[Congressional Record (Bound Edition), Volume 157 (2011), Part 2]
[Senate]
[Pages 2694-2711]
[From the U.S. 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.]

[[Page 2695]]



     SEC. 2. FIRST INVENTOR TO FILE.

       (a) Definitions.--Section 100 of title 35, United States 
     Code, is amended by adding at the end the following:
       ``(f) The term `inventor' means the individual or, if a 
     joint invention, the individuals collectively who invented or 
     discovered the subject matter of the invention.
       ``(g) The terms `joint inventor' and `coinventor' mean any 
     1 of the individuals who invented or discovered the subject 
     matter of a joint invention.
       ``(h) The term `joint research agreement' means a written 
     contract, grant, or cooperative agreement entered into by 2 
     or more persons or entities for the performance of 
     experimental, developmental, or research work in the field of 
     the claimed invention.
       ``(i)(1) The term `effective filing date' of a claimed 
     invention in a patent or application for patent means--
       ``(A) if subparagraph (B) does not apply, the actual filing 
     date of the patent or the application for the patent 
     containing a claim to the invention; or
       ``(B) the filing date of the earliest application for which 
     the patent or application is entitled, as to such invention, 
     to a right of priority under section 119, 365(a), or 365(b) 
     or to the benefit of an earlier filing date under section 
     120, 121, or 365(c).
       ``(2) The effective filing date for a claimed invention in 
     an application for reissue or reissued patent shall be 
     determined by deeming the claim to the invention to have been 
     contained in the patent for which reissue was sought.
       ``(j) The term `claimed invention' means the subject matter 
     defined by a claim in a patent or an application for a 
     patent.''.
       (b) Conditions for Patentability.--
       (1) In general.--Section 102 of title 35, United States 
     Code, is amended to read as follows:

     ``Sec. 102. Conditions for patentability; novelty

       ``(a) Novelty; Prior Art.--A person shall be entitled to a 
     patent unless--
       ``(1) the claimed invention was patented, described in a 
     printed publication, or in public use, on sale, or otherwise 
     available to the public before the effective filing date of 
     the claimed invention; or
       ``(2) the claimed invention was described in a patent 
     issued under section 151, or in an application for patent 
     published or deemed published under section 122(b), in which 
     the patent or application, as the case may be, names another 
     inventor and was effectively filed before the effective 
     filing date of the claimed invention.
       ``(b) Exceptions.--
       ``(1) Disclosures made 1 year or less before the effective 
     filing date of the claimed invention.--A disclosure made 1 
     year or less before the effective filing date of a claimed 
     invention shall not be prior art to the claimed invention 
     under subsection (a)(1) if--
       ``(A) the disclosure was made by the inventor or joint 
     inventor or by another who obtained the subject matter 
     disclosed directly or indirectly from the inventor or a joint 
     inventor; or
       ``(B) the subject matter disclosed had, before such 
     disclosure, been publicly disclosed by the inventor or a 
     joint inventor or another who obtained the subject matter 
     disclosed directly or indirectly from the inventor or a joint 
     inventor.
       ``(2) Disclosures appearing in applications and patents.--A 
     disclosure shall not be prior art to a claimed invention 
     under subsection (a)(2) if--
       ``(A) the subject matter disclosed was obtained directly or 
     indirectly from the inventor or a joint inventor;
       ``(B) the subject matter disclosed had, before such subject 
     matter was effectively filed under subsection (a)(2), been 
     publicly disclosed by the inventor or a joint inventor or 
     another who obtained the subject matter disclosed directly or 
     indirectly from the inventor or a joint inventor; or
       ``(C) the subject matter disclosed and the claimed 
     invention, not later than the effective filing date of the 
     claimed invention, were owned by the same person or subject 
     to an obligation of assignment to the same person.
       ``(c) Common Ownership Under Joint Research Agreements.--
     Subject matter disclosed and a claimed invention shall be 
     deemed to have been owned by the same person or subject to an 
     obligation of assignment to the same person in applying the 
     provisions of subsection (b)(2)(C) if--
       ``(1) the subject matter disclosed was developed and the 
     claimed invention was made by, or on behalf of, 1 or more 
     parties to a joint research agreement that was in effect on 
     or before the effective filing date of the claimed invention;
       ``(2) the claimed invention was made as a result of 
     activities undertaken within the scope of the joint research 
     agreement; and
       ``(3) the application for patent for the claimed invention 
     discloses or is amended to disclose the names of the parties 
     to the joint research agreement.
       ``(d) Patents and Published Applications Effective as Prior 
     Art.--For purposes of determining whether a patent or 
     application for patent is prior art to a claimed invention 
     under subsection (a)(2), such patent or application shall be 
     considered to have been effectively filed, with respect to 
     any subject matter described in the patent or application--
       ``(1) if paragraph (2) does not apply, as of the actual 
     filing date of the patent or the application for patent; or
       ``(2) if the patent or application for patent is entitled 
     to claim a right of priority under section 119, 365(a), or 
     365(b), or to claim the benefit of an earlier filing date 
     under section 120, 121, or 365(c), based upon 1 or more prior 
     filed applications for patent, as of the filing date of the 
     earliest such application that describes the subject 
     matter.''.
       (2) 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

[[Page 2696]]

     title due to publication, on sale, or public use'' and 
     inserting ``the expiration of the 1-year period referred to 
     in section 102(b)''.
       (h) Derived Patents.--Section 291 of title 35, United 
     States Code, is amended to read as follows:

     ``Sec. 291. Derived patents

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

     ``Sec. 135. Derivation proceedings

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

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

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

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

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

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

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

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

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

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

       (k) False Marking.--
       (1) In general.--Section 292 of title 35, United States 
     Code, is amended--
       (A) in subsection (a), by adding at the end the following:
       ``Only the United States may sue for the penalty authorized 
     by this subsection.''; and
       (B) by striking subsection (b) and inserting the following:
       ``(b) Any person who has suffered a competitive injury as a 
     result of a violation of this section may file a civil action 
     in a district court of the United States for recovery of 
     damages adequate to compensate for the injury.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to all cases, without exception, pending on or 
     after the date of the enactment of this Act.
       (l) Statute of Limitations.--
       (1) In general.--Section 32 of title 35, United States 
     Code, is amended by inserting between the third and fourth 
     sentences the following: ``A proceeding under this section 
     shall be commenced not later than the earlier of either 10 
     years after the date on which the misconduct forming the 
     basis for the proceeding occurred, or 1 year after the date 
     on which the misconduct forming the basis for the proceeding 
     is made known to an officer or employee of the Office as 
     prescribed in the regulations established under section 
     2(b)(2)(D).''.
       (2) Report to congress.--The Director shall provide on a 
     biennial basis to the Judiciary Committees of the Senate and 
     House of Representatives a report providing a short 
     description of incidents made known to an officer or employee 
     of the Office as prescribed in the regulations established 
     under section 2(b)(2)(D) of title 35, United States Code, 
     that reflect substantial evidence of misconduct before the 
     Office but for which the Office was barred from commencing a 
     proceeding under section 32 of title 35, United States Code, 
     by the time limitation established by the fourth sentence of 
     that section.
       (3) Effective date.--The amendment made by paragraph (1) 
     shall apply in all cases in which the time period for 
     instituting a proceeding under section 32 of title 35, United 
     State Code, had not lapsed prior to the date of the enactment 
     of this Act.
       (m) Small Business Study.--
       (1) Definitions.--In this subsection--
       (A) the term ``Chief Counsel'' means the Chief Counsel for 
     Advocacy of the Small Business Administration;
       (B) the term ``General Counsel'' means the General Counsel 
     of the United States Patent and Trademark Office; and
       (C) the term ``small business concern'' has the meaning 
     given that term under section 3 of the Small Business Act (15 
     U.S.C. 632).
       (2) Study.--
       (A) In general.--The Chief Counsel, in consultation with 
     the General Counsel, shall conduct a study of the effects of 
     eliminating the use of dates of invention in determining 
     whether an applicant is entitled to a patent under title 35, 
     United States Code.

[[Page 2697]]

       (B) Areas of study.--The study conducted under subparagraph 
     (A) shall include examination of the effects of eliminating 
     the use of invention dates, including examining--
       (i) how the change would affect the ability of small 
     business concerns to obtain patents and their costs of 
     obtaining patents;
       (ii) whether the change would create, mitigate, or 
     exacerbate any disadvantage for applicants for patents that 
     are small business concerns relative to applicants for 
     patents that are not small business concerns, and whether the 
     change would create any advantages for applicants for patents 
     that are small business concerns relative to applicants for 
     patents that are not small business concerns;
       (iii) the cost savings and other potential benefits to 
     small business concerns of the change; and
       (iv) the feasibility and costs and benefits to small 
     business concerns of alternative means of determining whether 
     an applicant is entitled to a patent under title 35, United 
     States Code.
       (3) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Chief Counsel shall submit to the 
     Committee on Small Business and Entrepreneurship and the 
     Committee on the Judiciary of the Senate and the Committee on 
     Small Business and the Committee on the Judiciary of the 
     House of Representatives a report regarding the results of 
     the study under paragraph (2).
       (n) Report on Prior User Rights.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this Act, the Director shall report, to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives, the findings 
     and recommendations of the Director on the operation of prior 
     user rights in selected countries in the industrialized 
     world. The report shall include the following:
       (A) A comparison between patent laws of the United States 
     and the laws of other industrialized countries, including 
     members of the European Union and Japan, Canada, and 
     Australia.
       (B) An analysis of the effect of prior user rights on 
     innovation rates in the selected countries.
       (C) An analysis of the correlation, if any, between prior 
     user rights and start-up enterprises and the ability to 
     attract venture capital to start new companies.
       (D) An analysis of the effect of prior user rights, if any, 
     on small businesses, universities, and individual inventors.
       (E) An analysis of legal and constitutional issues, if any, 
     that arise from placing trade secret law in patent law.
       (F) An analysis of whether the change to a first-to-file 
     patent system creates a particular need for prior user 
     rights.
       (2) Consultation with other agencies.--In preparing the 
     report required under paragraph (1), the Director shall 
     consult with the United States Trade Representative, the 
     Secretary of State, and the Attorney General.
       (o) Effective Date.--
       (1) In general.--Except as otherwise provided by this 
     section, the amendments made by this section shall take 
     effect on the date that is 18 months after the date of the 
     enactment of this Act, and shall apply to any application for 
     patent, and to any patent issuing thereon, that contains or 
     contained at any time--
       (A) a claim to a claimed invention that has an effective 
     filing date as defined in section 100(i) of title 35, United 
     States Code, that is 18 months or more after the date of the 
     enactment of this Act; or
       (B) a specific reference under section 120, 121, or 365(c) 
     of title 35, United States Code, to any patent or application 
     that contains or contained at any time such a claim.
       (2) Interfering patents.--The provisions of sections 
     102(g), 135, and 291 of title 35, United States Code, in 
     effect on the day prior to the date of the enactment of this 
     Act, shall apply to each claim of an application for patent, 
     and any patent issued thereon, for which the amendments made 
     by this section also apply, if such application or patent 
     contains or contained at any time--
       (A) a claim to an invention having an effective filing date 
     as defined in section 100(i) of title 35, United States Code, 
     earlier than 18 months after the date of the enactment of 
     this Act; or
       (B) a specific reference under section 120, 121, or 365(c) 
     of title 35, United States Code, to any patent or application 
     that contains or contained at any time such a claim.

     SEC. 3. INVENTOR'S OATH OR DECLARATION.

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

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

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

[[Page 2698]]

     imprisonment of not more than 5 years, or both.''.
       (2) Relationship to divisional applications.--Section 121 
     of title 35, United States Code, is amended by striking ``If 
     a divisional application'' and all that follows through 
     ``inventor.''.
       (3) Requirements for nonprovisional applications.--Section 
     111(a) of title 35, United States Code, is amended--
       (A) in paragraph (2)(C), by striking ``by the applicant'' 
     and inserting ``or declaration'';
       (B) in the heading for paragraph (3), by inserting ``or 
     declaration'' after ``and oath''; and
       (C) by inserting ``or declaration'' after ``and oath'' each 
     place it appears.
       (4) Conforming amendment.--The item relating to section 115 
     in the table of sections for chapter 11 of title 35, United 
     States Code, is amended to read as follows:

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

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

     ``Sec. 118. Filing by other than inventor

       ``A person to whom the inventor has assigned or is under an 
     obligation to assign the invention may make an application 
     for patent. A person who otherwise shows sufficient 
     proprietary interest in the matter may make an application 
     for patent on behalf of and as agent for the inventor on 
     proof of the pertinent facts and a showing that such action 
     is appropriate to preserve the rights of the parties. If the 
     Director grants a patent on an application filed under this 
     section by a person other than the inventor, the patent shall 
     be granted to the real party in interest and upon such notice 
     to the inventor as the Director considers to be 
     sufficient.''.
       (2) Conforming amendment.--Section 251 of title 35, United 
     States Code, is amended in the third undesignated paragraph 
     by inserting ``or the application for the original patent was 
     filed by the assignee of the entire interest'' after ``claims 
     of the original patent''.
       (c) Specification.--Section 112 of title 35, United States 
     Code, is amended--
       (1) in the first paragraph--
       (A) by striking ``The specification'' and inserting ``(a) 
     In General.--The specification''; and
       (B) by striking ``of carrying out his invention'' and 
     inserting ``or joint inventor of carrying out the 
     invention'';
       (2) in the second paragraph--
       (A) by striking ``The specification'' and inserting ``(b) 
     Conclusion.--The specification''; and
       (B) by striking ``applicant regards as his invention'' and 
     inserting ``inventor or a joint inventor regards as the 
     invention'';
       (3) in the third paragraph, by striking ``A claim'' and 
     inserting ``(c) Form.--A claim'';
       (4) in the fourth paragraph, by striking ``Subject to the 
     following paragraph,'' and inserting ``(d) Reference in 
     Dependent Forms.--Subject to subsection (e),'';
       (5) in the fifth paragraph, by striking ``A claim'' and 
     inserting ``(e) Reference in Multiple Dependent Form.--A 
     claim''; and
       (6) in the last paragraph, by striking ``An element'' and 
     inserting ``(f) Element in Claim for a Combination.--An 
     element''.
       (d) Conforming Amendments.--
       (1) Sections 111(b)(1)(A) is amended by striking ``the 
     first paragraph of section 112 of this title'' and inserting 
     ``section 112(a)''.
       (2) Section 111(b)(2) is amended by striking ``the second 
     through fifth paragraphs of section 112,'' and inserting 
     ``subsections (b) through (e) of section 112,''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect 1 year after the date of the enactment of 
     this Act and shall apply to patent applications that are 
     filed on or after that effective date.

     SEC. 4. DAMAGES.

       (a) Damages.--Section 284 of title 35, United States Code, 
     is amended--
       (1) by striking ``Upon finding'' and inserting the 
     following: ``(a) In General.--Upon finding'';
       (2) by striking ``fixed by the court'' and all that follows 
     through ``When the damages'' and inserting the following: 
     ``fixed by the court. When the damages'';
       (3) by striking ``shall assess them.'' and all that follows 
     through ``The court may receive'' and inserting the 
     following: ``shall assess them.  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''.

[[Page 2699]]

       (d) Advice of Counsel.--Chapter 29 of title 35, United 
     States Code, is amended by adding at the end the following:

     ``Sec. 298. Advice of Counsel

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

     SEC. 5. POST-GRANT REVIEW PROCEEDINGS.

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

                   ``CHAPTER 31--INTER PARTES REVIEW

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

     ``Sec. 311. Inter partes review

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

     ``Sec. 312. Petitions

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

     ``Sec. 313. Preliminary response to petition

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

     ``Sec. 314. Institution of inter partes review

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

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

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

[[Page 2700]]

     cancel a challenged claim or propose a reasonable number of 
     substitute claims, and ensuring that any information 
     submitted by the patent owner in support of any amendment 
     entered under subsection (d) is made available to the public 
     as part of the prosecution history of the patent;
       ``(11) providing either party with the right to an oral 
     hearing as part of the proceeding; and
       ``(12) requiring that the final determination in an inter 
     partes review be issued not later than 1 year after the date 
     on which the Director notices the institution of a review 
     under this chapter, except that the Director may, for good 
     cause shown, extend the 1-year period by not more than 6 
     months, and may adjust the time periods in this paragraph in 
     the case of joinder under section 315(c).
       ``(b) Considerations.--In prescribing regulations under 
     this section, the Director shall consider the effect of any 
     such regulation on the economy, the integrity of the patent 
     system, the efficient administration of the Office, and the 
     ability of the Office to timely complete proceedings 
     instituted under this chapter.
       ``(c) Patent Trial and Appeal Board.--The Patent Trial and 
     Appeal Board shall, in accordance with section 6, conduct 
     each proceeding authorized by the Director.
       ``(d) Amendment of the Patent.--
       ``(1) In general.--During an inter partes review instituted 
     under this chapter, the patent owner may file 1 motion to 
     amend the patent in 1 or more of the following ways:
       ``(A) Cancel any challenged patent claim.
       ``(B) For each challenged claim, propose a reasonable 
     number of substitute claims.
       ``(2) Additional motions.--Additional motions to amend may 
     be permitted upon the joint request of the petitioner and the 
     patent owner to materially advance the settlement of a 
     proceeding under section 317, or as permitted by regulations 
     prescribed by the Director.
       ``(3) Scope of claims.--An amendment under this subsection 
     may not enlarge the scope of the claims of the patent or 
     introduce new matter.
       ``(e) Evidentiary Standards.--In an inter partes review 
     instituted under this chapter, the petitioner shall have the 
     burden of proving a proposition of unpatentability by a 
     preponderance of the evidence.

     ``Sec. 317. Settlement

       ``(a) In General.--An inter partes review instituted under 
     this chapter shall be terminated with respect to any 
     petitioner upon the joint request of the petitioner and the 
     patent owner, unless the Office has decided the merits of the 
     proceeding before the request for termination is filed. If 
     the inter partes review is terminated with respect to a 
     petitioner under this section, no estoppel under section 
     315(e) shall apply to that petitioner. If no petitioner 
     remains in the inter partes review, the Office may terminate 
     the review or proceed to a final written decision under 
     section 318(a).
       ``(b) Agreements in Writing.--Any agreement or 
     understanding between the patent owner and a petitioner, 
     including any collateral agreements referred to in such 
     agreement or understanding, made in connection with, or in 
     contemplation of, the termination of an inter partes review 
     under this section shall be in writing and a true copy of 
     such agreement or understanding shall be filed in the Office 
     before the termination of the inter partes review as between 
     the parties. If any party filing such agreement or 
     understanding so requests, the copy shall be kept separate 
     from the file of the inter partes review, and shall be made 
     available only to Federal Government agencies upon written 
     request, or to any other person on a showing of good cause.

     ``Sec. 318. Decision of the board

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

     ``Sec. 319. Appeal

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

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

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

       (I) in subsection (a)--

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

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

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

                    ``CHAPTER 32--POST-GRANT REVIEW

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

     ``Sec. 321. Post-grant review

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

     ``Sec. 322. Petitions

       ``(a) Requirements of Petition.--A petition filed under 
     section 321 may be considered only if--
       ``(1) the petition is accompanied by payment of the fee 
     established by the Director under section 321;
       ``(2) the petition identifies all real parties in interest;
       ``(3) the petition identifies, in writing and with 
     particularity, each claim challenged, the grounds on which 
     the challenge to each claim is based, and the evidence that 
     supports the grounds for the challenge to each claim, 
     including--
       ``(A) copies of patents and printed publications that the 
     petitioner relies upon in support of the petition; and
       ``(B) affidavits or declarations of supporting evidence and 
     opinions, if the petitioner relies on other factual evidence 
     or on expert opinions;
       ``(4) the petition provides such other information as the 
     Director may require by regulation; and

[[Page 2701]]

       ``(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. 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

[[Page 2702]]

     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 
     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:

[[Page 2703]]



     ``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 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

[[Page 2704]]

       (ii) the Director shall assist the relevant advisory 
     committee in carrying out such public hearing, including by 
     offering the use of Office resources to notify and promote 
     the hearing to the public and interested stakeholders;
       (C) require the relevant advisory committee to make 
     available to the public a written report detailing the 
     comments, advice, and recommendations of the committee 
     regarding any proposed fee;
       (D) consider and analyze any comments, advice, or 
     recommendations received from the relevant advisory committee 
     before setting or adjusting any fee; and
       (E) notify, through the Chair and Ranking Member of the 
     Senate and House Judiciary Committees, the Congress of any 
     final rule setting or adjusting fees under paragraph (1).
       (5) Publication in the federal register.--
       (A) In general.--Any rules prescribed under this subsection 
     shall be published in the Federal Register.
       (B) Rationale.--Any proposal for a change in fees under 
     this section shall--
       (i) be published in the Federal Register; and
       (ii) include, in such publication, the specific rationale 
     and purpose for the proposal, including the possible 
     expectations or benefits resulting from the proposed change.
       (C) Public comment period.--Following the publication of 
     any proposed fee in the Federal Register pursuant to 
     subparagraph (A), the Director shall seek public comment for 
     a period of not less than 45 days.
       (6) Congressional comment period.--Following the 
     notification described in paragraph (3)(E), Congress shall 
     have not more than 45 days to consider and comment on any 
     final rule setting or adjusting fees under paragraph (1). No 
     fee set or adjusted under paragraph (1) shall be effective 
     prior to the end of such 45-day comment period.
       (7) Rule of construction.--No rules prescribed under this 
     subsection may diminish--
       (A) an applicant's rights under title 35, United States 
     Code, or the Trademark Act of 1946; or
       (B) any rights under a ratified treaty.
       (b) Fees for Patent Services.--Division B of Public Law 
     108-447 is amended in title VIII of the Departments of 
     Commerce, Justice, and State, the Judiciary, and Related 
     Agencies Appropriations Act, 2005--
       (1) in subsections (a), (b), and (c) of section 801, by--
       (A) striking ``During'' and all that follows through `` 
     2006, subsection'' and inserting ``Subsection''; and
       (B) striking ``shall be administered as though that 
     subsection reads'' and inserting ``is amended to read'';
       (2) in subsection (d) of section 801, by striking 
     ``During'' and all that follows through `` 2006, subsection'' 
     and inserting ``Subsection''; and
       (3) in subsection (e) of section 801, by--
       (A) striking ``During'' and all that follows through 
     ``2006, subsection'' and inserting ``Subsection''; and
       (B) striking ``shall be administered as though that 
     subsection''.
       (c) Adjustment of Trademark Fees.--Division B of Public Law 
     108-447 is amended in title VIII of the Departments of 
     Commerce, Justice and State, the Judiciary and Related 
     Agencies Appropriations Act, 2005, in section 802(a) by 
     striking ``During fiscal years 2005, 2006 and 2007'', and 
     inserting ``Until such time as the Director sets or adjusts 
     the fees otherwise,''.
       (d) Effective Date, Applicability, and Transition 
     Provisions.--Division B of Public Law 108-447 is amended in 
     title VIII of the Departments of Commerce, Justice and State, 
     the Judiciary and Related Agencies Appropriations Act, 2005, 
     in section 803(a) by striking ``and shall apply only with 
     respect to the remaining portion of fiscal year 2005, 2006 
     and 2007''.
       (e) Statutory Authority.--Section 41(d)(1)(A) of title 35, 
     United States Code, is amended by striking ``, and the 
     Director may not increase any such fee thereafter''.
       (f) Rule of Construction.--Nothing in this section shall be 
     construed to affect any other provision of Division B of 
     Public Law 108-447, including section 801(c) of title VIII of 
     the Departments of Commerce, Justice and State, the Judiciary 
     and Related Agencies Appropriations Act, 2005.
       (g) Definitions.--In this section, the following 
     definitions shall apply:
       (1) Director.--The term ``Director'' means the Director of 
     the United States Patent and Trademark Office.
       (2) Office.--The term ``Office'' means the United States 
     Patent and Trademark Office.
       (3) Trademark act of 1946.--The term ``Trademark Act of 
     1946'' means an Act entitled ``Act to provide for the 
     registration and protection of trademarks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946 
     (15 U.S.C. 1051 et seq.) (commonly referred to as the 
     Trademark Act of 1946 or the Lanham Act).
       (h) Electronic Filing Incentive.--
       (1) In general.--Notwithstanding any other provision of 
     this section, a fee of $400 shall be established for each 
     application for an original patent, except for a design, 
     plant, or provisional application, that is not filed by 
     electronic means as prescribed by the Director. The fee 
     established by this subsection shall be reduced 50 percent 
     for small entities that qualify for reduced fees under 
     section 41(h)(1) of title 35, United States Code. All fees 
     paid under this subsection shall be deposited in the Treasury 
     as an offsetting receipt that shall not be available for 
     obligation or expenditure.
       (2) Effective date.--This subsection shall become effective 
     60 days after the date of the enactment of this Act.
       (i) Effective Date.--Except as provided in subsection (h), 
     the provisions of this section shall take effect upon the 
     date of the enactment of this Act.

     SEC. 10. SUPPLEMENTAL EXAMINATION.

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

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

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

[[Page 2705]]



     [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.
       (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)''.]

[[Page 2706]]

       (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 
     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

[[Page 2707]]

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. 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

[[Page 2708]]

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 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

[[Page 2709]]

     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 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.

[[Page 2710]]

  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 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

[[Page 2711]]

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.
  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.

                          ____________________