[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1553 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1553
To amend title 35, United States Code, to invest in inventors in the
United States, maintain the United States as the leading innovation
economy in the world, and protect the property rights of the inventors
that grow the economy of the United States, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 1, 2025
Mr. Coons (for himself, Mr. Tillis, Mr. Durbin, and Ms. Hirono)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 35, United States Code, to invest in inventors in the
United States, maintain the United States as the leading innovation
economy in the world, and protect the property rights of the inventors
that grow the economy of the United States, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Promoting and Respecting
Economically Vital American Innovation Leadership Act'' or the
``PREVAIL Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The patent property rights enshrined in the
Constitution of the United States provide the foundation for
the exceptional innovation environment in the United States.
(2) Reliable and effective patent protection encourages
United States inventors to invest their resources in creating
new inventions.
(3) United States inventors have made discoveries leading
to patient cures, positive changes to the standard of living
for all people in the United States, and improvements to the
agricultural, telecommunications, and electronics industries,
among others.
(4) The United States patent system is an essential part of
the economic success of the United States.
(5) Reliable and effective patent protection improves the
chances of success for individual inventors and small companies
and increases the chances of securing investments for those
inventors and companies.
(6) Intellectual property-intensive industries in the
United States--
(A) generate tens of millions of jobs for
individuals in the United States; and
(B) account for more than \1/3\ of the gross
domestic product of the United States.
(7) The National Security Commission on Artificial
Intelligence has emphasized that--
(A) the People's Republic of China is leveraging
and exploiting intellectual property as a critical tool
within its national strategies for emerging
technologies; and
(B) the United States has failed to similarly
recognize the importance of intellectual property in
securing its own national security, economic interests,
and technological competitiveness.
(8) In the highly competitive global economy, the United
States needs reliable and effective patent protections to
safeguard national security interests and maintain its position
as the most innovative country in the world.
(9) Congress last enacted comprehensive reforms of the
patent system in 2011.
(10) Unintended consequences of the comprehensive 2011
reform of patent laws have become evident during the decade
preceding the date of enactment of this Act, including the
strategic filing of post-grant review proceedings to depress
stock prices and extort settlements, the filing of repetitive
petitions for inter partes and post-grant reviews that have the
effect of harassing patent owners, and the unnecessary
duplication of work by the district courts of the United States
and the Patent Trial and Appeal Board, all of which drive down
investment in innovation and frustrate the purpose of those
patent reform laws.
(11) Efforts by Congress to reform the patent system
without careful scrutiny create a serious risk of making it
more costly and difficult for innovators to protect their
patents from infringement, thereby--
(A) disincentivizing United States companies from
innovating; and
(B) weakening the economy of the United States.
SEC. 3. PATENT TRIAL AND APPEAL BOARD.
Section 6 of title 35, United States Code, is amended--
(1) by redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively;
(2) by inserting after subsection (a) the following:
``(b) Code of Conduct.--
``(1) In general.--The Director shall prescribe regulations
establishing a code of conduct for the members of the Patent
Trial and Appeal Board.
``(2) Considerations.--In prescribing regulations under
paragraph (1), the Director shall consider the Code of Conduct
for United States Judges and how the provisions of that Code of
Conduct may apply to the Patent Trial and Appeal Board.'';
(3) by striking subsection (d), as so redesignated, and
inserting the following:
``(d) 3-Member Panels.--
``(1) In general.--Each appeal, derivation proceeding,
post-grant review, and inter partes review shall be heard by at
least 3 members of the Patent Trial and Appeal Board, who shall
be designated by the Director. The Patent Trial and Appeal
Board may grant rehearings.
``(2) Changes to constitution of panel.--After the
constitution of a panel of the Patent Trial and Appeal Board
under this subsection has been made public, any changes to the
constitution of that panel, including changes that were made
before the constitution of the panel was made public, shall be
noted in the record.
``(3) No direction or influence.--An officer who has
supervisory authority or disciplinary authority with respect to
an administrative patent judge of the Patent Trial and Appeal
Board (or a delegate of such an officer), and who is not a
member of a panel described in this subsection, shall refrain
from communications with the panel that direct or otherwise
influence any merits decision of the panel.
``(4) Ineligibility to hear review.--A member of the Patent
Trial and Appeal Board who participates in the decision to
institute an inter partes review or a post-grant review of a
patent shall be ineligible to hear the review.''; and
(4) in subsection (e), as so redesignated--
(A) in the first sentence--
(i) by striking ``the date of the enactment
of this subsection'' and inserting ``the date
of enactment of the Promoting and Respecting
Economically Vital American Innovation
Leadership Act'';
(ii) by striking ``by the Director'' and
inserting ``by the Director or the Secretary'';
and
(iii) by inserting ``or the Secretary, as
applicable,'' after ``on which the Director'';
and
(B) in the second sentence--
(i) by inserting after ``by the Director''
the following: ``, or, before the date of
enactment of the Promoting and Respecting
Economically Vital American Innovation
Leadership Act, having performed duties no
longer performed by administrative patent
judges,''; and
(ii) by striking ``that the administrative
patent judge so appointed'' and inserting
``that the applicable administrative patent
judge''.
SEC. 4. INTER PARTES REVIEW.
(a) Real Parties in Interest.--Section 311 of title 35, United
States Code, is amended by adding at the end the following:
``(d) Real Party in Interest.--For purposes of this chapter, a
person that, directly or through an affiliate, subsidiary, or proxy,
makes a financial contribution to the preparation for, or conduct
during, an inter partes review on behalf of a petitioner shall be
considered a real party in interest of that petitioner.''.
(b) Petitioner Certification and Director Determination.--Section
312(a) of title 35, United States Code, is amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(6) the petitioner certifies, and the Director
determines, that the petitioner--
``(A) is a nonprofit organization that--
``(i) is exempt from taxation under section
501(a) of the Internal Revenue Code of 1986,
described in section 501(c)(3) of such Code,
and described in section 170(b)(1)(A) of such
Code, other than an organization described in
section 509(a)(3) of such Code;
``(ii) does not have any member, donor, or
other funding source that is, or reasonably
could be accused of, infringing 1 or more
claims of the challenged patent; and
``(iii) is filing the petition for the sole
purpose of ascertaining the patentability of
the challenged claims of the patent and not to
profit from or fund the operations of the
petitioner;
``(B) is currently engaging in, or has a bona fide
intent to engage in, conduct within the United States
that reasonably could be accused of infringing 1 or
more claims of the challenged patent;
``(C) would have standing to bring a civil action
in a court of the United States seeking a declaratory
judgment of invalidity with respect to 1 or more claims
of the challenged patent; or
``(D) has been sued in a court of the United States
for infringement of the challenged patent.''.
(c) Institution Decision Rehearing Timing.--Section 314 of title
35, United States Code, is amended by adding at the end the following:
``(e) Rehearing.--Not later than 45 days after the date on which a
request for rehearing from a determination by the Director under
subsection (b) is filed, the Director shall finally decide any request
for reconsideration, rehearing, or review with respect to the
determination, except that the Director may, for good cause shown,
extend that 45-day period by not more than 30 days.''.
(d) Eliminating Repetitive Proceedings.--
(1) In general.--Section 315 of title 35, United States
Code, is amended--
(A) in subsection (b), by amending the second
sentence to read as follows: ``The time limitation set
forth in the preceding sentence shall not bar a request
for joinder under subsection (d), but shall establish a
rebuttable presumption against joinder for the
requesting person.'';
(B) by redesignating subsections (c), (d), and (e)
as subsections (d), (e), and (f), respectively;
(C) by inserting after subsection (b) the
following:
``(c) Single Forum.--
``(1) In general.--If an inter partes review is instituted
challenging the validity of a patent, the petitioner, a real
party in interest, or a privy of the petitioner may not file or
maintain, in a civil action arising in whole or in part under
section 1338 of title 28, or in a proceeding before the
International Trade Commission under section 337 of the Tariff
Act of 1930 (19 U.S.C. 1337), a claim, a counterclaim, or an
affirmative defense challenging the validity of any claim of
the patent on any ground described in section 311(b).
``(2) Considerations.--In determining whether to institute
a proceeding under this chapter, subject to the provisions of
subsections (a)(1) and (g), the Director may not reject a
petition requesting an inter partes review on the basis of the
petitioner, a real party in interest, or a privy of the
petitioner filing or maintaining a claim, a counterclaim, or an
affirmative defense challenging the validity of the applicable
patent in any civil action arising in whole or in part under
section 1338 of title 28, or in a proceeding before the
International Trade Commission under section 337 of the Tariff
Act of 1930 (19 U.S.C. 1337).'';
(D) by amending subsection (d), as so redesignated,
to read as follows:
``(d) Joinder.--
``(1) In general.--If the Director institutes an inter
partes review, the Director, in the discretion of the Director,
may join as a party to that inter partes review any person that
properly files a request to join the inter partes review and a
petition under section 311 that the Director, after receiving a
preliminary response under section 313 or the expiration of the
time for filing such a response, determines warrants the
institution of an inter partes review under section 314.
``(2) Time-barred person.--Pursuant to paragraph (1), the
Director, in the discretion of the Director, may join as a
party to an inter partes review a person that did not satisfy
the time limitation under subsection (b) that rebuts the
presumption against joinder, except that any such person shall
not be permitted to serve as the lead petitioner and shall not
be permitted to maintain the inter partes review unless a
petitioner that satisfied the time limitation under subsection
(b) remains in the inter partes review.'';
(E) by amending subsection (e), as so redesignated,
to read as follows:
``(e) Multiple Proceedings.--
``(1) In general.--Notwithstanding sections 135(a), 251,
and 252, and chapter 30, after a petition to institute an inter
partes review is filed, if another proceeding or matter
involving the patent is before the Office--
``(A) the parties shall notify the Director of that
other proceeding or matter--
``(i) not later than 30 days after the date
of entry of the notice of filing date accorded
to the petition; or
``(ii) if the other proceeding or matter is
filed after the date on which the petition to
institute an inter partes review is filed, not
later than 30 days after the date on which the
other proceeding or matter is filed; and
``(B) the Director shall issue a decision
determining the manner in which the inter partes review
or other proceeding or matter may proceed, including
providing for stay, transfer, consolidation, or
termination of any such matter or proceeding.
``(2) Considerations.--In determining whether to institute
a proceeding under this chapter, the Director shall, unless the
Director determines that the petitioner has demonstrated
exceptional circumstances, reject any petition that presents
prior art or an argument that is the same or substantially the
same as prior art or an argument that previously was presented
to the Office.'';
(F) by amending subsection (f), as so redesignated,
to read as follows:
``(f) Estoppel.--
``(1) In general.--A petitioner that has previously
requested an inter partes review of a claim in a patent under
this chapter, or a real party in interest or a privy of such a
petitioner, may not request or maintain another proceeding
before the Office with respect to that patent on any ground
that the petitioner raised or reasonably could have raised in
the petition requesting or during the prior inter partes
review, unless--
``(A) after the filing of the initial petition, the
petitioner, or a real party in interest or a privy of
the petitioner, is charged with infringement of
additional claims of the patent;
``(B) a subsequent petition requests an inter
partes review of only the additional claims of the
patent that the petitioner, or a real party in interest
or a privy of the petitioner, is later charged with
infringing; and
``(C) that subsequent petition is accompanied by a
request for joinder to the prior inter partes review,
which overcomes the rebuttable presumption against
joinder set forth in subsection (b), and which the
Director shall grant if the Director authorizes an
inter partes review to be instituted on the subsequent
petition under section 314.
``(2) Joined party.--Any person joined as a party to an
inter partes review, and any real party in interest or any
privy of such person, shall be estopped under this subsection
and subsections (c)(1) and (e)(2) to the same extent as if that
person, real party in interest, or privy had been the first
petitioner in that inter partes review.''; and
(G) by adding at the end the following:
``(g) Federal Court and International Trade Commission Validity
Determinations.--An inter partes review of a patent claim may not be
instituted or maintained if, in a civil action arising in whole or in
part under section 1338 of title 28, or in a proceeding before the
International Trade Commission under section 337 of the Tariff Act of
1930 (19 U.S.C. 1337), in which the petitioner, a real party in
interest, or a privy of the petitioner is a party, the court, or the
International Trade Commission, as applicable, has entered a final
judgment that decides a challenge to the validity of the patent claim
with respect to any ground described in section 311(b).''.
(2) Technical and conforming amendments.--Section 316(a) of
title 35, United States Code, is amended--
(A) in paragraph (11), by striking ``section
315(c)'' and inserting ``section 315(d)''; and
(B) in paragraph (12), by striking ``section
315(c)'' and inserting ``section 315(d)''.
(e) Conduct of Inter Partes Review.--Section 316 of title 35,
United States Code, is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2) through (13) as
paragraphs (3) through (14), respectively;
(B) by inserting after paragraph (1) the following:
``(2) establishing procedures for briefing and limited
discovery, at the request and discretion of the Director, for
assisting the Director in making a determination under section
312(a)(6);'';
(C) by amending paragraph (6), as so redesignated,
to read as follows:
``(6) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to--
``(A) the deposition of witnesses submitting
affidavits or declarations;
``(B) evidence identifying the real parties in
interest of the petitioner; and
``(C) what is otherwise necessary in the interest
of justice;'';
(D) by amending paragraph (10), as so redesignated,
to read as follows:
``(10) setting forth standards and procedures for--
``(A) allowing the patent owner to move to amend
the patent under subsection (d) to cancel a challenged
claim or propose a reasonable number of substitute
claims;
``(B) allowing the Patent Trial and Appeal Board to
provide guidance on substitute claims proposed by the
patent owner;
``(C) allowing the patent owner to further revise
proposed substitute claims after the issuance of
guidance described in subparagraph (B); and
``(D) ensuring that any information submitted by
the patent owner in support of any amendment entered
under subsection (d), and any guidance issued by the
Patent Trial and Appeal Board, is made available to the
public as part of the prosecution history of the
patent;'';
(E) in paragraph (13), as so redesignated, by
striking ``and'' at the end;
(F) in paragraph (14), as so redesignated, by
striking the period at the end and inserting ``; and'';
and
(G) by adding at the end the following:
``(15) setting forth the standards for demonstrating
exceptional circumstances under sections 303(e)(1) and
315(e)(2).'';
(2) by amending subsection (e) to read as follows:
``(e) Evidentiary Standards.--
``(1) Presumption of validity.--The presumption of validity
under section 282(a) shall apply to previously issued claims of
a patent that is challenged in an inter partes review under
this chapter.
``(2) Burden of proof.--In an inter partes review under
this chapter--
``(A) the petitioner shall have the burden of
proving a proposition of unpatentability of a
previously issued claim of a patent by clear and
convincing evidence; and
``(B) the petitioner shall have the burden of
persuasion, by a preponderance of the evidence, with
respect to a proposition of unpatentability for any
substitute claim proposed by the patent owner.''; and
(3) by adding at the end the following:
``(f) Claim Construction.--For the purposes of this chapter--
``(1) each challenged claim of a patent, and each
substitute claim proposed in a motion to amend, shall be
construed as the claim would be construed under section 282(b)
in an action to invalidate a patent, including by construing
each such claim in accordance with--
``(A) the ordinary and customary meaning of the
claim as understood by a person having ordinary skill
in the art to which the claimed invention pertains; and
``(B) the prosecution history pertaining to the
patent; and
``(2) if a court has previously construed a challenged
claim of a patent or a challenged claim term in a civil action
to which the patent owner was a party, the Office shall
consider that claim construction.''.
(f) Settlement.--Section 317(a) of title 35, United States Code, is
amended by striking the second sentence.
(g) Timing To Issue Trial Certificate and Decisions on Rehearing.--
Section 318 of title 35, United States Code, is amended--
(1) in subsection (b), by inserting ``, not later than 60
days after the date on which the parties to the inter partes
review have informed the Director that the time for appeal has
expired or any appeal has terminated,'' after ``the Director
shall''; and
(2) by adding at the end the following:
``(e) Rehearing.--Not later than 90 days after the date on which a
request for rehearing of a final written decision issued by the Patent
and Trial Appeal Board under subsection (a) is filed, the Board or the
Director shall finally decide any request for reconsideration,
rehearing, or review that is submitted with respect to the decision,
except that the Director may, for good cause shown, extend that 90-day
period by not more than 60 days.
``(f) Review by Director.--
``(1) In general.--The Director may grant rehearing,
reconsideration, or review of a decision by the Patent Trial
and Appeal Board issued under this chapter.
``(2) Requirements.--Any reconsideration, rehearing, or
review by the Director, as described in paragraph (1), shall be
issued in a separate written opinion that--
``(A) is made part of the public record; and
``(B) sets forth the reasons for the
reconsideration, rehearing, or review of the applicable
decision by the Patent Trial and Appeal Board.
``(g) Rule of Construction.--For the purposes of an appeal
permitted under section 141, any decision on rehearing,
reconsideration, or review of a final written decision of the Patent
Trial and Appeal Board under subsection (a) of this section that is
issued by the Director shall be deemed to be a final written decision
of the Patent Trial and Appeal Board.''.
(h) Timing To Issue Decisions on Remand.--Section 319 of title 35,
United States Code, is amended--
(1) by striking ``A party'' and inserting the following:
``(a) In General.--A party''; and
(2) by adding at the end the following:
``(b) Timing on Remand After Appeal.--Not later than 120 days after
the date on which a mandate issues from the court remanding to the
Patent Trial and Appeal Board after an appeal under subsection (a), the
Board or the Director shall finally decide any issue on remand, except
that the Director may, for good cause shown, extend that 120-day period
by not more than 60 days.''.
SEC. 5. POST-GRANT REVIEW.
(a) Real Parties in Interest.--Section 321 of title 35, United
States Code, is amended by adding at the end the following:
``(d) Real Party in Interest.--For purposes of this chapter, a
person that, directly or through an affiliate, subsidiary, or proxy,
makes a financial contribution to the preparation for, or conduct
during, a post-grant review on behalf of a petitioner shall be
considered a real party in interest of that petitioner.''.
(b) Timing To Issue Decisions on Rehearing.--Section 324 of title
35, United States Code, is amended by adding at the end the following:
``(f) Rehearing.--Not later than 45 days after the date on which a
request for rehearing from a determination by the Director under
subsection (c) is filed, the Director shall finally decide any request
for reconsideration, rehearing, or review with respect to the
determination, except that the Director may, for good cause shown,
extend that 45-day period by not more than 30 days.''.
(c) Eliminating Repetitive Proceedings.--Section 325 of title 35,
United States Code, is amended--
(1) by redesignating subsections (c) through (f) as
subsections (d) through (g), respectively;
(2) by inserting after subsection (b) the following:
``(c) Single Forum.--
``(1) In general.--If a post-grant review is instituted
challenging the validity of a patent, the petitioner, a real
party in interest, or a privy of the petitioner may not file or
maintain, in a civil action arising in whole or in part under
section 1338 of title 28, or in a proceeding before the
International Trade Commission under section 337 of the Tariff
Act of 1930 (19 U.S.C. 1337), a claim, a counterclaim, or an
affirmative defense challenging the validity of any claim of
the patent.
``(2) Considerations.--In determining whether to institute
a proceeding under this chapter, subject to the provisions of
subsections (a)(1) and (h), the Director may not reject a
petition requesting a post-grant review on the basis of the
petitioner, a real party in interest, or a privy of the
petitioner filing or maintaining a claim, a counterclaim, or an
affirmative defense challenging the validity of the patent in
any civil action arising in whole or in part under section 1338
of title 28, or in a proceeding before the International Trade
Commission under section 337 of the Tariff Act of 1930 (19
U.S.C. 1337).'';
(3) by amending subsection (e), as so redesignated, to read
as follows:
``(e) Multiple Proceedings.--
``(1) In general.--Notwithstanding sections 135(a), 251,
and 252, and chapter 30, after a petition to institute a post-
grant review is filed, if another proceeding or matter
involving the patent is before the Office--
``(A) the parties shall notify the Director of that
other proceeding or matter--
``(i) not later than 30 days after the date
of entry of the notice of filing date accorded
to the petition; or
``(ii) if the other proceeding or matter is
filed after the date on which the petition to
institute an inter partes review is filed, not
later than 30 days after the date on which the
other proceeding or matter is filed; and
``(B) the Director shall issue a decision
determining the manner in which the post-grant review
or other proceeding or matter may proceed, including
providing for stay, transfer, consolidation, or
termination of any such matter or proceeding.
``(2) Considerations.--In determining whether to institute
a proceeding under this chapter, the Director shall, unless the
Director determines that the petitioner has demonstrated
exceptional circumstances, reject any petition that presents
prior art or an argument that is the same or substantially the
same as prior art or an argument that previously was presented
to the Office.'';
(4) by amending subsection (f), as so redesignated, to read
as follows:
``(f) Estoppel.--
``(1) In general.--A petitioner that has previously
requested a post-grant review of a claim in a patent under this
chapter, or a real party in interest or a privy of a
petitioner, may not request or maintain another proceeding
before the Office with respect to that patent on any ground
that the petitioner raised or reasonably could have raised in
the petition requesting or during the prior post-grant review,
unless--
``(A) after the filing of the initial petition, the
petitioner, or a real party in interest or a privy of
the petitioner, is charged with infringement of
additional claims of the patent;
``(B) a subsequent petition requests an inter
partes review of only the additional claims of the
patent that the petitioner, or a real party in interest
or a privy of the petitioner, is later charged with
infringing; and
``(C) that subsequent petition is accompanied by a
request for joinder to the prior post-grant review,
which the Director shall grant if the Director
authorizes a post-grant review to be instituted on the
subsequent petition under section 324.
``(2) Joined party.--Any person joined as a party to a
post-grant review, and any real party in interest or any privy
of such person, shall be estopped under this subsection and
subsections (c)(1) and (e)(2) to the same extent as if that
person, real party in interest, or privy had been the first
petitioner in that post-grant review.''; and
(5) by adding at the end the following:
``(h) Federal Court and International Trade Commission Validity
Determinations.--A post-grant review of a patent claim may not be
instituted or maintained if, in a civil action arising in whole or in
part under section 1338 of title 28, or in a proceeding before the
International Trade Commission under section 337 of the Tariff Act of
1930 (19 U.S.C. 1337), in which the petitioner, a real party in
interest, or a privy of the petitioner is a party, the court, or the
International Trade Commission, as applicable, has entered a final
judgment that decides a challenge to the validity of the patent
claim.''.
(d) Conduct of Post-Grant Review.--Section 326 of title 35, United
States Code, is amended--
(1) in subsection (a)--
(A) by amending paragraph (5) to read as follows:
``(5) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to--
``(A) the deposition of witnesses submitting
affidavits or declarations;
``(B) evidence identifying the real parties in
interest of the petitioner; and
``(C) what is otherwise necessary in the interest
of justice;'';
(B) by amending paragraph (9) to read as follows:
``(9) setting forth standards and procedures for--
``(A) allowing the patent owner to move to amend
the patent under subsection (d) to cancel a challenged
claim or propose a reasonable number of substitute
claims;
``(B) allowing the Patent Trial and Appeal Board to
provide guidance on substitute claims proposed by the
patent owner;
``(C) allowing the patent owner to further revise
proposed substitute claims after the issuance of
guidance described in subparagraph (B); and
``(D) ensuring that any information submitted by
the patent owner in support of any amendment entered
under subsection (d), and any guidance issued by the
Patent Trial and Appeal Board, is made available to the
public as part of the prosecution history of the
patent;'';
(C) in paragraph (11)--
(i) by striking ``section 325(c)'' and
inserting ``section 325(d)''; and
(ii) by striking ``and'' at the end;
(D) in paragraph (12), by striking the period at
the end and inserting ``; and''; and
(E) by adding at the end the following:
``(13) setting forth the standards for demonstrating
exceptional circumstances under section 325(e)(2).'';
(2) by amending subsection (e) to read as follows:
``(e) Evidentiary Standards.--
``(1) Presumption of validity.--The presumption of validity
under section 282(a) shall apply to previously issued claims of
a patent that is challenged in a post-grant review under this
chapter.
``(2) Burden of proof.--In a post-grant review under this
chapter--
``(A) the petitioner shall have the burden of
proving a proposition of unpatentability of a
previously issued claim of a patent by clear and
convincing evidence; and
``(B) the petitioner shall have the burden of
persuasion, by a preponderance of the evidence, with
respect to a proposition of unpatentability for any
substitute claim proposed by the patent owner.''; and
(3) by adding at the end the following:
``(f) Claim Construction.--For the purposes of this chapter--
``(1) each challenged claim of a patent, and each
substitute claim proposed in a motion to amend, shall be
construed as the claim would be construed under section 282(b)
in an action to invalidate a patent, including by construing
each such claim in accordance with--
``(A) the ordinary and customary meaning of the
claim as understood by a person having ordinary skill
in the art to which the claimed invention pertains; and
``(B) the prosecution history pertaining to the
patent; and
``(2) if a court has previously construed a challenged
claim of a patent or a challenged claim term in a civil action
to which the patent owner was a party, the Office shall
consider that claim construction.''.
(e) Settlement.--Section 327(a) of title 35, United States Code, is
amended by striking the second sentence.
(f) Timing To Issue Trial Certificates and Decisions on
Rehearing.--Section 328 of title 35, United States Code, is amended--
(1) in subsection (b), by inserting ``, not later than 60
days after the date on which the parties to the post-grant
review have informed the Director that the time for appeal has
expired or any appeal has terminated,'' after ``the Director
shall''; and
(2) by adding at the end the following:
``(e) Rehearing.--Not later than 90 days after the date on which a
request for rehearing of a final written decision issued by the Patent
and Trial Appeal Board under subsection (a) is filed, the Board or the
Director shall finally decide any request for reconsideration,
rehearing, or review that is submitted with respect to the decision,
except that the Director may, for good cause shown, extend that 90-day
period by not more than 60 days.
``(f) Review by Director.--
``(1) In general.--The Director may grant rehearing,
reconsideration, or review of a decision by the Patent Trial
and Appeal Board issued under this chapter.
``(2) Requirements.--Any reconsideration, rehearing, or
review by the Director, as described in paragraph (1), shall be
issued in a separate written opinion that--
``(A) is made part of the public record; and
``(B) sets forth the reasons for the
reconsideration, rehearing, or review of the applicable
decision by the Patent Trial and Appeal Board.
``(g) Rule of Construction.--For the purposes of an appeal
permitted under section 141, any decision on rehearing,
reconsideration, or review of a final written decision of the Patent
Trial and Appeal Board under subsection (a) of this section that is
issued by the Director shall be deemed to be a final written decision
of the Patent Trial and Appeal Board.''.
(g) Timing To Issue Decisions on Remand.--Section 329 of title 35,
United States Code, is amended--
(1) by striking ``A party'' and inserting the following:
``(a) In General.--A party''; and
(2) by adding at the end the following:
``(b) Timing on Remand After Appeal.--Not later than 120 days after
the date on which a mandate issues from the court remanding to the
Patent Trial and Appeal Board after an appeal under subsection (a), the
Board or the Director shall finally decide any issue on remand, except
that the Director may, for good cause shown, extend that 120-day period
by not more than 60 days.''.
SEC. 6. REEXAMINATION OF PATENTS.
(a) Request for Reexamination.--Section 302 of title 35, United
States Code, is amended by inserting after the second sentence the
following: ``The request must identify all real parties in interest and
certify that reexamination is not barred under section 303(d).''.
(b) Reexamination Barred.--Section 303 of title 35, United States
Code, is amended--
(1) in subsection (a), by striking the third sentence; and
(2) by adding at the end the following:
``(d) An ex parte reexamination may not be ordered if the request
for reexamination is filed more than 1 year after the date on which the
requester or a real party in interest or a privy of the requester is
served with a complaint alleging infringement of the patent. For
purposes of this chapter, a person that directly or through an
affiliate, subsidiary, or proxy makes a financial contribution to the
preparation for, or conduct during, an ex parte reexamination on behalf
of a requester shall be considered a real party in interest of the
requester.
``(e) In determining whether to order an ex parte reexamination,
the Director--
``(1) shall, unless the Director determines that the
requestor has demonstrated exceptional circumstances, reject
any request that presents prior art or an argument that is the
same or substantially the same as prior art or an argument that
previously was presented to the Office; and
``(2) may reject any request that the Director determines
has used a prior Office decision as a guide to correct or
bolster a previous deficient request filed under this chapter
or a previous deficient petition filed under chapter 31 or
32.''.
(c) Reexamination Order by Director.--Section 304 of title 35,
United States Code, is amended, in the first sentence, by inserting
after ``resolution of the question'' the following: ``, unless the
Director determines that the request for reexamination should be
rejected under subsection (d) or (e) of section 303, in which case the
Director shall issue an order denying reexamination''.
SEC. 7. ELIMINATION OF USPTO FEE DIVERSION.
(a) Funding.--Section 42 of title 35, United States Code, is
amended--
(1) in subsection (a), by striking ``All fees'' and
inserting the following:
``(a) Fees for Service by PTO.--All fees'';
(2) in subsection (b)--
(A) by striking ``All fees paid to the Director and
all appropriations'' and inserting the following:
``(b) Innovation Promotion Fund.--All fees paid to the Director'';
and
(B) by striking ``Patent and Trademark Office
Appropriation Account'' and inserting ``United States
Patent and Trademark Office Innovation Promotion
Fund'';
(3) by striking subsection (c) and inserting the following:
``(c) Collection of Funds for PTO Activities.--
``(1) In general.--Fees authorized in this title or any
other Act to be charged or established by the Director shall be
collected by the Director and shall be available to the
Director until expended to carry out the activities of the
Patent and Trademark Office.
``(2) Use of fees.--
``(A) Patent fees.--Any fees that are collected
under this title, and any surcharges on such fees, may
only be used for expenses of the Office relating to the
processing of patent applications and for other
activities, services, and materials relating to patents
and to cover a proportionate share of the
administrative costs of the Office.
``(B) Trademark fees.--Any fees that are collected
under section 31 of the Trademark Act of 1946 (as
defined in subsection (d)(1)) (15 U.S.C. 1113), and any
surcharges on such fees, may only be used for expenses
of the Office relating to the processing of trademark
registrations and for other activities, services, and
materials relating to trademarks and to cover a
proportionate share of the administrative costs of the
Office.'';
(4) by redesignating subsections (d) and (e) as subsections
(e) and (f), respectively;
(5) by inserting after subsection (c) the following:
``(d) Revolving Fund.--
``(1) Definitions.--In this subsection--
``(A) the term `Fund' means the United States
Patent and Trademark Office Innovation Promotion Fund
established under paragraph (2); and
``(B) the term `Trademark Act of 1946' means the
Act entitled `An Act to provide for the registration
and protection of trademarks used in commerce, to carry
out the provisions of certain international
conventions, and for other purposes', approved July 5,
1946 (15 U.S.C. 1051 et seq.) (commonly referred to as
the `Trademark Act of 1946' or the `Lanham Act').
``(2) Establishment.--There is established in the Treasury
a revolving fund to be known as the `United States Patent and
Trademark Office Innovation Promotion Fund'.
``(3) Derivation of resources.--There shall be deposited
into the Fund any fees collected under--
``(A) this title; or
``(B) the Trademark Act of 1946.
``(4) Expenses.--Amounts deposited into the Fund under
paragraph (3) shall be available, without fiscal year
limitation, to cover--
``(A) to the extent consistent with the limitation
on the use of fees under subsection (c), all expenses,
including all administrative and operating expenses,
determined by the Director to be ordinary and
reasonable, incurred by the Director for the continued
operation of all services, programs, activities, and
duties of the Office relating to patents and
trademarks, as such services, programs, activities, and
duties are described under--
``(i) this title; and
``(ii) the Trademark Act of 1946; and
``(B) all expenses incurred pursuant to any
obligation, representation, or other commitment of the
Office.'';
(6) in subsection (e), as so redesignated, by striking
``The Director'' and inserting the following:
``(e) Refunds.--The Director''; and
(7) in subsection (f), as so redesignated, by striking
``The Secretary'' and inserting the following:
``(f) Report.--The Secretary''.
(b) Effective Date; Transfer From and Termination of Obsolete
Funds.--
(1) Effective date.--The amendments made by subsection (a)
shall take effect on the first day of the first fiscal year
that begins on or after the date of enactment of this Act.
(2) Remaining balances.--On the effective date described in
paragraph (1), there shall be deposited in the United States
Patent and Trademark Office Innovation Promotion Fund
established under section 42(d)(2) of title 35, United States
Code (as added by subsection (a)), any available unobligated
balances remaining in the Patent and Trademark Office
Appropriation Account, and in the Patent and Trademark Fee
Reserve Fund established under section 42(c)(2) of title 35,
United States Code, as in effect on the day before that
effective date.
(3) Termination of reserve fund.--Upon the payment of all
obligated amounts in the Patent and Trademark Fee Reserve Fund
under paragraph (2), the Patent and Trademark Fee Reserve Fund
shall be terminated.
SEC. 8. INSTITUTIONS OF HIGHER EDUCATION.
Section 123(d) of title 35, United States Code, is amended to read
as follows:
``(d) Institutions of Higher Education.--
``(1) Definition.--In this subsection, the term
`institution of higher education' has the meaning given the
term in section 101(a) of the Higher Education Act of 1965 (20
U.S.C. 1001(a)).
``(2) Inclusions.--For purposes of this section, a micro
entity shall include an applicant who certifies that--
``(A) the applicant's employer, from which the
applicant obtains the majority of the applicant's
income, is an institution of higher education;
``(B) the applicant has assigned, granted,
conveyed, or is under an obligation by contract or law
to assign, grant, or convey, a license or other
ownership interest in the particular applications to an
institution of higher education;
``(C) the applicant is an institution of higher
education; or
``(D) the applicant is an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986
and exempt from taxation under section 501(a) of such
Code that holds title to patents and patent
applications on behalf of an institution of higher
education for the purpose of facilitating
commercialization of the technologies of the patents
and patent applications.''.
SEC. 9. ASSISTING SMALL BUSINESSES IN THE UNITED STATES PATENT SYSTEM.
(a) Definition.--In this section, the term ``small business
concern'' has the meaning given the term in section 3 of the Small
Business Act (15 U.S.C. 632).
(b) Small Business Administration Report.--Not later than 1 year
after the date of the enactment of this Act, the Administrator of the
Small Business Administration, using existing resources, shall submit
to the Committee on Small Business and Entrepreneurship of the Senate
and the Committee on Small Business of the House of Representatives a
report analyzing the impact of--
(1) patent ownership by small business concerns; and
(2) civil actions against small business concerns arising
under title 35, United States Code, relating to patent
infringement.
(c) Free Online Availability of Public Search Facility Materials.--
Section 41(i) of title 35, United States Code, is amended by adding at
the end the following:
``(5) Free online availability of public search facility
materials.--The Director shall make available online and at no
charge all patent and trademark information that is available
at the Public Search Facility of the Office located in
Alexandria, Virginia, including, except to the extent that
licenses with third-party contractors would make such provision
financially unviable--
``(A) search tools and databases;
``(B) informational materials; and
``(C) training classes and materials.''.
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