[Congressional Record Volume 153, Number 62 (Wednesday, April 18, 2007)]
[Senate]
[Pages S4685-S4692]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Hatch, Mr. Schumer, Mr. Cornyn, 
        and Mr. Whitehouse):
  S. 1145. A bill to amend title 35, United States Code, to provide for 
patent reform; to the Committee on the Judiciary.
  Mr. LEAHY. Mr. President, our patent system is grounded in the 
Constitution. Among the specifically enumerated powers of Congress in 
Article I, Section 8, stands the command to ``promote the progress of 
science and the useful arts, by securing for limited times to authors 
and inventors the exclusive right to their respective discoveries.'' 
Those discoveries have, since the founding of our Nation, made us the 
envy of the world. Our inventors, our research institutions, and the 
many companies that commercialize those discoveries have brought a 
wealth of new products and processes to our society; we have all been 
the beneficiaries of that creativity and hard work.
  Vermont has long played an important role in bringing such inventions 
to the public, combining `Yankee ingenuity' with lots of sweat equity. 
In fact, the very first U.S. patent was granted to Samuel Hopkins, a 
farmer in Pittsford, VT, who discovered a process for making potash. 
That ethic continues to the present day; just last year, inventors in 
IBM's Essex Junction plant received 360 patents 10 percent of IBM's 
total U.S. patents.
  Vermont is special, of course, but not unique in this regard. 
American inventors are in every community, every company and school. 
They are individuals tinkering on the weekends in their garages. They 
are teams of PhDs in our largest corporations. They are scientists 
training students in laboratories at our colleges and universities. Our 
patent laws should support and reward all American innovators--
independent inventors, small businesses, venture capitalists, academic 
researchers, and large corporations. To do so, we must update our 
patent laws. Crafted for an earlier time, when smokestacks rather than 
microchips were the emblems of industry, those laws have served well 
but need some refinements.
  Senator Hatch and I introduced an earlier version of this bill, S. 
3818, last August. At that time, I said we had taken the first step 
down a road to real, constructive patent reform, which could reduce the 
unnecessary burdens of litigation in the patent system and enhance the 
quality of patents granted by the Patent and Trademark Office. Senator 
Hatch wisely noted that we would have to have continuing conversations 
about issues that remained unresolved. We have spent the time since 
then hearing from all manner of interested parties, and indeed we have 
learned as much since we introduced S. 3818 as we had in the two years 
prior to its introduction.
  In this Congress, the partnership is not only bipartisan but 
bicameral. We have reached not only across the aisle but across the 
Hill to work out a bill that joins the Senate and the House, Democrats 
and Republicans, so that today we are introducing a Leahy-Hatch bill in 
the Senate that mirrors a Berman-Smith bill in the House. The message 
is both strong and clear: We have a unified and resolute approach to 
improving the nation's patent system. We will all have time to focus on 
the bill's many provisions in the weeks to come, but I would highlight 
three significant changes we have made since last summer, aided by the 
many stakeholders in this process.
  First, the Patent Reform Act of 2007 now includes a pure ``first-to-
file'' system, which will inject needed clarity and certainty into the 
system. The United States stands alone among nations that grant patents 
in giving priority for a patent to the first inventor, as opposed to 
the first to file a patent application for a claimed invention. The 
result is a lack of international consistency, and a complex and costly 
system in the United States to determine inventors' rights. At the same 
time, our legislation provides important protections for inventors at 
universities, by permitting them to discuss publicly their work without 
losing priority for their inventions.
  Second, poor patent quality has been identified as a key element of 
the law that needs attention. After a patent is issued, a party seeking 
to challenge the validity and enforceability of the patent has two 
avenues under current law: by reexamination proceeding at the USPTO or 
by litigation in federal district court. The former is used sparingly 
and some see it as ineffective; the latter, district court litigation, 
can be unwieldy and expensive. S. 3818 had created a new, post-grant 
review to provide an effective and efficient system for considering 
challenges to the validity of patents. The Patent Reform Act of 2007 
has improved that system, and in particular, we have addressed concerns 
about misuse of the procedure. Post-grant review will include 
protections to avoid the possibility of misuse of the post-grant 
process. The Director is instructed to prescribe rules to prevent 
harassment or abuse, successive petitions are prohibited, and 
petitioners are barred from raising the same arguments in court.
  Third, we are keenly aware that a sound patent system needs fair and 
equitable remedies. As products have become more complex, often 
involving hundreds or even thousands of patented aspects, litigation 
has not reliably produced damages awards in infringement cases that 
correspond to the value of the infringed patent. Our bill last summer 
was our first effort to ensure that damages awards accurately reflected 
the harm caused by infringement. Subsequent conversations with many 
affected parties have led us to language that, we believe, better 
serves that purpose and avoids potential pitfalls.
  The Patent Reform Act of 2007 is also significant for what is not 
included. S. 3818 would have made three considerable changes to the 
patent laws that, upon further consideration and after listening to the 
affected parties, we have decided not to make in this year's 
legislation. First is the requirement that patent applicants not 
intentionally misrepresent a material fact or fail to disclose material 
information to the PTO. Candor and truthfulness are the backbone of the 
patent application system, and are protected by the inequitable conduct 
doctrine. S. 3818 would have weakened that doctrine, but it is 
preserved this year. Second, we maintain the traditional rule on 
attorneys' fees, instead of shifting fees and other expenses to the 
non-prevailing party as was proposed in S. 3818. Finally, we do not 
inject Congress into the ongoing litigation over the extra-territorial 
provision, section 271(f). S. 3818 would have repealed the provision in 
its entirety; the Patent Reform Act of 2007 does not, while the 
interpretation of the provision is currently pending before the Supreme 
Court. If the Court does not resolve that issue, we will revisit it in 
the legislative process.
  If we are to maintain our position at the forefront of the world's 
economy, if

[[Page S4686]]

we are to continue to lead the globe in innovation and production, if 
we are to continue to enjoy the fruits of the most creative citizens, 
then we must have a patent system that produces high quality patents, 
that limits counterproductive litigation over those patents, and that 
makes the entire system more streamlined and efficient. This bill is an 
important step towards that goal. I look forward to immediate and 
intense debate that will inform both the Members of Congress and the 
public about these improvements, that will allow us to further refine 
our legislation, and that will lead us to consideration on the Senate 
floor.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1145

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Patent 
     Reform Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Reference to title 35, United States Code.
Sec. 3. Right of the first inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Right of the inventor to obtain damages.
Sec. 6. Post-grant procedures and other quality enhancements.
Sec. 7. Definitions; patent trial and appeal board.
Sec. 8. Study and report on reexamination proceedings.
Sec. 9. Submissions by third parties and other quality enhancements.
Sec. 10. Venue and jurisdiction.
Sec. 11. Regulatory authority.
Sec. 12. Technical amendments.
Sec. 13. Effective date; rule of construction.

     SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE.

       Whenever in this Act a section or other provision is 
     amended or repealed, that amendment or repeal shall be 
     considered to be made to that section or other provision of 
     title 35, United States Code.

     SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE.

       (a) Definitions.--Section 100 is amended by adding at the 
     end the following:
       ``(f) The term `inventor' means the individual or, if a 
     joint invention, the individuals collectively who invented or 
     discovered the subject matter of the invention.
       ``(g) The terms `joint inventor' and `coinventor' mean any 
     1 of the individuals who invented or discovered the subject 
     matter of a joint invention.
       ``(h) The `effective filing date of a claimed invention' 
     is--
       ``(1) the filing date of the patent or the application for 
     patent containing the claim to the invention; or
       ``(2) if the patent or application for patent is entitled 
     to a right of priority of any other application under section 
     119, 365(a), or 365(b) or to the benefit of an earlier filing 
     date in the United States under section 120, 121, or 365(c), 
     the filing date of the earliest such application in which the 
     claimed invention is disclosed in the manner provided by the 
     first paragraph of section 112.
       ``(i) The term `claimed invention' means the subject matter 
     defined by a claim in a patent or an application for a 
     patent.
       ``(j) The term `joint invention' means an invention 
     resulting from the collaboration of inventive endeavors of 2 
     or more persons working toward the same end and producing an 
     invention by their collective efforts.''.
       (b) Conditions for Patentability.--
       (1) In general.--Section 102 is amended to read as follows:

     ``Sec. 102. Conditions for patentability; novelty

       ``(a) Novelty; Prior Art.--A patent for a claimed invention 
     may not be obtained if--
       ``(1) the claimed invention was patented, described in a 
     printed publication, or in public use or on sale--
       ``(A) more than one year before the effective filing date 
     of the claimed invention; or
       ``(B) one year or less before the effective filing date of 
     the claimed invention, other than through disclosures made by 
     the inventor or a joint inventor or by others who obtained 
     the subject matter disclosed directly or indirectly from the 
     inventor or a joint inventor; or
       ``(2) the claimed invention was described in a patent 
     issued under section 151, or in an application for patent 
     published or deemed published under section 122(b), in which 
     the patent or application, as the case may be, names another 
     inventor and was effectively filed before the effective 
     filing date of the claimed invention.
       ``(b) Exceptions.--
       ``(1) Prior inventor disclosure exception.--Subject matter 
     that would otherwise qualify as prior art under subparagraph 
     (B) of subsection (a)(1) shall not be prior art to a claimed 
     invention under that subparagraph if the subject matter had, 
     before the applicable date under such subparagraph (B), been 
     publicly disclosed by the inventor or a joint inventor or 
     others who obtained the subject matter disclosed directly or 
     indirectly from the inventor, joint inventor, or applicant.
       ``(2) Derivation and common assignment exceptions.--Subject 
     matter that would otherwise qualify as prior art only under 
     subsection (a)(2), after taking into account the exception 
     under paragraph (1), shall not be prior art to a claimed 
     invention if--
       ``(A) the subject matter was obtained directly or 
     indirectly from the inventor or a joint inventor; or
       ``(B) the subject matter and the claimed invention, not 
     later than the effective filing date of the claimed 
     invention, were owned by the same person or subject to an 
     obligation of assignment to the same person.
       ``(3) Joint research agreement exception.--
       ``(A) In general.--Subject matter and a claimed invention 
     shall be deemed to have been owned by the same person or 
     subject to an obligation of assignment to the same person in 
     applying the provisions of paragraph (2) if--
       ``(i) the claimed invention was made by or on behalf of 
     parties to a joint research agreement that was in effect on 
     or before the effective filing date of the claimed invention;
       ``(ii) the claimed invention was made as a result of 
     activities undertaken within the scope of the joint research 
     agreement; and
       ``(iii) the application for patent for the claimed 
     invention discloses or is amended to disclose the names of 
     the parties to the joint research agreement.
       ``(B) For purposes of subparagraph (A), the term `joint 
     research agreement' means a written contract, grant, or 
     cooperative agreement entered into by two or more persons or 
     entities for the performance of experimental, developmental, 
     or research work in the field of the claimed invention.
       ``(4) Patents and published applications effectively 
     filed.--A patent or application for patent is effectively 
     filed under subsection (a)(2) with respect to any subject 
     matter described in the patent or application--
       ``(A) as of the filing date of the patent or the 
     application for patent; or
       ``(B) if the patent or application for patent is entitled 
     to claim a right of priority under section 119, 365(a), or 
     365(b) or to claim the benefit of an earlier filing date 
     under section 120, 121, or 365(c), based upon one or more 
     prior filed applications for patent, as of the filing date of 
     the earliest such application that describes the subject 
     matter.''.
       (2) Conforming amendment.--The item relating to section 102 
     in the table of sections for chapter 10 is amended to read as 
     follows:

``102. Conditions for patentability; novelty.''.
       (c) Conditions for Patentability; Non-Obvious Subject 
     Matter.--Section 103 is amended to read as follows:

     ``Sec. 103. Conditions for patentability; nonobvious subject 
       matter

       ``A patent for a claimed invention may not be obtained 
     though the claimed invention is not identically disclosed as 
     set forth in section 102, if the differences between the 
     claimed invention and the prior art are such that the claimed 
     invention as a whole would have been obvious before the 
     effective filing date of the claimed invention to a person 
     having ordinary skill in the art to which the claimed 
     invention pertains. Patentability shall not be negated by the 
     manner in which the invention was made.''.
       (d) Repeal of Requirements for Inventions Made Abroad.--
     Section 104, and the item relating to that section in the 
     table of sections for chapter 10, are repealed.
       (e) Repeal of Statutory Invention Registration.--
       (1) In general.--Section 157, and the item relating to that 
     section in the table of sections for chapter 14, are 
     repealed.
       (2) Removal of cross references.--Section 111(b)(8) is 
     amended by striking ``sections 115, 131, 135, and 157'' and 
     inserting ``sections 131 and 135''.
       (f) Earlier Filing Date for Inventor and Joint Inventor.--
     Section 120 is amended by striking ``which is filed by an 
     inventor or inventors named'' and inserting ``which names an 
     inventor or joint inventor''.
       (g) Conforming Amendments.--
       (1) Right of priority.--Section 172 is amended by striking 
     ``and the time specified in section 102(d)''.
       (2) Limitation on remedies.--Section 287(c)(4) is amended 
     by striking ``the earliest effective filing date of which is 
     prior to'' and inserting ``which has an effective filing date 
     before''.
       (3) International application designating the united 
     states: effect.--Section 363 is amended by striking ``except 
     as otherwise provided in section 102(e) of this title''.
       (4) Publication of international application: effect.--
     Section 374 is amended by striking ``sections 102(e) and 
     154(d)'' and inserting ``section 154(d)''.
       (5) Patent issued on international application: effect.--
     The second sentence of section 375(a) is amended by striking 
     ``Subject to section 102(e) of this title, such'' and 
     inserting ``Such''.
       (6) Limit on right of priority.--Section 119(a) is amended 
     by striking ``; but no patent shall be granted'' and all that 
     follows through ``one year prior to such filing''.
       (7) Inventions made with federal assistance.--Section 
     202(c) is amended--
       (A) in paragraph (2)--
       (i) by striking ``publication, on sale, or public use,'' 
     and all that follows through ``obtained in the United 
     States'' and inserting ``the 1-year period referred to in 
     section 102(a) would end before the end of that 2-year 
     period''; and

[[Page S4687]]

       (ii) by striking ``the statutory'' and inserting ``that 1-
     year''; and
       (B) in paragraph (3), by striking ``any statutory bar date 
     that may occur under this title due to publication, on sale, 
     or public use'' and inserting ``the expiration of the 1-year 
     period referred to in section 102(a)''.
       (h) Repeal of Interfering Patent Remedies.--Section 291, 
     and the item relating to that section in the table of 
     sections for chapter 29, are repealed.
       (i) Action for Claim to Patent on Derived Invention.--
     Section 135(a) is amended to read as follows:
       ``(a) Dispute Over Right to Patent.--
       ``(1) Institution of derivation proceeding.--An applicant 
     may request initiation of a derivation proceeding to 
     determine the right of the applicant to a patent by filing a 
     request which sets forth with particularity the basis for 
     finding that an earlier applicant derived the claimed 
     invention from the applicant requesting the proceeding and, 
     without authorization, filed an application claiming such 
     invention. Any such request may only be made within 12 months 
     after the date of first publication of an application 
     containing a claim that is the same or is substantially the 
     same as the claimed invention, must be made under oath, and 
     must be supported by substantial evidence. Whenever the 
     Director determines that patents or applications for patent 
     naming different individuals as the inventor interfere with 
     one another because of a dispute over the right to patent 
     under section 101, the Director shall institute a derivation 
     proceeding for the purpose of determining which applicant is 
     entitled to a patent.
       ``(2) Requirements.--A proceeding under this subsection may 
     not be commenced unless the party requesting the proceeding 
     has filed an application that was filed not later than 18 
     months after the effective filing date of the application or 
     patent deemed to interfere with the subsequent application or 
     patent.
       ``(3) Determination by patent trial and appeal board.--In 
     any proceeding under this subsection, the Patent Trial and 
     Appeal Board--
       ``(A) shall determine the question of the right to patent;
       ``(B) in appropriate circumstances, may correct the naming 
     of the inventor in any application or patent at issue; and
       ``(C) shall issue a final decision on the right to patent.
       ``(4) Derivation proceeding.--The Board may defer action on 
     a request to initiate a derivation proceeding until 3 months 
     after the date on which the Director issues a patent to the 
     applicant that filed the earlier application.
       ``(5) Effect of final decision.--The final decision of the 
     Patent Trial and Appeal Board, if adverse to the claim of an 
     applicant, shall constitute the final refusal by the Patent 
     and Trademark Office on the claims involved. The Director may 
     issue a patent to an applicant who is determined by the 
     Patent Trial and Appeal Board to have the right to patent. 
     The final decision of the Board, if adverse to a patentee, 
     shall, if no appeal or other review of the decision has been 
     or can be taken or had, constitute cancellation of the claims 
     involved in the patent, and notice of such cancellation shall 
     be endorsed on copies of the patent distributed after such 
     cancellation by the Patent and Trademark Office.''.
       (j) Elimination of References to Interferences.--(1) 
     Sections 6, 41, 134, 141, 145, 146, 154, 305, and 314 are 
     each amended by striking ``Board of Patent Appeals and 
     Interferences'' each place it appears and inserting ``Patent 
     Trial and Appeal Board''.
       (2) Sections 141, 146, and 154 are each amended--
       (A) by striking ``an interference'' each place it appears 
     and inserting ``a derivation proceeding''; and
       (B) by striking ``interference'' each additional place it 
     appears and inserting ``derivation proceeding''.
       (3) The section heading for section 134 is amended to read 
     as follows:

     ``Sec. 134. Appeal to the Patent Trial and Appeal Board''.

       (4) The section heading for section 135 is amended to read 
     as follows:

     ``Sec. 135. Derivation proceedings''.

       (5) The section heading for section 146 is amended to read 
     as follows:

     ``Sec. 146. Civil action in case of derivation proceeding''.

       (6) Section 154(b)(1)(C) is amended by striking 
     ``interferences'' and inserting ``derivation proceedings''.
       (7) The item relating to section 6 in the table of sections 
     for chapter 1 is amended to read as follows:

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

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

``146. Civil action in case of derivation proceeding.''.
       (10) Certain Appeals.--Subsection 1295(a)(4)(A) of title 
     28, United States Code, is amended to read as follows:
       ``(A) the Patent Trial and Appeal Board of the United 
     States Patent and Trademark Office with respect to patent 
     applications, derivation proceedings, and post-grant review 
     proceedings, at the instance of an applicant for a patent or 
     any party to a patent interference (commenced before the 
     effective date of the Patent Reform Act of 2007), derivation 
     proceeding, or post-grant review proceeding, and any such 
     appeal shall waive any right of such applicant or party to 
     proceed under section 145 or 146 of title 35;''.

     SEC. 4. INVENTOR'S OATH OR DECLARATION.

       (a) Inventor's Oath or Declaration.--
       (1) In general.--Section 115 is amended to read as follows:

     ``Sec. 115. Inventor's oath or declaration

       ``(a) Naming the Inventor; Inventor's Oath or 
     Declaration.--An application for patent that is filed under 
     section 111(a), that commences the national stage under 
     section 363, or that is filed by an inventor for an invention 
     for which an application has previously been filed under this 
     title by that inventor shall include, or be amended to 
     include, the name of the inventor of any claimed invention in 
     the application. Except as otherwise provided in this 
     section, an individual who is the inventor or a joint 
     inventor of a claimed invention in an application for patent 
     shall execute an oath or declaration in connection with the 
     application.
       ``(b) Required Statements.--An oath or declaration under 
     subsection (a) shall contain statements that--
       ``(1) the application was made or was authorized to be made 
     by the affiant or declarant; and
       ``(2) such individual believes himself or herself to be the 
     original inventor or an original joint inventor of a claimed 
     invention in the application.
       ``(c) Additional Requirements.--The Director may specify 
     additional information relating to the inventor and the 
     invention that is required to be included in an oath or 
     declaration under subsection (a).
       ``(d) Substitute Statement.--
       ``(1) In general.--In lieu of executing an oath or 
     declaration under subsection (a), the applicant for patent 
     may provide a substitute statement under the circumstances 
     described in paragraph (2) and such additional circumstances 
     that the Director may specify by regulation.
       ``(2) Permitted circumstances.--A substitute statement 
     under paragraph (1) is permitted with respect to any 
     individual who--
       ``(A) is unable to file the oath or declaration under 
     subsection (a) because the individual--
       ``(i) is deceased;
       ``(ii) is under legal incapacity; or
       ``(iii) cannot be found or reached after diligent effort; 
     or
       ``(B) is under an obligation to assign the invention but 
     has refused to make the oath or declaration required under 
     subsection (a).
       ``(3) Contents.--A substitute statement under this 
     subsection shall--
       ``(A) identify the individual with respect to whom the 
     statement applies;
       ``(B) set forth the circumstances representing the 
     permitted basis for the filing of the substitute statement in 
     lieu of the oath or declaration under subsection (a); and
       ``(C) contain any additional information, including any 
     showing, required by the Director.
       ``(e) Making Required Statements in Assignment of Record.--
     An individual who is under an obligation of assignment of an 
     application for patent may include the required statements 
     under subsections (b) and (c) in the assignment executed by 
     the individual, in lieu of filing such statements separately.
       ``(f) Time for Filing.--A notice of allowance under section 
     151 may be provided to an applicant for patent only if the 
     applicant for patent has filed each required oath or 
     declaration under subsection (a) or has filed a substitute 
     statement under subsection (d) or recorded an assignment 
     meeting the requirements of subsection (e).
       ``(g) Earlier-Filed Application Containing Required 
     Statements or Substitute Statement.--The requirements under 
     this section shall not apply to an individual with respect to 
     an application for patent in which the individual is named as 
     the inventor or a joint inventor and that claims the benefit 
     under section 120 or 365(c) of the filing of an earlier-filed 
     application, if--
       ``(1) an oath or declaration meeting the requirements of 
     subsection (a) was executed by the individual and was filed 
     in connection with the earlier-filed application;
       ``(2) a substitute statement meeting the requirements of 
     subsection (d) was filed in the earlier filed application 
     with respect to the individual; or
       ``(3) an assignment meeting the requirements of subsection 
     (e) was executed with respect to the earlier-filed 
     application by the individual and was recorded in connection 
     with the earlier-filed application.
       ``(h) Supplemental and Corrected Statements; Filing 
     Additional Statements.--
       ``(1) In general.--Any person making a statement required 
     under this section may withdraw, replace, or otherwise 
     correct the statement at any time. If a change is made in the 
     naming of the inventor requiring the filing of 1 or more 
     additional statements under this section, the Director shall 
     establish regulations under which such additional statements 
     may be filed.
       ``(2) Supplemental statements not required.--If an 
     individual has executed an oath or declaration under 
     subsection (a) or an assignment meeting the requirements of 
     subsection (e) with respect to an application

[[Page S4688]]

     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).''.
       (2) Relationship to divisional applications.--Section 121 
     is amended by striking ``If a divisional application'' and 
     all that follows through ``inventor.''.
       (3) Requirements for nonprovisional applications.--Section 
     111(a) is amended--
       (A) in paragraph (2)(C), by striking ``by the applicant'' 
     and inserting ``or declaration'';
       (B) in the heading for paragraph (3), by striking ``and 
     oath''; and
       (C) by striking ``and oath'' each place it appears.
       (4) Conforming amendment.--The item relating to section 115 
     in the table of sections for chapter 10 is amended to read as 
     follows:

``115. Inventor's oath or declaration.''.
       (b) Filing by Other Than Inventor.--Section 118 is amended 
     to read as follows:

     ``Sec. 118. Filing by other than inventor

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

     SEC. 5. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES.

       (a) Damages.--Section 284 is amended--
       (1) in the first paragraph--
       (A) by striking ``Upon'' and inserting ``(a) Award of 
     Damages.--
       ``(1) In general.--Upon'';
       (B) by aligning the remaining text accordingly; and
       (C) by adding at the end the following:
       ``(2) Relationship of damages to contributions over prior 
     art.--The court shall conduct an analysis to ensure that a 
     reasonable royalty under paragraph (1) is applied only to 
     that economic value properly attributable to the patent's 
     specific contribution over the prior art. In a reasonable 
     royalty analysis, the court shall identify all factors 
     relevant to the determination of a reasonable royalty under 
     this subsection, and the court or the jury, as the case may 
     be, shall consider only those factors in making the 
     determination. The court shall exclude from the analysis the 
     economic value properly attributable to the prior art, and 
     other features or improvements, whether or not themselves 
     patented, that contribute economic value to the infringing 
     product or process.
       ``(3) Entire market value.--Unless the claimant shows that 
     the patent's specific contribution over the prior art is the 
     predominant basis for market demand for an infringing product 
     or process, damages may not be based upon the entire market 
     value of that infringing product or process.
       ``(4) Other factors.--In determining damages, the court may 
     also consider, or direct the jury to consider, the terms of 
     any nonexclusive marketplace licensing of the invention, 
     where appropriate, as well as any other relevant factors 
     under applicable law.'';
       (2) by amending the second undesignated paragraph to read 
     as follows:
       ``(b) Willful Infringement .--
       ``(1) Increased damages.--A court that has determined that 
     the infringer has willfully infringed a patent or patents may 
     increase the damages up to three times the amount of damages 
     found or assessed under subsection (a), except that increased 
     damages under this paragraph shall not apply to provisional 
     rights under section 154(d).
       ``(2) Permitted grounds for willfulness.--A court may find 
     that an infringer has willfully infringed a patent only if 
     the patent owner presents clear and convincing evidence 
     that--
       ``(A) after receiving written notice from the patentee--
       ``(i) alleging acts of infringement in a manner sufficient 
     to give the infringer an objectively reasonable apprehension 
     of suit on such patent, and
       ``(ii) identifying with particularity each claim of the 
     patent, each product or process that the patent owner alleges 
     infringes the patent, and the relationship of such product or 
     process to such claim,
     the infringer, after a reasonable opportunity to investigate, 
     thereafter performed one or more of the alleged acts of 
     infringement;
       ``(B) the infringer intentionally copied the patented 
     invention with knowledge that it was patented; or
       ``(C) after having been found by a court to have infringed 
     that patent, the infringer engaged in conduct that was not 
     colorably different from the conduct previously found to have 
     infringed the patent, and which resulted in a separate 
     finding of infringement of the same patent.
       ``(3) Limitations on willfulness.--(A) A court may not find 
     that an infringer has willfully infringed a patent under 
     paragraph (2) for any period of time during which the 
     infringer had an informed good faith belief that the patent 
     was invalid or unenforceable, or would not be infringed by 
     the conduct later shown to constitute infringement of the 
     patent.
       ``(B) An informed good faith belief within the meaning of 
     subparagraph (A) may be established by--
       ``(i) reasonable reliance on advice of counsel;
       ``(ii) evidence that the infringer sought to modify its 
     conduct to avoid infringement once it had discovered the 
     patent; or
       ``(iii) other evidence a court may find sufficient to 
     establish such good faith belief.
       ``(C) The decision of the infringer not to present evidence 
     of advice of counsel is not relevant to a determination of 
     willful infringement under paragraph (2).
       ``(4) Limitation on pleading.--Before the date on which a 
     court determines that the patent in suit is not invalid, is 
     enforceable, and has been infringed by the infringer, a 
     patentee may not plead and a court may not determine that an 
     infringer has willfully infringed a patent. The court's 
     determination of an infringer's willfulness shall be made 
     without a jury.''; and
       (3) in the third undesignated paragraph, by striking ``The 
     court'' and inserting ``(c) Expert Testimony.--The court''.
       (b) Defense to Infringement Based on Earlier Inventor.--
     Section 273 of title 35, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) by striking ``of a method''; and
       (ii) by striking ``review period;'' and inserting ``review 
     period; and'';
       (B) in paragraph (2)(B), by striking the semicolon at the 
     end and inserting a period; and
       (C) by striking paragraphs (3) and (4);
       (2) in subsection (b)--
       (A) in paragraph (1)--
       (i) by striking ``for a method''; and
       (ii) by striking ``at least 1 year before the effective 
     filing date of such patent, and'' and all that follows 
     through the period and inserting ``and commercially used, or 
     made substantial preparations for commercial use of, the 
     subject matter before the effective filing date of the 
     claimed invention.'';
       (B) in paragraph (2)--
       (i) by striking ``The sale or other disposition of a useful 
     end result produced by a patented method'' and inserting 
     ``The sale or other disposition of subject matter that 
     qualifies for the defense set forth in this section''; and
       (ii) by striking ``a defense under this section with 
     respect to that useful end result'' and inserting ``such 
     defense''; and
       (C) in paragraph (3)--
       (i) by striking subparagraph (A); and
       (ii) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (A) and (B), respectively;
       (3) in paragraph (7), by striking ``of the patent'' and 
     inserting ``of the claimed invention''; and
       (4) by amending the heading to read as follows:

     ``Sec. 273. Special defenses to and exemptions from 
       infringement''.

       (c) Table of Sections.--The item relating to section 273 in 
     the table of sections for chapter 28 is amended to read as 
     follows:

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

     SEC. 6. POST-GRANT PROCEDURES AND OTHER QUALITY ENHANCEMENTS.

       (a) Reexamination.--Section 303(a) is amended to read as 
     follows:
       ``(a) Within 3 months after the owner of a patent files a 
     request for reexamination under section 302, the Director 
     shall determine whether a substantial new question of 
     patentability affecting any claim of the patent concerned is 
     raised by the request, with or without consideration of other 
     patents or printed publications. On the Director's own 
     initiative, and at any time, the Director may determine 
     whether a substantial new question of patentability is raised 
     by patents and publications discovered by the Director, is 
     cited under section 301, or is cited by any person other than 
     the owner of the patent

[[Page S4689]]

     under section 302 or section 311. The existence of a 
     substantial new question of patentability is not precluded by 
     the fact that a patent or printed publication was previously 
     cited by or to the Office or considered by the Office.''.
       (b) Reexamination.--Section 315(c) is amended by striking 
     ``or could have raised''.
       (c) Reexamination Prohibited After District Court 
     Decision.--Section 317(b) is amended--
       (1) in the subsection heading, by striking ``Final 
     Decision'' and inserting ``District Court Decision''; and
       (2) by striking ``Once a final decision has been entered'' 
     and inserting ``Once the judgment of the district court has 
     been entered''.
       (d) Effective Dates.--Notwithstanding any other provision 
     of law, sections 311 through 318 of title 35, United States 
     Code, as amended by this Act, shall apply to any patent that 
     issues before, on, or after the date of enactment of this Act 
     from an original application filed on any date.
       (e) Post-Grant Opposition Procedures.--
       (1) In general.--Part III is amended by adding at the end 
     the following new chapter:

               ``CHAPTER 32--POST-GRANT REVIEW PROCEDURES

``Sec.
``321. Petition for post-grant review.
``322. Timing and bases of petition.
``323. Requirements of petition.
``324. Prohibited filings.
``325. Submission of additional information; showing of sufficient 
              grounds.
``326. Conduct of post-grant review proceedings.
``327. Patent owner response.
``328. Proof and evidentiary standards.
``329. Amendment of the patent.
``330. Decision of the Board.
``331. Effect of decision.
``332. Relationship to other pending proceedings.
``333. Effect of decisions rendered in civil action on future post-
              grant review proceedings.
``334. Effect of final decision on future proceedings.
``335. Appeal.

     ``Sec. 321. Petition for post-grant review

       ``Subject to sections 322, 324, 332, and 333, a person who 
     is not the patent owner may file with the Office a petition 
     for cancellation seeking to institute a post-grant review 
     proceeding to cancel as unpatentable any claim of a patent on 
     any ground that could be raised under paragraph (2) or (3) of 
     section 282(b) (relating to invalidity of the patent or any 
     claim). The Director shall establish, by regulation, fees to 
     be paid by the person requesting the proceeding, in such 
     amounts as the Director determines to be reasonable.

     ``Sec. 322. Timing and bases of petition

       ``A post-grant proceeding may be instituted under this 
     chapter pursuant to a cancellation petition filed under 
     section 321 only if--
       ``(1) the petition is filed not later than 12 months after 
     the grant of the patent or issuance of a reissue patent, as 
     the case may be;
       ``(2)(A) the petitioner establishes a substantial reason to 
     believe that the continued existence of the challenged claim 
     in the petition causes or is likely to cause the petitioner 
     significant economic harm; or
       ``(B) the petitioner has received notice from the patent 
     holder alleging infringement by the petitioner of the patent; 
     or
       ``(3) the patent owner consents in writing to the 
     proceeding.

     ``Sec. 323. Requirements of petition

       ``A cancellation petition filed under section 321 may be 
     considered only if--
       ``(1) the petition is accompanied by payment of the fee 
     established by the Director under section 321;
       ``(2) the petition identifies the cancellation petitioner; 
     and
       ``(3) the petition sets forth in writing the basis for the 
     cancellation, identifying each claim challenged and providing 
     such information as the Director may require by regulation, 
     and includes copies of patents and printed publications that 
     the cancellation petitioner relies upon in support of the 
     petition; and
       ``(4) the petitioner provides copies of those documents to 
     the patent owner or, if applicable, the designated 
     representative of the patent owner.

     ``Sec. 324. Prohibited filings

       ``A post-grant review proceeding may not be instituted 
     under paragraph (1), (2), or (3) of section 322 if the 
     petition for cancellation requesting the proceeding 
     identifies the same cancellation petitioner and the same 
     patent as a previous petition for cancellation filed under 
     the same paragraph of section 322.

     ``Sec. 325. Submission of additional information; showing of 
       sufficient grounds

       ``The cancellation petitioner shall file such additional 
     information with respect to the petition as the Director may 
     require. The Director may not authorize a post-grant review 
     proceeding to commence unless the Director determines that 
     the information presented provides sufficient grounds to 
     proceed.

     ``Sec. 326. Conduct of post-grant review proceedings

       ``(a) In General.--The Director shall--
       ``(1) prescribe regulations, in accordance with section 
     2(b)(2), establishing and governing post-grant review 
     proceedings under this chapter and their relationship to 
     other proceedings under this title;
       ``(2) prescribe regulations setting forth the standards for 
     showings of substantial reason to believe and significant 
     economic harm under section 322(2) and sufficient grounds 
     under section 325;
       ``(3) prescribe regulations establishing procedures for the 
     submission of supplemental information after the petition for 
     cancellation is filed; and
       ``(4) prescribe regulations setting forth procedures for 
     discovery of relevant evidence, including that such discovery 
     shall be limited to evidence directly related to factual 
     assertions advanced by either party in the proceeding, and 
     the procedures for obtaining such evidence shall be 
     consistent with the purpose and nature of the proceeding.
       ``(b) Post-Grant Regulations.--Regulations under subsection 
     (a)(1)--
       ``(1) shall require that the final determination in a post-
     grant proceeding issue not later than one year after the date 
     on which the post-grant review proceeding is instituted under 
     this chapter, except that, for good cause shown, the Director 
     may extend the 1-year period by not more than six months;
       ``(2) shall provide for discovery upon order of the 
     Director;
       ``(3) shall prescribe sanctions for abuse of discovery, 
     abuse of process, or any other improper use of the 
     proceeding, such as to harass or to cause unnecessary delay 
     or unnecessary increase in the cost of the proceeding;
       ``(4) may provide for protective orders governing the 
     exchange and submission of confidential information; and
       ``(5) shall ensure that any information submitted by the 
     patent owner in support of any amendment entered under 
     section 328 is made available to the public as part of the 
     prosecution history of the patent.
       ``(c) Considerations.--In prescribing regulations under 
     this section, the Director shall consider the effect on the 
     economy, the integrity of the patent system, and the 
     efficient administration of the Office.
       ``(d) Conduct of Proceeding.--The Patent Trial and Appeal 
     Board shall, in accordance with section 6(b), conduct each 
     post-grant review proceeding authorized by the Director.

     ``Sec. 327. Patent owner response

       ``After a post-grant proceeding under this chapter has been 
     instituted with respect to a patent, the patent owner shall 
     have the right to file, within a time period set by the 
     Director, a response to the cancellation petition. The patent 
     owner shall file with the response, through affidavits or 
     declarations, any additional factual evidence and expert 
     opinions on which the patent owner relies in support of the 
     response.

     ``Sec. 328. Proof and evidentiary standards

       ``(a) In General.--The presumption of validity set forth in 
     section 282 shall not apply in a challenge to any patent 
     claim under this chapter.
       ``(b) Burden of Proof.--The party advancing a proposition 
     under this chapter shall have the burden of proving that 
     proposition by a preponderance of the evidence.

     ``Sec. 329. Amendment of the patent

       ``(a) In General.--In response to a challenge in a petition 
     for cancellation, the patent owner may file 1 motion to amend 
     the patent in 1 or more of the following ways:
       ``(1) Cancel any challenged patent claim.
       ``(2) For each challenged claim, propose a substitute 
     claim.
       ``(3) Amend the patent drawings or otherwise amend the 
     patent other than the claims.
       ``(b) Additional Motions.--Additional motions to amend may 
     be permitted only for good cause shown.
       ``(c) Scope of Claims.--An amendment under this section may 
     not enlarge the scope of the claims of the patent or 
     introduce new matter.

     ``Sec. 330. Decision of the Board

       ``If the post-grant review proceeding is instituted and not 
     dismissed under this chapter, the Patent Trial and Appeal 
     Board shall issue a final written decision with respect to 
     the patentability of any patent claim challenged and any new 
     claim added under section 329.

     ``Sec. 331. Effect of decision

       ``(a) In General.--If the Patent Trial and Appeal Board 
     issues a final decision under section 330 and the time for 
     appeal has expired or any appeal proceeding has terminated, 
     the Director shall issue and publish a certificate canceling 
     any claim of the patent finally determined to be unpatentable 
     and incorporating in the patent by operation of the 
     certificate any new claim determined to be patentable.
       ``(b) New Claims.--Any new claim held to be patentable and 
     incorporated into a patent in a post-grant review proceeding 
     shall have the same effect as that specified in section 252 
     for reissued patents on the right of any person who made, 
     purchased, offered to sell, or used within the United States, 
     or imported into the United States, anything patented by such 
     new claim, or who made substantial preparations therefore, 
     prior to issuance of a certificate under subsection (a) of 
     this section.

     ``Sec. 332. Relationship to other pending proceedings

       ``Notwithstanding subsection 135(a), sections 251 and 252, 
     and chapter 30, the Director may determine the manner in 
     which any reexamination proceeding, reissue proceeding, 
     interference proceeding (commenced before the effective date 
     of the Patent Reform Act of 2007), derivation proceeding, or 
     post-grant

[[Page S4690]]

     review proceeding, that is pending during a post-grant review 
     proceeding, may proceed, including providing for stay, 
     transfer, consolidation, or termination of any such 
     proceeding.

     ``Sec. 333. Effect of decisions rendered in civil action on 
       future post-grant review proceedings

       ``If a final decision has been entered against a party in a 
     civil action arising in whole or in part under section 1338 
     of title 28 establishing that the party has not sustained its 
     burden of proving the invalidity of any patent claim--
       ``(1) that party to the civil action and the privies of 
     that party may not thereafter request a post-grant review 
     proceeding on that patent claim on the basis of any grounds, 
     under the provisions of section 311, which that party or the 
     privies of that party raised or had actual knowledge of; and
       ``(2) the Director may not thereafter maintain a post-grant 
     review proceeding previously requested by that party or the 
     privies of that party on the basis of such grounds.

     ``Sec. 334. Effect of final decision on future proceedings

       ``(a) In General.--If a final decision under section 330 is 
     favorable to the patentability of any original or new claim 
     of the patent challenged by the cancellation petitioner, the 
     cancellation petitioner may not thereafter, based on any 
     ground which the cancellation petitioner raised during the 
     post-grant review proceeding--
       ``(1) request or pursue a reexamination of such claim under 
     chapter 31;
       ``(2) request or pursue a derivation proceeding with 
     respect to such claim;
       ``(3) request or pursue a post-grant review proceeding 
     under this chapter with respect to such claim; or
       ``(4) assert the invalidity of any such claim, in any civil 
     action arising in whole or in part under section 1338 of 
     title 28.
       ``(b) Extension of Prohibition.--If the final decision is 
     the result of a petition for cancellation filed on the basis 
     of paragraph (2) of section 322, the prohibition under this 
     section shall extend to any ground which the cancellation 
     petitioner raised during the post-grant review proceeding.

     ``Sec. 335. Appeal

       ``A party dissatisfied with the final determination of the 
     Patent Trial and Appeal Board in a post-grant proceeding 
     under this chapter may appeal the determination under 
     sections 141 through 144. Any party to the post-grant 
     proceeding shall have the right to be a party to the 
     appeal.''.
       (f) Conforming Amendment.--The table of chapters for part 
     III is amended by adding at the end the following:

``32. Post-Grant Review Proceedings..........................321''.....

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

     SEC. 7. DEFINITIONS; PATENT TRIAL AND APPEAL BOARD.

       (a) Definitions.--Section 100 (as amended by this Act) is 
     further amended--
       (1) in subsection (e), by striking ``or inter partes 
     reexamination under section 311'';
       (2) by adding at the end the following:
       ``(k) The term `cancellation petitioner' means the real 
     party in interest requesting cancellation of any claim of a 
     patent under chapter 31 of this title and the privies of the 
     real party in interest.''.
       (b) Patent Trial and Appeal Board.--Section 6 is amended to 
     read as follows:

     ``Sec. 6. Patent Trial and Appeal Board

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

     SEC. 8. STUDY AND REPORT ON REEXAMINATION PROCEEDINGS.

       The Under Secretary of Commerce for Intellectual Property 
     and Director of the Patent and Trademark Office shall, not 
     later than 3 years after the date of the enactment of this 
     Act--
       (1) conduct a study of the effectiveness and efficiency of 
     the different forms of proceedings available under title 35, 
     United States Code, for the reexamination of patents; and
       (2) submit to the Committees on the Judiciary of the House 
     of Representatives and the Senate a report on the results of 
     the study, including any of the Director's suggestions for 
     amending the law, and any other recommendations the Director 
     has with respect to patent reexamination proceedings.

     SEC. 9. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY 
                   ENHANCEMENTS.

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

     SEC. 10. VENUE AND JURISDICTION.

       (a) Venue for Patent Cases.--Section 1400 of title 28, 
     United States Code, is amended by striking subsection (b) and 
     inserting the following:
       ``(b) Any civil action arising under any Act of Congress 
     relating to patents, other than an action for declaratory 
     judgment or an action seeking review of a decision of the 
     Patent Trial and Appeal Board under chapter 13 of title 35, 
     may be brought only--
       ``(1) in the judicial district where either party resides; 
     or
       ``(2) in the judicial district where the defendant has 
     committed acts of infringement and has a regular and 
     established place of business.
       ``(c) Notwithstanding section 1391(c) of this title, for 
     purposes of venue under subsection (b), a corporation shall 
     be deemed to reside in the judicial district in which the 
     corporation has its principal place of business or in the 
     State in which the corporation is incorporated.''.
       (b) Interlocutory Appeals.--Subsection (c)(2) of section 
     1292 of title 28, United States Code, is amended by adding at 
     the end the following:
       ``(3) of an appeal from an interlocutory order or decree 
     determining construction of claims in a civil action for 
     patent infringement under section 271 of title 35.
     Application for an appeal under paragraph (3) shall be made 
     to the court within 10 days after entry of the order or 
     decree, and proceedings in the district court under such 
     paragraph shall be stayed during pendency of the appeal.''.

     SEC. 11. REGULATORY AUTHORITY.

       Section 3(a) is amended by adding at the end the following:

[[Page S4691]]

       ``(5) Regulatory authority.--In addition to the authority 
     conferred by other provisions of this title, the Director may 
     promulgate such rules, regulations, and orders that the 
     Director determines appropriate to carry out the provisions 
     of this title or any other law applicable to the United 
     States Patent and Trademark Office or that the Director 
     determines necessary to govern the operation and organization 
     of the Office.''.

     SEC. 12. TECHNICAL AMENDMENTS.

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

     SEC. 13. EFFECTIVE DATE; RULE OF CONSTRUCTION.

       (a) Effective Date.--Except as otherwise provided in this 
     Act, the provisions of this Act shall take effect 12 months 
     after the date of the enactment of this Act and shall apply 
     to any patent issued on or after that effective date.
       (b) Continuity of Intent Under the Create Act.--The 
     enactment of section 102(b)(3) of title 35, United States 
     Code, under section (3)(b) of this Act is done with the same 
     intent to promote joint research activities that was 
     expressed, including in the legislative history, through the 
     enactment of the Cooperative Research and Technology 
     Enhancement Act of 2004 (Public Law 108-453; the ``CREATE 
     Act''), the amendments of which are stricken by section 3(c) 
     of this Act. The United States Patent and Trademark Office 
     shall administer section 102(b)(3) of title 35, United States 
     Code, in a manner consistent with the legislative history of 
     the CREATE Act that was relevant to its administration by the 
     Patent and Trademark Office.

  Mr. HATCH. Mr. President, I rise today to introduce with Senate 
Judiciary Committee Chairman Patrick Leahy the Patent Reform Act of 
2007, S. 1145. S. 1145 represents years of careful negotiation and 
input from a wide-spectrum of stake holders. In fact, the 2006 Hatch-
Leahy bill has served as a blueprint for this year's legislation and 
contains substantially similar language. Chairman Leahy's desire to 
have a piece of legislation that is both bipartisan and bicameral is a 
great undertaking and represents a tremendous commitment by Congress to 
move forward in streamlining and strengthening our patent system.
  The patent system is the bedrock of innovation, especially in today's 
global economy. Last year, more than 440,000 patent applications were 
filed at the United States Patent and Trademark Office (USPTO). The 
sheer volume of patent applications reflects the vibrant, innovative 
spirit that has made America a world-wide leader in science, 
engineering, and technology. Because America's ingenuity continues to 
fund our economy, we must protect new ideas and investments in 
innovation and creativity. Patents encourage technological advancement 
by providing incentives to invent, invest in, and disclose new 
technology. Now, more than ever, it is important to ensure efficiency 
and increased quality in the issuance of patents. This in turn creates 
an environment that fosters entrepreneurship and the creation of jobs: 
two significant pillars in our economy. In my home State of Utah alone, 
there are over 3,200 technology and 500 life science companies, and 
eight percent year-over-year growth. Utah leads the western States 
region in creating and sustaining these companies.
  Additionally, the concentration of college graduates in Utah is 
contributing to the State's technological friendliness, attracting 
growth companies to Utah and creating new ones. There is a large, young 
adult population in Utah attending not only the two world-class 
research universities of the University of Utah and Utah State 
University, but also Brigham Young University, Utah Valley State 
College and Weber State University. These universities and colleges are 
strong economic drivers that encourage technology industry growth in my 
State.
  For years, Chairman Leahy and I have been working together to craft 
meaningful patent reform to address problems that have been identified 
through a series of hearings and discussions with stake holders. This 
bill addresses many of the problems with the substantive, procedural, 
and administrative aspects of the patent system, which governs how 
entities here in the United States apply for, receive, and eventually 
make use of patents.
  The Patent Reform Act of 2007 includes provisions to improve patent 
quality. Many complaints about the current patent system deal with the 
number of suspect and over-broad patents that are issued. Because bad 
patents are generally of little value to productive companies, in many 
cases their value is maximized by using them as a basis for 
infringement suits against deep-pocket defendants. This bill institutes 
a robust post-grant review process so that third parties can challenge 
suspect patents in an administrative process, rather than through 
costly litigation. In the bill we introduced today, Section 6 has been 
tightened by including an anti-harassment provision to discourage 
companies from colluding and perpetually harassing one company. I am 
hopeful this will serve as a deterrent to those who seek to abuse post-
grant review process.
  In addition, S. 1145 is designed to harmonize U.S. law with the law 
of other countries by instituting a first-to-file system. The United 
States is the only significant country following the first-to-invent 
system, in which the right of the patent lies with the first inventor, 
rather than the first inventor to file for a patent. The Patent Reform 
Act of 2007 provides greater certainty because the filing date of an 
application can very rarely be challenged.
  S. 1145 also seeks to provide fair and equitable remedies. Some claim 
that courts have allowed damages for infringement to be based on the 
market for an entire product when all that was infringed is a minor 
component of the product. The bill's language preserves the current 
rule that mandates that a damages award shall not be less than a 
reasonable royalty for the infringed patent, and further requires the 
court to conduct an analysis to ensure that when a reasonable royalty 
is the award, it reflects only the economic value of the patent's 
specific contribution over the prior art.
  There are a few provisions I believe need further discussion. I was 
disappointed that the inequitable conduct provision from last year's 
bill was removed. Attorneys well know that the inequitable conduct 
defense has been overpleaded and has become a drag on the litigation 
process. I think last year's language struck the correct balance by 
focusing on the patentability of the claims in dispute and properly 
prevented parties from asserting the defense frivolously. Let me hasten 
to add that I do believe there should be consequences for misconduct. I 
believe that reforms to the inequitable conduct defense should focus on 
the nature

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of the misconduct and not permit the unenforceability of a perfectly 
valid patent on a meritorious invention. And, sanctions should be 
commensurate with the misconduct.
  Moreover, establishing inequitable conduct is supposed to require 
independent proof that: (1) the information at issue was material; and 
(2) the person who failed to disclose it or made the misrepresentation 
had the specific intention of misleading the USPTO. The two elements 
have become linked, and courts often discount the intent requirement by 
finding that the information is ``highly material.'' In fact, the 
materiality standard has become so inclusive that virtually anything 
now is portrayed as material. Information should only be considered 
material when it causes the USPTO to improperly grant patent claims. 
Using a standard of whether USPTO examiners would reject the claims is 
a good approximation of materiality because of the prima facie standard 
they use to determine whether the claims meet the requirements for 
patentability. Unfortunately, this bill preserves the status quo.
  A provision that would provide attorneys' fees and costs to a 
prevailing party was also left out of this bill. I included this 
provision in last year's bill to discourage weak cases from clogging 
the already-burdened judicial system. This is not a new concept in the 
realm of intellectual property. In fact, I note, Section 505 of the 
Copyright Act clearly provides courts the discretion to award 
attorneys' fees and costs. It seems logical that we would provide the 
same discretion in S. 1145 and I look forward to discussing this issue 
with Chairman Leahy.
  We opted this year not to include a provision that would repeal 
Section 271(f) of Title 35, pending a Supreme Court decision that is 
expected soon. Section 271(f) creates a cause of action for 
infringement due to foreign sales when a component of a patented 
invention is supplied from this country, knowing that a component will 
be combined in an infringing manner outside the United States. In the 
event of an unfavorable ruling, Chairman Leahy and I are committed to 
addressing this issue using the legislative process.
  Patent law is vital to our Nation's ability to compete in the global 
economy. S. 1145 is designed to ensure that the United States remains 
at the forefront of developing and translating new ideas into tangible 
goods and services through an effective patent review and protection 
system
  This bill represents a commitment from Congress to move forward in 
streamlining and strengthening our patent system. I am hopeful that 
further refinements will be made to this bill during the legislative 
process. I am committed to moving this legislation forward and hope 
that we can join efforts to refine and enact this important bill.
                                 ______