[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 23 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 23

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 25 (legislative day, January 5), 2011

  Mr. Leahy (for himself, Mr. Hatch, Mr. Grassley, Ms. Klobuchar, Mr. 
    Sessions, Mr. Kyl, Mr. Lieberman, and Mr. Coons) introduced the 
 following bill; which was read twice and referred to the Committee on 
                             the Judiciary

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patent Reform Act 
of 2011''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. First inventor to file.
Sec. 3. Inventor's oath or declaration.
Sec. 4. Damages.
Sec. 5. Post-grant review proceedings.
Sec. 6. Patent Trial and Appeal Board.
Sec. 7. Preissuance submissions by third parties.
Sec. 8. Venue.
Sec. 9. Fee setting authority.
Sec. 10. Supplemental examination.
Sec. 11. Residency of Federal Circuit judges.
Sec. 12. Micro entity defined.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Technical amendments.
Sec. 17. Effective date; rule of construction.

SEC. 2. FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of the invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any 1 of the 
individuals who invented or discovered the subject matter of a joint 
invention.
    ``(h) The 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' of 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) Conforming amendment.--The item relating to section 102 
        in the table of sections for chapter 10 of title 35, United 
        States Code, is amended to read as follows:

``102. Conditions for patentability; novelty.''.
    (c) Conditions for Patentability; Nonobvious Subject Matter.--
Section 103 of title 35, United States Code, is amended to read as 
follows:
``Sec. 103. Conditions for patentability; nonobvious subject matter
    ``A patent for a claimed invention may not be obtained, 
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 1 year after the date of the enactment of 
        this Act, and shall apply to any request for a statutory 
        invention registration filed on or after that 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 ``the statutory'' and 
                        inserting ``that 1-year''; and
                    (B) in paragraph (3), by striking ``any statutory 
                bar date that may occur under this title due to 
                publication, on sale, or public use'' and inserting 
                ``the expiration of the 1-year period referred to in 
                section 102(b)''.
    (h) Derived Patents.--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 only be 
filed within 1 year after 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.''.
    (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 only be filed within 1 year after 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. The Director 
shall prescribe regulations setting forth standards for the conduct of 
derivation proceedings.
    ``(c) Deferral of Decision.--The Patent Trial and Appeal Board may 
defer action on a petition for a derivation proceeding until 3 months 
after 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 41, 
134, 145, 146, 154, 305, and 314 of title 35, United States Code, are 
each amended by striking ``Board of Patent Appeals and Interferences'' 
each place it appears and inserting ``Patent Trial and Appeal Board''.
    (2)(A) Sections 146 and 154 of title 35, United States Code, are 
each amended--
                    (i) by striking ``an interference'' each place it 
                appears and inserting ``a derivation proceeding''; and
                    (ii) by striking ``interference'' each additional 
                place it appears and inserting ``derivation 
                proceeding''.
            (B) The subparagraph heading for section 154(b)(1)(C) of 
        title 35, United States Code, as amended by this paragraph, is 
        further amended by--
                    (i) striking ``or'' and inserting ``of''; and
                    (ii) striking ``secrecy order'' and inserting 
                ``secrecy orders''.
    (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) Section 154(b)(1)(C) of title 35, United States Code, is 
amended by striking ``interferences'' and inserting ``derivation 
proceedings''.
    (6) 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.''.
    (7) 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.''.
    (8) 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) False Marking.--
            (1) In general.--Section 292 of title 35, United States 
        Code, is amended--
                    (A) in subsection (a), by adding at the end the 
                following:
    ``Only the United States may sue for the penalty authorized by this 
subsection.''; and
                    (B) by striking subsection (b) and inserting the 
                following:
    ``(b) Any 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.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to all cases, without exception, pending on or 
        after the date of the enactment of this Act.
    (l) 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 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 all cases in which the time period for 
        instituting a proceeding under section 32 of title 35, United 
        State Code, had not lapsed prior to the date of the enactment 
        of this Act.
    (m) 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 disadvantage 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 1 year after the date of 
        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 regarding the results of the study 
        under paragraph (2).
    (n) Report on Prior User Rights.--
            (1) In general.--Not later than 1 year after 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.
    (o) Effective Date.--
            (1) In general.--Except as otherwise provided by this 
        section, the amendments made by this section shall take effect 
        on the date that is 18 months after 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 18 months or more 
                after the date of the enactment of this Act; 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, in effect 
        on the day prior to the date of the enactment of this Act, 
        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, earlier than 18 months after the 
                date of the enactment of this Act; 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.

SEC. 3. INVENTOR'S OATH OR DECLARATION.

    (a) Inventor's Oath or Declaration.--
            (1) In general.--Section 115 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 115. Inventor's oath or declaration
    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a) 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 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 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.--No patent shall be invalid or 
        unenforceable based upon the failure to comply with a 
        requirement under this section if the failure is remedied as 
        provided under paragraph (1).
    ``(i) Acknowledgment of Penalties.--Any declaration or statement 
filed pursuant to this section shall contain an acknowledgment that any 
willful false statement made in such declaration or statement is 
punishable under section 1001 of title 18 by fine or imprisonment of 
not more than 5 years, or both.''.
            (2) Relationship to divisional applications.--Section 121 
        of title 35, United States Code, is amended by striking ``If a 
        divisional application'' and all that follows through 
        ``inventor.''.
            (3) Requirements for nonprovisional applications.--Section 
        111(a) of title 35, United States Code, is amended--
                    (A) in paragraph (2)(C), by striking ``by the 
                applicant'' and inserting ``or declaration'';
                    (B) in the heading for paragraph (3), by 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 paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(a) In General.--The specification''; and
                    (B) by striking ``of carrying out his invention'' 
                and inserting ``or joint inventor of carrying out the 
                invention'';
            (2) in the second paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(b) Conclusion.--The specification''; and
                    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';
            (3) in the third paragraph, by striking ``A claim'' and 
        inserting ``(c) Form.--A claim'';
            (4) in the fourth paragraph, by striking ``Subject to the 
        following paragraph,'' and inserting ``(d) Reference in 
        Dependent Forms.--Subject to subsection (e),'';
            (5) in the fifth paragraph, by striking ``A claim'' and 
        inserting ``(e) Reference in Multiple Dependent Form.--A 
        claim''; and
            (6) in the last paragraph, by striking ``An element'' and 
        inserting ``(f) Element in Claim for a Combination.--An 
        element''.
    (d) Conforming Amendments.--
            (1) Sections 111(b)(1)(A) is amended by striking ``the 
        first paragraph of section 112 of this title'' and inserting 
        ``section 112(a)''.
            (2) Section 111(b)(2) 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 1 year after the date of the enactment of this Act and shall 
apply to patent applications that are filed on or after that effective 
date.

SEC. 4. DAMAGES.

    (a) Damages.--Section 284 of title 35, United States Code, is 
amended--
            (1) by striking ``Upon finding'' and inserting the 
        following: ``(a) In General.--Upon finding'';
            (2) by striking ``fixed by the court'' and all that follows 
        through ``When the damages'' and inserting the following: 
        ``fixed by the court. When the damages'';
            (3) by striking ``shall assess them.'' and all that follows 
        through ``The court may receive'' and inserting the following: 
        ``shall assess them. The court may receive''; and
            (4) by adding at the end the following:
    ``(b) Procedure for Determining Damages.--
            ``(1) In general.--The court shall identify the 
        methodologies and factors that are relevant to the 
        determination of damages, and the court or jury shall consider 
        only those methodologies and factors relevant to making such 
        determination.
            ``(2) Disclosure of claims.--By no later than the entry of 
        the final pretrial order, unless otherwise ordered by the 
        court, the parties shall state, in writing and with 
        particularity, the methodologies and factors the parties 
        propose for instruction to the jury in determining damages 
        under this section, specifying the relevant underlying legal 
        and factual bases for their assertions.
            ``(3) Sufficiency of evidence.--Prior to the introduction 
        of any evidence concerning the determination of damages, upon 
        motion of either party or sua sponte, the court shall consider 
        whether one or more of a party's damages contentions lacks a 
        legally sufficient evidentiary basis. After providing a 
        nonmovant the opportunity to be heard, and after any further 
        proffer of evidence, briefing, or argument that the court may 
        deem appropriate, the court shall identify on the record those 
        methodologies and factors as to which there is a legally 
        sufficient evidentiary basis, and the court or jury shall 
        consider only those methodologies and factors in making the 
        determination of damages under this section. The court shall 
        only permit the introduction of evidence relating to the 
        determination of damages that is relevant to the methodologies 
        and factors that the court determines may be considered in 
        making the damages determination.
    ``(c) Sequencing.--Any party may request that a patent-infringement 
trial be sequenced so that the trier of fact decides questions of the 
patent's infringement and validity before the issues of damages and 
willful infringement are tried to the court or the jury. The court 
shall grant such a request absent good cause to reject the request, 
such as the absence of issues of significant damages or infringement 
and validity. The sequencing of a trial pursuant to this subsection 
shall not affect other matters, such as the timing of discovery. This 
subsection does not authorize a party to request that the issues of 
damages and willful infringement be tried to a jury different than the 
one that will decide questions of the patent's infringement and 
validity.
    ``(d) Willful Infringement.--
            ``(1) In general.--The court may increase damages up to 3 
        times the amount found or assessed if the court or the jury, as 
        the case may be, determines that the infringement of the patent 
        was willful. Increased damages under this subsection shall not 
        apply to provisional rights under section 154(d). Infringement 
        is not willful unless the claimant proves by clear and 
        convincing evidence that the accused infringer's conduct with 
        respect to the patent was objectively reckless. An accused 
        infringer's conduct was objectively reckless if the infringer 
        was acting despite an objectively high likelihood that his 
        actions constituted infringement of a valid patent, and this 
        objectively-defined risk was either known or so obvious that it 
        should have been known to the accused infringer.
            ``(2) Pleading standards.--A claimant asserting that a 
        patent was infringed willfully shall comply with the pleading 
        requirements set forth under Federal Rule of Civil Procedure 
        9(b).
            ``(3) Knowledge alone insufficient.--Infringement of a 
        patent may not be found to be willful solely on the basis that 
        the infringer had knowledge of the infringed patent.
            ``(4) Pre-suit notification.--A claimant seeking to 
        establish willful infringement may not rely on evidence of pre-
        suit notification of infringement unless that notification 
        identifies with particularity the asserted patent, identifies 
        the product or process accused, and explains with 
        particularity, to the extent possible following a reasonable 
        investigation or inquiry, how the product or process infringes 
        one or more claims of the patent.
            ``(5) Close case.--The court shall not increase damages 
        under this subsection if the court determines that there is a 
        close case as to infringement, validity, or enforceability. On 
        the motion of either party, the court shall determine whether a 
        close case as to infringement, validity, or enforceability 
        exists, and the court shall explain its decision. Once the 
        court determines that such a close case exists, the issue of 
        willful infringement shall not thereafter be tried to the jury.
            ``(6) Accrued damages.--If a court or jury finds that the 
        infringement of patent was willful, the court may increase only 
        those damages that accrued after the infringement became 
        willful.''.
    (b) Defense to Infringement Based on Earlier Inventor.--Section 
273(b)(6) of title 35, United States Code, is amended to read as 
follows:
            ``(6) Personal defense.--The defense under this section may 
        be asserted only by the person who performed or caused the 
        performance of the acts necessary to establish the defense as 
        well as any other entity that controls, is controlled by, or is 
        under common control with such person and, except for any 
        transfer to the patent owner, the right to assert the defense 
        shall not be licensed or assigned or transferred to another 
        person except as an ancillary and subordinate part of a good 
        faith assignment or transfer for other reasons of the entire 
        enterprise or line of business to which the defense relates. 
        Notwithstanding the preceding sentence, any person may, on its 
        own behalf, assert a defense based on the exhaustion of rights 
        provided under paragraph (3), including any necessary elements 
        thereof.''.
    (c) Virtual Marking.--Section 287(a) of title 35, United States 
Code, is amended by 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'' before ``, or when''.
    (d) Advice of Counsel.--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.''.
    (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. 5. 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 patent owner may file with the Office a petition 
to institute an inter partes review for a 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) 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
    ``(a) Preliminary Response.--If an inter partes review petition is 
filed under section 311, the patent owner shall have the right to file 
a preliminary response within a time period set by the Director.
    ``(b) Content of Response.--A preliminary response to a petition 
for inter partes review shall set 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 commence 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 within 3 months after receiving 
a preliminary response under section 313 or, if none is filed, within 
three months after the expiration of the time for filing such a 
response.
    ``(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 list 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 Action.--An inter partes review may not be 
instituted or maintained if the petitioner or real party in interest 
has filed a civil action challenging the validity of a claim of the 
patent.
    ``(b) Patent Owner's Action.--An inter partes review may not be 
instituted if the petition requesting the proceeding is filed more than 
3 months after the date on which the petitioner, real party in 
interest, or his privy is required to respond to a civil action 
alleging infringement of the patent.
    ``(c) Joinder.--If the Director institutes an inter partes review, 
the Director, in his 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 under this chapter, or his real party in 
        interest or privy, may not request or maintain a proceeding 
        before the Office with respect to a claim on any ground that 
        the petitioner raised or reasonably could have raised during an 
        inter partes review of the claim that resulted in a final 
        written decision under section 318(a).
            ``(2) Civil actions and other proceedings.--The petitioner 
        in an inter partes review under this chapter, or his real party 
        in interest or privy, 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 that 
        a claim in a patent is invalid on any ground that the 
        petitioner raised or reasonably could have raised during an 
        inter partes review of the claim that resulted in a final 
        written decision under section 318(a).
``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 be accompanied by a motion to seal, and such petition or 
        document shall 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) in accordance with section 2(b)(2), establishing and 
        governing inter partes review under this chapter and the 
        relationship of such review to other proceedings under this 
        title;
            ``(5) setting a time period for requesting joinder under 
        section 315(c);
            ``(6) 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;
            ``(7) 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;
            ``(8) providing for protective orders governing the 
        exchange and submission of confidential information;
            ``(9) allowing the patent owner to file a response to the 
        petition 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;
            ``(10) 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;
            ``(11) providing either party with the right to an oral 
        hearing as part of the proceeding; and
            ``(12) 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).
    ``(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 proceeding 
authorized by the Director.
    ``(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 apply to that petitioner. 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. If any 
party filing such agreement or understanding so requests, the copy 
shall be kept separate from the file of the inter partes review, and 
shall be made available only to Federal Government agencies upon 
written request, or to any other 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.
``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) Technical and 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 on the date that is 1 year after 
                the date of the enactment of this Act and shall apply 
                to all patents issued before, on, or after the 
                effective date of subsection (a).
                    (B) Exception.--The provisions of chapter 31 of 
                title 35, United States Code, as amended by paragraph 
                (3), shall continue to apply to requests for inter 
                partes reexamination that are filed prior to the 
                effective date of subsection (a) as if subsection (a) 
                had not been enacted.
                    (C) Graduated implementation.--The Director may 
                impose a limit on the number of inter partes reviews 
                that may be instituted during each of the first 4 years 
                following the effective date of subsection (a), 
                provided that such number shall in each year be 
                equivalent to or greater than the number of inter 
                partes reexaminations that are ordered in the last full 
                fiscal year prior to the effective date of 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 shall apply to requests for inter partes 
                reexamination that are filed on or after the date of 
                the enactment of this Act, but prior to the effective 
                date of subsection (a).
    (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 patent owner may file with the Office a petition 
to institute a post-grant review for a 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 shall be 
filed not later than 9 months after the grant of the patent or issuance 
of a reissue patent.
``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
    ``(a) Preliminary Response.--If a post-grant review petition is 
filed under section 321, the patent owner shall have the right to file 
a preliminary response within 2 months of the filing of the petition.
    ``(b) Content of Response.--A preliminary response to a petition 
for post-grant review shall set 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 commence unless the Director determines that the information 
presented in the petition, 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 within 3 months after receiving a 
preliminary response under section 323 or, if none is filed, the 
expiration of the time for filing such a response.
    ``(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. The Director shall make each notice of the institution 
of a post-grant review available to the public. Such notice shall list 
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 Action.--A post-grant review may not be 
instituted or maintained if the petitioner or real party in interest 
has filed a civil action challenging the validity of a claim of the 
patent.
    ``(b) Patent Owner's Action.--A post-grant review may not be 
instituted if the petition requesting the proceeding is filed more than 
3 months after the date on which the petitioner, real party in 
interest, or his privy is required to respond to a civil action 
alleging infringement of the patent.
    ``(c) Joinder.--If more than 1 petition for a post-grant review 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, 
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 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 under this chapter, or his real party in 
        interest or privy, may not request or maintain a proceeding 
        before the Office with respect to a claim on any ground that 
        the petitioner raised or reasonably could have raised during a 
        post-grant review of the claim that resulted in a final written 
        decision under section 328(a).
            ``(2) Civil actions and other proceedings.--The petitioner 
        in a post-grant review under this chapter, or his real party in 
        interest or privy, 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 that 
        a claim in a patent is invalid on any ground that the 
        petitioner raised during a post-grant review of the claim that 
        resulted in a final written decision under section 328(a).
    ``(f) Preliminary Injunctions.--If a civil action alleging 
infringement of a patent is filed within 3 months of the grant of the 
patent, 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 or 
that such a proceeding has been instituted.
    ``(g) Reissue Patents.--A post-grant review may not be instituted 
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 be accompanied by a motion to seal, and such petition or 
        document shall 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) in accordance with section 2(b)(2), 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) allowing the patent owner to file a response to the 
        petition 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; and
            ``(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).
    ``(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 proceeding 
authorized by the Director.
    ``(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 apply to that petitioner. 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. If any 
party filing such agreement or understanding so requests, the copy 
shall be kept separate from the file of the post-grant review, and 
shall be made available only to Federal Government agencies upon 
written request, or to any other 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.
``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) Technical and Conforming Amendment.--The table of chapters for 
part III of title 35, United States Code, is amended by adding at the 
end the following:

``32. Post-Grant Review.....................................    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.--The amendments made by subsection (d) 
        shall take effect on the date that is 1 year after the date of 
        the enactment of this Act and shall apply only to patents 
        issued on or after that date. The Director may impose a limit 
        on the number of post-grant reviews that may be instituted 
        during each of the 4 years following the effective date of 
        subsection (d).
            (3) Pending interferences.--The Director shall determine 
        the procedures under which interferences commenced before the 
        effective date of subsection (d) are to proceed, including 
        whether any such interference is to be dismissed without 
        prejudice to the filing of a petition for a post-grant review 
        under chapter 32 of title 35, United States Code, or is to 
        proceed as if this Act had not been enacted. The Director shall 
        include such procedures in regulations issued under paragraph 
        (1). For purposes of an interference that is commenced before 
        the effective date of subsection (d), 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. 
        The authorization to appeal or have remedy from derivation 
        proceedings in sections 141(d) and 146 of title 35, United 
        States Code, and the jurisdiction to entertain appeals from 
        derivation proceedings in section 1295(a)(4)(A) of title 28, 
        United States Code, shall be deemed to extend to final 
        decisions in interferences that are commenced before the 
        effective date of subsection (d) and that are 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, it 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) Effective date.--The amendment made by this subsection 
        shall take effect 1 year after the date of the enactment of 
        this Act and shall apply to patents 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 1 year after the date of 
                the enactment of this Act and shall apply to patents 
                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 enactment of 
                this Act and shall apply to appeals of reexaminations 
                that are pending before the Board of Patent Appeals and 
                Interferences or the Patent Trial and Appeal Board on 
                or after the date of the enactment of this Act.

SEC. 6. PATENT TRIAL AND APPEAL BOARD.

    (a) Composition and Duties.--Section 6 of title 35, United States 
Code, is amended to read as follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) 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) 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) 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) The Secretary of Commerce may, in his 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.''.
    (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 the 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 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 a post-grant 
or inter partes review who is dissatisfied with the final written 
decision of the Patent Trial and Appeal Board under section 318(a) or 
328(a) 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 on 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 patent applications, derivation proceedings, 
                reexaminations, post-grant reviews, and inter partes 
                reviews at the instance of a party who exercised his 
                right to participate in a 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 repealing the second of the two identical 
                fourth sentences.
    (d) Effective Date.--The amendments made by this section shall take 
effect 1 year after 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 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, in effect on the day prior to the date of 
        the enactment of this Act shall continue to apply to inter 
        partes reexaminations that are requested under section 311 
        prior to the date that is 1 year after the date of the 
        enactment of this Act;
            (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 prior to the date that is 1 year after the date of 
        the enactment of this Act; and
            (4) the Director's right under the last sentence of section 
        143 of title 35, United States Code, as amended by subsection 
        (c)(3), 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 prior to the date that is 1 year after the date of the 
        enactment of this Act.

SEC. 7. 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 1 year after the date of the enactment of this Act and shall 
apply to patent applications filed before, on, or after that effective 
date.

SEC. 8. VENUE.

    (a) Change of Venue.--Section 1400 of title 28, United States Code, 
is amended by adding at the end the following:
    ``(c) Change of Venue.--For the convenience of parties and 
witnesses, in the interest of justice, a district court shall transfer 
any civil action arising under any Act of Congress relating to patents 
upon a showing that the transferee venue is clearly more convenient 
than the venue in which the civil action is pending.''.
    (b) Technical Amendments Relating to Venue.--Sections 32, 145, 146, 
154(b)(4)(A), and 293 of title 35, United States Code, and section 
21(b)(4) of the Act entitled ``An Act to provide for the registration 
and protection of trademarks used in commerce, to carry out the 
provisions of certain international conventions, and for other 
purposes'', approved July 5, 1946 (commonly referred to as the 
``Trademark Act of 1946'' or the ``Lanham Act''; 15 U.S.C. 1071(b)(4)), 
are each amended by striking ``United States District Court for the 
District of Columbia'' each place that term appears and inserting 
``United States District Court for the Eastern District of Virginia''.
    (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 
civil actions commenced on or after that date.

SEC. 9. FEE SETTING AUTHORITY.

    (a) Fee Setting.--
            (1) In general.--The Director shall have authority to set 
        or adjust by rule any fee established or charged by the Office 
        under sections 41 and 376 of title 35, United States Code, or 
        under section 31 of the Trademark Act of 1946 (15 U.S.C. 1113), 
        or any other fee established or charged by the Office under any 
        other provision of law, notwithstanding the fee amounts 
        established or charged thereunder, for the filing or processing 
        of any submission to, and for all other services performed by 
        or materials furnished by, the Office, provided that patent and 
        trademark fee amounts are in the aggregate set to recover the 
        estimated cost to the Office for processing, activities, 
        services and materials relating to patents and trademarks, 
        respectively, including proportionate shares of the 
        administrative costs of the Office.
            (2) Small and micro entities.--The fees established under 
        paragraph (1) for filing, processing, issuing, and maintaining 
        patent applications and patents shall be reduced by 50 percent 
        with respect to their application 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 their application to any micro entity as defined in 
        section 123 of that title.
            (3) Reduction of fees in certain fiscal years.--In any 
        fiscal year, the Director--
                    (A) shall consult with the Patent Public Advisory 
                Committee and the Trademark Public Advisory Committee 
                on the advisability of reducing any fees described in 
                paragraph (1); and
                    (B) after the consultation required under 
                subparagraph (A), may reduce such fees.
            (4) Role of the public advisory committee.--The Director 
        shall--
                    (A) submit to the Patent Public Advisory Committee 
                or the Trademark Public Advisory Committee, or both, as 
                appropriate, any proposed fee under paragraph (1) not 
                less than 45 days before publishing any proposed fee in 
                the Federal Register;
                    (B) provide the relevant advisory committee 
                described in subparagraph (A) a 30-day period following 
                the submission of any proposed fee, on which to 
                deliberate, consider, and comment on such proposal, and 
                require that--
                            (i) during such 30-day period, the relevant 
                        advisory committee hold a public hearing 
                        related to such proposal; and
                            (ii) the Director shall assist the relevant 
                        advisory committee in carrying out such public 
                        hearing, including by offering the use of 
                        Office resources to notify and promote the 
                        hearing to the public and interested 
                        stakeholders;
                    (C) require the relevant advisory committee to make 
                available to the public a written report detailing the 
                comments, advice, and recommendations of the committee 
                regarding any proposed fee;
                    (D) consider and analyze any comments, advice, or 
                recommendations received from the relevant advisory 
                committee before setting or adjusting any fee; and
                    (E) notify, through the Chair and Ranking Member of 
                the Senate and House Judiciary Committees, the Congress 
                of any final rule setting or adjusting fees under 
                paragraph (1).
            (5) Publication in the federal register.--
                    (A) In general.--Any rules prescribed under this 
                subsection shall be published in the Federal Register.
                    (B) Rationale.--Any proposal for a change in fees 
                under this section shall--
                            (i) be published in the Federal Register; 
                        and
                            (ii) include, in such publication, the 
                        specific rationale and purpose for the 
                        proposal, including the possible expectations 
                        or benefits resulting from the proposed change.
                    (C) Public comment period.--Following the 
                publication of any proposed fee in the Federal Register 
                pursuant to subparagraph (A), the Director shall seek 
                public comment for a period of not less than 45 days.
            (6) Congressional comment period.--Following the 
        notification described in paragraph (3)(E), Congress shall have 
        not more than 45 days to consider and comment on any final rule 
        setting or adjusting fees under paragraph (1). No fee set or 
        adjusted under paragraph (1) shall be effective prior to the 
        end of such 45-day comment period.
            (7) Rule of construction.--No rules prescribed under this 
        subsection may diminish--
                    (A) an applicant's rights under title 35, United 
                States Code, or the Trademark Act of 1946; or
                    (B) any rights under a ratified treaty.
    (b) Fees for Patent Services.--Division B of Public Law 108-447 is 
amended in title VIII of the Departments of Commerce, Justice, and 
State, the Judiciary, and Related Agencies Appropriations Act, 2005--
            (1) in subsections (a), (b), and (c) of section 801, by--
                    (A) striking ``During'' and all that follows 
                through `` 2006, subsection'' and inserting 
                ``Subsection''; and
                    (B) striking ``shall be administered as though that 
                subsection reads'' and inserting ``is amended to 
                read'';
            (2) in subsection (d) of section 801, by striking 
        ``During'' and all that follows through `` 2006, subsection'' 
        and inserting ``Subsection''; and
            (3) in subsection (e) of section 801, by--
                    (A) striking ``During'' and all that follows 
                through ``2006, subsection'' and inserting 
                ``Subsection''; and
                    (B) striking ``shall be administered as though that 
                subsection''.
    (c) Adjustment of Trademark Fees.--Division B of Public Law 108-447 
is amended in title VIII of the Departments of Commerce, Justice and 
State, the Judiciary and Related Agencies Appropriations Act, 2005, in 
section 802(a) by striking ``During fiscal years 2005, 2006 and 2007'', 
and inserting ``Until such time as the Director sets or adjusts the 
fees otherwise,''.
    (d) Effective Date, Applicability, and Transition Provisions.--
Division B of Public Law 108-447 is amended in title VIII of the 
Departments of Commerce, Justice and State, the Judiciary and Related 
Agencies Appropriations Act, 2005, in section 803(a) by striking ``and 
shall apply only with respect to the remaining portion of fiscal year 
2005, 2006 and 2007''.
    (e) Statutory Authority.--Section 41(d)(1)(A) of title 35, United 
States Code, is amended by striking ``, and the Director may not 
increase any such fee thereafter''.
    (f) Rule of Construction.--Nothing in this section shall be 
construed to affect any other provision of Division B of Public Law 
108-447, including section 801(c) of title VIII of the Departments of 
Commerce, Justice and State, the Judiciary and Related Agencies 
Appropriations Act, 2005.
    (g) Definitions.--In this section, the following definitions shall 
apply:
            (1) Director.--The term ``Director'' means the Director of 
        the United States Patent and Trademark Office.
            (2) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (3) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means an Act entitled ``Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out the provisions of certain international conventions, 
        and for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 
        et seq.) (commonly referred to as the Trademark Act of 1946 or 
        the Lanham Act).
    (h) Electronic Filing Incentive.--
            (1) In general.--Notwithstanding any other provision of 
        this section, a 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 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 become effective 
        60 days after the date of the enactment of this Act.
    (i) Effective Date.--Except as provided in subsection (h), the 
provisions of this section shall take effect upon the date of the 
enactment of this Act.

SEC. 10. 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) In General.--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. Within 3 
months of 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 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 therein relating to patents and printed publication or any 
other provision of chapter 30.
    ``(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.--This subsection shall not 
                apply to an allegation pled with particularity, 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, this 
                subsection 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.--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 pursuant to 
subsection (a), fees established and applicable to ex parte 
reexamination proceedings under chapter 30 shall be paid in addition to 
fees applicable to supplemental examination. The Director shall 
promulgate regulations governing the form, content, and other 
requirements of requests for supplemental examination, and establishing 
procedures for conducting review of information submitted in such 
requests.
    ``(e) 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 promulgate 
        regulations under chapter 3 relating to sanctions for 
        misconduct by representatives practicing before the Office.''.
    (b) Effective Date.--This section shall take effect 1 year after 
the date of the enactment of this Act and shall apply to patents issued 
before, on, or after that date.

SEC. 11. RESIDENCY OF FEDERAL CIRCUIT JUDGES.

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

SEC. 12. MICRO ENTITY DEFINED.

    Chapter 11 of title 35, United States Code, is amended by adding at 
the end the following new section:
``Sec. 123. Micro entity defined
    ``(a) In General.--For purposes of this title, the term `micro 
entity' means an applicant who makes a certification under either 
subsection (b) or (c).
    ``(b) Unassigned Application.--For an unassigned application, each 
applicant shall certify that the applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director;
            ``(2) has not been named on 5 or more previously filed 
        patent applications;
            ``(3) has not assigned, granted, or conveyed, and is not 
        under an obligation by contract or law to assign, grant, or 
        convey, a license or any other ownership interest in the 
        particular application; and
            ``(4) does not have a gross income, as defined in section 
        61(a) of the Internal Revenue Code (26 U.S.C. 61(a)), exceeding 
        2.5 times the average gross income, as reported by the 
        Department of Labor, in the calendar year immediately preceding 
        the calendar year in which the examination fee is being paid.
    ``(c) Assigned Application.--For an assigned application, each 
applicant shall certify that the applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director, and meets the requirements 
        of subsection (b)(4);
            ``(2) has not been named on 5 or more previously filed 
        patent applications; and
            ``(3) has assigned, granted, conveyed, or is under an 
        obligation by contract or law to assign, grant, or convey, a 
        license or other ownership interest in the particular 
        application to an entity that has 5 or fewer employees and that 
        such entity has a gross income, as defined in section 61(a) of 
        the Internal Revenue Code (26 U.S.C. 61(a)), that does not 
        exceed 2.5 times the average gross income, as reported by the 
        Department of Labor, in the calendar year immediately preceding 
        the calendar year in which the examination fee is being paid.
    ``(d) Income Level Adjustment.--The gross income levels established 
under subsections (b) and (c) shall be adjusted by the Director on 
October 1, 2009, and every year thereafter, to reflect any fluctuations 
occurring during the previous 12 months in the Consumer Price Index, as 
determined by the Secretary of Labor.''.

SEC. 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''; and
            (2) by striking ``25 percent'' and inserting ``85 
        percent''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act and shall apply to patents 
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) Effective Date; Applicability.--This section shall take effect 
on the date of enactment of this Act and shall apply to any patent 
application pending and any patent issued on or after that date.

SEC. 15. BEST MODE REQUIREMENT.

    (a) In General.--Section 282 of title 35, United State Code, is 
amended in its 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. TECHNICAL AMENDMENTS.

    (a) Joint Inventions.--Section 116 of title 35, United States Code, 
is amended--
                    (1) in the first paragraph, by striking ``When'' 
                and inserting ``(a) Joint Inventions.--When'';
                    (2) in the second paragraph, by striking ``If a 
                joint inventor'' and inserting ``(b) Omitted 
                Inventor.--If a joint inventor''; and
                    (3) in the third paragraph--
                            (A) by striking ``Whenever'' and inserting 
                        ``(c) Correction of Errors in Application.--
                        Whenever''; and
                            (B) by striking ``and such error arose 
                        without any deceptive intent on his part,''.
    (b) Filing of Application in Foreign Country.--Section 184 of title 
35, United States Code, is amended--
            (1) in the first 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 paragraph, by striking ``The term'' and 
        inserting ``(b) Application.--The term''; and
            (3) in the third paragraph, by striking ``The scope'' and 
        inserting ``(c) Subsequent Modifications, Amendments, and 
        Supplements.--The scope''.
    (c) 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 paragraph--
                    (A) by striking ``Whenever'' and inserting ``(a) In 
                General.--Whenever''; and
                    (B) by striking ``without any deceptive 
                intention'';
            (2) in the second paragraph, by striking ``The Director'' 
        and inserting ``(b) Multiple Reissued Patents.--The Director'';
            (3) in the third paragraph, by striking ``The provisions'' 
        and inserting ``(c) Applicability of This Title.--The 
        provisions''; and
            (4) in the last paragraph, by striking ``No reissued 
        patent'' and inserting ``(d) Reissue Patent Enlarging Scope of 
        Claims.--No reissued patent''.
    (e) Effect of Reissue.--Section 253 of title 35, United States 
Code, is amended--
            (1) in the first paragraph, by striking ``Whenever, without 
        any deceptive intention'' and inserting ``(a) In General.--
        Whenever''; and
            (2) in the second paragraph, by striking ``in like manner'' 
        and inserting ``(b) Additional Disclaimer or Dedication.--In 
        the manner set forth in subsection (a),''.
    (f) Correction of Named Inventor.--Section 256 of title 35, United 
States Code, is amended--
            (1) in the first 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 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, by striking ``The 
        following'' and inserting ``(b) Defenses.--The following''; and
            (3) in the third undesignated paragraph, by striking ``In 
        actions'' and inserting ``(c) Notice of Actions; Actions During 
        Extension of Patent Term.--In actions''.
    (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(b)(3) of title 35, United States Code, is 
        amended by striking ``the section 203(b)'' and inserting 
        ``section 203(b)''.
            (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 157(a).
                    (F) Section 161.
                    (G) Section 164.
                    (H) Section 171.
                    (I) Section 251(c), as so designated by this 
                section.
                    (J) Section 261.
                    (K) Subsections (g) and (h) of section 271.
                    (L) Section 287(b)(1).
                    (M) Section 289.
                    (N) The first instance of the use of such term in 
                section 375(a).
    (k) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act and shall 
apply to proceedings commenced on or after that effective date.

SEC. 17. EFFECTIVE DATE; RULE OF CONSTRUCTION.

    (a) Effective Date.--Except as otherwise provided in this Act, the 
provisions of this Act shall take effect 1 year after the date of the 
enactment of this Act and shall apply to any patent issued on or after 
that effective date.
    (b) Continuity of Intent Under the Create Act.--The enactment of 
section 102(c) of title 35, United States Code, under section (2)(b) of 
this Act is done with the same intent to promote joint research 
activities that was expressed, including in the legislative history, 
through the enactment of the Cooperative Research and Technology 
Enhancement Act of 2004 (Public Law 108-453; the ``CREATE Act''), the 
amendments of which are stricken by section 2(c) of this Act. The 
United States Patent and Trademark Office shall administer section 
102(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.
                                 <all>