[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1249 Enrolled Bill (ENR)]

        H.R.1249

                      One Hundred Twelfth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
            the fifth day of January, two thousand and eleven


                                 An Act


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

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
    (a) Short Title.--This Act may be cited as the ``Leahy-Smith 
America Invents Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. First inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Defense to infringement based on prior commercial use.
Sec. 6. Post-grant review proceedings.
Sec. 7. Patent Trial and Appeal Board.
Sec. 8. Preissuance submissions by third parties.
Sec. 9. Venue.
Sec. 10. Fee setting authority.
Sec. 11. Fees for patent services.
Sec. 12. Supplemental examination.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Marking.
Sec. 17. Advice of counsel.
Sec. 18. Transitional program for covered business method patents.
Sec. 19. Jurisdiction and procedural matters.
Sec. 20. Technical amendments.
Sec. 21. Travel expenses and payment of administrative judges.
Sec. 22. Patent and Trademark Office funding.
Sec. 23. Satellite offices.
Sec. 24. Designation of Detroit satellite office.
Sec. 25. Priority examination for important technologies.
Sec. 26. Study on implementation.
Sec. 27. Study on genetic testing.
Sec. 28. Patent Ombudsman Program for small business concerns.
Sec. 29. Establishment of methods for studying the diversity of 
          applicants.
Sec. 30. Sense of Congress.
Sec. 31. USPTO study on international patent protections for small 
          businesses.
Sec. 32. Pro bono program.
Sec. 33. Limitation on issuance of patents.
Sec. 34. Study of patent litigation.
Sec. 35. Effective date.
Sec. 36. Budgetary effects.
Sec. 37. Calculation of 60-day period for application of patent term 
          extension.
SEC. 2. DEFINITIONS.
    In this Act:
        (1) Director.--The term ``Director'' means the Under Secretary 
    of Commerce for Intellectual Property and Director of the United 
    States Patent and Trademark Office.
        (2) Office.--The term ``Office'' means the United States Patent 
    and Trademark Office.
        (3) Patent public advisory committee.--The term ``Patent Public 
    Advisory Committee'' means the Patent Public Advisory Committee 
    established under section 5(a) of title 35, United States Code.
        (4) Trademark act of 1946.--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'').
        (5) Trademark public advisory committee.--The term ``Trademark 
    Public Advisory Committee'' means the Trademark Public Advisory 
    Committee established under section 5(a) of title 35, United States 
    Code.
SEC. 3. FIRST INVENTOR TO FILE.
    (a) Definitions.--Section 100 of title 35, United States Code, is 
amended--
        (1) in subsection (e), by striking ``or inter partes 
    reexamination under section 311''; and
        (2) 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 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.
    ``(i)(1) The term `effective filing date' for a claimed invention 
in a patent or application for patent means--
        ``(A) if subparagraph (B) does not apply, the actual filing 
    date of the patent or the application for the patent containing a 
    claim to the invention; or
        ``(B) the filing date of the earliest application for which the 
    patent or application is entitled, as to such invention, to a right 
    of priority under section 119, 365(a), or 365(b) or to the benefit 
    of an earlier filing date under section 120, 121, or 365(c).
    ``(2) The effective filing date for a claimed invention in an 
application for reissue or reissued patent shall be determined by 
deeming the claim to the invention to have been contained in the patent 
for which reissue was sought.
    ``(j) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.''.
    (b) Conditions for Patentability.--
        (1) In general.--Section 102 of title 35, United States Code, 
    is amended to read as follows:
``Sec. 102. Conditions for patentability; novelty
    ``(a) Novelty; Prior Art.--A person shall be entitled to a patent 
unless--
        ``(1) the claimed invention was patented, described in a 
    printed publication, or in public use, on sale, or otherwise 
    available to the public before the effective filing date of the 
    claimed invention; 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) Disclosures made 1 year or less before the effective 
    filing date of the claimed invention.--A disclosure made 1 year or 
    less before the effective filing date of a claimed invention shall 
    not be prior art to the claimed invention under subsection (a)(1) 
    if--
            ``(A) the disclosure was made by the inventor or joint 
        inventor or by another who obtained the subject matter 
        disclosed directly or indirectly from the inventor or a joint 
        inventor; or
            ``(B) the subject matter disclosed had, before such 
        disclosure, been publicly disclosed by the inventor or a joint 
        inventor or another who obtained the subject matter disclosed 
        directly or indirectly from the inventor or a joint inventor.
        ``(2) Disclosures appearing in applications and patents.--A 
    disclosure shall not be prior art to a claimed invention under 
    subsection (a)(2) if--
            ``(A) the subject matter disclosed was obtained directly or 
        indirectly from the inventor or a joint inventor;
            ``(B) the subject matter disclosed had, before such subject 
        matter was effectively filed under subsection (a)(2), been 
        publicly disclosed by the inventor or a joint inventor or 
        another who obtained the subject matter disclosed directly or 
        indirectly from the inventor or a joint inventor; or
            ``(C) the subject matter disclosed 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.
    ``(c) Common Ownership Under Joint Research Agreements.--Subject 
matter disclosed 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 subsection (b)(2)(C) if--
        ``(1) the subject matter disclosed was developed and the 
    claimed invention was made by, or on behalf of, 1 or more parties 
    to a joint research agreement that was in effect on or before the 
    effective filing date of the claimed invention;
        ``(2) the claimed invention was made as a result of activities 
    undertaken within the scope of the joint research agreement; and
        ``(3) the application for patent for the claimed invention 
    discloses or is amended to disclose the names of the parties to the 
    joint research agreement.
    ``(d) Patents and Published Applications Effective as Prior Art.--
For purposes of determining whether a patent or application for patent 
is prior art to a claimed invention under subsection (a)(2), such 
patent or application shall be considered to have been effectively 
filed, with respect to any subject matter described in the patent or 
application--
        ``(1) if paragraph (2) does not apply, as of the actual filing 
    date of the patent or the application for patent; or
        ``(2) 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) Continuity of intent under the create act.--The enactment 
    of section 102(c) of title 35, United States Code, under paragraph 
    (1) of this subsection 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 
    subsection (c) of this section. The United States Patent and 
    Trademark Office shall administer section 102(c) 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.
        (3) 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; non-obvious subject matter
    ``A patent for a claimed invention may not be obtained, 
notwithstanding that 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''.
        (3) Effective date.--The amendments made by this subsection 
    shall take effect upon the expiration of the 18-month period 
    beginning on the date of the enactment of this Act, and shall apply 
    to any request for a statutory invention registration filed on or 
    after that effective date.
    (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(b) would end before the end of that 2-
            year period''; and
                (ii) by striking ``prior to the end of the statutory'' 
            and inserting ``before the end of 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(b)''.
    (h) Derived Patents.--
        (1) In general.--Section 291 of title 35, United States Code, 
    is amended to read as follows:
``Sec. 291. Derived Patents
    ``(a) In General.--The owner of a patent may have relief by civil 
action against the owner of another patent that claims the same 
invention and has an earlier effective filing date, if the invention 
claimed in such other patent was derived from the inventor of the 
invention claimed in the patent owned by the person seeking relief 
under this section.
    ``(b) Filing Limitation.--An action under this section may be filed 
only before the end of the 1-year period beginning on the date of the 
issuance of the first patent containing a claim to the allegedly 
derived invention and naming an individual alleged to have derived such 
invention as the inventor or joint inventor.''.
        (2) Conforming amendment.--The item relating to section 291 in 
    the table of sections for chapter 29 of title 35, United States 
    Code, is amended to read as follows:

``291. Derived patents.''.

    (i) Derivation Proceedings.--Section 135 of title 35, United States 
Code, is amended to read as follows:
``Sec. 135. Derivation proceedings
    ``(a) Institution of Proceeding.--An applicant for patent may file 
a petition to institute a derivation proceeding in the Office. The 
petition shall set forth with particularity the basis for finding that 
an inventor named in an earlier application derived the claimed 
invention from an inventor named in the petitioner's application and, 
without authorization, the earlier application claiming such invention 
was filed. Any such petition may be filed only within the 1-year period 
beginning on the date of the first publication of a claim to an 
invention that is the same or substantially the same as the earlier 
application's claim to the invention, shall be made under oath, and 
shall be supported by substantial evidence. Whenever the Director 
determines that a petition filed under this subsection demonstrates 
that the standards for instituting a derivation proceeding are met, the 
Director may institute a derivation proceeding. The determination by 
the Director whether to institute a derivation proceeding shall be 
final and nonappealable.
    ``(b) Determination by Patent Trial and Appeal Board.--In a 
derivation proceeding instituted under subsection (a), the Patent Trial 
and Appeal Board shall determine whether an inventor named in the 
earlier application derived the claimed invention from an inventor 
named in the petitioner's application and, without authorization, the 
earlier application claiming such invention was filed. In appropriate 
circumstances, the Patent Trial and Appeal Board may correct the naming 
of the inventor in any application or patent at issue. The Director 
shall prescribe regulations setting forth standards for the conduct of 
derivation proceedings, including requiring parties to provide 
sufficient evidence to prove and rebut a claim of derivation.
    ``(c) Deferral of Decision.--The Patent Trial and Appeal Board may 
defer action on a petition for a derivation proceeding until the 
expiration of the 3-month period beginning on the date on which the 
Director issues a patent that includes the claimed invention that is 
the subject of the petition. The Patent Trial and Appeal Board also may 
defer action on a petition for a derivation proceeding, or stay the 
proceeding after it has been instituted, until the termination of a 
proceeding under chapter 30, 31, or 32 involving the patent of the 
earlier applicant.
    ``(d) Effect of Final Decision.--The final decision of the Patent 
Trial and Appeal Board, if adverse to claims in an application for 
patent, shall constitute the final refusal by the Office on those 
claims. The final decision of the Patent Trial and Appeal Board, if 
adverse to claims in a patent, shall, if no appeal or other review of 
the decision has been or can be taken or had, constitute cancellation 
of those claims, and notice of such cancellation shall be endorsed on 
copies of the patent distributed after such cancellation.
    ``(e) Settlement.--Parties to a proceeding instituted under 
subsection (a) 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, if any, 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.
    ``(f) Arbitration.--Parties to a proceeding instituted under 
subsection (a) may, within such time as may be specified by the 
Director by regulation, 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 
the patentability of the claimed inventions involved in the 
proceeding.''.
    (j) Elimination of References to Interferences.--(1) Sections 134, 
145, 146, 154, and 305 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)(A) Section 146 of title 35, United States Code, is amended--
            (i) by striking ``an interference'' and inserting ``a 
        derivation proceeding''; and
            (ii) by striking ``the interference'' and inserting ``the 
        derivation proceeding''.
        (B) The subparagraph heading for section 154(b)(1)(C) of title 
    35, United States Code, is amended to read as follows:
                ``(C) Guarantee of adjustments for delays due to 
            derivation proceedings, secrecy orders, and appeals.--''.
    (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 146 of title 35, United States 
Code, is amended to read as follows:
``Sec. 146. Civil action in case of derivation proceeding''.
    (5) 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.''.

    (6) 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.''.

    (k) Statute of Limitations.--
        (1) In general.--Section 32 of title 35, United States Code, is 
    amended by inserting between the third and fourth sentences the 
    following: ``A proceeding under this section shall be commenced not 
    later than the earlier of either the date that is 10 years after 
    the date on which the misconduct forming the basis for the 
    proceeding occurred, or 1 year after the date on which the 
    misconduct forming the basis for the proceeding is made known to an 
    officer or employee of the Office as prescribed in the regulations 
    established under section 2(b)(2)(D).''.
        (2) Report to congress.--The Director shall provide on a 
    biennial basis to the Judiciary Committees of the Senate and House 
    of Representatives a report providing a short description of 
    incidents made known to an officer or employee of the Office as 
    prescribed in the regulations established under section 2(b)(2)(D) 
    of title 35, United States Code, that reflect substantial evidence 
    of misconduct before the Office but for which the Office was barred 
    from commencing a proceeding under section 32 of title 35, United 
    States Code, by the time limitation established by the fourth 
    sentence of that section.
        (3) Effective date.--The amendment made by paragraph (1) shall 
    apply in any case in which the time period for instituting a 
    proceeding under section 32 of title 35, United States Code, had 
    not lapsed before the date of the enactment of this Act.
    (l) Small Business Study.--
        (1) Definitions.--In this subsection--
            (A) the term ``Chief Counsel'' means the Chief Counsel for 
        Advocacy of the Small Business Administration;
            (B) the term ``General Counsel'' means the General Counsel 
        of the United States Patent and Trademark Office; and
            (C) the term ``small business concern'' has the meaning 
        given that term under section 3 of the Small Business Act (15 
        U.S.C. 632).
        (2) Study.--
            (A) In general.--The Chief Counsel, in consultation with 
        the General Counsel, shall conduct a study of the effects of 
        eliminating the use of dates of invention in determining 
        whether an applicant is entitled to a patent under title 35, 
        United States Code.
            (B) Areas of study.--The study conducted under subparagraph 
        (A) shall include examination of the effects of eliminating the 
        use of invention dates, including examining--
                (i) how the change would affect the ability of small 
            business concerns to obtain patents and their costs of 
            obtaining patents;
                (ii) whether the change would create, mitigate, or 
            exacerbate any disadvantages for applicants for patents 
            that are small business concerns relative to applicants for 
            patents that are not small business concerns, and whether 
            the change would create any advantages for applicants for 
            patents that are small business concerns relative to 
            applicants for patents that are not small business 
            concerns;
                (iii) the cost savings and other potential benefits to 
            small business concerns of the change; and
                (iv) the feasibility and costs and benefits to small 
            business concerns of alternative means of determining 
            whether an applicant is entitled to a patent under title 
            35, United States Code.
        (3) Report.--Not later than the date that is 1 year after the 
    date of the enactment of this Act, the Chief Counsel shall submit 
    to the Committee on Small Business and Entrepreneurship and the 
    Committee on the Judiciary of the Senate and the Committee on Small 
    Business and the Committee on the Judiciary of the House of 
    Representatives a report on the results of the study under 
    paragraph (2).
    (m) Report on Prior User Rights.--
        (1) In general.--Not later than the end of the 4-month period 
    beginning on the date of the 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 
        members of the European Union and 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.
            (F) An analysis of whether the change to a first-to-file 
        patent system creates a particular need for prior user rights.
        (2) Consultation with other agencies.--In preparing the report 
    required under paragraph (1), the Director shall consult with the 
    United States Trade Representative, the Secretary of State, and the 
    Attorney General.
    (n) Effective Date.--
        (1) In general.--Except as otherwise provided in this section, 
    the amendments made by this section shall take effect upon the 
    expiration of the 18-month period beginning on the date of the 
    enactment of this Act, and shall apply to any application for 
    patent, and to any patent issuing thereon, that contains or 
    contained at any time--
            (A) a claim to a claimed invention that has an effective 
        filing date as defined in section 100(i) of title 35, United 
        States Code, that is on or after the effective date described 
        in this paragraph; or
            (B) a specific reference under section 120, 121, or 365(c) 
        of title 35, United States Code, to any patent or application 
        that contains or contained at any time such a claim.
        (2) Interfering patents.--The provisions of sections 102(g), 
    135, and 291 of title 35, United States Code, as in effect on the 
    day before the effective date set forth in paragraph (1) of this 
    subsection, shall apply to each claim of an application for patent, 
    and any patent issued thereon, for which the amendments made by 
    this section also apply, if such application or patent contains or 
    contained at any time--
            (A) a claim to an invention having an effective filing date 
        as defined in section 100(i) of title 35, United States Code, 
        that occurs before the effective date set forth in paragraph 
        (1) of this subsection; or
            (B) a specific reference under section 120, 121, or 365(c) 
        of title 35, United States Code, to any patent or application 
        that contains or contained at any time such a claim.
    (o) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent system from ``first to invent'' to 
a system of ``first inventor to file'' will promote the progress of 
science and the useful arts by securing for limited times to inventors 
the exclusive rights to their discoveries and provide inventors with 
greater certainty regarding the scope of protection provided by the 
grant of exclusive rights to their discoveries.
    (p) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent system from ``first to invent'' to 
a system of ``first inventor to file'' will improve the United States 
patent system and promote harmonization of the United States patent 
system with the patent systems commonly used in nearly all other 
countries throughout the world with whom the United States conducts 
trade and thereby promote greater international uniformity and 
certainty in the procedures used for securing the exclusive rights of 
inventors to their discoveries.
SEC. 4. 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) or commences 
the national stage under section 371 shall include, or be amended to 
include, the name of the inventor for any invention claimed in the 
application. Except as otherwise provided in this section, each 
individual who is the inventor or a joint inventor of a claimed 
invention in an application for patent shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration 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.--
        ``(1) Exception.--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 who claims the benefit under section 120, 121, or 365(c) of the 
    filing of an earlier-filed application, if--
            ``(A) 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;
            ``(B) a substitute statement meeting the requirements of 
        subsection (d) was filed in connection with the earlier filed 
        application with respect to the individual; or
            ``(C) 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.
        ``(2) Copies of oaths, declarations, statements, or 
    assignments.--Notwithstanding paragraph (1), the Director may 
    require that a copy of the executed oath or declaration, the 
    substitute statement, or the assignment filed in connection with 
    the earlier-filed application be included in the later-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 meeting the requirements of 
    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.--A patent shall not 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 inserting ``or 
        declaration'' after ``and oath''; and
            (C) by inserting ``or declaration'' after ``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.--
        (1) In general.--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.''.
        (2) Conforming amendment.--Section 251 of title 35, United 
    States Code, is amended in the third undesignated paragraph by 
    inserting ``or the application for the original patent was filed by 
    the assignee of the entire interest'' after ``claims of the 
    original patent''.
    (c) Specification.--Section 112 of title 35, United States Code, is 
amended--
        (1) in the first undesignated 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 undesignated paragraph--
            (A) by striking ``The specification'' and inserting ``(b) 
        Conclusion.--The specification''; and
            (B) by striking ``applicant regards as his invention'' and 
        inserting ``inventor or a joint inventor regards as the 
        invention'';
        (3) in the third undesignated paragraph, by striking ``A 
    claim'' and inserting ``(c) Form.--A claim'';
        (4) in the fourth undesignated paragraph, by striking ``Subject 
    to the following paragraph,'' and inserting ``(d) Reference in 
    Dependent Forms.--Subject to subsection (e),'';
        (5) in the fifth undesignated paragraph, by striking ``A 
    claim'' and inserting ``(e) Reference in Multiple Dependent Form.--
    A claim''; and
        (6) in the last undesignated paragraph, by striking ``An 
    element'' and inserting ``(f) Element in Claim for a Combination.--
    An element''.
    (d) Conforming Amendments.--
        (1) Sections 111(b)(1)(A) of title 35, United States Code, is 
    amended by striking ``the first paragraph of section 112 of this 
    title'' and inserting ``section 112(a)''.
        (2) Section 111(b)(2) of title 35, United States Code, is 
    amended by striking ``the second through fifth paragraphs of 
    section 112,'' and inserting ``subsections (b) through (e) of 
    section 112,''.
    (e) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent application 
that is filed on or after that effective date.
SEC. 5. DEFENSE TO INFRINGEMENT BASED ON PRIOR COMMERCIAL USE.
    (a) In General.--Section 273 of title 35, United States Code, is 
amended to read as follows:
``Sec. 273. Defense to infringement based on prior commercial use
    ``(a) In General.--A person shall be entitled to a defense under 
section 282(b) with respect to subject matter consisting of a process, 
or consisting of a machine, manufacture, or composition of matter used 
in a manufacturing or other commercial process, that would otherwise 
infringe a claimed invention being asserted against the person if--
        ``(1) such person, acting in good faith, commercially used the 
    subject matter in the United States, either in connection with an 
    internal commercial use or an actual arm's length sale or other 
    arm's length commercial transfer of a useful end result of such 
    commercial use; and
        ``(2) such commercial use occurred at least 1 year before the 
    earlier of either--
            ``(A) the effective filing date of the claimed invention; 
        or
            ``(B) the date on which the claimed invention was disclosed 
        to the public in a manner that qualified for the exception from 
        prior art under section 102(b).
    ``(b) Burden of Proof.--A person asserting a defense under this 
section shall have the burden of establishing the defense by clear and 
convincing evidence.
    ``(c) Additional Commercial Uses.--
        ``(1) Premarketing regulatory review.--Subject matter for which 
    commercial marketing or use is subject to a premarketing regulatory 
    review period during which the safety or efficacy of the subject 
    matter is established, including any period specified in section 
    156(g), shall be deemed to be commercially used for purposes of 
    subsection (a)(1) during such regulatory review period.
        ``(2) Nonprofit laboratory use.--A use of subject matter by a 
    nonprofit research laboratory or other nonprofit entity, such as a 
    university or hospital, for which the public is the intended 
    beneficiary, shall be deemed to be a commercial use for purposes of 
    subsection (a)(1), except that a defense under this section may be 
    asserted pursuant to this paragraph only for continued and 
    noncommercial use by and in the laboratory or other nonprofit 
    entity.
    ``(d) Exhaustion of Rights.--Notwithstanding subsection (e)(1), the 
sale or other disposition of a useful end result by a person entitled 
to assert a defense under this section in connection with a patent with 
respect to that useful end result shall exhaust the patent owner's 
rights under the patent to the extent that such rights would have been 
exhausted had such sale or other disposition been made by the patent 
owner.
    ``(e) Limitations and Exceptions.--
        ``(1) Personal defense.--
            ``(A) In general.--A defense under this section may be 
        asserted only by the person who performed or directed the 
        performance of the commercial use described in subsection (a), 
        or by an entity that controls, is controlled by, or is under 
        common control with such person.
            ``(B) Transfer of right.--Except for any transfer to the 
        patent owner, the right to assert a defense under this section 
        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.
            ``(C) Restriction on sites.--A defense under this section, 
        when acquired by a person as part of an assignment or transfer 
        described in subparagraph (B), may only be asserted for uses at 
        sites where the subject matter that would otherwise infringe a 
        claimed invention is in use before the later of the effective 
        filing date of the claimed invention or the date of the 
        assignment or transfer of such enterprise or line of business.
        ``(2) Derivation.--A person may not assert a defense under this 
    section if the subject matter on which the defense is based was 
    derived from the patentee or persons in privity with the patentee.
        ``(3) Not a general license.--The defense asserted by a person 
    under this section is not a general license under all claims of the 
    patent at issue, but extends only to the specific subject matter 
    for which it has been established that a commercial use that 
    qualifies under this section occurred, except that the defense 
    shall also extend to variations in the quantity or volume of use of 
    the claimed subject matter, and to improvements in the claimed 
    subject matter that do not infringe additional specifically claimed 
    subject matter of the patent.
        ``(4) Abandonment of use.--A person who has abandoned 
    commercial use (that qualifies under this section) of subject 
    matter may not rely on activities performed before the date of such 
    abandonment in establishing a defense under this section with 
    respect to actions taken on or after the date of such abandonment.
        ``(5) University exception.--
            ``(A) In general.--A person commercially using subject 
        matter to which subsection (a) applies may not assert a defense 
        under this section if the claimed invention with respect to 
        which the defense is asserted was, at the time the invention 
        was made, owned or subject to an obligation of assignment to 
        either an institution of higher education (as defined in 
        section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1001(a)), or a technology transfer organization whose primary 
        purpose is to facilitate the commercialization of technologies 
        developed by one or more such institutions of higher education.
            ``(B) Exception.--Subparagraph (A) shall not apply if any 
        of the activities required to reduce to practice the subject 
        matter of the claimed invention could not have been undertaken 
        using funds provided by the Federal Government.
    ``(f) Unreasonable Assertion of Defense.--If the defense under this 
section is pleaded by a person who is found to infringe the patent and 
who subsequently fails to demonstrate a reasonable basis for asserting 
the defense, the court shall find the case exceptional for the purpose 
of awarding attorney fees under section 285.
    ``(g) Invalidity.--A patent shall not be deemed to be invalid under 
section 102 or 103 solely because a defense is raised or established 
under this section.''.
    (b) Conforming Amendment.--The item relating to section 273 in the 
table of sections for chapter 28 of title 35, United States Code, is 
amended to read as follows:

``273. Defense to infringement based on prior commercial use.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to any patent issued on or after the date of the enactment of 
this Act.
SEC. 6. POST-GRANT REVIEW PROCEEDINGS.
    (a) Inter Partes Review.--Chapter 31 of title 35, United States 
Code, is amended to read as follows:

                   ``CHAPTER 31--INTER PARTES REVIEW

``Sec.
``311. Inter partes review.
``312. Petitions.
``313. Preliminary response to petition.
``314. Institution of inter partes review.
``315. Relation to other proceedings or actions.
``316. Conduct of inter partes review.
``317. Settlement.
``318. Decision of the Board.
``319. Appeal.

``Sec. 311. Inter partes review
    ``(a) In General.--Subject to the provisions of this chapter, a 
person who is not the owner of a patent may file with the Office a 
petition to institute an inter partes review of the patent. The 
Director shall establish, by regulation, fees to be paid by the person 
requesting the review, in such amounts as the Director determines to be 
reasonable, considering the aggregate costs of the review.
    ``(b) Scope.--A petitioner in an inter partes review may request to 
cancel as unpatentable 1 or more claims of a patent only on a ground 
that could be raised under section 102 or 103 and only on the basis of 
prior art consisting of patents or printed publications.
    ``(c) Filing Deadline.--A petition for inter partes review shall be 
filed after the later of either--
        ``(1) the date that is 9 months after the grant of a patent or 
    issuance of a reissue of a patent; or
        ``(2) if a post-grant review is instituted under chapter 32, 
    the date of the termination of such post-grant review.
``Sec. 312. Petitions
    ``(a) Requirements of Petition.--A petition filed under section 311 
may be considered only if--
        ``(1) the petition is accompanied by payment of the fee 
    established by the Director under section 311;
        ``(2) the petition identifies all 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 the challenge to each 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 expert opinions;
        ``(4) the petition provides such other information as the 
    Director may require by regulation; and
        ``(5) the petitioner provides copies of any of the documents 
    required under paragraphs (2), (3), and (4) to the patent owner or, 
    if applicable, the designated representative of the patent owner.
    ``(b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 311, the Director shall make the 
petition available to the public.
``Sec. 313. Preliminary response to petition
    ``If an inter partes review petition is filed under section 311, 
the patent owner shall have the right to file a preliminary response to 
the petition, within a time period set by the Director, that sets forth 
reasons why no inter partes review should be instituted based upon the 
failure of the petition to meet any requirement of this chapter.
``Sec. 314. Institution of inter partes review
    ``(a) Threshold.--The Director may not authorize an inter partes 
review to be instituted unless the Director determines that the 
information presented in the petition filed under section 311 and any 
response filed under section 313 shows that there is a reasonable 
likelihood that the petitioner would prevail with respect to at least 1 
of the claims challenged in the petition.
    ``(b) Timing.--The Director shall determine whether to institute an 
inter partes review under this chapter pursuant to a petition filed 
under section 311 within 3 months after--
        ``(1) receiving a preliminary response to the petition under 
    section 313; or
        ``(2) if no such preliminary response is filed, the last date 
    on which such response may be filed.
    ``(c) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection 
(a), and shall make such notice available to the public as soon as is 
practicable. Such notice shall include the date on which the review 
shall commence.
    ``(d) No Appeal.--The determination by the Director whether to 
institute an inter partes review under this section shall be final and 
nonappealable.
``Sec. 315. Relation to other proceedings or actions
    ``(a) Infringer's Civil Action.--
        ``(1) Inter partes review barred by civil action.--An inter 
    partes review may not be instituted if, before the date on which 
    the petition for such a review is filed, the petitioner or real 
    party in interest filed a civil action challenging the validity of 
    a claim of the patent.
        ``(2) Stay of civil action.--If the petitioner or real party in 
    interest files a civil action challenging the validity of a claim 
    of the patent on or after the date on which the petitioner files a 
    petition for inter partes review of the patent, that civil action 
    shall be automatically stayed until either--
            ``(A) the patent owner moves the court to lift the stay;
            ``(B) the patent owner files a civil action or counterclaim 
        alleging that the petitioner or real party in interest has 
        infringed the patent; or
            ``(C) the petitioner or real party in interest moves the 
        court to dismiss the civil action.
        ``(3) Treatment of counterclaim.--A counterclaim challenging 
    the validity of a claim of a patent does not constitute a civil 
    action challenging the validity of a claim of a patent for purposes 
    of this subsection.
    ``(b) Patent Owner's Action.--An inter partes review may not be 
instituted if the petition requesting the proceeding is filed more than 
1 year after the date on which the petitioner, real party in interest, 
or privy of the petitioner is served with a complaint alleging 
infringement of the patent. The time limitation set forth in the 
preceding sentence shall not apply to a request for joinder under 
subsection (c).
    ``(c) Joinder.--If the Director institutes an inter partes review, 
the Director, in his or her discretion, may join as a party to that 
inter partes review any person who properly files a petition under 
section 311 that the Director, after receiving a preliminary response 
under section 313 or the expiration of the time for filing such a 
response, determines warrants the institution of an inter partes review 
under section 314.
    ``(d) Multiple Proceedings.--Notwithstanding sections 135(a), 251, 
and 252, and chapter 30, during the pendency of an inter partes review, 
if another proceeding or matter involving the patent is before the 
Office, the Director may determine the manner in which the inter partes 
review or other proceeding or matter may proceed, including providing 
for stay, transfer, consolidation, or termination of any such matter or 
proceeding.
    ``(e) Estoppel.--
        ``(1) Proceedings before the office.--The petitioner in an 
    inter partes review of a claim in a patent under this chapter that 
    results in a final written decision under section 318(a), or the 
    real party in interest or privy of the petitioner, may not request 
    or maintain a proceeding before the Office with respect to that 
    claim on any ground that the petitioner raised or reasonably could 
    have raised during that inter partes review.
        ``(2) Civil actions and other proceedings.--The petitioner in 
    an inter partes review of a claim in a patent under this chapter 
    that results in a final written decision under section 318(a), or 
    the real party in interest or privy of the petitioner, may not 
    assert either in a civil action arising in whole or in part under 
    section 1338 of title 28 or in a proceeding before the 
    International Trade Commission under section 337 of the Tariff Act 
    of 1930 that the claim is invalid on any ground that the petitioner 
    raised or reasonably could have raised during that inter partes 
    review.
``Sec. 316. Conduct of inter partes review
    ``(a) Regulations.--The Director shall prescribe regulations--
        ``(1) providing that 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 that it be sealed shall, 
    if accompanied by a motion to seal, be treated as sealed pending 
    the outcome of the ruling on the motion;
        ``(2) setting forth the standards for the showing of sufficient 
    grounds to institute a review under section 314(a);
        ``(3) establishing procedures for the submission of 
    supplemental information after the petition is filed;
        ``(4) establishing and governing inter partes review under this 
    chapter and the relationship of such review to other proceedings 
    under this title;
        ``(5) setting forth standards and procedures for discovery of 
    relevant evidence, including that such discovery shall be limited 
    to--
            ``(A) the deposition of witnesses submitting affidavits or 
        declarations; and
            ``(B) what is otherwise necessary in the interest of 
        justice;
        ``(6) prescribing 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 an unnecessary increase in 
    the cost of the proceeding;
        ``(7) providing for protective orders governing the exchange 
    and submission of confidential information;
        ``(8) providing for the filing by the patent owner of a 
    response to the petition under section 313 after an inter partes 
    review has been instituted, and requiring that the patent owner 
    file with such response, through affidavits or declarations, any 
    additional factual evidence and expert opinions on which the patent 
    owner relies in support of the response;
        ``(9) setting forth standards and procedures for allowing the 
    patent owner to move to amend the patent under subsection (d) to 
    cancel a challenged claim or propose a reasonable number of 
    substitute claims, and ensuring that any information submitted by 
    the patent owner in support of any amendment entered under 
    subsection (d) is made available to the public as part of the 
    prosecution history of the patent;
        ``(10) providing either party with the right to an oral hearing 
    as part of the proceeding;
        ``(11) requiring that the final determination in an inter 
    partes review be issued not later than 1 year after the date on 
    which the Director notices the institution of a review under this 
    chapter, except that the Director may, for good cause shown, extend 
    the 1-year period by not more than 6 months, and may adjust the 
    time periods in this paragraph in the case of joinder under section 
    315(c);
        ``(12) setting a time period for requesting joinder under 
    section 315(c); and
        ``(13) providing the petitioner with at least 1 opportunity to 
    file written comments within a time period established by the 
    Director.
    ``(b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such regulation 
on the economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to timely 
complete proceedings instituted under this chapter.
    ``(c) Patent Trial and Appeal Board.--The Patent Trial and Appeal 
Board shall, in accordance with section 6, conduct each inter partes 
review instituted under this chapter.
    ``(d) Amendment of the Patent.--
        ``(1) In general.--During an inter partes review instituted 
    under this chapter, the patent owner may file 1 motion to amend the 
    patent in 1 or more of the following ways:
            ``(A) Cancel any challenged patent claim.
            ``(B) For each challenged claim, propose a reasonable 
        number of substitute claims.
        ``(2) Additional motions.--Additional motions to amend may be 
    permitted upon the joint request of the petitioner and the patent 
    owner to materially advance the settlement of a proceeding under 
    section 317, or as permitted by regulations prescribed by the 
    Director.
        ``(3) Scope of claims.--An amendment under this subsection may 
    not enlarge the scope of the claims of the patent or introduce new 
    matter.
    ``(e) Evidentiary Standards.--In an inter partes review instituted 
under this chapter, the petitioner shall have the burden of proving a 
proposition of unpatentability by a preponderance of the evidence.
``Sec. 317. Settlement
    ``(a) In General.--An inter partes review instituted 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 merits of the proceeding before the request for 
termination is filed. If the inter partes review is terminated with 
respect to a petitioner under this section, no estoppel under section 
315(e) shall attach to the petitioner, or to the real party in interest 
or privy of the petitioner, on the basis of that petitioner's 
institution of that inter partes review. If no petitioner remains in 
the inter partes review, the Office may terminate the review or proceed 
to a final written decision under section 318(a).
    ``(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 an inter 
partes review under this section shall be in writing and a true copy of 
such agreement or understanding shall be filed in the Office before the 
termination of the inter partes review as between the parties. 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, and shall be made 
available only to Federal Government agencies on written request, or to 
any person on a showing of good cause.
``Sec. 318. Decision of the Board
    ``(a) Final Written Decision.--If an inter partes review 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 by the petitioner and any 
new claim added under section 316(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Intervening Rights.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following an 
inter partes review under this chapter shall have the same effect as 
that specified in section 252 for reissued patents on the right of any 
person who made, purchased, or used within the United States, or 
imported into the United States, anything patented by such proposed 
amended or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each inter partes review.
``Sec. 319. Appeal
    ``A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 318(a) may appeal the 
decision pursuant to sections 141 through 144. Any party to the inter 
partes review shall have the right to be a party to the appeal.''.
    (b) Conforming Amendment.--The table of chapters for part III of 
title 35, United States Code, is amended by striking the item relating 
to chapter 31 and inserting the following:

``31. Inter Partes Review.........................................311''.

    (c) Regulations and Effective Date.--
        (1) Regulations.--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 31 of title 35, United States 
    Code, as amended by subsection (a) of this section.
        (2) Applicability.--
            (A) In general.--The amendments made by subsection (a) 
        shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and shall 
        apply to any patent issued before, on, or after that effective 
        date.
            (B) Graduated implementation.--The Director may impose a 
        limit on the number of inter partes reviews that may be 
        instituted under chapter 31 of title 35, United States Code, 
        during each of the first 4 1-year periods in which the 
        amendments made by subsection (a) are in effect, if such number 
        in each year equals or exceeds the number of inter partes 
        reexaminations that are ordered under chapter 31 of title 35, 
        United States Code, in the last fiscal year ending before the 
        effective date of the amendments made by subsection (a).
        (3) Transition.--
            (A) In general.--Chapter 31 of title 35, United States 
        Code, is amended--
                (i) in section 312--

                    (I) in subsection (a)--

                        (aa) in the first sentence, by striking ``a 
                    substantial new question of patentability affecting 
                    any claim of the patent concerned is raised by the 
                    request,'' and inserting ``the information 
                    presented in the request shows that there is a 
                    reasonable likelihood that the requester would 
                    prevail with respect to at least 1 of the claims 
                    challenged in the request,''; and
                        (bb) in the second sentence, by striking ``The 
                    existence of a substantial new question of 
                    patentability'' and inserting ``A showing that 
                    there is a reasonable likelihood that the requester 
                    would prevail with respect to at least 1 of the 
                    claims challenged in the request''; and

                    (II) in subsection (c), in the second sentence, by 
                striking ``no substantial new question of patentability 
                has been raised,'' and inserting ``the showing required 
                by subsection (a) has not been made,''; and

                (ii) in section 313, by striking ``a substantial new 
            question of patentability affecting a claim of the patent 
            is raised'' and inserting ``it has been shown that there is 
            a reasonable likelihood that the requester would prevail 
            with respect to at least 1 of the claims challenged in the 
            request''.
            (B) Application.--The amendments made by this paragraph--
                (i) shall take effect on the date of the enactment of 
            this Act; and
                (ii) shall apply to requests for inter partes 
            reexamination that are filed on or after such date of 
            enactment, but before the effective date set forth in 
            paragraph (2)(A) of this subsection.
            (C) Continued applicability of prior provisions.--The 
        provisions of chapter 31 of title 35, United States Code, as 
        amended by this paragraph, shall continue to apply to requests 
        for inter partes reexamination that are filed before the 
        effective date set forth in paragraph (2)(A) as if subsection 
        (a) had not been enacted.
    (d) Post-Grant Review.--Part III of title 35, United States Code, 
is amended by adding at the end the following:

                    ``CHAPTER 32--POST-GRANT REVIEW

``Sec.
``321. Post-grant review.
``322. Petitions.
``323. Preliminary response to petition.
``324. Institution of post-grant review.
``325. Relation to other proceedings or actions.
``326. Conduct of post-grant review.
``327. Settlement.
``328. Decision of the Board.
``329. Appeal.

``Sec. 321. Post-grant review
    ``(a) In General.--Subject to the provisions of this chapter, a 
person who is not the owner of a patent may file with the Office a 
petition to institute a post-grant review of the patent. The Director 
shall establish, by regulation, fees to be paid by the person 
requesting the review, in such amounts as the Director determines to be 
reasonable, considering the aggregate costs of the post-grant review.
    ``(b) Scope.--A petitioner in a post-grant review may request to 
cancel as unpatentable 1 or more claims 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).
    ``(c) Filing Deadline.--A petition for a post-grant review may only 
be filed not later than the date that is 9 months after the date of the 
grant of the patent or of the issuance of a reissue patent (as the case 
may be).
``Sec. 322. Petitions
    ``(a) 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 all 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 the challenge to each 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 other information as the 
    Director may require by regulation; and
        ``(5) the petitioner provides copies of any of the documents 
    required under paragraphs (2), (3), and (4) to the patent owner or, 
    if applicable, the designated representative of the patent owner.
    ``(b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 321, the Director shall make the 
petition available to the public.
``Sec. 323. Preliminary response to petition
    ``If a post-grant review petition is filed under section 321, the 
patent owner shall have the right to file a preliminary response to the 
petition, within a time period set by the Director, that sets forth 
reasons why no post-grant review should be instituted based upon the 
failure of the petition to meet any requirement of this chapter.
``Sec. 324. Institution of post-grant review
    ``(a) Threshold.--The Director may not authorize a post-grant 
review to be instituted unless the Director determines that the 
information presented in the petition filed under section 321, if such 
information is not rebutted, would demonstrate that it is more likely 
than not that at least 1 of the claims challenged in the petition is 
unpatentable.
    ``(b) Additional Grounds.--The determination required under 
subsection (a) may also be satisfied by a showing that the petition 
raises a novel or unsettled legal question that is important to other 
patents or patent applications.
    ``(c) Timing.--The Director shall determine whether to institute a 
post-grant review under this chapter pursuant to a petition filed under 
section 321 within 3 months after--
        ``(1) receiving a preliminary response to the petition under 
    section 323; or
        ``(2) if no such preliminary response is filed, the last date 
    on which such response may be filed.
    ``(d) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection (a) 
or (b), and shall make such notice available to the public as soon as 
is practicable. Such notice shall include the date on which the review 
shall commence.
    ``(e) No Appeal.--The determination by the Director whether to 
institute a post-grant review under this section shall be final and 
nonappealable.
``Sec. 325. Relation to other proceedings or actions
    ``(a) Infringer's Civil Action.--
        ``(1) Post-grant review barred by civil action.--A post-grant 
    review may not be instituted under this chapter if, before the date 
    on which the petition for such a review is filed, the petitioner or 
    real party in interest filed a civil action challenging the 
    validity of a claim of the patent.
        ``(2) Stay of civil action.--If the petitioner or real party in 
    interest files a civil action challenging the validity of a claim 
    of the patent on or after the date on which the petitioner files a 
    petition for post-grant review of the patent, that civil action 
    shall be automatically stayed until either--
            ``(A) the patent owner moves the court to lift the stay;
            ``(B) the patent owner files a civil action or counterclaim 
        alleging that the petitioner or real party in interest has 
        infringed the patent; or
            ``(C) the petitioner or real party in interest moves the 
        court to dismiss the civil action.
        ``(3) Treatment of counterclaim.--A counterclaim challenging 
    the validity of a claim of a patent does not constitute a civil 
    action challenging the validity of a claim of a patent for purposes 
    of this subsection.
    ``(b) Preliminary Injunctions.--If a civil action alleging 
infringement of a patent is filed within 3 months after the date on 
which the patent is granted, the court may not stay its consideration 
of the patent owner's motion for a preliminary injunction against 
infringement of the patent on the basis that a petition for post-grant 
review has been filed under this chapter or that such a post-grant 
review has been instituted under this chapter.
    ``(c) Joinder.--If more than 1 petition for a post-grant review 
under this chapter is properly filed against the same patent and the 
Director determines that more than 1 of these petitions warrants the 
institution of a post-grant review under section 324, the Director may 
consolidate such reviews into a single post-grant review.
    ``(d) Multiple Proceedings.--Notwithstanding sections 135(a), 251, 
and 252, and chapter 30, during the pendency of any post-grant review 
under this chapter, if another proceeding or matter involving the 
patent is before the Office, the Director may determine the manner in 
which the post-grant review or other proceeding or matter may proceed, 
including providing for the stay, transfer, consolidation, or 
termination of any such matter or proceeding. In determining whether to 
institute or order a proceeding under this chapter, chapter 30, or 
chapter 31, the Director may take into account whether, and reject the 
petition or request because, the same or substantially the same prior 
art or arguments previously were presented to the Office.
    ``(e) Estoppel.--
        ``(1) Proceedings before the office.--The petitioner in a post-
    grant review of a claim in a patent under this chapter that results 
    in a final written decision under section 328(a), or the real party 
    in interest or privy of the petitioner, may not request or maintain 
    a proceeding before the Office with respect to that claim on any 
    ground that the petitioner raised or reasonably could have raised 
    during that post-grant review.
        ``(2) Civil actions and other proceedings.--The petitioner in a 
    post-grant review of a claim in a patent under this chapter that 
    results in a final written decision under section 328(a), or the 
    real party in interest or privy of the petitioner, may not assert 
    either in a civil action arising in whole or in part under section 
    1338 of title 28 or in a proceeding before the International Trade 
    Commission under section 337 of the Tariff Act of 1930 that the 
    claim is invalid on any ground that the petitioner raised or 
    reasonably could have raised during that post-grant review.
    ``(f) Reissue Patents.--A post-grant review may not be instituted 
under this chapter if the petition requests cancellation of a claim in 
a reissue patent that is identical to or narrower than a claim in the 
original patent from which the reissue patent was issued, and the time 
limitations in section 321(c) would bar filing a petition for a post-
grant review for such original patent.
``Sec. 326. Conduct of post-grant review
    ``(a) Regulations.--The Director shall prescribe regulations--
        ``(1) providing that 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 that it be sealed shall, 
    if accompanied by a motion to seal, be treated as sealed pending 
    the outcome of the ruling on the motion;
        ``(2) setting forth the standards for the showing of sufficient 
    grounds to institute a review under subsections (a) and (b) of 
    section 324;
        ``(3) establishing procedures for the submission of 
    supplemental information after the petition is filed;
        ``(4) establishing and governing a post-grant review under this 
    chapter and the relationship of such review to other proceedings 
    under this title;
        ``(5) setting forth standards and 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;
        ``(6) prescribing 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 an unnecessary increase in 
    the cost of the proceeding;
        ``(7) providing for protective orders governing the exchange 
    and submission of confidential information;
        ``(8) providing for the filing by the patent owner of a 
    response to the petition under section 323 after a post-grant 
    review has been instituted, and requiring that the patent owner 
    file with such response, through affidavits or declarations, any 
    additional factual evidence and expert opinions on which the patent 
    owner relies in support of the response;
        ``(9) setting forth standards and procedures for allowing the 
    patent owner to move to amend the patent under subsection (d) to 
    cancel a challenged claim or propose a reasonable number of 
    substitute claims, and ensuring that any information submitted by 
    the patent owner in support of any amendment entered under 
    subsection (d) is made available to the public as part of the 
    prosecution history of the patent;
        ``(10) providing either party with the right to an oral hearing 
    as part of the proceeding;
        ``(11) requiring that the final determination in any post-grant 
    review be issued not later than 1 year after the date on which the 
    Director notices the institution of a proceeding under this 
    chapter, except that the Director may, for good cause shown, extend 
    the 1-year period by not more than 6 months, and may adjust the 
    time periods in this paragraph in the case of joinder under section 
    325(c); and
        ``(12) providing the petitioner with at least 1 opportunity to 
    file written comments within a time period established by the 
    Director.
    ``(b) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect of any such regulation 
on the economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to timely 
complete proceedings instituted under this chapter.
    ``(c) Patent Trial and Appeal Board.--The Patent Trial and Appeal 
Board shall, in accordance with section 6, conduct each post-grant 
review instituted under this chapter.
    ``(d) Amendment of the Patent.--
        ``(1) In general.--During a post-grant review instituted under 
    this chapter, the patent owner may file 1 motion to amend the 
    patent in 1 or more of the following ways:
            ``(A) Cancel any challenged patent claim.
            ``(B) For each challenged claim, propose a reasonable 
        number of substitute claims.
        ``(2) Additional motions.--Additional motions to amend may be 
    permitted upon the joint request of the petitioner and the patent 
    owner to materially advance the settlement of a proceeding under 
    section 327, or upon the request of the patent owner for good cause 
    shown.
        ``(3) Scope of claims.--An amendment under this subsection may 
    not enlarge the scope of the claims of the patent or introduce new 
    matter.
    ``(e) Evidentiary Standards.--In a post-grant review instituted 
under this chapter, the petitioner shall have the burden of proving a 
proposition of unpatentability by a preponderance of the evidence.
``Sec. 327. Settlement
    ``(a) In General.--A post-grant review instituted 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 merits of the proceeding before the request for 
termination is filed. If the post-grant review is terminated with 
respect to a petitioner under this section, no estoppel under section 
325(e) shall attach to the petitioner, or to the real party in interest 
or privy of the petitioner, on the basis of that petitioner's 
institution of that post-grant review. If no petitioner remains in the 
post-grant review, the Office may terminate the post-grant review or 
proceed to a final written decision under section 328(a).
    ``(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 under this section shall be in writing, and a true copy of 
such agreement or understanding shall be filed in the Office before the 
termination of the post-grant review as between the parties. 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, and shall be made 
available only to Federal Government agencies on written request, or to 
any person on a showing of good cause.
``Sec. 328. Decision of the Board
    ``(a) Final Written Decision.--If a post-grant review 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 by the petitioner and any new claim 
added under section 326(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Intervening Rights.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following a 
post-grant review under this chapter shall have the same effect as that 
specified in section 252 of this title for reissued patents on the 
right of any person who made, purchased, or used within the United 
States, or imported into the United States, anything patented by such 
proposed amended or new claim, or who made substantial preparation 
therefor, before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each post-grant review.
``Sec. 329. Appeal
    ``A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 328(a) may appeal the 
decision pursuant to sections 141 through 144. Any party to the post-
grant review shall have the right to be a party to the appeal.''.
    (e) 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...........................................321''.

    (f) Regulations and Effective Date.--
        (1) Regulations.--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 (d) of this section.
        (2) Applicability.--
            (A) In general.--The amendments made by subsection (d) 
        shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and, except 
        as provided in section 18 and in paragraph (3), shall apply 
        only to patents described in section 3(n)(1).
            (B) Limitation.--The Director may impose a limit on the 
        number of post-grant reviews that may be instituted under 
        chapter 32 of title 35, United States Code, during each of the 
        first 4 1-year periods in which the amendments made by 
        subsection (d) are in effect.
        (3) Pending interferences.--
            (A) Procedures in general.--The Director shall determine, 
        and include in the regulations issued under paragraph (1), the 
        procedures under which an interference commenced before the 
        effective date set forth in paragraph (2)(A) is to proceed, 
        including whether such interference--
                (i) is to be dismissed without prejudice to the filing 
            of a petition for a post-grant review under chapter 32 of 
            title 35, United States Code; or
                (ii) is to proceed as if this Act had not been enacted.
            (B) Proceedings by patent trial and appeal board.--For 
        purposes of an interference that is commenced before the 
        effective date set forth in paragraph (2)(A), the Director may 
        deem the Patent Trial and Appeal Board to be the Board of 
        Patent Appeals and Interferences, and may allow the Patent 
        Trial and Appeal Board to conduct any further proceedings in 
        that interference.
            (C) Appeals.--The authorization to appeal or have remedy 
        from derivation proceedings in sections 141(d) and 146 of title 
        35, United States Code, as amended by this Act, and the 
        jurisdiction to entertain appeals from derivation proceedings 
        in section 1295(a)(4)(A) of title 28, United States Code, as 
        amended by this Act, shall be deemed to extend to any final 
        decision in an interference that is commenced before the 
        effective date set forth in paragraph (2)(A) of this subsection 
        and that is not dismissed pursuant to this paragraph.
    (g) Citation of Prior Art and Written Statements.--
        (1) In general.--Section 301 of title 35, United States Code, 
    is amended to read as follows:
``Sec. 301. Citation of prior art and written statements
    ``(a) In General.--Any person at any time may cite to the Office in 
writing--
        ``(1) prior art consisting of patents or printed publications 
    which that person believes to have a bearing on the patentability 
    of any claim of a particular patent; or
        ``(2) statements of the patent owner filed in a proceeding 
    before a Federal court or the Office in which the patent owner took 
    a position on the scope of any claim of a particular patent.
    ``(b) Official File.--If the person citing prior art or written 
statements pursuant to subsection (a) explains in writing the 
pertinence and manner of applying the prior art or written statements 
to at least 1 claim of the patent, the citation of the prior art or 
written statements and the explanation thereof shall become a part of 
the official file of the patent.
    ``(c) Additional Information.--A party that submits a written 
statement pursuant to subsection (a)(2) shall include any other 
documents, pleadings, or evidence from the proceeding in which the 
statement was filed that addresses the written statement.
    ``(d) Limitations.--A written statement submitted pursuant to 
subsection (a)(2), and additional information submitted pursuant to 
subsection (c), shall not be considered by the Office for any purpose 
other than to determine the proper meaning of a patent claim in a 
proceeding that is ordered or instituted pursuant to section 304, 314, 
or 324. If any such written statement or additional information is 
subject to an applicable protective order, such statement or 
information shall be redacted to exclude information that is subject to 
that order.
    ``(e) Confidentiality.--Upon the written request of the person 
citing prior art or written statements pursuant to subsection (a), that 
person's identity shall be excluded from the patent file and kept 
confidential.''.
        (2) Conforming amendment.--The item relating to section 301 in 
    the table of sections for chapter 30 of title 35, United States 
    Code, is amended to read as follows:

``301. Citation of prior art and written statements.''.

        (3) Effective date.--The amendments made by this subsection 
    shall take effect upon the expiration of the 1-year period 
    beginning on the date of the enactment of this Act and shall apply 
    to any patent issued before, on, or after that effective date.
    (h) Reexamination.--
        (1) Determination by director.--
            (A) In general.--Section 303(a) of title 35, United States 
        Code, is amended by striking ``section 301 of this title'' and 
        inserting ``section 301 or 302''.
            (B) Effective date.--The amendment made by this paragraph 
        shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and shall 
        apply to any patent issued before, on, or after that effective 
        date.
        (2) Appeal.--
            (A) In general.--Section 306 of title 35, United States 
        Code, is amended by striking ``145'' and inserting ``144''.
            (B) Effective date.--The amendment made by this paragraph 
        shall take effect on the date of the enactment of this Act and 
        shall apply to any appeal of a reexamination before the Board 
        of Patent Appeals and Interferences or the Patent Trial and 
        Appeal Board that is pending on, or brought on or after, the 
        date of the enactment of this Act.
SEC. 7. PATENT TRIAL AND APPEAL BOARD.
    (a) Composition and Duties.--
        (1) In general.--Section 6 of title 35, United States Code, is 
    amended to read as follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) In General.--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, in 
consultation with 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 applications for patents pursuant to 
    section 134(a);
        ``(2) review appeals of reexaminations pursuant to section 
    134(b);
        ``(3) conduct derivation proceedings pursuant to section 135; 
    and
        ``(4) conduct inter partes reviews and post-grant reviews 
    pursuant to chapters 31 and 32.
    ``(c) 3-Member Panels.--Each appeal, derivation proceeding, post-
grant review, and inter partes review 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.
    ``(d) Treatment of Prior Appointments.--The Secretary of Commerce 
may, in the Secretary's discretion, deem the appointment of an 
administrative patent judge who, before the date of the enactment of 
this subsection, held office pursuant to an appointment by the Director 
to take effect on the date on which the Director initially appointed 
the administrative patent judge. It shall be a defense to a challenge 
to the appointment of an administrative patent judge on the basis of 
the judge's having been originally appointed by the Director that the 
administrative patent judge so appointed was acting as a de facto 
officer.''.
        (2) Conforming amendment.--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.''.

    (b) Administrative Appeals.--Section 134 of title 35, United States 
Code, is amended--
        (1) in subsection (b), by striking ``any reexamination 
    proceeding'' and inserting ``a reexamination''; and
        (2) by striking subsection (c).
    (c) Circuit Appeals.--
        (1) In general.--Section 141 of title 35, United States Code, 
    is amended to read as follows:
``Sec. 141. Appeal to Court of Appeals for the Federal Circuit
    ``(a) Examinations.--An applicant who is dissatisfied with the 
final decision in an appeal to the Patent Trial and Appeal Board under 
section 134(a) may appeal the Board's decision to the United States 
Court of Appeals for the Federal Circuit. By filing such an appeal, the 
applicant waives his or her right to proceed under section 145.
    ``(b) Reexaminations.--A patent owner who is dissatisfied with the 
final decision in an appeal of a reexamination to the Patent Trial and 
Appeal Board under section 134(b) may appeal the Board's decision only 
to the United States Court of Appeals for the Federal Circuit.
    ``(c) Post-Grant and Inter Partes Reviews.--A party to an inter 
partes review or a post-grant review who is dissatisfied with the final 
written decision of the Patent Trial and Appeal Board under section 
318(a) or 328(a) (as the case may be) may appeal the Board's decision 
only to the United States Court of Appeals for the Federal Circuit.
    ``(d) Derivation Proceedings.--A party to a derivation proceeding 
who is dissatisfied with the final decision of the Patent Trial and 
Appeal Board in the proceeding may appeal the decision to the United 
States Court of Appeals for the Federal Circuit, but such appeal shall 
be dismissed if any adverse party to such derivation proceeding, within 
20 days after the appellant has filed notice of appeal in accordance 
with section 142, files notice with the Director that the party elects 
to have all further proceedings conducted as provided in section 146. 
If the appellant does not, within 30 days after the filing of such 
notice by the adverse party, file a civil action under section 146, the 
Board's decision shall govern the further proceedings in the case.''.
        (2) Jurisdiction.--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 a patent 
        application, derivation proceeding, reexamination, post-grant 
        review, or inter partes review under title 35, at the instance 
        of a party who exercised that party's right to participate in 
        the applicable proceeding before or appeal to the Board, except 
        that an applicant or a party to a derivation proceeding may 
        also have remedy by civil action pursuant to section 145 or 146 
        of title 35; an appeal under this subparagraph of a decision of 
        the Board with respect to an application or derivation 
        proceeding shall waive the right of such applicant or party to 
        proceed under section 145 or 146 of title 35;''.
        (3) Proceedings on appeal.--Section 143 of title 35, United 
    States Code, is amended--
            (A) by striking the third sentence and inserting the 
        following: ``In an ex parte case, the Director shall submit to 
        the court in writing the grounds for the decision of the Patent 
        and Trademark Office, addressing all of the issues raised in 
        the appeal. The Director shall have the right to intervene in 
        an appeal from a decision entered by the Patent Trial and 
        Appeal Board in a derivation proceeding under section 135 or in 
        an inter partes or post-grant review under chapter 31 or 32.''; 
        and
            (B) by striking the last sentence.
    (d) Conforming Amendments.--
        (1) Atomic energy act of 1954.--Section 152 of the Atomic 
    Energy Act of 1954 (42 U.S.C. 2182) is amended in the third 
    undesignated paragraph--
            (A) by striking ``Board of Patent Appeals and 
        Interferences'' each place it appears and inserting ``Patent 
        Trial and Appeal Board''; and
            (B) by inserting ``and derivation'' after ``established for 
        interference''.
        (2) Title 51.--Section 20135 of title 51, United States Code, 
    is amended--
            (A) in subsections (e) and (f), by striking ``Board of 
        Patent Appeals and Interferences'' each place it appears and 
        inserting ``Patent Trial and Appeal Board''; and
            (B) in subsection (e), by inserting ``and derivation'' 
        after ``established for interference''.
    (e) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to proceedings commenced 
on or after that effective date, except that--
        (1) the extension of jurisdiction to the United States Court of 
    Appeals for the Federal Circuit to entertain appeals of decisions 
    of the Patent Trial and Appeal Board in reexaminations under the 
    amendment made by subsection (c)(2) shall be deemed to take effect 
    on the date of the enactment of this Act and shall extend to any 
    decision of the Board of Patent Appeals and Interferences with 
    respect to a reexamination that is entered before, on, or after the 
    date of the enactment of this Act;
        (2) the provisions of sections 6, 134, and 141 of title 35, 
    United States Code, as in effect on the day before the effective 
    date of the amendments made by this section shall continue to apply 
    to inter partes reexaminations that are requested under section 311 
    of such title before such effective date;
        (3) the Patent Trial and Appeal Board may be deemed to be the 
    Board of Patent Appeals and Interferences for purposes of appeals 
    of inter partes reexaminations that are requested under section 311 
    of title 35, United States Code, before the effective date of the 
    amendments made by this section; and
        (4) the Director's right under the fourth sentence of section 
    143 of title 35, United States Code, as amended by subsection 
    (c)(3) of this section, to intervene in an appeal from a decision 
    entered by the Patent Trial and Appeal Board shall be deemed to 
    extend to inter partes reexaminations that are requested under 
    section 311 of such title before the effective date of the 
    amendments made by this section.
SEC. 8. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.
    (a) In General.--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 third party may submit for consideration 
    and inclusion in the record of a patent application, any patent, 
    published patent application, or other printed 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 
        given or mailed in the application for patent; or
            ``(B) the later of--
                ``(i) 6 months after the date on which the application 
            for patent is first published under section 122 by the 
            Office, 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.
        ``(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.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent application 
filed before, on, or after that effective date.
SEC. 9. VENUE.
    (a) 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 Trademark Act of 1946 (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''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act and shall apply to any 
civil action commenced on or after that date.
  SEC. 10. FEE SETTING AUTHORITY.
    (a) Fee Setting.--
        (1) In general.--The Director may set or adjust by rule any fee 
    established, authorized, or charged under title 35, United States 
    Code, or the Trademark Act of 1946 (15 U.S.C. 1051 et seq.), for 
    any services performed by or materials furnished by, the Office, 
    subject to paragraph (2).
        (2) Fees to recover costs.--Fees may be set or adjusted under 
    paragraph (1) only to recover the aggregate estimated costs to the 
    Office for processing, activities, services, and materials relating 
    to patents (in the case of patent fees) and trademarks (in the case 
    of trademark fees), including administrative costs of the Office 
    with respect to such patent or trademark fees (as the case may be).
    (b) Small and Micro Entities.--The fees set or adjusted under 
subsection (a) for filing, searching, examining, issuing, appealing, 
and maintaining patent applications and patents shall be reduced by 50 
percent with respect to the application of such fees to any small 
entity that qualifies for reduced fees under section 41(h)(1) of title 
35, United States Code, and shall be reduced by 75 percent with respect 
to the application of such fees to any micro entity as defined in 
section 123 of that title (as added by subsection (g) of this section).
    (c) Reduction of Fees in Certain Fiscal Years.--In each fiscal 
year, the Director--
        (1) shall consult with the Patent Public Advisory Committee and 
    the Trademark Public Advisory Committee on the advisability of 
    reducing any fees described in subsection (a); and
        (2) after the consultation required under paragraph (1), may 
    reduce such fees.
    (d) Role of the Public Advisory Committee.--The Director shall--
        (1) not less than 45 days before publishing any proposed fee 
    under subsection (a) in the Federal Register, submit the proposed 
    fee to the Patent Public Advisory Committee or the Trademark Public 
    Advisory Committee, or both, as appropriate;
        (2)(A) provide the relevant advisory committee described in 
    paragraph (1) a 30-day period following the submission of any 
    proposed fee, in which to deliberate, consider, and comment on such 
    proposal;
        (B) require that, during that 30-day period, the relevant 
    advisory committee hold a public hearing relating to such proposal; 
    and
        (C) assist the relevant advisory committee in carrying out that 
    public hearing, including by offering the use of the resources of 
    the Office to notify and promote the hearing to the public and 
    interested stakeholders;
        (3) require the relevant advisory committee to make available 
    to the public a written report setting forth in detail the 
    comments, advice, and recommendations of the committee regarding 
    the proposed fee; and
        (4) consider and analyze any comments, advice, or 
    recommendations received from the relevant advisory committee 
    before setting or adjusting (as the case may be) the fee.
    (e) Publication in the Federal Register.--
        (1) Publication and rationale.--The Director shall--
            (A) publish any proposed fee change under this section in 
        the Federal Register;
            (B) include, in such publication, the specific rationale 
        and purpose for the proposal, including the possible 
        expectations or benefits resulting from the proposed change; 
        and
            (C) notify, through the Chair and Ranking Member of the 
        Committees on the Judiciary of the Senate and the House of 
        Representatives, the Congress of the proposed change not later 
        than the date on which the proposed change is published under 
        subparagraph (A).
        (2) Public comment period.--The Director shall, in the 
    publication under paragraph (1), provide the public a period of not 
    less than 45 days in which to submit comments on the proposed 
    change in fees.
        (3) Publication of final rule.--The final rule setting or 
    adjusting a fee under this section shall be published in the 
    Federal Register and in the Official Gazette of the Patent and 
    Trademark Office.
        (4) Congressional comment period.--A fee set or adjusted under 
    subsection (a) may not become effective--
            (A) before the end of the 45-day period beginning on the 
        day after the date on which the Director publishes the final 
        rule adjusting or setting the fee under paragraph (3); or
            (B) if a law is enacted disapproving such fee.
        (5) Rule of construction.--Rules prescribed under this section 
    shall not diminish--
            (A) the rights of an applicant for a patent under title 35, 
        United States Code, or for a mark under the Trademark Act of 
        1946; or
            (B) any rights under a ratified treaty.
    (f) Retention of Authority.--The Director retains the authority 
under subsection (a) to set or adjust fees only during such period as 
the Patent and Trademark Office remains an agency within the Department 
of Commerce.
    (g) Micro Entity Defined.--
        (1) In general.--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 that the 
applicant--
        ``(1) qualifies as a small entity, as defined in regulations 
    issued by the Director;
        ``(2) has not been named as an inventor on more than 4 
    previously filed patent applications, other than applications filed 
    in another country, provisional applications under section 111(b), 
    or international applications filed under the treaty defined in 
    section 351(a) for which the basic national fee under section 41(a) 
    was not paid;
        ``(3) did not, in the calendar year preceding the calendar year 
    in which the applicable fee is being paid, have a gross income, as 
    defined in section 61(a) of the Internal Revenue Code of 1986, 
    exceeding 3 times the median household income for that preceding 
    calendar year, as most recently reported by the Bureau of the 
    Census; and
        ``(4) has not assigned, granted, or conveyed, and is not under 
    an obligation by contract or law to assign, grant, or convey, a 
    license or other ownership interest in the application concerned to 
    an entity that, in the calendar year preceding the calendar year in 
    which the applicable fee is being paid, had a gross income, as 
    defined in section 61(a) of the Internal Revenue Code of 1986, 
    exceeding 3 times the median household income for that preceding 
    calendar year, as most recently reported by the Bureau of the 
    Census.
    ``(b) Applications Resulting From Prior Employment.--An applicant 
is not considered to be named on a previously filed application for 
purposes of subsection (a)(2) if the applicant has assigned, or is 
under an obligation by contract or law to assign, all ownership rights 
in the application as the result of the applicant's previous 
employment.
    ``(c) Foreign Currency Exchange Rate.--If an applicant's or 
entity's gross income in the preceding calendar year is not in United 
States dollars, the average currency exchange rate, as reported by the 
Internal Revenue Service, during that calendar year shall be used to 
determine whether the applicant's or entity's gross income exceeds the 
threshold specified in paragraphs (3) or (4) of subsection (a).
    ``(d) Institutions of Higher Education.--For purposes of this 
section, a micro entity shall include an applicant who certifies that--
        ``(1) the applicant's employer, from which the applicant 
    obtains the majority of the applicant's income, is an institution 
    of higher education as defined in section 101(a) of the Higher 
    Education Act of 1965 (20 U.S.C. 1001(a)); or
        ``(2) the applicant 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 
    applications to such an institution of higher education.
    ``(e) Director's Authority.--In addition to the limits imposed by 
this section, the Director may, in the Director's discretion, impose 
income limits, annual filing limits, or other limits on who may qualify 
as a micro entity pursuant to this section if the Director determines 
that such additional limits are reasonably necessary to avoid an undue 
impact on other patent applicants or owners or are otherwise reasonably 
necessary and appropriate. At least 3 months before any limits proposed 
to be imposed pursuant to this subsection take effect, the Director 
shall inform the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate of any 
such proposed limits.''.
        (2) Conforming amendment.--Chapter 11 of title 35, United 
    States Code, is amended by adding at the end the following new 
    item:

``123. Micro entity defined.''.

    (h) Electronic Filing Incentive.--
        (1) In general.--Notwithstanding any other provision of this 
    section, an additional fee of $400 shall be established for each 
    application for an original patent, except for a design, plant, or 
    provisional application, that is not filed by electronic means as 
    prescribed by the Director. The fee established by this subsection 
    shall be reduced by 50 percent for small entities that qualify for 
    reduced fees under section 41(h)(1) of title 35, United States 
    Code. All fees paid under this subsection shall be deposited in the 
    Treasury as an offsetting receipt that shall not be available for 
    obligation or expenditure.
        (2) Effective date.--This subsection shall take effect upon the 
    expiration of the 60-day period beginning on the date of the 
    enactment of this Act.
    (i) Effective Date; Sunset.--
        (1) Effective date.--Except as provided in subsection (h), this 
    section and the amendments made by this section shall take effect 
    on the date of the enactment of this Act.
        (2) Sunset.--The authority of the Director to set or adjust any 
    fee under subsection (a) shall terminate upon the expiration of the 
    7-year period beginning on the date of the enactment of this Act.
        (3) Prior regulations not affected.--The termination of 
    authority under this subsection shall not affect any regulations 
    issued under this section before the effective date of such 
    termination or any rulemaking proceeding for the issuance of 
    regulations under this section that is pending on such date.
  SEC. 11. FEES FOR PATENT SERVICES.
    (a) General Patent Services.--Subsections (a) and (b) of section 41 
of title 35, United States Code, are amended to read as follows:
    ``(a) General Fees.--The Director shall charge the following fees:
        ``(1) Filing and basic national fees.--
            ``(A) On filing each application for an original patent, 
        except for design, plant, or provisional applications, $330.
            ``(B) On filing each application for an original design 
        patent, $220.
            ``(C) On filing each application for an original plant 
        patent, $220.
            ``(D) On filing each provisional application for an 
        original patent, $220.
            ``(E) On filing each application for the reissue of a 
        patent, $330.
            ``(F) The basic national fee for each international 
        application filed under the treaty defined in section 351(a) 
        entering the national stage under section 371, $330.
            ``(G) In addition, excluding any sequence listing or 
        computer program listing filed in an electronic medium as 
        prescribed by the Director, for any application the 
        specification and drawings of which exceed 100 sheets of paper 
        (or equivalent as prescribed by the Director if filed in an 
        electronic medium), $270 for each additional 50 sheets of paper 
        (or equivalent as prescribed by the Director if filed in an 
        electronic medium) or fraction thereof.
        ``(2) Excess claims fees.--
            ``(A) In general.--In addition to the fee specified in 
        paragraph (1)--
                ``(i) on filing or on presentation at any other time, 
            $220 for each claim in independent form in excess of 3;
                ``(ii) on filing or on presentation at any other time, 
            $52 for each claim (whether dependent or independent) in 
            excess of 20; and
                ``(iii) for each application containing a multiple 
            dependent claim, $390.
            ``(B) Multiple dependent claims.--For the purpose of 
        computing fees under subparagraph (A), a multiple dependent 
        claim referred to in section 112 or any claim depending 
        therefrom shall be considered as separate dependent claims in 
        accordance with the number of claims to which reference is 
        made.
            ``(C) Refunds; errors in payment.--The Director may by 
        regulation provide for a refund of any part of the fee 
        specified in subparagraph (A) for any claim that is canceled 
        before an examination on the merits, as prescribed by the 
        Director, has been made of the application under section 131. 
        Errors in payment of the additional fees under this paragraph 
        may be rectified in accordance with regulations prescribed by 
        the Director.
        ``(3) Examination fees.--
            ``(A) In general.--
                ``(i) For examination of each application for an 
            original patent, except for design, plant, provisional, or 
            international applications, $220.
                ``(ii) For examination of each application for an 
            original design patent, $140.
                ``(iii) For examination of each application for an 
            original plant patent, $170.
                ``(iv) For examination of the national stage of each 
            international application, $220.
                ``(v) For examination of each application for the 
            reissue of a patent, $650.
            ``(B) Applicability of other fee provisions.--The 
        provisions of paragraphs (3) and (4) of section 111(a) relating 
        to the payment of the fee for filing the application shall 
        apply to the payment of the fee specified in subparagraph (A) 
        with respect to an application filed under section 111(a). The 
        provisions of section 371(d) relating to the payment of the 
        national fee shall apply to the payment of the fee specified in 
        subparagraph (A) with respect to an international application.
        ``(4) Issue fees.--
            ``(A) For issuing each original patent, except for design 
        or plant patents, $1,510.
            ``(B) For issuing each original design patent, $860.
            ``(C) For issuing each original plant patent, $1,190.
            ``(D) For issuing each reissue patent, $1,510.
        ``(5) Disclaimer fee.--On filing each disclaimer, $140.
        ``(6) Appeal fees.--
            ``(A) On filing an appeal from the examiner to the Patent 
        Trial and Appeal Board, $540.
            ``(B) In addition, on filing a brief in support of the 
        appeal, $540, and on requesting an oral hearing in the appeal 
        before the Patent Trial and Appeal Board, $1,080.
        ``(7) Revival fees.--On filing each petition for the revival of 
    an unintentionally abandoned application for a patent, for the 
    unintentionally delayed payment of the fee for issuing each patent, 
    or for an unintentionally delayed response by the patent owner in 
    any reexamination proceeding, $1,620, unless the petition is filed 
    under section 133 or 151, in which case the fee shall be $540.
        ``(8) Extension fees.--For petitions for 1-month extensions of 
    time to take actions required by the Director in an application--
            ``(A) on filing a first petition, $130;
            ``(B) on filing a second petition, $360; and
            ``(C) on filing a third or subsequent petition, $620.
    ``(b) Maintenance Fees.--
        ``(1) In general.--The Director shall charge the following fees 
    for maintaining in force all patents based on applications filed on 
    or after December 12, 1980:
            ``(A) Three years and 6 months after grant, $980.
            ``(B) Seven years and 6 months after grant, $2,480.
            ``(C) Eleven years and 6 months after grant, $4,110.
        ``(2) Grace period; surcharge.--Unless payment of the 
    applicable maintenance fee under paragraph (1) is received in the 
    Office on or before the date the fee is due or within a grace 
    period of 6 months thereafter, the patent shall expire as of the 
    end of such grace period. The Director may require the payment of a 
    surcharge as a condition of accepting within such 6-month grace 
    period the payment of an applicable maintenance fee.
        ``(3) No maintenance fee for design or plant patent.--No fee 
    may be established for maintaining a design or plant patent in 
    force.''.
    (b) Delays in Payment.--Subsection (c) of section 41 of title 35, 
United States Code, is amended--
        (1) by striking ``(c)(1) The Director'' and inserting:
    ``(c) Delays in Payment of Maintenance Fees.--
        ``(1) Acceptance.--The Director''; and
        (2) by striking ``(2) A patent'' and inserting:
        ``(2) Effect on rights of others.--A patent''.
    (c) Patent Search Fees.--Subsection (d) of section 41 of title 35, 
United States Code, is amended to read as follows:
    ``(d) Patent Search and Other Fees.--
        ``(1) Patent search fees.--
            ``(A) In general.--The Director shall charge the fees 
        specified under subparagraph (B) for the search of each 
        application for a patent, except for provisional applications. 
        The Director shall adjust the fees charged under this paragraph 
        to ensure that the fees recover an amount not to exceed the 
        estimated average cost to the Office of searching applications 
        for patent by Office personnel.
            ``(B) Specific fees.--The fees referred to in subparagraph 
        (A) are--
                ``(i) $540 for each application for an original patent, 
            except for design, plant, provisional, or international 
            applications;
                ``(ii) $100 for each application for an original design 
            patent;
                ``(iii) $330 for each application for an original plant 
            patent;
                ``(iv) $540 for the national stage of each 
            international application; and
                ``(v) $540 for each application for the reissue of a 
            patent.
            ``(C) Applicability of other provisions.--The provisions of 
        paragraphs (3) and (4) of section 111(a) relating to the 
        payment of the fee for filing the application shall apply to 
        the payment of the fee specified in this paragraph with respect 
        to an application filed under section 111(a). The provisions of 
        section 371(d) relating to the payment of the national fee 
        shall apply to the payment of the fee specified in this 
        paragraph with respect to an international application.
            ``(D) Refunds.--The Director may by regulation provide for 
        a refund of any part of the fee specified in this paragraph for 
        any applicant who files a written declaration of express 
        abandonment as prescribed by the Director before an examination 
        has been made of the application under section 131.
        ``(2) Other fees.--
            ``(A) In general.--The Director shall establish fees for 
        all other processing, services, or materials relating to 
        patents not specified in this section to recover the estimated 
        average cost to the Office of such processing, services, or 
        materials, except that the Director shall charge the following 
        fees for the following services:
                ``(i) For recording a document affecting title, $40 per 
            property.
                ``(ii) For each photocopy, $.25 per page.
                ``(iii) For each black and white copy of a patent, $3.
            ``(B) Copies for libraries.--The yearly fee for providing a 
        library specified in section 12 with uncertified printed copies 
        of the specifications and drawings for all patents in that year 
        shall be $50.''.
    (d) Fees for Small Entities.--Subsection (h) of section 41 of title 
35, United States Code, is amended to read as follows:
    ``(h) Fees for Small Entities.--
        ``(1) Reductions in fees.--Subject to paragraph (3), fees 
    charged under subsections (a), (b), and (d)(1) shall be reduced by 
    50 percent with respect to their application to any small business 
    concern as defined under section 3 of the Small Business Act, and 
    to any independent inventor or nonprofit organization as defined in 
    regulations issued by the Director.
        ``(2) Surcharges and other fees.--With respect to its 
    application to any entity described in paragraph (1), any surcharge 
    or fee charged under subsection (c) or (d) shall not be higher than 
    the surcharge or fee required of any other entity under the same or 
    substantially similar circumstances.
        ``(3) Reduction for electronic filing.--The fee charged under 
    subsection (a)(1)(A) shall be reduced by 75 percent with respect to 
    its application to any entity to which paragraph (1) applies, if 
    the application is filed by electronic means as prescribed by the 
    Director.''.
    (e) Technical Amendments.--Section 41 of title 35, United States 
Code, is amended--
        (1) in subsection (e), in the first sentence, by striking ``The 
    Director'' and inserting ``Waiver of Fees; Copies Regarding 
    Notice.--The Director'';
        (2) in subsection (f), by striking ``The fees'' and inserting 
    ``Adjustment of Fees.--The fees'';
        (3) by repealing subsection (g); and
        (4) in subsection (i)--
            (A) by striking ``(i)(1) The Director'' and inserting the 
        following:
    ``(i) Electronic Patent and Trademark Data.--
        ``(1) Maintenance of collections.--The Director'';
            (B) by striking ``(2) The Director'' and inserting the 
        following:
        ``(2) Availability of automated search systems.--The 
    Director'';
            (C) by striking ``(3) The Director'' and inserting the 
        following:
        ``(3) Access fees.--The Director''; and
            (D) by striking ``(4) The Director'' and inserting the 
        following:
        ``(4) Annual report to congress.--The Director''.
    (f) Adjustment of Trademark Fees.--Section 802(a) of division B of 
the Consolidated Appropriations Act, 2005 (Public Law 108-447) is 
amended--
        (1) in the first sentence, by striking ``During fiscal years 
    2005, 2006, and 2007,'', and inserting ``Until such time as the 
    Director sets or adjusts the fees otherwise,''; and
        (2) in the second sentence, by striking ``During fiscal years 
    2005, 2006, and 2007, the'' and inserting ``The''.
    (g) Effective Date, Applicability, and Transition Provisions.--
Section 803(a) of division B of the Consolidated Appropriations Act, 
2005 (Public Law 108-447) is amended by striking ``and shall apply only 
with respect to the remaining portion of fiscal year 2005 and fiscal 
year 2006''.
    (h) Prioritized Examination Fee.--
        (1) In general.--
            (A) Fee.--
                (i) Prioritized examination fee.--A fee of $4,800 shall 
            be established for filing a request, pursuant to section 
            2(b)(2)(G) of title 35, United States Code, for prioritized 
            examination of a nonprovisional application for an original 
            utility or plant patent.
                (ii) Additional fees.--In addition to the prioritized 
            examination fee under clause (i), the fees due on an 
            application for which prioritized examination is being 
            sought are the filing, search, and examination fees 
            (including any applicable excess claims and application 
            size fees), processing fee, and publication fee for that 
            application.
            (B) Regulations; limitations.--
                (i) Regulations.--The Director may by regulation 
            prescribe conditions for acceptance of a request under 
            subparagraph (A) and a limit on the number of filings for 
            prioritized examination that may be accepted.
                (ii) Limitation on claims.-- Until regulations are 
            prescribed under clause (i), no application for which 
            prioritized examination is requested may contain or be 
            amended to contain more than 4 independent claims or more 
            than 30 total claims.
                (iii) Limitation on total number of requests.--The 
            Director may not accept in any fiscal year more than 10,000 
            requests for prioritization until regulations are 
            prescribed under this subparagraph setting another limit.
        (2) Reduction in fees for small entities.--The Director shall 
    reduce fees for providing prioritized examination of nonprovisional 
    applications for original utility and plant patents by 50 percent 
    for small entities that qualify for reduced fees under section 
    41(h)(1) of title 35, United States Code.
        (3) Deposit of fees.--All fees paid under this subsection shall 
    be credited to the United States Patent and Trademark Office 
    Appropriation Account, shall remain available until expended, and 
    may be used only for the purposes specified in section 42(c)(3)(A) 
    of title 35, United States Code.
        (4) Effective date and termination.--
            (A) Effective date.--This subsection shall take effect on 
        the date that is 10 days after the date of the enactment of 
        this Act.
            (B) Termination.--The fee imposed under paragraph 
        (1)(A)(i), and the reduced fee under paragraph (2), shall 
        terminate on the effective date of the setting or adjustment of 
        the fee under paragraph (1)(A)(i) pursuant to the exercise of 
        the authority under section 10 for the first time with respect 
        to that fee.
    (i) Appropriation Account Transition Fees.--
        (1) Surcharge.--
            (A) In general.--There shall be a surcharge of 15 percent, 
        rounded by standard arithmetic rules, on all fees charged or 
        authorized by subsections (a), (b), and (d)(1) of section 41, 
        and section 132(b), of title 35, United States Code. Any 
        surcharge imposed under this subsection is, and shall be 
        construed to be, separate from and in addition to any other 
        surcharge imposed under this Act or any other provision of law.
            (B) Deposit of amounts.--Amounts collected pursuant to the 
        surcharge imposed under subparagraph (A) shall be credited to 
        the United States Patent and Trademark Appropriation Account, 
        shall remain available until expended, and may be used only for 
        the purposes specified in section 42(c)(3)(A) of title 35, 
        United States Code.
        (2) Effective date and termination of surcharge.--The surcharge 
    provided for in paragraph (1)--
            (A) shall take effect on the date that is 10 days after the 
        date of the enactment of this Act; and
            (B) shall terminate, with respect to a fee to which 
        paragraph (1)(A) applies, on the effective date of the setting 
        or adjustment of that fee pursuant to the exercise of the 
        authority under section 10 for the first time with respect to 
        that fee.
    (j) Effective Date.--Except as otherwise provided in this section, 
this section and the amendments made by this section shall take effect 
on the date of the enactment of this Act.
  SEC. 12. SUPPLEMENTAL EXAMINATION.
    (a) In General.--Chapter 25 of title 35, United States Code, is 
amended by adding at the end the following:
``Sec. 257. Supplemental examinations to consider, reconsider, or 
   correct information
    ``(a) Request for Supplemental Examination.--A patent owner may 
request supplemental examination of a patent in the Office to consider, 
reconsider, or correct information believed to be relevant to the 
patent, in accordance with such requirements as the Director may 
establish. Within 3 months after the date a request for supplemental 
examination meeting the requirements of this section is received, the 
Director shall conduct the supplemental examination and shall conclude 
such examination by issuing a certificate indicating whether the 
information presented in the request raises a substantial new question 
of patentability.
    ``(b) Reexamination Ordered.--If the certificate issued under 
subsection (a) indicates that a substantial new question of 
patentability is raised by 1 or more items of information in the 
request, the Director shall order reexamination of the patent. The 
reexamination shall be conducted according to procedures established by 
chapter 30, except that the patent owner shall not have the right to 
file a statement pursuant to section 304. During the reexamination, the 
Director shall address each substantial new question of patentability 
identified during the supplemental examination, notwithstanding the 
limitations in chapter 30 relating to patents and printed publication 
or any other provision of such chapter.
    ``(c) Effect.--
        ``(1) In general.--A patent shall not be held unenforceable on 
    the basis of conduct relating to information that had not been 
    considered, was inadequately considered, or was incorrect in a 
    prior examination of the patent if the information was considered, 
    reconsidered, or corrected during a supplemental examination of the 
    patent. The making of a request under subsection (a), or the 
    absence thereof, shall not be relevant to enforceability of the 
    patent under section 282.
        ``(2) Exceptions.--
            ``(A) Prior allegations.--Paragraph (1) shall not apply to 
        an allegation pled with particularity in a civil action, or set 
        forth with particularity in a notice received by the patent 
        owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before 
        the date of a supplemental examination request under subsection 
        (a) to consider, reconsider, or correct information forming the 
        basis for the allegation.
            ``(B) Patent enforcement actions.--In an action brought 
        under section 337(a) of the Tariff Act of 1930 (19 U.S.C. 
        1337(a)), or section 281 of this title, paragraph (1) shall not 
        apply to any defense raised in the action that is based upon 
        information that was considered, reconsidered, or corrected 
        pursuant to a supplemental examination request under subsection 
        (a), unless the supplemental examination, and any reexamination 
        ordered pursuant to the request, are concluded before the date 
        on which the action is brought.
    ``(d) Fees and Regulations.--
        ``(1) Fees.--The Director shall, by regulation, establish fees 
    for the submission of a request for supplemental examination of a 
    patent, and to consider each item of information submitted in the 
    request. If reexamination is ordered under subsection (b), fees 
    established and applicable to ex parte reexamination proceedings 
    under chapter 30 shall be paid, in addition to fees applicable to 
    supplemental examination.
        ``(2) Regulations.--The Director shall issue regulations 
    governing the form, content, and other requirements of requests for 
    supplemental examination, and establishing procedures for reviewing 
    information submitted in such requests.
    ``(e) Fraud.--If the Director becomes aware, during the course of a 
supplemental examination or reexamination proceeding ordered under this 
section, that a material fraud on the Office may have been committed in 
connection with the patent that is the subject of the supplemental 
examination, then in addition to any other actions the Director is 
authorized to take, including the cancellation of any claims found to 
be invalid under section 307 as a result of a reexamination ordered 
under this section, the Director shall also refer the matter to the 
Attorney General for such further action as the Attorney General may 
deem appropriate. Any such referral shall be treated as confidential, 
shall not be included in the file of the patent, and shall not be 
disclosed to the public unless the United States charges a person with 
a criminal offense in connection with such referral.
    ``(f) Rule of Construction.--Nothing in this section shall be 
construed--
        ``(1) to preclude the imposition of sanctions based upon 
    criminal or antitrust laws (including section 1001(a) of title 18, 
    the first section of the Clayton Act, and section 5 of the Federal 
    Trade Commission Act to the extent that section relates to unfair 
    methods of competition);
        ``(2) to limit the authority of the Director to investigate 
    issues of possible misconduct and impose sanctions for misconduct 
    in connection with matters or proceedings before the Office; or
        ``(3) to limit the authority of the Director to issue 
    regulations under chapter 3 relating to sanctions for misconduct by 
    representatives practicing before the Office.''.
    (b) Conforming Amendment.--The table of sections for chapter 25 of 
title 35, United States Code, is amended by adding at the end the 
following new item:

``257. Supplemental examinations to consider, reconsider, or correct 
          information.''.

    (c) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent issued 
before, on, or after that effective date.
  SEC. 13. FUNDING AGREEMENTS.
    (a) In General.--Section 202(c)(7)(E)(i) of title 35, United States 
Code, is amended--
        (1) by striking ``75 percent'' and inserting ``15 percent'';
        (2) by striking ``25 percent'' and inserting ``85 percent''; 
    and
        (3) by striking ``as described above in this clause (D);'' and 
    inserting ``described above in this clause;''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act and shall apply to any 
patent issued before, on, or after that date.
  SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR ART.
    (a) In General.--For purposes of evaluating an invention under 
section 102 or 103 of title 35, United States Code, any strategy for 
reducing, avoiding, or deferring tax liability, whether known or 
unknown at the time of the invention or application for patent, shall 
be deemed insufficient to differentiate a claimed invention from the 
prior art.
    (b) Definition.--For purposes of this section, the term ``tax 
liability'' refers to any liability for a tax under any Federal, State, 
or local law, or the law of any foreign jurisdiction, including any 
statute, rule, regulation, or ordinance that levies, imposes, or 
assesses such tax liability.
    (c) Exclusions.--This section does not apply to that part of an 
invention that--
        (1) is a method, apparatus, technology, computer program 
    product, or system, that is used solely for preparing a tax or 
    information return or other tax filing, including one that records, 
    transmits, transfers, or organizes data related to such filing; or
        (2) is a method, apparatus, technology, computer program 
    product, or system used solely for financial management, to the 
    extent that it is severable from any tax strategy or does not limit 
    the use of any tax strategy by any taxpayer or tax advisor.
    (d) Rule of Construction.--Nothing in this section shall be 
construed to imply that other business methods are patentable or that 
other business method patents are valid.
    (e) Effective Date; Applicability.--This section shall take effect 
on the date of the enactment of this Act and shall apply to any patent 
application that is pending on, or filed on or after, that date, and to 
any patent that is issued on or after that date.
  SEC. 15. BEST MODE REQUIREMENT.
    (a) In General.--Section 282 of title 35, United States Code, is 
amended in the second undesignated paragraph by striking paragraph (3) 
and inserting the following:
        ``(3) Invalidity of the patent or any claim in suit for failure 
    to comply with--
            ``(A) any requirement of section 112, except that the 
        failure to disclose the best mode shall not be a basis on which 
        any claim of a patent may be canceled or held invalid or 
        otherwise unenforceable; or
            ``(B) any requirement of section 251.''.
    (b) Conforming Amendment.--Sections 119(e)(1) and 120 of title 35, 
United States Code, are each amended by striking ``the first paragraph 
of section 112 of this title'' and inserting ``section 112(a) (other 
than the requirement to disclose the best mode)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect upon the date of the enactment of this Act and shall apply to 
proceedings commenced on or after that date.
  SEC. 16. MARKING.
    (a) Virtual Marking.--
        (1) In general.--Section 287(a) of title 35, United States 
    Code, is amended by striking ``or when,'' and inserting ``or by 
    fixing thereon the word `patent' or the abbreviation `pat.' 
    together with an address of a posting on the Internet, accessible 
    to the public without charge for accessing the address, that 
    associates the patented article with the number of the patent, or 
    when,''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to any case that is pending on, or commenced on or 
    after, the date of the enactment of this Act.
        (3) Report.--Not later than the date that is 3 years after the 
    date of the enactment of this Act, the Director shall submit a 
    report to Congress that provides--
            (A) an analysis of the effectiveness of ``virtual 
        marking'', as provided in the amendment made by paragraph (1) 
        of this subsection, as an alternative to the physical marking 
        of articles;
            (B) an analysis of whether such virtual marking has limited 
        or improved the ability of the general public to access 
        information about patents;
            (C) an analysis of the legal issues, if any, that arise 
        from such virtual marking; and
            (D) an analysis of the deficiencies, if any, of such 
        virtual marking.
    (b) False Marking.--
        (1) Civil penalty.--Section 292(a) of title 35, United States, 
    Code, is amended by adding at the end the following: ``Only the 
    United States may sue for the penalty authorized by this 
    subsection.''.
        (2) Civil action for damages.--Subsection (b) of section 292 of 
    title 35, United States Code, is amended to read as follows:
    ``(b) A person who has suffered a competitive injury as a result of 
a violation of this section may file a civil action in a district court 
of the United States for recovery of damages adequate to compensate for 
the injury.''.
        (3) Expired patents.--Section 292 of title 35, United States 
    Code, is amended by adding at the end the following:
    ``(c) The marking of a product, in a manner described in subsection 
(a), with matter relating to a patent that covered that product but has 
expired is not a violation of this section.''.
        (4) Effective date.--The amendments made by this subsection 
    shall apply to all cases, without exception, that are pending on, 
    or commenced on or after, the date of the enactment of this Act.
  SEC. 17. ADVICE OF COUNSEL.
    (a) In General.--Chapter 29 of title 35, United States Code, is 
amended by adding at the end the following:
``Sec. 298. Advice of counsel
    ``The failure of an infringer to obtain the advice of counsel with 
respect to any allegedly infringed patent, or the failure of the 
infringer to present such advice to the court or jury, may not be used 
to prove that the accused infringer willfully infringed the patent or 
that the infringer intended to induce infringement of the patent.''.
    (b) Conforming Amendment.--The table of sections for chapter 29 of 
title 35, United States Code, is amended by adding at the end the 
following:

``298. Advice of counsel.''.
  SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS METHOD PATENTS.
    (a) Transitional Program.--
        (1) Establishment.--Not later than the date that is 1 year 
    after the date of the enactment of this Act, the Director shall 
    issue regulations establishing and implementing a transitional 
    post-grant review proceeding for review of the validity of covered 
    business method patents. The transitional proceeding implemented 
    pursuant to this subsection shall be regarded as, and shall employ 
    the standards and procedures of, a post-grant review under chapter 
    32 of title 35, United States Code, subject to the following:
            (A) Section 321(c) of title 35, United States Code, and 
        subsections (b), (e)(2), and (f) of section 325 of such title 
        shall not apply to a transitional proceeding.
            (B) A person may not file a petition for a transitional 
        proceeding with respect to a covered business method patent 
        unless the person or the person's real party in interest or 
        privy has been sued for infringement of the patent or has been 
        charged with infringement under that patent.
            (C) A petitioner in a transitional proceeding who 
        challenges the validity of 1 or more claims in a covered 
        business method patent on a ground raised under section 102 or 
        103 of title 35, United States Code, as in effect on the day 
        before the effective date set forth in section 3(n)(1), may 
        support such ground only on the basis of--
                (i) prior art that is described by section 102(a) of 
            such title of such title (as in effect on the day before 
            such effective date); or
                (ii) prior art that--

                    (I) discloses the invention more than 1 year before 
                the date of the application for patent in the United 
                States; and
                    (II) would be described by section 102(a) of such 
                title (as in effect on the day before the effective 
                date set forth in section 3(n)(1)) if the disclosure 
                had been made by another before the invention thereof 
                by the applicant for patent.

            (D) The petitioner in a transitional proceeding that 
        results in a final written decision under section 328(a) of 
        title 35, United States Code, with respect to a claim in a 
        covered business method patent, or the petitioner's real party 
        in interest, may not assert, either in a civil action arising 
        in whole or in part under section 1338 of title 28, United 
        States Code, or in a proceeding before the International Trade 
        Commission under section 337 of the Tariff Act of 1930 (19 
        U.S.C. 1337), that the claim is invalid on any ground that the 
        petitioner raised during that transitional proceeding.
            (E) The Director may institute a transitional proceeding 
        only for a patent that is a covered business method patent.
        (2) Effective date.--The regulations issued under paragraph (1) 
    shall take effect upon the expiration of the 1-year period 
    beginning on the date of the enactment of this Act and shall apply 
    to any covered business method patent issued before, on, or after 
    that effective date, except that the regulations shall not apply to 
    a patent described in section 6(f)(2)(A) of this Act during the 
    period in which a petition for post-grant review of that patent 
    would satisfy the requirements of section 321(c) of title 35, 
    United States Code.
        (3) Sunset.--
            (A) In general.--This subsection, and the regulations 
        issued under this subsection, are repealed effective upon the 
        expiration of the 8-year period beginning on the date that the 
        regulations issued under to paragraph (1) take effect.
            (B) Applicability.--Notwithstanding subparagraph (A), this 
        subsection and the regulations issued under this subsection 
        shall continue to apply, after the date of the repeal under 
        subparagraph (A), to any petition for a transitional proceeding 
        that is filed before the date of such repeal.
    (b) Request for Stay.--
        (1) In general.--If a party seeks a stay of a civil action 
    alleging infringement of a patent under section 281 of title 35, 
    United States Code, relating to a transitional proceeding for that 
    patent, the court shall decide whether to enter a stay based on--
            (A) whether a stay, or the denial thereof, will simplify 
        the issues in question and streamline the trial;
            (B) whether discovery is complete and whether a trial date 
        has been set;
            (C) whether a stay, or the denial thereof, would unduly 
        prejudice the nonmoving party or present a clear tactical 
        advantage for the moving party; and
            (D) whether a stay, or the denial thereof, will reduce the 
        burden of litigation on the parties and on the court.
        (2) Review.--A party may take an immediate interlocutory appeal 
    from a district court's decision under paragraph (1). The United 
    States Court of Appeals for the Federal Circuit shall review the 
    district court's decision to ensure consistent application of 
    established precedent, and such review may be de novo.
    (c) ATM Exemption for Venue Purposes.--In an action for 
infringement under section 281 of title 35, United States Code, of a 
covered business method patent, an automated teller machine shall not 
be deemed to be a regular and established place of business for 
purposes of section 1400(b) of title 28, United States Code.
    (d) Definition.--
        (1) In general.--For purposes of this section, the term 
    ``covered business method patent'' means a patent that claims a 
    method or corresponding apparatus for performing data processing or 
    other operations used in the practice, administration, or 
    management of a financial product or service, except that the term 
    does not include patents for technological inventions.
        (2) Regulations.--To assist in implementing the transitional 
    proceeding authorized by this subsection, the Director shall issue 
    regulations for determining whether a patent is for a technological 
    invention.
    (e) Rule of Construction.--Nothing in this section shall be 
construed as amending or interpreting categories of patent-eligible 
subject matter set forth under section 101 of title 35, United States 
Code.
  SEC. 19. JURISDICTION AND PROCEDURAL MATTERS.
    (a) State Court Jurisdiction.--Section 1338(a) of title 28, United 
States Code, is amended by striking the second sentence and inserting 
the following: ``No State court shall have jurisdiction over any claim 
for relief arising under any Act of Congress relating to patents, plant 
variety protection, or copyrights. For purposes of this subsection, the 
term `State' includes any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, American Samoa, Guam, and the Northern Mariana Islands.''.
    (b) Court of Appeals for the Federal Circuit.--Section 1295(a)(1) 
of title 28, United States Code, is amended to read as follows:
        ``(1) of an appeal from a final decision of a district court of 
    the United States, the District Court of Guam, the District Court 
    of the Virgin Islands, or the District Court of the Northern 
    Mariana Islands, in any civil action arising under, or in any civil 
    action in which a party has asserted a compulsory counterclaim 
    arising under, any Act of Congress relating to patents or plant 
    variety protection;''.
    (c) Removal.--
        (1) In general.--Chapter 89 of title 28, United States Code, is 
    amended by adding at the end the following new section:
``Sec. 1454. Patent, plant variety protection, and copyright cases
    ``(a) In General.--A civil action in which any party asserts a 
claim for relief arising under any Act of Congress relating to patents, 
plant variety protection, or copyrights may be removed to the district 
court of the United States for the district and division embracing the 
place where the action is pending.
    ``(b) Special Rules.--The removal of an action under this section 
shall be made in accordance with section 1446, except that if the 
removal is based solely on this section--
        ``(1) the action may be removed by any party; and
        ``(2) the time limitations contained in section 1446(b) may be 
    extended at any time for cause shown.
    ``(c) Clarification of Jurisdiction in Certain Cases.--The court to 
which a civil action is removed under this section is not precluded 
from hearing and determining any claim in the civil action because the 
State court from which the civil action is removed did not have 
jurisdiction over that claim.
    ``(d) Remand.--If a civil action is removed solely under this 
section, the district court--
        ``(1) shall remand all claims that are neither a basis for 
    removal under subsection (a) nor within the original or 
    supplemental jurisdiction of the district court under any Act of 
    Congress; and
        ``(2) may, under the circumstances specified in section 
    1367(c), remand any claims within the supplemental jurisdiction of 
    the district court under section 1367.''.
        (2) Conforming amendment.--The table of sections for chapter 89 
    of title 28, United States Code, is amended by adding at the end 
    the following new item:

``1454. Patent, plant variety protection, and copyright cases.''.

    (d) Procedural Matters in Patent Cases.--
        (1) Joinder of parties and stay of actions.--Chapter 29 of 
    title 35, United States Code, as amended by this Act, is further 
    amended by adding at the end the following new section:
``Sec. 299. Joinder of parties
    ``(a) Joinder of Accused Infringers.--With respect to any civil 
action arising under any Act of Congress relating to patents, other 
than an action or trial in which an act of infringement under section 
271(e)(2) has been pled, parties that are accused infringers may be 
joined in one action as defendants or counterclaim defendants, or have 
their actions consolidated for trial, or counterclaim defendants only 
if--
        ``(1) any right to relief is asserted against the parties 
    jointly, severally, or in the alternative with respect to or 
    arising out of the same transaction, occurrence, or series of 
    transactions or occurrences relating to the making, using, 
    importing into the United States, offering for sale, or selling of 
    the same accused product or process; and
        ``(2) questions of fact common to all defendants or 
    counterclaim defendants will arise in the action.
    ``(b) Allegations Insufficient for Joinder.--For purposes of this 
subsection, accused infringers may not be joined in one action as 
defendants or counterclaim defendants, or have their actions 
consolidated for trial, based solely on allegations that they each have 
infringed the patent or patents in suit.
    ``(c) Waiver.--A party that is an accused infringer may waive the 
limitations set forth in this section with respect to that party.''.
        (2) Conforming amendment.--The table of sections for chapter 29 
    of title 35, United States Code, as amended by this Act, is further 
    amended by adding at the end the following new item:

``299. Joinder of parties.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to any civil action commenced on or after the date of the 
enactment of this Act.
  SEC. 20. TECHNICAL AMENDMENTS.
    (a) Joint Inventions.--Section 116 of title 35, United States Code, 
is amended--
            (1) in the first undesignated paragraph, by striking 
        ``When'' and inserting ``(a) Joint Inventions.--When'';
            (2) in the second undesignated paragraph, by striking ``If 
        a joint inventor'' and inserting ``(b) Omitted Inventor.--If a 
        joint inventor''; and
            (3) in the third undesignated paragraph--
                (A) by striking ``Whenever'' and inserting ``(c) 
            Correction of Errors in Application.--Whenever''; and
                (B) by striking ``and such error arose without any 
            deceptive intention on his part,''.
    (b) Filing of Application in Foreign Country.--Section 184 of title 
35, United States Code, is amended--
        (1) in the first undesignated paragraph--
            (A) by striking ``Except when'' and inserting ``(a) Filing 
        in Foreign Country.--Except when''; and
            (B) by striking ``and without deceptive intent'';
        (2) in the second undesignated paragraph, by striking ``The 
    term'' and inserting ``(b) Application.--The term''; and
        (3) in the third undesignated paragraph, by striking ``The 
    scope'' and inserting ``(c) Subsequent Modifications, Amendments, 
    and Supplements.--The scope''.
    (c) Filing Without a License.--Section 185 of title 35, United 
States Code, is amended by striking ``and without deceptive intent''.
    (d) Reissue of Defective Patents.--Section 251 of title 35, United 
States Code, is amended--
        (1) in the first undesignated paragraph--
            (A) by striking ``Whenever'' and inserting ``(a) In 
        General.--Whenever''; and
            (B) by striking ``without any deceptive intention'';
        (2) in the second undesignated paragraph, by striking ``The 
    Director'' and inserting ``(b) Multiple Reissued Patents.--The 
    Director'';
        (3) in the third undesignated paragraph, by striking ``The 
    provisions'' and inserting ``(c) Applicability of This Title.--The 
    provisions''; and
        (4) in the last undesignated paragraph, by striking ``No 
    reissued patent'' and inserting ``(d) Reissue Patent Enlarging 
    Scope of Claims.--No reissued patent''.
    (e) Effect of Reissue.--Section 253 of title 35, United States 
Code, is amended--
        (1) in the first undesignated paragraph, by striking 
    ``Whenever, without any deceptive intention,'' and inserting ``(a) 
    In General.--Whenever''; and
        (2) in the second undesignated paragraph, by striking ``In like 
    manner'' and inserting ``(b) Additional Disclaimer or Dedication.--
    In the manner set forth in subsection (a),''.
    (f) Correction of Named Inventor.--Section 256 of title 35, United 
States Code, is amended--
        (1) in the first undesignated paragraph--
            (A) by striking ``Whenever'' and inserting ``(a) 
        Correction.--Whenever''; and
            (B) by striking ``and such error arose without any 
        deceptive intention on his part''; and
        (2) in the second undesignated paragraph, by striking ``The 
    error'' and inserting ``(b) Patent Valid if Error Corrected.--The 
    error''.
    (g) Presumption of Validity.--Section 282 of title 35, United 
States Code, is amended--
        (1) in the first undesignated paragraph--
            (A) by striking ``A patent'' and inserting ``(a) In 
        General.--A patent''; and
            (B) by striking the third sentence;
        (2) in the second undesignated paragraph--
            (A) by striking ``The following'' and inserting ``(b) 
        Defenses.--The following'';
            (B) in paragraph (1), by striking ``uneforceability,'' and 
        inserting ``unenforceability.''; and
            (C) in paragraph (2), by striking ``patentability,'' and 
        inserting ``patentability.'' ; and
        (3) in the third undesignated paragraph--
            (A) by striking ``In actions involving the validity or 
        infringement of a patent'' and inserting ``(c) Notice of 
        Actions; Actions During Extension of Patent Term.--In an action 
        involving the validity or infringement of a patent''; and
            (B) by striking ``Claims Court'' and inserting ``Court of 
        Federal Claims''.
    (h) Action for Infringement.--Section 288 of title 35, United 
States Code, is amended by striking ``, without deceptive intention,''.
    (i) Reviser's Notes.--
        (1) Section 3(e)(2) of title 35, United States Code, is amended 
    by striking ``this Act,'' and inserting ``that Act,''.
        (2) Section 202 of title 35, United States Code, is amended--
            (A) in subsection (b)(3), by striking ``the section 
        203(b)'' and inserting ``section 203(b)''; and
            (B) in subsection (c)(7)(D), by striking ``except where it 
        proves'' and all that follows through ``small business firms; 
        and'' and inserting: ``except where it is determined to be 
        infeasible following a reasonable inquiry, a preference in the 
        licensing of subject inventions shall be given to small 
        business firms; and''.
        (3) Section 209(d)(1) of title 35, United States Code, is 
    amended by striking ``nontransferrable'' and inserting 
    ``nontransferable''.
        (4) Section 287(c)(2)(G) of title 35, United States Code, is 
    amended by striking ``any state'' and inserting ``any State''.
        (5) Section 371(b) of title 35, United States Code, is amended 
    by striking ``of the treaty'' and inserting ``of the treaty.''.
    (j) Unnecessary References.--
        (1) In general.--Title 35, United States Code, is amended by 
    striking ``of this title'' each place that term appears.
        (2) Exception.--The amendment made by paragraph (1) shall not 
    apply to the use of such term in the following sections of title 
    35, United States Code:
            (A) Section 1(c).
            (B) Section 101.
            (C) Subsections (a) and (b) of section 105.
            (D) The first instance of the use of such term in section 
        111(b)(8).
            (E) Section 161.
            (F) Section 164.
            (G) Section 171.
            (H) Section 251(c), as so designated by this section.
            (I) Section 261.
            (J) Subsections (g) and (h) of section 271.
            (K) Section 287(b)(1).
            (L) Section 289.
            (M) The first instance of the use of such term in section 
        375(a).
    (k) Additional Technical Amendments.--Sections 155 and 155A of 
title 35, United States Code, and the items relating to those sections 
in the table of sections for chapter 14 of such title, are repealed.
    (l) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to proceedings commenced 
on or after that effective date.
  SEC. 21. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE JUDGES.
    (a) Authority To Cover Certain Travel Related Expenses.--Section 
2(b)(11) of title 35, United States Code, is amended by inserting ``, 
and the Office is authorized to expend funds to cover the subsistence 
expenses and travel-related expenses, including per diem, lodging 
costs, and transportation costs, of persons attending such programs who 
are not Federal employees'' after ``world''.
    (b) Payment of Administrative Judges.--Section 3(b) of title 35, 
United States Code, is amended by adding at the end the following:
        ``(6) Administrative patent judges and administrative trademark 
    judges.--The Director may fix the rate of basic pay for the 
    administrative patent judges appointed pursuant to section 6 and 
    the administrative trademark judges appointed pursuant to section 
    17 of the Trademark Act of 1946 (15 U.S.C. 1067) at not greater 
    than the rate of basic pay payable for level III of the Executive 
    Schedule under section 5314 of title 5. The payment of a rate of 
    basic pay under this paragraph shall not be subject to the pay 
    limitation under section 5306(e) or 5373 of title 5.''.
  SEC. 22. PATENT AND TRADEMARK OFFICE FUNDING.
    (a) In General.--Section 42(c) of title 35, United States Code, is 
amended--
        (1) by striking ``(c)'' and inserting ``(c)(1)'';
        (2) in the first sentence, by striking ``shall be available'' 
    and inserting ``shall, subject to paragraph (3), be available'';
        (3) by striking the second sentence; and
        (4) by adding at the end the following:
    ``(2) There is established in the Treasury a Patent and Trademark 
Fee Reserve Fund. If fee collections by the Patent and Trademark Office 
for a fiscal year exceed the amount appropriated to the Office for that 
fiscal year, fees collected in excess of the appropriated amount shall 
be deposited in the Patent and Trademark Fee Reserve Fund. To the 
extent and in the amounts provided in appropriations Acts, amounts in 
the Fund shall be made available until expended only for obligation and 
expenditure by the Office in accordance with paragraph (3).
    ``(3)(A) Any fees that are collected under sections 41, 42, and 
376, and any surcharges on such fees, may only be used for expenses of 
the Office relating to the processing of patent applications and for 
other activities, services, and materials relating to patents and to 
cover a share of the administrative costs of the Office relating to 
patents.
    ``(B) Any fees that are collected under section 31 of the Trademark 
Act of 1946, and any surcharges on such fees, may only be used for 
expenses of the Office relating to the processing of trademark 
registrations and for other activities, services, and materials 
relating to trademarks and to cover a share of the administrative costs 
of the Office relating to trademarks.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2011.
  SEC. 23. SATELLITE OFFICES.
    (a) Establishment.--Subject to available resources, the Director 
shall, by not later than the date that is 3 years after the date of the 
enactment of this Act, establish 3 or more satellite offices in the 
United States to carry out the responsibilities of the Office.
    (b) Purposes.--The purposes of the satellite offices established 
under subsection (a) are to--
        (1) increase outreach activities to better connect patent 
    filers and innovators with the Office;
        (2) enhance patent examiner retention;
        (3) improve recruitment of patent examiners;
        (4) decrease the number of patent applications waiting for 
    examination; and
        (5) improve the quality of patent examination.
    (c) Required Considerations.--
        (1) In general.--In selecting the location of each satellite 
    office to be established under subsection (a), the Director--
            (A) shall ensure geographic diversity among the offices, 
        including by ensuring that such offices are established in 
        different States and regions throughout the Nation;
            (B) may rely upon any previous evaluations by the Office of 
        potential locales for satellite offices, including any 
        evaluations prepared as part of the Office's Nationwide 
        Workforce Program that resulted in the 2010 selection of 
        Detroit, Michigan, as the first satellite office of the Office;
            (C) shall evaluate and consider the extent to which the 
        purposes of satellite offices listed under subsection (b) will 
        be achieved;
            (D) shall consider the availability of scientific and 
        technically knowledgeable personnel in the region from which to 
        draw new patent examiners at minimal recruitment cost; and
            (E) shall consider the economic impact to the region.
        (2) Open selection process.--Nothing in paragraph (1) shall 
    constrain the Office to only consider its evaluations in selecting 
    the Detroit, Michigan, satellite office.
    (d) Report to Congress.--Not later than the end of the third fiscal 
year that begins after the date of the enactment of this Act, the 
Director shall submit a report to Congress on--
        (1) the rationale of the Director in selecting the location of 
    any satellite office required under subsection (a), including an 
    explanation of how the selected location will achieve the purposes 
    of satellite offices listed under subsection (b) and how the 
    required considerations listed under subsection (c) were met;
        (2) the progress of the Director in establishing all such 
    satellite offices; and
        (3) whether the operation of existing satellite offices is 
    achieving the purposes under subsection (b).
  SEC. 24. DESIGNATION OF DETROIT SATELLITE OFFICE.
    (a) Designation.--The satellite office of the United States Patent 
and Trademark Office to be located in Detroit, Michigan, shall be known 
and designated as the ``Elijah J. McCoy United States Patent and 
Trademark Office''.
    (b) References.--Any reference in a law, map, regulation, document, 
paper, or other record of the United States to the satellite office of 
the United States Patent and Trademark Office to be located in Detroit, 
Michigan, referred to in subsection (a) shall be deemed to be a 
reference to the ``Elijah J. McCoy United States Patent and Trademark 
Office''.
  SEC. 25. PRIORITY EXAMINATION FOR IMPORTANT TECHNOLOGIES.
    Section 2(b)(2) of title 35, United States Code, is amended--
        (1) in subparagraph (E), by striking ``and'' after the 
    semicolon;
        (2) in subparagraph (F), by inserting ``and'' after the 
    semicolon; and
        (3) by adding at the end the following:
            ``(G) may, subject to any conditions prescribed by the 
        Director and at the request of the patent applicant, provide 
        for prioritization of examination of applications for products, 
        processes, or technologies that are important to the national 
        economy or national competitiveness without recovering the 
        aggregate extra cost of providing such prioritization, 
        notwithstanding section 41 or any other provision of law;''.
  SEC. 26. STUDY ON IMPLEMENTATION.
    (a) PTO Study.--The Director shall conduct a study on the manner in 
which this Act and the amendments made by this Act are being 
implemented by the Office, and on such other aspects of the patent 
policies and practices of the Federal Government with respect to patent 
rights, innovation in the United States, competitiveness of United 
States markets, access by small businesses to capital for investment, 
and such other issues, as the Director considers appropriate.
    (b) Report to Congress.--The Director shall, not later than the 
date that is 4 years after the date of the enactment of this Act, 
submit to the Committees on the Judiciary of the House of 
Representatives and the Senate a report on the results of the study 
conducted under subsection (a), including recommendations for any 
changes to laws and regulations that the Director considers 
appropriate.
  SEC. 27. STUDY ON GENETIC TESTING.
    (a) In General.--The Director shall conduct a study on effective 
ways to provide independent, confirming genetic diagnostic test 
activity where gene patents and exclusive licensing for primary genetic 
diagnostic tests exist.
    (b) Items Included in Study.--The study shall include an 
examination of at least the following:
        (1) The impact that the current lack of independent second 
    opinion testing has had on the ability to provide the highest level 
    of medical care to patients and recipients of genetic diagnostic 
    testing, and on inhibiting innovation to existing testing and 
    diagnoses.
        (2) The effect that providing independent second opinion 
    genetic diagnostic testing would have on the existing patent and 
    license holders of an exclusive genetic test.
        (3) The impact that current exclusive licensing and patents on 
    genetic testing activity has on the practice of medicine, including 
    but not limited to: the interpretation of testing results and 
    performance of testing procedures.
        (4) The role that cost and insurance coverage have on access to 
    and provision of genetic diagnostic tests.
    (c) Confirming Genetic Diagnostic Test Activity Defined.--For 
purposes of this section, the term ``confirming genetic diagnostic test 
activity'' means the performance of a genetic diagnostic test, by a 
genetic diagnostic test provider, on an individual solely for the 
purpose of providing the individual with an independent confirmation of 
results obtained from another test provider's prior performance of the 
test on the individual.
    (d) Report.--Not later than 9 months 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 on the findings of the study and provide 
recommendations for establishing the availability of such independent 
confirming genetic diagnostic test activity.
  SEC. 28. PATENT OMBUDSMAN PROGRAM FOR SMALL BUSINESS CONCERNS.
    Using available resources, the Director shall establish and 
maintain in the Office a Patent Ombudsman Program. The duties of the 
Program's staff shall include providing support and services relating 
to patent filings to small business concerns and independent inventors.
  SEC. 29. ESTABLISHMENT OF METHODS FOR STUDYING THE DIVERSITY OF 
      APPLICANTS.
    The Director shall, not later than the end of the 6-month period 
beginning on the date of the enactment of this Act, establish methods 
for studying the diversity of patent applicants, including those 
applicants who are minorities, women, or veterans. The Director shall 
not use the results of such study to provide any preferential treatment 
to patent applicants.
  SEC. 30. SENSE OF CONGRESS.
    It is the sense of Congress that the patent system should promote 
industries to continue to develop new technologies that spur growth and 
create jobs across the country which includes protecting the rights of 
small businesses and inventors from predatory behavior that could 
result in the cutting off of innovation.
  SEC. 31. USPTO STUDY ON INTERNATIONAL PATENT PROTECTIONS FOR SMALL 
      BUSINESSES.
    (a) Study Required.--The Director, in consultation with the 
Secretary of Commerce and the Administrator of the Small Business 
Administration, shall, using the existing resources of the Office, 
carry out a study--
        (1) to determine how the Office, in coordination with other 
    Federal departments and agencies, can best help small businesses 
    with international patent protection; and
        (2) whether, in order to help small businesses pay for the 
    costs of filing, maintaining, and enforcing international patent 
    applications, there should be established either--
            (A) a revolving fund loan program to make loans to small 
        businesses to defray the costs of such applications, 
        maintenance, and enforcement and related technical assistance; 
        or
            (B) a grant program to defray the costs of such 
        applications, maintenance, and enforcement and related 
        technical assistance.
    (b) Report.--Not later than 120 days after the date of the 
enactment of this Act, the Director shall issue a report to the 
Congress containing--
        (1) all findings and determinations made in carrying out the 
    study required under subsection (a);
        (2) a statement of whether the determination was made that--
            (A) a revolving fund loan program described under 
        subsection (a)(2)(A) should be established;
            (B) a grant program described under subsection (a)(2)(B) 
        should be established; or
            (C) neither such program should be established; and
        (3) any legislative recommendations the Director may have 
    developed in carrying out such study.
  SEC. 32. PRO BONO PROGRAM.
    (a) In General.--The Director shall work with and support 
intellectual property law associations across the country in the 
establishment of pro bono programs designed to assist financially 
under-resourced independent inventors and small businesses.
    (b) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.
  SEC. 33. LIMITATION ON ISSUANCE OF PATENTS.
    (a) Limitation.--Notwithstanding any other provision of law, no 
patent may issue on a claim directed to or encompassing a human 
organism.
    (b) Effective Date.--
        (1) In general.--Subsection (a) shall apply to any application 
    for patent that is pending on, or filed on or after, the date of 
    the enactment of this Act.
        (2) Prior applications.--Subsection (a) shall not affect the 
    validity of any patent issued on an application to which paragraph 
    (1) does not apply.
  SEC. 34. STUDY OF PATENT LITIGATION.
    (a) GAO Study.--The Comptroller General of the United States shall 
conduct a study of the consequences of litigation by non-practicing 
entities, or by patent assertion entities, related to patent claims 
made under title 35, United States Code, and regulations authorized by 
that title.
    (b) Contents of Study.--The study conducted under this section 
shall include the following:
        (1) The annual volume of litigation described in subsection (a) 
    over the 20-year period ending on the date of the enactment of this 
    Act.
        (2) The volume of cases comprising such litigation that are 
    found to be without merit after judicial review.
        (3) The impacts of such litigation on the time required to 
    resolve patent claims.
        (4) The estimated costs, including the estimated cost of 
    defense, associated with such litigation for patent holders, patent 
    licensors, patent licensees, and inventors, and for users of 
    alternate or competing innovations.
        (5) The economic impact of such litigation on the economy of 
    the United States, including the impact on inventors, job creation, 
    employers, employees, and consumers.
        (6) The benefit to commerce, if any, supplied by non-practicing 
    entities or patent assertion entities that prosecute such 
    litigation.
    (c) Report to Congress.--The Comptroller General shall, not later 
than the date that is 1 year after the date of the enactment of this 
Act, submit to the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate a 
report on the results of the study required under this section, 
including recommendations for any changes to laws and regulations that 
will minimize any negative impact of patent litigation that was the 
subject of such study.
  SEC. 35. EFFECTIVE DATE.
    Except as otherwise provided in this Act, the provisions of this 
Act shall take effect upon the expiration of the 1-year period 
beginning on the date of the enactment of this Act and shall apply to 
any patent issued on or after that effective date.
  SEC. 36. BUDGETARY EFFECTS.
    The budgetary effects of this Act, for the purpose of complying 
with the Statutory Pay-As-You-Go Act of 2010, shall be determined by 
reference to the latest statement titled ``Budgetary Effects of PAYGO 
Legislation'' for this Act, submitted for printing in the Congressional 
Record by the Chairman of the House Budget Committee, provided that 
such statement has been submitted prior to the vote on passage.
  SEC. 37. CALCULATION OF 60-DAY PERIOD FOR APPLICATION OF PATENT TERM 
      EXTENSION.
    (a) In General.--Section 156(d)(1) of title 35, United States Code, 
is amended by adding at the end the following flush sentence:
``For purposes of determining the date on which a product receives 
permission under the second sentence of this paragraph, if such 
permission is transmitted after 4:30 P.M., Eastern Time, on a business 
day, or is transmitted on a day that is not a business day, the product 
shall be deemed to receive such permission on the next business day. 
For purposes of the preceding sentence, the term `business day' means 
any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any 
legal holiday under section 6103 of title 5.''.
    (b) Applicability.--The amendment made by subsection (a) shall 
apply to any application for extension of a patent term under section 
156 of title 35, United States Code, that is pending on, that is filed 
after, or as to which a decision regarding the application is subject 
to judicial review on, the date of the enactment of this Act.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.