[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5364 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5364

 To amend title 35, United States Code, to provide for improvements in 
             the quality of patents on certain inventions.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 3, 2000

Mr. Berman (for himself and Mr. Boucher) introduced the following bill; 
          which was referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To amend title 35, United States Code, to provide for improvements in 
             the quality of patents on certain inventions.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Business Method Patent Improvement 
Act of 2000''.

SEC. 2. DEFINITIONS.

    Section 100 of title 35, United States Code, is amended by adding 
at the end the following:
    ``(f) The term `business method' means--
            ``(1) a method of--
                    ``(A) administering, managing, or otherwise 
                operating an enterprise or organization, including a 
                technique used in doing or conducting business; or
                    ``(B) processing financial data;
            ``(2) any technique used in athletics, instruction, or 
        personal skills; and
            ``(3) any computer-assisted implementation of a method 
        described in paragraph (1) or a technique described in 
        paragraph (2).
    ``(g) The term `business method invention' means--
            ``(1) any invention which is a business method (including 
        any software or other apparatus); and
            ``(2) any invention which is comprised of any claim that is 
        a business method.''.

SEC. 3. PATENTS ON BUSINESS METHOD INVENTIONS.

    (a) In General.--Title 35, United States Code, is amended by 
inserting after chapter 31 the following new chapter:

          ``CHAPTER 32--PATENTS ON BUSINESS METHOD INVENTIONS

``Sec.
``321. Business method invention determinations.
``322. Opposition procedures.
``323. Effect on other proceedings.
``324. Burden of proof.
``Sec. 321. Business method invention determinations
    ``(a) Confidentiality.--Except as provided in subsection (b), an 
application for a patent on a business method invention shall be kept 
in confidence by the Patent and Trademark Office and no information 
concerning the application may be given without authority of the 
applicant or owner unless necessary to carry out the provisions of an 
Act of Congress or in such special circumstances as may be determined 
by the Director.
    ``(b) Publication.--
            ``(1) In general.--(A) Subject to subparagraph (E) and 
        paragraph (2), each application for a patent on a business 
        method invention shall be published, in accordance with 
        procedures determined by the Director, promptly after the 
        expiration of a period of 18 months after the earliest filing 
        date for which a benefit is sought under this title. At the 
        request of the applicant, an application may be published 
        earlier than the end of that 18-month period.
            ``(B) Within 12 months after the earliest filing date of an 
        application for a patent under this title, the Director shall 
        make a determination of whether any invention claimed in the 
        application is a business method invention.
            ``(C) After making a determination under subparagraph (B) 
        that an invention is a business method invention, the Director 
        shall notify the applicant of the determination and shall 
        provide the applicant with a period of 60 days within which to 
        respond to the determination by amending the application, 
        withdrawing the application, or otherwise.
            ``(D) No information concerning patent applications 
        published under this subsection shall be made available to the 
        public, except as the Director determines.
            ``(E)(i) The Director shall establish procedures for making 
        determinations under subparagraph (B), and for addressing 
        amendments to any application that may affect the Director's 
        determination of whether the invention claimed in the 
        application is a business method invention.
            ``(ii) In no case shall an application that would be 
        subject to section 122 but for this section be published later 
        than the date that would otherwise apply to the application 
        under section 122.
            ``(2) Exceptions.--(A) An application shall not be 
        published under paragraph (1) if that application is--
                    ``(i) no longer pending;
                    ``(ii) subject to a secrecy order under section 181 
                of this title;
                    ``(iii) a provisional application filed under 
                section 111(b) of this title; or
                    ``(iv) an application for a design patent filed 
                under chapter 16 of this title.
            ``(B) No application for a patent shall be published under 
        paragraph (1) if the publication or disclosure of such 
        invention would be detrimental to the national security. The 
        Director shall establish appropriate procedures to ensure that 
        such applications are promptly identified and the secrecy of 
        such inventions is maintained in accordance with chapter 17 of 
        this title.
            ``(3) Public participation.--Any party shall have the 
        opportunity to submit to the Director for the record prior art 
        (including, but not limited to, evidence of knowledge or use, 
        or public use or sale, under section 102), file a protest, or 
        petition the Director to conduct a proceeding to determine 
        whether the invention was known or used, or was in public use, 
        or on sale, under section 102 or is obvious under section 103. 
        The Director shall conduct such a proceeding if the petition--
                    ``(i) is in writing;
                    ``(ii) is accompanied by payment of the fee set 
                forth in section 41(a) of this title; and
                    ``(iii) sets forth in detail the basis on which the 
                proceeding is requested.
            ``(4) Availability of information.--Information submitted 
        pursuant to paragraph (3) shall be considered during the 
        examination of the patent application.
            ``(5) Provisional rights.--During the period of pendency of 
        an application after publication, an applicant shall have 
        provisional rights pursuant to section 154 of this title.
``Sec. 322. Opposition procedures
    ``(a) Administrative Opposition Panel.--
            ``(1) Establishment.--The Director shall, not later than 1 
        year after the date of enactment of the Business Method Patent 
        Improvement Act of 2000, establish an Administrative Opposition 
        Panel. The Administrative Opposition Panel shall be 
comprised of not less than 18 administrative opposition judges, each of 
whom shall be an individual of competent legal knowledge and scientific 
ability. Upon establishment of the Administrative Opposition Panel, the 
Director shall publish notice of the establishment of the Panel in the 
Federal Register.
            ``(2) Assignment of patent examiners to panel.--Patent 
        examiners may be assigned on detail to assist the 
        Administrative Opposition Panel in carrying out opposition 
        proceedings under this section, except that a patent examiner 
        may not be assigned to assist in review of a patent application 
        examined by that patent examiner. The Director shall establish 
        procedures by which an opposition is heard under subsection 
        (b).
    ``(b) Opposition Procedures.--
            ``(1) Request for opposition.--(A) Any person may file a 
        request for an opposition to a patent on a business method 
        invention on the basis of section 101, 102, 103, or 112 of this 
        title. Such a request is valid only if the request--
                    ``(i) is made not later than 9 months after the 
                date of issuance of the patent;
                    ``(ii) is in writing;
                    ``(iii) is accompanied by payment of the opposition 
                fee set forth in section 41(a) of this title; and
                    ``(iv) sets forth in detail the basis on which the 
                opposition is requested.
            ``(B) Not later than 60 days after receiving a valid 
        request under subparagraph (A), the Director shall issue an 
        order for an opposition proceeding to be held on the record 
        after opportunity for a hearing, and shall promptly send a copy 
        of the request to the owner of record of the patent. The patent 
        owner shall be provided a reasonable period, but in no case 
        less than 60 days after the date on which a copy of the request 
        is given or mailed to the patent owner, within which the owner 
        may file a statement in reply to the grounds for the request 
        for opposition, including any amendment to the patent and new 
        claim or claims, for consideration in the opposition 
        proceeding. If the patent owner files such a statement, the 
        patent owner promptly shall serve a copy of the statement on 
        the third-party requester. Not later than 2 months after the 
        date of such service, the third-party requester may file and 
        have considered in the opposition proceeding a reply to the 
        statement filed by the patent owner.
            ``(2) Conduct of opposition proceedings.--Each opposition 
        shall be heard by one administrative opposition judge, and no 
        party shall be permitted ex parte communication with the 
        administrative opposition judge. In addition to the statements 
        and replies set forth in paragraph (1), the administrative 
        opposition judge may consider evidence that the judge considers 
        relevant, including evidence that is presented in any oral 
        testimony (including exhibits and expert testimony) in direct 
        or cross examination, or in any deposition, affidavit, or other 
        documentary form, whether voluntary or compelled. In any 
        opposition proceeding, the Federal Rules of Evidence shall 
        apply.
            ``(3) Amendments to patent claims.--A patent applicant may 
        propose to amend a patent claim or propose a new claim at any 
        time during the opposition proceeding, except that no proposed 
        amended or new claim enlarging the scope of a claim of the 
        patent may be permitted at any time during an opposition 
        proceeding under this section.
            ``(4) Determination.--Not later than 18 months after the 
        filing of a request for an opposition under this section, the 
        administrative opposition judge in the opposition proceeding 
        shall determine the patentability of the subject matter of the 
        patent, a record of the administrative opposition judge's 
        determination under this section shall be placed in the 
        official file of the patent, and a copy promptly shall be given 
        or mailed to the owner of record of the patent and to the 
        third-party requester.
            ``(5) Appeals.--Any party to the opposition may appeal a 
        decision of the Administrative Opposition Panel under the 
        provisions of section 134 of this title, and may seek court 
        review under the provisions of section 141 to 145 of this 
        title, with respect to any decision in regard to the 
        patentability of any original or proposed amended or new claim 
        of the patent. A patent owner may be a party to an appeal taken 
        by a third-party requester. Any third-party requester may be a 
        party to an appeal taken by a patent owner.
            ``(6) Certification of patentability.--In an opposition 
        proceeding under this chapter, when the time for appeal has 
        expired or any appeal proceeding has terminated, the Director 
        shall issue and publish a certificate canceling any claim of 
        the patent finally determined to be unpatentable, confirming 
        any claim of the patent determined to be patentable, and 
        incorporating in the patent any proposed amended or new claim 
        determined to be patentable.
            ``(7) Effect of determination.--Any proposed, amended, or 
        new claim determined to be patentable and incorporated into a 
        patent following an opposition proceeding shall have the same 
        effect as that specified in section 252 of this title for 
        reissued patents on the right of any person who made, 
        purchased, or used within the United States, or imported into 
        the United States, anything patented by such proposed amended 
        or new claim, or who made substantial preparations therefor, 
        prior to issuance of a certificate under paragraph (6) of this 
        subsection.
``Sec. 323. Effect on other proceedings
    ``(a) Right to Litigation.--Subject to subsections (b), (c), and 
(d), proceedings under section 322 shall not alter or prejudice any 
party's right to pursue remedies under provisions of law other than 
this section. In the case of court proceedings, other than an appeal of 
a decision in an opposition proceeding under this section, the court 
may consider any matter independently of any opposition proceeding 
under this section.
    ``(b) Effect of Final Decision.--
            ``(1) In general.--If a final decision has been entered 
        against a party in a civil action arising in whole or in part 
        under section 1338 of title 28, establishing that the party has 
        not sustained its burden of proving the invalidity of any 
        patent claim, or if a final decision in an inter partes 
        reexamination proceeding or an opposition proceeding instituted 
        by a third-party requester is favorable to the patentability of 
        any original or proposed amended or new claim of the patent--
                    ``(A) neither that party to the civil action, the 
                third-party requester, nor the privies of that party or 
                third-party requester may thereafter bring a civil 
                action under section 1338 of title 28, or request an 
                inter partes reexamination of, or an opposition to, 
                such patent claim on the basis of issues which that 
                party, third-party requester, or the privies of that 
                party or third-party requester raised or could have 
                raised in such civil action, inter partes reexamination 
                proceeding, or opposition proceeding (as the case may 
                be); and
                    ``(B) an inter partes reexamination or opposition 
                requested by that party, third-party requester, or the 
                privies of that party or third-party requester on the 
                basis of such issues may not thereafter be maintained 
                by the Office.
            ``(2) New evidence.--Paragraph (1) does not prevent the 
        assertion by a party to a civil action or a third-party 
        requester of invalidity based on newly discovered prior art, or 
        other evidence, unavailable to that party or third-party 
        requester, as the case may be, and the Patent and Trademark 
        Office, at the time of the civil action, inter partes 
        reexamination, or opposition proceeding (as the case may be).
    ``(c) Stay of Litigation.--Once an order for an opposition 
proceeding with respect to a patent has been issued under section 
322(b)(1), any party to the proceeding may obtain a stay of any pending 
court proceeding (other than an appeal to the Court of Appeals for the 
Federal Circuit) which involves an issue of patentability of any claims 
of the patent which are the subject of the opposition proceeding, 
unless the court before which such litigation is pending determines 
that a stay would not serve the interests of justice.
``Sec. 324. Burden of proof
    ``(a) Burden of Proof.--In the case of reexamination, interference, 
opposition, or other legal challenge (including a civil action brought 
in whole or in part under section 1338 of title 28) to a patent (or an 
application for a patent) on a business method invention, the party 
producing evidence of invalidity or ineligibility shall have the burden 
of showing by a preponderance of the evidence the invalidity of the 
patent or ineligibility of the subject matter of the application.''.
    (b) Fees.--Section 41(a) of title 35, United States Code, is 
amended--
            (1) by redesignating paragraphs (7) through (15) as 
        paragraphs (9) through (17), respectively; and
            (2) by inserting after paragraph (6) the following:
            ``(7)(A) On filing an opposition under chapter 32 to a 
        patent on a business method invention based on prior art 
        citations or obviousness, a fee of $200.
            ``(B) On filing an opposition under chapter 32 to a patent 
        on a business method invention on any other basis, a fee of 
        $5,000.
            ``(C) The Director may waive the payment by an individual 
        of fees under this paragraph if such waiver is in the public 
        interest.
            ``(8) On filing a request for a proceeding to determine 
        whether an invention claimed in an application was known or 
        used, or has been in public use or on sale, under section 102, 
        a fee of $35.''.
    (b) Clerical Amendment.--The table of chapters for part III of 
title 35, United States Code, is amended by adding at the end the 
following:

``32. Patents on Business Method Inventions.................    321.''.

SEC. 4. NONOBVIOUSNESS.

    Section 103 of title 35, United States Code, is amended by adding 
at the end the following:
    ``(d)(1) If--
            ``(A) subject matter within the scope of a claim addressed 
        to a business method invention would be obtained by combining 
        or modifying one or more prior art references, and
            ``(B) any of those prior art references discloses a 
        business method which differs from what is claimed only in that 
        the claim requires a computer technology to implement the 
        practice of the business method invention,
the invention shall be presumed obvious to a person of ordinary skill 
in the art at the time of the invention.
    ``(2)(A) An applicant or patentee may rebut the presumption under 
paragraph (1) upon a showing by a preponderance of the evidence that 
the invention is not obvious to persons of ordinary skill in all 
relevant arts.
    ``(B) Those areas of art which are relevant for purposes of 
subparagraph (A) include the field of the business method and the field 
of the computer implementation.''.

SEC. 5. REQUIREMENT TO DISCLOSE SEARCH.

    The Director of the Patent and Trademark Office shall, within 30 
days after the date of enactment of this Act, publish notice of 
rulemaking proceedings to amend the rules of the Patent and Trademark 
Office to require an applicant for a patent for a business method 
invention to disclose in the application the extent to which the 
applicant searched for prior art to meet the requirements of title 35, 
United States Code. Such amendment shall include appropriate penalties 
for failure to comply with such requirement. The Director shall ensure 
that the amendment is implemented as promptly as possible.

SEC. 6. CONFORMING AMENDMENTS.

    (a) Definitions.--Section 100(e) of title 35, United States Code, 
is amended by striking ``or inter partes reexamination under section 
311'' and inserting ``, inter partes reexamination under section 311, 
or an opposition under section 322,''.
    (b) Board of Patent Appeals and Interferences.--Section 134 of 
title 35, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by inserting ``or opposition'' after 
                ``reexamination''; and
                    (B) by inserting ``or the Administrative Opposition 
                Panel (as the case may be)'' after ``administrative 
                patent judge''; and
            (2) in subsection (c)--
                    (A) by striking ``proceeding'' and inserting 
                ``reexamination proceeding or an opposition 
                proceeding'';
                    (B) by inserting ``or the Administrative Opposition 
                Panel (as the case may be)'' after ``administrative 
                patent judge''; and
                    (C) in the last sentence, by inserting ``in an 
                inter partes reexamination proceeding'' after 
                ``requester''.
    (c) Appeal to Court of Appeals.--(1) Section 141 of title 35, 
United States Code, is amended in the second sentence by inserting 
after ``reexamination proceeding'' the following: ``, and any party in 
an opposition proceeding, who is''.
    (2) Section 143 of title 35, United States Code, is amended by 
inserting after the third sentence the following: ``In any opposition 
proceeding, the Administrative Opposition Panel shall submit to the 
court in writing the grounds for the decision of the Panel, addressing 
all the issues involved in the appeal.''.
    (d) Defense to Infringement.--Section 273 of title 35, United 
States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (3) and redesignating 
                paragraph (4) as paragraph (3); and
                    (B) in paragraphs (1) and (2) by striking 
                ``method'' and inserting ``business method''; and
            (2) in subsection (b), by striking ``method'' each place it 
        appears and inserting ``business method''.
    (e) Other Publication of Patent Applications.--Section 122 of title 
35, United States Code, is amended by adding at the end the following:
    ``(e) Business Method Inventions.--In the case of applications for 
business method inventions, section 321 of this title applies in lieu 
of this section.''.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--Subject to subsections (b), (c), and (d), this Act 
and the amendments made by this Act apply to--
            (1) any application for patent that is pending on, or that 
        is filed on or after, the date of enactment of this Act; and
            (2) any patent issued on or after the date of enactment of 
        this Act.
    (b) Pending Applications.--In applying section 321 of title 35, 
United States Code, as added by section 3 of this Act, to an 
application for patent that is pending on the date of enactment of this 
Act--
            (1) the Director of the Patent and Trademark Office shall 
        make the determination required by subsection (b)(1)(B) of such 
        section 321 within 12 months after the date of enactment of 
        this Act, or on the date specified in such section 321, 
        whichever occurs later;
            (2) subject to paragraph (3), such an application shall be 
        published--
                    (A) on the date specified in section 321 of title 
                35, United States Code, or
                    (B) the date on which the determination is made 
                pursuant to paragraph (1),
        whichever occurs later; and
            (3) in no case shall an application that would be published 
        under section 122 of title 35, United States Code, but for the 
        enactment of this Act, be published later than the date 
        specified in such section 122, regardless of when the Director 
        makes the determination under paragraph (1).
    (c) Patents Issued Before Establishment of Administrative 
Opposition Panel.--In the case of a patent issued after the enactment 
of this Act but before the date on which notice of the establishment of 
the Administrative Opposition Panel is published under section 
322(a)(1) of title 35, United States Code (as added by this Act), a 
request for an opposition to the patent may be filed under section 
322(b)(1)(A) of title 35, United States Code (as added by this Act), 
notwithstanding the 9-month requirement set forth in clause (i) of that 
section, if the request is filed not later than 9 months after the date 
on which such notice is so published.
                                 <all>