[DOCID: f:hr314.110]
From the House Reports Online via GPO Access
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110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-314
======================================================================
PATENT REFORM ACT OF 2007
_______
September 4, 2007.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 1908]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1908) 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.............................................. 20
Background and Need for the Legislation.......................... 21
Hearings......................................................... 46
Committee Consideration.......................................... 49
Committee Votes.................................................. 50
Committee Oversight Findings..................................... 50
New Budget Authority and Tax Expenditures........................ 50
Congressional Budget Office Cost Estimate........................ 50
Performance Goals and Objectives................................. 55
Constitutional Authority Statement............................... 55
Advisory on Earmarks............................................. 55
Section-by-Section Analysis...................................... 55
Changes in Existing Law Made by the Bill, as Reported............ 88
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 ``Patent Reform Act
of 2007''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Reference to title 35, United States Code.
Sec. 3. Right of the first inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Right of the inventor to obtain damages.
Sec. 6. Post-grant procedures and other quality enhancements.
Sec. 7. Definitions; patent trial and appeal board.
Sec. 8. Study and report on reexamination proceedings.
Sec. 9. Submissions by third parties and other quality enhancements.
Sec. 10. Tax planning methods not patentable.
Sec. 11. Venue and jurisdiction.
Sec. 12. Additional information; inequitable conduct as defense to
infringement.
Sec. 13. Best mode requirement.
Sec. 14. Regulatory authority.
Sec. 15. Technical amendments.
Sec. 16. Study of special masters in patent cases.
Sec. 17. Rule of construction.
SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE.
Whenever in this Act a section or other provision is amended or
repealed, that amendment or repeal shall be considered to be made to
that section or other provision of title 35, United States Code.
SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE.
(a) Definitions.--Section 100 is amended by adding at the end the
following:
``(f) The term `inventor' means the individual or, if a joint
invention, the individuals collectively who invented or discovered the
subject matter of an invention.
``(g) The terms `joint inventor' and `coinventor' mean any one of
the individuals who invented or discovered the subject matter of a
joint invention.
``(h) The `effective filing date of a claimed invention' is--
``(1) the filing date of the patent or the application for
patent containing the claim to the invention; or
``(2) if the patent or application for patent is entitled
to a right of priority of any other application under section
119, 365(a), or 365(b) or to the benefit of an earlier filing
date in the United States under section 120, 121, or 365(c),
the filing date of the earliest such application in which the
claimed invention is disclosed in the manner provided by
section 112(a).
``(i) The term `claimed invention' means the subject matter defined
by a claim in a patent or an application for a patent.
``(j) The term `joint invention' means an invention resulting from
the collaboration of inventive endeavors of two or more persons working
toward the same end and producing an invention by their collective
efforts.''.
(b) Conditions for Patentability.--
(1) In general.--Section 102 is amended to read as follows:
``Sec. 102. Conditions for patentability; novelty
``(a) Novelty; Prior Art.--A patent for a claimed invention may not
be obtained if--
``(1) the claimed invention was patented, described in a
printed publication, in public use, or on sale--
``(A) more than one year before the effective
filing date of the claimed invention; or
``(B) one year or less before the effective filing
date of the claimed invention, other than through
disclosures made by the inventor or a joint inventor or
by others who obtained the subject matter disclosed
directly or indirectly from the inventor or a joint
inventor; 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) Prior inventor disclosure exception.--Subject matter
that would otherwise qualify as prior art based upon a
disclosure under subparagraph (B) of subsection (a)(1) shall
not be prior art to a claimed invention under that subparagraph
if the subject matter had, before such disclosure, been
publicly disclosed by the inventor or a joint inventor or
others who obtained the subject matter disclosed directly or
indirectly from the inventor or a joint inventor.
``(2) Derivation, prior disclosure, and common assignment
exceptions.--Subject matter that would otherwise qualify as
prior art only under subsection (a)(2) shall not be prior art
to a claimed invention if--
``(A) the subject matter was obtained directly or
indirectly from the inventor or a joint inventor;
``(B) the subject matter had been publicly
disclosed by the inventor or a joint inventor or others
who obtained the subject matter disclosed directly or
indirectly from the inventor or a joint inventor before
the date on which the application or patent referred to
in subsection (a)(2) was effectively filed; or
``(C) the subject matter 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.
``(3) Joint research agreement exception.--
``(A) In general.--Subject matter 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
paragraph (2) if--
``(i) the claimed invention was made by or
on behalf of parties to a joint research
agreement that was in effect on or before the
effective filing date of the claimed invention;
``(ii) the claimed invention was made as a
result of activities undertaken within the
scope of the joint research agreement; and
``(iii) the application for patent for the
claimed invention discloses or is amended to
disclose the names of the parties to the joint
research agreement.
``(B) For purposes of subparagraph (A), 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.
``(4) Patents and published applications effectively
filed.--A patent or application for patent is effectively filed
under subsection (a)(2) with respect to any subject matter
described in the patent or application--
``(A) as of the filing date of the patent or the
application for patent; or
``(B) 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 one or more prior filed applications for
patent, as of the filing date of the earliest such
application that describes the subject matter.''.
(2) Conforming amendment.--The item relating to section 102
in the table of sections for chapter 10 is amended to read as
follows:
``102. Conditions for patentability; novelty.''.
(c) Conditions for Patentability; Non-Obvious Subject Matter.--
Section 103 is amended to read as follows:
``Sec. 103. Conditions for patentability; nonobvious subject matter
``A patent for a claimed invention may not be obtained though 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, and the item relating to that section in the table of sections for
chapter 10, are repealed.
(e) Repeal of Statutory Invention Registration.--
(1) In general.--Section 157, and the item relating to that
section in the table of sections for chapter 14, are repealed.
(2) Removal of cross references.--Section 111(b)(8) is
amended by striking ``sections 115, 131, 135, and 157'' and
inserting ``sections 131 and 135''.
(f) Earlier Filing Date for Inventor and Joint Inventor.--Section
120 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 is amended by striking
``and the time specified in section 102(d)''.
(2) Limitation on remedies.--Section 287(c)(4) 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 is amended by striking ``except as
otherwise provided in section 102(e) of this title''.
(4) Publication of international application: effect.--
Section 374 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) 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) 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) 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(a) would end before the end of that 2-year
period''; and
(ii) by striking ``the statutory'' and
inserting ``that 1-year''; and
(B) in paragraph (3), by striking ``any statutory
bar date that may occur under this title due to
publication, on sale, or public use'' and inserting
``the expiration of the 1-year period referred to in
section 102(a)''.
(h) Repeal of Interfering Patent Remedies.--Section 291, and the
item relating to that section in the table of sections for chapter 29,
are repealed.
(i) Action for Claim to Patent on Derived Invention.--
(1) In general.--Section 135(a) is amended to read as
follows:
``(a) Dispute Over Right to Patent.--
``(1) Institution of derivation proceeding.--
``(A) Request for proceeding.--An applicant may
request initiation of a derivation proceeding to
determine the right of the applicant to a patent by
filing a request that sets forth with particularity the
basis for finding that another applicant derived the
claimed invention from the applicant requesting the
proceeding and, without authorization, filed an
application claiming such invention. Any such request--
``(i) may only be made within 12 months
after the earlier of--
``(I) the date on which a patent is
issued containing a claim that is the
same or substantially the same as the
claimed invention; or
``(II) the date of first
publication of an application
containing a claim that is the same or
is substantially the same as the
claimed invention; and
``(ii) must be made under oath, and must be
supported by substantial evidence.
``(B) Determination of director.-- Whenever the
Director determines that patents or applications for
patent naming different individuals as the inventor
interfere with one another because of a dispute over
the right to patent under section 101 on the basis of a
request under subparagraph (A), the Director shall
institute a derivation proceeding for the purpose of
determining which applicant is entitled to a patent.
``(2) Determination by patent trial and appeal board.--In
any proceeding under this subsection, the Patent Trial and
Appeal Board--
``(A) shall determine the question of the right to
patent;
``(B) in appropriate circumstances, may correct the
naming of the inventor in any application or patent at
issue; and
``(C) shall issue a final decision on the right to
patent.
``(3) Derivation proceeding.--The Patent Trial and Appeal
Board may defer action on a request to initiate a derivation
proceeding for up to three months after the date on which the
Director issues a patent to the applicant that filed the
earlier application.
``(4) Effect of final decision.--The final decision of the
Patent Trial and Appeal Board in a derivation proceeding, if
adverse to the claim of an applicant, shall constitute the
final refusal by the Patent and Trademark Office on the claims
involved. The Director may issue a patent to an applicant who
is determined by the Patent Trial and Appeal Board to have the
right to a patent. The final decision of the Board, if adverse
to a patentee, shall, if no appeal or other review of the
decision has been or can be taken or had, 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.''.
(2) Conforming amendments.--(A) Section 135 is further
amended--
(i) in subsection (b)--
(I) by striking ``(b)(1) A claim'' and
inserting the following:
``(b) Same Claims.--
``(1) Issued patents.--A claim''; and
(II) by striking ``(2) A claim'' and
inserting the following:
``(2) Published applications.--A claim''; and
(III) moving the remaining text of
paragraphs (1) and (2) 2 ems to the right;
(ii) in subsection (c)--
(I) by striking ``(c) Any agreement'' and
inserting the following:
``(c) Agreements to Terminate Proceedings.--
``(1) In general.--Any agreement'';
(II) by striking ``an interference'' and
inserting ``a derivation proceeding'';
(III) by striking ``the interference'' each
place it appears and inserting ``the derivation
proceeding'';
(IV) in the second paragraph, by striking
``The Director'' and inserting the following:
``(2) Notice.--The Director'';
(V) by amending the third paragraph to read
as follows:
``(3) Judicial review.--Any discretionary action of the
Director under this subsection shall be reviewable under
chapter 7 of title 5.''; and
(VI) by moving the remaining text of
paragraphs (1) and (2) of subsection (c) 2 ems
to the right; and
(iii) in subsection (d)--
(I) by striking ``(d) Parties'' and
inserting ``(d) Arbitration.--Parties'';
(II) by striking ``a patent interference''
and inserting ``a derivation proceeding''; and
(III) by striking ``the interference'' and
inserting ``the derivation proceeding''.
(j) Elimination of References to Interferences.--(1) Sections
41(a)(6), 134, 141, 145, 146, 154, 305, and 314 are each amended by
striking ``Board of Patent Appeals and Interferences'' each place it
appears and inserting ``Patent Trial and Appeal Board''.
(2) Section 141 is amended--
(A) by striking ``an interference'' and inserting ``a
derivation proceeding''; and
(B) by striking ``interference'' each additional place it
appears and inserting ``derivation proceeding''.
(3) Section 146 is amended--
(A) in the first paragraph--
(i) by striking ``Any party'' and inserting ``(a)
In General.--Any party'';
(ii) by striking ``an interference'' and inserting
``a derivation proceeding''; and
(iii) by striking ``interference'' each additional
place it appears and inserting ``derivation
proceeding''; and
(B) in the second paragraph, by striking ``Such suit'' and
inserting ``(b) Procedure.--A suit under subsection (a)''
(4) The section heading for section 134 is amended to read as
follows:
``Sec. 134. Appeal to the Patent Trial and Appeal Board''.
(5) The section heading for section 135 is amended to read as
follows:
``Sec. 135. Derivation proceedings''.
(6) The section heading for section 146 is amended to read as
follows:
``Sec. 146. Civil action in case of derivation proceeding''.
(7) Section 154(b)(1)(C) is amended by striking ``interferences''
and inserting ``derivation proceedings''.
(8) The item relating to section 6 in the table of sections for
chapter 1 is amended to read as follows:
``6. Patent Trial and Appeal Board.''.
(9) The items relating to sections 134 and 135 in the table of
sections for chapter 12 are amended to read as follows:
``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.
(10) The item relating to section 146 in the table of sections for
chapter 13 is amended to read as follows:
``146. Civil action in case of derivation proceeding.''.
(11) Certain Appeals.--Subsection 1295(a)(4)(A) of title 28, United
States Code, is amended to read as follows:
``(A) the Patent Trial and Appeal Board of the
United States Patent and Trademark Office with respect
to patent applications, derivation proceedings, and
post-grant review proceedings, at the instance of an
applicant for a patent or any party to a patent
interference (commenced before the effective date
provided in section 3(k) of the Patent Reform Act of
2007), derivation proceeding, or post-grant review
proceeding, and any such appeal shall waive any right
of such applicant or party to proceed under section 145
or 146 of title 35;''.
(k) Effective Date.--
(1) In general.--The amendments made by this section--
(A) shall take effect 90 days after the date on
which the President transmits to the Congress a finding
that major patenting authorities have adopted a grace
period having substantially the same effect as that
contained under the amendments made by this section;
and
(B) shall apply to all applications for patent that
are filed on or after the effective date under
subparagraph (A).
(2) Definitions.--In this subsection:
(A) Major patenting authorities.--The term ``major
patenting authorities'' means at least the patenting
authorities in Europe and Japan.
(B) Grace period.--The term ``grace period'' means
the 1-year period ending on the effective filing date
of a claimed invention, during which disclosures of the
subject matter by the inventor or a joint inventor, or
by others who obtained the subject matter disclosed
directly or indirectly from the inventor or a joint
inventor, do not qualify as prior art to the claimed
invention.
(C) Effective filing date.--The term ``effective
filing date of a claimed invention'' means, with
respect to a patenting authority in another country, a
date equivalent to the effective filing date of a
claimed invention as defined in section 100(h) of title
35, United States Code, as added by subsection (a) of
this section.
(l) Review Every 7 Years.--Not later than the end of the 7-year
period beginning on the effective date under subsection (k), and the
end of every 7-year period thereafter, the Under Secretary of Commerce
for Intellectual Property and Director of the United States Patent and
Trademark Office (in this subsection referred to as the ``Director'')
shall--
(1) conduct a study on the effectiveness and efficiency of
the amendments made by this section; and
(2) submit to the Committees on the Judiciary of the House
of Representatives and the Senate a report on the results of
the study, including any recommendations the Director has on
amendments to the law and other recommendations of the Director
with respect to the first-to-file system implemented under the
amendments made by this section.
SEC. 4. INVENTOR'S OATH OR DECLARATION.
(a) Inventor's Oath or Declaration.--
(1) In general.--Section 115 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), that
commences the national stage under section 363, or that is filed by an
inventor for an invention for which an application has previously been
filed under this title by that inventor shall include, or be amended to
include, the name of the inventor of any claimed invention 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 by an individual
under subsection (a) shall contain statements that--
``(1) the application was made or was authorized to be made
by individual; and
``(2) the 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 and 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.--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
that claims the benefit of an earlier filing date under section 120 or
365(c), if--
``(1) 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;
``(2) a substitute statement meeting the requirements of
subsection (d) was filed in the earlier filed application with
respect to the individual; or
``(3) 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.
``(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, such additional statements shall
be filed in accordance with regulations established by the
Director.
``(2) Supplemental statements not required.--If an
individual has executed an oath or declaration under subsection
(a) or an assignment meeting the requirements of subsection (e)
with respect to an application for patent, the Director may not
thereafter require that individual to make any additional oath,
declaration, or other statement equivalent to those required by
this section in connection with the application for patent or
any patent issuing thereon.
``(3) Savings clause.--No patent shall be invalid or
unenforceable based upon the failure to comply with a
requirement under this section if the failure is remedied as
provided under paragraph (1).
``(i) Acknowledgment of Penalties.--Any declaration or statement
filed under this section must contain an acknowledgment that any
willful false statement is punishable by fine or imprisonment, or both,
under section 1001 of title 18.''.
(2) Relationship to divisional applications.--Section 121
is amended by striking ``If a divisional application'' and all
that follows through ``inventor.''.
(3) Requirements for nonprovisional applications.--Section
111(a) is amended--
(A) in paragraph (2)(C), by striking ``by the
applicant'' and inserting ``or declaration'';
(B) in the heading for paragraph (3), by striking
``and oath''; and
(C) by striking ``and oath'' each place it appears.
(4) Conforming amendment.--The item relating to section 115
in the table of sections for chapter 11 is amended to read as
follows:
``115. Inventor's oath or declaration.''.
(b) Filing by Other Than Inventor.--Section 118 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.''.
(c) Specification.--Section 112 is amended--
(1) in the first paragraph----
(A) by striking ``The specification'' and inserting
``(a) In General.--The specification''; and
(B) by striking ``of carrying out his invention''
and inserting ``or joint inventor of carrying out the
invention''; and
(2) in the second paragraph--
(A) by striking ``The specification'' and inserting
``(b) Conclusion.--The specification''; and
(B) by striking ``applicant regards as his
invention'' and inserting ``inventor or a joint
inventor regards as the invention'';
(3) in the third paragraph, by striking ``A claim'' and
inserting ``(c) Form.--A claim'';
(4) in the fourth paragraph, by striking ``Subject to the
following paragraph,'' and inserting ``(d) Reference in
Dependent Forms.--Subject to subsection (e),'';
(5) in the fifth paragraph, by striking ``A claim'' and
inserting ``(e) Reference in Multiple Dependent Form.--A
claim''; and
(6) in the last paragraph, by striking ``An element'' and
inserting ``(f) Element in Claim for a Combination.--An
element''.
(d) Effective Date.--The amendments made by this section--
(1) shall take effect at the end of the 1-year period
beginning on the date of the enactment of this Act; and
(2) shall apply to any application for patent, or
application for reissue patent, that is filed on or after the
effective date under paragraph (1).
SEC. 5. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES.
(a) Damages.--Section 284 is amended--
(1) in the first paragraph, by striking ``Upon'' and
inserting ``(a) In General.--Upon'';
(2) by designating the second undesignated paragraph as
subsection (c);
(3) by inserting after subsection (a) (as designated by
paragraph (1) of this subsection) the following:
``(b) Reasonable Royalty.--
``(1) In general.-- An award pursuant to subsection (a)
that is based upon a reasonable royalty shall be determined in
accordance with this subsection. Based on the facts of the
case, the court shall determine whether paragraph (2), (3), or
(5) will be used by the court or the jury in calculating a
reasonable royalty. The court shall identify the factors that
are relevant to the determination of a reasonable royalty under
the applicable paragraph, and the court or jury, as the case
may be, shall consider only those factors in making the
determination.
``(2) Relationship of damages to contributions over prior
art.--The court shall conduct an analysis to ensure that a
reasonable royalty under subsection (a) is applied only to that
economic value properly attributable to the patent's specific
contribution over the prior art. The court shall exclude from
the analysis the economic value properly attributable to the
prior art, and other features or improvements, whether or not
themselves patented, that contribute economic value to the
infringing product or process.
``(3) Entire market value.--Unless the claimant shows that
the patent's specific contribution over the prior art is the
predominant basis for market demand for an infringing product
or process, damages may not be based upon the entire market
value of the products or processes involved that satisfy that
demand.
``(4) Combination inventions.--For purposes of paragraphs
(2) and (3), in the case of a combination invention the
elements of which are present individually in the prior art,
the patentee may show that the contribution over the prior art
may include the value of the additional function resulting from
the combination, as well as the enhanced value, if any, of some
or all of the prior art elements resulting from the
combination.
``(5) Other factors.--In determining a reasonable royalty,
the court may also consider, or direct the jury to consider,
the terms of any nonexclusive marketplace licensing of the
invention, where appropriate, as well as any other relevant
factors under applicable law.'';
(4) by amending subsection (c) (as designated by paragraph
(1) of this subsection) to read as follows:
``(c) Willful Infringement.--
``(1) Increased damages.--A court that has determined that
the infringer has willfully infringed a patent or patents may
increase the damages up to three times the amount of damages
found or assessed under subsection (a), except that increased
damages under this paragraph shall not apply to provisional
rights under section 154(d).
``(2) Permitted grounds for willfulness.--A court may find
that an infringer has willfully infringed a patent only if the
patent owner presents clear and convincing evidence that--
``(A) after receiving written notice from the
patentee--
``(i) alleging acts of infringement in a
manner sufficient to give the infringer an
objectively reasonable apprehension of suit on
such patent, and
``(ii) identifying with particularity each
claim of the patent, each product or process
that the patent owner alleges infringes the
patent, and the relationship of such product or
process to such claim,
the infringer, after a reasonable opportunity to
investigate, thereafter performed one or more of the
alleged acts of infringement;
``(B) the infringer intentionally copied the
patented invention with knowledge that it was patented;
or
``(C) after having been found by a court to have
infringed that patent, the infringer engaged in conduct
that was not colorably different from the conduct
previously found to have infringed the patent, and that
resulted in a separate finding of infringement of the
same patent.
``(3) Limitations on willfulness.--(A) A court may not find
that an infringer has willfully infringed a patent under
paragraph (2) for any period of time during which the infringer
had an informed good faith belief that the patent was invalid
or unenforceable, or would not be infringed by the conduct
later shown to constitute infringement of the patent.
``(B) An informed good faith belief within the meaning of
subparagraph (A) may be established by--
``(i) reasonable reliance on advice of counsel;
``(ii) evidence that the infringer sought to modify
its conduct to avoid infringement once it had
discovered the patent; or
``(iii) other evidence a court may find sufficient
to establish such good faith belief.
``(C) The decision of the infringer not to present evidence
of advice of counsel is not relevant to a determination of
willful infringement under paragraph (2).
``(4) Limitation on pleading.--Before the date on which a
court determines that the patent in suit is not invalid, is
enforceable, and has been infringed by the infringer, a
patentee may not plead and a court may not determine that an
infringer has willfully infringed a patent. The court's
determination of an infringer's willfulness shall be made
without a jury.''; and
(5) in the third undesignated paragraph, by striking ``The
court'' and inserting ``(d) Expert Testimony.--The court''.
(b) Defense to Infringement Based on Earlier Inventor.--Section 273
is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) by striking ``of a method''; and
(ii) by striking ``review period;'' and
inserting ``review period; and'';
(B) in paragraph (2)(B), by striking the semicolon
at the end and inserting a period; and
(C) by striking paragraphs (3) and (4);
(2) in subsection (b)--
(A) in paragraph (1)--
(i) by striking ``for a method''; and
(ii) by striking ``at least 1 year before
the effective filing date of such patent, and''
and all that follows through the period and
inserting ``and commercially used, or made
substantial preparations for commercial use of,
the subject matter before the effective filing
date of the claimed invention.'';
(B) in paragraph (2)--
(i) by striking ``The sale or other
disposition of a useful end product produced by
a patented method'' and inserting ``The sale or
other disposition of subject matter that
qualifies for the defense set forth in this
section''; and
(ii) by striking ``a defense under this
section with respect to that useful end
result'' and inserting ``such defense'';
(C) in paragraph (3)--
(i) by striking subparagraph (A); and
(ii) by redesignating subparagraphs (B) and
(C) as subparagraphs (A) and (B), respectively;
and
(D) in paragraph (7), by striking ``of the patent''
and inserting ``of the claimed invention''; and
(3) by amending the heading to read as follows:
``Sec. 273. Special defenses to and exemptions from infringement''.
(c) Table of Sections.--The item relating to section 273 in the
table of sections for chapter 28 is amended to read as follows:
``273. Special defenses to and exemptions from infringement.''.
(d) Effective Date.--The amendments made by this section shall
apply to any civil action commenced on or after the date of the
enactment of this Act.
(e) Review Every 7 Years.--Not later than the end of the 7-year
period beginning on the date of the enactment of this Act, and the end
of every 7-year period thereafter, the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent and
Trademark Office (in this subsection referred to as the ``Director'')
shall--
(1) conduct a study on the effectiveness and efficiency of
the amendments made by this section; and
(2) submit to the Committees on the Judiciary of the House
of Representatives and the Senate a report on the results of
the study, including any recommendations the Director has on
amendments to the law and other recommendations of the Director
with respect to the right of the inventor to obtain damages for
patent infringement.
SEC. 6. POST-GRANT PROCEDURES AND OTHER QUALITY ENHANCEMENTS.
(a) Citation of Prior Art.--
(1) In general.--Section 301 is amended to read as follows:
``Sec. 301. Citation of prior art
``(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) written statements of the patent owner filed in a
proceeding before a Federal court or the Patent and Trademark
Office in which the patent owner takes a position on the scope
of one or more patent claims.
``(b) Submissions Part of Official File.--If the person citing
prior art or written submissions under subsection (a) explains in
writing the pertinence and manner of applying the prior art or written
submissions to at least one claim of the patent, the citation of the
prior art or written submissions (as the case may be) and the
explanation thereof shall become a part of the official file of the
patent.
``(c) Procedures for Written Statements.--
``(1) Submission of additional materials.--A party that
submits written statements under subsection (a)(2) in a
proceeding shall include any other documents, pleadings, or
evidence from the proceeding that address the patent owner's
statements or the claims addressed by the written statements.
``(2) Limitation on use of statements.--Written statements
submitted under subsection (a)(2) 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
ordered pursuant to section 304 or 313. Any such written
statements, and any materials submitted under paragraph (1),
that are subject to an applicable protective order shall be
redacted to exclude information subject to the order.
``(d) Identity Withheld.--Upon the written request of the person
citing prior art or written statements under subsection (a), the
person's identity shall be excluded from the patent file and kept
confidential.''.
(b) Reexamination.--Section 303(a) is amended to read as follows:
``(a) Within three months after the owner of a patent files a
request for reexamination under section 302, 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. On the
Director's own initiative, and at any time, the Director may determine
whether a substantial new question of patentability is raised by
patents and publications discovered by the Director, is cited under
section 301, or is cited by any person other than the owner of the
patent under section 302 or section 311. 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) Conduct of Inter Partes Proceedings.--Section 314 is amended--
(1) in the first sentence of subsection (a), by striking
``conducted according to the procedures established for initial
examination under the provisions of sections 132 and 133'' and
inserting ``heard by an administrative patent judge in
accordance with procedures which the Director shall
establish'';
(2) in subsection (b), by striking paragraph (2) and
inserting the following:
``(2) The third-party requester shall have the opportunity to file
written comments on any action on the merits by the Office in the inter
partes reexamination proceeding, and on any response that the patent
owner files to such an action, if those written comments are received
by the Office within 60 days after the date of service on the third-
party requester of the Office action or patent owner response, as the
case may be.''; and
(3) by adding at the end the following:
``(d) Oral Hearing.--At the request of a third party requestor or
the patent owner, the administrative patent judge shall conduct an oral
hearing, unless the judge finds cause lacking for such hearing.''.
(d) Estoppel.--Section 315(c) is amended by striking ``or could
have raised''.
(e) Reexamination Prohibited After District Court Decision.--
Section 317(b) is amended--
(1) in the subsection heading, by striking ``Final
Decision'' and inserting ``District Court Decision''; and
(2) by striking ``Once a final decision has been entered''
and inserting ``Once the judgment of the district court has
been entered''.
(f) Post-Grant Opposition Procedures.--
(1) In general.--Part III is amended by adding at the end
the following new chapter:
``CHAPTER 32--POST-GRANT REVIEW PROCEDURES
``Sec.
``321. Petition for post-grant review.
``322. Timing and bases of petition.
``323. Requirements of petition.
``324. Prohibited filings.
``325. Submission of additional information; showing of sufficient
grounds.
``326. Conduct of post-grant review proceedings.
``327. Patent owner response.
``328. Proof and evidentiary standards.
``329. Amendment of the patent.
``330. Decision of the Board.
``331. Effect of decision.
``332. Settlement.
``333. Relationship to other pending proceedings.
``334. Effect of decisions rendered in civil action on post-grant
review proceedings.
``335. Effect of final decision on future proceedings.
``336. Appeal.
``Sec. 321. Petition for post-grant review
``Subject to sections 322, 324, 332, and 333, a person who is not
the patent owner may file with the Office a petition for cancellation
seeking to institute a post-grant review proceeding to cancel as
unpatentable any claim 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). The Director shall establish, by regulation,
fees to be paid by the person requesting the proceeding, in such
amounts as the Director determines to be reasonable.
``Sec. 322. Timing and bases of petition
``A post-grant proceeding may be instituted under this chapter
pursuant to a cancellation petition filed under section 321 only if--
``(1) the petition is filed not later than 12 months after
the grant of the patent or issuance of a reissue patent, as the
case may be; or
``(2) the patent owner consents in writing to the
proceeding.
``Sec. 323. Requirements of petition
``A cancellation 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 the cancellation petitioner;
and
``(3) the petition sets forth in writing the basis for the
cancellation, identifying each claim challenged and providing
such information as the Director may require by regulation, and
includes copies of patents and printed publications that the
cancellation petitioner relies upon in support of the petition;
and
``(4) the petitioner provides copies of those documents to
the patent owner or, if applicable, the designated
representative of the patent owner.
``Sec. 324. Prohibited filings
``A post-grant review proceeding may not be instituted under
section 322 if the petition for cancellation requesting the proceeding
identifies the same cancellation petitioner and the same patent as a
previous petition for cancellation filed under such section.
``Sec. 325. Submission of additional information; showing of sufficient
grounds
``(a) In General.--The cancellation petitioner shall file such
additional information with respect to the petition as the Director may
require. For each petition submitted under section 321, the Director
shall determine if the written statement, and any evidence submitted
with the request, establish that a substantial question of
patentability exists for at least one claim in the patent. The Director
may initiate a post-grant review proceeding if the Director determines
that the information presented provides sufficient grounds to believe
that there is a substantial question of patentability concerning one or
more claims of the patent at issue.
``(b) Notification; Determinations Not Reviewable.--The Director
shall notify the patent owner and each petitioner in writing of the
Director's determination under subsection (a), including a
determination to deny the petition. The Director shall make that
determination in writing not later than 60 days after receiving the
petition. Any determination made by the Director under subsection (a),
including whether or not to institute a post-grant review proceeding or
to deny the petition, shall not be reviewable.
``Sec. 326. Conduct of post-grant review proceedings
``(a) In General.--The Director shall prescribe regulations, in
accordance with section 2(b)(2)--
``(1) establishing and governing post-grant review
proceedings under this chapter and their relationship to other
proceedings under this title;
``(2) establishing procedures for the submission of
supplemental information after the petition for cancellation is
filed; and
``(3) setting forth 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, and the procedures for
obtaining such evidence shall be consistent with the purpose
and nature of the proceeding.
``(b) Post-Grant Regulations.--Regulations under subsection
(a)(1)--
``(1) shall require that the final determination in a post-
grant proceeding issue not later than one year after the date
on which the post-grant review proceeding is instituted under
this chapter, except that, for good cause shown, the Director
may extend the 1-year period by not more than six months;
``(2) shall provide for discovery upon order of the
Director;
``(3) shall provide for publication of notice in the
Federal Register of the filing of a petition for post-grant
review under this chapter, for publication of the petition, and
documents, orders, and decisions relating to the petition, on
the website of the Patent and Trademark Office, and for filings
under seal exempt from publication requirements;
``(4) shall prescribe 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 unnecessary
increase in the cost of the proceeding;
``(5) may provide for protective orders governing the
exchange and submission of confidential information; and
``(6) shall ensure that any information submitted by the
patent owner in support of any amendment entered under section
329 is made available to the public as part of the prosecution
history of the patent.
``(c) Considerations.--In prescribing regulations under this
section, the Director shall consider the effect on the economy, the
integrity of the patent system, and the efficient administration of the
Office.
``(d) Conduct of Proceeding.--The Patent Trial and Appeal Board
shall, in accordance with section 6(b), conduct each post-grant review
proceeding authorized by the Director.
``Sec. 327. Patent owner response
``After a post-grant proceeding under this chapter has been
instituted with respect to a patent, the patent owner shall have the
right to file, within a time period set by the Director, a response to
the cancellation petition. The patent owner shall file with the
response, through affidavits or declarations, any additional factual
evidence and expert opinions on which the patent owner relies in
support of the response.
``Sec. 328. Proof and evidentiary standards
``(a) In General.--The presumption of validity set forth in section
282 shall not apply in a challenge to any patent claim under this
chapter.
``(b) Burden of Proof.--The party advancing a proposition under
this chapter shall have the burden of proving that proposition by a
preponderance of the evidence.
``Sec. 329. Amendment of the patent
``(a) In General.--In response to a challenge in a petition for
cancellation, the patent owner may file one motion to amend the patent
in one or more of the following ways:
``(1) Cancel any challenged patent claim.
``(2) For each challenged claim, propose a substitute
claim.
``(3) Amend the patent drawings or otherwise amend the
patent other than the claims.
``(b) Additional Motions.--Additional motions to amend may be
permitted only for good cause shown.
``(c) Scope of Claims.--An amendment under this section may not
enlarge the scope of the claims of the patent or introduce new matter.
``Sec. 330. Decision of the Board
``If the post-grant review proceeding 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 and any new claim added under section 329.
``Sec. 331. Effect of decision
``(a) In General.--If the Patent Trial and Appeal Board issues a
final decision under section 330 and 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 and incorporating in the patent by
operation of the certificate any new claim determined to be patentable.
``(b) New Claims.--Any new claim held to be patentable and
incorporated into a patent in a post-grant review proceeding shall have
the same effect as that specified in section 252 for reissued patents
on the right of any person who made, purchased, offered to sell, or
used within the United States, or imported into the United States,
anything patented by such new claim, or who made substantial
preparations therefor, before a certificate under subsection (a) of
this section is issued.
``Sec. 332. Settlement
``(a) In General.--A post-grant review proceeding shall be
terminated with respect to any petitioner upon the joint request of the
petitioner and the patent owner, unless the Patent Trial and Appeal
Board has issued a written decision before the request for termination
is filed. If the post-grant review proceeding is terminated with
respect to a petitioner under this paragraph, no estoppel shall apply
to that petitioner. If no petitioner remains in the proceeding, the
panel of administrative patent judges assigned to the proceeding shall
terminate the proceeding.
``(b) Agreement in Writing.--Any agreement or understanding between
the patent owner and a petitioner, including any collateral agreements
referred to in the agreement or understanding, that is made in
connection with or in contemplation of the termination of a post-grant
review proceeding, must be in writing. A post-grant review proceeding
as between the parties to the agreement or understanding may not be
terminated until a copy of the agreement or understanding, including
any such collateral agreements, has been filed in the Office. If any
party filing such an agreement or understanding requests, the agreement
or understanding shall be kept separate from the file of the post-grant
review proceeding, and shall be made available only to Government
agencies on written request, or to any person on a showing of good
cause.
``Sec. 333. Relationship to other pending proceedings
``(a) In General.--Notwithstanding subsection 135(a), sections 251
and 252, and chapter 30, the Director may determine the manner in which
any reexamination proceeding, reissue proceeding, interference
proceeding (commenced before the effective date provided in section
3(k) of the Patent Reform Act of 2007), derivation proceeding, or post-
grant review proceeding, that is pending during a post-grant review
proceeding, may proceed, including providing for stay, transfer,
consolidation, or termination of any such proceeding.
``(b) Stays.--The Director may stay a post-grant review proceeding
if a pending civil action for infringement addresses the same or
substantially the same questions of patentability.
``Sec. 334. Effect of decisions rendered in civil action on post-grant
review proceedings
``If a final decision is entered against a party in a civil action
arising in whole or in part under section 1338 of title 28 establishing
that the party has not sustained its burden of proving the invalidity
of any patent claim--
``(1) that party to the civil action and the privies of
that party may not thereafter request a post-grant review
proceeding on that patent claim on the basis of any grounds,
under the provisions of section 321, which that party or the
privies of that party raised or could have raised; and
``(2) the Director may not thereafter maintain a post-grant
review proceeding that was requested, before the final decision
was so entered, by that party or the privies of that party on
the basis of such grounds.
``Sec. 335. Effect of final decision on future proceedings
``If a final decision under section 330 is favorable to the
patentability of any original or new claim of the patent challenged by
the cancellation petitioner, the cancellation petitioner may not
thereafter, based on any ground that the cancellation petitioner raised
during the post-grant review proceeding--
``(1) request or pursue a reexamination of such claim under
chapter 31;
``(2) request or pursue a derivation proceeding with
respect to such claim;
``(3) request or pursue a post-grant review proceeding
under this chapter with respect to such claim; or
``(4) assert the invalidity of any such claim in any civil
action arising in whole or in part under section 1338 of title
28.
``Sec. 336. Appeal
``A party dissatisfied with the final determination of the Patent
Trial and Appeal Board in a post-grant proceeding under this chapter
may appeal the determination under sections 141 through 144. Any party
to the post-grant proceeding shall have the right to be a party to the
appeal.''.
(g) Conforming Amendment.--The table of chapters for part III is
amended by adding at the end the following:
``32. Post-Grant Review Proceedings......................... 321''.
(h) Repeal.--Section 4607 of the Intellectual Property and
Communications Omnibus Reform Act of 1999, as enacted by section
1000(a)(9) of Public Law 106-113, is repealed.
(i) Effective Dates.--
(1) In general.--The amendments and repeal made by this
section shall take effect at the end of the 1-year period
beginning on the date of the enactment of this Act.
(2) Applicability to ex parte and inter partes
proceedings.--Notwithstanding any other provision of law,
sections 301 and 311 through 318 of title 35, United States
Code, as amended by this section, shall apply to any patent
that issues before, on, or after the effective date under
paragraph (1) from an original application filed on any date.
(3) Applicability to post-grant proceedings.--The
amendments made by subsection (f) shall apply to patents issued
on or after the effective date under paragraph (1).
(j) Regulations.--
(1) Regulations.--The Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office (in this subsection referred to as 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 (f) of this section.
(2) Pending interferences.--The Director shall determine
the procedures under which interferences under title 35, United
States Code, that are commenced before the effective date under
subsection (i)(1) are to proceed, including whether any such
interference is to be dismissed without prejudice to the filing
of a cancellation petition for a post-grant opposition
proceeding under chapter 32 of title 35, United States Code, or
is to proceed as if this Act had not been enacted. The Director
shall include such procedures in regulations issued under
paragraph (1).
SEC. 7. DEFINITIONS; PATENT TRIAL AND APPEAL BOARD.
(a) Definitions.--Section 100 (as amended by this Act) is further
amended by adding at the end the following:
``(k) The term `cancellation petitioner' means the real party in
interest requesting cancellation of any claim of a patent under chapter
32 of this title and the privies of the real party in interest.''.
(a) Patent Trial and Appeal Board.--Section 6 is amended to read as
follows:
``Sec. 6. Patent Trial and Appeal Board
``(a) Establishment and Composition.--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 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 application for patents;
``(2) on written appeal of a patent owner, review adverse
decisions of examiners upon patents in reexamination
proceedings under chapter 30;
``(3) review appeals by patent owners and third-party
requesters under section 315;
``(4) determine priority and patentability of invention in
derivation proceedings under section 135(a); and
``(5) conduct post-grant opposition proceedings under
chapter 32.
Each appeal and derivation proceeding 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. The Director shall assign each post-grant review proceeding
to a panel of 3 administrative patent judges. Once assigned, each such
panel of administrative patent judges shall have the responsibilities
under chapter 32 in connection with post-grant review proceedings.''.
(b) Effective Date.--The amendments made by this section shall take
effect at the end of the 1-year period beginning on the date of the
enactment of this Act.
SEC. 8. STUDY AND REPORT ON REEXAMINATION PROCEEDINGS.
The Under Secretary of Commerce for Intellectual Property and
Director of the Patent and Trademark Office shall, not later than 2
years after the date of the enactment of this Act--
(1) conduct a study of the effectiveness and efficiency of
the different forms of proceedings available under title 35,
United States Code, for the reexamination of patents; and
(2) submit to the Committees on the Judiciary of the House
of Representatives and the Senate a report on the results of
the study, including any of the Director's suggestions for
amending the law, and any other recommendations the Director
has with respect to patent reexamination proceedings.
SEC. 9. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY ENHANCEMENTS.
(a) Publication.--Section 122(b)(2) is amended--
(1) by striking subparagraph (B); and
(2) in subparagraph (A)--
(A) by striking ``(A) An application'' and
inserting ``An application''; and
(B) by redesignating clauses (i) through (iv) as
subparagraphs (A) through (D), respectively.
(b) Preissuance Submissions by Third Parties.--Section 122 is
amended by adding at the end the following:
``(e) Preissuance Submissions by Third Parties.--
``(1) In general.--Any person may submit for consideration
and inclusion in the record of a patent application, any
patent, published patent application, or other 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 mailed in the application for patent; or
``(B) either--
``(i) 6 months after the date on which the
application for patent is published under
section 122, 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,
whichever occurs later.
``(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 submitter
affirming that the submission was made in compliance
with this section.''.
(c) Effective Date.--The amendments made by this section--
(1) shall take effect at the end of the 1-year period
beginning on the date of the enactment of this Act; and
(2) shall apply to any application for patent filed before,
on, or after the effective date under paragraph (1).
SEC. 10. TAX PLANNING METHODS NOT PATENTABLE.
(a) In General.--Section 101 is amended--
(1) by striking ``Whoever'' and inserting ``(a) Patentable
Inventions.--Whoever''; and
(2) by adding at the end the following:
``(b) Tax Planning Methods.--
``(1) Unpatentable subject matter.--A patent may not be
obtained for a tax planning method.
``(2) Definitions.--For purposes of paragraph (1)--
``(A) the term `tax planning method' means a plan,
strategy, technique, or scheme that is designed to
reduce, minimize, or defer, or has, when implemented,
the effect of reducing, minimizing, or deferring, a
taxpayer's tax liability, but does not include the use
of tax preparation software or other tools used solely
to perform or model mathematical calculations or
prepare tax or information returns;
``(B) the term `taxpayer' means an individual,
entity, or other person (as defined in section 7701 of
the Internal Revenue Code of 1986) that is subject to
taxation directly, is required to prepare a tax return
or information statement to enable one or more other
persons to determine their tax liability, or is
otherwise subject to a tax law;
``(C) the terms `tax', `tax laws', `tax liability',
and `taxation' refer to any Federal, State, county,
city, municipality, or other governmental levy,
assessment, or imposition, whether measured by income,
value, or otherwise; and
``(D) the term `State' means each of the several
States, the District of Columbia, and any commonwealth,
territory, or possession of the United States.''.
(b) Applicability.--The amendments made by this section--
(1) shall take effect on the date of the enactment of this
Act;
(2) shall apply to any application for patent or
application for a reissue patent that is--
(A) filed on or after the date of the enactment of
this Act; or
(B) filed before that date if a patent or reissue
patent has not been issued pursuant to the application
as of that date; and
(3) shall not be construed as validating any patent issued
before the date of the enactment of this Act for an invention
described in section 101(b) of title 35, United States Code, as
amended by this section.
SEC. 11. VENUE AND JURISDICTION.
(a) Venue for Patent Cases.--Section 1400 of title 28, United
States Code, is amended by striking subsection (b) and inserting the
following:
``(b) Notwithstanding section 1391 of this title, in any civil
action arising under any Act of Congress relating to patents, a party
shall not manufacture venue by assignment, incorporation, or otherwise
to invoke the venue of a specific district court.
``(c) Notwithstanding section 1391 of this title, any civil action
for patent infringement or any action for declaratory judgment may be
brought only in a judicial district--
``(1) where the defendant has its principal place of
business or in the location or place in which the defendant is
incorporated, or, for foreign corporations with a United States
subsidiary, where the defendant's primary United States
subsidiary has its principal place of business or in the
location or place in which the defendants primary United States
subsidiary is incorporated;
``(2) where the defendant has committed a substantial
portion of the acts of infringement and has a regular and
established physical facility that the defendant controls and
that constitutes a substantial portion of the operations of the
defendant;
``(3) where the primary plaintiff resides, if the primary
plaintiff in the action is an institution of higher education
as defined under section 101(a) of the Higher Education Act of
1965 (20 U.S.C. 1001(a)); or
``(4) where the plaintiff resides, if the plaintiff or a
subsidiary of the plaintiff has an established physical
facility in such district dedicated to research, development,
or manufacturing that is operated by full-time employees of the
plaintiff or such subsidiary, or if the sole plaintiff in the
action is an individual inventor who is a natural person and
who qualifies at the time such action is filed as a micro
entity under section 124 of title 35.
``(d) If the plaintiff brings a civil action for patent
infringement in a judicial district under subsection (c), the district
court may transfer that action to any other district or division
where--
``(1) the defendant has substantial evidence or witnesses;
and
``(2) venue would be appropriate under section 1391 of this
title, if such transfer would be appropriate under section 1404
of this title.''.
(b) Interlocutory Appeals.--Subsection (c) of section 1292 of title
28, United States Code, is amended--
(1) by striking ``and'' at the end of paragraph (1);
(2) by striking the period at the end of paragraph (2) and
inserting ``; and''; and
(3) by adding at the end the following:
``(3) of an appeal from an interlocutory order or decree
determining construction of claims in a civil action for patent
infringement under section 271 of title 35.
Application for an appeal under paragraph (3) shall be made to the
court within 10 days after entry of the order or decree. The district
court shall have discretion whether to approve the application and, if
so, whether to stay proceedings in the district court during pendency
of the appeal.''.
(c) Effective Date.--The amendments made by this section shall
apply to any action commenced on or after the date of the enactment of
this Act.
SEC. 12. ADDITIONAL INFORMATION; INEQUITABLE CONDUCT AS DEFENSE TO
INFRINGEMENT.
(a) Disclosure Requirements for Applicants.--
(1) In general.--Chapter 11 is amended by adding at the end
the following new section:
``Sec. 123. Additional information
``(a) In General.--The Director shall, by regulation, require that
applicants submit a search report and other information and analysis
relevant to patentability. An application shall be regarded as
abandoned if the applicant fails to submit the required search report,
information, and analysis in the manner and within the time period
prescribed by the Director.
``(b) Exception for Micro Entities.--Applications from micro-
entities shall not be subject to the requirements of regulations issued
under subsection (a).
``Sec. 124. Micro entities
``(a) Definition.--For purposes of this title, the term `micro
entity' means an applicant for patent who makes a certification under
either subsection (b) or (c).
``(b) Unassigned Application.--A certification under this
subsection is a certification by each inventor named in the application
that the inventor--
``(1) qualifies as a small entity as defined in regulations
issued by the Director;
``(2) has not been named on five or more previously filed
patent applications;
``(3) has not assigned, granted, or conveyed, and is not
under an obligation by contract or law to assign, grant, or
convey, a license or any other ownership interest in the
application; and
``(4) does not have a gross income, as defined in section
61(a) of the Internal Revenue Code of 1986, exceeding 2.5 times
the median household income, as reported by the Bureau of the
Census, for the most recent calendar year preceding the
calendar year in which the examination fee is being paid.
``(c) Assigned Application.--A certification under this subsection
is a certification by each inventor named in the application that the
inventor--
``(1) qualifies as a small entity as defined in regulations
issued by the Director and meets the requirements of subsection
(b)(4);
``(2) has not been named on five or more previously filed
patent applications; and
``(3) 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 application to an
entity that has five or fewer employees and has a gross taxable
income, as defined in section 61(a) of the Internal Revenue
Code of 1986, that does not exceed 2.5 times the median
household income, as reported by the Bureau of the Census, for
the most recent calendar year preceding the calendar year in
which the examination fee is being paid.''.
(2) Conforming amendment.--The table of sections for
chapter 11 is amended by adding at the end the following new
items:
``123. Additional information.
``124. Micro entities.''.
(b) Inequitable Conduct as Defense to Infringement.--Section 282 is
amended--
(1) in the first undesignated paragraph, by striking ``A
patent'' and inserting ``(a) In General.--A patent'';
(2) in the second undesignated paragraph--
(A) by striking ``The following'' and inserting
``(b) Defenses.--The following''; and
(B) by striking the comma at the end of each of
paragraphs (1), (2), and (3) and inserting a period;
(3) in the third undesignated paragraph--
(A) by striking ``In actions'' and inserting ``(d)
Notice of Actions; Pleading.--In actions'';
(B) by inserting after the second sentence the
following: ``In an action involving any allegation of
inequitable conduct under subsection (c), the party
asserting this defense or claim shall comply with the
pleading requirements set forth in Rule 9(b) of the
Federal Rules of Civil Procedure.''; and
(C) by striking ``Invalidity'' and inserting ``(e)
Extension of Patent Term.--Invalidity''; and
(4) by inserting after subsection (b), as designated by
paragraph (2) of this subsection, the following:
``(c) Inequitable Conduct.--
``(1) Defense.--A patent may be held to be unenforceable,
or other remedy imposed under paragraph (3), for inequitable
conduct only if it is established, by clear and convincing
evidence, that--
``(A) the patentee, its agents, or another person
with a duty of disclosure to the Office, with the
intent to mislead or deceive the patent examiner,
misrepresented or failed to disclose material
information concerning a matter or proceeding before
the Office; and
``(B) in the absence of such deception, the Office,
acting reasonably, would, on the record before it, have
made a prima facie finding of unpatentability.
``(2) Intent.--In order to prove intent to mislead or
deceive under paragraph (1), specific facts beyond materiality
of the information submitted or not disclosed must be proven
that support an inference of intent to mislead or deceive the
Patent and Trademark Office. Facts support an inference of
intent if they show circumstances that indicate conscious or
deliberate behavior on the part of the patentee, its agents, or
another person with a duty of disclosure to the Office, to not
disclose material information or to submit materially false
information.
``(3) Remedy.--Upon a finding of inequitable conduct, the
court shall balance the equities to determine which of the
following remedies to impose:
``(A) Denying equitable relief to the patent holder
and limiting the remedy for infringement to damages.
``(B) Holding the claims-in-suit, or the claims in
which inequitable conduct occurred, unenforceable.
``(C) Holding the patent unenforceable.
``(D) Holding the claims of a related patent
unenforceable.
``(4) Attorney misconduct.--Upon a finding of inequitable
conduct, if there is evidence that the conduct can be
attributable to a person or persons authorized to practice
before the Office, the court shall refer the matter to the
Office for appropriate disciplinary action under section 32,
and shall order the parties to preserve and make available to
the Office any materials that may be relevant to the
determination under section 32.''.
(c) Effective Date.--
(1) Subsection (a).--The amendments made by subsection
(a)--
(A) shall take effect at the end of the 1-year
period beginning on the date of the enactment of this
Act; and
(B) shall apply to any application for patent filed
on or after the effective date under subparagraph (A).
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to any civil action commenced on or after the date
of the enactment of this Act.
SEC. 13. BEST MODE REQUIREMENT.
Section 282(b) (as designated by section 12(b) of this Act) is
amended 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 of this title,
other than the requirement that the specification shall
set forth the best mode contemplated by the inventor of
carrying out his invention; or
``(B) any requirement of section 251 of this
title.''.
SEC. 14. REGULATORY AUTHORITY.
(a) Regulatory Authority.--Section 2(c) is amended by adding at the
end the following:
``(6) The powers granted under paragraph (2) of subsection (b)
include the authority to promulgate regulations to ensure the quality
and timeliness of applications and their examination, including
specifying circumstances under which an application for patent may
claim the benefit under sections 120, 121 and 365(c) of the filing date
of a prior filed application for patent.''.
(b) Clarification.--The amendment made by subsection (a) clarifies
the scope of power granted to the United States Patent and Trademark
Office by paragraph (2) of section 2(b) of title 35, United States
Code, as in effect since the enactment of Public Law 106-113.
SEC. 15. TECHNICAL AMENDMENTS.
(a) Joint Inventions.--Section 116 is amended--
(1) in the first paragraph, by striking ``When''
and inserting ``(a) Joint Inventions.--When'';
(2) in the second paragraph, by striking ``If a
joint inventor'' and inserting ``(b) Omitted
Inventor.--If a joint inventor''; and
(3) in the third paragraph, by striking
``Whenever'' and inserting ``(c) Correction of Errors
in Application.--Whenever''.
(b) Filing of Application in Foreign Country.--Section 184 is
amended--
(1) in the first paragraph, by striking ``Except when'' and
inserting ``(a) Filing in Foreign Country.--Except when'';
(2) in the second paragraph, by striking ``The term'' and
inserting ``(b) Application.--The term''; and
(3) in the third paragraph, by striking ``The scope'' and
inserting ``(c) Subsequent Modifications, Amendments, and
Supplements.--The scope''.
(c) Reissue of Defective Patents.--Section 251 is amended--
(1) in the first paragraph, by striking ``Whenever'' and
inserting ``(a) In General.--Whenever'';
(2) in the second paragraph, by striking ``The Director''
and inserting ``(b) Multiple Reissued Patents.--The Director'';
(3) in the third paragraph, by striking ``The provisions''
and inserting ``(c) Applicability of This Title.--The
provisions''; and
(4) in the last paragraph, by striking ``No reissued
patent'' and inserting ``(d) Reissue Patent Enlarging Scope of
Claims.--No reissued patent''.
(d) Effect of Reissue.--Section 253 is amended--
(1) in the first paragraph, by striking ``Whenever'' and
inserting ``(a) In General.--Whenever''; and
(2) in the second paragraph, by striking ``In like manner''
and inserting ``(b) Additional Disclaimer or Dedication.--In
the manner set forth in subsection (a),''.
(e) Correction of Named Inventor.--Section 256 is amended--
(1) in the first paragraph, by striking ``Whenever'' and
inserting ``(a) Correction.--Whenever''; and
(2) in the second paragraph, by striking ``The error'' and
inserting ``(b) Patent Valid if Error Corrected.--The error''.
(f) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 16. STUDY OF SPECIAL MASTERS IN PATENT CASES.
(a) In General.--Not later than 180 days after the date of the
enactment of this Act, the Director of the Administrative Office of the
United States Courts shall conduct a study of, and 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 use of
special masters in patent litigation who are appointed in accordance
with Rule 53 of the Federal Rules of Civil Procedure.
(b) Objective.--In conducting the study under subsection (a), the
Director shall consider whether the use of special masters has been
beneficial in patent litigation and what, if any, program should be
undertaken to facilitate the use by the judiciary of special masters in
patent litigation.
(c) Factors to Consider.--In conducting the study under subsection
(a), the Director, in consultation with the Federal Judicial Center,
shall consider--
(1) the basis upon which courts appoint special masters
under Rule 53(b) of the Federal Rules of Civil Procedure;
(2) the frequency with which special masters have been used
by the courts;
(3) the role and powers special masters are given by the
courts;
(4) the subject matter at issue in cases that use special
masters;
(5) the impact on court time and costs in cases where a
special master is used as compared to cases where no special
master is used;
(6) the legal and technical training and experience of
special masters;
(7) whether the use of special masters has an impact on the
reversal rate of district court decisions at the Court of
Appeals for the Federal Circuit; and
(8) any other factors that the Director believes would
assist in gauging the effectiveness of special masters in
patent litigation.
SEC. 17. RULE OF CONSTRUCTION.
The enactment of section 102(b)(3) of title 35, United States Code,
under section (3)(b) of this Act 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 section 3(c)
of this Act. The United States Patent and Trademark Office shall
administer section 102(b)(3) 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 Patent and Trademark Office.
Purpose and Summary
The purpose H.R. 1908, the ``Patent Reform Act of 2007,''
is to address several problems in the patent system that hinder
the ability of patents to promote future innovation. These
problems deal primarily with the rampant issuance of poor-
quality patents, abusive practices particular to patent
litigation, and inefficiencies that are a result of the lack of
harmonization between patent law in the United States and the
rest of the world. Among the many agencies and groups calling
for some form of patent reform include the United States Patent
and Trademark Office (USPTO), the Federal Trade Commission
(FTC), the National Academy of Science, the Intellectual
Property Owners Association, the American Bar Association
Intellectual Property Division, the American Intellectual
Property Law Association, and businesses representing every
sector of industry.
The reforms included in H.R. 1908, are the creation of a
post-grant review procedure as a check on poor-quality patents,
defining how courts are to apportion damages in patent
infringement cases so that awards reflect patent value,
clarification of when treble damages may be awarded in order to
prevent patent hold-ups, updating inter partes reexamination to
promote greater use of the procedure, eliminating so-called
``submarine patents'' by requiring 18-month publication for all
patent applications, allowing third parties to submit prior art
during patent prosecution as a further check against poor-
quality patents, codifying the doctrine of inequitable conduct
in order to stem its overuse, clarifying the extent the USPTO's
regulatory authority, switching the United States patent system
to a first-inventor-to-file system in order to promote
harmonization, and creating prior user rights as a means to
mitigate the change in the scope of prior art required by a
first-inventor-to-file system.
Background and Need for the Legislation
Patents are provided to inventors as an incentive to
advance the state of knowledge and to develop innovative
products and services. They do this by granting inventors
exclusive rights to their inventions for a limited period. In
exchange for the temporary monopoly right, inventors are
required to disclose to society the knowledge behind their
inventions. This social bargain is enshrined in the
Constitution, which empowers Congress to ``promote the progress
of . . . science and the useful arts . . . by securing for
limited times to . . . inventors the exclusive right to their .
. . discoveries.''\1\
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\1\U.S. Const., Art. 1, Sec. 8, Cl. 8.
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Over the last several years, agencies like the USPTO and
FTC, the National Academy of Science, professional
organizations, industry coalitions, economists, academics and
others have identified significant problems in the patent
system. These problems boil down to two main areas--the
issuance of poor-quality patents and abusive practices
particular to patent litigation. These problems have hindered
the ability of patents to spur innovation today and have put at
risk future innovation. H.R. 1908, the Patent Reform Act of
2007, is designed to address several of the problems identified
in the United States patent system and modernize it for the
21st Century.
The Patent Reform Act of 2007 affects several parts of our
patent law. The most significant changes pertain to the first-
inventor-to-file system, the inventor's oath requirement,
apportionment of damages, willful infringement, prior user
rights, reexamination generally, ex parte reexamination, inter
partes reexamination, post-grant review, 18 month publication
of patent applications, prior art submissions by third parties,
tax patents, venue, interlocutory appeals, applicant disclosure
requirements, inequitable conduct, best mode and USPTO
regulatory authority. Background for each of these topics is
provided below.
FIRST-INVENTOR-TO-FILE SYSTEM
The United States is the only major industrialized country
to maintain a first-to-invent patent system. In such a system,
priority to a patent for an invention is awarded to the first
inventor. However, often times, especially in cases of dispute
over the invention date or who invented first, two complex
issues can arise that leave in doubt whether the applicant has
the right to the patent. The first relates to ``prior art''--
information already available to the public at the time a
patent is sought. If the invention already appears in the prior
art, or is made obvious by it, then the patentee cannot receive
a patent. But if prior art that defeats the patent application
is found by the United States Patent and Trademark Office
(USPTO) during examination, an applicant may prove that the
invention was conceived and reduced to practice at a date
earlier than the prior art date, unless the prior art was
available more than 1 year before the application filing date.
This process is called ``swearing back'' and is intended to
allow an inventor to prove he was the first to come up with the
invention. Maintaining sufficient proof to swear back requires
the inventor to keep detailed records of all activities leading
up to the invention and can be quite a burden to demonstrate
when required. Second, where there are two or more applications
that claim the same invention, priority to the patent is
awarded to the inventor who can demonstrate the earliest
conception of the invention in an administrative proceeding
called an interference. Again, this process permits the first
inventor to show that he was indeed the first to come up with
the invention. Here again, inventors need to keep detailed
records of all activities leading up to invention in order to
furnish proof of invention date. These characteristics of a
first-to-invent patent system leave in doubt whether an
applicant will actually have the right to patent his invention.
In all other countries in the world, priority to a patent
for an invention is awarded to the first person to file a
patent application for the invention. These systems are aptly
referred to as first-to-file systems. In such systems, one need
not prove the date of invention. A second or subsequent
inventor may secure the patent right in an invention if this
person was the first to submit a patent application on the
invention. Also, any prior art references adequately discloses
the invention and predates that invention's application date
will invalidate the patent for the invention. A first-to-file
system is not only more streamlined but also gives inventors
and the public a clearer idea of whether they have the right to
patent their inventions.
There are compelling reasons for the United States to
switch to a first-inventor-to-file system.\2\ As discussed
above, maintaining a first-to-invent system requires
interference proceedings to determine who among two or more
inventors to the same invention is entitled to the patent
right. According to a recent study by National Research Council
(NRC),\3\ these interference proceedings are ``costly and very
protracted,'' and in general are not worth maintaining. The NRC
estimates that on average it costs between $750,000 and
$1,000,000 to participate in an interference proceeding. Costs
such as these disadvantage small inventors who may not have the
resources to initiate an interference proceeding, and thus
undermines any argument that a first-to-invent patent system is
fairer than a first-inventor-to file patent system.
Furthermore, a detailed review of patents issued from 1983
through 2004 showed that greater than 50% of interference
decisions disadvantaged small entities.\4\
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\2\This report uses the term ``first-inventor-to-file,'' rather
than ``first-to-file,'' because a patent applicant who files later than
another can be awarded a patent if he demonstrates that the earlier
filer was not a true inventor.
\3\National Research Council of the National Academies (hereinafter
``NRC''), A Patent System for the 21st Century (2004) at 124.
\4\Perspectives on Patents: Harmonization and Other Matters,
Hearings Before the Subcommittee on Intellectual Property, Senate
Judiciary Committee, 109th Cong. (2005) (statement of Hon. Gerald
Mossinghoff, Former Assistant Secretary of Commerce and Commissioner of
Patents and Trademarks and Senior Counsel, Oblon, Spivak, McClelland,
Maier & Neustadt).
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The NRC Report also points out that as a practical matter,
most applicants simply use their date of application as their
date of invention, and therefore most applicants already
operate as if the United States has a first-inventor-to-file
patent system, so there would be little disruption to formally
change to such a system. Likewise, statistics show that less
than 1 in 1000 patent applications are ever subject to an
interference proceeding. Since the first-to-invent aspects of
our patent system are rarely used, serious doubt is cast on the
need of having a first-to-invent system.
Many businesses have urged that the United States move to a
first-inventor-to-file system. Businesses of every size seek to
protect their inventions throughout the world and thus they
apply for and maintain patents for the same invention in
several countries. Because the basic rules relating to priority
to invention are different between the United States and the
rest of the world, businesses are forced to dedicate more
resources to maintaining their patent portfolios than they
would otherwise have to if the United States adopted a first-
inventor-to-file system.
Lastly, patent harmonization is in the long-run interests
of United States inventors. Greater harmonization will make it
easier for United States inventors to secure patent rights in
other countries. Given the increasing globalization of
commerce, international patent protection will be increasingly
important to the ability of United States companies to compete.
Unfortunately, recent attempts to harmonize patent laws, such
as through the Substantive Patent Law Treaty, have stalled, to
a large extent, because of the fundamental difference between
how the United States and the rest of the world award priority
of invention.
The Committee has found persuasive the above reasons to
move the United States patent system to a first-inventor-to-
file system. As such, the legislation gives priority, in most
cases, to the first inventor to file an application for patent
on an invention, thus bringing United States patent system into
conformity with the practices of the rest of the world. In
order to fully implement this new system, changes are made to
the definition and scope of prior art. Additionally, to
facilitate an easy transition to a first-inventor-to-file
system, the 1-year inventor's grace period is maintained and
important exceptions to prior art are established, such as a
first-to-publish rule that preserves an inventor's priority of
application in limited circumstances where he publicly
discloses his invention. The grace period and exceptions to
prior art will effectively address any lingering concerns that
a first-inventor-to-file system will force inventors to patent
their inventions before they are ready for patenting, or
disadvantage inventors whose first regular means of disclosure
is through publication.
Additionally, a derivation proceeding is created to
determine the right to patent in cases where an invention may
have been misappropriated. There has been some concern that a
first-inventor-to-file system will encourage theft of
inventions by unscrupulous parties who may be able to file a
patent application on the invention before the real inventor
has an opportunity to do so. An inventor suffering from
misappropriation can make use of the derivation proceeding even
if he does not immediately know that his invention has been
misappropriated. This derivation proceeding will ensure that
only a true inventor, and not someone who misappropriates an
invention, will be awarded the patent.
Finally, so that American inventors are not disadvantaged
by the lack of an inventor's grace period in other important
countries, the implementation of these changes are conditioned
on the major patent authorities in Japan and Europe adopting a
similar kind of grace period.
INVENTOR'S OATH
Existing 35 U.S.C. Sec. 115 requires an inventor (or if
relevant, joint inventors) to execute an oath stating that he
believes himself to be an original inventor of the claimed
invention and the country of which he is a citizen. This
requirement, however, does not reflect the realities of modern
research. The globalization of science and technology has led
to an environment of international collaborations and migrating
scientists and engineers, in which it is increasingly difficult
to obtain the signatures of all the inventors when filing a
patent application. Often, it is at the time when the research
is developed to the point at which a patent application can be
prepared that one or more inventors may no longer reside in the
United States.
The legislation amends Sec. 115 to allow a substitute
statement to be submitted in lieu of an inventor's oath or
declaration. The statement will be required to state why an
oath could not be obtained and to have a warning that any false
statement would be subject to perjury charges. The amendments
will provide more flexibility in completing the oath
requirements, particularly in cases where it is difficult to
reach an inventor who has already assigned his rights.
Existing Sec. 118 provides that when an inventor refuses to
execute an application for a 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 a
person who otherwise shows sufficient proprietary interest in
the matter to justify the action, may apply for a patent on
behalf of and as agent for the inventor. As amended, Sec. 118
will allow a person who has an assignment from an inventor to
submit a patent application for an invention made by the
inventor. If the Director permits such a filing, the patent
will issue in the name of the real party in interest.
APPORTIONMENT OF DAMAGES
The right conferred by a patent on its owner is the right
to exclude others from making, using, offering to sell, selling
and importing a patented invention, as set forth in Sec. 271.
Whoever engages in any of those activities, or induces others
to do so, without permission of the patent owner infringes the
patent. The remedies for patent infringement include injunction
and damages.
The basic goal of damages for infringement is to put the
plaintiff patent holder in the same position (economically) as
it would have been had the defendant not infringed. In other
words, damages are intended to compensate plaintiff for the
loss resulting from invasion of his rights; they are not
intended to provide windfalls or to punish the infringer. In
only limited circumstances (e.g., treble damages for willful
infringement) should damages exceed the amount necessary to
provide full compensation. Thus, the patent damages statute,
Sec. 284, currently provides, in pertinent part:
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 . . .
Unfortunately, as the Committee has found, courts often
have difficulty in assuring that damages are: 1) ``to
compensate for the infringement'' (i.e., compensatory, not
punitive); 2) ``reasonable;'' and 3) related to ``the use made
of the invention by the infringer.''
``Damages adequate to compensate for the infringement'' are
plaintiff's loss due to infringement. In some cases, this can
be ascertained by applying a lost profits analysis (such as
where an infringing competitor diverts sales from plaintiff).
However, circumstances often do not allow for a lost profit
analysis. For instance, a lost profit analysis cannot be used
where a plaintiff is not (yet) engaged in selling its patented
product or process, nor has a track record of licensing the
patent to others. In these situations, under Sec. 284, the
plaintiff is entitled to a ``reasonable royalty'' in lieu of
lost profits. A ``reasonableness'' standard allows a fair
degree of flexibility, hence uncertainty, in calculating
damages.
Courts have endeavored to provide certainty and
predictability to the ``reasonable royalty'' analysis by
crafting guidelines to be used in calculating awards. In
Georgia-Pacific Corp. v. United States Plywood Corp.,\5\ the
court compiled a list of 15 factors to be used as the starting
point (and, often, the end point) for most reasonable royalty
damage calculations. The 15 factors are complex and are
designed to cover a wide range of situations among diverse
technologies and market practices. Courts often simply provide
juries all of Georgia-Pacific's 15 possible factors for
assessing a reasonable royalty and then direct the juries to
determine a reasonable royalty without much other guidance.\6\
This often results in the misapplication of these factors and
damage awards that are neither just nor related to the
statutory standard--compensation for ``the use made of the
invention by the infringer.'' Moreover, damage awards are
seldom overturned on appeal. Because the record often fails to
reveal which factors the jury used in calculating the award, it
is usually hard to identify errors of law. As a result, the
Federal Circuit uses a highly deferential standard:
---------------------------------------------------------------------------
\5\318 F.Supp. 1116, 1120 (S.D.N.Y. 1970), modified 446 F.2d 295
(2d Cir. 1971).
\6\See, for example, the American of Intellectual Property Law
Association's Model Patent Jury Instructions 12.15 (``In determining
the value of a reasonable royalty, you may consider evidence on any of
the following factors:'' [listing the 15 Georgia-Pacific factors], plus
``16. Any other economic factor that a normally prudent business person
would, under similar circumstances, take into consideration in
negotiating the hypothetical license ''). Similar jury instructions are
urged by the Federal Circuit Bar Association. and the American Bar
Association's Model Jury Instructions for Patent Litigation.
``The jury's award of damages is entitled to deference.
Specifically, the jury's damages award must be upheld
unless the amount is grossly excessive or monstrous,
clearly not supported by the evidence, or based only on
speculation or guesswork.''\7\
---------------------------------------------------------------------------
\7\Monsanto Co. v. Ralph, 382 F.3d 1374, 1383 (Fed. Cir. 2004).
Fundamentally, the economic value of a patent is determined
by the marketplace. Licensing deals are heavily influenced by
the consequences of infringement. Damage awards that greatly
exceed plaintiff's loss have a recursive effect on license
negotiations, and vice versa. A patent holder's fee demand for
a license increases as damage awards escalate. Awards, in turn,
reflect inflation in license fees. This results in an upward
cycle of ever increasing royalties, both those negotiated in
the market and those awarded by juries. Indeed, the Committee
was presented with numerous studies showing that current
litigation practices often produce a royalty award
substantially in excess of a reasonable royalty. This cycle is
harmful to our overall economy and especially damaging to
technology innovation.
Professor John Thomas of Georgetown University Law Center
has pointed to three adverse practical consequences resulting
from this trend:
<bullet> L``excessive awards may promote patent
litigation. A rational patent proprietor may be
unwilling to make fair royalty demands in the boardroom
when they are able to obtain significantly higher
damages awards in the courtroom;''
<bullet> L``the gap between the damages awarded for
patent infringement and the marketplace value of a
patented invention may also encourage speculation in
patents;''
<bullet> L``high damages awards ``may cause the scope
of patent protection routinely to extend beyond the
scope of its claims.''
And he noted, the threat of these adverse consequences is
much greater in today's ``environment where high technology
products increasingly embody not merely a single or handful of
patented inventions, but hundreds or even thousands of
them.''\8\ As an example, ``literally thousands of patents have
been identified as essential to the proposed new standards for
3G cellular telephone systems.''\9\ Infringement suits
typically focus on one or a few patents in isolation, rather
than their relative contribution to an overall product. In
economic theory, each patentee seeks to capture a share of the
licensee (or infringer's) surplus.\10\ When the user has to pay
monopoly rents for each of many patents (called ``royalty
stacking ''), the sum of the parts can become greater than the
whole. In other words, the net total damage award can be
disproportionate to the patent's market utility. In some cases,
it can exceed the infringer's total profit.\11\
---------------------------------------------------------------------------
\8\The Patent Reform Act of 2007, Hearings Before the Subcommittee
on Courts, the Internet and Intellectual Property, House Judiciary
Committee, 110th Cong. (2007) (statement of John R. Thomas, Professor
of Law Georgetown University Law Center Washington, D.C.).
\9\Mark A. Lemley and Carl Shapiro, Patent Holdup and Royalty
Stacking, 85 Texas L. Rev. 1991, 1992 (2007).
\10\The FTC describes this as a ``complements problem,'' where
multiple patent holders each seek monopoly rents in exchange for their
exclusive rights. Federal Trade Commission, To Promote Innovation: The
Proper Balance of Competition and Patent Law and Policy (FTC, Oct.
2003).
\11\See State Indus. Inc. v. Mor-Flo Indus. Inc., 883 F.2d 1573,
1580 (Fed. Cir. 1989) (``there is no rule that a royalty be no higher
than the infringer's net profit'').
---------------------------------------------------------------------------
Reasonable royalty analysis typically focuses on: 1) what
the patentee could obtain in the market as a license fee for
the invention, or 2) the amount of defendant's profits from
sale of an infringing product. Both mechanisms have their
limitations. The first is based either on an ``established
royalty rate'' if the patent-in-suit has been licensed by the
patentee or, where licensing history is lacking, on a
constructed ``hypothetical negotiation'' between plaintiff and
defendant. This can result in excessive royalties where the
patent is used to block development or marketing of defendant's
products. Thus, in the 3G example, a holdout patentee can
extract above-market fees from potential licensees (hence, from
defendant as a ``hypothetical'' licensee). The second approach,
using the defendant's profits as a base for reasonable royalty,
can also lead to excessive damages due to the difficulty in
calculating what portion of defendant's profits resulted from
``the use made of the invention by the infringer.''\12\
---------------------------------------------------------------------------
\12\The case of Fonar Corp. v. General Electric, 107 F.3d 1543
(Fed. Cir. 1997) illustrates the problem courts have had in calculating
damages when ``reasonable royalty'' is premised on defendant's profits.
Fonar's patent was for a method of using a Magnetic Resonance Imaging
(MRI) machine that reduced the number of scans required to obtain
multiple images (called ``MAO'' imaging). GE's MRI machines were held
to infringe the patent. In upholding a reasonable royalty award ($34
million) based on the entire sales price of GE's machines, the Court of
Appeals ruled there was no need to apportion GE's profits between the
patented invention and other components and features of the machines.
Instead, the court applied the ``Entire Market Value'' rule to award
damages based on total sales, rather than the separate value of the MAO
feature. A similar result occurred in Lucent-Alcatel v. Microsoft,
02CV2060 (SD Cal. 2007), where the jury awarded the patentee of a
component piece of MP3 audio compression technology $1.52 billion in
damages, based on world-wide sales of computers running Windows XP,
which contained the Windows Media Player, which in turn contained an
MP3 codec, which ultimately contained the patented component.
On August 6, 2007, the jury award in Lucent-Alcatel was set aside by
the trial court on a motion for new trial, ruling that the Entire
Market Value rule was inapplicable to the facts of the case.
Because of the difficulty in evaluating the specific
contribution a patented invention makes to defendant's profits
on an infringing product, courts often use a rule known as the
``Entire Market Value'' to award the entirety of such profits
to the plaintiff. The Entire Market Value rule was judicially
created for situations where patented and unpatented components
are sold and operate together as a functional unit, or where
the infringed patent is the basis for customer demand'' for the
entire unit.\13\ Unless that precondition applies, the Entire
Market Value rule is inapplicable, and a court should
``apportion'' the infringer's profits to determine the unique
contribution of the infringed patent. Like other economic
calculations, apportionment is not an easy task. Despite the
fact that apportionment appears as one of the Georgia-Pacific
factors (number 13), it appears to be under-utilized. This can
lead to excessive damage awards. The Committee believes this
growing problem can be attributed to the lack of guidance
provided to and by the courts in calculating reasonable royalty
damages.
---------------------------------------------------------------------------
\13\See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1550 (Fed.
Cir. 1995).
---------------------------------------------------------------------------
In order to ensure that damages awards are just and fairly
compensate inventors, Sec. 284 is significantly amended by
providing important additional guidance for both courts and
juries. First, courts will have the responsibility to determine
what factors are most appropriate to use in determining a
reasonable royalty in each case. The factors that courts may
choose from are defined in further amendments of Sec. 284, and
include apportionment of damages, the entire market value rule,
and other factors recognized as appropriate.
Apportionment of damages, as specified in the bill, should
allow for reasonable royalty calculations that truly reflect
the value of the invention being infringed. Apportionment is
also particularly appropriate to use to confront ``stacking
royalties;'' that is, where a product embodies numerous
patented components, each requiring a license and associated
royalty payments.
WILLFUL INFRINGEMENT
Under current 35 U.S.C. Sec. 284 a ``court may increase the
damages up to three times the amount found or assessed.''
Nothing in the existing statute explicitly states on what
grounds a court may increase damages in an infringement action.
But courts have found that this provision allows for
``punitive'' or exemplary damages in appropriate cases, as in
where infringement is found to be willful or in bad faith.\14\
---------------------------------------------------------------------------
\14\Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476,
508 (1964).
---------------------------------------------------------------------------
There is currently no threshold requirement for having a
charge of willfulness considered by the court. Thus, given the
potential benefits of proving willfulness, it is asserted in
most infringement suits. However, there is substantial question
as to whether the current standards used by the court to
determine willfulness are appropriate. For instance, courts
have found that knowledge of a patent can be used as evidence
to prove willful infringement of the patent. Further, this
knowledge can be established by vague assertions in notice of
infringement and ``invitation to license'' letters.\15\
---------------------------------------------------------------------------
\15\Christopher A. Harkins, Choosing Between the Advice of Counsel
Defense to Willful Patent Infringment or the Effective Assistance of
Trial Counsel: A Bridge or the Troubled Waters?, 5 Nw. J. of Tech and
Intell. Prop. 209, 219 (2007).
---------------------------------------------------------------------------
Businesses have employed various strategies to protect
themselves from willful infringement charges. For instance, a
company may obtain patent liability opinions from outside
counsel when they learn of a patent that may relate to its
products or activities.\16\ This, however, is a very expense
means to protect against willful infringement claims. The NRC
estimated that an infringement opinion usually costs between
$10,000 and $100,000.\17\ Additionally, patent liability
opinion letters are not always sufficient to establish there
was no willful infringement.\18\
---------------------------------------------------------------------------
\16\Knorr-Bremse Systeme Fuer Nutzfahrzeuge Gmbh v. Dana Corp., 383
F.3d 1337 (Fed. Cir. 2004) (en banc)(providing that an adverse
inference cannot be imputed if a company seeks a patent liability
opinion).
\17\NRC, supra note 3, at 119.
\18\Harkins, supra note 6, at 225.
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Another strategy businesses use to protect themselves from
a willful infringement charge is to deliberately avoid
searching for patents altogether, on the theory that if they
are not aware they are infringing a patent, their activity
cannot be willful.\19\ This result, however, is the exact
opposite of the intention of the patent system. As part of the
social contract underlying the patent system, each patent is
made publicly available in order to disseminate the knowledge
contained therein. However, because courts have found that
where previous knowledge of a patent is evidence of willful
infringement, some businesses actively avoid consulting patent
records.
---------------------------------------------------------------------------
\19\Id.
---------------------------------------------------------------------------
This bill addresses these problems concerning willfulness
by amending Sec. 284 to codify that treble damages may be
awarded when the court has determined that the infringer
engaged in willful infringement. This bill also limits the
permitted grounds for a finding of willfulness, by enhancing
standards for notice of infringement, establishing limitations
on the time during which an infringer may be held to have
willfully infringed, and establishing limitations on when a
pleading of willfulness may be made by the patentee or
determined by the courts.\20\
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\20\Just before this Committee Report went to print, the Court of
Appeals for the Federal Circuit amended its rule for finding willful
patent infringement. See In re Seagate Technology, 2007 U.S. App. LEXIS
19768 (Fed. Cir. 2007) (``proof of willful infringement permitting
enhanced damages requires at least a showing of objective
recklessness'' together with actual or constructive knowledge of
infringement).
---------------------------------------------------------------------------
PRIOR USER RIGHTS
Generally, prior user rights allow someone who had been
making or using an invention to continue to do so after the
invention has been patented by another. Prior user rights are
found under current law in Sec. 273. This was added by the
American Inventor's Protection Act of 1999 (AIPA), responding
in part to the Federal Circuit's decision to allow ``business
methods patents.''\21\ In particular, prior to the State Street
decision, most patent practitioners believed that business
methods were unpatentable subject matter, and they did not file
for patents in this subject area. After State Street, the USPTO
experienced a flood of business method patent applications. As
with other expansions of patentable subject matter, the USPTO
initially had few prior art references to use to judge the
novelty and obviousness of business method patent applications.
This led to the issuance of a large number of business method
patents that were not properly vetted against existing prior
art. Lawsuits and threats of lawsuits began to surface where
poor-quality business method patents were being enforced
against companies who had been practicing the claimed invention
for years under the assumption such inventions could not be
patented. While in many of these cases there was ample room for
defendants to argue that the patents being enforced were
invalid, the costs of litigating the matter were thought to be
an unproductive drain on the resources of defendants. The
defense of prior user rights, which had been considered in
amendments to the patent statute since the 1980's, was
established only for business method patents. However, the
defense as created by the AIPA, may be too narrow, since very
few prior users have to date invoked it.
---------------------------------------------------------------------------
\21\State Street Bank & Trust Co. v. Signature Financial Group, 149
F.3d 1368 (Fed. Cir. 1998).
---------------------------------------------------------------------------
The defense is limited not only in scope--namely, business
method patents--but also to a person's prior use of an
invention at a particular location at the time of the filing of
a patent that may cover some or all of that same use. These
limitations were imputed to ensure that incentive to use the
patent system (vs. trade secret law) were not diminished while
allowing use of something that was used previous to the filing
of a patent.
This legislation widens the scope of prior user rights to
all patented inventions. Thus, users of all types of
inventions, products or processes, will now be able to make use
of the defense if the invention is later patented by another.
The changes to prior user rights made by this bill do not
change the original goal of Sec. 273, but enhance the original
purpose for the provision. This goal, however, is secondary to
two other goals achieved by the expansion of prior user rights.
These goals are to 1) give early users limited protection from
patent infringement and 2) reduce the burden on the applicant
to file applications on every technology they use (versus
choosing to use trade secret law) and as a result reduce the
number of patent applications filed at the USPTO on less
critical inventions.
Given the definition and scope of prior art under both
current law and the modifications of 35 USC Sec. 102 discussed
above, an inventor must decide whether or not to seek patent
protection for his invention. If an inventor chooses patent
protection, the patent system provides the inventor legal
recourse to prevent others from making or using his invention
for a period of 20 years in exchange for public disclosure of
how the invention works. If an inventor chooses not to seek
patent protection, he does not have to disclose the invention
to the public and may make exclusive use of the invention
indefinitely under trade secret law. However, the inventor who
seeks trade secret protection also runs the risk of another
inventor independently coming up with and patenting the
invention. If this were to happen, the first inventor would not
only lose his monopoly over the invention, but would be subject
to an infringement suit by the later inventor who chose to
patent the invention. A limited prior user rights defense,
however, ensures that an inventor who chooses to protect his
invention through trade secrets will not be barred from using
the invention. In this case, a prior user will continue making
use of the invention, and the subsequent patent holder is
foreclosed from enforcing his patent right against the prior
user but may enforce the patent against others.
The other goal of providing prior user rights is to reduce
the number of applications filed overall, by removing the
burden on applicants to file an application on every invention.
Many companies today file patent applications on every aspect
of their business, including incremental inventions, in order
to shield themselves from potential liability for infringement
if someone were to later patent the invention. This practice of
defensive patenting has contributed to the increase of patent
applications in recent years and the resultant backlog in
examinations. Inventions that are patented for defensive
reasons are generally not enforced against others and are
simply used as a safeguard.
REEXAMINATION
After a patent issues, a party seeking to challenge the
validity and enforceability of the patent has two avenues under
current law: a reexamination proceeding at the USPTO or
litigation in district court. The former is used sparingly and
is considered not very effective; the latter is unwieldy and
expensive. The average time between patent application and
final outcome in patent litigation is a staggering 12 years, or
60% of a patent's life.\22\ The legislation reforms the
reexamination procedure to make it more effective and encourage
its wider use. It also creates a new post-grant review
proceeding that will allow for limited USPTO review of a patent
on the basis of patentability.
---------------------------------------------------------------------------
\22\NRC, supra note 3, at 66.
---------------------------------------------------------------------------
The Committee believes that the ability to have a quality
check on issued patents is important to the integrity of the
patent system. Patents of questionable validity may stifle
innovation, especially in fast-moving technology industries.
Some patent holders have developed strategic methods to game
the system based on poor-quality patents, building business
plans around leveraging monetary value from patent portfolios.
Reexamination of an issued patent is currently governed by
Chapters 30 and 31 Title 35. Reexamination serves as an
expedited, low-cost alternative to patent litigation for
reviewing limited aspects of patent validity, specifically
whether an invention was anticipated or made obvious by
documentary prior art.
Chapter 30 was added in 1980\23\ and is codified in 35
U.S.C. Sec. Sec. 301-307. Under this mechanism, an ex parte
reexamination can be initiated. Patentees may request ex parte
reexamination of their own patents. Approximately half of all
ex parte proceedings have been requested by the patentee, often
as a strategy to insulate the patent from late-surfacing prior
art by cutting back the claims.
---------------------------------------------------------------------------
\23\Pub. L. 96-517, 94 Stat. 3016, Sec. 1. The rules governing
reexamination are found at 37 C.F.R. 1.501-1.570.
---------------------------------------------------------------------------
Potential challengers have regarded ex parte reexamination
as insufficient because:
(1) Lafter a reexamination is ordered, the third
party's participation is limited to one statutory reply
prior to the examination process, and only if the
patent owner files an optional pre-examination
statement;
(2) Lreexamination does not permit challenges to
enablement, written description, best mode, or utility;
and
(3) Lthere is no opportunity for the challenger to
appeal the examiner's decision on reexamination.
Subsequent congressional review indicated infrequent use of
ex parte reexamination. Interested parties suggested that the
volume of lawsuits in the district courts would be reduced if
third parties had the opportunity to present their case for
patent invalidity at the USPTO during reexamination. To address
those concerns and provide such an opportunity, Congress
enacted the ``Optional Inter Partes Reexamination Procedure Act
of 1999'' as Subtitle F of the AIPA. The AIPA retained the
existing ex parte reexamination procedure intact and separate
from the newly enacted inter partes reexamination procedure.
Chapter 31 (35 U.S.C. Sec. 311, et seq.) governs the inter
partes reexamination procedure, where third parties can more
fully participate than under the ex parte procedure. They can:
(1) Lsubmit a written comment each time the patent
owner files a response to an ``Office action'' on the
merits issued by the USPTO;
(2) Lappeal an adverse decision of the patent examiner
to the Board of Patent Appeals and Interferences
(BPAI); and
(3) Lhave full participation rights in a patent owner's
appeal to the BPAI.
Several infirmities in the reexamination process remained
following enactment of the AIPA. Of greatest import were that:
(1) Lit did not provide third-party requesters the
ability to appeal to the Federal Circuit, nor to
participate in the patent owner's appeal to the Court;
(2) Lany prior art considered during the initial
examination of an application could not serve as the
basis for reexamination, since it did not raise ``a
substantially new question of patentability.''\24\
---------------------------------------------------------------------------
\24\In re Portola Packaging Inc., 110 F.3d 786 (Fed. Cir. 1997).
This was reversed in the 2002 amendments of the Patent Act.
---------------------------------------------------------------------------
(3) Lthere was no opportunity for discovery;
(4) Lthe requester was ``estopped'' from asserting in
subsequent litigation (including as defendant in an
infringement case) patent invalidity based on any
ground the requester raised or could have raised in the
inter partes reexamination; and
(5) Lthe new procedure was available only regarding
patents issued on applications filed on or after
November 29, 1999, the date of enactment of the
statute. All previously issued patents, and all patents
based on applications pending on the effective date,
were excluded from inter partes reexamination.
Whether a ground for invalidity ``could have been raised''
turned on a fact-intensive analysis of the availability of
prior art at the time the reexamination proceeding was
conducted. Also, the requester would be estopped from later
challenging in a civil action any ``fact'' determined in the
inter partes reexamination.\25\ (). At the same time, ``the
confirmation of a patent in reexamination is accorded a great
deal of respect by courts, and hence a reexamination could
bolster the 'strength' of a patent.''\26\
---------------------------------------------------------------------------
\25\Optional Inter Partes Reexamination Procedure Act of 1999,
Sec. 4607, uncodified
\26\Merges & Duffy, Patent Law And Policy: Cases And Materials
(2002) at 1210-11.
---------------------------------------------------------------------------
As a result of the limitations in the inter partes
reexamination procedure, it was rarely used. Although the USPTO
had estimated it would receive approximately 400 inter partes
reexamination requests in the first year alone, not a single
request was filed. In the first 3 years, only five inter partes
requests were filed, out of approximately 160,000 patents
issued.
In 2002, in order to make the optional inter partes
reexamination procedures a more attractive alternative to
litigation, the AIPA's inter partes reexamination practice was
amended by the Patent and Trademark Office Authorization Act of
2002.\27\ This act:
---------------------------------------------------------------------------
\27\Pub. L. 107-273, Sec. 5-6, amending 35 U.S.C. Sec. 303(a), 312
(a) 134, and 141-44.
(1) Lprovide third party inter partes reexamination
requesters with the right to appeal to the Court of
Appeals for the Federal Circuit and to participate in
---------------------------------------------------------------------------
the patent owner's appeal to the Court; and
(2) Lclarify that reexamination (both ex parte and
inter partes) may be based on a patent or printed
publication previously cited by or to the USPTO, or
considered by the USPTO, as long as a substantial new
question of patentability is raised.
The estoppel provisions were not, however, changed by the
2002 amendments. Another unaddressed limitation was the
effective date of the inter partes reexamination statute. A
large number of patents issued before 2002 remained exempt from
the inter partes reexamination procedures.
The AIPA included the requirement that USPTO assist
Congress in its continuing oversight of patent operations. The
agency was required to submit to Congress, within 5 years of
enactment, a report evaluating whether the inter partes
reexamination proceedings established by the Act were
``inequitable to any of the parties in interest.'' If the
agency were to find inequity to exist, the USPTO's report must
then contain ``recommendations for changes . . . to remove such
inequity.'' In fulfilling this duty, the Director reported to
Congress in 2004 that changes needed to be made to
reexamination. The Director provided the following
recommendations for post-issuance review of patents:
(1) Lreducing the estoppel effects on challengers;
(2) Lbroadening challenger participation (currently
limited to replying to patentee reexamination filings),
such as independent submissions;
(3) Lenlarging the time for challenger responses
(current 30 day time frame may affect thoroughness of
response);
(4) Lenlarging the scope of reexamination (currently
limited to novelty and obviousness disclosed by
documentary prior art) to include non-documentary prior
art or other validity-related questions (e.g.,
statutory bars, enablement, utility);
(5) Lscaled filing fees for small entity challengers;
(6) Lavailability of discovery and cross-examination;
and
(7) Lcreation of a special review panel.
The Committee is also mindful of recommendations made 15
years ago by the Advisory Commission on Patent Law Reform:
``An essential relationship [exists] between the value
of patent rights . . . and the cost of patent
litigation. [Reform should] ensure that transactional
costs do not prejudice the rights of patentees or the
rights of the public through the process of patent
enforcement.'' Increased quality of examination will
strengthen the presumption of validity, which in turn
will decrease the number of unwarranted challenges to
patent validity. This will also increase the confidence
of the courts in applying the statutory presumption of
validity.''\28\
---------------------------------------------------------------------------
\28\The Advisory Commission On Patent Law Reform, A Report To The
Secretary Of Commerce (1992).
The amendments to the reexamination procedure address most
of the concerns raised by the FTC, the USPTO and the Advisory
Committee. They are the result of thorough consideration given
to those views as well as other scholarly commentary.\29\
---------------------------------------------------------------------------
\29\As the Federal Trade Commission noted in its report on the
patent system, ``procedures that third parties can use to challenge
questionable patents may be insufficient.'' Federal Trade Commission
(``FTC''), To Promote Innovation: The Proper Balance of Competition and
Patent Law and Policy, Ch. 1, 33 (Oct. 2003).
---------------------------------------------------------------------------
CITABLE PRIOR ART
Prior art that may be cited to establish either an ex parte
and inter partes reexamination includes ``. . . patents or
printed publications which that person believes to have a
bearing on the patentability of any claim of a particular
patent.''\30\ The Committee heard comments that patent owners
would, occasionally, offer differing interpretations of cited
prior art. They might take one position during litigation or
initial examination, and a different one during reexamination.
To counteract this practice, the legislation amends 35 U.S.C.
Sec. 301 to allow the submission of documents, pleadings, or
evidence from another proceeding that addresses the patent
owner's statements or the claims addressed by the written
statements. Consideration of such statements is limited to
determining the proper meaning of any claims that are the
subject of the reexamination proceeding. Otherwise the
operative language of Sec. 301 is retained.
---------------------------------------------------------------------------
\30\35 U.S.C. Sec. 301.
---------------------------------------------------------------------------
The legislation retains the types of prior art that can be
cited under 35 U.S.C. Sec. 301, namely patents and printed
publications. While the term ``patents'' is self-evident, the
term ``printed publications'' has become a term of art in case
law. This applies not just to Sec. 301, but also to Sec. 102,
which also includes printed publications as prior art. As it
turns out, a reference does not need literally be ``printed''
or a ``publication.'' Rather, these terms have evolved,
commensurate with advances in technology and public
accessibility of information.
In 1966, the President's Commission on the Patent System
proposed that Sec. 102 be amended to reflect changes in
technology in the intervening 130 years since ``printed'' first
appeared in the patent code.\31\ The report recommended
eliminating the technical requirement of printing, as to
include other media of wide distribution, such as microfilm and
computer storage.
---------------------------------------------------------------------------
\31\President's Commission on the Patent System, To Promote the
Progress of . . . Useful Arts in an Age of Exploding Technology 7
(1966).
---------------------------------------------------------------------------
At the time, the patent office had already begun construing
``printed'' as including any reproduction ``impressed or fixed
upon a sheet of paper or other material.''\32\ This included
microfilm and other fixed media. Courts accepted the expanded
definition.\33\
---------------------------------------------------------------------------
\32\Gulliksen v. Halberg, 75 USPQ 252 (Pat. Off. Bd. Int'f. 1937).
\33\See, e.g., In re Wyer, 655 F.2d 221, 226-27 (CCPA 1981)
(``traditional dichotomy between 'printing' and 'publication' is no
longer valid. Given the state of technology in document duplication,
data storage, and data-retrieval systems, the 'probability of
dissemination' of an item very often has little to do with whether or
not it is 'printed' in the sense of that word when it was introduced
into the patent statutes in 1836 '').
---------------------------------------------------------------------------
Under current law, if a reference may be obtained through
reasonable diligence by a person of ordinary skill in the art,
the reference will qualify as a ``printed publication.''\34\
This includes modern forms of communication such as
presentation slide shows.\35\ Even a single copy of a document,
such as a doctoral thesis, indexed and catalogued in a library,
qualifies as a ``printed publication'' if it is ``sufficiently
accessible to a researcher who exercised reasonable
diligence.''\36\
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\34\MIT v. AB Fortia, 774 F.2d 1104 (Fed. Cir. 1985) (oral
presentation to technical audience accompanied by distribution of some
copies satisfied ``publication'' requirement).
\35\In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004).
\36\E. I. du Pont de Nemours & Co. v. Cetus Corp., 19 USPQ2d 1174
(N.D. Calif. 1990).
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The Committee intends that case law will continue to inform
the definition of ``printed publication'' for purposes of prior
art citation under Sec. 301, as amended by the legislation.
EX PARTE REEXAMINATION
The legislation amends Sec. 303(a) relating to ex parte
reexaminations. It allows the Director to institute an ex parte
reexamination at any time based on certain prior art discovered
by the Director, cited under Sec. 301, or cited by any person
other than the owner of the patent under Sec. 302 or Sec. 311.
It permits the Director to order an ex parte reexamination
based on art submitted in a request by a third party for an
inter partes reexamination. This change clarifies the existing
authority of the Director, since prior art that accompanies a
request under Sec. 311 must be submitted under the provisions
of Sec. 301, and is therefore available to the Director to use
in determining whether a substantial new question of
patentability exists.
The prior art upon which a substantial new question of
patentability is raised is the same as that specified in
Sec. 301, even though that section uses the term ``printed
publication'' rather than simply ``publication'' as here. As
noted above, given the evolving meaning of the term
``publication,'' no operative difference arises between the two
terms.
Inter Partes Reexamination
The legislation also amends Sec. Sec. 314, 315 and 317
relating to the conduct of inter partes reexamination
proceedings. The changes are aimed at increasing the
effectiveness of inter partes reexamination and making it a
more attractive way to challenge patents without having to
resort to litigation. The amendments to Sec. Sec. 314, 315 and
317 accomplish the following:
1. LReexamination will no longer be conducted by a
patent examiner. Rather, an administrative patent judge
(APJ) will conduct and decide the reexamination.
2. LThe petitoner (or ``requestor '') may file replies
to any office action on the merits or on any submission
by the patent owner.
3. LThe APJ may hold an oral hearing upon request
``unless the judge finds cause lacking for such
hearing.''
4. LThe scope of estoppel is narrowed. A challenger is
still estopped, after decision, from reasserting patent
invalidity based on any ground actually raised in an
inter partes reexamination, but estoppel no longer
extends to any ground that ``could have [been] raised''
during the proceeding.
5. LThe heading and text of Sec. 317(b), relating to
preclusion of inter partes reexamination following
civil action, is changed from ``Final Decision'' to
``District Court Decision'' (heading) and ``judgment of
the district court'' (body). By this change, an inter
partes reexamination may not be instituted after a
district court decision.
6. LInter partes reexamination will be available for
all patents, not just those issued after November 29,
1999.
POST-GRANT REVIEW
The legislation also adds a new post-grant review procedure
that can be utilized during the first 12 months after a patent
issues, or thereafter with consent of the patent owner. The ex
parte or inter partes reexamination is extremely limited. The
post-grant review would allow a time constrained challenge to
an issued patent on any ground going to patentability, not just
those based on certain prior art (i.e., patents and printed
publications under Sec. 301). More specifically, the
reexamination process does not allow a patent to be challenged
on the basis that the claims were anticipated or made obvious
by prior non-documentary knowledge, public uses, sale, or that
the disclosure was inadequate to enable others to practice the
invention. The new post-grant review procedure is intended to
fill this gap in patent review.
Post-grant review offers meaningful opportunities to
improve patent quality by drawing upon the information and
expertise of those skilled in the art. Under an ex parte
examination system, access to competitors' knowledge is
limited. In contrast, a person skilled in the art engaged in an
administrative challenge to a patent will be well-positioned to
supply the best prior art, as well as the expertise necessary
to probe beneath the surface of an applicant's affidavits and
declarations. A post-grant review system channels
administrative and public resources in a cost-effective and
expeditious way to assure patent quality and validity.
As part of its 21st Century Strategic Plan, the USPTO
proposed a new Post-Grant Review system to address patent
quality, as well as provide an expeditious alternative to
litigation. Post-Grant Review received great support among all
major patent interest groups, including the bar, technology
companies, academicians, and others seeking patent reform.
18-MONTH PUBLICATION OF ALL PATENT APPLICATIONS
United States patent law was fundamentally changed in 1999
with the introduction of pre-grant publication. Prior to this
change, all applications filed with the USPTO were maintained
in secrecy until a patent issued from the application. The
secrecy of a pending application, combined with the ability of
applicants to file unlimited numbers of continuing
applications, and a patent term that ran for 17 years from the
date a patent issued, led to abuse of the system with so-called
``submarine'' patents. These were patents that were
deliberately kept under examination for long periods of time
while a technology was developed in the market-place, and then
allowed to issue and asserted against businesses that had taken
the risks and expense of commercializing the technology without
knowing that applications to patent that technology had been
filed.
The 1999 changes required that certain applications be
published 18-months after they were submitted to the USPTO.
This requirement eliminated a portion of the submarine patent
problem. Pre-grant publication also increased the quality of
issued patents by making applications available as prior art in
a manner that was more effective than procedures then
previously available at the USPTO. However, the amended statute
gave applicants the opportunity to opt out of pre-grant
publication if they agreed not to file an application on the
same invention with another national or international patent
office or agency, thus leaving open the possibility of
submarine patents.
The legislation eliminate that opt-out provision,
preventing an application from remaining a secret after 18
months. It is the opinion of the Committee that this will
provide better notice to potential users of inventions that
have not yet been patented, but may be in the near future, and
that the availability of all applications as potential prior
art will reduce the number of patents that issue on closely
related inventions that may be obvious variants of the same
invention.
THIRD PARTY SUBMISSION OF PRIOR ART
The quality of issued patents has received a great deal of
attention in recent years. There has been a growing concern
that, regardless of the efforts of competent examiners, patents
have issued on inventions that were publicly known and in use
prior to the filing of the applications. Much of the reason for
the issuance of patents on already known inventions is that
evidence of the knowledge or use is not readily available to
the patent examiners. This has proven to be especially true in
newer areas of technology that previously did not exist, or
were considered not to be eligible for patent protection.
Examples of such areas of technology include computer software
and systems, processes implemented by or involving computers,
and processes that do not necessarily involve what is commonly
thought of as technology, such as methods of doing business.
Unlike the academic-based areas of chemistry and biotechnology,
the computer and business method areas do not have a well-
developed tradition of, or system for, publication in readily
searchable printed journals. The result has been that examiners
in the computer and business method fields, and to a lesser
extent in some other fields, have not been able to find all of
the prior art that exists in these fields.
The bill amends 35 U.S.C. Sec. 122(e) to allow third
parties to submit prior art that may be known to the public,
but not readily available to the examiner, before the
determination of patentability is made. Under existing law,
third parties are allowed to submit information related to a
published application within 2 months of publication of the
application or prior to the mailing of a notice of allowance,
whichever is earlier, but the submission cannot include any
explanation of the references submitted or any other
explanation. These and other limiting conditions are set in 37
CFR Sec. 1.99, and are designed to comply with Sec. 122(c) by
ensuring that the submissions not amount to a protest or pre-
issuance opposition by a third party. By leaving Sec. 122(c)
intact, but amending Sec. 122(e) to include broader
circumstances under which third parties may submit prior art in
a published application, the Committee intends to increase the
opportunities for the examiner to have the best prior art
available during examination of an application. The submission
must, however, include an explanation of the relevance of the
prior art to the application being examined. Nor does the
Committee intend this change to allow for additional third
party input that would amount to a protest or pre-issuance
opposition. To meet these ends, and to limit the possibility
that the process be used to interfere with the progress of
examination, the time period for submissions by third parties
is extended to either 6 months after the date of publication,
or the date of the first rejection of one or more claims in the
published application, whichever occurs later, unless a notice
of allowance is mailed earlier than either of those times. Once
6 months have elapsed from time of publication, or the examiner
has made a substantive determination related to the
patentability of the claims, additional third party submissions
will not be accepted for consideration. In order to assist the
examiner in focusing on the relevant information in any
submitted patent or publication, the submitter must explain how
the reference pertains to the invention claimed in the
published application. Besides focusing the examiner, the
requirement for an explanation of each reference will reduce
the likelihood that a third party will submit large numbers of
irrelevant or cumulative references. Through these provisions,
examiners should obtain the benefit of patents and publications
they may not otherwise see, without significant additional
burden.
TAX PATENTS
Under current law, patents on tax strategies may be granted
provided they meet the general requirements of patentability.
Tax strategy patents negatively impact a broad range of issues,
and the legislation would accordingly deem them unpatentable
subject matter.
Tax strategy patents are considered a subclass of business
method patents. The USPTO website shows that 60 patents had
been issued in that subclass as of July 31, 2007, along with at
least 89 more applications pending. These patents have involved
many aspects of the tax law, including financial products,
charitable giving, estate planning, and tax-deferred exchanges.
Patenting tax strategies also raises the question of patent
quality, insofar as the relevant prior art may be difficult to
find.
The Committee has a number of concerns regarding tax
strategy patents. As an initial matter, they conflict with the
primary purpose of our tax laws, to raise money for government
programs and responsibilities and protect the public fisc.
Many, perhaps most, tax strategy patents have as their
fundamental objective the reduction of Federal tax liabilities.
If the use of tax strategy patents proliferates, encouraged by
the marketing advantages conferred by a patent's government-
granted monopoly and presumption of validity, many tax lawyers
anticipate that there will be a corresponding reduction in
Federal tax revenues. Granting a government monopoly in the
form of a patent that undermines another key Federal function--
the collection of revenue--seems peculiar, if not
contradictory, and raises fundamental questions about the
appropriateness of such patents.
Moreover, tax strategy patents remove from the public
domain particular ways to satisfy a taxpayer's legal
obligations. Those methods cannot be practiced by the taxpayer
without permission of the patent holder. This will have adverse
consequences for both the tax payers and tax advisers who may
face patent infringement suits for using patented tax
strategies. This undermines public confidence in law and
uniformity in tax policies. It is also likely to increase
public dissatisfaction with tax laws if compliance must be
accompanied by patent searches and licensing.
Finally, if patents become an important part of the tax
landscape, the atmosphere could become more secretive and less
cooperative. The tax system as a whole will suffer if, in order
to protect their patentable intellectual property, tax
professionals are no longer willing to discuss, evaluate, and
criticize each other's insights regarding how to comply with
the tax system.
The Committee has considered whether removing tax
strategies as patentable subject matter would violate the
United States' obligations as a member of the World Trade
Organization (WTO), specifically whether the Agreement on Trade
Related Aspects of Intellectual Property Rights (TRIPs) allowed
such exclusion.
Article 27.1 of TRIPs requires that ``patents shall be
available and patent rights enjoyable without discrimination as
to the place of invention, the field of technology and whether
products are imported or locally produced.'' This anti-
discrimination provision raises the question of whether tax
strategies are a protected ``field of technology.'' Analysis of
the patent laws of signatories to WTO at the time of
ratification (1994), and the members' negotiating positions,
confirms that business methods were not included as a ``field
of technology,'' either in 1994 or subsequently.\37\
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\37\``Examples of items which do not meet [TRIPs patent] criteria
are . . . methods of doing business, and algorithms and mathematical
formulas per se, including those incorporated in computer programs.''
Suggestion by the United States for Achieving the Negotiating
Objective, Oct. 17, 1988, at 4.
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The table of existing international standards prepared by
the Secretariat for Uruguay Round negotiators does not show
that any country had, prior to that time, provided patent
protection for software or business methods.\38\ Other
documents prepared for TRIPs negotiators showed that business
method patents were often excluded, but never included.\39\
Indeed, many countries today still do not recognize business
methods as patentable subject matter.\40\
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\38\Synoptic Tables Setting Out Existing International Standards
And Proposed Standards And Principles, Revision, Sept. 29, 1989.
\39\``Surely, TRIPs does not prescribe patentability of business
methods. The generally perceived need for world wide patent law
harmonisation should not lead to the conclusion that the European
patent system must follow U.S. developments automatically.''
Directorate-General for Research of the European Parliament, The
Patentability of Computer Programmes (2002) at 14.
\40\For instance, under the European Patent Convention, business
methods ``as such'' are unpatentable because they make no contribution
to the technical arts.
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Further, TRIPs allows countries to make exceptions to
patentable subject matter under certain circumstances.
Specifically, article 27.3 allows members to exclude from
patentability inventions that are necessary to protect ordre
public or morality. As noted above, tax patents may be contrary
to tax policy, and therefore offend public order. They also
frustrate regulatory action aimed at diminishing economic
incentives to exploit tax loopholes. Tax strategy patents can
change and burden the practice of tax law. It will make
compliance with U.S. law (the ability to engage in tax
planning) subject to private regulation and licensing. In
short, it would privatize public policy and law compliance. For
these reasons, even if tax strategy patents were otherwise
covered by TRIPs, they may be excluded under the ordre public
exception.
VENUE
Since 1800, the United States district courts have had
original and exclusive jurisdiction ``of any civil action
arising under any Act of Congress relating to patents . .
.''\41\ A special venue statute for patent infringement cases.
28 U.S.C. Sec. 1400(b), was enacted as part of the 1948
revision to the Judicial Code. It was designed to limit the
available forums ``to those reasonably convenient to the
defendant.''\42\ As such, venue is proper in the judicial
district where the defendant resides, or where the defendant
has committed acts of infringement and has a regular and
established place of business.
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\41\28 U.S.C. Sec. 1338(a).
\42\Bradford Novelty Co. v Manheim, 156 F Supp 489 (SD NY 1957).
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The Supreme Court held that Sec. 1400(b) was the exclusive
provision for venue in patent infringement cases.\43\ The
general and more expansive venue statute for Federal question
cases, 28 U.S.C. Sec. 1391(b), could not be used in
infringement cases, although it was still applicable to other
cases involving patents; e.g., declaratory relief cases.\44\
However, Sec. 1391(c) was amended in 1988 to provide enlarged
venue for corporate defendants. This change was the basis of
the Federal Circuit's decision to holding that the amendments
to Sec. 1391(c) also apply to venue under Sec. 1400(b).\45\
Accordingly, corporate defendants in infringement cases can be
sued wherever personal jurisdiction attaches. That is
determined by state long-arm statutes. Since these, typically,
are broad, and include any place the defendant does business,
Sec. 1391(c) invites plaintiffs to forum shop.
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\43\Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222
(1957).
\44\Schnell v Peter Eckrich & Sons, Inc., 365 U.S. 260 (1961);
United States Aluminum Corp. v. Kawneer Co., 694 F.2d 193, 195 (9th
Cir. 1982).
\45\VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1575
(Fed. Cir. 1990).
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The amendments made by the Act to Sec. 1400 are designed to
discourage the widespread use of forum shopping and to provide
greater certainty in venue selection. The Committee believes
that simply returning to the 1948 venue framework would be too
strict for modern patterns of technology development and global
commerce. Accordingly, venue requirements are relaxed by
providing venue based on plaintiff's residence in many cases.
In this way venue in patent cases should optimize convenience
to all parties.
INTERLOCUTORY APPEALS
Currently, interlocutory appeals are permitted in limited
circumstances, which are specifically described in 28 U.S.C.
Sec. 1292(a). The most common of these is the grant or refusal
of a preliminary injunction. In addition to the specified
interlocutory orders which are appealable as of right, a
district court may certify other non-final orders for immediate
appeal if the court is ``of the opinion that such order
involves a controlling question of law as to which there is
substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation.''\46\ In addition to
the discretionary certification by the district court, the
circuit court must also agree to hear the interlocutory
appeal.\47\
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\46\28 U.S.C. Sec. 1292(b).
\47\Id.; Fed. R. App. Pro. 5.
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The Federal Circuit's jurisdiction in infringement cases
extends to the same type of interlocutory rulings as permitted
by Sec. 1292(a) and (b).\48\ Respecting discretionary appeals,
the Federal Circuit must also agree that interlocutory appeal
is proper under Sec. 1292 (b).\49\
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\48\See 28 U.S.C. Sec. 1292(c).
\49\See Voda v. Cordis Corp., 476 F.3d 887 (Fed. Cir. 2007).
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There is a small class of interlocutory orders that do not
fit within either Sec. 1292(a) or (b), and yet are permitted.
The so-called ``collateral order'' doctrine permits appeal of
district court orders that (1) ``conclusively determine the
disputed question,'' (2) ``resolve an important issue
completely separate from the merits of the action,'' and (3)
are ``effectively unreviewable on appeal from a final
judgment.''\50\ This doctrine also applies to appeals in patent
cases.\51\
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\50\Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978).
\51\Intel Corp. v. Commonwealth Sci. & Indus. Research Org., 455
F.3d 1364 (Fed. Cir. 2006).
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Finally, a district court can accelerate appeal by issuing
a ``partial judgment.''\52\ Thus, if the causes of action in an
infringement case are severable, the court can (and often does)
issue partial summary judgment. The partial judgment is final
and appealable under Sec. 1291.
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\52\Fed. R. Civ. Pro. 54(b) (``the court may direct the entry of a
final judgment as to one or more but fewer than all of the claims or
parties '').
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To review, the Court of Appeals for the Federal Circuit has
jurisdiction over patent appeals from the district courts in
five classes of cases:
(1) LFinal decisions.
(2) LInterlocutory appeals as of right.
(3) LDiscretionary interlocutory appeals of controlling
questions of law.
(4) LCollateral orders.\53\
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\53\Coopers & Lybrand, supra note 40.
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(5) Partial final judgment.
Another type of interlocutory order, Markman hearings, is
essentially claim construction rulings that do not neatly fit
into the narrow categories of immediately appealable
interlocutory orders. Although often they are dispositive on
the meaning or validity of a patent, they cannot ordinarily be
appealed until after trial and judgment. They are not a final
judgment, nor a ``collateral order,'' nor an interlocutory
order appealable as of right. The only route for immediate
appeal is by district court certification under Sec. 1292(b).
Yet, even where that has occurred, the Federal Circuit has
declined all such certified questions. Their reason is because
of ``the difficulties that could flow from premature claim
interpretation.''\54\
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\54\Cybor Corp. v. Fas Techs., 138 F.3d 1448, 1479 (Fed. Cir.
1998). See also Lava Trading, Inc. v. Sonic Trading Mgmt., LLC, 445
F.3d 1348, 1350 (Fed. Cir. 2006) (``[w]ithout the vital contextual
knowledge of the accused products or processes, [an interlocutory]
appeal takes on the attributes of something akin to an advisory opinion
on the scope of the . . . patent '').
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While the Federal Circuit refuses to hear appeals of just
Markman rulings, statistics show that they reverse around 50%
of all Markman rulings do eventually hear when the district
court ruling is appealed.\55\ The large number of appeals--and
reversals--significantly increases the time and money it takes
to resolve infringement suits. As such, the administration of
justice could be promoted and final resolution of many patent
disputes could be accelerated if appeals to Markman rulings
were held prior to the district courts decision on the merits
of the infringement action. Accordingly, 28 U.S.C. Sec. 1292(c)
is amended to permit such appeals, at the discretion of the
district court, since they are in the best position to
determine whether the scope of patent claims is integral or
dispositive to the ultimate decision in each case. While such
interlocutory appeals can occur under the existing statute, it
is vehicle that will never be used if left up to the Federal
Circuit. By inserting a special provision in the jurisdictional
statutes relating to interlocutory patent appeals, it is the
Committee's intent that this mechanism be more widely
considered by district courts.
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\55\Paul M. Schoenhard, Reversing the Reversal Rate: Using Real
Property Principles to Guide Federal Circuit Patent Jurisprudence, 17
Fordham Intell. Prop. Media & Ent. L.J. 299, 302-303 (2007)
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APPLICANT DISCLOSURES
The determination to grant or not grant a patent is an ex
parte, non-adversarial procedure where the person who wishes to
obtain a patent provides information in support of
patentability and a patent examiner evaluates that information
in the context of what is known in the relevant art. The
examiner is expected to be knowledgeable in the technology and
proficient at searching and evaluating the prior art, and is to
use his knowledge and resources to determine whether a patent
should be granted for each application he reviews. However, an
examiner does not know everything about a particular field, nor
could he have access to or know where to find all information
about a particular field.
On the other hand, patent applicants have a better
perspective and often the best perspective on what prior art is
relevant to their invention and more importantly, why it is
relevant. However, under current law, applicants are only
required to disclose prior art relevant to their invention of
which they are aware. This has had two affects, both of which
have impacted the ability of examiners to thoroughly examine
applications.
First, since the current disclosure requirement only
requires disclosure of prior art that the applicant is aware
of, many applicants choose not to perform prior art searches.
This increases the burden upon examiners because they have very
little information in an application, besides the patent, to
use in their review. This means examiners must take more time
than they would have otherwise to search and review the
relevant prior art. Second, for applicants that do review the
prior art, in order to fulfill their disclosure requirement and
avoid a later charge of inequitable conduct, they send the
office all the prior art references they know of, including
those that are only vaguely relevant. This creates another
substantial burden on examiners, as they have to sift through
voluminous application files.
To address these two problems with the current system, the
legislation grants the Director authority to require by rule
that applicants perform prior art searches and submit to the
USPTO search reports with their applications. Additionally, the
Director may also promulgate rules requiring applicants to
analyze the prior art provided in the search report.
INEQUITABLE CONDUCT
Inequitable conduct has been established by the courts as a
defense to patent infringement. The primary purpose of this
defense is to foreclose enforcement of a patent that was
secured through acts of fraud or other dishonest practice. A
fraudulently procured patent has long been treated as
invalid.\56\
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\56\United States v. American Bell Tel. Co., 128 U.S. 315 (1888).
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Generally, to prove inequitable conduct, it must be shown
that the patent holder withheld or misstated material
information with the intent to deceive the USPTO. But because
this remedy was established by the courts, a number of
interpretations of the requisite level of materiality and
intent have been generated, leading to uncertainty in how the
defense will be applied. For instance, in a recently decided
Federal Circuit opinion on inequitable conduct, it was found
that no less than four separate standards for materiality may
be used in deciding inequitable conduct.\57\ Furthermore,
courts have bound materiality and intent together, holding that
a strong showing of one element will be sufficient to overcome
a weak showing of the other.\58\ This has given courts the
opportunity to infer intent solely from the materiality of
information misstated or withheld.
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\57\Digital Control v. Merlin Technology, 437 F.3d 1309, 1314-1315
(Fed. Cir. 2006).
\58\Id. at 1313; Union Pac. Res. Co. v. Chesapeake Energy Corp.,
236 F.3d 684, 693 (Fed. Cir. 2001); FMC Corp. v. Manitowoc Co. Inc.,
835 F.2d 1411, 1413 (Fed. Cir. 1987).
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As applied by the courts, the penalty for engaging in
inequitable conduct is to render the patent unenforceable, and
sometimes related patents as well, even if all of the patent's
claims are otherwise valid. The severity of the penalty
provides strong motivation for the accused infringer to plead
inequitable conduct as a defense. However, it has also led to
over use of the defense, prompting many users of the patent
system to argue that it is often pled but rarely found.\59\
Once plead, it adds significantly to the complexity and expense
of the trial because it opens avenues to extensive discovery.
Because it depends on a subjective finding of intent on the
part of the applicant, it injects a great deal of uncertainty
into the trial. The possibility of the patent being held
unenforceable also impacts potential settlement discussions.
The mere pleading of inequitable conduct places a significant
burden on the patent owner and has little or no adverse impact
on the accused infringer. However, it is extremely important to
maintain an adequate deterrence to applicant lying to the
USPTO.
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\59\John F. Lynch, An Argument for Eliminating the Defense of
Patent Unenforceability Based on Inequitable Conduct, 16 Am. Intell.
Prop. Law Asso. Q. J. (1988); Burlington Indus., Inc. v. Dayco Corp.,
849 F.2d 1418 (Fed. Cir. 1988) (``the habit of charging inequitable
conduct in almost every major patent case has become an absolute
plague.'').
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In order to provide an increased level of certainty to the
defense, inequitable conduct is codified. This codification
includes procedural requirements, substantive standards and
remedies for inequitable conduct.
BEST MODE
Under current law, the first paragraph of 35 U.S.C.
Sec. 112 requires applicants for a patent to disclose three
things: (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, and (3) the best mode contemplated by the inventor
of carrying out his invention.
The best mode requirement is unique to American patent law.
While other patent laws and international agreements (i.e.,
TRIPs) typically impose an enablement requirement, the
additional requirement of best mode is not required. The public
policy behind Sec. 112 goes to the heart of the reason that
patents exist in the United States to advance technology (the
useful arts) by rewarding inventors for teaching the public how
to make and use their inventions in the best, most effective
way of which they are aware. Its inclusion in American law is
intended to preclude a patentee from maintaining a competitive
advantage after patent expiration. While the patent must teach
others how to practice the invention, if the patentee can
withhold superior modes of practice, he effectively retains a
trade secret at the same time as receiving patent protection.
This breaks faith with the fundamental bargain of patent law.
Determining whether an application complies with the best
mode requirement involves two factual inquiries. First, it must
be determined whether or not the inventor knew of or had in
mind a best mode of practicing the invention. This
determination is subjective and temporal, in that it requires
assessing what was in the mind of the inventor at the time the
application was filed. Second, if it can be determined that the
inventor did contemplate a best mode for the invention, the
application disclosure must be analyzed to determine whether
that best mode was disclosed in sufficient detail to enable one
skilled in the art to practice the best mode. Failure to
disclose a known best mode of carrying out the invention,
whether intentional or accidental, could result in denial of a
patent on the claimed invention or a holding of invalidity of
an issued claim.\60\
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\60\Manual of Patent Examining Procedure, Chapter 2100,
Sec. Sec. 2161.01 and 2162.
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In recent years, the wisdom of requiring disclosure of best
mode has been questioned on three grounds. The first is that
the subjective nature of whether the inventor contemplated a
best mode, and what that was, requires what may be extensive
pre-trial discovery to obtain the evidence necessary for a
clear and convincing showing, if such evidence exists. As with
other defenses based on subjective findings (e.g., inequitable
conduct), the defense based on best mode significantly
increases the expense and complexity of litigation. Moreover,
since the defense applies only to particular claims in which
the best mode was known at the time but was not disclosed, it
must be litigated on a claim-by-claim basis.\61\
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\61\See Amgen, Inc. v. Chugai Pharmaceutical Co., Ltd., 927 F.2d
1200, 1205 n.5 (Fed. Cir. 1991).
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The second ground is that best mode applies only to what
the inventor knew at the time of filing, not modes of practice
that may be created or refined thereafter. Accordingly, by the
time of patent litigation, the best mode may already be
obsolete.
The third objection to best mode is the expense it adds to
international filings. Foreign patent applicants wishing to
protect their inventions in the United States must amend or
prepare their applications to meet a requirement that is
unnecessary anywhere else.
The Committee has acknowledged the desire to address the
difficulty of litigating extremely subjective elements such as
best mode.\62\ Therefore, the Committee opted to make failure
to meet the best mode requirement unavailable as a defense to
infringement by amending 35 U.S.C. Sec. 282. Failure to include
best mode in the written description is still grounds for
rejecting an application, or for opposition under any of the
post-grant procedures specified in the Act (particularly inter
partes reexamination or post-grant review). However, the
requirement to disclose the best mode is retained. By retaining
the requirement so that applicants provide a full disclosure of
the invention, which can later be used by the public. By
removing best mode as a defense to infringement, the bill
eliminates the incentive to engage in speculative analysis.
---------------------------------------------------------------------------
\62\NRC, supra note 3, at 54.
---------------------------------------------------------------------------
REGULATORY AUTHORITY
The primary grant of USPTO rulemaking authority is found in
35 U.S.C. 2(b)(2)(A), which gives the USPTO authority to
``establish regulations, not inconsistent with law, which shall
govern the conduct of proceedings in the Office.'' Under this
authority, the USPTO has promulgated numerous regulations
related to the processing and granting of patents. A recent
example of this rulemaking authority are the rules on
continuation applications recently promulgated.\63\ The reason
behind this change, as cited by the USPTO, is that continuation
applications make up a large portion of total applications and
as such which contributes partially to the USPTO's application
backlog.\64\ The extent of this authority, however, has been
questioned, bringing into doubt whether the USPTO may place
limitations on continuations or require applicants to provide
documentation to support their applications.
---------------------------------------------------------------------------
\63\The USPTO's new rules related to continuations allows patent
applicants to file two continuation applications and one Request for
Continued Examination (RCE) without restriction, but any further
continuations or RCEs would be allowed only if they are filed to obtain
consideration of an amendment, argument or evidence that could not have
been submitted during the prosecution of the prior-filed application.
Changes to Practice for Continuing Applications, Patent Applications
Containing Patentably Indistinct Claims, and Examination of Claims in
Patent Applications; Final Rule, 72 Fed. Reg. 46716 (Aug. 21, 2007).
\64\Changes to Practice for Continuing Applications, Requests for
Continued Examination Practice, and Applications Containing
Patentability Indistinct Claims, 71 Fed. Reg. 48, 49-50 (Jan. 3, 2006).
---------------------------------------------------------------------------
Typically, courts will give deference to the rules
promulgated by an agency if an Act which charges the agency
with responsibility doesn't speak to the issue that the rule
pertains to. However, if direction on the issue can be found in
the statute, any agency rules that conflict with the statute
must be struck down. This is what was done in 1968 to rules
established by the USPTO's Board of Patent Appeals and
Interferences (BPAI) that limited continuations.
The BPAI had construed a limit on the number of
continuations an applicant can file based on a literal reading
of 35 USC Sec. 120 that would suggest only one or two
continuations could ever be filed. However, in In re Hernicksen
the Court of Claims and Patent Appeals (CCPA) held that the
BPAI's decision was flawed.\65\ The CCPA found that the statute
placed no restrictions on the number of continuations an
applicant may obtain, and that the BPAI's interpretation of the
continuations provisions was inconsistent with Sec. 120. Many
have since suggested that In re Herniksen established that any
``mechanical rules'' that limit the number of continuations,
even if passed through normal rulemaking procedures, would be
in violation of Sec. 120 of the patent statute, despite later
precedent in In re Bogese II suggesting that the USPTO may
limit continuations when ``dilatory tactics'' are used in the
prosecution of applications.\66\
---------------------------------------------------------------------------
\65\In re Henriksen, 399 F.2d 253 (CCPA, 1968).
\66\In re Bogese II, 303 F.3d 1362 (Fed. Cir., 2002).
---------------------------------------------------------------------------
To resolve the ambiguity in the USPTO's rulemaking
authority, the Committee does not intend to alter it, but only
clarify and reiterate that the USPTO has always had authority
to promulgate rules that place limitations or conditions on
patent applications, including continuation applications, that
do not directly contradict any such limitations or conditions
expressly stated in statute. Where Congress has seen fit to
provide specific limitations or conditions in statute, the
USPTO may not surpass or take away these limitations or
conditions by promulgated rule. But where Congress has remained
silent and no express limitations or conditions are stated in
statute, the USPTO may make rules that promote the quality and
timeliness of patent applications which impose limitations or
conditions, provided such rules are reasonable and do not
eviscerate the rights and privileges that Congress intended to
give patent applicants.
Hearings
The Judiciary Committee's Subcommittee on Courts, the
Internet and Intellectual Property held a day of hearings on
H.R. 1908 on Thursday, April 26, 2007. Testimony was received
from Gary L. Griswold, President and Chief Counsel of
Intellectual Property, 3M Innovative Properties, St. Paul,
Minnesota; Anthony Peterman, Director, Patent Counsel, Dell
Incorporated, Round Rock, Texas; Kevin Sharer, Chairman of the
Board and Chief Executive Officer, Amgen Incorporated, Thousand
Oaks, California; John R. Thomas, Professor of Law, Georgetown
University Law Center, Washington, D.C.; William T. Tucker,
Executive Director, Research and Administration and Technology
Transfer, University of California, Oakland, California.
In addition to this hearing, the testimony collected at
numerous hearings over the past several years has also greatly
informed the reforms to the patent system called for in H.R.
1908. These hearings include:
<bullet> LClosed door meeting for Member and staff of
the Subcommittee briefing on ``Patent Reform,'' held on
May 9, 2007. Participants included Pat Choate,
Political Economist and Author of Hot Property: The
Stealing of Ideas in an Age of Globalization; Gary L.
Griswold, President and Chief Counsel of Intellectual
Property, 3M Innovative Properties, St. Paul,
Minnesota; Bryan Lord, CEO, Amber Waves; Moshe Malina,
Director, Associate General Counsel and Chief Patent
Counsel for Citigroup, representing the Financial
Services Roundtable; Emery Simon, Counsel, The Business
Software Alliance (BSA); John R. Thomas, Professor of
Law, Georgetown University Law Center, Washington, D.C.
<bullet> LOversight Hearing by the Subcommittee on
``American Innovation at Risk: The Case for Patent
Reform,'' held on Thursday, February 15, 2007.
Testimony was received from Adam B. Jaffe, Professor of
Economics and Dean of Arts and Sciences, Brandeis
University Whaltham, Massachusetts; Suzanne Michel,
Chief Intellectual Property Counsel and the Deputy
Assistant Director for Policy Coordination, Federal
Trade Commission, Washington, D.C.; Mark Myers, Co-
Chair of the National Academy of Sciences Report Patent
System for 21st Century, Unionville, Pennsylvania;
Daniel B. Ravicher, Executive Director, Public Patent
Foundation, New York, New York.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Trolls: Fact or Fiction?'' held on Thurday,
June 15, 2006. Testimony was received from Ed Reines
Esq., Weil, Gotshal & Manges, LLP; Dean Kamen
President, DEKA Research & Development Corporation,
Paul Misener, Vice President for Global Policy,
Amazon.com; Chuck Fish, Vice President & Chief Patent
Counsel, Time Warner, Inc.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Harmonization,'' held on Thursday, April 27,
2006. Testimony was received from Q. Todd Dickinson,
Vice President and Chief Intellectual Property Counsel,
General Electric Company; Robert A. Armitage, Senior
Vice President and General Counsel, Eli Lilly and
Company; Gary Mueller, President and Chief Executive
Officer, Digital Now, Inc.; Pat Choate, Political
Economist and Author of Hot Property: The Stealing of
Ideas in an Age of Globalization.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Quality Enhancement in the Information-Based
Economy,'' held on Wednesday, April 5, 2006. Testimony
was received from the Honorable Jon W. Dudas, Under
Secretary of Commerce for Intellectual Property &
Director of the U.S. Patent and Trademark Office; James
Balsillie, Chairman and Co-Chief Executive Officer,
Research in Motion; Robert A. Stewart, Director and
Chief Patent Counsel of Americas, UBS AG; Mark A.
Lemley, William H. Neukom Professor of Law, Stanford
Law School.
<bullet> LOversight Hearing by the Subcommittee on
``Improving Federal Court Adjudication of Patent
Cases,'' held on October 6, 2005. Testimony was
received from Kimberly A. Moore, Professor of Law,
George Mason University School of Law; John B. Pegram,
Senior Counsel, New York Office of Fish & Richardson,
P.C.; Chris J. Katopis, Counsel, Drinker Biddle &
Reath, LLP; the Honorable T. S. Ellis, III, United
States District Judge, Eastern District of Virginia.
<bullet> LLegislative Hearing by the Subcommittee on
``The Amendment in the Nature of a Substitute to H.R.
2795, the Patent Act of 2005,'' held on Thursday,
September 15, 2005. Testimony was received from Emery
Simon, Counsel, The Business Software Alliance (BSA);
Philip S. Johnson Chief Patent Counsel, Johnson &
Johnson on behalf of the Pharmaceutical Research and
Manufacturers of America (PhRMA); Robert B. Chess,
Chairman, Nektar Therapeutics on behalf of the
Biotechnology Industry Organization (BIO); John R.
Thomas, Professor, Georgetown University Law Center.
<bullet> LOversight Hearing by the Subcommittee on
``Review of U.S. Patent and Trademark Office
Operations, Including Analysis of General Accounting
Office, Inspector General, and National Academy of
Public Administration Reports,'' held on September 8,
2005. Testimony was received from the Honorable Jon W.
Dudas, Under Secretary of Commerce for Intellectual
Property & Director of the U.S. Patent and Trademark
Office (USPTO); Anu K. Mittal, Director, Science and
Technology Issues, U.S. General Accounting Office
(GAO); Ronald J. Stern President, Patent Office
Professional Association (POPA); Charles Van Horn,
Finnegan, Henderson, Farabow, Garrett, and Dunner, LLP.
<bullet> LLegislative Hearing by the Subcommittee on
H.R. 2795, the ``Patent Act of 2005,'' held on
Thursday, June 9, 2005. Testimony was received from
Gary L. Griswold, President and Chief Intellectual
Property Counsel, 3M Innovative Properties Company on
behalf of the American Intellectual Property Law
Association (AIPLA); Carl Gulbrandsen, Managing
Director, Wisconsin Alumni Research Foundation (WARF);
Josh Lerner, Professor, Harvard Business School; Daniel
B. Ravicher, Executive Director, Public Patent
Foundation (PUBPAT).
<bullet> LOversight Hearing by the Subcommittee on the
``Committee Print Regarding Patent Quality
Improvement--Part II,'' held on Thursday, April 28,
2005. Testimony was received from the Honorable Jon W.
Dudas, Under Secretary of Commerce for Intellectual
Property & Director of the USPTO; Richard Levin,
President, Yale University; Dr. Nathan P. Myhrvold,
Chief Executive Officer, Intellectual Ventures; Darin
E. Bartholomew, Senior Attorney, Patent Department,
John Deere and Company on behalf of the Financial
Services Roundtable.
<bullet> LOversight Hearing by the Subcommittee on the
``Committee Print Regarding Patent Quality
Improvement--Part I,'' Wednesday, April 20, 2005.
Testimony was received from J. Jeffrey Hawley, Legal
Division Vice President and Director, Patent Legal
Staff, Eastman Kodak Company on behalf of Intellectual
Property Owners Association (IPO); Richard J. Lutton
Jr., Chief Patent Counsel, Apple on behalf of the
Business Software Alliance; Jeffrey P. Kusham Esq.;
Sidley Austin Brown and Wood, LLP, on behalf of
Genetech; William L. LaFuze, Chair, Section of
Intellectual Property Law, American Bar Association on
behalf of the American Bar Association and the ABA
Section of Intellectual Property Law.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Quality Improvement: Post-Grant Opposition,''
held on Thursday, June 24, 2004. Testimony was received
from Michael K. Kirk, Executive Director, American
Intellectual Property Law Association (AIPLA); Jeffrey
P. Kushan Esq., Sidley Austin Brown & Wood on behalf of
Genentech; Karl Sun, Senior Patent Counsel, Google
Inc.; James A. Toupin, General Counsel, USPTO.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Quality Improvement,'' held on Thursday, July
24, 2003. Testimony was received from, Mark Kesslen,
Managing Director and Associate General Counsel, J.P.
Morgan Chase & Company on behalf of the Financial
Services Roundtable and BITS; David M. Simon, Chief
Patent Counsel, Intel Corporation; John R. Thomas,
Professor of Law, Georgetown University; Mr. Charles E.
Van Horn, Partner, Finnegan, Henderson, Farabow,
Garrett & Dunner, on behalf of the American
Intellectual Property Law Association (AIPLA).
<bullet> LOversight Hearing by the Subcommittee on
``The U.S. Patent and Trademark Office: Fee Schedule
Adjustment and Agency Reform,'' held on July 18, 2002.
Testimony was received from Charles P. Baker, Chair,
Intellectual Property Law Section, American Bar
Association; Michael K. Kirk, Executive Director,
American Intellectual Property Law Association (AIPLA),
Kathryn Barrett Park, Executive Vice President,
International Trademark Association (INTA); the
Honorable James Rogan, Undersecretary of Commerce for
Intellectual Property and Director of the U.S. Patent
and Trademark Office.
<bullet> LOversight Hearing by the Subcommittee on
``Patent Reexamination and Small Business
Innovations,'' held on Thursday, June 20, 2002.
Testimony was received by Paul Heckel, Independent
Inventor; Dr. Nancy Linck, Senior Vice President,
General Counsel & Secretary, Guilford Pharmaceuticals,
Inc.; Peter Theis, President, Theis Research, Inc.; Mr.
Mark H. Webbink, Senior Vice President & General
Counsel, Red Hat, Inc.
<bullet> LOversight Hearing by the Subcommittee on
``The U.S. Patent and Trademark Office: Operations and
Fiscal Year 2003 Budget,'' held on April 11, 2002.
Testimony was received by the Honorable James Rogan,
Undersecretary of Commerce for Intellectual Property
and Director of the U.S. Patent and Trademark Office,
Michael K. Kirk, Executive Director, American
Intellectual Property Law Association; John K.
Williamson, President, Intellectual Property Owners;
Colleen Kelley, National President, National Treasury
Employees Union.
<bullet> LOversight Hearing by the Subcommittee on
``Patents Improving Quality and Curing Defect,'' held
on Thursday, May 10, 2001. Testimony was received by
James F. Cottone, President, National Intellectual
Property Researchers Association; Michael K. Kirk,
Executive Director, American Intellectual Property Law
Association (AIPLA); Jeffrey P. Kushan, Esq., Powell,
Goldstein, Frazer and Murphy, LLP; David E. Martin,
Chief Executive Officer, M.CAM.
<bullet> LOversight Hearing by the Subcommittee on
``Business Method Patents,'' held on April 4, 2001.
Testimony was received by the Honorable Nicholas
Godici; Acting Undersecretary of Commerce for
Intellectual Property and Acting Director of the U.S.
Patent and Trademark Office; Michael K. Kirk, Executive
Director, American Intellectual Property Law
Association (AIPLA); Ronald E. Myrick, Chief
Intellectual Property Counsel, General Electric on
behalf of Intellectual Property Owners Association;
Andrew B. Steinberg, Executive Vice President,
Administration General Counsel and Corporate Secretary,
Travelocity.
As evidenced by the number of hearings, the Committee has
been mindful that patent reform is a complex and very important
policy objective, and has proceeded in a deliberative fashion,
soliciting at every stage the input and advice of all users of
the patent system. As the legislation proceeds through the
legislative process the Committee intends to remain receptive
to input from all concerned, so as to arrive at a balanced
final bill that benefits from the fullest consideration of all
points of view..
Committee Consideration
On May 16, 2007, the Subcommittee on Courts, the Internet
and Intellectual Property met in open session and ordered the
bill H.R. 1908 favorably reported, by voice vote, a quorum
being present. On July 18, 2007, the Committee met in open
session and ordered the bill H.R. 1908 favorably reported, as
amended, by voice vote, 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 there
were no recorded votes during the Committee's consideration of
H.R. 1908.
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. xxxx, 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, September 4, 2007.
Hon. John Conyers, Jr., 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. 1908, the Patent
Reform Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact for health-
related questions is Julia Christensen, who can be reached at
226-9010. For other questions, the staff contact is Susan
Willie, who can be reached at 226-2860.
Sincerely,
Peter R. Orszag,
Director.
Enclosure
cc:
Honorable Lamar S. Smith.
Ranking Member
H.R. 1908--Patent Reform Act of 2007.
SUMMARY
H.R. 1908 would amend various provisions of current law
that regulate how the Patent and Trademark Office (PTO) awards
patents. 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 followed in awarding patents and procedures that
allow individuals to challenge the validity of patents that
have been awarded. The bill would authorize PTO to collect
certain fees to offset most of the costs associated with these
new procedures. Several provisions of H.R. 1908 would alter
intellectual property protections associated with brand name
drugs and could affect when competing versions of generic drugs
ultimately enter the market. Other provisions would require PTO
to prepare several reports for the Congress on the
effectiveness of the changes to the patent process that would
be made by H.R. 1908.
Subject to appropriation of the necessary amounts, CBO
estimates that implementing the bill would have a net
discretionary cost of $3 million in 2008 and $11 million over
the 2008-2012 period. Enacting H.R. 1908 could affect direct
spending and revenues, but CBO estimates that any such changes
would be negligible over the 2008-2017 period.
H.R. 1908 would impose intergovernmental and private-sector
mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on certain patent applicants. Based on information from
PTO, CBO estimates that the cost of complying with the mandates
would exceed the annual threshold for private-sector mandates
established in UMRA ($131 million in 2007, adjusted annually
for inflation) in each of the first 5 years the mandate is in
effect. CBO estimates that the costs to state and local
governments of complying with the mandates would not exceed the
annual threshold for intergovernmental mandates established in
UMRA ($66 million in 2007, adjusted annually for inflation).
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 1908 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
------------------------------------------------------------------------
2008 2009 2010 2011 2012
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Inter Partes Reexaminations
Estimated Authorization Level 4 17 28 44 57
Estimated Outlays 4 15 26 41 54
Post-grant Reviews
Estimated Authorization Level 1 4 10 5 2
Estimated Outlays 1 4 9 5 2
Offsetting Collections
Estimated Authorization Level -2 -29 -35 -40 -44
Estimated Outlays -2 -29 -35 -40 -44
Net Changes
Estimated Authorization Level 3 -8 3 9 15
Estimated Outlays 3 -10 0 6 12
------------------------------------------------------------------------
BASIS OF ESTIMATE
For this estimate, CBO assumes the bill will be enacted
near the start of fiscal year 2008.
Spending Subject to Appropriation
H.R. 1908 would create a new procedure to challenge the
validity of a patent and would authorize PTO to collect fees to
offset its costs for this activity. Further, PTO expects that
the volume of requests for certain other patent review
processes would increase as a result of implementing the bill.
Under current law, PTO is authorized to collect fees for these
activities. The collection and spending of those fees are
subject to provisions in annual appropriations acts, and the
fees are recorded in the budget as offsets to the discretionary
spending of PTO. For 2007, the PTO received a gross
appropriation of $1,771 million, and CBO estimates that amount
will be offset by $1,799 million in fee collections. Assuming
appropriation of the necessary amounts, CBO estimates that
implementing H.R. 1908 would increase the PTO's net outlays by
$3 million in 2008 and $11 million over the 2008-2012 period.
Inter Partes Reexaminations. Under current law, an
individual may question the validity of an awarded patent
through an inter partes reexamination, which allows both the
challenger and the patent-holder to participate in the
proceedings by submitting arguments and filing appeals.
Inter partes challenges may be raised at any time after a
patent has been awarded. Because of certain limitations in the
process, however, very few challenges have been raised. The
bill would relax these limitations and increase the number of
patents that could be challenged. Further, the bill would
require the inter partes proceedings to be conducted by an
administrative patent judge; under current law, these
proceedings are conducted by a patent examiner.
With fewer limitations on future challenges and a larger
universe of patents open to challenge, CBO expects that the
number of inter partes proceedings would increase under the
bill. Based on information from PTO, CBO expects at least 100
additional employees would be necessary to handle that increase
in patent challenges. We estimate that implementing the changes
to the inter partes reexamination procedures would cost about
$4 million in 2008 to begin hiring and training additional
staff, and $140 million over the 2008-2012 period. PTO is
authorized to collect fees that would offset most of the costs
of conducting those examinations.
Post-grant Opposition Procedures. H.R. 1908 would authorize
PTO to initiate a new procedure, at the request of third
parties, to review the validity of patents already awarded.
This opportunity for a post-grant review generally would be
available within 12 months of the date the patent was issued,
and would take place in a court-like proceeding where both
parties would be involved in developing and presenting
information regarding the validity of an awarded patent. The
bill also would authorize PTO to collect a fee to offset the
cost of this new process.
Based on information from PTO, CBO expects that around 300
requests for post-grant reviews would be made each year once
regulations defining the process are complete. CBO estimates
that implementing this new process would cost $1 million in
2008 and $21 million over the 2008-2012 period, which would be
offset by fee collections starting in 2009. The cost would be
higher in the early years because we expect that the agency
would incur expenses to set up the system before cases would be
presented for review.
Offsetting Collections. H.R. 1908 would authorize PTO to
collect fees to offset the cost of post-grant reviews. In
addition, PTO is authorized to collect fees under current law
for inter partes reexaminations. Fees for inter partes reviews
are set in current law, and PTO cannot increase the fees beyond
an annual adjustment for inflation. CBO expects that fees for
inter partes reexaminations would largely but not completely
offset the cost of those reviews. Based on information from
PTO, CBO expects that most fee collections would begin in 2009
after regulations to implement the legislation are completed.
CBO estimates that fee collections would total $2 million in
2008 and $150 million over the 2008-2012 period.
Direct Spending
Several provisions of H.R. 1908 would alter intellectual
property protections associated with brand name drugs and could
affect when competing versions of generic drugs ultimately
enter the market. Changing when lower-priced generic drugs
would be available to purchasers would affect spending by
Federal health programs that purchase drugs or provide health
insurance that covers drugs. Consequently, CBO expects that
direct spending for Medicare, Medicaid, the Federal Employees
Health Benefits program, and the Defense Department's TRICARE
for Life program could be affected under the bill. However,
based on information provided by experts in patent law and the
brand and generic drug industry, CBO estimates that net changes
in direct spending for those programs would be negligible over
the 2008-2017 period.
The potential effects of the bill on the pharmaceutical
industry are highly uncertain. Some provisions of the bill
could affect patent protections for pharmaceuticals (and the
timing of generic entry) in countervailing ways. For example,
allowing a party to administratively challenge the validity of
a patent through the new post-grant review proceedings at PTO,
under certain circumstances, would provide generic firms and
other interested parties with a new tool to eliminate patents
that block entry of lower priced generic drugs. However, other
provisions in the bill, such as one that would modify standards
for proving inequitable conduct by patent holders, could make
overturning certain patents or the timely launch of their
products more uncertain for generic firms in some cases.
CBO anticipates that provisions of the Federal Food, Drug,
and Cosmetic Act governing marketing of brand and generic drugs
would significantly limit how H.R. 1908 might affect the timing
of generic entry over the 2008-2017 period. H.R. 1908 also
would make certain new requirements prospective in nature and
thereby limit the effect of such changes on the market entry of
generic drugs over that period. Because numerous provisions
would apply to patent cases initiated and new patents issued
after enactment, we expect that the effect of the bill on
average drug prices could be significant beyond 2017. The
nature and extent of any such long-term effects are unclear,
however.
The Chief Judge of the U.S. Court of Appeals for the
Federal Circuit has expressed concerns that section 5 of H.R.
1908 could significantly lengthen patent trials and delay their
final resolution.\1\ CBO expects that the provision relating to
damages would infrequently apply to drug cases involving
generic competitors and would apply only to cases initiated
after enactment. Consequently, any potential budgetary effect
from delaying resolution of pharmaceutical patents probably
would not be significant over the next 10 years.
---------------------------------------------------------------------------
\1\Letter from the Honorable Paul R. Michel, U.S. Court of Appeals
for the Federal Circuit, to the Honorable John Conyers Jr. and the
Honorable Lamar S. Smith, Chairman and Ranking Member, respectively, of
the House Committee on the Judiciary, May 21, 2007.
---------------------------------------------------------------------------
Revenues
Enacting H.R. 1908 also could affect Federal revenues. Any
change to the average cost for prescription drugs available on
the market would affect the cost of premiums for private health
insurance. CBO anticipates that changes in spending by private
health insurance plans would cause a shift in compensation
between taxable wages and tax-favored benefits, thereby
affecting Federal revenue from income taxes and payroll taxes.
However, because CBO estimates that enacting the bill would
have a negligible net effect on the average price of drugs over
the next 10 years, the net effect on Federal revenues would
also be negligible over that period.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 1908 would impose intergovernmental and private-sector
mandates, as defined in UMRA, on certain patent applicants. The
mandates include following new application requirements and
prohibiting tax planning methods from being patentable.
Required Search Reports
The bill would direct the Patent and Trademark Office to
establish regulations that would require certain patent
applicants to submit a search report, analysis, and other
information relevant to receiving a patent. Most patent
applicants, including public universities, would be required to
follow the new application process. The bill would exempt
applications from micro-entities, as defined in the bill, from
providing such reports and information. According to PTO, the
cost for applicants to research and provide such information
would be about $5,000 to $10,000 per search report; however,
some applicants already provide similar information in their
applications. Based on the number of patent applications per
year, CBO expects that the direct cost to comply with the
mandate would exceed the annual threshold for private-sector
mandates established in UMRA ($131 million in 2007, adjusted
annually for inflation) in each of the first 5 years the
mandate is in effect. CBO estimates that the costs to public
universities of complying with the mandates would not exceed
the annual threshold for intergovernmental mandates established
in UMRA ($66 million in 2007, adjusted annually for inflation).
Prohibiting Tax Planning Methods
The bill also would prohibit tax planning methods from
being patentable. The prohibition would apply to any
application for a new or reissued patent that is filed on or
after the date of enactment. While the number of such
applicants would likely be small, CBO has no basis for
estimating the net income that would be forgone by a patent
applicant for not receiving a patent. Therefore, CBO cannot
estimate the cost to private entities of complying with this
mandate. CBO estimates that the costs of complying with this
mandate for state, local, and tribal entities would be small.
ESTIMATE PREPARED BY:
Federal Costs: Susan Willie (226-2860) and Julia Christensen
(226-9010)
Impact on State, Local, and Tribal Governments: Elizabeth Cove
(225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2960)
ESTIMATE APPROVED BY:
Peter H. Fontaine
Assistant Director for Budget Analysis
Performance Goals and Objectives
The Committee states, pursuant to clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, H.R. 1908
will improve the quality of patents being issued by the USPTO,
greatly reduce the abusive practices particular to patent
litigation, and harmonize the United States patent system with
the rest of the world.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 8 of the
Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 1908 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.
Section-by-Section Analysis
SEC. 1. SHORT TITLE; TABLE OF CONTENTS
This section sets forth the short title of the bill as the
``Patent Reform Act of 2007'' and sets forth a table of
contents.
SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE
This section makes clear that amendments made by this Act
are to made to title 35 of the United States Code, unless
otherwise stated.
SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE
Definitions
In order to accommodate the change to a first-to-file
patent system, Section 3(a) amends 35 U.S.C. Sec. 100 to
include definitions for terms that are used in the context of a
first-to-file system. These definitions bring added clarity to
the meaning and application of the terms. Terms added and
defined include Sec. 100(f) ``inventor'', Sec. 100(g) ``joint
inventor'', Sec. 100(h) ``effective filing date of a claim
invention'', Sec. 100(i) ``claimed invention'', and Sec. 100(j)
``joint invention.''
The term ``inventor'' refers to a single individual who
has, working alone, invented or discovered an invention. In
cases where two or more individuals are responsible for
inventing or discovering an invention, the term inventor
applies to all the individuals collectively.
The term ``joint inventor'' is applied to any one of the
individuals who have invented or discovered an invention
together. Such a term is necessary since the term inventor is
used to refer to either a single inventor or, collectively, to
all the joint inventors of an invention made or discovered by
more than one person.
The ``effective filing date of a claimed invention'' as
applied in Sec. 100(h)(1) is the date a patent application
containing a disclosure of the invention is filed. The
``effective filing date for the claimed invention'' may also be
the filing date of a previously filed application if the
current application is entitled to a right of priority to an
earlier provisional or foreign application under 35 U.S.C.
Sec. Sec. 119, 365(a) or 365(b), or is entitled to the benefit
of an earlier filing date of a United States application under
35 U.S.C. Sec. Sec. 120, 121 or 365(c) as provided by
Sec. 100(h)(2), so long as the application that is the basis of
priority fully describes and enables the claimed invention.
The term ``claimed invention'' is any invention defined by
a claim in a particular patent or patent application, as
required by Sec. 112(b) as amended by this Act.
The term ``joint invention'' is an invention that is made
from the collaboration of inventive endeavors of two or more
persons working toward the same end and producing an invention
by their collective efforts.
Prior Art
Section 3(b) substantially amends Sec. 102, the definition
of prior art and conditions for patentability. Broadly, the new
Sec. 102(a) defines prior art while the new Sec. 102(b)
establishes exceptions to Sec. 102(a).
Under the new Sec. 102(a)(1), the issuance of a patent is
prohibited if the claimed invention was patented, described in
a publication, in public use, or on sale before the effective
filing date of an application claiming the invention. Pursuant
to subparagraph (A), any of these acts operates as an absolute
bar if done more than a year prior to filing. Such acts also
operate as a bar under subparagraph (B) if done a year or less
prior to filing, except for an inventor's own disclosure.
Working together and as required in a first-to-file patent
system, these two provisions establish that any prior art
reference or disclosure (e.g., patent, publication, public use
or sale) available before the effective filing date of an
application that teaches or describes the invention may be used
to defeat the patentability of the invention.
Under the new Sec. 102(a)(1)(B) the grace period that has
traditionally been available in the Untied States is
maintained. This inventor's grace period allows an inventor to
make his invention publicly available, whether by publication,
public use, or sale, up to 1 year prior to filing a patent
application for the invention, without such activity being used
as prior art against him. This grace period allows an inventor
to assess the usefulness, marketability and practicality of the
invention for a limited period of time before undertaking the
expense of obtaining a patent on the invention. The grace
period is also very important for universities and nonprofit
research organizations and will allow academic inventors to
discuss or publish information concerning their invention
without fear that such a disclosure would be used against their
applications.
The Committee uses the current Sec. 102(b) as the template
from which to define the scope of prior art in the Act,
primarily because of how the terms ``in public use'' and ``on
sale'' have been interpreted by the courts. The provisions of
Sec. 102(b) are meant to serve a set of very specific policy
goals which include 1) encouraging inventors to file early for
patent protection, 2) preventing inventors from extending their
monopoly in the invention and 3) not taking away from the
public what it justifiably believes is in the public domain.
Additionally, there is nothing inherent in a first-to-file
system that will deter inventors from making use of their
inventions as trade secrets and then some time later filing a
patent application for the invention. Thus, the maintenance of
the ``public use'' and ``on sale'' definitions of prior art are
needed to prevent such activity.
The Committee also chose to eliminate any geographical
limitations placed on the ``in public use'' and ``on sale''
prior art found in the current Sec. 102(b). These limitations
were first created in an era where it took weeks to travel to
other countries and information concerning inventions in other
countries, was limited at best. Given advances in
communications technology and transportation, the average
person can learn as much about activities in a foreign land as
he can learn about what is happening in his own neighborhood.
As such, there is no longer a need to distinguish, for prior
art purposes, between a public use or sale in this country
versus one in another. Furthermore, most other countries do not
limit prior art to domestic knowledge.
The new Sec. 102(a)(2) carries over the current Sec. 102(e)
class of prior art, namely patents and patent applications not
yet published.
Exceptions to Prior Art
While the Committee finds that the United States should
make the switch to a first-inventor-to-file system, the
Committee also recognizes that the limitations inherent in a
strict first-to-file system may be too restrictive given the
nature of invention discovery and development, even with the
inventor's grace period provided in Sec. 102(a)(1)(B). With
this in mind, this Act incorporates a number of exceptions to
prior art.
The first exception to prior art is provided by
Sec. 102(b)(1). This provision disqualifies any prior art under
Sec. 102(a)(1)(B) if the same subject matter had already been
publicly disclosed by the inventor (hereinafter ``first-to-
disclose exception''). This exception effectively creates a
first-to-disclose rule. If an inventor publicly discloses his
invention, he preserves his priority to the invention even if
there is intervening prior art between the inventor's public
disclosure and the inventor's application for patent, provided
that the application is made 1 year or less after the initial
disclosure.
As a general rule in a first-to-file system, where two
independent inventors come up with the same invention, priority
will go to the first inventor to submit an application (new
Sec. 102(a)(2)). The earlier, or ``senior,'' application will
operate as prior art against the later, or ``junior,''
application and bar the second patent. However, new
Sec. 102(b)(2) establishes several exceptions to
Sec. 102(a)(2).
First, if a senior application claims subject matter that
was obtained directly or indirectly from a junior applicant who
was the true inventor, the senior application will not qualify
as Sec. 102(a)(2) prior art against the junior application.
This is why the new ``first-to-file'' system is more properly
characterized as a ``first-inventor-to-file'' system. Second,
if the subject matter of the senior application was publicly
disclosed by the junior applicant before the senior application
was filed, the senior application does not qualify as prior art
against the junior one under Sec. 102(b)(2). In this sense, the
new ``first-inventor-to-file'' system is also a ``first-to-
disclose'' system. Finally, under the new Sec. 102(b)(2), a
published patent or application under Sec. 102(a)(2) that
normally would constitute prior art against a subsequently
filed patent application, does not qualify as prior art against
the subsequent invention if the published patent or application
and the subsequent invention were owned by or subject to an
obligation of assignment to the same entity as of the effective
filing date of the subsequent patent application.
The new Sec. 102(b)(3) carries over the Cooperative
Research and Technology Enhancement (CREATE) Act of 2004 (108
P.L. 453; 118 Stat. 3596), originally codified in Sec. 103(c).
This re-codification establishes an exception to Sec. 102(a)(2)
prior art in the possession of parties to a joint research
agreement. Such prior art will not be counted against a
subsequently filed application by the parties if the claimed
invention was developed under a joint research agreement and
has an effective filing date on or after the date of the joint
research agreement.
The above provisions are illustrated by the following
example. Inventor (I) delivers a paper at an academic
conference on January 1, disclosing the subject matter of her
invention. Colleague (C) learns the invention at the conference
and publishes a paper on the same subject matter on August 1.
Thereafter, C files a patent application on October 1. I files
her own application on December 1. Is either I or C entitled to
a patent?
I's disclosure at the conference would ordinarily
constitute prior art under Sec. 102(a)(1). Because it was
disclosed less than 1 year prior to filing (by both I and C),
it is covered by Sec. 102(a)(1)(B), which exempts it as prior
art for I (``disclosures made by the inventor '') but not for
C. It will defeat C's patent application, but not I's.
C's publication on August 1 would also ordinarily
constitute prior art for both I and C. Yet, it is excluded for
C by Sec. 102(a)(1)(B) and for I by the same paragraph
(disclosure ``by others who obtained the subject matter
disclosed directly or indirectly from the inventor ''). If C
were an independent inventor and did not obtain the subject
matter from I, C's disclosure by publication on August 1 would
still not operate as prior art against I because of the
exception in Sec. 102(b)(1) (earlier disclosure by inventor).
An independent disclosure will not operate as prior art if the
applicant had disclosed first (within 1 year of her filing).
C's patent application on October 1 will also operate as
prior art against I pursuant to Sec. 102(a)(2) because it was
effectively filed before the filing date of I's application.
However, since the subject matter in C's application was
obtained from I, Sec. 102(b)(2)(A) prevents it from operating
as prior art. Even if C obtained the subject matter
independently, and not from I, C's application will not serve
as prior art because of the exception in Sec. 102(b)(2)(B).
That is because I publicly disclosed her invention before C
filed.
In summary, because of the ``grace period'' in Sec. 102,
none of the events prior to I's filing on December 1 will
operate as prior art as to I. C's application, however, is
barred. He may have a grace period for his own disclosures, but
not for earlier disclosures by another inventor. Even if C were
not barred, I could initiate a derivation proceeding against
him under Sec. 135(a). Upon proof that C derived his invention
from I, I would be awarded the patent.
It's right to a patent over C is illustrative of the
difference of a pure ``first-to-file'' as opposed to ``first-
inventor-to file'' system.
Changes to Obviousness
Section 3(c) repeals Sec. Sec. 103(b) & (c) and amends the
definition of obviousness so that obviousness is measured as of
the date of application for the claimed invention instead of
the date of invention.
Derivation Proceeding
In order to address concerns that a first-inventor-to-file
system may make it easier for an invention to be
misappropriated from the true inventor, section 3(i) replaces
the current interference proceeding in Sec. 135(a) with a new
derivation proceeding that will allow a true inventor to
challenge an earlier applicant's right to patent. This is a
formal administrative proceeding that provides an applicant the
opportunity to show that another, earlier applicant claiming
essentially the same invention, actually derived the invention
from the requester, thus removing the earlier application or
patent as prior art under the exception set forth in
Sec. 102(b)(2)(A).
Under the amended Sec. 135(a)(1)(A), an applicant
requesting a derivation proceeding must set forth the basis for
finding that an earlier applicant misappropriated the claimed
invention and without authorization filed an application
claiming such invention. Also the request must be filed within
12 months of the date of first publication of an earlier
application or issuance of a patent on that application,
whichever is first, covering a claim that is the same or
substantially the same as the claimed invention.
Under Sec. 135(a)(1)(B), the Director is to determine
whether the basis set forth under Sec. 135(a)(1)(A) has been
met. Under Sec. 135(a)(2), the Patent Trial and Appeal Board
(PTAB) shall determine the right to the patent and issue a
final decision thereon. Under Sec. 135(a)(3), the Board may
defer action on a request for a derivation proceeding until 3
months after a patent is issued on the earlier-filed
application. As per Sec. 135(a)(3), the Board's decision
concerning the merits of the positions advanced during the
derivation proceeding will serve as the final decision by the
USPTO as to who has the right to patent. The losing party may
appeal to the Federal Circuit.
While a derivation proceeding may appear to have some
similarity to an interference proceeding, its purpose is not to
determine who invented first. The only concern of a derivation
proceeding is whether one applicant obtained the subject matter
from the other, and is therefore not a true inventor of that
subject matter.
Condition on Implementation of Section 3
Section 3(k) contains the effective date for this section.
The adoption of the ``first-inventor-to-file'' system is
delayed until 90 days after the President certifies to Congress
that other ``major patenting authorities'' have adopted a grace
period substantially similar to the one contained in this
section. As of time of adoption of this report, neither the
European Patent Convention nor Japanese patent law provide a
grace period. The beneficial effect of the grace period
provided to United States filers by this section could be lost
should they also seek patent protection in Europe or Japan,
which are the most frequent destinations for international
filings by United States nationals. The Committee believes that
in this limited instance and with Congressional oversight, the
Executive is the appropriate body to determine whether other
countries have sufficiently conformed their patent laws to the
grace period under this section. The Committee is providing
section 3(k) as guidance to the President, by defining ``major
patenting authorities'' to mean the patenting authorities in
Europe and Japan. This is not meant to require that every
European country adopt a grace period. Rather, it is sufficient
if the European Patent Office and the patent offices of Germany
and the United Kingdom do so. Nor must their grace periods
operate exactly as in this section, or define exempt prior art
in precisely the same way.
Review of Effects of Section 3 Amendments
Section 3(l) mandates that the Undersecretary of Commerce
for Intellectual Property and Director (hereinafter ``the
Director'' of the Unites States Patent and Trademark Office
(USPTO) conduct a study on the effectiveness and efficiency of
the amendments made by this section, and submit to the
Committees on the Judiciary of the House of Representatives and
the Senate a report on the results of the study. The report
must include any recommendations the Director may have on
amendments to the law and any other recommendations the
Director may have with respect to the first-inventor-to-file
system as put into effect by the amendments in this section.
The first such study must be done not later than the end of the
7-year period beginning on the effective date of this section
as set forth in subsection (k). The study must be repeated at
the end of every 7-year period after the date of the first
study. It is the opinion of the Committee that the amendments
in section 3 of the bill serve to implement a fundamental
change in the operation of the United States patent system.
Such change, while well-reasoned, requires a mechanism for
monitoring its long-term effects.
SEC. 4. INVENTOR'S OATH OR DECLARATION
Section 4 amends Sec. Sec. 115 and 118. As amended,
Sec. 115(a) requires that z patent application include the
names of the inventors of any invention claimed in the
application, and that inventors sign an oath or a declaration
in lieu of oath. Section 115(a) also requires that the inventor
of each claim in the patent application execute an oath or
declaration for the application. An oath or declaration must be
executed by every inventor in the case where an invention has
more than one inventor.
Under Sec. 115(b) the oath or declaration required under
Sec. 115(a) must state that the application was made or
authorized to be made by the affiant or declarant, and that
such individual believes himself to be the ``original''
inventor of the claimed invention. This change partly reflects
a change to a first-inventor-to-file system, because the
affiant or declarant no longer has to state that he believes
himself to be the ``first'' inventor of the claimed invention.
Under Sec. 115(c), the Director of the USPTO is allowed to
require additional information related to the inventor or
invention to be included in the oath or declaration.
Under Sec. 115(d)(1), the requirements of Sec. 115 (b) and
(c) may be met through a substitute statement in lieu of an
oath or declaration under certain circumstances. These
circumstances are listed in Sec. 115(d)(2), and include times
where the inventor is dead, is legally incapacitated, or cannot
be found or reached after a diligent effort. Section 115(d)(2)
also allows a substitute statement to be submitted in lieu of
an oath or declaration when an inventor has an obligation to
assign his rights to the invention but refuses to make the oath
or declaration required by Sec. 115(a). Today, many inventions
are made by employee-inventors who have assigned to their
employers, in contract or other terms of employment, the rights
to any inventions they make in connection with their
employment. Or an employer may claim rights to an invention by
implication. Where such a relationship exists, this change will
prevent an employee-inventor from withholding his oath or
declaration as a means to delay or prevent an employer from
seeking patent protection of an invention created by the
employee-inventor, or as a means to negotiate remuneration from
the employer. Under Sec. 115(d)(3) the substitute statement
must identify the individual with respect to whom the statement
is made (i.e., the inventor or joint inventor) and set forth
the permitted circumstances that are the basis for filing the
statement (e.g., the inventor has an obligation to assign his
invention but refuses to sign the oath or declaration). The
Director of the USPTO is authorized to require additional
information to be included in the substitute statement. In
cases where assignment is alleged, the Committee expects the
Director to require evidence showing the assignment.
To provide further flexibility, Sec. 115(e) allows an
individual who is under an obligation to assign the invention
to make the statements required under Sec. 115 (b) and (c) in
the assignment document, rather than making the statements in a
separate filing. Amended Sec. 115(e) exempts individuals from
the requirements of the section when they file an application
that claims priority under Sec. 120 or Sec. 365(c) if the
requirements of this section were met in the earlier
application. Finally, amended Sec. 115 prohibits the USPTO from
issuing a notice of allowance under Sec. 151 until the
conditions of this section are met, thus defining the time at
which the conditions must be met by the applicant(s) as anytime
prior to the issuance of a notice of allowance.
Section 115(f) requires, as a condition before a notice of
allowance is provided, that the applicant has filed each
required oath or declaration under Sec. 115(a), or substitute
statement under Sec. 115(d), or has recorded an assignment
meeting the requirements of Sec. 115(e).
Section 115(g) allows an applicant to forgo the
requirements of Sec. 115 if the application is claiming
priority based on a continuation application under Sec. 120 or
a foreign filed application under Sec. 365 and the earlier
application meets the requirements set out in Sec. 115 (a), (d)
or (e).
Section 115(h)(1) allows changes to be made to any
statements filed under Sec. 115. If the change includes naming
one or more additional inventors, the Director will establish
regulations that guide how such a change is to be made.
However, under Sec. 115(h)(2), no supplemental statement shall
be required if an oath or declaration under Sec. 115(a) or an
assignment under Sec. 115(e) is already executed. Section
115(h)(3) provides that no patent shall be invalid or
enforceable if the requirements of Sec. 115 are not met.
However, willful false statements may still serve as a basis
for making unenforceable patents that are acquired by means of
inequitable conduct as defined in Sec. 282.
Section 115(i) requires that any declaration or statement,
including oaths, include an acknowledgment that any willful
false statement is punishable by fine or imprisonment, or both,
under 18 U.S.C. Sec. 1001. This is to ensure that all inventors
and/or applicants are held accountable for making any
statements they know are false in an oath or declaration, or a
substitute statement or assignment that is intended to be in
lieu of an oath or declaration as permitted under Sec. 115.
As amended, Sec. 118 will permit a person to whom the
invention is assigned, or to whom the inventor is under an
obligation to assign the invention, to apply for a patent on
the invention without having to show that the inventor cannot
be found or reached, or has refused to execute the application.
Also, under the amended Sec. 118, a patent issuing from an
application filed by anyone other than the inventor will be
issued to the real party in interest, with notice to the
inventor. In most cases, the real party in interest will be the
person to whom the patent is assigned. This change will have
little impact on the rights of the inventor who has already
given up his rights to the invention by having assigned his
rights to the applicant, and should increase the flexibility
and efficiency with which an assignee may file a patent
application on inventions made under the assignee's auspices.
As amended, Sec. 118 will harmonize U.S. patent law relating to
who can file a patent application with the laws of most if not
all foreign patent agencies.
SEC. 5. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES
Apportionment of Damages
Section 5(a) amends 35 U.S.C. Sec. 284. As amended,
Sec. 284(a) maintains the current option between lost profits
and other measures, not less than a reasonable royalty, as the
basis for damages. The Committee does not intend to change or
affect the ways courts and juries award damages for lost
profits. The changes in the bill are addressed to awards of
damages based on a reasonably royalty theory. Further, the
plaintiff is still entitled to compensatory damages ``together
with interest and costs as fixed by the court.''
Generally, newly added Sec. 284(b) is applicable whenever
``reasonable royalty'' is used to determine damages. Paragraph
(1) governs how a reasonable royalty is to be calculated. It
prescribes three essential steps. First, the court must
affirmatively determine which of the specified alternative
methods of calculating a reasonable royalty will be used. Next,
the court must identify which factors (e.g., from among the 15
Georgia-Pacific factors or any others) are relevant to the
selected calculation method. In these first two steps, the
court acts as gatekeeper, identifying for the jury (or for the
court's own consideration) the applicable methodology and the
factors that are both relevant under that methodology and
supported by the evidence in the case. Finally, the court or
jury may rely only on the selected method (or methods) and only
those factors specifically identified as relevant and supported
by the evidence presented in calculating the amount of
reasonable royalty. Merely providing a list of the Georgia-
Pacific factors to the jury, as often occurs now, would be
insufficient and impermissible under the revised Sec. 287(b)
unless the court explains on the record why only that approach
can produce a just damages award and is necessary in the
interest of justice.
Paragraphs (2), (3) and (5) of Sec. 284(b) provide
different approaches to the determination of a reasonable
royalty. The court will select the methodology that best suits
the facts of the case and the patent-in-suit. The Committee
expects that paragraphs (2) or (3) will apply in many of cases.
However, where neither of those methods is capable of achieving
the standard set out in subsection (a) (``a reasonable royalty
for the use made of the invention by the infringer ''), then
the court may use the alternative provided by paragraph (5).
The Committee anticipates that courts will perform their
gate-keeping function by conducting a hearing outside the
presence of a jury in cases tried to a jury for the purpose of
reviewing the evidence that the parties plan to introduce
relating to calculation of damages. After assessing the
admissible evidence relating to reasonable royalty, the court
will (1) determine the applicable methodology and factors
relevant under that methodology and explain on the record the
reasons for its determination; and (2) permit the parties to
put before the jury only the evidence relevant to the
methodology and factors determined to be applicable by the
court. This will prevent confusion of the jury that likely
would result from the introduction of misleading or irrelevant
evidence. Making these determinations part of the record will
facilitate review, both by the court on a post-trial motion and
on appeal.
Although individual judges should determine what is
appropriate based on the facts of the case before them, it
would be preferable for the analysis to occur earlier in the
process rather than later. Evidence presented in support of a
reasonable royalty award often will include experts' economic
analysis of three relevant sets of commercial considerations
aimed toward establishing ``a reasonable royalty for the use
made of the invention by the infringer''--
<bullet> Lthe value of the actual invention (its
``specific contribution over the prior art'');
<bullet> Lthe impact of the actual invention, if any,
on supply of and demand for a product or process
incorporating the invention; and
<bullet> Lany collateral effects, such as cost savings,
increased efficiency in production, lower distribution
cost, etc.
Expert testimony may include opinion testimony on
development costs, production costs, cost associated with re-
engineering, the market size, changes in both supply and demand
directly attributable to the invention, evidence of specific
consumer reliance on the invention and other microeconomic
analyses. This evidence, when appropriate, may include previous
licensing of the actual or related inventions, accounting for
variations in the terms and conditions of such licenses.
Finally, if available, evidence may be taken on the economic
value of non-infringing alternatives to the actual invention.
As amended, Sec. 284(b)(2) provides for apportionment of
damages as the first of three alternative mechanisms for
calculating reasonable royalty. This paragraph requires the
court to conduct an economic analysis of the infringing product
or process and determine what portion of its value is properly
attributable to the invention. Expert testimony typically would
focus on the value of the invention as such, separate and apart
from the economic value of the product or process that may
incorporate the invention. It would do so by a process of
identifying the elements of the invention that render it
patentable and the economic value properly attributable to
those elements. The economic valuation should identify the
specific value of the invention's inventive steps as such,
separate and apart from other technologies and elements (the
``prior art '') with which it may be associated. Finally, from
the infringing product or process's overall value, the court
must exclude ``the economic value properly attributable to the
prior art'' and the ``other features or improvements, whether
or not themselves patented, that contribute economic value to
the infringing product or process.''
For example, in a case alleging that the patent-in-suit was
infringed by a particular aspect of a GPS navigation system
incorporated in an automobile, the economic analysis would
focus on determining the incremental value contributed by the
particular aspect of the GPS system attributable to
infringement of the actual invention embodied in that patent;
it should exclude the value contributed by the other GPS
technology, as well as the value of the car as a whole, its
engines, body, steering system, seats, drive train, windows,
etc. Similarly, an invention permitting a bank's customers to
round up their debit card or credit card charges to even
dollars and automatically transfer those cents into a savings
account, should not be valued on the basis of banking services
generally such as savings, debit card use or brokerage but
rather on the incremental value attributable to the rounding
up/transfer process itself.
Accordingly, paragraph (2) directs the use of an objective
method to measure a patent's value for damages purposes.
Inventors should be rewarded for their ``inventive
contributions;'' they should not be rewarded for others'
innovations (even where incorporated into the patent) or for
market success properly attributable to the overall commercial
context in which the invention is used, except as provided
under paragraph (3).
As amended, Sec. 284(b)(3) permits courts to use the
``entire market value'' rule in calculating damages when the
prerequisites for use of that standard are met.
The ``entire market value'' rule is the corollary of
apportionment. Where separate unpatented products operate as a
functional unit with the infringing product, or the infringed
component serves as the basis for customer demand of the
functional unit, damages may be based on the ``entire market
value'' of the combination. See Rite-Hite Corp. v. Kelley Co.,
Inc., 56 F.3d 1538 (Fed. Cir. 1995) (in banc). The rule applies
most often in the case of accessory items which form a single
functional and marketable unit with the infringing product.
After-market ``convoyed'' sales can also be included. See Juicy
Whip, Inc. v. Orange Bang, Inc., 382 F.3d 1367 (Fed. Cir.
2004). In both cases, defendant's profits on separate, non-
infringing, products may be included in the damages base if the
market demand for them is determined by the infringed
invention.
The test for determining whether the infringed component
drives the market demand for the overall product or combination
is refined by Sec. 284(b)(3). ``[T]he patent's specific
contribution over the prior art [must be] the predominant basis
for market demand for an infringing product or process.'' The
``specific contribution'' requirement focuses the inquiry on
whether the innovative element of the patented product is the
basis for customer demand, rather than non-innovative (prior
art) features that just happen to be claimed in the patent.
This complements the purpose of paragraph (2) to award a patent
holder for his true contributions, rather than for technologies
defendant could have incorporated without infringing.
In using the term ``predominant basis,'' the Committee did
not intend to imply that the invention should be the one and
only factor that leads all consumers to make their purchase
decisions. Rather the intent of the Committee is to ensure that
this test is met only when the invention is the factor
determining marketplace acceptance, not in the sense that it is
the only relevant factor but in the sense that, based on the
facts presented, the invention's specific contribution over the
prior art (and not other factors) drives marketplace demand for
the product or process which incorporates it.
Typical examples of situations where the patented
contribution may distinguish over the prior art include
pharmaceuticals. Often the only reason to purchase a drug is
the patented active chemical agent for a drug or a treatment.
In such cases, the invention is the very reason why customers
purchase the product. In the case of a patented cholesterol-
reducing chemical dispensed in the form of a pill, the customer
has little interest in the binders, buffers, starches or
coloring associated with the pill. The sole reason for the
demand is the therapeutic effect. Similarly, when the invention
is a new methodology for dispensing medication, such as
insulin, the dispenser itself, for example an inhaler, may be
the sole reason for customers to demand the medication in that
form.. As a general rule, for products with one or two key
distinct features which are the actual invention, it should be
relatively easy to establish that the entire market value rule
applies. However, with respect to products that have many
constituent components, such as software and integrated
circuits, it should rarely apply.
The codification of the ``entire market value rule'' at
Sec. 284(b)(3) does not otherwise change the operation of the
rule as it pertains to convoyed sales (``the products or
processes involved '') so long as they satisfy the customer
demand created by infringing use of the patent-in-suit.
The amended Sec. 284(b)(4) applies to damages measures
under Sec. 284(b)(2) and (3); it is not an independent method
that can be used as an alternative to them. It reflects the
reality of modern technology, that innovation may lie simply in
combining prior art in novel, non-obvious and useful ways. In
such cases, the value of the invention may lie in increased
functionality or enhancement of the prior art due to the
inventive combination.
Thus, in determining an invention's ``specific contribution
over the prior art'' (i.e., the value of the patented
innovation), in the case of a combination, a court should not
simply exclude the values of previously known elements. Some of
that value may be attributable to the invention and is properly
part of plaintiff's damages base. One example provided to the
Committee was that of a telephone. Its inventor (Alexander
Graham Bell) mostly combined pre-existing products in a novel
way. If the separate value of each component preexisting in the
prior art was simply subtracted from the overall value of the
telephone, there would be nothing left that could be attributed
to the novel combination (the patented invention). Clearly, the
combination increased the value of the coils, wires,
amplifiers, and so on, that previously existed; Sec. 284(b)(4)
permits plaintiff to include these ``additions to value'' under
Sec. 284(b)(2) or (3) by showing the enhanced value of the
combination due to the patented invention.
Amended Sec. 284(b)(5) provides alternate mechanisms for
determining a reasonable royalty when the two principal methods
(Sec. 284(b)(2) and (3)) have been found by the court to be
ill-suited to the facts of the case, and the court explains the
reasons for that determination on the record. Paragraph (5)
contains two approaches, which may be used singly or in
combination.
The first looks to ``any nonexclusive marketplace licensing
of the invention.'' Where there is an established marketplace
standard for licensing of the invention for the particular use
made by the defendant, the royalties obtained under those
licenses provide an established measurement of ``reasonable
royalty'' for Sec. 284 purposes. Courts often prefer to use
this measurement, where available, rather than to estimate a
royalty by constructing a hypothetical negotiation between the
parties. This approach derives from the first of 15 factors
identified by the court in Georgia-Pacific v. United States
Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970), modified
446 F.2d 295 (2d Cir. 1971).
The second approach allows the court to select any other
relevant factors under applicable law. This is designed to
permit courts to address the situations in which the methods
set forth in the other paragraphs of Sec. 284(b) will not
produce a just result. This includes factors courts have used
in applying Sec. 284 since 1952 or other factors the court
determines to be necessary to achieve a just result. Since the
amendments to that section do not change the basic framework
(``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 ''), judicial approaches under
existing law are relevant to the section as amended. This
includes the 15 Georgia-Pacific factors. They appear in three
groupings:
1. LRates and terms of marketplace licenses (factors 1-
4, 7);
2. LNature of the invention, and its economic value to
infringer (factors 6, 8-13);
3. LRelationship and bargaining positions of the
parties (factors 5, 15).
A court may use such factors individually or in combination as
it finds appropriate, provided that it states its reasons on
the record (including its reason for resorting to paragraph (5)
in the first place).
The Georgia-Pacific factors were never intended as an
exclusive list. As new forms of technology become patented, new
forms of business relationships appear in the market, and new
indications of infringement emerge, a court can craft
additional factors to respond to the specifics of the case at
hand. In addition, a court may take the opinion testimony of
experts (factor 14). As noted above, such testimony should
focus on the microeconomic variables that set the value of the
actual invention, and should be stated with precision and
specificity. The value of the invention is a function of many
variables that affect supply and demand both for the invention
itself and for products or processes that incorporate or rely
on the invention. In making these determinations experts should
focus on both the factors of production that affect the supply
of the invention--the development, production, distribution,
etc.--as well as the factors that determine demand, the value
customers associate with the inclusion of the invention in a
product or process as compared to products or processes that do
not include the invention.
An explanation of how paragraph (5) would apply is provided
by the example of insulin inhalers, which has been cited to the
Committee a number of times, and was raised specifically by
Kathryn L. Biberstein, Senior Vice President of Alkermes, Inc.,
in her testimony to the Senate on the topic of patent reform.
Ms. Biberstein argued that the language of the bill requiring
the assessment of damages based on the invention's specific
contribution over prior art would exclude from damages analysis
previously known technologies, potentially leaving without
remedies inventors of devices such as insulin inhalers, where
both its principal components--insulin and pump inhalers--are
previously known technologies. Mr. Gary Griswold, of the 3M
Corporation, made substantially the same arguments in his
testimony to the House, using the example of Post-It notes.
Both instances present examples where combinations of
existing technologies produce a valuable new invention. Of
course, this is very much the norm. Few inventions are dramatic
departures. In virtually all cases, inventions are the product
of incremental change and cumulative growth in knowledge.
Although the Committee believes that both the insulin pump
and the Post-It note are very much susceptible to a just
damages analysis and compensation under paragraph (2) or (3),
the specific purpose of including paragraph (5) is to ensure
courts and juries have the latitude to rely on case law and
common law when it determines just results cannot be achieved
otherwise.
Under paragraph (5), licensing by Alkermes or 3M of its
inventions, the terms and conditions of those licenses, would
be fully available to the judge or jury as they calculated a
reasonable royalty and could be considered if the standards
discussed above are satisfied. If the patent owner has not
licensed the invention, the court may find applicable the other
Georgia-Pacific factors. In fact the court under subparagraph
(5) can rely on any of these factors provided their application
is not inconsistent with the balance of this section, and the
court determines that the methods specified in the statute are
not capable of producing a just result. Still, it is the
Committee's intention that courts should not continue the
practice of instructing juries on all 15 Georgia-Pacific
factors and leaving the jury to determine which factors are
relevant. As required in Sec. 284(b)(1), if the court
determines that other factors are to be used to determine a
reasonable royalty, then the court must also identify which of
these factors are to be used and why.
Willful Infringement
Section 5(a) also amends 35 U.S.C. Sec. 284(c), relating to
willful infringement. As amended, Sec. 284(c)(1) codifies the
judicial doctrine that treble damages may be awarded when the
court has determined that the infringer engaged in willful
infringement.
Under the amended Sec. 284(c)(2), willful infringement
cannot be found unless there is clear and convincing evidence
of one of the following:
(1) Lthat an infringer continued to infringe after
receiving written notice alleging acts of infringement
in a manner that gives the alleged infringer reasonable
apprehension of suit on those grounds, and identifies
with particularity each claim that is infringed, each
activity or product that infringes, and the
relationship between the claim and the infringing
product or activity; or
(2) Lthe infringer intentionally copied the patented
invention with knowledge that it was patented, or
(3) Lthe infringer continued to infringe after having
been found by a court to have infringed the same
patent. In this case, the infringer must have been
found to infringe a patent by engaging in acts not
colorably different from activities that were found in
the previous infringement action to have infringed the
same patent.
Amended Sec. 284(c)(3) places limitations on when
infringing activities may be considered to have been willful.
First, any act of infringement may not be deemed to be willful
for any period during which the infringer had an informed good
faith belief that activities later found to be infringing would
not infringe the patent, or that the claims were invalid or
unenforceable. The informed good faith belief may be based on
reasonable reliance on advice of counsel, evidence that the
infringer took significant steps to modify its conduct to avoid
infringement once it became aware of the patent, or other
evidence that the court may find sufficient to establish good
faith belief. Under amended Sec. 284(c)(3)(C), an infringer's
failure to seek or present advice of counsel shall have no
evidentiary implications regarding willfulness. It is the
Committee's opinion that a documented search effort aimed at
establishing freedom to operate, conducted prior to engaging in
activities that were later found to infringe, may constitute
evidence against willful infringement provided the search and
resulting efforts to avoid infringing prior art patents are
sufficiently extensive.
Amended Sec. 284 (c)(4) bars the patentee from pleading
willfulness and the courts from finding willfulness until the
court first finds that the patent in suit is valid and
enforceable, and has been infringed by the infringer. The
determination of willfulness shall be made by the court even
when the rest of the case is tried to a jury. These provisions
will reduce significantly the added expense and complications
attributable to the process of determining willfulness during
litigation by eliminating any consideration of willfulness in
cases where the patent in suit is judged to be invalid,
unenforceable or not infringed. In such cases there can be no
damages payable to the patentee, and thus no consideration of
treble damages.
Prior User Rights
Section 5(b) amends Sec. 273, the defense to infringement
based on an earlier invention (i.e., ``prior user rights '').
Under current law, prior user rights are available only for the
prior use of business method patents. However, as amended,
Sec. 273(a) widens the scope of prior user rights to all
patented inventions. Thus, users of all types of inventions,
products or processes, will now be able to make use of the
defense if the invention is later patented by another.
Another significant change will be the relaxing of
conditions to make use of the defense. Under current law, in
order to use the defense, a prior user must have made
commercial use of the invention more than 1 year prior to
another's filing of a patent application on the invention.
However, the amended Sec. 284(b)(1) will allow the prior user
defense to be applied to a qualifying use prior to the filing
date of a claimed invention. Furthermore, a qualifying use may
be either a commercial use or substantial preparation for
commercial use.
Review of Effects of Section 5 Amendments
Section 5(e) mandates that the Director conduct a study on
the effectiveness and efficiency of the amendments made by this
section, and submit to the Committees on the Judiciary of the
House of Representatives and the Senate a report on the results
of the study. The report must include any recommendations the
Director may have on amendments to the law and any other
recommendations the Director may have with respect to the right
of the inventor to obtain damages for patent infringement. The
study must be done not later than the end of the 7-year period
beginning on the date of enactment of this Act and at the end
of every 7-year period after the date of the first study. It is
the opinion of the Committee that the amendments in section 5
of the bill will have many positive effects on the patent
system, but that the changes are sufficiently significant to
require periodic monitoring. By examining the effects of these
changes on a regular basis, and by paying attention to such
feedback as may be obtained through these studies, Congress can
ensure that any unforeseen negative consequences that may arise
can be dealt with through future legislation or other
mechanisms.
SEC. 6. POST-GRANT PROCEDURES AND OTHER QUALITY ENHANCEMENTS
Reexamination
Section 6(a) amends ex parte and inter partes reexamination
and establishes a new post-grant review procedure.
Under the amended Sec. 301(a)(2), a person requesting
reexamination may cite to written statements of the patent
owner made before a Federal court or the USPTO in which the
patent owner takes a position on the scope of one or more
patent claims. The Committee heard comments that patent owners
would, occasionally, offer differing interpretations of cited
prior art. They might take one position during litigation or
initial examination, and a different one during reexamination.
This amendment is meant to allow such earlier statements to
form part of the reexamination record. These written
statements, which include, documents, pleadings, or evidence
from the aforementioned 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.
Under current law, if a reference is ``disseminated or
otherwise made available to the extent that persons interested
and of ordinary skill in the subject matter or art, exercising
reasonable diligence can locate it,'' it will qualify as a
``printed publication.'' MIT v. AB Fortia, 774 F.2d 1104 (Fed.
Cir. 1985) (oral presentation to technical audience accompanied
by distribution of some copies satisfied ``publication''
requirement). This includes modern forms of communication such
as presentation slide shows. In re Klopfenstein, 380 F.3d 1345
(Fed. Cir. 2004). Even a single copy of a document, such as a
doctoral thesis, indexed and catalogued in a library, qualifies
as a ``printed publication'' if it is ``sufficiently accessible
to a researcher who exercised reasonable diligence.'' E. I. du
Pont de Nemours & Co. v. Cetus Corp., 19 USPQ2d 1174 (N.D.
Calif. 1990).
The Committee endorses the current case law and definition
of print publication for purposes of prior art citation under
Sec. 301 and recognizes that the definition will evolve
commensurate with advances in technology and public
accessibility of information.
Section 6(b) amends Sec. 303(a) relating to ex parte
reexaminations by allowing the Director to determine whether a
substantial new question of patentability exists based on
patents or publications discovered by the Director, cited under
Sec. 301, or cited by any person other than the owner of the
patent under Sec. 302 or Sec. 311. The term ``publication'' as
used here is meant to have no operative difference with the
term ``printed publication'' as used in Sec. 301.
Section 6(c) amends Sec. 314 relating to the conduct of
inter partes reexamination proceedings. Amended Sec. 314(a)
deletes the procedure for reexamination under Sec. Sec. 132 and
133, and replaces it with a new procedure using Administrative
Patent Judges (APJs). Under current law, reexaminations are
conducted by patent examiners in the same manner as initial
examinations. However, reliance on the same corps of examiners
to uncover and correct errors in their colleague's initial
decisions may result in institutional bias. The amendment
replaces reexamination by patent examiners with reexamination
by APJs. APJs are defined by 35 U.S.C. Sec. 6 as ``persons of
competent legal knowledge and scientific ability who are
appointed by the Director.''
Amended Sec. 314(b) enlarges the opportunity that a third-
party requester has to participate in an inter partes
reexamination. Under current Sec. 314(b)(2), the third-party
requester can reply only to patent owner responses to office
actions. The amendment allows the requester to also file
written comments in response to the office action itself. In
both cases (response to the office action, reply to patent
owner's response), the requestor's filing must be received
within 60 days of the precipitating event.
Amended Sec. 314(d) allows either party to an inter partes
reexamination to request an oral hearing before the APJ. Here,
an ``oral hearing'' is equivalent to an oral argument, as at a
motion hearing or appeal in civil litigation. It is not an
opportunity to present evidence or witnesses. Since the grounds
for inter partes reexamination are limited by Sec. 301 to
documentary prior art, all supporting materials introduced by a
party should be part of their written submissions. The APJ may
dispense with an oral hearing if he feels it would not aid
disposition of contested matters.
Section 6(d) amends Sec. 315(c), the estoppel provision in
inter partes reexamination. Under current law, Sec. 315(c)
estops a third-party requestor from reasserting in civil
litigation the invalidity of a patent 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.'' The highlighted
language creates a form of res judicata, or ``claim
preclusion'' in civil procedure, by prohibiting renewed
challenges to patent claims even where a precise ground for
invalidity was not asserted in the prior action. This has
discouraged many challengers from utilizing the inter partes
reexamination procedure. Accordingly, Sec. 315(c) is amended by
removing the phrase ``or could have been raised.''
Section 6(e) amends Sec. 317(b), which precludes inter
partes reexamination of a claim following civil action
upholding its validity. The heading of Sec. 317(b) is amended
from ``Final Decision'' to ``District Court Decision'' and its
text is amended to read ``Once the judgment of the district
court has been entered.'' By this change, an inter partes
reexamination may not be instituted after a district court
decision.
Post-Grant Review
Section 6(f) adds Chapter 32, commencing with Sec. 321
which describes a petition for post-grant review as a petition
by a third-party (``a person who is not the patent owner '')
seeking ``to cancel as unpatentable any claim of a patent on
any ground'' going to patentability under Chapter II (35 U.S.C.
Sec. 100, et seq). A reissue patent under Sec. 251 may be
challenged on the same grounds. The Director will prescribe the
filing fee to be paid by the cancellation petitioner.
Conditions for filing a cancellation petition are defined
in Sec. 322. The opportunity to challenge is limited to 12
months after a patent issues or reissues. However, a patent
owner may consent in writing to a post-grant review proceeding
at any time. Where a challenger is outside the Sec. 322 window,
his only means to challenge the validity of a patent is to file
a request for reexamination or challenge the patent's validity
in a judicial proceeding.
Requirements of the petition for cancellation are set forth
in Sec. 323. A petition must:
(1) Lbe accompanied by the filing fee;
(2) Lidentify the cancellation petitioner;
(3) Lset forth in writing the basis for the
cancellation and each claim challenged, including other
information as required by the Director; and
(4) Lprovide copies of patents and printed publications
relied upon, both to the office and to the patent owner
(or representative).
The purpose for requiring a petitioner to identify and
provide copies of his evidence is both to provide full notice
to the patent holder and to streamline the process. It is
expected that the Director will promulgate regulations under
this section to require petitioner to include all information
he has, relating to the patent (e.g., other documentary
evidence, affidavits), at the time of filing. Further
information beyond the initial filing may be submitted only
pursuant to Sec. 325. A petition that fails to comply with the
filing requirements, or alleges insufficient grounds for post-
grant review, will be dismissed pursuant to Sec. 325.
Multiple challenges are prohibited under Sec. 324. A
cancellation petitioner may not file a second post-grant
opposition proceeding against the same patent, including other
claims of the patent, irrespective of its disposition. To avoid
collusive filings, the ``same cancellation petitioner''
includes other parties, although not named in the earlier
petition, if they were in privy with the petitioner. ``Privy''
describes a person or entity that was ``in privity'' with the
named parties of record. This includes non-parties to the first
action whose interests are so closely aligned with a named
party, that a judgment against the latter should be preclusive
as to all. See generally 18-131 Moore's Federal Practice--Civil
Sec. 131.40.
Under Sec. 325(a), the Director may require a cancellation
petitioner to provide additional information, either before
initiating the proceeding or after. The Director must determine
whether the original petition, together with additional
information supplied, establish a substantial question of
patentability for at least one claim in the patent. If he
determines that it does not, the petition must be dismissed.
A substantial question of patentability exists where there
is a substantial likelihood that a reasonable examiner would
consider the prior art reference or other information supplied
by the petitioner important in deciding whether or not the
claim is patentable. It is not necessary that a prima facie
case of unpatentability exist based on the reference or
information. In re Etter, 756 F.2d 852, 857 n.5 (Fed. Cir.
1985). Furthermore, questions of patentability reviewed by an
examiner during prosecution may serve as the basis for post-
grant review.
Under Sec. 325(b), the Director is required to send notice
to the patent owner and each petitioner, within 60 days of the
filing of the petition, of the determination made under
Sec. 325(a). The Director's determination is not reviewable by
appeal or otherwise (e.g., by writ of mandamus). Dilatory
petitions can obstruct successful exploitation of a patent by
using the post-grant review process as a delaying tactic.
Foreclosing review is thought necessary to avoid this problem
Under Sec. 326 the Director is required to promulgate
regulations governing the conduct of post-grant review
proceedings. It also specifies that the proceeding will be
conducted before the PTAB.
Under Sec. 326(a) the Director is required to promulgate
regulations in three areas. Paragraph (1) provides specific
authority, consistent with the USPTO's general regulatory
authority in 35 U.S.C. Sec. 2(b), to issue regulations
``establishing and governing post-grant review proceedings . .
. and their relationship to other proceedings under this
title.'' The first of these authorizations is modified by the
requirements set forth in subsection 9(b). The latter
authorization is read in conjunction with new Sec. 333
(Relationship to other pending proceedings). Together, they
allow the Director to coordinate or terminate co-pending
proceedings related to the same patent.
Paragraph (2) authorizes regulations regarding submission
of information by the parties as provided in Sec. 325. Although
Sec. 323(3) requires a cancellation petitioner to include [with
the petition] copies of patents and printed publications upon
which it relies, the form of other permitted or required
evidence is not specified. This paragraph allows the Director
to specify what types of submissions (e.g., declarations,
affidavits) may be made, and when they can be filed.
Paragraph (3) authorizes regulations regarding discovery.
Such discovery must be related to factual assertions advanced
by either party. It is expected that the Director will
promulgate regulations concerning the availability, scope and
timing of discovery, limiting it to relevant evidence or
information likely to lead to relevant evidence. The Director
can also specify the conditions for protective orders and
submission of evidence under seal (e.g., confidential matters).
Discovery may occur only upon order of the Director, as per
Sec. 326(b)(2) and should reflective of the fact that this is
an administrative proceeding and not a court proceeding.
Specific limitations on the regulations promulgated by the
Director pursuant to Sec. 326(a)(1) are imposed by Sec. 326(b).
Paragraph (1) requires that a post-grant review proceeding
conclude no later than 1 year after it is initiated. For good
cause shown, the Director may extend this period up to 6
months.
Paragraph (2) precludes discovery except upon order of the
Director. Thus, despite a possible broad reading of
Sec. 326(a)(3) to permit automatic or as-of-right discovery,
this paragraph requires the Director to order any discovery
request, which should generally be contingent upon approval by
the APJs hearing the post-grant review proceeding.
Paragraph (3) governs publication of petitions for post-
grant review and related documents. Notice of the petition must
be published in the Federal Register. This will identify the
petitioner, the patentee or patent holder, and the patent
claims in dispute. The full petition, together with supporting
and opposing documents and other pleadings, and orders and
decisions, will be published to the USPTO website, except for
those filings made under seal.
Paragraph (4) authorizes the Director to discourage
harassment through abuse of the post-grant review process, by
specifying the actions that constitute abuse and by prescribing
appropriate sanctions. The Director is given wide discretion to
protect the integrity of the process, and may impose sanctions
in the form of monetary fines (or payments to other parties) or
restrictive orders relating to the proceedings, including
dismissal of petitions or cancellation of claims.
Paragraph (5) authorizes regulations to protect
confidential matters, such as trade secrets.
Paragraph (6) requires that any submissions by the patent
owner become part of the patent file, and be made publicly
available to the same extent as other matter in the file,
except where subject to protective orders.
The considerations the Director must take into account in
promulgating regulations under Sec. 326(a) and (b) are set
forth in Sec. 326(c). These are: ``the effect on the economy,
the integrity of the patent system, and the efficient
administration of the Office.'' As used here, ``effect on the
economy,'' means simply the cost to the parties of conducting
the post-grant review process, including complying with the
regulations issued under this section.
All post-grant review proceedings under this chapter are
required to be conducted by the PTAB by Sec. 326(d).
The patent owner is given the right to respond to the
cancellation petition by Sec. 327. However, this right is
available only after a post-grant review proceeding has been
initiated by the Director pursuant to Sec. 325. Accordingly,
the determination made by the Director merely tests the
sufficiency of the allegations and supporting documents in the
petition; it is not an opportunity to resolve conflicting
positions. In his response after the Director has initiated the
proceeding, the patent owner has the right to submit
affidavits, declarations, expert opinions and other evidence
bearing on patentability. The time period for the patent
owner's response shall be set by the Director by regulation.
Under Sec. 328(a), the presumption of validity set forth in
Sec. 282 shall not apply in a challenge to any patent claim
under this chapter. Given that post-grant review is not
``judicial review,'' with its attendant deference to agency
determinations, the presumption of validity found in Sec. 282
is not required, either by the Administrative Procedure Act or
general separation of powers principles. Indeed, the whole
purpose of post-grant review is to test the validity of the
patent vel non; to catch patents that never should have issued
in the first place.
The burden of proving a proposition is allocated to the
party advancing that proposition by Sec. 328(b). The term
``burden of proof'' is used here in its common sense as
including both the ``burden of production'' and the ``burden of
persuasion.'' Both are imposed, with respect to a particular
proposition, on the party putting forward that proposition. For
example, a challenger claiming that prior art makes obvious the
patented invention would have to both (1) produce and
authenticate the prior art, and (2) persuade the APJ that a
person of ordinary skill in the relevant art would find the
invention obvious in light of that prior art.
Also, Sec. 328(b) defines the standard of persuasion as
preponderance of the evidence. In the example, the APJ would
have to find it more likely than not that a person of ordinary
skill in the art would find the invention obvious in light of
the reference. This is the same standard used in reexamination
proceedings. See Patent Office Rule 1.555 (b)(2)(ii).
Under Sec. 329, in response to a cancellation petition, the
patent owner may file a motion to amend the patent by canceling
or substituting any challenged claim or by amending the
specification or drawings. One such motion may be filed as of
right under Sec. 329(a); subsequent motions will be granted
only for good cause shown as per Sec. 329(b). A substitute
claim cannot enlarge the scope of the original claim nor
introduce new matter.
Under Sec. 330, once the Director has initiated a post-
grant review proceeding, the PTAB must render a written
decision respecting the patentability of any challenged or new
claim (as permitted by Sec. 329), unless the matter is first
settled pursuant to Sec. 332.
Under Sec. 331(a) and following a decision of the PTAB, the
Director shall issue and publish a certificate canceling any
claim found by the PTAB to be unpatentable, or incorporating
into the patent any new claim determined to be patentable.
Pursuant Sec. 331(b), any new claim incorporated into the
patent shall have the same effect as that of a reissue patent
under Sec. 252. A pending case or cause of action for acts that
infringed a valid claim replaced pursuant to Sec. 329 is not
abated by that claim's replacement if the new claim is
substantially similar to the one it replaces. However, acts
that infringe only newly added claims, but not claims in the
original patent, that were commenced (or substantial
preparations were made for such acts) prior to the date of the
Director's certificate under Sec. 331, may continue under such
conditions as a court specifies in an infringement action. This
provision conforms acts commenced prior to a recertified patent
to the policy of ``prior user rights'' in Sec. 273.
Under Sec. 332(a), the patent holder and cancellation
petitioner may agree to settle and terminate the post-grant
review proceeding at any time before the Board issues its
written decision. The provisions of Sec. 335, relating to
estoppel, do not apply to any petitioner who settles under this
section. Where there are multiple petitioners, the proceeding
may be settled for fewer than all of them. If the sole
petitioner settles, or all petitioners settle, the Board shall
terminate the proceeding.
Pursuant to Sec. 332(b), all settlement agreements must be
in writing with a copy filed in the Patent Office. Any
collateral agreements (such as license or covenant not to sue)
must accompany the filing. At the request of any party, the
settlement agreement shall be sealed and made available only to
government agencies on written request, or other person for
good cause shown.
The Director is authorized by Sec. 333(a) to resolve any
conflicts or inconsistencies arising from the co-pendency of
post-grant review under this chapter with another post-issue
review proceeding. Several changes made by this statute can
affect pending USPTO proceedings. Not only does the newly added
chapter 32 create a post-grant review process, but adoption of
the first-inventor-to-file system (section 3 of the statute),
expanded reexamination procedures (sections 6(a)--(e)), and the
new derivation proceeding (section 3(i)), among others, can
affect pending reexamination, reissue and interference
proceedings. While some sections have a delayed effective date,
conflicts still could arise among co-pending proceedings. Also,
because of multiple routes to post-issue review of patents, or
separate proceedings brought by multiple parties, some overlap
can be expected even after the statute becomes fully operative.
Pursuant to Sec. 333(a), the Director may stay, transfer,
consolidate or terminate such other proceedings. This provision
is designed to promote judicial economy by having fewer
proceedings on the same issue.
Another set of potential conflicts, arising from the co-
pendency of post-grant review proceedings and infringement
actions in district court, are addressed by Sec. 333(b). Under
this provision, the Director may stay the post-grant proceeding
if a pending infringement action addresses the same or
substantially the same questions of patentability. That would
presumably occur wherever the claims-in-suit are the same as
those challenged by the cancellation petitioner. The stay
authority is discretionary with the Director.
A final decision in a civil case has a preclusive effect on
the parties in a later civil action. Section 317(b) in current
law extends preclusion to later filed or pending inter partes
examinations. New Sec. 334 does the same for post-grant review
proceedings. It applies to all patent litigation cases where
jurisdiction is, or could be, based on 28 U.S.C. Sec. 1338
(jurisdiction in intellectual property cases). ``Final
decision'' means a final judgment. Thus, a decision of the
district court has no preclusive effect until it has been
upheld on appeal or the time for appeal has lapsed. Preclusion
extends to any cancellation petitioner who was a party, or a
``privy'' to a party, in an earlier civil action.
Preclusion under Sec. 334 operates in two situations. Under
paragraph (1) a precluded party may not request a post-grant
review proceeding on any patent claim previously adjudicated
against it on the basis of any ground that the party raised or
could have raised. The ``could have raised'' language makes
this a broad form of preclusion, similar to claim preclusion or
res judicata in civil litigation. It is not limited to facts or
legal issues actually decided. Thus, a new ground for
unpatentability (e.g., newly discovered prior art) ordinarily
could not serve as a basis for a later-instituted post-grant
review proceeding. Nominally, preclusion applies only to
grounds raised under the provisions of Sec. 311, i.e.
anticipation or obviousness resulting from prior art consisting
of patents and printed publications. However, the reference to
Sec. 311 is illustrative, not limiting. Thus, a patent claim
may not be made the subject of a post-grant review proceeding,
irrespective of the reason alleged for unpatentability, if it
had previously been adjudicated in district court.
Preclusion under paragraph (2) operates in much the same
way as under paragraph (1), except that it applies to pending
post-grant review proceedings. Once a final decision adverse to
the cancellation petitioner has been entered in Federal court,
any precluded claims must be severed from the pending post-
grant review proceeding. If no claims remain in the proceeding,
it must be dismissed.
Preclusion under Sec. 334 operates only if validity of the
claim is called into question, and upheld, in the prior civil
action. If the claim is not challenged as unpatentable, then
the judgment does not preclude a pending or later-filed post-
grant review proceeding.
Similar to Sec. 334, Sec. 335 provides preclusion where the
first decision is in a post-grant review proceeding under this
chapter. However, it differs in an important respect.
Preclusion applies only to a ground which the cancellation
petitioner raised, not to grounds that could have been raised.
Thus, it operates similar to issue preclusion or collateral
estoppel in civil litigation. Only grounds actually asserted
(whether or not decided) in the prior proceeding serve as the
basis for preclusion. This difference is partly based on the
Committee's intent that some form of post-issue review remain
available throughout the life of a patent, so as to accommodate
newly discovered prior art or application of patent claims to
new circumstances.
Preclusion under Sec. 335 applies only to final decisions
of the PTAB issued under Sec. 330. Preclusion is effective as
soon as the decision issues, even if it is subsequently
appealed to the Federal Circuit. Of course, if the court
reverses or remands, the decision may no longer be favorable to
patentability, thus undoing the basis for asserting preclusion.
Under Sec. 335, preclusion will apply to all of the
following, (1) new or ongoing inter partes reexaminations, (2)
new or ongoing derivation proceedings under Sec. 135(a), (3)
new or other ongoing post-grant review proceedings under
chapter 32, and (4) new or ongoing patent litigation cases,
including declaratory judgment cases.
Judicial review of a final decision of the PTAB is given
exclusively to the Federal Circuit by Sec. 336. It references,
and is therefore identical to, appeal provisions in the patent
code (specifically 35 U.S.C. Sec. Sec. 141-145) applicable to
other decisions of the PTAB. Any party to the post-grant review
proceeding has standing on appeal.
Conforming Amendment
The table for part III (``Patents and Protection of Patent
Rights'') is amended to conform to the new chapter added by
section 6(f).
Repeal of Former Estoppel Provision in Inter Partes Reexamination
Section 6(h) repeals Sec. 4607 of the Optional Inter Partes
Reexamination Procedure Act of 1999, which describes the
estoppel grounds in inter partes reexamination. Estoppel
resulting from inter partes reexamination decisions is now
governed by Sec. 315(c), as amendment by this Act.
Effective Dates
Under section 6(i), the amendments made by section 6 become
effective 1 year after the date of enactment of this statute.
Once effective, the amendments made to Sec. 301 (citation of
prior art) and to chapter 31 (ex parte reexamination) will
apply to all patents, irrespective of when issued. This
supercedes any previously stated effective date for inter
partes reexamination. See Optional Inter Partes Reexamination
Procedure Act of 1999, Sec. 4608 (applicable only to patents
issued after Nov. 20, 1999).
But, chapter 32 (post-grant review procedure) will apply
only to patents issued on or after the section's effective
date. Accordingly, patents issued at any time before the
effective date are subject to the amended reexamination
provisions, but not subject to post-grant review proceedings.
Regulatory Authority
Section 6(j), requires the Director to promulgate
regulations governing chapter 32 post-grant review proceedings
as described in Sec. 326, not later than 1 year after enactment
of this Act. This is time frame is made with the effective date
of chapter 32 in mind. Because the regulations must be in place
when the post-grant review procedures become operative, the
Director will need to promulgate and publish the regulations,
for notice and comment, in advance of the date set by this
section.
SEC. 7. DEFINITIONS: PATENT AND TRIAL APPEAL BOARD
Section 7 amends 35 U.S.C. Sec. 6(a) to define the
composition of the PTAB to include the Director, Deputy
Director, Commissioner for Patents, the Commissioner for
Trademarks, and administrative patent judges. This corrects the
current language of Sec. 6(a) which names the Deputy
Commissioner instead of the Deputy Director to the Board.
As amended, Sec. 6(b) defines the duties of the Board.
These duties include hearing appeals from adverse decisions by
examiners, hearing adverse decisions by examiners on ex parte
reexaminations, hearing appeals from inter partes
reexamination, determining the right to patent in derivation
proceedings, and conducting post-grant review proceedings.
Also under amended Sec. 6(b), the Director is to assign
each post-grant review proceeding to a panel of three
administrative patent judges. It is the Committee's intention
that only administrative patent judges may adjudicate post-
grant review proceedings and that the Director, Deputy
Director, the Commissioner for Patents, and the Commissioner
for Trademarks may not participate in the adjudication of post-
grant review proceedings. The purpose of this provision is to
prevent political considerations from influencing post-grant
opposition decisions.
Section 7 also defines an additional term, ``cancellation
petitioner'' as the real party in interest who requests a post-
grant review proceeding as provided in Chapter 32, and its
privies.
SEC. 8. STUDY AND REPORT ON REEXAMINATION PROCEEDINGS
Section 8 directs the Director to conduct a study of the
effectiveness and efficiency of reexamination proceedings
available under Title 35 of the U.S. Code, and to submit a
report on the results of the study to the Judiciary Committees
of the House of Representatives and Senate, along with any
suggestions or recommendations the Director may have to amend
the law with respect to patent reexamination proceedings or
otherwise change the way reexamination proceedings operate. The
study is to be initiated not later than 2 years after the date
of enactment of this Act. The Director should focus the study
on whether ex parte reexamination, inter partes reexamination,
or both, should be phased out or merged, particularly in light
of the newly created post-grant opposition proceeding.
SEC. 9. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY ENHANCEMENTS
Section 9 amends Sec. 122 which provides guidelines to the
publication of pending patent applications. Under current
Sec. 122(b)(2)(B), an applicant is allowed to request that an
application not be published if the applicant certifies that
the invention disclosed in the application will not be the
subject of an application filed in another country or under a
multilateral international agreement that requires publication
of applications 18 months after filing. Section 122(b)(2)(B) is
struck, thus all non-provisional utility patent applications
will be published 18 months after application, unless they are
abandoned prior to the 18 month publication date, or are
subject to a secrecy order.
Section 9 also adds Sec. 122(e) which allows third parties
to submit patents, printed patent applications and other
publications of potential relevance for consideration by an
examiner and inclusion in the record of a published
application. Third party submitted references must be made in
writing before the earlier of either the mailing of a notice of
allowance in the application for patent, or the later of 6
months after the date of publication or the date of the first
rejection under Sec. 132 of any claim in the application for
patent. To be considered and placed in the record of a
published application, a submitted reference must be
accompanied by a concise description of its asserted relevance,
any fee that may be prescribed by the Director, and a statement
that the submission was made in compliance with Sec. 122.
SEC. 10. TAX PLANNING METHODS NOT PATENTABLE.
Section 10 amends Sec. 101, which defines patentable
subject matter, by adding paragraph (b)(1) which states that a
patent may not be obtained for a tax planning method. Paragraph
(2) defines the operative terms. Here, a tax planning method is
any plan, strategy, technique, or scheme that is designed to
reduce, minimize, or defer a taxpayer's tax liability, or has
such effect. Excluded from the definition (and hence not
unpatentable) are tax preparation software or other tools used
solely to perform or model mathematical calculations or prepare
tax or information returns. The intention is to prohibit the
following tax planning methods:
(1) LPatents claiming strategies for reducing tax
liability;
(2) LPatents claiming investment strategies, to the
extent the patent claims the sheltering of income from
tax liability; and
(3) LPatents claiming strategies designed to maximize
investment return, to the extent the patent claims the
minimization of taxes on those returns.
Excluded from the definition of ``tax planning method''
are, inter alia:
(1) LPatents claiming software to assist in determining
tax liability; and
(2) LBusiness method patents, including investment
strategies, to the extent tax planning methods are not
claimed
If a patent or application claims both excluded and not-
excluded subject matter, the latter claims are unaffected by
this amendment.
The exceptions to non-patentability, found in
Sec. 101(b)(2), covering tax preparation software and the like,
does not necessarily mean that such items are patentable.
Rather, any patent or application falling within the exception,
whenever issued or filed, will be subject to generally
applicable patent standards and procedures. The Committee does
not intend by this exclusion to express any view on the
patentability of such inventions.
Pursuant to Sec. 101(b)(2)(B), ``taxpayer,'' for purposes
of Sec. 101(b), is any individual, entity or other person (as
defined by 26 U.S.C. Sec. 7701) subject to taxation or a tax
law, or is required to prepare a tax return or other
information for someone who is.
``Tax'' and related terms are defined by Sec. 101(b)(2)(C)
and include any form of state, local or Federal tax, whether
income, gift and estate, consumption and sales, property, ad
valorem or any other similar government levy. It does not
include foreign taxes.
Section 10 becomes effective on the date of enactment of
the Act. It applies to all applications filed on or after the
effective date, and to all pending applications that have not
resulted in an issued patent as of the effective date. Patents
issued before the effective date are unaffected by this
section. However, pursuant to Sec. 101(b)(3), this grandfather
provision shall not be construed as validating any patent
issued before the date of enactment of this Act for an
invention described in 35 U.S.C. Sec. 101(b), as amended by
this section.
This provision expresses the Committee's intent that
previously issued tax strategy patents should be evaluated, if
subject to review in litigation or USPTO post-issuance review,
based on standards existing at the time of issue. The
prospective exclusion of such patents under Sec. 101(b) shall
not be construed as expressing the Committee's view that, prior
to that time, such patents were valid.
SEC. 11. VENUE AND JURISDICTION
Venue
Section 11(a) amends 28 U.S.C. Sec. 1400(b) relating to
venue in patent cases by completely replacing the current
language with a detailed means for establishing venue. Section
11 also amends Sec. 1292 of the same title pertaining to
interlocutory appeals.
The new Sec. 1400(b) prohibits manufactured venue by virtue
of assignment, incorporation, or otherwise. As used in the case
law, ``manufactured venue'' usually refers to a plaintiff
taking advantage of the liberal venue rules in Sec. 1391, but
still in literal compliance with the statute. See, e.g., Sidney
Coal Co. v. SSA, 427 F.3d 336 (6th Cir. 2005). In this sense,
manufactured venue is entirely permissible since venue cannot
be defeated based on plaintiff's motives. Martin v. United
States, 323 F. Supp. 1131 (D. Pa. 1970). Manufactured venue for
patent venue purposes is redefined by Sec. 1400(b). It
precludes venue otherwise permitted by Sec. 1400(c) and (d), if
the circumstance on which venue is based has no independent
purpose. It is similar to (but broader than) the collusive
venue doctrine and similar in function to Sec. 1359 of the
Judicial Code:
``A district court shall not have jurisdiction of a
civil action in which any party, by assignment or
otherwise, has been improperly or collusively made or
joined to invoke the jurisdiction of such court.''
Examples of manufactured venue under amended Sec. 1400(b)
include:
(1) LA patent holder who assigns or licenses his patent
rights to a person or entity residing elsewhere, for no
apparent reason other than to obtain a preferred venue;
(2) LCollusive or fraudulent joinder of a plaintiff or
defendant to secure venue based on that party's
location;
(3) LA party incorporating or reincorporating, or
creating or merging with a subsidiary, in a district
primarily for venue purposes;
(4) LA defendant who seeks a change of venue (see
Sec. 1400(d)) based on the situs of relevant evidence
or witnesses recently relocated or procured in the
transferee district.
The sole authority for venue on the basis of defendant's
residence is established under Sec. 1400(c). The expanded venue
provisions of Sec. 1391(c) are no longer applicable to patent
infringement cases, although they still are in other cases
involving patents (e.g., declaratory judgment).
Under paragraph Sec. 1400(c)(1), venue is proper at the
following locations:
(1) LWhere defendant has its principal place of
business; or
(2) LWhere the defendant is incorporated, if a domestic
corporation; or
(3) LWhere the defendant's primary United States
subsidiary, if any, has its principal place of business
or is incorporated, if the defendant is a foreign
corporation;
The term ``where the defendant resides'' in existing
Sec. 1400(b) was limited, in the case of a corporate defendant,
to the state of its incorporation. Fourco Glass Co. v.
Transmirra Products Corp., 353 U.S. 222 (1957). Within that
state, its residency is where it has its principle place of
business. Zin-Plas Corp. v Plumbing Quality AGF. Co., 622 F
Supp 415 (WD Mich, 1985). The amendment to Sec. 1400(b) expands
venue based on defendant's residency to include states other
than the state of incorporation if their principal place of
business is there, and in the case of foreign corporations. The
term ``principal place of business'' has a long and well
established meaning in case law, and its is the Committee's
intention that the term be so defined. See, e.g., Panhandle
Eastern Pipe Line Co. v. Federal Power Com'n., 324 U.S. 635
(1945); United Nuclear Corp. v Moki Oil & Rare Metals Co., 364
F2d 568 (10th Cir. 1966).
A foreign defendant without a United States subsidiary
could not be sued on the basis of Sec. 1400(c)(1). Where
Sec. 1400 provides no forum for an infringement suit against a
foreign defendant, a court should look to Sec. 1391(d) (``an
alien may be sued in any district ''). Brunette Machine Works,
Ltd. v. Kockum Industries, Inc., 406 U.S. 706, 714 (1972); Zin-
Plas Corp (infringement suit against U.S. citizen with no
domestic residence governed by Sec. 1391(d)). The amendment to
Sec. 1400 does not change this rule.
The amendment to Sec. 1400(b)(1) also does not affect the
rule that, in case of multiple defendants, venue must be proper
for all of them. Thus, unless the principal place of business
or state of incorporation are common, paragraph (1) may not be
used as a basis for venue.
Venue under Sec. 1400(c)(2) is more restrictive. Under
current law, venue is where the defendant has committed acts of
infringement and has a regular and established place of
business. Section 1400(c)(2) adds two requirements:
(1) La substantial portion of the acts of infringement
must occur in the district; and
(2) Lthe defendant must have a regular and established
physical facility that the defendant controls and that
constitutes a substantial portion of the operations of
the defendant.
It is also important to note that both tests under subsection
(c)(2) must be met. If not, plaintiffs must establish venue
under the other subsections of this section.
The requirement of substantial acts of infringement is
intended to reduce plaintiff forum shopping, especially in
cases of nationwide sales and uses. The other requirement,
operations at defendant-controlled physical facility, may also
reduce the available fora. Regular and established place of
business, under the existing patent venue statute, is often
interpreted to require a significant on-going corporate
presence in the district, but a fixed physical presence has not
been required. See, e.g., In re Cordis Corp., 769 F2d 733 (Fed.
Cir. 1985). The amendment to Sec. 1400(c)(2) adds a fixed
physical presence as a requirement.
As per 35 U.S.C. Sec. 271(a), acts of infringement can
occur where the defendant makes, uses, offers to sell, or sells
any patented invention, or imports an infringing product into
the United States. Venue based on Sec. 1400(c)(2) would exist
only where a substantial portion of the infringing acts occurs.
In the case of infringement by manufacture, that will likely be
the defendant's principal manufacturing facility, at least for
the infringing product, which may or may not also constitute a
substantial portion of the operations of the defendant. If
these conditions describe separate facilities in different
districts, then venue cannot be based on Sec. 1400(c)(2). The
same analysis would apply to infringement by use.
In the case of infringement by sale or an offer to sell, a
substantial portion of infringing acts describes where a
substantial number of sales or offers occur. If defendant does
not have a qualifying facility in that forum, then
Sec. 1400(c)(2) is not available.
Finally, the place of importation, if that is the
infringing act, must also be where defendant has a qualifying
physical facility.
As with Sec. 1400(c)(1), venue based on Sec. 1400(c)(2)
must be proper as to all defendants. A forum where a
substantial portion of the acts of infringement occurs with
respect to one defendant may not be the with respect to another
defendant. Or, more likely, the multiple defendants will not
all have qualifying physical facilities in the same forum.
``Congress does not in general intend to create venue
gaps,'' Brunette, 406 at 710. The Committee recognizes,
however, that the ``all defendants'' rules of Sec. 1400(c)(1)
and (2) could, in isolated cases, leave a case without a
suitable forum. It is not the Committee's intent that
infringement plaintiffs not be able to sue at all. Therefore,
where no district would have venue under Sec. 1400(c), the
regular venue statute, 28 U.S.C. Sec. 1391, should apply.
Under Sec. 1400(c)(3), venue is proper at the primary
plaintiff's residence if it is an institution of higher
education as defined by 20 U.S.C. Sec. 1010(a); e.g.,
accredited post-secondary 4-year degree-granting institutions
and 2-year credit-granting institutions. Most plaintiffs taking
advantage of this venue provision will be universities with
research programs. In some cases, however, the university is
not the patentee or the holder of patent rights, or not the
``primary plaintiff.''
Under Sec. 1400(c)(4), venue is proper where the plaintiff
or subsidiary has an established physical facility dedicated to
research, development, or manufacturing that is operated by
full-time employees, or where the sole plaintiff is an
individual inventor who is a natural person and who qualifies
at the time such action is filed as a micro entity.
The plaintiff's physical facility need not be the
counterpart of a defendant's physical facility for venue under
Sec. 1400(c)(2). It does not have to be regular and it does not
have to constitute a substantial portion of the party's
operations. But it does have to be operated by full-time
employees, which, may approximate the ``regular'' requirement
of Sec. 1400(c)(2). Moreover, the facility must be one for
research, development, or manufacturing. This requirement will
exclude many ``non-practicing entities;'' i.e., plaintiffs for
whom the patent-in-suit is more of a financial or investment
instrument than a means for manufacturing, using or marketing a
product or process. It is the Committee's intention that
university licensing entities, whether acting as a unit of a
university or as a related third party, be considered a
facility dedicated to research and development.
As in the case of defendants, venue under Sec. 1400(c)(4)
must be proper as to all plaintiffs in the case of multiple
plaintiffs.
The combined effect of Sec. 1400(c)(3) and (4) is to allow
many plaintiffs to sue in the forum of their residence.
However, excluded are patent holding companies and owners of
``liquid patents.'' See, Amy Landers, Liquid Patents, 84 Denv.
U.L. Rev. 199, 233 (2006). Venue in cases filed by such
entities must be based on paragraphs Sec. 1400(c)(1) or (2).
The exclusive method for change of venue in patent
infringement cases is provided by Sec. 1400(d), supplanting the
general change of venue statute, 28 U.S.C. Sec. 1404. In patent
infringement cases, where venue is governed by Sec. 1400, a
change of venue is permissible only to another district where
the defendant has substantial evidence or witnesses, and change
of venue is proper under Sec. 1404. Where it applies, a
defendant can choose any forum that would have been proper
under the old venue statute, as modified by 28 U.S.C.
Sec. 1391(c) in the case of corporate defendants.
It is expected that most motions for change of venue under
Sec. 1400(d) will be filed by defendants. Egregious forms of
defendant forum shopping are avoided by the rule against
manufactured venue in Sec. 1400(a). Furthermore, a change of
venue is discretionary with the district court.
While Sec. 1400(d) supersedes 28 U.S.C. Sec. 1404, it does
not supersede 28 U.S.C. Sec. 1406. This latter provision allows
a court to cure a defect in venue by transferring the case to
any district or division in which it could have been brought.
It also allows the parties to waive venue defects, such as by
failure to timely interpose an objection.
The Committee understands that certain jurisdictions have
seen a rapid rise in patent infringement filings in the first
half of 2007, perhaps due to Congressional efforts to reform
and bring balance to the patent laws. The Committee urges the
courts to provide appropriate scrutiny to any recent case
filings to ensure that they are being pursued in a proper
venue, and where there is some nexus to the issues of the case.
If cases have been inappropriately filed, the Committee urges
the courts to consider transferring them to more appropriate
forums, according to the procedures permitted under 28 U.S.C.
Sec. 1404.
Interlocutory Appeals
Section 11(b) amends 28 U.S.C. Sec. 1292(c) by allowing
appeals from interlocutory orders that determine construction
of claims in patent infringement suits. The district court will
have discretion as to whether to approve the appeal and whether
to stay the proceedings.
In most patent infringement cases, a question is raised
about the scope of the invention as defined by the claims and
limitations in the patent. Because construing patent claims is
usually complicated and is a matter of law, Markman v. Westview
Instruments, Inc., 517 U.S. 370 (1996), courts often conduct
pre-trial hearings to determine the scope of claims, without
regard to the question of infringement. These so-called
``Markman hearings'' do not neatly fit into the narrow
categories of immediately appealable interlocutory orders and
cannot ordinarily be appealed until after trial and judgment.
Furthermore, the Committee has heard testimony that the Federal
Circuit's reversal rate of claim construction is unusually
high. For these reasons, the District Courts will now have to
certify the interlocutory appeal for it to go forward.
SEC. 12. ADDITIONAL INFORMATION; INEQUITABLE CONDUCT AS A DEFENSE TO
INFRINGEMENT
Disclosure Requirements
Section 12(a) amends Chapter 11 of Title 35 of the United
States Code by adding Sec. Sec. 123 and 124.
The newly created Sec. 123 gives the Director of the USPTO
authority to require applicants to submit a search report with
an analysis relevant to the patentability of the invention
claimed in the application. Noncompliance with the requirements
within the time periods prescribed by the Director as
abandonment of the application are also addressed by Sec. 123.
The proposed statutory language of Sec. 123 does not define
in any detail what is necessary or sufficient to meet these
requirements as the Committee believes that is best left to the
Director. The USPTO has discussed the need for some sort of
examination support document or applicant quality submission to
improve the examination process. It may include a thorough
search of the art in the field of the invention and in related
fields in which one skilled in the art pertaining to the
invention would expect to find information applicable to the
invention. It is also expected that the information discovered
by the search that is material to the patentability of the
claimed invention be disclosed to the USPTO along with an
analysis of how the information relates to the claimed
invention and how the claimed invention us distinguished over
the prior art information.
Micro Entities
The newly created Sec. 124 defines a new category of
applicant, known as a ``micro entity.'' Under Sec. 124(b), a
micro entity is defined as a small entity who has not been
named on five or more previously filed patent applications, has
not assigned, granted or conveyed a license or other ownership
interest in the application and is not under an obligation by
contract or law to do so, and does not have a gross income of
greater than 2.5 times the Average Gross Income (AGI) as
reported by the Secretary of Labor. An applicant who has
assigned rights in the application can qualify as a micro
entity under Sec. 124(c) if the assignee or licensee is an
entity with five or fewer employees and has a gross taxable
income that does not exceed 2.5 times the AGI for the calendar
year immediately preceding the year in which the examination
fee is being paid. If the AGI for the previous year has not yet
been reported, the AGI of the latest year for which it was
reported should be used.
The income level ceilings for micro entities under
Sec. 124(b) and (c) may be further adjusted to reflect annual
changes in the Consumer Price Index (CPI). This is intended to
give the Director discretion to adjust the income qualification
for micro entity status where the CPI rises substantially
faster than AGI.
Because fulfilling the requirements of Sec. 123 may be
particularly burdensome on applicants that qualify as micro
entities, such entities are exempted from the information
submission requirements of Sec. 123.
Inequitable Conduct
Section 12(b) codifies at 35 U.S.C. Sec. 282(c) the
judicially-created doctrine of ``inequitable conduct'' as a
defense to patent infringement. The defense of inequitable
conduct was established by the courts as an equitable remedy
aimed at deterring applicants from deliberately misstating or
withholding information that is materially related to the
examination of an application. The Federal Circuit has held
that in order to prove inequitable conduct, there must be
separate showings of: a) materiality of the information
misstated or withheld and b) intent to deceive the patent
office. Uncertainty has developed in the application of these
standards. As such, this codification is intended to preserve
the primary purpose of the defense, while also making its
application more predictable and certain. Additionally, it is
also intended that this codification will allay concerns patent
applicants have in sharing information with the USPTO
concerning the patentability of their inventions during
prosecution.
Under Sec. 282(c)(1), three substantive elements of the
defense are spelled out. They are: (1) the applicant (or
another with the duty to disclose) had ``the intent to mislead
or deceive the patent examiner;'' (2) in furtherance of such
intent, the applicant ``misrepresented or failed to disclose
material information'' to the Office; and (3) in the absence of
the misrepresentation or nondisclosure, the Office would have
made a prima facie finding of unpatentability.
Under Sec. 282(c)(2), intent must be proven as a separate
element of the offense. Under current doctrine, some courts
infer intent from the materiality of withheld or misrepresented
information. The Committee believes this has lead to some
unjust results. Accordingly, to prove intent under Sec. 282(c),
specific facts beyond the materiality of the information
misstated or withheld must be proven, showing deliberate or
conscious action to deceive or mislead the USPTO. Because
intent is a subjective matter, going to state of mind, it may
still be proven inferentially (by circumstantial rather than
direct evidence). Still, facts independent of the materiality
of the information must be proven to support such inference.
In addition to the requirement that the misrepresented or
withheld information be ``material,'' the information must be
such that, had the deception not occurred, the examiner would
have made a prima facie finding that the claimed invention was
unpatentable. As used here, a prima facie showing of
unpatentability is a showing that the claimed invention is
unpatentable for any reason based on the requirements of
patentability provided in 35 U.S.C. Sec. 101, Sec. 102,
Sec. 103 or Sec. 112, unless expressly prohibited by other
parts of the patent statute, that may yet be overcome in a
rebuttal by the patent applicant. The intention behind this
codification is to provide clarity about which standard of
materiality courts should use.
Courts are given a range of remedies they may provide when
inequitable conduct is found by Sec. 282(c)(3). These remedies
include denying the patent holder an injunction against the
infringer, holding the claims-in-suit or those in which the
inequitable conduct occurred unenforceable, holding the entire
patent unenforceable, and holding related patents
unenforceable. The discretion in remedies given the courts is
intended to allow them to apply remedies that are commensurate
to the level of deception and materiality found. While the
Committee expects the courts to continue to hold patents
unenforceable where it is proven that the actions of the
applicant or its agents are so culpable or egregious as to
constitute fraud on the USPTO, and thereby merit such a harsh
penalty, there may be circumstances which warrant a less severe
penalty. For instance, where patent attorneys or agents acting
without authority, direction or knowledge of the patent
applicant are found solely responsible for the inequitable
conduct, a penalty less than unenforceability of the entire
patent may be in order. Further, there are most likely other
scenarios that would similarly warrant a less severe penalty
than holding the entire patent unenforceable, and it is
expected that the courts will exercise their judgment in
balancing the equities of each case to decide the appropriate
remedy.
Under Sec. 282(c)(4), attorneys and others who are licensed
to practice before the USPTO may now also be held accountable
for actions amounting to inequitable conduct where inequitable
conduct is found and there is evidence that suggests such
person licensed has engaged in inequitable conduct. These
persons will be referred by court to the USPTO for disciplinary
action. Additionally, the court shall order the parties to make
available to the USPTO any evidence showing this person has
engaged in inequitable conduct. The Committee has heard that
people who engage in inequitable conduct are rarely held
accountable for their actions. The lack of action by the USPTO
to enforce its own rules concerning the duty imposed on
attorneys and agents to act with candor, good faith and honesty
before it creates the opportunity for abuse of these rules. As
such, the intention behind this provision is to require that
those persons found to have deceived the USPTO during patent
prosecution are held accountable.
Under Sec. 282(d), a person asserting the inequitable
conduct defense must comply with Rule 9(b) of the Federal Rules
of Civil Procedure. That means the circumstances constituting
inequitable conduct must be plead with particularity. The
pleader must identify specific information showing the
materiality of misstated or withheld information, as described
in this section. Averments of fraud or conscious or deliberate
behavior to mislead or deceive the USPTO may be made generally.
This requirement is intended to avoid use of the defense simply
as a dilatory or settlement tactic.
SEC. 13. BEST MODE REQUIREMENT
Section 13 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. Under current law, the
defense of patent invalidity is available for failure to comply
with any requirement of Sec. Sec. 112 (specification) or 251
(reissued patents). Further, Sec. 282(b)(3) is amended to
strike best mode as a defense; all other defenses are
unaffected by section 13. The best mode requirement will
otherwise remain in Sec. 112, where it can serve as a basis for
rejection of a claim if it appears that the best mode
contemplated by the inventor has not been disclosed.
SEC. 14. REGULATORY AUTHORITY
Section 14(a) amends Sec. 2(c) to provide guidance as to
the extent of rulemaking authority granted the USPTO under
Sec. 2(b). Specifically, this amendment clarifies that the
USPTO may make rules that pertain to the quality and timeliness
of applications, which include establishing conditions on the
use of continuations. The Committee chose to codify this
amendment under Sec. 2(c) instead of Sec. 2(b) to confirm that
such power was granted to the USPTO at least as early as
enactment of Public Law 106-113 (1999), and that this change is
only a ``clarification of specific powers'' granted in
Sec. 2(b). To ensure there is no ambiguity on this point,
section 14(b) states that this language should be construed as
adding no new rulemaking powers to the USPTO.
Typically, courts will give deference to the rules
promulgated by agencies if an Act which charges the agency with
responsibility doesn't speak to the issue that the rule
pertains to. However, if direction on the issue can be found in
the statute, any agency rules that conflict with the statute
must be struck down.
In In re Henriksen, 399 F.2d 253 (CCPA, 1968), the Court of
Claims and Patent Appeals (CCPA) held that a Board of Patent
Appeals and Interferences (BPAI) decision violated the USPTO's
rule making authority. The BPAI had construed a limit on the
number of continuations an applicant could file based on a
literal reading of 35 USC Sec. 120 that would suggest only one
or two continuations could ever be filed. The CCPA reversed the
BPAI's decision, finding that the statute placed no
restrictions on the number of continuations an applicant may
obtain and thus the BPAI's mechanical rule on the number of
continuations an applicant could file was inconsistent with
Sec. 120. However, later precedent in In re Bogese II, 303 F.3d
1362 (Fed. Cir., 2002), suggests that the USPTO may limit
continuations when ``dilatory tactics'' are used in the
prosecution of applications, thus leading to some confusion as
to the nature of limits the USPTO can place on continuations
through rulemaking.
To resolve the ambiguity behind the USPTO's rulemaking
authority that In re Hernicksen has caused, the Committee has
clarified that the USPTO has always had authority to promulgate
rules that place limitations or conditions on patent
applications, including continuation applications, that do no
directly contradict any limitations or conditions expressly
stated in statute.
SEC. 15. TECHNICAL AMENDMENTS
Section 15 makes a number of technical changes that improve
the formatting or organization of the patent statute. None of
the changes in this section are intended to substantive in any
way.
SEC. 16. STUDY OF SPECIAL MASTERS IN PATENT CASES
Section 16 directs the Administrative Offices of the United
States Courts, in consultation with the Federal Judicial
Center, to study the use of special masters in patent
infringement cases. This study will investigate what benefits,
if any, are derived from the use of special masters in patent
cases. The study will look into such factors as the costs and
length of litigation when special masters are used, the role
special masters are given in patent cases, the legal and
technical background of special masters and any other factors
that the Administrative Offices of the United States Courts or
the Federal Judicial Center believe will assist in determining
whether the use of special masters in patent litigation should
be encouraged and/or supported.
SEC. 17. RULE OF CONSTRUCTION
It is the Committee's intention to preserve the CREATE Act
as originally codified in 35 USC Sec. 103(c), in the new
Sec. 102(b)(3). Section 17 explicitly states this intention and
directs any inquiry to the purpose of the new Sec. 102(b)(3) to
the legislative history of the CREATE Act.
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) * * *
* * * * * * *
(c) Clarification of Specific Powers.--(1) * * *
* * * * * * *
(6) The powers granted under paragraph (2) of subsection
(b) include the authority to promulgate regulations to ensure
the quality and timeliness of applications and their
examination, including specifying circumstances under which an
application for patent may claim the benefit under sections
120, 121 and 365(c) of the filing date of a prior filed
application for patent.
* * * * * * *
[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
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.]
Sec. 6. Patent Trial and Appeal Board
(a) Establishment and Composition.--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
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 application for
patents;
(2) on written appeal of a patent owner, review
adverse decisions of examiners upon patents in
reexamination proceedings under chapter 30;
(3) review appeals by patent owners and third-party
requesters under section 315;
(4) conduct post-grant opposition proceedings under
chapter 32.
Each appeal and derivation proceeding 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. The Director shall assign each
post-grant review proceeding to a panel of 3 administrative
patent judges. Once assigned, each such panel of administrative
patent judges shall have the responsibilities under chapter 32
in connection with post-grant review proceedings.
* * * * * * *
Sec. 41. Patent fees; patent and trademark search systems
(a) The Director shall charge the following fees:
(1) * * *
(6)(A) On filing an appeal from the examiner to the
[Board of Patent Appeals and Interferences] Patent
Trial and Appeal Board, $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] Patent Trial and Appeal Board, $260.
* * * * * * *
PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
* * * * * * *
CHAPTER 10--PATENTABILITY OF INVENTIONS
Sec.
100. Definitions.
101. Inventions patentable.
[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 one of the individuals who invented or discovered the
subject matter of a joint invention.
(h) The ``effective filing date of a claimed invention''
is--
(1) the filing date of the patent or the
application for patent containing the claim to the
invention; or
(2) if the patent or application for patent is
entitled to a right of priority of any other
application under section 119, 365(a), or 365(b) or to
the benefit of an earlier filing date in the United
States under section 120, 121, or 365(c), the filing
date of the earliest such application in which the
claimed invention is disclosed in the manner provided
by section 112(a).
(i) The term ``claimed invention'' means the subject matter
defined by a claim in a patent or an application for a patent.
(j) The term ``joint invention'' means an invention
resulting from the collaboration of inventive endeavors of two
or more persons working toward the same end and producing an
invention by their collective efforts.
(k) The term ``cancellation petitioner'' means the real
party in interest requesting cancellation of any claim of a
patent under chapter 32 of this title and the privies of the
real party in interest.
Sec. 101. Inventions patentable
[Whoever] (a) Patentable inventions.--Whoever invents or
discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title.
(b) Tax Planning Methods.--
(1) Unpatentable subject matter.--A patent may not
be obtained for a tax planning method.
(2) Definitions.--For purposes of paragraph (1)--
(A) the term ``tax planning method'' means
a plan, strategy, technique, or scheme that is
designed to reduce, minimize, or defer, or has,
when implemented, the effect of reducing,
minimizing, or deferring, a taxpayer's tax
liability, but does not include the use of tax
preparation software or other tools used solely
to perform or model mathematical calculations
or prepare tax or information returns;
(B) the term ``taxpayer'' means an
individual, entity, or other person (as defined
in section 7701 of the Internal Revenue Code of
1986) that is subject to taxation directly, is
required to prepare a tax return or information
statement to enable one or more other persons
to determine their tax liability, or is
otherwise subject to a tax law;
(C) the terms ``tax'', ``tax laws'', ``tax
liability'', and ``taxation'' refer to any
Federal, State, county, city, municipality, or
other governmental levy, assessment, or
imposition, whether measured by income, value,
or otherwise; and
(D) the term ``State'' means each of the
several States, the District of Columbia, and
any commonwealth, territory, or possession of
the United States.
[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 patent for a claimed invention
may not be obtained if--
(1) the claimed invention was patented, described
in a printed publication, in public use, or on sale--
(A) more than one year before the effective
filing date of the claimed invention; or
(B) one year or less before the effective
filing date of the claimed invention, other
than through disclosures made by the inventor
or a joint inventor or by others who obtained
the subject matter disclosed directly or
indirectly from the inventor or a joint
inventor; 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) Prior inventor disclosure exception.--Subject
matter that would otherwise qualify as prior art based
upon a disclosure under subparagraph (B) of subsection
(a)(1) shall not be prior art to a claimed invention
under that subparagraph if the subject matter had,
before such disclosure, been publicly disclosed by the
inventor or a joint inventor or others who obtained the
subject matter disclosed directly or indirectly from
the inventor or a joint inventor.
(2) Derivation, prior disclosure, and common
assignment exceptions.--Subject matter that would
otherwise qualify as prior art only under subsection
(a)(2) shall not be prior art to a claimed invention
if--
(A) the subject matter was obtained
directly or indirectly from the inventor or a
joint inventor;
(B) the subject matter had been publicly
disclosed by the inventor or a joint inventor
or others who obtained the subject matter
disclosed directly or indirectly from the
inventor or a joint inventor before the date on
which the application or patent referred to in
subsection (a)(2) was effectively filed; or
(C) the subject matter 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.
(3) Joint research agreement exception.--
(A) In general.--Subject matter 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 paragraph (2) if--
(i) the claimed invention was made
by or on behalf of parties to a joint
research agreement that was in effect
on or before the effective filing date
of the claimed invention;
(ii) the claimed invention was made
as a result of activities undertaken
within the scope of the joint research
agreement; and
(iii) the application for patent
for the claimed invention discloses or
is amended to disclose the names of the
parties to the joint research
agreement.
(B) For purposes of subparagraph (A), 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.
(4) Patents and published applications effectively
filed.--A patent or application for patent is
effectively filed under subsection (a)(2) with respect
to any subject matter described in the patent or
application--
(A) as of the filing date of the patent or
the application for patent; or
(B) 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 one 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; nonobvious subject matter
A patent for a claimed invention may not be obtained though
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. Additional information.
124. Micro entities.
* * * * * * *
Sec. 111. Application
(a) In General.--
(1) * * *
(2) Contents.--Such application shall include--
(A) * * *
* * * * * * *
(C) an oath [by the applicant] or
declaration as prescribed by section 115 of
this title.
(3) Fee [and oath].--The application must be
accompanied by the fee required by law. The fee [and
oath] 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] 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] 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) * * *
* * * * * * *
(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] sections 131 and 135
of this title.
Sec. 112. Specification
[The 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.
[The specification] (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.
[A claim] (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.
[A claim] (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.
[An element] (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),
that commences the national stage under section 363, or that is
filed by an inventor for an invention for which an application
has previously been filed under this title by that inventor
shall include, or be amended to include, the name of the
inventor of any claimed invention 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 by an
individual under subsection (a) shall contain statements that--
(1) the application was made or was authorized to
be made by individual; and
(2) the 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 and 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.--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 that claims the benefit of
an earlier filing date under section 120 or 365(c), if--
(1) 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;
(2) a substitute statement meeting the requirements
of subsection (d) was filed in the earlier filed
application with respect to the individual; or
(3) 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.
(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, such additional statements shall be filed
in accordance with regulations established by the
Director.
(2) Supplemental statements not required.--If an
individual has executed an oath or declaration under
subsection (a) or an assignment meeting the
requirements of subsection (e) with respect to an
application for patent, the Director may not thereafter
require that individual to make any additional oath,
declaration, or other statement equivalent to those
required by this section in connection with the
application for patent or any patent issuing thereon.
(3) Savings clause.--No patent shall be invalid or
unenforceable based upon the failure to comply with a
requirement under this section if the failure is
remedied as provided under paragraph (1).
(i) Acknowledgment of Penalties.--Any declaration or
statement filed under this section must contain an
acknowledgment that any willful false statement is punishable
by fine or imprisonment, or both, under section 1001 of title
18.
Sec. 116. Inventors
[When] (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.
[If a joint inventor] (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.
[Whenever] (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].
* * * * * * *
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 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)] (A) no longer pending;
[(ii)] (B) subject to a secrecy order under
section 181 of this title;
[(iii)] (C) a provisional application filed
under section 111(b) of this title; or
[(iv)] (D) an application for a design
patent filed under chapter 16 of this title.
[(B)(i) If an applicant makes a request upon
filing, certifying that the invention disclosed in the
application has not and will not be the subject of an
application filed in another country, or under a
multilateral international agreement, that requires
publication of applications 18 months after filing, the
application shall not be published as provided in
paragraph (1).
[(ii) An applicant may rescind a request made under
clause (i) at any time.
[(iii) An applicant who has made a request under
clause (i) but who subsequently files, in a foreign
country or under a multilateral international agreement
specified in clause (i), an application directed to the
invention disclosed in the application filed in the
Patent and Trademark Office, shall notify the Director
of such filing not later than 45 days after the date of
the filing of such foreign or international
application. A failure of the applicant to provide such
notice within the prescribed period shall result in the
application being regarded as abandoned, unless it is
shown to the satisfaction of the Director that the
delay in submitting the notice was unintentional.
[(iv) If an applicant rescinds a request made under
clause (i) or notifies the Director that an application
was filed in a foreign country or under a multilateral
international agreement specified in clause (i), the
application shall be published in accordance with the
provisions of paragraph (1) on or as soon as is
practical after the date that is specified in clause
(i).
[(v) If an applicant has filed applications in one
or more foreign countries, directly or through a
multilateral international agreement, and such foreign
filed applications corresponding to an application
filed in the Patent and Trademark Office or the
description of the invention in such foreign filed
applications is less extensive than the application or
description of the invention in the application filed
in the Patent and Trademark Office, the applicant may
submit a redacted copy of the application filed in the
Patent and Trademark Office eliminating any part or
description of the invention in such application that
is not also contained in any of the corresponding
applications filed in a foreign country. The Director
may only publish the redacted copy of the application
unless the redacted copy of the application is not
received within 16 months after the earliest effective
filing date for which a benefit is sought under this
title. The provisions of section 154(d) shall not apply
to a claim if the description of the invention
published in the redacted application filed under this
clause with respect to the claim does not enable a
person skilled in the art to make and use the subject
matter of the claim.]
* * * * * * *
(e) Preissuance Submissions by Third Parties.--
(1) In general.--Any person may submit for
consideration and inclusion in the record of a patent
application, any patent, published patent application,
or other 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 mailed in the application for
patent; or
(B) either--
(i) 6 months after the date on
which the application for patent is
published under section 122, 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,
whichever occurs later.
(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 submitter
affirming that the submission was made in
compliance with this section.
Sec. 123. Additional information
(a) In General.--The Director shall, by regulation, require
that applicants submit a search report and other information
and analysis relevant to patentability. An application shall be
regarded as abandoned if the applicant fails to submit the
required search report, information, and analysis in the manner
and within the time period prescribed by the Director.
(b) Exception for Micro Entities.--Applications from micro-
entities shall not be subject to the requirements of
regulations issued under subsection (a).
Sec. 124. Micro entities
(a) Definition.--For purposes of this title, the term
``micro entity'' means an applicant for patent who makes a
certification under either subsection (b) or (c).
(b) Unassigned Application.--A certification under this
subsection is a certification by each inventor named in the
application that the inventor--
(1) qualifies as a small entity as defined in
regulations issued by the Director;
(2) has not been named on five or more previously
filed patent applications;
(3) has not assigned, granted, or conveyed, and is
not under an obligation by contract or law to assign,
grant, or convey, a license or any other ownership
interest in the application; and
(4) does not have a gross income, as defined in
section 61(a) of the Internal Revenue Code of 1986,
exceeding 2.5 times the median household income, as
reported by the Bureau of the Census, for the most
recent calendar year preceding the calendar year in
which the examination fee is being paid.
(c) Assigned Application.--A certification under this
subsection is a certification by each inventor named in the
application that the inventor--
(1) qualifies as a small entity as defined in
regulations issued by the Director and meets the
requirements of subsection (b)(4);
(2) has not been named on five or more previously
filed patent applications; and
(3) 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
application to an entity that has five or fewer
employees and has a gross taxable income, as defined in
section 61(a) of the Internal Revenue Code of 1986,
that does not exceed 2.5 times the median household
income, as reported by the Bureau of the Census, for
the most recent calendar year preceding the calendar
year in which the examination fee is being paid.
* * * * * * *
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. 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 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 [Board of Patent Appeals
and Interferences] 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.]
Sec. 135. Derivation proceedings
(a) Dispute Over Right to Patent.--
(1) Institution of derivation proceeding.--
(A) Request for proceeding.--An applicant
may request initiation of a derivation
proceeding to determine the right of the
applicant to a patent by filing a request that
sets forth with particularity the basis for
finding that another applicant derived the
claimed invention from the applicant requesting
the proceeding and, without authorization,
filed an application claiming such invention.
Any such request--
(i) may only be made within 12
months after the earlier of--
(I) the date on which a
patent is issued containing a
claim that is the same or
substantially the same as the
claimed invention; or
(II) the date of first
publication of an application
containing a claim that is the
same or is substantially the
same as the claimed invention;
and
(ii) must be made under oath, and
must be supported by substantial
evidence.
(B) Determination of director.-- Whenever
the Director determines that patents or
applications for patent naming different
individuals as the inventor interfere with one
another because of a dispute over the right to
patent under section 101 on the basis of a
request under subparagraph (A), the Director
shall institute a derivation proceeding for the
purpose of determining which applicant is
entitled to a patent.
(2) Determination by patent trial and appeal
board.--In any proceeding under this subsection, the
Patent Trial and Appeal Board--
(A) shall determine the question of the
right to patent;
(B) in appropriate circumstances, may
correct the naming of the inventor in any
application or patent at issue; and
(C) shall issue a final decision on the
right to patent.
(3) Derivation proceeding.--The Patent Trial and
Appeal Board may defer action on a request to initiate
a derivation proceeding for up to three months after
the date on which the Director issues a patent to the
applicant that filed the earlier application.
(4) Effect of final decision.--The final decision
of the Patent Trial and Appeal Board in a derivation
proceeding, if adverse to the claim of an applicant,
shall constitute the final refusal by the Patent and
Trademark Office on the claims involved. The Director
may issue a patent to an applicant who is determined by
the Patent Trial and Appeal Board to have the right to
a patent. The final decision of the Board, if adverse
to a patentee, shall, if no appeal or other review of
the decision has been or can be taken or had,
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] (b) Same Claims
(1) Issued patents.--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]
(2) Published applications.--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] (c) Agreements to Terminate
Proceedings.--
(1) In general.--Any agreement or understanding
between parties to [an interference] a derivation
proceeding, including any collateral agreements
referred to therein, made in connection with or in
contemplation of the termination of [the interference]
the derivation proceeding, shall be in writing and a
true copy thereof filed in the Patent and Trademark
Office before the termination of [the interference] the
derivation proceeding 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] the derivation
proceeding, 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]
the derivation proceeding 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] the derivation proceeding as between the
parties to the agreement or understanding.
[The Director]
(2) Notice.--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.]
(3) Judicial review.--Any discretionary action of
the Director under this subsection shall be reviewable
under chapter 7 of title 5.
[(d) Parties] (d) Arbitration.--Parties to [a patent
interference] a derivation proceeding, 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] the derivation 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] Patent Trial
and Appeal Board 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] Patent Trial
and Appeal Board under section 134 may appeal the decision only
to the United States Court of Appeals for the Federal Circuit.
A 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] derivation 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
[interference] derivation proceeding, 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. 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 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] (a) In General.--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] 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] (b) Procedure.--A suit under subsection (a) 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 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) * * *
(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) * * *
* * * * * * *
(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
* * * * * * *
(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
* * * * * * *
(C) Guarantee or adjustments for delays due
to [interferences] 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
Boardor 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,
* * * * * * *
[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 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. 184. Filing of application in foreign country
[Except when] (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.
[The term] (b) Application.--The term ``application'' when
used in this chapter includes applications and any
modifications, amendments, or supplements thereto, or divisions
thereof.
[The scope] (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.
* * * * * * *
CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE
* * * * * * *
Sec. 202. Disposition of rights
(a) * * *
* * * * * * *
(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(a)
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] 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(a), 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.
* * * * * * *
PART III--PATENTS AND PROTECTION OF PATENT RIGHTS
Chap. Sec.
Amendment and Correction of Patents............................251
* * * * * * *
321 Post-Grant Review Proceedings.....................................
* * * * * * *
CHAPTER 25--AMENDMENT AND CORRECTION OF PATENTS
* * * * * * *
Sec. 251. Reissue of defective patents
[Whenever] (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.
[The Director] (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.
[The provisions] (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.
[No reissued patent] (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] (a) In general.--Whenever, without any deceptive
intention, 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
[Whenever] (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.
[The 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.
* * * * * * *
CHAPTER 28--INFRINGEMENT OF PATENTS
Sec.
271. Infringement of patent.
272. Temporary presence in the United States.
[273. Defense to infringement based on earlier inventor.]
273. Special defenses to and exemptions from infringement.
* * * * * * *
[Sec. 273. Defense to infringement based on earlier inventor]
Sec. 273. Special defenses to and exemptions from infringement
(a) Definitions.--For purposes of this section--
(1) the terms ``commercially used'' and
``commercial use'' mean use [of a method] 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;] 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, or made
substantial preparations for commercial use of, the
subject matter before the effective filing date of the
claimed invention.
(2) Exhaustion of right.--[The sale or other
disposition of a useful end product produced by a
patented method] The sale or other disposition of
subject matter that qualifies for the defense set forth
in this section, by a person entitled to assert [a
defense under this section with respect to that useful
end result] such defense 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)] (A) 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.
[(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.
* * * * * * *
(7) Limitation on sites.--A defense under this
section, when acquired as part of a good faith
assignment or transfer of an entire enterprise or line
of business to which the defense relates, may only be
asserted for uses at sites where the subject matter
that would otherwise infringe one or more of the claims
is in use before the later of the effective filing date
[of the patent] of the claimed invention or the date of
the assignment or transfer of such enterprise or line
of business.
* * * * * * *
CHAPTER 29--REMEDIES FOR INFRINGEMENT OF PATENT, AND OTHER ACTIONS
Sec.
281. Remedy for infringement of patent.
* * * * * * *
[291. Interfering patents.]
* * * * * * *
Sec. 282. Presumption of validity; defenses
[A patent] (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.
[The following] (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[,].
(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[,].
[(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 of this
title, other than the requirement that the
specification shall set forth the best mode
contemplated by the inventor of carrying out
his invention; or
(B) any requirement of section 251 of this
title.
(4) Any other fact or act made a defense by this
title.
(c) Inequitable Conduct.--
(1) Defense.--A patent may be held to be
unenforceable, or other remedy imposed under paragraph
(3), for inequitable conduct only if it is established,
by clear and convincing evidence, that--
(A) the patentee, its agents, or another
person with a duty of disclosure to the Office,
with the intent to mislead or deceive the
patent examiner, misrepresented or failed to
disclose material information concerning a
matter or proceeding before the Office; and
(B) in the absence of such deception, the
Office, acting reasonably, would, on the record
before it, have made a prima facie finding of
unpatentability.
(2) Intent.--In order to prove intent to mislead or
deceive under paragraph (1), specific facts beyond
materiality of the information submitted or not
disclosed must be proven that support an inference of
intent to mislead or deceive the Patent and Trademark
Office. Facts support an inference of intent if they
show circumstances that indicate conscious or
deliberate behavior on the part of the patentee, its
agents, or another person with a duty of disclosure to
the Office, to not disclose material information or to
submit materially false information.
(3) Remedy.--Upon a finding of inequitable conduct,
the court shall balance the equities to determine which
of the following remedies to impose:
(A) Denying equitable relief to the patent
holder and limiting the remedy for infringement
to damages.
(B) Holding the claims-in-suit, or the
claims in which inequitable conduct occurred,
unenforceable.
(C) Holding the patent unenforceable.
(D) Holding the claims of a related patent
unenforceable.
(4) Attorney misconduct.--Upon a finding of
inequitable conduct, if there is evidence that the
conduct can be attributable to a person or persons
authorized to practice before the Office, the court
shall refer the matter to the Office for appropriate
disciplinary action under section 32, and shall order
the parties to preserve and make available to the
Office any materials that may be relevant to the
determination under section 32.
[In actions] (d) Notice of Actions; Pleading.--In actions
involving the validity or infringement of a patent 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 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. In an action involving any
allegation of inequitable conduct under subsection (c), the
party asserting this defense or claim shall comply with the
pleading requirements set forth in Rule 9(b) of the Federal
Rules of Civil Procedure. [Invalidity]
(e) Extension of Patent Term.--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) by the applicant for the extension, or
(2) by the Director,
to comply with the requirements of such section shall be a
defense in any action involving the infringement of a patent
during the period of the extension of its term and shall be
pleaded. A due diligence determination under section 156(d)(2)
is not subject to review in such an action.
* * * * * * *
Sec. 284. Damages
[Upon] (a) In general.--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.
(b) Reasonable Royalty.--
(1) In general.-- An award pursuant to subsection
(a) that is based upon a reasonable royalty shall be
determined in accordance with this subsection. Based on
the facts of the case, the court shall determine
whether paragraph (2), (3), or (5) will be used by the
court or the jury in calculating a reasonable royalty.
The court shall identify the factors that are relevant
to the determination of a reasonable royalty under the
applicable paragraph, and the court or jury, as the
case may be, shall consider only those factors in
making the determination.
(2) Relationship of damages to contributions over
prior art.--The court shall conduct an analysis to
ensure that a reasonable royalty under subsection (a)
is applied only to that economic value properly
attributable to the patent's specific contribution over
the prior art. The court shall exclude from the
analysis the economic value properly attributable to
the prior art, and other features or improvements,
whether or not themselves patented, that contribute
economic value to the infringing product or process.
(3) Entire market value.--Unless the claimant shows
that the patent's specific contribution over the prior
art is the predominant basis for market demand for an
infringing product or process, damages may not be based
upon the entire market value of the products or
processes involved that satisfy that demand.
(4) Combination inventions.--For purposes of
paragraphs (2) and (3), in the case of a combination
invention the elements of which are present
individually in the prior art, the patentee may show
that the contribution over the prior art may include
the value of the additional function resulting from the
combination, as well as the enhanced value, if any, of
some or all of the prior art elements resulting from
the combination.
(5) Other factors.--In determining a reasonable
royalty, the court may also consider, or direct the
jury to consider, the terms of any nonexclusive
marketplace licensing of the invention, where
appropriate, as well as any other relevant factors
under applicable law.
[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.]
(c) Willful Infringement.--
(1) Increased damages.--A court that has determined
that the infringer has willfully infringed a patent or
patents may increase the damages up to three times the
amount of damages found or assessed under subsection
(a), except that increased damages under this paragraph
shall not apply to provisional rights under section
154(d).
(2) Permitted grounds for willfulness.--A court may
find that an infringer has willfully infringed a patent
only if the patent owner presents clear and convincing
evidence that--
(A) after receiving written notice from the
patentee--
(i) alleging acts of infringement
in a manner sufficient to give the
infringer an objectively reasonable
apprehension of suit on such patent,
and
(ii) identifying with particularity
each claim of the patent, each product
or process that the patent owner
alleges infringes the patent, and the
relationship of such product or process
to such claim,
the infringer, after a reasonable opportunity
to investigate, thereafter performed one or
more of the alleged acts of infringement;
(B) the infringer intentionally copied the
patented invention with knowledge that it was
patented; or
(C) after having been found by a court to
have infringed that patent, the infringer
engaged in conduct that was not colorably
different from the conduct previously found to
have infringed the patent, and that resulted in
a separate finding of infringement of the same
patent.
(3) Limitations on willfulness.--(A) A court may
not find that an infringer has willfully infringed a
patent under paragraph (2) for any period of time
during which the infringer had an informed good faith
belief that the patent was invalid or unenforceable, or
would not be infringed by the conduct later shown to
constitute infringement of the patent.
(B) An informed good faith belief within the
meaning of subparagraph (A) may be established by--
(i) reasonable reliance on advice of
counsel;
(ii) evidence that the infringer sought to
modify its conduct to avoid infringement once
it had discovered the patent; or
(iii) other evidence a court may find
sufficient to establish such good faith belief.
(C) The decision of the infringer not to present
evidence of advice of counsel is not relevant to a
determination of willful infringement under paragraph
(2).
(4) Limitation on pleading.--Before the date on
which a court determines that the patent in suit is not
invalid, is enforceable, and has been infringed by the
infringer, a patentee may not plead and a court may not
determine that an infringer has willfully infringed a
patent. The court's determination of an infringer's
willfulness shall be made without a jury.
[The court] (d) Expert Testimony.--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) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(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. 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. 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
(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) written statements of the patent owner filed in
a proceeding before a Federal court or the Patent and
Trademark Office in which the patent owner takes a
position on the scope of one or more patent claims.
(b) Submissions Part of Official File.--If the person
citing prior art or written submissions under subsection (a)
explains in writing the pertinence and manner of applying the
prior art or written submissions to at least one claim of the
patent, the citation of the prior art or written submissions
(as the case may be) and the explanation thereof shall become a
part of the official file of the patent.
(c) Procedures for Written Statements.--
(1) Submission of additional materials.--A party
that submits written statements under subsection (a)(2)
in a proceeding shall include any other documents,
pleadings, or evidence from the proceeding that address
the patent owner's statements or the claims addressed
by the written statements.
(2) Limitation on use of statements.--Written
statements submitted under subsection (a)(2) 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 ordered pursuant to
section 304 or 313. Any such written statements, and
any materials submitted under paragraph (1), that are
subject to an applicable protective order shall be
redacted to exclude information subject to the order.
(d) Identity Withheld.--Upon the written request of the
person citing prior art or written statements under subsection
(a), the person's identity shall be excluded from the patent
file and kept confidential.
* * * * * * *
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. 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.]
(a) Within three months after the owner of a patent files a
request for reexamination under section 302, 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. On the Director's own initiative, and at
any time, the Director may determine whether a substantial new
question of patentability is raised by patents and publications
discovered by the Director, is cited under section 301, or is
cited by any person other than the owner of the patent under
section 302 or section 311. 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.
* * * * * * *
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. 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] heard by an administrative
patent judge in accordance with procedures which the Director
shall establish. 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.]
(2) The third-party requester shall have the opportunity to
file written comments on any action on the merits by the Office
in the inter partes reexamination proceeding, and on any
response that the patent owner files to such an action, if
those written comments are received by the Office within 60
days after the date of service on the third-party requester of
the Office action or patent owner response, as the case may be.
(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] Patent Trial and
Appeal Board, shall be conducted with special dispatch within
the Office.
(d) Oral Hearing.--At the request of a third party
requestor or the patent owner, the administrative patent judge
shall conduct an oral hearing, unless the judge finds cause
lacking for such hearing.
Sec. 315. Appeal
(a) * * *
* * * * * * *
(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. 317. Inter partes reexamination prohibited
(a) * * *
(b) [Final Decision.--Once a final decision has been
entered] District Court Decision.--Once the judgment of the
district court 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.
* * * * * * *
CHAPTER 32--POST-GRANT REVIEW PROCEDURES
Sec.
321. Petition for post-grant review.
322. Timing and bases of petition.
323. Requirements of petition.
324. Prohibited filings.
325. Submission of additional information; showing of sufficient
grounds.
326. Conduct of post-grant review proceedings.
327. Patent owner response.
328. Proof and evidentiary standards.
329. Amendment of the patent.
330. Decision of the Board.
331. Effect of decision.
332. Settlement.
333. Relationship to other pending proceedings.
334. Effect of decisions rendered in civil action on post-grant review
proceedings.
335. Effect of final decision on future proceedings.
336. Appeal.
Sec. 321. Petition for post-grant review
Subject to sections 322, 324, 332, and 333, a person who is
not the patent owner may file with the Office a petition for
cancellation seeking to institute a post-grant review
proceeding to cancel as unpatentable any claim 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). The Director shall establish, by regulation, fees to be
paid by the person requesting the proceeding, in such amounts
as the Director determines to be reasonable.
Sec. 322. Timing and bases of petition
A post-grant proceeding may be instituted under this
chapter pursuant to a cancellation petition filed under section
321 only if--
(1) the petition is filed not later than 12 months
after the grant of the patent or issuance of a reissue
patent, as the case may be; or
(2) the patent owner consents in writing to the
proceeding.
Sec. 323. Requirements of petition
A cancellation 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 the cancellation
petitioner;
(3) the petition sets forth in writing the basis
for the cancellation, identifying each claim challenged
and providing such information as the Director may
require by regulation, and includes copies of patents
and printed publications that the cancellation
petitioner relies upon in support of the petition; and
(4) the petitioner provides copies of those
documents to the patent owner or, if applicable, the
designated representative of the patent owner.
Sec. 324. Prohibited filings
A post-grant review proceeding may not be instituted under
section 322 if the petition for cancellation requesting the
proceeding identifies the same cancellation petitioner and the
same patent as a previous petition for cancellation filed under
such section.
Sec. 325. Submission of additional information; showing of sufficient
grounds
(a) In General.--The cancellation petitioner shall file
such additional information with respect to the petition as the
Director may require. For each petition submitted under section
321, the Director shall determine if the written statement, and
any evidence submitted with the request, establish that a
substantial question of patentability exists for at least one
claim in the patent. The Director may initiate a post-grant
review proceeding if the Director determines that the
information presented provides sufficient grounds to believe
that there is a substantial question of patentability
concerning one or more claims of the patent at issue.
(b) Notification; Determinations Not Reviewable.--The
Director shall notify the patent owner and each petitioner in
writing of the Director's determination under subsection (a),
including a determination to deny the petition. The Director
shall make that determination in writing not later than 60 days
after receiving the petition. Any determination made by the
Director under subsection (a), including whether or not to
institute a post-grant review proceeding or to deny the
petition, shall not be reviewable.
Sec. 326. Conduct of post-grant review proceedings
(a) In General.--The Director shall prescribe regulations,
in accordance with section 2(b)(2)--
(1) establishing and governing post-grant review
proceedings under this chapter and their relationship
to other proceedings under this title;
(2) establishing procedures for the submission of
supplemental information after the petition for
cancellation is filed; and
(3) setting forth 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,
and the procedures for obtaining such evidence shall be
consistent with the purpose and nature of the
proceeding.
(b) Post-Grant Regulations.--Regulations under subsection
(a)(1)--
(1) shall require that the final determination in a
post-grant proceeding issue not later than one year
after the date on which the post-grant review
proceeding is instituted under this chapter, except
that, for good cause shown, the Director may extend the
1-year period by not more than six months;
(2) shall provide for discovery upon order of the
Director;
(3) shall provide for publication of notice in the
Federal Register of the filing of a petition for post-
grant review under this chapter, for publication of the
petition, and documents, orders, and decisions relating
to the petition, on the website of the Patent and
Trademark Office, and for filings under seal exempt
from publication requirements;
(4) shall prescribe 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 unnecessary increase in the cost
of the proceeding;
(5) may provide for protective orders governing the
exchange and submission of confidential information;
and
(6) shall ensure that any information submitted by
the patent owner in support of any amendment entered
under section 329 is made available to the public as
part of the prosecution history of the patent.
(c) Considerations.--In prescribing regulations under this
section, the Director shall consider the effect on the economy,
the integrity of the patent system, and the efficient
administration of the Office.
(d) Conduct of Proceeding.--The Patent Trial and Appeal
Board shall, in accordance with section 6(b), conduct each
post-grant review proceeding authorized by the Director.
Sec. 327. Patent owner response
After a post-grant proceeding under this chapter has been
instituted with respect to a patent, the patent owner shall
have the right to file, within a time period set by the
Director, a response to the cancellation petition. The patent
owner shall file with the response, through affidavits or
declarations, any additional factual evidence and expert
opinions on which the patent owner relies in support of the
response.
Sec. 328. Proof and evidentiary standards
(a) In General.--The presumption of validity set forth in
section 282 shall not apply in a challenge to any patent claim
under this chapter.
(b) Burden of Proof.--The party advancing a proposition
under this chapter shall have the burden of proving that
proposition by a preponderance of the evidence.
Sec. 329. Amendment of the patent
(a) In General.--In response to a challenge in a petition
for cancellation, the patent owner may file one motion to amend
the patent in one or more of the following ways:
(1) Cancel any challenged patent claim.
(2) For each challenged claim, propose a substitute
claim.
(3) Amend the patent drawings or otherwise amend
the patent other than the claims.
(b) Additional Motions.--Additional motions to amend may be
permitted only for good cause shown.
(c) Scope of Claims.--An amendment under this section may
not enlarge the scope of the claims of the patent or introduce
new matter.
Sec. 330. Decision of the board
If the post-grant review proceeding 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 and any new claim
added under section 329.
Sec. 331. Effect of decision
(a) In General.--If the Patent Trial and Appeal Board
issues a final decision under section 330 and 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 and
incorporating in the patent by operation of the certificate any
new claim determined to be patentable.
(b) New Claims.--Any new claim held to be patentable and
incorporated into a patent in a post-grant review proceeding
shall have the same effect as that specified in section 252 for
reissued patents on the right of any person who made,
purchased, offered to sell, or used within the United States,
or imported into the United States, anything patented by such
new claim, or who made substantial preparations therefor,
before a certificate under subsection (a) of this section is
issued.
Sec. 332. Settlement
(a) In General.--A post-grant review proceeding shall be
terminated with respect to any petitioner upon the joint
request of the petitioner and the patent owner, unless the
Patent Trial and Appeal Board has issued a written decision
before the request for termination is filed. If the post-grant
review proceeding is terminated with respect to a petitioner
under this paragraph, no estoppel shall apply to that
petitioner. If no petitioner remains in the proceeding, the
panel of administrative patent judges assigned to the
proceeding shall terminate the proceeding.
(b) Agreement in Writing.--Any agreement or understanding
between the patent owner and a petitioner, including any
collateral agreements referred to in the agreement or
understanding, that is made in connection with or in
contemplation of the termination of a post-grant review
proceeding, must be in writing. A post-grant review proceeding
as between the parties to the agreement or understanding may
not be terminated until a copy of the agreement or
understanding, including any such collateral agreements, has
been filed in the Office. If any party filing such an agreement
or understanding requests, the agreement or understanding shall
be kept separate from the file of the post-grant review
proceeding, and shall be made available only to Government
agencies on written request, or to any person on a showing of
good cause.
Sec. 333. Relationship to other pending proceedings
(a) In General.--Notwithstanding subsection 135(a),
sections 251 and 252, and chapter 30, the Director may
determine the manner in which any reexamination proceeding,
reissue proceeding, interference proceeding (commenced before
the effective date provided in section 3(k) of the Patent
Reform Act of 2007), derivation proceeding, or post-grant
review proceeding, that is pending during a post-grant review
proceeding, may proceed, including providing for stay,
transfer, consolidation, or termination of any such proceeding.
(b) Stays.--The Director may stay a post-grant review
proceeding if a pending civil action for infringement addresses
the same or substantially the same questions of patentability.
Sec. 334. Effect of decisions rendered in civil action on post-grant
review proceedings
If a final decision is entered against a party in a civil
action arising in whole or in part under section 1338 of title
28 establishing that the party has not sustained its burden of
proving the invalidity of any patent claim--
(1) that party to the civil action and the privies
of that party may not thereafter request a post-grant
review proceeding on that patent claim on the basis of
any grounds, under the provisions of section 321, which
that party or the privies of that party raised or could
have raised; and
(2) the Director may not thereafter maintain a
post-grant review proceeding that was requested, before
the final decision was so entered, by that party or the
privies of that party on the basis of such grounds.
Sec. 335. Effect of final decision on future proceedings
If a final decision under section 330 is favorable to the
patentability of any original or new claim of the patent
challenged by the cancellation petitioner, the cancellation
petitioner may not thereafter, based on any ground that the
cancellation petitioner raised during the post-grant review
proceeding--
(1) request or pursue a reexamination of such claim
under chapter 31;
(2) request or pursue a derivation proceeding with
respect to such claim;
(3) request or pursue a post-grant review
proceeding under this chapter with respect to such
claim; or
(4) assert the invalidity of any such claim in any
civil action arising in whole or in part under section
1338 of title 28.
Sec. 336. Appeal
A party dissatisfied with the final determination of the
Patent Trial and Appeal Board in a post-grant proceeding under
this chapter may appeal the determination under sections 141
through 144. Any party to the post-grant proceeding shall have
the right to be a party to the appeal.
* * * * * * *
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].
* * * * * * *
CHAPTER 37--NATIONAL STAGE
* * * * * * *
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)]
section 154(d) of this title.
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. 1292. Interlocutory decisions
(a) * * *
* * * * * * *
(c) The United States Court of Appeals for the Federal
Circuit Shall Have Exclusive Jurisdiction.--
(1) of an appeal from an interlocutory order or
decree described in subsection (a) or (b) of this
section in any case over which the court would have
jurisdiction of an appeal under section 1295 of this
title; [and]
(2) of an appeal from a judgment in a civil action
for patent infringement which would otherwise be
appealable to the United States Court of Appeals for
the Federal Circuit and is final except for an
accounting[.]; and
(3) of an appeal from an interlocutory order or
decree determining construction of claims in a civil
action for patent infringement under section 271 of
title 35.
Application for an appeal under paragraph (3) shall be made to
the court within 10 days after entry of the order or decree.
The district court shall have discretion whether to approve the
application and, if so, whether to stay proceedings in the
district court during pendency of the appeal.
* * * * * * *
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) * * *
* * * * * * *
(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 patent applications, derivation
proceedings, and post-grant review proceedings,
at the instance of an applicant for a patent or
any party to a patent interference (commenced
before the effective date provided in section
3(k) of the Patent Reform Act of 2007),
derivation proceeding, or post-grant review
proceeding, and any such appeal shall waive any
right of such applicant or party to proceed
under section 145 or 146 of title 35;
* * * * * * *
CHAPTER 87--DISTRICT COURTS; VENUE
* * * * * * *
Sec. 1400. Patents and copyrights, mask works, and designs
(a) * * *
[(b) Any civil action for patent infringement may be
brought in the judicial district where the defendant resides,
or where the defendant has committed acts of infringement and
has a regular and established place of business.]
(b) Notwithstanding section 1391 of this title, in any
civil action arising under any Act of Congress relating to
patents, a party shall not manufacture venue by assignment,
incorporation, or otherwise to invoke the venue of a specific
district court.
(c) Notwithstanding section 1391 of this title, any civil
action for patent infringement or any action for declaratory
judgment may be brought only in a judicial district--
(1) where the defendant has its principal place of
business or in the location or place in which the
defendant is incorporated, or, for foreign corporations
with a United States subsidiary, where the defendant's
primary United States subsidiary has its principal
place of business or in the location or place in which
the defendants primary United States subsidiary is
incorporated;
(2) where the defendant has committed a substantial
portion of the acts of infringement and has a regular
and established physical facility that the defendant
controls and that constitutes a substantial portion of
the operations of the defendant;
(3) where the primary plaintiff resides, if the
primary plaintiff in the action is an institution of
higher education as defined under section 101(a) of the
Higher Education Act of 1965 (20 U.S.C. 1001(a)); or
(4) where the plaintiff resides, if the plaintiff
or a subsidiary of the plaintiff has an established
physical facility in such district dedicated to
research, development, or manufacturing that is
operated by full-time employees of the plaintiff or
such subsidiary, or if the sole plaintiff in the action
is an individual inventor who is a natural person and
who qualifies at the time such action is filed as a
micro entity under section 124 of title 35.
(d) If the plaintiff brings a civil action for patent
infringement in a judicial district under subsection (c), the
district court may transfer that action to any other district
or division where--
(1) the defendant has substantial evidence or
witnesses; and
(2) venue would be appropriate under section 1391
of this title, if such transfer would be appropriate
under section 1404 of this title.
* * * * * * *
----------
SECTION 4607 OF THE INTELLECTUAL PROPERTY AND COMMUNICATIONS OMNIBUS
REFORM ACT OF 1999
[SEC. 4607. ESTOPPEL EFFECT OF REEXAMINATION.
[Any party who requests an inter partes reexamination under
section 311 of title 35, United States Code, is estopped from
challenging at a later time, in any civil action, any fact
determined during the process of such reexamination, except
with respect to a fact determination later proved to be
erroneous based on information unavailable at the time of the
inter partes reexamination decision. If this section is held to
be unenforceable, the enforceability of the remainder of this
subtitle or of this title shall not be denied as a result.]
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