for a statutory
invention registration filed on or after that date.
(f) Earlier Filing Date for Inventor and Joint Inventor.--
Section 120 of title 35, United States Code, is amended by
striking ``which is filed by an inventor or inventors named''
and inserting ``which names an inventor or joint inventor''.
(g) Conforming Amendments.--
(1) Right of priority.--Section 172 of title 35, United
States Code, is amended by striking ``and the time specified
in section 102(d)''.
(2) Limitation on remedies.--Section 287(c)(4) of title 35,
United States Code, is amended by striking ``the earliest
effective filing date of which is prior to'' and inserting
``which has an effective filing date before''.
(3) International application designating the united
states: effect.--Section 363 of title 35, United States Code,
is amended by striking ``except as otherwise provided in
section 102(e) of this title''.
(4) Publication of international application: effect.--
Section 374 of title 35, United States Code, is amended by
striking ``sections 102(e) and 154(d)'' and inserting
``section 154(d)''.
(5) Patent issued on international application: effect.--
The second sentence of section 375(a) of title 35, United
States Code, is amended by striking ``Subject to section
102(e) of this title, such'' and inserting ``Such''.
(6) Limit on right of priority.--Section 119(a) of title
35, United States Code, is amended by striking ``; but no
patent shall be granted'' and all that follows through ``one
year prior to such filing''.
(7) Inventions made with federal assistance.--Section
202(c) of title 35, United States Code, is amended--
(A) in paragraph (2)--
(i) by striking ``publication, on sale, or public use,''
and all that follows through ``obtained in the United
States'' and inserting ``the 1-year period referred to in
section 102(b) would end before the end of that 2-year
period''; and
(ii) by striking ``the statutory'' and inserting ``that 1-
year''; and
(B) in paragraph (3), by striking ``any statutory bar date
that may occur under this title due to publication, on sale,
or public use'' and inserting ``the expiration of the 1-year
period referred to in section 102(b)''.
(h) Derived Patents.--Section 291 of title 35, United
States Code, is amended to read as follows:

``Sec. 291. Derived patents

``(a) In General.--The owner of a patent may have relief by
civil action against the owner of another patent that claims
the same invention and has an earlier effective filing date
if the invention claimed in such other patent was derived
from the inventor of the invention claimed in the patent
owned by the person seeking relief under this section.
``(b) Filing Limitation.--An action under this section may
only be filed within 1 year after the issuance of the first
patent containing a claim to the allegedly derived invention
and naming an individual alleged to have derived such
invention as the inventor or joint inventor.''.
(i) Derivation Proceedings.--Section 135 of title 35,
United States Code, is amended to read as follows:

``Sec. 135. Derivation proceedings

``(a) Institution of Proceeding.--An applicant for patent
may file a petition to institute a derivation proceeding in
the Office. The petition shall set forth with particularity
the basis for finding that an inventor named in an earlier
application derived the claimed invention from an inventor
named in the petitioner's application and, without
authorization, the earlier application claiming such
invention was filed. Any such petition may only be filed
within 1 year after the first publication of a claim to an
invention that is the same or substantially the same as the
earlier application's claim to the invention, shall be made
under oath, and shall be supported by substantial evidence.
Whenever the Director determines that a petition filed under
this subsection demonstrates that the standards for
instituting a derivation proceeding are met, the Director may
institute a derivation proceeding. The determination by the
Director whether to institute a derivation proceeding shall
be final and nonappealable.
``(b) Determination by Patent Trial and Appeal Board.--In a
derivation proceeding instituted under subsection (a), the
Patent Trial and Appeal Board shall determine whether an
inventor named in the earlier application derived the claimed
invention from an inventor named in the petitioner's
application and, without authorization, the earlier
application claiming such invention was filed. The Director
shall prescribe regulations setting forth standards for the
conduct of derivation proceedings.
``(c) Deferral of Decision.--The Patent Trial and Appeal
Board may defer action on a petition for a derivation
proceeding until 3 months after the date on which the
Director issues a patent that includes the claimed invention
that is the subject of the petition. The Patent Trial and
Appeal Board also may defer action on a petition for a
derivation proceeding, or stay the proceeding after it has
been instituted, until the termination of a proceeding under
chapter 30, 31, or 32 involving the patent of the earlier
applicant.
``(d) Effect of Final Decision.--The final decision of the
Patent Trial and Appeal Board, if adverse to claims in an
application for patent, shall constitute the final refusal by
the Office on those claims. The final decision of the Patent
Trial and Appeal Board, if adverse to claims in a patent,
shall, if no appeal or other review of the decision has been
or can be taken or had, constitute cancellation of those
claims, and notice of such cancellation shall be endorsed on
copies of the patent distributed after such cancellation.
``(e) Settlement.--Parties to a proceeding instituted under
subsection (a) may terminate the proceeding by filing a
written statement reflecting the agreement of the parties as
to the correct inventors of the claimed invention in dispute.
Unless the Patent Trial and Appeal Board finds the agreement
to be inconsistent with the evidence of record, if any, it
shall take action consistent with the agreement. Any written
settlement or understanding of the parties shall be filed
with the Director. At the request of a party to the
proceeding, the agreement or understanding shall be treated
as business confidential information, shall be kept separate
from the file of the involved patents or applications, and
shall be made available only to Government agencies on
written request, or to any person on a showing of good cause.
``(f) Arbitration.--Parties to a proceeding instituted
under subsection (a) may, within such time as may be
specified by the Director by regulation, determine such
contest or any aspect thereof by arbitration. Such
arbitration shall be governed by the provisions of title 9,
to the extent such title is not inconsistent with this
section. The parties shall give notice of any arbitration
award to the Director, and such award shall, as between the
parties to the arbitration, be dispositive of the issues to
which it relates. The arbitration award shall be
unenforceable until such notice is given. Nothing in this
subsection shall preclude the Director from determining the
patentability of the claimed inventions involved in the
proceeding.''.
(j) Elimination of References to Interferences.--(1)
Sections 41, 134, 145, 146, 154, 305, and 314 of title 35,
United States Code, are each amended by striking ``Board of
Patent Appeals and Interferences'' each place it appears and
inserting ``Patent Trial and Appeal Board''.
(2)(A) Sections 146 and 154 of title 35, United States
Code, are each amended--
(i) by striking ``an interference'' each place it appears
and inserting ``a derivation proceeding''; and
(ii) by striking ``interference'' each additional place it
appears and inserting ``derivation proceeding''.
(B) The subparagraph heading for section 154(b)(1)(C) of
title 35, United States Code, as amended by this paragraph,
is further amended by--
(i) striking ``or'' and inserting ``of''; and
(ii) striking ``secrecy order'' and inserting ``secrecy
orders''.
(3) The section heading for section 134 of title 35, United
States Code, is amended to read as follows:

``Sec. 134. Appeal to the Patent Trial and Appeal Board''.

(4) The section heading for section 146 of title 35, United
States Code, is amended to read as follows:

``Sec. 146. Civil action in case of derivation proceeding''.

(5) Section 154(b)(1)(C) of title 35, United States Code,
is amended by striking ``interferences'' and inserting
``derivation proceedings''.
(6) The item relating to section 6 in the table of sections
for chapter 1 of title 35, United States Code, is amended to
read as follows:

``6. Patent Trial and Appeal Board.''.

(7) The items relating to sections 134 and 135 in the table
of sections for chapter 12 of title 35, United States Code,
are amended to read as follows:

``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.

(8) The item relating to section 146 in the table of
sections for chapter 13 of title 35, United States Code, is
amended to read as follows:

``146. Civil action in case of derivation proceeding.''.

[[Page S1383]]

(k) False Marking.--
(1) In general.--Section 292 of title 35, United States
Code, is amended--
(A) in subsection (a), by adding at the end the following:
``Only the United States may sue for the penalty authorized
by this subsection.''; and
(B) by striking subsection (b) and inserting the following:
``(b) Any person who has suffered a competitive injury as a
result of a violation of this section may file a civil action
in a district court of the United States for recovery of
damages adequate to compensate for the injury.''.
(2) Effective date.--The amendments made by this subsection
shall apply to all cases, without exception, pending on or
after the date of the enactment of this Act.
(l) Statute of Limitations.--
(1) In general.--Section 32 of title 35, United States
Code, is amended by inserting between the third and fourth
sentences the following: ``A proceeding under this section
shall be commenced not later than the earlier of either 10
years after the date on which the misconduct forming the
basis for the proceeding occurred, or 1 year after the date
on which the misconduct forming the basis for the proceeding
is made known to an officer or employee of the Office as
prescribed in the regulations established under section
2(b)(2)(D).''.
(2) Report to congress.--The Director shall provide on a
biennial basis to the Judiciary Committees of the Senate and
House of Representatives a report providing a short
description of incidents made known to an officer or employee
of the Office as prescribed in the regulations established
under section 2(b)(2)(D) of title 35, United States Code,
that reflect substantial evidence of misconduct before the
Office but for which the Office was barred from commencing a
proceeding under section 32 of title 35, United States Code,
by the time limitation established by the fourth sentence of
that section.
(3) Effective date.--The amendment made by paragraph (1)
shall apply in all cases in which the time period for
instituting a proceeding under section 32 of title 35, United
State Code, had not lapsed prior to the date of the enactment
of this Act.
(m) Small Business Study.--
(1) Definitions.--In this subsection--
(A) the term ``Chief Counsel'' means the Chief Counsel for
Advocacy of the Small Business Administration;
(B) the term ``General Counsel'' means the General Counsel
of the United States Patent and Trademark Office; and
(C) the term ``small business concern'' has the meaning
given that term under section 3 of the Small Business Act (15
U.S.C. 632).
(2) Study.--
(A) In general.--The Chief Counsel, in consultation with
the General Counsel, shall conduct a study of the effects of
eliminating the use of dates of invention in determining
whether an applicant is entitled to a patent under title 35,
United States Code.
(B) Areas of study.--The study conducted under subparagraph
(A) shall include examination of the effects of eliminating
the use of invention dates, including examining--
(i) how the change would affect the ability of small
business concerns to obtain patents and their costs of
obtaining patents;
(ii) whether the change would create, mitigate, or
exacerbate any disadvantage for applicants for patents that
are small business concerns relative to applicants for
patents that are not small business concerns, and whether the
change would create any advantages for applicants for patents
that are small business concerns relative to applicants for
patents that are not small business concerns;
(iii) the cost savings and other potential benefits to
small business concerns of the change; and
(iv) the feasibility and costs and benefits to small
business concerns of alternative means of determining whether
an applicant is entitled to a patent under title 35, United
States Code.
(3) Report.--Not later than 1 year after the date of
enactment of this Act, the Chief Counsel shall submit to the
Committee on Small Business and Entrepreneurship and the
Committee on the Judiciary of the Senate and the Committee on
Small Business and the Committee on the Judiciary of the
House of Representatives a report regarding the results of
the study under paragraph (2).
(n) Report on Prior User Rights.--
(1) In general.--Not later than 1 year after the date of
the enactment of this Act, the Director shall report, to the
Committee on the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives, the findings
and recommendations of the Director on the operation of prior
user rights in selected countries in the industrialized
world. The report shall include the following:
(A) A comparison between patent laws of the United States
and the laws of other industrialized countries, including
members of the European Union and Japan, Canada, and
Australia.
(B) An analysis of the effect of prior user rights on
innovation rates in the selected countries.
(C) An analysis of the correlation, if any, between prior
user rights and start-up enterprises and the ability to
attract venture capital to start new companies.
(D) An analysis of the effect of prior user rights, if any,
on small businesses, universities, and individual inventors.
(E) An analysis of legal and constitutional issues, if any,
that arise from placing trade secret law in patent law.
(F) An analysis of whether the change to a first-to-file
patent system creates a particular need for prior user
rights.
(2) Consultation with other agencies.--In preparing the
report required under paragraph (1), the Director shall
consult with the United States Trade Representative, the
Secretary of State, and the Attorney General.
(o) Effective Date.--
(1) In general.--Except as otherwise provided by this
section, the amendments made by this section shall take
effect on the date that is 18 months after the date of the
enactment of this Act, and shall apply to any application for
patent, and to any patent issuing thereon, that contains or
contained at any time--
(A) a claim to a claimed invention that has an effective
filing date as defined in section 100(i) of title 35, United
States Code, that is 18 months or more after the date of the
enactment of this Act; or
(B) a specific reference under section 120, 121, or 365(c)
of title 35, United States Code, to any patent or application
that contains or contained at any time such a claim.
(2) Interfering patents.--The provisions of sections
102(g), 135, and 291 of title 35, United States Code, in
effect on the day prior to the date of the enactment of this
Act, shall apply to each claim of an application for patent,
and any patent issued thereon, for which the amendments made
by this section also apply, if such application or patent
contains or contained at any time--
(A) a claim to an invention having an effective filing date
as defined in section 100(i) of title 35, United States Code,
earlier than 18 months after the date of the enactment of
this Act; or
(B) a specific reference under section 120, 121, or 365(c)
of title 35, United States Code, to any patent or application
that contains or contained at any time such a claim.

SEC. 3. INVENTOR'S OATH OR DECLARATION.

(a) Inventor's Oath or Declaration.--
(1) In general.--Section 115 of title 35, United States
Code, is amended to read as follows:

``Sec. 115. Inventor's oath or declaration

``(a) Naming the Inventor; Inventor's Oath or
Declaration.--An application for patent that is filed under
section 111(a) or commences the national stage under section
371 shall include, or be amended to include, the name of the
inventor for any invention claimed in the application. Except
as otherwise provided in this section, each individual who is
the inventor or a joint inventor of a claimed invention in an
application for patent shall execute an oath or declaration
in connection with the application.
``(b) Required Statements.--An oath or declaration under
subsection (a) shall contain statements that--
``(1) the application was made or was authorized to be made
by the affiant or declarant; and
``(2) such individual believes himself or herself to be the
original inventor or an original joint inventor of a claimed
invention in the application.
``(c) Additional Requirements.--The Director may specify
additional information relating to the inventor and the
invention that is required to be included in an oath or
declaration under subsection (a).
``(d) Substitute Statement.--
``(1) In general.--In lieu of executing an oath or
declaration under subsection (a), the applicant for patent
may provide a substitute statement under the circumstances
described in paragraph (2) and such additional circumstances
that the Director may specify by regulation.
``(2) Permitted circumstances.--A substitute statement
under paragraph (1) is permitted with respect to any
individual who--
``(A) is unable to file the oath or declaration under
subsection (a) because the individual--
``(i) is deceased;
``(ii) is under legal incapacity; or
``(iii) cannot be found or reached after diligent effort;
or
``(B) is under an obligation to assign the invention but
has refused to make the oath or declaration required under
subsection (a).
``(3) Contents.--A substitute statement under this
subsection shall--
``(A) identify the individual with respect to whom the
statement applies;
``(B) set forth the circumstances representing the
permitted basis for the filing of the substitute statement in
lieu of the oath or declaration under subsection (a); and
``(C) contain any additional information, including any
showing, required by the Director.
``(e) Making Required Statements in Assignment of Record.--
An individual who is under an obligation of assignment of an
application for patent may include the required statements
under subsections (b) and (c) in the assignment executed by
the individual, in lieu of filing such statements separately.
``(f) Time for Filing.--A notice of allowance under section
151 may be provided to an applicant for patent only if the
applicant for patent has filed each required oath or
declaration under subsection (a) or has filed a substitute
statement under subsection (d) or recorded an assignment
meeting the requirements of subsection (e).
``(g) Earlier-Filed Application Containing Required
Statements or Substitute Statement.--

[[Page S1384]]

``(1) Exception.--The requirements under this section shall
not apply to an individual with respect to an application for
patent in which the individual is named as the inventor or a
joint inventor and who claims the benefit under section 120,
121, or 365(c) of the filing of an earlier-filed application,
if--
``(A) an oath or declaration meeting the requirements of
subsection (a) was executed by the individual and was filed
in connection with the earlier-filed application;
``(B) a substitute statement meeting the requirements of
subsection (d) was filed in the earlier filed application
with respect to the individual; or
``(C) an assignment meeting the requirements of subsection
(e) was executed with respect to the earlier-filed
application by the individual and was recorded in connection
with the earlier-filed application.
``(2) Copies of oaths, declarations, statements, or
assignments.--Notwithstanding paragraph (1), the Director may
require that a copy of the executed oath or declaration, the
substitute statement, or the assignment filed in the earlier-
filed application be included in the later-filed application.
``(h) Supplemental and Corrected Statements; Filing
Additional Statements.--
``(1) In general.--Any person making a statement required
under this section may withdraw, replace, or otherwise
correct the statement at any time. If a change is made in the
naming of the inventor requiring the filing of 1 or more
additional statements under this section, the Director shall
establish regulations under which such additional statements
may be filed.
``(2) Supplemental statements not required.--If an
individual has executed an oath or declaration meeting the
requirements of subsection (a) or an assignment meeting the
requirements of subsection (e) with respect to an application
for patent, the Director may not thereafter require that
individual to make any additional oath, declaration, or other
statement equivalent to those required by this section in
connection with the application for patent or any patent
issuing thereon.
``(3) Savings clause.--No patent shall be invalid or
unenforceable based upon the failure to comply with a
requirement under this section if the failure is remedied as
provided under paragraph (1).
``(i) Acknowledgment of Penalties.--Any declaration or
statement filed pursuant to this section shall contain an
acknowledgment that any willful false statement made in such
declaration or statement is punishable under section 1001 of
title 18 by fine or imprisonment of not more than 5 years, or
both.''.
(2) Relationship to divisional applications.--Section 121
of title 35, United States Code, is amended by striking ``If
a divisional application'' and all that follows through
``inventor.''.
(3) Requirements for nonprovisional applications.--Section
111(a) of title 35, United States Code, is amended--
(A) in paragraph (2)(C), by striking ``by the applicant''
and inserting ``or declaration'';
(B) in the heading for paragraph (3), by inserting ``or
declaration'' after ``and oath''; and
(C) by inserting ``or declaration'' after ``and oath'' each
place it appears.
(4) Conforming amendment.--The item relating to section 115
in the table of sections for chapter 11 of title 35, United
States Code, is amended to read as follows:

``115. Inventor's oath or declaration.''.

(b) Filing by Other Than Inventor.--
(1) In general.--Section 118 of title 35, United States
Code, is amended to read as follows:

``Sec. 118. Filing by other than inventor

``A person to whom the inventor has assigned or is under an
obligation to assign the invention may make an application
for patent. A person who otherwise shows sufficient
proprietary interest in the matter may make an application
for patent on behalf of and as agent for the inventor on
proof of the pertinent facts and a showing that such action
is appropriate to preserve the rights of the parties. If the
Director grants a patent on an application filed under this
section by a person other than the inventor, the patent shall
be granted to the real party in interest and upon such notice
to the inventor as the Director considers to be
sufficient.''.
(2) Conforming amendment.--Section 251 of title 35, United
States Code, is amended in the third undesignated paragraph
by inserting ``or the application for the original patent was
filed by the assignee of the entire interest'' after ``claims
of the original patent''.
(c) Specification.--Section 112 of title 35, United States
Code, is amended--
(1) in the first paragraph--
(A) by striking ``The specification'' and inserting ``(a)
In General.--The specification''; and
(B) by striking ``of carrying out his invention'' and
inserting ``or joint inventor of carrying out the
invention'';
(2) in the second paragraph--
(A) by striking ``The specification'' and inserting ``(b)
Conclusion.--The specification''; and
(B) by striking ``applicant regards as his invention'' and
inserting ``inventor or a joint inventor regards as the
invention'';
(3) in the third paragraph, by striking ``A claim'' and
inserting ``(c) Form.--A claim'';
(4) in the fourth paragraph, by striking ``Subject to the
following paragraph,'' and inserting ``(d) Reference in
Dependent Forms.--Subject to subsection (e),'';
(5) in the fifth paragraph, by striking ``A claim'' and
inserting ``(e) Reference in Multiple Dependent Form.--A
claim''; and
(6) in the last paragraph, by striking ``An element'' and
inserting ``(f) Element in Claim for a Combination.--An
element''.
(d) Conforming Amendments.--
(1) Sections 111(b)(1)(A) is amended by striking ``the
first paragraph of section 112 of this title'' and inserting
``section 112(a)''.
(2) Section 111(b)(2) is amended by striking ``the second
through fifth paragraphs of section 112,'' and inserting
``subsections (b) through (e) of section 112,''.
(e) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to patent applications that are
filed on or after that effective date.

SEC. 4. VIRTUAL MARKING AND ADVICE OF COUNSEL.

(a) Defense to Infringement Based on Earlier Inventor.--
Section 273(b)(6) of title 35, United States Code, is amended
to read as follows:
``(6) Personal defense.--The defense under this section may
be asserted only by the person who performed or caused the
performance of the acts necessary to establish the defense as
well as any other entity that controls, is controlled by, or
is under common control with such person and, except for any
transfer to the patent owner, the right to assert the defense
shall not be licensed or assigned or transferred to another
person except as an ancillary and subordinate part of a good
faith assignment or transfer for other reasons of the entire
enterprise or line of business to which the defense relates.
Notwithstanding the preceding sentence, any person may, on
its own behalf, assert a defense based on the exhaustion of
rights provided under paragraph (3), including any necessary
elements thereof.''.
(b) Virtual Marking.--Section 287(a) of title 35, United
States Code, is amended by inserting ``, or by fixing thereon
the word `patent' or the abbreviation `pat.' together with an
address of a posting on the Internet, accessible to the
public without charge for accessing the address, that
associates the patented article with the number of the
patent'' before ``, or when''.
(c) Advice of Counsel.--Chapter 29 of title 35, United
States Code, is amended by adding at the end the following:

``Sec. 298. Advice of Counsel

``The failure of an infringer to obtain the advice of
counsel with respect to any allegedly infringed patent or the
failure of the infringer to present such advice to the court
or jury may not be used to prove that the accused infringer
willfully infringed the patent or that the infringer intended
to induce infringement of the patent.''.
(d) Effective Date.--The amendments made by this section
shall apply to any civil action commenced on or after the
date of the enactment of this Act.

SEC. 5. POST-GRANT REVIEW PROCEEDINGS.

(a) Inter Partes Review.--Chapter 31 of title 35, United
States Code, is amended to read as follows:

``CHAPTER 31--INTER PARTES REVIEW

``Sec.
``311. Inter partes review.
``312. Petitions.
``313. Preliminary response to petition.
``314. Institution of inter partes review.
``315. Relation to other proceedings or actions.
``316. Conduct of inter partes review.
``317. Settlement.
``318. Decision of the board.
``319. Appeal.

``Sec. 311. Inter partes review

``(a) In General.--Subject to the provisions of this
chapter, a person who is not the patent owner may file with
the Office a petition to institute an inter partes review for
a patent. The Director shall establish, by regulation, fees
to be paid by the person requesting the review, in such
amounts as the Director determines to be reasonable,
considering the aggregate costs of the review.
``(b) Scope.--A petitioner in an inter partes review may
request to cancel as unpatentable 1 or more claims of a
patent only on a ground that could be raised under section
102 or 103 and only on the basis of prior art consisting of
patents or printed publications.
``(c) Filing Deadline.--A petition for inter partes review
shall be filed after the later of either--
``(1) 9 months after the grant of a patent or issuance of a
reissue of a patent; or
``(2) if a post-grant review is instituted under chapter
32, the date of the termination of such post-grant review.

``Sec. 312. Petitions

``(a) Requirements of Petition.--A petition filed under
section 311 may be considered only if--
``(1) the petition is accompanied by payment of the fee
established by the Director under section 311;
``(2) the petition identifies all real parties in interest;
``(3) the petition identifies, in writing and with
particularity, each claim challenged, the grounds on which
the challenge to each claim is based, and the evidence that
supports the grounds for the challenge to each claim,
including--
``(A) copies of patents and printed publications that the
petitioner relies upon in support of the petition; and
``(B) affidavits or declarations of supporting evidence and
opinions, if the petitioner relies on expert opinions;

[[Page S1385]]

``(4) the petition provides such other information as the
Director may require by regulation; and
``(5) the petitioner provides copies of any of the
documents required under paragraphs (2), (3), and (4) to the
patent owner or, if applicable, the designated representative
of the patent owner.
``(b) Public Availability.--As soon as practicable after
the receipt of a petition under section 311, the Director
shall make the petition available to the public.

``Sec. 313. Preliminary response to petition

``(a) Preliminary Response.--If an inter partes review
petition is filed under section 311, the patent owner shall
have the right to file a preliminary response within a time
period set by the Director.
``(b) Content of Response.--A preliminary response to a
petition for inter partes review shall set forth reasons why
no inter partes review should be instituted based upon the
failure of the petition to meet any requirement of this
chapter.

``Sec. 314. Institution of inter partes review

``(a) Threshold.--The Director may not authorize an inter
partes review to commence unless the Director determines that
the information presented in the petition filed under section
311 and any response filed under section 313 shows that there
is a reasonable likelihood that the petitioner would prevail
with respect to at least 1 of the claims challenged in the
petition.
``(b) Timing.--The Director shall determine whether to
institute an inter partes review under this chapter within 3
months after receiving a preliminary response under section
313 or, if none is filed, within three months after the
expiration of the time for filing such a response.
``(c) Notice.--The Director shall notify the petitioner and
patent owner, in writing, of the Director's determination
under subsection (a), and shall make such notice available to
the public as soon as is practicable. Such notice shall list
the date on which the review shall commence.
``(d) No Appeal.--The determination by the Director whether
to institute an inter partes review under this section shall
be final and nonappealable.

``Sec. 315. Relation to other proceedings or actions

``(a) Infringer's Action.--An inter partes review may not
be instituted or maintained if the petitioner or real party
in interest has filed a civil action challenging the validity
of a claim of the patent.
``(b) Patent Owner's Action.--An inter partes review may
not be instituted if the petition requesting the proceeding
is filed more than 6 months after the date on which the
petitioner, real party in interest, or his privy is served
with a complaint alleging infringement of the patent. The
time limitation set forth in the preceding sentence shall not
apply to a request for joinder under subsection (c).
``(c) Joinder.--If the Director institutes an inter partes
review, the Director, in his discretion, may join as a party
to that inter partes review any person who properly files a
petition under section 311 that the Director, after receiving
a preliminary response under section 313 or the expiration of
the time for filing such a response, determines warrants the
institution of an inter partes review under section 314.
``(d) Multiple Proceedings.--Notwithstanding sections
135(a), 251, and 252, and chapter 30, during the pendency of
an inter partes review, if another proceeding or matter
involving the patent is before the Office, the Director may
determine the manner in which the inter partes review or
other proceeding or matter may proceed, including providing
for stay, transfer, consolidation, or termination of any such
matter or proceeding.
``(e) Estoppel.--
``(1) Proceedings before the office.--The petitioner in an
inter partes review under this chapter, or his real party in
interest or privy, may not request or maintain a proceeding
before the Office with respect to a claim on any ground that
the petitioner raised or reasonably could have raised during
an inter partes review of the claim that resulted in a final
written decision under section 318(a).
``(2) Civil actions and other proceedings.--The petitioner
in an inter partes review under this chapter, or his real
party in interest or privy, may not assert either in a civil
action arising in whole or in part under section 1338 of
title 28 or in a proceeding before the International Trade
Commission that a claim in a patent is invalid on any ground
that the petitioner raised or reasonably could have raised
during an inter partes review of the claim that resulted in a
final written decision under section 318(a).

``Sec. 316. Conduct of inter partes review

``(a) Regulations.--The Director shall prescribe
regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that
any petition or document filed with the intent that it be
sealed shall be accompanied by a motion to seal, and such
petition or document shall be treated as sealed pending the
outcome of the ruling on the motion;
``(2) setting forth the standards for the showing of
sufficient grounds to institute a review under section
314(a);
``(3) establishing procedures for the submission of
supplemental information after the petition is filed;
``(4) in accordance with section 2(b)(2), establishing and
governing inter partes review under this chapter and the
relationship of such review to other proceedings under this
title;
``(5) setting a time period for requesting joinder under
section 315(c);
``(6) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to--
``(A) the deposition of witnesses submitting affidavits or
declarations; and
``(B) what is otherwise necessary in the interest of
justice;
``(7) prescribing sanctions for abuse of discovery, abuse
of process, or any other improper use of the proceeding, such
as to harass or to cause unnecessary delay or an unnecessary
increase in the cost of the proceeding;
``(8) providing for protective orders governing the
exchange and submission of confidential information;
``(9) allowing the patent owner to file a response to the
petition after an inter partes review has been instituted,
and requiring that the patent owner file with such response,
through affidavits or declarations, any additional factual
evidence and expert opinions on which the patent owner relies
in support of the response;
``(10) setting forth standards and procedures for allowing
the patent owner to move to amend the patent under subsection
(d) to cancel a challenged claim or propose a reasonable
number of substitute claims, and ensuring that any
information submitted by the patent owner in support of any
amendment entered under subsection (d) is made available to
the public as part of the prosecution history of the patent;
``(11) providing either party with the right to an oral
hearing as part of the proceeding; and
``(12) requiring that the final determination in an inter
partes review be issued not later than 1 year after the date
on which the Director notices the institution of a review
under this chapter, except that the Director may, for good
cause shown, extend the 1-year period by not more than 6
months, and may adjust the time periods in this paragraph in
the case of joinder under section 315(c).
``(b) Considerations.--In prescribing regulations under
this section, the Director shall consider the effect of any
such regulation on the economy, the integrity of the patent
system, the efficient administration of the Office, and the
ability of the Office to timely complete proceedings
instituted under this chapter.
``(c) Patent Trial and Appeal Board.--The Patent Trial and
Appeal Board shall, in accordance with section 6, conduct
each proceeding authorized by the Director.
``(d) Amendment of the Patent.--
``(1) In general.--During an inter partes review instituted
under this chapter, the patent owner may file 1 motion to
amend the patent in 1 or more of the following ways:
``(A) Cancel any challenged patent claim.
``(B) For each challenged claim, propose a reasonable
number of substitute claims.
``(2) Additional motions.--Additional motions to amend may
be permitted upon the joint request of the petitioner and the
patent owner to materially advance the settlement of a
proceeding under section 317, or as permitted by regulations
prescribed by the Director.
``(3) Scope of claims.--An amendment under this subsection
may not enlarge the scope of the claims of the patent or
introduce new matter.
``(e) Evidentiary Standards.--In an inter partes review
instituted under this chapter, the petitioner shall have the
burden of proving a proposition of unpatentability by a
preponderance of the evidence.

``Sec. 317. Settlement

``(a) In General.--An inter partes review instituted under
this chapter shall be terminated with respect to any
petitioner upon the joint request of the petitioner and the
patent owner, unless the Office has decided the merits of the
proceeding before the request for termination is filed. If
the inter partes review is terminated with respect to a
petitioner under this section, no estoppel under section
315(e) shall apply to that petitioner. If no petitioner
remains in the inter partes review, the Office may terminate
the review or proceed to a final written decision under
section 318(a).
``(b) Agreements in Writing.--Any agreement or
understanding between the patent owner and a petitioner,
including any collateral agreements referred to in such
agreement or understanding, made in connection with, or in
contemplation of, the termination of an inter partes review
under this section shall be in writing and a true copy of
such agreement or understanding shall be filed in the Office
before the termination of the inter partes review as between
the parties. If any party filing such agreement or
understanding so requests, the copy shall be kept separate
from the file of the inter partes review, and shall be made
available only to Federal Government agencies upon written
request, or to any other person on a showing of good cause.

``Sec. 318. Decision of the board

``(a) Final Written Decision.--If an inter partes review is
instituted and not dismissed under this chapter, the Patent
Trial and Appeal Board shall issue a final written decision
with respect to the patentability of any patent claim
challenged by the petitioner and any new claim added under
section 316(d).

[[Page S1386]]

``(b) Certificate.--If the Patent Trial and Appeal Board
issues a final written decision under subsection (a) and the
time for appeal has expired or any appeal has terminated, the
Director shall issue and publish a certificate canceling any
claim of the patent finally determined to be unpatentable,
confirming any claim of the patent determined to be
patentable, and incorporating in the patent by operation of
the certificate any new or amended claim determined to be
patentable.
``(c) Data on Length of Review.--The Patent and Trademark
Office shall make available to the public data describing the
length of time between the commencement of each inter partes
review and the conclusion of that review.

``Sec. 319. Appeal

``A party dissatisfied with the final written decision of
the Patent Trial and Appeal Board under section 318(a) may
appeal the decision pursuant to sections 141 through 144. Any
party to the inter partes review shall have the right to be a
party to the appeal.''.
(b) Technical and Conforming Amendment.--The table of
chapters for part III of title 35, United States Code, is
amended by striking the item relating to chapter 31 and
inserting the following:

``31. Inter Partes Review...................................311.''.....

(c) Regulations and Effective Date.--
(1) Regulations.--The Director shall, not later than the
date that is 1 year after the date of the enactment of this
Act, issue regulations to carry out chapter 31 of title 35,
United States Code, as amended by subsection (a) of this
section.
(2) Applicability.--
(A) In general.--The amendments made by subsection (a)
shall take effect on the date that is 1 year after the date
of the enactment of this Act and shall apply to all patents
issued before, on, or after the effective date of subsection
(a).
(B) Exception.--The provisions of chapter 31 of title 35,
United States Code, as amended by paragraph (3), shall
continue to apply to requests for inter partes reexamination
that are filed prior to the effective date of subsection (a)
as if subsection (a) had not been enacted.
(C) Graduated implementation.--The Director may impose a
limit on the number of inter partes reviews that may be
instituted during each of the first 4 years following the
effective date of subsection (a), provided that such number
shall in each year be equivalent to or greater than the
number of inter partes reexaminations that are ordered in the
last full fiscal year prior to the effective date of
subsection (a).
(3) Transition.--
(A) In general.--Chapter 31 of title 35, United States
Code, is amended--
(i) in section 312--

(I) in subsection (a)--

(aa) in the first sentence, by striking ``a substantial new
question of patentability affecting any claim of the patent
concerned is raised by the request,'' and inserting ``the
information presented in the request shows that there is a
reasonable likelihood that the requester would prevail with
respect to at least 1 of the claims challenged in the
request,''; and
(bb) in the second sentence, by striking ``The existence of
a substantial new question of patentability'' and inserting
``A showing that there is a reasonable likelihood that the
requester would prevail with respect to at least 1 of the
claims challenged in the request''; and

(II) in subsection (c), in the second sentence, by striking
``no substantial new question of patentability has been
raised,'' and inserting ``the showing required by subsection
(a) has not been made,''; and

(ii) in section 313, by striking ``a substantial new
question of patentability affecting a claim of the patent is
raised'' and inserting ``it has been shown that there is a
reasonable likelihood that the requester would prevail with
respect to at least 1 of the claims challenged in the
request''.
(B) Application.--The amendments made by this paragraph
shall apply to requests for inter partes reexamination that
are filed on or after the date of the enactment of this Act,
but prior to the effective date of subsection (a).
(d) Post-Grant Review.--Part III of title 35, United States
Code, is amended by adding at the end the following:

``CHAPTER 32--POST-GRANT REVIEW

``Sec.
``321. Post-grant review.
``322. Petitions.
``323. Preliminary response to petition.
``324. Institution of post-grant review.
``325. Relation to other proceedings or actions.
``326. Conduct of post-grant review.
``327. Settlement.
``328. Decision of the board.
``329. Appeal.

``Sec. 321. Post-grant review

``(a) In General.--Subject to the provisions of this
chapter, a person who is not the patent owner may file with
the Office a petition to institute a post-grant review for a
patent. The Director shall establish, by regulation, fees to
be paid by the person requesting the review, in such amounts
as the Director determines to be reasonable, considering the
aggregate costs of the post-grant review.
``(b) Scope.--A petitioner in a post-grant review may
request to cancel as unpatentable 1 or more claims of a
patent on any ground that could be raised under paragraph (2)
or (3) of section 282(b) (relating to invalidity of the
patent or any claim).
``(c) Filing Deadline.--A petition for a post-grant review
shall be filed not later than 9 months after the grant of the
patent or issuance of a reissue patent.

``Sec. 322. Petitions

``(a) Requirements of Petition.--A petition filed under
section 321 may be considered only if--
``(1) the petition is accompanied by payment of the fee
established by the Director under section 321;
``(2) the petition identifies all real parties in interest;
``(3) the petition identifies, in writing and with
particularity, each claim challenged, the grounds on which
the challenge to each claim is based, and the evidence that
supports the grounds for the challenge to each claim,
including--
``(A) copies of patents and printed publications that the
petitioner relies upon in support of the petition; and
``(B) affidavits or declarations of supporting evidence and
opinions, if the petitioner relies on other factual evidence
or on expert opinions;
``(4) the petition provides such other information as the
Director may require by regulation; and
``(5) the petitioner provides copies of any of the
documents required under paragraphs (2), (3), and (4) to the
patent owner or, if applicable, the designated representative
of the patent owner.
``(b) Public Availability.--As soon as practicable after
the receipt of a petition under section 321, the Director
shall make the petition available to the public.

``Sec. 323. Preliminary response to petition

``(a) Preliminary Response.--If a post-grant review
petition is filed under section 321, the patent owner shall
have the right to file a preliminary response within 2 months
of the filing of the petition.
``(b) Content of Response.--A preliminary response to a
petition for post-grant review shall set forth reasons why no
post-grant review should be instituted based upon the failure
of the petition to meet any requirement of this chapter.

``Sec. 324. Institution of post-grant review

``(a) Threshold.--The Director may not authorize a post-
grant review to commence unless the Director determines that
the information presented in the petition, if such
information is not rebutted, would demonstrate that it is
more likely than not that at least 1 of the claims challenged
in the petition is unpatentable.
``(b) Additional Grounds.--The determination required under
subsection (a) may also be satisfied by a showing that the
petition raises a novel or unsettled legal question that is
important to other patents or patent applications.
``(c) Timing.--The Director shall determine whether to
institute a post-grant review under this chapter within 3
months after receiving a preliminary response under section
323 or, if none is filed, the expiration of the time for
filing such a response.
``(d) Notice.--The Director shall notify the petitioner and
patent owner, in writing, of the Director's determination
under subsection (a) or (b), and shall make such notice
available to the public as soon as is practicable. The
Director shall make each notice of the institution of a post-
grant review available to the public. Such notice shall list
the date on which the review shall commence.
``(e) No Appeal.--The determination by the Director whether
to institute a post-grant review under this section shall be
final and nonappealable.

``Sec. 325. Relation to other proceedings or actions

``(a) Infringer's Action.--A post-grant review may not be
instituted or maintained if the petitioner or real party in
interest has filed a civil action challenging the validity of
a claim of the patent.
``(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.
``(c) Joinder.--If more than 1 petition for a post-grant
review is properly filed against the same patent and the
Director determines that more than 1 of these petitions
warrants the institution of a post-grant review under section
324, the Director may consolidate such reviews into a single
post-grant review.
``(d) Multiple Proceedings.--Notwithstanding sections
135(a), 251, and 252, and chapter 30, during the pendency of
any post-grant review, if another proceeding or matter
involving the patent is before the Office, the Director may
determine the manner in which the post-grant review or other
proceeding or matter may proceed, including providing for
stay, transfer, consolidation, or termination of any such
matter or proceeding. In determining whether to institute or
order a proceeding under this chapter, chapter 30, or chapter
31, the Director may take into account whether, and reject
the petition or request because, the same or substantially
the same prior art or arguments previously were presented to
the Office.
``(e) Estoppel.--
``(1) Proceedings before the office.--The petitioner in a
post-grant review under this chapter, or his real party in
interest or

[[Page S1387]]

privy, may not request or maintain a proceeding before the
Office with respect to a claim on any ground that the
petitioner raised or reasonably could have raised during a
post-grant review of the claim that resulted in a final
written decision under section 328(a).
``(2) Civil actions and other proceedings.--The petitioner
in a post-grant review under this chapter, or his real party
in interest or privy, may not assert either in a civil action
arising in whole or in part under section 1338 of title 28 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 post-grant review of the claim
that resulted in a final written decision under section
328(a).
``(f) Reissue Patents.--A post-grant review may not be
instituted if the petition requests cancellation of a claim
in a reissue patent that is identical to or narrower than a
claim in the original patent from which the reissue patent
was issued, and the time limitations in section 321(c) would
bar filing a petition for a post-grant review for such
original patent.

``Sec. 326. Conduct of post-grant review

``(a) Regulations.--The Director shall prescribe
regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that
any petition or document filed with the intent that it be
sealed shall be accompanied by a motion to seal, and such
petition or document shall be treated as sealed pending the
outcome of the ruling on the motion;
``(2) setting forth the standards for the showing of
sufficient grounds to institute a review under subsections
(a) and (b) of section 324;
``(3) establishing procedures for the submission of
supplemental information after the petition is filed;
``(4) in accordance with section 2(b)(2), establishing and
governing a post-grant review under this chapter and the
relationship of such review to other proceedings under this
title;
``(5) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to evidence directly related to factual assertions
advanced by either party in the proceeding;
``(6) prescribing sanctions for abuse of discovery, abuse
of process, or any other improper use of the proceeding, such
as to harass or to cause unnecessary delay or an unnecessary
increase in the cost of the proceeding;
``(7) providing for protective orders governing the
exchange and submission of confidential information;
``(8) allowing the patent owner to file a response to the
petition after a post-grant review has been instituted, and
requiring that the patent owner file with such response,
through affidavits or declarations, any additional factual
evidence and expert opinions on which the patent owner relies
in support of the response;
``(9) setting forth standards and procedures for allowing
the patent owner to move to amend the patent under subsection
(d) to cancel a challenged claim or propose a reasonable
number of substitute claims, and ensuring that any
information submitted by the patent owner in support of any
amendment entered under subsection (d) is made available to
the public as part of the prosecution history of the patent;
``(10) providing either party with the right to an oral
hearing as part of the proceeding; and
``(11) requiring that the final determination in any post-
grant review be issued not later than 1 year after the date
on which the Director notices the institution of a proceeding
under this chapter, except that the Director may, for good
cause shown, extend the 1-year period by not more than 6
months, and may adjust the time periods in this paragraph in
the case of joinder under section 325(c).
``(b) Considerations.--In prescribing regulations under
this section, the Director shall consider the effect of any
such regulation on the economy, the integrity of the patent
system, the efficient administration of the Office, and the
ability of the Office to timely complete proceedings
instituted under this chapter.
``(c) Patent Trial and Appeal Board.--The Patent Trial and
Appeal Board shall, in accordance with section 6, conduct
each proceeding authorized by the Director.
``(d) Amendment of the Patent.--
``(1) In general.--During a post-grant review instituted
under this chapter, the patent owner may file 1 motion to
amend the patent in 1 or more of the following ways:
``(A) Cancel any challenged patent claim.
``(B) For each challenged claim, propose a reasonable
number of substitute claims.
``(2) Additional motions.--Additional motions to amend may
be permitted upon the joint request of the petitioner and the
patent owner to materially advance the settlement of a
proceeding under section 327, or upon the request of the
patent owner for good cause shown.
``(3) Scope of claims.--An amendment under this subsection
may not enlarge the scope of the claims of the patent or
introduce new matter.
``(e) Evidentiary Standards.--In a post-grant review
instituted under this chapter, the petitioner shall have the
burden of proving a proposition of unpatentability by a
preponderance of the evidence.

``Sec. 327. Settlement

``(a) In General.--A post-grant review instituted under
this chapter shall be terminated with respect to any
petitioner upon the joint request of the petitioner and the
patent owner, unless the Office has decided the merits of the
proceeding before the request for termination is filed. If
the post-grant review is terminated with respect to a
petitioner under this section, no estoppel under section
325(e) shall apply to that petitioner. If no petitioner
remains in the post-grant review, the Office may terminate
the post-grant review or proceed to a final written decision
under section 328(a).
``(b) Agreements in Writing.--Any agreement or
understanding between the patent owner and a petitioner,
including any collateral agreements referred to in such
agreement or understanding, made in connection with, or in
contemplation of, the termination of a post-grant review
under this section shall be in writing, and a true copy of
such agreement or understanding shall be filed in the Office
before the termination of the post-grant review as between
the parties. If any party filing such agreement or
understanding so requests, the copy shall be kept separate
from the file of the post-grant review, and shall be made
available only to Federal Government agencies upon written
request, or to any other person on a showing of good cause.

``Sec. 328. Decision of the board

``(a) Final Written Decision.--If a post-grant review is
instituted and not dismissed under this chapter, the Patent
Trial and Appeal Board shall issue a final written decision
with respect to the patentability of any patent claim
challenged by the petitioner and any new claim added under
section 326(d).
``(b) Certificate.--If the Patent Trial and Appeal Board
issues a final written decision under subsection (a) and the
time for appeal has expired or any appeal has terminated, the
Director shall issue and publish a certificate canceling any
claim of the patent finally determined to be unpatentable,
confirming any claim of the patent determined to be
patentable, and incorporating in the patent by operation of
the certificate any new or amended claim determined to be
patentable.
``(c) Data on Length of Review.--The Patent and Trademark
Office shall make available to the public data describing the
length of time between the commencement of each post-grant
review and the conclusion of that review.

``Sec. 329. Appeal

``A party dissatisfied with the final written decision of
the Patent Trial and Appeal Board under section 328(a) may
appeal the decision pursuant to sections 141 through 144. Any
party to the post-grant review shall have the right to be a
party to the appeal.''.
(e) Technical and Conforming Amendment.--The table of
chapters for part III of title 35, United States Code, is
amended by adding at the end the following:

``32. Post-Grant Review.....................................321.''.....

(f) Regulations and Effective Date.--
(1) Regulations.--The Director shall, not later than the
date that is 1 year after the date of the enactment of this
Act, issue regulations to carry out chapter 32 of title 35,
United States Code, as added by subsection (d) of this
section.
(2) Applicability.--The amendments made by subsection (d)
shall take effect on the date that is 1 year after the date
of the enactment of this Act and, except as provided in
section 18 and in paragraph (3), shall apply only to patents
that are described in section 2(o)(1). The Director may
impose a limit on the number of post-grant reviews that may
be instituted during each of the 4 years following the
effective date of subsection (d).
(3) Pending interferences.--The Director shall determine
the procedures under which interferences commenced before the
effective date of subsection (d) are to proceed, including
whether any such interference is to be dismissed without
prejudice to the filing of a petition for a post-grant review
under chapter 32 of title 35, United States Code, or is to
proceed as if this Act had not been enacted. The Director
shall include such procedures in regulations issued under
paragraph (1). For purposes of an interference that is
commenced before the effective date of subsection (d), the
Director may deem the Patent Trial and Appeal Board to be the
Board of Patent Appeals and Interferences, and may allow the
Patent Trial and Appeal Board to conduct any further
proceedings in that interference. The authorization to appeal
or have remedy from derivation proceedings in sections 141(d)
and 146 of title 35, United States Code, and the jurisdiction
to entertain appeals from derivation proceedings in section
1295(a)(4)(A) of title 28, United States Code, shall be
deemed to extend to final decisions in interferences that are
commenced before the effective date of subsection (d) and
that are not dismissed pursuant to this paragraph.
(g) Citation of Prior Art and Written Statements.--
(1) In general.--Section 301 of title 35, United States
Code, is amended to read as follows:

``Sec. 301. Citation of prior art and written statements

``(a) In General.--Any person at any time may cite to the
Office in writing--
``(1) prior art consisting of patents or printed
publications which that person believes to have a bearing on
the patentability of any claim of a particular patent; or

[[Page S1388]]

``(2) statements of the patent owner filed in a proceeding
before a Federal court or the Office in which the patent
owner took a position on the scope of any claim of a
particular patent.
``(b) Official File.--If the person citing prior art or
written statements pursuant to subsection (a) explains in
writing the pertinence and manner of applying the prior art
or written statements to at least 1 claim of the patent, the
citation of the prior art or written statements and the
explanation thereof shall become a part of the official file
of the patent.
``(c) Additional Information.--A party that submits a
written statement pursuant to subsection (a)(2) shall include
any other documents, pleadings, or evidence from the
proceeding in which the statement was filed that addresses
the written statement.
``(d) Limitations.--A written statement submitted pursuant
to subsection (a)(2), and additional information submitted
pursuant to subsection (c), shall not be considered by the
Office for any purpose other than to determine the proper
meaning of a patent claim in a proceeding that is ordered or
instituted pursuant to section 304, 314, or 324. If any such
written statement or additional information is subject to an
applicable protective order, it shall be redacted to exclude
information that is subject to that order.
``(e) Confidentiality.--Upon the written request of the
person citing prior art or written statements pursuant to
subsection (a), that person's identity shall be excluded from
the patent file and kept confidential.''.
(2) Effective date.--The amendment made by this subsection
shall take effect 1 year after the date of the enactment of
this Act and shall apply to patents issued before, on, or
after that effective date.
(h) Reexamination.--
(1) Determination by director.--
(A) In general.--Section 303(a) of title 35, United States
Code, is amended by striking ``section 301 of this title''
and inserting ``section 301 or 302''.
(B) Effective date.--The amendment made by this paragraph
shall take effect 1 year after the date of the enactment of
this Act and shall apply to patents issued before, on, or
after that effective date.
(2) Appeal.--
(A) In general.--Section 306 of title 35, United States
Code, is amended by striking ``145'' and inserting ``144''.
(B) Effective date.--The amendment made by this paragraph
shall take effect on the date of enactment of this Act and
shall apply to appeals of reexaminations that are pending
before the Board of Patent Appeals and Interferences or the
Patent Trial and Appeal Board on or after the date of the
enactment of this Act.

SEC. 6. PATENT TRIAL AND APPEAL BOARD.

(a) Composition and Duties.--Section 6 of title 35, United
States Code, is amended to read as follows:

``Sec. 6. Patent Trial and Appeal Board

``(a) There shall be in the Office a Patent Trial and
Appeal Board. The Director, the Deputy Director, the
Commissioner for Patents, the Commissioner for Trademarks,
and the administrative patent judges shall constitute the
Patent Trial and Appeal Board. The administrative patent
judges shall be persons of competent legal knowledge and
scientific ability who are appointed by the Secretary, in
consultation with the Director. Any reference in any Federal
law, Executive order, rule, regulation, or delegation of
authority, or any document of or pertaining to the Board of
Patent Appeals and Interferences is deemed to refer to the
Patent Trial and Appeal Board.
``(b) The Patent Trial and Appeal Board shall--
``(1) on written appeal of an applicant, review adverse
decisions of examiners upon applications for patents pursuant
to section 134(a);
``(2) review appeals of reexaminations pursuant to section
134(b);
``(3) conduct derivation proceedings pursuant to section
135; and
``(4) conduct inter partes reviews and post-grant reviews
pursuant to chapters 31 and 32.
``(c) Each appeal, derivation proceeding, post-grant
review, and inter partes review shall be heard by at least 3
members of the Patent Trial and Appeal Board, who shall be
designated by the Director. Only the Patent Trial and Appeal
Board may grant rehearings.
``(d) The Secretary of Commerce may, in his discretion,
deem the appointment of an administrative patent judge who,
before the date of the enactment of this subsection, held
office pursuant to an appointment by the Director to take
effect on the date on which the Director initially appointed
the administrative patent judge. It shall be a defense to a
challenge to the appointment of an administrative patent
judge on the basis of the judge's having been originally
appointed by the Director that the administrative patent
judge so appointed was acting as a de facto officer.''.
(b) Administrative Appeals.--Section 134 of title 35,
United States Code, is amended--
(1) in subsection (b), by striking ``any reexamination
proceeding'' and inserting ``a reexamination''; and
(2) by striking subsection (c).
(c) Circuit Appeals.--
(1) In general.--Section 141 of title 35, United States
Code, is amended to read as follows:

``Sec. 141. Appeal to the Court of Appeals for the Federal
Circuit

``(a) Examinations.--An applicant who is dissatisfied with
the final decision in an appeal to the Patent Trial and
Appeal Board under section 134(a) may appeal the Board's
decision to the United States Court of Appeals for the
Federal Circuit. By filing such an appeal, the applicant
waives his right to proceed under section 145.
``(b) Reexaminations.--A patent owner who is dissatisfied
with the final decision in an appeal of a reexamination to
the Patent Trial and Appeal Board under section 134(b) may
appeal the Board's decision only to the United States Court
of Appeals for the Federal Circuit.
``(c) Post-Grant and Inter Partes Reviews.--A party to a
post-grant or inter partes review who is dissatisfied with
the final written decision of the Patent Trial and Appeal
Board under section 318(a) or 328(a) may appeal the Board's
decision only to the United States Court of Appeals for the
Federal Circuit.
``(d) Derivation Proceedings.--A party to a derivation
proceeding who is dissatisfied with the final decision of the
Patent Trial and Appeal Board on the proceeding may appeal
the decision to the United States Court of Appeals for the
Federal Circuit, but such appeal shall be dismissed if any
adverse party to such derivation proceeding, within 20 days
after the appellant has filed notice of appeal in accordance
with section 142, files notice with the Director that the
party elects to have all further proceedings conducted as
provided in section 146. If the appellant does not, within 30
days after the filing of such notice by the adverse party,
file a civil action under section 146, the Board's decision
shall govern the further proceedings in the case.''.
(2) Jurisdiction.--Section 1295(a)(4)(A) of title 28,
United States Code, is amended to read as follows:
``(A) the Patent Trial and Appeal Board of the United
States Patent and Trademark Office with respect to patent
applications, derivation proceedings, reexaminations, post-
grant reviews, and inter partes reviews at the instance of a
party who exercised his right to participate in a proceeding
before or appeal to the Board, except that an applicant or a
party to a derivation proceeding may also have remedy by
civil action pursuant to section 145 or 146 of title 35. An
appeal under this subparagraph of a decision of the Board
with respect to an application or derivation proceeding shall
waive the right of such applicant or party to proceed under
section 145 or 146 of title 35;''.
(3) Proceedings on appeal.--Section 143 of title 35, United
States Code, is amended--
(A) by striking the third sentence and inserting the
following: ``In an ex parte case, the Director shall submit
to the court in writing the grounds for the decision of the
Patent and Trademark Office, addressing all of the issues
raised in the appeal. The Director shall have the right to
intervene in an appeal from a decision entered by the Patent
Trial and Appeal Board in a derivation proceeding under
section 135 or in an inter partes or post-grant review under
chapter 31 or 32.''; and
(B) by repealing the second of the two identical fourth
sentences.
(d) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to proceedings commenced on or after
that effective date, except that--
(1) the extension of jurisdiction to the United States
Court of Appeals for the Federal Circuit to entertain appeals
of decisions of the Patent Trial and Appeal Board in
reexaminations under the amendment made by subsection (c)(2)
shall be deemed to take effect on the date of enactment of
this Act and shall extend to any decision of the Board of
Patent Appeals and Interferences with respect to a
reexamination that is entered before, on, or after the date
of the enactment of this Act;
(2) the provisions of sections 6, 134, and 141 of title 35,
United States Code, in effect on the day prior to the date of
the enactment of this Act shall continue to apply to inter
partes reexaminations that are requested under section 311
prior to the date that is 1 year after the date of the
enactment of this Act;
(3) the Patent Trial and Appeal Board may be deemed to be
the Board of Patent Appeals and Interferences for purposes of
appeals of inter partes reexaminations that are requested
under section 311 prior to the date that is 1 year after the
date of the enactment of this Act; and
(4) the Director's right under the last sentence of section
143 of title 35, United States Code, as amended by subsection
(c)(3), to intervene in an appeal from a decision entered by
the Patent Trial and Appeal Board shall be deemed to extend
to inter partes reexaminations that are requested under
section 311 prior to the date that is 1 year after the date
of the enactment of this Act.

SEC. 7. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.

(a) In General.--Section 122 of title 35, United States
Code, is amended by adding at the end the following:
``(e) Preissuance Submissions by Third Parties.--
``(1) In general.--Any third party may submit for
consideration and inclusion in the record of a patent
application, any patent, published patent application, or
other printed publication of potential relevance to the
examination of the application, if such submission is made in
writing before the earlier of--

[[Page S1389]]

``(A) the date a notice of allowance under section 151 is
given or mailed in the application for patent; or
``(B) the later of--
``(i) 6 months after the date on which the application for
patent is first published under section 122 by the Office, or
``(ii) the date of the first rejection under section 132 of
any claim by the examiner during the examination of the
application for patent.
``(2) Other requirements.--Any submission under paragraph
(1) shall--
``(A) set forth a concise description of the asserted
relevance of each submitted document;
``(B) be accompanied by such fee as the Director may
prescribe; and
``(C) include a statement by the person making such
submission affirming that the submission was made in
compliance with this section.''.
(b) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to patent applications filed before,
on, or after that effective date.

SEC. 8. VENUE.

(a) Technical Amendments Relating to Venue.--Sections 32,
145, 146, 154(b)(4)(A), and 293 of title 35, United States
Code, and section 21(b)(4) of the Act entitled ``An Act to
provide for the registration and protection of trademarks
used in commerce, to carry out the provisions of certain
international conventions, and for other purposes'', approved
July 5, 1946 (commonly referred to as the ``Trademark Act of
1946'' or the ``Lanham Act''; 15 U.S.C. 1071(b)(4)), are each
amended by striking ``United States District Court for the
District of Columbia'' each place that term appears and
inserting ``United States District Court for the Eastern
District of Virginia''.
(b) Effective Date.--The amendments made by this section
shall take effect upon the date of the enactment of this Act
and shall apply to civil actions commenced on or after that
date.

SEC. 9. FEE SETTING AUTHORITY.

(a) Fee Setting.--
(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.
(2) Small and micro entities.--The fees established under
paragraph (1) for filing, searching, examining, issuing,
appealing, and maintaining patent applications and patents
shall be reduced by 50 percent with respect to their
application to any small entity that qualifies for reduced
fees under section 41(h)(1) of title 35, United States Code,
and shall be reduced by 75 percent with respect to their
application to any micro entity as defined in section 123 of
that title.
(3) Reduction of fees in certain fiscal years.--In any
fiscal year, the Director--
(A) shall consult with the Patent Public Advisory Committee
and the Trademark Public Advisory Committee on the
advisability of reducing any fees described in paragraph (1);
and
(B) after the consultation required under subparagraph (A),
may reduce such fees.
(4) Role of the public advisory committee.--The Director
shall--
(A) submit to the Patent Public Advisory Committee or the
Trademark Public Advisory Committee, or both, as appropriate,
any proposed fee under paragraph (1) not less than 45 days
before publishing any proposed fee in the Federal Register;
(B) provide the relevant advisory committee described in
subparagraph (A) a 30-day period following the submission of
any proposed fee, on which to deliberate, consider, and
comment on such proposal, and require that--
(i) during such 30-day period, the relevant advisory
committee hold a public hearing related to such proposal; and
(ii) the Director shall assist the relevant advisory
committee in carrying out such public hearing, including by
offering the use of Office resources to notify and promote
the hearing to the public and interested stakeholders;
(C) require the relevant advisory committee to make
available to the public a written report detailing the
comments, advice, and recommendations of the committee
regarding any proposed fee;
(D) consider and analyze any comments, advice, or
recommendations received from the relevant advisory committee
before setting or adjusting any fee; and
(E) notify, through the Chair and Ranking Member of the
Senate and House Judiciary Committees, the Congress of any
final rule setting or adjusting fees under paragraph (1).
(5) Publication in the federal register.--
(A) In general.--Any rules prescribed under this subsection
shall be published in the Federal Register.
(B) Rationale.--Any proposal for a change in fees under
this section shall--
(i) be published in the Federal Register; and
(ii) include, in such publication, the specific rationale
and purpose for the proposal, including the possible
expectations or benefits resulting from the proposed change.
(C) Public comment period.--Following the publication of
any proposed fee in the Federal Register pursuant to
subparagraph (A), the Director shall seek public comment for
a period of not less than 45 days.
(6) Congressional comment period.--Following the
notification described in paragraph (3)(E), Congress shall
have not more than 45 days to consider and comment on any
final rule setting or adjusting fees under paragraph (1). No
fee set or adjusted under paragraph (1) shall be effective
prior to the end of such 45-day comment period.
(7) Rule of construction.--No rules prescribed under this
subsection may diminish--
(A) an applicant's rights under title 35, United States
Code, or the Trademark Act of 1946; or
(B) any rights under a ratified treaty.
(b) Fees for Patent Services.--Division B of Public Law
108-447 is amended in title VIII of the Departments of
Commerce, Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 2005--
(1) in subsections (a), (b), and (c) of section 801, by--
(A) striking ``During'' and all that follows through ``
2006, subsection'' and inserting ``Subsection''; and
(B) striking ``shall be administered as though that
subsection reads'' and inserting ``is amended to read'';
(2) in subsection (d) of section 801, by striking
``During'' and all that follows through ``2006, subsection''
and inserting ``Subsection''; and
(3) in subsection (e) of section 801, by--
(A) striking ``During'' and all that follows through
``2006, subsection'' and inserting ``Subsection''; and
(B) striking ``shall be administered as though that
subsection''.
(c) Adjustment of Trademark Fees.--Division B of Public Law
108-447 is amended in title VIII of the Departments of
Commerce, Justice and State, the Judiciary and Related
Agencies Appropriations Act, 2005, in section 802(a) by
striking ``During fiscal years 2005, 2006 and 2007'', and
inserting ``Until such time as the Director sets or adjusts
the fees otherwise,''.
(d) Effective Date, Applicability, and Transition
Provisions.--Division B of Public Law 108-447 is amended in
title VIII of the Departments of Commerce, Justice and State,
the Judiciary and Related Agencies Appropriations Act, 2005,
in section 803(a) by striking ``and shall apply only with
respect to the remaining portion of fiscal year 2005, 2006
and 2007''.
(e) Statutory Authority.--Section 41(d)(1)(A) of title 35,
United States Code, is amended by striking ``, and the
Director may not increase any such fee thereafter''.
(f) Rule of Construction.--Nothing in this section shall be
construed to affect any other provision of Division B of
Public Law 108-447, including section 801(c) of title VIII of
the Departments of Commerce, Justice and State, the Judiciary
and Related Agencies Appropriations Act, 2005.
(g) 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) Office.--The term ``Office'' means the United States
Patent and Trademark Office.
(3) Trademark act of 1946.--The term ``Trademark Act of
1946'' means an Act entitled ``Act to provide for the
registration and 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).
(h) Electronic Filing Incentive.--
(1) In general.--Notwithstanding any other provision of
this section, a fee of $400 shall be established for each
application for an original patent, except for a design,
plant, or provisional application, that is not filed by
electronic means as prescribed by the Director. The fee
established by this subsection shall be reduced 50 percent
for small entities that qualify for reduced fees under
section 41(h)(1) of title 35, United States Code. All fees
paid under this subsection shall be deposited in the Treasury
as an offsetting receipt that shall not be available for
obligation or expenditure.
(2) Effective date.--This subsection shall become effective
60 days after the date of the enactment of this Act.
(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.
(j) Effective Date.--Except as provided in subsection (h),
the provisions of this section shall take effect upon the
date of the enactment of this Act.

SEC. 10. SUPPLEMENTAL EXAMINATION.

(a) In General.--Chapter 25 of title 35, United States
Code, is amended by adding at the end the following:

``Sec. 257. Supplemental examinations to consider,
reconsider, or correct information

``(a) In General.--A patent owner may request supplemental
examination of a patent in the Office to consider,
reconsider, or correct information believed to be relevant to

[[Page S1390]]

the patent. Within 3 months of the date a request for
supplemental examination meeting the requirements of this
section is received, the Director shall conduct the
supplemental examination and shall conclude such examination
by issuing a certificate indicating whether the information
presented in the request raises a substantial new question of
patentability.
``(b) Reexamination Ordered.--If a substantial new question
of patentability is raised by 1 or more items of information
in the request, the Director shall order reexamination of the
patent. The reexamination shall be conducted according to
procedures established by chapter 30, except that the patent
owner shall not have the right to file a statement pursuant
to section 304. During the reexamination, the Director shall
address each substantial new question of patentability
identified during the supplemental examination,
notwithstanding the limitations therein relating to patents
and printed publication or any other provision of chapter 30.
``(c) Effect.--
``(1) In general.--A patent shall not be held unenforceable
on the basis of conduct relating to information that had not
been considered, was inadequately considered, or was
incorrect in a prior examination of the patent if the
information was considered, reconsidered, or corrected during
a supplemental examination of the patent. The making of a
request under subsection (a), or the absence thereof, shall
not be relevant to enforceability of the patent under section
282.
``(2) Exceptions.--
``(A) Prior allegations.--This subsection shall not apply
to an allegation pled with particularity, or set forth with
particularity in a notice received by the patent owner under
section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the
date of a supplemental-examination request under subsection
(a) to consider, reconsider, or correct information forming
the basis for the allegation.
``(B) Patent enforcement actions.--In an action brought
under section 337(a) of the Tariff Act of 1930 (19 U.S.C.
1337(a)), or section 281 of this title, this subsection shall
not apply to any defense raised in the action that is based
upon information that was considered, reconsidered, or
corrected pursuant to a supplemental-examination request
under subsection (a) unless the supplemental examination, and
any reexamination ordered pursuant to the request, are
concluded before the date on which the action is brought.
``(d) Fees and Regulations.--The Director shall, by
regulation, establish fees for the submission of a request
for supplemental examination of a patent, and to consider
each item of information submitted in the request. If
reexamination is ordered pursuant to subsection (a), fees
established and applicable to ex parte reexamination
proceedings under chapter 30 shall be paid in addition to
fees applicable to supplemental examination. The Director
shall promulgate regulations governing the form, content, and
other requirements of requests for supplemental examination,
and establishing procedures for conducting review of
information submitted in such requests.
``(e) Rule of Construction.--Nothing in this section shall
be construed--
``(1) to preclude the imposition of sanctions based upon
criminal or antitrust laws (including section 1001(a) of
title 18, the first section of the Clayton Act, and section 5
of the Federal Trade Commission Act to the extent that
section relates to unfair methods of competition);
``(2) to limit the authority of the Director to investigate
issues of possible misconduct and impose sanctions for
misconduct in connection with matters or proceedings before
the Office; or
``(3) to limit the authority of the Director to promulgate
regulations under chapter 3 relating to sanctions for
misconduct by representatives practicing before the
Office.''.
(b) Effective Date.--This section shall take effect 1 year
after the date of the enactment of this Act and shall apply
to patents issued before, on, or after that date.

SEC. 11. RESIDENCY OF FEDERAL CIRCUIT JUDGES.

(a) In General.--Section 44(c) of title 28, United States
Code, is amended--
(1) by repealing the second sentence; and
(2) in the third sentence, by striking ``state'' and
inserting ``State''.
(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.
(c) Effective Date.--This section shall take effect on the
date of enactment of this Act.

SEC. 12. MICRO ENTITY DEFINED.

Chapter 11 of title 35, United States Code, is amended by
adding at the end the following new section:

``Sec. 123. Micro entity defined

``(a) In General.--For purposes of this title, the term
`micro entity' means an applicant who makes a certification
that the applicant--
``(1) qualifies as a small entity, as defined in
regulations issued by the Director;
``(2) has not been named on 5 or more previously filed
patent applications, 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;
``(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
``(4) has not assigned, granted, conveyed, and is not under
an obligation by contract or law to assign, grant, or convey,
a license or other ownership interest in the particular
application to an entity that had 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 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.
``(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).
``(d) State Institutions of Higher Education.--
``(1) In general.--For purposes of this section, a micro
entity shall include an applicant who certifies that--
``(A) the applicant's employer, from which the applicant
obtains the majority of the applicant's income, is a State
public institution of higher education, as defined in section
102 of the Higher Education Act of 1965 (20 U.S.C. 1002); or
``(B) the applicant has assigned, granted, conveyed, or is
under an obligation by contract or law to assign, grant, or
convey, a license or other ownership interest in the
particular application to such State public institution.
``(2) Director's authority.--The Director may, in the
Director's discretion, impose income limits, annual filing
limits, or other limits on who may qualify as a micro entity
pursuant to this subsection if the Director determines that
such additional limits are reasonably necessary to avoid an
undue impact on other patent applicants or owners or are
otherwise reasonably necessary and appropriate. At least 3
months before any limits proposed to be imposed pursuant to
this paragraph shall take effect, the Director shall inform
the Committee on the Judiciary of the House of
Representatives and the Committee on the Judiciary of the
Senate of any such proposed limits.''.

SEC. 13. FUNDING AGREEMENTS.

(a) In General.--Section 202(c)(7)(E)(i) of title 35,
United States Code, is amended--
(1) by striking ``75 percent'' and inserting ``15
percent''; and
(2) by striking ``25 percent'' and inserting ``85
percent''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this Act and
shall apply to patents issued before, on, or after that date.

SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR ART.

(a) In General.--For purposes of evaluating an invention
under section 102 or 103 of title 35, United States Code, any
strategy for reducing, avoiding, or deferring tax liability,
whether known or unknown at the time of the invention or
application for patent, shall be deemed insufficient to
differentiate a claimed invention from the prior art.
(b) Definition.--For purposes of this section, the term
``tax liability'' refers to any liability for a tax under any
Federal, State, or local law, or the law of any foreign
jurisdiction, including any statute, rule, regulation, or
ordinance that levies, imposes, or assesses such tax
liability.
(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.
(d) Effective Date; Applicability.--This section shall take
effect on the date of enactment of this Act and shall apply
to any patent application pending and any patent issued on or
after that date.
(e) Exclusion.--This section does not apply to that part of
an invention that is a method, apparatus, computer program
product, or system, that is used solely for preparing a tax
or information return or other tax filing, including one that
records, transmits, transfers, or organizes data related to
such filing.

SEC. 15. BEST MODE REQUIREMENT.

(a) In General.--Section 282 of title 35, United State
Code, is amended in its second undesignated paragraph by
striking paragraph (3) and inserting the following:
``(3) Invalidity of the patent or any claim in suit for
failure to comply with--
``(A) any requirement of section 112, except that the
failure to disclose the best mode

[[Page S1391]]

shall not be a basis on which any claim of a patent may be
canceled or held invalid or otherwise unenforceable; or
``(B) any requirement of section 251.''.
(b) Conforming Amendment.--Sections 119(e)(1) and 120 of
title 35, United States Code, are each amended by striking
``the first paragraph of section 112 of this title'' and
inserting ``section 112(a) (other than the requirement to
disclose the best mode)''.
(c) Effective Date.--The amendments made by this section
shall take effect upon the date of the enactment of this Act
and shall apply to proceedings commenced on or after that
date.

SEC. 16. TECHNICAL AMENDMENTS.

(a) Joint Inventions.--Section 116 of title 35, United
States Code, is amended--
(1) in the first paragraph, by striking ``When'' and
inserting ``(a) Joint Inventions.--When'';
(2) in the second paragraph, by striking ``If a joint
inventor'' and inserting ``(b) Omitted Inventor.--If a joint
inventor''; and
(3) in the third paragraph--
(A) by striking ``Whenever'' and inserting ``(c) Correction
of Errors in Application.--Whenever''; and
(B) by striking ``and such error arose without any
deceptive intent on his part,''.
(b) Filing of Application in Foreign Country.--Section 184
of title 35, United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Except when'' and inserting ``(a) Filing
in Foreign Country.--Except when''; and
(B) by striking ``and without deceptive intent'';
(2) in the second paragraph, by striking ``The term'' and
inserting ``(b) Application.--The term''; and
(3) in the third paragraph, by striking ``The scope'' and
inserting ``(c) Subsequent Modifications, Amendments, and
Supplements.--The scope''.
(c) Filing Without a License.--Section 185 of title 35,
United States Code, is amended by striking ``and without
deceptive intent''.
(d) Reissue of Defective Patents.--Section 251 of title 35,
United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Whenever'' and inserting ``(a) In
General.--Whenever''; and
(B) by striking ``without any deceptive intention'';
(2) in the second paragraph, by striking ``The Director''
and inserting ``(b) Multiple Reissued Patents.--The
Director'';
(3) in the third paragraph, by striking ``The provisions''
and inserting ``(c) Applicability of This Title.--The
provisions''; and
(4) in the last paragraph, by striking ``No reissued
patent'' and inserting ``(d) Reissue Patent Enlarging Scope
of Claims.--No reissued patent''.
(e) Effect of Reissue.--Section 253 of title 35, United
States Code, is amended--
(1) in the first paragraph, by striking ``Whenever, without
any deceptive intention'' and inserting ``(a) In General.--
Whenever''; and
(2) in the second paragraph, by striking ``in like manner''
and inserting ``(b) Additional Disclaimer or Dedication.--In
the manner set forth in subsection (a),''.
(f) Correction of Named Inventor.--Section 256 of title 35,
United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Whenever'' and inserting ``(a)
Correction.--Whenever''; and
(B) by striking ``and such error arose without any
deceptive intention on his part''; and
(2) in the second paragraph, by striking ``The error'' and
inserting ``(b) Patent Valid if Error Corrected.--The
error''.
(g) Presumption of Validity.--Section 282 of title 35,
United States Code, is amended--
(1) in the first undesignated paragraph--
(A) by striking ``A patent'' and inserting ``(a) In
General.--A patent''; and
(B) by striking the third sentence;
(2) in the second undesignated paragraph, by striking ``The
following'' and inserting ``(b) Defenses.--The following'';
and
(3) in the third undesignated paragraph, by striking ``In
actions'' and inserting ``(c) Notice of Actions; Actions
During Extension of Patent Term.--In actions''.
(h) Action for Infringement.--Section 288 of title 35,
United States Code, is amended by striking ``, without
deceptive intention,''.
(i) Reviser's Notes.--
(1) Section 3(e)(2) of title 35, United States Code, is
amended by striking ``this Act,'' and inserting ``that
Act,''.
(2) Section 202 of title 35, United States Code, is
amended--
(A) in subsection (b)(3), by striking ``the section
203(b)'' and inserting ``section 203(b)''; and
(B) in subsection (c)(7)--
(i) in subparagraph (D), by striking ``except where it
proves'' and all that follows through ``; and'' and
inserting: ``except where it is determined to be infeasible
following a reasonable inquiry, a preference in the licensing
of subject inventions shall be given to small business firms;
and''; and
(ii) in subparagraph (E)(i), by striking ``as described
above in this clause (D);'' and inserting ``described above
in this clause;''.
(3) Section 209(d)(1) of title 35, United States Code, is
amended by striking ``nontransferrable'' and inserting
``nontransferable''.
(4) Section 287(c)(2)(G) of title 35, United States Code,
is amended by striking ``any state'' and inserting ``any
State''.
(5) Section 371(b) of title 35, United States Code, is
amended by striking ``of the treaty'' and inserting ``of the
treaty.''.
(j) Unnecessary References.--
(1) In general.--Title 35, United States Code, is amended
by striking ``of this title'' each place that term appears.
(2) Exception.--The amendment made by paragraph (1) shall
not apply to the use of such term in the following sections
of title 35, United States Code:
(A) Section 1(c).
(B) Section 101.
(C) Subsections (a) and (b) of section 105.
(D) The first instance of the use of such term in section
111(b)(8).
(E) Section 157(a).
(F) Section 161.
(G) Section 164.
(H) Section 171.
(I) Section 251(c), as so designated by this section.
(J) Section 261.
(K) Subsections (g) and (h) of section 271.
(L) Section 287(b)(1).
(M) Section 289.
(N) The first instance of the use of such term in section
375(a).
(k) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to proceedings commenced on or after
that effective date.

SEC. 17. CLARIFICATION OF JURISDICTION.

(a) Short Title.--This section may be cited as the
``Intellectual Property Jurisdiction Clarification Act of
2011''.
(b) State Court Jurisdiction.--Section 1338(a) of title 28,
United States Code, is amended by striking the second
sentence and inserting the following: ``No State court shall
have jurisdiction over any claim for relief arising under any
Act of Congress relating to patents, plant variety
protection, or copyrights.''.
(c) Court of Appeals for the Federal Circuit.--Section
1295(a)(1) of title 28, United States Code, is amended to
read as follows:
``(1) of an appeal from a final decision of a district
court of the United States, the District Court of Guam, the
District Court of the Virgin Islands, or the District Court
of the Northern Mariana Islands, in any civil action arising
under, or in any civil action in which a party has asserted a
compulsory counterclaim arising under, any Act of Congress
relating to patents or plant variety protection;''.
(d) Removal.--
(1) In general.--Chapter 89 of title 28, United States
Code, is amended by adding at the end the following new
section:

``Sec. 1454. Patent, plant variety protection, and copyright
cases

``(a) In General.--A civil action in which any party
asserts a claim for relief arising under any Act of Congress
relating to patents, plant variety protection, or copyrights
may be removed to the district court of the United States for
the district and division embracing the place where such
action is pending.
``(b) Special Rules.--The removal of an action under this
section shall be made in accordance with section 1446 of this
chapter, except that if the removal is based solely on this
section--
``(1) the action may be removed by any party; and
``(2) the time limitations contained in section 1446(b) may
be extended at any time for cause shown.
``(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.
``(d) Remand.--If a civil action is removed solely under
this section, the district court--
``(1) shall remand all claims that are neither a basis for
removal under subsection (a) nor within the original or
supplemental jurisdiction of the district court under any Act
of Congress; and
``(2) may, under the circumstances specified in section
1367(c), remand any claims within the supplemental
jurisdiction of the district court under section 1367.''.
(2) Conforming amendment.--The table of sections for
chapter 89 of title 28, United States Code, is amended by
adding at the end the following new item:

``1454. Patent, plant variety protection, and copyright cases.''.

(e) Transfer by Court of Appeals for the Federal Circuit.--
(1) In general.--Chapter 99 of title 28, United States
Code, is amended by adding at the end the following new
section:

``Sec. 1632. Transfer by the Court of Appeals for the Federal
Circuit

``When a case is appealed to the Court of Appeals for the
Federal Circuit under section 1295(a)(1), and no claim for
relief arising under any Act of Congress relating to patents
or plant variety protection is the subject of the appeal by
any party, the Court of Appeals for the Federal Circuit shall
transfer the appeal to the court of appeals for the regional
circuit embracing the district from which the appeal has been
taken.''.
(2) Conforming amendment.--The table of sections for
chapter 99 of title 28, United States Code, is amended by
adding at the end the following new item:

``1632. Transfer by the Court of Appeals for the Federal Circuit.''.

(f) Effective Date.--The amendments made by this section
shall apply to any civil

[[Page S1392]]

action commenced on or after the date of the enactment of
this Act.

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, and such
review may be de novo.
(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 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;

[[Page S1393]]

(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.

SEC. 21. SATELLITE OFFICES.

(a) Establishment.--Subject to available resources, the
Director may establish 3 or more satellite offices in the
United States to carry out the responsibilities of the Patent
and Trademark Office.
(b) Purpose.--The purpose of the satellite offices
established under subsection (a) are to--
(1) increase outreach activities to better connect patent
filers and innovators with the Patent and Trademark Office;
(2) enhance patent examiner retention;
(3) improve recruitment of patent examiners; and
(4) decrease the number of patent applications waiting for
examination and improve the quality of patent examination.
(c) Required Considerations.--In selecting the locale of
each satellite office to be established under subsection (a),
the Director--
(1) shall ensure geographic diversity among the offices,
including by ensuring that such offices are established in
different States and regions throughout the Nation;
(2) may rely upon any previous evaluations by the Patent
and Trademark Office of potential locales for satellite
offices, including any evaluations prepared as part of the
Patent and Trademark Office's Nationwide Workforce Program
that resulted in the 2010 selection of Detroit, Michigan as
the first ever satellite office of the Patent and Trademark
Office; and
(3) nothing in the preceding paragraph shall constrain the
Patent and Trademark Office to only consider its prior work
from 2010. The process for site selection shall be open.
(d) Phase-in.--The Director shall satisfy the requirements
of subsection (a) over the 3-year period beginning on the
date of enactment of this Act.
(e) Report to Congress.--Not later than the end of the
first fiscal year that occurs after the date of the enactment
of this Act, and each fiscal year thereafter, the Director
shall submit a report to Congress on--
(1) the rationale of the Director in selecting the locale
of any satellite office required under subsection (a);
(2) the progress of the Director in establishing all such
satellite offices; and
(3) whether the operation of existing satellite offices is
achieving the purposes required under subsection (b).
(f) 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) Patent and trademark office.--The term ``Patent and
Trademark Office'' means the United States Patent and
Trademark Office.

SEC. 22. PATENT OMBUDSMAN PROGRAM FOR SMALL BUSINESS
CONCERNS.

Subject to available resources, the Director may establish
in the United States Patent and Trademark Office a Patent
Ombudsman Program. The duties of the Program's staff shall
include providing support and services relating to patent
filings to small business concerns.

SEC. 23. PRIORITY EXAMINATION FOR TECHNOLOGIES IMPORTANT TO
AMERICAN COMPETITIVENESS.

Section 2(b)(2) of title 35, United States Code, is
amended--
(1) in subparagraph (E), by striking ``; and'' and
inserting a semicolon;
(2) in subparagraph (F), by striking the semicolon and
inserting ``; and''; and
(3) by adding at the end the following:
``(G) may, subject to any conditions prescribed by the
Director and at the request of the patent applicant, provide
for prioritization of examination of applications for
products, processes, or technologies that are important to
the national economy or national competitiveness without
recovering the aggregate extra cost of providing such
prioritization, notwithstanding section 41 or any other
provision of law;''.

SEC. 24. DESIGNATION OF DETROIT SATELLITE OFFICE.

(a) Designation.--The satellite office of the United States
Patent and Trademark Office to be located in Detroit,
Michigan shall be known and designated as the ``Elijah J.
McCoy United States Patent and Trademark Office''.
(b) References.--Any reference in a law, map, regulation,
document, paper, or other record of the United States to the
satellite office of the United States Patent and Trademark
Office to be located in Detroit, Michigan referred to in
subsection (a) shall be deemed to be a reference to the
``Elijah J. McCoy United States Patent and Trademark
Office''.

SEC. 25. EFFECTIVE DATE.

Except as otherwise provided in this Act, the provisions of
this Act shall take effect 1 year after the date of the
enactment of this Act and shall apply to any patent issued on
or after that effective date.

SEC. 26. 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.

Mr. LEAHY. I move to reconsider the vote.
Mr. GRASSLEY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. LEAHY. Mr. President, it has been many years getting to this
point. I cannot tell you the amount of pride I have in my fellow
Senators, both Republicans and Democrats. I thank the Senator from Iowa
who has been here with me and so many others I mentioned earlier. It is
nice to finally have this bill through the Senate.
Mr. KYL. Mr. President, I rise today to recognize and thank the
patent lawyers and Senate staff who have played a critical role in the
drafting and enactment of the present bill.
Among the Senate staff who have played a role with regard to this
bill are Chip Roy, Holt Lackey, and Zina Bash of Senator Cornyn's
staff, David Barlow and Rob Porter of Senator Lee's staff, Walt Kuhn of
Senator Graham's staff, and Danielle Cutrona and Bradley Hayes of
Senator Sessions's staff. Special mention is merited for Matt Sandgren
of Senator Hatch's staff, who fought tenaciously for the bill's
supplemental examination provision, and who worked hard to defeat the
amendment to strip the bill of its adoption of the first-to-file
system, and Sarah Beth Groshart of Senator Coburn's staff, who helped
draft the Coburn amendment, which will create a revolving fund for the
PTO and put an end to fee diversion. Past staff who played an important
role include Jennifer Duck of Senator Feinstein's staff, and Ryan
Triplette, who managed the bill for Senator Hatch while he was chairman
and for Senator Specter while he was the lead Republican on the
committee. Miss Duck and Miss Triplette negotiated the managers'
amendment that was adopted during the bill's 2009 committee mark up,
and which represented a major breakthrough on this bill, resolving the
contentious issues of damages and venue. In the House of
Representatives, key staff include Blaine Merritt and Vishal Amin of
Chairman Lamar Smith's staff, and Christal Sheppard of Mr. Conyers's
staff. Bob Schiff of Senator Feingold's staff worked with my staff to
develop minority views for the bill's 2009 committee report--I believe
that this is the only time that Senator Feingold and I ever submitted a
minority report together. I should also acknowledge Tim Molino of
Senator Klobuchar's staff, Rebecca Kelly of Senator Schumer's staff,
Caroline Holland of Senator Kohl's staff, and Galen Roehl, who worked
in past Congresses for Senator Brownback, and who currently staffs
Senator Toomey. Much of S. 3600 was drafted in Senator Brownback's
conference room. Let me also recognize the work of Rob Grant of Senate
Legislative Counsel, who has drafted literally hundreds of versions of
and amendments to this bill. And finally, I must acknowledge Rita Lari,
who managed this bill for Senator Grassley on the Senate floor this
past week, and the indispensable Aaron Cooper, who has managed the bill
for the chairman since the beginning of 2009.

[[Page S1394]]

Among those outside the Senate, I recognize and thank Hayden Gregory
of the American Bar Association, Laurie Self and Rod McKelvie of
Covington & Burling, and Hans Sauer, Mike Schiffer, Bruce Burton, Matt
Rainey, David Korn, Carl Horton, Steve Miller, Doug Norman, and Stan
Fendley. The Wisconsin Alumni Research Foundation has played an
important role, particularly with regard to the bill's enhanced grace
period. I thank Carl Gulbrandsen, Howard Bremmer, Andy Cohn, and Mike
Remington. I thank Todd Dickinson and Vince Garlock of AIPLA, and Jim
Crowne, who was willing to come to the Senate to double check the draft
enrolled bill. I should also mention Herb Wamsley of Intellectual
Property Owners, as well as Dana Colarulli, who has worn two hats
during the course of his work on this bill, first with IPO, and
subsequently as the head of legislative affairs at the PTO. Key
participants at the PTO have also included Mike Fleming, John Love, Jim
Toupin, and Rob Clarke. And of course I must mention the current
Director, David Kappos, without whose effort and dedication the passage
of the present bill would not have been possible.
Finally, allow me to acknowledge the key members of the 21st Century
Coalition for Patent Reform, who have devoted countless hours to this
bill, and stuck with it through thick and thin. They have also formed
an important ``kitchen cabinet'' that has been indispensable to the
committee's drafting of this bill and to the resolution of difficult
technical questions. I thus acknowledge and thank Phil Johnson, Gary
Griswold, Bob Armitage, and Mike Kirk for their key role in the
creation of the America Invents Act.
I yield the floor. I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Bennet). The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. LEAHY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________

Congressional Record PDF

Legislative Activity

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Senate amendment agreed to: Amendment SA 143 as modified agreed to in Senate by Voice Vote.

March 8, 2011

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Floor

Senate amendment agreed to: Amendment SA 143 as modified agreed to in Senate by Voice Vote.

March 8, 2011

Floor

Considered by Senate. (consideration: CR S1348, S1362-1363)

March 8, 2011

Floor

Amendment SA 143 as modified agreed to in Senate by Voice Vote. (text as modified: CR S1362)

March 8, 2011

Floor

Senate amendment proposed (on the floor): Amendment SA 143 proposed by Senator Reid.

March 7, 2011

Floor

Amendment SA 143 proposed by Senator Reid. (consideration: CR S1324; text: CR S1324) To include public institutions of higher education in the definition of a micro entity.

March 7, 2011

Floor

Senate amendment submitted

March 3, 2011

Amendments

1 amendment

Offered to this amendment

S.Amdt. 1522nd degreeMar 8, 2011

To provide an effective date.

Inserts new text on page 2, line 11 of the amendment

Proposed amendment SA 152 withdrawn in Senate. (consideration: CR S1362) · Sponsored by Harry Reid · Amends S.Amdt. 143