[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 515 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 515

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 3, 2009

    Mr. Leahy (for himself, Mr. Hatch, Mr. Schumer, Mr. Crapo, Mr. 
 Whitehouse, Mr. Risch, and Mrs. Gillibrand) introduced the following 
    bill; which was read twice and referred to the Committee on the 
                               Judiciary

_______________________________________________________________________

                                 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,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patent Reform Act 
of 2009''.
    (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. Preissuance submissions by third parties.
Sec. 8. Venue and jurisdiction.
Sec. 9. Patent and Trademark Office regulatory authority.
Sec. 10. Residency of Federal Circuit judges.
Sec. 11. Micro-entity defined.
Sec. 12. Technical amendments.
Sec. 13. Effective date; rule of construction.
Sec. 14. Severability.

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 
        the 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; Nonobvious 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 
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.
    ``(b) Settlement.--Parties to a derivation proceeding may terminate 
the proceeding by filing a written statement reflecting the agreement 
of the parties as to the correct inventors of the claimed invention in 
dispute. Unless the Patent Trial and Appeal Board finds the agreement 
to be inconsistent with the evidence of record, it shall take action 
consistent with the agreement. Any written settlement or understanding 
of the parties shall be filed with the Director. At the request of a 
party to the proceeding, the agreement or understanding shall be 
treated as business confidential information, shall be kept separate 
from the file of the involved patents or applications, and shall be 
made available only to Government agencies on written request, or to 
any person on a showing of good cause.
    ``(c) Arbitration.--Parties to a derivation proceeding, within such 
time as may be specified by the Director by regulation, may determine 
such contest or any aspect thereof by arbitration. Such arbitration 
shall be governed by the provisions of title 9 to the extent such title 
is not inconsistent with this section. The parties shall give notice of 
any arbitration award to the Director, and such award shall, as between 
the parties to the arbitration, be dispositive of the issues to which 
it relates. The arbitration award shall be unenforceable until such 
notice is given. Nothing in this subsection shall preclude the Director 
from determining patentability of the invention involved in the 
derivation proceeding.''.
    (j) Elimination of References to Interferences.--(1) Sections 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, interference proceedings 
                (commenced before the date of enactment of the Patent 
                Reform Act of 2009), 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 2009), derivation proceeding, 
                or post-grant review proceeding, and any such appeal 
                shall waive any right of such applicant or party to 
                proceed under section 145 or 146 of title 35;''.
    (k) Search and Examination Functions.--Section 131 of title 35, 
United States Code, is amended by--
            (1) by striking ``The Director shall cause'' and inserting 
        ``(a) In General.--The Director shall cause''; and
            (2) by adding at the end the following:
    ``(b) Search and Examination Functions.--To the extent consistent 
with United States obligations under international agreements, 
examination and search duties for the grant of a United States patent 
are sovereign functions which shall be performed within the United 
States by United States citizens who are employees of the United States 
Government.''.

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 11 of title 35, United 
        States Code, is amended to read as follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--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'';
            (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 acting 
        with objective recklessness--
                    ``(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) 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.''.
    (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.

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

    (a) Citation of Prior Art.--Section 301 of title 35, United States 
Code, is amended to read as follows:
``Sec. 301. Citation of prior art
    ``(a) In General.--Any person at any time may cite to the Office in 
writing--
            ``(1) prior art consisting of patents, printed 
        publications, or evidence that the claimed invention was in 
        public use or sale in the United States more than 1 year prior 
        to the date of the application for patent in the United States, 
        which that person believes to have a bearing on the 
        patentability of any claim of a particular patent; or
            ``(2) written statements of the patent owner filed in a 
        proceeding before a Federal court or the Patent and Trademark 
        Office in which the patent owner takes a position on the scope 
        of one or more patent claims.
    ``(b) Submissions Part of Official File.--If the person citing 
prior art or written submissions under subsection (a) explains in 
writing the pertinence and manner of applying the prior art or written 
submission to at least one claim of the patent, the citation of the 
prior art or documentary evidence (as the case may be) and the 
explanation thereof shall become a part of the official file of the 
patent.
    ``(c) Procedures for Written Statements.--
            ``(1) Submission of additional materials.--A party that 
        submits written statements under subsection (a)(2) in a 
        proceeding shall include any other documents, pleadings, or 
        evidence from the proceeding that address the patent owner's 
        statements or the claims addressed by the written statements.
            ``(2) Limitation on use of statements.--Written statements 
        submitted under subsection (a)(2) shall not be considered for 
        any purpose other than to determine the proper meaning of the 
        claims that are the subject of the request in a proceeding 
        ordered pursuant to section 304 or 313. Any such written 
        statements, and any materials submitted under paragraph (1), 
        that are subject to an applicable protective order shall be 
        redacted to exclude information subject to the order.
    ``(d) Identity Withheld.--Upon the written request of the person 
making the citation under subsection (a), the person's identity shall 
be excluded from the patent file and kept confidential.''.
    (b) Request for Reexamination.--The first sentence of section 302 
of title 35, United States Code, is amended to read as follows: ``Any 
person at any time may file a request for reexamination by the Office 
of any claim on a patent on the basis of any prior art or documentary 
evidence cited under paragraph (1) or (3) of subsection (a) of section 
301 of this title.''.
    (c) Reexamination.--Section 303(a) of title 35, United States Code, 
is amended to read as follows:
    ``(a) Within three months following the filing of 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, publications, or other evidence 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, printed publication, or other evidence was previously 
considered by the Office.''.
    (d) Request for Inter Partes Reexamination.--Section 311(a) of 
title 35, United States Code, is amended to read as follows:
    ``(a) In General.--Any third-party requester at any time may file a 
request for inter partes reexamination by the Office of a patent on the 
basis of any prior art or documentary evidence cited under paragraph 
(1) or (3) of subsection (a) of section 301 of this title.''.
    (e) Conduct of Inter Partes Proceedings.--Section 314 of title 35, 
United States Code, is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``conducted according to the procedures established for initial 
        examination under the provisions of sections 132 and 133'' and 
        inserting ``heard by an administrative patent judge in 
        accordance with procedures which the Director shall 
        establish'';
            (2) in subsection (b), by striking paragraph (2) and 
        inserting the following:
    ``(2) The third-party requester shall have the opportunity to file 
written comments on any action on the merits by the Office in the inter 
partes reexamination proceeding, and on any response that the patent 
owner files to such an action, if those written comments are received 
by the Office within 60 days after the date of service on the third-
party requester of the Office action or patent owner response, as the 
case may be.''; and
            (3) by adding at the end the following:
    ``(d) Oral Hearing.--At the request of a third-party requestor or 
the patent owner, the administrative patent judge shall conduct an oral 
hearing, unless the judge finds cause lacking for such hearing.''.
    (f) Estoppel.--Section 315(c) of title 35, United States Code, is 
amended by striking ``or could have raised''.
    (g) Reexamination Prohibited After District Court Decision.--
Section 317(b) of title 35, United States Code, is amended--
            (1) in the subsection heading, by striking ``Final 
        Decision'' and inserting ``District Court Decision''; and
            (2) by striking ``Once a final decision has been entered'' 
        and inserting ``Once the judgment of the district court has 
        been entered''.
    (h) 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. Prohibited filings.
``325. Submission of additional information; showing of sufficient 
                            grounds.
``326. Conduct of post-grant review proceedings.
``327. Patent owner response.
``328. Proof and evidentiary standards.
``329. Amendment of the patent.
``330. Decision of the Board.
``331. Effect of decision.
``332. Settlement.
``333. Relationship to other pending proceedings.
``334. Effect of decisions rendered in civil action on post-grant 
                            review proceedings.
``335. Effect of final decision on future proceedings.
``336. Appeal.
``Sec. 321. Petition for post-grant review
    ``Subject to sections 322, 324, 332, and 333, a person who is not 
the patent owner may file with the Office a petition for cancellation 
seeking to institute a post-grant review proceeding to cancel as 
unpatentable any claim of a patent on any ground that could be raised 
under paragraph (2) or (3) of section 282(b) (relating to invalidity of 
the patent or any claim). The Director shall establish, by regulation, 
fees to be paid by the person requesting the proceeding, in such 
amounts as the Director determines to be reasonable.
``Sec. 322. Timing and bases of petition
    ``A post-grant proceeding may be instituted under this chapter 
pursuant to a cancellation petition filed under section 321 only if--
            ``(1) the petition is filed not later than 12 months after 
        the issuance of the patent or a reissue patent, as the case may 
        be; or
            ``(2) the patent owner consents in writing to the 
        proceeding.
``Sec. 323. Requirements of petition
    ``A cancellation petition filed under section 321 may be considered 
only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 321;
            ``(2) the petition identifies the cancellation petitioner;
            ``(3) for each claim sought to be canceled, the petition 
        sets forth in writing the basis for cancellation and provides 
        the evidence in support thereof, including copies of patents 
        and printed publications, or written testimony of a witness 
        attested to under oath or declaration by the witness, or any 
        other information that the Director may require by regulation; 
        and
            ``(4) the petitioner provides copies of the petition, 
        including any evidence submitted with the petition and any 
        other information submitted under paragraph (3), to the patent 
        owner or, if applicable, the designated representative of the 
        patent owner.
``Sec. 324. Prohibited filings
    ``A post-grant review proceeding may not be instituted under 
section 322 if the petition for cancellation requesting the 
proceeding--
            ``(1) identifies the same cancellation petitioner and the 
        same patent as a previous petition for cancellation filed under 
        such section; or
            ``(2) is based on the best mode requirement contained in 
        section 112.
``Sec. 325. Submission of additional information; showing of sufficient 
              grounds
    ``(a) In General.--The cancellation petitioner shall file such 
additional information with respect to the petition as the Director may 
require. For each petition submitted under section 321, the Director 
shall determine if the written statement, and any evidence submitted 
with the request, establish that a substantial question of 
patentability exists for at least one claim in the patent. The Director 
may initiate a post-grant review proceeding if the Director determines 
that the information presented provides sufficient grounds to believe 
that there is a substantial question of patentability concerning one or 
more claims of the patent at issue.
    ``(b) Notification; Determinations Not Reviewable.--The Director 
shall notify the patent owner and each petitioner in writing of the 
Director's determination under subsection (a), including a 
determination to deny the petition. The Director shall make that 
determination in writing not later than 60 days after receiving the 
petition. Any determination made by the Director under subsection (a), 
including whether or not to institute a post-grant review proceeding or 
to deny the petition, shall not be reviewable.
``Sec. 326. Conduct of post-grant review proceedings
    ``(a) In General.--The Director shall prescribe regulations, in 
accordance with section 2(b)(2)--
            ``(1) establishing and governing post-grant review 
        proceedings under this chapter and their relationship to other 
        proceedings under this title;
            ``(2) establishing procedures for the submission of 
        supplemental information after the petition for cancellation is 
        filed; and
            ``(3) setting forth procedures for discovery of relevant 
        evidence, including that such discovery shall be limited to 
        evidence directly related to factual assertions advanced by 
        either party in the proceeding, and the procedures for 
        obtaining such evidence shall be consistent with the purpose 
        and nature of the proceeding.
In carrying out paragraph (3), the Director shall bear in mind that 
discovery must be in the interests of justice.
    ``(b) Post-Grant Regulations.--Regulations under subsection 
(a)(1)--
            ``(1) shall require that the final determination in a post-
        grant proceeding issue not later than one year after the date 
        on which the post-grant review proceeding is instituted under 
        this chapter, except that, for good cause shown, the Director 
        may extend the 1-year period by not more than six months;
            ``(2) shall provide for discovery upon order of the 
        Director;
            ``(3) shall provide for publication of notice in the 
        Federal Register of the filing of a petition for post-grant 
        review under this chapter, for publication of the petition, and 
        documents, orders, and decisions relating to the petition, on 
        the website of the Patent and Trademark Office, and for filings 
        under seal exempt from publication requirements;
            ``(4) shall prescribe sanctions for abuse of discovery, 
        abuse of process, or any other improper use of the proceeding, 
        such as to harass or to cause unnecessary delay or unnecessary 
        increase in the cost of the proceeding;
            ``(5) may provide for protective orders governing the 
        exchange and submission of confidential information; and
            ``(6) shall ensure that any information submitted by the 
        patent owner in support of any amendment entered under section 
        329 is made available to the public as part of the prosecution 
        history of the patent.
    ``(c) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect on the economy, the 
integrity of the patent system, and the efficient administration of the 
Office.
    ``(d) Conduct of Proceeding.--The Patent Trial and Appeal Board 
shall, in accordance with section 6(b), conduct each post-grant review 
proceeding authorized by the Director.
``Sec. 327. Patent owner response
    ``After a post-grant proceeding under this chapter has been 
instituted with respect to a patent, the patent owner shall have the 
right to file, within a time period set by the Director, a response to 
the cancellation petition. The patent owner shall file with the 
response, through affidavits or declarations, any additional factual 
evidence and expert opinions on which the patent owner relies in 
support of the response.
``Sec. 328. Proof and evidentiary standards
    ``(a) In General.--The presumption of validity set forth in section 
282 shall not apply in a challenge to any patent claim under this 
chapter.
    ``(b) Burden of Proof.--The party advancing a proposition under 
this chapter shall have the burden of proving that proposition by a 
preponderance of the evidence.
``Sec. 329. Amendment of the patent
    ``(a) In General.--In response to a challenge in a petition for 
cancellation, the patent owner may file one motion to amend the patent 
in one or more of the following ways:
            ``(1) Cancel any challenged patent claim.
            ``(2) For each challenged claim, propose a substitute 
        claim.
            ``(3) Amend the patent drawings or otherwise amend the 
        patent other than the claims.
    ``(b) Additional Motions.--Additional motions to amend may be 
permitted only for good cause shown.
    ``(c) Scope of Claims.--An amendment under this section may not 
enlarge the scope of the claims of the patent or introduce new matter.
``Sec. 330. Decision of the Board
    ``If the post-grant review proceeding is instituted and not 
dismissed under this chapter, the Patent Trial and Appeal Board shall 
issue a final written decision addressing the patentability of any 
patent claim challenged and any new claim added under section 329.
``Sec. 331. Effect of decision
    ``(a) In General.--If the Patent Trial and Appeal Board issues a 
final decision under section 330 and the time for appeal has expired or 
any appeal proceeding has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable and incorporating in the patent by 
operation of the certificate any new claim determined to be patentable.
    ``(b) New Claims.--Any new claim held to be patentable and 
incorporated into a patent in a post-grant review proceeding shall have 
the same effect as that specified in section 252 for reissued patents 
on the right of any person who made, purchased, offered to sell, or 
used within the United States, or imported into the United States, 
anything patented by such new claim, or who made substantial 
preparations therefor, before a certificate under subsection (a) of 
this section is issued.
``Sec. 332. Settlement
    ``(a) In General.--A post-grant review proceeding shall be 
terminated with respect to any petitioner upon the joint request of the 
petitioner and the patent owner, unless the Patent Trial and Appeal 
Board has issued a written decision before the request for termination 
is filed. If the post-grant review proceeding is terminated with 
respect to a petitioner under this paragraph, no estoppel shall apply 
to that petitioner. If no petitioner remains in the proceeding, the 
panel of administrative patent judges assigned to the proceeding shall 
terminate the proceeding.
    ``(b) Agreement in Writing.--Any agreement or understanding between 
the patent owner and a petitioner, including any collateral agreements 
referred to in the agreement or understanding, that is made in 
connection with or in contemplation of the termination of a post-grant 
review proceeding, must be in writing. A post-grant review proceeding 
as between the parties to the agreement or understanding may not be 
terminated until a copy of the agreement or understanding, including 
any such collateral agreements, has been filed in the Office. If any 
party filing such an agreement or understanding requests, the agreement 
or understanding shall be kept separate from the file of the post-grant 
review proceeding, and shall be made available only to Government 
agencies on written request, or to any person on a showing of good 
cause.
``Sec. 333. Relationship to other proceedings
    ``(a) In General.--Notwithstanding subsection 135(a), sections 251 
and 252, and chapter 30, the Director may determine the manner in which 
any reexamination proceeding, reissue proceeding, interference 
proceeding (commenced with respect to an application for patent filed 
before the effective date provided in section 3(k) of the Patent Reform 
Act of 2009), derivation proceeding, or post-grant review proceeding, 
that is pending during a post-grant review proceeding, may proceed, 
including providing for stay, transfer, consolidation, or termination 
of any such proceeding.
    ``(b) Stays.--The Director may stay a post-grant review proceeding 
if a pending civil action for infringement of a patent addresses the 
same or substantially the same questions of patentability raised 
against the patent in a petition for the post-grant review proceeding.
    ``(c) Effect of Commencement of Proceeding.--The commencement of a 
post-grant review proceeding--
            ``(1) shall not limit in any way the right of the patent 
        owner to commence an action for infringement of the patent; and
            ``(2) shall not be cited as evidence relating to the 
        validity of any claim of the patent in any proceeding before a 
        court or the International Trade Commission concerning the 
        patent.
``Sec. 334. Effect of decisions rendered in civil action on post-grant 
              review proceedings
    ``If a final decision is entered against a party in a civil action 
arising in whole or in part under section 1338 of title 28 establishing 
that the party has not sustained its burden of proving the invalidity 
of any patent claim--
            ``(1) that party to the civil action and the privies of 
        that party may not thereafter request a post-grant review 
        proceeding on that patent claim on the basis of any grounds, 
        under the provisions of section 321, which that party or the 
        privies of that party raised or could have raised; and
            ``(2) the Director may not thereafter maintain a post-grant 
        review proceeding that was requested, before the final decision 
        was so entered, by that party or the privies of that party on 
        the basis of such grounds.
``Sec. 335. Effect of final decision on future proceedings
    ``If a final decision under section 330 is favorable to the 
patentability of any original or new claim of the patent challenged by 
the cancellation petitioner, the cancellation petitioner may not 
thereafter, based on any ground that the cancellation petitioner raised 
during the post-grant review proceeding--
            ``(1) request or pursue a reexamination of such claim under 
        chapter 31;
            ``(2) request or pursue a derivation proceeding with 
        respect to such claim;
            ``(3) request or pursue a post-grant review proceeding 
        under this chapter with respect to such claim;
            ``(4) assert the invalidity of any such claim in any civil 
        action arising in whole or in part under section 1338 of title 
        28; or
            ``(5) assert the invalidity of any such claim in defense to 
        an action brought under section 337 of the Tariff Act of 1930 
        (19 U.S.C. 1337).
``Sec. 336. Appeal
    ``A party dissatisfied with the final determination of the Patent 
Trial and Appeal Board in a post-grant proceeding under this chapter 
may appeal the determination under sections 141 through 144. Any party 
to the post-grant proceeding shall have the right to be a party to the 
appeal.''.
    (i) 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''.
    (j) Repeal.--Section 4607 of the Intellectual Property and 
Communications Omnibus Reform Act of 1999, as enacted by section 
1000(a)(9) of Public Law 106-113, is repealed.
    (k) Effective Dates.--
            (1) In general.--The amendments and repeal made by this 
        section shall take effect at the end of the 1-year period 
        beginning on the date of the enactment of this Act.
            (2) Applicability to ex parte and inter partes 
        proceedings.--Notwithstanding any other provision of law, 
        sections 301 and 311 through 318 of title 35, United States 
        Code, as amended by this section, shall apply to any patent 
        that issues before, on, or after the effective date under 
        paragraph (1) from an original application filed on any date.
            (3) Applicability to post-grant proceedings.--The 
        amendments made by subsections (h) and (i) shall apply to 
        patents issued on or after the effective date under paragraph 
        (1).
    (l) 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 (h) of this section.

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 Secretary of Commerce. Any reference in any Federal law, Executive 
order, rule, regulation, or delegation of authority, or any document of 
or pertaining to the Board of Patent Appeals and Interferences is 
deemed to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon application for patents;
            ``(2) on written appeal of a patent owner, review adverse 
        decisions of examiners upon patents in reexamination 
        proceedings under chapter 30;
            ``(3) conduct 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. 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 
21(b)(4) of 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 (commonly referred to as the 
``Trademark Act of 1946'' or the ``Lanham Act''; 15 U.S.C. 1071(b)(4)), 
are each amended by striking ``United States District Court for the 
District of Columbia'' each place that term appears and inserting 
``United States District Court for the Eastern District of Virginia''.

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.

    (a) Residency.--The second sentence of section 44(c) of title 28, 
United States Code, is repealed.
    (b) Facilities.--Section 44 of title 28, United States Code, is 
amended by adding at the end the following:
    ``(e)(1) The Director of the Administrative Office of the United 
States Courts shall provide--
            ``(A) a judge of the Federal judicial circuit who lives 
        within 50 miles of the District of Columbia with appropriate 
        facilities and administrative support services in the District 
        of the District of Columbia; and
            ``(B) a judge of the Federal judicial circuit who does not 
        live within 50 miles of the District of Columbia with 
        appropriate facilities and administrative support services--
                    ``(i) in the district and division in which that 
                judge resides; or
                    ``(ii) if appropriate facilities are not available 
                in the district and division in which that judge 
                resides, in the district and division closest to the 
                residence of that judge in which such facilities are 
                available, as determined by the Director.
    ``(2) Nothing in this subsection may be construed to authorize or 
require the construction of new facilities.''.

SEC. 11. MICRO-ENTITY DEFINED.

    Chapter 11 of title 35, United States Code, is amended by adding at 
the end the following new section:
``Sec. 123. Micro-entity defined
    ``(a) In General.--For purposes of this title, the term `micro-
entity' means an applicant who makes a certification under either 
subsections (b) or (c).
    ``(b) Unassigned Application.--For an unassigned application, each 
applicant shall certify that the applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director;
            ``(2) has not been named on 5 or more previously filed 
        patent applications;
            ``(3) has not assigned, granted, or conveyed, and is not 
        under an obligation by contract or law to assign, grant, or 
        convey, a license or any other ownership interest in the 
        particular application; and
            ``(4) 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.
    ``(c) Assigned Application.--For an assigned application, each 
applicant shall certify that the applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director, and meets the requirements 
        of subsection (b)(4);
            ``(2) has not been named on 5 or more previously filed 
        patent applications; and
            ``(3) has assigned, granted, conveyed, or is under an 
        obligation by contract or law to assign, grant, or convey, a 
        license or other ownership interest in the 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.
    ``(d) Income Level Adjustment.--The gross income levels established 
under subsections (b) and (c) 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. 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. 13. 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.

SEC. 14. SEVERABILITY.

    If any provision of this Act or of any amendment or repeals made by 
this Act, or the application of such a provision to any person or 
circumstance, is held to be invalid or unenforceable, the remainder of 
this Act and the amendments and repeals made by this Act, and the 
application of this Act and such amendments and repeals to any other 
person or circumstance, shall not be affected by such holding.
                                 <all>