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112th Congress                                             Rept. 112-98
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
                          AMERICA INVENTS ACT

                                _______
                                

  June 1, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

       Mr. Smith of Texas, from the Committee on the Judiciary, 
                        submitted the following

                              R E P O R T

                             together with

                 DISSENTING VIEWS AND ADDITIONAL VIEWS

                        [To accompany H.R. 1249]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1249) to amend title 35, United States Code, to 
provide for patent reform, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................    38
Background and Need for the Legislation..........................    40
Hearings.........................................................    57
Committee Consideration..........................................    58
Committee Votes..................................................    58
Committee Oversight Findings.....................................    63
New Budget Authority and Tax Expenditures........................    63
Congressional Budget Office Cost Estimate........................    63
Performance Goals and Objectives.................................    73
Advisory on Earmarks.............................................    73
Section-by-Section Analysis......................................    73
Agency Views.....................................................    85
Changes in Existing Law Made by the Bill, as Reported............    89
Dissenting Views.................................................   162
Additional Views.................................................   163

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. First inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Defense to infringement based on earlier inventor.
Sec. 6. Post-grant review proceedings.
Sec. 7. Patent Trial and Appeal Board.
Sec. 8. Preissuance submissions by third parties.
Sec. 9. Venue.
Sec. 10. Fee setting authority.
Sec. 11. Fees for patent services.
Sec. 12. Supplemental examination.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Marking.
Sec. 17. Advice of counsel.
Sec. 18. Transitional program for covered business method patents.
Sec. 19. Jurisdiction and procedural matters.
Sec. 20. Technical amendments.
Sec. 21. Travel expenses and payment of administrative judges.
Sec. 22. Patent and Trademark Office funding.
Sec. 23. Satellite offices.
Sec. 24. Designation of Detroit satellite office.
Sec. 25. Patent Ombudsman Program for small business concerns.
Sec. 26. Priority examination for technologies important to American 
competitiveness.
Sec. 27. Calculation of 60-day period for application of patent term 
extension.
Sec. 28. Study on implementation.
Sec. 29. Pro bono program.
Sec. 30. Effective date.
Sec. 31. Budgetary effects.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Director.--The term ``Director'' means the Under 
        Secretary of Commerce for Intellectual Property and Director of 
        the United States Patent and Trademark Office.
            (2) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (3) Patent public advisory committee.--The term ``Patent 
        Public Advisory Committee'' means the Patent Public Advisory 
        Committee established under section 5(a)(1) of title 35, United 
        States Code.
            (4) Trademark act of 1946.--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'').
            (5) Trademark public advisory committee.--The term 
        ``Trademark Public Advisory Committee'' means the Trademark 
        Public Advisory Committee established under section 5(a)(1) of 
        title 35, United States Code.

SEC. 3. FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 of title 35, United States Code, is 
amended--
            (1) in subsection (e), by striking ``or inter partes 
        reexamination under section 311''; and
            (2) by adding at the end the following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of the invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any 1 of the 
individuals who invented or discovered the subject matter of a joint 
invention.
    ``(h) The term `joint research agreement' means a written contract, 
grant, or cooperative agreement entered into by 2 or more persons or 
entities for the performance of experimental, developmental, or 
research work in the field of the claimed invention.
    ``(i)(1) The term `effective filing date' for a claimed invention 
in a patent or application for patent means--
            ``(A) if subparagraph (B) does not apply, the actual filing 
        date of the patent or the application for the patent containing 
        a claim to the invention; or
            ``(B) the filing date of the earliest application for which 
        the patent or application is entitled, as to such invention, to 
        a right of priority under section 119, 365(a), or 365(b) or to 
        the benefit of an earlier filing date un
    ``(2) The effective filing date for a claimed invention in an 
application for reissue or reissued patent shall be determined by 
deeming the claim to the invention to have been contained in the patent 
for which reissue was sought.
    ``(j) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.''.
    (b) Conditions for Patentability.--
            (1) In general.--Section 102 of title 35, United States 
        Code, is amended to read as follows:

``Sec. 102. Conditions for patentability; novelty

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

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

``Sec. 103. Conditions for patentability; non-obvious subject matter

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

``Sec. 291. Derived Patents

    ``(a) In General.--The owner of a patent may have relief by civil 
action against the owner of another patent that claims the same 
invention and has an earlier effective filing date, if the invention 
claimed in such other patent was derived from the inventor of the 
invention claimed in the patent owned by the person seeking relief 
under this section.
    ``(b) Filing Limitation.--An action under this section may be filed 
only before the end of the 1-year period beginning on the date of the 
issuance of the first patent containing a claim to the allegedly 
derived invention and naming an individual alleged to have derived such 
invention as the inventor or joint inventor.''.
            (2) Conforming amendment.--The item relating to section 291 
        in the table of sections for chapter 29 of title 35, United 
        States Code, is amended to read as follows:

``291. Derived patents.''.
    (i) Derivation Proceedings.--Section 135 of title 35, United States 
Code, is amended to read as follows:

``Sec. 135. Derivation proceedings

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

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

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

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

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

``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.
    (6) The item relating to section 146 in the table of sections for 
chapter 13 of title 35, United States Code, is amended to read as 
follows:

``146. Civil action in case of derivation proceeding.''.
    (k) Statute of Limitations.--
            (1) In general.--Section 32 of title 35, United States 
        Code, is amended by inserting between the third and fourth 
        sentences the following: ``A proceeding under this section 
        shall be commenced not later than the earlier of either the 
        date that is 10 years after the date on which the misconduct 
        forming the basis for the proceeding occurred, or 1 year after 
        the date on which the misconduct forming the basis for the 
        proceeding is made known to an officer or employee of the 
        Office as prescribed in the regulations established under 
        section 2(b)(2)(D).''.
            (2) Report to congress.--The Director shall provide on a 
        biennial basis to the Judiciary Committees of the Senate and 
        House of Representatives a report providing a short description 
        of incidents made known to an officer or employee of the Office 
        as prescribed in the regulations established under section 
        2(b)(2)(D) of title 35, United States Code, that reflect 
        substantial evidence of misconduct before the Office but for 
        which the Office was barred from commencing a proceeding under 
        section 32 of title 35, United States Code, by the time 
        limitation established by the fourth sentence of that section.
            (3) Effective date.--The amendment made by paragraph (1) 
        shall apply in any case in which the time period for 
        instituting a proceeding under section 32 of title 35, United 
        States Code, had not lapsed before the date of the enactment of 
        this Act.
    (l) Small Business Study.--
            (1) Definitions.--In this subsection--
                    (A) the term ``Chief Counsel'' means the Chief 
                Counsel for Advocacy of the Small Business 
                Administration;
                    (B) the term ``General Counsel'' means the General 
                Counsel of the United States Patent and Trademark 
                Office; and
                    (C) the term ``small business concern'' has the 
                meaning given that term under section 3 of the Small 
                Business Act (15 U.S.C. 632).
            (2) Study.--
                    (A) In general.--The Chief Counsel, in consultation 
                with the General Counsel, shall conduct a study of the 
                effects of eliminating the use of dates of invention in 
                determining whether an applicant is entitled to a 
                patent under title 35, United States Code.
                    (B) Areas of study.--The study conducted under 
                subparagraph (A) shall include examination of the 
                effects of eliminating the use of invention dates, 
                including examining--
                            (i) how the change would affect the ability 
                        of small business concerns to obtain patents 
                        and their costs of obtaining patents;
                            (ii) whether the change would create, 
                        mitigate, or exacerbate any disadvantages for 
                        applicants for patents that are small business 
                        concerns relative to applicants for patents 
                        that are not small business concerns, and 
                        whether the change would create any advantages 
                        for applicants for patents that are small 
                        business concerns relative to applicants for 
                        patents that are not small business concerns;
                            (iii) the cost savings and other potential 
                        benefits to small business concerns of the 
                        change; and
                            (iv) the feasibility and costs and benefits 
                        to small business concerns of alternative means 
                        of determining whether an applicant is entitled 
                        to a patent under title 35, United States Code.
            (3) Report.--Not later than the date that is 1 year after 
        the date of the enactment of this Act, the Chief Counsel shall 
        submit to the Committee on Small Business and Entrepreneurship 
        and the Committee on the Judiciary of the Senate and the 
        Committee on Small Business and the Committee on the Judiciary 
        of the House of Representatives a report on the results of the 
        study under paragraph (2).
    (m) Report on Prior User Rights.--
            (1) In general.--Not later than the end of the 4-month 
        period beginning on the date of the enactment of this Act, the 
        Director shall report, to the Committee on the Judiciary of the 
        Senate and the Committee on the Judiciary of the House of 
        Representatives, the findings and recommendations of the 
        Director on the operation of prior user rights in selected 
        countries in the industrialized world. The report shall include 
        the following:
                    (A) A comparison between patent laws of the United 
                States and the laws of other industrialized countries, 
                including members of the European Union and Japan, 
                Canada, and Australia.
                    (B) An analysis of the effect of prior user rights 
                on innovation rates in the selected countries.
                    (C) An analysis of the correlation, if any, between 
                prior user rights and start-up enterprises and the 
                ability to attract venture capital to start new 
                companies.
                    (D) An analysis of the effect of prior user rights, 
                if any, on small businesses, universities, and 
                individual inventors.
                    (E) An analysis of legal and constitutional issues, 
                if any, that arise from placing trade secret law in 
                patent law.
                    (F) An analysis of whether the change to a first-
                to-file patent system creates a particular need for 
                prior user rights.
            (2) Consultation with other agencies.--In preparing the 
        report required under paragraph (1), the Director shall consult 
        with the United States Trade Representative, the Secretary of 
        State, and the Attorney General.
    (n) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        section, the amendments made by this section shall take effect 
        upon the expiration of the 18-month period beginning on the 
        date of the enactment of this Act, and shall apply to any 
        application for patent, and to any patent issuing thereon, that 
        contains or contained at any time--
                    (A) a claim to a claimed invention that has an 
                effective filing date as defined in section 100(i) of 
                title 35, United States Code, that is on or after the 
                effective date described in this paragraph; or
                    (B) a specific reference under section 120, 121, or 
                365(c) of title 35, United States Code, to any patent 
                or application that contains or contained at any time 
                such a claim.
            (2) Interfering patents.--The provisions of sections 
        102(g), 135, and 291 of title 35, United States Code, as in 
        effect on the day before the effective date set forth in 
        paragraph (1) of this subsection, shall apply to each claim of 
        an application for patent, and any patent issued thereon, for 
        which the amendments made by this section also apply, if such 
        application or patent contains or contained at any time--
                    (A) a claim to an invention having an effective 
                filing date as defined in section 100(i) of title 35, 
                United States Code, that occurs before the effective 
                date set forth in paragraph (1) of this subsection; or
                    (B) a specific reference under section 120, 121, or 
                365(c) of title 35, United States Code, to any patent 
                or application that contains or contained at any time 
                such a claim.
    (o) Study of Patent Litigation.--
            (1) GAO study.--The Comptroller General of the United 
        States shall conduct a study of the consequences of litigation 
        by non-practicing entities, or by patent assertion entities, 
        related to patent claims made under title 35, United States 
        Code, and regulations authorized by that title.
            (2) Contents of study.--The study conducted under this 
        subsection shall include the following:
                    (A) The annual volume of litigation described in 
                paragraph (1) over the 20-year period ending on the 
                date of the enactment of this Act.
                    (B) The volume of cases comprising such litigation 
                that are found to be without merit after judicial 
                review.
                    (C) The impacts of such litigation on the time 
                required to resolve patent claims.
                    (D) The estimated costs, including the estimated 
                cost of defense, associated with such litigation for 
                patent holders, patent licensors, patent licensees, and 
                inventors, and for users of alternate or competing 
                innovations.
                    (E) The economic impact of such litigation on the 
                economy of the United States, including the impact on 
                inventors, job creation, employers, employees, and 
                consumers.
                    (F) The benefit to commerce, if any, supplied by 
                non-practicing entities or patent assertion entities 
                that prosecute such litigation.
            (3) Report to congress.--The Comptroller General shall, not 
        later than the date that is 1 year after the date of the 
        enactment of this Act, submit to the Committee on the Judiciary 
        of the House of Representatives and the Committee on the 
        Judiciary of the Senate a report on the results of the study 
        required under this subsection, including recommendations for 
        any changes to laws and regulations that will minimize any 
        negative impact of patent litigation that was the subject of 
        such study.
    (p) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent registration system from ``first 
inventor to use'' to a system of ``first inventor to file'' will 
promote the progress of science by securing for limited times to 
inventors the exclusive rights to their discoveries and provide 
inventors with greater certainty regarding the scope of protection 
granted by the exclusive rights to their discoveries.
    (q) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent registration system from ``first 
inventor to use'' to a system of ``first inventor to file'' will 
harmonize the United States patent registration system with the patent 
registration systems commonly used in nearly all other countries 
throughout the world with whom the United States conducts trade and 
thereby promote a greater sense of international uniformity and 
certainty in the procedures used for securing the exclusive rights of 
inventors to their discoveries.

SEC. 4. INVENTOR'S OATH OR DECLARATION.

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

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

    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a) or commences 
the national stage under section 371 shall include, or be amended to 
include, the name of the inventor for any invention claimed in the 
application. Except as otherwise provided in this section, each 
individual who is the inventor or a joint inventor of a claimed 
invention in an application for patent shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration under subsection 
(a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by the affiant or declarant; and
            ``(2) such individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) is permitted with respect to any individual 
        who--
                    ``(A) is unable to file the oath or declaration 
                under subsection (a) because the individual--
                            ``(i) is deceased;
                            ``(ii) is under legal incapacity; or
                            ``(iii) cannot be found or reached after 
                        diligent effort; or
                    ``(B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--
            ``(1) Exception.--The requirements under this section shall 
        not apply to an individual with respect to an application for 
        patent in which the individual is named as the inventor or a 
        joint inventor and who claims the benefit under section 120, 
        121, or 365(c) of the filing of an earlier-filed application, 
        if--
                    ``(A) an oath or declaration meeting the 
                requirements of subsection (a) was executed by the 
                individual and was filed in connection with the 
                earlier-filed application;
                    ``(B) a substitute statement meeting the 
                requirements of subsection (d) was filed in connection 
                with the earlier filed application with respect to the 
                individual; or
                    ``(C) an assignment meeting the requirements of 
                subsection (e) was executed with respect to the 
                earlier-filed application by the individual and was 
                recorded in connection with the earlier-filed 
                application.
            ``(2) Copies of oaths, declarations, statements, or 
        assignments.--Notwithstanding paragraph (1), the Director may 
        require that a copy of the executed oath or declaration, the 
        substitute statement, or the assignment filed in connection 
        with the earlier-filed application be included in the later-
        filed application.
    ``(h) Supplemental and Corrected Statements; Filing Additional 
Statements.--
            ``(1) In general.--Any person making a statement required 
        under this section may withdraw, replace, or otherwise correct 
        the statement at any time. If a change is made in the naming of 
        the inventor requiring the filing of 1 or more additional 
        statements under this section, the Director shall establish 
        regulations under which such additional statements may be 
        filed.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration meeting the 
        requirements of subsection (a) or an assignment meeting the 
        requirements of subsection (e) with respect to an application 
        for patent, the Director may not thereafter require that 
        individual to make any additional oath, declaration, or other 
        statement equivalent to those required by this section in 
        connection with the application for patent or any patent 
        issuing thereon.
            ``(3) Savings clause.--A patent shall not be invalid or 
        unenforceable based upon the failure to comply with a 
        requirement under this section if the failure is remedied as 
        provided under paragraph (1).
    ``(i) Acknowledgment of Penalties.--Any declaration or statement 
filed pursuant to this section shall contain an acknowledgment that any 
willful false statement made in such declaration or statement is 
punishable under section 1001 of title 18 by fine or imprisonment of 
not more than 5 years, or both.''.
            (2) Relationship to divisional applications.--Section 121 
        of title 35, United States Code, is amended by striking ``If a 
        divisional application'' and all that follows through 
        ``inventor.''.
            (3) Requirements for nonprovisional applications.--Section 
        111(a) of title 35, United States Code, is amended--
                    (A) in paragraph (2)(C), by striking ``by the 
                applicant'' and inserting ``or declaration'';
                    (B) in the heading for paragraph (3), by inserting 
                ``or declaration'' after ``and oath''; and
                    (C) by inserting ``or declaration'' after ``and 
                oath'' each place it appears.
            (4) Conforming amendment.--The item relating to section 115 
        in the table of sections for chapter 11 of title 35, United 
        States Code, is amended to read as follows:

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

``Sec. 118. Filing by other than inventor

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

SEC. 5. DEFENSE TO INFRINGEMENT BASED ON EARLIER INVENTOR.

    Section 273 of title 35, United States Code, is amended as follows:
            (1) Subsection (a) is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``use of a method in'' and 
                        inserting ``use of the subject matter of a 
                        patent in''; and
                            (ii) by adding ``and'' after the semicolon;
                    (B) in paragraph (2), by striking the semicolon at 
                the end of subparagraph (B) and inserting a period; and
                    (C) by striking paragraphs (3) and (4).
            (2) Subsection (b) is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``for a method''; and
                            (ii) by striking ``at least 1 year'' and 
                        all that follows through the end and inserting 
                        ``and commercially used the subject matter at 
                        least 1 year before the effective filing date 
                        of the claimed invention that is the subject 
                        matter of the patent.'';
                    (B) in paragraph (2), by striking ``patented 
                method'' and inserting ``patented process'';
                    (C) in paragraph (3)--
                            (i) by striking subparagraph (A);
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(A) Derivation and prior disclosure to the 
                public.--A person may not assert the defense under this 
                section if--
                            ``(i) the subject matter on which the 
                        defense is based was derived from the patentee 
                        or persons in privity with the patentee; or
                            ``(ii) the claimed invention that is the 
                        subject of the defense was disclosed to the 
                        public in a manner that qualified for the 
                        exception from the prior art under section 
                        102(b) and the commercialization date relied 
                        upon under paragraph (1) of this subsection for 
                        establishing entitlement to the defense is less 
                        than 1 year before the date of such disclosure 
                        to the public;'';
                            (iii) by redesignating subparagraph (C) as 
                        subparagraph (B); and
                            (iv) by adding at the end the following:
                    ``(C) Funding.--
                            ``(i) Defense not available in certain 
                        cases.--A person may not assert the defense 
                        under this section if the subject matter of the 
                        patent on which the defense is based was 
                        developed pursuant to a funding agreement under 
                        chapter 18 or by a nonprofit institution of 
                        higher education, or a technology transfer 
                        organization affiliated with such an 
                        institution, that did not receive funding from 
                        a private business enterprise in support of 
                        that development.
                            ``(ii) Definitions.--In this subparagraph--
                                    ``(I) the term `institution of 
                                higher education' has the meaning given 
                                that term in section 101(a) of the 
                                Higher Education Act of 1965 (20 U.S.C. 
                                1001(a)); and
                                    ``(II) the term `technology 
                                transfer organization' means an 
                                organization the primary purpose of 
                                which is to facilitate the 
                                commercialization of technologies 
                                developed by one or more institutions 
                                of higher education.''; and
                    (D) by amending paragraph (6) to read as follows:
            ``(6) Personal defense.--
                    ``(A) In general.--The defense under this section 
                may be asserted only by the person who performed or 
                caused the performance of the acts necessary to 
                establish the defense, as well as any other entity that 
                controls, is controlled by, or is under common control 
                with such person, and, except for any transfer to the 
                patent owner, the right to assert the defense shall not 
                be licensed or assigned or transferred to another 
                person except as an ancillary and subordinate part of a 
                good faith assignment or transfer for other reasons of 
                the entire enterprise or line of business to which the 
                defense relates.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                any person may, on the person's own behalf, assert a 
                defense based on the exhaustion of rights provided 
                under paragraph (2), including any necessary elements 
                thereof.''.

SEC. 6. POST-GRANT REVIEW PROCEEDINGS.

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

                   ``CHAPTER 31--INTER PARTES REVIEW

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

``Sec. 311. Inter partes review

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

``Sec. 312. Petitions

    ``(a) Requirements of Petition.--A petition filed under section 311 
may be considered only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 311;
            ``(2) the petition identifies all real parties in interest;
            ``(3) the petition identifies, in writing and with 
        particularity, each claim challenged, the grounds on which the 
        challenge to each claim is based, and the evidence that 
        supports the grounds for the challenge to each claim, 
        including--
                    ``(A) copies of patents and printed publications 
                that the petitioner relies upon in support of the 
                petition; and
                    ``(B) affidavits or declarations of supporting 
                evidence and opinions, if the petitioner relies on 
                expert opinions;
            ``(4) the petition provides such other information as the 
        Director may require by regulation; and
            ``(5) the petitioner provides copies of any of the 
        documents required under paragraphs (2), (3), and (4) to the 
        patent owner or, if applicable, the designated representative 
        of the patent owner.
    ``(b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 311, the Director shall make the 
petition available to the public.

``Sec. 313. Preliminary response to petition

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

``Sec. 314. Institution of inter partes review

    ``(a) Threshold.--The Director may not authorize an inter partes 
review to commence unless the Director determines that the information 
presented in the petition filed under section 311 and any response 
filed under section 313 shows that there is a reasonable likelihood 
that the petitioner would prevail with respect to at least 1 of the 
claims challenged in the petition.
    ``(b) Timing.--The Director shall determine whether to institute an 
inter partes review under this chapter pursuant to a petition filed 
under section 311 within 3 months after--
            ``(1) receiving a preliminary response to the petition 
        under section 313; or
            ``(2) if no such preliminary response is filed, the last 
        date on which such response may be filed.
    ``(c) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection 
(a), and shall make such notice available to the public as soon as is 
practicable. Such notice shall include the date on which the review 
shall commence.
    ``(d) No Appeal.--The determination by the Director whether to 
institute an inter partes review under this section shall be final and 
nonappealable.

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

    ``(a) Infringer's Civil Action.--
            ``(1) Inter partes review barred by civil action.--An inter 
        partes review may not be instituted if, before the date on 
        which the petition for such a review is filed, the petitioner, 
        real party in interest, or privy of the petitioner filed a 
        civil action challenging the validity of a claim of the patent.
            ``(2) Stay of civil action.--If the petitioner, real party 
        in interest, or privy of the petitioner files a civil action 
        challenging the validity of a claim of the patent on or after 
        the date on which the petitioner files a petition for inter 
        partes review of the patent, that civil action shall be 
        automatically stayed until either--
                    ``(A) the patent owner moves the court to lift the 
                stay;
                    ``(B) the patent owner files a civil action or 
                counterclaim alleging that the petitioner, real party 
                in interest, or privy of the petitioner has infringed 
                the patent; or
                    ``(C) the petitioner, real party in interest, or 
                privy of the petitioner moves the court to dismiss the 
                civil action.
            ``(3) Treatment of counterclaim.--A counterclaim 
        challenging the validity of a claim of a patent does not 
        constitute a civil action challenging the validity of a claim 
        of a patent for purposes of this subsection.
    ``(b) Patent Owner's Action.--An inter partes review may not be 
instituted if the petition requesting the proceeding is filed more than 
1 year after the date on which the petitioner, real party in interest, 
or privy of the petitioner is served with a complaint alleging 
infringement of the patent. The time limitation set forth in the 
preceding sentence shall not apply to a request for joinder under 
subsection (c).
    ``(c) Joinder.--If the Director institutes an inter partes review, 
the Director, in his or her discretion, may join as a party to that 
inter partes review any person who properly files a petition under 
section 311 that the Director, after receiving a preliminary response 
under section 313 or the expiration of the time for filing such a 
response, determines warrants the institution of an inter partes review 
under section 314.
    ``(d) Multiple Proceedings.--Notwithstanding sections 135(a), 251, 
and 252, and chapter 30, during the pendency of an inter partes review, 
if another proceeding or matter involving the patent is before the 
Office, the Director may determine the manner in which the inter partes 
review or other proceeding or matter may proceed, including providing 
for stay, transfer, consolidation, or termination of any such matter or 
proceeding.
    ``(e) Estoppel.--
            ``(1) Proceedings before the office.--The petitioner in an 
        inter partes review of a claim in a patent under this chapter 
        that results in a final written decision under section 318(a), 
        or the real party in interest or privy of the petitioner, may 
        not request or maintain a proceeding before the Office with 
        respect to that claim on any ground that the petitioner raised 
        or reasonably could have raised during that inter partes 
        review.
            ``(2) Civil actions and other proceedings.--The petitioner 
        in an inter partes review of a claim in a patent under this 
        chapter that results in a final written decision under section 
        318(a), or the real party in interest or privy of the 
        petitioner, may not assert either in a civil action arising in 
        whole or in part under section 1338 of title 28 or in a 
        proceeding before the International Trade Commission under 
        section 337 of the Tariff Act of 1930 that the claim is invalid 
        on any ground that the petitioner raised or reasonably could 
        have raised during that inter partes review.

``Sec. 316. Conduct of inter partes review

    ``(a) Regulations.--The Director shall prescribe regulations--
            ``(1) providing that the file of any proceeding under this 
        chapter shall be made available to the public, except that any 
        petition or document filed with the intent that it be sealed 
        shall, if accompanied by a motion to seal, be treated as sealed 
        pending the outcome of the ruling on the motion;
            ``(2) setting forth the standards for the showing of 
        sufficient grounds to institute a review under section 314(a);
            ``(3) establishing procedures for the submission of 
        supplemental information after the petition is filed;
            ``(4) establishing and governing inter partes review under 
        this chapter and the relationship of such review to other 
        proceedings under this title;
            ``(5) setting forth standards and procedures for discovery 
        of relevant evidence, including that such discovery shall be 
        limited to--
                    ``(A) the deposition of witnesses submitting 
                affidavits or declarations; and
                    ``(B) what is otherwise necessary in the interest 
                of justice;
            ``(6) prescribing sanctions for abuse of discovery, abuse 
        of process, or any other improper use of the proceeding, such 
        as to harass or to cause unnecessary delay or an unnecessary 
        increase in the cost of the proceeding;
            ``(7) providing for protective orders governing the 
        exchange and submission of confidential information;
            ``(8) providing for the filing by the patent owner of a 
        response to the petition under section 313 after an inter 
        partes review has been instituted, and requiring that the 
        patent owner file with such response, through affidavits or 
        declarations, any additional factual evidence and expert 
        opinions on which the patent owner relies in support of the 
        response;
            ``(9) setting forth standards and procedures for allowing 
        the patent owner to move to amend the patent under subsection 
        (d) to cancel a challenged claim or propose a reasonable number 
        of substitute claims, and ensuring that any information 
        submitted by the patent owner in support of any amendment 
        entered under subsection (d) is made available to the public as 
        part of the prosecution history of the patent;
            ``(10) providing either party with the right to an oral 
        hearing as part of the proceeding;
            ``(11) requiring that the final determination in an inter 
        partes review be issued not later than 1 year after the date on 
        which the Director notices the institution of a review under 
        this chapter, except that the Director may, for good cause 
        shown, extend the 1-year period by not more than 6 months, and 
        may adjust the time periods in this paragraph in the case of 
        joinder under section 315(c);
            ``(12) setting a time period for requesting joinder under 
        section 315(c); and
            ``(13) providing the petitioner with at least 1 opportunity 
        to file written comments within a time period established by 
        the Director.
    ``(b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such regulation 
on the economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to timely 
complete proceedings instituted under this chapter.
    ``(c) Patent Trial and Appeal Board.--The Patent Trial and Appeal 
Board shall, in accordance with section 6, conduct each inter partes 
review instituted under this chapter.
    ``(d) Amendment of the Patent.--
            ``(1) In general.--During an inter partes review instituted 
        under this chapter, the patent owner may file 1 motion to amend 
        the patent in 1 or more of the following ways:
                    ``(A) Cancel any challenged patent claim.
                    ``(B) For each challenged claim, propose a 
                reasonable number of substitute claims.
            ``(2) Additional motions.--Additional motions to amend may 
        be permitted upon the joint request of the petitioner and the 
        patent owner to materially advance the settlement of a 
        proceeding under section 317, or as permitted by regulations 
        prescribed by the Director.
            ``(3) Scope of claims.--An amendment under this subsection 
        may not enlarge the scope of the claims of the patent or 
        introduce new matter.
    ``(e) Evidentiary Standards.--In an inter partes review instituted 
under this chapter, the petitioner shall have the burden of proving a 
proposition of unpatentability by a preponderance of the evidence.

``Sec. 317. Settlement

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

``Sec. 318. Decision of the Board

    ``(a) Final Written Decision.--If an inter partes review is 
instituted and not dismissed under this chapter, the Patent Trial and 
Appeal Board shall issue a final written decision with respect to the 
patentability of any patent claim challenged by the petitioner and any 
new claim added under section 316(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Amended or New Claim.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following an 
inter partes review under this chapter shall have the same effect as 
that specified in section 252 for reissued patents on the right of any 
person who made, purchased, or used within the United States, or 
imported into the United States, anything patented by such proposed 
amended or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each inter partes review.

``Sec. 319. Appeal

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

``31. Inter Partes Review...................................     311''.
    (c) Regulations and Effective Date.--
            (1) Regulations.--The Director shall, not later than the 
        date that is 1 year after the date of the enactment of this 
        Act, issue regulations to carry out chapter 31 of title 35, 
        United States Code, as amended by subsection (a) of this 
        section.
            (2) Applicability.--
                    (A) In general.--The amendments made by subsection 
                (a) shall take effect upon the expiration of the 1-year 
                period beginning on the date of the enactment of this 
                Act and shall apply to any patent issued before, on, or 
                after that effective date.
                    (B) Graduated implementation.--The Director may 
                impose a limit on the number of inter partes reviews 
                that may be instituted under chapter 31 of title 35, 
                United States Code, during each of the first 4 1-year 
                periods in which the amendments made by subsection (a) 
                are in effect, if such number in each year equals or 
                exceeds the number of inter partes reexaminations that 
                are ordered under chapter 31 of title 35, United States 
                Code, in the last fiscal year ending before the 
                effective date of the amendments made by subsection 
                (a).
    (d) Post-Grant Review.--Part III of title 35, United States Code, 
is amended by adding at the end the following:

                    ``CHAPTER 32--POST-GRANT REVIEW

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

``Sec. 321. Post-grant review

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

``Sec. 322. Petitions

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

``Sec. 323. Preliminary response to petition

    ``If a post-grant review petition is filed under section 321, the 
patent owner shall have the right to file a preliminary response to the 
petition, within a time period set by the Director, that sets forth 
reasons why no post-grant review should be instituted based upon the 
failure of the petition to meet any requirement of this chapter.

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

    ``(a) Threshold.--The Director may not authorize a post-grant 
review to commence unless the Director determines that the information 
presented in the petition filed under section 321, if such information 
is not rebutted, would demonstrate that it is more likely than not that 
at least 1 of the claims challenged in the petition is unpatentable.
    ``(b) Additional Grounds.--The determination required under 
subsection (a) may also be satisfied by a showing that the petition 
raises a novel or unsettled legal question that is important to other 
patents or patent applications.
    ``(c) Timing.--The Director shall determine whether to institute a 
post-grant review under this chapter pursuant to a petition filed under 
section 321 within 3 months after--
            ``(1) receiving a preliminary response to the petition 
        under section 323; or
            ``(2) if no such preliminary response is filed, the last 
        date on which such response may be filed.
    ``(d) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection (a) 
or (b), and shall make such notice available to the public as soon as 
is practicable. The Director shall make each notice of the institution 
of a post-grant review available to the public. Such notice shall 
include the date on which the review shall commence.
    ``(e) No Appeal.--The determination by the Director whether to 
institute a post-grant review under this section shall be final and 
nonappealable.

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

    ``(a) Infringer's Civil Action.--
            ``(1) Post-grant review barred by civil action.--A post-
        grant review may not be instituted under this chapter if, 
        before the date on which the petition for such a review is 
        filed, the petitioner, real party in interest, or privy of the 
        petitioner filed a civil action challenging the validity of a 
        claim of the patent.
            ``(2) Stay of civil action.--If the petitioner, real party 
        in interest, or privy of the petitioner files a civil action 
        challenging the validity of a claim of the patent on or after 
        the date on which the petitioner files a petition for post-
        grant review of the patent, that civil action shall be 
        automatically stayed until either--
                    ``(A) the patent owner moves the court to lift the 
                stay;
                    ``(B) the patent owner files a civil action or 
                counterclaim alleging that the petitioner, real party 
                in interest, or privy of the petitioner has infringed 
                the patent; or
                    ``(C) the petitioner, real party in interest, or 
                privy of the petitioner moves the court to dismiss the 
                civil action.
            ``(3) Treatment of counterclaim.--A counterclaim 
        challenging the validity of a claim of a patent does not 
        constitute a civil action challenging the validity of a claim 
        of a patent for purposes of this subsection.
    ``(b) Preliminary Injunctions.--If a civil action alleging 
infringement of a patent is filed within 3 months after the date on 
which the patent is granted, the court may not stay its consideration 
of the patent owner's motion for a preliminary injunction against 
infringement of the patent on the basis that a petition for post-grant 
review has been filed under this chapter or that such a post-grant 
review has been instituted under this chapter.
    ``(c) Joinder.--If more than 1 petition for a post-grant review 
under this chapter is properly filed against the same patent and the 
Director determines that more than 1 of these petitions warrants the 
institution of a post-grant review under section 324, the Director may 
consolidate such reviews into a single post-grant review.
    ``(d) Multiple Proceedings.--Notwithstanding sections 135(a), 251, 
and 252, and chapter 30, during the pendency of any post-grant review 
under this chapter, if another proceeding or matter involving the 
patent is before the Office, the Director may determine the manner in 
which the post-grant review or other proceeding or matter may proceed, 
including providing for the stay, transfer, consolidation, or 
termination of any such matter or proceeding. In determining whether to 
institute or order a proceeding under this chapter, chapter 30, or 
chapter 31, the Director may take into account whether, and reject the 
petition or request because, the same or substantially the same prior 
art or arguments previously were presented to the Office.
    ``(e) Estoppel.--
            ``(1) Proceedings before the office.--The petitioner in a 
        post-grant review of a claim in a patent under this chapter 
        that results in a final written decision under section 328(a), 
        or the real party in interest or privy of the petitioner, may 
        not request or maintain a proceeding before the Office with 
        respect to that claim on any ground that the petitioner raised 
        or reasonably could have raised during that post-grant review.
            ``(2) Civil actions and other proceedings.--The petitioner 
        in a post-grant review of a claim in a patent under this 
        chapter that results in a final written decision under section 
        328(a), or the real party in interest or privy of the 
        petitioner, may not assert either in a civil action arising in 
        whole or in part under section 1338 of title 28 or in a 
        proceeding before the International Trade Commission under 
        section 337 of the Tariff Act of 1930 that the claim is invalid 
        on any ground that the petitioner raised or reasonably could 
        have raised during that post-grant review.
    ``(f) Reissue Patents.--A post-grant review may not be instituted 
under this chapter if the petition requests cancellation of a claim in 
a reissue patent that is identical to or narrower than a claim in the 
original patent from which the reissue patent was issued, and the time 
limitations in section 321(c) would bar filing a petition for a post-
grant review for such original patent.

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

    ``(a) Regulations.--The Director shall prescribe regulations--
            ``(1) providing that the file of any proceeding under this 
        chapter shall be made available to the public, except that any 
        petition or document filed with the intent that it be sealed 
        shall, if accompanied by a motion to seal, be treated as sealed 
        pending the outcome of the ruling on the motion;
            ``(2) setting forth the standards for the showing of 
        sufficient grounds to institute a review under subsections (a) 
        and (b) of section 324;
            ``(3) establishing procedures for the submission of 
        supplemental information after the petition is filed;
            ``(4) establishing and governing a post-grant review under 
        this chapter and the relationship of such review to other 
        proceedings under this title;
            ``(5) setting forth standards and procedures for discovery 
        of relevant evidence, including that such discovery shall be 
        limited to evidence directly related to factual assertions 
        advanced by either party in the proceeding;
            ``(6) prescribing sanctions for abuse of discovery, abuse 
        of process, or any other improper use of the proceeding, such 
        as to harass or to cause unnecessary delay or an unnecessary 
        increase in the cost of the proceeding;
            ``(7) providing for protective orders governing the 
        exchange and submission of confidential information;
            ``(8) providing for the filing by the patent owner of a 
        response to the petition under section 323 after a post-grant 
        review has been instituted, and requiring that the patent owner 
        file with such response, through affidavits or declarations, 
        any additional factual evidence and expert opinions on which 
        the patent owner relies in support of the response;
            ``(9) setting forth standards and procedures for allowing 
        the patent owner to move to amend the patent under subsection 
        (d) to cancel a challenged claim or propose a reasonable number 
        of substitute claims, and ensuring that any information 
        submitted by the patent owner in support of any amendment 
        entered under subsection (d) is made available to the public as 
        part of the prosecution history of the patent;
            ``(10) providing either party with the right to an oral 
        hearing as part of the proceeding; and
            ``(11) requiring that the final determination in any post-
        grant review be issued not later than 1 year after the date on 
        which the Director notices the institution of a proceeding 
        under this chapter, except that the Director may, for good 
        cause shown, extend the 1-year period by not more than 6 
        months, and may adjust the time periods in this paragraph in 
        the case of joinder under section 325(c).
    ``(b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such regulation 
on the economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to timely 
complete proceedings instituted under this chapter.
    ``(c) Patent Trial and Appeal Board.--The Patent Trial and Appeal 
Board shall, in accordance with section 6, conduct each post-grant 
review instituted under this chapter.
    ``(d) Amendment of the Patent.--
            ``(1) In general.--During a post-grant review instituted 
        under this chapter, the patent owner may file 1 motion to amend 
        the patent in 1 or more of the following ways:
                    ``(A) Cancel any challenged patent claim.
                    ``(B) For each challenged claim, propose a 
                reasonable number of substitute claims.
            ``(2) Additional motions.--Additional motions to amend may 
        be permitted upon the joint request of the petitioner and the 
        patent owner to materially advance the settlement of a 
        proceeding under section 327, or upon the request of the patent 
        owner for good cause shown.
            ``(3) Scope of claims.--An amendment under this subsection 
        may not enlarge the scope of the claims of the patent or 
        introduce new matter.
    ``(e) Evidentiary Standards.--In a post-grant review instituted 
under this chapter, the petitioner shall have the burden of proving a 
proposition of unpatentability by a preponderance of the evidence.

``Sec. 327. Settlement

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

``Sec. 328. Decision of the Board

    ``(a) Final Written Decision.--If a post-grant review is instituted 
and not dismissed under this chapter, the Patent Trial and Appeal Board 
shall issue a final written decision with respect to the patentability 
of any patent claim challenged by the petitioner and any new claim 
added under section 326(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Amended or New Claim.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following a 
post-grant review under this chapter shall have the same effect as that 
specified in section 252 of this title for reissued patents on the 
right of any person who made, purchased, or used within the United 
States, or imported into the United States, anything patented by such 
proposed amended or new claim, or who made substantial preparation 
therefor, before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each post-grant review.

``Sec. 329. Appeal

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

``32. Post-Grant Review.....................................     321''.
    (f) Regulations and Effective Date.--
            (1) Regulations.--The Director shall, not later than the 
        date that is 1 year after the date of the enactment of this 
        Act, issue regulations to carry out chapter 32 of title 35, 
        United States Code, as added by subsection (d) of this section.
            (2) Applicability.--
                    (A) In general.--The amendments made by subsection 
                (d) shall take effect upon the expiration of the 1-year 
                period beginning on the date of the enactment of this 
                Act and, except as provided in section 18 and in 
                paragraph (3), shall apply to any patent that is 
                described in section 3(n)(1).
                    (B) Limitation.--The Director may impose a limit on 
                the number of post-grant reviews that may be instituted 
                under chapter 32 of title 35, United States Code, 
                during each of the first 4 1-year periods in which the 
                amendments made by subsection (d) are in effect.
            (3) Pending interferences.--
                    (A) Procedures in general.--The Director shall 
                determine, and include in the regulations issued under 
                paragraph (1), the procedures under which an 
                interference commenced before the effective date set 
                forth in paragraph (2)(A) is to proceed, including 
                whether such interference--
                            (i) is to be dismissed without prejudice to 
                        the filing of a petition for a post-grant 
                        review under chapter 32 of title 35, United 
                        States Code; or
                            (ii) is to proceed as if this Act had not 
                        been enacted.
                    (B) Proceedings by patent trial and appeal board.--
                For purposes of an interference that is commenced 
                before the effective date set forth in paragraph 
                (2)(A), the Director may deem the Patent Trial and 
                Appeal Board to be the Board of Patent Appeals and 
                Interferences, and may allow the Patent Trial and 
                Appeal Board to conduct any further proceedings in that 
                interference.
                    (C) Appeals.--The authorization to appeal or have 
                remedy from derivation proceedings in sections 141(d) 
                and 146 of title 35, United States Code, as amended by 
                this Act, and the jurisdiction to entertain appeals 
                from derivation proceedings in section 1295(a)(4)(A) of 
                title 28, United States Code, as amended by this Act, 
                shall be deemed to extend to any final decision in an 
                interference that is commenced before the effective 
                date set forth in paragraph (2)(A) of this subsection 
                and that is not dismissed pursuant to this paragraph.
    (g) Citation of Prior Art and Written Statements.--
            (1) In general.--Section 301 of title 35, United States 
        Code, is amended to read as follows:

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

    ``(a) In General.--Any person at any time may cite to the Office in 
writing--
            ``(1) prior art consisting of patents or printed 
        publications which that person believes to have a bearing on 
        the patentability of any claim of a particular patent; or
            ``(2) statements of the patent owner filed in a proceeding 
        before a Federal court or the Office in which the patent owner 
        took a position on the scope of any claim of a particular 
        patent.
    ``(b) Official File.--If the person citing prior art or written 
statements pursuant to subsection (a) explains in writing the 
pertinence and manner of applying the prior art or written statements 
to at least 1 claim of the patent, the citation of the prior art or 
written statements and the explanation thereof shall become a part of 
the official file of the patent.
    ``(c) Additional Information.--A party that submits a written 
statement pursuant to subsection (a)(2) shall include any other 
documents, pleadings, or evidence from the proceeding in which the 
statement was filed that addresses the written statement.
    ``(d) Limitations.--A written statement submitted pursuant to 
subsection (a)(2), and additional information submitted pursuant to 
subsection (c), shall not be considered by the Office for any purpose 
other than to determine the proper meaning of a patent claim in a 
proceeding that is ordered or instituted pursuant to section 304, 314, 
or 324. If any such written statement or additional information is 
subject to an applicable protective order, such statement or 
information shall be redacted to exclude information that is subject to 
that order.
    ``(e) Confidentiality.--Upon the written request of the person 
citing prior art or written statements pursuant to subsection (a), that 
person's identity shall be excluded from the patent file and kept 
confidential.''.
            (2) Conforming amendment.--The item relating to section 301 
        in the table of sections for chapter 30 of title 35, United 
        States Code, is amended to read as follows:

``301. Citation of prior art and written statements.''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and shall 
        apply to any patent issued before, on, or after that effective 
        date.
    (h) Reexamination.--
            (1) Determination by director.--
                    (A) In general.--Section 303(a) of title 35, United 
                States Code, is amended by striking ``section 301 of 
                this title'' and inserting ``section 301 or 302''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall take effect upon the expiration of the 
                1-year period beginning on the date of the enactment of 
                this Act and shall apply to any patent issued before, 
                on, or after that effective date.
            (2) Appeal.--
                    (A) In general.--Section 306 of title 35, United 
                States Code, is amended by striking ``145'' and 
                inserting ``144''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall take effect on the date of the 
                enactment of this Act and shall apply to any appeal of 
                a reexamination before the Board of Patent Appeals and 
                Interferences or the Patent Trial and Appeal Board that 
                is pending on, or brought on or after, the date of the 
                enactment of this Act.

SEC. 7. PATENT TRIAL AND APPEAL BOARD.

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

``Sec. 6. Patent Trial and Appeal Board

    ``(a) In General.--There shall be in the Office a Patent Trial and 
Appeal Board. The Director, the Deputy Director, the Commissioner for 
Patents, the Commissioner for Trademarks, and the administrative patent 
judges shall constitute the Patent Trial and Appeal Board. The 
administrative patent judges shall be persons of competent legal 
knowledge and scientific ability who are appointed by the Secretary, in 
consultation with the Director. Any reference in any Federal law, 
Executive order, rule, regulation, or delegation of authority, or any 
document of or pertaining to the Board of Patent Appeals and 
Interferences is deemed to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon applications for patents pursuant 
        to section 134(a);
            ``(2) review appeals of reexaminations pursuant to section 
        134(b);
            ``(3) conduct derivation proceedings pursuant to section 
        135; and
            ``(4) conduct inter partes reviews and post-grant reviews 
        pursuant to chapters 31 and 32.
    ``(c) 3-Member Panels.--Each appeal, derivation proceeding, post-
grant review, and inter partes review shall be heard by at least 3 
members of the Patent Trial and Appeal Board, who shall be designated 
by the Director. Only the Patent Trial and Appeal Board may grant 
rehearings.
    ``(d) Treatment of Prior Appointments.--The Secretary of Commerce 
may, in the Secretary's discretion, deem the appointment of an 
administrative patent judge who, before the date of the enactment of 
this subsection, held office pursuant to an appointment by the Director 
to take effect on the date on which the Director initially appointed 
the administrative patent judge. It shall be a defense to a challenge 
to the appointment of an administrative patent judge on the basis of 
the judge's having been originally appointed by the Director that the 
administrative patent judge so appointed was acting as a de facto 
officer.''.
            (2) Conforming amendment.--The item relating to section 6 
        in the table of sections for chapter 1 of title 35, United 
        States Code, is amended to read as follows:

``6. Patent Trial and Appeal Board.''.
    (b) Administrative Appeals.--Section 134 of title 35, United States 
Code, is amended--
            (1) in subsection (b), by striking ``any reexamination 
        proceeding'' and inserting ``a reexamination''; and
            (2) by striking subsection (c).
    (c) Circuit Appeals.--
            (1) In general.--Section 141 of title 35, United States 
        Code, is amended to read as follows:

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

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

SEC. 8. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.

    (a) In General.--Section 122 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(e) Preissuance Submissions by Third Parties.--
            ``(1) In general.--Any third party may submit for 
        consideration and inclusion in the record of a patent 
        application, any patent, published patent application, or other 
        printed publication of potential relevance to the examination 
        of the application, if such submission is made in writing 
        before the earlier of--
                    ``(A) the date a notice of allowance under section 
                151 is given or mailed in the application for patent; 
                or
                    ``(B) the later of--
                            ``(i) 6 months after the date on which the 
                        application for patent is first published under 
                        section 122 by the Office, or
                            ``(ii) the date of the first rejection 
                        under section 132 of any claim by the examiner 
                        during the examination of the application for 
                        patent.
            ``(2) Other requirements.--Any submission under paragraph 
        (1) shall--
                    ``(A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    ``(B) be accompanied by such fee as the Director 
                may prescribe; and
                    ``(C) include a statement by the person making such 
                submission affirming that the submission was made in 
                compliance with this section.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent application 
filed before, on, or after that effective date.

SEC. 9. VENUE.

    (a) Technical Amendments Relating to Venue.--Sections 32, 145, 146, 
154(b)(4)(A), and 293 of title 35, United States Code, and section 
21(b)(4) of the Trademark Act of 1946 (15 U.S.C. 1071(b)(4)), are each 
amended by striking ``United States District Court for the District of 
Columbia'' each place that term appears and inserting ``United States 
District Court for the Eastern District of Virginia''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act and shall apply to any 
civil action commenced on or after that date.

SEC. 10. FEE SETTING AUTHORITY.

    (a) Fee Setting.--
            (1) In general.--The Director may set or adjust by rule any 
        fee established, authorized, or charged under title 35, United 
        States Code, or the Trademark Act of 1946 (15 U.S.C. 1051 et 
        seq.), for any services performed by or materials furnished by, 
        the Office, subject to paragraph (2).
            (2) Fees to recover costs.--Fees may be set or adjusted 
        under paragraph (1) only to recover the aggregate estimated 
        costs to the Office for processing, activities, services, and 
        materials relating to patents (in the case of patent fees) and 
        trademarks (in the case of trademark fees), including 
        administrative costs of the Office with respect to such patent 
        or trademark fees (as the case may be).
    (b) Small and Micro Entities.--The fees set or adjusted under 
subsection (a) for filing, searching, examining, issuing, appealing, 
and maintaining patent applications and patents shall be reduced by 50 
percent with respect to the application of such fees to any small 
entity that qualifies for reduced fees under section 41(h)(1) of title 
35, United States Code, and shall be reduced by 75 percent with respect 
to the application of such fees to any micro entity as defined in 
section 123 of that title (as added by subsection (g) of this section).
    (c) Reduction of Fees in Certain Fiscal Years.--In each fiscal 
year, the Director--
            (1) shall consult with the Patent Public Advisory Committee 
        and the Trademark Public Advisory Committee on the advisability 
        of reducing any fees described in subsection (a); and
            (2) after the consultation required under paragraph (1), 
        may reduce such fees.
    (d) Role of the Public Advisory Committee.--The Director shall--
            (1) not less than 45 days before publishing any proposed 
        fee under subsection (a) in the Federal Register, submit the 
        proposed fee to the Patent Public Advisory Committee or the 
        Trademark Public Advisory Committee, or both, as appropriate;
            (2)(A) provide the relevant advisory committee described in 
        paragraph (1) a 30-day period following the submission of any 
        proposed fee, in which to deliberate, consider, and comment on 
        such proposal;
            (B) require that, during that 30-day period, the relevant 
        advisory committee hold a public hearing relating to such 
        proposal; and
            (C) assist the relevant advisory committee in carrying out 
        that public hearing, including by offering the use of the 
        resources of the Office to notify and promote the hearing to 
        the public and interested stakeholders;
            (3) require the relevant advisory committee to make 
        available to the public a written report setting forth in 
        detail the comments, advice, and recommendations of the 
        committee regarding the proposed fee; and
            (4) consider and analyze any comments, advice, or 
        recommendations received from the relevant advisory committee 
        before setting or adjusting (as the case may be) the fee.
    (e) Publication in the Federal Register.--
            (1) Publication and rationale.--The Director shall--
                    (A) publish any proposed fee change under this 
                section in the Federal Register;
                    (B) include, in such publication, the specific 
                rationale and purpose for the proposal, including the 
                possible expectations or benefits resulting from the 
                proposed change; and
                    (C) notify, through the Chair and Ranking Member of 
                the Committees on the Judiciary of the Senate and the 
                House of Representatives, the Congress of the proposed 
                change not later than the date on which the proposed 
                change is published under subparagraph (A).
            (2) Public comment period.--The Director shall, in the 
        publication under paragraph (1), provide the public a period of 
        not less than 45 days in which to submit comments on the 
        proposed change in fees.
            (3) Publication of final rule.--The final rule setting or 
        adjusting a fee under this section shall be published in the 
        Federal Register and in the Official Gazette of the Patent and 
        Trademark Office.
            (4) Congressional comment period.--A fee set or adjusted 
        under subsection (a) may not become effective--
                    (A) before the end of the 45-day period beginning 
                on the day after the date on which the Director 
                publishes the final rule adjusting or setting the fee 
                under paragraph (3); or
                    (B) if a law is enacted disapproving such fee.
            (5) Rule of construction.--Rules prescribed under this 
        section shall not diminish--
                    (A) the rights of an applicant for a patent under 
                title 35, United States Code, or for a mark under the 
                Trademark Act of 1946; or
                    (B) any rights under a ratified treaty.
    (f) Retention of Authority.--The Director retains the authority 
under subsection (a) to set or adjust fees only during such period as 
the Patent and Trademark Office remains an agency within the Department 
of Commerce.
    (g) Micro Entity Defined.--
            (1) In general.--Chapter 11 of title 35, United States 
        Code, is amended by adding at the end the following new 
        section:

``Sec. 123. Micro entity defined

    ``(a) In General.--For purposes of this title, the term `micro 
entity' means an applicant who makes a certification that the 
applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director;
            ``(2) has not been named as an inventor on more than 4 
        previously filed patent applications, other than applications 
        filed in another country, provisional applications under 
        section 111(b), or international applications filed under the 
        treaty defined in section 351(a) for which the basic national 
        fee under section 41(a) was not paid;
            ``(3) did not, in the calendar year preceding the calendar 
        year in which the examination fee for the application is being 
        paid, have a gross income, as defined in section 61(a) of the 
        Internal Revenue Code of 1986, exceeding 3 times the median 
        household income for that preceding calendar year, as reported 
        by the Bureau of the Census; and
            ``(4) has not assigned, granted, or conveyed, and is not 
        under an obligation by contract or law to assign, grant, or 
        convey, a license or other ownership interest in the 
        application concerned to an entity that, in the calendar year 
        preceding the calendar year in which the examination fee for 
        the application is being paid, had a gross income, as defined 
        in section 61(a) of the Internal Revenue Code of 1986, 
        exceeding 3 times the median household income for that 
        preceding calendar year, as reported by the Bureau of the 
        Census.
    ``(b) Applications Resulting From Prior Employment.--An applicant 
is not considered to be named on a previously filed application for 
purposes of subsection (a)(2) if the applicant has assigned, or is 
under an obligation by contract or law to assign, all ownership rights 
in the application as the result of the applicant's previous 
employment.
    ``(c) Foreign Currency Exchange Rate.--If an applicant's or 
entity's gross income in the preceding calendar year is not in United 
States dollars, the average currency exchange rate, as reported by the 
Internal Revenue Service, during that calendar year shall be used to 
determine whether the applicant's or entity's gross income exceeds the 
threshold specified in paragraphs (3) or (4) of subsection (a).
    ``(d) Public Institutions of Higher Education.--
            ``(1) In general.--For purposes of this section, a micro 
        entity shall include an applicant who certifies that--
                    ``(A) the applicant's employer, from which the 
                applicant obtains the majority of the applicant's 
                income, is an institution of higher education, as 
                defined in section 101 of the Higher Education Act of 
                1965 (20 U.S.C. 1001), that is a public institution; or
                    ``(B) the applicant has assigned, granted, 
                conveyed, or is under an obligation by contract or law 
                to assign, grant, or convey, a license or other 
                ownership interest in the particular application to 
                such public institution.
            ``(2) Director's authority.--The Director may, in the 
        Director's discretion, impose income limits, annual filing 
        limits, or other limits on who may qualify as a micro entity 
        pursuant to this subsection if the Director determines that 
        such additional limits are reasonably necessary to avoid an 
        undue impact on other patent applicants or owners or are 
        otherwise reasonably necessary and appropriate. At least 3 
        months before any limits proposed to be imposed pursuant to 
        this paragraph take effect, the Director shall inform the 
        Committee on the Judiciary of the House of Representatives and 
        the Committee on the Judiciary of the Senate of any such 
        proposed limits.''.
            (2) Conforming amendment.--Chapter 11 of title 35, United 
        States Code, is amended by adding at the end the following new 
        item:

``123. Micro entity defined.''.
    (h) Electronic Filing Incentive.--
            (1) In general.--Notwithstanding any other provision of 
        this section, a fee of $400 shall be established for each 
        application for an original patent, except for a design, plant, 
        or provisional application, that is not filed by electronic 
        means as prescribed by the Director. The fee established by 
        this subsection shall be reduced by 50 percent for small 
        entities that qualify for reduced fees under section 41(h)(1) 
        of title 35, United States Code. All fees paid under this 
        subsection shall be deposited in the Treasury as an offsetting 
        receipt that shall not be available for obligation or 
        expenditure.
            (2) Effective date.--This subsection shall take effect upon 
        the expiration of the 60-day period beginning on the date of 
        the enactment of this Act.
    (i) Effective Date; Sunset.--
            (1) Effective date.--This section and the amendments made 
        by this section shall take effect on the date of the enactment 
        of this Act.
            (2) Sunset.--The authority of the Director to set or adjust 
        any fee under subsection (a) shall terminate upon the 
        expiration of the 6-year period beginning on the date of the 
        enactment of this Act.

SEC. 11. FEES FOR PATENT SERVICES.

    (a) General Patent Services.--Subsections (a) and (b) of section 41 
of title 35, United States Code, are amended to read as follows:
    ``(a) General Fees.--The Director shall charge the following fees:
            ``(1) Filing and basic national fees.--
                    ``(A) On filing each application for an original 
                patent, except for design, plant, or provisional 
                applications, $330.
                    ``(B) On filing each application for an original 
                design patent, $220.
                    ``(C) On filing each application for an original 
                plant patent, $220.
                    ``(D) On filing each provisional application for an 
                original patent, $220.
                    ``(E) On filing each application for the reissue of 
                a patent, $330.
                    ``(F) The basic national fee for each international 
                application filed under the treaty defined in section 
                351(a) entering the national stage under section 371, 
                $330.
                    ``(G) In addition, excluding any sequence listing 
                or computer program listing filed in an electronic 
                medium as prescribed by the Director, for any 
                application the specification and drawings of which 
                exceed 100 sheets of paper (or equivalent as prescribed 
                by the Director if filed in an electronic medium), $270 
                for each additional 50 sheets of paper (or equivalent 
                as prescribed by the Director if filed in an electronic 
                medium) or fraction thereof.
            ``(2) Excess claims fees.--
                    ``(A) In general.--In addition to the fee specified 
                in paragraph (1)--
                            ``(i) on filing or on presentation at any 
                        other time, $220 for each claim in independent 
                        form in excess of 3;
                            ``(ii) on filing or on presentation at any 
                        other time, $52 for each claim (whether 
                        dependent or independent) in excess of 20; and
                            ``(iii) for each application containing a 
                        multiple dependent claim, $390.
                    ``(B) Multiple dependent claims.--For the purpose 
                of computing fees under subparagraph (A), a multiple 
                dependent claim referred to in section 112 or any claim 
                depending therefrom shall be considered as separate 
                dependent claims in accordance with the number of 
                claims to which reference is made.
                    ``(C) Refunds; errors in payment.--The Director may 
                by regulation provide for a refund of any part of the 
                fee specified in subparagraph (A) for any claim that is 
                canceled before an examination on the merits, as 
                prescribed by the Director, has been made of the 
                application under section 131. Errors in payment of the 
                additional fees under this paragraph may be rectified 
                in accordance with regulations prescribed by the 
                Director.
            ``(3) Examination fees.--
                    ``(A) In general.--
                            ``(i) For examination of each application 
                        for an original patent, except for design, 
                        plant, provisional, or international 
                        applications, $220.
                            ``(ii) For examination of each application 
                        for an original design patent, $140.
                            ``(iii) For examination of each application 
                        for an original plant patent, $170.
                            ``(iv) For examination of the national 
                        stage of each international application, $220.
                            ``(v) For examination of each application 
                        for the reissue of a patent, $650.
                    ``(B) Applicability of other fee provisions.--The 
                provisions of paragraphs (3) and (4) of section 111(a) 
                relating to the payment of the fee for filing the 
                application shall apply to the payment of the fee 
                specified in subparagraph (A) with respect to an 
                application filed under section 111(a). The provisions 
                of section 371(d) relating to the payment of the 
                national fee shall apply to the payment of the fee 
                specified in subparagraph (A) with respect to an 
                international application.
            ``(4) Issue fees.--
                    ``(A) For issuing each original patent, except for 
                design or plant patents, $1,510.
                    ``(B) For issuing each original design patent, 
                $860.
                    ``(C) For issuing each original plant patent, 
                $1,190.
                    ``(D) For issuing each reissue patent, $1,510.
            ``(5) Disclaimer fee.--On filing each disclaimer, $140.
            ``(6) Appeal fees.--
                    ``(A) On filing an appeal from the examiner to the 
                Patent Trial and Appeal Board, $540.
                    ``(B) In addition, on filing a brief in support of 
                the appeal, $540, and on requesting an oral hearing in 
                the appeal before the Patent Trial and Appeal Board, 
                $1,080.
            ``(7) Revival fees.--On filing each petition for the 
        revival of an unintentionally abandoned application for a 
        patent, for the unintentionally delayed payment of the fee for 
        issuing each patent, or for an unintentionally delayed response 
        by the patent owner in any reexamination proceeding, $1,620, 
        unless the petition is filed under section 133 or 151, in which 
        case the fee shall be $540.
            ``(8) Extension fees.--For petitions for 1-month extensions 
        of time to take actions required by the Director in an 
        application--
                    ``(A) on filing a first petition, $130;
                    ``(B) on filing a second petition, $360; and
                    ``(C) on filing a third or subsequent petition, 
                $620.
    ``(b) Maintenance Fees.--
            ``(1) In general.--The Director shall charge the following 
        fees for maintaining in force all patents based on applications 
        filed on or after December 12, 1980:
                    ``(A) Three years and 6 months after grant, $980.
                    ``(B) Seven years and 6 months after grant, $2,480.
                    ``(C) Eleven years and 6 months after grant, 
                $4,110.
            ``(2) Grace period; surcharge.--Unless payment of the 
        applicable maintenance fee under paragraph (1) is received in 
        the Office on or before the date the fee is due or within a 
        grace period of 6 months thereafter, the patent shall expire as 
        of the end of such grace period. The Director may require the 
        payment of a surcharge as a condition of accepting within such 
        6-month grace period the payment of an applicable maintenance 
        fee.
            ``(3) No maintenance fee for design or plant patent.--No 
        fee may be established for maintaining a design or plant patent 
        in force.''.
    (b) Delays in Payment.--Subsection (c) of section 41 of title 35, 
United States Code, is amended--
            (1) by striking ``(c)(1) The Director'' and inserting:
    ``(c) Delays in Payment of Maintenance Fees.--
            ``(1) Acceptance.--The Director''; and
            (2) by striking ``(2) A patent'' and inserting:
            ``(2) Effect on rights of others.--A patent''.
    (c) Patent Search Fees.--Subsection (d) of section 41 of title 35, 
United States Code, is amended to read as follows:
    ``(d) Patent Search and Other Fees.--
            ``(1) Patent search fees.--
                    ``(A) In general.--The Director shall charge the 
                fees specified under subparagraph (B) for the search of 
                each application for a patent, except for provisional 
                applications. The Director shall adjust the fees 
                charged under this paragraph to ensure that the fees 
                recover an amount not to exceed the estimated average 
                cost to the Office of searching applications for patent 
                either by acquiring a search report from a qualified 
                search authority, or by causing a search by Office 
                personnel to be made, of each application for patent.
                    ``(B) Specific fees.--The fees referred to in 
                subparagraph (A) are--
                            ``(i) $540 for each application for an 
                        original patent, except for design, plant, 
                        provisional, or international applications;
                            ``(ii) $100 for each application for an 
                        original design patent;
                            ``(iii) $330 for each application for an 
                        original plant patent;
                            ``(iv) $540 for the national stage of each 
                        international application; and
                            ``(v) $540 for each application for the 
                        reissue of a patent.
                    ``(C) Applicability of other provisions.--The 
                provisions of paragraphs (3) and (4) of section 111(a) 
                relating to the payment of the fee for filing the 
                application shall apply to the payment of the fee 
                specified in this paragraph with respect to an 
                application filed under section 111(a). The provisions 
                of section 371(d) relating to the payment of the 
                national fee shall apply to the payment of the fee 
                specified in this paragraph with respect to an 
                international application.
                    ``(D) Refunds.--The Director may by regulation 
                provide for a refund of any part of the fee specified 
                in this paragraph for any applicant who files a written 
                declaration of express abandonment as prescribed by the 
                Director before an examination has been made of the 
                application under section 131.
                    ``(E) Applications subject to secrecy order.--A 
                search of an application that is the subject of a 
                secrecy order under section 181 or otherwise involves 
                classified information may be conducted only by Office 
                personnel.
                    ``(F) Conflicts of interest.--A qualified search 
                authority that is a commercial entity may not conduct a 
                search of a patent application if the entity has any 
                direct or indirect financial interest in any patent or 
                in any pending or imminent application for patent filed 
                or to be filed in the Office.
            ``(2) Other fees.--
                    ``(A) In general.--The Director shall establish 
                fees for all other processing, services, or materials 
                relating to patents not specified in this section to 
                recover the estimated average cost to the Office of 
                such processing, services, or materials, except that 
                the Director shall charge the following fees for the 
                following services:
                            ``(i) For recording a document affecting 
                        title, $40 per property.
                            ``(ii) For each photocopy, $.25 per page.
                            ``(iii) For each black and white copy of a 
                        patent, $3.
                    ``(B) Copies for libraries.--The yearly fee for 
                providing a library specified in section 12 with 
                uncertified printed copies of the specifications and 
                drawings for all patents in that year shall be $50.''.
    (d) Fees for Small Entities.--Subsection (h) of section 41 of title 
35, United States Code, is amended to read as follows:
    ``(h) Fees for Small Entities.--
            ``(1) Reductions in fees.--Subject to paragraph (3), fees 
        charged under subsections (a), (b), and (d)(1) shall be reduced 
        by 50 percent with respect to their application to any small 
        business concern as defined under section 3 of the Small 
        Business Act, and to any independent inventor or nonprofit 
        organization as defined in regulations issued by the Director.
            ``(2) Surcharges and other fees.--With respect to its 
        application to any entity described in paragraph (1), any 
        surcharge or fee charged under subsection (c) or (d) shall not 
        be higher than the surcharge or fee required of any other 
        entity under the same or substantially similar circumstances.
            ``(3) Reduction for electronic filing.--The fee charged 
        under subsection (a)(1)(A) shall be reduced by 75 percent with 
        respect to its application to any entity to which paragraph (1) 
        applies, if the application is filed by electronic means as 
        prescribed by the Director.''.
    (e) Technical Amendments.--Section 41 of title 35, United States 
Code, is amended--
            (1) in subsection (e), in the first sentence, by striking 
        ``The Director'' and inserting ``Waiver of Fees; Copies 
        Regarding Notice.--The Director'';
            (2) in subsection (f), by striking ``The fees'' and 
        inserting ``Adjustment of Fees.--The fees'';
            (3) by repealing subsection (g); and
            (4) in subsection (i)--
                    (A) by striking ``(i)(1) The Director'' and 
                inserting the following:
    ``(i) Electronic Patent and Trademark Data.--
            ``(1) Maintenance of collections.--The Director'';
                    (B) by striking ``(2) The Director'' and inserting 
                the following:
            ``(2) Availability of automated search systems.--The 
        Director'';
                    (C) by striking ``(3) The Director'' and inserting 
                the following:
            ``(3) Access fees.--The Director''; and
                    (D) by striking ``(4) The Director'' and inserting 
                the following:
            ``(4) Annual report to congress.--The Director''.
    (f) Adjustment of Trademark Fees.--Section 802(a) of division B of 
the Consolidated Appropriations Act, 2005 (Public Law 108-447) is 
amended--
            (1) in the first sentence, by striking ``During fiscal 
        years 2005, 2006, and 2007,'', and inserting ``Until such time 
        as the Director sets or adjusts the fees otherwise,''; and
            (2) in the second sentence, by striking ``During fiscal 
        years 2005, 2006, and 2007, the'' and inserting ``The''.
    (g) Effective Date, Applicability, and Transition Provisions.--
Section 803(a) of division B of the Consolidated Appropriations Act, 
2005 (Public Law 108-447) is amended by striking ``and shall apply only 
with respect to the remaining portion of fiscal year 2005 and fiscal 
year 2006''.
    (h) Reduction in Fees for Small Entity Patents.--The Director shall 
reduce fees for providing prioritized examination of utility and plant 
patent applications by 50 percent for small entities that qualify for 
reduced fees under section 41(h)(1) of title 35, United States Code, so 
long as the fees of the prioritized examination program are set to 
recover the estimated cost of the program.
    (i) Effective Date.--Except as provided in subsection (h), this 
section and the amendments made by this section shall take effect on 
the date of the enactment of this Act.

SEC. 12. SUPPLEMENTAL EXAMINATION.

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

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

    ``(a) Request for Supplemental Examination.--A patent owner may 
request supplemental examination of a patent in the Office to consider, 
reconsider, or correct information believed to be relevant to the 
patent, in accordance with such requirements as the Director may 
establish. Within 3 months after the date a request for supplemental 
examination meeting the requirements of this section is received, the 
Director shall conduct the supplemental examination and shall conclude 
such examination by issuing a certificate indicating whether the 
information presented in the request raises a substantial new question 
of patentability.
    ``(b) Reexamination Ordered.--If the certificate issued under 
subsection (a) indicates that a substantial new question of 
patentability is raised by 1 or more items of information in the 
request, the Director shall order reexamination of the patent. The 
reexamination shall be conducted according to procedures established by 
chapter 30, except that the patent owner shall not have the right to 
file a statement pursuant to section 304. During the reexamination, the 
Director shall address each substantial new question of patentability 
identified during the supplemental examination, notwithstanding the 
limitations in chapter 30 relating to patents and printed publication 
or any other provision of such chapter.
    ``(c) Effect.--
            ``(1) In general.--A patent shall not be held unenforceable 
        on the basis of conduct relating to information that had not 
        been considered, was inadequately considered, or was incorrect 
        in a prior examination of the patent if the information was 
        considered, reconsidered, or corrected during a supplemental 
        examination of the patent. The making of a request under 
        subsection (a), or the absence thereof, shall not be relevant 
        to enforceability of the patent under section 282.
            ``(2) Exceptions.--
                    ``(A) Prior allegations.--Paragraph (1) shall not 
                apply to an allegation pled with particularity in a 
                civil action, or set forth with particularity in a 
                notice received by the patent owner under section 
                505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before 
                the date of a supplemental examination request under 
                subsection (a) to consider, reconsider, or correct 
                information forming the basis for the allegation.
                    ``(B) Patent enforcement actions.--In an action 
                brought under section 337(a) of the Tariff Act of 1930 
                (19 U.S.C. 1337(a)), or section 281 of this title, 
                paragraph (1) shall not apply to any defense raised in 
                the action that is based upon information that was 
                considered, reconsidered, or corrected pursuant to a 
                supplemental examination request under subsection (a), 
                unless the supplemental examination, and any 
                reexamination ordered pursuant to the request, are 
                concluded before the date on which the action is 
                brought.
                    ``(C) Fraud.--No supplemental examination may be 
                commenced by the Director on, and any pending 
                supplemental examination shall be immediately 
                terminated regarding, an application or patent in 
                connection with which fraud on the Office was practiced 
                or attempted. If the Director determines that such a 
                fraud on the Office was practiced or attempted, the 
                Director shall also refer the matter to the Attorney 
                General for such action as the Attorney General may 
                deem appropriate.
    ``(d) Fees and Regulations.--
            ``(1) Fees.--The Director shall, by regulation, establish 
        fees for the submission of a request for supplemental 
        examination of a patent, and to consider each item of 
        information submitted in the request. If reexamination is 
        ordered under subsection (b), fees established and applicable 
        to ex parte reexamination proceedings under chapter 30 shall be 
        paid, in addition to fees applicable to supplemental 
        examination.
            ``(2) Regulations.--The Director shall issue regulations 
        governing the form, content, and other requirements of requests 
        for supplemental examination, and establishing procedures for 
        reviewing information submitted in such requests.
    ``(e) Rule of Construction.--Nothing in this section shall be 
construed--
            ``(1) to preclude the imposition of sanctions based upon 
        criminal or antitrust laws (including section 1001(a) of title 
        18, the first section of the Clayton Act, and section 5 of the 
        Federal Trade Commission Act to the extent that section relates 
        to unfair methods of competition);
            ``(2) to limit the authority of the Director to investigate 
        issues of possible misconduct and impose sanctions for 
        misconduct in connection with matters or proceedings before the 
        Office; or
            ``(3) to limit the authority of the Director to issue 
        regulations under chapter 3 relating to sanctions for 
        misconduct by representatives practicing before the Office.''.
    (b) Conforming Amendment.--The table of sections for chapter 25 of 
title 35, United States Code, is amended by adding at the end the 
following new item:

``257. Supplemental examinations to consider, reconsider, or correct 
information.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent issued 
before, on, or after that effective date.

SEC. 13. FUNDING AGREEMENTS.

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

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

    (a) In General.--For purposes of evaluating an invention under 
section 102 or 103 of title 35, United States Code, any strategy for 
reducing, avoiding, or deferring tax liability, whether known or 
unknown at the time of the invention or application for patent, shall 
be deemed insufficient to differentiate a claimed invention from the 
prior art.
    (b) Definition.--For purposes of this section, the term ``tax 
liability'' refers to any liability for a tax under any Federal, State, 
or local law, or the law of any foreign jurisdiction, including any 
statute, rule, regulation, or ordinance that levies, imposes, or 
assesses such tax liability.
    (c) Exclusions.--This section does not apply to that part of an 
invention that--
            (1) is a method, apparatus, technology, computer program 
        product, or system, that is used solely for preparing a tax or 
        information return or other tax filing, including one that 
        records, transmits, transfers, or organizes data related to 
        such filing; or
            (2) is a method, apparatus, technology, computer program 
        product, or system used solely for financial management, to the 
        extent that it is severable from any tax strategy or does not 
        limit the use of any tax strategy by any taxpayer or tax 
        advisor.
    (d) Rule of Construction.--Nothing in this section shall be 
construed to imply that other business methods are patentable or that 
other business method patents are valid.
    (e) Effective Date; Applicability.--This section shall take effect 
on the date of the enactment of this Act and shall apply to any patent 
application that is pending on, or filed on or after, that date, and to 
any patent that is issued on or after that date.

SEC. 15. BEST MODE REQUIREMENT.

    (a) In General.--Section 282 of title 35, United States Code, is 
amended in the second undesignated paragraph by striking paragraph (3) 
and inserting the following:
            ``(3) Invalidity of the patent or any claim in suit for 
        failure to comply with--
                    ``(A) any requirement of section 112, except that 
                the failure to disclose the best mode shall not be a 
                basis on which any claim of a patent may be canceled or 
                held invalid or otherwise unenforceable; or
                    ``(B) any requirement of section 251.''.
    (b) Conforming Amendment.--Sections 119(e)(1) and 120 of title 35, 
United States Code, are each amended by striking ``the first paragraph 
of section 112 of this title'' and inserting ``section 112(a) (other 
than the requirement to disclose the best mode)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect upon the date of the enactment of this Act and shall apply to 
proceedings commenced on or after that date.

SEC. 16. MARKING.

    (a) Virtual Marking.--
            (1) In general.--Section 287(a) of title 35, United States 
        Code, is amended by striking ``or when,'' and inserting ``or by 
        fixing thereon the word `patent' or the abbreviation `pat.' 
        together with an address of a posting on the Internet, 
        accessible to the public without charge for accessing the 
        address, that associates the patented article with the number 
        of the patent, or when,''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to any case that is pending on, or commenced on or 
        after, the date of the enactment of this Act.
            (3) Report.--Not later than the date that is 3 years after 
        the date of the enactment of this Act, the Director shall 
        submit a report to Congress that provides--
                    (A) an analysis of the effectiveness of ``virtual 
                marking'', as provided in the amendment made by 
                paragraph (1) of this subsection, as an alternative to 
                the physical marking of articles;
                    (B) an analysis of whether such virtual marking has 
                limited or improved the ability of the general public 
                to access information about patents;
                    (C) an analysis of the legal issues, if any, that 
                arise from such virtual marking; and
                    (D) an analysis of the deficiencies, if any, of 
                such virtual marking.
    (b) False Marking.--
            (1) Civil penalty.--Section 292(a) of title 35, United 
        States, Code, is amended by adding at the end the following: 
        ``Only the United States may sue for the penalty authorized by 
        this subsection.''.
            (2) Civil action for damages.--Subsection (b) of section 
        292 of title 35, United States Code, is amended to read as 
        follows:
    ``(b) A person who has suffered a competitive injury as a result of 
a violation of this section may file a civil action in a district court 
of the United States for recovery of damages adequate to compensate for 
the injury.''.
            (3) Expired patents.--Section 292 of title 35, United 
        States Code, is amended by adding at the end the following:
    ``(c) Whoever engages in an activity under subsection (a) for which 
liability would otherwise be imposed shall not be liable for such 
activity--
            ``(1) that is engaged in during the 3-year period beginning 
        on the date on which the patent at issue expires; or
            ``(2) that is engaged in after the end of that 3-year 
        period if the word `expired' is placed before the word 
        `patent', `patented', the abbreviation `pat', or the patent 
        number, either on the article or through a posting on the 
        Internet, as provided in section 287(a).''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to any case that is pending on, or commenced on or 
        after, the date of the enactment of this Act.

SEC. 17. ADVICE OF COUNSEL.

    (a) In General.--Chapter 29 of title 35, United States Code, is 
amended by adding at the end the following:

``Sec. 298. Advice of counsel

    ``The failure of an infringer to obtain the advice of counsel with 
respect to any allegedly infringed patent, or the failure of the 
infringer to present such advice to the court or jury, may not be used 
to prove that the accused infringer willfully infringed the patent or 
that the infringer intended to induce infringement of the patent.''.
    (b) Conforming Amendment.--The table of sections for chapter 29 of 
title 35, United States Code, is amended by adding at the end the 
following:

``298. Advice of counsel.''.

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

    (a) Transitional Program.--
            (1) Establishment.--Not later than the date that is 1 year 
        after the date of the enactment of this Act, the Director shall 
        issue regulations establishing and implementing a transitional 
        post-grant review proceeding for review of the validity of 
        covered business method patents. The transitional proceeding 
        implemented pursuant to this subsection shall be regarded as, 
        and shall employ the standards and procedures of, a post-grant 
        review under chapter 32 of title 35, United States Code, 
        subject to the following:
                    (A) Section 321(c) of title 35, United States Code, 
                and subsections (b), (e)(2), and (f) of section 325 of 
                such title shall not apply to a transitional 
                proceeding.
                    (B) A person may not file a petition for a 
                transitional proceeding with respect to a covered 
                business method patent unless the person or the 
                person's real party in interest has been sued for 
                infringement of the patent or has been charged with 
                infringement under that patent.
                    (C) A petitioner in a transitional proceeding who 
                challenges the validity of 1 or more claims in a 
                covered business method patent on a ground raised under 
                section 102 or 103 of title 35, United States Code, as 
                in effect on the day before the effective date set 
                forth in section 3(n)(1), may support such ground only 
                on the basis of--
                            (i) prior art that is described by section 
                        102(a) of such title of such title (as in 
                        effect on the day before such effective date); 
                        or
                            (ii) prior art that--
                                    (I) discloses the invention more 
                                than 1 year before the date of the 
                                application for patent in the United 
                                States; and
                                    (II) would be described by section 
                                102(a) of such title (as in effect on 
                                the day before the effective date set 
                                forth in section 3(n)(1)) if the 
                                disclosure had been made by another 
                                before the invention thereof by the 
                                applicant for patent.
                    (D) The petitioner in a transitional proceeding, or 
                the petitioner's real party in interest, may not 
                assert, either in a civil action arising in whole or in 
                part under section 1338 of title 28, United States 
                Code, or in a proceeding before the International Trade 
                Commission under section 337 of the Tariff Act of 1930 
                (19 U.S.C. 1337), that a claim in a patent is invalid 
                on any ground that the petitioner raised during a 
                transitional proceeding that resulted in a final 
                written decision.
                    (E) The Director may institute a transitional 
                proceeding only for a patent that is a covered business 
                method patent.
            (2) Effective date.--The regulations issued under paragraph 
        (1) shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and shall 
        apply to any covered business method patent issued before, on, 
        or after that effective date, except that the regulations shall 
        not apply to a patent described in section 6(f)(2)(A) of this 
        Act during the period in which a petition for post-grant review 
        of that patent would satisfy the requirements of section 321(c) 
        of title 35, United States Code.
            (3) Sunset.--
                    (A) In general.--This subsection, and the 
                regulations issued under this subsection, are repealed 
                effective upon the expiration of the 10-year period 
                beginning on the date that the regulations issued under 
                to paragraph (1) take effect.
                    (B) Applicability.--Notwithstanding subparagraph 
                (A), this subsection and the regulations issued under 
                this subsection shall continue to apply, after the date 
                of the repeal under subparagraph (A), to any petition 
                for a transitional proceeding that is filed before the 
                date of such repeal.
    (b) Request for Stay.--
            (1) In general.--If a party seeks a stay of a civil action 
        alleging infringement of a patent under section 281 of title 
        35, United States Code, relating to a transitional proceeding 
        for that patent, the court shall decide whether to enter a stay 
        based on--
                    (A) whether a stay, or the denial thereof, will 
                simplify the issues in question and streamline the 
                trial;
                    (B) whether discovery is complete and whether a 
                trial date has been set;
                    (C) whether a stay, or the denial thereof, would 
                unduly prejudice the nonmoving party or present a clear 
                tactical advantage for the moving party; and
                    (D) whether a stay, or the denial thereof, will 
                reduce the burden of litigation on the parties and on 
                the court.
            (2) Review.--A party may take an immediate interlocutory 
        appeal from a district court's decision under paragraph (1). 
        The United States Court of Appeals for the Federal Circuit 
        shall review the district court's decision to ensure consistent 
        application of established precedent, and such review may be de 
        novo.
    (c) ATM Exemption for Venue Purposes.--In an action for 
infringement under section 281 of title 35, United States Code, of a 
covered business method patent, an automated teller machine shall not 
be deemed to be a regular and established place of business for 
purposes of section 1400(b) of title 28, United States Code.
    (d) Definition.--
            (1) In general.--For purposes of this section, the term 
        ``covered business method patent'' means a patent that claims a 
        method or corresponding apparatus for performing data 
        processing or other operations used in the practice, 
        administration, or management of a financial product or 
        service, except that the term does not include patents for 
        technological inventions.
            (2) Regulations.--To assist in implementing the 
        transitional proceeding authorized by this subsection, the 
        Director shall issue regulations for determining whether a 
        patent is for a technological invention.
    (e) Rule of Construction.--Nothing in this section shall be 
construed as amending or interpreting categories of patent-eligible 
subject matter set forth under section 101 of title 35, United States 
Code.

SEC. 19. JURISDICTION AND PROCEDURAL MATTERS.

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

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

    ``(a) In General.--A civil action in which any party asserts a 
claim for relief arising under any Act of Congress relating to patents, 
plant variety protection, or copyrights may be removed to the district 
court of the United States for the district and division embracing the 
place where the action is pending.
    ``(b) Special Rules.--The removal of an action under this section 
shall be made in accordance with section 1446, except that if the 
removal is based solely on this section--
            ``(1) the action may be removed by any party; and
            ``(2) the time limitations contained in section 1446(b) may 
        be extended at any time for cause shown.
    ``(c) Clarification of Jurisdiction in Certain Cases.--The court to 
which a civil action is removed under this section is not precluded 
from hearing and determining any claim in the civil action because the 
State court from which the civil action is removed did not have 
jurisdiction over that claim.
    ``(d) Remand.--If a civil action is removed solely under this 
section, the district court--
            ``(1) shall remand all claims that are neither a basis for 
        removal under subsection (a) nor within the original or 
        supplemental jurisdiction of the district court under any Act 
        of Congress; and
            ``(2) may, under the circumstances specified in section 
        1367(c), remand any claims within the supplemental jurisdiction 
        of the district court under section 1367.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 89 of title 28, United States Code, is amended by 
        adding at the end the following new item:

``1454. Patent, plant variety protection, and copyright cases.''.
    (d) Transfer by Court of Appeals for the Federal Circuit.--
            (1) In general.--Chapter 99 of title 28, United States 
        Code, is amended by adding at the end the following new 
        section:

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

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

``1632. Transfer by the Court of Appeals for the Federal Circuit.''.
    (e) Procedural Matters in Patent Cases.--
            (1) Joinder of parties and stay of actions.--Chapter 29 of 
        title 35, United States Code, as amended by this Act, is 
        further amended by adding at the end the following new section:

``Sec. 299. Joinder of parties

    ``(a) Joinder of Accused Infringers.--In any civil action arising 
under any Act of Congress relating to patents, other than an action or 
trial in which an act of infringement under section 271(e)(2) has been 
pled, parties that are accused infringers may be joined in one action 
as defendants or counterclaim defendants only if--
            ``(1) any right to relief is asserted against the parties 
        jointly, severally, or in the alternative with respect to or 
        arising out of the same transaction, occurrence, or series of 
        transactions or occurrences relating to the making, using, 
        importing into the United States, offering for sale, or selling 
        of the same accused product or process; and
            ``(2) questions of fact common to all defendants or 
        counterclaim defendants will arise in the action.
    ``(b) Allegations Insufficient for Joinder.--For purposes of this 
subsection, accused infringers may not be joined in one action or trial 
as defendants or counterclaim defendants based solely on allegations 
that they each have infringed the patent or patents in suit.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 29 of title 35, United States Code, as amended by this 
        Act, is further amended by adding at the end the following new 
        item:

``299. Joinder of parties.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to any civil action commenced on or after the date of the 
enactment of this Act.

SEC. 20. TECHNICAL AMENDMENTS.

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

SEC. 21. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE JUDGES.

    (a) Authority To Cover Certain Travel Related Expenses.--Section 
2(b)(11) of title 35, United States Code, is amended by inserting ``, 
and the Office is authorized to expend funds to cover the subsistence 
expenses and travel-related expenses, including per diem, lodging 
costs, and transportation costs, of persons attending such programs who 
are not Federal employees'' after ``world''.
    (b) Payment of Administrative Judges.--Section 3(b) of title 35, 
United States Code, is amended by adding at the end the following:
            ``(6) Administrative patent judges and administrative 
        trademark judges.--The Director may fix the rate of basic pay 
        for the administrative patent judges appointed pursuant to 
        section 6 and the administrative trademark judges appointed 
        pursuant to section 17 of the Trademark Act of 1946 (15 U.S.C. 
        1067) at not greater than the rate of basic pay payable for 
        level III of the Executive Schedule under section 5314 of title 
        5. The payment of a rate of basic pay under this paragraph 
        shall not be subject to the pay limitation under section 
        5306(e) or 5373 of title 5.''.

SEC. 22. PATENT AND TRADEMARK OFFICE FUNDING.

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

SEC. 23. SATELLITE OFFICES.

    (a) Establishment.--Subject to available resources, the Director 
shall, by not later than the date that is 3 years after the date of the 
enactment of this Act, establish 3 or more satellite offices in the 
United States to carry out the responsibilities of the Office.
    (b) Purposes.--The purposes of the satellite offices established 
under subsection (a) are to--
            (1) increase outreach activities to better connect patent 
        filers and innovators with the Office;
            (2) enhance patent examiner retention;
            (3) improve recruitment of patent examiners;
            (4) decrease the number of patent applications waiting for 
        examination; and
            (5) improve the quality of patent examination.
    (c) Required Considerations.--
            (1) In general.--In selecting the location of each 
        satellite office to be established under subsection (a), the 
        Director--
                    (A) shall ensure geographic diversity among the 
                offices, including by ensuring that such offices are 
                established in different States and regions throughout 
                the Nation;
                    (B) may rely upon any previous evaluations by the 
                Office of potential locales for satellite offices, 
                including any evaluations prepared as part of the 
                Office's Nationwide Workforce Program that resulted in 
                the 2010 selection of Detroit, Michigan, as the first 
                satellite office of the Office.
            (2) Open selection process.--Nothing in paragraph (1) shall 
        constrain the Office to only consider its evaluations in 
        selecting the Detroit, Michigan, satellite office.
    (d) Report to Congress.--Not later than the end of the third fiscal 
year that begins after the date of the enactment of this Act, the 
Director shall submit a report to Congress on--
            (1) the rationale of the Director in selecting the location 
        of any satellite office required under subsection (a);
            (2) the progress of the Director in establishing all such 
        satellite offices; and
            (3) whether the operation of existing satellite offices is 
        achieving the purposes under subsection (b).

SEC. 24. DESIGNATION OF DETROIT SATELLITE OFFICE.

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

SEC. 25. PATENT OMBUDSMAN PROGRAM FOR SMALL BUSINESS CONCERNS.

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

SEC. 26. PRIORITY EXAMINATION FOR TECHNOLOGIES IMPORTANT TO AMERICAN 
                    COMPETITIVENESS.

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

SEC. 27. CALCULATION OF 60-DAY PERIOD FOR APPLICATION OF PATENT TERM 
                    EXTENSION.

    (a) In General.--Section 156(d)(1) of title 35, United States Code, 
is amended by adding at the end the following flush sentence:
``For purposes of determining the date on which a product receives 
permission under the second sentence of this paragraph, if such 
permission is transmitted after 4:30 P.M., Eastern Time, on a business 
day, or is transmitted on a day that is not a business day, the product 
shall be deemed to receive such permission on the next business day. 
For purposes of the preceding sentence, the term `business day' means 
any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any 
legal holiday under section 6103 of title 5.''.
    (b) Applicability.--The amendment made by subsection (a) shall 
apply to any application for extension of a patent term under section 
156 of title 35, United States Code, that is pending on, that is filed 
after, or as to which a decision regarding the application is subject 
to judicial review on, the date of the enactment of this Act.

SEC. 28. STUDY ON IMPLEMENTATION.

    (a) PTO Study.--The Director shall conduct a study on the manner in 
which this Act and the amendments made by this Act are being 
implemented by the Office, and on such other aspects of the patent 
policies and practices of the Federal Government with respect to patent 
rights, innovation in the United States, competitiveness of United 
States markets, access by small businesses to capital for investment, 
and such other issues, as the Director considers appropriate.
    (b) Report to Congress.--The Director shall, not later than the 
date that is 4 years after the date of the enactment of this Act, 
submit to the Committees on the Judiciary of the House of 
Representatives and the Senate a report on the results of the study 
conducted under subsection (a), including recommendations for any 
changes to laws and regulations that the Director considers 
appropriate.

SEC. 29. PRO BONO PROGRAM.

    (a) In General.--The Director shall work with and support 
intellectual property law associations across the country in the 
establishment of pro bono programs designed to assist financially 
under-resourced independent inventors and small businesses.
    (b) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.

SEC. 30. EFFECTIVE DATE.

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

SEC. 31. BUDGETARY EFFECTS.

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

                          Purpose and Summary

    The Constitution explicitly grants Congress the power to 
``promote the progress of science and useful arts, by securing 
for limited times to . . . inventors the exclusive right to 
their respective . . . discoveries.''\1\ Congress has responded 
by authorizing patents to issue to inventors of new and useful 
inventions or improvements on inventions.\2\ The patent law 
thus accomplishes two objectives, consistent with the 
authorization granted by the Constitution: first, it encourages 
inventors by granting them limited, but exclusive rights to 
their inventions; second, in exchange for the grant of those 
exclusive rights, the patent law requires disclosure of the 
invention and terminates the monopoly after a period of 
years.\3\ This disclosure and limited time benefits both 
society and future inventors by making the details of the 
invention available to the public immediately, and the right to 
make use of that invention after the expiration of 20 years 
from the date the patent application was filed.
---------------------------------------------------------------------------
    \1\U.S. Const. Art. 1, Sec. 8.
    \2\See 35 U.S.C. Sec. 101.
    \3\See Perspectives on Patents: Post-Grant Review Procedures and 
Other Litigation Reforms: Hearing before the Subcomm. on Intellectual 
Prop. of the Senate Comm. on the Judiciary, 109th Cong. (2006) 
(statement of Nathan P. Myhrvold, Chief Executive Officer, Intellectual 
Ventures); Perspectives on Patents: Hearing before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of Dean Kamen, President, DEKA Research and 
Development Corp.).
---------------------------------------------------------------------------
    Congress has not enacted comprehensive patent law reform in 
nearly 60 years.\4\ The object of the patent law today must 
remain true to the constitutional command, but its form needs 
to change, both to correct flaws in the system that have become 
unbearable, and to accommodate changes in the economy and the 
litigation practices in the patent realm. The need to update 
our patent laws has been meticulously documented in 15 hearings 
before the Committee or its Subcommittee on Courts, the 
Internet, and Intellectual Property, as well as eight hearings 
before the United States Senate Committee on the Judiciary. In 
addition, these legislative findings are augmented by the 
Federal Trade Commission and the National Academy of 
Sciences,\5\ both of which published authoritative reports on 
patent reform, and a plethora of academic commentary.\6\
---------------------------------------------------------------------------
    \4\The last major revision of the patent laws was the Patent Act of 
1952, P.L. 82-593.
    \5\The National Academy of Sciences (NAS), and the Federal Trade 
Commission (FTC) conducted multi-year studies on the patent system and 
its need for reform. See National Research Council of the National 
Academies, A Patent System for the 21st Century (2004) (hereinafter 
``NAS Report''); and Federal Trade Comm'n, To Promote Innovation: The 
Proper Balance of Competition and Patent Law and Policy (2003) 
(hereinafter ``FTC Report'').
    \6\See, e.g., Mark A. Lemley and Carl Shapiro, Patent Holdup and 
Royalty Stacking, 85 Tex. L. Rev. 1991 (2007); Donald S. Chisum, 
Reforming Patent Law Reform, 4 J. Marshall Rev. Intell. Prop. L. 336 
(2005); Gerald J. Mossinghoff, The First-to-Invent Rule in the U.S. 
Patent System has Provided no Advantage to Small Entities, 87 JPTOS 514 
(2005); Joseph Farrell & Robert P. Merges, Incentives to Challenge and 
Defend Patents: Why Litigation Won't Reliably Fix Patent Office Errors 
and Why Administrative Patent Review Might Help, 19 Berkeley Tech. L.J. 
943, 958 (2004); see also Adam B. Jaffe & Josh Lerner, Innovation and 
Its Discontents: How Our Broken Patent System is Endangering Innovation 
and Progress, and What to Do About It (2004); Kevin G. Rivette & David 
Kline, Rembrandts in the Attic, Unlocking the Hidden Value of Patents 
(2000).
---------------------------------------------------------------------------
    While Congress has considered patent reform legislation 
over the last four Congresses, the need to modernize our patent 
laws has found expression in the courts, as well. The Supreme 
Court has reversed the Federal Circuit in six of the patent-
related cases that it has heard since the beginning of the 
109th Congress.\7\ The Court's decisions have moved in the 
direction of improving patent quality and making the 
determination of patent validity more efficient. The decisions 
reflect a growing sense that questionable patents are too 
easily obtained and are too difficult to challenge.\8\ Recent 
decisions by the Federal Circuit reflect a similar trend in 
response to these concerns.\9\ But the courts are constrained 
in their decisions by the text of the statutes at issue. It is 
time for Congress to act.
---------------------------------------------------------------------------
    \7\See Bilski v. Kappos,___ U.S. __, 130 S.Ct. 3218 (2010) 
(reversing the Federal Circuit and holding that the machine-or-
transformation test is not the sole test for determining the patent 
eligibility of a process); Quanta Computer, Inc. v. LG Elecs. Inc., 553 
U.S. 617 (2008) (reversing the Federal Circuit and holding that patent 
exhaustion applies to method patents when the essential or inventive 
feature of the invention is embodied in the product); Microsoft Corp. 
v. AT&T; Corp., 550 U.S. 437 (2007) (reversing the Federal Circuit and 
limiting the extraterritorial reach of section 271(f), which imposes 
liability on a party which supplies from the U.S. components of a 
patented invention for combination outside the U.S.); KSR Int'l Co. v. 
Teleflex Inc., 550 U.S. 398 (2007) (reversing the Federal Circuit and 
strengthening the standard for determining when an invention is obvious 
under section 103); MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 
(2007) (reversing the Federal Circuit and holding that the threat of a 
private enforcement action is sufficient to confirm standing under the 
Constitution); eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) 
(reversing the Federal Circuit and holding that the generally 
applicable four-factor test for injunctive relief applies to disputes 
in patent cases).
    \8\See generally Patent Reform in the 111th Congress: Legislation 
and Recent Court Decisions, Senate Judiciary Committee, 111th Cong. 
(2009) (statement of Professor Mark A. Lemley, Stanford Law School).
    \9\See, e.g., In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 
2007) (holding that willful infringement requires at least a 
demonstration of objectively reckless behavior and removing any 
affirmative obligation to obtain an opinion of counsel letter to combat 
an allegation of willful infringement).
---------------------------------------------------------------------------
    The voices heard during the debate over changes to the 
patent law have been diverse and their proposals have been far 
from uniform. They have focused the Committee's attention on 
the value of harmonizing our system for granting patents with 
the best parts of other major patent systems throughout the 
industrialized world for the benefit of U.S. patent holders; 
improving patent quality and providing a more efficient system 
for challenging patents that should not have issued; and 
reducing unwarranted litigation costs and inconsistent damage 
awards.
    The purpose of the ``America Invents Act,'' as reported by 
the Committee on the Judiciary, is to ensure that the patent 
system in the 21st century reflects the constitutional 
imperative. Congress must promote innovation by granting 
inventors temporally limited monopolies on their inventions in 
a manner that ultimately benefits the public through the 
disclosure of the invention to the public. The legislation is 
designed to establish a more efficient and streamlined patent 
system that will improve patent quality and limit unnecessary 
and counterproductive litigation costs.
    If the United States is to maintain its competitive edge in 
the global economy, it needs a system that will support and 
reward all innovators with high quality patents. The Committee 
has taken testimony from and its members have held meetings 
with interested parties that have different and often 
conflicting perspectives on the patent system. The Committee 
has taken all of those views into consideration, and drafted 
and then amended the ``America Invents Act'' to balance the 
competing interests. The legislation ordered reported by the 
Committee on a vote of 32-3 is a consensus approach that will 
modernize the United States patent system in significant 
respects.

                Background and Need for the Legislation

First Inventor to File
    The ``America Invents Act'' creates a new ``first-inventor-
to-file'' system. Every industrialized nation other than the 
United States uses a patent priority system commonly referred 
to as ``first-to-file.'' In a first-to-file system, when more 
than one application claiming the same invention is filed, the 
priority of a right to a patent is based on the earlier-filed 
application. The United States, by contrast, currently uses a 
``first-to-invent'' system, in which priority is established 
through a proceeding to determine which applicant actually 
invented the claimed invention first. Differences between the 
two systems arise in large part from the date that is most 
relevant to each respective system. In a first-to-file system, 
the filing date of the application is most relevant;\10\ the 
filing date of an application is an objective date, simple to 
determine, for it is listed on the face of the patent. In 
contrast, in a first-to-invent system, the date the invention 
claimed in the application was actually invented is the 
determinative date. Unlike the objective date of filing, the 
date someone invents something is often uncertain, and, when 
disputed, typically requires corroborating evidence as part of 
an adjudication.
---------------------------------------------------------------------------
    \10\When the term ``filing date'' is used herein, it is also meant 
to include, when appropriate, the effective filing date, i.e., the 
earliest date the claim in an application-claims priority.
---------------------------------------------------------------------------
    There are significant, practical differences between the 
two systems. Among them is the ease of determining the right to 
a claimed invention in the instance in which two different 
people file patent applications for the same invention. In a 
first-to-file system, the application with the earlier filing 
date prevails and will be awarded the patent, if one issues. In 
the first-to-invent system, a lengthy, complex and costly 
administrative proceeding (called an ``interference 
proceeding'') must be conducted at the United States Patent and 
Trademark Office (``USPTO'') to determine who actually invented 
first.\11\ Interference proceedings can take years to complete 
(even if there is no appeal to the United States Court of 
Appeals for the Federal Circuit), cost hundreds of thousands of 
dollars, and require extensive discovery.\12\ In addition, 
because it is always possible that an applicant could be 
involved in an interference proceeding, companies must maintain 
extensive recording and document retention systems in case they 
are later required to prove the date they invented the claimed 
invention.
---------------------------------------------------------------------------
    \11\See 35 U.S.C. Sec. 135.
    \12\See, e.g., Robert W. Pritchard, The Future is Now--The Case for 
Patent Harmonization, 20 N.C. J. Int'l L. & Com. Reg. 291, 313 (1995).
---------------------------------------------------------------------------
    Another important difference between the two systems is 
that in some first-to-file systems, prior art can include the 
inventor's own disclosure of his invention prior to the filing 
date of his application. Such systems do not provide the 
inventor any grace period during which time he is allowed to 
publish his invention without fear of its later being used 
against him as prior art. The Committee heard from universities 
and small inventors, in particular, about the importance of 
maintaining that grace period in our system.\13\ They argued 
that the grace period affords the necessary time to prepare and 
file applications, and in some instances, to obtain the 
necessary funding that enables the inventor to prepare 
adequately the application. In addition, the grace period 
benefits the public by encouraging early disclosure of new 
inventions, regardless of whether an application may later be 
filed for a patent on it.
---------------------------------------------------------------------------
    \13\See, e.g., Perspectives on Patents: Harmonization and Other 
Matters: Hearing Before the Subcomm. on Intellectual Prop. of the 
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Charles 
E. Phelps, Provost, University of Rochester, on behalf of the 
Association of American Universities); Patent Law Reform: Injunctions 
and Damages: Hearing Before the Subcomm. on Intellectual Prop. of the 
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Carl 
Gulbrandsen, Managing Director, Wisconsin Alumni Research Foundation 
(WARF)); Perspective on Patents: Hearing Before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of William Parker, Diffraction, Ltd.).
---------------------------------------------------------------------------
    Numerous organizations, institutions, and companies have 
advocated that the U.S. adopt a first-to-file system similar to 
those used in the rest of the world.\14\ The National Academy 
of Sciences made a similar recommendation after an extensive 
study of the patent system.\15\ When the United States patent 
system was first adopted, inventors did not typically file in 
other countries. It is now common for inventors and companies 
to file for protection in several countries at the same 
time.\16\ Thus, United States applicants, who also want to file 
abroad, are forced to follow and comply with two different 
filing systems. Maintaining a filing system so different from 
the rest of the world disadvantages United States applicants 
who, in most instances, also file in other countries.\17\ A 
change is long overdue.\18\
---------------------------------------------------------------------------
    \14\See, e.g., Perspectives on Patents: Harmonization and Other 
Matters: Hearing Before the Subcomm. on Intellectual Prop. of the 
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Gerald 
J. Mossinghoff, Former Assistant Secretary of Commerce and Commissioner 
of Patents and Trademarks); Perspectives on Patents: Harmonization and 
Other Matters: Hearing Before the Subcomm. on Intellectual Prop. of the 
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Q. Todd 
Dickinson, Former Under Secretary of Commerce for Intellectual Property 
and Director of the United States Patent and Trademark Office); Patent 
Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of Jeffrey P. Kushan, Partner, Sidley Austin Brown & 
Wood, LLP); Patent Law Reform: Injunctions and Damages: Hearing Before 
the Subcomm. on Intellectual Prop. of the Senate Comm. on the 
Judiciary, 109th Cong. (2005) (statement of Mark A. Lemley, Professor, 
Stanford Law School); Perspectives on Patents: Hearing Before the 
Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 
109th Cong. (2005) (statement of Robert A. Armitage, Senior Vice 
President and General Patent Counsel, Eli Lilly and Company); 
Perspectives on Patents: Hearing Before the Subcomm. on Intellectual 
Prop. of the Senate Comm. on the Judiciary, 109th Cong. (2005) 
(statement of Michael K. Kirk, Executive Director, American 
Intellectual Property Law Association).
    \15\See NAS Report at 124; see also Perspectives on Patents: 
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. 
on the Judiciary, 109th Cong. (2005) (statement of Richard C. Levin, 
Yale University).
    \16\See Perspectives on Patents: Harmonization and Other Matters: 
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. 
on the Judiciary, 109th Cong. (2005) (statement of Gerald J. 
Mossinghoff, Former Assistant Secretary of Commerce and Commissioner of 
Patents and Trademarks) .
    \17\See Perspectives on Patents: Hearing Before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of Richard C. Levin, President, Yale University, and 
Mark B. Meyers, Visiting Executive Professor, Management Department at 
the Wharton Business School, University of Pennsylvania), estimating 
that it costs as much as $750,000 to $1 million to obtain worldwide 
patent protection on an important invention, and the lack of 
harmonization regarding filing systems adds unnecessary cost and delay.
    \18\The NAS recommended changing the U.S. to a first-to-file 
system, while maintaining a grace period. See NAS Report at 124-27. See 
also Patent Reform in the 111th Congress: Legislation and Recent Court 
Decisions: Hearing Before the Senate Comm. on the Judiciary, 111th 
Cong. (2009) (statement of Steven Appleton, Chairman and Chief 
Executive Officer, Micron Technologies, Inc.); Patent Reform in the 
111th Congress: Legislation and Recent Court Decisions: Hearing Before 
the Senate Comm. on the Judiciary, 111th Cong. (2009) (statement of 
Philip S. Johnson, Chief Patent Counsel, Johnson & Johnson); Patent 
Reform in the 111th Congress: Legislation and Recent Court Decisions: 
Hearing Before the Senate Comm. on the Judiciary, 111th Cong. (2009) 
(statement of Herbert C. Wamsley, Executive Director, Intellectual 
Property Owners Association); Patent Reform in the 111th Congress: 
Legislation and Recent Court Decisions: Hearing Before the Senate Comm. 
on the Judiciary, 111th Cong. (2009) (statement of Mark A. Lemley, 
Professor, Stanford Law School).
---------------------------------------------------------------------------
    Drawing on the best aspects of the two existing systems, 
the America Invents Act creates a new ``first-inventor-to-
file'' system. This new system provides patent applicants in 
the United States the efficiency benefits of the first-to-file 
systems used in the rest of the world by moving the U.S. system 
much closer to a first-to-file system and making the filing 
date that which is most relevant in determining whether an 
application is patentable. The new system continues, however, 
to provide inventors the benefit of the 1-year grace period. As 
part of the transition to a simpler, more efficient first-
inventor-to-file system, this provision eliminates costly, 
complex interference proceedings, because priority will be 
based on the first application. A new administrative 
proceeding--called a ``derivation'' proceeding--is created to 
ensure that the first person to file the application is 
actually a true inventor. This new proceeding will ensure that 
a person will not be able to obtain a patent for the invention 
that he did not actually invent. If a dispute arises as to 
which of two applicants is a true inventor (as opposed to who 
invented it first), it will be resolved through an 
administrative proceeding by the Patent Board. The Act also 
simplifies how prior art is determined, provides more 
certainty, and reduces the cost associated with filing and 
litigating patents.
    The Act maintains a 1-year grace period for U.S. 
applicants. Applicants' own publication or disclosure that 
occurs within 1 year prior to filing will not act as prior art 
against their applications. Similarly, disclosure by others 
during that time based on information obtained (directly or 
indirectly) from the inventor will not constitute prior art. 
This 1-year grace period should continue to give U.S. 
applicants the time they need to prepare and file their 
applications.
    This provision also, and necessarily, modifies the prior-
art sections of the patent law. Prior art will be measured from 
the filing date of the application and will typically include 
all art that publicly exists prior to the filing date, other 
than disclosures by the inventor within 1 year of filing. Prior 
art also will no longer have any geographic limitations. Thus, 
in section 102 the ``in this country'' limitation as applied to 
``public use'' and ``on sale'' is removed, and 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 
must be publicly accessible. Prior art based on earlier-filed 
United States applications is maintained,\19\ as is current 
law's grace period, which will apply to all actions by the 
patent owner during the year prior to filing that would 
otherwise create Sec. 102(a) prior art.\20\ Sections (and 
subsections) of the existing statute are renumbered, modified, 
or deleted consistent with converting to a first-inventor-to-
file system.\21\ Finally, the intent behind the CREATE Act to 
promote joint research activities is preserved by including a 
prior art exception for subject matter invented by parties to a 
joint research agreement. The Act also provides that its 
enactment of new section 102(c) of title 35 is done with the 
same intent to promote joint research activities that was 
expressed in the Cooperative Research and Technology 
Enhancement Act of 2004 (Public Law 108-453), and that section 
102(c) shall be administered in a manner consistent with such 
intent.
---------------------------------------------------------------------------
    \19\Compare current Sec. 102(e) with new Sec. 102(a)(2).
    \20\See generally 157 Cong. Rec. S.1496-97 (daily ed. March 9, 
2011), S. 1370-71 (daily ed. March 8, 2011).
    \21\The Committee does not intend a substantive change by replacing 
the word ``negatived'' in section 103 of title 35 with ``negated.''
---------------------------------------------------------------------------
Inventor's oath or declaration
    The U.S. patent system, when first adopted in 1790, 
contemplated that individual inventors would file their own 
patent applications, or would have a patent practitioner do so 
on their behalf. It has become increasingly common for patent 
applications to be assigned to corporate entities, most 
commonly the employer of the inventor.\22\ In fact, many 
employment contracts require employees to assign their 
inventions to their employer.\23\
---------------------------------------------------------------------------
    \22\See John R. Allison & Mark A. Lemley, The Growing Complexity of 
the United States Patent System, 82 B.U. L. Rev. 77, 97 (2002) (study 
showing that approximately 85% of the patents issued between 1996-98 
were assigned by inventors to corporations; an increase from 79% during 
the period between 1976-78).
    \23\See Jerry C. Liu, Overview of Patent Ownership Considerations 
in Joint Technology Development, 2005 Syracuse Sci. & Tech. L. Rep. 1 
(2005).
---------------------------------------------------------------------------
    Current law still reflects the antiquated notion that it is 
the inventor who files the application, not the company-
assignee. For example, every inventor must sign an oath as part 
of the patent application stating that the inventor believes he 
or she is the true inventor of the invention claimed in the 
application.\24\ By the time an application is eventually 
filed, however, the applicant filing as an assignee may have 
difficulty locating and obtaining every inventor's signature 
for the statutorily required oath. Although the USPTO has 
adopted certain regulations to allow filing of an application 
when the inventor's signature is unobtainable,\25\ many have 
advocated that the statute be modernized to facilitate the 
filing of applications by assignees.\26\
---------------------------------------------------------------------------
    \24\35 U.S.C. Sec. 115.
    \25\See 37 C.F.R. Sec. 1.47, which permits an applicant to petition 
the Director of the USPTO to have the application accepted without 
every inventor's signature in limited circumstances, e.g., when the 
inventor cannot be found or refuses to participate in the application.
    \26\See Perspectives on Patents: Harmonization and Other Matters: 
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. 
on the Judiciary, 109th Cong. (2005) (statement of David Beier, Senior 
Vice President of Global Government Affairs, Amgen).
---------------------------------------------------------------------------
    The Act updates the patent system by facilitating the 
process by which an assignee may file and prosecute patent 
applications. It provides similar flexibility for a person to 
whom the inventor is obligated to assign, but has not assigned, 
rights to the invention (the ``obligated assignee'').
    Section 115 of title 35 is amended to allow a substitute 
statement to be submitted in lieu of an inventor's oath when 
either the inventor (i) is unable to submit an oath, or (ii) is 
both unwilling to do so and under an obligation to assign the 
invention. If an error is discovered, the statement may later 
be corrected. A savings clause is included to prevent an 
invalidity or unenforceability challenge to the patent based on 
failure to comply with these requirements, provided that any 
error has been remedied. Willful false statements remain 
punishable, however, under Federal criminal laws.\27\
---------------------------------------------------------------------------
    \27\See 18 U.S.C. Sec. 1001.
---------------------------------------------------------------------------
    Section 118 of title 35 is also amended to make it easier 
for an assignee to file a patent application. The amendment now 
allows obligated assignees--entities to which the inventor is 
obligated to assign the application--to file applications, as 
well. It also allows a person who has a sufficient proprietary 
interest in the invention to file an application to preserve 
that person's rights and those of the inventor.
Defense to infringement based on earlier inventor
    Under current law, ``prior user rights'' may offer a 
defense to patent infringement when the patent in question is a 
``business method patent''\28\ and its inventor uses the 
invention, but never files a patent application for it.\29\ If 
the same invention is later patented by another party, the 
prior user may not be liable for infringement to the new patent 
holder, although all others may be.
---------------------------------------------------------------------------
    \28\35 U.S.C. Sec. 273(a)(3) states: ``The term `method' means a 
method of doing or conducting business.''
    \29\See 35 U.S.C. Sec. 273.
---------------------------------------------------------------------------
    Many counties include a more expansive prior-user rights 
regime within their first-to-file system. In the United States, 
this is particularly important to high-tech businesses that 
prefer not to patent every process or method that is part of 
their commercial operations. The Act responds to this point by 
revising US law as follows: First, the prior-use defense may be 
asserted against any patent (not just method patents), provided 
the person asserting the defense reduced the subject matter of 
the patent to practice and commercially used the subject matter 
at least 1 year before the effective filing date of the patent. 
Second, the defense cannot be asserted if the subject matter 
was derived from the patent holder or persons in privity with 
the patent holder. And third, the defense cannot be asserted 
unless the prior user both reduced the subject matter of the 
patent to practice and commercially used it at least 1 year 
before the effective filing date of the patent or the date that 
the patentee publicly disclosed the invention and invoked the 
Sec. 102(b) grace period, whichever is earlier.
    This narrow expansion of prior-user rights balances the 
interests of patent holders, including universities, against 
the legitimate concerns of businesses that want to avoid 
infringement suits relating to processes that they developed 
and used prior to another party acquiring related patents.
Post-grant review proceedings
    The Act amends ex parte and inter partes reexamination and 
establishes a new post-grant review procedure. Under current 
law, there are two ways to challenge the validity and 
enforceability of a patent that has issued. The patent may be 
challenged in district court litigation or in a reexamination 
at the USPTO.
    Nearly 30 years ago, Congress created the administrative 
``reexamination'' process, through which the USPTO could review 
the validity of already-issued patents on the request of either 
the patent holder or a third party,\30\ in the expectation that 
it would serve as an effective and efficient alternative to 
often costly and protracted district court litigation.\31\ 
Reexamination requires the USPTO to review the patent in light 
of a substantial new question of patentability not presented 
during the original examination.\32\ The initial reexamination 
statute had several limitations that later proved to make it a 
less viable alternative to litigation for evaluating patent 
validity than Congress intended. First, a reexamination request 
could only be based on prior art, and could not be based on 
prior public use or prior sales. Moreover, the requestor could 
not raise any challenge based on Sec. 101 (utility, 
eligibility) or Sec. 112 (indefiniteness, enablement, written 
description, best mode). A third party alleging a patent is 
invalid, therefore, had fewer challenges it could raise in the 
proceeding and, therefore, may instead opt to risk infringement 
and litigate the validity of the patent in court. Second, in 
the original reexamination system, the third-party challenger 
had no role once the proceeding was initiated, while the patent 
holder had significant input throughout the entire process. 
Third, a challenger that lost at the USPTO under reexamination 
had no right to appeal an examiner's, or the Patent Board's, 
decision either administratively or in court. Restrictions such 
as these made reexamination a much less favored avenue to 
challenge questionable patents than litigation. Reexamination 
proceedings are also often costly, taking several years to 
complete,\33\ and are first conducted by examiners and, if the 
patent is rejected, then by Patent Board judges. Thus, many 
patents must go through two rounds of administrative review 
(one by the examiner, and a second by the Patent Board) adding 
to the length of the proceeding.\34\
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    \30\See 35 U.S.C. Sec. Sec. 301-307. A patent holder will typically 
request reexamination to bolster the patent in view of new prior art. A 
third party may request reexamination to challenge, and ultimately 
invalidate, the patent.
    \31\``Reexamination will permit efficient resolution of questions 
about the validity of issued patents without recourse to expensive and 
lengthy infringement litigation. . . . The reexamination of issued 
patents could be conducted with a fraction of the time and cost of 
formal legal proceedings and would help restore confidence in the 
effectiveness of our patent system. . . . It is anticipated that these 
measures provide a useful and necessary alternative for challengers and 
for patent owners to test the validity of united states patents in an 
efficient and relatively inexpensive manner.'' See H.R. Rep. No. 96-
1307(I) at 3 (1980), reprinted in 1980 U.S.C.C.A.N. 6460, 6462-63.
    \32\See 35 U.S.C. Sec. 303.
    \33\See Perspectives on Patents: Hearing Before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of Jon W. Dudas, Undersecretary of Commerce for 
Intellectual Property, Director of the U.S. Patent and Trademark 
Office), explaining that ``a large number of reexamination proceedings 
have been pending before the USPTO for more than 4 years,'' and 
questioning whether this amount of time is consistent with the 
statutory requirement that ``[a]ll reexamination proceedings . . . will 
be conducted with special dispatch within the Office.'' See also 35 
U.S.C. Sec. 305.
    \34\For several years, the standard practice at the USPTO was to 
assign the reexamination to the patent examiner who had originally 
examined that patent. In addition, the same third-party requester could 
file multiple, serial reexaminations based on the same ``substantial 
new question of patentability,'' so long as the initial reexamination 
was not complete. More recently, the USPTO ended some of these 
procedures, and now reexaminations are handled by a Central 
Reexamination Unit (CRU), and subsequent serial reexamination, based on 
the same ``substantial new question of patentability,'' is no longer 
permitted. See, e.g., Manual of Patent Examining Procedure (MPEP) 
Sec. Sec. 2236 and 2240 (August 2006).
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    Congress has responded several times to criticisms of the 
reexamination system by making amendments to the process.\35\ 
In 1999, Congress created a second reexamination procedure--
called inter partes reexamination--that gave third-party 
challengers greater input throughout the proceeding by 
permitting them to respond to every pleading submitted by the 
patent holder.\36\ Congress also eventually gave third-party 
challengers the right to appeal adverse decisions.\37\
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    \35\See e.g., 21st Century Dep't of Justice Appropriations 
Authorization Act, Pub. L. No. 107-273, Sec. Sec. 13105-06, 13202, 116 
Stat. 1758, 1761 (2002) (effective Nov. 2, 2002); American Inventors 
Protection Act, Pub.L. 106-113, 113 Stat. 1536, Sec. 1501A et seq. 
(1999) (creating inter partes reexamination) (hereafter referred to as 
the ``AIPA'').
    \36\See 35 U.S.C. Sec. Sec. 311-318.
    \37\See 35 U.S.C. Sec. 315(b).
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    As part of the 1999 improvements to reexamination, Congress 
directed the USPTO to submit a report to Congress evaluating 
the inter partes reexamination process and making any 
recommendations for changes.\38\ Initially, the USPTO projected 
that in the first year after the creation of inter partes 
reexamination, it would receive 400 such requests and it 
projected that by 2004 it would receive nearly 600.\39\ No 
inter partes reexamination requests were actually filed in 2000 
and only 27 such requests had been filed by 2004.\40\ Over the 
5-year period studied by the USPTO, it issued 900,000 patents 
and received only 53 requests for inter partes 
reexamination.\41\
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    \38\AIPA, Pub. L. 106-113, Sec. 4606.
    \39\See United States Patent and Trademark Office, Report to 
Congress on Inter Partes Reexamination (2004) (hereinafter referred to 
as ``Report on Inter Partes Reexamination''), at 4.
    \40\Id. at 5.
    \41\Id.
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    The Act expands the category of documents that may be cited 
in a reexamination proceeding to include written statements of 
the patent owner that have been filed in a proceeding before a 
Federal court or the USPTO regarding the scope of claims. This 
addition will counteract the ability of patent owners to offer 
differing interpretations of prior art in different 
proceedings. These written statements, which include documents, 
pleadings or evidence from proceedings that address the patent 
owner's statements, shall not be considered for any purpose 
other than to determine the proper meaning of the claims that 
are the subject of the request in a proceeding. Specifically, 
the Committee does not intend these statements to be a basis 
for the institution of a reexamination proceeding. 
Reexaminations will continue to be available only on the basis 
of ``patents or printed publications.''\42\
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    \42\The scope of ``patent and printed publication'' prior art in 
the amended section 301 is intended to be coextensive with these terms 
in current section 102 of the title 35. Further, amendments made by 
Section 2 of the Act, which expand and contract the definition of 
certain other forms of prior art, are not intended to change the 
particular ``patent or printed publication'' prior art, which will 
continue to be the sole basis for initiating reexamination proceedings.
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    The Act also amends the ex parte reexamination procedure to 
allow the Director to institute a reexamination on the 
Director's own initiative if a substantial new question of 
patentability is raised by patents or publications.
    The Act converts inter partes reexamination from an 
examinational to an adjudicative proceeding, and renames the 
proceeding ``inter partes review.'' The Act also makes the 
following improvements to this proceeding:

         L``Reasonable likelihood of success'' for 
        instituting inter partes review. The threshold for 
        initiating an inter partes review is elevated from 
        ``significant new question of patentability''--a 
        standard that currently allows 95% of all requests to 
        be granted--to a standard requiring petitioners to 
        present information showing that their challenge has a 
        reasonable likelihood of success. Satisfaction of the 
        new threshold will be assessed based on the information 
        presented both in the petition for the proceeding and 
        in the patent owner's response to the petition.

         L``Reasonably could have raised'' estoppel 
        applied to subsequent administrative proceedings. A 
        party that uses inter partes review is estopped from 
        raising in a subsequent PTO proceeding (such as an ex 
        parte reexam or inter partes review) any issue that it 
        raised or reasonably could have raised in the inter 
        partes review.

         LRepeal of the 1999 limit. The limit on 
        challenging patents issued before 1999 in inter partes 
        reexamination is eliminated; all patents can be 
        challenged in inter partes review.

         LPreponderance burden. Petitioners bear the 
        burden of proving that a patent is invalid by a 
        preponderance of the evidence in inter partes review.

         LTime limits during litigation. Parties who 
        want to use inter partes review during litigation are 
        required to seek a proceeding within 12 months of being 
        served with a complaint alleging infringement of the 
        patent, and are barred from seeking or maintaining an 
        inter partes review if they file an action for a 
        declaratory judgment that the patent is invalid.

         LDiscovery. Parties may depose witnesses 
        submitting affidavits or declarations and seek such 
        discovery as the Patent Office determines is otherwise 
        necessary in the interest of justice.

         L12- to 18-month deadline. Inter partes review 
        must be completed within 1 year of when the proceeding 
        is instituted, except that the Office can extend this 
        deadline by 6 months for good cause.

         LOral hearing. Each party has the right to 
        request an oral hearing as part of an inter partes 
        review.

         LThree-judge panels. Inter partes reviews will 
        be conducted before a panel of three APJs. Decisions 
        will be appealed directly to the Federal Circuit.

    The Act also creates a new post-grant opposition procedure 
that can be utilized during the first 12 months after the grant 
of a patent or issue of a reissue patent. Unlike reexamination 
proceedings, which provide only a limited basis on which to 
consider whether a patent should have issued, the post-grant 
review proceeding permits a challenge on any ground related to 
invalidity under section 282. The intent of the post-grant 
review process is to enable early challenges to patents, while 
still protecting the rights of inventors and patent owners 
against new patent challenges unbounded in time and scope. The 
Committee believes that this new, early-stage process for 
challenging patent validity and its clear procedures for 
submission of art will make the patent system more efficient 
and improve the quality of patents and the patent system. This 
new, but time-limited, post-grant review procedure will provide 
a meaningful opportunity to improve patent quality and restore 
confidence in the presumption of validity that comes with 
issued patents in court.
    In utilizing the post-grant review process, petitioners, 
real parties in interest, and their privies are precluded from 
improperly mounting multiple challenges to a patent or 
initiating challenges after filing a civil action challenging 
the validity a claim in the patent. Further, a final decision 
in a post-grant review process will prevent the petitioner, a 
real party in interest, or its privy from challenging any 
patent claim on a ground that was raised in the post-grant 
review process. The post-grant review procedure is not 
intended, however, to inhibit patent owners from pursuing the 
various avenues of enforcement of their rights under a patent, 
and the amendment makes clear that the filing or institution of 
a post-grant review proceeding does not limit a patent owner 
from commencing such actions.
    The Committee recognizes the importance of quiet title to 
patent owners to ensure continued investment resources. While 
this amendment is intended to remove current disincentives to 
current administrative processes, the changes made by it are 
not to be used as tools for harassment or a means to prevent 
market entry through repeated litigation and administrative 
attacks on the validity of a patent. Doing so would frustrate 
the purpose of the section as providing quick and cost 
effective alternatives to litigation. Further, such activity 
would divert resources from the research and development of 
inventions. As such, the Committee intends for the USPTO to 
address potential abuses and current inefficiencies under its 
expanded procedural authority.
Patent Trial and Appeal Board.
    The Act renames the Patent Board the ``Patent Trial and 
Appeal Board'' and sets forth its duties, which are expanded to 
include jurisdiction over the new post-grant review and 
derivation proceedings. This section strikes references to 
proceedings eliminated by the Act, including interference 
proceedings, and updates the various appeals statutes.
Preissuance submissions by third parties
    After an application is published, members of the public--
most likely, a competitor or someone else familiar with the 
patented invention's field--may realize they have information 
relevant to a pending application. The relevant information may 
include prior art that would prohibit the pending application 
from issuing as a patent. Current USPTO rules permit the 
submission of such prior art by third parties only if it is in 
the form of a patent or publication,\43\ but the submitter is 
precluded from explaining why the prior art was submitted or 
what its relevancy to the application might be.\44\ Such 
restrictions decrease the value of the information to the 
examiner and may, as a result, deter such submissions.\45\
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    \43\See 35 C.F.R. Sec. 1.99.
    \44\See 35 C.F.R. Sec. 1.99(d) (``A submission under this section 
shall not include any explanation of the patents or publications, or 
any other information.'').
    \45\See Perspectives on Patents: Hearing Before the Subcomm. on 
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 
(2005) (statement of David Simon, Chief Patent Counsel, Intel 
Corporation).
---------------------------------------------------------------------------
    The Act improves the process by which third parties submit 
relevant information to the UPSTO by permitting those third 
parties to make statements concerning the relevance of the 
patents, patent applications, and other printed publications 
that they bring to the USPTO's attention.
Venue
    In 1999, as part of the American Inventors Protection Act 
(AIPA), Congress established that as a general matter the venue 
of the USPTO is the district where it resides.\46\ The USPTO 
currently resides in the Eastern District of Virginia. However, 
Congress inadvertently failed to make this change uniformly 
throughout the entire patent statute. As a result, certain 
sections of the patent statute (and one section of the 
trademark statute) continue to allow challenges to USPTO 
decisions to be brought in the District of Columbia, a place 
where the USPTO has not resided in decades.
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    \46\See 35 U.S.C. Sec. 1(b).
---------------------------------------------------------------------------
    Because the USPTO no longer resides in the District of 
Columbia, the sections that authorize venue for litigation 
against the USPTO are consistently changed to reflect the venue 
where the USPTO currently resides.
Fee-setting authority
a) Agency fee setting authority
    Although the USPTO has had the ability to set certain fees 
by regulation, most fees (e.g., filing fee, issuance fee, 
maintenance fees) are set by Congress.\47\ History has shown 
that such a scheme does not allow the USPTO to respond promptly 
to the challenges that confront it. The USPTO has argued for 
years that it must have fee-setting authority to administer 
properly the agency and its growing workload.
---------------------------------------------------------------------------
    \47\See, e.g., 35 U.S.C. Sec. 41.
---------------------------------------------------------------------------
    The Act allows the USPTO to set or adjust all of its fees, 
including those related to patents and trademarks, so long as 
they do no more than reasonably compensate the USPTO for the 
services performed. Prior to setting such fees, the Director 
must give notice to, and receive input from, the Patent or 
Trademark Public Advisory Committee (PPAC or TPAC). The 
Director may also reduce fees for any given fiscal year, but 
only after consultation with the PPAC or TPAC. The Act details 
the procedures for how the Director shall consult with the PPAC 
and TPAC, including providing for public hearings and the 
dissemination to the public of any recommendations made by 
either Committee. Fees shall be prescribed by rule. Any 
proposed fee change shall be published in the Federal Register 
and include the specific rationale and purpose for the proposed 
change. The Director must seek public comments for no less than 
45 days. The Director must also notify Congress of any final 
decision regarding proposed fees. Congress shall have no more 
than 45 days to consider and comment on any proposed fee, but 
no proposed fee shall be effective prior to the expiration of 
this 45-day period.
b) ``Micro entity'' defined
    As part of the ongoing effort to nurture U.S. innovation, 
Congress has long recognized that certain groups, including 
independent inventors, small business concerns, and non-profit 
organizations (collectively referred to as ``small business 
entities'') should not bear the same financial burden for 
filing patent applications as larger corporate interests. The 
current statute provides for a significant reduction in certain 
fees for small business entities.\48\ The Committee was made 
aware, however, that there is likely a benefit to describing--
and then accommodating--a group of inventors who are even 
smaller, in order to ensure that the USPTO can tailor its 
requirements, and its assistance, to the people with very 
little capital, and just a few inventions, as they are starting 
out.
---------------------------------------------------------------------------
    \48\See 35 U.S.C. Sec. 41(h).
---------------------------------------------------------------------------
    This section of the Act defines this even smaller group--
the micro-entity--that includes only truly independent 
inventors. The Committee expects that the USPTO will make 
accommodations under its authority in recognition of the 
special status of micro-entities.
Supplemental examination
    Patents are unenforceable and invalid if they are obtained 
through fraud. This concept is addressed in the ``inequitable 
conduct'' defense, which allows a defendant in an infringement 
suit to plead that the plaintiff patent-holder would not have 
received a patent but for misrepresentations made to the USPTO. 
Inequitable conduct requires proof of materiality as well as 
intent to deceive. These standards require courts and litigants 
to invest time and resources in determining the patent-holder's 
state of mind or intent when developing the invention and 
submitting the application. Critics of the inequitable conduct 
defense, including the National Academies and the Federal Trade 
Commission, argue that our patent system is hampered by 
provisions that require courts to divine the difficult-to-prove 
subjective intent of individuals in patent disputes. And most 
defendants reflexively plead inequitable conduct as a defense 
to infringement, prompting the Federal Circuit to label the 
practice a ``plague'' on the patent system.
    The Act addresses the inequitable conduct doctrine by 
authorizing 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 later be 
used to hold the patent unenforceable or invalid on the basis 
for an inequitable-conduct attack in civil litigation.
Funding agreements
    The Patent and Trademark Amendments Act of 1980 (commonly 
referred to as the Bayh-Dole Act)\49\ granted universities, 
other non-profit organizations, and small businesses the right 
to title to inventions developed using Federal funds. In 1984, 
Congress amended the law to ensure that universities and small 
businesses operating at Government facilities (GOCOs) reaped 
the benefits of Bayh-Dole by giving them the right to elect 
title to a subject invention.\50\ The 1984 Act permitted GOCOs 
to retain the balance of any royalties or income earned from 
licensing inventions, up to 5 percent of the annual budget of 
the facility, for further research, development, and related 
activities. If the balance exceeds 5 percent of the facility's 
annual budget, however, 75 percent of the excess is recouped by 
the Government, with the remaining 25 percent of the excess 
also retained by the GOCO for further research, development, 
and related activities.\51\
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    \49\P.L. 96-517.
    \50\P.L. 98-620, Sec. 501.
    \51\35 U.S.C. Sec. 202(c)(7).
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    The Senate Judiciary Committee considered testimony that 
the requirement to repay the government 75 percent of the 
excess on royalty payments may be causing a disincentive for 
universities and small business operating under the GOCO 
provisions to commercialize products.\52\ Based on these 
concerns, the Act maintains the essence of the agreement GOCOs 
made with the taxpayers when they received funding that they 
would reimburse the taxpayer if they are sufficiently 
successful in commercializing a product invented with taxpayer 
dollars, but which reduces the burden on universities and small 
businesses, thereby encouraging commercialization. Pursuant to 
the Act, instead of reimbursing 75% of the excess to the 
Government, the GOCO will retain 85 percent for further 
research, development, and related activities and reimburse the 
Government 15 percent.
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    \52\See The Role of Federally-Funded University Research in the 
Patent System: Hearing Before the Senate Comm. on the Judiciary, 110th 
Cong. (2008) (statement of Dr. Elizabeth Hoffman, Executive Vice 
President and Provost, Iowa State University).
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Tax strategies deemed within the prior art
    In recent years, the numbers of patents on tax-strategies 
have increased. Critics assert that it is not fair to permit 
patents on techniques used to satisfy a government mandate, 
such as compliance with the Internal Revenue Code.
    Tax preparers, lawyers, and planners have a long history of 
sharing their knowledge regarding how to file returns, plan 
estates, and advise clients. The ability to interpret the tax 
law and implement such interpretations should remain in the 
public domain, available to all taxpayers and their advisors.
    The Act mandates that tax strategies are deemed 
``insufficient to differentiate a claimed invention from the 
prior art.'' In other words, any future tax strategy will be 
considered indistinguishable from all other publicly available 
information that is relevant to a patent's claim of 
originality. Under the Act, however, protection (an exclusion) 
is made available for software that enables individuals to file 
their income tax returns or that assists them with managing 
their finances. The exclusion does not apply to that part of 
the software related to a tax strategy.
Best mode requirement
    The Act amends Sec. 282(b) to eliminate as a defense to 
patent infringement the patentee's failure to comply with the 
best mode requirement of Sec. 112. An applicant for a patent 
must disclose: (1) a written description of the invention; (2) 
a written description of the manner of making and using the 
invention, sufficient to enable one skilled in the art to make 
and use it (known as the ``enablement requirement''); and (3) 
the best mode contemplated by the inventor of carrying out the 
invention.\53\ The disclosures required of an applicant are 
part of the important tradeoff that underlies the patent laws: 
the grant of a limited-term monopoly in exchange for disclosure 
of the invention.
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    \53\35 U.S.C. Sec. 112. Section 112 also requires an applicant to 
disclose a written description of the invention and a written 
description of the manner of making and using the invention, sufficient 
to enable one skilled in the art to make and use it.
---------------------------------------------------------------------------
    Under current law, the defense of patent invalidity is 
available for failure to comply with any requirement of 
Sec. 112 (specification) or Sec. 251 (reissued patents). 
Further, a defendant in patent litigation may also allege an 
intentional nondisclosure of the best mode, with intent to 
deceive the Office, as a basis for an unenforceability defense. 
Many have argued in recent years that the best mode 
requirement, which is unique to American patent law, is 
counterproductive.\54\ They argue that challenges to patents 
based on best mode are inherently subjective and not relevant 
by the time the patent is in litigation, because the best mode 
contemplated at the time of the invention may not be the best 
mode for practicing or using the invention years later.
---------------------------------------------------------------------------
    \54\Among those who have so argued are the National Academy of 
Sciences, the Biotechnology Industry Organization, the American 
Intellectual Property Law Association, the Intellectual Property Owners 
Association, and Pharmaceutical Research and Manufacturers of America.
---------------------------------------------------------------------------
    In response to these concerns, the Act includes a provision 
that eliminates best mode as a basis for both invalidity and 
unenforceability defenses under Sec. 282; other defenses are 
unaffected.
Marking
a) Virtual Marking
    In general, for patented ``articles,'' a patent holder must 
give an alleged infringer notice of the claimed infringement, 
and the infringer must continue to infringe, before the patent 
holder may succeed in a suit for damages.\55\ Actual notice 
requires the affirmative communication of infringement to the 
defendant, which may include the filing of a lawsuit. 
Constructive notice is possible by ``marking'' any patented 
article that the patent holder (or its licensee) makes, uses, 
sells or imports.\56\ Failure to appropriately mark an article 
can preclude the recovery of damages until notice is effective.
---------------------------------------------------------------------------
    \55\See 35 U.S.C. Sec. 287.
    \56\See id.
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    The Act permits patent holders to ``virtually mark'' a 
product by providing the address of a publicly available 
website that associates the patented article with the number of 
the patent. The burden will remain on the patent holder to 
demonstrate that the marking was effective. This amendment will 
save costs for producers of products that include technology on 
which a patent issues after the product is on the market, and 
will facilitate effective marking on smaller products.
b) False marking
    The Federal Circuit's recent decision in Forest Group, Inc. 
v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), which held 
that section 292's $500 fine is assessed for each product that 
is falsely marked, has created a surge in false-marking qui tam 
litigation. Though one might assume that section 292 actions 
are 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 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 period 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.
    To address the recent surge in litigation, the bill 
replaces the qui tam remedy for false marking with a new action 
that allows a party that has suffered a competitive injury as a 
result of such marking to seek compensatory damages. The United 
States would be allowed to seek the $500-per-article fine, and 
competitors may recover in relation to actual injuries that 
they have suffered as a result of false marking, but the bill 
would eliminate litigation brought by unrelated, private third 
parties.
Advice of Counsel
    The Act includes a new provision that 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. Section 298 of title 35 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. Section 298 applies to findings 
of both willfulness and intent to induce infringement--and thus 
legislatively abrogates the Federal Circuit's decision in 
Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 699 (Fed. Cir. 
2008).
Transitional program for covered business method patents
    A number of patent observers believe the issuance of poor 
business-method patents during the late 1990's through the 
early 2000's led to the patent ``troll'' lawsuits that 
compelled the Committee to launch the patent reform project 6 
years ago. At the time, the USPTO lacked a sufficient number of 
examiners with expertise in the relevant art area. Compounding 
this problem, there was a dearth of available prior art to 
assist examiners as they reviewed business method applications. 
Critics also note that most countries do not grant patents for 
business methods.
    The Act responds to the problem by creating a transitional 
program 1 year after enactment of the bill to implement a 
provisional post-grant proceeding for review of the validity of 
any business method patent. In contrast to the era of the late 
1990's-early 2000's, examiners will review the best prior art 
available. A petition to initiate a review will not be granted 
unless the petitioner is first sued for infringement or is 
accused of infringement. The program otherwise generally 
functions on the same terms as other post-grant proceedings 
initiated pursuant to the bill. Any party may request a stay of 
a civil action if a related post-grant proceeding is granted. 
The program sunsets after 10 years, which ensures that patent 
holders cannot delay filing a lawsuit over a shorter time 
period to avoid reevaluation under the transitional program.
Jurisdictional and procedural matters
a) LState court jurisdiction and the US Court of Appeals for the 
        Federal Circuit
    The US district courts area given original jurisdiction to 
hear patent cases,\57\ while the US Court of Appeals for the 
Federal Circuit adjudicates all patent appeals.\58\ The Supreme 
Court ruled in 2002,\59\ however, that patent counterclaims do 
not give the Federal Circuit appellate jurisdiction over a 
case.
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    \57\28 USC Sec. 1338.
    \58\28 USC Sec. 1295.
    \59\Holmes Group, Inc., v. Vornado Air Circulation Systems, Inc. 
535 U.S. 826 (2002).
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    The Act clarifies the jurisdiction of the US district 
courts and stipulates that the US Court of Appeals for the 
Federal Circuit has jurisdiction over appeals involving 
compulsory patent counterclaims. The legislative history of 
this provision, which we reaffirm and adopt as our own, appears 
in the Committee Report accompanying H.R. 2955 from the 109th 
Congress,\60\ which the Committee reported favorably to the 
House on April 5, 2006.
---------------------------------------------------------------------------
    \60\H. Rep. 109-405.
---------------------------------------------------------------------------
b) Joinder
    The Act also addresses problems occasioned by the joinder 
of defendants (sometimes numbering in the dozens) who have 
tenuous connections to the underlying disputes in patent 
infringement suits.
    The Act amends chapter 29 of the Patent Act by creating a 
new Sec. 299 that addresses joinder under Rule 20 and 
consolidation of trials under Rule 42. Pursuant to the 
provision, parties who are accused infringers in most patent 
suits may be joined as defendants or counterclaim defendants 
only if: (1) relief is asserted against the parties, jointly, 
severally, or in the alternative, arising out of the same 
transaction regarding the manufacture, use, or importation of 
the accused product or process; and (2) questions of fact 
common to all of the defendants will arise in the action. New 
Sec. 299 also clarifies that joinder will not be available if 
it based solely on allegations that a defendant has infringed 
the patent(s) in question.\61\
---------------------------------------------------------------------------
    \61\Section 299 legislatively abrogates the construction of Rule 
20(a) adopted in MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 455 
(E.D. Tex. 2004); Sprint Communications Co. v. Theglobe.com, Inc., 233 
F.R.D. 615 (D. Kan. 2006); Adrain v. Genetec Inc., 2009 WL3063414 (E.D. 
Tex. September 22, 2009); Better Educ. Inc. v. Einstruction Corp., 2010 
WL 918307 (E.D. Tex. March 10, 2010); Mannatech, Inc. v. Country Life, 
LLC, 2010 WL 2944574 (N.D. Tex. July 26, 2010); Alford Safety Services, 
Inc., v. Hot-Hed, Inc., 2010 WL 3418233 (E.D. La. August 24, 2010); and 
Eolas Technologies, Inc. v. Adobe Systems, Inc., 2010 WL 3835762 (E.D. 
Tex. September 28, 2010)--effectively conforming these courts' 
jurisprudence to that followed by a majority of jurisdictions. See 
generally Rudd v. Lux Products Corp., 2011 WL 148052 (N.D. Ill. January 
12, 2011).
---------------------------------------------------------------------------
Technical amendments
    The Act contains technical amendments to improve the 
organization of the patent statute.
Travel expenses and payment of administrative judges
    The USPTO Director is authorized to conduct programs or 
exchanges pertaining to intellectual property law and 
protection ``domestically and throughout the world.'' The House 
bill clarifies that this authority includes expending funds to 
cover the subsistence and travel expenses of non-Federal 
employees who attend these programs.
    The House bill also clarifies that the Director may fix the 
pay for administrative patent judges and administrative 
trademark judges under the new Patent Trial and Appeal Board 
set forth in Section 6 of the bill.
Patent and Trademark Office funding
    The USPTO is a fee-funded agency. The revenue it collects 
from fees imposed on inventors and trademark filers is 
deposited in a special USPTO appropriations account in the 
Treasury. To obtain funding for its operations, the agency must 
request the revenue back from congressional appropriators. 
Since the early 1990's, however, more than $800 million has 
been diverted from the agency and spent on non-USPTO 
initiatives.
    The Committee believes the USPTO could operate more 
efficiently and productively if the agency had full access to 
all of its fee-generated revenue. The House bill therefore 
creates a USPTO revolving fund within the Treasury that allows 
the agency to keep all of the funds it raises until expended.
    The provision also requires the Director to submit an 
annual spending plan as well as an annual year-end report to 
the House and Senate Appropriations and Judiciary Committees.
Satellite offices
    The USPTO is conducting a pilot to create and operate a new 
satellite office located in Detroit. The bill requires the 
Director to establish three other satellite offices within a 3-
year window, subject to available resources. The legislation 
includes criteria that must be invoked when selecting the new 
sites.
Designation of Detroit satellite office
    The House and Senate bills contain a provision that 
designates the PTO satellite office in Detroit as the ``Elijah 
J. McCoy United States Patent and Trademark Office.'' Elijah 
McCoy was an African-Canadian inventor who spent much of his 
life in Michigan and earned 57 US patents. His work on an 
automatic lubricator to oil railroad steam engines gave rise to 
the expression, ``the real McCoy.''
Patent Ombudsman Program for small business concerns
    The Act requires the USPTO Director to establish a Patent 
Ombudsman Program to provide support and services regarding 
patent filings to small business concerns. The authorization is 
subject to available resources.
Priority examination for technologies important to American 
        competitiveness
    The Act stipulates that the USPTO may promulgate 
regulations, not inconsistent with law, that prioritize 
examination of applications for products, processes, or 
technologies that are important to the national economy or 
national competitiveness. This may be done without recovering 
the aggregate extra cost of providing the prioritization.
Calculation of 60-day period for application of patent term extension
    The USPTO has inconsistently applied ``counting'' rules 
that are imposed on patent holders who must submit documents to 
the agency within statutory time periods for consideration of 
additional patent term under Sec. 156 of the Patent Act. The 
Act clarifies that the agency should impose a ``business-day'' 
construction for application to Sec. 156, consistent with 
recent case law on the matter\62\.
---------------------------------------------------------------------------
    \62\The Medicines Co. v. Kappos, et. al., 10-CV-286 (E.D. Va. 
August 3, 2010).
---------------------------------------------------------------------------
Study on implementation
    The Act requires the USPTO Director to conduct a study 
regarding the implementation of the legislation and on such 
other aspects of Federal patent policies and practices with 
respect to patent rights, innovation in the United States, 
competitiveness of US markets, access by small business to 
capital and investment, and such other issues as the Director 
deems appropriate. The study must be completed within 4 years 
and the results submitted to the House and Senate Committees on 
the Judiciary.
Pro bono program
    The Committee acknowledges the importance of individuals 
and small businesses to the patent system and our national 
culture of innovation. Consistent with this sentiment, the Act 
requires the USPTO Director to support intellectual property 
law associations across the United States to establish pro bono 
programs to assist under-resourced independent inventors and 
businesses.
Effective date
    Except as otherwise provided, the provisions of the bill 
take effect 1 year following the date of enactment and shall 
apply to any patent issued on or after that date.
Budgetary effects
    The House bill retains a Senate provision that references a 
CBO PAYGO score in The Congressional Record.

                                Hearings

    The Committee's Subcommittee on Intellectual Property, 
Competition, and the Internet held 1 day of hearings on H.R. 
1249. The hearing took place on March 30, 2011. Testimony was 
received from the Honorable David Kappos, Under Secretary of 
Commerce for Intellectual Property and Director of the United 
States Patent and Trademark Office; Steve Bartlett, President 
and CEO of The Financial Services Roundtable; Steven Miller, 
President and General Counsel (Intellectual Property) for 
Procter & Gamble; Mark Chandler, Senior Vice President, General 
Counsel, and Secretary for Cisco; and John Vaughn, Executive 
Vice President of the Association of American Universities.
    The Subcommittee also conducted three separate but related 
hearings on January 25, 2011 (``How an Improved US Patent and 
Trademark Office Can Create Jobs,'' Serial No. 112-6), February 
11, 2011 (``Crossing the Finish Line on Patent Reform--What Can 
and Should be Done,'' Serial No. 112-8), and March 10, 2011 
(``Review of Recent Judicial Decisions on Patent Law,'' Serial 
No. 112-20).
    Given that the bill is a 6-year work in progress, the 
legislative record should also reflect that the Subcommittee 
conducted related hearings on patent reform in the 109th 
through 111th Congresses. These hearings include the following: 
``H.R. 2795, the `Patent Reform Act of 2005''' (June 19, 2005); 
``Committee Print Regarding Patent Quality Improvement (Part 
I)'' (April 20, 2005, Serial No. 109-11); ``Committee Print 
Regarding Patent Quality Improvement (Part II)'' (April 28, 
2005, Serial No. 109-11); ``Review of US Patent and Trademark 
Office Operations'' (September 8, 2005, Serial No. 109-48); 
``Patent Quality Enhancement in the Information-Based Economy'' 
(April 5, 2006, Serial No. 109-99); ``Patent Harmonization'' 
(April 26, 2006, Serial No. 109-100); ``Patent Trolls: Fact or 
Fiction?'' (June 15, 2006, Serial No. 109-104); ``Oversight 
Hearing on the US Patent and Trademark Office'' (February 27, 
2008, Serial No. 110-115); ``The `Patent Reform Act of 2007''' 
(April 26, 2007, Serial No. 110-65); ``H.R. 1260, The `Patent 
Reform Act of 2009''' (April 30, 2009, Serial No. 111-92); and 
``The US Patent and Trademark Office'' (May 5, 2010, Serial No. 
111-135).
    Finally, the United States Senate Committee on the 
Judiciary devoted substantial process to patent reform over the 
same time period. Beginning in 2005, the Senate Judiciary 
Committee conducted eight hearings on the subject and reported 
separate bills in the 110th (S. 1145), 111th (S. 515), and 
112th (S. 23) Congresses. The full Senate passed S. 23 on March 
8, 2011, by a vote of 95-5. H.R. 1249 is substantially similar 
to S. 23.

                        Committee Consideration

    On April 14, 2011, the Committee met in open session and 
ordered the bill H.R. 1249 favorably reported with an 
amendment, by a rollcall vote of 32 to 3, a quorum being 
present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 1249.
    1. Amendment #7 to the Manager's Amendment, offered by Ms. 
Lofgren. The amendment ties the commencement of an inter partes 
proceeding to a claims-construction order following a 
``Markman'' hearing. Failed by a rollcall of 14-17.

                                                 ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................              X
Mr. Coble.......................................................
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Lungren.....................................................              X
Mr. Chabot......................................................                              X
Mr. Issa........................................................                              X
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................                              X
Ms. Adams.......................................................
Mr. Quayle......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................             14              17
----------------------------------------------------------------------------------------------------------------

    2. Amendment #11 to the Manager's amendment, offered by Ms. 
Chu. The amendment strikes the inter partes review threshold 
and retains the lower threshold of a ``substantial new 
questions of patentability.'' Failed by a rollcall of 7-21.

                                                 ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Lungren.....................................................                              X
Mr. Chabot......................................................                              X
Mr. Issa........................................................                              X
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................                              X
Ms. Adams.......................................................                              X
Mr. Quayle......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Cohen.......................................................
Mr. Johnson.....................................................                              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................
Ms. Chu.........................................................              X
Mr. Deutch......................................................                              X
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................              7              21
----------------------------------------------------------------------------------------------------------------

    3. Manager's amendment as amended to H.R. 1249. The 
manager's amendment revises the inter partes review proceeding, 
clarifies the application of the prior-user defense, and makes 
other improvements to H.R. 1249. Adopted by a rollcall of 29-2.

                                                 ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Lungren.....................................................              X
Mr. Chabot......................................................              X
Mr. Issa........................................................
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................              X
Mr. Chaffetz....................................................              X
Mr. Griffin.....................................................
Mr. Marino......................................................              X
Mr. Gowdy.......................................................              X
Mr. Ross........................................................              X
Ms. Adams.......................................................              X
Mr. Quayle......................................................              X
Mr. Conyers, Jr., Ranking Member................................                              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................             29               2
----------------------------------------------------------------------------------------------------------------

    4. Amendment #8 to H.R. 1249, offered by Mr. Goodlatte. The 
amendment precludes the use of supplemental examination by any 
patent holder who attempts to practice or practices fraud on 
the USPTO. The amendment passed by a rollcall of 21-9, with one 
vote recorded as ``present'' and one vote recorded as ``pass.''

                                                 ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................              X
Mr. Lungren.....................................................              X
Mr. Chabot......................................................                              X
Mr. Issa........................................................              X
Mr. Pence.......................................................                              X
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz....................................................              X
Mr. Griffin.....................................................              X
Mr. Marino......................................................              X
Mr. Gowdy.......................................................              X
Mr. Ross........................................................              X
Ms. Adams.......................................................              X
Mr. Quayle......................................................              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................                                           Pass
Mr. Johnson.....................................................                              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................
Ms. Chu.........................................................                              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................             21               9
----------------------------------------------------------------------------------------------------------------

    5. Amendment #15 to H.R. 1249, offered by Ms. Lofgren. The 
amendment strikes the supplemental examination provision from 
the bill. Failed by a rollcall of 8-21.

                                                 ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Lungren.....................................................                              X
Mr. Chabot......................................................                              X
Mr. Issa........................................................                              X
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................
Ms. Adams.......................................................                              X
Mr. Quayle......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................                              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................                              X
Ms. Chu.........................................................                              X
Mr. Deutch......................................................                              X
Ms. Sanchez.....................................................                              X
Ms. Wasserman Schultz...........................................              X
                                                                 -----------------------------------------------
    Total.......................................................              8              21
----------------------------------------------------------------------------------------------------------------

    6. Amendment #1 to H.R. 1249, offered by Mr. Conyers. The 
amendment limits the application of the business method patent 
program. Failed by a rollcall of 11-24.

                                                 ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Lungren.....................................................              X
Mr. Chabot......................................................                              X
Mr. Issa........................................................                              X
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................                              X
Mr. Jordan......................................................                              X
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................                              X
Ms. Adams.......................................................                              X
Mr. Quayle......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................              X
Mr. Nadler......................................................                              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................                              X
Ms. Sanchez.....................................................              X
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................             11              24
----------------------------------------------------------------------------------------------------------------

    7. Reporting H.R. 1249 as amended. The bill bolsters 
funding for the USPTO, switches the United States to a first-
to-file patent system, and makes further improvements to the 
Patent Act. Reported by a rollcall of 32-3.

                                                 ROLLCALL NO. 7
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Lungren.....................................................              X
Mr. Chabot......................................................              X
Mr. Issa........................................................              X
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. King........................................................                              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................              X
Mr. Jordan......................................................              X
Mr. Poe.........................................................              X
Mr. Chaffetz....................................................              X
Mr. Griffin.....................................................              X
Mr. Marino......................................................              X
Mr. Gowdy.......................................................              X
Mr. Ross........................................................              X
Ms. Adams.......................................................              X
Mr. Quayle......................................................              X
Mr. Conyers, Jr., Ranking Member................................                              X
Mr. Berman......................................................              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
Ms. Wasserman Schultz...........................................
                                                                 -----------------------------------------------
    Total.......................................................             32               3
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1249, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 26, 2011.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1249, the 
``America Invents Act.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure.

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 1249--America Invents Act.

                                SUMMARY

    H.R. 1249 would amend the law that governs how the Patent 
and Trademark Office (PTO) awards patents. Among other things, 
the bill would alter the rule that prioritizes the award of a 
patent from the ``first to invent'' to the ``first inventor to 
file.'' As a result, PTO would change certain procedures it 
follows in awarding patents. The bill also would establish new 
review procedures that would allow individuals to challenge the 
validity of a patent and would modify PTO's authority to 
collect and spend fees.
    CBO estimates that enacting the bill would reduce net 
direct spending by $725 million and revenues by $8 million over 
the 2011-2021 period. Most of the change in direct spending 
would result from providing PTO with permanent authority to 
collect and spend certain fees. In total, the changes would 
decrease budget deficits by $717 million over the 2011-2021 
period. Because enacting the legislation would affect direct 
spending and revenues, pay-as-you-go procedures apply. CBO 
estimates that implementing H.R. 1249 would have a 
discretionary cost of $446 million over the 2011-2016 period, 
assuming appropriation of the necessary amounts.
    H.R. 1249 would impose both intergovernmental and private-
sector mandates, as defined in the Unfunded Mandates Reform Act 
(UMRA), on certain patent applicants and other entities. The 
bill also would preempt the authority of state courts to hear 
certain patent cases. Based on information from PTO, CBO 
estimates that the costs of complying with those mandates would 
exceed the annual threshold for private-sector mandates 
established in UMRA ($142 million in 2011, adjusted annually 
for inflation) in each of the first 5 years the mandate is in 
effect. CBO estimates that the cost to state, local, and tribal 
governments would fall below the annual threshold established 
in UMRA ($71 million in 2011, adjusted annually for inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1249 is shown in the 
following table. The costs of this legislation fall within 
budget function 370 (commerce and housing credit).

                                                         By Fiscal Year, in Millions of Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  2011    2012     2013     2014     2015     2016     2017     2018     2019     2020     2021    2011-2016   2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Reclassification of PTO
 Spending
  Estimated Budget Authority         0    2,266    2,573    2,784    2,907    3,017    3,143    3,262    3,375    3,472    3,593      13,547      30,392
  Estimated Outlays                  0    1,869    2,486    2,743    2,883    2,995    3,119    3,238    3,353    3,453    3,571      12,976      29,710
New and Amended PTO Processes
  Estimated Budget Authority         0       43       92       99      113      123      129      134      141      149      157         470       1,180
  Estimated Outlays                  0       35       83       97      110      121      127      134      140      147      155         446       1,149
PTO Administrative Costs
  Estimated Budget Authority         0        8        7        3        0        0        0        0        0        0        0          18          18
  Estimated Outlays                  0        8        7        3        0        0        0        0        0        0        0          18          18
Reclassification of PTO
 Collections
  Estimated Budget Authority         0   -2,318   -2,672   -2,886   -3,019   -3,140   -3,272   -3,396   -3,516   -3,620   -3,750     -14,035     -31,589
  Estimated Outlays                  0   -2,318   -2,672   -2,886   -3,019   -3,140   -3,272   -3,396   -3,516   -3,620   -3,750     -14,035     -31,589
Electronic Filing Incentive
  Estimated Budget Authority         0       -3        3       -2       -2       -2       -1       -1       -1       -1       -1         -12         -17
  Estimated Outlays                  0       -3       -3       -2       -2       -2       -1       -1       -1       -1       -1         -12         -17
Funding Agreements
  Estimated Budget Authority         *        1        1        *        *        *        *        *        *  .......        *           2           4
  Estimated Outlays                  *        1        1        *        *        *        *        *        *        *        *           2           4
  Total Changes in Direct
 Spending
    Estimated Budget Authority       *       -3       -2       -2       -1       -2       -1       -1       -1        0        0         -10         -12
    Estimated Outlays                *     -408      -98      -45      -28      -26      -27      -25      -24      -21      -25        -605        -725

CHANGES IN REVENUES
Estimated Revenues                  -1       -3       -2       -1        *        *        *        *        *        *        *          -7          -8

NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND RECEIPTS
Impact on Deficit                    1     -405      -96      -44      -28      -26      -27      -25      -24      -21      -25        -598        -717

CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level        0      -76      -37        5       44       76     n.a.     n.a.     n.a.     n.a.     n.a.          13        n.a.
Estimated Outlays                    0      294       -8       16       55       88     n.a.     n.a.     n.a.     n.a.     n.a.         446        n.a.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
Components may not sum to totals because of rounding.
Negative numbers denote reductions in spending, revenues, and the deficit.
PTO = Patent and Trademark Office; * = between -$500,000 and $500,000; n.a. = not applicable.

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that the bill will be 
enacted near the end of fiscal year 2011, the necessary amounts 
will be appropriated each year, and spending will follow 
historical patterns for the PTO. Further, CBO assumes that most 
of the bill's provisions would be effective 1 year after the 
date of enactment.
    H.R. 1249 would change the basis that PTO uses to award 
patents. Under current law, where two or more persons 
independently develop identical or similar inventions at 
approximately the same time, the patent is awarded to the 
inventor PTO established to be first through PTO's examination 
process. H.R. 1249 would direct PTO, under the same 
circumstances, to award the patent to the inventor whose 
application to PTO had the earliest filing date.
    H.R. 1249 also would provide PTO with permanent authority 
to collect and spend certain fees, shifting collections and 
spending out of the PTO appropriation account and into a 
revolving fund. Further, H.R. 1249 would direct PTO's 
collections to be recorded in the budget as offsetting 
receipts, that is, offsets to direct spending. Under current 
law, PTO is authorized to collect fees from the public for 
specific activities related to processing applications for 
patents and trademarks. The agency assesses and collects fees 
for a number of different activities, and the rate for each is 
set in law. Currently, authority to collect and spend those 
fees is provided in annual appropriation acts, and the fees are 
classified as offsets to the agency's discretionary spending 
levels. For 2011, PTO received a gross appropriation of $2,016 
million, and CBO estimates the agency will collect fees of 
$2,198 million that year to more than offset that 
appropriation.
Direct Spending
    Based on information from PTO and other agencies, CBO 
estimates that enacting H.R. 1249 would reduce net direct 
spending by about $0.7 billion over the 2012-2021 period. 
Provisions of the bill that would reclassify PTO spending and 
broaden the agency's workload would increase spending by $30.9 
billion over the 2012-2021 period. Other provisions of the bill 
would decrease direct spending (by changing the amount of 
collections classified as offsets to direct spending) by $31.6 
billion over the same period.
    Reclassification of PTO Spending. Because PTO's spending 
would no longer be controlled by the availability of 
appropriated funds, H.R. 1249 would make all of the agency's 
fee collections permanently available for spending. Based on 
historical growth in the number of applications filed for 
patents and trademarks and historical spending patterns, we 
estimate that enacting those provisions of H.R. 1249 would 
increase gross direct spending by about $29.7 billion over the 
2012-2021 period.
    New and Amended PTO Processes. H.R. 1249 would establish 
two new procedures to review or update patents and amend one 
process already available under current law to review existing 
patents. PTO would be authorized to collect fees to offset much 
of the costs associated with those activities. Based on 
information from PTO, CBO estimates that those new and amended 
processes, taken together, would increase direct spending by 
$1.1 billion over the 2012-2021 period.
    Specifically, the bill would:

         LEstablish a new procedure, known as post-
        grant review, to review the validity of a patent. This 
        option generally would be available within 12 months of 
        the date the patent was issued and would take place in 
        a court-like proceeding in which both the challenger 
        and the owner of the patent present information 
        regarding the validity of a patent. CBO estimates that 
        implementing this new process would increase direct 
        spending by $140 million over the 2012-2021 period.


         LEstablish a new procedure that would allow 
        patent holders to request that PTO review an existing 
        patent to consider, reconsider, or correct information 
        believed to be relevant to the patent. Should this 
        supplemental review raise a new question of 
        patentability, PTO would then reexamine the patent. CBO 
        estimates that the supplemental reviews and the 
        additional reexaminations that would result under the 
        bill would increase direct spending by $758 million 
        over the 2012-2021 period.


         LAmend a process already existing under 
        current law, inter partes reexamination, to expand the 
        universe of patents that could be challenged through 
        this proceeding but also limit the time period during 
        which such a challenge could be raised. CBO estimates 
        that implementing the changes to inter partes 
        reexamination procedures would increase direct spending 
        by $251 million over the 2012-2021 period.

    PTO Administrative Costs. As a result of the switch to a 
``first-to-file'' principle for granting patents, PTO would 
incur additional administrative costs, including updating its 
information technology systems, training staff, and preparing 
several reports for the Congress. Further, the bill would 
require PTO to establish at least three additional satellite 
offices in different regions throughout the country. CBO 
estimates that those changes would cost $18 million over the 
2012-2021 period.
    Reclassification of PTO Fees. As noted above, the bill 
would permanently authorize PTO to set and collect fees and 
would direct those collections to be recorded in the budget as 
offsetting receipts (credits against direct spending). Further, 
the bill would amend current law to permanently increase fee 
rates that have been temporarily authorized in annual 
appropriation acts since 2005 and authorize PTO, after 
specified public notice and comment periods, to set fee rates 
at levels sufficient to cover the agency's operating costs.
    Based on information from PTO and historical patterns of 
collections, CBO estimates that enacting H.R. 1249 would result 
in collections of $31.6 billion over the 2012-2021 period. Most 
of that amount, about $30.5 billion, would stem from the 
reclassification of the fees from offsets to discretionary 
spending to offsetting receipts and from PTO's new authority to 
set fees to recover costs; the balance, about $1.1 billion, 
would result from increases in fee collections related to the 
increases in the agency's workload.
    Electronic Filing Incentive. In addition to fees PTO 
collects under current law, H.R. 1249 would establish a new fee 
that would be charged to patent applicants that do not use 
electronic means to file an application. Based on information 
from PTO, CBO estimates that about 5,000 paper applications, on 
average, would be filed per year, generating collections of 
about $17 million over the 2012-2021 period. The bill would 
direct those collections to be recorded as offsets to direct 
spending and would make them unavailable for spending by PTO.
    Funding Agreements. H.R. 1249 would change the amount of 
royalties or income earned by certain contractors that is 
required to be remitted to the federal government. Under 
current law, funding agreements between the federal government 
and contractors operating government-owned, contractor-operated 
(GOCO) laboratories allow contractors to retain, up to a 
certain threshold, all royalty and other income earned from 
patents received as a result of work performed under the 
contract. Beyond that, 75 percent of royalties or income earned 
above the threshold must be returned to the U.S. Treasury. The 
royalties returned to the Treasury are recorded as offsetting 
receipts. H.R. 1249 would reduce the amount deposited into the 
Treasury to 15 percent.
    Currently, only one entity operating a GOCO laboratory 
returns royalties and license fees to the federal government. 
Over the past several years, the Ames Laboratory, operated by 
Iowa State University, has returned to the Treasury 
approximately $1 million a year in license fees earned from 
patents awarded under its contract with the federal government. 
CBO estimates that reducing the percentage of income that is 
returned to the Treasury would reduce offsetting receipts (and 
thus increase direct spending) by about $4 million over the 
2011-2021 period.

                                REVENUES

    H.R. 1249 would change how certain patent cases, known as 
false marking cases, are handled by the court system. False 
marking cases are brought when a defendant is accused of 
incorrectly claiming a product's right to certain patent 
protection. Under current law, such cases can be brought by any 
person on behalf of the government; the government receives 
half of the value of any fines or amount paid as part of a 
court-mediated settlement, with the person bringing the case 
receiving the other. H.R. 1249 would permit competitors to 
recover damages for the competitive harm caused by a 
defendant's false marking but would eliminate the option for 
individuals to seek fines on behalf of the government by 
stating that only the United States can sue for a civil 
penalty. H.R. 1249 would further specify that a defendant would 
not be liable for a false marking suit if the patent involved 
either expired within 3 years of the alleged false marking or 
if the word 'expired' were added to the claim of patent 
protection.
    Information from the Department of Justice (DOJ) indicates 
that in 2010, the government collected fines (recorded as 
revenues) of about $3 million from false marking cases. Under 
current law, CBO expects that a diminishing number of new cases 
will be filed through 2011 and beyond, as courts define 
stricter standards for proving 'intent to deceive' on the part 
of the defendant, and as companies rectify their patent marking 
procedures in response to the risk of litigation. Based on 
information from DOJ, CBO estimates that about a third of 
currently pending cases will eventually be settled in court; we 
expect the rest to be dismissed with no monetary settlement. 
Thus, CBO estimates that under current law, by 2014, federal 
revenues from those cases will drop to less than $500,000 a 
year.
    By changing both who can litigate and their incentives for 
doing so, H.R. 1249 would significantly reduce both the pending 
caseload and the number of future cases filed. Therefore, CBO 
estimates that enacting the bill would reduce federal revenues 
by $7 million over the 2011-2016 period and by $8 million over 
the 2011-2021 period.
Spending Subject to Appropriation
    H.R. 1249 would provide PTO with permanent authority to 
collect fees and spend those collections thus changing the 
budgetary classification of those fees and spending. Under that 
permanent authority, PTO fees would be recorded as offsetting 
receipts rather than as offsets to discretionary spending. As a 
result of the reclassification, CBO estimates that this 
provision would decrease discretionary spending by $10.4 
billion and offsetting collections by about $10.8 billion over 
the 2012-2016 period. On net, CBO estimates that implementing 
this provision would increase net discretionary spending by 
$445 million over the 5-year period, assuming that 
appropriation actions consistent with H.R. 1249 are enacted.
    H.R. 1249 also would require the Small Business 
Administration to prepare a study of the effects on small 
businesses of eliminating the use of dates of invention for 
determining entitlement to a patent. The results of the study 
would be included in a report to the Congress due 1 year after 
enactment of the bill. In addition, H.R. 1249 would require the 
Government Accountability Office to conduct a study on the 
implementation of the bill's provisions by PTO; a report on the 
results of the study would be due 4 years after enactment of 
the bill. Based on information from the affected agencies, CBO 
estimates that those reporting requirements would cost $1 
million over the 2012-2016 period, assuming availability of 
appropriated funds.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. The net changes in outlays and 
revenues that are subject to those pay-as-you-go procedures are 
shown in the following table.


CBO Estimate of Pay-As-You-Go Effects for H.R. 1249 as ordered reported 
by the House Committee on the Judiciary on April 14, 2011



                                                         By Fiscal Year, in Millions of Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        2011   2012   2013   2014   2015   2016   2017   2018   2019   2020   2021  2011-2016  2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact                             1   -405    -96    -44    -28    -26    -27    -25    -24    -21    -25      -598       -717

Memorandum:
  Changes in
    Outlays                                                0   -408    -98    -45    -28    -26    -27    -25    -24    -21    -25      -605       -725
  Changes in
    Revenues                                              -1     -3     -2     -1      0      0      0      0      0      0      0        -7         -8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1249 would impose both intergovernmental and private-
sector mandates, as defined in UMRA, on certain patent 
applicants and other entities. The bill also would preempt the 
authority of state courts to hear certain patent cases. Based 
on information from PTO, CBO estimates that the costs of 
complying with those mandates would exceed the annual threshold 
for private-sector mandates established in UMRA ($142 million 
in 2011, adjusted annually for inflation) in each of the first 
5 years the mandate is in effect. CBO estimates that the costs 
to state, local, and tribal governments would fall below the 
annual threshold established in UMRA ($71 million in 2011, 
adjusted annually for inflation).
Mandates That Apply to Both Public and Private Entities
    PTO fees. H.R. 1249 would impose a mandate on both public 
and private entities by allowing PTO to set or adjust certain 
fees and by permanently extending other fee increases that are 
set to expire at the end of fiscal year 2011. The requirement 
to pay those fees is a mandate because the federal government 
controls the patent and trademark systems, and no reasonable 
alternatives to the systems exist.
    Based on information from PTO, CBO estimates that the total 
cost to comply with the mandate would range from about $220 
million in 2013 to about $350 million in 2017, with less than 
$1 million of those costs accruing to public entities and the 
rest accruing to private entities.
    Restricting Prior-Use Defense. H.R. 1249 would prohibit 
public and private entities from using the prior-use defense to 
patent infringement claims for business processes brought by a 
university or technology-transfer organization. Consequently, 
public and private entities that have been using business 
processes which are later patented by a university or 
technology-transfer organization would no longer be eligible to 
use those processes without permission from the patent holder. 
That restriction would be an intergovernmental and private-
sector mandate. The cost of the mandate would be the cost to 
purchase a license from the patent holder, or the amount of net 
income the entity would lose as a result of no longer being 
able to use that patent commercially. Based on the small number 
of public entities that use business methods, CBO estimates 
that the cost to comply with the mandate would be small for 
public entities. According to information from industry 
experts, the prior-use defense has never been asserted in a 
recorded case and therefore it is likely that the use of such a 
defense would be uncommon. Consequently, CBO estimates that the 
cost to comply with the mandate for private entities would 
probably be small.
Mandate That Applies to Public Entities Only
    H.R. 1249 would preempt the authority of state courts to 
hear certain patent cases. That provision would be an 
intergovernmental mandate as defined in UMRA. While it would 
limit the authority of state courts, CBO estimates that it 
would impose no duty on states that would result in additional 
spending.
Mandate That Applies to Private Entities Only
    The bill also would impose a mandate on patent applicants 
by prohibiting certain tax strategies from being patented. The 
prohibition would apply to any application pending on the date 
of enactment and any application submitted for such a patent 
after that date. CBO has no basis for estimating the net income 
that would be forgone by a patent applicant for not receiving 
such a patent. Therefore, the cost to private entities to 
comply with this mandate is uncertain.

                         PREVIOUS CBO ESTIMATE

    On March 8, 2011, CBO transmitted a pay-as-you-go estimate 
for S. 23, the America Invents Act, reflecting a number of 
amendments adopted prior to Senate passage of the bill. One 
amendment would provide permanent authority to PTO to collect 
and spend fees. CBO estimated that enacting S. 23 would reduce 
budget deficits by $750 million over the 2011-2021 period.
    On March 1, 2011, CBO transmitted a cost estimate for S. 
23, the Patent Reform Act of 2011, as ordered reported by the 
Senate Committee on the Judiciary on February 3, 2011. That 
version of the legislation would not provide permanent 
authority to PTO to collect and spend fees. CBO's estimates of 
the House and Senate bills reflect those differences. The 
mandates contained in both the House and Senate bills are the 
same, except for the mandate regarding prior-use defense, which 
is only in H.R. 1249.

                         ESTIMATE PREPARED BY:

Federal Spending: Susan Willie
Federal Revenue: Kalyani Parthasarathy
Impact on State, Local, and Tribal Governments: Elizabeth Cove 
    Delisle
Impact on the Private Sector: Paige Piper/Bach

                         ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis
Frank Sammartino
Assistant Director for Tax Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
1249 modernizes US patent law to improve the operations of the 
US Patent and Trademark Office, inhibit frivolous patent 
lawsuits, protect the rights of all inventors, and spur 
innovation as a means to create American jobs and raise 
standards of living.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1249 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                           Section-by-Section

Section 1. Short title; table of contents.
    This Act may be cited as the ``America Invents Act.''
Section 2. Definitions.
    Section 2 defines the following terms: ``Director,'' 
``Office,'' ``Patent Public Advisory Committee,'' ``Trademark 
Act of 1946,'' and ``Trademark Public Advisory Committee''.
Section 3. First inventor to file.
    Subsection (a)--Sec. 100 is amended to include definitions 
for additional terms, including ``effective filing date.''
    Subsection (b)--Sec. 102 is amended to make an invention's 
priority date its effective filing date. This change moves the 
United States to the first-to-file system. New section 102(b) 
preserves the grace period, ensuring that during the year prior 
to filing, an invention will not be rendered unpatentable based 
on any of the inventor's own disclosures, or any disclosure 
made by any party after the inventor has disclosed his 
invention to the public. Section 102(c) recodifies the CREATE 
Act, and section 102(d) defines the effective filing date of a 
patent or application that is cited as prior art to a claimed 
invention.
    Subsection (c)--Sec. 103 is amended consistent with moving 
to a first-to-file system. Existing subsection (a) is amended 
slightly; subsection (b) is deleted because it is no longer 
needed; subsection (c), which is the CREATE Act, has been moved 
to Sec. 102.
    Subsection (d)--Repeals Sec. 104 (Inventions Made Abroad).
    Subsection (e)--Repeals Sec. 157 (Statutory Invention 
Registration).
    Subsection (f)--Amends Sec. 120 related to filing dates to 
conform with the CREATE Act.
    Subsection (g)--Makes various conforming amendments.
    Subsections (h), (i) & (j)--Repeals interference proceeding 
and makes conforming changes to Sec. 291. Amends Sec. 135(a) 
and provides for a ``derivation proceeding,'' designed to 
determine the inventor with the right to file an application on 
a claimed invention. An applicant requesting a derivation 
proceeding must set forth the basis for finding that an earlier 
applicant derived the claimed invention and without 
authorization filed an application claiming such invention. The 
request must be filed within 1 year of the date of first 
publication of an application for a claim that is substantially 
the same as the claimed invention. The Patent Trial and Appeal 
Board (the ``Board'') shall determine the right to patent and 
issue a final decision thereon. Decisions of the Board may be 
appealed to the Federal Circuit, or to district court pursuant 
to Sec. 146.
    Subsection (k)--Paragraph (1) amends Sec. 32 of the Patent 
Act (``suspension or exclusion from practice'') by placing time 
limitations on the commencement of a proceeding. Paragraph (2) 
imposes a reporting requirement on the Director regarding 
instances of misconduct before the agency and how they were 
addressed.
    Subsection (l)--Contains a provision for a study regarding 
first-to-file to be conducted by the Small Business 
Administration and the USPTO.
    Subsection (m)--Requires a study of prior user rights.
    Subsection (n)--Contains an effective date provision.
    Subsection (o)--Contains a study of patent litigation and 
its effect on the patent system.
    Subsection (p)--Sets forth the sense of Congress that the 
first-to-file system promotes the purposes of Article I, 
section 8, clause 8, of the US Constitution.
    Subsection (q)--Sets forth the sense of Congress that the 
first-to-file system promotes harmonization of the US and other 
patent systems.
Section 4. Inventor's oath or declaration.
    The section streamlines the requirement that the inventor 
submit an oath as part of a patent application, and makes it 
easier for patent owners to file applications.
    Subsection (a)--Section 115 is amended to permit an 
applicant to submit a substitute statement in lieu of the 
inventor's oath or declaration in certain circumstances, 
including if the inventor is (i) unable to do so, or (ii) 
unwilling to do so and is under an obligation to assign the 
invention. A savings clause provides that failure to comply 
with the requirements of this section will not be a basis for 
invalidity or unenforceability of the patent if the failure is 
remedied by a supplemental and corrected statement. False 
substitute statements are subject to the same penalties as 
false oaths and declarations.
    Subsection (b)--Section 118 is amended to allow the person 
to whom the inventor has assigned (or is under an obligation to 
assign) the invention to file a patent application. A person 
who otherwise shows sufficient proprietary interest in the 
invention may file a patent application as an agent of the 
inventor to preserve the rights of the parties.
Section 5. Defense to infringement based on earlier inventor.
    Section 5 amends Sec. 273 of the Patent Act, which 
addresses prior-user rights, as follows:
    The prior-use defense may be asserted against any patent 
(not just methods), provided the person asserting the defense 
reduced the subject matter of the patent to practice and 
commercially used the subject matter at least 1 year before the 
effective filing date of the patent. However, the defense 
cannot be asserted if the subject matter was derived from the 
patent holder or persons in privity with the patent holder. Nor 
can the defense be asserted unless the prior user both reduced 
the subject matter of the patent to practice and commercially 
used it at least 1 year before the effective filing date of the 
patent or the date that the patentee publicly disclosed the 
invention and invoked the Sec. 102(b) grace period, whichever 
is earlier.
    Section 5 also clarifies that a person may not assert the 
defense if the subject matter of the patent on which the 
defense is based was developed pursuant to a funding agreement 
under Chapter 18 of the Patent Act (patent rights in inventions 
made with Federal assistance) or by a university or a 
technology transfer organization affiliated with a university 
that did not receive private business funding in support of the 
patent's development.
    Finally, Section 5 states that the defense may only be 
asserted by the person who performed or caused the performance 
of the acts necessary to establish the defense, as well as any 
other entity that controls, is controlled by, or is under 
common control with such person; and except for any transfer to 
the patent owner, the right to assert the defense cannot be 
licensed or assigned or transferred to another person except as 
an ancillary and subordinate part of a good faith assignment or 
transfer for other reasons of the entire enterprise or line of 
bsiness to which the defense relates.
Section 6. Post-grant review proceedings.
    Subsections (a) and (d) enact new chapters 31 and 32, which 
create adjudicative systems of post-grant and inter partes 
review. The parallel sections of these new chapters are as 
follows:

        Sec. Sec. 311 and 321. Inter partes review may be 
        sought on the basis of patents and printed publications 
        any time after a post-grant review is concluded or, if 
        no such review is instituted, after the time for 
        seeking such review has expired. Post-grant review may 
        be sought on any invalidity ground during the first 12 
        months after a patent is issue or reissued.

        Sec. Sec. 312 and 322. Petitions for review shall 
        explain the basis for seeking review, shall identify 
        the petitioner's real parties in interest and privies, 
        and shall be made publicly available as soon as is 
        practicable.

        Sec. Sec. 313 and 323. Patent owners may file a 
        response to a petition for reviewing explaining why a 
        review should not be instituted.

        Sec. Sec. 314 and 324. Inter partes review shall not be 
        instituted unless the information in the petition and 
        response shows that there is a reasonable likelihood 
        that a claim would be found invalid. Post-grant review 
        shall not be instituted unless the information 
        presented in the petition, if not rebutted, shows that 
        it is more likely than not that a claim would be found 
        invalid, or the petition raises a novel or unsettled 
        legal question that is important to other patents or 
        applications.

        Sec. Sec. 315 and 325. (a) Review may not be instituted 
        if the petitioner has previously filed a civil action 
        challenging the validity of the patent. The petitioner 
        may, however, file a declaratory-judgment action 
        challenging the validity of one or more claims in the 
        patent on or after the day that he files the review 
        petition, but such action is automatically stayed until 
        the patent owner countersues for infringement.

        (b) Inter partes review must be sought by a party 
        within 12 months of the date when the party is served 
        with a complaint for infringement. If a patent owner 
        sues for infringement within 3 months of the patent's 
        issue, a pending petition for post-grant review or the 
        institution of such a proceeding may not serve as a 
        basis for staying the court's consideration of the 
        patent owner's motion for a preliminary injunction.

        (c) The Director may allow other petitioners to join an 
        inter partes or post-grant review.

        (d) The Director may consolidate multiple proceedings 
        or matters concerning the same patent and decline 
        requests for repeated proceedings on the same question.

        (e) Inter partes and post-grant petitioners are 
        estopped from raising in a subsequent Office proceeding 
        any issue that they raised or reasonably could have 
        raised in the inter partes or post grant review, and 
        inter partes petitioners are also estopped from raising 
        in civil litigation or an ITC proceeding any issue that 
        they raised or could have raised in the inter partes 
        review. Post-grant petitioners are only estopped from 
        raising in civil litigation or ITC proceedings those 
        issues that they actually raised in the post-grant 
        review.

        (f) Post-grant review may not be used to challenge 
        claims in a reissue patent that are the same as or 
        narrower than claims in the original patent if the time 
        for seeking review of the original patent has lapsed.

        Sec. Sec. 316 and 326. (a) The Director shall prescribe 
        regulations that make the file in proceedings public; 
        define standards for instituting reviews; allow 
        submission of additional information; establish and 
        govern review and its relationship to other 
        proceedings; set a time limit for requesting joinder in 
        inter partes review; set standards for discovery; 
        prescribe sanctions for abuse of the proceedings; 
        provide for protective orders for confidential 
        information; allow the patent owner to file a response 
        after an inter partes review has been instituted; allow 
        the patent owner to amend the patent; provide either 
        party with the right to an oral hearing; and set a 1-
        year time limit for completion of the proceeding, with 
        a 6-month extension for good cause; and provide the 
        petitioner with at least one opportunity to file 
        written comments after the proceeding is instituted.

        (b) In prescribing regulations, the Director shall 
        consider the integrity of the patent system and the 
        efficient operation of the Office.

        (c) The Patent Trial and Appeal Board shall conduct 
        review proceedings.

        (d) The patent owner may submit one amendment with a 
        reasonable number of substitute claims, and additional 
        amendments either as agreed to by the parties for 
        settlement, for good cause shown in post-grant review, 
        or as prescribed in regulations by the Director in 
        inter partes review.

        (e) The challenger shall have the burden of providing 
        unpatentability by a preponderance of the evidence.

    Sec. Sec. 317 and 327. Parties may agree to settle review 
proceedings, in which case estoppel shall not apply and a copy 
of the settlement agreement shall be filed in the Office.

    Sec. Sec. 318 and 328. The Patent Trial and Appeal Board 
shall issue a final written decision and a certificate 
cancelling, confirming, or incorporating claims.

    Sec. Sec. 319 and 329. A party dissatisfied with a final 
written decision may appeal to the U.S. Court of Appeals for 
the Federal Circuit.

    Subsections (b) and (e) of section 5 make technical and 
conforming amendments.
    Subsections (c) and (f) require the Director to issue 
regulations implementing the new reviews within 1 year, and 
create transition provisions for proceedings pending between 
the enactment of the Act and the full implementation of the new 
reviews.
    Subsection (g) amends Sec. 301 to include written 
statements of the patent owner filed in a proceedings before a 
Federal court or the Office as citable prior art. The section 
is further amended to provide rules for submitting such 
statements and the limitations on their use.
    Subsection (h) amends Sec. 303 to provide that the Director 
may determine whether to initiate reexamination on the 
Director's own initiative based on citations by any person 
other than the owner of the patent under section 301 or 302. 
Also, Sec. 306 is amended to conform to the changes made by 
Sec. 4605 of the American Inventors Protection Act of 1999, 
Public Law 106-113, to Sec. Sec. 134 and 141 of title 35.
Section 7. Patent Trial and Appeal Board.
    The Board of Patent Appeals and Interferences is replaced 
with the new Patent Trial and Appeal Board (``Board''). The 
Board is charged with (i) reviewing adverse decisions of 
examiners on applications and reexamination proceedings, (ii) 
conducting derivation proceedings, and (iii) conducting the 
post-grant review proceedings. This section also updates the 
various appeals statutes.
Section 8. Preissuance submissions by third parties.
    This section amends Sec. 122 to create a mechanism for 
third parties to submit timely pre-issuance information 
relevant to the examination of the application, including a 
concise statement of the relevance of the submission.
Section 9. Venue.
    The venue for certain district court challenges of USPTO 
decisions is changed from the District of Columbia to the 
Eastern District of Virginia, the district where the USPTO 
resides.
Section 10. Fee-setting authority.
    This section gives the Director rulemaking authority to set 
or adjust any fee under Sec. Sec. 41 and 376, and section 1113 
of title 15, provided that such fee amounts are set to 
reasonably compensate the USPTO for the services performed. The 
Director may also reduce such fees. The Director shall consult 
with the patent and trademark advisory committees as provided 
for in this section. Any proposal for a change in fees 
(including the rationale, purpose, and possible expectations or 
benefits that will result) shall be published in the Federal 
Register and shall seek public comment for a period of not less 
than 45 days. The Director shall notify Congress of any final 
proposed fee change and Congress shall have up to 45 days to 
consider and comment before any proposed fee change becomes 
effective.
    Rules of construction are provided.
Section 11. Fees for patent services.
    The Act includes the current patent fee schedule in the 
text. This schedule represents a reference point for any future 
adjustments to the fee schedule by the Director.
Section 12. Supplemental examination.
    This section authorizes a new Sec. 257 of the Patent Act 
that addresses the ``supplemental examination'' of a patent to 
correct errors or omissions in proceedings before the Office. 
Information that was not considered or was inadequately 
considered or was incorrect can be presented to the Office.
    Under new subsection (a) of Sec. 257, the Director must 
initially determine whether a petitioner's request for 
supplemental examination of one or more items in the request 
raises a new question of patentability. The Director must make 
this determination within 3 months of receiving a request for 
supplemental examination.
    Under new subsection (b), if the Director issues a 
certificate affirming that this threshold is met, a 
reexamination shall be ordered and will be conducted according 
to the procedures under Chapter 30 of the Patent Act (ex parte 
reexamination).
    New Subsection (c) of Sec. 257 stipulates that a patent 
cannot be held unenforceable on the basis of conduct relating 
to information that had not been considered, was inadequately 
considered, or was incorrect in a prior examination if the 
information was considered, reconsidered, or corrected during 
the supplemental examination. Challengers may still argue in 
court that the Office's conclusion in supplemental examination 
was erroneous and that the information renders the patent 
invalid, but the information cannot be used to render the 
patent invalid or unenforceable on the basis of inequitable 
conduct.
    New subsection (c) also enumerates three exceptions to 
these terms: (1) prior allegations involving certain new drug 
applications (21 USC Sec. 355(j)); (2) patent enforcement 
actions before the International Trade Commission or a US 
district court, unless the supplemental examination was 
concluded before the date on which the action is brought; and 
(3) instances in which fraud on the USPTO was practiced or 
attempted.
    New subsection (d) of Sec. 257 authorizes the Director to 
establish fees, by regulation, to help defray the cost of a 
supplemental examination, in addition to those charged pursuant 
to Chapter 30.
    Finally, new subsection (e) clarifies that nothing in 
Section 12 limits the application of criminal or antitrust laws 
or the ability of the USPTO Director to investigate and 
sanction persons or their representatives for misconduct before 
the Office.
Section 13. Funding agreements.
    Clause (i) of Sec. 202(c)(7)(E) is amended to permit a 
nonprofit organization that has a funding agreement for the 
operation of a Government-owned-contractor-operated facility to 
retain 85%, rather than 25% under current law, of licensing 
royalties in excess of the amount equal to 5% of the annual 
budget of the facility.
Section 14. Tax strategies deemed within the prior art.
    This section provides that strategies for reducing, 
avoiding, or deferring tax liability shall be deemed 
insufficient to differentiate an invention from the prior art. 
In other words, applicants will no longer be able to rely on 
the novelty or non-obviousness of a tax strategy embodied in 
their claims in order to distinguish their claims from the 
prior art under the statutory novelty and non-obviousness 
requirements of those provisions.
    Under the provision, the term ``tax liability'' refers to 
any liability for a tax under any Federal, State, or local law, 
or law of any foreign jurisdiction, including any statute, 
rule, regulation, or ordinance that levies, imposes, or 
assesses such tax liability.
    The provision is directed to tax strategies, which are a 
subset of business methods, and is not intended to deny patent 
protection for an invention that consists of tax preparation 
software or other tools used solely to enter data on tax or 
information returns or any other filing required by a tax 
authority. Thus, a software program that is novel and non-
obvious as software would not be affected by this section even 
though the software is used for a tax purpose. A prior-art 
software program, however, could not overcome the section 102 
and 103 hurdles by implementing a novel and non-obvious 
strategy for reducing, avoiding, or deferring taxes.
    There may be situations in which some aspects of an 
invention are separable from the tax strategy. In this case, 
any claim that encompasses a tax strategy will be subject to 
the provision and the novelty or non-obviousness of the tax 
strategy will be deemed insufficient to differentiate that 
claim from the prior art. However, any claim that does not 
involve a tax strategy would not be within the scope of the 
provision. In such a case, if the invention includes claims 
that are separable from the tax strategy, such claims could, if 
otherwise enforceable, be enforced.
    Inventions that fall within the scope of the provision 
include those especially suitable for use with tax-favored 
structures that must meet certain requirements, such as 
employee benefit plans, tax-exempt organizations, or any other 
entities that must be structured or operated in a particular 
manner to obtain certain tax consequences. Thus, the provision 
applies if the effect of an invention is to aid in satisfying 
the qualification requirements for the desired tax-favored 
entity status, to take advantage of the specific tax benefits 
offered in a tax-favored structure, or to allow for tax 
reduction, avoidance, or deferral not otherwise automatically 
available in such entity or structure.
    In general, the USPTO may seek advice and assistance from 
Treasury and the IRS to better recognize tax strategies. Such 
consultations should help ensure that patents do not infringe 
on the ability of others to interpret the tax law and that 
implementing such interpretations remains in the public domain, 
available to all taxpayers and their advisors.
Section 15. Best Mode Requirement.
    This section amends Sec. 282(b) by removing the failure to 
disclose the best mode under section 112 as a basis for 
canceling or holding either invalid or unenforceable a patent 
claim.
Section 16. Marking.
    Subsection (a) addresses virtual marking. The provision 
allows a patent holder to satisfy the requirements of Sec. 287 
of the Patent Act by affixing to a patented article the word 
``patent'' or the abbreviation ``pat.'' together with an 
Internet address that the public can access free of charge to 
determine the status of the patent. The USPTO is also 
instructed to submit a report to Congress on the effectiveness 
of virtual marking that is due no later than 3 years after the 
date of enactment.
    Subsection (b) addresses false marking in the following 
ways: (1) Only the United States may sue for the qui tam 
penalty under the subsection. (2) A person who has suffered a 
competitive injury as a result of a violation may still bring a 
civil action in US district court for compensatory damages. (3) 
Persons or companies otherwise liable under Sec. 292 (the false 
marking statute) are protected during a 3-year window beginning 
on the date the patent at issue expires. Beyond the 3-year 
window, persons or companies are also protected if they place 
the word ``patent'' or ``patented'', the abbreviation ``pat.'', 
or the patent number either on the article or through an 
Internet posting, consistent with the amendments in subsection 
(a).
Section 17. Advice of Counsel.
    Section 17 creates a new Sec. 298 of the Patent Act that 
states that the failure of an infringer to obtain the advice of 
counsel regarding any allegedly infringed patent, or the 
failure of the infringer to present such advice to the court or 
jury, may not be used to prove that the accused infringer 
willfully infringed the patent or that the infringer intended 
to induce infringement of the patent.
Section 18. Transitional program for covered business method patents.
    Section 18 creates a transitional program to allow post-
grant review of the validity of business method patents.
    Under subsection (a), the Director is authorized to 
establish regulations governing the use of the new proceeding, 
which will be modeled after post-grant review as set forth in 
Section 6 (new Chapter 32 of the Patent Act). The proceeding is 
limited in certain respects. A petition cannot be accepted 
unless the petitioner or his real party in interest has been 
sued for infringement of the patent or has been charged with 
infringement. Nor can the petitioner or his real party in 
interest later assert invalidity before the ITC or a Federal 
court on a ground that was considered and resulted in a written 
decision by the agency in the course of a transitional 
proceeding.
    The program takes effect 1 year following the date of 
enactment and applies to any covered business method patent 
issued before, on, or after the effective date, with the 
exception of a patent that satisfies the requirements of 
Sec. 321(c) of the Patent Act as set forth in Section 6 of the 
bill. The program sunsets after 10 years.
    Subsection (b) addresses requests for a stay of a civil 
action alleging infringement under Sec. 281 of the Patent Act. 
A US district court shall decide to grant a stay based on 
prescribed criteria: (A) whether a stay (or denial thereof) 
will simplify the issues in question and streamline the trial; 
(B) whether discovery is complete and whether a trial date has 
been set; (C) whether a stay (or a denial thereof) would unduly 
prejudice the non-moving party or present a clear tactical 
advantage for the moving party; and (D) whether a stay (or the 
denial thereof) will reduce the burden of litigation on the 
parties and on the court. A party may seek an interlocutory 
appeal of the US district court's decision, which the Federal 
Circuit shall review to ensure consistent application of 
established precedent, and such review may be de novo.
    Subsection (c) deems that in an action for infringement 
under Sec. 281 of a covered business method patent, an 
automated teller machine (``ATM'') shall not be considered a 
regular and established place of business for purposes of the 
patent venue statute.\63\
---------------------------------------------------------------------------
    \63\28 USC Sec. 1400(b).
---------------------------------------------------------------------------
    Subsection (d) defines ``covered business method patent'' 
as one that claims a method or corresponding apparatus for 
performing data processing or other operations used in the 
practice, administration, or management of a financial product 
or service, except that it does not include patents for 
technological inventions.
    Finally, subsection (e) clarifies that nothing in Section 
18 shall be construed as amending or interpreting categories of 
patent-eligible subject matter under Sec. 101 of the Patent 
Act.
Section 19. Jurisdiction and procedural matters.
    Subsection (a) through (d) enact the so-called Holmes Group 
fix (H.R. 2955, 109th Congress), which the House Judiciary 
Committee reported favorably in 2006. The Committee Report 
accompanying H.R. 2955 (House Rep. 109-407), which we reaffirm, 
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.
    Subsection (e) creates a new Sec. 299 of the Patent Act 
that addresses joinder of accused infringers in patent actions 
or trials not involving certain drugs and biologics. Parties 
accused as defendants may be joined in one action as defendants 
or counterclaim defendants only if: (1) any right to relief is 
asserted against the parties jointly, severally, or in the 
alternative with respect to or arising out of the same 
transaction, occurrence, or series of transactions or 
occurrences relating to the making, using, importing into the 
United States, offering for sale, or selling of the same 
accused product or process; and (2) questions of fact common to 
all defendants or counterclaim defendants will arise in the 
action.
    For purposes of subsection (e), accused infringers may not 
be joined based solely on allegations that they each have 
infringed the patent or patents in suit.
    The changes set forth in Section 19 shall apply to any 
civil action commenced on or after the date of enactment of the 
Act.
Section 20. Technical amendments.
    This section sets forth technical amendments consistent 
with this Act.
Section 21. Travel expenses and payment of administrative judges.
    Subsection (a) authorizes the USPTO to expend funds to 
cover the subsistence and travel-related expenses of non-
Federal employees attending intellectual property programs 
hosted by the agency.
    Subsection (b) authorizes the Director to fix the rate of 
basic pay for administrative patent and trademark judges at a 
rate not greater than that payable for level III of the 
Executive Pay Schedule under 5 USC Sec. 5314.
Section 22. Patent and Trademark Office funding.
    Subsections (a) defines the ``United State Patent and 
Trademark Office Public Enterprise Fund'' (``the Fund'') that 
replaces the existing ``Patent and Trademark Office 
Appropriation Account.''
    Subsection (b) clarifies the USPTO Director's authority 
under the new Fund to collect all patent and trademark user fee 
revenue, which shall be available to the agency until expended. 
This change shall take effect on the later of October 1, 2011, 
or the first day of the first fiscal year that begins after the 
date of the enactment of the Act.
    Subsection (c) establishes the Fund as a revolving fund in 
the US Treasury. Any amounts in the Fund shall be available for 
use by the Director without fiscal year limitation. Patent and 
trademark fees deposited in the Fund shall be recorded as 
offsetting receipts. Amounts deposited in the Fund shall be 
available, without fiscal year limitation, to cover all 
expenses determined in the discretion of the Director to be 
ordinary and reasonable.
    Subsection (d) requires the Director, not later than 60 
days after the end of each fiscal year, to submit a report to 
Congress that summarizes the USPTO operations for the preceding 
fiscal year, details the operating plan of the agency, 
describes its long-term modernization plans as well as any 
progress made toward modernization efforts in the previous 
fiscal year, and includes the results of the most recent audit 
as carried out by subsection (f).
    Not later than 30 days after the beginning of each fiscal 
year, subsection (e) instructs the Director to notify the 
Committees on Appropriations of both houses of Congress of the 
plan for the obligation and expenditure of the total amount of 
the funds for that fiscal year under Public Law 109-108.
    Subsection (f) mandates that the Director annually shall 
provide for an independent audit of the financial statement of 
the USPTO.
    Subsection (g) requires the Director to prepare and submit 
to the President an annual ``business-type'' budget for the 
Fund as the President prescribes by regulation for the Federal 
Budget.
Section 23. Satellite offices.
    Pursuant to subsection (a), and subject to available 
resources, the Director shall establish three or more satellite 
offices in the United States to carry out the responsibilities 
of the USPTO. The Director has 3 years after the date of 
enactment of the Act to complete the task.
    Subject (b) enumerates the purposes of the satellite 
offices, including efforts to increase outreach activities, 
enhance patent examiner retention, and improve the quality of 
patent examination.
    Subsection (c) details the required considerations the 
Director must invoke in selecting each location. Among the 
criteria are geographic diversity among the offices and 
reliance upon previous evaluations.
    Not later than three fiscal years after the date of 
enactment of the Act, Subsection (d) requires the Director to 
submit a report to Congress on the rationale of the Director in 
selecting the location of any satellite office, the progress in 
establishing any satellite offices so selected, and whether the 
operation of any existing satellite office is achieving the 
purposes set forth in subsection (b).
Section 24. Designation of the Detroit satellite office.
    Section 24 designates the USPTO satellite office to be 
located in Detroit, Michigan, as the ``Elijah J. McCoy United 
States Patent and Trademark Office.''
Section 25. Patent Ombudsman Program for small business concerns.
    Section 25 states that, using available resources, the 
Director shall establish and maintain in the USPTO a Patent 
Ombudsman Program, whose staff shall provide support and 
services relating to patent filings to small business concerns.
Section 26. Priority examination for technologies important to American 
        competitiveness.
    Section 26 amends Sec. 2(b)(2) of the Patent Act by 
permitting the USPTO to prioritize the examination of 
applications for products, processes, or technologies that are 
important to the national economy or national competitiveness 
without recovering the aggregate extra cost of providing such 
prioritization.
Section 27. Calculation of 60-day period for application of patent term 
        extension.
    Subsection (a) clarifies USPTO ``counting'' rules that are 
used to determine whether an applicant has submitted an 
application to the agency in a timely manner under 
Sec. 156(d)(1) of the Patent Act. If the application is 
transmitted after 4:30 pm, EST, on a business day, or is 
transmitted on a day that is not a business day, the product 
addressed by the application shall be deemed to receive 
``permission'' on the next business day. ``Business day'' means 
any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding 
any legal holiday under 5 USC Sec. 6103.
    Subsection (b) states that subsection (a) shall apply to 
any application for extension of term under Sec. 156 of the 
Patent Act that is pending on, filed after, or as to which a 
decision regarding the application is subject judicial review 
on, the date of enactment of the Act.
Section 28. Study on implementation.
    Subsection (a) requires the Director to conduct a study on 
the manner in which the Act is being implemented by the USPTO, 
along with a review of patent policies and practices of the 
Federal Government with respect to patent rights, US 
innovation, access by small business to capital, and other 
issues as the Director deems appropriate.
    Subsection (b) stipulates that the Director shall submit 
the results of the study along with his recommendations for any 
changes to the Senate and House Judiciary Committees not later 
than 4 years after the date of enactment of the Act.
Section 29. Pro bono program.
    Section 29 requires the Director to work with and support 
intellectual law associations across the country to establish 
pro bono programs to assist financially under-resourced 
independent inventors and small businesses.
Section 30. Effective date.
    Except as otherwise provided, this Act takes effect 12 
months after the date of enactment and applies to any patent 
issued on or after that effective date.
Section 31. Budgetary effects.
    Section 31 references text from S. 23 regarding the 
budgetary effects of the Act as it pertains to PAYGO 
compliance.

                              Agency Views




                               __________

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 35, UNITED STATES CODE

           PART I--UNITED STATES PATENT AND TRADEMARK OFFICE

      CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS

Sec.
1. Establishment.
     * * * * * * *
[6. Board of Patent Appeals and Interferences.]
6. Patent Trial and Appeal Board.
     * * * * * * *

Sec. 2. Powers and duties

    (a) * * *
    (b) Specific Powers.--The Office--
            (1) * * *
            (2) may establish regulations, not inconsistent 
        with law, which--
                    (A) * * *

           *       *       *       *       *       *       *

                    (E) shall recognize the public interest in 
                continuing to safeguard broad access to the 
                United States patent system through the reduced 
                fee structure for small entities under section 
                41(h)(1) [of this title; and];
                    (F) provide for the development of a 
                performance-based process that includes 
                quantitative and qualitative measures and 
                standards for evaluating cost-effectiveness and 
                is consistent with the principles of 
                impartiality and competitiveness; and
                    (G) may, subject to any conditions 
                prescribed by the Director and at the request 
                of the patent applicant, provide for 
                prioritization of examination of applications 
                for products, processes, or technologies that 
                are important to the national economy or 
                national competitiveness without recovering the 
                aggregate extra cost of providing such 
                prioritization, notwithstanding section 41 or 
                any other provision of law;

           *       *       *       *       *       *       *

            (11) may conduct programs, studies, or exchanges of 
        items or services regarding domestic and international 
        intellectual property law and the effectiveness of 
        intellectual property protection domestically and 
        throughout the world, and the Office is authorized to 
        expend funds to cover the subsistence expenses and 
        travel-related expenses, including per diem, lodging 
        costs, and transportation costs, of persons attending 
        such programs who are not Federal employees;

           *       *       *       *       *       *       *


Sec. 3. Officers and employees

    (a) * * *
    (b) Officers and Employees of the Office.--
            (1) * * *

           *       *       *       *       *       *       *

            (6) Administrative patent judges and administrative 
        trademark judges.--The Director may fix the rate of 
        basic pay for the administrative patent judges 
        appointed pursuant to section 6 and the administrative 
        trademark judges appointed pursuant to section 17 of 
        the Trademark Act of 1946 (15 U.S.C. 1067) at not 
        greater than the rate of basic pay payable for level 
        III of the Executive Schedule under section 5314 of 
        title 5. The payment of a rate of basic pay under this 
        paragraph shall not be subject to the pay limitation 
        under section 5306(e) or 5373 of title 5.

           *       *       *       *       *       *       *

    (e) Carryover of Personnel.--
            (1) * * *
            (2) Other personnel.--Any individual who, on the 
        day before the effective date of the Patent and 
        Trademark Office Efficiency Act, is an officer or 
        employee of the Department of Commerce (other than an 
        officer or employee under paragraph (1)) shall be 
        transferred to the Office, as necessary to carry out 
        the purposes of [this Act,] that Act, if--
                    (A) * * *

           *       *       *       *       *       *       *


[Sec. 6. Board of Patent Appeals and Interferences

    [(a) Establishment and Composition.--There shall be in the 
United States Patent and Trademark Office a Board of Patent 
Appeals and Interferences. The Director, the Commissioner for 
Patents, the Commissioner for Trademarks, and the 
administrative patent judges shall constitute the Board. The 
administrative patent judges shall be persons of competent 
legal knowledge and scientific ability who are appointed by the 
Secretary of Commerce, in consultation with the Director.
    [(b) Duties.--The Board of Patent Appeals and Interferences 
shall, on written appeal of an applicant, review adverse 
decisions of examiners upon applications for patents and shall 
determine priority and patentability of invention in 
interferences declared under section 135(a). Each appeal and 
interference shall be heard by at least three members of the 
Board, who shall be designated by the Director. Only the Board 
of Patent Appeals and Interferences may grant rehearings.
    [(c) Authority of the Secretary.--The Secretary of Commerce 
may, in his or her discretion, deem the appointment of an 
administrative patent judge who, before the date of the 
enactment of this subsection, held office pursuant to an 
appointment by the Director to take effect on the date on which 
the Director initially appointed the administrative patent 
judge.
    [(d) Defense to Challenge of Appointment.--It shall be a 
defense to a challenge to the appointment of an administrative 
patent judge on the basis of the judge's having been originally 
appointed by the Director that the administrative patent judge 
so appointed was acting as a de facto officer.]

Sec. 6. Patent Trial and Appeal Board

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

           *       *       *       *       *       *       *


Sec. 12. Copies of patents and applications for public libraries

    The Director may supply copies of specifications and 
drawings of patents in printed or electronic form and published 
applications for patents to public libraries in the United 
States which shall maintain such copies for the use of the 
public, at the rate for each year's issue established for this 
purpose in section 41(d) [of this title].

           *       *       *       *       *       *       *


         CHAPTER 3--PRACTICE BEFORE PATENT AND TRADEMARK OFFICE

Sec. 32. Suspension or exclusion from practice

    The Director may, after notice and opportunity for a 
hearing, suspend or exclude, either generally or in any 
particular case, from further practice before the Patent and 
Trademark Office, any person, agent, or attorney shown to be 
incompetent or disreputable, or guilty of gross misconduct, or 
who does not comply with the regulations established under 
section 2(b)(2)(D) [of this title], or who shall, by word, 
circular, letter, or advertising, with intent to defraud in any 
manner, deceive, mislead, or threaten any applicant or 
prospective applicant, or other person having immediate or 
prospective business before the Office. The reasons for any 
such suspension or exclusion shall be duly recorded. The 
Director shall have the discretion to designate any attorney 
who is an officer or employee of the United States Patent and 
Trademark Office to conduct the hearing required by this 
section. A proceeding under this section shall be commenced not 
later than the earlier of either the date that is 10 years 
after the date on which the misconduct forming the basis for 
the proceeding occurred, or 1 year after the date on which the 
misconduct forming the basis for the proceeding is made known 
to an officer or employee of the Office as prescribed in the 
regulations established under section 2(b)(2)(D). The [United 
States District Court for the District of Columbia] United 
States District Court for the Eastern District of Virginia, 
under such conditions and upon such proceedings as it by its 
rules determines, may review the action of the Director upon 
the petition of the person so refused recognition or so 
suspended or excluded.

           *       *       *       *       *       *       *


            CHAPTER 4--PATENT FEES; FUNDING; SEARCH SYSTEMS

Sec. 41. Patent fees; patent and trademark search systems

    [(a) The Director shall charge the following fees:
            [(1)(A) On filing each application for an original 
        patent, except in design or plant cases, $690.
            [(B) In addition, on filing or on presentation at 
        any other time, $78 for each claim in independent form 
        which is in excess of 3, $18 for each claim (whether 
        independent or dependent) which is in excess of 20, and 
        $260 for each application containing a multiple 
        dependent claim.
            [(C) On filing each provisional application for an 
        original patent, $150.
            [(2) For issuing each original or reissue patent, 
        except in design or plant cases, $1,210.
            [(3) In design and plant cases--
                    [(A) on filing each design application, 
                $310;
                    [(B) on filing each plant application, 
                $480;
                    [(C) on issuing each design patent, $430; 
                and
                    [(D) on issuing each plant patent, $580.
            [(4)(A) On filing each application for the reissue 
        of a patent, $690.
            [(B) In addition, on filing or on presentation at 
        any other time, $78 for each claim in independent form 
        which is in excess of the number of independent claims 
        of the original patent, and $18 for each claim (whether 
        independent or dependent) which is in excess of 20 and 
        also in excess of the number of claims of the original 
        patent.
            [(5) On filing each disclaimer, $110.
            [(6)(A) On filing an appeal from the examiner to 
        the Board of Patent Appeals and Interferences, $300.
            [(B) In addition, on filing a brief in support of 
        the appeal, $300, and on requesting an oral hearing in 
        the appeal before the Board of Patent Appeals and 
        Interferences, $260.
            [(7) On filing each petition for the revival of an 
        unintentionally abandoned application for a patent, for 
        the unintentionally delayed payment of the fee for 
        issuing each patent, or for an unintentionally delayed 
        response by the patent owner in any reexamination 
        proceeding, $1,210, unless the petition is filed under 
        section 133 or 151 of this title, in which case the fee 
        shall be $110.
            [(8) For petitions for 1-month extensions of time 
        to take actions required by the Director in an 
        application--
                    [(A) on filing a first petition, $110;
                    [(B) on filing a second petition, $270; and
                    [(C) on filing a third petition or 
                subsequent petition, $490.
            [(9) Basic national fee for an international 
        application where the Patent and Trademark Office was 
        the International Preliminary Examining Authority and 
        the International Searching Authority, $670.
            [(10) Basic national fee for an international 
        application where the Patent and Trademark Office was 
        the International Searching Authority but not the 
        International Preliminary Examining Authority, $690.
            [(11) Basic national fee for an international 
        application where the Patent and Trademark Office was 
        neither the International Searching Authority nor the 
        International Preliminary Examining Authority, $970.
            [(12) Basic national fee for an international 
        application where the international preliminary 
        examination fee has been paid to the Patent and 
        Trademark Office, and the international preliminary 
        examination report states that the provisions of 
        Article 33(2), (3), and (4) of the Patent Cooperation 
        Treaty have been satisfied for all claims in the 
        application entering the national stage, $96.
            [(13) For filing or later presentation of each 
        independent claim in the national stage of an 
        international application in excess of 3, $78.
            [(14) For filing or later presentation of each 
        claim (whether independent or dependent) in a national 
        stage of an international application in excess of 20, 
        $18.
            [(15) For each national stage of an international 
        application containing a multiple dependent claim, 
        $260.
For the purpose of computing fees, a multiple dependent claim 
referred to in section 112 of this title or any claim depending 
therefrom shall be considered as separate dependent claims in 
accordance with the number of claims to which reference is 
made. Errors in payment of the additional fees may be rectified 
in accordance with regulations of the Director.
    [(b) The Director shall charge the following fees for 
maintaining in force all patents based on applications filed on 
or after December 12, 1980:
            [(1) 3 years and 6 months after grant, $830.
            [(2) 7 years and 6 months after grant, $1,900.
            [(3) 11 years and 6 months after grant, $2,910.
Unless payment of the applicable maintenance fee is received in 
the Patent and Trademark Office on or before the date the fee 
is due or within a grace period of 6 months thereafter, the 
patent will expire as of the end of such grace period. The 
Director may require the payment of a surcharge as a condition 
of accepting within such 6-month grace period the payment of an 
applicable maintenance fee. No fee may be established for 
maintaining a design or plant patent in force.]
    (a) General Fees.--The Director shall charge the following 
fees:
            (1) Filing and basic national fees.--
                    (A) On filing each application for an 
                original patent, except for design, plant, or 
                provisional applications, $330.
                    (B) On filing each application for an 
                original design patent, $220.
                    (C) On filing each application for an 
                original plant patent, $220.
                    (D) On filing each provisional application 
                for an original patent, $220.
                    (E) On filing each application for the 
                reissue of a patent, $330.
                    (F) The basic national fee for each 
                international application filed under the 
                treaty defined in section 351(a) entering the 
                national stage under section 371, $330.
                    (G) In addition, excluding any sequence 
                listing or computer program listing filed in an 
                electronic medium as prescribed by the 
                Director, for any application the specification 
                and drawings of which exceed 100 sheets of 
                paper (or equivalent as prescribed by the 
                Director if filed in an electronic medium), 
                $270 for each additional 50 sheets of paper (or 
                equivalent as prescribed by the Director if 
                filed in an electronic medium) or fraction 
                thereof.
            (2) Excess claims fees.--
                    (A) In general.--In addition to the fee 
                specified in paragraph (1)--
                            (i) on filing or on presentation at 
                        any other time, $220 for each claim in 
                        independent form in excess of 3;
                            (ii) on filing or on presentation 
                        at any other time, $52 for each claim 
                        (whether dependent or independent) in 
                        excess of 20; and
                            (iii) for each application 
                        containing a multiple dependent claim, 
                        $390.
                    (B) Multiple dependent claims.--For the 
                purpose of computing fees under subparagraph 
                (A), a multiple dependent claim referred to in 
                section 112 or any claim depending therefrom 
                shall be considered as separate dependent 
                claims in accordance with the number of claims 
                to which reference is made.
                    (C) Refunds; errors in payment.--The 
                Director may by regulation provide for a refund 
                of any part of the fee specified in 
                subparagraph (A) for any claim that is canceled 
                before an examination on the merits, as 
                prescribed by the Director, has been made of 
                the application under section 131. Errors in 
                payment of the additional fees under this 
                paragraph may be rectified in accordance with 
                regulations prescribed by the Director.
            (3) Examination fees.--
                    (A) In general.--
                            (i) For examination of each 
                        application for an original patent, 
                        except for design, plant, provisional, 
                        or international applications, $220.
                            (ii) For examination of each 
                        application for an original design 
                        patent, $140.
                            (iii) For examination of each 
                        application for an original plant 
                        patent, $170.
                            (iv) For examination of the 
                        national stage of each international 
                        application, $220.
                            (v) For examination of each 
                        application for the reissue of a 
                        patent, $650.
                    (B) Applicability of other fee 
                provisions.--The provisions of paragraphs (3) 
                and (4) of section 111(a) relating to the 
                payment of the fee for filing the application 
                shall apply to the payment of the fee specified 
                in subparagraph (A) with respect to an 
                application filed under section 111(a). The 
                provisions of section 371(d) relating to the 
                payment of the national fee shall apply to the 
                payment of the fee specified in subparagraph 
                (A) with respect to an international 
                application.
            (4) Issue fees.--
                    (A) For issuing each original patent, 
                except for design or plant patents, $1,510.
                    (B) For issuing each original design 
                patent, $860.
                    (C) For issuing each original plant patent, 
                $1,190.
                    (D) For issuing each reissue patent, 
                $1,510.
            (5) Disclaimer fee.--On filing each disclaimer, 
        $140.
            (6) Appeal fees.--
                    (A) On filing an appeal from the examiner 
                to the Patent Trial and Appeal Board, $540.
                    (B) In addition, on filing a brief in 
                support of the appeal, $540, and on requesting 
                an oral hearing in the appeal before the Patent 
                Trial and Appeal Board, $1,080.
            (7) Revival fees.--On filing each petition for the 
        revival of an unintentionally abandoned application for 
        a patent, for the unintentionally delayed payment of 
        the fee for issuing each patent, or for an 
        unintentionally delayed response by the patent owner in 
        any reexamination proceeding, $1,620, unless the 
        petition is filed under section 133 or 151, in which 
        case the fee shall be $540.
            (8) Extension fees.--For petitions for 1-month 
        extensions of time to take actions required by the 
        Director in an application--
                    (A) on filing a first petition, $130;
                    (B) on filing a second petition, $360; and
                    (C) on filing a third or subsequent 
                petition, $620.
    (b) Maintenance Fees.--
            (1) In general.--The Director shall charge the 
        following fees for maintaining in force all patents 
        based on applications filed on or after December 12, 
        1980:
                    (A) Three years and 6 months after grant, 
                $980.
                    (B) Seven years and 6 months after grant, 
                $2,480.
                    (C) Eleven years and 6 months after grant, 
                $4,110.
            (2) Grace period; surcharge.--Unless payment of the 
        applicable maintenance fee under paragraph (1) is 
        received in the Office on or before the date the fee is 
        due or within a grace period of 6 months thereafter, 
        the patent shall expire as of the end of such grace 
        period. The Director may require the payment of a 
        surcharge as a condition of accepting within such 6-
        month grace period the payment of an applicable 
        maintenance fee.
            (3) No maintenance fee for design or plant 
        patent.--No fee may be established for maintaining a 
        design or plant patent in force.
    [(c)(1) The Director]
    (c)   Delays in Payment of Maintenance Fees.--
            (1) Acceptance.--The Director may accept the 
        payment of any maintenance fee required by subsection 
        (b) of this section which is made within twenty-four 
        months after the six-month grace period if the delay is 
        shown to the satisfaction of the Director to have been 
        unintentional, or at any time after the six-month grace 
        period if the delay is shown to the satisfaction of the 
        Director to have been unavoidable. The Director may 
        require the payment of a surcharge as a condition of 
        accepting payment of any maintenance fee after the six-
        month grace period. If the Director accepts payment of 
        a maintenance fee after the six-month grace period, the 
        patent shall be considered as not having expired at the 
        end of the grace period.
    [(2) A patent]
            (2) Effect on rights of others.--A patent, the term 
        of which has been maintained as a result of the 
        acceptance of a payment of a maintenance fee under this 
        subsection, shall not abridge or affect the right of 
        any person or that person's successors in business who 
        made, purchased, offered to sell, or used anything 
        protected by the patent within the United States, or 
        imported anything protected by the patent into the 
        United States after the 6-month grace period but prior 
        to the acceptance of a maintenance fee under this 
        subsection, to continue the use of, to offer for sale, 
        or to sell to others to be used, offered for sale, or 
        sold, the specific thing so made, purchased, offered 
        for sale, used, or imported. The court before which 
        such matter is in question may provide for the 
        continued manufacture, use, offer for sale, or sale of 
        the thing made, purchased, offered for sale, or used 
        within the United States, or imported into the United 
        States, as specified, or for the manufacture, use, 
        offer for sale, or sale in the United States of which 
        substantial preparation was made after the 6-month 
        grace period but before the acceptance of a maintenance 
        fee under this subsection, and the court may also 
        provide for the continued practice of any process that 
        is practiced, or for the practice of which substantial 
        preparation was made, after the 6-month grace period 
        but before the acceptance of a maintenance fee under 
        this subsection, to the extent and under such terms as 
        the court deems equitable for the protection of 
        investments made or business commenced after the 6-
        month grace period but before the acceptance of a 
        maintenance fee under this subsection.
    [(d) The Director shall establish fees for all other 
processing, services, or materials relating to patents not 
specified in this section to recover the estimated average cost 
to the Office of such processing, services, or materials, 
except that the Director shall charge the following fees for 
the following services:
            [(1) For recording a document affecting title, $40 
        per property.
            [(2) For each photocopy, $.25 per page.
            [(3) For each black and white copy of a patent, $3.
The yearly fee for providing a library specified in section 13 
of this title with uncertified printed copies of the 
specifications and drawings for all patents in that year shall 
be $50.]
    (d) Patent Search and Other Fees.--
            (1) Patent search fees.--
                    (A) In general.--The Director shall charge 
                the fees specified under subparagraph (B) for 
                the search of each application for a patent, 
                except for provisional applications. The 
                Director shall adjust the fees charged under 
                this paragraph to ensure that the fees recover 
                an amount not to exceed the estimated average 
                cost to the Office of searching applications 
                for patent either by acquiring a search report 
                from a qualified search authority, or by 
                causing a search by Office personnel to be 
                made, of each application for patent.
                    (B) Specific fees.--The fees referred to in 
                subparagraph (A) are--
                            (i) $540 for each application for 
                        an original patent, except for design, 
                        plant, provisional, or international 
                        applications;
                            (ii) $100 for each application for 
                        an original design patent;
                            (iii) $330 for each application for 
                        an original plant patent;
                            (iv) $540 for the national stage of 
                        each international application; and
                            (v) $540 for each application for 
                        the reissue of a patent.
                    (C) Applicability of other provisions.--The 
                provisions of paragraphs (3) and (4) of section 
                111(a) relating to the payment of the fee for 
                filing the application shall apply to the 
                payment of the fee specified in this paragraph 
                with respect to an application filed under 
                section 111(a). The provisions of section 
                371(d) relating to the payment of the national 
                fee shall apply to the payment of the fee 
                specified in this paragraph with respect to an 
                international application.
                    (D) Refunds.--The Director may by 
                regulation provide for a refund of any part of 
                the fee specified in this paragraph for any 
                applicant who files a written declaration of 
                express abandonment as prescribed by the 
                Director before an examination has been made of 
                the application under section 131.
                    (E) Applications subject to secrecy 
                order.--A search of an application that is the 
                subject of a secrecy order under section 181 or 
                otherwise involves classified information may 
                be conducted only by Office personnel.
                    (F) Conflicts of interest.--A qualified 
                search authority that is a commercial entity 
                may not conduct a search of a patent 
                application if the entity has any direct or 
                indirect financial interest in any patent or in 
                any pending or imminent application for patent 
                filed or to be filed in the Office.
            (2) Other fees.--
                    (A) In general.--The Director shall 
                establish fees for all other processing, 
                services, or materials relating to patents not 
                specified in this section to recover the 
                estimated average cost to the Office of such 
                processing, services, or materials, except that 
                the Director shall charge the following fees 
                for the following services:
                            (i) For recording a document 
                        affecting title, $40 per property.
                            (ii) For each photocopy, $.25 per 
                        page.
                            (iii) For each black and white copy 
                        of a patent, $3.
                    (B) Copies for libraries.--The yearly fee 
                for providing a library specified in section 12 
                with uncertified printed copies of the 
                specifications and drawings for all patents in 
                that year shall be $50.
    (e) [The Director] Waiver of Fees; Copies Regarding 
Notice._The Director may waive the payment of any fee for any 
service or material related to patents in connection with an 
occasional or incidental request made by a department or agency 
of the Government, or any officer thereof. The Director may 
provide any applicant issued a notice under section 132 [of 
this title] with a copy of the specifications and drawings for 
all patents referred to in that notice without charge.
    (f) [The fees] Adjustment of Fees._The fees established in 
subsections (a) and (b) of this section may be adjusted by the 
Director on October 1, 1992, and every year thereafter, to 
reflect any fluctuations occurring during the previous 12 
months in the Consumer Price Index, as determined by the 
Secretary of Labor. Changes of less than 1 per centum may be 
ignored.
    [(g) No fee established by the Director under this section 
shall take effect until at least 30 days after notice of the 
fee has been published in the Federal Register and in the 
Official Gazette of the Patent and Trademark Office.
    [(h)(1) Fees charged under subsection (a) or (b) shall be 
reduced by 50 percent with respect to their application to any 
small business concern as defined under section 3 of the Small 
Business Act, and to any independent inventor or nonprofit 
organization as defined in regulations issued by the Director.
    [(2) With respect to its application to any entity 
described in paragraph (1), any surcharge or fee charged under 
subsection (c) or (d) shall not be higher than the surcharge or 
fee required of any other entity under the same or 
substantially similar circumstances.]
    (h) Fees for Small Entities.--
            (1) Reductions in fees.--Subject to paragraph (3), 
        fees charged under subsections (a), (b), and (d)(1) 
        shall be reduced by 50 percent with respect to their 
        application to any small business concern as defined 
        under section 3 of the Small Business Act, and to any 
        independent inventor or nonprofit organization as 
        defined in regulations issued by the Director.
            (2) Surcharges and other fees.--With respect to its 
        application to any entity described in paragraph (1), 
        any surcharge or fee charged under subsection (c) or 
        (d) shall not be higher than the surcharge or fee 
        required of any other entity under the same or 
        substantially similar circumstances.
            (3) Reduction for electronic filing.--The fee 
        charged under subsection (a)(1)(A) shall be reduced by 
        75 percent with respect to its application to any 
        entity to which paragraph (1) applies, if the 
        application is filed by electronic means as prescribed 
        by the Director.
    [(i)(1) The Director]
    (i)   Electronic Patent and Trademark Data.--
            (1) Maintenance of collections.--The Director shall 
        maintain, for use by the public, paper, microform, or 
        electronic collections of United States patents, 
        foreign patent documents, and United States trademark 
        registrations arranged to permit search for and 
        retrieval of information. The Director may not impose 
        fees directly for the use of such collections, or for 
        the use of the public patent or trademark search rooms 
        or libraries.
    [(2) The Director]
            (2) Availability of automated search systems.--The 
        Director shall provide for the full deployment of the 
        automated search systems of the Patent and Trademark 
        Office so that such systems are available for use by 
        the public, and shall assure full access by the public 
        to, and dissemination of, patent and trademark 
        information, using a variety of automated methods, 
        including electronic bulletin boards and remote access 
        by users to mass storage and retrieval systems.
    [(3) The Director]
            (3) Access fees.--The Director may establish 
        reasonable fees for access by the public to the 
        automated search systems of the Patent and Trademark 
        Office. If such fees are established, a limited amount 
        of free access shall be made available to users of the 
        systems for purposes of education and training. The 
        Director may waive the payment by an individual of fees 
        authorized by this subsection upon a showing of need or 
        hardship, and if such a waiver is in the public 
        interest.
    [(4) The Director]
            (4) Annual report to congress.--The Director shall 
        submit to the Congress an annual report on the 
        automated search systems of the Patent and Trademark 
        Office and the access by the public to such systems. 
        The Director shall also publish such report in the 
        Federal Register. The Director shall provide an 
        opportunity for the submission of comments by 
        interested persons on each such report.

Sec. 42. Patent and Trademark Office funding

    (a) * * *
    (b) All fees paid to the Director and all appropriations 
for defraying the costs of the activities of the Patent and 
Trademark Office will be credited to the [Patent and Trademark 
Office Appropriation Account] United States Patent and 
Trademark Office Public Enterprise Fund in the Treasury of the 
United States.
    (c) [To the extent and in the amounts provided in advance 
in appropriations Acts, fees] Fees authorized in this title or 
any other Act to be charged or established by the Director 
[shall be collected by and shall be available to the Director] 
shall be collected by the Director and shall be available until 
expended to carry out the activities of the Patent and 
Trademark Office. All fees available to the Director under 
section 31 of the Trademark Act of 1946 shall be used only for 
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 Patent and Trademark Office.

           *       *       *       *       *       *       *


                CHAPTER 10--PATENTABILITY OF INVENTIONS

Sec.
100. Definitions.
     * * * * * * *
[102. Conditions for patentability; novelty and loss of right to 
          patent.]
102. Conditions for patentability; novelty.
     * * * * * * *
[104. Invention made abroad.]
     * * * * * * *

Sec. 100. Definitions

    When used in this title unless the context otherwise 
indicates--
    (a) * * *

           *       *       *       *       *       *       *

    (e) The term ``third-party requester'' means a person 
requesting ex parte reexamination under section 302   [or inter 
partes reexamination under section 311] who is not the patent 
owner.
    (f) The term ``inventor'' means the individual or, if a 
joint invention, the individuals collectively who invented or 
discovered the subject matter of the invention.
    (g) The terms ``joint inventor'' and ``coinventor'' mean 
any 1 of the individuals who invented or discovered the subject 
matter of a joint invention.
    (h) The term ``joint research agreement'' means a written 
contract, grant, or cooperative agreement entered into by 2 or 
more persons or entities for the performance of experimental, 
developmental, or research work in the field of the claimed 
invention.
    (i)(1) The term ``effective filing date'' for a claimed 
invention in a patent or application for patent means--
            (A) if subparagraph (B) does not apply, the actual 
        filing date of the patent or the application for the 
        patent containing a claim to the invention; or
            (B) the filing date of the earliest application for 
        which the patent or application is entitled, as to such 
        invention, to a right of priority under section 119, 
        365(a), or 365(b) or to the benefit of an earlier 
        filing date under section 120, 121, or 365(c).
    (2) The effective filing date for a claimed invention in an 
application for reissue or reissued patent shall be determined 
by deeming the claim to the invention to have been contained in 
the patent for which reissue was sought.
    (j) The term ``claimed invention'' means the subject matter 
defined by a claim in a patent or an application for a patent.

           *       *       *       *       *       *       *


[Sec. 102. Conditions for patentability; novelty and loss of right to 
                    patent

    [A person shall be entitled to a patent unless--
    [(a) the invention was known or used by others in this 
country, or patented or described in a printed publication in 
this or a foreign country, before the invention thereof by the 
applicant for patent, or
    [(b) the invention was patented or described in a printed 
publication in this or a foreign country or in public use or on 
sale in this country, more than one year prior to the date of 
the application for patent in the United States, or
    [(c) he has abandoned the invention, or
    [(d) the invention was first patented or caused to be 
patented, or was the subject of an inventor's certificate, by 
the applicant or his legal representatives or assigns in a 
foreign country prior to the date of the application for patent 
in this country on an application for patent or inventor's 
certificate filed more than twelve months before the filing of 
the application in the United States, or
    [(e) the invention was described in (1) an application for 
patent, published under section 122(b), by another filed in the 
United States before the invention by the applicant for patent 
or (2) a patent granted on an application for patent by another 
filed in the United States before the invention by the 
applicant for patent, except that an international application 
filed under the treaty defined in section 351(a) shall have the 
effects for the purposes of this subsection of an application 
filed in the United States only if the international 
application designated the United States and was published 
under Article 21(2) of such treaty in the English language; or
    [(f) he did not himself invent the subject matter sought to 
be patented, or
    [(g)(1) during the course of an interference conducted 
under section 135 or section 291, another inventor involved 
therein establishes, to the extent permitted in section 104, 
that before such person's invention thereof the invention was 
made by such other inventor and not abandoned, suppressed, or 
concealed, or (2) before such person's invention thereof, the 
invention was made in this country by another inventor who had 
not abandoned, suppressed, or concealed it. In determining 
priority of invention under this subsection, there shall be 
considered not only the respective dates of conception and 
reduction to practice of the invention, but also the reasonable 
diligence of one who was first to conceive and last to reduce 
to practice, from a time prior to conception by the other.

[Sec. 103. Conditions for patentability; non-obvious subject matter

    [(a) A patent may not be obtained though the invention is 
not identically disclosed or described as set forth in section 
102 of this title, if the differences between the subject 
matter sought to be patented and the prior art are such that 
the subject matter as a whole would have been obvious at the 
time the invention was made to a person having ordinary skill 
in the art to which said subject matter pertains. Patentability 
shall not be negatived by the manner in which the invention was 
made.
    [(b)(1) Notwithstanding subsection (a), and upon timely 
election by the applicant for patent to proceed under this 
subsection, a biotechnological process using or resulting in a 
composition of matter that is novel under section 102 and 
nonobvious under subsection (a) of this section shall be 
considered nonobvious if--
            [(A) claims to the process and the composition of 
        matter are contained in either the same application for 
        patent or in separate applications having the same 
        effective filing date; and
            [(B) the composition of matter, and the process at 
        the time it was invented, were owned by the same person 
        or subject to an obligation of assignment to the same 
        person.
    [(2) A patent issued on a process under paragraph (1)--
            [(A) shall also contain the claims to the 
        composition of matter used in or made by that process, 
        or
            [(B) shall, if such composition of matter is 
        claimed in another patent, be set to expire on the same 
        date as such other patent, notwithstanding section 154.
    [(3) For purposes of paragraph (1), the term 
``biotechnological process'' means--
            [(A) a process of genetically altering or otherwise 
        inducing a single- or multi-celled organism to--
                    [(i) express an exogenous nucleotide 
                sequence,
                    [(ii) inhibit, eliminate, augment, or alter 
                expression of an endogenous nucleotide 
                sequence, or
                    [(iii) express a specific physiological 
                characteristic not naturally associated with 
                said organism;
            [(B) cell fusion procedures yielding a cell line 
        that expresses a specific protein, such as a monoclonal 
        antibody; and
            [(C) a method of using a product produced by a 
        process defined by subparagraph (A) or (B), or a 
        combination of subparagraphs (A) and (B).
    [(c)(1) Subject matter developed by another person, which 
qualifies as prior art only under one or more of subsections 
(e), (f), and (g) of section 102 of this title, shall not 
preclude patentability under this section where the subject 
matter and the claimed invention were, at the time the claimed 
invention was made, owned by the same person or subject to an 
obligation of assignment to the same person.
    [(2) For purposes of this subsection, subject matter 
developed by another person and a claimed invention shall be 
deemed to have been owned by the same person or subject to an 
obligation of assignment to the same person if--
            [(A) the claimed invention was made by or on behalf 
        of parties to a joint research agreement that was in 
        effect on or before the date the claimed invention was 
        made;
            [(B) the claimed invention was made as a result of 
        activities undertaken within the scope of the joint 
        research agreement; and
            [(C) the application for patent for the claimed 
        invention discloses or is amended to disclose the names 
        of the parties to the joint research agreement.
    [(3) For purposes of paragraph (2), the term ``joint 
research agreement'' means a written contract, grant, or 
cooperative agreement entered into by two or more persons or 
entities for the performance of experimental, developmental, or 
research work in the field of the claimed invention.

[Sec. 104. Invention made abroad

    [(a) In General.--
            [(1) Proceedings.--In proceedings in the Patent and 
        Trademark Office, in the courts, and before any other 
        competent authority, an applicant for a patent, or a 
        patentee, may not establish a date of invention by 
        reference to knowledge or use thereof, or other 
        activity with respect thereto, in a foreign country 
        other than a NAFTA country or a WTO member country, 
        except as provided in sections 119 and 365 of this 
        title.
            [(2) Rights.--If an invention was made by a person, 
        civil or military--
                    [(A) while domiciled in the United States, 
                and serving in any other country in connection 
                with operations by or on behalf of the United 
                States,
                    [(B) while domiciled in a NAFTA country and 
                serving in another country in connection with 
                operations by or on behalf of that NAFTA 
                country, or
                    [(C) while domiciled in a WTO member 
                country and serving in another country in 
                connection with operations by or on behalf of 
                that WTO member country,
        that person shall be entitled to the same rights of 
        priority in the United States with respect to such 
        invention as if such invention had been made in the 
        United States, that NAFTA country, or that WTO member 
        country, as the case may be.
            [(3) Use of information.--To the extent that any 
        information in a NAFTA country or a WTO member country 
        concerning knowledge, use, or other activity relevant 
        to proving or disproving a date of invention has not 
        been made available for use in a proceeding in the 
        Patent and Trademark Office, a court, or any other 
        competent authority to the same extent as such 
        information could be made available in the United 
        States, the Director, court, or such other authority 
        shall draw appropriate inferences, or take other action 
        permitted by statute, rule, or regulation, in favor of 
        the party that requested the information in the 
        proceeding.
    [(b) Definitions.--As used in this section--
            [(1) the term ``NAFTA country'' has the meaning 
        given that term in section 2(4) of the North American 
        Free Trade Agreement Implementation Act; and
            [(2) the term ``WTO member country'' has the 
        meaning given that term in section 2(10) of the Uruguay 
        Round Agreements Act.]

Sec. 102. Conditions for patentability; novelty

    (a) Novelty; Prior Art.--A person shall be entitled to a 
patent unless--
            (1) the claimed invention was patented, described 
        in a printed publication, or in public use, on sale, or 
        otherwise available to the public before the effective 
        filing date of the claimed invention; or
            (2) the claimed invention was described in a patent 
        issued under section 151, or in an application for 
        patent published or deemed published under section 
        122(b), in which the patent or application, as the case 
        may be, names another inventor and was effectively 
        filed before the effective filing date of the claimed 
        invention.
    (b) Exceptions.--
            (1) Disclosures made 1 year or less before the 
        effective filing date of the claimed invention.--A 
        disclosure made 1 year or less before the effective 
        filing date of a claimed invention shall not be prior 
        art to the claimed invention under subsection (a)(1) 
        if--
                    (A) the disclosure was made by the inventor 
                or joint inventor or by another who obtained 
                the subject matter disclosed directly or 
                indirectly from the inventor or a joint 
                inventor; or
                    (B) the subject matter disclosed had, 
                before such disclosure, been publicly disclosed 
                by the inventor or a joint inventor or another 
                who obtained the subject matter disclosed 
                directly or indirectly from the inventor or a 
                joint inventor.
            (2) Disclosures appearing in applications and 
        patents.--A disclosure shall not be prior art to a 
        claimed invention under subsection (a)(2) if--
                    (A) the subject matter disclosed was 
                obtained directly or indirectly from the 
                inventor or a joint inventor;
                    (B) the subject matter disclosed had, 
                before such subject matter was effectively 
                filed under subsection (a)(2), been publicly 
                disclosed by the inventor or a joint inventor 
                or another who obtained the subject matter 
                disclosed directly or indirectly from the 
                inventor or a joint inventor; or
                    (C) the subject matter disclosed and the 
                claimed invention, not later than the effective 
                filing date of the claimed invention, were 
                owned by the same person or subject to an 
                obligation of assignment to the same person.
    (c) Common Ownership Under Joint Research Agreements.--
Subject matter disclosed and a claimed invention shall be 
deemed to have been owned by the same person or subject to an 
obligation of assignment to the same person in applying the 
provisions of subsection (b)(2)(C) if--
            (1) the subject matter disclosed was developed and 
        the claimed invention was made by, or on behalf of, 1 
        or more parties to a joint research agreement that was 
        in effect on or before the effective filing date of the 
        claimed invention;
            (2) the claimed invention was made as a result of 
        activities undertaken within the scope of the joint 
        research agreement; and
            (3) the application for patent for the claimed 
        invention discloses or is amended to disclose the names 
        of the parties to the joint research agreement.
    (d) Patents and Published Applications Effective as Prior 
Art.--For purposes of determining whether a patent or 
application for patent is prior art to a claimed invention 
under subsection (a)(2), such patent or application shall be 
considered to have been effectively filed, with respect to any 
subject matter described in the patent or application--
            (1) if paragraph (2) does not apply, as of the 
        actual filing date of the patent or the application for 
        patent; or
            (2) if the patent or application for patent is 
        entitled to claim a right of priority under section 
        119, 365(a), or 365(b), or to claim the benefit of an 
        earlier filing date under section 120, 121, or 365(c), 
        based upon 1 or more prior filed applications for 
        patent, as of the filing date of the earliest such 
        application that describes the subject matter.

Sec. 103. Conditions for patentability; non-obvious subject matter

    A patent for a claimed invention may not be obtained, 
notwithstanding that the claimed invention is not identically 
disclosed as set forth in section 102, if the differences 
between the claimed invention and the prior art are such that 
the claimed invention as a whole would have been obvious before 
the effective filing date of the claimed invention to a person 
having ordinary skill in the art to which the claimed invention 
pertains. Patentability shall not be negated by the manner in 
which the invention was made.

                   CHAPTER 11--APPLICATION FOR PATENT

Sec.
111. Application.
     * * * * * * *
[115. Oath of applicant.]
115. Inventor's oath or declaration.
     * * * * * * *
123. Micro entity defined.

Sec. 111. Application

    (a) In General.--
            (1) * * *
            (2) Contents.--Such application shall include--
                    (A) a specification as prescribed by 
                section 112 [of this title];
                    (B) a drawing as prescribed by section 113 
                [of this title]; and
                    (C) an oath [by the applicant] or 
                declaration as prescribed by section 115 [of 
                this title].
            (3) Fee and oath or declaration.--The application 
        must be accompanied by the fee required by law. The fee 
        and oath or declaration may be submitted after the 
        specification and any required drawing are submitted, 
        within such period and under such conditions, including 
        the payment of a surcharge, as may be prescribed by the 
        Director.
            (4) Failure to submit.--Upon failure to submit the 
        fee and oath or declaration within such prescribed 
        period, the application shall be regarded as abandoned, 
        unless it is shown to the satisfaction of the Director 
        that the delay in submitting the fee and oath or 
        declaration was unavoidable or unintentional. The 
        filing date of an application shall be the date on 
        which the specification and any required drawing are 
        received in the Patent and Trademark Office.
    (b) Provisional Application.--
            (1) Authorization.--A provisional application for 
        patent shall be made or authorized to be made by the 
        inventor, except as otherwise provided in this title, 
        in writing to the Director. Such application shall 
        include--
                    (A) a specification as prescribed by [the 
                first paragraph of section 112 of this title] 
                section 112(a); and
                    (B) a drawing as prescribed by section 113 
                [of this title].
            (2) Claim.--A claim, as required by [the second 
        through fifth paragraphs of section 112,] subsections 
        (b) through (e) of section 112, shall not be required 
        in a provisional application.

           *       *       *       *       *       *       *

            (5) Abandonment.--Notwithstanding the absence of a 
        claim, upon timely request and as prescribed by the 
        Director, a provisional application may be treated as 
        an application filed under subsection (a). Subject to 
        section 119(e)(3) [of this title], if no such request 
        is made, the provisional application shall be regarded 
        as abandoned 12 months after the filing date of such 
        application and shall not be subject to revival after 
        such 12-month period.
            (6) Other basis for provisional application.--
        Subject to all the conditions in this subsection and 
        section 119(e) [of this title], and as prescribed by 
        the Director, an application for patent filed under 
        subsection (a) may be treated as a provisional 
        application for patent.
            (7) No right of priority or benefit of earliest 
        filing date.--A provisional application shall not be 
        entitled to the right of priority of any other 
        application under section 119 or 365(a) [of this title] 
          or to the benefit of an earlier filing date in the 
        United States under section 120, 121, or 365(c) [of 
        this title].
            (8) Applicable provisions.--The provisions of this 
        title relating to applications for patent shall apply 
        to provisional applications for patent, except as 
        otherwise provided, and except that provisional 
        applications for patent shall not be subject to 
        [sections 115, 131, 135, and 157 of this title] 
        sections 131 and 135.

Sec. 112. Specification

    (a) In General.--The specification shall contain a written 
description of the invention, and of the manner and process of 
making and using it, in such full, clear, concise, and exact 
terms as to enable any person skilled in the art to which it 
pertains, or with which it is most nearly connected, to make 
and use the same, and shall set forth the best mode 
contemplated by the inventor [of carrying out his invention] or 
joint inventor of carrying out the invention.
    (b) Conclusion.--The specification shall conclude with one 
or more claims particularly pointing out and distinctly 
claiming the subject matter which the [applicant regards as his 
invention] inventor or a joint inventor regards as the 
invention.
    (c) Form.--A claim may be written in independent or, if the 
nature of the case admits, in dependent or multiple dependent 
form.
    [Subject to the following paragraph,] (d) Reference in 
Dependent Forms.--Subject to subsection (e), a claim in 
dependent form shall contain a reference to a claim previously 
set forth and then specify a further limitation of the subject 
matter claimed. A claim in dependent form shall be construed to 
incorporate by reference all the limitations of the claim to 
which it refers.
    (e) Reference in Multiple Dependent Form.--A claim in 
multiple dependent form shall contain a reference, in the 
alternative only, to more than one claim previously set forth 
and then specify a further limitation of the subject matter 
claimed. A multiple dependent claim shall not serve as a basis 
for any other multiple dependent claim. A multiple dependent 
claim shall be construed to incorporate by reference all the 
limitations of the particular claim in relation to which it is 
being considered.
    (f) Element in Claim for a Combination.--An element in a 
claim for a combination may be expressed as a means or step for 
performing a specified function without the recital of 
structure, material, or acts in support thereof, and such claim 
shall be construed to cover the corresponding structure, 
material, or acts described in the specification and 
equivalents thereof.

           *       *       *       *       *       *       *


[Sec. 115. Oath of applicant

    [The applicant shall make oath that he believes himself to 
be the original and first inventor of the process, machine, 
manufacture, or composition of matter, or improvement thereof, 
for which he solicits a patent; and shall state of what country 
he is a citizen. Such oath may be made before any person within 
the United States authorized by law to administer oaths, or, 
when, made in a foreign country, before any diplomatic or 
consular officer of the United States authorized to administer 
oaths, or before any officer having an official seal and 
authorized to administer oaths in the foreign country in which 
the applicant may be, whose authority is proved by certificate 
of a diplomatic or consular officer of the United States, or 
apostille of an official designated by a foreign country which, 
by treaty or convention, accords like effect to apostilles of 
designated officials in the United States, and such oath shall 
be valid if it complies with the laws of the state or country 
where made. When the application is made as provided in this 
title by a person other than the inventor, the oath may be so 
varied in form that it can be made by him. For purposes of this 
section, a consular officer shall include any United States 
citizen serving overseas, authorized to perform notarial 
functions pursuant to section 1750 of the Revised Statutes, as 
amended (22 U.S.C. 4221).]

Sec. 115. Inventor's oath or declaration

    (a) Naming the Inventor; Inventor's Oath or Declaration.--
An application for patent that is filed under section 111(a) or 
commences the national stage under section 371 shall include, 
or be amended to include, the name of the inventor for any 
invention claimed in the application. Except as otherwise 
provided in this section, each individual who is the inventor 
or a joint inventor of a claimed invention in an application 
for patent shall execute an oath or declaration in connection 
with the application.
    (b) Required Statements.--An oath or declaration under 
subsection (a) shall contain statements that--
            (1) the application was made or was authorized to 
        be made by the affiant or declarant; and
            (2) such individual believes himself or herself to 
        be the original inventor or an original joint inventor 
        of a claimed invention in the application.
    (c) Additional Requirements.--The Director may specify 
additional information relating to the inventor and the 
invention that is required to be included in an oath or 
declaration under subsection (a).
    (d) Substitute Statement.--
            (1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for 
        patent may provide a substitute statement under the 
        circumstances described in paragraph (2) and such 
        additional circumstances that the Director may specify 
        by regulation.
            (2) Permitted circumstances.--A substitute 
        statement under paragraph (1) is permitted with respect 
        to any individual who--
                    (A) is unable to file the oath or 
                declaration under subsection (a) because the 
                individual--
                            (i) is deceased;
                            (ii) is under legal incapacity; or
                            (iii) cannot be found or reached 
                        after diligent effort; or
                    (B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).
            (3) Contents.--A substitute statement under this 
        subsection shall--
                    (A) identify the individual with respect to 
                whom the statement applies;
                    (B) set forth the circumstances 
                representing the permitted basis for the filing 
                of the substitute statement in lieu of the oath 
                or declaration under subsection (a); and
                    (C) contain any additional information, 
                including any showing, required by the 
                Director.
    (e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an 
application for patent may include the required statements 
under subsections (b) and (c) in the assignment executed by the 
individual, in lieu of filing such statements separately.
    (f) Time for Filing.--A notice of allowance under section 
151 may be provided to an applicant for patent only if the 
applicant for patent has filed each required oath or 
declaration under subsection (a) or has filed a substitute 
statement under subsection (d) or recorded an assignment 
meeting the requirements of subsection (e).
    (g) Earlier-Filed Application Containing Required 
Statements or Substitute Statement.--
            (1) Exception.--The requirements under this section 
        shall not apply to an individual with respect to an 
        application for patent in which the individual is named 
        as the inventor or a joint inventor and who claims the 
        benefit under section 120, 121, or 365(c) of the filing 
        of an earlier-filed application, if--
                    (A) an oath or declaration meeting the 
                requirements of subsection (a) was executed by 
                the individual and was filed in connection with 
                the earlier-filed application;
                    (B) a substitute statement meeting the 
                requirements of subsection (d) was filed in 
                connection with the earlier filed application 
                with respect to the individual; or
                    (C) an assignment meeting the requirements 
                of subsection (e) was executed with respect to 
                the earlier-filed application by the individual 
                and was recorded in connection with the 
                earlier-filed application.
            (2) Copies of oaths, declarations, statements, or 
        assignments.--Notwithstanding paragraph (1), the 
        Director may require that a copy of the executed oath 
        or declaration, the substitute statement, or the 
        assignment filed in connection with the earlier-filed 
        application be included in the later-filed application.
    (h) Supplemental and Corrected Statements; Filing 
Additional Statements.--
            (1) In general.--Any person making a statement 
        required under this section may withdraw, replace, or 
        otherwise correct the statement at any time. If a 
        change is made in the naming of the inventor requiring 
        the filing of 1 or more additional statements under 
        this section, the Director shall establish regulations 
        under which such additional statements may be filed.
            (2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration meeting 
        the requirements of subsection (a) or an assignment 
        meeting the requirements of subsection (e) with respect 
        to an application for patent, the Director may not 
        thereafter require that individual to make any 
        additional oath, declaration, or other statement 
        equivalent to those required by this section in 
        connection with the application for patent or any 
        patent issuing thereon.
            (3) Savings clause.--A patent shall not be invalid 
        or unenforceable based upon the failure to comply with 
        a requirement under this section if the failure is 
        remedied as provided under paragraph (1).
    (i) Acknowledgment of Penalties.--Any declaration or 
statement filed pursuant to this section shall contain an 
acknowledgment that any willful false statement made in such 
declaration or statement is punishable under section 1001 of 
title 18 by fine or imprisonment of not more than 5 years, or 
both.

Sec. 116. Inventors

    (a) Joint Inventions.--When an invention is made by two or 
more persons jointly, they shall apply for patent jointly and 
each make the required oath, except as otherwise provided in 
this title. Inventors may apply for a patent jointly even 
though (1) they did not physically work together or at the same 
time, (2) each did not make the same type or amount of 
contribution, or (3) each did not make a contribution to the 
subject matter of every claim of the patent.
    (b) Omitted Inventor.--If a joint inventor refuses to join 
in an application for patent or cannot be found or reached 
after diligent effort, the application may be made by the other 
inventor on behalf of himself and the omitted inventor. The 
Director, on proof of the pertinent facts and after such notice 
to the omitted inventor as he prescribes, may grant a patent to 
the inventor making the application, subject to the same rights 
which the omitted inventor would have had if he had been 
joined. The omitted inventor may subsequently join in the 
application.
    (c) Correction of Errors in Application.--Whenever through 
error a person is named in an application for patent as the 
inventor, or through error an inventor is not named in an 
application, [and such error arose without any deceptive 
intention on his part,] the Director may permit the application 
to be amended accordingly, under such terms as he prescribes.

           *       *       *       *       *       *       *


[Sec. 118. Filing by other than inventor

    [Whenever an inventor refuses to execute an application for 
patent, or cannot be found or reached after diligent effort, a 
person to whom the inventor has assigned or agreed in writing 
to assign the invention or who otherwise shows sufficient 
proprietary interest in the matter justifying such action, may 
make application for patent on behalf of and as agent for the 
inventor on proof of the pertinent facts and a showing that 
such action is necessary to preserve the rights of the parties 
or to prevent irreparable damage; and the Director may grant a 
patent to such inventor upon such notice to him as the Director 
deems sufficient, and on compliance with such regulations as he 
prescribes.]

Sec. 118. Filing by other than inventor

    A person to whom the inventor has assigned or is under an 
obligation to assign the invention may make an application for 
patent. A person who otherwise shows sufficient proprietary 
interest in the matter may make an application for patent on 
behalf of and as agent for the inventor on proof of the 
pertinent facts and a showing that such action is appropriate 
to preserve the rights of the parties. If the Director grants a 
patent on an application filed under this section by a person 
other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as 
the Director considers to be sufficient.

Sec. 119. Benefit of earlier filing date; right of priority

    (a) An application for patent for an invention filed in 
this country by any person who has, or whose legal 
representatives or assigns have, previously regularly filed an 
application for a patent for the same invention in a foreign 
country which affords similar privileges in the case of 
applications filed in the United States or to citizens of the 
United States, or in a WTO member country, shall have the same 
effect as the same application would have if filed in this 
country on the date on which the application for patent for the 
same invention was first filed in such foreign country, if the 
application in this country is filed within twelve months from 
the earliest date on which such foreign application was filed[; 
but no patent shall be granted on any application for patent 
for an invention which had been patented or described in a 
printed publication in any country more than one year before 
the date of the actual filing of the application in this 
country, or which had been in public use or on sale in this 
country more than one year prior to such filing].

           *       *       *       *       *       *       *

    (e)(1) An application for patent filed under section 111(a) 
or section 363 [of this title]   for an invention disclosed in 
the manner provided by [the first paragraph of section 112 of 
this title] section 112(a) (other than the requirement to 
disclose the best mode) in a provisional application filed 
under section 111(b) [of this title], by an inventor or 
inventors named in the provisional application, shall have the 
same effect, as to such invention, as though filed on the date 
of the provisional application filed under section 111(b) [of 
this title], if the application for patent filed under section 
111(a) or section 363 [of this title] is filed not later than 
12 months after the date on which the provisional application 
was filed and if it contains or is amended to contain a 
specific reference to the provisional application. No 
application shall be entitled to the benefit of an earlier 
filed provisional application under this subsection unless an 
amendment containing the specific reference to the earlier 
filed provisional application is submitted at such time during 
the pendency of the application as required by the Director. 
The Director may consider the failure to submit such an 
amendment within that time period as a waiver of any benefit 
under this subsection. The Director may establish procedures, 
including the payment of a surcharge, to accept an 
unintentionally delayed submission of an amendment under this 
subsection during the pendency of the application.
    (2) A provisional application filed under section 111(b) 
[of this title]   may not be relied upon in any proceeding in 
the Patent and Trademark Office unless the fee set forth in 
subparagraph (A) or (C) of section 41(a)(1) [of this title] has 
been paid.

           *       *       *       *       *       *       *

    (g) As used in this section--
            (1) the term ``WTO member country'' has the same 
        meaning as the term is defined in section 104(b)(2)   
        [of this title]; and

           *       *       *       *       *       *       *


Sec. 120. Benefit of earlier filing date in the United States

    An application for patent for an invention disclosed in the 
manner provided by [the first paragraph of section 112 of this 
title] section 112(a) (other than the requirement to disclose 
the best mode) in an application previously filed in the United 
States, or as provided by section 363 [of this title], [which 
is filed by an inventor or inventors named] which names an 
inventor or joint inventor in the previously filed application 
shall have the same effect, as to such invention, as though 
filed on the date of the prior application, if filed before the 
patenting or abandonment of or termination of proceedings on 
the first application or on an application similarly entitled 
to the benefit of the filing date of the first application and 
if it contains or is amended to contain a specific reference to 
the earlier filed application. No application shall be entitled 
to the benefit of an earlier filed application under this 
section unless an amendment containing the specific reference 
to the earlier filed application is submitted at such time 
during the pendency of the application as required by the 
Director. The Director may consider the failure to submit such 
an amendment within that time period as a waiver of any benefit 
under this section. The Director may establish procedures, 
including the payment of a surcharge, to accept an 
unintentionally delayed submission of an amendment under this 
section.

Sec. 121. Divisional applications

    If two or more independent and distinct inventions are 
claimed in one application, the Director may require the 
application to be restricted to one of the inventions. If the 
other invention is made the subject of a divisional application 
which complies with the requirements of section 120 [of this 
title]   it shall be entitled to the benefit of the filing date 
of the original application. A patent issuing on an application 
with respect to which a requirement for restriction under this 
section has been made, or on an application filed as a result 
of such a requirement, shall not be used as a reference either 
in the Patent and Trademark Office or in the courts against a 
divisional application or against the original application or 
any patent issued on either of them, if the divisional 
application is filed before the issuance of the patent on the 
other application. [If a divisional application is directed 
solely to subject matter described and claimed in the original 
application as filed, the Director may dispense with signing 
and execution by the inventor.] The validity of a patent shall 
not be questioned for failure of the Director to require the 
application to be restricted to one invention.

Sec. 122. Confidential status of applications; publication of patent 
                    applications

    (a) * * *
    (b) Publication.--
            (1) * * *
            (2) Exceptions.--(A) An application shall not be 
        published if that application is--
                    (i) * * *
                    (ii) subject to a secrecy order under 
                section 181 [of this title];
                    (iii) a provisional application filed under 
                section 111(b) [of this title]; or
                    (iv) an application for a design patent 
                filed under chapter 16 [of this title].

           *       *       *       *       *       *       *

    (d) National Security.--No application for patent shall be 
published under subsection (b)(1) if the publication or 
disclosure of such invention would be detrimental to the 
national security. The Director shall establish appropriate 
procedures to ensure that such applications are promptly 
identified and the secrecy of such inventions is maintained in 
accordance with chapter 17 [of this title].
    (e) Preissuance Submissions by Third Parties.--
            (1) In general.--Any third party may submit for 
        consideration and inclusion in the record of a patent 
        application, any patent, published patent application, 
        or other printed publication of potential relevance to 
        the examination of the application, if such submission 
        is made in writing before the earlier of--
                    (A) the date a notice of allowance under 
                section 151 is given or mailed in the 
                application for patent; or
                    (B) the later of--
                            (i) 6 months after the date on 
                        which the application for patent is 
                        first published under section 122 by 
                        the Office, or
                            (ii) the date of the first 
                        rejection under section 132 of any 
                        claim by the examiner during the 
                        examination of the application for 
                        patent.
            (2) Other requirements.--Any submission under 
        paragraph (1) shall--
                    (A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    (B) be accompanied by such fee as the 
                Director may prescribe; and
                    (C) include a statement by the person 
                making such submission affirming that the 
                submission was made in compliance with this 
                section.

Sec. 123. Micro entity defined

    (a) In General.--For purposes of this title, the term 
``micro entity'' means an applicant who makes a certification 
that the applicant--
            (1) qualifies as a small entity, as defined in 
        regulations issued by the Director;
            (2) has not been named as an inventor on more than 
        4 previously filed patent applications, other than 
        applications filed in another country, provisional 
        applications under section 111(b), or international 
        applications filed under the treaty defined in section 
        351(a) for which the basic national fee under section 
        41(a) was not paid;
            (3) did not, in the calendar year preceding the 
        calendar year in which the examination fee for the 
        application is being paid, have a gross income, as 
        defined in section 61(a) of the Internal Revenue Code 
        of 1986, exceeding 3 times the median household income 
        for that preceding calendar year, as reported by the 
        Bureau of the Census; and
            (4) has not assigned, granted, or conveyed, and is 
        not under an obligation by contract or law to assign, 
        grant, or convey, a license or other ownership interest 
        in the application concerned to an entity that, in the 
        calendar year preceding the calendar year in which the 
        examination fee for the application is being paid, had 
        a gross income, as defined in section 61(a) of the 
        Internal Revenue Code of 1986, exceeding 3 times the 
        median household income for that preceding calendar 
        year, as reported by the Bureau of the Census.
    (b) Applications Resulting From Prior Employment.--An 
applicant is not considered to be named on a previously filed 
application for purposes of subsection (a)(2) if the applicant 
has assigned, or is under an obligation by contract or law to 
assign, all ownership rights in the application as the result 
of the applicant's previous employment.
    (c) Foreign Currency Exchange Rate.--If an applicant's or 
entity's gross income in the preceding calendar year is not in 
United States dollars, the average currency exchange rate, as 
reported by the Internal Revenue Service, during that calendar 
year shall be used to determine whether the applicant's or 
entity's gross income exceeds the threshold specified in 
paragraphs (3) or (4) of subsection (a).
    (d) Public Institutions of Higher Education.--
            (1) In general.--For purposes of this section, a 
        micro entity shall include an applicant who certifies 
        that--
                    (A) the applicant's employer, from which 
                the applicant obtains the majority of the 
                applicant's income, is an institution of higher 
                education, as defined in section 101 of the 
                Higher Education Act of 1965 (20 U.S.C. 1001), 
                that is a public institution; or
                    (B) the applicant has assigned, granted, 
                conveyed, or is under an obligation by contract 
                or law to assign, grant, or convey, a license 
                or other ownership interest in the particular 
                application to such public institution.
            (2) Director's authority.--The Director may, in the 
        Director's discretion, impose income limits, annual 
        filing limits, or other limits on who may qualify as a 
        micro entity pursuant to this subsection if the 
        Director determines that such additional limits are 
        reasonably necessary to avoid an undue impact on other 
        patent applicants or owners or are otherwise reasonably 
        necessary and appropriate. At least 3 months before any 
        limits proposed to be imposed pursuant to this 
        paragraph take effect, the Director shall inform the 
        Committee on the Judiciary of the House of 
        Representatives and the Committee on the Judiciary of 
        the Senate of any such proposed limits.

                 CHAPTER 12--EXAMINATION OF APPLICATION

Sec.
131. Examination of application.
     * * * * * * *
[134. Appeal to the Board of Patent Appeals and Interferences.
[135. Interferences.]
134. Appeal to the Patent Trial and Appeal Board.
135. Derivation proceedings.
     * * * * * * *

Sec. 132. Notice of rejection; reexamination

    (a) * * *
    (b) The Director shall prescribe regulations to provide for 
the continued examination of applications for patent at the 
request of the applicant. The Director may establish 
appropriate fees for such continued examination and shall 
provide a 50 percent reduction in such fees for small entities 
that qualify for reduced fees under section 41(h)(1) [of this 
title].

           *       *       *       *       *       *       *


[Sec. 134. Appeal to the Board of Patent Appeals and Interferences]

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

    (a) Patent Applicant.--An applicant for a patent, any of 
whose claims has been twice rejected, may appeal from the 
decision of the primary examiner to the [Board of Patent 
Appeals and Interferences] Patent Trial and Appeal Board, 
having once paid the fee for such appeal.
    (b) Patent Owner.--A patent owner in [any reexamination 
proceeding] a reexamination may appeal from the final rejection 
of any claim by the a primary examiner to the [Board of Patent 
Appeals and Interferences] Patent Trial and Appeal Board, 
having once paid the fee for such appeal.
    [(c) Third-Party.--A third-party requester in an inter 
partes proceeding may appeal to the Patent Trial and Appeal 
Board from the final decision of the primary examiner favorable 
to the patentability of any original or proposed amended or new 
claim of a patent, having once paid the fee for such appeal.]

[Sec. 135. Interferences

    [(a) Whenever an application is made for a patent which, in 
the opinion of the Director, would interfere with any pending 
application, or with any unexpired patent, an interference may 
be declared and the Director shall give notice of such 
declaration to the applicants, or applicant and patentee, as 
the case may be. The Board of Patent Appeals and Interferences 
shall determine questions of priority of the inventions and may 
determine questions of patentability. Any final decision, if 
adverse to the claim of an applicant, shall constitute the 
final refusal by the Patent and Trademark Office of the claims 
involved, and the Director may issue a patent to the applicant 
who is adjudged the prior inventor. A final judgment adverse to 
a patentee from which no appeal or other review has been or can 
be taken or had shall constitute cancellation of the claims 
involved in the patent, and notice of such cancellation shall 
be endorsed on copies of the patent distributed after such 
cancellation by the Patent and Trademark Office.
    [(b)(1) A claim which is the same as, or for the same or 
substantially the same subject matter as, a claim of an issued 
patent may not be made in any application unless such a claim 
is made prior to one year from the date on which the patent was 
granted.
    [(2) A claim which is the same as, or for the same or 
substantially the same subject matter as, a claim of an 
application published under section 122(b) of this title may be 
made in an application filed after the application is published 
only if the claim is made before 1 year after the date on which 
the application is published.
    [(c) Any agreement or understanding between parties to an 
interference, including any collateral agreements referred to 
therein, made in connection with or in contemplation of the 
termination of the interference, shall be in writing and a true 
copy thereof filed in the Patent and Trademark Office before 
the termination of the interference as between the said parties 
to the agreement or understanding. If any party filing the same 
so requests, the copy shall be kept separate from the file of 
the interference, and made available only to Government 
agencies on written request, or to any person on a showing of 
good cause. Failure to file the copy of such agreement or 
understanding shall render permanently unenforceable such 
agreement or understanding and any patent of such parties 
involved in the interference or any patent subsequently issued 
on any application of such parties so involved. The Director 
may, however, on a showing of good cause for failure to file 
within the time prescribed, permit the filing of the agreement 
or understanding during the six-month period subsequent to the 
termination of the interference as between the parties to the 
agreement or understanding.The Director shall give notice to 
the parties or their attorneys of record, a reasonable time 
prior to said termination, of the filing requirement of this 
section. If the Director gives such notice at a later time, 
irrespective of the right to file such agreement or 
understanding within the six-month period on a showing of good 
cause, the parties may file such agreement or understanding 
within sixty days of the receipt of such notice.Any 
discretionary action of the Director under this subsection 
shall be reviewable under section 10 of the Administrative 
Procedure Act.
    [(d) Parties to a patent interference, within such time as 
may be specified by the Director by regulation, may determine 
such contest or any aspect thereof by arbitration. Such 
arbitration shall be governed by the provisions of title 9 to 
the extent such title is not inconsistent with this section. 
The parties shall give notice of any arbitration award to the 
Director, and such award shall, as between the parties to the 
arbitration, be dispositive of the issues to which it relates. 
The arbitration award shall be unenforceable until such notice 
is given. Nothing in this subsection shall preclude the 
Director from determining patentability of the invention 
involved in the interference.]

Sec. 135. Derivation proceedings

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

           *       *       *       *       *       *       *


      CHAPTER 13--REVIEW OF PATENT AND TRADEMARK OFFICE DECISIONS

Sec.
141. Appeal to Court of Appeals for the Federal Circuit.
     * * * * * * *
[146. Civil action in case of interference.]
146. Civil action in case of derivation proceeding.

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

    [An applicant dissatisfied with the decision in an appeal 
to the Board of Patent Appeals and Interferences under section 
134 of this title may appeal the decision to the United States 
Court of Appeals for the Federal Circuit. By filing such an 
appeal the applicant waives his or her right to proceed under 
section 145 of this title. A patent owner, or a third-party 
requester in an inter partes reexamination proceeding, who is 
in any reexamination proceeding dissatisfied with the final 
decision in an appeal to the Board of Patent Appeals and 
Interferences under section 134 may appeal the decision only to 
the United States Court of Appeals for the Federal Circuit. A 
party to an interference dissatisfied with the decision of the 
Board of Patent Appeals and Interferences on the interference 
may appeal the decision to the United States Court of Appeals 
for the Federal Circuit, but such appeal shall be dismissed if 
any adverse party to such interference, within twenty days 
after the appellant has filed notice of appeal in accordance 
with section 142 of this title, files notice with the Director 
that the party elects to have all further proceedings conducted 
as provided in section 146 of this title. If the appellant does 
not, within thirty days after the filing of such notice by the 
adverse party, file a civil action under section 146, the 
decision appealed from shall govern the further proceedings in 
the case.]

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

    (a) Examinations.--An applicant who is dissatisfied with 
the final decision in an appeal to the Patent Trial and Appeal 
Board under section 134(a) may appeal the Board's decision to 
the United States Court of Appeals for the Federal Circuit. By 
filing such an appeal, the applicant waives his or her right to 
proceed under section 145.
    (b) Reexaminations.--A patent owner who is dissatisfied 
with the final decision in an appeal of a reexamination to the 
Patent Trial and Appeal Board under section 134(b) may appeal 
the Board's decision only to the United States Court of Appeals 
for the Federal Circuit.
    (c) Post-Grant and Inter Partes Reviews.--A party to an 
inter partes review or a post-grant review who is dissatisfied 
with the final written decision of the Patent Trial and Appeal 
Board under section 318(a) or 328(a) (as the case may be) may 
appeal the Board's decision only to the United States Court of 
Appeals for the Federal Circuit.
    (d) Derivation Proceedings.--A party to a derivation 
proceeding who is dissatisfied with the final decision of the 
Patent Trial and Appeal Board in the proceeding may appeal the 
decision to the United States Court of Appeals for the Federal 
Circuit, but such appeal shall be dismissed if any adverse 
party to such derivation proceeding, within 20 days after the 
appellant has filed notice of appeal in accordance with section 
142, files notice with the Director that the party elects to 
have all further proceedings conducted as provided in section 
146. If the appellant does not, within 30 days after the filing 
of such notice by the adverse party, file a civil action under 
section 146, the Board's decision shall govern the further 
proceedings in the case.

           *       *       *       *       *       *       *


Sec. 143. Proceedings on appeal

    With respect to an appeal described in section 142 [of this 
title], the Director shall transmit to the United States Court 
of Appeals for the Federal Circuit a certified list of the 
documents comprising the record in the Patent and Trademark 
Office. The court may request that the Director forward the 
original or certified copies of such documents during pendency 
of the appeal. In an ex parte case or any reexamination case, 
the Director shall submit to the court in writing the grounds 
for the decision of the Patent and Trademark Office, addressing 
all the issues involved in the appeal. [The court shall, before 
hearing an appeal, give notice of the time and place of the 
hearing to the Director and the parties in the appeal. The 
court shall, before hearing an appeal, give notice of the time 
and place of the hearing to the Director and the parties in the 
appeal] In an ex parte case, the Director shall submit to the 
court in writing the grounds for the decision of the Patent and 
Trademark Office, addressing all of the issues raised in the 
appeal. The Director shall have the right to intervene in an 
appeal from a decision entered by the Patent Trial and Appeal 
Board in a derivation proceeding under section 135 or in an 
inter partes or post-grant review under chapter 31 or 32.

           *       *       *       *       *       *       *


Sec. 145. Civil action to obtain patent

    An applicant dissatisfied with the decision of the [Board 
of Patent Appeals and Interferences] Patent Trial and Appeal 
Board in an appeal under section 134(a) [of this title]   may, 
unless appeal has been taken to the United States Court of 
Appeals for the Federal Circuit, have remedy by civil action 
against the Director in the [United States District Court for 
the District of Columbia] United States District Court for the 
Eastern District of Virginia if commenced within such time 
after such decision, not less than sixty days, as the Director 
appoints. The court may adjudge that such applicant is entitled 
to receive a patent for his invention, as specified in any of 
his claims involved in the decision of the [Board of Patent 
Appeals and Interferences] Patent Trial and Appeal Board, as 
the facts in the case may appear and such adjudication shall 
authorize the Director to issue such patent on compliance with 
the requirements of law. All the expenses of the proceedings 
shall be paid by the applicant.

[Sec. 146. Civil action in case of interference]

Sec. 146. Civil action in case of derivation proceeding

    Any party to [an interference] a derivation proceeding 
dissatisfied with the decision of the [Board of Patent Appeals 
and Interferences] Patent Trial and Appeal Board on [the 
interference] the derivation proceeding, may have remedy by 
civil action, if commenced within such time after such 
decision, not less than sixty days, as the Director appoints or 
as provided in section 141 [of this title], unless he has 
appealed to the United States Court of Appeals for the Federal 
Circuit, and such appeal is pending or has been decided. In 
such suits the record in the Patent and Trademark Office shall 
be admitted on motion of either party upon the terms and 
conditions as to costs, expenses, and the further cross-
examination of the witnesses as the court imposes, without 
prejudice to the right of the parties to take further 
testimony. The testimony and exhibits of the record in the 
Patent and Trademark Office when admitted shall have the same 
effect as if originally taken and produced in the suit.
    Such suit may be instituted against the party in interest 
as shown by the records of the Patent and Trademark Office at 
the time of the decision complained of, but any party in 
interest may become a party to the action. If there be adverse 
parties residing in a plurality of districts not embraced 
within the same state, or an adverse party residing in a 
foreign country, the [United States District Court for the 
District of Columbia] United States District Court for the 
Eastern District of Virginia shall have jurisdiction and may 
issue summons against the adverse parties directed to the 
marshal of any district in which any adverse party resides. 
Summons against adverse parties residing in foreign countries 
may be served by publication or otherwise as the court directs. 
The Director shall not be a necessary party but he shall be 
notified of the filing of the suit by the clerk of the court in 
which it is filed and shall have the right to intervene. 
Judgment of the court in favor of the right of an applicant to 
a patent shall authorize the Director to issue such patent on 
the filing in the Patent and Trademark Office of a certified 
copy of the judgment and on compliance with the requirements of 
law.

           *       *       *       *       *       *       *


                      CHAPTER 14--ISSUE OF PATENT

Sec.
151. Issue of patent.
     * * * * * * *
[157. Statutory invention registration.]

           *       *       *       *       *       *       *


Sec. 154. Contents and term of patent; provisional rights

    (a) In General.--
            (1) * * *
            (2) Term.--Subject to the payment of fees under 
        this title, such grant shall be for a term beginning on 
        the date on which the patent issues and ending 20 years 
        from the date on which the application for the patent 
        was filed in the United States or, if the application 
        contains a specific reference to an earlier filed 
        application or applications under section 120, 121, or 
        365(c) [of this title], from the date on which the 
        earliest such application was filed.
            (3) Priority.--Priority under section 119, 365(a), 
        or 365(b) [of this title] shall not be taken into 
        account in determining the term of a patent.

           *       *       *       *       *       *       *

    (b) Adjustment of Patent Term.--
            (1) Patent term guarantees.--
                    (A) Guarantee of prompt patent and 
                trademark office responses.--Subject to the 
                limitations under paragraph (2), if the issue 
                of an original patent is delayed due to the 
                failure of the Patent and Trademark Office to--
                            (i) provide at least one of the 
                        notifications under section 132 [of 
                        this title]   or a notice of allowance 
                        under section 151 [of this title] not 
                        later than 14 months after--
                                    (I) the date on which an 
                                application was filed under 
                                section 111(a) [of this title]; 
                                or
                                    (II) the date on which an 
                                international application 
                                fulfilled the requirements of 
                                section 371 [of this title];

           *       *       *       *       *       *       *

                            (iii) act on an application within 
                        4 months after the date of a decision 
                        by the [Board of Patent Appeals and 
                        Interferences] Patent Trial and Appeal 
                        Board under section 134 or 135 or a 
                        decision by a Federal court under 
                        section 141, 145, or 146 in a case in 
                        which allowable claims remain in the 
                        application; or

           *       *       *       *       *       *       *

                the term of the patent shall be extended 1 day 
                for each day after the end of the period 
                specified in clause (i), (ii), (iii), or (iv), 
                as the case may be, until the action described 
                in such clause is taken.
                    (B) Guarantee of no more than 3-year 
                application pendency.--Subject to the 
                limitations under paragraph (2), if the issue 
                of an original patent is delayed due to the 
                failure of the United States Patent and 
                Trademark Office to issue a patent within 3 
                years after the actual filing date of the 
                application in the United States, not 
                including--
                            (i) * * *
                            (ii) any time consumed by a 
                        proceeding under section 135(a), any 
                        time consumed by the imposition of an 
                        order under section 181, or any time 
                        consumed by appellate review by the 
                        [Board of Patent Appeals and 
                        Interferences] Patent Trial and Appeal 
                        Board or by a Federal court; or

           *       *       *       *       *       *       *

                the term of the patent shall be extended 1 day 
                for each day after the end of that 3-year 
                period until the patent is issued.
                    [(C) Guarantee or adjustments for delays 
                due to interferences, secrecy orders, and 
                appeals.--]
                    (C) Guarantee of adjustments for delays due 
                to derivation proceedings, secrecy orders, and 
                appeals.--Subject to the limitations under 
                paragraph (2), if the issue of an original 
                patent is delayed due to--
                            (i) * * *

           *       *       *       *       *       *       *

                            (iii) appellate review by the 
                        [Board of Patent Appeals and 
                        Interferences] Patent Trial and Appeal 
                        Board or by a Federal court in a case 
                        in which the patent was issued under a 
                        decision in the review reversing an 
                        adverse determination of patentability,
                the term of the patent shall be extended 1 day 
                for each day of the pendency of the proceeding, 
                order, or review, as the case may be.

           *       *       *       *       *       *       *

            (4) Appeal of patent term adjustment 
        determination.--
                    (A) An applicant dissatisfied with a 
                determination made by the Director under 
                paragraph (3) shall have remedy by a civil 
                action against the Director filed in the 
                [United States District Court for the District 
                of Columbia] United States District Court for 
                the Eastern District of Virginia within 180 
                days after the grant of the patent. Chapter 7 
                of title 5 shall apply to such action. Any 
                final judgment resulting in a change to the 
                period of adjustment of the patent term shall 
                be served on the Director, and the Director 
                shall thereafter alter the term of the patent 
                to reflect such change.

           *       *       *       *       *       *       *

    (c) Continuation.--
            (1) * * *
            (2) Remedies.--The remedies of sections 283, 284, 
        and 285 [of this title] shall not apply to acts which--
                    (A) * * *

           *       *       *       *       *       *       *

            (3) Remuneration.--The acts referred to in 
        paragraph (2) may be continued only upon the payment of 
        an equitable remuneration to the patentee that is 
        determined in an action brought under chapter 28 and 
        chapter 29 (other than those provisions excluded by 
        paragraph (2)) [of this title].

           *       *       *       *       *       *       *


Sec. 155A. Patent term restoration

    (a) Notwithstanding section 154 [of this title], the term 
of each of the following patents shall be extended in 
accordance with this section:
            (1) * * *

           *       *       *       *       *       *       *


Sec. 156. Extension of patent term

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) To obtain an extension of the term of a patent under 
this section, the owner of record of the patent or its agent 
shall submit an application to the Director. Except as provided 
in paragraph (5), such an application may only be submitted 
within the sixty-day period beginning on the date the product 
received permission under the provision of law under which the 
applicable regulatory review period occurred for commercial 
marketing or use. The application shall contain--
            (A) * * *

           *       *       *       *       *       *       *

For purposes of determining the date on which a product 
receives permission under the second sentence of this 
paragraph, if such permission is transmitted after 4:30 P.M., 
Eastern Time, on a business day, or is transmitted on a day 
that is not a business day, the product shall be deemed to 
receive such permission on the next business day. For purposes 
of the preceding sentence, the term ``business day'' means any 
Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any 
legal holiday under section 6103 of title 5.

           *       *       *       *       *       *       *


[Sec. 157. Statutory invention registration

    [(a) Notwithstanding any other provision of this title, the 
Director is authorized to publish a statutory invention 
registration containing the specification and drawings of a 
regularly filed application for a patent without examination if 
the applicant--
            [(1) meets the requirements of section 112 of this 
        title;
            [(2) has complied with the requirements for 
        printing, as set forth in regulations of the Director;
            [(3) waives the right to receive a patent on the 
        invention within such period as may be prescribed by 
        the Director; and
            [(4) pays application, publication, and other 
        processing fees established by the Director.
If an interference is declared with respect to such an 
application, a statutory invention registration may not be 
published unless the issue of priority of invention is finally 
determined in favor of the applicant.
    [(b) The waiver under subsection (a)(3) of this section by 
an applicant shall take effect upon publication of the 
statutory invention registration.
    [(c) A statutory invention registration published pursuant 
to this section shall have all of the attributes specified for 
patents in this title except those specified in section 183 and 
sections 271 through 289 of this title. A statutory invention 
registration shall not have any of the attributes specified for 
patents in any other provision of law other than this title. A 
statutory invention registration published pursuant to this 
section shall give appropriate notice to the public, pursuant 
to regulations which the Director shall issue, of the preceding 
provisions of this subsection. The invention with respect to 
which a statutory invention certificate is published is not a 
patented invention for purposes of section 292 of this title.
    [(d) The Director shall report to the Congress annually on 
the use of statutory invention registrations. Such report shall 
include an assessment of the degree to which agencies of the 
Federal Government are making use of the statutory invention 
registration system, the degree to which it aids the management 
of federally developed technology, and an assessment of the 
cost savings to the Federal Government of the use of such 
procedures.]

           *       *       *       *       *       *       *


CHAPTER 15--PLANT PATENTS

           *       *       *       *       *       *       *


Sec. 162. Description, claim

    No plant patent shall be declared invalid for noncompliance 
with section 112 [of this title] if the description is as 
complete as is reasonably possible.
    The claim in the specification shall be in formal terms to 
the plant shown and described.

           *       *       *       *       *       *       *


CHAPTER 16--DESIGNS

           *       *       *       *       *       *       *


Sec. 172. Right of priority

    The right of priority provided for by subsections (a) 
through (d) of section 119 [of this title and the time 
specified in section 102(d)]   shall be six months in the case 
of designs. The right of priority provided for by section 
119(e) [of this title] shall not apply to designs.

           *       *       *       *       *       *       *


 CHAPTER 17--SECRECY OF CERTAIN INVENTIONS AND FILING APPLICATIONS IN 
FOREIGN COUNTRY

           *       *       *       *       *       *       *


Sec. 182. Abandonment of invention for unauthorized disclosure

    The invention disclosed in an application for patent 
subject to an order made pursuant to section 181 [of this 
title] may be held abandoned upon its being established by the 
Commissioner of Patents that in violation of said order the 
invention has been published or disclosed or that an 
application for a patent therefor has been filed in a foreign 
country by the inventor, his successors, assigns, or legal 
representatives, or anyone in privity with him or them, without 
the consent of the Commissioner of Patents. The abandonment 
shall be held to have occurred as of the time of violation. The 
consent of the Commissioner of Patents shall not be given 
without the concurrence of the heads of the departments and the 
chief officers of the agencies who caused the order to be 
issued. A holding of abandonment shall constitute forfeiture by 
the applicant, his successors, assigns, or legal 
representatives, or anyone in privity with him or them, of all 
claims against the United States based upon such invention.

Sec. 183. Right to compensation

    An applicant, his successors, assigns, or legal 
representatives, whose patent is withheld as herein provided, 
shall have the right, beginning at the date the applicant is 
notified that, except for such order, his application is 
otherwise in condition for allowance, or February 1, 1952, 
whichever is later, and ending six years after a patent is 
issued thereon, to apply to the head of any department or 
agency who caused the order to be issued for compensation for 
the damage caused by the order of secrecy and/or for the use of 
the invention by the Government, resulting from his disclosure. 
The right to compensation for use shall begin on the date of 
the first use of the invention by the Government. The head of 
the department or agency is authorized, upon the presentation 
of a claim, to enter into an agreement with the applicant, his 
successors, assigns, or legal representatives, in full 
settlement for the damage and/or use. This settlement agreement 
shall be conclusive for all purposes notwithstanding any other 
provision of law to the contrary. If full settlement of the 
claim cannot be effected, the head of the department or agency 
may award and pay to such applicant, his successors, assigns, 
or legal representatives, a sum not exceeding 75 per centum of 
the sum which the head of the department or agency considers 
just compensation for the damage and/or use. A claimant may 
bring suit against the United States in the United States Court 
of Federal Claims or in the District Court of the United States 
for the district in which such claimant is a resident for an 
amount which when added to the award shall constitute just 
compensation for the damage and/or use of the invention by the 
Government. The owner of any patent issued upon an application 
that was subject to a secrecy order issued pursuant to section 
181 [of this title], who did not apply for compensation as 
above provided, shall have the right, after the date of 
issuance of such patent, to bring suit in the United States 
Court of Federal Claims for just compensation for the damage 
caused by reason of the order of secrecy and/or use by the 
Government of the invention resulting from his disclosure. The 
right to compensation for use shall begin on the date of the 
first use of the invention by the Government. In a suit under 
the provisions of this section the United States may avail 
itself of all defenses it may plead in an action under section 
1498 of title 28. This section shall not confer a right of 
action on anyone or his successors, assigns, or legal 
representatives who, while in the full-time employment or 
service of the United States, discovered, invented, or 
developed the invention on which the claim is based.

Sec. 184. Filing of application in foreign country

    (a) Filing in Foreign Country.--Except when authorized by a 
license obtained from the Commissioner of Patents a person 
shall not file or cause or authorize to be filed in any foreign 
country prior to six months after filing in the United States 
an application for patent or for the registration of a utility 
model, industrial design, or model in respect of an invention 
made in this country. A license shall not be granted with 
respect to an invention subject to an order issued by the 
Commissioner of Patents pursuant to section 181 [of this title] 
  without the concurrence of the head of the departments and 
the chief officers of the agencies who caused the order to be 
issued. The license may be granted retroactively where an 
application has been filed abroad through error [and without 
deceptive intent]   and the application does not disclose an 
invention within the scope of section 181 [of this title].
    (b) Application.--The term ``application'' when used in 
this chapter includes applications and any modifications, 
amendments, or supplements thereto, or divisions thereof.
    (c) Subsequent modifications, amendments, and 
supplements.--The scope of a license shall permit subsequent 
modifications, amendments, and supplements containing 
additional subject matter if the application upon which the 
request for the license is based is not, or was not, required 
to be made available for inspection under section 181 [of this 
title] and if such modifications, amendments, and supplements 
do not change the general nature of the invention in a manner 
which would require such application to be made available for 
inspection under such section 181. In any case in which a 
license is not, or was not, required in order to file an 
application in any foreign country, such subsequent 
modifications, amendments, and supplements may be made, without 
a license, to the application filed in the foreign country if 
the United States application was not required to be made 
available for inspection under section 181 and if such 
modifications, amendments, and supplements do not, or did not, 
change the general nature of the invention in a manner which 
would require the United States application to have been made 
available for inspection under such section 181.

Sec. 185. Patent barred for filing without license

    Notwithstanding any other provisions of law any person, and 
his successors, assigns, or legal representatives, shall not 
receive a United States patent for an invention if that person, 
or his successors, assigns, or legal representatives shall, 
without procuring the license prescribed in section 184 [of 
this title], have made, or consented to or assisted another's 
making, application in a foreign country for a patent or for 
the registration of a utility model, industrial design, or 
model in respect of the invention. A United States patent 
issued to such person, his successors, assigns, or legal 
representatives shall be invalid, unless the failure to procure 
such license was through error [and without deceptive intent], 
and the patent does not disclose subject matter within the 
scope of section 181 [of this title].

Sec. 186. Penalty

    Whoever, during the period or periods of time an invention 
has been ordered to be kept secret and the grant of a patent 
thereon withheld pursuant to section 181 [of this title], 
shall, with knowledge of such order and without due 
authorization, willfully publish or disclose or authorize or 
cause to be published or disclosed the invention, or material 
information with respect thereto, or whoever willfully, in 
violation of the provisions of section 184 [of this title], 
shall file or cause or authorize to be filed in any foreign 
country an application for patent or for the registration of a 
utility model, industrial design, or model in respect of any 
invention made in the United States, shall, upon conviction, be 
fined not more than $10,000 or imprisoned for not more than two 
years, or both.

           *       *       *       *       *       *       *


CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE

           *       *       *       *       *       *       *


Sec. 202. Disposition of rights

    (a) * * *
    (b)(1) * * *

           *       *       *       *       *       *       *

    (3) If the contractor believes that a determination is 
contrary to the policies and objectives of this chapter or 
constitutes an abuse of discretion by the agency, the 
determination shall be subject to [the section 203(b)] section 
203(b).
    (c) Each funding agreement with a small business firm or 
nonprofit organization shall contain appropriate provisions to 
effectuate the following:
            (1) * * *
            (2) That the contractor make a written election 
        within two years after disclosure to the Federal agency 
        (or such additional time as may be approved by the 
        Federal agency) whether the contractor will retain 
        title to a subject invention: Provided, That in any 
        case where [publication, on sale, or public use, has 
        initiated the one year statutory period in which valid 
        patent protection can still be obtained in the United 
        States] the 1-year period referred to in section 102(b) 
        would end before the end of that 2-year period, the 
        period for election may be shortened by the Federal 
        agency to a date that is not more than sixty days 
        [prior to the end of the statutory] before the end of 
        that 1-year period: And provided further, That the 
        Federal Government may receive title to any subject 
        invention in which the contractor does not elect to 
        retain rights or fails to elect rights within such 
        times.
            (3) That a contractor electing rights in a subject 
        invention agrees to file a patent application prior to 
        [any statutory bar date that may occur under this title 
        due to publication, on sale, or public use] the 
        expiration of the 1-year period referred to in section 
        102(b), and shall thereafter file corresponding patent 
        applications in other countries in which it wishes to 
        retain title within reasonable times, and that the 
        Federal Government may receive title to any subject 
        inventions in the United States or other countries in 
        which the contractor has not filed patent applications 
        on the subject invention within such times.

           *       *       *       *       *       *       *

            (7) In the case of a nonprofit organization, (A) a 
        prohibition upon the assignment of rights to a subject 
        invention in the United States without the approval of 
        the Federal agency, except where such assignment is 
        made to an organization which has as one of its primary 
        functions the management of inventions (provided that 
        such assignee shall be subject to the same provisions 
        as the contractor); (B) a requirement that the 
        contractor share royalties with the inventor; (C) 
        except with respect to a funding agreement for the 
        operation of a Government-owned-contractor-operated 
        facility, a requirement that the balance of any 
        royalties or income earned by the contractor with 
        respect to subject inventions, after payment of 
        expenses (including payments to inventors) incidental 
        to the administration of subject inventions, be 
        utilized for the support of scientific research or 
        education; (D) a requirement that, [except where it 
        proves infeasible after a reasonable inquiry, in the 
        licensing of subject inventions shall be given to small 
        business firms; and] except where it is determined to 
        be infeasible following a reasonable inquiry, a 
        preference in the licensing of subject inventions shall 
        be given to small business firms; and (E) with respect 
        to a funding agreement for the operation of a 
        Government-owned-contractor-operated facility, 
        requirements (i) that after payment of patenting costs, 
        licensing costs, payments to inventors, and other 
        expenses incidental to the administration of subject 
        inventions, 100 percent of the balance of any royalties 
        or income earned and retained by the contractor during 
        any fiscal year up to an amount equal to 5 percent of 
        the annual budget of the facility, shall be used by the 
        contractor for scientific research, development, and 
        education consistent with the research and development 
        mission and objectives of the facility, including 
        activities that increase the licensing potential of 
        other inventions of the facility; provided that if said 
        balance exceeds 5 percent of the annual budget of the 
        facility, that [75] 15 percent of such excess shall be 
        paid to the Treasury of the United States and the 
        remaining [25] 85 percent shall be used for the same 
        purposes [as described above in this clause (D);] 
        described above in this clause; and (ii) that, to the 
        extent it provides the most effective technology 
        transfer, the licensing of subject inventions shall be 
        administered by contractor employees on location at the 
        facility.

           *       *       *       *       *       *       *


Sec. 207. Domestic and foreign protection of federally owned inventions

    (a) Each Federal agency is authorized to--
            (1) * * *
            (2) grant nonexclusive, exclusive, or partially 
        exclusive licenses under federally owned inventions, 
        royalty-free or for royalties or other consideration, 
        and on such terms and conditions, including the grant 
        to the licensee of the right of enforcement pursuant to 
        the provisions of chapter 29 [of this title] as 
        determined appropriate in the public interest;

           *       *       *       *       *       *       *


Sec. 209. Licensing federally owned inventions

    (a) * * *

           *       *       *       *       *       *       *

    (d) Terms and Conditions.--Any licenses granted under 
section 207(a)(2) shall contain such terms and conditions as 
the granting agency considers appropriate, and shall include 
provisions--
            (1) retaining a [nontransferrable] nontransferable, 
        irrevocable, paid-up license for any Federal agency to 
        practice the invention or have the invention practiced 
        throughout the world by or on behalf of the Government 
        of the United States;

           *       *       *       *       *       *       *


Sec. 210. Precedence of chapter

    (a) * * *

           *       *       *       *       *       *       *

    (c) Nothing in this chapter is intended to limit the 
authority of agencies to agree to the disposition of rights in 
inventions made in the performance of work under funding 
agreements with persons other than nonprofit organizations or 
small business firms in accordance with the Statement of 
Government Patent Policy issued on February 18, 1983, agency 
regulations, or other applicable regulations or to otherwise 
limit the authority of agencies to allow such persons to retain 
ownership of inventions except that all funding agreements, 
including those with other than small business firms and 
nonprofit organizations, shall include the requirements 
established in section 202(c)(4) and section 203 [of this 
title]. Any disposition of rights in inventions made in 
accordance with the Statement or implementing regulations, 
including any disposition occurring before enactment of this 
section, are hereby authorized.

           *       *       *       *       *       *       *


           *       *       *       *       *       *       *


           PART III--PATENTS AND PROTECTION OF PATENT RIGHTS

Chap.                                                               Sec.
      Optional Inter Partes Reexamination of Patents................311]
      Inter Partes Review............................................311
      Post-Grant Review..............................................321
     * * * * * * *

            CHAPTER 25--AMENDMENT AND CORRECTION OF PATENTS

Sec.
251. Reissue of defective patents.
     * * * * * * *
257. Supplemental examinations to consider, reconsider, or correct 
          information.

Sec. 251. Reissue of defective patents

    (a) In General.--Whenever any patent is, through error 
[without any deceptive intention], deemed wholly or partly 
inoperative or invalid, by reason of a defective specification 
or drawing, or by reason of the patentee claiming more or less 
than he had a right to claim in the patent, the Director shall, 
on the surrender of such patent and the payment of the fee 
required by law, reissue the patent for the invention disclosed 
in the original patent, and in accordance with a new and 
amended application, for the unexpired part of the term of the 
original patent. No new matter shall be introduced into the 
application for reissue.
    (b) Multiple Reissued Patents.--The Director may issue 
several reissued patents for distinct and separate parts of the 
thing patented, upon demand of the applicant, and upon payment 
of the required fee for a reissue for each of such reissued 
patents.
    (c) Applicability of This Title.--The provisions of this 
title relating to applications for patent shall be applicable 
to applications for reissue of a patent, except that 
application for reissue may be made and sworn to by the 
assignee of the entire interest if the application does not 
seek to enlarge the scope of the claims of the original patent 
or the application for the original patent was filed by the 
assignee of the entire interest.
    (d) Reissue Patent Enlarging Scope of Claims.--No reissued 
patent shall be granted enlarging the scope of the claims of 
the original patent unless applied for within two years from 
the grant of the original patent.

           *       *       *       *       *       *       *


Sec. 253. Disclaimer

    [Whenever, without any deceptive intention,] (a) In 
General.--Whenever a claim of a patent is invalid the remaining 
claims shall not thereby be rendered invalid. A patentee, 
whether of the whole or any sectional interest therein, may, on 
payment of the fee required by law, make disclaimer of any 
complete claim, stating therein the extent of his interest in 
such patent. Such disclaimer shall be in writing, and recorded 
in the Patent and Trademark Office; and it shall thereafter be 
considered as part of the original patent to the extent of the 
interest possessed by the disclaimant and by those claiming 
under him.
    [In like manner]   (b) Additional Disclaimer or 
Dedication._In the manner set forth in subsection (a),  any 
patentee or applicant may disclaim or dedicate to the public 
the entire term, or any terminal part of the term, of the 
patent granted or to be granted.

           *       *       *       *       *       *       *


Sec. 256. Correction of named inventor

    (a) Correction.--Whenever through error a person is named 
in an issued patent as the inventor, or through error an 
inventor is not named in an issued patent [and such error arose 
without any deceptive intention on his part], the Director may, 
on application of all the parties and assignees, with proof of 
the facts and such other requirements as may be imposed, issued 
a certificate correcting such error.
    (b) Patent valid if error corrected.--The error of omitting 
inventors or naming persons who are not inventors shall not 
invalidate the patent in which such error occurred if it can be 
corrected as provided in this section. The court before which 
such matter is called in question may order correction of the 
patent on notice and hearing of all parties concerned and the 
Director shall issue a certificate accordingly.

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

    (a) Request for Supplemental Examination.--A patent owner 
may request supplemental examination of a patent in the Office 
to consider, reconsider, or correct information believed to be 
relevant to the patent, in accordance with such requirements as 
the Director may establish. Within 3 months after the date a 
request for supplemental examination meeting the requirements 
of this section is received, the Director shall conduct the 
supplemental examination and shall conclude such examination by 
issuing a certificate indicating whether the information 
presented in the request raises a substantial new question of 
patentability.
    (b) Reexamination Ordered.--If the certificate issued under 
subsection (a) indicates that a substantial new question of 
patentability is raised by 1 or more items of information in 
the request, the Director shall order reexamination of the 
patent. The reexamination shall be conducted according to 
procedures established by chapter 30, except that the patent 
owner shall not have the right to file a statement pursuant to 
section 304. During the reexamination, the Director shall 
address each substantial new question of patentability 
identified during the supplemental examination, notwithstanding 
the limitations in chapter 30 relating to patents and printed 
publication or any other provision of such chapter.
    (c) Effect.--
            (1) In general.--A patent shall not be held 
        unenforceable on the basis of conduct relating to 
        information that had not been considered, was 
        inadequately considered, or was incorrect in a prior 
        examination of the patent if the information was 
        considered, reconsidered, or corrected during a 
        supplemental examination of the patent. The making of a 
        request under subsection (a), or the absence thereof, 
        shall not be relevant to enforceability of the patent 
        under section 282.
            (2) Exceptions.--
                    (A) Prior allegations.--Paragraph (1) shall 
                not apply to an allegation pled with 
                particularity in a civil action, or set forth 
                with particularity in a notice received by the 
                patent owner under section 505(j)(2)(B)(iv)(II) 
                of the Federal Food, Drug, and Cosmetic Act (21 
                U.S.C. 355(j)(2)(B)(iv)(II)), before the date 
                of a supplemental examination request under 
                subsection (a) to consider, reconsider, or 
                correct information forming the basis for the 
                allegation.
                    (B) Patent enforcement actions.--In an 
                action brought under section 337(a) of the 
                Tariff Act of 1930 (19 U.S.C. 1337(a)), or 
                section 281 of this title, paragraph (1) shall 
                not apply to any defense raised in the action 
                that is based upon information that was 
                considered, reconsidered, or corrected pursuant 
                to a supplemental examination request under 
                subsection (a), unless the supplemental 
                examination, and any reexamination ordered 
                pursuant to the request, are concluded before 
                the date on which the action is brought.
                    (C) Fraud.--No supplemental examination may 
                be commenced by the Director on, and any 
                pending supplemental examination shall be 
                immediately terminated regarding, an 
                application or patent in connection with which 
                fraud on the Office was practiced or attempted. 
                If the Director determines that such a fraud on 
                the Office was practiced or attempted, the 
                Director shall also refer the matter to the 
                Attorney General for such action as the 
                Attorney General may deem appropriate.
    (d) Fees and Regulations.--
            (1) Fees.--The Director shall, by regulation, 
        establish fees for the submission of a request for 
        supplemental examination of a patent, and to consider 
        each item of information submitted in the request. If 
        reexamination is ordered under subsection (b), fees 
        established and applicable to ex parte reexamination 
        proceedings under chapter 30 shall be paid, in addition 
        to fees applicable to supplemental examination.
            (2) Regulations.--The Director shall issue 
        regulations governing the form, content, and other 
        requirements of requests for supplemental examination, 
        and establishing procedures for reviewing information 
        submitted in such requests.
    (e) Rule of Construction.--Nothing in this section shall be 
construed--
            (1) to preclude the imposition of sanctions based 
        upon criminal or antitrust laws (including section 
        1001(a) of title 18, the first section of the Clayton 
        Act, and section 5 of the Federal Trade Commission Act 
        to the extent that section relates to unfair methods of 
        competition);
            (2) to limit the authority of the Director to 
        investigate issues of possible misconduct and impose 
        sanctions for misconduct in connection with matters or 
        proceedings before the Office; or
            (3) to limit the authority of the Director to issue 
        regulations under chapter 3 relating to sanctions for 
        misconduct by representatives practicing before the 
        Office.

           *       *       *       *       *       *       *


              CHAPTER 27--GOVERNMENT INTERESTS IN PATENTS

Sec. 267. Time for taking action in Government applications

    Notwithstanding the provisions of sections 133 and 151 [of 
this title], the Director may extend the time for taking any 
action to three years, when an application has become the 
property of the United States and the head of the appropriate 
department or agency of the Government has certified to the 
Director that the invention disclosed therein is important to 
the armament or defense of the United States.

CHAPTER 28--INFRINGEMENT OF PATENTS

           *       *       *       *       *       *       *


Sec. 273. Defense to infringement based on earlier inventor

    (a) Definitions.--For purposes of this section--
            (1) the terms ``commercially used'' and 
        ``commercial use'' mean [use of a method in] use of the 
        subject matter of a patent in the United States, so 
        long as such use is in connection with an internal 
        commercial use or an actual arm's-length sale or other 
        arm's-length commercial transfer of a useful end 
        result, whether or not the subject matter at issue is 
        accessible to or otherwise known to the public, except 
        that the subject matter for which commercial marketing 
        or use is subject to a premarketing regulatory review 
        period during which the safety or efficacy of the 
        subject matter is established, including any period 
        specified in section 156(g), shall be deemed 
        ``commercially used'' and in ``commercial use'' during 
        such regulatory review period; and
            (2) in the case of activities performed by a 
        nonprofit research laboratory, or nonprofit entity such 
        as a university, research center, or hospital, a use 
        for which the public is the intended beneficiary shall 
        be considered to be a use described in paragraph (1), 
        except that the use--
                    (A) * * *
                    (B) may not be asserted as a defense with 
                respect to any subsequent commercialization or 
                use outside such laboratory or nonprofit 
                entity[;].
            [(3) the term ``method'' means a method of doing or 
        conducting business; and
            [(4) the ``effective filing date'' of a patent is 
        the earlier of the actual filing date of the 
        application for the patent or the filing date of any 
        earlier United States, foreign, or international 
        application to which the subject matter at issue is 
        entitled under section 119, 120, or 365 of this title.]
    (b) Defense to Infringement.--
            (1) In general.--It shall be a defense to an action 
        for infringement under section 271 [of this title]   
        with respect to any subject matter that would otherwise 
        infringe one or more claims [for a method]   in the 
        patent being asserted against a person, if such person 
        had, acting in good faith, actually reduced the subject 
        matter to practice [at least 1 year before the 
        effective filing date of such patent, and commercially 
        used the subject matter before the effective filing 
        date of such patent.] and commercially used the subject 
        matter at least 1 year before the effective filing date 
        of the claimed invention that is the subject matter of 
        the patent.
            (2) Exhaustion of right.--The sale or other 
        disposition of a useful end product produced by a 
        [patented method] patented process, by a person 
        entitled to assert a defense under this section with 
        respect to that useful end result shall exhaust the 
        patent owner's rights under the patent to the extent 
        such rights would have been exhausted had such sale or 
        other disposition been made by the patent owner.
            (3) Limitations and qualifications of defense.--The 
        defense to infringement under this section is subject 
        to the following:
                    [(A) Patent.--A person may not assert the 
                defense under this section unless the invention 
                for which the defense is asserted is for a 
                method.
                    [(B) Derivation.--A person may not assert 
                the defense under this section if the subject 
                matter on which the defense is based was 
                derived from the patentee or persons in privity 
                with the patentee.]
                    (A) Derivation and prior disclosure to the 
                public.--A person may not assert the defense 
                under this section if--
                            (i) the subject matter on which the 
                        defense is based was derived from the 
                        patentee or persons in privity with the 
                        patentee; or
                            (ii) the claimed invention that is 
                        the subject of the defense was 
                        disclosed to the public in a manner 
                        that qualified for the exception from 
                        the prior art under section 102(b) and 
                        the commercialization date relied upon 
                        under paragraph (1) of this subsection 
                        for establishing entitlement to the 
                        defense is less than 1 year before the 
                        date of such disclosure to the public;
                    [(C)] (B) Not a general license.--The 
                defense asserted by a person under this section 
                is not a general license under all claims of 
                the patent at issue, but extends only to the 
                specific subject matter claimed in the patent 
                with respect to which the person can assert a 
                defense under this chapter, except that the 
                defense shall also extend to variations in the 
                quantity or volume of use of the claimed 
                subject matter, and to improvements in the 
                claimed subject matter that do not infringe 
                additional specifically claimed subject matter 
                of the patent.
                    (C) Funding.--
                            (i) Defense not available in 
                        certain cases.--A person may not assert 
                        the defense under this section if the 
                        subject matter of the patent on which 
                        the defense is based was developed 
                        pursuant to a funding agreement under 
                        chapter 18 or by a nonprofit 
                        institution of higher education, or a 
                        technology transfer organization 
                        affiliated with such an institution, 
                        that did not receive funding from a 
                        private business enterprise in support 
                        of that development.
                            (ii) Definitions.--In this 
                        subparagraph--
                                    (I) the term ``institution 
                                of higher education'' has the 
                                meaning given that term in 
                                section 101(a) of the Higher 
                                Education Act of 1965 (20 
                                U.S.C. 1001(a)); and
                                    (II) the term ``technology 
                                transfer organization'' means 
                                an organization the primary 
                                purpose of which is to 
                                facilitate the 
                                commercialization of 
                                technologies developed by one 
                                or more institutions of higher 
                                education.

           *       *       *       *       *       *       *

            [(6) Personal defense.--The defense under this 
        section may be asserted only by the person who 
        performed the acts necessary to establish the defense 
        and, except for any transfer to the patent owner, the 
        right to assert the defense shall not be licensed or 
        assigned or transferred to another person except as an 
        ancillary and subordinate part of a good faith 
        assignment or transfer for other reasons of the entire 
        enterprise or line of business to which the defense 
        relates.]
            (6) Personal defense.--
                    (A) In general.--The defense under this 
                section may be asserted only by the person who 
                performed or caused the performance of the acts 
                necessary to establish the defense, as well as 
                any other entity that controls, is controlled 
                by, or is under common control with such 
                person, and, except for any transfer to the 
                patent owner, the right to assert the defense 
                shall not be licensed or assigned or 
                transferred to another person except as an 
                ancillary and subordinate part of a good faith 
                assignment or transfer for other reasons of the 
                entire enterprise or line of business to which 
                the defense relates.
                    (B) Exception.--Notwithstanding 
                subparagraph (A), any person may, on the 
                person's own behalf, assert a defense based on 
                the exhaustion of rights provided under 
                paragraph (2), including any necessary elements 
                thereof.

           *       *       *       *       *       *       *

            (8) Unsuccessful assertion of defense.--If the 
        defense under this section is pleaded by a person who 
        is found to infringe the patent and who subsequently 
        fails to demonstrate a reasonable basis for asserting 
        the defense, the court shall find the case exceptional 
        for the purpose of awarding attorney fees under section 
        285 [of this title].
            (9) Invalidity.--A patent shall not be deemed to be 
        invalid under section 102 or 103 [of this title] solely 
        because a defense is raised or established under this 
        section.

   CHAPTER 29--REMEDIES FOR INFRINGEMENT OF PATENT, AND OTHER ACTIONS

Sec.
281. Remedy for infringement of patent.
     * * * * * * *
[291. Interfering patents.]
291. Derived patents.
     * * * * * * *
298. Advice of counsel.
299. Joinder of parties.

           *       *       *       *       *       *       *


Sec. 282. Presumption of validity; defenses

    (a) In General.--A patent shall be presumed valid. Each 
claim of a patent (whether in independent, dependent, or 
multiple dependent form) shall be presumed valid independently 
of the validity of other claims; dependent or multiple 
dependent claims shall be presumed valid even though dependent 
upon an invalid claim. [Notwithstanding the preceding sentence, 
if a claim to a composition of matter is held invalid and that 
claim was the basis of a determination of nonobviousness under 
section 103(b)(1), the process shall no longer be considered 
nonobvious solely on the basis of section 103(b)(1).] The 
burden of establishing invalidity of a patent or any claim 
thereof shall rest on the party asserting such invalidity.
    (b) Defenses.--The following shall be defenses in any 
action involving the validity or infringement of a patent and 
shall be pleaded:
            (1) Noninfringement, absence of liability for 
        infringement or [unenforceability,] unenforceability.
            (2) Invalidity of the patent or any claim in suit 
        on any ground specified in part II [of this title] as a 
        condition for [patentability,] patentability.
            [(3) Invalidity of the patent or any claim in suit 
        for failure to comply with any requirement of sections 
        112 or 251 of this title,]
            (3) Invalidity of the patent or any claim in suit 
        for failure to comply with--
                    (A) any requirement of section 112, except 
                that the failure to disclose the best mode 
                shall not be a basis on which any claim of a 
                patent may be canceled or held invalid or 
                otherwise unenforceable; or
                    (B) any requirement of section 251.
            (4) Any other fact or act made a defense by this 
        title.
    [In actions involving the validity or infringement of a 
patent]   (c) Notice of Actions; Actions During Extension of 
Patent Term._In an action involving the validity or 
infringement of patent, the party asserting infringement shall 
identify, in the pleadings or otherwise in writing to the 
adverse party, all of its real parties in interest, and  the 
party asserting invalidity or noninfringement shall give notice 
in the pleadings or otherwise in writing to the adverse party 
at least thirty days before the trial, of the country, number, 
date, and name of the patentee of any patent, the title, date, 
and page numbers of any publication to be relied upon as 
anticipation of the patent in suit or, except in actions in the 
United States [Claims Court] Court of Federal Claims, as 
showing the state of the art, and the name and address of any 
person who may be relied upon as the prior inventor or as 
having prior knowledge of or as having previously used or 
offered for sale the invention of the patent in suit. In the 
absence of such notice proof of the said matters may not be 
made at the trial except on such terms as the court requires. 
Invalidity of the extension of a patent term or any portion 
thereof under section 154(b) or 156 [of this title] because of 
the material failure--
            (1) * * *

           *       *       *       *       *       *       *


Sec. 284. Damages

    Upon finding for the claimant the court shall award the 
claimant damages adequate to compensate for the infringement, 
but in no event less than a reasonable royalty for the use made 
of the invention by the infringer, together with interest and 
costs as fixed by the court.
    When the damages are not found by a jury, the court shall 
assess them. In either event the court may increase the damages 
up to three times the amount found or assessed. Increased 
damages under this paragraph shall not apply to provisional 
rights under section 154(d) [of this title].
    The court may receive expert testimony as an aid to the 
determination of damages or of what royalty would be reasonable 
under the circumstances.

           *       *       *       *       *       *       *


Sec. 287. Limitation on damages and other remedies; marking and notice

    (a) Patentees, and persons making, offering for sale, or 
selling within the United States any patented article for or 
under them, or importing any patented article into the United 
States, may give notice to the public that the same is 
patented, either by fixing thereon the word ``patent'' or the 
abbreviation ``pat.'', together with the number of the patent, 
[or when,] or by fixing thereon the word ``patent'' or the 
abbreviation ``pat.'' together with an address of a posting on 
the Internet, accessible to the public without charge for 
accessing the address, that associates the patented article 
with the number of the patent, or when, from the character of 
the article, this can not be done, by fixing to it, or to the 
package wherein one or more of them is contained, a label 
containing a like notice. In the event of failure so to mark, 
no damages shall be recovered by the patentee in any action for 
infringement, except on proof that the infringer was notified 
of the infringement and continued to infringe thereafter, in 
which event damages may be recovered only for infringement 
occurring after such notice. Filing of an action for 
infringement shall constitute such notice.
    (b)(1) * * *
    (2) No remedies for infringement under section 271(g) [of 
this title] shall be available with respect to any product in 
the possession of, or in transit to, the person subject to 
liability under such section before that person had notice of 
infringement with respect to that product. The person subject 
to liability shall bear the burden of proving any such 
possession or transit.

           *       *       *       *       *       *       *

    (c)(1) With respect to a medical practitioner's performance 
of a medical activity that constitutes an infringement under 
section 271 (a) or (b) [of this title], the provisions of 
sections 281, 283, 284, and 285 [of this title] shall not apply 
against the medical practitioner or against a related health 
care entity with respect to such medical activity.
    (2) For the purposes of this subsection:
            (A) * * *

           *       *       *       *       *       *       *

            (G) the term ``State'' shall mean   [any state] any 
        State or territory of the United States, the District 
        of Columbia, and the Commonwealth of Puerto Rico.

           *       *       *       *       *       *       *

    (4) This subsection shall not apply to any patent issued 
based on an application [the earliest effective filing date of 
which is prior to] which has an effective filing date before 
September 30, 1996.

Sec. 288. Action for infringement of a patent containing an invalid 
                    claim

    Whenever[, without deceptive intention,] a claim of a 
patent is invalid, an action may be maintained for the 
infringement of a claim of the patent which may be valid. The 
patentee shall recover no costs unless a disclaimer of the 
invalid claim has been entered at the Patent and Trademark 
Office before the commencement of the suit.

           *       *       *       *       *       *       *


[Sec. 291. Interfering patents

    [The owner of an interfering patent may have relief against 
the owner of another by civil action, and the court may adjudge 
the question of the validity of any of the interfering patents, 
in whole or in part. The provisions of the second paragraph of 
section 146 of this title shall apply to actions brought under 
this section.]

Sec. 291. Derived Patents

    (a) In General.--The owner of a patent may have relief by 
civil action against the owner of another patent that claims 
the same invention and has an earlier effective filing date, if 
the invention claimed in such other patent was derived from the 
inventor of the invention claimed in the patent owned by the 
person seeking relief under this section.
    (b) Filing Limitation.--An action under this section may be 
filed only before the end of the 1-year period beginning on the 
date of the issuance of the first patent containing a claim to 
the allegedly derived invention and naming an individual 
alleged to have derived such invention as the inventor or joint 
inventor.

Sec. 292. False marking

    (a) Whoever, without the consent of the patentee, marks 
upon, or affixes to, or uses in advertising in connection with 
anything made, used, offered for sale, or sold by such person 
within the United States, or imported by the person into the 
United States, the name or any imitation of the name of the 
patentee, the patent number, or the words ``patent,'' 
``patentee,'' or the like, with the intent of counterfeiting or 
imitating the mark of the patentee, or of deceiving the public 
and inducing them to believe that the thing was made, offered 
for sale, sold, or imported into the United States by or with 
the consent of the patentee; or
    Whoever marks upon, or affixes to, or uses in advertising 
in connection with any unpatented article, the word ``patent'' 
or any word or number importing that the same is patented for 
the purpose of deceiving the public; or
    Whoever marks upon, or affixes to, or uses in advertising 
in connection with any article, the words ``patent applied 
for,'' ``patent pending,'' or any word importing that an 
application for patent has been made, when no application for 
patent has been made, or if made, is not pending, for the 
purpose of deceiving the public--
    Shall be fined not more than $500 for every such offense. 
Only the United States may sue for the penalty authorized by 
this subsection.
    [(b) Any person may sue for the penalty, in which event 
one-half shall go to the person suing and the other to the use 
of the United States.]
    (b) A person who has suffered a competitive injury as a 
result of a violation of this section may file a civil action 
in a district court of the United States for recovery of 
damages adequate to compensate for the injury.
    (c) Whoever engages in an activity under subsection (a) for 
which liability would otherwise be imposed shall not be liable 
for such activity--
            (1) that is engaged in during the 3-year period 
        beginning on the date on which the patent at issue 
        expires; or
            (2) that is engaged in after the end of that 3-year 
        period if the word ``expired'' is placed before the 
        word ``patent'', ``patented'', the abbreviation 
        ``pat'', or the patent number, either on the article or 
        through a posting on the Internet, as provided in 
        section 287(a).

Sec. 293. Nonresident patentee; service and notice

    Every patentee not residing in the United States may file 
in the Patent and Trademark Office a written designation 
stating the name and address of a person residing within the 
United States on whom may be served process or notice of 
proceedings affecting the patent or rights thereunder. If the 
person designated cannot be found at the address given in the 
last designation, or if no person has been designated, the 
[United States District Court for the District of Columbia] 
United States District Court for the Eastern District of 
Virginia shall have jurisdiction and summons shall be served by 
publication or otherwise as the court directs. The court shall 
have the same jurisdiction to take any action respecting the 
patent or rights thereunder that it would have if the patentee 
were personally within the jurisdiction of the court.

Sec. 294. Voluntary arbitration

    (a) * * *
    (b) Arbitration of such disputes, awards by arbitrators and 
confirmation of awards shall be governed by title 9, to the 
extent such title is not inconsistent with this section. In any 
such arbitration proceeding, the defenses provided for under 
section 282 [of this title] shall be considered by the 
arbitrator if raised by any party to the proceeding.

           *       *       *       *       *       *       *


Sec. 298. Advice of counsel

    The failure of an infringer to obtain the advice of counsel 
with respect to any allegedly infringed patent, or the failure 
of the infringer to present such advice to the court or jury, 
may not be used to prove that the accused infringer willfully 
infringed the patent or that the infringer intended to induce 
infringement of the patent.

Sec. 299. Joinder of parties

    (a) Joinder of accused infringers.--In any civil action 
arising under any Act of Congress relating to patents, other 
than an action or trial in which an act of infringement under 
section 271(e)(2) has been pled, parties that are accused 
infringers may be joined in one action as defendants or 
counterclaim defendants only if--
            (1) any right to relief is asserted against the 
        parties jointly, severally, or in the alternative with 
        respect to or arising out of the same transaction, 
        occurrence, or series of transactions or occurrences 
        relating to the making, using, importing into the 
        United States, offering for sale, or selling of the 
        same accused product or process; and
            (2) questions of fact common to all defendants or 
        counterclaim defendants will arise in the action.
    (b) Allegations insufficient for joinder.--For purposes of 
this subsection, accused infringers may not be joined in one 
action or trial as defendants or counterclaim defendants based 
solely on allegations that they each have infringed the patent 
or patents in suit.

CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND EX PARTE REEXAMINATION OF 
                                PATENTS

Sec.
[301. Citation of prior art.]
301. Citation of prior art and written statements.
     * * * * * * *

[Sec. 301. Citation of prior art

    [Any person at any time may cite to the Office in writing 
prior art consisting of patents or printed publications which 
that person believes to have a bearing on the patentability of 
any claim of a particular patent. If the person explains in 
writing the pertinency and manner of applying such prior art to 
at least one claim of the patent, the citation of such prior 
art and the explanation thereof will become a part of the 
official file of the patent. At the written request of the 
person citing the prior art, his or her identity will be 
excluded from the patent file and kept confidential.]

Sec. 301. Citation of prior art and written statements

    (a) In General.--Any person at any time may cite to the 
Office in writing--
            (1) prior art consisting of patents or printed 
        publications which that person believes to have a 
        bearing on the patentability of any claim of a 
        particular patent; or
            (2) statements of the patent owner filed in a 
        proceeding before a Federal court or the Office in 
        which the patent owner took a position on the scope of 
        any claim of a particular patent.
    (b) Official File.--If the person citing prior art or 
written statements pursuant to subsection (a) explains in 
writing the pertinence and manner of applying the prior art or 
written statements to at least 1 claim of the patent, the 
citation of the prior art or written statements and the 
explanation thereof shall become a part of the official file of 
the patent.
    (c) Additional Information.--A party that submits a written 
statement pursuant to subsection (a)(2) shall include any other 
documents, pleadings, or evidence from the proceeding in which 
the statement was filed that addresses the written statement.
    (d) Limitations.--A written statement submitted pursuant to 
subsection (a)(2), and additional information submitted 
pursuant to subsection (c), shall not be considered by the 
Office for any purpose other than to determine the proper 
meaning of a patent claim in a proceeding that is ordered or 
instituted pursuant to section 304, 314, or 324. If any such 
written statement or additional information is subject to an 
applicable protective order, such statement or information 
shall be redacted to exclude information that is subject to 
that order.
    (e) Confidentiality.--Upon the written request of the 
person citing prior art or written statements pursuant to 
subsection (a), that person's identity shall be excluded from 
the patent file and kept confidential.

Sec. 302. Request for reexamination

    Any person at any time may file a request for reexamination 
by the Office of any claim of a patent on the basis of any 
prior art cited under the provisions of section 301 [of this 
title]. The request must be in writing and must be accompanied 
by payment of a reexamination fee established by the Director 
pursuant to the provisions of section 41 [of this title]. The 
request must set forth the pertinency and manner of applying 
cited prior art to every claim for which reexamination is 
requested. Unless the requesting person is the owner of the 
patent, the Director promptly will send a copy of the request 
to the owner of record of the patent.

Sec. 303. Determination of issue by Director

    (a) Within three months following the filing of a request 
for reexamination under the provisions of section 302 [of this 
title], the Director will determine whether a substantial new 
question of patentability affecting any claim of the patent 
concerned is raised by the request, with or without 
consideration of other patents or printed publications. On his 
own initiative, and any time, the Director may determine 
whether a substantial new question of patentability is raised 
by patents and publications discovered by him or cited under 
the provisions of [section 301 of this title] section 301 or 
302. The existence of a substantial new question of 
patentability is not precluded by the fact that a patent or 
printed publication was previously cited by or to the Office or 
considered by the Office.

           *       *       *       *       *       *       *

    (c) A determination by the Director pursuant to subsection 
(a) of this section that no substantial new question of 
patentability has been raised will be final and nonappealable. 
Upon such a determination, the Director may refund a portion of 
the reexamination fee required under section 302 [of this 
title].

Sec. 304. Reexamination order by Director

    If, in a determination made under the provisions of 
subsection 303(a) [of this title], the Director finds that a 
substantial new question of patentability affecting any claim 
of a patent is raised, the determination will include an order 
for reexamination of the patent for resolution of the question. 
The patent owner will be given a reasonable period, not less 
than two months from the date a copy of the determination is 
given or mailed to him, within which he may file a statement on 
such question, including any amendment to his patent and new 
claim or claims he may wish to propose, for consideration in 
the reexamination. If the patent owner files such a statement, 
he promptly will serve a copy of it on the person who has 
requested reexamination under the provisions of section 302 [of 
this title]. Within a period of two months from the date of 
service, that person may file and have considered in the 
reexamination a reply to any statement filed by the patent 
owner. That person promptly will serve on the patent owner a 
copy of any reply filed.

Sec. 305. Conduct of reexamination proceedings

    After the times for filing the statement and reply provided 
for by section 304 [of this title]   have expired, 
reexamination will be conducted according to the procedures 
established for initial examination under the provisions of 
sections 132 and 133 [of this title]. In any reexamination 
proceeding under this chapter, the patent owner will be 
permitted to propose any amendment to his patent and a new 
claim or claims thereto, in order to distinguish the invention 
as claimed from the prior art cited under the provisions of 
section 301 [of this title], or in response to a decision 
adverse to the patentability of a claim of a patent. No 
proposed amended or new claim enlarging the scope of a claim of 
the patent will be permitted in a reexamination proceeding 
under this chapter. All reexamination proceedings under this 
section, including any appeal to the [Board of Patent Appeals 
and Interferences] Patent Trial and Appeal Board, will be 
conducted with special dispatch within the Office.

Sec. 306. Appeal

    The patent owner involved in a reexamination proceeding 
under this chapter may appeal under the provisions of section 
134 [of this title], and may seek court review under the 
provisions of sections 141 to [145 of this title] 144, with 
respect to any decision adverse to the patentability of any 
original or proposed amended or new claim of the patent.

Sec. 307. Certificate of patentability, unpatentability, and claim 
                    cancellation

    (a) * * *
    (b) Any proposed amended or new claim determined to be 
patentable and incorporated into a patent following a 
reexamination proceeding will have the same effect as that 
specified in section 252 [of this title] for reissued patents 
on the right of any person who made, purchased, or used within 
the United States, or imported into the United States, anything 
patented by such proposed amended or new claim, or who made 
substantial preparation for the same, prior to issuance of a 
certificate under the provisions of subsection (a) of this 
section.

      [CHAPTER 31--OPTIONAL INTER PARTES REEXAMINATION PROCEDURES

[Sec. 311. Request for inter partes reexamination

    [(a) In General.--Any third-party requester at any time may 
file a request for inter partes reexamination by the Office of 
a patent on the basis of any prior art cited under the 
provisions of section 301.
    [(b) Requirements.--The request shall--
            [(1) be in writing, include the identity of the 
        real party in interest, and be accompanied by payment 
        of an inter partes reexamination fee established by the 
        Director under section 41; and
            [(2) set forth the pertinency and manner of 
        applying cited prior art to every claim for which 
        reexamination is requested.
            [(c) Copy.--The Director promptly shall send a copy 
        of the request to the owner of record of the patent.

[Sec. 312. Determination of issue by Director

    [(a) Reexamination.--Not later than 3 months after the 
filing of a request for inter partes reexamination under 
section 311, the Director shall determine whether a substantial 
new question of patentability affecting any claim of the patent 
concerned is raised by the request, with or without 
consideration of other patents or printed publications. The 
existence of a substantial new question of patentability is not 
precluded by the fact that a patent or printed publication was 
previously cited by or to the Office or considered by the 
Office.
    [(b) Record.--A record of the Director's determination 
under subsection (a) shall be placed in the official file of 
the patent, and a copy shall be promptly given or mailed to the 
owner of record of the patent and to the third-party requester.
    [(c) Final Decision.--A determination by the Director under 
subsection (a) shall be final and non-appealable. Upon a 
determination that no substantial new question of patentability 
has been raised, the Director may refund a portion of the inter 
partes reexamination fee required under section 311.

[Sec. 313. Inter partes reexamination order by Director

    [If, in a determination made under section 312(a), the 
Director finds that a substantial new question of patentability 
affecting a claim of a patent is raised, the determination 
shall include an order for inter partes reexamination of the 
patent for resolution of the question. The order may be 
accompanied by the initial action of the Patent and Trademark 
Office on the merits of the inter partes reexamination 
conducted in accordance with section 314.

[Sec. 314. Conduct of inter partes reexamination proceedings

    [(a) In General.--Except as otherwise provided in this 
section, reexamination shall be conducted according to the 
procedures established for initial examination under the 
provisions of sections 132 and 133. In any inter partes 
reexamination proceeding under this chapter, the patent owner 
shall be permitted to propose any amendment to the patent and a 
new claim or claims, except that no proposed amended or new 
claim enlarging the scope of the claims of the patent shall be 
permitted.
    [(b) Response.--(1) With the exception of the inter partes 
reexamination request, any document filed by either the patent 
owner or the third-party requester shall be served on the other 
party. In addition, the Office shall send to the third-party 
requester a copy of any communication sent by the Office to the 
patent owner concerning the patent subject to the inter partes 
reexamination proceeding.
    [(2) Each time that the patent owner files a response to an 
action on the merits from the Patent and Trademark Office, the 
third-party requester shall have one opportunity to file 
written comments addressing issues raised by the action of the 
Office or the patent owner's response thereto, if those written 
comments are received by the Office within 30 days after the 
date of service of the patent owner's response.
    [(c) Special Dispatch.--Unless otherwise provided by the 
Director for good cause, all inter partes reexamination 
proceedings under this section, including any appeal to the 
Board of Patent Appeals and Interferences, shall be conducted 
with special dispatch within the Office.

[Sec. 315. Appeal

    [(a) Patent Owner.--The patent owner involved in an inter 
partes reexamination proceeding under this chapter--
            [(1) may appeal under the provisions of section 134 
        and may appeal under the provisions of sections 141 
        through 144, with respect to any decision adverse to 
        the patentability of any original or proposed amended 
        or new claim of the patent; and
            [(2) may be a party to any appeal taken by a third-
        party requester under subsection (b).
    [(b) Third-Party Requester.--A third-party requester--
            [(1) may appeal under the provisions of section 
        134, and may appeal under the provisions of sections 
        141 through 144, with respect to any final decision 
        favorable to the patentability of any original or 
        proposed amended or new claim of the patent; and
            [(2) may, subject to subsection (c), be a party to 
        any appeal taken by the patent owner under the 
        provisions of section 134 or sections 141 through 144.
    [(c) Civil Action.--A third-party requester whose request 
for an inter partes reexamination results in an order under 
section 313 is estopped from asserting at a later time, in any 
civil action arising in whole or in part under section 1338 of 
title 28, the invalidity of any claim finally determined to be 
valid and patentable on any ground which the third-party 
requester raised or could have raised during the inter partes 
reexamination proceedings. This subsection does not prevent the 
assertion of invalidity based on newly discovered prior art 
unavailable to the third-party requester and the Patent and 
Trademark Office at the time of the inter partes reexamination 
proceedings.

[Sec. 316. Certificate of patentability, unpatentability, and claim 
                    cancellation

    [(a) In General.--In an inter partes reexamination 
proceeding under this chapter, when the time for appeal has 
expired or any appeal proceeding has terminated, the Director 
shall issue and publish a certificate canceling any claim of 
the patent finally determined to be unpatentable, confirming 
any claim of the patent determined to be patentable, and 
incorporating in the patent any proposed amended or new claim 
determined to be patentable.
    [(b) Amended or New Claim.--Any proposed amended or new 
claim determined to be patentable and incorporated into a 
patent following an inter partes reexamination proceeding shall 
have the same effect as that specified in section 252 of this 
title for reissued patents on the right of any person who made, 
purchased, or used within the United States, or imported into 
the United States, anything patented by such proposed amended 
or new claim, or who made substantial preparation therefor, 
prior to issuance of a certificate under the provisions of 
subsection (a) of this section.

[Sec. 317. Inter partes reexamination prohibited

    [(a) Order for Reexamination.--Notwithstanding any 
provision of this chapter, once an order for inter partes 
reexamination of a patent has been issued under section 313, 
neither the third-party requester nor its privies, may file a 
subsequent request for inter partes reexamination of the patent 
until an inter partes reexamination certificate is issued and 
published under section 316, unless authorized by the Director.
    [(b) Final Decision.--Once a final decision has been 
entered against a party in a civil action arising in whole or 
in part under section 1338 of title 28, that the party has not 
sustained its burden of proving the invalidity of any patent 
claim in suit or if a final decision in an inter partes 
reexamination proceeding instituted by a third-party requester 
is favorable to the patentability of any original or proposed 
amended or new claim of the patent, then neither that party nor 
its privies may thereafter request an inter partes 
reexamination of any such patent claim on the basis of issues 
which that party or its privies raised or could have raised in 
such civil action or inter partes reexamination proceeding, and 
an inter partes reexamination requested by that party or its 
privies on the basis of such issues may not thereafter be 
maintained by the Office, notwithstanding any other provision 
of this chapter. This subsection does not prevent the assertion 
of invalidity based on newly discovered prior art unavailable 
to the third-party requester and the Patent and Trademark 
Office at the time of the inter partes reexamination 
proceedings.

[Sec. 318. Stay of litigation

    [Once an order for inter partes reexamination of a patent 
has been issued under section 313, the patent owner may obtain 
a stay of any pending litigation which involves an issue of 
patentability of any claims of the patent which are the subject 
of the inter partes reexamination order, unless the court 
before which such litigation is pending determines that a stay 
would not serve the interests of justice.]

                    CHAPTER 31--INTER PARTES REVIEW

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

Sec. 311. Inter partes review

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

Sec. 312. Petitions

    (a) Requirements of Petition.--A petition filed under 
section 311 may be considered only if--
            (1) the petition is accompanied by payment of the 
        fee established by the Director under section 311;
            (2) the petition identifies all real parties in 
        interest;
            (3) the petition identifies, in writing and with 
        particularity, each claim challenged, the grounds on 
        which the challenge to each claim is based, and the 
        evidence that supports the grounds for the challenge to 
        each claim, including--
                    (A) copies of patents and printed 
                publications that the petitioner relies upon in 
                support of the petition; and
                    (B) affidavits or declarations of 
                supporting evidence and opinions, if the 
                petitioner relies on expert opinions;
            (4) the petition provides such other information as 
        the Director may require by regulation; and
            (5) the petitioner provides copies of any of the 
        documents required under paragraphs (2), (3), and (4) 
        to the patent owner or, if applicable, the designated 
        representative of the patent owner.
    (b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 311, the Director shall 
make the petition available to the public.

Sec. 313. Preliminary response to petition

    If an inter partes review petition is filed under section 
311, the patent owner shall have the right to file a 
preliminary response to the petition, within a time period set 
by the Director, that sets forth reasons why no inter partes 
review should be instituted based upon the failure of the 
petition to meet any requirement of this chapter.

Sec. 314. Institution of inter partes review

    (a) Threshold.--The Director may not authorize an inter 
partes review to commence unless the Director determines that 
the information presented in the petition filed under section 
311 and any response filed under section 313 shows that there 
is a reasonable likelihood that the petitioner would prevail 
with respect to at least 1 of the claims challenged in the 
petition.
    (b) Timing.--The Director shall determine whether to 
institute an inter partes review under this chapter pursuant to 
a petition filed under section 311 within 3 months after--
            (1) receiving a preliminary response to the 
        petition under section 313; or
            (2) if no such preliminary response is filed, the 
        last date on which such response may be filed.
    (c) Notice.--The Director shall notify the petitioner and 
patent owner, in writing, of the Director's determination under 
subsection (a), and shall make such notice available to the 
public as soon as is practicable. Such notice shall include the 
date on which the review shall commence.
    (d) No Appeal.--The determination by the Director whether 
to institute an inter partes review under this section shall be 
final and nonappealable.

Sec. 315. Relation to other proceedings or actions

    (a) Infringer's Civil Action.--
            (1) Inter partes review barred by civil action.--An 
        inter partes review may not be instituted if, before 
        the date on which the petition for such a review is 
        filed, the petitioner, real party in interest, or privy 
        of the petitioner filed a civil action challenging the 
        validity of a claim of the patent.
            (2) Stay of civil action.--If the petitioner, real 
        party in interest, or privy of the petitioner files a 
        civil action challenging the validity of a claim of the 
        patent on or after the date on which the petitioner 
        files a petition for inter partes review of the patent, 
        that civil action shall be automatically stayed until 
        either--
                    (A) the patent owner moves the court to 
                lift the stay;
                    (B) the patent owner files a civil action 
                or counterclaim alleging that the petitioner, 
                real party in interest, or privy of the 
                petitioner has infringed the patent; or
                    (C) the petitioner, real party in interest, 
                or privy of the petitioner moves the court to 
                dismiss the civil action.
            (3) Treatment of counterclaim.--A counterclaim 
        challenging the validity of a claim of a patent does 
        not constitute a civil action challenging the validity 
        of a claim of a patent for purposes of this subsection.
    (b) Patent Owner's Action.--An inter partes review may not 
be instituted if the petition requesting the proceeding is 
filed more than 1 year after the date on which the petitioner, 
real party in interest, or privy of the petitioner is served 
with a complaint alleging infringement of the patent. The time 
limitation set forth in the preceding sentence shall not apply 
to a request for joinder under subsection (c).
    (c) Joinder.--If the Director institutes an inter partes 
review, the Director, in his or her discretion, may join as a 
party to that inter partes review any person who properly files 
a petition under section 311 that the Director, after receiving 
a preliminary response under section 313 or the expiration of 
the time for filing such a response, determines warrants the 
institution of an inter partes review under section 314.
    (d) Multiple Proceedings.--Notwithstanding sections 135(a), 
251, and 252, and chapter 30, during the pendency of an inter 
partes review, if another proceeding or matter involving the 
patent is before the Office, the Director may determine the 
manner in which the inter partes review or other proceeding or 
matter may proceed, including providing for stay, transfer, 
consolidation, or termination of any such matter or proceeding.
    (e) Estoppel.--
            (1) Proceedings before the office.--The petitioner 
        in an inter partes review of a claim in a patent under 
        this chapter that results in a final written decision 
        under section 318(a), or the real party in interest or 
        privy of the petitioner, may not request or maintain a 
        proceeding before the Office with respect to that claim 
        on any ground that the petitioner raised or reasonably 
        could have raised during that inter partes review.
            (2) Civil actions and other proceedings.--The 
        petitioner in an inter partes review of a claim in a 
        patent under this chapter that results in a final 
        written decision under section 318(a), or the real 
        party in interest or privy of the petitioner, may not 
        assert either in a civil action arising in whole or in 
        part under section 1338 of title 28 or in a proceeding 
        before the International Trade Commission under section 
        337 of the Tariff Act of 1930 that the claim is invalid 
        on any ground that the petitioner raised or reasonably 
        could have raised during that inter partes review.

Sec. 316. Conduct of inter partes review

    (a) Regulations.--The Director shall prescribe 
regulations--
            (1) providing that the file of any proceeding under 
        this chapter shall be made available to the public, 
        except that any petition or document filed with the 
        intent that it be sealed shall, if accompanied by a 
        motion to seal, be treated as sealed pending the 
        outcome of the ruling on the motion;
            (2) setting forth the standards for the showing of 
        sufficient grounds to institute a review under section 
        314(a);
            (3) establishing procedures for the submission of 
        supplemental information after the petition is filed;
            (4) establishing and governing inter partes review 
        under this chapter and the relationship of such review 
        to other proceedings under this title;
            (5) setting forth standards and procedures for 
        discovery of relevant evidence, including that such 
        discovery shall be limited to--
                    (A) the deposition of witnesses submitting 
                affidavits or declarations; and
                    (B) what is otherwise necessary in the 
                interest of justice;
            (6) prescribing sanctions for abuse of discovery, 
        abuse of process, or any other improper use of the 
        proceeding, such as to harass or to cause unnecessary 
        delay or an unnecessary increase in the cost of the 
        proceeding;
            (7) providing for protective orders governing the 
        exchange and submission of confidential information;
            (8) providing for the filing by the patent owner of 
        a response to the petition under section 313 after an 
        inter partes review has been instituted, and requiring 
        that the patent owner file with such response, through 
        affidavits or declarations, any additional factual 
        evidence and expert opinions on which the patent owner 
        relies in support of the response;
            (9) setting forth standards and procedures for 
        allowing the patent owner to move to amend the patent 
        under subsection (d) to cancel a challenged claim or 
        propose a reasonable number of substitute claims, and 
        ensuring that any information submitted by the patent 
        owner in support of any amendment entered under 
        subsection (d) is made available to the public as part 
        of the prosecution history of the patent;
            (10) providing either party with the right to an 
        oral hearing as part of the proceeding;
            (11) requiring that the final determination in an 
        inter partes review be issued not later than 1 year 
        after the date on which the Director notices the 
        institution of a review under this chapter, except that 
        the Director may, for good cause shown, extend the 1-
        year period by not more than 6 months, and may adjust 
        the time periods in this paragraph in the case of 
        joinder under section 315(c);
            (12) setting a time period for requesting joinder 
        under section 315(c); and
            (13) providing the petitioner with at least 1 
        opportunity to file written comments within a time 
        period established by the Director.
    (b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such 
regulation on the economy, the integrity of the patent system, 
the efficient administration of the Office, and the ability of 
the Office to timely complete proceedings instituted under this 
chapter.
    (c) Patent Trial and Appeal Board.--The Patent Trial and 
Appeal Board shall, in accordance with section 6, conduct each 
inter partes review instituted under this chapter.
    (d) Amendment of the Patent.--
            (1) In general.--During an inter partes review 
        instituted under this chapter, the patent owner may 
        file 1 motion to amend the patent in 1 or more of the 
        following ways:
                    (A) Cancel any challenged patent claim.
                    (B) For each challenged claim, propose a 
                reasonable number of substitute claims.
            (2) Additional motions.--Additional motions to 
        amend may be permitted upon the joint request of the 
        petitioner and the patent owner to materially advance 
        the settlement of a proceeding under section 317, or as 
        permitted by regulations prescribed by the Director.
            (3) Scope of claims.--An amendment under this 
        subsection may not enlarge the scope of the claims of 
        the patent or introduce new matter.
    (e) Evidentiary Standards.--In an inter partes review 
instituted under this chapter, the petitioner shall have the 
burden of proving a proposition of unpatentability by a 
preponderance of the evidence.

Sec. 317. Settlement

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

Sec. 318. Decision of the Board

    (a) Final Written Decision.--If an inter partes review is 
instituted and not dismissed under this chapter, the Patent 
Trial and Appeal Board shall issue a final written decision 
with respect to the patentability of any patent claim 
challenged by the petitioner and any new claim added under 
section 316(d).
    (b) Certificate.--If the Patent Trial and Appeal Board 
issues a final written decision under subsection (a) and the 
time for appeal has expired or any appeal has terminated, the 
Director shall issue and publish a certificate canceling any 
claim of the patent finally determined to be unpatentable, 
confirming any claim of the patent determined to be patentable, 
and incorporating in the patent by operation of the certificate 
any new or amended claim determined to be patentable.
    (c) Amended or New Claim.--Any proposed amended or new 
claim determined to be patentable and incorporated into a 
patent following an inter partes review under this chapter 
shall have the same effect as that specified in section 252 for 
reissued patents on the right of any person who made, 
purchased, or used within the United States, or imported into 
the United States, anything patented by such proposed amended 
or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under subsection (b).
    (d) Data on Length of Review.--The Office shall make 
available to the public data describing the length of time 
between the institution of, and the issuance of a final written 
decision under subsection (a) for, each inter partes review.

Sec. 319. Appeal

    A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 318(a) may appeal 
the decision pursuant to sections 141 through 144. Any party to 
the inter partes review shall have the right to be a party to 
the appeal.

                     CHAPTER 32--POST-GRANT REVIEW

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

Sec. 321. Post-grant review

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

Sec. 322. Petitions

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

Sec. 323. Preliminary response to petition

    If a post-grant review petition is filed under section 321, 
the patent owner shall have the right to file a preliminary 
response to the petition, within a time period set by the 
Director, that sets forth reasons why no post-grant review 
should be instituted based upon the failure of the petition to 
meet any requirement of this chapter.

Sec. 324. Institution of post-grant review

    (a) Threshold.--The Director may not authorize a post-grant 
review to commence unless the Director determines that the 
information presented in the petition filed under section 321, 
if such information is not rebutted, would demonstrate that it 
is more likely than not that at least 1 of the claims 
challenged in the petition is unpatentable.
    (b) Additional Grounds.--The determination required under 
subsection (a) may also be satisfied by a showing that the 
petition raises a novel or unsettled legal question that is 
important to other patents or patent applications.
    (c) Timing.--The Director shall determine whether to 
institute a post-grant review under this chapter pursuant to a 
petition filed under section 321 within 3 months after--
            (1) receiving a preliminary response to the 
        petition under section 323; or
            (2) if no such preliminary response is filed, the 
        last date on which such response may be filed.
    (d) Notice.--The Director shall notify the petitioner and 
patent owner, in writing, of the Director's determination under 
subsection (a) or (b), and shall make such notice available to 
the public as soon as is practicable. The Director shall make 
each notice of the institution of a post-grant review available 
to the public. Such notice shall include the date on which the 
review shall commence.
    (e) No Appeal.--The determination by the Director whether 
to institute a post-grant review under this section shall be 
final and nonappealable.

Sec. 325. Relation to other proceedings or actions

    (a) Infringer's Civil Action.--
            (1) Post-grant review barred by civil action.--A 
        post-grant review may not be instituted under this 
        chapter if, before the date on which the petition for 
        such a review is filed, the petitioner, real party in 
        interest, or privy of the petitioner filed a civil 
        action challenging the validity of a claim of the 
        patent.
            (2) Stay of civil action.--If the petitioner, real 
        party in interest, or privy of the petitioner files a 
        civil action challenging the validity of a claim of the 
        patent on or after the date on which the petitioner 
        files a petition for post-grant review of the patent, 
        that civil action shall be automatically stayed until 
        either--
                    (A) the patent owner moves the court to 
                lift the stay;
                    (B) the patent owner files a civil action 
                or counterclaim alleging that the petitioner, 
                real party in interest, or privy of the 
                petitioner has infringed the patent; or
                    (C) the petitioner, real party in interest, 
                or privy of the petitioner moves the court to 
                dismiss the civil action.
            (3) Treatment of counterclaim.--A counterclaim 
        challenging the validity of a claim of a patent does 
        not constitute a civil action challenging the validity 
        of a claim of a patent for purposes of this subsection.
    (b) Preliminary Injunctions.--If a civil action alleging 
infringement of a patent is filed within 3 months after the 
date on which the patent is granted, the court may not stay its 
consideration of the patent owner's motion for a preliminary 
injunction against infringement of the patent on the basis that 
a petition for post-grant review has been filed under this 
chapter or that such a post-grant review has been instituted 
under this chapter.
    (c) Joinder.--If more than 1 petition for a post-grant 
review under this chapter is properly filed against the same 
patent and the Director determines that more than 1 of these 
petitions warrants the institution of a post-grant review under 
section 324, the Director may consolidate such reviews into a 
single post-grant review.
    (d) Multiple Proceedings.--Notwithstanding sections 135(a), 
251, and 252, and chapter 30, during the pendency of any post-
grant review under this chapter, if another proceeding or 
matter involving the patent is before the Office, the Director 
may determine the manner in which the post-grant review or 
other proceeding or matter may proceed, including providing for 
the stay, transfer, consolidation, or termination of any such 
matter or proceeding. In determining whether to institute or 
order a proceeding under this chapter, chapter 30, or chapter 
31, the Director may take into account whether, and reject the 
petition or request because, the same or substantially the same 
prior art or arguments previously were presented to the Office.
    (e) Estoppel.--
            (1) Proceedings before the office.--The petitioner 
        in a post-grant review of a claim in a patent under 
        this chapter that results in a final written decision 
        under section 328(a), or the real party in interest or 
        privy of the petitioner, may not request or maintain a 
        proceeding before the Office with respect to that claim 
        on any ground that the petitioner raised or reasonably 
        could have raised during that post-grant review.
            (2) Civil actions and other proceedings.--The 
        petitioner in a post-grant review of a claim in a 
        patent under this chapter that results in a final 
        written decision under section 328(a), or the real 
        party in interest or privy of the petitioner, may not 
        assert either in a civil action arising in whole or in 
        part under section 1338 of title 28 or in a proceeding 
        before the International Trade Commission under section 
        337 of the Tariff Act of 1930 that the claim is invalid 
        on any ground that the petitioner raised or reasonably 
        could have raised during that post-grant review.
    (f) Reissue Patents.--A post-grant review may not be 
instituted under this chapter if the petition requests 
cancellation of a claim in a reissue patent that is identical 
to or narrower than a claim in the original patent from which 
the reissue patent was issued, and the time limitations in 
section 321(c) would bar filing a petition for a post-grant 
review for such original patent.

Sec. 326. Conduct of post-grant review

    (a) Regulations.--The Director shall prescribe 
regulations--
            (1) providing that the file of any proceeding under 
        this chapter shall be made available to the public, 
        except that any petition or document filed with the 
        intent that it be sealed shall, if accompanied by a 
        motion to seal, be treated as sealed pending the 
        outcome of the ruling on the motion;
            (2) setting forth the standards for the showing of 
        sufficient grounds to institute a review under 
        subsections (a) and (b) of section 324;
            (3) establishing procedures for the submission of 
        supplemental information after the petition is filed;
            (4) establishing and governing a post-grant review 
        under this chapter and the relationship of such review 
        to other proceedings under this title;
            (5) setting forth standards and procedures for 
        discovery of relevant evidence, including that such 
        discovery shall be limited to evidence directly related 
        to factual assertions advanced by either party in the 
        proceeding;
            (6) prescribing sanctions for abuse of discovery, 
        abuse of process, or any other improper use of the 
        proceeding, such as to harass or to cause unnecessary 
        delay or an unnecessary increase in the cost of the 
        proceeding;
            (7) providing for protective orders governing the 
        exchange and submission of confidential information;
            (8) providing for the filing by the patent owner of 
        a response to the petition under section 323 after a 
        post-grant review has been instituted, and requiring 
        that the patent owner file with such response, through 
        affidavits or declarations, any additional factual 
        evidence and expert opinions on which the patent owner 
        relies in support of the response;
            (9) setting forth standards and procedures for 
        allowing the patent owner to move to amend the patent 
        under subsection (d) to cancel a challenged claim or 
        propose a reasonable number of substitute claims, and 
        ensuring that any information submitted by the patent 
        owner in support of any amendment entered under 
        subsection (d) is made available to the public as part 
        of the prosecution history of the patent;
            (10) providing either party with the right to an 
        oral hearing as part of the proceeding; and
            (11) requiring that the final determination in any 
        post-grant review be issued not later than 1 year after 
        the date on which the Director notices the institution 
        of a proceeding under this chapter, except that the 
        Director may, for good cause shown, extend the 1-year 
        period by not more than 6 months, and may adjust the 
        time periods in this paragraph in the case of joinder 
        under section 325(c).
    (b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such 
regulation on the economy, the integrity of the patent system, 
the efficient administration of the Office, and the ability of 
the Office to timely complete proceedings instituted under this 
chapter.
    (c) Patent Trial and Appeal Board.--The Patent Trial and 
Appeal Board shall, in accordance with section 6, conduct each 
post-grant review instituted under this chapter.
    (d) Amendment of the Patent.--
            (1) In general.--During a post-grant review 
        instituted under this chapter, the patent owner may 
        file 1 motion to amend the patent in 1 or more of the 
        following ways:
                    (A) Cancel any challenged patent claim.
                    (B) For each challenged claim, propose a 
                reasonable number of substitute claims.
            (2) Additional motions.--Additional motions to 
        amend may be permitted upon the joint request of the 
        petitioner and the patent owner to materially advance 
        the settlement of a proceeding under section 327, or 
        upon the request of the patent owner for good cause 
        shown.
            (3) Scope of claims.--An amendment under this 
        subsection may not enlarge the scope of the claims of 
        the patent or introduce new matter.
    (e) Evidentiary Standards.--In a post-grant review 
instituted under this chapter, the petitioner shall have the 
burden of proving a proposition of unpatentability by a 
preponderance of the evidence.

Sec. 327. Settlement

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

Sec. 328. Decision of the Board

    (a) Final Written Decision.--If a post-grant review is 
instituted and not dismissed under this chapter, the Patent 
Trial and Appeal Board shall issue a final written decision 
with respect to the patentability of any patent claim 
challenged by the petitioner and any new claim added under 
section 326(d).
    (b) Certificate.--If the Patent Trial and Appeal Board 
issues a final written decision under subsection (a) and the 
time for appeal has expired or any appeal has terminated, the 
Director shall issue and publish a certificate canceling any 
claim of the patent finally determined to be unpatentable, 
confirming any claim of the patent determined to be patentable, 
and incorporating in the patent by operation of the certificate 
any new or amended claim determined to be patentable.
    (c) Amended or New Claim.--Any proposed amended or new 
claim determined to be patentable and incorporated into a 
patent following a post-grant review under this chapter shall 
have the same effect as that specified in section 252 of this 
title for reissued patents on the right of any person who made, 
purchased, or used within the United States, or imported into 
the United States, anything patented by such proposed amended 
or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under subsection (b).
    (d) Data on Length of Review.--The Office shall make 
available to the public data describing the length of time 
between the institution of, and the issuance of a final written 
decision under subsection (a) for, each post-grant review.

Sec. 329. Appeal

    A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 328(a) may appeal 
the decision pursuant to sections 141 through 144. Any party to 
the post-grant review shall have the right to be a party to the 
appeal.

PART IV--PATENT COOPERATION TREATY

           *       *       *       *       *       *       *


                    CHAPTER 36--INTERNATIONAL STAGE

Sec. 363. International application designating the United States: 
                    Effect

    An international application designating the United States 
shall have the effect, from its international filing date under 
article 11 of the treaty, of a national application for patent 
regularly filed in the Patent and Trademark Office [except as 
otherwise provided in section 102(e) of this title].

Sec. 365. Right of priority; benefit of the filing date of a prior 
                    application

    (a) In accordance with the conditions and requirements of 
subsections (a) through (d) of section 119 [of this title], a 
national application shall be entitled to the right of priority 
based on a prior filed international application which 
designated at least one country other than the United States.
    (b) In accordance with the conditions and requirement of 
section 119(a) [of this title] and the treaty and the 
Regulations, an international application designating the 
United States shall be entitled to the right of priority based 
on a prior foreign application, or a prior international 
application designating at least one country other than the 
United States.
    (c) In accordance with the conditions and requirements of 
section 120 [of this title], an international application 
designating the United States shall be entitled to the benefit 
of the filing date of a prior national application or a prior 
international application designating the United States, and a 
national application shall be entitled to the benefit of the 
filing date of a prior international application designating 
the United States. If any claim for the benefit of an earlier 
filing date is based on a prior international application which 
designated but did not originate in the United States, the 
Director may require the filing in the Patent and Trademark 
Office of a certified copy of such application together with a 
translation thereof into the English language, if it was filed 
in another language.

           *       *       *       *       *       *       *


Sec. 368. Secrecy of certain inventions; filing international 
                    applications in foreign countries

    (a) International applications filed in the Patent and 
Trademark Office shall be subject to the provisions of chapter 
17 [of this title].
    (b) In accordance with article 27(8) of the treaty, the 
filing of an international application in a country other than 
the United States on the invention made in this country shall 
be considered to constitute the filing of an application in a 
foreign country within the meaning of chapter 17 [of this 
title], whether or not the United States is designated in that 
international application.

           *       *       *       *       *       *       *


                       CHAPTER 37--NATIONAL STAGE

Sec. 371. National stage: Commencement

    (a) * * *
    (b) Subject to subsection (f) of this section, the national 
stage shall commence with the expiration of the applicable time 
limit under article 22(1) or (2), or under article 39(1)(a) [of 
the treaty] of the treaty.
    (c) The applicant shall file in the Patent and Trademark 
Office--
            (1) the national fee provided in section 41(a) [of 
        this title];

           *       *       *       *       *       *       *

            (4) an oath or declaration of the inventor (or 
        other person authorized under chapter 11 [of this 
        title]) complying with the requirements of section 115 
        [of this title] and with regulations prescribed for 
        oaths or declarations of applicants;

           *       *       *       *       *       *       *


Sec. 372. National stage: Requirements and procedure

    (a) * * *
    (b) In case of international applications designating but 
not originating in, the United States--
            (1) * * *
            (2) the Director may cause the question of unity of 
        invention to be reexamined under section 121 [of this 
        title], within the scope of the requirements of the 
        treaty and the Regulations; and

           *       *       *       *       *       *       *


Sec. 373. Improper applicant

    An international application designating the United States, 
shall not be accepted by the Patent and Trademark Office for 
the national stage if it was filed by anyone not qualified 
under chapter 11 [of this title]   to be an applicant for the 
purpose of filing a national application in the United States. 
Such international applications shall not serve as the basis 
for the benefit of an earlier filing date under section 120 [of 
this title]   in a subsequently filed application, but may 
serve as the basis for a claim of the right of priority under 
subsections (a) through (d) of section 119 [of this title], if 
the United States was not the sole country designated in such 
international application.

Sec. 374. Publication of international application

    The publication under the treaty defined in section 351(a) 
[of this title], of an international application designating 
the United States shall be deemed a publication under section 
122(b), except as provided in [sections 102(e) and 154(d) of 
this title] section 154(d).
    The publication under the treaty of an international 
application shall confer no rights and shall have no effect 
under this title other than that of a printed publication.

Sec. 375. Patent issued on international application: Effect

    (a) A patent may be issued by the Director based on an 
international application designating the United States, in 
accordance with the provisions of this title. [Subject to 
section 102(e) of this title, such] Such patent shall have the 
force and effect of a patent issued on a national application 
filed under the provisions of chapter 11 [of this title].

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 28, UNITED STATES CODE



           *       *       *       *       *       *       *
PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


CHAPTER 83--COURTS OF APPEALS

           *       *       *       *       *       *       *


Sec. 1295. Jurisdiction of the united states court of appeals for the 
                    federal circuit

    (a) The United States Court of Appeals for the Federal 
Circuit shall have exclusive jurisdiction-
            [(1) of an appeal from a final decision of a 
        district court of the United States, the United States 
        District Court for the District of the Canal Zone, the 
        District Court of Guam, the District Court of the 
        Virgin Islands, or the District Court for the Northern 
        Mariana Islands, if the jurisdiction of that court was 
        based, in whole or in part, on section 1338 of this 
        title, except that a case involving a claim arising 
        under any Act of Congress relating to copyrights, 
        exclusive rights in mask works, or trademarks and no 
        other claims under section 1338(a) shall be governed by 
        sections 1291, 1292, and 1294 of this title;]
            (1) of an appeal from a final decision of a 
        district court of the United States, the District Court 
        of Guam, the District Court of the Virgin Islands, or 
        the District Court of the Northern Mariana Islands, in 
        any civil action arising under, or in any civil action 
        in which a party has asserted a compulsory counterclaim 
        arising under, any Act of Congress relating to patents 
        or plant variety protection;

           *       *       *       *       *       *       *

            (4) of an appeal from a decision of-
                    [(A) the Board of Patent Appeals and 
                Interferences of the United States Patent and 
                Trademark Office with respect to patent 
                applications and interferences, at the instance 
                of an applicant for a patent or any party to a 
                patent interference, and any such appeal shall 
                waive the right of such applicant or party to 
                proceed under section 145 or 146 of title 35;]
                    (A) the Patent Trial and Appeal Board of 
                the United States Patent and Trademark Office 
                with respect to a patent application, 
                derivation proceeding, reexamination, post-
                grant review, or inter partes review under 
                title 35, at the instance of a party who 
                exercised that party's right to participate in 
                the applicable proceeding before or appeal to 
                the Board, except that an applicant or a party 
                to a derivation proceeding may also have remedy 
                by civil action pursuant to section 145 or 146 
                of title 35; an appeal under this subparagraph 
                of a decision of the Board with respect to an 
                application or derivation proceeding shall 
                waive the right of such applicant or party to 
                proceed under section 145 or 146 of title 35;

           *       *       *       *       *       *       *


CHAPTER 85--COURTS OF APPEALS

           *       *       *       *       *       *       *


Sec. 1338. Patents, plant variety protection, copyrights, mask works, 
                    designs, trademarks, and unfair competition

    (a) The district courts shall have original jurisdiction of 
any civil action arising under any Act of Congress relating to 
patents, plant variety protection, copyrights and trademarks. 
[Such jurisdiction shall be exclusive of the courts of the 
states in patent, plant variety protection and copyright 
cases.] No State court shall have jurisdiction over any claim 
for relief arising under any Act of Congress relating to 
patents, plant variety protection, or copyrights. For purposes 
of this subsection, the term ``State'' includes any State of 
the United States, the District of Columbia, the Commonwealth 
of Puerto Rico, the United States Virgin Islands, American 
Samoa, Guam, and the Northern Mariana Islands.

           *       *       *       *       *       *       *


    CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

Sec.
1441. Actions removable generally.
     * * * * * * *
1454. Patent, plant variety protection, and copyright cases.
     * * * * * * *

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

    (a) In General.--A civil action in which any party asserts 
a claim for relief arising under any Act of Congress relating 
to patents, plant variety protection, or copyrights may be 
removed to the district court of the United States for the 
district and division embracing the place where the action is 
pending.
    (b) Special Rules.--The removal of an action under this 
section shall be made in accordance with section 1446, except 
that if the removal is based solely on this section--
            (1) the action may be removed by any party; and
            (2) the time limitations contained in section 
        1446(b) may be extended at any time for cause shown.
    (c) Clarification of Jurisdiction in Certain Cases.--The 
court to which a civil action is removed under this section is 
not precluded from hearing and determining any claim in the 
civil action because the State court from which the civil 
action is removed did not have jurisdiction over that claim.
    (d) Remand.--If a civil action is removed solely under this 
section, the district court--
            (1) shall remand all claims that are neither a 
        basis for removal under subsection (a) nor within the 
        original or supplemental jurisdiction of the district 
        court under any Act of Congress; and
            (2) may, under the circumstances specified in 
        section 1367(c), remand any claims within the 
        supplemental jurisdiction of the district court under 
        section 1367.

           *       *       *       *       *       *       *


                     CHAPTER 99--GENERAL PROVISIONS

Sec.
1631. Transfer to cure want of jurisdiction.
1632. Transfer by the Court of Appeals for the Federal Circuit.
     * * * * * * *

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

    When a case is appealed to the Court of Appeals for the 
Federal Circuit under section 1295(a)(1), and no claim for 
relief arising under any Act of Congress relating to patents or 
plant variety protection is the subject of the appeal by any 
party, the Court of Appeals for the Federal Circuit shall 
transfer the appeal to the court of appeals for the regional 
circuit embracing the district from which the appeal has been 
taken.

           *       *       *       *       *       *       *

                              ----------                              


                         TRADEMARK ACT OF 1946

TITLE I--THE PRINCIPAL REGISTER

           *       *       *       *       *       *       *


    Sec. 21. (a) * * *
    (b)(1) * * *

           *       *       *       *       *       *       *

    (4) Where there is an adverse party, such suit may be 
instituted against the party in interest as shown by the 
records of the United States Patent and Trademark Office at the 
time of the decision complained of, but any party in interest 
may become a party to the action. If there are adverse parties 
residing in a plurality of districts not embraced within the 
same State, or an adverse party residing in a foreign country, 
the [United States District Court for the District of Columbia] 
United States District Court for the Eastern District of 
Virginia shall have jurisdiction and may issue summons against 
the adverse parties directed to the marshal of any district in 
which any adverse party resides. Summons against adverse 
parties residing in foreign countries may be served by 
publication or otherwise as the court directs.

           *       *       *       *       *       *       *

                              ----------                              


                 CONSOLIDATED APPROPRIATIONS ACT, 2005



           *       *       *       *       *       *       *
DIVISION B--DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, 
AND RELATED AGENCIES APPROPRIATIONS ACT, 2005

           *       *       *       *       *       *       *


TITLE VIII--PATENT AND TRADEMARK FEES

           *       *       *       *       *       *       *


SEC. 802. ADJUSTMENT OF TRADEMARK FEES.

    (a) Fee For Filing Application.--[During fiscal years 2005, 
2006, and 2007,] Until such time as the Director sets or 
adjusts the fees otherwise, under such conditions as may be 
prescribed by the Director, the fee under section 31(a) of the 
Trademark Act of 1946 (15 U.S.C. 1113(a)) for: (1) the filing 
of a paper application for the registration of a trademark 
shall be $375; (2) the filing of an electronic application 
shall be $325; and (3) the filing of an electronic application 
meeting certain additional requirements prescribed by the 
Director shall be $275. [During fiscal years 2005, 2006, and 
2007, the] The provisions of the second and third sentences of 
section 31(a) of the Trademark Act of 1946 shall apply to the 
fees established under this section.

           *       *       *       *       *       *       *


SEC. 803. EFFECTIVE DATE, APPLICABILITY, AND TRANSITIONAL PROVISION.

    (a) Effective Date.--Except as otherwise provided in this 
title (including this section), the provisions of this title 
shall take effect on the date of the enactment of this Act [and 
shall apply only with respect to the remaining portion of 
fiscal year 2005 and fiscal year 2006].

           *       *       *       *       *       *       *



                            Dissenting Views

    Patent reform is one of the most important issues facing 
Congress and the Nation. Increasingly our nation has an 
information based economy, and the key to such an economy is 
intellectual property such as patents, copyrights and 
trademarks. Studies establish that intellectual property drives 
this economy to the tune of $5 trillion dollars, accounting for 
half of all U.S. exports and employing nearly 18 million 
workers. This is why the House Judiciary Committee has been 
working on patent reform for over 6 years, under both parties.
    Unfortunately, the legislation does not represent an 
overall improvement over the status quo and, as presently 
drafted is not one that I can support. Among other things, I 
object to provisions in the bill that apply retroactively with 
regard to business method patents\1\ and false markings 
cases.\2\ Most of the proposed reforms in both the House and 
Senate patent reform bills such as the other post-grant 
provisions are applicable going forward, not retroactively. If 
we are seeking to craft a bipartisan bill with consensus, 
stripping the legal rights of private parties involved in 
pending litigation is a non-starter.
---------------------------------------------------------------------------
    \1\America Invents Act, H.R. 1249, 112th Cong. Sec. 18.
    \2\Id. Sec. 15(b).
---------------------------------------------------------------------------
    Section 18 in the bill is purportedly designed to create an 
administrative mechanism to review so-called business method 
patents whose validity has been questioned. However, Section 18 
is both too broad and too narrow to serve its purported goal, 
and works an injustice on legitimate patent holders as a 
result. Section 18 is overly broad because it is retroactive, 
applying to patents granted more than a decade ago. It is also 
overly broad because it could affect patents that have been 
upheld as valid through additional review at the USPTO, such as 
ex parte re-examination, or that have been held valid by a 
federal court. It applies not only to business methods but also 
to apparatus inventions. On the other hand, Section 18 is too 
narrow because instead of applying to all kinds of business 
methods, it only applies to financially-related business 
methods. Further, it is unfair and inappropriate to force 
specific patent holders that have been through reexamination, 
or that have survived years of legal challenge, to defend their 
patents under an entirely new set of rules at the USPTO. It is 
also contrary to patent law norms and establishes a bad 
precedent for our trade partners to force a small subset of 
patent holders--those who have invented financially-related 
business methods and associated apparatus--to defend themselves 
in a new, retroactive procedure that does not apply to any 
other patent holders.
    I am also opposed to the section dealing with false 
markings cases. I say this as a member who has expressed 
concerns in the past with the Federal Circuit decision in 
Forest Group Inc. v. Bon Tool Co.\3\ The legislation, in 
essence, would change the rules of the game for cases that are 
currently being litigated. To the extent legislation is needed, 
I support applying the new rules going forward because these 
rules would be implemented and cases would be adjudicated in 
conjunction with the new broader reforms of the entire patent 
system the bill proposes, creating balance and fairness for all 
parties. Moreover, based on recent court decisions that have 
already imposed more restrictive standards concerning present 
claims, there is absolutely no reason for Congress to interfere 
in these claims which are before the courts.\4\
---------------------------------------------------------------------------
    \3\Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 
2009).
    \4\Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc., No. 10-
1912, 2011 U.S. Dist. LEXIS (N.D. Ohio Feb. 23, 2011); In re BP 
Lubricants USA Inc., Misc. Docket No. 960, 2011 U.S. App. LEXIS 5015 
(Fed. Cir. March 15, 2011).
---------------------------------------------------------------------------
    I am also concerned about the creation of a 3-year safe 
harbor for companies accused of false marking their products. 
Providing a safe harbor for expiring patents only compounds the 
retroactivity problem by ensuring that almost all ongoing 
litigation will be eliminated.
    I would also like to express my support for the Additional 
Views being filed by other Democratic Members noting 
improvements that should be made in the bill regarding inter 
partes reexamination.
    It is my hope that these and other problems can be 
alleviated and the bill modified so that it can become a true 
bipartisan consensus product.

                                   John Conyers, Jr.


                            Additional Views

    Congressional efforts to enact comprehensive patent reform 
began in the 107th Congress. Since that time, various 
iterations of patent reform bills have fallen short of the 
elusive finish-line. Today, however, we are closer than we have 
ever been to crafting legislation that will strengthen the 
patent system and afford the U.S. Patent and Trademark Office 
(PTO) the resources it requires to clear the still sizeable 
backlog of patent applications and move forward to deliver to 
all American inventors the first rate service they deserve. We 
are not there yet and the process has not been perfect. But 
Committee Democrats are encouraged that some of the core 
provisions we sought, for example, the expansion of prior user 
rights and the end to fee diversion, are in H.R. 1249. We write 
separately to highlight our concerns with modifications to the 
post-grant review procedures designed to provide controls on 
the quality of issued patents.
    A longstanding goal of patent reform has been to improve 
the PTO's administrative procedures for challenging dubious 
patents through reexamination. H.R. 1249 creates a new post-
grant review procedure to provide an additional check on poor-
quality patents than currently available under current law. 
However, this new procedure is limited to challenges filed 
within 12 months of the date that a patent is granted. This 12-
month deadline will limit the utility of the post-grant review 
as an efficient, low-cost alternative to litigation. The lack 
of clear notice of the precise scope of a given patents is well 
documented.\1\ In several industries, patents are often 
multitudinous, vague, and highly abstract. This prevents 
practitioners from being able to identify and assess relevant 
patents before they receive some specific warning of liability, 
which often comes many years after a patent has been issued. 
For this reason, the National Research Council of the National 
Academies recommended, at a minimum, the creation of a ``second 
window'' for post-grant review challenges triggered by 
litigation or a threat of enforcement by a patent owner.\2\
---------------------------------------------------------------------------
    \1\See Federal Trade Commission, The Evolving IP Marketplace: 
Aligning Patent Notice and Remedies with Competition (Mar. 2011), 
available at http://www.ftc.gov/os/2011/03/110307
patentreport.pdf.
    \2\National Research Council of the National Academies, A Patent 
System for the 21st Century (2004) at 101.
---------------------------------------------------------------------------
    In the absence of a second window, patent reform 
legislation should maintain the existing system for 
reexaminations by the PTO, through ex parte and inter partes 
procedures. Inter partes reexamination in particular provides 
important ongoing opportunities for expert review of patent 
validity in some cases. H.R. 1249 maintains this procedure with 
some changes. We support the continued existence of inter 
partes reexamination\3\ as well as the creation of the new 
post-grant review procedure. However, we have significant 
concerns about the limitations that H.R. 1249 imposes on inter 
partes review.
---------------------------------------------------------------------------
    \3\Under Sec. 5 of H.R. 1249, inter partes reexamination is renamed 
as ``inter partes review.''
---------------------------------------------------------------------------
    Use of inter partes reexamination is already exceedingly 
rare in the status quo. In Fiscal Year 2010, 281 reexamination 
petitions were filed,\4\ while 219,614 utility patents were 
granted.\5\ The limitations imposed by H.R. 1249 and the 
managers amendment are motivated by assertions that the inter 
partes procedure may be abused to harass patent owners and 
interfere with the enforcement of valid patents. However, no 
empirical evidence, even anecdotally, was proffered to the 
Committee to demonstrate such abuses occur in the current 
reexamination system. On the contrary, of the 253 inter partes 
reexaminations decided since the procedure was created in 
1999,\6\ 224 (89%) resulted in the modification or 
nullification of at least one patent claim, which means that 
the challenges were ultimately found meritorious.\7\ This 
suggests that further limitations and deterrents against inter 
partes petitions, beyond those already in place in current law, 
are unnecessary and counterproductive.
---------------------------------------------------------------------------
    \4\United States Patent and Trademark Office (USPTO), Inter Partes 
Reexamination Filing Data (Mar. 31, 2011), available at http://
www.uspto.gov/patents/IP_quarterly_
report_March_2011.pdf.
    \5\United States Patent and Trademark Office, U.S. Patent Activity, 
Calendar Years 1790 to the Present, available at http://www.uspto.gov/
web/offices/ac/ido/oeip/taf/h_counts.htm.
    \6\The Optional Inter Partes Reexamination Act, Pub. L. No. 106-
113.
    \7\See Inter Partes Reexamination Filing Data, supra note 4.
---------------------------------------------------------------------------
    Patent reform legislation should seek to expand 
opportunities for low-cost, efficient alternatives to 
litigation as a way of resolving disputes about the validity of 
issued patents. In the context of inter partes reexamination, 
H.R. 1249 does the opposite, by placing unnecessary constraints 
on a procedure that is already under-utilized. We are 
particularly concerned about two specific provisions.
    First, H.R. 1249 as amended sets a 12-month deadline for a 
defendant in litigation to file a petition for inter partes 
review, starting from the date on which the party is served 
with a complaint for infringement. The length of this deadline 
is completely arbitrary, and does not account for the 
complexity of many patent cases that can encompass dozens of 
patents and defendants and hundreds of separate patent claims. 
In such complex cases, the 12-month period imposes an extremely 
compressed schedule that will not provide enough time for the 
defendants to prepare and file an inter partes petition. 
Instead, the deadline should be tied to substantive progress in 
patent litigation, such as the entry of an order by the 
district court construing the relevant patent claims. This 
would ensure that defendants have an opportunity to prepare 
legitimate petitions for inter partes review based upon the 
core issues in a patent case.
    Second, H.R. 1249 as amended raises the threshold for 
initiating an inter partes review procedure. In order to 
initiate a review, the Director must find ``a reasonable 
likelihood that the petitioner would prevail with respect to at 
least one of the claims challenged in the petition.'' The 
existing threshold--whether a petition raises a ``substantial 
new question of patentability''--should be maintained instead. 
As noted above, the overwhelming majority of inter partes 
reexaminations that have been initiated under the current 
standard have been ultimately deemed meritorious. A stricter 
threshold is therefore unjustified. Moreover, the practical 
meaning of the new standard in H.R. 1249 is not clear and 
creates a risk that the PTO will reject legitimate petitions at 
the outset of the procedure, without further inquiry.
    Because of these provisions, we do not support Sec. 5(a) of 
H.R. 1249. Several Democratic amendments designed to address 
these provisions were offered but defeated during the markup of 
the bill. We believe that, at minimum, in order to preserve the 
existing utility of inter partes reexaminations, current law 
should be maintained. Ensuring the high caliber of patents 
circulating in the marketplace inures to the benefit of all 
Americans by stimulating innovation, encouraging investment and 
creating jobs. We hope that as H.R. 1249 moves closer to the 
floor, needed revisions will be made to ensure that inter 
partes reexamination remains a viable, efficient alternative to 
litigation for weeding out bad patents.

                                   Howard L. Berman.
                                   Melvin L. Watt.
                                   Zoe Lofgren.