[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1908 Placed on Calendar Senate (PCS)]
Calendar No. 348
110th CONGRESS
1st Session
H. R. 1908
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 10, 2007
Received and read the first time
September 11, 2007
Read the second time and placed on the calendar
_______________________________________________________________________
AN ACT
To amend title 35, United States Code, to provide for patent reform.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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. Study on workplace conditions.
Sec. 18. Rule of construction.
Sec. 19. Study on patent damages.
Sec. 20. Severability.
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repealed, that amendment or repeal shall be considered to be made to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.''.
(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.--Section 135
is amended to read as follows:
``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.
``(B) Requirements for request.--Any request under
subparagraph (A)--
``(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.
``(C) 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 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) Settlement.--Parties to a derivation proceeding may terminate
the proceeding by filing a written statement reflecting the agreement
of the parties as to the correct inventors of the claimed invention in
dispute. Unless the Patent Trial and Appeal Board finds the agreement
to be inconsistent with the evidence of record, it shall take action
consistent with the agreement. Any written settlement or understanding
of the parties shall be filed with the Director. At the request of a
party to the proceeding, the agreement or understanding shall be
treated as business confidential information, shall be kept separate
from the file of the involved patents or applications, and shall be
made available only to Government agencies on written request, or to
any person on a showing of good cause.
``(c) Arbitration.--Parties to 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
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 with respect to an application
for patent filed 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 issues an Executive order
containing the President's 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.
(3) Retention of interference procedures with respect to
applications filed before effective date.--In the case of any
application for patent that is filed before the effective date
under paragraph (1)(A), the provisions of law repealed or
amended by subsections (h), (i), and (j) shall apply to such
application as such provisions of law were in effect on the day
before such effective date.
(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 has assigned rights in 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) 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''.
(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, 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
(4) 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.--Upon a showing to the satisfaction of the court that a
reasonable royalty should be based on a portion of the value of
the infringing product or process, 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.--Upon a showing to the
satisfaction of the court 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
be based upon the entire market value of the products or
processes involved that satisfy that demand.
``(4) Other factors.--If neither paragraph (2) or (3) is
appropriate for determining a reasonable royalty, the court may
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.
``(5) 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.'';
(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.''; and
(5) in the third undesignated paragraph, by striking ``The
court'' and inserting ``(d) Expert Testimony.--The court''.
(b) Report to Congressional Committees.--Not later than June 30,
2009, 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 report to the
Committee on the Judiciary of the House of Representatives and the
Committee on the Judiciary of the Senate the findings and
recommendations of the Director on the operation of prior user rights
in selected countries in the industrialized world. The report shall
include the following:
(1) A comparison between the patent laws of the United
States and the laws of other industrialized countries,
including the European Union, Japan, Canada, and Australia.
(2) An analysis of the effect of prior user rights on
innovation rates in the selected countries.
(3) An analysis of the correlation, if any, between prior
user rights and start-up enterprises and the ability to attract
venture capital to start new companies.
(4) An analysis of the effect of prior user rights, if any,
on small businesses, universities, and individual inventors.
(5) An analysis of any legal or constitutional issues that
arise from placing elements of trade secret law, in the form of
prior user rights, in patent law.
In preparing the report, the Director shall consult with the Secretary
of State and the Attorney General of the United States.
(c) 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.
(d) 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 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 issuance of the patent or 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) for each claim sought to be canceled, the petition
sets forth in writing the basis for cancellation and provides
the evidence in support thereof, including copies of patents
and printed publications, or written testimony of a witness
attested to under oath or declaration by the witness, or any
other information that the Director may require by regulation;
and
``(4) the petitioner provides copies of the petition,
including any evidence submitted with the petition and any
other information submitted under paragraph (3), 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--
``(1) identifies the same cancellation petitioner and the
same patent as a previous petition for cancellation filed under
such section; or
``(2) is based on the best mode requirement contained in
section 112.
``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.
In carrying out paragraph (3), the Director shall bear in mind that
discovery must be in the interests of justice.
``(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 addressing 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 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 with respect to an application for patent filed
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 of a patent addresses the
same or substantially the same questions of patentability raised
against the patent in a petition for post-grant review.
``(c) Effect of Commencement of Proceeding.--The commencement of a
post-grant review proceeding--
``(1) shall not limit in any way the right of the patent
owner to commence an action for infringement of the patent; and
``(2) shall not be cited as evidence relating to the
validity of any claim of the patent in any proceeding before a
court or the International Trade Commission concerning the
patent.
``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;
``(4) assert the invalidity of any such claim in any civil
action arising in whole or in part under section 1338 of title
28; or
``(5) assert the invalidity of any such claim in defense to
an action brought under section 337 of the Tariff Act of 1930
(19 U.S.C. 1337).
``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 subsections (f) and (g) shall apply to
patents issued on or after the effective date under paragraph
(1).
(j) 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.
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 administrative patent judges shall
constitute the Patent Trial and Appeal Board. The administrative patent
judges shall be persons of competent legal knowledge and scientific
ability who are appointed by the Secretary of Commerce. 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)(B)(i) is amended by striking
``published as provided in paragraph (1).'' and inserting the
following: ``published until the later of--
``(I) three months after a second action is taken
pursuant to section 132 on the application, of which
notice has been given or mailed to the applicant; or
``(II) the date specified in paragraph (1).''.
(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;
``(C) include a statement by the submitter
affirming that the submission was made in compliance
with this section; and
``(D) identify the real party-in-interest making
the submission.''.
(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) In any civil action arising under any Act of Congress
relating to patents, a party shall not manufacture venue by assignment,
incorporation, joinder, or otherwise primarily to invoke the venue of a
specific district court.
``(c) Notwithstanding section 1391 of this title, except as
provided in paragraph (3) of this subsection, any civil action for
patent infringement or any action for declaratory judgment relating to
a patent may be brought only in a judicial district--
``(1) where the defendant has its principal place of
business or 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
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 defendant's
operations;
``(3) for cases involving only foreign defendants with no
United States subsidiary, according to section 1391(d) of this
title;
``(4) where the plaintiff resides, if the plaintiff is--
``(A) an institution of higher education as defined
under section 101(a) of the Higher Education Act of
1965 (20 U.S.C. section 1001(a)); or
``(B) a nonprofit organization that--
``(i) is described in section 501(c)(3) of
the Internal Revenue Code of 1986;
``(ii) is exempt from taxation under
section 501(a) of such Code; and
``(iii) serves primarily as the patent and
licensing organization for an institution of
higher education as defined under section
101(a) of the Higher Education Act of 1965 (20
U.S.C. 1001(a));
``(5) where the plaintiff or a subsidiary has a place of
business that is engaged in substantial--
``(A) research and development,
``(B) manufacturing activities, or
``(C) management of research and development or
manufacturing activities,
related to the patent or patents in dispute;
``(6) where the plaintiff resides if the plaintiff is named
as inventor or co-inventor on the patent and has not assigned,
granted, conveyed, or licensed, and is under no obligation to
assign, grant, convey, or license, any rights in the patent or
in enforcement of the patent, including the results of any such
enforcement; or
``(7) where any of the defendants has substantial evidence
and witnesses if there is no other district in which the action
may be brought under this section.''.
(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.--
(1) In general.--The amendments made by this section--
(A) shall take effect on the date of the enactment
of this Act; and
(B) shall apply to any civil action commenced on or
after such date of enactment.
(2) Pending cases.--Any case commenced in a United States
district court on or after September 7, 2007, in which venue is
improper under section 1400 of title 28, United States Code, as
amended by this section, shall be transferred pursuant to
section 1404 of such title, unless--
(A) one or more substantive rulings on the merits,
or other substantial litigation, has occurred; and
(B) the court finds that transfer would not serve
the interests of justice.
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 may, by regulation, require that
applicants submit a search report and other information and analysis
relevant to patentability. If the Director requires a search report to
be submitted by applicants, and an applicant does not itself perform
the search, the search must be performed by one or more individuals who
are United States citizens or by a commercial entity that is organized
under the laws of the United States or any State and employs United
States citizens to perform such searches. An application shall be
regarded as abandoned if the applicant fails to submit a search report,
information, or an analysis in the manner and within the time period
prescribed by the Director. Any search report required by the Director
may not substitute in any way for a search by an examiner of the prior
art during examination.
``(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.--One or more claims of a patent may be held
to be unenforceable, or other remedy imposed under paragraph
(4), for inequitable conduct only if it is established, by
clear and convincing evidence, that a 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 to the examiner during examination of the
patent.
``(2) Materiality.--
``(A) In general.--Information is material under
this section if--
``(i) a reasonable examiner would have made
a prima facie finding of unpatentability, or
maintained a finding of unpatentability, of one
or more of the patent claims based on the
information, and the information is not
cumulative to information already of record or
previously considered by the Office; or
``(ii) information that is otherwise
material refutes or is inconsistent with a
position the applicant takes in opposing a
rejection of the claim or in asserting an
argument of patentability.
``(B) Prima facie finding.--A prima facie finding
of unpatentability under this section is shown if a
reasonable examiner, based on a preponderance of the
evidence, would conclude that the claim is unpatentable
based on the information misrepresented or not
disclosed, when that information is considered alone or
in conjunction with other information or record. In
determining whether there is a prima facie finding of
unpatentability, each term in the claim shall be given
its broadest reasonable construction consistent with
the specification, and rebuttal evidence shall not be
considered.
``(3) Intent.--To prove a person with a duty of disclosure
to the Office intended to mislead or deceive the examiner under
paragraph (1), specific facts beyond materiality of the
information misrepresented or not disclosed must be proven that
establish the intent of the person to mislead or deceive the
examiner by the actions of the person. Facts support an intent
to mislead or deceive if they show circumstances that indicate
conscious or deliberate behavior on the part of the person to
not disclose material information or to submit false material
information in order to mislead or deceive the examiner.
Circumstantial evidence may be used to prove that a person had
the intent to mislead or deceive the examiner under paragraph
(1).
``(4) 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 reasonable
royalties.
``(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.
``(5) Attorney misconduct.--Upon a finding of inequitable
conduct, if there is evidence that the conduct is 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.
(c) Effective Date of Regulations.--
(1) Review by congress.--A regulation promulgated by the
United States Patent and Trademark Office under section 2(b)(2)
of title 35, United States Code, with respect to any matter
described in section 2(c)(6) of such title, as added by
subsection (a) of this section, may not take effect before the
end of a period of 60 days beginning on the date on which the
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office
submits to each House of Congress a copy of the regulation,
together with a report containing the reasons for its adoption.
The regulation and report so submitted shall be referred to the
Committee on the Judiciary of the House of Representatives and
the Committee on the Judiciary of the Senate.
(2) Joint resolution of disapproval.--If a joint resolution
of disapproval with respect to the regulation is enacted into
law, the regulation shall not become effective or continue in
effect.
(3) Joint resolution defined.--For purposes of this
subsection, the term a ``joint resolution of disapproval''
means a joint resolution, the matter after the resolving clause
of which is as follows: ``That Congress disapproves the
regulation submitted by the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office on ___ relating to ___, and such
regulation shall have no force or effect.'', with the first
space being filled with the appropriate date, and the second
space being filled with a description of the regulation at
issue.
(4) Referral.--A joint resolution of disapproval shall be
referred in the House of Representatives to the Committee on
the Judiciary and in the Senate to the Committee on the
Judiciary.
(5) Floor consideration.--A vote on final passage of a
joint resolution of disapproval shall be taken in each House on
or before the close of the 15th day after the bill or
resolution is reported by the committee of that House to which
it was referred or after such committee has been discharged
from further consideration of the joint resolution of
disapproval.
(6) No inferences.--If the Congress does not enact a joint
resolution of disapproval, no court or agency may infer
therefrom any intent of the Congress with regard to such
regulation or action.
(7) Calculation of days.--The 60-day period referred to in
paragraph (1) and the 15-day period referred to in paragraph
(5) shall be computed by excluding--
(A) the days on which either House of Congress is
not in session because of an adjournment of the
Congress sine die; and
(B) any Saturday and Sunday, not excluded under
subparagraph (A), when either House is not in session.
(8) Rulemaking authority.--This subsection is enacted by
the Congress as an exercise of the rulemaking power of the
Senate and House of Representatives respectively, and as such
it is deemed a part of the rules of each House, respectively.
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 1 year 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. STUDY ON WORKPLACE CONDITIONS.
The Comptroller General shall, not later than 2 years after the
date of the enactment of this Act--
(1) conduct a study of workplace conditions for the
examiner corps of the United States Patent and Trademark
Office, including the effect, if any, of this Act and the
amendments made by this Act on--
(A) recruitment, retention, and promotion of
employees; and
(B) workload, quality assurance, and employee
grievances; 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 suggestions for improving workplace
conditions, together with any other recommendations that the
Comptroller General has with respect to patent reexamination
proceedings.
SEC. 18. 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.
SEC. 19. STUDY ON PATENT DAMAGES.
(a) In General.--The Under Secretary of Commerce for Intellectual
Property and Director of the United States Patent and Trademark Office
(in this section referred to as the ``Director'') shall conduct a study
of patent damage awards in cases where such awards have been based on a
reasonable royalty under section 284 of title 35, United States Code.
The study should, at a minimum, consider cases from 1990 to the
present.
(b) Conduct.--In conducting the study under subsection (a), the
Director shall investigate, at a minimum, the following:
(1) Whether the mean or median dollar amount of reasonable-
royalty-based patent damages awarded by courts or juries, as
the case may be, has significantly increased on a per case
basis during the period covered by the study, taking into
consideration adjustments for inflation and other relevant
economic factors.
(2) Whether there has been a pattern of excessive and
inequitable reasonable-royalty-based damages during the period
covered by the study and, if so, any contributing factors,
including, for example, evidence that Federal courts have
routinely and inappropriately broadened the scope of the
``entire market value rule'', or that juries have routinely
misapplied the entire market value rule to the facts at issue.
(3) To the extent that a pattern of excessive and
inequitable damage awards exists, measures that could guard
against such inappropriate awards without unduly prejudicing
the rights and remedies of patent holders or significantly
increasing litigation costs, including legislative reforms or
improved model jury instructions.
(4) To the extent that a pattern of excessive and
inequitable damage awards exists, whether legislative proposals
that would mandate, or create a presumption in favor of,
apportionment of reasonable-royalty-based patent damages would
effectively guard against such inappropriate awards without
unduly prejudicing the rights and remedies of patent holders or
significantly increasing litigation costs.
(c) Report.--Not later than 1 year after the date of the enactment
of this Act, the Director shall submit to the Congress a report on the
study conducted under this section.
SEC. 20. SEVERABILITY.
If any provision of this Act or of any amendment or repeals made by
this Act, or the application of such a provision to any person or
circumstance, is held to be invalid or unenforceable, the remainder of
this Act and the amendments and repeals made by this Act, and the
application of this Act and such amendments and repeals to any other
person or circumstance, shall not be affected by such holding.
Passed the House of Representatives September 7, 2007.
Attest:
LORRAINE C. MILLER,
Clerk.
Calendar No. 348
110th CONGRESS
1st Session
H. R. 1908
_______________________________________________________________________
AN ACT
To amend title 35, United States Code, to provide for patent reform.
_______________________________________________________________________
September 11, 2007
Read the second time and placed on the calendar