[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1145 Reported in Senate (RS)]






                                                       Calendar No. 563
110th CONGRESS
  2d Session
                                S. 1145

                          [Report No. 110-259]

  To amend title 35, United States Code, to provide for patent reform.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 18, 2007

    Mr. Leahy (for himself, Mr. Hatch, Mr. Schumer, Mr. Cornyn, Mr. 
  Whitehouse, Mr. Craig, Mr. Crapo, Mr. Bennett, Mr. Salazar, and Mr. 
Smith) introduced the following bill; which was read twice and referred 
                   to the Committee on the Judiciary

                            January 24, 2008

                Reported by Mr. Leahy, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
  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,

<DELETED>SECTION 1. SHORT TITLE; TABLE OF CONTENTS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the ``Patent 
Reform Act of 2007''.</DELETED>
<DELETED>    (b) Table of Contents.--The table of contents of this Act 
is as follows:</DELETED>

<DELETED>Sec. 1. Short title; table of contents.
<DELETED>Sec. 2. Reference to title 35, United States Code.
<DELETED>Sec. 3. Right of the first inventor to file.
<DELETED>Sec. 4. Inventor's oath or declaration.
<DELETED>Sec. 5. Right of the inventor to obtain damages.
<DELETED>Sec. 6. Post-grant procedures and other quality enhancements.
<DELETED>Sec. 7. Definitions; patent trial and appeal board.
<DELETED>Sec. 8. Study and report on reexamination proceedings.
<DELETED>Sec. 9. Submissions by third parties and other quality 
                            enhancements.
<DELETED>Sec. 10. Venue and jurisdiction.
<DELETED>Sec. 11. Regulatory authority.
<DELETED>Sec. 12. Technical amendments.
<DELETED>Sec. 13. Effective date; rule of construction.

<DELETED>SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE.</DELETED>

<DELETED>    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.</DELETED>

<DELETED>SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE.</DELETED>

<DELETED>    (a) Definitions.--Section 100 is amended by adding at the 
end the following:</DELETED>
<DELETED>    ``(f) The term `inventor' means the individual or, if a 
joint invention, the individuals collectively who invented or 
discovered the subject matter of the invention.</DELETED>
<DELETED>    ``(g) The terms `joint inventor' and `coinventor' mean any 
1 of the individuals who invented or discovered the subject matter of a 
joint invention.</DELETED>
<DELETED>    ``(h) The `effective filing date of a claimed invention' 
is--</DELETED>
        <DELETED>    ``(1) the filing date of the patent or the 
        application for patent containing the claim to the invention; 
        or</DELETED>
        <DELETED>    ``(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 the first paragraph of section 112.</DELETED>
<DELETED>    ``(i) The term `claimed invention' means the subject 
matter defined by a claim in a patent or an application for a 
patent.</DELETED>
<DELETED>    ``(j) The term `joint invention' means an invention 
resulting from the collaboration of inventive endeavors of 2 or more 
persons working toward the same end and producing an invention by their 
collective efforts.''.</DELETED>
<DELETED>    (b) Conditions for Patentability.--</DELETED>
        <DELETED>    (1) In general.--Section 102 is amended to read as 
        follows:</DELETED>
<DELETED>``Sec. 102. Conditions for patentability; novelty</DELETED>
<DELETED>    ``(a) Novelty; Prior Art.--A patent for a claimed 
invention may not be obtained if--</DELETED>
        <DELETED>    ``(1) the claimed invention was patented, 
        described in a printed publication, or in public use or on 
        sale--</DELETED>
                <DELETED>    ``(A) more than one year before the 
                effective filing date of the claimed invention; 
                or</DELETED>
                <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(b) Exceptions.--</DELETED>
        <DELETED>    ``(1) Prior inventor disclosure exception.--
        Subject matter that would otherwise qualify as prior art 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 the applicable date under such subparagraph 
        (B), been publicly disclosed by the inventor or a joint 
        inventor or others who obtained the subject matter disclosed 
        directly or indirectly from the inventor, joint inventor, or 
        applicant.</DELETED>
        <DELETED>    ``(2) Derivation and common assignment 
        exceptions.--Subject matter that would otherwise qualify as 
        prior art only under subsection (a)(2), after taking into 
        account the exception under paragraph (1), shall not be prior 
        art to a claimed invention if--</DELETED>
                <DELETED>    ``(A) the subject matter was obtained 
                directly or indirectly from the inventor or a joint 
                inventor; or</DELETED>
                <DELETED>    ``(B) 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.</DELETED>
        <DELETED>    ``(3) Joint research agreement exception.--
        </DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(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;</DELETED>
                        <DELETED>    ``(ii) the claimed invention was 
                        made as a result of activities undertaken 
                        within the scope of the joint research 
                        agreement; and</DELETED>
                        <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(A) as of the filing date of the patent 
                or the application for patent; or</DELETED>
                <DELETED>    ``(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.''.</DELETED>
        <DELETED>    (2) Conforming amendment.--The item relating to 
        section 102 in the table of sections for chapter 10 is amended 
        to read as follows:</DELETED>

<DELETED>``102. Conditions for patentability; novelty.''.
<DELETED>    (c) Conditions for Patentability; Non-Obvious Subject 
Matter.--Section 103 is amended to read as follows:</DELETED>
<DELETED>``Sec. 103. Conditions for patentability; nonobvious subject 
              matter</DELETED>
<DELETED>    ``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.''.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (e) Repeal of Statutory Invention Registration.--
</DELETED>
        <DELETED>    (1) In general.--Section 157, and the item 
        relating to that section in the table of sections for chapter 
        14, are repealed.</DELETED>
        <DELETED>    (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''.</DELETED>
<DELETED>    (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''.</DELETED>
<DELETED>    (g) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Right of priority.--Section 172 is amended by 
        striking ``and the time specified in section 
        102(d)''.</DELETED>
        <DELETED>    (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''.</DELETED>
        <DELETED>    (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''.</DELETED>
        <DELETED>    (4) Publication of international application: 
        effect.--Section 374 is amended by striking ``sections 102(e) 
        and 154(d)'' and inserting ``section 154(d)''.</DELETED>
        <DELETED>    (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''.</DELETED>
        <DELETED>    (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''.</DELETED>
        <DELETED>    (7) Inventions made with federal assistance.--
        Section 202(c) is amended--</DELETED>
                <DELETED>    (A) in paragraph (2)--</DELETED>
                        <DELETED>    (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</DELETED>
                        <DELETED>    (ii) by striking ``the statutory'' 
                        and inserting ``that 1-year''; and</DELETED>
                <DELETED>    (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)''.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (i) Action for Claim to Patent on Derived Invention.--
Section 135(a) is amended to read as follows:</DELETED>
<DELETED>    ``(a) Dispute Over Right to Patent.--</DELETED>
        <DELETED>    ``(1) Institution of derivation proceeding.--An 
        applicant may request initiation of a derivation proceeding to 
        determine the right of the applicant to a patent by filing a 
        request which sets forth with particularity the basis for 
        finding that an earlier applicant derived the claimed invention 
        from the applicant requesting the proceeding and, without 
        authorization, filed an application claiming such invention. 
        Any such request may only be made within 12 months after the 
        date of first publication of an application containing a claim 
        that is the same or is substantially the same as the claimed 
        invention, must be made under oath, and must be supported by 
        substantial evidence. Whenever the Director determines that 
        patents or applications for patent naming different individuals 
        as the inventor interfere with one another because of a dispute 
        over the right to patent under section 101, the Director shall 
        institute a derivation proceeding for the purpose of 
        determining which applicant is entitled to a patent.</DELETED>
        <DELETED>    ``(2) Requirements.--A proceeding under this 
        subsection may not be commenced unless the party requesting the 
        proceeding has filed an application that was filed not later 
        than 18 months after the effective filing date of the 
        application or patent deemed to interfere with the subsequent 
        application or patent.</DELETED>
        <DELETED>    ``(3) Determination by patent trial and appeal 
        board.--In any proceeding under this subsection, the Patent 
        Trial and Appeal Board--</DELETED>
                <DELETED>    ``(A) shall determine the question of the 
                right to patent;</DELETED>
                <DELETED>    ``(B) in appropriate circumstances, may 
                correct the naming of the inventor in any application 
                or patent at issue; and</DELETED>
                <DELETED>    ``(C) shall issue a final decision on the 
                right to patent.</DELETED>
        <DELETED>    ``(4) Derivation proceeding.--The Board may defer 
        action on a request to initiate a derivation proceeding until 3 
        months after the date on which the Director issues a patent to 
        the applicant that filed the earlier application.</DELETED>
        <DELETED>    ``(5) Effect of final decision.--The final 
        decision of the Patent Trial and Appeal Board, 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 
        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.''.</DELETED>
<DELETED>    (j) Elimination of References to Interferences.--(1) 
Sections 6, 41, 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''.</DELETED>
<DELETED>    (2) Sections 141, 146, and 154 are each amended--
</DELETED>
        <DELETED>    (A) by striking ``an interference'' each place it 
        appears and inserting ``a derivation proceeding''; 
        and</DELETED>
        <DELETED>    (B) by striking ``interference'' each additional 
        place it appears and inserting ``derivation 
        proceeding''.</DELETED>
<DELETED>    (3) The section heading for section 134 is amended to read 
as follows:</DELETED>
<DELETED>``Sec. 134. Appeal to the Patent Trial and Appeal 
              Board''.</DELETED>
<DELETED>    (4) The section heading for section 135 is amended to read 
as follows:</DELETED>
<DELETED>``Sec. 135. Derivation proceedings''.</DELETED>
<DELETED>    (5) The section heading for section 146 is amended to read 
as follows:</DELETED>
<DELETED>``Sec. 146. Civil action in case of derivation 
              proceeding''.</DELETED>
<DELETED>    (6) Section 154(b)(1)(C) is amended by striking 
``interferences'' and inserting ``derivation proceedings''.</DELETED>
<DELETED>    (7) The item relating to section 6 in the table of 
sections for chapter 1 is amended to read as follows:</DELETED>

<DELETED>``6. Patent Trial and Appeal Board.''.
<DELETED>    (8) The items relating to sections 134 and 135 in the 
table of sections for chapter 12 are amended to read as 
follows:</DELETED>

<DELETED>``134. Appeal to the Patent Trial and Appeal Board.
<DELETED>``135. Derivation proceedings.''.
<DELETED>    (9) The item relating to section 146 in the table of 
sections for chapter 13 is amended to read as follows:</DELETED>

<DELETED>``146. Civil action in case of derivation proceeding.''.
<DELETED>    (10) Certain Appeals.--Subsection 1295(a)(4)(A) of title 
28, United States Code, is amended to read as follows:</DELETED>
                <DELETED>    ``(A) the Patent Trial and Appeal Board of 
                the United States Patent and Trademark Office with 
                respect to patent applications, derivation proceedings, 
                and post-grant review proceedings, at the instance of 
                an applicant for a patent or any party to a patent 
                interference (commenced before the effective date 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;''.</DELETED>

<DELETED>SEC. 4. INVENTOR'S OATH OR DECLARATION.</DELETED>

<DELETED>    (a) Inventor's Oath or Declaration.--</DELETED>
        <DELETED>    (1) In general.--Section 115 is amended to read as 
        follows:</DELETED>
<DELETED>``Sec. 115. Inventor's oath or declaration</DELETED>
<DELETED>    ``(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, an 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.</DELETED>
<DELETED>    ``(b) Required Statements.--An oath or declaration under 
subsection (a) shall contain statements that--</DELETED>
        <DELETED>    ``(1) the application was made or was authorized 
        to be made by the affiant or declarant; and</DELETED>
        <DELETED>    ``(2) such individual believes himself or herself 
        to be the original inventor or an original joint inventor of a 
        claimed invention in the application.</DELETED>
<DELETED>    ``(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).</DELETED>
<DELETED>    ``(d) Substitute Statement.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(2) Permitted circumstances.--A substitute 
        statement under paragraph (1) is permitted with respect to any 
        individual who--</DELETED>
                <DELETED>    ``(A) is unable to file the oath or 
                declaration under subsection (a) because the 
                individual--</DELETED>
                        <DELETED>    ``(i) is deceased;</DELETED>
                        <DELETED>    ``(ii) is under legal incapacity; 
                        or</DELETED>
                        <DELETED>    ``(iii) cannot be found or reached 
                        after diligent effort; or</DELETED>
                <DELETED>    ``(B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).</DELETED>
        <DELETED>    ``(3) Contents.--A substitute statement under this 
        subsection shall--</DELETED>
                <DELETED>    ``(A) identify the individual with respect 
                to whom the statement applies;</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(C) contain any additional information, 
                including any showing, required by the 
                Director.</DELETED>
<DELETED>    ``(e) Making Required Statements in Assignment of 
Record.--An individual who is under an obligation of assignment of an 
application for patent may include the required statements under 
subsections (b) and (c) in the assignment executed by the individual, 
in lieu of filing such statements separately.</DELETED>
<DELETED>    ``(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).</DELETED>
<DELETED>    ``(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 under section 120 or 365(c) of the 
filing of an earlier-filed application, if--</DELETED>
        <DELETED>    ``(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;</DELETED>
        <DELETED>    ``(2) a substitute statement meeting the 
        requirements of subsection (d) was filed in the earlier filed 
        application with respect to the individual; or</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(h) Supplemental and Corrected Statements; Filing 
Additional Statements.--</DELETED>
        <DELETED>    ``(1) In general.--Any person making a statement 
        required under this section may withdraw, replace, or otherwise 
        correct the statement at any time. If a change is made in the 
        naming of the inventor requiring the filing of 1 or more 
        additional statements under this section, the Director shall 
        establish regulations under which such additional statements 
        may be filed.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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).''.</DELETED>
        <DELETED>    (2) Relationship to divisional applications.--
        Section 121 is amended by striking ``If a divisional 
        application'' and all that follows through 
        ``inventor.''.</DELETED>
        <DELETED>    (3) Requirements for nonprovisional 
        applications.--Section 111(a) is amended--</DELETED>
                <DELETED>    (A) in paragraph (2)(C), by striking ``by 
                the applicant'' and inserting ``or 
                declaration'';</DELETED>
                <DELETED>    (B) in the heading for paragraph (3), by 
                striking ``and oath''; and</DELETED>
                <DELETED>    (C) by striking ``and oath'' each place it 
                appears.</DELETED>
        <DELETED>    (4) Conforming amendment.--The item relating to 
        section 115 in the table of sections for chapter 10 is amended 
        to read as follows:</DELETED>

<DELETED>``115. Inventor's oath or declaration.''.
<DELETED>    (b) Filing by Other Than Inventor.--Section 118 is amended 
to read as follows:</DELETED>
<DELETED>``Sec. 118. Filing by other than inventor</DELETED>
<DELETED>    ``A person to whom the inventor has assigned or is under 
an obligation to assign the invention may make an application for 
patent. A person who otherwise shows sufficient proprietary interest in 
the matter may make an application for patent on behalf of and as agent 
for the inventor on proof of the pertinent facts and a showing that 
such action is appropriate to preserve the rights of the parties. If 
the Director grants a patent on an application filed under this section 
by a person other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as the 
Director considers to be sufficient.''.</DELETED>
<DELETED>    (c) Specification.--Section 112 is amended--</DELETED>
        <DELETED>    (1) in the first paragraph----</DELETED>
                <DELETED>    (A) by striking ``The specification'' and 
                inserting ``(a) In General.--The specification''; 
                and</DELETED>
                <DELETED>    (B) by striking ``of carrying out his 
                invention'' and inserting ``or joint inventor of 
                carrying out the invention''; and</DELETED>
        <DELETED>    (2) in the second paragraph--</DELETED>
                <DELETED>    (A) by striking ``The specifications'' and 
                inserting ``(b) Conclusion.--The specifications''; 
                and</DELETED>
                <DELETED>    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';</DELETED>
        <DELETED>    (3) in the third paragraph, by striking ``A 
        claim'' and inserting ``(c) Form.--A claim'';</DELETED>
        <DELETED>    (4) in the fourth paragraph, by striking ``Subject 
        to the following paragraph,'' and inserting ``(d) Reference in 
        Dependent Forms.--Subject to subsection (e),'';</DELETED>
        <DELETED>    (5) in the fifth paragraph, by striking ``A 
        claim'' and inserting ``(e) Reference in Multiple Dependent 
        Form.--A claim''; and</DELETED>
        <DELETED>    (6) in the last paragraph, by striking ``An 
        element'' and inserting ``(f) Element in Claim for a 
        Combination.--An element''.</DELETED>

<DELETED>SEC. 5. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES.</DELETED>

<DELETED>    (a) Damages.--Section 284 is amended--</DELETED>
        <DELETED>    (1) in the first paragraph--</DELETED>
                <DELETED>    (A) by striking ``Upon'' and inserting 
                ``(a) Award of Damages.--</DELETED>
        <DELETED>    ``(1) In general.--Upon'';</DELETED>
                <DELETED>    (B) by aligning the remaining text 
                accordingly; and</DELETED>
                <DELETED>    (C) by adding at the end the 
                following:</DELETED>
        <DELETED>    ``(2) Relationship of damages to contributions 
        over prior art.--The court shall conduct an analysis to ensure 
        that a reasonable royalty under paragraph (1) is applied only 
        to that economic value properly attributable to the patent's 
        specific contribution over the prior art. In a reasonable 
        royalty analysis, the court shall identify all factors relevant 
        to the determination of a reasonable royalty under this 
        subsection, and the court or the jury, as the case may be, 
        shall consider only those factors in making the determination. 
        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.</DELETED>
        <DELETED>    ``(3) Entire market value.--Unless the claimant 
        shows that the patent's specific contribution over the prior 
        art is the predominant basis for market demand for an 
        infringing product or process, damages may not be based upon 
        the entire market value of that infringing product or 
        process.</DELETED>
        <DELETED>    ``(4) Other factors.--In determining damages, the 
        court may also consider, or direct the jury to consider, the 
        terms of any nonexclusive marketplace licensing of the 
        invention, where appropriate, as well as any other relevant 
        factors under applicable law.'';</DELETED>
        <DELETED>    (2) by amending the second undesignated paragraph 
        to read as follows:</DELETED>
<DELETED>    ``(b) Willful Infringement .--</DELETED>
        <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) after receiving written notice from 
                the patentee--</DELETED>
                        <DELETED>    ``(i) alleging acts of 
                        infringement in a manner sufficient to give the 
                        infringer an objectively reasonable 
                        apprehension of suit on such patent, 
                        and</DELETED>
                        <DELETED>    ``(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,</DELETED>
                <DELETED>the infringer, after a reasonable opportunity 
                to investigate, thereafter performed one or more of the 
                alleged acts of infringement;</DELETED>
                <DELETED>    ``(B) the infringer intentionally copied 
                the patented invention with knowledge that it was 
                patented; or</DELETED>
                <DELETED>    ``(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 which resulted in a separate finding of 
                infringement of the same patent.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(B) An informed good faith belief within the 
        meaning of subparagraph (A) may be established by--</DELETED>
                <DELETED>    ``(i) reasonable reliance on advice of 
                counsel;</DELETED>
                <DELETED>    ``(ii) evidence that the infringer sought 
                to modify its conduct to avoid infringement once it had 
                discovered the patent; or</DELETED>
                <DELETED>    ``(iii) other evidence a court may find 
                sufficient to establish such good faith 
                belief.</DELETED>
        <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(4) Limitation on pleading.--Before the date on 
        which a court determines that the patent in suit is not 
        invalid, is enforceable, and has been infringed by the 
        infringer, a patentee may not plead and a court may not 
        determine that an infringer has willfully infringed a patent. 
        The court's determination of an infringer's willfulness shall 
        be made without a jury.''; and</DELETED>
        <DELETED>    (3) in the third undesignated paragraph, by 
        striking ``The court'' and inserting ``(c) Expert Testimony.--
        The court''.</DELETED>
<DELETED>    (b) Defense to Infringement Based on Earlier Inventor.--
Section 273 of title 35, United States Code, is amended--</DELETED>
        <DELETED>    (1) in subsection (a)--</DELETED>
                <DELETED>    (A) in paragraph (1)--</DELETED>
                        <DELETED>    (i) by striking ``of a method''; 
                        and</DELETED>
                        <DELETED>    (ii) by striking ``review 
                        period;'' and inserting ``review period; 
                        and'';</DELETED>
                <DELETED>    (B) in paragraph (2)(B), by striking the 
                semicolon at the end and inserting a period; 
                and</DELETED>
                <DELETED>    (C) by striking paragraphs (3) and 
                (4);</DELETED>
        <DELETED>    (2) in subsection (b)--</DELETED>
                <DELETED>    (A) in paragraph (1)--</DELETED>
                        <DELETED>    (i) by striking ``for a method''; 
                        and</DELETED>
                        <DELETED>    (ii) by striking ``at least 1 year 
                        before the effective filing date of such 
                        patent, and'' and all that follows through the 
                        period and inserting ``and commercially used, 
                        or made substantial preparations for commercial 
                        use of, the subject matter before the effective 
                        filing date of the claimed 
                        invention.'';</DELETED>
                <DELETED>    (B) in paragraph (2)--</DELETED>
                        <DELETED>    (i) by striking ``The sale or 
                        other disposition of a useful end result 
                        produced by a patented method'' and inserting 
                        ``The sale or other disposition of subject 
                        matter that qualifies for the defense set forth 
                        in this section''; and</DELETED>
                        <DELETED>    (ii) by striking ``a defense under 
                        this section with respect to that useful end 
                        result'' and inserting ``such defense''; 
                        and</DELETED>
                <DELETED>    (C) in paragraph (3)--</DELETED>
                        <DELETED>    (i) by striking subparagraph (A); 
                        and</DELETED>
                        <DELETED>    (ii) by redesignating 
                        subparagraphs (B) and (C) as subparagraphs (A) 
                        and (B), respectively;</DELETED>
        <DELETED>    (3) in paragraph (7), by striking ``of the 
        patent'' and inserting ``of the claimed invention''; 
        and</DELETED>
        <DELETED>    (4) by amending the heading to read as 
        follows:</DELETED>
<DELETED>``Sec. 273. Special defenses to and exemptions from 
              infringement''.</DELETED>
<DELETED>    (c) Table of Sections.--The item relating to section 273 
in the table of sections for chapter 28 is amended to read as 
follows:</DELETED>

<DELETED>``273. Special defenses to and exemptions from 
                            infringement.''.
<DELETED>    (d) Effective Date.--The amendments made by this section 
shall apply to any civil action commenced on or after the date of 
enactment of this Act.</DELETED>

<DELETED>SEC. 6. POST-GRANT PROCEDURES AND OTHER QUALITY 
              ENHANCEMENTS.</DELETED>

<DELETED>    (a) Reexamination.--Section 303(a) is amended to read as 
follows:</DELETED>
<DELETED>    ``(a) Within 3 months after the owner of a patent files a 
request for reexamination under section 302, the Director shall 
determine whether a substantial new question of patentability affecting 
any claim of the patent concerned is raised by the request, with or 
without consideration of other patents or printed publications. On the 
Director's own initiative, and at any time, the Director may determine 
whether a substantial new question of patentability is raised by 
patents and publications discovered by the Director, is cited under 
section 301, or is cited by any person other than the owner of the 
patent under section 302 or section 311. The existence of a substantial 
new question of patentability is not precluded by the fact that a 
patent or printed publication was previously cited by or to the Office 
or considered by the Office.''.</DELETED>
<DELETED>    (b) Reexamination.--Section 315(c) is amended by striking 
``or could have raised''.</DELETED>
<DELETED>    (c) Reexamination Prohibited After District Court 
Decision.--Section 317(b) is amended--</DELETED>
        <DELETED>    (1) in the subsection heading, by striking ``Final 
        Decision'' and inserting ``District Court Decision''; 
        and</DELETED>
        <DELETED>    (2) by striking ``Once a final decision has been 
        entered'' and inserting ``Once the judgment of the district 
        court has been entered''.</DELETED>
<DELETED>    (d) Effective Dates.--Notwithstanding any other provision 
of law, sections 311 through 318 of title 35, United States Code, as 
amended by this Act, shall apply to any patent that issues before, on, 
or after the date of enactment of this Act from an original application 
filed on any date.</DELETED>
<DELETED>    (e) Post-Grant Opposition Procedures.--</DELETED>
        <DELETED>    (1) In general.--Part III is amended by adding at 
        the end the following new chapter:</DELETED>

     <DELETED>``CHAPTER 32--POST-GRANT REVIEW PROCEDURES</DELETED>

<DELETED>``Sec.
<DELETED>``321. Petition for post-grant review.
<DELETED>``322. Timing and bases of petition.
<DELETED>``323. Requirements of petition.
<DELETED>``324. Prohibited filings.
<DELETED>``325. Submission of additional information; showing of 
                            sufficient grounds.
<DELETED>``326. Conduct of post-grant review proceedings.
<DELETED>``327. Patent owner response.
<DELETED>``328. Proof and evidentiary standards.
<DELETED>``329. Amendment of the patent.
<DELETED>``330. Decision of the Board.
<DELETED>``331. Effect of decision.
<DELETED>``332. Relationship to other pending proceedings.
<DELETED>``333. Effect of decisions rendered in civil action on future 
                            post-grant review proceedings.
<DELETED>``334. Effect of final decision on future proceedings.
<DELETED>``335. Appeal.
<DELETED>``Sec. 321. Petition for post-grant review</DELETED>
<DELETED>    ``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.</DELETED>
<DELETED>``Sec. 322. Timing and bases of petition</DELETED>
<DELETED>    ``A post-grant proceeding may be instituted under this 
chapter pursuant to a cancellation petition filed under section 321 
only if--</DELETED>
        <DELETED>    ``(1) the petition is filed not later than 12 
        months after the grant of the patent or issuance of a reissue 
        patent, as the case may be;</DELETED>
        <DELETED>    ``(2)(A) the petitioner establishes a substantial 
        reason to believe that the continued existence of the 
        challenged claim in the petition causes or is likely to cause 
        the petitioner significant economic harm; or</DELETED>
        <DELETED>    ``(B) the petitioner has received notice from the 
        patent holder alleging infringement by the petitioner of the 
        patent; or</DELETED>
        <DELETED>    ``(3) the patent owner consents in writing to the 
        proceeding.</DELETED>
<DELETED>``Sec. 323. Requirements of petition</DELETED>
<DELETED>    ``A cancellation petition filed under section 321 may be 
considered only if--</DELETED>
        <DELETED>    ``(1) the petition is accompanied by payment of 
        the fee established by the Director under section 
        321;</DELETED>
        <DELETED>    ``(2) the petition identifies the cancellation 
        petitioner; and</DELETED>
        <DELETED>    ``(3) the petition sets forth in writing the basis 
        for the cancellation, identifying each claim challenged and 
        providing such information as the Director may require by 
        regulation, and includes copies of patents and printed 
        publications that the cancellation petitioner relies upon in 
        support of the petition; and</DELETED>
        <DELETED>    ``(4) the petitioner provides copies of those 
        documents to the patent owner or, if applicable, the designated 
        representative of the patent owner.</DELETED>
<DELETED>``Sec. 324. Prohibited filings</DELETED>
<DELETED>    ``A post-grant review proceeding may not be instituted 
under paragraph (1), (2), or (3) of section 322 if the petition for 
cancellation requesting the proceeding identifies the same cancellation 
petitioner and the same patent as a previous petition for cancellation 
filed under the same paragraph of section 322.</DELETED>
<DELETED>``Sec. 325. Submission of additional information; showing of 
              sufficient grounds</DELETED>
<DELETED>    ``The cancellation petitioner shall file such additional 
information with respect to the petition as the Director may require. 
The Director may not authorize a post-grant review proceeding to 
commence unless the Director determines that the information presented 
provides sufficient grounds to proceed.</DELETED>
<DELETED>``Sec. 326. Conduct of post-grant review proceedings</DELETED>
<DELETED>    ``(a) In General.--The Director shall--</DELETED>
        <DELETED>    ``(1) prescribe regulations, in accordance with 
        section 2(b)(2), establishing and governing post-grant review 
        proceedings under this chapter and their relationship to other 
        proceedings under this title;</DELETED>
        <DELETED>    ``(2) prescribe regulations setting forth the 
        standards for showings of substantial reason to believe and 
        significant economic harm under section 322(2) and sufficient 
        grounds under section 325;</DELETED>
        <DELETED>    ``(3) prescribe regulations establishing 
        procedures for the submission of supplemental information after 
        the petition for cancellation is filed; and</DELETED>
        <DELETED>    ``(4) prescribe regulations 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.</DELETED>
<DELETED>    ``(b) Post-Grant Regulations.--Regulations under 
subsection (a)(1)--</DELETED>
        <DELETED>    ``(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;</DELETED>
        <DELETED>    ``(2) shall provide for discovery upon order of 
        the Director;</DELETED>
        <DELETED>    ``(3) 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;</DELETED>
        <DELETED>    ``(4) may provide for protective orders governing 
        the exchange and submission of confidential information; 
        and</DELETED>
        <DELETED>    ``(5) shall ensure that any information submitted 
        by the patent owner in support of any amendment entered under 
        section 328 is made available to the public as part of the 
        prosecution history of the patent.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>``Sec. 327. Patent owner response</DELETED>
<DELETED>    ``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.</DELETED>
<DELETED>``Sec. 328. Proof and evidentiary standards</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>``Sec. 329. Amendment of the patent</DELETED>
<DELETED>    ``(a) In General.--In response to a challenge in a 
petition for cancellation, the patent owner may file 1 motion to amend 
the patent in 1 or more of the following ways:</DELETED>
        <DELETED>    ``(1) Cancel any challenged patent 
        claim.</DELETED>
        <DELETED>    ``(2) For each challenged claim, propose a 
        substitute claim.</DELETED>
        <DELETED>    ``(3) Amend the patent drawings or otherwise amend 
        the patent other than the claims.</DELETED>
<DELETED>    ``(b) Additional Motions.--Additional motions to amend may 
be permitted only for good cause shown.</DELETED>
<DELETED>    ``(c) Scope of Claims.--An amendment under this section 
may not enlarge the scope of the claims of the patent or introduce new 
matter.</DELETED>
<DELETED>``Sec. 330. Decision of the Board</DELETED>
<DELETED>    ``If the post-grant review proceeding is instituted and 
not dismissed under this chapter, the Patent Trial and Appeal Board 
shall issue a final written decision with respect to the patentability 
of any patent claim challenged and any new claim added under section 
329.</DELETED>
<DELETED>``Sec. 331. Effect of decision</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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 therefore, prior to issuance of a certificate under 
subsection (a) of this section.</DELETED>
<DELETED>``Sec. 332. Relationship to other pending 
              proceedings</DELETED>
<DELETED>    ``Notwithstanding subsection 135(a), sections 251 and 252, 
and chapter 30, the Director may determine the manner in which any 
reexamination proceeding, reissue proceeding, interference proceeding 
(commenced before the effective date 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.</DELETED>
<DELETED>``Sec. 333. Effect of decisions rendered in civil action on 
              future post-grant review proceedings</DELETED>
<DELETED>    ``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--</DELETED>
        <DELETED>    ``(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 311, which that party 
        or the privies of that party raised or had actual knowledge of; 
        and</DELETED>
        <DELETED>    ``(2) the Director may not thereafter maintain a 
        post-grant review proceeding previously requested by that party 
        or the privies of that party on the basis of such 
        grounds.</DELETED>
<DELETED>``Sec. 334. Effect of final decision on future 
              proceedings</DELETED>
<DELETED>    ``(a) In General.--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 which the 
cancellation petitioner raised during the post-grant review 
proceeding--</DELETED>
        <DELETED>    ``(1) request or pursue a reexamination of such 
        claim under chapter 31;</DELETED>
        <DELETED>    ``(2) request or pursue a derivation proceeding 
        with respect to such claim;</DELETED>
        <DELETED>    ``(3) request or pursue a post-grant review 
        proceeding under this chapter with respect to such claim; 
        or</DELETED>
        <DELETED>    ``(4) assert the invalidity of any such claim, in 
        any civil action arising in whole or in part under section 1338 
        of title 28.</DELETED>
<DELETED>    ``(b) Extension of Prohibition.--If the final decision is 
the result of a petition for cancellation filed on the basis of 
paragraph (2) of section 322, the prohibition under this section shall 
extend to any ground which the cancellation petitioner raised during 
the post-grant review proceeding.</DELETED>
<DELETED>``Sec. 335. Appeal</DELETED>
<DELETED>    ``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.''.</DELETED>
<DELETED>    (f) Conforming Amendment.--The table of chapters for part 
III is amended by adding at the end the following:</DELETED>

<DELETED>``32. Post-Grant Review Proceedings................     321''.
<DELETED>    (g) Regulations and Effective Date.--</DELETED>
        <DELETED>    (1) Regulations.--The Under Secretary of Commerce 
        for Intellectual Property and Director of the United States 
        Patent and Trademark Office (in this subsection referred to as 
        the ``Director'') shall, not later than the date that is 1 year 
        after the date of the enactment of this Act, issue regulations 
        to carry out chapter 32 of title 35, United States Code, as 
        added by subsection (e) of this section</DELETED>
        <DELETED>    (2) Applicability.--The amendments made by 
        subsection (e) shall take effect on the date that is 1 year 
        after the date of the enactment of this Act and shall apply to 
        patents issued before, on, or after that date, except that, in 
        the case of a patent issued before that date, a petition for 
        cancellation under section 321 of title 35, United States Code, 
        may be filed only if a circumstance described in paragraph (2), 
        (3), or (4) of section 322 of title 35, United States Code, 
        applies to the petition.</DELETED>
        <DELETED>    (3) Pending interferences.--The Director shall 
        determine the procedures under which interferences commenced 
        before the effective date under paragraph (2) are to proceed, 
        including whether any such interference is to be dismissed 
        without prejudice to the filing of a cancellation petition for 
        a post-grant opposition proceeding under chapter 32 of title 
        35, United States Code, or is to proceed as if this Act had not 
        been enacted. The Director shall include such procedures in 
        regulations issued under paragraph (1).</DELETED>

<DELETED>SEC. 7. DEFINITIONS; PATENT TRIAL AND APPEAL BOARD.</DELETED>

<DELETED>    (a) Definitions.--Section 100 (as amended by this Act) is 
further amended--</DELETED>
        <DELETED>    (1) in subsection (e), by striking ``or inter 
        partes reexamination under section 311''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
<DELETED>    ``(k) The term `cancellation petitioner' means the real 
party in interest requesting cancellation of any claim of a patent 
under chapter 31 of this title and the privies of the real party in 
interest.''.</DELETED>
<DELETED>    (b) Patent Trial and Appeal Board.--Section 6 is amended 
to read as follows:</DELETED>
<DELETED>``Sec. 6. Patent Trial and Appeal Board</DELETED>
<DELETED>    ``(a) Establishment and Composition.--There shall be in 
the Office a Patent Trial and Appeal Board. The Director, the Deputy 
Director, the Commissioner for Patents, the Commissioner for 
Trademarks, and the administrative patent judges shall constitute the 
Patent Trial and Appeal Board. The administrative patent judges shall 
be persons of competent legal knowledge and scientific ability who are 
appointed by the Director. Any reference in any Federal law, Executive 
order, rule, regulation, or delegation of authority, or any document of 
or pertaining to the Board of Patent Appeals and Interferences is 
deemed to refer to the Patent Trial and Appeal Board.</DELETED>
<DELETED>    ``(b) Duties.--The Patent Trial and Appeal Board shall--
</DELETED>
        <DELETED>    ``(1) on written appeal of an applicant, review 
        adverse decisions of examiners upon application for 
        patents;</DELETED>
        <DELETED>    ``(2) on written appeal of a patent owner, review 
        adverse decisions of examiners upon patents in reexamination 
        proceedings under chapter 30; and</DELETED>
        <DELETED>    ``(3) determine priority and patentability of 
        invention in derivation proceedings under subsection 135(a); 
        and</DELETED>
        <DELETED>    ``(4) conduct post-grant opposition proceedings 
        under chapter 32.</DELETED>
<DELETED>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.''.</DELETED>

<DELETED>SEC. 8. STUDY AND REPORT ON REEXAMINATION 
              PROCEEDINGS.</DELETED>

<DELETED>    The Under Secretary of Commerce for Intellectual Property 
and Director of the Patent and Trademark Office shall, not later than 3 
years after the date of the enactment of this Act--</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (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.</DELETED>

<DELETED>SEC. 9. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY 
              ENHANCEMENTS.</DELETED>

<DELETED>    (a) Publication.--Section 122(b)(2) is amended--</DELETED>
        <DELETED>    (1) by striking subparagraph (B); and</DELETED>
        <DELETED>    (2) in subparagraph (A)--</DELETED>
                <DELETED>    (A) by striking ``(A) An application'' and 
                inserting ``An application''; and</DELETED>
                <DELETED>    (B) by redesignating clauses (i) through 
                (iv) as subparagraphs (A) through (D), 
                respectively.</DELETED>
<DELETED>    (b) Preissuance Submissions by Third Parties.--Section 122 
is amended by adding at the end the following:</DELETED>
<DELETED>    ``(e) Preissuance Submissions by Third Parties.--
</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) the date a notice of allowance under 
                section 151 is mailed in the application for patent; 
                or</DELETED>
                <DELETED>    ``(B) either--</DELETED>
                        <DELETED>    ``(i) 6 months after the date on 
                        which the application for patent is published 
                        under section 122, or</DELETED>
                        <DELETED>    ``(ii) the date of the first 
                        rejection under section 132 of any claim by the 
                        examiner during the examination of the 
                        application for patent,</DELETED>
                <DELETED>whichever occurs later.</DELETED>
        <DELETED>    ``(2) Other requirements.--Any submission under 
        paragraph (1) shall--</DELETED>
                <DELETED>    ``(A) set forth a concise description of 
                the asserted relevance of each submitted 
                document;</DELETED>
                <DELETED>    ``(B) be accompanied by such fee as the 
                Director may prescribe; and</DELETED>
                <DELETED>    ``(C) include a statement by the submitter 
                affirming that the submission was made in compliance 
                with this section.''.</DELETED>

<DELETED>SEC. 10. VENUE AND JURISDICTION.</DELETED>

<DELETED>    (a) Venue for Patent Cases.--Section 1400 of title 28, 
United States Code, is amended by striking subsection (b) and inserting 
the following:</DELETED>
<DELETED>    ``(b) Any civil action arising under any Act of Congress 
relating to patents, other than an action for declaratory judgment or 
an action seeking review of a decision of the Patent Trial and Appeal 
Board under chapter 13 of title 35, may be brought only--</DELETED>
        <DELETED>    ``(1) in the judicial district where either party 
        resides; or</DELETED>
        <DELETED>    ``(2) in the judicial district where the defendant 
        has committed acts of infringement and has a regular and 
        established place of business.</DELETED>
<DELETED>    ``(c) Notwithstanding section 1391(c) of this title, for 
purposes of venue under subsection (b), a corporation shall be deemed 
to reside in the judicial district in which the corporation has its 
principal place of business or in the State in which the corporation is 
incorporated.''.</DELETED>
<DELETED>    (b) Interlocutory Appeals.--Subsection (c)(2) of section 
1292 of title 28, United States Code, is amended by adding at the end 
the following:</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>Application for an appeal under paragraph (3) shall be made to 
the court within 10 days after entry of the order or decree, and 
proceedings in the district court under such paragraph shall be stayed 
during pendency of the appeal.''.</DELETED>

<DELETED>SEC. 11. REGULATORY AUTHORITY.</DELETED>

<DELETED>    Section 3(a) is amended by adding at the end the 
following:</DELETED>
        <DELETED>    ``(5) Regulatory authority.--In addition to the 
        authority conferred by other provisions of this title, the 
        Director may promulgate such rules, regulations, and orders 
        that the Director determines appropriate to carry out the 
        provisions of this title or any other law applicable to the 
        United States Patent and Trademark Office or that the Director 
        determines necessary to govern the operation and organization 
        of the Office.''.</DELETED>

<DELETED>SEC. 12. TECHNICAL AMENDMENTS.</DELETED>

<DELETED>    (a) Joint Inventions.--Section 116 is amended--</DELETED>
                <DELETED>    (1) in the first paragraph, by striking 
                ``When'' and inserting ``(a) Joint Inventions.--
                When'';</DELETED>
                <DELETED>    (2) in the second paragraph, by striking 
                ``If a joint inventor'' and inserting ``(b) Omitted 
                Inventor.--If a joint inventor''; and</DELETED>
                <DELETED>    (3) in the third paragraph, by striking 
                ``Whenever'' and inserting ``(c) Correction of Errors 
                in Application.--Whenever''.</DELETED>
<DELETED>    (b) Filing of Application in Foreign Country.--Section 184 
is amended--</DELETED>
        <DELETED>    (1) in the first paragraph, by striking ``Except 
        when'' and inserting ``(a) Filing in Foreign Country.--Except 
        when'';</DELETED>
        <DELETED>    (2) in the second paragraph, by striking ``The 
        term'' and inserting ``(b) Application.--The term''; 
        and</DELETED>
        <DELETED>    (3) in the third paragraph, by striking ``The 
        scope'' and inserting ``(c) Subsequent Modifications, 
        Amendments, and Supplements.--The scope''.</DELETED>
<DELETED>    (c) Reissue of Defective Patents.--Section 251 is 
amended--</DELETED>
        <DELETED>    (1) in the first paragraph, by striking 
        ``Whenever'' and inserting ``(a) In General.--
        Whenever'';</DELETED>
        <DELETED>    (2) in the second paragraph, by striking ``The 
        Director'' and inserting ``(b) Multiple Reissued Patents.--The 
        Director'';</DELETED>
        <DELETED>    (3) in the third paragraph, by striking ``The 
        provision'' and inserting ``(c) Applicability of This Title.--
        The provisions''; and</DELETED>
        <DELETED>    (4) in the last paragraph, by striking ``No 
        reissued patent'' and inserting ``(d) Reissue Patent Enlarging 
        Scope of Claims.--No reissued patent''.</DELETED>
<DELETED>    (d) Effect of Reissue.--Section 253 is amended--</DELETED>
        <DELETED>    (1) in the first paragraph, by striking 
        ``Whenever'' and inserting ``(a) In General.--Whenever''; 
        and</DELETED>
        <DELETED>    (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),''.</DELETED>
<DELETED>    (e) Correction of Named Inventor.--Section 256 is 
amended--</DELETED>
        <DELETED>    (1) in the first paragraph, by striking 
        ``Whenever'' and inserting ``(a) Correction.--Whenever''; 
        and</DELETED>
        <DELETED>    (2) in the second paragraph, by striking ``The 
        error'' and inserting ``(b) Patent Valid if Error Corrected.--
        The error''.</DELETED>
<DELETED>    (f) Presumption of Validity.--Section 282 is amended--
</DELETED>
        <DELETED>    (1) in the first undesignated paragraph, by 
        striking ``A patent'' and inserting ``(a) In General.--A 
        patent'';</DELETED>
        <DELETED>    (2) in the second undesignated paragraph, by 
        striking ``The following'' and inserting ``(b) Defenses.--The 
        following''; and</DELETED>
        <DELETED>    (3) in the third undesignated paragraph, by 
        striking ``In actions'' and inserting ``(c) Notice of Actions; 
        Actions During Extension of Patent Term.--In 
        actions''.</DELETED>

<DELETED>SEC. 13. EFFECTIVE DATE; RULE OF CONSTRUCTION.</DELETED>

<DELETED>    (a) Effective Date.--Except as otherwise provided in this 
Act, the provisions of this Act shall take effect 12 months after the 
date of the enactment of this Act and shall apply to any patent issued 
on or after that effective date.</DELETED>
<DELETED>    (b) Continuity of Intent Under the Create Act.--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.</DELETED>

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 for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Right of the first inventor to file.
Sec. 3. Inventor's oath or declaration.
Sec. 4. Right of the inventor to obtain damages.
Sec. 5. Post-grant procedures and other quality enhancements.
Sec. 6. Definitions; patent trial and appeal board.
Sec. 7. Submissions by third parties and other quality enhancements.
Sec. 8. Venue and jurisdiction.
Sec. 9. Patent and trademark office regulatory authority.
Sec. 10. Residency of Federal Circuit judges.
Sec. 11. Applicant quality submissions.
Sec. 12. Inequitable conduct.
Sec. 13. Authority of the Director of the Patent and Trademark Office 
                            to accept late filings.
Sec. 14. Limitation on damages and other remedies with respect to 
                            patents for methods in compliance with 
                            check imaging methods.
Sec. 15. Patent and Trademark Office funding.
Sec. 16. Technical amendments.
Sec. 17. Effective date; rule of construction.

SEC. 2. RIGHT OF THE FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 of title 35, United States Code, 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 the invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any 1 of the 
individuals who invented or discovered the subject matter of a joint 
invention.
    ``(h) The `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 the 
        first paragraph of section 112.
    ``(i) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.
    ``(j) The term `joint invention' means an invention resulting from 
the collaboration of inventive endeavors of 2 or more persons working 
toward the same end and producing an invention by their collective 
efforts.''.
    (b) Conditions for Patentability.--
            (1) In general.--Section 102 of title 35, United States 
        Code, 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, or in public use, on sale, or otherwise 
        available to the public--
                    ``(A) more than 1 year before the effective filing 
                date of the claimed invention; or
                    ``(B) 1 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), after taking into 
        account the exception under paragraph (1), 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 effective filing date of the application or 
                patent set forth under subsection (a)(2); 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 2 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 1 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 of title 35, United 
        States Code, is amended to read as follows:

``102. Conditions for patentability; novelty.''.
    (c) Conditions for Patentability; Non-Obvious Subject Matter.--
Section 103 of title 35, United States Code, 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 
of title 35, United States Code, and the item relating to that section 
in the table of sections for chapter 10 of title 35, United States 
Code, are repealed.
    (e) Repeal of Statutory Invention Registration.--
            (1) In general.--Section 157 of title 35, United States 
        Code, and the item relating to that section in the table of 
        sections for chapter 14 of title 35, United States Code, are 
        repealed.
            (2) Removal of cross references.--Section 111(b)(8) of 
        title 35, United States Code, is amended by striking ``sections 
        115, 131, 135, and 157'' and inserting ``sections 131 and 
        135''.
    (f) Earlier Filing Date for Inventor and Joint Inventor.--Section 
120 of title 35, United States Code, is amended by striking ``which is 
filed by an inventor or inventors named'' and inserting ``which names 
an inventor or joint inventor''.
    (g) Conforming Amendments.--
            (1) Right of priority.--Section 172 of title 35, United 
        States Code, is amended by striking ``and the time specified in 
        section 102(d)''.
            (2) Limitation on remedies.--Section 287(c)(4) of title 35, 
        United States Code, is amended by striking ``the earliest 
        effective filing date of which is prior to'' and inserting 
        ``which has an effective filing date before''.
            (3) International application designating the united 
        states: effect.--Section 363 of title 35, United States Code, 
        is amended by striking ``except as otherwise provided in 
        section 102(e) of this title''.
            (4) Publication of international application: effect.--
        Section 374 of title 35, United States Code, is amended by 
        striking ``sections 102(e) and 154(d)'' and inserting ``section 
        154(d)''.
            (5) Patent issued on international application: effect.--
        The second sentence of section 375(a) of title 35, United 
        States Code, is amended by striking ``Subject to section 102(e) 
        of this title, such'' and inserting ``Such''.
            (6) Limit on right of priority.--Section 119(a) of title 
        35, United States Code, is amended by striking ``; but no 
        patent shall be granted'' and all that follows through ``one 
        year prior to such filing''.
            (7) Inventions made with federal assistance.--Section 
        202(c) of title 35, United States Code, is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``publication, on sale, or 
                        public use,'' and all that follows through 
                        ``obtained in the United States'' and inserting 
                        ``the 1-year period referred to in section 
                        102(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 of title 
35, United States Code, and the item relating to that section in the 
table of sections for chapter 29 of title 35, United States Code, are 
repealed.
    (i) Action for Claim to Patent on Derived Invention.--Section 
135(a) of title 35, United States Code, is amended to read as follows:
    ``(a) Dispute Over Right to Patent.--
            ``(1) Institution of derivation proceeding.--An applicant 
        may request initiation of a derivation proceeding to determine 
        the right of the applicant to a patent by filing a request 
        which sets forth with particularity the basis for finding that 
        an earlier applicant derived the claimed invention from the 
        applicant requesting the proceeding and, without authorization, 
        filed an application claiming such invention. Any such request 
        may only be made within 12 months after the date of first 
        publication of an application containing a claim that is the 
        same or is substantially the same as the claimed invention, 
        must be made under oath, and must be supported by substantial 
        evidence. Whenever the Director determines that patents or 
        applications for patent naming different individuals as the 
        inventor interfere with one another because of a dispute over 
        the right to patent under section 101, 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 Board may defer action on 
        a request to initiate a derivation proceeding until 3 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, if adverse to the claim of an 
        applicant, shall constitute the final refusal by the United 
        States 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 
        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 United States Patent and Trademark 
        Office.''.
    (j) Elimination of References to Interferences.--(1) Sections 6, 
41, 134, 141, 145, 146, 154, 305, and 314 of title 35, United States 
Code, are each amended by striking ``Board of Patent Appeals and 
Interferences'' each place it appears and inserting ``Patent Trial and 
Appeal Board''.
    (2) Sections 141, 146, and 154 of title 35, United States Code, are 
each amended--
            (A) by striking ``an interference'' each place it appears 
        and inserting ``a derivation proceeding''; and
            (B) by striking ``interference'' each additional place it 
        appears and inserting ``derivation proceeding''.
    (3) The section heading for section 134 of title 35, United States 
Code, is amended to read as follows:
``Sec. 134. Appeal to the Patent Trial and Appeal Board''.
    (4) The section heading for section 135 of title 35, United States 
Code, is amended to read as follows:
``Sec. 135. Derivation proceedings''.
    (5) The section heading for section 146 of title 35, United States 
Code, is amended to read as follows:
``Sec. 146. Civil action in case of derivation proceeding''.
    (6) Section 154(b)(1)(C) of title 35, United States Code, is 
amended by striking ``interferences'' and inserting ``derivation 
proceedings''.
    (7) The item relating to section 6 in the table of sections for 
chapter 1 of title 35, United States Code, is amended to read as 
follows:

``6. Patent Trial and Appeal Board.''.
    (8) The items relating to sections 134 and 135 in the table of 
sections for chapter 12 of title 35, United States Code, are amended to 
read as follows:

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

``146. Civil action in case of derivation proceeding.''.
    (10) Certain Appeals.--Section 1295(a)(4)(A) of title 28, United 
States Code, is amended to read as follows:
                    ``(A) the Patent Trial and Appeal Board of the 
                United States Patent and Trademark Office with respect 
                to patent applications, derivation proceedings, and 
                post-grant review proceedings, at the instance of an 
                applicant for a patent or any party to a patent 
                interference (commenced before the effective date 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;''.

SEC. 3. INVENTOR'S OATH OR DECLARATION.

    (a) Inventor's Oath or Declaration.--
            (1) In general.--Section 115 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 115. Inventor's oath or declaration
    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a), 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, an 
individual who is the inventor or a joint inventor of a claimed 
invention in an application for patent shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration under subsection 
(a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by the affiant or declarant; and
            ``(2) such individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) is permitted with respect to any individual 
        who--
                    ``(A) is unable to file the oath or declaration 
                under subsection (a) because the individual--
                            ``(i) is deceased;
                            ``(ii) is under legal incapacity; or
                            ``(iii) cannot be found or reached after 
                        diligent effort; or
                    ``(B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--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 under section 120 or 365(c) of the filing of an 
earlier-filed application, 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, the Director shall establish 
        regulations under which such additional statements may be 
        filed.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration 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 pursuant to this section shall contain an acknowledgment that any 
willful false statement made in such declaration or statement is 
punishable under section 1001 of title 18 by fine or imprisonment of 
not more than 5 years, or both.''.
            (2) Relationship to divisional applications.--Section 121 
        of title 35, United States Code, is amended by striking ``If a 
        divisional application'' and all that follows through 
        ``inventor.''.
            (3) Requirements for nonprovisional applications.--Section 
        111(a) of title 35, United States Code, is amended--
                    (A) in paragraph (2)(C), by striking ``by the 
                applicant'' and inserting ``or declaration'';
                    (B) in the heading for paragraph (3), by 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 10 of title 35, United 
        States Code, is amended to read as follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--Section 118 of title 35, United 
States Code, is amended to read as follows:
``Sec. 118. Filing by other than inventor
    ``A person to whom the inventor has assigned or is under an 
obligation to assign the invention may make an application for patent. 
A person who otherwise shows sufficient proprietary interest in the 
matter may make an application for patent on behalf of and as agent for 
the inventor on proof of the pertinent facts and a showing that such 
action is appropriate to preserve the rights of the parties. If the 
Director grants a patent on an application filed under this section by 
a person other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as the 
Director considers to be sufficient.''.
    (c) Specification.--Section 112 of title 35, United States Code, 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 specifications'' and 
                inserting ``(b) Conclusion.--The specifications''; 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''.

SEC. 4. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES.

    (a) Damages.--Section 284 of title 35, United States Code, is 
amended to read as follows:
``Sec. 284. Damages
    ``(a) In General.--Upon finding for the claimant the court shall 
award the claimant damages adequate to compensate for the infringement 
but in no event less than a reasonable royalty for the use made of the 
invention by the infringer, together with interest and costs as fixed 
by the court, subject to the provisions of this section.
    ``(b) Determination of Damages; Evidence Considered; Procedure.--
The court may receive expert testimony as an aid to the determination 
of damages or of what royalty would be reasonable under the 
circumstances. The admissibility of such testimony shall be governed by 
the rules of evidence governing expert testimony. When the damages are 
not found by a jury, the court shall assess them.
    ``(c) Standard for Calculating Reasonable Royalty.--
            ``(1) In general.--The court shall determine, based on the 
        facts of the case and after adducing any further evidence the 
        court deems necessary, which of the following methods shall be 
        used by the court or the jury in calculating a reasonable 
        royalty pursuant to subsection (a). The court shall also 
        identify the factors that are relevant to the determination of 
        a reasonable royalty, and the court or jury, as the case may 
        be, shall consider only those factors in making such 
        determination.
                    ``(A) Entire market value.--Upon a showing to the 
                satisfaction of the court that the claimed invention'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 that infringing product or 
                process.
                    ``(B) Established royalty based on marketplace 
                licensing.--Upon a showing to the satisfaction of the 
                court that the claimed invention has been the subject 
                of a nonexclusive license for the use made of the 
                invention by the infringer, to a number of persons 
                sufficient to indicate a general marketplace 
                recognition of the reasonableness of the licensing 
                terms, if the license was secured prior to the filing 
                of the case before the court, and the court determines 
                that the infringer's use is of substantially the same 
                scope, volume, and benefit of the rights granted under 
                such license, damages may be determined on the basis of 
                the terms of such license. Upon a showing to the 
                satisfaction of the court that the claimed invention 
                has sufficiently similar noninfringing substitutes in 
                the relevant market, which have themselves been the 
                subject of such nonexclusive licenses, and the court 
                determines that the infringer's use is of substantially 
                the same scope, volume, and benefit of the rights 
                granted under such licenses, damages may be determined 
                on the basis of the terms of such licenses.
                    ``(C) Valuation calculation.--Upon a determination 
                by the court that the showings required under 
                subparagraphs (A) and (B) have not been made, the court 
                shall conduct an analysis to ensure that a reasonable 
                royalty is applied only to the portion of the economic 
                value of the infringing product or process properly 
                attributable to the claimed invention's specific 
                contribution over the prior art. In the case of a 
                combination invention whose elements are present 
                individually in the prior art, 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 as part of the combination, if the patentee 
                demonstrates that value.
            ``(2) Additional factors.--Where the court determines it to 
        be appropriate in determining a reasonable royalty under 
        paragraph (1), the court may also consider, or direct the jury 
        to consider, any other relevant factors under applicable law.
    ``(d) Inapplicability to Other Damages Analysis.--The methods for 
calculating a reasonable royalty described in subsection (c) shall have 
no application to the calculation of an award of damages that does not 
necessitate the determination of a reasonable royalty as a basis for 
monetary relief sought by the claimant
    ``(e) Willful Infringement .--
            ``(1) Increased damages.--A court that has determined that 
        an infringer has willfully infringed a patent or patents may 
        increase damages up to 3 times the amount of the 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 1 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 
                which resulted in a separate finding of infringement of 
                the same patent.
            ``(3) Limitations on willfulness.--
                    ``(A) In general.--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) Good faith established.--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) Relevance of not presenting certain 
                evidence.--The decision of the infringer not to present 
                evidence of advice of counsel is not relevant to a 
                determination of willful infringement under paragraph 
                (2).
            ``(4) Limitation on pleading.--Before the date on which a 
        court determines that the patent in suit is not invalid, is 
        enforceable, and has been infringed by the infringer, a 
        patentee may not plead and a court may not determine that an 
        infringer has willfully infringed a patent. The court's 
        determination of an infringer's willfulness shall be made 
        without a jury.''.
    (b) Report to Congressional Committees.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Director shall report to the 
        Committee on the Judiciary of the Senate and the Committee on 
        the Judiciary of the House of Representatives, the findings and 
        recommendations of the Director on the operation of prior user 
        rights in selected countries in the industrialized world. The 
        report shall include the following:
                    (A) A comparison between patent laws of the United 
                States and the laws of other industrialized countries, 
                including the European Union, Japan, Canada, and 
                Australia.
                    (B) An analysis of the effect of prior user rights 
                on innovation rates in the selected countries.
                    (C) An analysis of the correlation, if any, between 
                prior user rights and start-up enterprises and the 
                ability to attract venture capital to start new 
                companies.
                    (D) An analysis of the effect of prior user rights, 
                if any, on small businesses, universities, and 
                individual inventors.
                    (E) An analysis of legal and constitutional issues, 
                if any, that arise from placing trade secret law in 
                patent law.
            (2) Consultation with other agencies.--In preparing the 
        report required under paragraph (1), the Director shall consult 
        with the Secretary of State and the Attorney General.
    (c) Limitation on Damages and Other Remedies; Marking and Notice.--
Section 287(a) of title 35, United States Code, is amended to read as 
follows:
    ``(a)(1) Patentees, and persons making, offering for sale, or 
selling within the United States any patented article for or under 
them, or importing any patented article into the United States, may 
give notice to the public that the same is patented, either by fixing 
thereon the word `patent' or the abbreviation `pat.', together with the 
number of the patent, or when, from the character of the article, this 
cannot be done, by fixing to it, or to the package wherein 1 or more of 
them is contained, a label containing a like notice. In the event of 
failure so to mark, no damages shall be recovered by the patentee in 
any action for infringement, except on proof that the infringer was 
notified of the infringement and continued to infringe thereafter, in 
which event damages may be recovered only for infringement occurring 
after such notice. Filing of an action for infringement shall 
constitute such notice.
    ``(2) In the case of a patented invention not covered under 
paragraph (1), no recovery shall be had for any infringement committed 
more than 2 years prior to the filing of the complaint or counterclaim 
for infringement in the action, except upon proof that the infringer 
was notified of the infringement by the patentee. Upon such proof, the 
patentee may recover damages for infringement for up to 2 years prior 
to such notice, as well as for infringement after such notice. In no 
event may damages be recovered for more than 6 years prior to the 
filing of the complaint or counterclaim for infringement in the 
action.''.
    (d) Defense to Infringement Based on Earlier Inventor.--Section 
273(b)(6) of title 35, United States Code, is amended to read as 
follows:
            ``(6) Personal defense.--The defense under this section may 
        be asserted only by the person who performed or caused the 
        performance of the acts necessary to establish the defense as 
        well as any other entity that controls, is controlled by, or is 
        under common control with such person and, except for any 
        transfer to the patent owner, the right to assert the defense 
        shall not be licensed or assigned or transferred to another 
        person except as an ancillary and subordinate part of a good 
        faith assignment or transfer for other reasons of the entire 
        enterprise or line of business to which the defense relates. 
        Notwithstanding the preceding sentence, any person may, on its 
        own behalf, assert a defense based on the exhaustion of rights 
        provided under paragraph (3), including any necessary elements 
        thereof.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to any civil action commenced on or after the date of enactment 
of this Act.

SEC. 5. POST-GRANT PROCEDURES AND OTHER QUALITY ENHANCEMENTS.

    (a) Reexamination.--Section 303(a) of title 35, United States Code, 
is amended to read as follows:
    ``(a) Within 3 months after the owner of a patent files a request 
for reexamination under section 302, the Director shall determine 
whether a substantial new question of patentability affecting any claim 
of the patent concerned is raised by the request, with or without 
consideration of other patents or printed publications. On the 
Director's own initiative, and at any time, the Director may determine 
whether a substantial new question of patentability is raised by 
patents and publications discovered by the Director, is cited under 
section 301, or is cited by any person other than the owner of the 
patent under section 302 or section 311. The existence of a substantial 
new question of patentability is not precluded by the fact that a 
patent or printed publication was previously cited by or to the Office 
or considered by the Office.''.
    (b) Repeal of Optional Inter Partes Reexamination Procedures.--
            (1) In general.--Sections 311, 312, 313, 314, 315, 316, 
        317, and 318 of title 35, United States Code, and the items 
        relating to those sections in the table of sections, are 
        repealed.
            (2) Effective date.--Notwithstanding paragraph (1), the 
        provisions of sections 311, 312, 313, 314, 315, 316, 317, and 
        318 of title 35, United States Code, shall continue to apply to 
        any inter partes reexamination determination request filed on 
        or before the date of enactment of this Act.
    (c) Post-Grant Opposition Procedures.--
            (1) In general.--Part III of title 35, United States Code, 
        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. Publication and public availability of petition.
``325. Prohibited filings.
``326. Submission of additional information.
``327. Institution of post-grant review proceedings.
``328. Consolidation of proceedings and joinder.
``329. Conduct of post-grant review proceedings.
``330. Patent owner response.
``331. Proof and evidentiary standards.
``332. Amendment of the patent.
``333. Settlement.
``334. Decision of the board.
``335. Effect of decision.
``336. Relationship to other pending proceedings.
``337. Effect of decisions rendered in civil action on future post-
                            grant review proceedings.
``338. Effect of final decision on future proceedings.
``339. Appeal.
``Sec. 321. Petition for post-grant review
    ``Subject to sections 322, 324, 332, and 333 of this chapter, a 
person who is not the patent owner may file with the Office a petition 
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, considering the 
aggregate costs of the post-grant review proceeding and the status of 
the petitioner.
``Sec. 322. Timing and bases of petition
    ``A post-grant proceeding may be instituted under this chapter 
pursuant to a petition filed under section 321 only if--
            ``(1) the petition is filed not later than 12 months after 
        the grant of the patent or issuance of a reissue patent, as the 
        case may be;
            ``(2)(A) the petitioner establishes in the petition a 
        substantial reason to believe that the continued existence of 
        the challenged claim in the petition causes or is likely to 
        cause the petitioner significant economic harm; and
            ``(B) the petitioner files a petition not later than 12 
        months after receiving notice, explicitly or implicitly, that 
        the patent holder alleges infringement; or
            ``(3) the patent owner consents in writing to the 
        proceeding.
``Sec. 323. Requirements of petition
    ``A petition filed under section 321 may be considered only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 321;
            ``(2) the petition identifies any real parties in interest;
            ``(3) the petition identifies, in writing and with 
        particularity, each claim challenged, the grounds on which the 
        challenge to each claim is based, and the evidence that 
        supports the grounds for each challenged claim, including--
                    ``(A) copies of patents and printed publications 
                that the petitioner relies upon in support of the 
                petition; and
                    ``(B) affidavits or declarations of supporting 
                evidence and opinions, if the petitioner relies on 
                other factual evidence or on expert opinions;
            ``(4) the petition provides such information as the 
        Director may require by regulation; and
            ``(5) the petitioner provides copies of any of the 
        documents required under paragraphs (3) and (4) to the patent 
        owner or, if applicable, the designated representative of the 
        patent owner.
``Sec. 324. Publication and public availability of petition
    ``(a) In General.--As soon as practicable after the receipt of a 
petition under section 321, the Director shall--
            ``(1) publish the petition in the Federal Register; and
            ``(2) make that petition available on the website of the 
        United States Patent and Trademark Office.
    ``(b) Public Availability.--The file of any proceeding under this 
chapter shall be made available to the public except that any petition 
or document filed with the intent to be sealed shall be accompanied by 
a motion to seal. Such petition or document shall be treated as sealed, 
pending the outcome of the ruling on the motion. Failure to file a 
motion to seal will result in the pleading being placed in the public 
record.
``Sec. 325. Prohibited filings
    ``(a) In General.--A post-grant review proceeding may not be 
instituted under paragraph (1), (2), or (3) of section 322 if the 
petition requesting the proceeding identifies the same petitioner or 
real party in interest and the same patent as a previous petition filed 
under any paragraph of section 322.
    ``(b) Previously Filed Civil Actions.--A post-grant review 
proceeding may not be instituted or maintained under paragraph (1) or 
(2) of section 322 if the petitioner or real party in interest has 
instituted a civil action challenging the validity of a claim of the 
patent.
``Sec. 326. Submission of additional information
    ``A petitioner under this chapter shall file such additional 
information with respect to the petition as the Director may require by 
regulation.
``Sec. 327. Institution of post-grant review proceedings
    ``(a) In General.--The Director may not authorize a post-grant 
review proceeding to commence unless the Director determines that the 
information presented in the petition raises a substantial new question 
of patentability for at least 1 of the challenged claims. The Director 
shall determine whether to authorize a post-grant proceeding within 90 
days after receiving a petition.
    ``(b) Notification.--The Director shall notify the petitioner and 
patent owner, in writing, of the Director's determination under 
subsection (a). The Director shall publish each notice of institution 
of a post-grant review proceeding in the Federal Register and make such 
notice available on the website of the United States Patent and 
Trademark Office. Such notice shall list the date on which the 
proceeding shall commence.
    ``(c) Determination Not Appealable.--The determination by the 
Director regarding whether to authorize a post-grant review proceeding 
under subsection (a) shall not be appealable.
    ``(d) Assignment of the Proceeding to a Panel.--Upon a 
determination of the Director to commence a post-grant review 
proceeding, the Director shall assign the proceeding to a panel of 3 
administrative patent judges from the Patent Trial and Appeal Board.
``Sec. 328. Consolidation of proceedings and joinder
    ``(a) Consolidation of Post-Grant Proceedings.--If more than 1 
petition is submitted under section 322(1) against the same patent and 
the Director determines that each raises a substantial new question of 
patentability warranting the commencement of a post-grant review 
proceeding under section 327, the Director may consolidate such 
proceedings into a single post-grant review proceeding.
    ``(b) Joinder.--If the Director commences a post-grant review 
proceeding on the basis of a petition filed under section 322(2), any 
person who files in compliance with section 322(2)(A) a petition that 
the Director finds sufficient to proceed under section 327 may be 
joined at the discretion of the Director, and such person shall 
participate in such post-grant review proceeding.
``Sec. 329. Conduct of post-grant review proceedings
    ``(a) In General.--The Director shall prescribe regulations--
            ``(1) in accordance with section 2(b)(2), establishing and 
        governing post-grant review proceedings under this chapter and 
        their relationship to other proceedings under this title;
            ``(2) for setting forth the standards for showings of 
        substantial reason to believe and significant economic harm 
        under section 322(2) and substantial new question of 
        patentability under section 327(a);
            ``(3) providing for the publication in the Federal Register 
        all requests for the institution of post-grant proceedings;
            ``(4) establishing procedures for the submission of 
        supplemental information after the petition is filed; and
            ``(5) 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.
    ``(b) Post-Grant Review Regulations.--Regulations under subsection 
(a)(1) shall--
            ``(1) require that the final determination in a post-grant 
        review proceeding issue not later than 1 year after the date on 
        which the Director notices the institution of a post-grant 
        proceeding under this chapter, except that, for good cause 
        shown, the Director may extend the 1-year period by not more 
        than 6 months;
            ``(2) provide for discovery upon order of the Director, as 
        required in the interests of justice;
            ``(3) 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;
            ``(4) provide for protective orders governing the exchange 
        and submission of confidential information; and
            ``(5) ensure that any information submitted by the patent 
        owner in support of any amendment entered under section 332 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 proceeding 
authorized by the Director.
``Sec. 330. Patent owner response
    ``After a post-grant review 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 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. 331. Proof and evidentiary standards
    ``(a) In General.--The presumption of validity set forth in section 
282 of this title shall not apply to challenges brought under section 
322(1) but shall apply in a challenge brought under paragraph (2) or 
(3) of section 322 to any patent claim under this chapter.
    ``(b) Burden of Proof.--The petitioner under section 322(1) shall 
have the burden of proving a proposition of invalidity by a 
preponderance of the evidence. For petitions filed under paragraphs (2) 
or (3) of section 322, the existence, authentication, availability, and 
scope of any evidence offered to establish invalidity shall be 
established by clear and convincing evidence. If such predicate facts 
are so established, invalidity shall be proven only if the persuasive 
force of such facts demonstrates invalidity by a preponderance of the 
evidence.
``Sec. 332. Amendment of the patent
    ``(a) In General.--During a post-grant review proceeding, the 
patent owner may file 1 motion to amend the patent in 1 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. 333. Settlement
    ``(a) In General.--A post-grant review proceeding under this 
chapter shall be terminated with respect to any petitioner upon the 
joint request of the petitioner and the patent owner, unless the Office 
has decided the matter before the request for termination is filed. If 
the post-grant review proceeding is terminated with respect to a 
petitioner under this section, no estoppel under this chapter shall 
apply to that petitioner. If no petitioner remains in the post-grant 
review proceeding, the Office shall terminate the post-grant review 
proceeding.
    ``(b) Agreements in Writing.--Any agreement or understanding 
between the patent owner and a petitioner, including any collateral 
agreements referred to in such agreement or understanding, made in 
connection with, or in contemplation of, the termination of a post-
grant review proceeding under this section shall be in writing and a 
true copy of such agreement or understanding shall be filed in the 
United States Patent and Trademark Office before the termination of the 
post-grant review proceeding as between the parties to the agreement or 
understanding. If any party filing such agreement or understanding so 
requests, the copy shall be kept separate from the file of the post-
grant review proceeding, and made available only to Federal Government 
agencies upon written request, or to any other person on a showing of 
good cause.
``Sec. 334. Decision of the board
    ``If the post-grant review proceeding is instituted and not 
dismissed under this chapter, the Patent Trial and Appeal Board shall 
issue a final written decision with respect to the patentability of any 
patent claim challenged and any new claim added under section 332.
``Sec. 335. Effect of decision
    ``If the Patent Trial and Appeal Board issues a final decision 
under section 334 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.
``Sec. 336. Relationship to other pending proceedings
    ``Notwithstanding section 135(a), 251, and 252, and chapter 30, the 
Director may determine the manner in which any ex parte reexamination 
proceeding, reissue proceeding, interference proceeding (commenced 
before the effective date 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.
``Sec. 337. Effect of decisions rendered in civil action on future 
              post-grant review proceedings
    ``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--
            ``(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 section 322; and
            ``(2) the Director may not thereafter maintain a post-grant 
        review proceeding previously requested by that party or the 
        real parties in interest of that party.
``Sec. 338. Effect of final decision on future proceedings
    ``(a) In General.--If a final decision under section 334 is 
favorable to the patentability of any original or new claim of the 
patent challenged by the petitioner, the petitioner may not thereafter, 
based on any ground which the petitioner raised during the post-grant 
review proceeding--
            ``(1) request or pursue a derivation proceeding with 
        respect to such claim; or
            ``(2) assert the invalidity of any such claim in any civil 
        action arising in whole or in part under section 1338 of title 
        28.
    ``(b) Extension of Prohibition.--If the final decision is the 
result of a petition filed on the basis of section 322(2), the 
prohibition under this section shall extend to any ground which the 
petitioner raised during the post-grant review proceeding.
``Sec. 339. 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.''.
    (d) Technical and Conforming Amendment.--The table of chapters for 
part III of title 35, United States Code, is amended by adding at the 
end the following:

``32. Post-Grant Review Proceedings.........................     321''.
    (e) Regulations and Effective Date.--
            (1) Regulations.--The Under Secretary of Commerce for 
        Intellectual Property and the 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 (c) of this section.
            (2) Applicability.--The amendments made by subsection (c) 
        shall take effect on the date that is 1 year after the date of 
        the enactment of this Act and shall apply to patents issued on 
        or after that date, except that, in the case of a patent issued 
        before the effective date of this Act on an application filed 
        between November 29, 1999 and the effective date of this Act, a 
        petition for post-grant review under section 321 of title 35, 
        United States Code, may only be filed under paragraph (2) or 
        (3) of section 322 of title 35, United States Code.
            (3) Pending interferences.--The Director shall determine 
        the procedures under which interferences commenced before the 
        effective date under paragraph (2) are to proceed, including 
        whether any such interference is to be dismissed without 
        prejudice to the filing of a petition for a post-grant review 
        proceeding under chapter 32 of title 35, United States Code, or 
        is to proceed as if this Act had not been enacted. The Director 
        shall include such procedures in regulations issued under 
        paragraph (1).

SEC. 6. DEFINITIONS; PATENT TRIAL AND APPEAL BOARD.

    (a) Definitions.--Section 100 of title 35, United States Code, (as 
amended by section 2 of this Act) is further amended--
            (1) in subsection (e), by striking ``or inter partes 
        reexamination under section 311''; and
            (2) 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 
31 of this title and the privies of the real party in interest.''.
    (b) Patent Trial and Appeal Board.--Section 6 of title 35, United 
States Code, is amended to read as follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) Establishment and Composition.--There shall be in the Office 
a Patent Trial and Appeal Board. The Director, the Deputy Director, the 
Commissioner for Patents, the Commissioner for Trademarks, and the 
administrative patent judges shall constitute the Patent Trial and 
Appeal Board. The administrative patent judges shall be persons of 
competent legal knowledge and scientific ability who are appointed by 
the Director. Any reference in any Federal law, Executive order, rule, 
regulation, or delegation of authority, or any document of or 
pertaining to the Board of Patent Appeals and Interferences is deemed 
to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon application for patents;
            ``(2) on written appeal of a patent owner, review adverse 
        decisions of examiners upon patents in reexamination 
        proceedings under chapter 30;
            ``(3) determine priority and patentability of invention in 
        derivation proceedings under subsection 135(a); and
            ``(4) conduct post-grant opposition proceedings under 
        chapter 32.
Each appeal and derivation proceeding shall be heard by at least 3 
members of the Patent Trial and Appeal Board, who shall be designated 
by the Director. Only the Patent Trial and Appeal Board may grant 
rehearings. The Director shall assign each post-grant review proceeding 
to a panel of 3 administrative patent judges. Once assigned, each such 
panel of administrative patent judges shall have the responsibilities 
under chapter 32 in connection with post-grant review proceedings.''.

SEC. 7. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY ENHANCEMENTS.

    (a) Publication.--Section 122(b)(2) of title 35, United States 
Code, is amended--
            (1) by striking subparagraph (B); and
            (2) in subparagraph (A)--
                    (A) by striking ``(A) An application'' and 
                inserting ``An application''; and
                    (B) by redesignating clauses (i) through (iv) as 
                subparagraphs (A) through (D), respectively.
    (b) Preissuance Submissions by Third Parties.--Section 122 of title 
35, United States Code, is amended by adding at the end the following:
    ``(e) Preissuance Submissions by Third Parties.--
            ``(1) In general.--Any person may submit for consideration 
        and inclusion in the record of a patent application, any 
        patent, published patent application, or other publication of 
        potential relevance to the examination of the application, if 
        such submission is made in writing before the earlier of--
                    ``(A) the date a notice of allowance under section 
                151 is mailed in the application for patent; or
                    ``(B) either--
                            ``(i) 6 months after the date on which the 
                        application for patent is published under 
                        section 122, or
                            ``(ii) the date of the first rejection 
                        under section 132 of any claim by the examiner 
                        during the examination of the application for 
                        patent,
                whichever occurs later.
            ``(2) Other requirements.--Any submission under paragraph 
        (1) shall--
                    ``(A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    ``(B) be accompanied by such fee as the Director 
                may prescribe; and
                    ``(C) include a statement by the person making such 
                submission affirming that the submission was made in 
                compliance with this section.''.

SEC. 8. VENUE AND JURISDICTION.

    (a) Venue for Patent Cases.--Section 1400 of title 28, United 
States Code, is amended by striking subsection (b) and inserting the 
following:
    ``(b) Notwithstanding section 1391 of this title, in any civil 
action arising under any Act of Congress relating to patents, a party 
shall not manufacture venue by assignment, incorporation, or otherwise 
to invoke the venue of a specific district court.
    ``(c) Notwithstanding section 1391 of this title, any civil action 
for patent infringement or any action for declaratory judgment may be 
brought only in a judicial district--
            ``(1) where the defendant has its principal place of 
        business or in the location or place in which the defendant is 
        incorporated or formed, 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 or formed;
            ``(2) where the defendant has committed substantial acts of 
        infringement and has a regular and established physical 
        facility that the defendant controls and that constitutes a 
        substantial portion of the operations of the defendant;
            ``(3) where the primary plaintiff resides, if the primary 
        plaintiff in the action is--
                    ``(A) an institution of higher education as defined 
                under section 101(a) of the Higher Education Act of 
                1965 (20 U.S.C. 1001(a)); or
                    ``(B) a nonprofit organization that--
                            ``(i) qualifies for treatment under section 
                        501(c)(3) of the Internal Revenue Code (26 
                        U.S.C. 501(c)(3));
                            ``(ii) is exempt from taxation under 
                        section 501(a) of such Code; and
                            ``(iii) serves 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)); or
            ``(4) where the plaintiff resides, if the sole plaintiff in 
        the action is an individual inventor who is a natural person 
        and who qualifies at the time such action is filed as a micro-
        entity pursuant to section 123 of title 35.
    ``(d) If a plaintiff brings a civil action for patent infringement 
or declaratory judgment relief under subsection (c), then the defendant 
may request the district court to transfer that action to another 
district or division where, in the court's determination--
            ``(1) any of the parties has substantial evidence or 
        witnesses that otherwise would present considerable evidentiary 
        burdens to the defendant if such transfer were not granted;
            ``(2) such transfer would not cause undue hardship to the 
        plaintiff; and
            ``(3) venue would be otherwise appropriate under section 
        1391 of this title.''.
    (b) Interlocutory Appeals.--Subsection (c)(2) of section 1292 of 
title 28, United States Code, is amended 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 the pendency of such appeal.''.
    (c) Technical Amendments Relating to Venue.--Sections 32, 145, 146, 
154(b)(4)(A), and 293 of title 35, United States Code, and section 
1071(b)(4) of an Act to provide for the registration and protection of 
trademarks used in commerce, to carry out the provisions of certain 
international conventions, and for other purposes, approved July 5, 
1946 (15 U.S.C. 1051 et seq.) (commonly referred to as the Trademark 
Act of 1946 or the Lanham Act) are each amended by striking ``United 
States District Court for the District of Columbia'' each place that 
term appears and inserting ``United States District Court for the 
Eastern District of Virginia''.

SEC. 9. PATENT AND TRADEMARK OFFICE REGULATORY AUTHORITY.

    (a) Fee Setting.--
            (1) In general.--The Director shall have authority to set 
        or adjust by rule any fee established or charged by the Office 
        under sections 41 and 376 of title 35, United States Code or 
        under section 31 of the Trademark Act of 1946 (15 U.S.C. 1113) 
        for the filing or processing of any submission to, and for all 
        other services performed by or materials furnished by, the 
        Office, provided that such fee amounts are set to reasonably 
        compensate the Office for the services performed.
            (2) Reduction of fees in certain fiscal years.--In any 
        fiscal year, the Director--
                    (A) shall consult with the Patent Public Advisory 
                Committee and the Trademark Public Advisory Committee 
                on the advisability of reducing any fees described in 
                paragraph (1); and
                    (B) after that consultation may reduce such fees.
            (3) Role of the public advisory committee.--The Director 
        shall--
                    (A) submit to the Patent or Trademark Public 
                Advisory Committee, or both, as appropriate, any 
                proposed fee under paragraph (1) not less than 45 days 
                before publishing any proposed fee in the Federal 
                Register;
                    (B) provide the relevant advisory committee 
                described in subparagraph (A) a 30-day period following 
                the submission of any proposed fee, on which to 
                deliberate, consider, and comment on such proposal, and 
                require that--
                            (i) during such 30-day period, the relevant 
                        advisory committee hold a public hearing 
                        related to such proposal; and
                            (ii) the Director shall assist the relevant 
                        advisory committee in carrying out such public 
                        hearing, including by offering the use of 
                        Office resources to notify and promote the 
                        hearing to the public and interested 
                        stakeholders;
                    (C) require the relevant advisory committee to make 
                available to the public a written report detailing the 
                comments, advice, and recommendations of the committee 
                regarding any proposed fee;
                    (D) consider and analyze any comments, advice, or 
                recommendations received from the relevant advisory 
                committee before setting or adjusting any fee; and
                    (E) notify, through the Chair and Ranking Member of 
                the Senate and House Judiciary Committees, the Congress 
                of any final decision regarding proposed fees.
            (4) Publication in the federal register.--
                    (A) In general.--Any rules prescribed under this 
                subsection shall be published in the Federal Register.
                    (B) Rationale.--Any proposal for a change in fees 
                under this section shall--
                            (i) be published in the Federal Register; 
                        and
                            (ii) include, in such publication, the 
                        specific rationale and purpose for the 
                        proposal, including the possible expectations 
                        or benefits resulting from the proposed change.
                    (C) Public comment period.--Following the 
                publication of any proposed fee in the Federal Register 
                pursuant to subparagraph (A), the Director shall seek 
                public comment for a period of not less than 45 days.
            (5) Congressional comment period.--Following the 
        notification described in paragraph (3)(E), Congress shall have 
        not more than 45 days to consider and comment on any proposed 
        fee under paragraph (1). No proposed fee shall be effective 
        prior to the end of such 45-day comment period.
            (6) Rule of construction.--No rules prescribed under this 
        subsection may diminish--
                    (A) an applicant's rights under this title or the 
                Trademark Act of 1946; or
                    (B) any rights under a ratified treaty.
    (b) Fees for Patent Services.--Division B of Public Law 108-447 is 
amended in title VIII of the Departments of Commerce, Justice and 
State, the Judiciary, and Related Agencies Appropriations Act, 2005, in 
section 801(a) by striking ``During fiscal years 2005, 2006 and 2007'', 
and inserting ``Until such time as the Director sets or adjusts the 
fees otherwise,''.
    (c) Adjustment of Trademark Fees.--Division B of Public Law 108-447 
is amended in title VIII of the Departments of Commerce, Justice and 
State, the Judiciary and Related Agencies Appropriations Act, 2005, in 
section 802(a) by striking ``During fiscal years 2005, 2006 and 2007'', 
and inserting ``Until such time as the Director sets or adjusts the 
fees otherwise,''.
    (d) Effective Date, Applicability, and Transitional Provision.--
Division B of Public Law 108-447 is amended in title VIII of the 
Departments of Commerce, Justice and State, the Judiciary and Related 
Agencies Appropriations Act, 2005, in section 803(a) by striking ``and 
shall apply only with respect to the remaining portion of fiscal year 
2005, 2006 and 2007.''.
    (e) Rule of Construction.--Nothing in this section shall be 
construed to affect any other provision of Division B of Public Law 
108-447, including section 801(c) of title VII of the Departments of 
Commerce, Justice and State, the Judiciary and Related Agencies 
Appropriations Act, 2005.
    (f) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the United States Patent and Trademark Office.
            (2) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (3) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means an Act entitled ``Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out the provisions of certain international conventions, 
        and for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 
        et seq.) (commonly referred to as the Trademark Act of 1946 or 
        the Lanham Act).

SEC. 10. RESIDENCY OF FEDERAL CIRCUIT JUDGES.

    The second sentence of section 44(c) of title 28, United States 
Code, is repealed.

SEC. 11. APPLICANT QUALITY SUBMISSIONS.

    Chapter 11 of title 35, United States Code, is amended by adding at 
the end the following new section:
``Sec. 123. Additional information; micro-entity exception
    ``(a) In General.--The Director shall, by regulation, require that 
an applicant for a patent under this title submit to the Director--
            ``(1) a search report and analysis relevant to 
        patentability; and
            ``(2) any other information relevant to patentability that 
        the Director, in his discretion, determines necessary.
    ``(b) Failure To Comply.--If an applicant fails to submit the 
search report, analysis, or information required under subsection (a) 
in the manner and within the time period prescribed by the Director, 
such application shall be regarded as abandoned.
    ``(c) Exception.--Any application for a patent submitted by a 
micro-entity shall not be subject to the requirements of this section.
    ``(d) Micro-Entity Defined.--
            ``(1) In general.--For purposes of this section, the term 
        `micro-entity' means an applicant who makes a certification 
        under either paragraph (2) or (3).
            ``(2) Unassigned application.--For an unassigned 
        application, each applicant shall certify that the applicant--
                    ``(A) qualifies as a small entity, as defined in 
                regulations issued by the Director;
                    ``(B) has not been named on 5 or more previously 
                filed patent applications;
                    ``(C) 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 particular application; and
                    ``(D) does not have a gross income, as defined in 
                section 61(a) of the Internal Revenue Code (26 U.S.C. 
                61(a)), exceeding 2.5 times the average gross income, 
                as reported by the Department of Labor, in the calendar 
                year immediately preceding the calendar year in which 
                the examination fee is being paid.
            ``(3) Assigned application.--For an assigned application, 
        each applicant shall certify that the applicant--
                    ``(A) qualifies as a small entity, as defined in 
                regulations issued by the Director, and meets the 
                requirements of paragraph (2)(D);
                    ``(B) has not been named on 5 or more previously 
                filed patent applications; and
                    ``(C) has assigned, granted, conveyed, or is under 
                an obligation by contract or law to assign, grant, or 
                convey, a license or other ownership interest in the 
                particular application to an entity that has 5 or fewer 
                employees and that such entity has a gross income, as 
                defined in section 61(a) of the Internal Revenue Code 
                (26 U.S.C. 61(a)), that does not exceed 2.5 times the 
                average gross income, as reported by the Department of 
                Labor, in the calendar year immediately preceding the 
                calendar year in which the examination fee is being 
                paid.
            ``(4) Income level adjustment.--The gross income levels 
        established under paragraphs (2) and (3) shall be adjusted by 
        the Director on October 1, 2009, and every year thereafter, to 
        reflect any fluctuations occurring during the previous 12 
        months in the Consumer Price Index, as determined by the 
        Secretary of Labor.''.

SEC. 12. INEQUITABLE CONDUCT.

    Chapter 29 of title 35, United States Code, is amended by adding at 
the end the following new section:
``Sec. 298. Inequitable conduct
    ``(a) In General.--A party advancing the proposition that a patent 
should be cancelled or held unenforceable due to inequitable conduct in 
connection with a matter or proceeding before the United States Patent 
and Trademark Office shall prove independently by clear and convincing 
evidence that material information was misrepresented or omitted from 
the patent application of such patent with the intention of deceiving 
the Office.
    ``(b) Materiality.--Information shall be considered material for 
purposes of subsection (a) if--
            ``(1) a reasonable patent examiner would consider such 
        information important in deciding whether to allow the patent 
        application; and
            ``(2) such information is not cumulative to information 
        already of record in the application.
    ``(c) Intent.--Intent to deceive the Office may be inferred under 
subsection (a), but the inference may not be based solely on the gross 
negligence of the patent owner or its representative, or on the 
materiality of the information misrepresented or not disclosed.
    ``(d) Pleading.--In actions involving allegations of inequitable 
conduct before the Office, the party asserting the defense or claim 
shall comply with the pleading requirements set forth under Federal 
Rules of Civil Procedure 9(b).
    ``(e) Remedies.--If the court finds both that material information 
was misrepresented to, or withheld from, the Office and an intent to 
deceive, after balancing the equities, the court, using its discretion, 
shall impose 1 or more of the following remedies as it deems 
appropriate:
            ``(1) Hold the patent unenforceable.
            ``(2) Hold 1 or more claims of the patent unenforceable.
            ``(3) Order that the patentee is not entitled to equitable 
        relief and that the sole and exclusive remedy for infringement 
        of the patent shall be a reasonable royalty.''.

SEC. 13. AUTHORITY OF THE DIRECTOR OF THE PATENT AND TRADEMARK OFFICE 
              TO ACCEPT LATE FILINGS.

    (a) Authority.--Section 2 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(e) Discretion To Accept Late Filings in Certain Cases of 
Unintentional Delay.--
            ``(1) In general.--The Director may accept any application 
        or other filing made by--
                    ``(A) an applicant for, or owner of, a patent after 
                the applicable deadline set forth in this title with 
                respect to the application or patent; or
                    ``(B) an applicant for, or owner of, a mark after 
                the applicable deadline under the Trademark Act of 1946 
                with respect to the registration or other filing of the 
                mark,
        to the extent that the Director considers appropriate, if the 
        applicant or owner files a petition within 30 days after such 
        deadline showing, to the satisfaction of the Director, that the 
        delay was unintentional.
            ``(2) Treatment of director's actions on petition.--If the 
        Director has not made a determination on a petition filed under 
        paragraph (1) within 60 days after the date on which the 
        petition is filed, the petition shall be deemed to be denied. A 
        decision by the Director not to exercise, or a failure to 
        exercise, the discretion provided by this subsection shall not 
        be subject to judicial review.
            ``(3) Other provisions not affected.--This subsection shall 
        not apply to any other provision of this title, or to any 
        provision of the Trademark Act of 1946, that authorizes the 
        Director to accept, under certain circumstances, applications 
        or other filings made after a statutory deadline or to 
        statutory deadlines that are required by reason of the 
        obligations of the United States under any treaty.
            ``(4) Definition.--In this subsection, the term `Trademark 
        Act of 1946' means the Act entitled `An Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out the provisions of certain international conventions, 
        and for other purposes', approved July 5, 1946 (15 U.S.C. 1051 
        et seq.) (commonly referred to as the Trademark Act of 1946 or 
        the Lanham Act).''.
    (b) Applicability.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to any application or other filing that--
                    (A) is filed on or after the date of the enactment 
                of this Act; or
                    (B) on such date of enactment, is pending before 
                the Director or is subject to judicial review.
            (2) Treatment of pending applications and filings.--In the 
        case of any application or filing described in paragraph 
        (1)(B), the 30-day period prescribed in section 2(e)(1) of 
        title 35, United States Code, as added by subsection (a) of 
        this section, shall be deemed to be the 30-day period beginning 
        on the date of the enactment of this Act.

SEC. 14. LIMITATION ON DAMAGES AND OTHER REMEDIES WITH RESPECT TO 
              PATENTS FOR METHODS IN COMPLIANCE WITH CHECK IMAGING 
              METHODS.

    (a) Limitation.--Section 287 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(d)(1) With respect to the use by a financial institution of a 
check collection system that constitutes an infringement under 
subsection (a) or (b) of section 271, the provisions of sections 281, 
283, 284, and 285 shall not apply against the financial institution 
with respect to such a check collection system.
    ``(2) For the purposes of this subsection--
            ``(A) the term `check' has the meaning given under section 
        3(6) of the Check Clearing for the 21st Century Act (12 U.S.C. 
        5002(6));
            ``(B) the term `check collection system' means the use, 
        creation, transmission, receipt, storing, settling, or 
        archiving of truncated checks, substitute checks, check images, 
        or electronic check data associated with or related to any 
        method, system, or process that furthers or effectuates, in 
        whole or in part, any of the purposes of the Check Clearing for 
        the 21st Century Act (12 U.S.C. 5001 et seq.);
            ``(C) the term `financial institution' has the meaning 
        given under section 509 of the Gramm-Leach-Bliley Act (15 
        U.S.C. 6809);
            ``(D) the term `substitute check' has the meaning given 
        under section 3(16) of the Check Clearing for the 21st Century 
        Act (12 U.S.C. 5002(16)); and
            ``(E) the term `truncate' has the meaning given under 
        section 3(18) of the Check Clearing for the 21st Century Act 
        (12 U.S.C. 5002(18)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to any civil action for patent infringement pending or filed on 
or after the date of enactment of this Act.

SEC. 15. PATENT AND TRADEMARK OFFICE FUNDING.

    (a) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the United States Patent and Trademark Office.
            (2) Fund.--The term ``Fund'' means the public enterprise 
        revolving fund established under subsection (c).
            (3) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (4) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means an Act entitled ``Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out the provisions of certain international conventions, 
        and for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 
        et seq.) (commonly referred to as the Trademark Act of 1946 or 
        the Lanham Act).
            (5) Undersecretary.--The term ``Undersecretary'' means the 
        Under Secretary of Commerce for Intellectual Property.
    (b) Funding.--
            (1) In general.--Section 42 of title 35, United States 
        Code, is amended--
                    (A) in subsection (b), by striking ``Patent and 
                Trademark Office Appropriation Account'' and inserting 
                ``United States Patent and Trademark Office Public 
                Enterprise Fund''; and
                    (B) in subsection (c), in the first sentence--
                            (i) by striking ``To the extent'' and all 
                        that follows through ``fees'' and inserting 
                        ``Fees''; and
                            (ii) by striking ``shall be collected by 
                        and shall be available to the Director'' and 
                        inserting ``shall be collected by the Director 
                        and shall be available until expended''.
            (2) Effective date.--
                    (A) In general.--The amendments made by paragraph 
                (1) shall take effect on October 1, 2008.
                    (B) Termination of appropriation.--The provisions 
                of any prior appropriation Act that makes amounts 
                available pursuant to section 42(c) of title 35, United 
                States Code, and are in effect on the effective date 
                set forth in subparagraph (A) shall cease to be 
                effective on that effective date, and any unexpended 
                amounts made available pursuant to such section shall 
                be transferred in accordance with subsection (c)(5).
    (c) USPTO Revolving Fund.--
            (1) Establishment.--There is established in the Treasury of 
        the United States a revolving fund to be known as the ``United 
        States Patent and Trademark Office Public Enterprise Fund''. 
        Any amounts in the Fund shall be available for use by the 
        Director without fiscal year limitation.
            (2) Derivation of resources.--There shall be deposited into 
        the Fund--
                    (A) any fees collected under sections 41, 42, and 
                376 of title 35, United States Code, provided that 
                notwithstanding any other provision of law, if such 
                fees are collected by, and payable to, the Director, 
                the Director shall transfer such amounts to the Fund; 
                and
                    (B) any fees collected under section 31 of the 
                Trademark Act of 1946 (15 U.S.C. 1113).
            (3) Expenses.--Amounts deposited into the Fund under 
        paragraph (2) shall be available, without fiscal year 
        limitation, to cover--
                    (A) all expenses to the extent consistent with the 
                limitation on the use of fees set forth in section 
                42(c) of title 35, United States Code, including all 
                administrative and operating expenses, determined in 
                the discretion of the Under Secretary to be ordinary 
                and reasonable, incurred by the Under Secretary and the 
                Director for the continued operation of all services, 
                programs, activities, and duties of the Office, as such 
                services, programs, activities, and duties are 
                described under--
                            (i) title 35, United States Code; and
                            (ii) the Trademark Act of 1946; and
                    (B) all expenses incurred pursuant to any 
                obligation, representation, or other commitment of the 
                Office.
            (4) Custodians of money.--Notwithstanding section 3302 of 
        title 31, United States Code, any funds received by the 
        Director and transferred to Fund, or any amounts directly 
        deposited into the Fund, may be used--
                    (A) to cover the expenses described in paragraph 
                (3); and
                    (B) to purchase obligations of the United States, 
                or any obligations guaranteed by the United States.
            (5) Unexpended balances.--Any unexpended balances in any 
        accounts held on behalf of the Director, or the Office, 
        including in the Patent and Trademark Office Appropriation 
        Account in the Treasury of the United States, shall be 
        transferred to the Fund and shall remain available until 
        expended.
    (d) Annual Report.--Not later than 60 days after the end of each 
fiscal year, the Under Secretary and the Director shall submit a report 
to Congress which shall--
            (1) summarize the operations of the Office for the 
        preceding fiscal year, including financial details and staff 
        levels broken down by each major activity of the Office;
            (2) detail the operating plan of the Office, including 
        specific expense and staff needs for the upcoming fiscal year;
            (3) describe the long term modernization plans of the 
        Office;
            (4) set forth details of any progress towards such 
        modernization plans made in the previous fiscal year; and
            (5) include the results of the most recent audit carried 
        out under subsection (f).
    (e) Annual Spending Plan.--
            (1) In general.--Not later than 30 days after the beginning 
        of each fiscal year, the Director shall notify the Committees 
        on Appropriations of both Houses of Congress of the plan for 
        the obligation and expenditure of the total amount of the funds 
        for that fiscal year in accordance with section 605 of the 
        Science, State, Justice, Commerce, and Related Agencies 
        Appropriations Act, 2006 (Public Law 109-108; 119 Stat. 2334).
            (2) Contents.--Each plan under paragraph (1) shall--
                    (A) summarize the operations of the Office for the 
                current fiscal year, including financial details and 
                staff levels with respect to major activities; and
                    (B) detail the operating plan of the Office, 
                including specific expense and staff needs, for the 
                current fiscal year.
    (f) Audit.--The Under Secretary shall, on an annual basis, provide 
for an independent audit of the financial statements of the Office. 
Such audit shall be conducted in accordance with generally acceptable 
accounting procedures.
    (g) Budget.--In accordance with section 9301 of title 31, United 
States Code, the Fund shall prepare and submit each year to the 
President a business-type budget in such manner, and before such date, 
as the President prescribes by regulation for the budget program.

SEC. 16. TECHNICAL AMENDMENTS.

    (a) Joint Inventions.--Section 116 of title 35, United States Code, 
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 of title 
35, United States Code, 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 of title 35, United 
States Code, 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 provision'' 
        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 of title 35, United States 
Code, 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 of title 35, United 
States Code, 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) Presumption of Validity.--Section 282 of title 35, United 
States Code, 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, by striking ``The 
        following'' and inserting ``(b) Defenses.--The following''; and
            (3) in the third undesignated paragraph, by striking ``In 
        actions'' and inserting ``(c) Notice of Actions; Actions During 
        Extension of Patent Term.--In actions''.

SEC. 17. EFFECTIVE DATE; RULE OF CONSTRUCTION.

    (a) Effective Date.--Except as otherwise provided in this Act, the 
provisions of this Act shall take effect 12 months after the date of 
the enactment of this Act and shall apply to any patent issued on or 
after that effective date.
    (b) Continuity of Intent Under the Create Act.--The enactment of 
section 102(b)(3) of title 35, United States Code, under section (2)(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 2(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 United States Patent and Trademark Office.
                                                       Calendar No. 563

110th CONGRESS

  2d Session

                                S. 1145

                          [Report No. 110-259]

_______________________________________________________________________

                                 A BILL

  To amend title 35, United States Code, to provide for patent reform.

_______________________________________________________________________

                            January 24, 2008

                       Reported with an amendment