[Congressional Record Volume 154, Number 153 (Thursday, September 25, 2008)]
[Senate]
[Pages S9506-S9516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KYL:

[[Page S9506]]

  S. 3600. A bill to amend title 35, United States Code, to provide for 
patent reform; to the Committee on the Judiciary.
  Mr. KYL. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the text of the bill ordered to be printed 
in the Record, as follows:

                                S. 3600

       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 2008''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

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

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

       (a) Definitions.--Section 100 of title 35, United States 
     Code, is amended by adding at the end the following:
       ``(f) The term `inventor' means the individual or, if a 
     joint invention, the individuals collectively who invented or 
     discovered the subject matter of the invention.
       ``(g) The terms `joint inventor' and `coinventor' mean any 
     1 of the individuals who invented or discovered the subject 
     matter of a joint invention.
       ``(h) The `effective filing date of a claimed invention' 
     is--
       ``(1) the filing date of the patent or the application for 
     patent containing the claim to the invention; or
       ``(2) if the patent or application for patent is entitled 
     to a right of priority of any other application under section 
     119, 365(a), or 365(b) or to the benefit of an earlier filing 
     date in the United States under section 120, 121, or 365(c), 
     the filing date of the earliest such application in which the 
     claimed invention is disclosed in the manner provided by the 
     first paragraph of section 112.
       ``(i) The term `claimed invention' means the subject matter 
     defined by a claim in a patent or an application for a 
     patent.''.
       (b) Conditions for Patentability.--
       (1) In general.--Section 102 of title 35, United States 
     Code, is amended to read as follows:

     ``Sec. 102. Conditions for patentability; novelty

       ``(a) Novelty; Prior Art.--A patent for a claimed invention 
     may not be obtained if--
       ``(1) the claimed invention was patented, described in a 
     printed publication, or otherwise made available to the 
     public (other than through testing undertaken to reduce the 
     invention to practice)--
       ``(A) more than 1 year before the effective filing date of 
     the claimed invention; or
       ``(B) 1 year or less before the effective filing date of 
     the claimed invention, other than through disclosures made by 
     the inventor or a joint inventor or by others who obtained 
     the subject matter disclosed directly or indirectly from the 
     inventor or a joint inventor; or
       ``(2) the claimed invention was described in a patent 
     issued under section 151, or in an application for patent 
     published or deemed published under section 122(b), in which 
     the patent or application, as the case may be, names another 
     inventor and was effectively filed before the effective 
     filing date of the claimed invention.
       ``(b) Exceptions.--
       ``(1) Prior inventor disclosure exception.--Subject matter 
     that would otherwise qualify as prior art based upon a 
     disclosure under subparagraph (B) of subsection (a)(1) shall 
     not be prior art to a claimed invention under that 
     subparagraph if the subject matter had, before such 
     disclosure, been publicly disclosed by the inventor or a 
     joint inventor or others who obtained the subject matter 
     disclosed directly or indirectly from the inventor or a joint 
     inventor.
       ``(2) Derivation, prior disclosure, and common assignment 
     exceptions.--Subject matter that would otherwise qualify as 
     prior art only under subsection (a)(2), after taking into 
     account the exception under paragraph (1), shall not be prior 
     art to a claimed invention if--
       ``(A) the subject matter was obtained directly or 
     indirectly from the inventor or a joint inventor;
       ``(B) the subject matter had been publicly disclosed by the 
     inventor or a joint inventor or others who obtained the 
     subject matter disclosed, directly or indirectly, from the 
     inventor or a joint inventor before the effective filing date 
     of the application or patent set forth under subsection 
     (a)(2); or
       ``(C) the subject matter and the claimed invention, not 
     later than the effective filing date of the claimed 
     invention, were owned by the same person or subject to an 
     obligation of assignment to the same person.
       ``(3) Joint research agreement exception.--
       ``(A) In general.--Subject matter and a claimed invention 
     shall be deemed to have been owned by the same person or 
     subject to an obligation of assignment to the same person in 
     applying the provisions of paragraph (2) if--
       ``(i) the subject matter and the claimed invention were 
     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;
       ``(ii) the claimed invention was made as a result of 
     activities undertaken within the scope of the joint research 
     agreement; and
       ``(iii) the application for patent for the claimed 
     invention discloses or is amended to disclose the names of 
     the parties to the joint research agreement.
       ``(B) For purposes of subparagraph (A), the term `joint 
     research agreement' means a written contract, grant, or 
     cooperative agreement entered into by 2 or more persons or 
     entities for the performance of experimental, developmental, 
     or research work in the field of the claimed invention.
       ``(4) Patents and published applications effectively 
     filed.--A patent or application for patent is effectively 
     filed under subsection (a)(2) with respect to any subject 
     matter described in the patent or application--
       ``(A) as of the filing date of the patent or the 
     application for patent; or
       ``(B) if the patent or application for patent is entitled 
     to claim a right of priority under section 119, 365(a), or 
     365(b) or to claim the benefit of an earlier filing date 
     under section 120, 121, or 365(c), based upon 1 or more prior 
     filed applications for patent, as of the filing date of the 
     earliest such application that describes the subject 
     matter.''.
       (2) Conforming amendment.--The item relating to section 102 
     in the table of sections for chapter 10 of title 35, United 
     States Code, is amended to read as follows:

``102. Conditions for patentability; novelty.''.

       (c) Conditions for Patentability; Nonobvious Subject 
     Matter.--Section 103 of title 35, United States Code, is 
     amended to read as follows:

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

       ``A patent for a claimed invention may not be obtained 
     though the claimed invention is not identically disclosed as 
     set forth in section 102, if the differences between the 
     claimed invention and the prior art are such that the claimed 
     invention as a whole would have been obvious before the 
     effective filing date of the claimed invention to a person 
     having ordinary skill in the art to which the claimed 
     invention pertains. Patentability shall not be negated by the 
     manner in which the invention was made.''.
       (d) Repeal of Requirements for Inventions Made Abroad.--
     Section 104 of title 35, United States Code, and the item 
     relating to that section in the table of sections for chapter 
     10 of title 35, United States Code, are repealed.
       (e) Repeal of Statutory Invention Registration.--
       (1) In general.--Section 157 of title 35, United States 
     Code, and the item relating to that section in the table of 
     sections for chapter 14 of title 35, United States Code, are 
     repealed.
       (2) Removal of cross references.--Section 111(b)(8) of 
     title 35, United States Code, is amended by striking 
     ``sections 115, 131, 135, and 157'' and inserting ``sections 
     131 and 135''.
       (f) Earlier Filing Date for Inventor and Joint Inventor.--
     Section 120 of title 35, United States Code, is amended by 
     striking ``which is filed by an inventor or inventors named'' 
     and inserting ``which names an inventor or joint inventor''.
       (g) Conforming Amendments.--
       (1) Right of priority.--Section 172 of title 35, United 
     States Code, is amended by striking ``and the time specified 
     in section 102(d)''.
       (2) Limitation on remedies.--Section 287(c)(4) of title 35, 
     United States Code, is amended by striking ``the earliest 
     effective filing date of which is prior to'' and inserting 
     ``which has an effective filing date before''.
       (3) International application designating the united 
     states: effect.--Section 363 of title 35, United States Code, 
     is amended by striking ``except as otherwise provided in 
     section 102(e) of this title''.
       (4) Publication of international application: effect.--
     Section 374 of title 35, United States Code, is amended by 
     striking ``sections 102(e) and 154(d)'' and inserting 
     ``section 154(d)''.
       (5) Patent issued on international application: effect.--
     The second sentence of section 375(a) of title 35, United 
     States Code, is amended by striking ``Subject to section 
     102(e) of this title, such'' and inserting ``Such''.
       (6) Limit on right of priority.--Section 119(a) of title 
     35, United States Code, is amended by striking ``; but no 
     patent shall be granted'' and all that follows through ``one 
     year prior to such filing''.
       (7) Inventions made with federal assistance.--Section 
     202(c) of title 35, United States Code, is amended--

[[Page S9507]]

       (A) in paragraph (2)--
       (i) by striking ``publication, on sale, or public use,'' 
     and all that follows through ``obtained in the United 
     States'' and inserting ``the 1-year period referred to in 
     section 102(a) would end before the end of that 2-year 
     period''; and
       (ii) by striking ``the statutory'' and inserting ``that 1-
     year''; and
       (B) in paragraph (3), by striking ``any statutory bar date 
     that may occur under this title due to publication, on sale, 
     or public use'' and inserting ``the expiration of the 1-year 
     period referred to in section 102(a)''.
       (h) Repeal of Interfering Patent Remedies.--Section 291 of 
     title 35, United States Code, and the item relating to that 
     section in the table of sections for chapter 29 of title 35, 
     United States Code, are repealed.
       (i) Action for Claim to Patent on Derived Invention.--
     Section 135(a) of title 35, United States Code, is amended to 
     read as follows:
       ``(a) Dispute Over Right to Patent.--
       ``(1) Institution of derivation proceeding.--An applicant 
     may request initiation of a derivation proceeding to 
     determine the right of the applicant to a patent by filing a 
     request which sets forth with particularity the basis for 
     finding that an earlier applicant derived the claimed 
     invention from the applicant requesting the proceeding and, 
     without authorization, filed an application claiming such 
     invention. Any such request may only be made within 1 year 
     after the date of first publication of an application or of 
     the issuance of a patent, whichever is earlier, containing a 
     claim that is the same or is substantially the same as the 
     claimed invention, must be made under oath, and must be 
     supported by substantial evidence. Whenever the Director 
     determines that patents or applications for patent naming 
     different individuals as the inventor interfere with one 
     another because of a dispute over the right to patent under 
     section 101, the Director shall institute a derivation 
     proceeding for the purpose of determining which applicant is 
     entitled to a patent.
       ``(2) Determination by patent trial and appeal board.--In 
     any proceeding under this subsection, the Patent Trial and 
     Appeal Board--
       ``(A) shall determine the question of the right to patent;
       ``(B) in appropriate circumstances, may correct the naming 
     of the inventor in any application or patent at issue; and
       ``(C) shall issue a final decision on the right to patent.
       ``(3) Derivation proceeding.--The Board may defer action on 
     a request to initiate a derivation proceeding until 3 months 
     after the date on which the Director issues a patent to the 
     applicant whose application has the earlier effective filing 
     date of the commonly claimed invention.
       ``(4) Effect of final decision.--The final decision of the 
     Patent Trial and Appeal Board, if adverse to the claim of an 
     applicant, shall constitute the final refusal by the United 
     States Patent and Trademark Office on the claims involved. 
     The Director may issue a patent to an applicant who is 
     determined by the Patent Trial and Appeal Board to have the 
     right to patent. The final decision of the Board, if adverse 
     to a patentee, shall, if no appeal or other review of the 
     decision has been or can be taken or had, constitute 
     cancellation of the claims involved in the patent, and notice 
     of such cancellation shall be endorsed on copies of the 
     patent distributed after such cancellation by the United 
     States Patent and Trademark Office.''.
       (j) Elimination of References to Interferences.--(1) 
     Sections 6, 41, 134, 141, 145, 146, 154, 305, and 314 of 
     title 35, United States Code, are each amended by striking 
     ``Board of Patent Appeals and Interferences'' each place it 
     appears and inserting ``Patent Trial and Appeal Board''.
       (2) Sections 141, 146, and 154 of title 35, United States 
     Code, are each amended--
       (A) by striking ``an interference'' each place it appears 
     and inserting ``a derivation proceeding''; and
       (B) by striking ``interference'' each additional place it 
     appears and inserting ``derivation proceeding''.
       (3) The section heading for section 134 of title 35, United 
     States Code, is amended to read as follows:

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

       (4) The section heading for section 135 of title 35, United 
     States Code, is amended to read as follows:

     ``Sec. 135. Derivation proceedings''.

       (5) The section heading for section 146 of title 35, United 
     States Code, is amended to read as follows:

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

       (6) Section 154(b)(1)(C) of title 35, United States Code, 
     is amended by striking ``interferences'' and inserting 
     ``derivation proceedings''.
       (7) The item relating to section 6 in the table of sections 
     for chapter 1 of title 35, United States Code, is amended to 
     read as follows:

``6. Patent Trial and Appeal Board.''.

       (8) The items relating to sections 134 and 135 in the table 
     of sections for chapter 12 of title 35, United States Code, 
     are amended to read as follows:

``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.

       (9) The item relating to section 146 in the table of 
     sections for chapter 13 of title 35, United States Code, is 
     amended to read as follows:

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

       (10) Certain Appeals.--Section 1295(a)(4)(A) of title 28, 
     United States Code, is amended to read as follows:
       ``(A) the Patent Trial and Appeal Board of the United 
     States Patent and Trademark Office with respect to patent 
     applications, derivation proceedings, and post-grant review 
     proceedings, at the instance of an applicant for a patent or 
     any party to a patent interference (commenced before the 
     effective date of the Patent Reform Act of 2008), derivation 
     proceeding, or post-grant review proceeding, and any such 
     appeal shall waive any right of such applicant or party to 
     proceed under section 145 or 146 of title 35;''.

     SEC. 3. INVENTOR'S OATH OR DECLARATION.

       (a) Inventor's Oath or Declaration.--
       (1) In general.--Section 115 of title 35, United States 
     Code, is amended to read as follows:

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

       ``(a) Naming the Inventor; Inventor's Oath or 
     Declaration.--An application for patent that is filed under 
     section 111(a) or that commences the national stage under 
     section 371 (including an application under section 111 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

[[Page S9508]]

     withdraw, replace, or otherwise correct the statement at any 
     time. If a change is made in the naming of the inventor 
     requiring the filing of 1 or more additional statements under 
     this section, the Director shall establish regulations under 
     which such additional statements may be filed.
       ``(2) Supplemental statements not required.--If an 
     individual has executed an oath or declaration under 
     subsection (a) or an assignment meeting the requirements of 
     subsection (e) with respect to an application for patent, the 
     Director may not thereafter require that individual to make 
     any additional oath, declaration, or other statement 
     equivalent to those required by this section in connection 
     with the application for patent or any patent issuing 
     thereon.
       ``(3) Savings clause.--No patent shall be invalid or 
     unenforceable based upon the failure to comply with a 
     requirement under this section if the failure is remedied as 
     provided under paragraph (1).
       ``(i) Acknowledgment of Penalties.--Any declaration or 
     statement filed pursuant to this section shall contain an 
     acknowledgment that any willful false statement made in such 
     declaration or statement is punishable under section 1001 of 
     title 18 by fine or imprisonment of not more than 5 years, or 
     both.''.
       (2) Relationship to divisional applications.--Section 121 
     of title 35, United States Code, is amended by striking ``If 
     a divisional application'' and all that follows through 
     ``inventor.''.
       (3) Requirements for nonprovisional applications.--Section 
     111(a) of title 35, United States Code, is amended--
       (A) in paragraph (2)(C), by striking ``by the applicant'' 
     and inserting ``or declaration'';
       (B) in the heading for paragraph (3), by striking ``and 
     oath''; and
       (C) by striking ``and oath'' each place it appears.
       (4) Conforming amendment.--The item relating to section 115 
     in the table of sections for chapter 10 of title 35, United 
     States Code, is amended to read as follows:

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

       (b) Filing by Other Than Inventor.--Section 118 of title 
     35, United States Code, is amended to read as follows:

     ``Sec. 118. Filing by other than inventor

       ``A person to whom the inventor has assigned or is under an 
     obligation to assign the invention may make an application 
     for patent. A person who otherwise shows sufficient 
     proprietary interest in the matter may make an application 
     for patent on behalf of and as agent for the inventor on 
     proof of the pertinent facts and a showing that such action 
     is appropriate to preserve the rights of the parties. If the 
     Director grants a patent on an application filed under this 
     section by a person other than the inventor, the patent shall 
     be granted to the real party in interest and upon such notice 
     to the inventor as the Director considers to be 
     sufficient.''.
       (c) Specification.--Section 112 of title 35, United States 
     Code, is amended--
       (1) in the first paragraph--
       (A) by striking ``The specification'' and inserting ``(a) 
     In General.--The specification''; and
       (B) by striking ``, and shall set forth'' and all that 
     follows through ``his invention''; and
       (2) in the second paragraph--
       (A) by striking ``The specifications'' and inserting ``(b) 
     Conclusion.--The specifications''; and
       (B) by striking ``applicant regards as his invention'' and 
     inserting ``inventor or a joint inventor regards as the 
     invention'';
       (3) in the third paragraph, by striking ``A claim'' and 
     inserting ``(c) Form.--A claim'';
       (4) in the fourth paragraph, by striking ``Subject to the 
     following paragraph,'' and inserting ``(d) Reference in 
     Dependent Forms.--Subject to subsection (e),'';
       (5) in the fifth paragraph, by striking ``A claim'' and 
     inserting ``(e) Reference in Multiple Dependent Form.--A 
     claim''; and
       (6) in the last paragraph, by striking ``An element'' and 
     inserting ``(f) Element in Claim for a Combination.--An 
     element''.

     SEC. 4. DAMAGES.

       (a) Damages.--Section 284 of title 35, United States Code, 
     is amended to read as follows:

     ``Sec. 284. Damages

       ``(a) In General.--
       ``(1) Compensatory damages.--Upon finding for a claimant, 
     the court shall award the claimant damages adequate to 
     compensate for the infringement, but in no event less than a 
     reasonable royalty for the use made of the invention by the 
     infringer, together with interest and costs as determined by 
     the court.
       ``(2) Increased damages.--When the damages are not found by 
     a jury, the court shall assess them. In either event the 
     court may increase the damages up to 3 times the amount found 
     or assessed. Increased damages under this paragraph shall not 
     apply to provisional rights under section 154(d) of this 
     title.
       ``(3) Limitation.--Subsections (b) through (i) of this 
     section apply only to the determination of the amount of 
     reasonable royalty and shall not apply to the determination 
     of other types of damages.
       ``(b) Hypothetical Negotiation.--For purposes of this 
     section, the term `reasonable royalty' means the amount that 
     the infringer would have agreed to pay and the claimant would 
     have agreed to accept if the infringer and claimant had 
     voluntarily negotiated a license for use of the invention at 
     the time just prior to when the infringement began. The court 
     or the jury, as the case may be, shall assume that the 
     infringer and claimant would have agreed that the patent is 
     valid, enforceable, and infringed.
       ``(c) Appropriate Factors.--The court or the jury, as the 
     case may be, may consider any factors that are relevant to 
     the determination of the amount of a reasonable royalty.
       ``(d) Standardized Measures.--The amount of a reasonable 
     royalty shall not be determined by the use of a standard or 
     average ratio for the division of profits, an industry 
     average rate for royalties, or other methods that are not 
     based on the particular benefits or advantages of the use of 
     the invention, unless the party asserting the propriety of 
     such a method demonstrates that--
       ``(1) the use made of the invention is the primary reason 
     for demand for the infringing product or process;
       ``(2) the method consists of the use of an established 
     royalty;
       ``(3) the method consists of the use of an industry average 
     range to confirm that an estimate of the amount of a 
     reasonable royalty that is produced by an independently 
     allowable method falls within a reasonable range; or
       ``(4) no other method is reasonably available to determine 
     the amount of a reasonable royalty and the use of the method 
     is otherwise appropriate.
       ``(e) Comparable Patents.--
       ``(1) In general.--The amount of a reasonable royalty shall 
     not be determined by comparison to royalties paid for patents 
     other than the patent in suit unless--
       ``(A) such other patents are used in the same or an 
     analogous technological field;
       ``(B) such other patents are found to be economically 
     comparable to the patent in suit; and
       ``(C) evidence of the value of such other patents is 
     presented in conjunction with or as confirmation of other 
     evidence for determining the amount of a reasonable royalty.
       ``(2) Factors.--Factors that may be considered to determine 
     whether another patent is economically comparable to the 
     patent in suit under paragraph (1)(A) include whether--
       ``(A) the other patent is comparable to the patent in suit 
     in terms of the overall significance of the other patent to 
     the product or process licensed under such other patent; and
       ``(B) the product or process that uses the other patent is 
     comparable to the infringing product or process based upon 
     its profitability or a like measure of value.
       ``(f) Financial Condition.--The financial condition of the 
     infringer as of the time of the trial shall not be relevant 
     to the determination of the amount of a reasonable royalty.
       ``(g) Sequencing.--Either party may request that a patent-
     infringement trial be sequenced so that the court or the 
     jury, as the case may be, decides questions of the patent's 
     infringement and validity before the issue of the amount of a 
     reasonable royalty is presented to the court or the jury, as 
     the case may be. 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.
       ``(h) Experts.--In addition to the expert disclosure 
     requirements under rule 26(a)(2) of the Federal Rules of 
     Civil Procedure, a party that intends to present the 
     testimony of an expert relating to the amount of a reasonable 
     royalty shall provide--
       ``(1) to the other parties to that civil action, the expert 
     report relating to damages, including all data and other 
     information considered by the expert in forming the opinions 
     of the expert; and
       ``(2) to the court, at the same time as to the other 
     parties, the complete statement of all opinions that the 
     expert will express and the basis and reasons for those 
     opinions.
       ``(i) Jury Instructions.--On the motion of any party and 
     after allowing any other party to the civil action a 
     reasonable opportunity to be heard, the court shall determine 
     whether there is no legally sufficient evidence to support 1 
     or more of the contentions of a party relating to the amount 
     of a reasonable royalty. The court shall identify for the 
     record those factors that are supported by legally sufficient 
     evidence, and shall instruct the jury to consider only those 
     factors when determining the amount of a reasonable royalty. 
     The jury may not consider any factor for which legally 
     sufficient evidence has not been admitted at trial.''.
       (b) Testimony by Experts.--Chapter 29 of title 35, United 
     States Code, as amended by section 11, is further amended by 
     adding at the end the following:

     ``Sec. 299A. Testimony by experts

       ``(a) Federal Rule.--In a patent case, the court shall 
     ensure that the testimony of a witness qualified as an expert 
     by knowledge, skill, experience, training, or education meets 
     the requirements set forth in rule 702 of the Federal Rules 
     of Evidence.
       ``(b) Determination of Reliability.--To determine whether 
     an expert's principles and methods are reliable, the court 
     may consider, among other factors--
       ``(1) whether the expert's theory or technique can be or 
     has been tested;
       ``(2) whether the theory or technique has been subjected to 
     peer review and publication;
       ``(3) the known or potential error rate of the theory or 
     technique, and the existence

[[Page S9509]]

     and maintenance of standards controlling the technique's 
     operation;
       ``(4) the degree of acceptance of the theory or technique 
     within the relevant scientific or specialized community;
       ``(5) whether the theory or technique is employed 
     independently of litigation; or
       ``(6) whether the expert has adequately considered or 
     accounted for readily available alternative theories or 
     techniques.
       ``(c) Required Explanation.--The court shall explain its 
     reasons for allowing or barring the introduction of an 
     expert's proposed testimony under this section.''.

     SEC. 5. POST-GRANT REVIEW PROCEEDINGS.

       (a) Reexamination.--Section 303(a) of title 35, United 
     States Code, is amended to read as follows:
       ``(a) Within 3 months after the owner of a patent files a 
     request for reexamination under section 302, the Director 
     shall determine whether a substantial new question of 
     patentability affecting any claim of the patent concerned is 
     raised by the request, with or without consideration of other 
     patents or printed publications. The existence of a 
     substantial new question of patentability is not precluded by 
     the fact that a patent or printed publication was previously 
     cited by or to the Office or considered by the Office.''.
       (b) Repeal of Optional Inter Partes Reexamination 
     Procedures.--
       (1) In general.--Sections 311, 312, 313, 314, 315, 316, 
     317, and 318 of title 35, United States Code, and the items 
     relating to those sections in the table of sections, are 
     repealed.
       (2) Effective date.--Notwithstanding paragraph (1), the 
     provisions of sections 311, 312, 313, 314, 315, 316, 317, and 
     318 of title 35, United States Code, shall continue to apply 
     to any inter partes reexamination determination request filed 
     on or before the effective date of subsection (c).
       (c) Post-Grant Review Proceedings.--Part III of title 35, 
     United States Code, is amended by adding at the end the 
     following:

              ``CHAPTER 32--POST-GRANT REVIEW PROCEEDINGS

``Sec.
``321. Petition for post-grant review.
``322. Relation to other proceedings or actions.
``323. Requirements of petition.
``324. Publication and public availability of petition.
``325. Consolidation or stay of proceedings.
``326. Submission of additional information.
``327. Institution of post-grant review proceedings.
``328. Determination not appealable.
``329. Conduct of post-grant review proceedings.
``330. Patent owner response.
``331. Proof and evidentiary standards.
``332. Amendment of the patent.
``333. Settlement.
``334. Decision of the board.
``335. Effect of decision.
``336. Appeal.

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

       ``(a) In General.--Subject to the provisions of this 
     chapter, a person who has a substantial economic interest 
     adverse to a patent may file with the Office a petition to 
     institute a post-grant review proceeding for that patent. If 
     instituted, such a proceeding shall be deemed to be either a 
     first-period proceeding or a second-period proceeding. The 
     Director shall establish, by regulation, fees to be paid by 
     the person requesting the proceeding, in such amounts as the 
     Director determines to be reasonable, considering the 
     aggregate costs of the post-grant review proceeding and the 
     status of the petitioner.
       ``(b) First-Period Proceeding.--
       ``(1) Scope.--A petitioner in a first-period proceeding 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).
       ``(2) Filing deadline.--A petition for a first-period 
     proceeding shall be filed not later than 9 months after the 
     grant of the patent or issuance of a reissue patent.
       ``(c) Second-Period Proceeding.--
       ``(1) Scope.--A petitioner in a second-period proceeding 
     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.
       ``(2) Filing deadline.--A petition for a second-period 
     proceeding shall be filed after the later of either--
       ``(A) 9 months after the grant of a patent or issuance of a 
     reissue of a patent; or
       ``(B) if a first-period proceeding is instituted under 
     section 327, the date of the termination of such first-period 
     proceeding.

     ``Sec. 322. Relation to other proceedings or actions

       ``(a) Early Actions.--A first-period proceeding may not be 
     instituted until after a civil action alleging infringement 
     of the patent is finally concluded if--
       ``(1) the infringement action is filed within 3 months 
     after the grant of the patent;
       ``(2) a stay of the proceeding is requested by the patent 
     owner;
       ``(3) the Director determines that the infringement action 
     is likely to address the same or substantially the same 
     questions of patentability that would be addressed in the 
     proceeding; and
       ``(4) the Director determines that a stay of the proceeding 
     would not be contrary to the interests of justice.
       ``(b) Pending Civil Actions.--
       ``(1) Infringer's action.--A post-grant review proceeding 
     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.
       ``(2) Patent owner's action.--A second-period proceeding 
     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.
       ``(3) Stay or dismissal.--The Director may stay or dismiss 
     a second-period proceeding if the petitioner or real party in 
     interest challenges the validity of a claim of the patent in 
     a civil action.
       ``(c) Duplicative Proceedings.--A post-grant review or 
     reexamination proceeding may not be instituted if--
       ``(1) the petition requesting the proceeding identifies the 
     same petitioner or real party in interest and the same patent 
     as a previous petition requesting a post-grant review 
     proceeding; or
       ``(2) the petition requests cancellation of a claim in a 
     reissue patent that is identical to a claim in the original 
     patent from which the reissue patent was issued, and the time 
     limitations in section 321 would bar filing a post-grant 
     review petition for such original patent.
       ``(d) Estoppel.--The petitioner in any post-grant review 
     proceeding under this chapter may not request or maintain a 
     proceeding before the Office with respect to a claim, or 
     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--
       ``(1) the petitioner, real party in interest, or his privy 
     raised during a post-grant review proceeding resulting in a 
     final decision under section 334; or
       ``(2) the petitioner, real party in interest, or his privy 
     could have raised during a second-period proceeding resulting 
     in a final decision under section 334.

     ``Sec. 323. Requirements of petition

       ``A petition filed under section 321 may be considered only 
     if--
       ``(1) the petition is accompanied by payment of the fee 
     established by the Director under section 321;
       ``(2) the petition identifies 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 each challenged claim, including--
       ``(A) copies of patents and printed publications that the 
     petitioner relies upon in support of the petition; and
       ``(B) affidavits or declarations of supporting evidence and 
     opinions, if the petitioner relies on other factual evidence 
     or on expert opinions;
       ``(4) the petition provides such other information as the 
     Director may require by regulation; and
       ``(5) the petitioner provides copies of any of the 
     documents required under paragraphs (3) and (4) to the patent 
     owner or, if applicable, the designated representative of the 
     patent owner.

     ``Sec. 324. Publication and public availability of petition

       ``(a) In General.--As soon as practicable after the receipt 
     of a petition under section 321, the Director shall--
       ``(1) publish the petition in the Federal Register; and
       ``(2) make that petition available on the website of the 
     United States Patent and Trademark Office.
       ``(b) Public Availability.--The file of any proceeding 
     under this chapter shall be made available to the public 
     except that any petition or document filed with the intent 
     that it be sealed shall be accompanied by a motion to seal. 
     Such petition or document shall be treated as sealed, pending 
     the outcome of the ruling on the motion. Failure to file a 
     motion to seal will result in the pleadings being placed in 
     the public record.

     ``Sec. 325. Consolidation or stay of proceedings

       ``(a) First-Period Proceedings.--If more than 1 petition 
     for a first-period proceeding is properly filed against the 
     same patent and the Director determines that more than 1 of 
     these petitions warrants the instituting of a first-period 
     proceeding under section 327, the Director shall consolidate 
     such proceedings into a single first-period proceeding.
       ``(b) Second-Period Proceedings.--If the Director 
     institutes a second-period proceeding, the Director, in his 
     discretion, may join as a party to that second-period 
     proceeding any person who properly files a petition under 
     section 321 that the Director, after receiving a preliminary 
     response under section 330 or the expiration of the time for 
     filing such a response, determines warrants the instituting 
     of a second-period proceeding under section 327.
       ``(c) Other Proceedings.--Notwithstanding sections 135(a), 
     251, and 252, and chapter 30, during the pendency of any 
     post-grant review proceeding the Director may determine the 
     manner in which any proceeding or matter involving the patent 
     that is before the Office may proceed, including providing 
     for stay, transfer, consolidation, or termination of any such 
     proceeding or matter.

     ``Sec. 326. Submission of additional information

       ``A petitioner under this chapter shall file such 
     additional information with respect to

[[Page S9510]]

     the petition as the Director may require by regulation.

     ``Sec. 327. Institution of post-grant review proceedings

       ``(a) Threshold.--The Director may not authorize a post-
     grant review proceeding to commence unless the Director 
     determines that the information presented in the petition, if 
     such information is not rebutted, would provide a sufficient 
     basis to conclude that at least 1 of the claims challenged in 
     the petition is unpatentable.
       ``(b) Additional Grounds.--In the case of a petition for a 
     first-period proceeding, the determination required under 
     subsection (a) may 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) Successive Petitions.--The Director may not institute 
     an additional second-period proceeding if a prior second-
     period proceeding has been instituted and the time period 
     established under section 329(b)(2) for requesting joinder 
     under section 325(b) has expired, unless the Director 
     determines that--
       ``(1) the additional petition satisfies the requirements 
     under subsection (a); and
       ``(2) either--
       ``(A) the additional petition presents exceptional 
     circumstances; or
       ``(B) such an additional proceeding is reasonably required 
     in the interests of justice.
       ``(d) Timing.--The Director shall determine whether to 
     institute a post-grant review proceeding under this chapter 
     within 3 months after receiving a preliminary response under 
     section 330 or the expiration of the time for filing such a 
     response.
       ``(e) Notice.--The Director shall notify the petitioner and 
     patent owner, in writing, of the Director's determination 
     under subsection (a). The Director shall publish each notice 
     of institution of a post-grant review proceeding in the 
     Federal Register and make such notice available on the 
     website of the United States Patent and Trademark Office. 
     Such notice shall list the date on which the proceeding shall 
     commence.

     ``Sec. 328. Determination not appealable

       ``The determination by the Director regarding whether to 
     institute a post-grant review proceeding under section 327 
     shall not be appealable.

     ``Sec. 329. Conduct of post-grant review proceedings

       ``(a) In General.--The Director shall prescribe 
     regulations--
       ``(1) in accordance with section 2(b)(2), establishing and 
     governing post-grant review proceedings under this chapter 
     and their relationship to other proceedings under this title;
       ``(2) for setting forth the standards for showings of 
     sufficient grounds to institute a proceeding under section 
     321(a) and subsections (a), (b), and (c) of section 327;
       ``(3) providing for the publication in the Federal Register 
     all requests for the institution of post-grant proceedings;
       ``(4) establishing procedures for the submission of 
     supplemental information after the petition is filed; and
       ``(5) setting forth procedures for discovery of relevant 
     evidence, including that such discovery shall be limited to 
     evidence directly related to factual assertions advanced by 
     either party in the proceeding.
       ``(b) Post-Grant Review Regulations.--The regulations 
     required under subsection (a)(1) shall--
       ``(1) require that the final determination in any post-
     grant review proceeding be issued not later than 1 year after 
     the date on which the Director notices the institution of a 
     post-grant proceeding under this chapter, except that 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(b);
       ``(2) set a time period for requesting joinder under 
     section 325(b);
       ``(3) allow for discovery upon order of the Director, 
     provided that in a second-period proceeding 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;
       ``(4) prescribe sanctions for abuse of discovery, abuse of 
     process, or any other improper use of the proceeding, such as 
     to harass or to cause unnecessary delay or unnecessary 
     increase in the cost of the proceeding;
       ``(5) provide for protective orders governing the exchange 
     and submission of confidential information;
       ``(6) ensure that any information submitted by the patent 
     owner in support of any amendment entered under section 332 
     is made available to the public as part of the prosecution 
     history of the patent; and
       ``(7) provide either party with the right to an oral 
     hearing as part of the proceeding.
       ``(c) Considerations.--In prescribing regulations under 
     this section, the Director shall consider the effect on the 
     economy, the integrity of the patent system, and the 
     efficient administration of the Office.
       ``(d) Conduct of Proceeding.--The Patent Trial and Appeal 
     Board shall, in accordance with section 6(b), conduct each 
     proceeding authorized by the Director.

     ``Sec. 330. Patent owner response

       ``(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--
       ``(1) in the case of a first-period proceeding, within 2 
     months of the expiration of the time for filing a petition 
     for a first-period proceeding; and
       ``(2) in the case of a second-period proceeding, within a 
     time period set by the Director.
       ``(b) Content of Response.--A preliminary response to a 
     petition for a post-grant review proceeding shall set forth 
     reasons why no post-grant review proceeding should be 
     instituted based upon the failure of the petition to meet any 
     requirement of this chapter.
       ``(c) Additional Response.--After a post-grant review 
     proceeding under this chapter has been instituted with 
     respect to a patent, the patent owner shall have the right to 
     file, within a time period set by the Director, a response to 
     the petition. The patent owner shall file with the response, 
     through affidavits or declarations, any additional factual 
     evidence and expert opinions on which the patent owner relies 
     in support of the response.

     ``Sec. 331. Proof and evidentiary standards

       ``(a) In General.--The presumption of validity set forth in 
     section 282 of this title shall apply in post-grant review 
     proceedings instituted under this chapter.
       ``(b) Burden of Proof.--The petitioner shall have the 
     burden of proving a proposition of invalidity by a 
     preponderance of the evidence in a first-period proceeding 
     and by clear and convincing evidence in a second-period 
     proceeding.

     ``Sec. 332. Amendment of the patent

       ``(a) In General.--During a post-grant review proceeding 
     instituted under this chapter, 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 reasonable 
     number of substitute claims.
       ``(b) 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 333, or upon the request of the 
     patent owner for good cause shown.
       ``(c) Scope of Claims.--An amendment under this section may 
     not enlarge the scope of the claims of the patent or 
     introduce new matter.

     ``Sec. 333. Settlement

       ``(a) In General.--A post-grant review proceeding 
     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 matter before the request for termination is 
     filed. If the post-grant review proceeding is terminated with 
     respect to a petitioner under this section, no estoppel under 
     this chapter shall apply to that petitioner. If no petitioner 
     remains in the post-grant review proceeding, the Office may 
     terminate the post-grant review proceeding or proceed to a 
     final written decision under section 334.
       ``(b) Agreements in Writing.--Any agreement or 
     understanding between the patent owner and a petitioner, 
     including any collateral agreements referred to in such 
     agreement or understanding, made in connection with, or in 
     contemplation of, the termination of a post-grant review 
     proceeding under this section shall be in writing and a true 
     copy of such agreement or understanding shall be filed in the 
     United States Patent and Trademark Office before the 
     termination of the post-grant review proceeding as between 
     the parties to the agreement or understanding. If any party 
     filing such agreement or understanding so requests, the copy 
     shall be kept separate from the file of the post-grant review 
     proceeding, and shall be made available only to Federal 
     Government agencies upon written request, or to any other 
     person on a showing of good cause.

     ``Sec. 334. Decision of the board

       ``If the post-grant review proceeding is instituted and not 
     dismissed under this chapter, the Patent Trial and Appeal 
     Board shall issue a final written decision with respect to 
     the patentability of any patent claim challenged and any new 
     claim added under section 332.

     ``Sec. 335. Effect of decision

       ``If the Patent Trial and Appeal Board issues a final 
     decision under section 334 and the time for appeal has 
     expired or any appeal proceeding has terminated, the Director 
     shall issue and publish a certificate canceling any claim of 
     the patent finally determined to be unpatentable and 
     incorporating in the patent by operation of the certificate 
     any new claim determined to be patentable.

     ``Sec. 336. Appeal

       ``A party dissatisfied with the final determination of the 
     Patent Trial and Appeal Board in a post-grant review 
     proceeding instituted under this chapter may appeal the 
     determination under sections 141 through 144. Any party to 
     the post-grant review proceeding shall have the right to be a 
     party to the appeal.''.
       (d) Technical and Conforming Amendment.--The table of 
     chapters for part III of title 35, United States Code, is 
     amended by adding at the end the following:

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

       (e) Regulations and Effective Date.--
       (1) Regulations.--The Under Secretary of Commerce for 
     Intellectual Property and the Director of the United States 
     Patent and

[[Page S9511]]

     Trademark Office (in this subsection referred to as the 
     ``Director'') shall, not later than the date that is 1 year 
     after the date of the enactment of this Act, issue 
     regulations to carry out chapter 32 of title 35, United 
     States Code, as added by subsection (c) of this section.
       (2) Applicability.--The amendments made by subsection (c) 
     shall take effect on the date that is 1 year after the date 
     of the enactment of this Act and shall apply only to patents 
     issued on or after that date, except that, in the case of a 
     patent issued before the effective date of subsection (c) on 
     an application filed between September 15, 1999 and the 
     effective date of subsection (c), a petition for second-
     period review may be filed.
       (3) Pending interferences.--The Director shall determine 
     the procedures under which interferences commenced before the 
     effective date under paragraph (2) are to proceed, including 
     whether any such interference is to be dismissed without 
     prejudice to the filing of a petition for a post-grant review 
     proceeding under chapter 32 of title 35, United States Code, 
     or is to proceed as if this Act had not been enacted. The 
     Director shall include such procedures in regulations issued 
     under paragraph (1).

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

       (a) Definition.--Section 100 of title 35, United States 
     Code, as amended by section 2 of this Act, is further amended 
     in subsection (e), by striking ``or inter partes 
     reexamination under section 311''.
       (b) Patent Trial and Appeal Board.--Section 6 of title 35, 
     United States Code, is amended to read as follows:

     ``Sec. 6. Patent trial and appeal board

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

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

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

     SEC. 8. VENUE.

       (a) Venue for Patent Cases.--Section 1400 of title 28, 
     United States Code, is amended by striking subsection (b) and 
     inserting the following:
       ``(b) Notwithstanding subsections (b) and (c) of section 
     1391 of this title, any civil action for patent infringement 
     or any action for declaratory judgment arising under any Act 
     of Congress relating to patents may be brought only in a 
     judicial district--
       ``(1) where the defendant has its principal place of 
     business or is incorporated;
       ``(2) where the defendant has committed acts of 
     infringement and has a regular and established physical 
     facility;
       ``(3) where the defendant has agreed or consented to be 
     sued;
       ``(4) where the invention claimed in a patent in suit was 
     conceived or actually reduced to practice;
       ``(5) where significant research and development of an 
     invention claimed in a patent in suit occurred at a regular 
     and established physical facility;
       ``(6) where a party has a regular and established physical 
     facility that such party controls and operates and has--
       ``(A) engaged in management of significant research and 
     development of an invention claimed in a patent in suit;
       ``(B) manufactured a product that embodies an invention 
     claimed in a patent in suit; or
       ``(C) implemented a manufacturing process that embodies an 
     invention claimed in a patent in suit;
       ``(7) where a nonprofit organization whose function is the 
     management of inventions on behalf of an institution of 
     higher education (as that term is defined under section 
     101(a) of the Higher Education Act of 1965 (20 U.S.C. 
     1001(a))), including the patent in suit, has its principal 
     place of business; or
       ``(8) for foreign defendants that do not meet the 
     requirements of paragraphs (1) or (2), according to section 
     1391(d) of this title.''.
       (b) Technical Amendments Relating to Venue.--Sections 32, 
     145, 146, 154(b)(4)(A), and 293 of title 35, United States 
     Code, and section 1071(b)(4) of an Act 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 (commonly referred to as the ``Trademark Act of 
     1946'' or the ``Lanham Act'') are each amended by striking 
     ``United States District Court for the District of Columbia'' 
     each place that term appears and inserting ``United States 
     District Court for the Eastern District of Virginia''.

     SEC. 9. PATENT AND TRADEMARK OFFICE REGULATORY AUTHORITY.

       (a) Fee Setting.--
       (1) In general.--The Director shall have authority to set 
     or adjust by rule any fee established or charged by the 
     Office under sections 41 and 376 of title 35, United States 
     Code or under section 31 of the Trademark Act of 1946 (15 
     U.S.C. 1113) for the filing or processing of any submission 
     to, and for all other services performed by or materials 
     furnished by, the Office, provided that such fee amounts are 
     set to reasonably compensate the Office for the services 
     performed.
       (2) Reduction of fees in certain fiscal years.--In any 
     fiscal year, the Director--
       (A) shall consult with the Patent Public Advisory Committee 
     and the Trademark Public Advisory Committee on the 
     advisability of reducing any fees described in paragraph (1); 
     and
       (B) after that consultation may reduce such fees.
       (3) Role of the public advisory committee.--The Director 
     shall--
       (A) submit to the Patent or Trademark Public Advisory 
     Committee, or both, as appropriate, any proposed fee under 
     paragraph (1) not less than 45 days before publishing any 
     proposed fee in the Federal Register;
       (B) provide the relevant advisory committee described in 
     subparagraph (A) a 30-day period following the submission of 
     any proposed fee, on which to deliberate, consider, and 
     comment on such proposal, and require that--
       (i) during such 30-day period, the relevant advisory 
     committee hold a public hearing related to such proposal; and
       (ii) the Director shall assist the relevant advisory 
     committee in carrying out such public hearing, including by 
     offering the use of Office resources to notify and promote 
     the hearing to the public and interested stakeholders;
       (C) require the relevant advisory committee to make 
     available to the public a written report detailing the 
     comments, advice, and recommendations of the committee 
     regarding any proposed fee;
       (D) consider and analyze any comments, advice, or 
     recommendations received from the relevant advisory committee 
     before setting or adjusting any fee; and
       (E) notify, through the Chair and Ranking Member of the 
     Senate and House Judiciary Committees, the Congress of any 
     final decision regarding proposed fees.
       (4) Publication in the federal register.--
       (A) In general.--Any rules prescribed under this subsection 
     shall be published in the Federal Register.
       (B) Rationale.--Any proposal for a change in fees under 
     this section shall--
       (i) be published in the Federal Register; and
       (ii) include, in such publication, the specific rationale 
     and purpose for the proposal, including the possible 
     expectations or benefits resulting from the proposed change.
       (C) Public comment period.--Following the publication of 
     any proposed fee in the Federal Register pursuant to 
     subparagraph (A), the Director shall seek public comment for 
     a period of not less than 45 days.
       (5) Congressional comment period.--Following the 
     notification described in paragraph (3)(E), Congress shall 
     have not more than 45 days to consider and comment on any 
     proposed fee under paragraph (1). No proposed fee shall be 
     effective prior to the end of such 45-day comment period.
       (6) Rule of construction.--No rules prescribed under this 
     subsection may diminish--

[[Page S9512]]

       (A) an applicant's rights under this title or the Trademark 
     Act of 1946; or
       (B) any rights under a ratified treaty.
       (b) Fees for Patent Services.--Division B of Public Law 
     108-447 is amended in title VIII of the Departments of 
     Commerce, Justice and State, the Judiciary, and Related 
     Agencies Appropriations Act, 2005, in section 801(a) by 
     striking ``During fiscal years 2005, 2006, and 2007,'', and 
     inserting ``Until such time as the Director sets or adjusts 
     the fees otherwise,''.
       (c) Adjustment of Trademark Fees.--Division B of Public Law 
     108-447 is amended in title VIII of the Departments of 
     Commerce, Justice and State, the Judiciary and Related 
     Agencies Appropriations Act, 2005, in section 802(a) by 
     striking ``During fiscal years 2005, 2006, and 2007,'', and 
     inserting ``Until such time as the Director sets or adjusts 
     the fees otherwise,''.
       (d) Effective Date, Applicability, and Transitional 
     Provision.--Division B of Public Law 108-447 is amended in 
     title VIII of the Departments of Commerce, Justice and State, 
     the Judiciary and Related Agencies Appropriations Act, 2005, 
     in section 803(a) by striking ``and shall apply only with 
     respect to the remaining portion of fiscal year 2005 and 
     fiscal year 2006.''.
       (e) Rule of Construction.--Nothing in this section shall be 
     construed to affect any other provision of Division B of 
     Public Law 108-447, including section 801(c) of title VII of 
     the Departments of Commerce, Justice and State, the Judiciary 
     and Related Agencies Appropriations Act, 2005.
       (f) Definitions.--In this section:
       (1) Director.--The term ``Director'' means the Director of 
     the United States Patent and Trademark Office.
       (2) Office.--The term ``Office'' means the United States 
     Patent and Trademark Office.
       (3) Trademark act of 1946.--The term ``Trademark Act of 
     1946'' means an Act entitled ``Act to provide for the 
     registration and protection of trademarks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946 
     (15 U.S.C. 1051 et seq.) (commonly referred to as the 
     Trademark Act of 1946 or the Lanham Act).

     SEC. 10. APPLICANT QUALITY SUBMISSIONS.

       (a) In General.--Chapter 11 of title 35, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 123. Additional information

       ``(a) Incentives.--The Director may, by regulation, offer 
     incentives to applicants who submit a search report, a 
     patentability analysis, or other information relevant to 
     patentability. Such incentives may include prosecution 
     flexibility, modifications to requirements for adjustment of 
     a patent term pursuant to section 154(b) of this title, or 
     modifications to fees imposed pursuant to section 9 of the 
     Patent Reform Act of 2008.
       ``(b) Admissibility of Record.--If the Director certifies 
     that an applicant has satisfied the requirements of the 
     regulations issued pursuant to this section with regard to a 
     patent, the record made in a matter or proceeding before the 
     Office involving that patent or efforts to obtain the patent 
     shall not be admissible to construe the patent in a civil 
     action or in a proceeding before the International Trade 
     Commission, except that such record may be introduced to 
     demonstrate that the patent owner is estopped from asserting 
     that the patent is infringed under the doctrine of 
     equivalents. The Director may, by regulation, identify any 
     material submitted in an attempt to satisfy the requirements 
     of any regulations issued pursuant to this section that also 
     shall not be admissible to construe the patent in a civil 
     action or in a proceeding before the International Trade 
     Commission.''.
       (b) Rule of Construction.--Nothing in this section shall be 
     construed to imply that, prior to the date of enactment of 
     this section, the Director either lacked or possessed the 
     authority to offer incentives to applicants who submit a 
     search report, a patentability analysis, or other information 
     relevant to patentability.

     SEC. 11. INEQUITABLE CONDUCT AND CIVIL SANCTIONS FOR 
                   MISCONDUCT BEFORE THE OFFICE.

       (a) In General.--Chapter 29 of title 35, United States 
     Code, is amended by adding at the end the following new 
     sections:

     ``Sec. 298. Inequitable conduct

       ``(a) In General.--Except as provided under this section or 
     section 299, a patent shall not be held invalid or 
     unenforceable based upon misconduct before the Office. 
     Nothing in this section shall be construed to create a cause 
     of action or a defense in a civil action.
       ``(b) Order To Reissue Patent.--
       ``(1) Finding of the court.--
       ``(A) In general.--If a court in a civil action, upon 
     motion of a party to the action, finds that it is more likely 
     than not that a person who participated in a matter or 
     proceeding before the Office knowingly and intentionally 
     deceived the Office by concealing material information or by 
     submitting false material information in such matter or 
     proceeding, the court shall order the patent to be made the 
     subject of a reissue application under section 251. The 
     motion shall set forth any basis upon which the moving party 
     contends 1 or more claims of the patent are invalid in view 
     of information relating to the conduct at issue not 
     previously considered by the Director. The decision on a 
     motion filed under this paragraph shall not be subject to 
     appellate review.
       ``(B) Material information.--For purposes of this 
     paragraph, information is material if it is not part of the 
     record or cumulative to information in the record and either 
     establishes that a patent claim is not patentable or refutes 
     a position that the applicant or patent owner took in 
     response to a rejection of the claim as unpatentable.
       ``(2) Timing of motion.--A motion described under paragraph 
     (1) shall be filed promptly after discovery of the conduct at 
     issue by the moving party.
       ``(3) Required specificity in court order.--An order issued 
     by a court under paragraph (1) shall contain findings of fact 
     setting out with specificity the information relating to the 
     conduct at issue not previously considered by the Director 
     and upon which the court based its order. The findings of 
     fact shall not be used by a court except as provided under 
     this paragraph.
       ``(4) Stays.--A court shall not stay a civil action by 
     reason of commencement of a reissue proceeding that was 
     authorized to be filed under this section unless--
       ``(A) the Director in a notification under section 132 
     makes a rejection of 1 or more claims of the patent;
       ``(B) an allegation of infringement remains in the civil 
     action for at least 1 of the claims rejected; and
       ``(C) the court determines that the interests of justice 
     require a stay of the action.
       ``(5) Judgment that patent is unenforceable.--If a patentee 
     involved in a civil action in which an order under this 
     subsection is issued does not seek reissue of the patent 
     within 2 months of such order, the court shall enter judgment 
     that the patent is unenforceable.
       ``(c) Permitted Reissue by Patentee.--A patentee may 
     request reissue of a patent on the basis of information not 
     previously considered by the Director in connection with a 
     patent, or the efforts to obtain such patent, by filing an 
     application for reissue under section 251.
       ``(d) Required Statement, Amended Claims.--In any 
     application for reissue of a patent authorized to be filed 
     under this section, the patentee shall provide a statement to 
     the Director containing the information described in 
     subsections (b) and (c). The reissue application may be filed 
     with the omission of 1 or more claims of the original patent 
     and with a single substitute claim of equivalent or narrower 
     scope replacing any omitted claim of the original patent. For 
     a reissue application authorized to be filed under subsection 
     (c), the statement shall identify with specificity the issues 
     of patentability arising from the information and the basis 
     upon which the claims in the reissue application are believed 
     by the applicant to be patentable notwithstanding the 
     information.
       ``(e) Conduct of Reissue Proceeding.--
       ``(1) Initial action.--The Director shall provide at least 
     1 of the notifications under section 132 or a notice of 
     allowance under section 151 not later than 3 months after the 
     filing date of an application for reissue authorized to be 
     filed under this section.
       ``(2) Scope of proceeding.--
       ``(A) In general.--A reissue proceeding authorized to be 
     filed under this section shall, unless substitute claims are 
     submitted, address only whether original claims continue to 
     be patentable after consideration of the additional 
     information provided by the applicant for reissue pursuant to 
     subsection (d) in combination with information already of 
     record in the original patent.
       ``(B) Issues of patentability.--If the Director determines 
     during a reissue proceeding authorized to be filed under this 
     section that 1 or more of the original claims of the patent 
     cannot be reissued and the time for appeal of such 
     determination has expired or any appeal proceeding related to 
     such determination has terminated, the Director shall notify 
     the patentee of the surrender of the patent in connection 
     with the termination of the reissue proceeding, subject to 
     the patentee's right to obtain a reissue for claims the 
     Director determines to be patentable.
       ``(3) Duration of proceeding.--For a reissue application 
     authorized to be filed under subsection (b), a final decision 
     on all issues of patentability shall be made by the Director 
     within 1 year from the date of the initial notification under 
     paragraph (1), subject to the right of the patentee to appeal 
     under section 134.
       ``(4) Termination of proceeding.--If the Director 
     determines that all of the original claims continue to be 
     patentable, the Director shall terminate the proceeding 
     without the surrender of the original patent.
       ``(5) Procedure and appeals.--
       ``(A) In general.--A reissue application authorized to be 
     filed under this section may not be abandoned by the 
     applicant or otherwise terminated without surrender of the 
     original patent, except as provided under this section, and 
     shall be conducted as an ex parte matter before the Office.
       ``(B) Special procedures.--Subject to subsection (d), no 
     amendments other than an amendment presenting a single 
     substitute claim of equivalent or narrower scope for each 
     canceled claim in the first reply to the first action under 
     section 132 may be made during the examination of a reissue 
     application authorized to be filed under this section. The 
     Director may amend pending claims at any time on agreement to 
     a change proposed by the Director to the applicant. The 
     Director may refuse to admit any paper filed after a second 
     notification under section 132.
       ``(C) Continuing applications barred.--No application shall 
     be entitled to the benefit of

[[Page S9513]]

     the filing date of an application authorized to be filed 
     under this section.
       ``(D) Expanded examination.--The Director may consider 
     additional information introduced by the Director if 
     substitute claims are presented.
       ``(E) Appeal.--An applicant in a reissue application 
     authorized to be filed by this section dissatisfied with a 
     decision by the Patent Trial and Appeal Board may appeal only 
     under the provisions of sections 141 though 144.
       ``(f) Limitation on Enlarging Scope of Claims.--No patent 
     may be reissued based upon the filing of a reissue 
     application authorized to be filed under this section that 
     enlarges the scope of the claims of the original patent.
       ``(g) Sanctions.--Except as provided under subsection (h), 
     if a reissue proceeding authorized under this section 
     concludes without the surrender of the original patent or 
     with the grant of 1 or more reissued patents, no further 
     sanctions may be imposed against the patentee in connection 
     with the original patent or the reissued patents based upon 
     misconduct arising from the concealment of information 
     subsequently provided, or the misrepresentation of 
     information subsequently corrected in the statement provided 
     under subsection (d).
       ``(h) 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.

     ``Sec. 299. Civil sanctions for misconduct before the Office

       ``(a) Information Relating to Possible Misconduct.--The 
     Director shall provide by regulation procedures for receiving 
     and reviewing information indicating that parties to a matter 
     or proceeding before the Office may have engaged in 
     misconduct in connection with such matter or proceeding.
       ``(b) Administrative Proceeding.--
       ``(1) Probable cause.--The Director shall determine, based 
     on information received and reviewed under subsection (a), if 
     there is probable cause to believe that 1 or more individuals 
     or parties engaged in misconduct consisting of intentionally 
     deceptive conduct of a material nature in connection with a 
     matter or proceeding before the Office. A determination of 
     probable cause by the Director under this paragraph shall be 
     final and shall not be reviewable on appeal or otherwise.
       ``(2) Determination.--If the Director finds probable cause 
     under paragraph (1), the Director shall, after notice and an 
     opportunity for a hearing, and not later than 1 year after 
     the date of such finding, determine whether misconduct 
     consisting of intentionally deceptive conduct of a material 
     nature in connection with the applicable matter or proceeding 
     before the Office has occurred. The proceeding to determine 
     whether such misconduct occurred shall be before an 
     individual designated by the Director.
       ``(3) Civil sanctions.--
       ``(A) In general.--If the Director determines under 
     paragraph (2) that misconduct has occurred, the Director may 
     levy a civil penalty against the party that committed such 
     misconduct.
       ``(B) Factors.--In establishing the amount of any civil 
     penalty to be levied under subparagraph (A), the Director 
     shall consider--
       ``(i) the materiality of the misconduct;
       ``(ii) the impact of the misconduct on a decision of the 
     Director regarding a patent, proceeding, or application; and
       ``(iii) the impact of the misconduct on the integrity of 
     matters or proceedings before the Office.
       ``(C) Sanctions.--A civil penalty levied under subparagraph 
     (A) may consist of--
       ``(i) a penalty of up to $150,000 for each act of 
     misconduct;
       ``(ii) in the case of a finding of a pattern of misconduct, 
     a penalty of up to $1,000,000; or
       ``(iii) in the case of a finding of exceptional misconduct 
     establishing that an application for a patent amounted to a 
     fraud practiced by or at the behest of a real party in 
     interest of the application--

       ``(I) a determination that 1 or more claims of the patent 
     is unenforceable; or
       ``(II) a penalty of up to $10,000,000.

       ``(D) Joint and several liability.--Any party found to have 
     been responsible for misconduct in connection with any matter 
     or proceeding before the Office under this section may be 
     jointly and severally liable for any civil penalty levied 
     under subparagraph (A).
       ``(E) Deposit with the treasury.--Any civil penalty levied 
     under subparagraph (A) shall--
       ``(i) accrue to the benefit of the United States 
     Government; and
       ``(ii) be deposited under `Miscellaneous Receipts' in the 
     United States Treasury.
       ``(F) Authority to bring action for recovery of 
     penalties.--
       ``(i) In general.--If any party refuses to pay or remit to 
     the United States Government a civil penalty levied under 
     this paragraph, the United States may recover such amounts in 
     a civil action brought by the United States Attorney General 
     on behalf of the Director in the United States District Court 
     for the Eastern District of Virginia.
       ``(ii) Injunctions.--In any action brought under clause 
     (i), the United States District Court for the Eastern 
     District of Virginia may, as the court determines 
     appropriate, issue a mandatory injunction incorporating the 
     relief sought by the Director.
       ``(4) Combined proceedings.--If the misconduct that is the 
     subject of a proceeding under this subsection is attributed 
     to a practitioner who practices before the Office, the 
     Director may combine such proceeding with any other 
     disciplinary proceeding under section 32 of this title.
       ``(c) Obtaining Evidence.--
       ``(1) In general.--During the period in which an 
     investigation for a finding of probable cause or for a 
     determination of whether misconduct occurred in connection 
     with any matter or proceeding before the Office is being 
     conducted, the Director may require, by subpoena issued by 
     the Director, persons to produce any relevant information, 
     documents, reports, answers, records, accounts, papers, and 
     other documentary or testimonial evidence.
       ``(2) Additional authority.--For the purposes of carrying 
     out this section, the Director--
       ``(A) shall have access to, and the right to copy, any 
     document, paper, or record, the Director determines pertinent 
     to any investigation or determination under this section, in 
     the possession of any person;
       ``(B) may summon witnesses, take testimony, and administer 
     oaths;
       ``(C) may require any person to produce books or papers 
     relating to any matter pertaining to such investigation or 
     determination; and
       ``(D) may require any person to furnish in writing, in such 
     detail and in such form as the Director may prescribe, 
     information in their possession pertaining to such 
     investigation or determination.
       ``(3) Witnesses and evidence.--
       ``(A) In general.--The Director may require the attendance 
     of any witness and the production of any documentary evidence 
     from any place in the United States at any designated place 
     of hearing.
       ``(B) Contumacy.--
       ``(i) Orders of the court.--In the case of contumacy or 
     failure to obey a subpoena issued under this subsection, any 
     appropriate United States district court or territorial court 
     of the United States may issue an order requiring such 
     person--

       ``(I) to appear before the Director;
       ``(II) to appear at any other designated place to testify; 
     and
       ``(III) to produce documentary or other evidence.

       ``(ii) Failure to obey.--Any failure to obey an order 
     issued under this subparagraph court may be punished by the 
     court as a contempt of that court.
       ``(4) Depositions.--
       ``(A) In general.--In any proceeding or investigation under 
     this section, the Director may order a person to give 
     testimony by deposition.
       ``(B) Requirements of deposition.--
       ``(i) Oath.--A deposition may be taken before an individual 
     designated by the Director and having the power to administer 
     oaths.
       ``(ii) Notice.--Before taking a deposition, the Director 
     shall give reasonable notice in writing to the person ordered 
     to give testimony by deposition under this paragraph. The 
     notice shall state the name of the witness and the time and 
     place of taking the deposition.
       ``(iii) Written transcript.--The testimony of a person 
     deposed under this paragraph shall be under oath. The person 
     taking the deposition shall prepare, or cause to be prepared, 
     a written transcript of the testimony taken. The transcript 
     shall be subscribed by the deponent. Each deposition shall be 
     filed promptly with the Director.
       ``(d) Appeal.--
       ``(1) In general.--A party may appeal a determination under 
     subsection (b)(2) that misconduct occurred in connection with 
     any matter or proceeding before the Office to the United 
     States Court of Appeals for the Federal Circuit.
       ``(2) Notice to uspto.--A party appealing under this 
     subsection shall file in the Office a written notice of 
     appeal directed to the Director, within such time after the 
     date of the determination from which the appeal is taken as 
     the Director prescribes, but in no case less than 60 days 
     after such date.
       ``(3) Required actions of the director.--In any appeal 
     under this subsection, the Director shall transmit to the 
     United States Court of Appeals for the Federal Circuit a 
     certified list of the documents comprising the record in the 
     determination proceeding. The court may request that the 
     Director forward the original or certified copies of such 
     documents during the pendency of the appeal. The court shall, 
     before hearing the appeal, give notice of the time and place 
     of the hearing to the Director and the parties in the appeal.
       ``(4) Authority of the court.--The United States Court of 
     Appeals for the Federal Circuit shall have power to enter, 
     upon the pleadings and evidence of record at the time the 
     determination was made, a judgment affirming, modifying, or 
     setting aside, in whole or in part, the determination, with 
     or without remanding the case for a rehearing. The

[[Page S9514]]

     court shall not set aside or remand the determination made 
     under subsection (b)(2) unless there is not substantial 
     evidence on the record to support the findings or the 
     determination is not in accordance with law. Any sanction 
     levied under subsection (b)(3) shall not be set aside or 
     remanded by the court, unless the court determines that such 
     sanction constitutes an abuse of discretion of the Director.
       ``(e) Definition.--For purposes of this section, the term 
     `person' means any individual, partnership, corporation, 
     company, association, firm, partnership, society, trust, 
     estate, cooperative, association, or any other entity capable 
     of suing and being sued in a court of law.''.
       (b) Suspension or Exclusion From Practice.--Section 32 of 
     title 35, United States Code, is amended--
       (1) by striking ``The Director may'' and inserting the 
     following:
       ``(a) In General.--The Director may''; and
       (2) by adding at the end the following:
       ``(b) Tolling of Time Period.--The time period for 
     instituting a proceeding under subsection (a), as provided in 
     section 2462 of title 28, shall not begin to run where fraud, 
     concealment, or misconduct is involved until the information 
     regarding fraud, concealment, or misconduct is made known in 
     the manner set forth by regulation under section 2(b)(2)(D) 
     to an officer or employee of the United States Patent and 
     Trademark Office designated by the Director to receive such 
     information.''.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided under 
     paragraph (2), the amendments made by this section shall take 
     effect on the date of enactment of this Act.
       (2) Inapplicability to pending litigation.--Subsections (a) 
     and (b) of section 298 of title 35, United States Code (as 
     added by the amendment made by subsection (a) of this 
     section), shall apply to any civil action filed on or after 
     the date of the enactment of this Act.

     SEC. 12. AUTHORITY OF THE DIRECTOR OF THE PATENT AND 
                   TRADEMARK OFFICE TO ACCEPT LATE FILINGS.

       (a) Authority.--Section 2 of title 35, United States Code, 
     is amended by adding at the end the following:
       ``(e) Discretion To Accept Late Filings in Certain Cases of 
     Unintentional Delay.--
       ``(1) In general.--The Director may accept any application 
     or other filing made by--
       ``(A) an applicant for, or owner of, a patent after the 
     applicable deadline set forth in this title with respect to 
     the application or patent; or
       ``(B) an applicant for, or owner of, a mark after the 
     applicable deadline under the Trademark Act of 1946 with 
     respect to the registration or other filing of the mark,
     to the extent that the Director considers appropriate, if the 
     applicant or owner files a petition within 30 days after such 
     deadline showing, to the satisfaction of the Director, that 
     the delay was unintentional.
       ``(2) Treatment of director's actions on petition.--If the 
     Director has not made a determination on a petition filed 
     under paragraph (1) within 60 days after the date on which 
     the petition is filed, the petition shall be deemed to be 
     denied. A decision by the Director not to exercise, or a 
     failure to exercise, the discretion provided by this 
     subsection shall not be subject to judicial review.
       ``(3) Other provisions not affected.--This subsection shall 
     not apply to any other provision of this title, or to any 
     provision of the Trademark Act of 1946, that authorizes the 
     Director to accept, under certain circumstances, applications 
     or other filings made after a statutory deadline or to 
     statutory deadlines that are required by reason of the 
     obligations of the United States under any treaty.
       ``(4) Definition.--In this subsection, the term `Trademark 
     Act of 1946' means the Act entitled `An Act to provide for 
     the registration and protection of trademarks used in 
     commerce, to carry out the provisions of certain 
     international conventions, and for other purposes', approved 
     July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly referred to 
     as the Trademark Act of 1946 or the Lanham Act).''.
       (b) Applicability.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to any application or other filing that--
       (A) is filed on or after the date of the enactment of this 
     Act; or
       (B) on such date of enactment, is pending before the 
     Director or is subject to judicial review.
       (2) Treatment of pending applications and filings.--In the 
     case of any application or filing described in paragraph 
     (1)(B), the 30-day period prescribed in section 2(e)(1) of 
     title 35, United States Code, as added by subsection (a) of 
     this section, shall be deemed to be the 30-day period 
     beginning on the date of the enactment of this Act.
       (c) Conversion of Day-Based Deadlines Into Month-Based 
     Deadlines.--
       (1) Sections 141, 156(d)(2)(A), 156(d)(2)(B)(ii), 
     156(d)(5)(C), and 282 of title 35, United States Code, are 
     each amended by striking ``30 days'' or ``thirty days'' each 
     place that term appears and inserting ``1 month''.
       (2) Sections 135(c), 142, 145, 146, 156(d)(2)(B)(ii), 
     156(d)(5)(C), and the matter preceding clause (i) of section 
     156(d)(2)(A) of title 35, United States Code, are each 
     amended by striking ``60 days'' or ``sixty days'' each place 
     that term appears and inserting ``2 months''.
       (3) The matter preceding subparagraph (A) of section 
     156(d)(1) and sections 156(d)(2)(B)(ii) and 156(d)(5)(E) of 
     title 35, United States Code, are each amended by striking 
     ``60-day'' or ``sixty-day'' each place that term appears and 
     inserting ``2-month''.
       (4) Sections 155 and 156(d)(2)(B)(i) of title 35, United 
     States Code, are each amended by striking ``90 days'' or 
     ``ninety days'' each place that term appears and inserting 
     ``3 months''.
       (5) Sections 154(b)(4)(A) and 156(d)(2)(B)(i) of title 35, 
     United States Code, are each amended by striking ``180 days'' 
     each place that term appears and inserting ``6 months''.

     SEC. 13. LIMITATION ON DAMAGES AND OTHER REMEDIES WITH 
                   RESPECT TO PATENTS FOR METHODS IN COMPLIANCE 
                   WITH CHECK IMAGING METHODS.

       (a) Limitation.--Section 287 of title 35, United States 
     Code, is amended by adding at the end the following:
       ``(d)(1) With respect to the use by a financial institution 
     of a check collection system that constitutes an infringement 
     under subsection (a) or (b) of section 271, the provisions of 
     sections 281, 283, 284, and 285 shall not apply against the 
     financial institution with respect to such a check collection 
     system.
       ``(2) For the purposes of this subsection--
       ``(A) the term `check' has the meaning given under section 
     3(6) of the Check Clearing for the 21st Century Act (12 
     U.S.C. 5002(6));
       ``(B) the term `check collection system' means the use, 
     creation, transmission, receipt, storing, settling, or 
     archiving of truncated checks, substitute checks, check 
     images, or electronic check data associated with or related 
     to any method, system, or process that furthers or 
     effectuates, in whole or in part, any of the purposes of the 
     Check Clearing for the 21st Century Act (12 U.S.C. 5001 et 
     seq.);
       ``(C) the term `financial institution' has the meaning 
     given under section 509 of the Gramm-Leach-Bliley Act (15 
     U.S.C. 6809);
       ``(D) the term `substitute check' has the meaning given 
     under section 3(16) of the Check Clearing for the 21st 
     Century Act (12 U.S.C. 5002(16)); and
       ``(E) the term `truncate' has the meaning given under 
     section 3(18) of the Check Clearing for the 21st Century Act 
     (12 U.S.C. 5002(18)).
       ``(3) This subsection shall not limit or affect the 
     enforcement rights of the original owner of a patent where 
     such original owner--
       ``(A) is directly engaged in the commercial manufacture and 
     distribution of machinery or the commercial development of 
     software; and
       ``(B) has operated as a subsidiary of a bank holding 
     company, as such term is defined under section 2(a) of the 
     Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)), prior 
     to July 19, 2007.
       ``(4) A party shall not manipulate its activities, or 
     conspire with others to manipulate its activities, for 
     purposes of establishing compliance with the requirements of 
     this subsection, including, without limitation, by granting 
     or conveying any rights in the patent, enforcement of the 
     patent, or the result of any such enforcement.''.
       (b) Takings.--If this section is found to establish a 
     taking of private property for public use without just 
     compensation, this section shall be null and void. The 
     exclusive remedy for such a finding shall be invalidation of 
     this section. In the event of such invalidation, for purposes 
     of application of the time limitation on damages in section 
     286 of title 35, United States Code, any action for patent 
     infringement or counterclaim for infringement that could have 
     been filed or continued but for this section, shall be 
     considered to have been filed on the date of enactment of 
     this Act or continued from such date of enactment.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to any civil action for patent infringement 
     pending or filed on or after the date of enactment of this 
     Act.

     SEC. 14. PATENT AND TRADEMARK OFFICE FUNDING.

       (a) Definitions.--In this section:
       (1) Director.--The term ``Director'' means the Director of 
     the United States Patent and Trademark Office.
       (2) Fund.--The term ``Fund'' means the public enterprise 
     revolving fund established under subsection (c).
       (3) Office.--The term ``Office'' means the United States 
     Patent and Trademark Office.
       (4) Trademark act of 1946.--The term ``Trademark Act of 
     1946'' means an Act entitled ``Act to provide for the 
     registration and protection of trademarks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946 
     (15 U.S.C. 1051 et seq.) (commonly referred to as the 
     ``Trademark Act of 1946'' or the ``Lanham Act'').
       (5) Undersecretary.--The term ``Undersecretary'' means the 
     Under Secretary of Commerce for Intellectual Property.
       (b) Funding.--
       (1) In general.--Section 42 of title 35, United States 
     Code, is amended--
       (A) in subsection (b), by striking ``Patent and Trademark 
     Office Appropriation Account'' and inserting ``United States 
     Patent and Trademark Office Public Enterprise Fund''; and
       (B) in subsection (c), in the first sentence--
       (i) by striking ``To the extent'' and all that follows 
     through ``fees'' and inserting ``Fees''; and

[[Page S9515]]

       (ii) by striking ``shall be collected by and shall be 
     available to the Director'' and inserting ``shall be 
     collected by the Director and shall be available until 
     expended''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on the later of--
       (A) October 1, 2008; or
       (B) the date of enactment of this Act.
       (c) USPTO Revolving Fund.--
       (1) Establishment.--There is established in the Treasury of 
     the United States a revolving fund to be known as the 
     ``United States Patent and Trademark Office Public Enterprise 
     Fund''. Any amounts in the Fund shall be available for use by 
     the Director without fiscal year limitation.
       (2) Derivation of resources.--There shall be deposited into 
     the Fund--
       (A) any fees collected under sections 41, 42, and 376 of 
     title 35, United States Code, provided that notwithstanding 
     any other provision of law, if such fees are collected by, 
     and payable to, the Director, the Director shall transfer 
     such amounts to the Fund; and
       (B) any fees collected under section 31 of the Trademark 
     Act of 1946 (15 U.S.C. 1113).
       (3) Expenses.--Amounts deposited into the Fund under 
     paragraph (2) shall be available, without fiscal year 
     limitation, to cover--
       (A) all expenses to the extent consistent with the 
     limitation on the use of fees set forth in section 42(c) of 
     title 35, United States Code, including all administrative 
     and operating expenses, determined in the discretion of the 
     Under Secretary to be ordinary and reasonable, incurred by 
     the Under Secretary and the Director for the continued 
     operation of all services, programs, activities, and duties 
     of the Office, as such services, programs, activities, and 
     duties are described under--
       (i) title 35, United States Code; and
       (ii) the Trademark Act of 1946; and
       (B) all expenses incurred pursuant to any obligation, 
     representation, or other commitment of the Office.
       (4) Custodians of money.--Notwithstanding section 3302 of 
     title 31, United States Code, any funds received by the 
     Director and transferred to Fund, or any amounts directly 
     deposited into the Fund, may be used--
       (A) to cover the expenses described in paragraph (3); and
       (B) to purchase obligations of the United States, or any 
     obligations guaranteed by the United States.
       (d) Annual Report.--Not later than 60 days after the end of 
     each fiscal year, the Under Secretary and the Director shall 
     submit a report to Congress which shall--
       (1) summarize the operations of the Office for the 
     preceding fiscal year, including financial details and staff 
     levels broken down by each major activity of the Office;
       (2) detail the operating plan of the Office, including 
     specific expense and staff needs for the upcoming fiscal 
     year;
       (3) describe the long term modernization plans of the 
     Office;
       (4) set forth details of any progress towards such 
     modernization plans made in the previous fiscal year; and
       (5) include the results of the most recent audit carried 
     out under subsection (e).
       (e) Annual Spending Plan.--
       (1) In general.--Not later than 30 days after the beginning 
     of each fiscal year, the Director shall notify the Committees 
     on Appropriations of both Houses of Congress of the plan for 
     the obligation and expenditure of the total amount of the 
     funds for that fiscal year in accordance with section 605 of 
     the Science, State, Justice, Commerce, and Related Agencies 
     Appropriations Act, 2006 (Public Law 109-108; 119 Stat. 
     2334).
       (2) Contents.--Each plan under paragraph (1) shall--
       (A) summarize the operations of the Office for the current 
     fiscal year, including financial details and staff levels 
     with respect to major activities; and
       (B) detail the operating plan of the Office, including 
     specific expense and staff needs, for the current fiscal 
     year.
       (f) Audit.--The Under Secretary shall, on an annual basis, 
     provide for an independent audit of the financial statements 
     of the Office. Such audit shall be conducted in accordance 
     with generally acceptable accounting procedures.
       (g) Budget.--In accordance with section 9103 of title 31, 
     United States Code, the Fund shall prepare and submit each 
     year to the President a business-type budget in a way, and 
     before a date, the President prescribes by regulation for the 
     budget program.

     SEC. 15. 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 reissue of any patent is authorized under 
     section 298 or''; and
       (B) by striking ``without 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 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''.
       (e) Effect of Reissue.--Section 253 of title 35, United 
     States Code, is amended--
       (1) in the first paragraph, by striking ``Whenever, without 
     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, 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''.
       (g) Presumption of Validity.--Section 282 of title 35, 
     United States Code, is amended--
       (1) in the first undesignated paragraph, by striking ``A 
     patent'' and inserting ``(a) In General.--A patent'';
       (2) in the second undesignated paragraph, by striking ``The 
     following'' and inserting ``(b) Defenses.--The following''; 
     and
       (3) in the third undesignated paragraph, by striking ``In 
     actions'' and inserting ``(c) Notice of Actions; Actions 
     During Extension of Patent Term.--In actions''.
       (h) Action for Infringement.--Section 288 of title 35, 
     United States Code, is amended by striking ``, without any 
     deceptive intention,''.

     SEC. 16. 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) Special Provisions Relating to Determinations of 
     Validity and Patentability.--
       (1) In general.--The amendments made by section 2 shall 
     apply to any application for a patent and any patent issued 
     pursuant to such an application that at any time--
       (A) contained a claim to a claimed invention that has an 
     effective filing date, as such date is defined under section 
     100(h) of title 35, United States Code, 1 year or more after 
     the date of the enactment of this Act;
       (B) asserted a claim to a right of priority under section 
     119, 365(a), or 365(b) of title 35, United States Code, to 
     any application that was filed 1 year or more after the date 
     of the enactment of this Act; or
       (C) made a specific reference under section 120, 121, or 
     365(c) of title 35, United States Code, to any application to 
     which the amendments made by section 2 otherwise apply under 
     this subsection.
       (2) Patentability.--For any application for patent and any 
     patent issued pursuant to such an application to which the 
     amendments made by section 2 apply, no claim asserted in such 
     application shall be patentable or valid unless such claim 
     meets the conditions of patentability specified in section 
     102(g) of title 35, United States Code, as such conditions 
     were in effect on the day prior to the date of enactment of 
     this Act, if the application at any time--
       (A) contained a claim to a claimed invention that has an 
     effective filing date as defined in section 100(h) of title 
     35, United States Code, earlier than 1 year after the date of 
     the enactment of this Act;
       (B) asserted a claim to a right of priority under section 
     119, 365(a), or 365(b) of title 35, United States Code, to 
     any application that was filed earlier than 1 year after the 
     date of the enactment of this Act; or
       (C) made a specific reference under section 120, 121, or 
     365(c) of title 35, United States Code, with respect to which 
     the requirements of section 102(g) applied.
       (3) Validity of patents.--For the purpose of determining 
     the validity of a claim in any patent or the patentability of 
     any claim in a nonprovisional application for patent that is 
     made before the effective date of the amendments made by 
     sections 2 and 3, other than in an action brought in a court 
     before the date of the enactment of this Act--
       (A) the provisions of subsections (c), (d), and (f) of 
     section 102 of title 35, United States Code, that were in 
     effect on the day

[[Page S9516]]

     prior to the date of enactment of this Act shall be deemed to 
     be repealed;
       (B) the amendments made by section 3 of this Act shall 
     apply, except that a claim in a patent that is otherwise 
     valid under the provisions of section 102(f) of title 35, 
     United States Code, as such provision was in effect on the 
     day prior to the date of enactment of this Act, shall not be 
     invalidated by reason of this paragraph; and
       (C) the term ``in public use or on sale'' as used in 
     section 102(b) of title 35, United States Code, as such 
     section was in effect on the day prior to the date of 
     enactment of this Act shall be deemed to exclude the use, 
     sale, or offer for sale of any subject matter that had not 
     become available to the public.
       (4) Continuity of intent under the create act.--The 
     enactment of section 102(b)(3) of title 35, United States 
     Code, under section (2)(b) of this Act is done with the same 
     intent to promote joint research activities that was 
     expressed, including in the legislative history, through the 
     enactment of the Cooperative Research and Technology 
     Enhancement Act of 2004 (Public Law 108-453; the ``CREATE 
     Act''), the amendments of which are stricken by section 2(c) 
     of this Act. The United States Patent and Trademark Office 
     shall administer section 102(b)(3) of title 35, United States 
     Code, in a manner consistent with the legislative history of 
     the CREATE Act that was relevant to its administration by the 
     United States Patent and Trademark Office.
                                 ______