Floor Statements

I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent to speak for 15 minutes.

Mr. President, we are going to have a vote a little bit later this afternoon to proceed to a bill which I do not happen to think is a very good bill, but I am going to vote to proceed to it, because the majority leader has made clear we will have the opportunity to offer amendments. I know some of my colleagues specifically wish to offer amendments to get to the heart of the subject that should be most on our minds today, which is reducing wasteful Washington spending, to get our fiscal house in order. In order to provide that opportunity, we should, in my view, proceed to that legislation so we can offer those amendments. We should be laser-like focused on the deficit, the debt, the spending of the Congress, and what we can do to get a handle on that spending, so that we do not mortgage our children's future.

It starts, of course, with a budget. A few weeks ago, the President submitted his budget to Congress, but it seems to me the message that budget sends is one of more spending, bigger government, and one that trumps America's well-founded concerns about this huge debt we are piling up and how it jeopardizes our Nation's future.

Under this budget, the debt held by the public will double by the end of this President's term in 2012 and then triple by 2019, to an astonishing $7.3 billion. Think about that for a moment. In all of our history, from 1789, from George Washington through George W. Bush, we accumulated roughly $5 billion of debt. This President's budget, in his first term, will double that. So in the term of President Obama, we will accumulate as much debt as every President of the United States combined before that. That is too much. It will triple in the next 5 years. That is what we are talking about with regard to this budget. The debt is actually going to be larger than our entire economy. Think of the attendant consequences.

It not only undermines confidence in our economy, but it crushes private sector investment and, therefore, job creation. This budget punts on everything serious we need to do to bring down the debt. It accelerates our path to national bankruptcy, it ignores all the major components of the President's debt commission's deficit financing or reduction plan. It punts on serious spending cuts and punts on entitlement reforms.

In fact, the Washington Post editorialized the day after the budget was submitted, calling the President the ``Punter in Chief.'' It is a failure of leadership, and it indicates to me that the President is not taking the debt problem seriously.

As Erskine Bowles, who was the Democratic chairman of the President's fiscal commission, said, ``The White House budget request goes nowhere near where they will need to have to go to resolve our fiscal nightmare.''

We cannot spend, borrow, and tax our way to prosperity. Unfortunately, that is what the budget request proposes to do. Let me review a few key facts and some of the numbers in the budget. Under the category of ``it spends too much,'' the size of the Federal Government would nearly double since the day President Obama took office. Let me say that again. Under the President's budget, the size of the Federal Government will nearly double since the day he took office.

You cannot claim with a straight face that represents anything close to fiscal discipline. Over the next 10 years, the President proposes $8.7 trillion in new spending in this budget, with $46 trillion in total spending. Spending in the 2012 fiscal year is projected to be a record $3.8 trillion or 25.3 percent of the gross domestic product, which is the highest spending ratio to GDP since World War II.

I will note that while the President has touted the 5-year $400 billion in spending freezes in his budgets, those freezes merely lock in spending levels reached after the massive spending binge that occurred on his watch. In my view, the status quo is not good enough. It is like closing the door to the barn after the horse is already gone. The President says his spending would cut $1.1 trillion over the coming decade. Yes, that is true, but that is from what he planned to spend. So if he made an extraordinarily irresponsible request for spending and then cuts it by $1 trillion, it is not something to be cheering about. The figure is smaller than the projected $1.5 trillion deficit for the year 2011 alone. We need to do and we can do much better.

Under the category ``it borrows too much,'' the budget adds $13 trillion in new debt by the end of the decade. Gross debt by the end of the decade will reach $26.3 trillion or 107 percent of gross domestic product. That figure eclipses the size of the entire economy.

Gross debt is projected to remain above 100 percent of GDP for every following year. The effects of high debt on an economy are well known. They include fewer jobs, less investing, and a lower standard of living, and that is not acceptable.

Under the category of ``taxes too much,'' in total the President's budget includes $1.6 trillion in new taxes on families, small businesses, and job creators. Much of that is new taxes on energy, including on the gasoline we buy, and new taxes on ObamaCare, the health care reform. In fact, the President's health care bill is mentioned more than 250 times in the IRS's fiscal year 2012 budget request. The IRS has said it will have to hire thousands of new workers to implement the new taxes in the health care law. Let's remember, we are not in our current predicament because we are an undertaxed nation. It is because of wasteful Washington spending.

I am deeply disappointed the administration has not put together a more responsible and serious budget proposal. I had hoped the White House had received the message that Americans sent in the last election about spending and debt and the size of our government. It is time for us to make tough choices. We need to focus on progrowth policies, which includes much lower levels of spending and borrowing, and leaving more money in the private sector where it can be put to good use, including job creation.

Republicans want to work with the President to seriously cut government spending and bring down the debt. House Republicans took the first step by putting together a proposal that will cut spending to 2008 levels. That is the level prior to the Obama era spending binge, a binge which included, among other things, the failed stimulus plan and other massive spending bills.

That is the kind of meaningful action we need. I ask the President: Lead. Work with our leaders on both sides of the aisle to do a better job of promoting prosperity through much more sensible fiscal policies.

As I said, my colleagues will have amendments they will be bringing to the floor this week in an effort to point him in the right direction.

Another thing that is of concern to Americans and that we ought to be doing something about here at the Federal Government level is the problem of energy production and the implications of that through things such as higher gas prices.

Notably, the Energy Department recently estimated that the average American household can expect to spend $700 more at the gas pump this year than it did in 2010. Since President Obama came into office our gasoline prices have doubled.

In a tight oil market, new domestic supply can have a very positive impact on gasoline prices, and developing that supply would create many well-paying American jobs. So, today, I want to talk about national policies in support of affordable, new domestic energy. This is an opportunity for government to set the stage for job creation in the private sector, rather than continue its attempts to create jobs on its own through costly legislation.

Although we import 63 percent of our oil, America has abundant supplies of both oil and natural gas here at home. In a Washington Post op-ed published in 2008, columnist Robert Samuelson wrote at ``it may surprise Americans to discover that the United States is the third largest oil producer, behind Saudi Arabia and Russia. We could be producing more, but Congress has put large areas of potential supply off limits. They include the Atlantic and Pacific coasts and parts of Alaska and the Gulf of Mexico.''

So, why have not these energy development projects moved forward?

Let me provide some background. Before leaving office, President George W. Bush lifted an executive moratorium that had previously barred oil and natural gas development in the deep waters of the Gulf of Mexico, and Congress subsequently rescinded a statutory moratorium that year. These actions were intended to open an estimated 5.8 million acres in the central gulf to oil leasing and make as much as 16 billion barrels of oil available.

However, after the Deepwater Horizon oilspill in the gulf in 2010, the Obama administration imposed a new moratorium that all but halted deep-water exploration and development in the area.

A number of investigations were conducted to determine the cause of the Deepwater Horizon accident and protect against similar incidents in the future, and that was appropriate. But it was neither necessary nor wise to halt all off-shore energy exploration and development in response to the spill. The country needs a reliable supply of oil to fuel our cars, homes, and power plants, not to mention satisfy the numerous manufacturing processes that rely on oil. Locking away the vast supply of oil in the deep waters of the gulf merely increased our Nation's vulnerability to oil shocks emanating from abroad, and put consumers at risk of higher gas prices.

Despite Federal court orders, it was not until the end of February 2011 that the Interior Department finally issued the first permit to allow the resumption of energy exploration and development. Unfortunately, the permit was for just a single project. Essentially, the moratorium has become a ``permit-torium,'' or an extreme slow down of drilling permits allocated by the administration. This slow down has included delays, suspensions, revocations, and cancellations of lease permits. These moratoriums have caused six deepwater rigs to depart the gulf for other countries, taking valuable jobs, revenue, and income with them.

Others may soon leave as well. Former President Bill Clinton understands the damaging impact these de

facto moratoriums have on the economy. Last Friday, he called the continued delays ``ridiculous.''

Just as we should reopen the deep waters of the Gulf of Mexico to prudent exploration and development, so too should we lift the moratorium preventing job-creating development of resource-rich areas such as Alaska's Outer Continental Shelf, as well as oil shale in various Western States.

Senator Murkowski of Alaska has pointed out that her State has estimated oil reserves in excess of 65 years' worth of Persian Gulf oil imports. Yet they are virtually off limits.

As Alaska's Governor, Sean Parnell, wrote in a recent Wall Street Journal op-ed:

If Americans wonder what our economic Achilles' heel is,

they need look no further than the federal regulatory system

that delays permits for domestic exploration and production.

The Federal Government estimates that Alaska's Outer Continental Shelf holds 27 billion barrels of oil and 132 trillion cubic feet of natural gas. We could be drilling now in the Arctic Ocean off the coast of Alaska if the Environmental Protection Agency would speed things up and issue an air permit. Developing these resources would not only generate vast new supplies but translate to a lot of good jobs. In fact, a new study by Northern Economics and the University of Alaska Anchorage's Institute of Social and Economic Research shows that development of oil and gas in the Beaufort and Chukchi Seas of Alaska's Outer Continental Shelf would create 54,700 new jobs that would be sustained for 50 years. An estimated $63 billion would be paid to employees in Alaska, and another $82 billion would be paid to employees in the rest of the United States.

As the report notes:

Domestic energy production is important for the security

and prosperity of the United States. The money spent on

domestic energy cycles through the U.S. economy, thereby

increasing domestic activity and jobs.

Another resource-rich area in Alaska is ANWR. Despite being one of the largest resources of oil and gas in the United States, Alaska's ANWR is off limits for energy development. Tapping oil and gas supplies in ANWR would require opening just 2,000 acres of the 19 million-acre Arctic Plain to such development.

Remember, ANWR was specifically set aside by Congress for oil and gas exploration and development. It was specifically created for that purpose. This 2,000 acres would be the equivalent of the airport in Phoenix, called Phoenix Sky Harbor, inside an area the size of South Carolina--hardly noticeable.

Using directional drilling with a small environmental footprint, at least 1 million barrels of oil a day could be obtained from just this one area for the next 20 years. The U.S. Geological Survey has estimated that the area could have up to 16 billion barrels of recoverable oil, an amount that is equivalent to 30 years of Saudi oil imports.

Analysis from Arctic Power shows that opening ANWR to oil and gas production would create approximately 730,000 jobs.

Those opposed to developing these resources often make the argument that it will take 10 years to open ANWR. But if President Clinton had not vetoed legislation authorizing Arctic development in 1995, oil would likely be flowing from the area today, easing prices and helping to insulate our economy from the whims of OPEC. Continued delay will only put our Nation further at risk.

A few final points about abundant onshore oil resources--permits for which have also been blocked by the administration. In 2009, the administration canceled 77 oil and gas leases in Utah and in 2010 canceled another 61 in Montana. It has been estimated that the United States has approximately 800 billion barrels of technically recoverable shale oil, which is roughly three times more than the proven reserves of Saudi Arabia. Again, it is all off limits.

Finally, a note about the Strategic Petroleum Reserve. In recent days, some of my colleagues have called for tapping into the SPR to bring down gas prices. But this Strategic Petroleum Reserve is a national security tool to guard against an economically threatening disruption in oil supplies. It was never intended to be used to lower gas prices. Our problem today is not a matter of supply. We have plenty of supply.

Since its creation in 1995, a Presidentially directed release from SPR has occurred only twice--in 1995, at the beginning of Operation Desert Storm, and in 2005, after the devastation Hurricane Katrina caused in the Gulf of Mexico. The current SPR inventory is 720 million barrels, which equates to about 34 days of oil at current daily U.S. consumption. Tapping the Reserve is nothing more than a short-term political solution to a problem largely of the administration's own making--its continued refusal to allow access to our Nation's plentiful resources.

The benefits of increasing domestic energy production are unquestionable, especially at a time when gas prices are soaring and good jobs are needed by many Americans. I urge the administration to move swiftly in favor of issuing more production permits and urge my colleagues to support policies in favor of increased domestic energy production. There is no reason for further delay.

One of the most eloquent spokesman for this same point is on the floor, the Senator from Louisiana.

I am happy to yield the floor to her.

The following Senators are necessarily absent: the Senator from Georgia (Mr. Chambliss), the Senator from Idaho (Mr. Crapo), and the Senator from Idaho (Mr. Risch).

The following Senators are necessarily absent: the Senator from Georgia (Mr. Chambliss), the Senator from Idaho (Mr. Crapo), and the Senator from Idaho (Mr. Risch).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Oklahoma (Mr. Inhofe).

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.

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

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.

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

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

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

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

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

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.

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

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

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

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.

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.

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 following Senators are necessarily absent: the Senator from Utah (Mr. Hatch), the Senator from South Carolina (Mr. DeMint), the Senator from Nevada (Mr. Ensign), the Senator from North Dakota (Mr. Hoeven), the Senator from Georgia (Mr. Isakson), the Senator from Alaska (Ms. Murkowski), and the Senator from Kentucky (Mr. Paul).

Further, if present and voting, the Senator from Utah (Mr. Hatch) would have voted ``yea.''

The following Senators are necessarily absent: the Senator from Nevada (Mr. Ensign), the Senator from Utah (Mr. Hatch), the Senator from North Dakota (Mr. Hoeven), the Senator from Georgia (Mr. Isakson), the Senator from Alaska (Ms. Murkowski), and the Senator from Kentucky (Mr. Paul).

Further, if present and voting, the Senator from Utah (Mr. Hatch) would have voted ``yea.''

The following Senators are necessarily absent: the Senator from Nevada (Mr. Ensign), the Senator from Utah (Mr. Hatch), the Senator from North Dakota (Mr. Hoeven), the Senator from Georgia (Mr. Isakson), the Senator from Alaska (Ms. Murkowski), and the Senator from Kentucky (Mr. Paul).

Further, if present and voting, the Senator from Utah (Mr. Hatch) would have voted ``yea.''

Mr. President, I ask unanimous consent to speak in morning business for 10 minutes.

Mr. President, I wish to speak on the pending business before the Senate. We are hoping in maybe 45 minutes or so we will actually be able to vote on the Feinstein amendment to the patent bill. I am hoping that my colleagues will vote against the Feinstein amendment and support the authors of the legislation.

I noted yesterday that every version of the patent bill from 2005 forward has included the primary, centerpiece reform of the bill, which is the so-called first-to-file system. It may seem strange, but it has not been the case before this bill that you have a patent's priority from when you file it; that is to say, the first person to file on the patent is the one who has the patent; that the patent dates to the day it is filed. That is what we do in law and virtually every other situation I can imagine.

Instead, what has been the law is called the first-to-invent system. One of the reasons the whole patent reform movement began 5 or 6 years ago was that this system is very costly and difficult to administer because it relies on a lot of legal discovery and legal process to resolve questions or disputes between who actually conceived of the idea first and then did they apply the necessary diligence to get it patented. As a result, every other industrialized country uses the first-to-file system. Most of the companies in the United States are obviously used to that system because of their patents that are worldwide in scope.

The fundamental reform of the patent legislation to simplify, to reduce costs, to reduce the potential for litigation was to conform our system to that of the rest of the world--the first-to-file system.

What the Feinstein amendment would do is to throw that over and say: No, we are going to go back to the concept of this first-to-conceive- of-the-idea or first-to-invent notion. Whether intended or not, that will kill the bill. It is a poison pill amendment because the whole concept of the legislation and everything that follows from it is based on this first-to-file reform.

As I will note a little bit later, the bill simply would not work otherwise. We would have to scrap it and start from scratch. In fact, most of the reforms that are in the bill would not exist because we would have to go back to that concept of first-to-invent. So all of the savings and simplified procedures would simply not be possible.

Unfortunately, I note that if my colleagues have any notion of supporting the Feinstein amendment, they should realize that were it to be adopted, it would kill the bill. I do not think that is what we want to do. There have been so many improvements made in the bill. So many groups--all three of the major groups that have been working on the legislation are in support of the legislation and oppose the Feinstein amendment because they want us to move forward. We have not had patent reform in many years. Everybody recognizes it is time.

First and foremost, the administration and the Patent Office itself support the legislation and oppose the Feinstein amendment. In fact, one of the good changes made by the bill from the Patent Office's point of view is that it will stop fee diversion. In the past, the fees that have been collected, the filing fees from the inventors, have not all gone to the Patent Office. They are woefully understaffed and underfunded in working through the tens and hundreds of thousands of patent applications that are filed every year.

As we can all appreciate, our competitiveness in the world depends, first, on the ability of our people to invent and, second, to acquire the legal rights to those inventions so they have a property interest in them, and investors can then count on a return of their investment if they supply the capital for the invention to be brought to market.

What we are talking about is critical. I urge my colleagues who perhaps have not focused as much on this amendment and on the patent reform legislation to understand that we are talking about something very important, something that can create jobs, that is important to the competitiveness of our country.

The beauty is, unlike a lot of what we do around here, this is totally bipartisan. I am a Republican. The administration supports the legislation. It has Senator Leahy's name on it as chairman of the Judiciary Committee. In the House, it is supported by Democrats and Republicans. It is important we move this legislation through.

As I said, unfortunately, the Feinstein amendment would result in having to scrap the bill. There is no point in enacting it if we are not going to include the change to first to file.

Let me be a little more specific. One of the reasons we would not be able to move forward with the bill is the bill's entire post-grant review process, which is a big part of the bill, would be impossible for the Patent Office to administer under the discovery-intensive invention date issues that arise under the first-to-invent system. That is because, as I said, under that system you come before the Patent Office and say: I realize nobody else had a record of this, but I actually thought of this idea way back in 1999. I have a couple of notes that I made to myself. I dated them. One can see that all of a sudden they are getting into a big discovery and legal process. That is what we are trying to get away from. The whole post-grant review process would be turned upside down if we went back to the first-to- invent principle.

Also, striking the first-to-file provisions would greatly increase the workload for the Patent and Trademark Office. What we are trying to do is simplify procedures so they can get their work done, get the patents approved so our businesses can better compete in the world, and also provide more money for them to do that job. That also would be jeopardized as a result of this amendment. We will just add backlogs and delays and not enable our Patent Office to do what we are asking it to do.

As I said, that is one of the reasons the Patent Office opposes the Feinstein amendment and supports the underlying legislation. It is interesting; many American companies already use first-to-file. It is the easiest, most direct way to confirm you have the patent. It is very hard to win a patent contest through what is called an interference proceeding if you were not the first to file, which, of course, is logical. And because all the other countries in

the world use a first-to-file system, if you want your patent to be valid outside the United States you need to comply with first-to-file in any event.

Among many of our most innovative companies, 70 percent of their licensing revenues come from overseas. Obviously, they are already going to be complying with the first-to-file rules. This bill does not, therefore, so much switch the system with which Americans are complying today as it simply allows American companies to only have to comply with one system rather than two. As I said before, the first-to-file concept is clearer, faster, more transparent, and provides more certainty to inventors and manufacturers.

On the other hand, the first-to-invent concept would make it impossible, in many instances, to know who has priority and which of the competing patents is the valid one. To determine who has priority under first to invent, extensive discovery must be conducted and the Patent Office and courts must examine notebooks and other evidence to determine who conceived of the invention first and whether the inventor then diligently reduced it to practice.

Under first-to-file, on the other hand, an inventor can get priority by filing a provisional application. This is an important point. It is easy. It is not as if the first-to-file is hard to do. This provisional application, which only costs $110 for the small inventor, only requires you to write a description of what your invention is and how it works. That is all. That is the same thing that an inventor's notebook would have to contain under the first-to-invent concept if you are ever going to prevail in court by proving your invention date.

Because a provisional application is a government document, the date is clear. There is no opportunity for fraudulently backdating the invention date. There is no need for expensive discovery: What did the inventor know and when did he know it? You are essentially not requiring anything in addition. You file a provisional application. You have an entire year to get all of your work together and file your completed application, but your date is as of the time you file the provisional application.

As I said, for a small entity, the fee is only $110. That grace period makes it clear that the patent will not be invalid because of disclosures made by the inventor or someone who got information from an inventor during 1 year before filing. That is important.

A lot of academics and folks go to trade shows and begin talking about their concepts and what they have done. If you disclose this, you have a year to file after you disclose the information. And under the bill's second, enhanced grace period, no other disclosure, regardless of whether it was obtained from the inventor, can then invalidate the invention.

The bill has been very carefully written to protect the small inventor or the academic. That is what it is designed to do. This is not a case of big versus small, although people both big and small support the legislation. If anybody suggests the Feinstein amendment will protect the small inventor, it does not protect the small inventor. In fact, as I said, the legislation is very carefully crafted to give the small inventor a variety of ways to ensure that he or she is protected.

The first coalition to bring the whole idea of patent reform to the Congress, the Coalition for 21st Century Patent Reform, is very strongly in support of the legislation and in opposition to the Feinstein amendment. In fact, it noted in a statement released Wednesday that not only does it oppose the amendment, it would oppose the entire bill if the amendment were to be adopted and this first-to- file concept were stricken from the bill.

In fact, here is what they said:

The first-inventor-to-file provisions currently in S. 23

form the linchpin that makes possible the quality

improvements that S. 23 promises.

Here is what the Obama Statement of Administration Policy says. It lays out exactly what is at stake:

By moving the United States to a first-to-file system, the

bill simplifies the process of acquiring rights. This

essential provision will reduce legal costs, improve

fairness, and support U.S. innovators seeking to market their

products and services in the global marketplace.

I am continuing the statement:

Most of the arguments in opposition to the bill and FITF

appear to be decades-old contentions that have been fully and

persuasively rebutted. As one example, the National Research

Council of the National Academies assembled a group of

leading patent professionals, economists, and academics who

spent four years intensely studying these issues and

concluded in 2004 that the move to FITF represented a

necessary change for our patent system to operate fairly,

effectively and efficiently in the 21st century.

They go on to say:

Without retaining S. 23's current FITF provisions, the bill

would no longer provide meaningful patent reform.

Let me repeat that. If the Feinstein amendment would prevail, ``the bill would no longer provide meaningful patent reform.''

As an example, the new provisions on post-grant review of

patents, an important new mechanism for assuring patent

quality, could no longer be made to work. Instead of a patent

reform bill, what would remain of S. 23 would be essentially

an empty shell.

Let me finish the statement:

Thus, we could not continue our support of passage of S. 23

without the first-inventor-to-file provisions present in the

bill. It would place us in the unfortunate position of

opposing moving forward with a bill where we have been among

the longest, most ardent supporters.

Just to conclude, the National Association of Manufacturers, which represents both large and small manufacturers in every industrial sector, has also made it clear that it strongly opposes the amendment. I will conclude by quoting from that group's statement in opposition to the Feinstein amendment.

The NAM supports transitioning the United States from a

``first-to-invent'' system to a ``first-to-file'' system to

eliminate unnecessary cost and complexity in the U.S. patent

system. Manufacturers large and small operate in the global

marketplace and the United States needs to move toward a

system that will provide more patent protection around the

world for our innovative member companies. The ``first-to-

file'' provision currently included in S. 23 achieves this

goal.

Mr. President, I hope my colleagues will pay close attention to the arguments made by Chairman Leahy and the arguments I have made in opposition to the Feinstein amendment. Whether intended or not, it would be a poison pill. It would kill the legislation if it were adopted. We need to move this important legislation forward, as the administration notes in its statement of policy, and therefore I urge my colleagues, when we have an opportunity to vote on the Feinstein amendment, to vote against it and to support the legislation as reported.

Mr. President, I rise to submit for the Record some of the materials I have quoted from during the Senate's debate on the first- to-file provisions of the America Invents Act. These materials are produced by the National Association of Manufacturers and by the 21st Century Coalition for Patent Reform, an industry group that has been the leading advocate for the bill. They offer a detailed explanation of and case for the bill's shift from the current first-to-invent system to a first-to-file system of establishing patent priority.

I ask unanimous consent that the following materials be printed in the Record.

Mr. President, the story of human settlement in Arizona is in many respects the story of the extraordinary efforts people have made to harness water supplies for their use and benefit. Early Arizonans were keenly aware of the importance of the State's many rivers. Recognizing the immense power and unpredictability of those river flows, settlers devised an ambitious water system known as the Salt River Project, SRP. The keystone of their efforts, the Theodore Roosevelt Dam, celebrates its centennial this month.

More than a century ago, Arizonans understood that water reclamation is crucial to life in the Salt River Valley. Arizona farmers organized to lobby the U.S. Congress for a Federal reclamation law that would throw the weight of the Federal Government behind local projects. Together with the vision of President Theodore Roosevelt and the persuasive power of private citizens, Congress passed the National Reclamation Act in 1902. The Salt River Valley Water Users' Association was incorporated the following year.

SRP was the first major undertaking authorized by the National Reclamation Act, and Roosevelt Dam was a critical component of SRP's development. Upon its completion on March 18, 1911, the Roosevelt Dam was the largest masonry structure in the world. The dam captured the Salt River's flows, providing a secure water supply, flood control, and irrigation to communities in central Arizona. In addition to water management, the Roosevelt Dam generated power for mining, agriculture, and Arizona's growing population.

Today, economic growth in the region continues to depend on Roosevelt Dam and its ability to provide a reliable water storage and delivery system, as well as power. The dam is still in operation and provides 70 percent of the surface water available to SRP water shareholders and customers in and around Phoenix. While SRP's mission has evolved with Arizona's population growth, its core function has remained constant to provide a sustainable water resource for central Arizona.

As Arizona continues to develop, we will need the same foresight and entrepreneurial spirit to serve the water needs of a new generation of Arizonans. Mr. President, that is why today I honor those who made SRP and the Roosevelt Dam a reality 100 years ago.

Mr. President, I wish to get back to the underlying patent legislation to talk on a particular amendment. I am talking about the America Invents Act, legislation that would modernize our patent laws, legislation which I believe will have very strong support as soon as we are able to bring our debate to a close and have a vote.

There is one amendment that would be very troublesome if adopted. It is offered by my friend from California, Senator Feinstein. It would strike the bill's first-to-file provisions. This would not be a good idea. In fact, it would be a very bad idea. I wish to describe why.

First-to-file, which is just a concept, the filing date of the patent dates to the time one files it, is not new. The question is whether we would codify that. It has been a subject of debate now for about 20 years. But at this point it has been thoroughly explored by hearings before the House and Senate Judiciary Committees. We considered this at the outset of the drafting of our patent reform legislation, and it has been in every version of the bill since 2005.

Importantly, this provision we have in the bill that would be taken out by the Feinstein amendment is supported by all three of the major patent law organizations that represent all industries across the board. It has the support of the American Bar Association's Intellectual Property Law section. It is supported by Intellectual Property Owners, which is a trade group or association of companies which own patents and cuts across all industrial sectors. And, very importantly, our language also has the support of independent inventors, many of whom have signed letters to the Senate in support of the codification of the first-to-file rule embedded in the Leahy bill.

The bottom line is there is a strong consensus to finally codify what is the practice everywhere else in the world; namely, that patents are dated by when they were filed, which obviously makes sense.

Let me respond to a couple arguments raised in favor of the Feinstein amendment. One argument is that the current first-to-invent system is better for the little guy, the small independent inventor. It turns out that is actually not only not true but the opposite is the case.

Under the first-to-invent system, if the big company tries to claim the same innovation that a small innovator made, that innovator would prevail if he could prove that he actually invented first, even if he filed last. But to prove he invented first, the independent inventor would need to prevail in what is called an interference proceeding. These are proceedings before the Patent and Trade Office in which there is a determination by the PTO of who actually invented first. The PTO looks at all the parties' notebooks and other documents to determine issues such as conception of the idea and reduction to practice, the elements of a workable patent.

Yesterday I quoted from commentary published on Sunday, February 27, by Mr. Gene Quinn, a patent lawyer who writes for the IP Watchdog Web site. I quoted his commentary noting that only one independent inventor has actually prevailed in an interference proceeding in the last 7 years. In other words, if the idea is that we need to preserve something that is used by small inventors, by independent inventors, it just isn't the case that first-to-invent actually does that.

In his column, Mr. Quinn does a very good job of explaining why the interference proceeding is largely an illusory remedy for small or independent inventors. I will quote from what he said:

[T]he independent inventors and small entities, those

typically viewed as benefiting from the current first to

invent system, realistically could never benefit from such a

system. To prevail as the first to invent and second to file,

you must prevail in an Interference proceeding, and according

to 2005 data from the AIPLA, the average cost through an

interference is over $600,000. So let's not kid ourselves,

the first to invent system cannot be used by independent

inventors in any real, logical or intellectually honest way,

as supported by the reality of the numbers above. . . .

[F]irst to invent is largely a ``feel good'' approach to

patents where the underdog at least has a chance, if they

happen to have $600,000 in disposable income to invest on the

crap-shoot that is an Interference proceeding.

Obviously, the parties that are likely to take advantage of a system that costs more than $\1/2\ million to utilize are not likely to be small and independent inventors. Indeed, it is typically major corporations that invoke and prevail in interference proceedings. The very cost of the proceeding alone effectively ensures that it is these larger parties that can benefit from this system. In many cases, small inventors such as startups and universities simply cannot afford to participate in an interference, and they surrender their rights once a well-funded party starts such a proceeding.

I think that first argument is unassailable. Since only one small inventor in the last 7 years has prevailed in such a proceeding, it doesn't seem it is something that favors the small or independent inventor.

Mr. Quinn's article also responded to critics who allege that the present bill eliminates the grace period for patent applications. The grace period is the 1-year period prior to filing when the inventor may disclose his invention without giving up his right to patent. Mr. Quinn quotes the very language of the bill and draws the obvious conclusion:

Regardless of the disinformation that is widespread, the

currently proposed S. 23 does, in fact, have a grace period.

The grace period would be quite different than what we have

now and would not extend to all third party activities, but

many of the horror stories say that if someone learns of your

invention from you and beats you to the Patent Office, they

will get the patent. That is simply flat wrong.

He, of course, is referring to the bill's proposed section 102(b). Under paragraph (1)(A) of that section, disclosures made by the inventor or someone who got the information from the inventor less than one year before the application is filed do not count as prior art. Under paragraph (1)(B), during the 1-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 count as prior art and invalidate the patent.

This effectively creates a first-to-publish rule that protects those inventors who choose to disclose their invention. An inventor who publishes his invention or discloses it at a trade show or academic conference, for example, or otherwise makes it publicly available has an absolute right to priority if he files an application within 1 year of his disclosure. No application effectively filed after his disclosure and no prior art disclosed after his disclosure can defeat his application for the patent.

These rules are highly protective of inventors, especially those who share their inventions with the interested public but still file a patent application within 1 year.

These rules are also clear, objective, and transparent. That is what we are trying to achieve with this legislation, so that there is uniformity, clarity, and it is much easier to defend what one has done. In effect, the rules under the legislation create unambiguous guidelines for inventors. A return to the proposal of Senator Feinstein would create the ambiguity we are trying to get away from.

The bottom line is, an inventor who wishes to keep his invention secret must file an application promptly before another person discloses the invention to the public or files a patent for it. An inventor can also share his invention with others. If his activities make the invention publicly available, he must file an application within a year, but his disclosure also prevents any subsequently disclosed prior art from taking away his right to patent.

The bill's proposed section 102 also creates clear guidelines for those who practice in a technology. To figure out if a patent is valid against prior art, all a manufacturer needs to do is look at the patent's filing date and figure out whether the inventor publicly disclosed the invention. If prior art disclosed the invention to the public before the filing date, or if the inventor disclosed the invention within a year of filing but the prior art predates that disclosure, then the invention is invalid. If not, then the patent is valid against a prior art challenge.

Some critics of the first-to-file system also argue that it will be expensive for inventors because they will be forced to rush to file a completed application rather than being able to rely on their invention date and take their time to complete an application. But these critics ignore the possibility of filing a provisional application which requires only a written description of the invention and how to make it.

Once a provisional application is filed, the inventor has a year to file the completed application. Currently, filing a provisional application only costs $220 for a large entity and $110 for a small entity.

So this is easily accomplished and quite affordable.

In fact, one of Mr. Quinn's earlier columns, on November 7, 2009, effectively rebuts the notion that relying on invention dates offers inventors any substantial advantage over simply filing a provisional application. Here is what he says:

If you rely on first to invent and are operating at all

responsibly you are keeping an invention notebook that will

meet evidentiary burdens if and when it is necessary to

demonstrate conception prior to the conception of the party

who was first to file . . .

[Y]our invention notebook or invention record will detail,

describe, identify and date conception so that others skilled

in the art will be able to look at the notebook/record and

understand what you did, what you knew, and come to believe

that you did in fact appreciate what you had. If you have

this, you have provable conception. If you have provable and

identifiable conception, you also have a disclosure that

informs and supports the invention. . . . [And] [i]f the

notebook provably demonstrates conception, then it can be

filed as a provisional patent application. . . .

In other words, what you would ordinarily have in any event can be used as the provisional application.

In other words, the showing that an inventor must make in a provisional application is effectively the same showing that he would have to make to prove his invention date under the first-to-invent system. A small inventor operating under the first-to-invent rules already must keep independently validated notebooks that show when he conceived of his invention. Under first-to-file rules, the only additional steps the same inventor must take are writing down the same things his notebooks are supposed to prove, filing that writing with the Patent Office, and paying a $110 fee.

Once the possibility of filing a provisional application is considered, along with the bill's enhanced grace period, it should be clear that the first-to-file system will not be at all onerous for small inventors. Once one considers the bill's clean, clear rules for prior art and priority dates, its elimination of subjective elements in patent law, its new proceeding to correct patents, and its elimination of current patent-forfeiture pitfalls that trap legally unweary inventors, it is clear this bill will benefit inventors both large and small.

So because this issue has been considered from the inception of the debate about the legislation, in all of the testimony and markups in every version of the bill since 2005, is supported by all the industry groups who believe patent reform is necessary, conforms to the rules of all other countries in the world, and provides clear and easily demonstrable evidence of your patent, we believe the first-to-file rule is the best rule--date it from the date you filed your patent rather than this rather confusing notion of first-to-invent, which has not worked especially well, and certainly has not worked well for the small inventor, which is the point, I gather, of the amendment proposed by Senator Feinstein.

I urge my colleagues, if there are questions or confusion about this, those of us who have been involved in this will be happy to try to answer them. I will be happy to be on the Senate floor to discuss it further. But at such time as we have a vote, I hope my colleagues would go along with what the committee did and what all of the versions of the bill have written in the past and support the bill as written and not approve this amendment.

I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I rise today to speak on the Patent Reform Act of 2011, which I understand will be retitled as the ``America Invents Act.''

When this bill was marked up in the Judiciary Committee in 2007 and again in 2009, I voted against it, and I submitted minority views to the committee report for the bill. In the 2009 committee report, Senators Russ Feingold and Tom Coburn joined me in identifying a set of issues that we felt needed to be addressed before the bill was ready for consideration by the full Senate. Chief among these were concerns about the bill's system of postissuance administrative review of patents. Senior career staff at the Patent Office had expressed deep misgivings about the office's ability to administer this system. In response, at the conclusion of the 2009 mark up, Chairman Leahy pledged to invite the Patent Office to work with the committee to address these concerns and to try to develop a system that the office would be able to administer.

Chairman Leahy carried through on his pledge and held those meetings later that year. As a result, important changes were made to the bill, eventually resulting in a managers' amendment that was announced in 2010 by Chairman Leahy and then-Ranking Member Sessions. The 2010 managers' amendment, which is also the basis of the present bill, substantially addressed all of the concerns that Senators Feingold and Coburn and I raised in the 2009 Minority Report. As a result, I became a cosponsor of that amendment, and am proud to cosponsor and support the bill that is before us today.

I will take a few moments today to describe the key changes that led to the 2010 breakthrough on this bill. But first, I would like to address an important aspect of the bill that has recently become the subject of some controversy. This is the bill's change to a first- inventor-to-file patent system.

About two-thirds of the present bill has never been controversial and has been included in all of the various iterations of this bill ever since the first patent reform act was introduced in 2005 by Mr. Lamar Smith, who was then the chairman of the House Intellectual Property Subcommittee. Mr. Smith's 2005 bill, H.R. 2795, included the following proposals: it switched the United States from a first-to-invent patent system to a first-inventor-to-file system. The Smith bill enacted chapter 32 of title 35, creating a first-window, post-grant opposition procedure. It authorized third parties to submit and explain relevant prior art to the Patent Office with respect to an application before a patent is issued. The Smith bill amended the inventor's oath, and expanded the rights of assignees to prosecute a patent application under section 118. And it also eliminated subjective elements from the patent code, and included the first proposal for creating derivation proceedings. All of these elements of Mr. Smith's original 2005 bill are retained in the bill that is before us today, and are, in fact, the most important parts of the bill. And, until recently, these provisions had not proven controversial.

After the announcement of the 2010 managers' amendment, however, members of the Judiciary Committee began to hear more from critics of the bill's move to a first-to-file system. Under current law's first- to-invent system, a patent applicant or owner has priority against other patents or applications, or against invalidating prior art, if he conceived of his invention before the other inventor conceived of his invention or before the prior art was disclosed. Under the first-to- file system, by contrast, the same priority is determined by when the application for patent was filed. Whichever inventor files first has priority, and third-party prior art is measured against the filing date, and is invalidating if it disclosed the invention before the date when the application was filed, rather than the date when the invention was conceived.

In commentary that was published on Sunday, February 27, Mr. Gene Quinn, the writer of the IP Watchdog Web site, made some worthy points about the present bill's proposed move to a first-to-file system. Responding to critics of first to file, Mr. Quinn first noted that: in practical effect, we already have a first inventor to file system. For example, since the start of fiscal year 2005 on October 1, 2004, there have been over 2.9 million patent applications filed and only 502 Interferences decided. An Interference Proceeding occurs when multiple inventors file an application claiming the same invention, and is the hallmark of a first to invent system . . . . On top of the paltry 502 Interferences over nearly 7 years, a grand total of 1 independent inventor managed to demonstrate they were the first to invent, and a grand total of 35 small entities were even involved in an Interference.

In other words, as Mr. Quinn notes, although the first-to-invent system is supposed to help the little guy, over the last seven years, only one independent inventor has managed to win an interference contest and secure the benefits of the first to invent system. And again, this is out of nearly 3 million patent applications filed over this period.

Mr. Quinn's comments also debunk the notion that an interference proceeding is a viable means of securing first-to-invent rights for independent and other small inventors. He notes that:

On top of this, the independent inventors and small

entities, those typically viewed as benefiting from the

current first to invent system, realistically could never

benefit from such a system. To prevail as the first to invent

and second to file, you must prevail in an Interference

proceeding, and according to 2005 data from the AIPLA, the

average cost through an interference is over $600,000. So

let's not kid ourselves, the first to invent system cannot be

used by independent inventors in any real, logical or

intellectually honest way, as supported by the reality of the

numbers above. . . . [F]irst to invent is largely a ``feel

good'' approach to patents where the underdog at least has a

chance, if they happen to have $600,000 in disposable income

to invest on the crap-shoot that is an Interference

proceeding.

Obviously, the parties that are likely to take advantage of a system that costs more than half a million dollars to utilize are not likely to be small and independent inventors. Indeed, it is typically major corporations that invoke and prevail in interference proceedings. The very cost of the proceeding alone effectively ensures that

it is these larger parties that benefit from this system. In many cases, small inventors such as start ups and universities simply cannot afford to participate in an interference, and they surrender their rights once a well-funded party starts such a proceeding.

Mr. Quinn's article also responded to critics who allege that the present bill eliminates the grace period for patent applications. The grace period is the one-year period prior to filing when the inventor may disclose his invention without giving up his right to patent. Mr. Quinn quotes the very language of this bill, and draws the obvious conclusion:

Regardless of the disinformation that is widespread, the

currently proposed S. 23 does, in fact, have a grace period.

The grace period would be quite different than what we have

now and would not extend to all third party activities, but

many of the horror stories say that if someone learns of your

invention from you and beats you to the Patent Office, they

will get the patent. That is simply flat wrong.

Mr. Quinn is, of course, referring to the bill's proposed section 102(b). Under paragraph (1)(A) of that section, disclosures made by the inventor, or someone who got the information from the inventor, less than 1 year before the application is filed do not count as prior art. And under paragraph (1)(B), during the 1-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 count as prior art and invalidate the patent. This effectively creates a ``first to publish'' rule that protects those inventors who choose to disclose their invention. An inventor who publishes his invention, or discloses it at a trade show or academic conference, or otherwise makes it publicly available, has 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 application for patent.

These rules are highly protective of inventors, especially those who share their inventions with the interested public but still file a patent application within a year. These rules are also clear, objective, and transparent. They create unambiguous guidelines for inventors. An inventor who wishes to keep his invention secret must file an application promptly, before another person discloses the invention to the public. And an inventor can also share his invention with others. If his activities make the invention publicly available, he must file an application within a year, but his disclosures also prevents any subsequently disclosed prior art from taking away his right to patent. The bill's proposed section 102 also creates clear guidelines for those who practice in a technology. To figure out if a patent is valid against prior art, all that a manufacturer needs to do is look at the patent's filing date and figure out whether the inventor publicly disclosed the invention. If prior art disclosed the invention to the public before the filing date, or if the inventor disclosed the invention within a year of filing but the prior art predates that disclosure, then the invention is invalid. And if not, the patent is valid against a prior-art challenge.

Some critics of the first-to-file system also argue that it will be expensive for inventors because they will be forced to rush to file a completed application, rather than being able to rely on their invention date and take their time to complete an application. These critics generally ignore the possibility of filing a provisional application, which requires only a written description of the invention and how to make it. Once a provisional application is filed, the inventor has a year to file a completed application. Currently, filing a provisional application costs $220 for a large entity, and $110 for a small entity.

One of Mr. Quinn's earlier columns, on November 7, 2009, effectively rebuts the notion that relying on invention dates offers inventors any substantial advantage over simply filing a provisional application. As he notes:

If you rely on first to invent and are operating at all

responsibly you are keeping an invention notebook that will

meet evidentiary burdens if and when it is neces-

sary to demonstrate conception prior to the conception of the

party who was first to file. . . .

[Y]our invention notebook or invention record will detail,

describe, identify and date conception so that others skilled

in the art will be able to look at the notebook/record and

understand what you did, what you knew, and come to the

believe that you did in fact appreciate what you had. If you

have this, you have provable conception. If you have provable

and identifiable conception, you also have a disclosure that

informs and supports the invention. . . . [And] [i]f the

notebook provably demonstrates conception, then it can be

filed as a provisional patent application at least for the

purpose of staking a claim to the conception that is detailed

with enough specificity to later support an argument in a

first to invent regime.

In other words, the showing that an inventor must make in a provisional application is effectively the same showing that he would have to make to prove his invention date under the first-to-invent system. A small inventor operating under first-to-invent rules already must keep independently-validated notebooks that show when he conceived of his invention. Under first-to-file rules, the only additional steps that the same inventor must take are writing down the same things that his notebooks are supposed to prove filing that writing with the Patent Office, and paying a $110 fee.

Once the possibility of filing a provisional application is considered, along with this bill's enhanced grace period, it should be clear that the first-to-file system will not be at all onerous for small inventors. And once one considers the bill's clean, clear rules for prior art and priority dates, its elimination of subjective elements in patent law, its new proceeding to correct patents, and its elimination of current patent-forfeiture pitfalls that trap legally unwary inventors, it is clear that this bill will benefit inventors both large and small.

Allow me to also take a moment to briefly describe the concerns that Senators Feingold and Coburn and I raised in our 2009 Minority Report, and how the present bill addresses those concerns.

Senators Feingold and Coburn and I proposed that the bill impose a higher threshold showing for instituting an inter partes, or post-grant review. This had long been a top priority for the Patent Office, both under the previous administration and under the current one. The Patent Office made clear that a higher threshold is necessary to weed out marginal challenges and preserve the office's own resources, and that a higher threshold would also force parties to front-load their cases, allowing these proceedings to be resolved more quickly. The present bill imposes higher thresholds, requiring a reasonable likelihood of invalidity for inter partes review, and more-likely-than-not invalidity for post-grant review.

Senators Feingold and Coburn and I also recommended that the Patent Office be allowed to operate inter partes reexamination as an adjudicative proceeding, where the burden of proof is on the challenger and the office simply decides whether the challenger has met his burden. The present bill makes this change, repealing requirements that inter partes be run on an examinational model and allowing the PTO to adopt an adjudicative model.

The 2009 Minority Report also recommended that the bill restrict serial administrative challenges to patents and require coordination of these proceedings with litigation. We also called for limiting use of ex parte reexamination to patent owners, noting that allowing three different avenues for administrative attack on patents invites serial challenges. The present bill does coordinate inter partes and post- grant review with litigation, barring use of these proceedings if the challenger seeks a declaratory judgment that a patent is invalid, and setting a time limit for seeking inter partes review if the petitioner or related parties is sued for infringement of the patent. The present bill does not, however, bar the use of ex parte reexamination by third parties. The Patent Office and others persuaded me that these proceedings operate reasonably well in most cases and are not an undue burden on patent owners. The present bill does, however, impose limits on serial challenges that will also restrict the use of ex parte reexamination. The bill's enhanced administrative estoppel will effectively bar a third party or related parties from invoking ex parte reexamination against a patent if that third party has already employed post-grant or inter partes review against that patent.

Also, the bill allows the Patent Office to reject any request for a proceeding, including a request for ex parte reexamination, if the same or substantially the same prior art or arguments previously were presented to the Office with respect to that patent.

Senators Feingold and Coburn and I also recommended that the PTO be allowed to delay implementation of post-grant review if the office lacks the resources to implement that new proceeding. The present bill includes a number of safeguards that are the product of discussions with the PTO. Among other things, the present bill authorizes a ramp-up period, allowing the office to limit the number of proceedings that can be implemented during the first 4 years after the new proceeding becomes effective.

The 2009 Minority Report also recommended that treble damages be preserved as a meaningful deterrent to willful or calculated infringement of a patent. The present bill does so, eliminating the restrictive three-buckets approach and broad safe harbors that appeared in the bill in 2009. The report also recommended that the bill remove subjective elements from patent law, such as the various deceptive- intent elements throughout the code and the patent-forfeiture doctrines. The present bill effectively makes both changes. In fact, the 2007 bill had already been modified in mark up to eliminate the patent forfeiture doctrines, a point elucidated in that year's committee report and confirmed by a review of the relevant caselaw.

This last point should also help address a question that Mr. Quinn raised in his column on Sunday regarding proposed section 102(b)'s use of the word ``disclosure,'' and whether it covers public use or sale activities of the inventor. I would have thought that the meaning of the word would be clear: a disclosure is something that makes the invention available to the public--the same test applied by section 102(a) to define the scope of relevant prior art. And ``available to the public'' means the same thing that ``publicly accessible'' does in the context of a publication. Subject matter makes an invention publicly accessible or available if an interested person who is skilled in the field could, through reasonable diligence, find the subject matter and understand the invention from it. Obviously, Congress would not create a grace period that is narrower in scope than the relevant prior art. Thus for example, under this bill, any activity by the inventor that would constitute prior art under section 102(a)(1) would also invoke the grace period under section 102(b)(1). As a result, the inventor would be protected against his own activities so long as he files within a year, and under the bill's ``first to publish'' provisions, he would also be protected by any other person's disclosure of the invention, regardless of whether he could prove that the other person derived the invention from him.

The present bill is the product of almost a decade of hard work, including three Judiciary Committee mark ups, and the untold hours of work by Mr. Smith and other members of the House of Representatives that led to the introduction of the Patent Reform Act of 2005, the foundation of today's bill. This is a bill that will protect our heritage of innovation while updating the patent system for the current century. It will fix problems with current administrative proceedings, create new means for improving patent quality, and will generally 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.

I ask unanimous consent that Mr. Gene Quinn's columns of February 27, 2011, and November 7, 2009, with corrections of a few typos and enhancements of punctuation, be printed in the Record.

I would urge my colleagues to fully participate in this debate, come to the floor with any questions or comments they have, and at the end of this process Chairman Leahy will finally be rewarded with a bill that will bear his imprimatur and support, a bill that will be extraordinarily important to the future well-being of the people of the United States of America.

I thank the chairman of the committee.