Congressional Record, Volume 157 Issue 28 (Monday, February 28, 2011)

[Congressional Record Volume 157, Number 28 (Monday, February 28, 2011)]
[Senate]
[Pages S936-S953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PATENT REFORM ACT OF 2011

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will now proceed to the consideration of S. 23, which the clerk
will report.
The assistant legislative clerk read as follows:

A bill (S. 23) to amend title 35, United States Code, to
provide for patent reform.

The Senate proceeded to consider the bill, which had been reported
from the Committee on the Judiciary with amendments; as follows:

(The parts of the bill intended to be stricken are shown in
boldface brackets and the parts of the bill intended to be
inserted are shown in italics.)

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
Sec. 2. First inventor to file.
Sec. 3. Inventor's oath or declaration.
Sec. 4. Damages.
Sec. 5. Post-grant review proceedings.
Sec. 6. Patent Trial and Appeal Board.
Sec. 7. Preissuance submissions by third parties.
Sec. 8. Venue.
Sec. 9. Fee setting authority.
Sec. 10. Supplemental examination.
Sec. 11. Residency of Federal Circuit judges.
Sec. 12. Micro entity defined.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Technical amendments.
Sec. 17. Clarification of jurisdiction.
Sec. [17]18. Effective date; [rule of construction.]

SEC. 2. FIRST INVENTOR TO FILE.

(a) Definitions.--Section 100 of title 35, United States
Code, is amended by adding at the end the following:
``(f) The term `inventor' means the individual or, if a
joint invention, the individuals collectively who invented or
discovered the subject matter of the invention.
``(g) The terms `joint inventor' and `coinventor' mean any
1 of the individuals who invented or discovered the subject
matter of a joint invention.
``(h) The term `joint research agreement' means a written
contract, grant, or cooperative agreement entered into by 2
or more persons or entities for the performance of
experimental, developmental, or research work in the field of
the claimed invention.
``(i)(1) The term `effective filing date' of a claimed
invention in a patent or application for patent means--

[[Page S937]]

``(A) if subparagraph (B) does not apply, the actual filing
date of the patent or the application for the patent
containing a claim to the invention; or
``(B) the filing date of the earliest application for which
the patent or application is entitled, as to such invention,
to a right of priority under section 119, 365(a), or 365(b)
or to the benefit of an earlier filing date under section
120, 121, or 365(c).
``(2) The effective filing date for a claimed invention in
an application for reissue or reissued patent shall be
determined by deeming the claim to the invention to have been
contained in the patent for which reissue was sought.
``(j) The term `claimed invention' means the subject matter
defined by a claim in a patent or an application for a
patent.''.
(b) Conditions for Patentability.--
(1) In general.--Section 102 of title 35, United States
Code, is amended to read as follows:

``Sec. 102. Conditions for patentability; novelty

``(a) Novelty; Prior Art.--A person shall be entitled to a
patent unless--
``(1) the claimed invention was patented, described in a
printed publication, or in public use, on sale, or otherwise
available to the public before the effective filing date of
the claimed invention; or
``(2) the claimed invention was described in a patent
issued under section 151, or in an application for patent
published or deemed published under section 122(b), in which
the patent or application, as the case may be, names another
inventor and was effectively filed before the effective
filing date of the claimed invention.
``(b) Exceptions.--
``(1) Disclosures made 1 year or less before the effective
filing date of the claimed invention.--A disclosure made 1
year or less before the effective filing date of a claimed
invention shall not be prior art to the claimed invention
under subsection (a)(1) if--
``(A) the disclosure was made by the inventor or joint
inventor or by another who obtained the subject matter
disclosed directly or indirectly from the inventor or a joint
inventor; or
``(B) the subject matter disclosed had, before such
disclosure, been publicly disclosed by the inventor or a
joint inventor or another who obtained the subject matter
disclosed directly or indirectly from the inventor or a joint
inventor.
``(2) Disclosures appearing in applications and patents.--A
disclosure shall not be prior art to a claimed invention
under subsection (a)(2) if--
``(A) the subject matter disclosed was obtained directly or
indirectly from the inventor or a joint inventor;
``(B) the subject matter disclosed had, before such subject
matter was effectively filed under subsection (a)(2), been
publicly disclosed by the inventor or a joint inventor or
another who obtained the subject matter disclosed directly or
indirectly from the inventor or a joint inventor; or
``(C) the subject matter disclosed and the claimed
invention, not later than the effective filing date of the
claimed invention, were owned by the same person or subject
to an obligation of assignment to the same person.
``(c) Common Ownership Under Joint Research Agreements.--
Subject matter disclosed and a claimed invention shall be
deemed to have been owned by the same person or subject to an
obligation of assignment to the same person in applying the
provisions of subsection (b)(2)(C) if--
``(1) the subject matter disclosed was developed and the
claimed invention was made by, or on behalf of, 1 or more
parties to a joint research agreement that was in effect on
or before the effective filing date of the claimed invention;
``(2) the claimed invention was made as a result of
activities undertaken within the scope of the joint research
agreement; and
``(3) the application for patent for the claimed invention
discloses or is amended to disclose the names of the parties
to the joint research agreement.
``(d) Patents and Published Applications Effective as Prior
Art.--For purposes of determining whether a patent or
application for patent is prior art to a claimed invention
under subsection (a)(2), such patent or application shall be
considered to have been effectively filed, with respect to
any subject matter described in the patent or application--
``(1) if paragraph (2) does not apply, as of the actual
filing date of the patent or the application for patent; or
``(2) if the patent or application for patent is entitled
to claim a right of priority under section 119, 365(a), or
365(b), or to claim the benefit of an earlier filing date
under section 120, 121, or 365(c), based upon 1 or more prior
filed applications for patent, as of the filing date of the
earliest such application that describes the subject
matter.''.
(2) Continuity of intent under the create act.--The
enactment of section 102(c) of title 35, United States Code,
under the preceding paragraph is done with the same intent to
promote joint research activities that was expressed,
including in the legislative history, through the enactment
of the Cooperative Research and Technology Enhancement Act of
2004 (Public Law 108-453; the ``CREATE Act''), the amendments
of which are stricken by subsection (c). The United States
Patent and Trademark Office shall administer section 102(c)
of title 35, United States Code, in a manner consistent with
the legislative history of the CREATE Act that was relevant
to its administration by the United States Patent and
Trademark Office.
[2](3) Conforming amendment.--The item relating to section
102 in the table of sections for chapter 10 of title 35,
United States Code, is amended to read as follows:

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

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

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

``A patent for a claimed invention may not be obtained,
notwithstanding that the claimed invention is not identically
disclosed as set forth in section 102, if the differences
between the claimed invention and the prior art are such that
the claimed invention as a whole would have been obvious
before the effective filing date of the claimed invention to
a person having ordinary skill in the art to which the
claimed invention pertains. Patentability shall not be
negated by the manner in which the invention was made.''.
(d) Repeal of Requirements for Inventions Made Abroad.--
Section 104 of title 35, United States Code, and the item
relating to that section in the table of sections for chapter
10 of title 35, United States Code, are repealed.
(e) Repeal of Statutory Invention Registration.--
(1) In general.--Section 157 of title 35, United States
Code, and the item relating to that section in the table of
sections for chapter 14 of title 35, United States Code, are
repealed.
(2) Removal of cross references.--Section 111(b)(8) of
title 35, United States Code, is amended by striking
``sections 115, 131, 135, and 157'' and inserting ``sections
131 and 135''.
(3) Effective date.--The amendments made by this subsection
shall take effect 1 year after the date of the enactment of
this Act, and shall apply to any request for a statutory
invention registration filed on or after that date.
(f) Earlier Filing Date for Inventor and Joint Inventor.--
Section 120 of title 35, United States Code, is amended by
striking ``which is filed by an inventor or inventors named''
and inserting ``which names an inventor or joint inventor''.
(g) Conforming Amendments.--
(1) Right of priority.--Section 172 of title 35, United
States Code, is amended by striking ``and the time specified
in section 102(d)''.
(2) Limitation on remedies.--Section 287(c)(4) of title 35,
United States Code, is amended by striking ``the earliest
effective filing date of which is prior to'' and inserting
``which has an effective filing date before''.
(3) International application designating the united
states: effect.--Section 363 of title 35, United States Code,
is amended by striking ``except as otherwise provided in
section 102(e) of this title''.
(4) Publication of international application: effect.--
Section 374 of title 35, United States Code, is amended by
striking ``sections 102(e) and 154(d)'' and inserting
``section 154(d)''.
(5) Patent issued on international application: effect.--
The second sentence of section 375(a) of title 35, United
States Code, is amended by striking ``Subject to section
102(e) of this title, such'' and inserting ``Such''.
(6) Limit on right of priority.--Section 119(a) of title
35, United States Code, is amended by striking ``; but no
patent shall be granted'' and all that follows through ``one
year prior to such filing''.
(7) Inventions made with federal assistance.--Section
202(c) of title 35, United States Code, is amended--
(A) in paragraph (2)--
(i) by striking ``publication, on sale, or public use,''
and all that follows through ``obtained in the United
States'' and inserting ``the 1-year period referred to in
section 102(b) would end before the end of that 2-year
period''; and
(ii) by striking ``the statutory'' and inserting ``that 1-
year''; and
(B) in paragraph (3), by striking ``any statutory bar date
that may occur under this title due to publication, on sale,
or public use'' and inserting ``the expiration of the 1-year
period referred to in section 102(b)''.
(h) Derived Patents.--Section 291 of title 35, United
States Code, is amended to read as follows:

``Sec. 291. Derived patents

``(a) In General.--The owner of a patent may have relief by
civil action against the owner of another patent that claims
the same invention and has an earlier effective filing date
if the invention claimed in such other patent was derived
from the inventor of the invention claimed in the patent
owned by the person seeking relief under this section.
``(b) Filing Limitation.--An action under this section may
only be filed within 1 year after the issuance of the first
patent containing a claim to the allegedly derived invention
and naming an individual alleged to have derived such
invention as the inventor or joint inventor.''.
(i) Derivation Proceedings.--Section 135 of title 35,
United States Code, is amended to read as follows:

``Sec. 135. Derivation proceedings

``(a) Institution of Proceeding.--An applicant for patent
may file a petition to institute a derivation proceeding in
the Office.

[[Page S938]]

The petition shall set forth with particularity the basis for
finding that an inventor named in an earlier application
derived the claimed invention from an inventor named in the
petitioner's application and, without authorization, the
earlier application claiming such invention was filed. Any
such petition may only be filed within 1 year after the first
publication of a claim to an invention that is the same or
substantially the same as the earlier application's claim to
the invention, shall be made under oath, and shall be
supported by substantial evidence. Whenever the Director
determines that a petition filed under this subsection
demonstrates that the standards for instituting a derivation
proceeding are met, the Director may institute a derivation
proceeding. The determination by the Director whether to
institute a derivation proceeding shall be final and
nonappealable.
``(b) Determination by Patent Trial and Appeal Board.--In a
derivation proceeding instituted under subsection (a), the
Patent Trial and Appeal Board shall determine whether an
inventor named in the earlier application derived the claimed
invention from an inventor named in the petitioner's
application and, without authorization, the earlier
application claiming such invention was filed. The Director
shall prescribe regulations setting forth standards for the
conduct of derivation proceedings.
``(c) Deferral of Decision.--The Patent Trial and Appeal
Board may defer action on a petition for a derivation
proceeding until 3 months after the date on which the
Director issues a patent that includes the claimed invention
that is the subject of the petition. The Patent Trial and
Appeal Board also may defer action on a petition for a
derivation proceeding, or stay the proceeding after it has
been instituted, until the termination of a proceeding under
chapter 30, 31, or 32 involving the patent of the earlier
applicant.
``(d) Effect of Final Decision.--The final decision of the
Patent Trial and Appeal Board, if adverse to claims in an
application for patent, shall constitute the final refusal by
the Office on those claims. The final decision of the Patent
Trial and Appeal Board, if adverse to claims in a patent,
shall, if no appeal or other review of the decision has been
or can be taken or had, constitute cancellation of those
claims, and notice of such cancellation shall be endorsed on
copies of the patent distributed after such cancellation.
``(e) Settlement.--Parties to a proceeding instituted under
subsection (a) may terminate the proceeding by filing a
written statement reflecting the agreement of the parties as
to the correct inventors of the claimed invention in dispute.
Unless the Patent Trial and Appeal Board finds the agreement
to be inconsistent with the evidence of record, if any, it
shall take action consistent with the agreement. Any written
settlement or understanding of the parties shall be filed
with the Director. At the request of a party to the
proceeding, the agreement or understanding shall be treated
as business confidential information, shall be kept separate
from the file of the involved patents or applications, and
shall be made available only to Government agencies on
written request, or to any person on a showing of good cause.
``(f) Arbitration.--Parties to a proceeding instituted
under subsection (a) may, within such time as may be
specified by the Director by regulation, determine such
contest or any aspect thereof by arbitration. Such
arbitration shall be governed by the provisions of title 9,
to the extent such title is not inconsistent with this
section. The parties shall give notice of any arbitration
award to the Director, and such award shall, as between the
parties to the arbitration, be dispositive of the issues to
which it relates. The arbitration award shall be
unenforceable until such notice is given. Nothing in this
subsection shall preclude the Director from determining the
patentability of the claimed inventions involved in the
proceeding.''.
(j) Elimination of References to Interferences.--(1)
Sections 41, 134, 145, 146, 154, 305, and 314 of title 35,
United States Code, are each amended by striking ``Board of
Patent Appeals and Interferences'' each place it appears and
inserting ``Patent Trial and Appeal Board''.
(2)(A) Sections 146 and 154 of title 35, United States
Code, are each amended--
(i) by striking ``an interference'' each place it appears
and inserting ``a derivation proceeding''; and
(ii) by striking ``interference'' each additional place it
appears and inserting ``derivation proceeding''.
(B) The subparagraph heading for section 154(b)(1)(C) of
title 35, United States Code, as amended by this paragraph,
is further amended by--
(i) striking ``or'' and inserting ``of''; and
(ii) striking ``secrecy order'' and inserting ``secrecy
orders''.
(3) The section heading for section 134 of title 35, United
States Code, is amended to read as follows:

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

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

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

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

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

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

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

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

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

(k) False Marking.--
(1) In general.--Section 292 of title 35, United States
Code, is amended--
(A) in subsection (a), by adding at the end the following:
``Only the United States may sue for the penalty authorized
by this subsection.''; and
(B) by striking subsection (b) and inserting the following:
``(b) Any person who has suffered a competitive injury as a
result of a violation of this section may file a civil action
in a district court of the United States for recovery of
damages adequate to compensate for the injury.''.
(2) Effective date.--The amendments made by this subsection
shall apply to all cases, without exception, pending on or
after the date of the enactment of this Act.
(l) Statute of Limitations.--
(1) In general.--Section 32 of title 35, United States
Code, is amended by inserting between the third and fourth
sentences the following: ``A proceeding under this section
shall be commenced not later than the earlier of either 10
years after the date on which the misconduct forming the
basis for the proceeding occurred, or 1 year after the date
on which the misconduct forming the basis for the proceeding
is made known to an officer or employee of the Office as
prescribed in the regulations established under section
2(b)(2)(D).''.
(2) Report to congress.--The Director shall provide on a
biennial basis to the Judiciary Committees of the Senate and
House of Representatives a report providing a short
description of incidents made known to an officer or employee
of the Office as prescribed in the regulations established
under section 2(b)(2)(D) of title 35, United States Code,
that reflect substantial evidence of misconduct before the
Office but for which the Office was barred from commencing a
proceeding under section 32 of title 35, United States Code,
by the time limitation established by the fourth sentence of
that section.
(3) Effective date.--The amendment made by paragraph (1)
shall apply in all cases in which the time period for
instituting a proceeding under section 32 of title 35, United
State Code, had not lapsed prior to the date of the enactment
of this Act.
(m) Small Business Study.--
(1) Definitions.--In this subsection--
(A) the term ``Chief Counsel'' means the Chief Counsel for
Advocacy of the Small Business Administration;
(B) the term ``General Counsel'' means the General Counsel
of the United States Patent and Trademark Office; and
(C) the term ``small business concern'' has the meaning
given that term under section 3 of the Small Business Act (15
U.S.C. 632).
(2) Study.--
(A) In general.--The Chief Counsel, in consultation with
the General Counsel, shall conduct a study of the effects of
eliminating the use of dates of invention in determining
whether an applicant is entitled to a patent under title 35,
United States Code.
(B) Areas of study.--The study conducted under subparagraph
(A) shall include examination of the effects of eliminating
the use of invention dates, including examining--
(i) how the change would affect the ability of small
business concerns to obtain patents and their costs of
obtaining patents;
(ii) whether the change would create, mitigate, or
exacerbate any disadvantage for applicants for patents that
are small business concerns relative to applicants for
patents that are not small business concerns, and whether the
change would create any advantages for applicants for patents
that are small business concerns relative to applicants for
patents that are not small business concerns;
(iii) the cost savings and other potential benefits to
small business concerns of the change; and
(iv) the feasibility and costs and benefits to small
business concerns of alternative means of determining whether
an applicant is entitled to a patent under title 35, United
States Code.
(3) Report.--Not later than 1 year after the date of
enactment of this Act, the Chief Counsel shall submit to the
Committee on Small Business and Entrepreneurship and the
Committee on the Judiciary of the Senate and the Committee on
Small Business and the Committee on the Judiciary of the
House of Representatives a report regarding the results of
the study under paragraph (2).
(n) Report on Prior User Rights.--
(1) In general.--Not later than 1 year after the date of
the enactment of this Act, the Director shall report, to the
Committee on the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives, the findings
and recommendations of the Director on the operation of

[[Page S939]]

prior user rights in selected countries in the industrialized
world. The report shall include the following:
(A) A comparison between patent laws of the United States
and the laws of other industrialized countries, including
members of the European Union and Japan, Canada, and
Australia.
(B) An analysis of the effect of prior user rights on
innovation rates in the selected countries.
(C) An analysis of the correlation, if any, between prior
user rights and start-up enterprises and the ability to
attract venture capital to start new companies.
(D) An analysis of the effect of prior user rights, if any,
on small businesses, universities, and individual inventors.
(E) An analysis of legal and constitutional issues, if any,
that arise from placing trade secret law in patent law.
(F) An analysis of whether the change to a first-to-file
patent system creates a particular need for prior user
rights.
(2) Consultation with other agencies.--In preparing the
report required under paragraph (1), the Director shall
consult with the United States Trade Representative, the
Secretary of State, and the Attorney General.
(o) Effective Date.--
(1) In general.--Except as otherwise provided by this
section, the amendments made by this section shall take
effect on the date that is 18 months after the date of the
enactment of this Act, and shall apply to any application for
patent, and to any patent issuing thereon, that contains or
contained at any time--
(A) a claim to a claimed invention that has an effective
filing date as defined in section 100(i) of title 35, United
States Code, that is 18 months or more after the date of the
enactment of this Act; or
(B) a specific reference under section 120, 121, or 365(c)
of title 35, United States Code, to any patent or application
that contains or contained at any time such a claim.
(2) Interfering patents.--The provisions of sections
102(g), 135, and 291 of title 35, United States Code, in
effect on the day prior to the date of the enactment of this
Act, shall apply to each claim of an application for patent,
and any patent issued thereon, for which the amendments made
by this section also apply, if such application or patent
contains or contained at any time--
(A) a claim to an invention having an effective filing date
as defined in section 100(i) of title 35, United States Code,
earlier than 18 months after the date of the enactment of
this Act; or
(B) a specific reference under section 120, 121, or 365(c)
of title 35, United States Code, to any patent or application
that contains or contained at any time such a claim.

SEC. 3. INVENTOR'S OATH OR DECLARATION.

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

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

``(a) Naming the Inventor; Inventor's Oath or
Declaration.--An application for patent that is filed under
section 111(a) or commences the national stage under section
371 shall include, or be amended to include, the name of the
inventor for any invention claimed in the application. Except
as otherwise provided in this section, each individual who is
the inventor or a joint inventor of a claimed invention in an
application for patent shall execute an oath or declaration
in connection with the application.
``(b) Required Statements.--An oath or declaration under
subsection (a) shall contain statements that--
``(1) the application was made or was authorized to be made
by the affiant or declarant; and
``(2) such individual believes himself or herself to be the
original inventor or an original joint inventor of a claimed
invention in the application.
``(c) Additional Requirements.--The Director may specify
additional information relating to the inventor and the
invention that is required to be included in an oath or
declaration under subsection (a).
``(d) Substitute Statement.--
``(1) In general.--In lieu of executing an oath or
declaration under subsection (a), the applicant for patent
may provide a substitute statement under the circumstances
described in paragraph (2) and such additional circumstances
that the Director may specify by regulation.
``(2) Permitted circumstances.--A substitute statement
under paragraph (1) is permitted with respect to any
individual who--
``(A) is unable to file the oath or declaration under
subsection (a) because the individual--
``(i) is deceased;
``(ii) is under legal incapacity; or
``(iii) cannot be found or reached after diligent effort;
or
``(B) is under an obligation to assign the invention but
has refused to make the oath or declaration required under
subsection (a).
``(3) Contents.--A substitute statement under this
subsection shall--
``(A) identify the individual with respect to whom the
statement applies;
``(B) set forth the circumstances representing the
permitted basis for the filing of the substitute statement in
lieu of the oath or declaration under subsection (a); and
``(C) contain any additional information, including any
showing, required by the Director.
``(e) Making Required Statements in Assignment of Record.--
An individual who is under an obligation of assignment of an
application for patent may include the required statements
under subsections (b) and (c) in the assignment executed by
the individual, in lieu of filing such statements separately.
``(f) Time for Filing.--A notice of allowance under section
151 may be provided to an applicant for patent only if the
applicant for patent has filed each required oath or
declaration under subsection (a) or has filed a substitute
statement under subsection (d) or recorded an assignment
meeting the requirements of subsection (e).
``(g) Earlier-Filed Application Containing Required
Statements or Substitute Statement.--
``(1) Exception.--The requirements under this section shall
not apply to an individual with respect to an application for
patent in which the individual is named as the inventor or a
joint inventor and who claims the benefit under section 120,
121, or 365(c) of the filing of an earlier-filed application,
if--
``(A) an oath or declaration meeting the requirements of
subsection (a) was executed by the individual and was filed
in connection with the earlier-filed application;
``(B) a substitute statement meeting the requirements of
subsection (d) was filed in the earlier filed application
with respect to the individual; or
``(C) an assignment meeting the requirements of subsection
(e) was executed with respect to the earlier-filed
application by the individual and was recorded in connection
with the earlier-filed application.
``(2) Copies of oaths, declarations, statements, or
assignments.--Notwithstanding paragraph (1), the Director may
require that a copy of the executed oath or declaration, the
substitute statement, or the assignment filed in the earlier-
filed application be included in the later-filed application.
``(h) Supplemental and Corrected Statements; Filing
Additional Statements.--
``(1) In general.--Any person making a statement required
under this section may withdraw, replace, or otherwise
correct the statement at any time. If a change is made in the
naming of the inventor requiring the filing of 1 or more
additional statements under this section, the Director shall
establish regulations under which such additional statements
may be filed.
``(2) Supplemental statements not required.--If an
individual has executed an oath or declaration meeting the
requirements of subsection (a) or an assignment meeting the
requirements of subsection (e) with respect to an application
for patent, the Director may not thereafter require that
individual to make any additional oath, declaration, or other
statement equivalent to those required by this section in
connection with the application for patent or any patent
issuing thereon.
``(3) Savings clause.--No patent shall be invalid or
unenforceable based upon the failure to comply with a
requirement under this section if the failure is remedied as
provided under paragraph (1).
``(i) Acknowledgment of Penalties.--Any declaration or
statement filed pursuant to this section shall contain an
acknowledgment that any willful false statement made in such
declaration or statement is punishable under section 1001 of
title 18 by fine or imprisonment of not more than 5 years, or
both.''.
(2) Relationship to divisional applications.--Section 121
of title 35, United States Code, is amended by striking ``If
a divisional application'' and all that follows through
``inventor.''.
(3) Requirements for nonprovisional applications.--Section
111(a) of title 35, United States Code, is amended--
(A) in paragraph (2)(C), by striking ``by the applicant''
and inserting ``or declaration'';
(B) in the heading for paragraph (3), by inserting ``or
declaration'' after ``and oath''; and
(C) by inserting ``or declaration'' after ``and oath'' each
place it appears.
(4) Conforming amendment.--The item relating to section 115
in the table of sections for chapter 11 of title 35, United
States Code, is amended to read as follows:

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

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

``Sec. 118. Filing by other than inventor

``A person to whom the inventor has assigned or is under an
obligation to assign the invention may make an application
for patent. A person who otherwise shows sufficient
proprietary interest in the matter may make an application
for patent on behalf of and as agent for the inventor on
proof of the pertinent facts and a showing that such action
is appropriate to preserve the rights of the parties. If the
Director grants a patent on an application filed under this
section by a person other than the inventor, the patent shall
be granted to the real party in interest and upon such notice
to the inventor as the Director considers to be
sufficient.''.
(2) Conforming amendment.--Section 251 of title 35, United
States Code, is amended in the third undesignated paragraph
by inserting ``or the application for the original patent was
filed by the assignee of the entire interest'' after ``claims
of the original patent''.
(c) Specification.--Section 112 of title 35, United States
Code, is amended--

[[Page S940]]

(1) in the first paragraph--
(A) by striking ``The specification'' and inserting ``(a)
In General.--The specification''; and
(B) by striking ``of carrying out his invention'' and
inserting ``or joint inventor of carrying out the
invention'';
(2) in the second paragraph--
(A) by striking ``The specification'' and inserting ``(b)
Conclusion.--The specification''; and
(B) by striking ``applicant regards as his invention'' and
inserting ``inventor or a joint inventor regards as the
invention'';
(3) in the third paragraph, by striking ``A claim'' and
inserting ``(c) Form.--A claim'';
(4) in the fourth paragraph, by striking ``Subject to the
following paragraph,'' and inserting ``(d) Reference in
Dependent Forms.--Subject to subsection (e),'';
(5) in the fifth paragraph, by striking ``A claim'' and
inserting ``(e) Reference in Multiple Dependent Form.--A
claim''; and
(6) in the last paragraph, by striking ``An element'' and
inserting ``(f) Element in Claim for a Combination.--An
element''.
(d) Conforming Amendments.--
(1) Sections 111(b)(1)(A) is amended by striking ``the
first paragraph of section 112 of this title'' and inserting
``section 112(a)''.
(2) Section 111(b)(2) is amended by striking ``the second
through fifth paragraphs of section 112,'' and inserting
``subsections (b) through (e) of section 112,''.
(e) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to patent applications that are
filed on or after that effective date.

SEC. 4. DAMAGES.

(a) Damages.--Section 284 of title 35, United States Code,
is amended--
(1) by striking ``Upon finding'' and inserting the
following: ``(a) In General.--Upon finding'';
(2) by striking ``fixed by the court'' and all that follows
through ``When the damages'' and inserting the following:
``fixed by the court. When the damages'';
(3) by striking ``shall assess them.'' and all that follows
through ``The court may receive'' and inserting the
following: ``shall assess them. In either event the court
may increase the damages up to 3 times the amount found or
assessed. Increased damages under this subsection shall not
apply to provisional rights under section 154(d) of this
title. The court may receive''; and
(4) by adding at the end the following:
``(b) Procedure for Determining Damages.--
``(1) In general.--The court shall identify the
methodologies and factors that are relevant to the
determination of damages, and the court or jury shall
consider only those methodologies and factors relevant to
making such determination.
``(2) Disclosure of claims.--By no later than the entry of
the final pretrial order, unless otherwise ordered by the
court, the parties shall state, in writing and with
particularity, the methodologies and factors the parties
propose for instruction to the jury in determining damages
under this section, specifying the relevant underlying legal
and factual bases for their assertions.
``(3) Sufficiency of evidence.--Prior to the introduction
of any evidence concerning the determination of damages, upon
motion of either party or sua sponte, the court shall
consider whether one or more of a party's damages contentions
lacks a legally sufficient evidentiary basis. After providing
a nonmovant the opportunity to be heard, and after any
further proffer of evidence, briefing, or argument that the
court may deem appropriate, the court shall identify on the
record those methodologies and factors as to which there is a
legally sufficient evidentiary basis, and the court or jury
shall consider only those methodologies and factors in making
the determination of damages under this section. The court
shall only permit the introduction of evidence relating to
the determination of damages that is relevant to the
methodologies and factors that the court determines may be
considered in making the damages determination.
``(c) Sequencing.--Any party may request that a patent-
infringement trial be sequenced so that the trier of fact
decides questions of the patent's infringement and validity
before the issues of damages and willful infringement are
tried to the court or the jury. The court shall grant such a
request absent good cause to reject the request, such as the
absence of issues of significant damages or infringement and
validity. The sequencing of a trial pursuant to this
subsection shall not affect other matters, such as the timing
of discovery. This subsection does not authorize a party to
request that the issues of damages and willful infringement
be tried to a jury different than the one that will decide
questions of the patent's infringement and validity.
[``(d) Willful Infringement.--
[``(1) In general.--The court may increase damages up to 3
times the amount found or assessed if the court or the jury,
as the case may be, determines that the infringement of the
patent was willful. Increased damages under this subsection
shall not apply to provisional rights under section 154(d).
Infringement is not willful unless the claimant proves by
clear and convincing evidence that the accused infringer's
conduct with respect to the patent was objectively reckless.
An accused infringer's conduct was objectively reckless if
the infringer was acting despite an objectively high
likelihood that his actions constituted infringement of a
valid patent, and this objectively-defined risk was either
known or so obvious that it should have been known to the
accused infringer.
[``(2) Pleading standards.--A claimant asserting that a
patent was infringed willfully shall comply with the pleading
requirements set forth under Federal Rule of Civil Procedure
9(b).
[``(3) Knowledge alone insufficient.--Infringement of a
patent may not be found to be willful solely on the basis
that the infringer had knowledge of the infringed patent.
[``(4) Pre-suit notification.--A claimant seeking to
establish willful infringement may not rely on evidence of
pre-suit notification of infringement unless that
notification identifies with particularity the asserted
patent, identifies the product or process accused, and
explains with particularity, to the extent possible following
a reasonable investigation or inquiry, how the product or
process infringes one or more claims of the patent.
[``(5) Close case.--The court shall not increase damages
under this subsection if the court determines that there is a
close case as to infringement, validity, or enforceability.
On the motion of either party, the court shall determine
whether a close case as to infringement, validity, or
enforceability exists, and the court shall explain its
decision. Once the court determines that such a close case
exists, the issue of willful infringement shall not
thereafter be tried to the jury.
[``(6) Accrued damages.--If a court or jury finds that the
infringement of patent was willful, the court may increase
only those damages that accrued after the infringement became
willful.''.]
(b) Defense to Infringement Based on Earlier Inventor.--
Section 273(b)(6) of title 35, United States Code, is amended
to read as follows:
``(6) Personal defense.--The defense under this section may
be asserted only by the person who performed or caused the
performance of the acts necessary to establish the defense as
well as any other entity that controls, is controlled by, or
is under common control with such person and, except for any
transfer to the patent owner, the right to assert the defense
shall not be licensed or assigned or transferred to another
person except as an ancillary and subordinate part of a good
faith assignment or transfer for other reasons of the entire
enterprise or line of business to which the defense relates.
Notwithstanding the preceding sentence, any person may, on
its own behalf, assert a defense based on the exhaustion of
rights provided under paragraph (3), including any necessary
elements thereof.''.
(c) Virtual Marking.--Section 287(a) of title 35, United
States Code, is amended by inserting ``, or by fixing thereon
the word `patent' or the abbreviation `pat.' together with an
address of a posting on the Internet, accessible to the
public without charge for accessing the address, that
associates the patented article with the number of the
patent'' before ``, or when''.
(d) Advice of Counsel.--Chapter 29 of title 35, United
States Code, is amended by adding at the end the following:

``Sec. 298. Advice of Counsel

``The failure of an infringer to obtain the advice of
counsel with respect to any allegedly infringed patent or the
failure of the infringer to present such advice to the court
or jury may not be used to prove that the accused infringer
willfully infringed the patent or that the infringer intended
to induce infringement of the patent.''.
(e) Effective Date.--The amendments made by this section
shall apply to any civil action commenced on or after the
date of the enactment of this Act.

SEC. 5. POST-GRANT REVIEW PROCEEDINGS.

(a) Inter Partes Review.--Chapter 31 of title 35, United
States Code, is amended to read as follows:

``CHAPTER 31--INTER PARTES REVIEW

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

``Sec. 311. Inter partes review

``(a) In General.--Subject to the provisions of this
chapter, a person who is not the patent owner may file with
the Office a petition to institute an inter partes review for
a patent. The Director shall establish, by regulation, fees
to be paid by the person requesting the review, in such
amounts as the Director determines to be reasonable,
considering the aggregate costs of the review.
``(b) Scope.--A petitioner in an inter partes review may
request to cancel as unpatentable 1 or more claims of a
patent only on a ground that could be raised under section
102 or 103 and only on the basis of prior art consisting of
patents or printed publications.
``(c) Filing Deadline.--A petition for inter partes review
shall be filed after the later of either--
``(1) 9 months after the grant of a patent or issuance of a
reissue of a patent; or
``(2) if a post-grant review is instituted under chapter
32, the date of the termination of such post-grant review.

[[Page S941]]

``Sec. 312. Petitions

``(a) Requirements of Petition.--A petition filed under
section 311 may be considered only if--
``(1) the petition is accompanied by payment of the fee
established by the Director under section 311;
``(2) the petition identifies all real parties in interest;
``(3) the petition identifies, in writing and with
particularity, each claim challenged, the grounds on which
the challenge to each claim is based, and the evidence that
supports the grounds for the challenge to each claim,
including--
``(A) copies of patents and printed publications that the
petitioner relies upon in support of the petition; and
``(B) affidavits or declarations of supporting evidence and
opinions, if the petitioner relies on expert opinions;
``(4) the petition provides such other information as the
Director may require by regulation; and
``(5) the petitioner provides copies of any of the
documents required under paragraphs (2), (3), and (4) to the
patent owner or, if applicable, the designated representative
of the patent owner.
``(b) Public Availability.--As soon as practicable after
the receipt of a petition under section 311, the Director
shall make the petition available to the public.

``Sec. 313. Preliminary response to petition

``(a) Preliminary Response.--If an inter partes review
petition is filed under section 311, the patent owner shall
have the right to file a preliminary response within a time
period set by the Director.
``(b) Content of Response.--A preliminary response to a
petition for inter partes review shall set forth reasons why
no inter partes review should be instituted based upon the
failure of the petition to meet any requirement of this
chapter.

``Sec. 314. Institution of inter partes review

``(a) Threshold.--The Director may not authorize an inter
partes review to commence unless the Director determines that
the information presented in the petition filed under section
311 and any response filed under section 313 shows that there
is a reasonable likelihood that the petitioner would prevail
with respect to at least 1 of the claims challenged in the
petition.
``(b) Timing.--The Director shall determine whether to
institute an inter partes review under this chapter within 3
months after receiving a preliminary response under section
313 or, if none is filed, within three months after the
expiration of the time for filing such a response.
``(c) Notice.--The Director shall notify the petitioner and
patent owner, in writing, of the Director's determination
under subsection (a), and shall make such notice available to
the public as soon as is practicable. Such notice shall list
the date on which the review shall commence.
``(d) No Appeal.--The determination by the Director whether
to institute an inter partes review under this section shall
be final and nonappealable.

``Sec. 315. Relation to other proceedings or actions

``(a) Infringer's Action.--An inter partes review may not
be instituted or maintained if the petitioner or real party
in interest has filed a civil action challenging the validity
of a claim of the patent.
[``(b) Patent Owner's Action.--An inter partes review may
not be instituted if the petition requesting the proceeding
is filed more than 3 months after the date on which the
petitioner, real party in interest, or his privy is required
to respond to a civil action alleging infringement of the
patent.]
``(b) Patent Owner's Action.--An inter partes review may
not be instituted if the petition requesting the proceeding
is filed more than 6 months after the date on which the
petitioner, real party in interest, or his privy is served
with a complaint alleging infringement of the patent. The
time limitation set forth in the preceding sentence shall not
apply to a request for joinder under subsection (c).
``(c) Joinder.--If the Director institutes an inter partes
review, the Director, in his discretion, may join as a party
to that inter partes review any person who properly files a
petition under section 311 that the Director, after receiving
a preliminary response under section 313 or the expiration of
the time for filing such a response, determines warrants the
institution of an inter partes review under section 314.
``(d) Multiple Proceedings.--Notwithstanding sections
135(a), 251, and 252, and chapter 30, during the pendency of
an inter partes review, if another proceeding or matter
involving the patent is before the Office, the Director may
determine the manner in which the inter partes review or
other proceeding or matter may proceed, including providing
for stay, transfer, consolidation, or termination of any such
matter or proceeding.
``(e) Estoppel.--
``(1) Proceedings before the office.--The petitioner in an
inter partes review under this chapter, or his real party in
interest or privy, may not request or maintain a proceeding
before the Office with respect to a claim on any ground that
the petitioner raised or reasonably could have raised during
an inter partes review of the claim that resulted in a final
written decision under section 318(a).
``(2) Civil actions and other proceedings.--The petitioner
in an inter partes review under this chapter, or his real
party in interest or privy, may not assert either in a civil
action arising in whole or in part under section 1338 of
title 28 or in a proceeding before the International Trade
Commission that a claim in a patent is invalid on any ground
that the petitioner raised or reasonably could have raised
during an inter partes review of the claim that resulted in a
final written decision under section 318(a).

``Sec. 316. Conduct of inter partes review

``(a) Regulations.--The Director shall prescribe
regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that
any petition or document filed with the intent that it be
sealed shall be accompanied by a motion to seal, and such
petition or document shall be treated as sealed pending the
outcome of the ruling on the motion;
``(2) setting forth the standards for the showing of
sufficient grounds to institute a review under section
314(a);
``(3) establishing procedures for the submission of
supplemental information after the petition is filed;
``(4) in accordance with section 2(b)(2), establishing and
governing inter partes review under this chapter and the
relationship of such review to other proceedings under this
title;
``(5) setting a time period for requesting joinder under
section 315(c);
``(6) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to--
``(A) the deposition of witnesses submitting affidavits or
declarations; and
``(B) what is otherwise necessary in the interest of
justice;
``(7) prescribing sanctions for abuse of discovery, abuse
of process, or any other improper use of the proceeding, such
as to harass or to cause unnecessary delay or an unnecessary
increase in the cost of the proceeding;
``(8) providing for protective orders governing the
exchange and submission of confidential information;
``(9) allowing the patent owner to file a response to the
petition after an inter partes review has been instituted,
and requiring that the patent owner file with such response,
through affidavits or declarations, any additional factual
evidence and expert opinions on which the patent owner relies
in support of the response;
``(10) setting forth standards and procedures for allowing
the patent owner to move to amend the patent under subsection
(d) to cancel a challenged claim or propose a reasonable
number of substitute claims, and ensuring that any
information submitted by the patent owner in support of any
amendment entered under subsection (d) is made available to
the public as part of the prosecution history of the patent;
``(11) providing either party with the right to an oral
hearing as part of the proceeding; and
``(12) requiring that the final determination in an inter
partes review be issued not later than 1 year after the date
on which the Director notices the institution of a review
under this chapter, except that the Director may, for good
cause shown, extend the 1-year period by not more than 6
months, and may adjust the time periods in this paragraph in
the case of joinder under section 315(c).
``(b) Considerations.--In prescribing regulations under
this section, the Director shall consider the effect of any
such regulation on the economy, the integrity of the patent
system, the efficient administration of the Office, and the
ability of the Office to timely complete proceedings
instituted under this chapter.
``(c) Patent Trial and Appeal Board.--The Patent Trial and
Appeal Board shall, in accordance with section 6, conduct
each proceeding authorized by the Director.
``(d) Amendment of the Patent.--
``(1) In general.--During an inter partes review instituted
under this chapter, the patent owner may file 1 motion to
amend the patent in 1 or more of the following ways:
``(A) Cancel any challenged patent claim.
``(B) For each challenged claim, propose a reasonable
number of substitute claims.
``(2) Additional motions.--Additional motions to amend may
be permitted upon the joint request of the petitioner and the
patent owner to materially advance the settlement of a
proceeding under section 317, or as permitted by regulations
prescribed by the Director.
``(3) Scope of claims.--An amendment under this subsection
may not enlarge the scope of the claims of the patent or
introduce new matter.
``(e) Evidentiary Standards.--In an inter partes review
instituted under this chapter, the petitioner shall have the
burden of proving a proposition of unpatentability by a
preponderance of the evidence.

``Sec. 317. Settlement

``(a) In General.--An inter partes review instituted under
this chapter shall be terminated with respect to any
petitioner upon the joint request of the petitioner and the
patent owner, unless the Office has decided the merits of the
proceeding before the request for termination is filed. If
the inter partes review is terminated with respect to a
petitioner under this section, no estoppel under section
315(e) shall apply to that petitioner. If no petitioner
remains in the inter partes review, the Office may terminate
the review or proceed to a final written decision under
section 318(a).

[[Page S942]]

``(b) Agreements in Writing.--Any agreement or
understanding between the patent owner and a petitioner,
including any collateral agreements referred to in such
agreement or understanding, made in connection with, or in
contemplation of, the termination of an inter partes review
under this section shall be in writing and a true copy of
such agreement or understanding shall be filed in the Office
before the termination of the inter partes review as between
the parties. If any party filing such agreement or
understanding so requests, the copy shall be kept separate
from the file of the inter partes review, and shall be made
available only to Federal Government agencies upon written
request, or to any other person on a showing of good cause.

``Sec. 318. Decision of the board

``(a) Final Written Decision.--If an inter partes review is
instituted and not dismissed under this chapter, the Patent
Trial and Appeal Board shall issue a final written decision
with respect to the patentability of any patent claim
challenged by the petitioner and any new claim added under
section 316(d).
``(b) Certificate.--If the Patent Trial and Appeal Board
issues a final written decision under subsection (a) and the
time for appeal has expired or any appeal has terminated, the
Director shall issue and publish a certificate canceling any
claim of the patent finally determined to be unpatentable,
confirming any claim of the patent determined to be
patentable, and incorporating in the patent by operation of
the certificate any new or amended claim determined to be
patentable.

``Sec. 319. Appeal

``A party dissatisfied with the final written decision of
the Patent Trial and Appeal Board under section 318(a) may
appeal the decision pursuant to sections 141 through 144. Any
party to the inter partes review shall have the right to be a
party to the appeal.''.
(b) Technical and Conforming Amendment.--The table of
chapters for part III of title 35, United States Code, is
amended by striking the item relating to chapter 31 and
inserting the following:

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

(c) Regulations and Effective Date.--
(1) Regulations.--The Director shall, not later than the
date that is 1 year after the date of the enactment of this
Act, issue regulations to carry out chapter 31 of title 35,
United States Code, as amended by subsection (a) of this
section.
(2) Applicability.--
(A) In general.--The amendments made by subsection (a)
shall take effect on the date that is 1 year after the date
of the enactment of this Act and shall apply to all patents
issued before, on, or after the effective date of subsection
(a).
(B) Exception.--The provisions of chapter 31 of title 35,
United States Code, as amended by paragraph (3), shall
continue to apply to requests for inter partes reexamination
that are filed prior to the effective date of subsection (a)
as if subsection (a) had not been enacted.
(C) Graduated implementation.--The Director may impose a
limit on the number of inter partes reviews that may be
instituted during each of the first 4 years following the
effective date of subsection (a), provided that such number
shall in each year be equivalent to or greater than the
number of inter partes reexaminations that are ordered in the
last full fiscal year prior to the effective date of
subsection (a).
(3) Transition.--
(A) In general.--Chapter 31 of title 35, United States
Code, is amended--
(i) in section 312--

(I) in subsection (a)--

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

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

(ii) in section 313, by striking ``a substantial new
question of patentability affecting a claim of the patent is
raised'' and inserting ``it has been shown that there is a
reasonable likelihood that the requester would prevail with
respect to at least 1 of the claims challenged in the
request''.
(B) Application.--The amendments made by this paragraph
shall apply to requests for inter partes reexamination that
are filed on or after the date of the enactment of this Act,
but prior to the effective date of subsection (a).
(d) Post-Grant Review.--Part III of title 35, United States
Code, is amended by adding at the end the following:

``CHAPTER 32--POST-GRANT REVIEW

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

``Sec. 321. Post-grant review

``(a) In General.--Subject to the provisions of this
chapter, a person who is not the patent owner may file with
the Office a petition to institute a post-grant review for a
patent. The Director shall establish, by regulation, fees to
be paid by the person requesting the review, in such amounts
as the Director determines to be reasonable, considering the
aggregate costs of the post-grant review.
``(b) Scope.--A petitioner in a post-grant review may
request to cancel as unpatentable 1 or more claims of a
patent on any ground that could be raised under paragraph (2)
or (3) of section 282(b) (relating to invalidity of the
patent or any claim).
``(c) Filing Deadline.--A petition for a post-grant review
shall be filed not later than 9 months after the grant of the
patent or issuance of a reissue patent.

``Sec. 322. Petitions

``(a) Requirements of Petition.--A petition filed under
section 321 may be considered only if--
``(1) the petition is accompanied by payment of the fee
established by the Director under section 321;
``(2) the petition identifies all real parties in interest;
``(3) the petition identifies, in writing and with
particularity, each claim challenged, the grounds on which
the challenge to each claim is based, and the evidence that
supports the grounds for the challenge to each claim,
including--
``(A) copies of patents and printed publications that the
petitioner relies upon in support of the petition; and
``(B) affidavits or declarations of supporting evidence and
opinions, if the petitioner relies on other factual evidence
or on expert opinions;
``(4) the petition provides such other information as the
Director may require by regulation; and
``(5) the petitioner provides copies of any of the
documents required under paragraphs (2), (3), and (4) to the
patent owner or, if applicable, the designated representative
of the patent owner.
``(b) Public Availability.--As soon as practicable after
the receipt of a petition under section 321, the Director
shall make the petition available to the public.

``Sec. 323. Preliminary response to petition

``(a) Preliminary Response.--If a post-grant review
petition is filed under section 321, the patent owner shall
have the right to file a preliminary response within 2 months
of the filing of the petition.
``(b) Content of Response.--A preliminary response to a
petition for post-grant review shall set forth reasons why no
post-grant review should be instituted based upon the failure
of the petition to meet any requirement of this chapter.

``Sec. 324. Institution of post-grant review

``(a) Threshold.--The Director may not authorize a post-
grant review to commence unless the Director determines that
the information presented in the petition, if such
information is not rebutted, would demonstrate that it is
more likely than not that at least 1 of the claims challenged
in the petition is unpatentable.
``(b) Additional Grounds.--The determination required under
subsection (a) may also be satisfied by a showing that the
petition raises a novel or unsettled legal question that is
important to other patents or patent applications.
``(c) Timing.--The Director shall determine whether to
institute a post-grant review under this chapter within 3
months after receiving a preliminary response under section
323 or, if none is filed, the expiration of the time for
filing such a response.
``(d) Notice.--The Director shall notify the petitioner and
patent owner, in writing, of the Director's determination
under subsection (a) or (b), and shall make such notice
available to the public as soon as is practicable. The
Director shall make each notice of the institution of a post-
grant review available to the public. Such notice shall list
the date on which the review shall commence.
``(e) No Appeal.--The determination by the Director whether
to institute a post-grant review under this section shall be
final and nonappealable.

``Sec. 325. Relation to other proceedings or actions

``(a) Infringer's Action.--A post-grant review may not be
instituted or maintained if the petitioner or real party in
interest has filed a civil action challenging the validity of
a claim of the patent.
[``(b) Patent Owner's Action.--A post-grant review may not
be instituted if the petition requesting the proceeding is
filed more than 3 months after the date on which the
petitioner, real party in interest, or his privy is required
to respond to a civil action alleging infringement of the
patent.]
``(b) Patent Owner's Action.--A post-grant review may not
be instituted if the petition requesting the proceeding is
filed more than 6 months after the date on which the
petitioner, real party in interest, or his privy is served
with a complaint alleging infringement of the patent.

[[Page S943]]

The time limitation set forth in the preceding sentence shall
not apply to a request for joinder under subsection (c).
``(c) Joinder.--If more than 1 petition for a post-grant
review is properly filed against the same patent and the
Director determines that more than 1 of these petitions
warrants the institution of a post-grant review under section
324, the Director may consolidate such reviews into a single
post-grant review.
``(d) Multiple Proceedings.--Notwithstanding sections
135(a), 251, and 252, and chapter 30, during the pendency of
any post-grant review, if another proceeding or matter
involving the patent is before the Office, the Director may
determine the manner in which the post-grant review or other
proceeding or matter may proceed, including providing for
stay, transfer, consolidation, or termination of any such
matter or proceeding. In determining whether to institute or
order a proceeding under this chapter, chapter 30, or chapter
31, the Director may take into account whether, and reject
the petition or request because, the same or substantially
the same prior art or arguments previously were presented to
the Office.
``(e) Estoppel.--
``(1) Proceedings before the office.--The petitioner in a
post-grant review under this chapter, or his real party in
interest or privy, may not request or maintain a proceeding
before the Office with respect to a claim on any ground that
the petitioner raised or reasonably could have raised during
a post-grant review of the claim that resulted in a final
written decision under section 328(a).
``(2) Civil actions and other proceedings.--The petitioner
in a post-grant review under this chapter, or his real party
in interest or privy, may not assert either in a civil action
arising in whole or in part under section 1338 of title 28 or
in a proceeding before the International Trade Commission
that a claim in a patent is invalid on any ground that the
petitioner raised during a post-grant review of the claim
that resulted in a final written decision under section
328(a).
``(f) Preliminary Injunctions.--If a civil action alleging
infringement of a patent is filed within 3 months of the
grant of the patent, the court may not stay its consideration
of the patent owner's motion for a preliminary injunction
against infringement of the patent on the basis that a
petition for post-grant review has been filed or that such a
proceeding has been instituted.
``(g) Reissue Patents.--A post-grant review may not be
instituted if the petition requests cancellation of a claim
in a reissue patent that is identical to or narrower than a
claim in the original patent from which the reissue patent
was issued, and the time limitations in section 321(c) would
bar filing a petition for a post-grant review for such
original patent.

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

``(a) Regulations.--The Director shall prescribe
regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that
any petition or document filed with the intent that it be
sealed shall be accompanied by a motion to seal, and such
petition or document shall be treated as sealed pending the
outcome of the ruling on the motion;
``(2) setting forth the standards for the showing of
sufficient grounds to institute a review under subsections
(a) and (b) of section 324;
``(3) establishing procedures for the submission of
supplemental information after the petition is filed;
``(4) in accordance with section 2(b)(2), establishing and
governing a post-grant review under this chapter and the
relationship of such review to other proceedings under this
title;
``(5) setting forth standards and procedures for discovery
of relevant evidence, including that such discovery shall be
limited to evidence directly related to factual assertions
advanced by either party in the proceeding;
``(6) prescribing sanctions for abuse of discovery, abuse
of process, or any other improper use of the proceeding, such
as to harass or to cause unnecessary delay or an unnecessary
increase in the cost of the proceeding;
``(7) providing for protective orders governing the
exchange and submission of confidential information;
``(8) allowing the patent owner to file a response to the
petition after a post-grant review has been instituted, and
requiring that the patent owner file with such response,
through affidavits or declarations, any additional factual
evidence and expert opinions on which the patent owner relies
in support of the response;
``(9) setting forth standards and procedures for allowing
the patent owner to move to amend the patent under subsection
(d) to cancel a challenged claim or propose a reasonable
number of substitute claims, and ensuring that any
information submitted by the patent owner in support of any
amendment entered under subsection (d) is made available to
the public as part of the prosecution history of the patent;
``(10) providing either party with the right to an oral
hearing as part of the proceeding; and
``(11) requiring that the final determination in any post-
grant review be issued not later than 1 year after the date
on which the Director notices the institution of a proceeding
under this chapter, except that the Director may, for good
cause shown, extend the 1-year period by not more than 6
months, and may adjust the time periods in this paragraph in
the case of joinder under section 325(c).
``(b) Considerations.--In prescribing regulations under
this section, the Director shall consider the effect of any
such regulation on the economy, the integrity of the patent
system, the efficient administration of the Office, and the
ability of the Office to timely complete proceedings
instituted under this chapter.
``(c) Patent Trial and Appeal Board.--The Patent Trial and
Appeal Board shall, in accordance with section 6, conduct
each proceeding authorized by the Director.
``(d) Amendment of the Patent.--
``(1) In general.--During a post-grant review instituted
under this chapter, the patent owner may file 1 motion to
amend the patent in 1 or more of the following ways:
``(A) Cancel any challenged patent claim.
``(B) For each challenged claim, propose a reasonable
number of substitute claims.
``(2) Additional motions.--Additional motions to amend may
be permitted upon the joint request of the petitioner and the
patent owner to materially advance the settlement of a
proceeding under section 327, or upon the request of the
patent owner for good cause shown.
``(3) Scope of claims.--An amendment under this subsection
may not enlarge the scope of the claims of the patent or
introduce new matter.
``(e) Evidentiary Standards.--In a post-grant review
instituted under this chapter, the petitioner shall have the
burden of proving a proposition of unpatentability by a
preponderance of the evidence.

``Sec. 327. Settlement

``(a) In General.--A post-grant review instituted under
this chapter shall be terminated with respect to any
petitioner upon the joint request of the petitioner and the
patent owner, unless the Office has decided the merits of the
proceeding before the request for termination is filed. If
the post-grant review is terminated with respect to a
petitioner under this section, no estoppel under section
325(e) shall apply to that petitioner. If no petitioner
remains in the post-grant review, the Office may terminate
the post-grant review or proceed to a final written decision
under section 328(a).
``(b) Agreements in Writing.--Any agreement or
understanding between the patent owner and a petitioner,
including any collateral agreements referred to in such
agreement or understanding, made in connection with, or in
contemplation of, the termination of a post-grant review
under this section shall be in writing, and a true copy of
such agreement or understanding shall be filed in the Office
before the termination of the post-grant review as between
the parties. If any party filing such agreement or
understanding so requests, the copy shall be kept separate
from the file of the post-grant review, and shall be made
available only to Federal Government agencies upon written
request, or to any other person on a showing of good cause.

``Sec. 328. Decision of the board

``(a) Final Written Decision.--If a post-grant review is
instituted and not dismissed under this chapter, the Patent
Trial and Appeal Board shall issue a final written decision
with respect to the patentability of any patent claim
challenged by the petitioner and any new claim added under
section 326(d).
``(b) Certificate.--If the Patent Trial and Appeal Board
issues a final written decision under subsection (a) and the
time for appeal has expired or any appeal has terminated, the
Director shall issue and publish a certificate canceling any
claim of the patent finally determined to be unpatentable,
confirming any claim of the patent determined to be
patentable, and incorporating in the patent by operation of
the certificate any new or amended claim determined to be
patentable.

``Sec. 329. Appeal

``A party dissatisfied with the final written decision of
the Patent Trial and Appeal Board under section 328(a) may
appeal the decision pursuant to sections 141 through 144. Any
party to the post-grant review shall have the right to be a
party to the appeal.''.
(e) Technical and Conforming Amendment.--The table of
chapters for part III of title 35, United States Code, is
amended by adding at the end the following:

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

(f) Regulations and Effective Date.--
(1) Regulations.--The Director shall, not later than the
date that is 1 year 18 months after the date of the enactment
of this Act, issue regulations to carry out chapter 32 of
title 35, United States Code, as added by subsection (d) of
this section.
(2) Applicability.--The amendments made by subsection (d)
shall take effect on the date that is [1 year] 18 months
after the date of the enactment of this Act and shall apply
only to patents issued on or after that date. The Director
may impose a limit on the number of post-grant reviews that
may be instituted during each of the 4 years following the
effective date of subsection (d).
(3) Pending interferences.--The Director shall determine
the procedures under which interferences commenced before the
effective date of subsection (d) are to proceed, including
whether any such interference is to be dismissed without
prejudice to the filing of a petition for a post-grant review
under chapter 32 of title 35, United States Code, or is to

[[Page S944]]

proceed as if this Act had not been enacted. The Director
shall include such procedures in regulations issued under
paragraph (1). For purposes of an interference that is
commenced before the effective date of subsection (d), the
Director may deem the Patent Trial and Appeal Board to be the
Board of Patent Appeals and Interferences, and may allow the
Patent Trial and Appeal Board to conduct any further
proceedings in that interference. The authorization to appeal
or have remedy from derivation proceedings in sections 141(d)
and 146 of title 35, United States Code, and the jurisdiction
to entertain appeals from derivation proceedings in section
1295(a)(4)(A) of title 28, United States Code, shall be
deemed to extend to final decisions in interferences that are
commenced before the effective date of subsection (d) and
that are not dismissed pursuant to this paragraph.
(g) Citation of Prior Art and Written Statements.--
(1) In general.--Section 301 of title 35, United States
Code, is amended to read as follows:

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

``(a) In General.--Any person at any time may cite to the
Office in writing--
``(1) prior art consisting of patents or printed
publications which that person believes to have a bearing on
the patentability of any claim of a particular patent; or
``(2) statements of the patent owner filed in a proceeding
before a Federal court or the Office in which the patent
owner took a position on the scope of any claim of a
particular patent.
``(b) Official File.--If the person citing prior art or
written statements pursuant to subsection (a) explains in
writing the pertinence and manner of applying the prior art
or written statements to at least 1 claim of the patent, the
citation of the prior art or written statements and the
explanation thereof shall become a part of the official file
of the patent.
``(c) Additional Information.--A party that submits a
written statement pursuant to subsection (a)(2) shall include
any other documents, pleadings, or evidence from the
proceeding in which the statement was filed that addresses
the written statement.
``(d) Limitations.--A written statement submitted pursuant
to subsection (a)(2), and additional information submitted
pursuant to subsection (c), shall not be considered by the
Office for any purpose other than to determine the proper
meaning of a patent claim in a proceeding that is ordered or
instituted pursuant to section 304, 314, or 324. If any such
written statement or additional information is subject to an
applicable protective order, it shall be redacted to exclude
information that is subject to that order.
``(e) Confidentiality.--Upon the written request of the
person citing prior art or written statements pursuant to
subsection (a), that person's identity shall be excluded from
the patent file and kept confidential.''.
(2) Effective date.--The amendment made by this subsection
shall take effect [1 year] 18 months after the date of the
enactment of this Act and shall apply to patents issued
before, on, or after that effective date.
(h) Reexamination.--
(1) Determination by director.--
(A) In general.--Section 303(a) of title 35, United States
Code, is amended by striking ``section 301 of this title''
and inserting ``section 301 or 302''.
(B) Effective date.--The amendment made by this paragraph
shall take effect [1 year] 18 months after the date of the
enactment of this Act and shall apply to patents issued
before, on, or after that effective date.
(2) Appeal.--
(A) In general.--Section 306 of title 35, United States
Code, is amended by striking ``145'' and inserting ``144''.
(B) Effective date.--The amendment made by this paragraph
shall take effect on the date of enactment of this Act and
shall apply to appeals of reexaminations that are pending
before the Board of Patent Appeals and Interferences or the
Patent Trial and Appeal Board on or after the date of the
enactment of this Act.

SEC. 6. PATENT TRIAL AND APPEAL BOARD.

(a) Composition and Duties.--Section 6 of title 35, United
States Code, is amended to read as follows:

``Sec. 6. Patent Trial and Appeal Board

``(a) There shall be in the Office a Patent Trial and
Appeal Board. The Director, the Deputy Director, the
Commissioner for Patents, the Commissioner for Trademarks,
and the administrative patent judges shall constitute the
Patent Trial and Appeal Board. The administrative patent
judges shall be persons of competent legal knowledge and
scientific ability who are appointed by the Secretary, in
consultation with the Director. Any reference in any Federal
law, Executive order, rule, regulation, or delegation of
authority, or any document of or pertaining to the Board of
Patent Appeals and Interferences is deemed to refer to the
Patent Trial and Appeal Board.
``(b) The Patent Trial and Appeal Board shall--
``(1) on written appeal of an applicant, review adverse
decisions of examiners upon applications for patents pursuant
to section 134(a);
``(2) review appeals of reexaminations pursuant to section
134(b);
``(3) conduct derivation proceedings pursuant to section
135; and
``(4) conduct inter partes reviews and post-grant reviews
pursuant to chapters 31 and 32.
``(c) Each appeal, derivation proceeding, post-grant
review, and inter partes review shall be heard by at least 3
members of the Patent Trial and Appeal Board, who shall be
designated by the Director. Only the Patent Trial and Appeal
Board may grant rehearings.
``(d) The Secretary of Commerce may, in his discretion,
deem the appointment of an administrative patent judge who,
before the date of the enactment of this subsection, held
office pursuant to an appointment by the Director to take
effect on the date on which the Director initially appointed
the administrative patent judge. It shall be a defense to a
challenge to the appointment of an administrative patent
judge on the basis of the judge's having been originally
appointed by the Director that the administrative patent
judge so appointed was acting as a de facto officer.''.
(b) Administrative Appeals.--Section 134 of title 35,
United States Code, is amended--
(1) in subsection (b), by striking ``any reexamination
proceeding'' and inserting ``a reexamination''; and
(2) by striking subsection (c).
(c) Circuit Appeals.--
(1) In general.--Section 141 of title 35, United States
Code, is amended to read as follows:

``Sec. 141. Appeal to the Court of Appeals for the Federal
Circuit

``(a) Examinations.--An applicant who is dissatisfied with
the final decision in an appeal to the Patent Trial and
Appeal Board under section 134(a) may appeal the Board's
decision to the United States Court of Appeals for the
Federal Circuit. By filing such an appeal, the applicant
waives his right to proceed under section 145.
``(b) Reexaminations.--A patent owner who is dissatisfied
with the final decision in an appeal of a reexamination to
the Patent Trial and Appeal Board under section 134(b) may
appeal the Board's decision only to the United States Court
of Appeals for the Federal Circuit.
``(c) Post-Grant and Inter Partes Reviews.--A party to a
post-grant or inter partes review who is dissatisfied with
the final written decision of the Patent Trial and Appeal
Board under section 318(a) or 328(a) may appeal the Board's
decision only to the United States Court of Appeals for the
Federal Circuit.
``(d) Derivation Proceedings.--A party to a derivation
proceeding who is dissatisfied with the final decision of the
Patent Trial and Appeal Board on the proceeding may appeal
the decision to the United States Court of Appeals for the
Federal Circuit, but such appeal shall be dismissed if any
adverse party to such derivation proceeding, within 20 days
after the appellant has filed notice of appeal in accordance
with section 142, files notice with the Director that the
party elects to have all further proceedings conducted as
provided in section 146. If the appellant does not, within 30
days after the filing of such notice by the adverse party,
file a civil action under section 146, the Board's decision
shall govern the further proceedings in the case.''.
(2) Jurisdiction.--Section 1295(a)(4)(A) of title 28,
United States Code, is amended to read as follows:
``(A) the Patent Trial and Appeal Board of the United
States Patent and Trademark Office with respect to patent
applications, derivation proceedings, reexaminations, post-
grant reviews, and inter partes reviews at the instance of a
party who exercised his right to participate in a proceeding
before or appeal to the Board, except that an applicant or a
party to a derivation proceeding may also have remedy by
civil action pursuant to section 145 or 146 of title 35. An
appeal under this subparagraph of a decision of the Board
with respect to an application or derivation proceeding shall
waive the right of such applicant or party to proceed under
section 145 or 146 of title 35;''.
(3) Proceedings on appeal.--Section 143 of title 35, United
States Code, is amended--
(A) by striking the third sentence and inserting the
following: ``In an ex parte case, the Director shall submit
to the court in writing the grounds for the decision of the
Patent and Trademark Office, addressing all of the issues
raised in the appeal. The Director shall have the right to
intervene in an appeal from a decision entered by the Patent
Trial and Appeal Board in a derivation proceeding under
section 135 or in an inter partes or post-grant review under
chapter 31 or 32.''; and
(B) by repealing the second of the two identical fourth
sentences.
(d) Effective Date.--The amendments made by this section
shall take effect [1 year] 18 months after the date of the
enactment of this Act and shall apply to proceedings
commenced on or after that effective date, except that--
(1) the extension of jurisdiction to the United States
Court of Appeals for the Federal Circuit to entertain appeals
of decisions of the Patent Trial and Appeal Board in
reexaminations under the amendment made by subsection (c)(2)
shall be deemed to take effect on the date of enactment of
this Act and shall extend to any decision of the Board of
Patent Appeals and Interferences with respect to a
reexamination that is entered before, on, or after the date
of the enactment of this Act;
(2) the provisions of sections 6, 134, and 141 of title 35,
United States Code, in effect on

[[Page S945]]

the day prior to the date of the enactment of this Act shall
continue to apply to inter partes reexaminations that are
requested under section 311 prior to the date that is [1
year] 18 months after the date of the enactment of this Act;
(3) the Patent Trial and Appeal Board may be deemed to be
the Board of Patent Appeals and Interferences for purposes of
appeals of inter partes reexaminations that are requested
under section 311 prior to the date that is [1 year] 18
months after the date of the enactment of this Act; and
(4) the Director's right under the last sentence of section
143 of title 35, United States Code, as amended by subsection
(c)(3), to intervene in an appeal from a decision entered by
the Patent Trial and Appeal Board shall be deemed to extend
to inter partes reexaminations that are requested under
section 311 prior to the date that is [1 year] 18 months
after the date of the enactment of this Act.

SEC. 7. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.

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

SEC. 8. VENUE.

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

SEC. 9. FEE SETTING AUTHORITY.

(a) Fee Setting.--
(1) In general.--The Director shall have authority to set
or adjust by rule any fee established or charged by the
Office under sections 41 and 376 of title 35, United States
Code, or under section 31 of the Trademark Act of 1946 (15
U.S.C. 1113), or any other fee established or charged by the
Office under any other provision of law, notwithstanding the
fee amounts established or charged thereunder, for the filing
or processing of any submission to, and for all other
services performed by or materials furnished by, the Office,
provided that patent and trademark fee amounts are in the
aggregate set to recover the estimated cost to the Office for
processing, activities, services and materials relating to
patents and trademarks, respectively, including proportionate
shares of the administrative costs of the Office.
(2) Small and micro entities.--The fees established under
paragraph (1) for filing, processing, issuing, and
maintaining patent applications and patents shall be reduced
by 50 percent with respect to their application to any small
entity that qualifies for reduced fees under section 41(h)(1)
of title 35, United States Code, and shall be reduced by 75
percent with respect to their application to any micro entity
as defined in section 123 of that title.
(3) Reduction of fees in certain fiscal years.--In any
fiscal year, the Director--
(A) shall consult with the Patent Public Advisory Committee
and the Trademark Public Advisory Committee on the
advisability of reducing any fees described in paragraph (1);
and
(B) after the consultation required under subparagraph (A),
may reduce such fees.
(4) Role of the public advisory committee.--The Director
shall--
(A) submit to the Patent Public Advisory Committee or the
Trademark Public Advisory Committee, or both, as appropriate,
any proposed fee under paragraph (1) not less than 45 days
before publishing any proposed fee in the Federal Register;
(B) provide the relevant advisory committee described in
subparagraph (A) a 30-day period following the submission of
any proposed fee, on which to deliberate, consider, and
comment on such proposal, and require that--
(i) during such 30-day period, the relevant advisory
committee hold a public hearing related to such proposal; and
(ii) the Director shall assist the relevant advisory
committee in carrying out such public hearing, including by
offering the use of Office resources to notify and promote
the hearing to the public and interested stakeholders;
(C) require the relevant advisory committee to make
available to the public a written report detailing the
comments, advice, and recommendations of the committee
regarding any proposed fee;
(D) consider and analyze any comments, advice, or
recommendations received from the relevant advisory committee
before setting or adjusting any fee; and
(E) notify, through the Chair and Ranking Member of the
Senate and House Judiciary Committees, the Congress of any
final rule setting or adjusting fees under paragraph (1).
(5) Publication in the federal register.--
(A) In general.--Any rules prescribed under this subsection
shall be published in the Federal Register.
(B) Rationale.--Any proposal for a change in fees under
this section shall--
(i) be published in the Federal Register; and
(ii) include, in such publication, the specific rationale
and purpose for the proposal, including the possible
expectations or benefits resulting from the proposed change.
(C) Public comment period.--Following the publication of
any proposed fee in the Federal Register pursuant to
subparagraph (A), the Director shall seek public comment for
a period of not less than 45 days.
(6) Congressional comment period.--Following the
notification described in paragraph (3)(E), Congress shall
have not more than 45 days to consider and comment on any
final rule setting or adjusting fees under paragraph (1). No
fee set or adjusted under paragraph (1) shall be effective
prior to the end of such 45-day comment period.
(7) Rule of construction.--No rules prescribed under this
subsection may diminish--
(A) an applicant's rights under title 35, United States
Code, or the Trademark Act of 1946; or
(B) any rights under a ratified treaty.
(b) Fees for Patent Services.--Division B of Public Law
108-447 is amended in title VIII of the Departments of
Commerce, Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 2005--
(1) in subsections (a), (b), and (c) of section 801, by--
(A) striking ``During'' and all that follows through ``
2006, subsection'' and inserting ``Subsection''; and
(B) striking ``shall be administered as though that
subsection reads'' and inserting ``is amended to read'';
(2) in subsection (d) of section 801, by striking
``During'' and all that follows through `` 2006, subsection''
and inserting ``Subsection''; and
(3) in subsection (e) of section 801, by--
(A) striking ``During'' and all that follows through
``2006, subsection'' and inserting ``Subsection''; and
(B) striking ``shall be administered as though that
subsection''.
(c) Adjustment of Trademark Fees.--Division B of Public Law
108-447 is amended in title VIII of the Departments of
Commerce, Justice and State, the Judiciary and Related
Agencies Appropriations Act, 2005, in section 802(a) by
striking ``During fiscal years 2005, 2006 and 2007'', and
inserting ``Until such time as the Director sets or adjusts
the fees otherwise,''.
(d) Effective Date, Applicability, and Transition
Provisions.--Division B of Public Law 108-447 is amended in
title VIII of the Departments of Commerce, Justice and State,
the Judiciary and Related Agencies Appropriations Act, 2005,
in section 803(a) by striking ``and shall apply only with
respect to the remaining portion of fiscal year 2005, 2006
and 2007''.
(e) Statutory Authority.--Section 41(d)(1)(A) of title 35,
United States Code, is amended by striking ``, and the
Director may not increase any such fee thereafter''.
(f) Rule of Construction.--Nothing in this section shall be
construed to affect any other provision of Division B of
Public Law 108-447, including section 801(c) of title VIII of
the Departments of Commerce, Justice and State, the Judiciary
and Related Agencies Appropriations Act, 2005.
(g) Definitions.--In this section, the following
definitions shall apply:
(1) Director.--The term ``Director'' means the Director of
the United States Patent and Trademark Office.

[[Page S946]]

(2) Office.--The term ``Office'' means the United States
Patent and Trademark Office.
(3) Trademark act of 1946.--The term ``Trademark Act of
1946'' means an Act entitled ``Act to provide for the
registration and protection of trademarks used in commerce,
to carry out the provisions of certain international
conventions, and for other purposes'', approved July 5, 1946
(15 U.S.C. 1051 et seq.) (commonly referred to as the
Trademark Act of 1946 or the Lanham Act).
(h) Electronic Filing Incentive.--
(1) In general.--Notwithstanding any other provision of
this section, a fee of $400 shall be established for each
application for an original patent, except for a design,
plant, or provisional application, that is not filed by
electronic means as prescribed by the Director. The fee
established by this subsection shall be reduced 50 percent
for small entities that qualify for reduced fees under
section 41(h)(1) of title 35, United States Code. All fees
paid under this subsection shall be deposited in the Treasury
as an offsetting receipt that shall not be available for
obligation or expenditure.
(2) Effective date.--This subsection shall become effective
60 days after the date of the enactment of this Act.
(i) Effective Date.--Except as provided in subsection (h),
the provisions of this section shall take effect upon the
date of the enactment of this Act.

SEC. 10. SUPPLEMENTAL EXAMINATION.

(a) In General.--Chapter 25 of title 35, United States
Code, is amended by adding at the end the following:

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

``(a) In General.--A patent owner may request supplemental
examination of a patent in the Office to consider,
reconsider, or correct information believed to be relevant to
the patent. Within 3 months of the date a request for
supplemental examination meeting the requirements of this
section is received, the Director shall conduct the
supplemental examination and shall conclude such examination
by issuing a certificate indicating whether the information
presented in the request raises a substantial new question of
patentability.
``(b) Reexamination Ordered.--If a substantial new question
of patentability is raised by 1 or more items of information
in the request, the Director shall order reexamination of the
patent. The reexamination shall be conducted according to
procedures established by chapter 30, except that the patent
owner shall not have the right to file a statement pursuant
to section 304. During the reexamination, the Director shall
address each substantial new question of patentability
identified during the supplemental examination,
notwithstanding the limitations therein relating to patents
and printed publication or any other provision of chapter 30.
``(c) Effect.--
``(1) In general.--A patent shall not be held unenforceable
on the basis of conduct relating to information that had not
been considered, was inadequately considered, or was
incorrect in a prior examination of the patent if the
information was considered, reconsidered, or corrected during
a supplemental examination of the patent. The making of a
request under subsection (a), or the absence thereof, shall
not be relevant to enforceability of the patent under section
282.
``(2) Exceptions.--
``(A) Prior allegations.--This subsection shall not apply
to an allegation pled with particularity, or set forth with
particularity in a notice received by the patent owner under
section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the
date of a supplemental-examination request under subsection
(a) to consider, reconsider, or correct information forming
the basis for the allegation.
``(B) Patent enforcement actions.--In an action brought
under section 337(a) of the Tariff Act of 1930 (19 U.S.C.
1337(a)), or section 281 of this title, this subsection shall
not apply to any defense raised in the action that is based
upon information that was considered, reconsidered, or
corrected pursuant to a supplemental-examination request
under subsection (a) unless the supplemental examination, and
any reexamination ordered pursuant to the request, are
concluded before the date on which the action is brought.
``(d) Fees and Regulations.--The Director shall, by
regulation, establish fees for the submission of a request
for supplemental examination of a patent, and to consider
each item of information submitted in the request. If
reexamination is ordered pursuant to subsection (a), fees
established and applicable to ex parte reexamination
proceedings under chapter 30 shall be paid in addition to
fees applicable to supplemental examination. The Director
shall promulgate regulations governing the form, content, and
other requirements of requests for supplemental examination,
and establishing procedures for conducting review of
information submitted in such requests.
``(e) Rule of Construction.--Nothing in this section shall
be construed--
``(1) to preclude the imposition of sanctions based upon
criminal or antitrust laws (including section 1001(a) of
title 18, the first section of the Clayton Act, and section 5
of the Federal Trade Commission Act to the extent that
section relates to unfair methods of competition);
``(2) to limit the authority of the Director to investigate
issues of possible misconduct and impose sanctions for
misconduct in connection with matters or proceedings before
the Office; or
``(3) to limit the authority of the Director to promulgate
regulations under chapter 3 relating to sanctions for
misconduct by representatives practicing before the
Office.''.
(b) Effective Date.--This section shall take effect 1 year
after the date of the enactment of this Act and shall apply
to patents issued before, on, or after that date.

[SEC. 11. RESIDENCY OF FEDERAL CIRCUIT JUDGES.

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

SEC. 11. RESIDENCY OF FEDERAL CIRCUIT JUDGES.

(a) In General.--Section 44(c) of title 28, United States
Code, is amended--
(1) by repealing the second sentence; and
(2) in the third sentence, by striking ``state'' and
inserting ``State''.
(b) Effective Date.--This section shall take effect on the
date of enactment of this Act.

SEC. 12. MICRO ENTITY DEFINED.

Chapter 11 of title 35, United States Code, is amended by
adding at the end the following new section:

``Sec. 123. Micro entity defined

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

SEC. 13. FUNDING AGREEMENTS.

(a) In General.--Section 202(c)(7)(E)(i) of title 35,
United States Code, is amended--
(1) by striking ``75 percent'' and inserting ``15
percent''; and
(2) by striking ``25 percent'' and inserting ``85
percent''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this Act and
shall apply to patents issued before, on, or after that date.

SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR ART.

(a) In General.--For purposes of evaluating an invention
under section 102 or 103 of title 35, United States Code, any
strategy for reducing, avoiding, or deferring tax liability,
whether known or unknown at the time of the invention or
application for patent, shall be deemed insufficient to
differentiate a claimed invention from the prior art.

[[Page S947]]

(b) Definition.--For purposes of this section, the term
``tax liability'' refers to any liability for a tax under any
Federal, State, or local law, or the law of any foreign
jurisdiction, including any statute, rule, regulation, or
ordinance that levies, imposes, or assesses such tax
liability.
(c) Effective Date; Applicability.--This section shall take
effect on the date of enactment of this Act and shall apply
to any patent application pending and any patent issued on or
after that date.

SEC. 15. BEST MODE REQUIREMENT.

(a) In General.--Section 282 of title 35, United State
Code, is amended in its second undesignated paragraph by
striking paragraph (3) and inserting the following:
``(3) Invalidity of the patent or any claim in suit for
failure to comply with--
``(A) any requirement of section 112, except that the
failure to disclose the best mode shall not be a basis on
which any claim of a patent may be canceled or held invalid
or otherwise unenforceable; or
``(B) any requirement of section 251.''.
(b) Conforming Amendment.--Sections 119(e)(1) and 120 of
title 35, United States Code, are each amended by striking
``the first paragraph of section 112 of this title'' and
inserting ``section 112(a) (other than the requirement to
disclose the best mode)''.
(c) Effective Date.--The amendments made by this section
shall take effect upon the date of the enactment of this Act
and shall apply to proceedings commenced on or after that
date.

SEC. 16. TECHNICAL AMENDMENTS.

(a) Joint Inventions.--Section 116 of title 35, United
States Code, is amended--
(1) in the first paragraph, by striking ``When'' and
inserting ``(a) Joint Inventions.--When'';
(2) in the second paragraph, by striking ``If a joint
inventor'' and inserting ``(b) Omitted Inventor.--If a joint
inventor''; and
(3) in the third paragraph--
(A) by striking ``Whenever'' and inserting ``(c) Correction
of Errors in Application.--Whenever''; and
(B) by striking ``and such error arose without any
deceptive intent on his part,''.
(b) Filing of Application in Foreign Country.--Section 184
of title 35, United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Except when'' and inserting ``(a) Filing
in Foreign Country.--Except when''; and
(B) by striking ``and without deceptive intent'';
(2) in the second paragraph, by striking ``The term'' and
inserting ``(b) Application.--The term''; and
(3) in the third paragraph, by striking ``The scope'' and
inserting ``(c) Subsequent Modifications, Amendments, and
Supplements.--The scope''.
(c) Filing Without a License.--Section 185 of title 35,
United States Code, is amended by striking ``and without
deceptive intent''.
(d) Reissue of Defective Patents.--Section 251 of title 35,
United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Whenever'' and inserting ``(a) In
General.--Whenever''; and
(B) by striking ``without any deceptive intention'';
(2) in the second paragraph, by striking ``The Director''
and inserting ``(b) Multiple Reissued Patents.--The
Director'';
(3) in the third paragraph, by striking ``The provisions''
and inserting ``(c) Applicability of This Title.--The
provisions''; and
(4) in the last paragraph, by striking ``No reissued
patent'' and inserting ``(d) Reissue Patent Enlarging Scope
of Claims.--No reissued patent''.
(e) Effect of Reissue.--Section 253 of title 35, United
States Code, is amended--
(1) in the first paragraph, by striking ``Whenever, without
any deceptive intention'' and inserting ``(a) In General.--
Whenever''; and
(2) in the second paragraph, by striking ``in like manner''
and inserting ``(b) Additional Disclaimer or Dedication.--In
the manner set forth in subsection (a),''.
(f) Correction of Named Inventor.--Section 256 of title 35,
United States Code, is amended--
(1) in the first paragraph--
(A) by striking ``Whenever'' and inserting ``(a)
Correction.--Whenever''; and
(B) by striking ``and such error arose without any
deceptive intention on his part''; and
(2) in the second paragraph, by striking ``The error'' and
inserting ``(b) Patent Valid if Error Corrected.--The
error''.
(g) Presumption of Validity.--Section 282 of title 35,
United States Code, is amended--
(1) in the first undesignated paragraph--
(A) by striking ``A patent'' and inserting ``(a) In
General.--A patent''; and
(B) by striking the third sentence;
(2) in the second undesignated paragraph, by striking ``The
following'' and inserting ``(b) Defenses.--The following'';
and
(3) in the third undesignated paragraph, by striking ``In
actions'' and inserting ``(c) Notice of Actions; Actions
During Extension of Patent Term.--In actions''.
(h) Action for Infringement.--Section 288 of title 35,
United States Code, is amended by striking ``, without
deceptive intention,''.
(i) Reviser's Notes.--
(1) Section 3(e)(2) of title 35, United States Code, is
amended by striking ``this Act,'' and inserting ``that
Act,''.
[(2) Section 202(b)(3) of title 35, United States Code, is
amended by striking ``the section 203(b)'' and inserting
``section 203(b)''.]
(2) Section 202 of title 35, United States Code, is
amended--
(A) in subsection (b)(3), by striking ``the section
203(b)'' and inserting ``section 203(b)''; and
(B) in subsection (c)(7)--
(i) in subparagraph (D), by striking ``except where it
proves'' and all that follows through ``; and'' and
inserting: ``except where it is determined to be infeasible
following a reasonable inquiry, a preference in the licensing
of subject inventions shall be given to small business firms;
and''; and
(ii) in subparagraph (E)(i), by striking ``as described
above in this clause (D);'' and inserting ``described above
in this clause;''.
(3) Section 209(d)(1) of title 35, United States Code, is
amended by striking ``nontransferrable'' and inserting
``nontransferable''.
(4) Section 287(c)(2)(G) of title 35, United States Code,
is amended by striking ``any state'' and inserting ``any
State''.
(5) Section 371(b) of title 35, United States Code, is
amended by striking ``of the treaty'' and inserting ``of the
treaty.''.
(j) Unnecessary References.--
(1) In general.--Title 35, United States Code, is amended
by striking ``of this title'' each place that term appears.
(2) Exception.--The amendment made by paragraph (1) shall
not apply to the use of such term in the following sections
of title 35, United States Code:
(A) Section 1(c).
(B) Section 101.
(C) Subsections (a) and (b) of section 105.
(D) The first instance of the use of such term in section
111(b)(8).
(E) Section 157(a).
(F) Section 161.
(G) Section 164.
(H) Section 171.
(I) Section 251(c), as so designated by this section.
(J) Section 261.
(K) Subsections (g) and (h) of section 271.
(L) Section 287(b)(1).
(M) Section 289.
(N) The first instance of the use of such term in section
375(a).
(k) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act and shall apply to proceedings commenced on or after
that effective date.

SEC. 17. CLARIFICATION OF JURISDICTION.

(a) Short Title.--This section may be cited as the
``Intellectual Property Jurisdiction Clarification Act of
2011''.
(b) State Court Jurisdiction.--Section 1338(a) of title 28,
United States Code, is amended by striking the second
sentence and inserting the following: ``No State court shall
have jurisdiction over any claim for relief arising under any
Act of Congress relating to patents, plant variety
protection, or copyrights.''.
(c) Court of Appeals for the Federal Circuit.--Section
1295(a)(1) of title 28, United States Code, is amended to
read as follows:
``(1) of an appeal from a final decision of a district
court of the United States, the District Court of Guam, the
District Court of the Virgin Islands, or the District Court
of the Northern Mariana Islands, in any civil action arising
under, or in any civil action in which a party has asserted a
compulsory counterclaim arising under, any Act of Congress
relating to patents or plant variety protection;''.
(d) Removal.--
(1) In general.--Chapter 89 of title 28, United States
Code, is amended by adding at the end the following new
section:

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

``(a) In General.--A civil action in which any party
asserts a claim for relief arising under any Act of Congress
relating to patents, plant variety protection, or copyrights
may be removed to the district court of the United States for
the district and division embracing the place where such
action is pending.
``(b) Special Rules.--The removal of an action under this
section shall be made in accordance with section 1446 of this
chapter, except that if the removal is based solely on this
section--
``(1) the action may be removed by any party; and
``(2) the time limitations contained in section 1446(b) may
be extended at any time for cause shown.
``(c) Remand.--If a civil action is removed solely under
this section, the district court--
``(1) shall remand all claims that are neither a basis for
removal under subsection (a) nor within the original or
supplemental jurisdiction of the district court under any Act
of Congress; and
``(2) may, under the circumstances specified in section
1367(c), remand any claims within the supplemental
jurisdiction of the district court under section 1367.''.
(2) Conforming amendment.--The table of sections for
chapter 89 of title 28, United States Code, is amended by
adding at the end the following new item:

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

(e) Transfer by Court of Appeals for the Federal Circuit.--
(1) In general.--Chapter 99 of title 28, United States
Code, is amended by adding at the end the following new
section:

``Sec. 1632. Transfer by the Court of Appeals for the Federal
Circuit

``When a case is appealed to the Court of Appeals for the
Federal Circuit under section 1295(a)(1), and no claim for
relief arising under any Act of Congress relating to patents
or plant variety protection is the subject of the appeal by

[[Page S948]]

any party, the Court of Appeals for the Federal Circuit shall
transfer the appeal to the court of appeals for the regional
circuit embracing the district from which the appeal has been
taken.''.
(2) Conforming amendment.--The table of sections for
chapter 99 of title 28, United States Code, is amended by
adding at the end the following new item:

``1632. Transfer by the Court of Appeals for the Federal Circuit.''.

(f) Effective Date.--The amendments made by this section
shall apply to any civil action commenced on or after the
date of the enactment of this Act.

SEC. [17.]18. EFFECTIVE DATE[; RULE OF CONSTRUCTION.

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

Mr. LEAHY. Mr. President, I ask unanimous consent that the committee-
reported amendments be agreed to, the motions to reconsider be
considered made and laid upon the table, with no intervening action or
debate; further, that the amended version be considered original text
for the purposes of further amendment.
The ACTING PRESIDENT pro tempore. Is there an objection?
Without objection, it is so ordered.
The committee-reported amendments were agreed to.
Mr. LEAHY. Mr. President, the Senate today is turning its attention
to a measure that will help create jobs, energize the economy, and
promote innovation. The Patent Reform Act, which has also come to be
called the America Invents Act, is a key part of any jobs agenda.
We can help unleash innovation and promote American invention, all
without adding a penny to the deficit. This is commonsense and
bipartisan legislation. During the next few days, the Senate can come
together to pass this needed legislation, and do so in a bipartisan
manner. It represents the finest traditions of the Senate.
I thank the majority leader for proceeding to this measure, and the
Republican leader for his cooperation.
This is a bill that was reported unanimously by the members of the
Judiciary Committee. Republicans and Democrats alike recognize that it
is important to our country's continued economic recovery, and to our
ability to successfully compete in the global economy. America needs a
21st century patent system in order to lead. The last reform of our
patent system was nearly 60 years ago, and I think it is about time the
patent system caught up with the needs of this country and what the
rest of the world has already done.
In his State of the Union Address, President Obama challenged the
Nation to out-innovate, out-build, and out-educate. Enacting the
America Invents Act is a key to meeting this challenge.
Reforming the Nation's antiquated patent system will promote American
innovation, it will create American jobs, and it will grow America's
economy. I thank the President and his administration for their help
and support for the Leahy-Hatch-Grassley America Invents Act.
Commerce Secretary Locke has been a strong partner in our efforts,
and Director Kappos of the Patent and Trademark Office has been an
indispensable source of wise counsel.
Innovation drives the Nation's economy, and that entrepreneurial
spirit can only be protected by a patent system that promotes invention
and spurs new ideas. We need to reform our patent system so that these
innovations can more quickly get to market.
A modernized patent system--one that puts American entrepreneurs on
the same playing field as those throughout the world--is a key to that
success. This is an idea that cuts across the political spectrum.
Our bipartisan Senate cosponsors include Senator Kohl of Wisconsin,
Senator Klobuchar of Minnesota, Senator Gillibrand of New York, the
distinguished Acting President pro tempore, Senator Coons of Delaware,
as well as Senator Kyl, the assistant Republican leader, Senator
Sessions of Alabama, Senator Lieberman of Connecticut, Senator Franken
of Minnesota, Senator Blumenthal of Connecticut, and Senator Harkin of
Iowa.
Republicans and Democrats from big States and small, and from all
ends of the political spectrum, are coming together to support American
innovation.
The Senate Judiciary Committee unanimously approved this legislation
on February 3, 2011. But this effort extends back several years. Our
current congressional efforts to reform the Nation's patent system
began in 2005. Indeed, our bill is the product of years of work and
compromise. The Senate Judiciary Committee has reported patent reform
legislation to the Senate in each of the last three Congresses. And the
House has seen efforts over the same period led by Congressmen Lamar
Smith of Texas and Howard Berman of California. The legislation we are
considering today, in fact, is structured on the original House bill
and contains many of the original provisions.
From the beginning, we each recognized the need for a more effective
and efficient patent system, one that improves patent quality and
provides incentives for entrepreneurs to create jobs.
A balanced and efficient intellectual property system that rewards
invention and promotes innovation through high-quality patents is
crucial to our Nation's economic prosperity and job growth. It is how
we win the future--by unleashing the American inventive spirit. This
bill, the America Invents Act, will allow our inventors and innovators
to flourish, and it will do so without adding a penny to the deficit.
Not a dime in taxpayer money is spent on the Patent and Trademark
Office reforms. They are all funded by patent fees, not taxes.
The America Invents Act will accomplish three important goals, which
have been at the center of the patent reform debate from the beginning:
It will improve and harmonize operations at the Patent and Trademark
Office; it will improve the quality of patents that are issued; and it
will provide more certainty in litigation.
Particularly, this legislation will transition our Nation's patent
system to a first-inventor-to-file system. It will also make changes to
improve the quality of patents that are issued, and it will provide the
PTO with the resources it needs to work through its backlog.
The America Invents Act provides the tools the PTO needs to separate
the inventive wheat from the chaff, to help businesses bring new
products to market and create jobs.
This is interesting because this is a piece of legislation that is
supported by both business and labor--something we all want to see in
this Chamber--including the National Association of Manufacturers, the
United Steelworkers, the National Venture Capital Association, the AFL-
CIO, the Association of American Universities, and companies
representing all sectors of the patent community that have been urging
action on patent reform proposals for years.
Innovation has always been at the heart of America and American
success. From the founding of our Nation, we recognized the importance
of promoting and protecting innovation. The Constitution explicitly
grants Congress the power to ``promote the progress and science and
useful arts, by securing for limited times to . . . inventors the
exclusive right to their respective . . . discoveries.'' It is not a
creature of the legislature but an integral part of our Constitution.
The patent system plays a key role in encouraging innovation and
bringing new products to market. The discoveries made by American
inventors and research institutions, commercialized by our companies,
and protected and promoted by our patent laws, have made our system the
envy of the world.
In spite of this, a Newsweek study last year found that only 41
percent of Americans believe the United States is staying ahead of
China in innovation.

[[Page S949]]

A Thompson Reuters analysis has already predicted that China will
outpace the United States in patent filings this year.
China has a specific plan not just to overtake the United States in
patent applications, but to more than quadruple its patent filings over
the next 5 years--all the more reason why we must act now. This is not
something that should be delayed. We should act on it. Delaying it is
saying we want China to overtake the United States. Moving forward says
we want to be competitive.
It is astonishing to consider that China has been modernizing its
patent laws and promoting innovation, but the United States has failed
to keep pace. I said before, it has been 60 years since we last enacted
reform of American patent law. We can no longer wait. We can no longer
remain complacent and expect to stay on top.
In many areas that were highly contentious when the patent reform
debate began, the courts have acted. Their decisions reflect the
concerns heard in Congress that questionable patents were too easily
obtained, too difficult to challenge. The courts have moved the law in
a generally positive direction, more closely aligned with the text of
the statutes.
More recently, the Federal circuit aggressively moved to constrain
runaway damage awards, which plagued the patent system by basing awards
on unreliable numbers, untethered to the reality of licensing
decisions.
The courts have addressed issues where they can, but in some areas
only Congress can take the necessary steps. Our act will both speed the
application process and, at the same time, improve patent quality. It
will provide the USPTO with the resources it needs to work through its
application backlog, while also providing for greater input from third
parties to improve the quality of patents issued and that remain in
effect.
High quality patents are the key to our economic growth. They benefit
both patent owners and users, who can be more confident in the validity
of issued patents. Patents of low quality and dubious validity, by
contrast, enable patent trolls who extort unreasonable licensing fees
from legitimate businesses, and constitute a drag on innovation. Too
many dubious patents also unjustly cast doubt on truly high quality
patents.
The Department of Commerce issued a report indicating that these
reforms will create jobs without adding to the deficit. The Obama
administration supports these efforts, as do industries and
stakeholders from all sectors of the patent community. Congressional
action can no longer be delayed.
Innovation and economic development are not uniquely Democratic or
Republican objectives, so we worked together to find the proper balance
for America, for our economy, for our inventors, for our consumers.
Thomas Friedman wrote not too long ago in the New York Times that the
country which ``endows its people with more tools and basic research to
invent new goods and services . . . is the one that will not just
survive but thrive down the road. . . . We might be able to stimulate
our way back to stability, but we can only invent our way back to
prosperity.''
I think of the country's first patent, which was issued to a
Vermonter. Thomas Jefferson, the Secretary of State, examined the
application, and President George Washington signed it.
A recent Judiciary Committee meeting on this measure was on the
anniversary of the day Thomas Edison received the historic patent for
the principles of his incandescent lamp that paved the way for the bulb
that has illuminated our homes, offices, and venues in our country and
around the world.
This week is when the patent was issued for lifesaving improvements
to the diver's suit. It was magician Harry Houdini who devised a
mechanism that allowed divers in distress to safely escape a diving
suit.
So we can smooth the path for more interesting and great American
inventions. That is what the bipartisan comprehensive patent reform
bill would do.
I wish to recognize in particular the work of Senator Hatch, who is
here on the Senate floor--and he has been a longtime partner of mine on
intellectual property issues--and Senator Grassley, the ranking
Republican on our committee. The bill has also received tremendous
input from Senator Kyl, Senator Klobuchar, Senator Sessions and many
others. We are working together, along with those on both sides of the
aisle in the House, to reach the goal of improving patent quality and
the operations at the PTO, and to address the related unpredictability
of litigation that has been harming innovation.
No one claims that ours is a perfect bill. It is a compromise that
will make key improvements in the patent system. Over the course of the
next couple of days, the Senate will have the opportunity to consider
amendments.
Senator Coburn intends to bring an amendment on the use of patent
fees. Other Senators who disagree with the move to a first-to-file
system may seek to reverse that progress. I urge those Senators that
have amendments to come forward, agree to time agreements and proceed
without delay.
We should be able to complete action on this bill this week and I
would hope by Wednesday night. Then the Senate will need to move on to
other important matters. So after a brief period for opening statements
to outline the bill and frame the debate, I will call for Senators to
come forward with any amendments they may have to the bill. This bill
is important and its scheduling comes as no surprise. It was more than
10 days ago that the Senate unanimously agreed to its consideration.
So, let us do our job, and get to the task of considering and
completing action on this important bill in order to help create jobs,
encourage innovation and promote American invention.
Mr. President, some of the Nation's leading innovators and inventors
have expressed strong support for S. 23, the America Invents Act. The
Coalition for Patent and Trademark Information Dissemination, whose
members are patent and trademark holders, recently wrote to the Senate
Judiciary Committee in support of the bill, stating that its members
have ``an interest in a more efficient system that produces higher-
quality patents and trademarks.'' The Intellectual Property Owners
Association, one of the largest trade associations devoted to
intellectual property rights also recently wrote to Senators endorsing
important provisions in the bill, including the first-to-file system. I
ask that these letters, as well as a statement of support from the
Coalition for 21st Century Patent Reform be printed in the Record at
this time. I also ask that a list of cross-sector manufacturers and
innovators that support S. 23 be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Coalition for Patent and Trademark Information
Dissemination,
February 1, 2011.
Hon. Patrick J. Leahy,
Chairman, Judiciary Committee,
U.S. Senate, Washington, DC.
Hon. Charles Grassley
Ranking Member, Judiciary Committee,
U.S. Senate, Washington, DC.
Dear Chairman Leahy and Ranking Member Grassley: The
Coalition writes in support of S. 23, the Patent Reform Act
of 2011.
Coalition members are information services and workflow
solution provider companies that offer value-added patent and
trademark information services. Our services are aimed at
enabling patent and trademark applicants to find and make
available the most relevant information related to their
claimed inventions and marks through the data enhancements
and state of the art search tools provided. Members also are
patent and trademark holders with growing numbers of patent
and trademark applications who have an interest in a more
efficient system that produces higher-quality patents and
trademarks.
Patent quality is directly related to the adequacy of the
prior art presented to examiners. When applicants conduct a
patentability search and disclose all relevant prior art to
examiners, examiners will have a significantly increased
likelihood of making the right decision about patentability.
A major positive addition to patent law would be the
provisions in S. 23 allowing submission of patents or other
publications by third parties while applications are still
under consideration by the USPTO. This should further add to
the prior art made available to the examiner and has the
potential to greatly enhance patent quality.
Additionally, we applaud the inclusion of supplemental
examination provisions in the bill. This will allow patent
holders to request a review of patents where pertinent
history or information may have been intentionally omitted in
original requests. The inclusion

[[Page S950]]

of this provision will further strengthen our laws to prevent
unlawful infringement.
We are delighted that a provision disallowing outsourcing
of USPTO searches no longer seems to be under consideration.
Coalition members believe that the USPTO should be able to
contract with private companies to perform searches, whether
as part of the PCT process, as is now currently permitted, or
possibly for national searches at some future time. USPTO
operational flexibility with PCT searches has proven to
drastically reduce pendency rates. Achieving quality, speed,
and cost-effectiveness in USPTO processes is a goal to
encourage. USPTO management should be empowered to use the
best source or sources for searches.
There is one addition to S. 23 that we would hope to see as
the legislation advances. Coalition members believe that full
disclosure of prior art information to examiners is
constrained by concerns about inequitable conduct liability.
We urge Congress to reform the inequitable conduct defense in
order to remove the disincentive for full disclosure of all
prior art.
We appreciate this opportunity to express our positions on
patent reform issues, and the members of the Coalition stand
ready to work with the Senate Judiciary Committee as it
considers patent reform legislation.
Sincerely,

Marla Grossman,

Executive Director, Coalition for Patent
and Trademark Information Dissemination.
____

Intellectual Property

Owners Association,

February 25, 2011.
Re amendments to S. 23, the ``Patent Reform Act of 2011''
The Hon. ____
U.S. Senate,
Washington, DC.
Dear Senator ____: Intellectual Property Owners Association
(IPO) is pleased that the Senate is planning to proceed with
consideration of S. 23, the ``Patent Reform Act of 2011.''
IPO is one of the largest and most diverse trade
associations devoted to intellectual property rights. Our 200
corporate members cover a broad spectrum of U.S. companies in
industries ranging from information technology to consumer
products to pharmaceuticals and biotechnology.
We wish to give you our advice on amendments that we
understand might be offered during consideration of S. 23:
Vote AGAINST any amendment to delete the ``first-inventor-
to-file'' and related provisions in section 2 of the bill.
First-inventor-to-file, explained in a 1-page attachment to
this letter, is central to modernization and simplification
of patent law and is very widely supported by U.S. companies.
Vote FOR any amendment guaranteeing the U.S. Patent and
Trademark Office access to all user fees paid to the agency
by patent and trademark owners and applicants. Current delays
in processing patent applications are totally unacceptable
and the result of an underfunded Patent and Trademark Office.
Vote AGAINST any amendment that would interpose substantial
barriers to enforcement of validly-granted ``business
method'' patents. IPO supports business method patents that
were upheld by the U.S. Supreme Court in the recent Bilski
decision.
For more information, please call IPO at 202-507-4500.
Sincerely,
Douglas K. Norman,
President.
____

Intellectual Property

Owners Association,

February 25, 2011.

First-Inventor-To-File in S. 23, the ``Patent Reform Act of 2011''

Section 2 of S. 23 simplifies and modernizes U.S. patent
law by awarding the patent to the first of two competing
inventors to file in the U.S. Patent and Trademark Office
(PTO), a change from the traditional system of awarding the
patent, in theory, to the first inventor to invent. First-
inventor-to-file in S. 23 has these advantages:
Eliminates costly and slow patent interferences proceedings
conducted in the PTO and the courts to determine which
inventor was the first to invent.
Creates legal certainty about rights in all patents, the
vast majority of which never become entangled in interference
proceedings in the first place, but which are still subject
to the possibility under current law that another inventor
might come forward and seek to invalidate the patent on the
ground that this other inventor, who never applied for a
patent, was the first to invent.
Encourages both large and small patent applicants to file
more quickly in order to establish an early filing date.
Early filing leads to early disclosure of technology to the
public, enabling other parties to build on and improve the
technology. (Applicants who plan to file afterward in other
countries already have the incentive to file quickly in the
U.S.)
Makes feasible the introduction of post-grant opposition
proceedings to improve the quality of patents, by reducing
the issues that could be raised in a post-grant proceeding,
thereby limiting costs and delay.
Follows up on changes already made by Congress that (1)
established inexpensive and easy-to-file provisional patent
applications and, (2) in order to comply with treaty
obligations, allowed foreign inventors to participate in U.S.
patent interference proceedings.
____

The Coalition for 21st

Century Patent Reform

Bipartisan Efforts Move Strong Patent Reform Bill Forward in Senate--
Coalition Supports Commitment to Improve Patent System for All
Inventors

Washington, DC.--Gary Griswold of the Coalition for 21st
Century Patent Reform today released the following statement
after the Senate Judiciary Committee overwhelmingly approved
S. 23, The Patent Reform Act of 2011. The Coalition
appreciates the strong bipartisan support of the bill in the
committee and the recognition by the Senators that patent
reform will spur innovation and help create jobs across all
business sectors.
``Our Coalition is grateful for the bipartisan vote in
support of the legislation and the Senators' hard work to
craft legislation that will improve the patent system for all
the nation's innovators. It is very encouraging to have the
committee's overwhelming support for the legislation as it
moves to the Senate floor. We recognize Senators will
continue to fine-tune the language of the bill and we look
forward to working actively with them to address outstanding
issues.
The members of our Coalition will be working with other
inventors and innovators in the coming weeks to communicate
with all Senators as well as members of the House about the
importance of this legislation for jobs, promoting
innovation, and solidifying our global competitiveness.''
____

Cross-Sector Manufacturers & Innovators In Support of S. 23

3M, Air Liquide, Air Products, BP, Bridgestone American
Holdings, Inc., Cargill, Caterpillar, Coalition for Patent
and Trademark Information Dissemination, Coalition for 21st
Century Patent Reform, Cummins.
The Dow Chemical Company, DuPont, Eastman Chemical Company,
ExxonMobil, General Electric, General Mills, Henkel
Corporation, Honeywell, Intellectual Property Owners
Association.
Illinois Tool Works, Kodak, Milliken and Company, Monsanto,
Northrop Grumman, PepsiCo, Inc., Proctor & Gamble, United
Technologies, USG Corporation, Weyerhaeuser.

Amendment No. 114

Mr. LEAHY. Mr. President, as part of the housekeeping measures we
have, I send to the desk an amendment and ask for its immediate
consideration.
The PRESIDING OFFICER (Mr. Blumenthal). The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Vermont [Mr. Leahy] proposes an amendment
numbered 114.

Mr. LEAHY. Mr. President, I ask unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To improve the bill)

On page 1, strike line 5, and insert the following: ``
`America Invents Act' ''.
On page 79, strike lines 1 through 17, and insert the
following:
(1) In general.--The Director shall have authority to set
or adjust by rule any fee established, authorized, or charged
under title 35, United States Code, and the Trademark Act of
1946 (15 U.S.C. 1051 et seq.), notwithstanding the fee
amounts established, authorized, or charged thereunder, for
all services performed by or materials furnished by, the
Office, provided that patent and trademark fee amounts are in
the aggregate set to recover the estimated cost to the Office
for processing, activities, services, and materials relating
to patents and trademarks, respectively, including
proportionate shares of the administrative costs of the
Office.

Mr. LEAHY. Mr. President, I see the distinguished senior Senator from
Utah on the Senate floor, a man who has worked for years on this issue
and has made every effort to keep it bipartisan.
I yield to the Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I thank the distinguished chairman of the
Judiciary Committee. He has been one of the leaders the whole time I
have been on that committee with regard to intellectual property
issues. It has always been a pleasure to work with him and his staff.
They are good people.
This is a particularly important bill. It is only the first step,
once we bring it up and hopefully pass it, and then the House will
bring up their bill. There are likely to be differences between the
two, and we will have to get together in conference to resolve those
differences. So those who might have some angst about this particular
bill, give it time. We will be working diligently--the distinguished
Senator from Vermont, myself, and others, including, of course, our
ranking member, Senator Grassley--we will be working diligently to try
and resolve these

[[Page S951]]

problems and hopefully we will end up with a bill that everybody in
this country should recognize as what needs to be done to keep us at
the forefront of all technological innovation in this world.
I rise today to express my support for the pending patent reform
legislation before us. As many know, several of my colleagues and I
have been working together on this bill for several Congresses. I
especially wish to recognize the ongoing efforts of our Judiciary
Committee chairman, Pat Leahy. Over the years he and I have worked
tirelessly to bring about long overdue reform to our Nation's patent
system. I also wish to recognize the efforts of the Judiciary Committee
ranking member, Chuck Grassley, as well as many of my Senate colleagues
who have been instrumental in forging the compromise before us today
which, in my opinion, is the first step in trying to arrive at a final
consensus bill.
Similarly, no enumeration would be complete without recognizing the
considerable work that has been done by our colleagues over in the
House of Representatives. House Judiciary Committee chairman Lamar
Smith has been a leader on patent reform legislation for many years.
His vision, his expertise, and his leadership are highly respected and
appreciated by me, by my colleagues as well, and by many throughout the
patent community.
I also wish to specifically acknowledge the invaluable contributions
of Representatives John Conyers, Howard Berman, Bob Goodlatte, Howard
Coble, Darrell Issa, and Zoe Lofgren. They have all been very effective
people with regard to these very important issues. They have been
stalwarts in underscoring the vital need to reform our patent system. I
look forward to seeing the results of their process and working with
them to complete this important task.
Most of us are very familiar with the history of patent legislation,
but it bears repeating that we have not had meaningful reform to our
patent system in well over a half century--not any meaningful reform
whatsoever, even though many things have changed during these
intervening years--courts have instituted welcome changes to our patent
system, a lot of technology has changed, and a lot of innovation has
occurred.
I am not going to spend my time today on a history lesson. Instead, I
urge everyone to consider not the past, but to look forward to the
future, and that future begins with examining our present. The Nation's
current economic situation requires that we take advantage of our
ingenuity that has made America the economic envy of the world.
If enacted, the American Invents Act would move the United States to
a first-inventor-to-file system, which will create a system that is
more transparent, objective, and predictable for the patentee. In
addition, transitioning to a first-to-inventor-to-file system will
facilitate harmonization with other patent offices across the world and
contribute to ongoing work-sharing processes.
The bill will also establish another means to administratively
challenge the validity of a patent at the U.S. Patent and Trademark
Office, USPTO--creating a cost-effective alternative to formal
litigation, which will further enhance our patent system.
Patent owners will be able to improve the quality of their patents
through a new supplemental examination process. The bill further
prevents patents from being issued on claims for tax strategies and
provides fee-setting authority for the USPTO Director to ensure the
Office is properly funded.
This bipartisan bill also contains provisions on venue to curb forum
shopping; changes to the best mode disclosure requirement; increased
incentives for government laboratories to commercialize inventions;
restrictions on false marking claims, and removes restrictions on the
residency of Federal Circuit judges.
For me, it is pretty simple. Patent reform is more than words on
paper. It is about jobs and the positive impact they have on our
economy. Chairman Leahy understands this connection and has wisely
named the bill the America Invents Act of 2011.
While we debate this important legislation, it is crucial that we
keep the creation of jobs and economic prosperity at the forefront of
our thoughts. After all, patents encourage technological advancement by
providing incentives to invent, to invest in, and to disclose new
technology. Now more than ever we must ensure efficiency and increased
quality in the issuance of patents. This, in turn, will create an
environment that fosters entrepreneurship and the creation of new jobs,
thereby contributing to growth within all sectors of our economy.
If we think about it, one single deployed patent has a ripple effect
that works like this: A properly examined patent, promptly issued by
the USPTO, creates jobs--jobs that are dedicated to developing and
producing new products and services. Unfortunately, the current USPTO
backlog now exceeds 700,000 applicants. The sheer volume of the patent
applications not only reflects the vibrant, innovative spirit that has
made America a worldwide innovative leader in science, education, and
technology, but the patent backlog also represents dynamic economic
growth waiting to be unleashed. We cannot afford to go down this path
any longer. We need to take advantage of this opportunity to expand our
economy.
During consideration of the America Invents Act, I encourage my
colleagues to be mindful that legislation is rarely without its
imperfections, and we have a tremendous chance to take much needed
action. To those who believe otherwise, rest assured my intent is to do
no harm. But I want the legislative process to move forward. It is long
overdue.
I urge my colleagues to participate in the debate and vote on the
amendments they think will strengthen the bill. There are some
proposals that I believe merit serious consideration by all of us. At
the end of the day, the passage of this bill will update our patent
system, help strengthen our economy, and provide a springboard for
further improvements to our intellectual property laws.
I have every confidence that we can come together and act in a
bipartisan manner. The stakes are simply too high for us not to seize
this moment.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I rise to speak on S. 23. We probably
have a lot of amendments, but right now we are talking about the bill.
The America Invents Act is what it is called. I should express my
gratitude to those others who have helped so much on this and, quite
frankly, more involved on this bill than I have been, including
Chairman Leahy, Senator Hatch, Senator Sessions, and Senator Kyl.
This is a bipartisan bill. Over the past 5 years or so, the Senate
Judiciary Committee has been considering comprehensive patent reform.
Chairman Leahy has engaged Senators on both sides of the aisle as well
as a wide range of groups on the outside. His efforts have been pivotal
in bringing together diverse views and crafting a reasonable compromise
bill. In fact, the bill is supported by a large number of industries
and other stakeholders from the U.S. patent community.
I commend the leadership of Chairman Leahy as well as the leadership
of Senator Hatch for getting us to where we are at this point.
Intellectual property rights are extremely important to our Nation's
economy. An effective and efficient patent system will help promote
innovation and technological advancement in America and make life
better for us all. An effective and efficient patent system also will
help provide stimulus for businesses and obviously generate many new
jobs. Everyone agrees we need a well-functioning patent and trademark
office within our government so that it can complete its work in a
timely manner.
We should find ways to help the Patent and Trademark Office speed up
the patent application process and eliminate the current backlog it is
experiencing. We should reduce costs and decrease abusive litigation
and improve certainty in the patent process and strengthen patent
quality. The America Invents Act will help do all of these things.
The bipartisan bill before us will update and upgrade the U.S. patent
system. It will enhance transparency and patent quality, and it will
ensure that the Patent and Trademark Office has

[[Page S952]]

the tools and funding it needs to cut its backlog and process patent
applications more quickly.
The improvements to the patent system contained in our bill will help
spur economic prosperity and job creation. I am pleased to support it.
Specifically, the bill would improve patent quality by establishing
the opportunity for third parties to submit prior art and other
information related to a pending application for consideration by a
patent examiner. By allowing prior art to be submitted earlier in the
process and explained to the office, patent examiners will be able to
issue higher quality patents.
The bill would create a ``first window'' post-grant opposition
proceeding open for 9 months after the grant of a patent. This would
allow the Patent and Trademark Office to weed out patents that should
not have been issued in the first place.
This new post-grant review process--which was recommended in a 2004
report issued by the National Academy of Sciences--would enable early
challenges to patents, but also protect the rights of inventors and
patent owners against endless litigation. The reason we want to ensure
that the Patent and Trademark Office issues high quality patents is to
incentivize investment in truly innovative technological advances and
provide more certainty for investors in these inventions.
In addition, the bill would improve the current inter partes
administrative process for challenging the validity of a patent. It
would establish an adversarial inter partes review, with a higher
threshold for initiating a proceeding and procedural safeguards to
prevent a challenger from using the process to harass patent owners. It
also would include a strengthened estoppel standard to prevent
petitioners from raising in a subsequent challenge the same patent
issues that were raised or reasonably could have been raised in a prior
challenge. The bill would significantly reduce the ability to use post-
grant procedures for abusive serial challenges to patents. These new
procedures would also provide faster, less costly alternatives to civil
litigation to challenge patents.
The bill would institute a gatekeeping role for the court to assess
the legal basis for damages and jury instructions. This would provide
more certainty in damages calculation and promote uniformity and
fairness. The bill also would transition the United States to a first-
inventor to file system, simplifying the application process and
coordinating it with our trading partners. This change will reduce
costs and help improve the competitiveness of American inventors
abroad.
Further, the bill would provide fee setting authority for the Patent
Trademark Office Director to ensure that the Patent and Trademark
Office is properly funded and can reduce its current backlog of patent
applications.
The bill also would mandate a reduction of fees by 50 percent for
small entities and 75 percent for micro-entities.
I want to particularly thank Chairman Leahy for working with me and
Senator Baucus on a provision that would curtail patents on tax
strategies. These patents encumber the ability of taxpayers and their
advisers to use the tax law freely, interfering with the voluntary tax
compliance system. Tax strategy patents undermine the fairness of the
Federal tax system by removing from the public domain ways to satisfy a
taxpayer's legal obligations. If firms or individuals hold patents for
these strategies, some taxpayers could face fees simply for complying
with the Tax Code. Moreover, tax patents provide windfalls to lawyers
and patent holders by granting them exclusive rights to use tax
loopholes, which could provide some businesses with an unfair advantage
in our competitive market system.
Our provision would ensure that all taxpayers will have equal access
to strategies to comply with the Tax Code.
This provision was carefully drafted with the help of the Patent and
Trademark Office not to cover software preparation and other software,
tools or systems used to prepare tax or information returns or manage a
taxpayer's finances.
In conclusion, the America Invents Act will protect inventors' rights
and encourage innovation and investment in our economy. The bill will
improve transparency and third party participation in the patent
application review process. This, in turn, will strengthen patent
quality and result in more fairness for both patent holders and patent
challengers. The bill will institute beneficial changes to the patent
process to curb litigation abuses and improve certainty for investors
and innovators. It will help companies do business more efficiently on
an international basis.
The bill also will enhance operations of the Patent and Trademark
Office with administrative reforms and will give the office fee setting
authority to reduce backlogs and better manage its business.
I am pleased to support this hard fought bipartisan legislation, and
I urge my colleagues to support it as well.
I yield the floor.
Mr. LEAHY. Mr. President, I thank the distinguished Senator from
Iowa. As I noted before he got on the floor, he has been extremely
important in working on this issue.
Mr. President, just so I can have a moment to speak with the Senator
from Louisiana, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. VITTER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 112

Mr. VITTER. Mr. President, pursuant to a conversation with the
distinguished committee chairman, I ask unanimous consent to
temporarily set aside the pending amendment to call up the Toomey-
Vitter amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The legislative clerk read as follows:

The Senator from Louisiana [Mr. Vitter], for himself and
Mr. Toomey, proposes an amendment numbered 112.

Mr. VITTER. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To require that the Government prioritize all obligations on
the debt held by the public in the event that the debt limit is
reached)

At the appropriate place, insert the following:

SEC. ___. FULL FAITH AND CREDIT ACT.

(a) Short Title.--This section may be cited as the ``Full
Faith and Credit Act''.
(b) Prioritize Obligations on the Debt Held by the
Public.--In the event that the debt of the United States
Government, as defined in section 3101 of title 31, United
States Code, reaches the statutory limit, the authority of
the Department of the Treasury provided in section 3123 of
title 31, United States Code, to pay with legal tender the
principal and interest on debt held by the public shall take
priority over all other obligations incurred by the
Government of the United States.

Mr. VITTER. Mr. President, this Toomey-Vitter amendment is the Full
Faith and Credit Act--the concept that has been discussed for several
weeks prior to this week. It is very timely, as we are all rightly
focused on the spending and debt issue with the Thursday deadline
coming up.
No one that I know of wants the government to be shut down in any
way, shape, or form. No one that I know of wants any massive,
significant disruption. But lots of people that I know of, including
many in Louisiana, want us to change business as usual in Washington,
starting with spending and debt. This full faith and credit amendment
is an important step in that regard. Because of the time limitations in
front of us before we move to other pending business at 4:30, I have
agreed to come back at a later time to fully lay out this Toomey-Vitter
amendment, as well as a second-degree Vitter amendment that I will
advance with regard to Social Security.
It is very important to discuss this spending, to put it on the floor
and start this debate with vigor about spending and debt, changing the
fiscal policy of this country so that we can get on a more sustainable
path. There is only one thing certain about this debate; that is, if we
don't change the fiscal path we are on, it will lead to an economic
disaster.

[[Page S953]]

I urge us to debate these important proposals immediately, well
before the Thursday deadline, and come to a strong, positive
resolution. I will be back on the floor soon with Senator Toomey to
fully explain this amendment, as well as the Vitter second-degree
amendment.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
Mr. LEE. Mr. President, I send a motion to the desk.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, I understand we have a unanimous consent
agreement at 4:30 p.m. to go to two judicial nominations.
The PRESIDING OFFICER. The Senator is correct.
Mr. LEAHY. I ask for the regular order.

____________________