[Senate Report 111-18]
[From the U.S. Government Publishing Office]
111th Congress Report
SENATE
1st Session 111-18
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THE PATENT REFORM ACT OF 2009
_______
May 12, 2009.--Ordered to be printed
_______
Mr. Leahy, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
ADDITIONAL, SUPPLEMENTAL, AND MINORITY VIEWS
[To accompany S. 515]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to which was referred the
bill (S. 515), to amend title 35, United States Code, to
provide for patent reform, having considered the same, reports
favorably thereon, with amendments, and recommends that the
bill, as amended, do pass.
CONTENTS
Page
I. Background and Purpose of the Patent Reform Act of 2009..........1
II. History of the Bill and Committee Consideration.................27
III. Section-by-Section Summary of the Bill..........................32
IV. Congressional Budget Office Cost Estimate.......................40
V. Regulatory Impact Evaluation....................................45
VI. Conclusion......................................................45
VII. Additional, Supplemental, and Minority Views....................46
VIII.Changes to Existing Law Made by the Bill, as Reported...........62
I. Background and Purpose of the Patent Reform Act of 2009
A. PURPOSE OF THE BILL
The Constitution explicitly grants Congress the power to
``promote the progress of science and useful arts, by securing
for limited times to . . . inventors the exclusive right to
their respective . . . discoveries.''\1\ Congress has responded
by authorizing patents to issue to inventors of new and useful
inventions or improvements on inventions.\2\ The patent law
thus accomplishes two objectives, consistent with the
authorization granted by the Constitution: first, it encourages
inventors by granting them limited, but exclusive rights to
their inventions; second, in exchange for the grant of those
exclusive rights, the patent law requires disclosure of the
invention and terminates the monopoly after a period of
years.\3\ This disclosure and limited time benefits both
society and future inventors by making the details of the
invention available to the public immediately, and the right to
make use of that invention after the expiration of 20 years
from the date the patent application was filed.
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\1\U.S. Const. Art. 1, 8.
\2\See 35 U.S.C. 101.
\3\See Perspectives on Patents: Post-Grant Review Procedures and
Other Litigation Reforms: Hearing before the Subcomm. on Intellectual
Prop. of the Senate Comm. on the Judiciary, 109th Cong. (2006)
(statement of Nathan P. Myhrvold, Chief Executive Officer, Intellectual
Ventures); Perspectives on Patents: Hearing before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Dean Kamen, President, DEKA Research and
Development Corp.).
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Congress has not enacted comprehensive patent law reform in
more than 50 years.\4\ The object of the patent law today must
remain true to the constitutional command, but its form needs
to change, both to correct flaws in the system that have become
unbearable, and to accommodate changes in the economy and the
litigation practices in the patent realm. The need to update
our patent laws has been meticulously documented in eight
hearings before the United States Senate Committee on the
Judiciary, in addition to reports written by the Federal Trade
Commission and the National Academy of Sciences,\5\ hearings
before the House of Representatives Judiciary Committee's
Subcommittee on the Internet, Intellectual Property, and the
Courts, and a plethora of academic commentary.\6\
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\4\The last major revision of the patent laws was the Patent Act of
1952, P.L. 82-593.
\5\The National Academy of Science (NAS), and the Federal Trade
Commission (FTC) conducted multi-year studies on the patent system and
its need for reform. See National Research Council of the National
Academies, ``A Patent System for the 21st Century'' (2004) (hereinafter
``NAS Report''); and ``Federal Trade Comm'n, to Promote Innovation: The
Proper Balance of Competition and Patent Law and Policy'' (2003)
(hereinafter ``FTC Report'').
\6\See, e.g., Mark A. Lemley and Carl Shapiro, Patent Holdup and
Royalty Stacking, 85 Tex. L. Rev. 1991 (2007); Donald S. Chisum,
Reforming Patent Law Reform, 4 J. Marshall Rev. Intell. Prop. L. 336
(2005); Gerald J. Mossinghoff, The First-to-Invent Rule in the U.S.
Patent System has Provided no Advantage to Small Entities, 87 JPTOS 514
(2005); Joseph Farrell & Robert P. Merges, Incentives to Challenge and
Defend Patents: Why Litigation Won't Reliably Fix Patent Office Errors
and Why Administrative Patent Review Might Help, 19 Berkeley Tech. L.J.
943, 958 (2004); see also Adam B. Jaffe & Josh Lerner, Innovation and
Its Discontents: How Our Broken Patent System is Endangering Innovation
and Progress, and What to Do About It (2004); Kevin G. Rivette & David
Kline, Rembrandts in the Attic, Unlocking the Hidden Value of Patents
(2000).
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While Congress has considered patent reform legislation
over the last three Congresses, the need to modernize our
patent laws has found expression in the courts, as well. The
Supreme Court has reversed the Federal Circuit in five of the
patent related cases that it has heard since the beginning of
the 109th Congress.\7\ The Court's decisions have moved in the
direction of improving patent quality and making the
determination of patent validity more efficient. The decisions
reflect a growing sense that questionable patents are too
easily obtained and are too difficult to challenge.\8\ Recent
decisions by the Federal Circuit reflect a similar trend in
response to these concerns.\9\ But the courts are constrained
in their decisions by the text of the statutes at issue. It is
time for Congress to act.
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\7\See Quanta Computer, Inc. v. LG Elecs. Inc., _U.S., _, 128 S.Ct.
2109 (2008) (reversing the Federal Circuit and holding that patent
exhaustion applies to method patents when the essential or inventive
feature of the invention is embodied in the product); Microsoft Corp.
v. AT&T Corp., 550 U.S. 437 (2007) (reversing the Federal Circuit and
limiting the extraterritorial reach of section 271(f), which imposes
liability on a party which supplies from the U.S. components of a
patented invention for combination outside the U.S.); KSR Int'l Co. v.
Teleflex Inc., 550 U.S. 398 (2007) (reversing the Federal Circuit and
strengthening the standard for determining when an invention is obvious
under section 103); MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118
(2007) (reversing the Federal Circuit and holding that the threat of a
private enforcement action is sufficient to confirm standing under the
Constitution); eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)
(reversing the Federal Circuit and holding that the generally
applicable four-factor test for injunctive relief applies to disputes
in patent cases).
\8\See generally Patent Reform in the 111th Congress: Legislation
and Recent Court Decisions, Senate Judiciary Committee, 111th Cong.
(2009) (statement of Professor Mark A. Lemley, Stanford Law School).
\9\See, e.g., In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir.
2007) (holding that willful infringement requires at least a
demonstration of objectively reckless behavior and removing any
affirmative obligation to obtain an opinion of counsel letter to combat
an allegation of willful infringement); In re Bilski, 545 F.3d 943
(Fed. Cir. 2008) (limiting significantly the availability of business
method patents by applying a machine-or-transformation test for
determining patent eligibility under section 101).
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The voices heard during the debate over changes to the
patent law have been diverse and their proposals have been far
from uniform. They have focused the Committee's attention on
the value of harmonizing our system for granting patents with
the best parts of other major patent systems throughout the
industrialized world for the benefit of U.S. patent holders;
improving patent quality and providing a more efficient system
for challenging patents that should not have been issued; and
reducing unwarranted litigation costs and inconsistent damage
awards.
The purpose of the Patent Reform Act of 2009, as reported
by the United States Senate Committee on the Judiciary, is to
ensure that the patent system in the 21st century reflects the
constitutional imperative. Congress must promote innovation by
granting inventors temporally limited monopolies on their
inventions in a manner that ultimately benefits the public
through the disclosure of the invention to the public. The
legislation is designed to establish a more efficient and
streamlined patent system that will improve patent quality and
limit unnecessary and counterproductive litigation costs.
If the United States is to maintain its competitive edge in
the global economy, it needs a system that will support and
reward all innovators with high quality patents. The Committee
has taken testimony from, and its members have held meetings
with interested parties that have different, and often
conflicting, perspectives on the patent system. The Committee
has taken all of those views into consideration, and amended
the Patent Reform Act of 2009 to balance the competing
interests. The version of the legislation ordered reported by
the Committee on a vote of 15-4 is a consensus approach that
will modernize the United States patent system in significant
respects.
B. BACKGROUND AND SUMMARY OF THE BILL
Right of the first inventor to file
The Patent Reform Act of 2009 creates a new ``first-
inventor-to-file'' system. Every industrialized nation other
than the United States uses a patent priority system commonly
referred to as ``first-to-file.'' In a first-to-file system,
when more than one application claiming the same invention is
filed, the priority of a right to a patent is based on the
earlier-filed application. The United States, by contrast,
currently uses a ``first-to-invent'' system, in which priority
is established through a proceeding to determine which
applicant actually invented the claimed invention first.
Differences between the two systems arise in large part from
the date that is most relevant to each respective system. In a
first-to-file system, the filing date of the application is
most relevant;\10\ the filing date of an application is an
objective date, simple to determine, for it is listed on the
face of the patent. In contrast, in a first-to-invent system,
the date the invention claimed in the application was actually
invented is the determinative date. Unlike the objective date
of filing, the date someone invents something is often
uncertain, and, when disputed, typically requires corroborating
evidence as part of an adjudication.
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\10\Wherever the term ``filing date'' is used herein, it is meant
to also include, where appropriate, the effective filing date, i.e.,
the earliest date the claim in an application claims priority.
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There are significant, practical differences between the
two systems. Among them, is the ease of determining the right
to a claimed invention in the instance in which two different
people file patent applications for the same invention. In a
first-to-file system, the application with the earlier filing
date prevails and will be awarded the patent, if one issues. In
the first-to-invent system, a lengthy, complex and costly
administrative proceeding (called an ``interference
proceeding'') must be conducted at the United States Patent and
Trademark Office (``USPTO'') to determine who actually invented
first.\11\ Interference proceedings can take years to complete
(even if there is no appeal to the United States Court of
Appeals for the Federal Circuit), cost hundreds of thousands of
dollars, and require extensive discovery.\12\ In addition,
since it is always possible an applicant could be involved in
an interference proceeding, companies must maintain extensive
recording and document retention systems in case they are later
required to prove the date they invented the claimed invention.
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\11\See 35 U.S.C. 135.
\12\See, e.g., Robert W. Pritchard, The Future is Now--The Case for
Patent Harmonization, 20 N.C. J. Int'l L. & Com. Reg. 291, 313 (1995).
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Another important difference is that in some first-to-file
systems, prior art can include the inventor's own disclosure of
his invention prior to the filing date of his application. Such
systems do not provide the inventor any grace period during
which time he is allowed to publish his invention without fear
of it later being used against him as prior art. The Committee
heard from universities and small inventors, in particular,
about the importance of maintaining that grace period in our
system.\13\ They argued that the grace period affords the
necessary time to prepare and file applications, and in some
instances, to obtain the necessary funding that enables the
inventor to prepare adequately the application. In addition,
the grace period benefits the public by encouraging early
disclosure of new inventions, regardless of whether an
application may later be filed for a patent on it.
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\13\See, e.g., Perspectives on Patents: Harmonization and Other
Matters: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Charles
E. Phelps, Provost, University of Rochester, on behalf of the
Association of American Universities); Patent Law Reform: Injunctions
and Damages: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Carl
Gulbrandsen, Managing Director, Wisconsin Alumni Research Foundation
(WARF)); Perspective on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of William Parker, Diffraction, Ltd.).
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Numerous organizations, institutions, and companies have
advocated the U.S. adopt a first to file system similar to
those used in the rest of the world.\14\ The National Academy
of Sciences made a similar recommendation after an extensive
study of the patent system.\15\ When the United States patent
system was first adopted, inventors did not typically file in
other countries. It is now common for inventors and companies
to file for protection in several countries at the same
time.\16\ Thus United States applicants, who also want to file
abroad, are forced to follow and comply with two different
filing systems. Maintaining a filing system so different from
the rest of the world disadvantages United States applicants
who, in most instances, also file in other countries.\17\ A
change is long overdue.\18\
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\14\See, e.g., Perspectives on Patents: Harmonization and Other
Matters: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Gerald
J. Mossinghoff, Former Assistant Secretary of Commerce and Commissioner
of Patents and Trademarks); Perspectives on Patents: Harmonization and
Other Matters: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Q. Todd
Dickinson, Former Under Secretary of Commerce for Intellectual Property
and Director of the United States Patent and Trademark Office); Patent
Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Jeffrey P. Kushan, Partner, Sidley Austin Brown &
Wood, LLP); Patent Law Reform: Injunctions and Damages: Hearing Before
the Subcomm. on Intellectual Prop. of the Senate Comm. on the
Judiciary, 109th Cong. (2005) (statement of Mark A. Lemley, Professor,
Stanford Law School); Perspectives on Patents: Hearing Before the
Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary,
109th Cong. (2005) (statement of Robert A. Armitage, Senior Vice
President and General Patent Counsel, Eli Lilly and Company);
Perspectives on Patents: Hearing Before the Subcomm. on Intellectual
Prop. of the Senate Comm. on the Judiciary, 109th Cong. (2005)
(statement of Michael K. Kirk, Executive Director, American
Intellectual Property Law Association).
\15\See NAS Report at 124; see also Perspectives on Patents:
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm.
on the Judiciary, 109th Cong. (2005) (statement of Richard C. Levin,
Yale University).
\16\See Perspectives on Patents: Harmonization and Other Matters:
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm.
on the Judiciary, 109th Cong. (2005) (statement of Gerald J.
Mossinghoff, Former Assistant Secretary of Commerce and Commissioner of
Patents and Trademarks).
\17\See Perspectives on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Richard C. Levin, President, Yale University, and
Mark B. Meyers, Visiting Executive Professor, Management Department at
the Wharton Business School), estimating that it costs as much as
$750,000 to $1 million to obtain worldwide patent protection on an
important invention, and the lack of harmonization regarding filing
systems adds unnecessary cost and delay.
\18\The NAS recommended changing the U.S. to a first-to-file
system, while maintaining a grace period. See NAS Report at 124-27. See
also Patent Reform in the 111th Congress: Legislation and Recent Court
Decisions: Hearing Before the Senate Comm. on the Judiciary, 111th
Cong. (2009) (statement of Steven Appleton, Chairman and Chief
Executive Officer, Micron Technologies, Inc.); Patent Reform in the
111th Congress: Legislation and Recent Court Decisions: Hearing Before
the Senate Comm. on the Judiciary, 111th Cong. (2009) (statement of
Philip S. Johnson, Chief Patent Counsel, Johnson & Johnson); Patent
Reform in the 111th Congress: Legislation and Recent Court Decisions:
Hearing Before the Senate Comm. on the Judiciary, 111th Cong. (2009)
(statement of Herbert C. Wamsley, Executive Director, Intellectual
Property Owners Association); Patent Reform in the 111th Congress:
Legislation and Recent Court Decisions: Hearing Before the Senate Comm.
on the Judiciary, 111th Cong. (2009) (statement of Mark A. Lemley,
Professor, Stanford Law School).
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Drawing on the best aspects of the two existing systems,
the Patent Reform Act of 2009, creates a new ``first-inventor-
to-file'' system. This new system provides patent applicants in
the United States the efficiency benefits of the first-to-file
systems used in the rest of the world by moving the U.S. system
much closer to a first-to-file system and making the filing
date that which is most relevant in determining whether an
application is patentable. The new system continues, however,
to provide inventors the benefit of the one-year grace period.
As part of the transition to a simpler, more efficient first-
inventor-to-file system, this section eliminates costly,
complex interference proceedings, because priority will be
based on the first application. A new administrative
proceeding--called a ``derivation'' proceeding--is created to
ensure that the first person to file the application is
actually a true inventor. This will ensure that a person will
not be able to obtain a patent for the invention that he did
not actually invent. If a dispute arises as to which of two
applicants is a true inventor (as opposed to who invented it
first), it will be resolved through an administrative
proceeding by the Patent Board. The Act also simplifies how
prior art is determined, provides more certainty, and reduces
the cost associated with filing and litigating patents.
The Act maintains a one-year grace period for U.S.
applicants. Applicants' own publication or disclosure that
occurs within one year prior to filing will not act as prior
art against their applications. Similarly, disclosure by others
during that time based on information obtained (directly or
indirectly) from the inventor will not constitute prior art.
This one-year grace period should continue to give U.S.
applicants the time they need to prepare and file their
applications.
This section also, and necessarily, modifies the prior art
sections of the patent law. Prior art will be measured from the
filing date of the application and will typically include all
art that publicly exists prior to the filing date, other than
disclosures by the inventor within one year of filing. Prior
art also will no longer have any geographic limitations. Thus,
in section 102 the ``in this country'' limitation as applied to
``public use'' and ``on sale'' is removed, and the phrase
``available to the public'' is added to clarify the broad scope
of relevant prior art, as well as to emphasize the fact that it
must be publicly available. Prior art based on earlier-filed
United States applications is maintained.\19\ Sections (and
subsections) of the existing statute are renumbered, modified,
or deleted consistent with converting to a first-inventor-to-
file system.\20\ Finally, the intent behind the CREATE Act to
promote joint research activities is preserved by including a
prior art exception for subject matter invented by parties to a
joint research agreement.\21\
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\19\Compare current Sec. 102(e) with new Sec. 102(a)(2).
\20\The Committee does not intend a substantive change by replacing
the word ``negatived'' in section 103 of title 35 with ``negated.''
\21\The CREATE Act refers to the Cooperative Research and
Technology Enhancement Act of 2004 (P.L. 108-453), passed by the 108th
Congress. The relevant section is moved from section 103 to 102 of
title 35 and shall be administered in a manner consistent with the
CREATE Act.
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Inventor's oath or declaration
The U.S. patent system, when first adopted in 1790,
contemplated that individual inventors would file their own
patent applications, or would have a patent practitioner do so
on their own behalf. It has become increasingly common for
patent applications to be assigned to corporate entities, most
commonly the employer of the inventor.\22\ In fact, many
employment contracts require employees to assign their
inventions to their employer.\23\
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\22\See John R. Allison & Mark A. Lemley, The Growing Complexity of
the United States Patent System, 82 B.U.L. Rev. 77, 97 (2002) (study
showing that approximately 85% of the patents issued between 1996-98
were assigned by inventors to corporations; an increase from 79% during
the period between 1976-78).
\23\See Jerry C. Liu, Overview of Patent Ownership Considerations
in Joint Technology Development, 2005 Syracuse Sci. & Tech. L. Rep. 1
(2005).
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Current law still reflects the antiquated notion that it is
the inventor who files the application, not the company-
assignee. For example, every inventor must sign an oath as part
of the patent application stating that the inventor believes he
or she is the true inventor of the invention claimed in the
application.\24\ By the time an application is eventually
filed, however, the applicant filing as an assignee may have
difficulty locating and obtaining every inventor's signature
for the statutorily required oath. Although the USPTO has
adopted certain regulations to allow filing of an application
when the inventor's signature is unobtainable,\25\ many have
advocated that the statute be modernized to facilitate the
filing of applications by assignees.\26\
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\24\35 U.S.C. Sec. 115.
\25\See 37 C.F.R. Sec. 1.47, which permits an applicant to petition
the Director of the USPTO to have the application accepted without
every inventor's signature in limited circumstances, e.g., where the
inventor cannot be found or refuses to participate in the application.
\26\See Perspectives on Patents: Harmonization and Other Matters:
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm.
on the Judiciary, 109th Cong. (2005) (statement of David Beier, Senior
Vice President of Global Government Affairs, Amgen).
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The Act updates the patent system by facilitating the
process by which an assignee may file and prosecute patent
applications. It provides similar flexibility for a person to
whom the inventor is obligated to assign, but has not assigned,
rights to the invention (the ``obligated assignee'').
Section 115 of title 35 is amended to allow a substitute
statement to be submitted in lieu of an inventor's oath where
either the inventor (i) is unable to do so, or (ii) is both
unwilling to do so and under an obligation to assign the
invention. If an error is discovered, the statement may be
later corrected. A savings clause is included to prevent an
invalidity or unenforceability challenge to the patent based on
failure to comply with these requirements, provided any error
has been remedied. Willful false statements may be punishable,
however, under Federal criminal laws.\27\
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\27\See 18 U.S.C. Sec. 1001.
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Section 118 of title 35 is also amended to make it easier
for an assignee to file a patent application. The amendment now
allows obligated assignees--entities to which the inventor is
obligated to assign the application--to file applications, as
well. It also allows a person who has a sufficient proprietary
interest in the invention to file an application to preserve
the person's rights and those of the inventor.
Right of the inventor to obtain damages
Compensatory damages
Patent holders are granted the right to exclude others from
making, using, selling and importing their patented
inventions.\28\ When another party, without the inventor's
permission, commits one of these acts, or actively induces such
act, that party infringes the patent.\29\ The remedies for
infringement include an injunction\30\ and damages. The measure
for damages for infringement can be either (i) profits lost by
the patent holder because of the infringement (``lost
profits''), or (ii) ``not less than a reasonable royalty.''\31\
An increasing number of cases require the calculation of an
appropriate reasonable royalty.\32\ Damages are intended to
compensate the patent holder for the infringement of patent
rights. Absent willful infringement, damages are not meant to
be punitive or excessive in nature, but are meant to compensate
adequately the inventor.\33\
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\28\35 U.S.C. Sec. 271(a) provides: ``Except as otherwise provided
in this title, whoever without authority makes, uses, offers to sell,
or sells any patented invention, within the United States, or imports
into the United States any patented invention during the term of the
patent therefore, infringes the patent.''
\29\See 35 U.S.C. Sec. 271.
\30\The Supreme Court recently addressed the proper standard to be
applied in determining whether an injunction should issue when patent
infringement is found. eBay, Inc. v. MercExchange, L.L.C., 126 S. Ct.
1837 (2006).
\31\See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed.
Cir. 1995) (en banc).
\32\Although damage awards based on a reasonable royalty are
requested more often, the total number of such awards is still fairly
low in number. A recent study found that there were only 58 reported
cases over a 20 year period (1984-2005) where the decision clearly
reflected an award based on a reasonable royalty. See Mark A. Lemley
and Carl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev.
1991, 2031 (2007).
\33\See Donald S. Chisum, Chisum on Patents Sec. 20.01, at 20-7
(2002); Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 507 (1963);
Riles v. Shell Exploration and Prod. Co., 298 F.3d 1302, 1312-13 (Fed.
Cir. 2002).
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The Supreme Court reminded us just last year that ```the
primary purpose of our patent laws is not the creation of
private fortunes for the owners of patents but is to promote
the progress of science and useful arts.'''\34\ The Committee
has heard concerns that damage awards, particularly those
stemming from cases in which the plaintiffs do not practice
their inventions, are too often excessive and untethered from
the harm that compensatory damages are intended to measure.\35\
The threat of excessive awards has a direct effect on licensing
demands. This concern was also highlighted recently by the
Supreme Court, with Justice Kennedy specifically admonishing:
``In cases now arising trial courts should bear in mind that in
many instances the nature of the patent being enforced and the
economic function of the patent holder present considerations
quite unlike earlier cases. An industry has developed in which
firms use patents not as a basis for producing and selling
goods but, instead, primarily for obtaining license fees.''\36\
The Committee recognizes, at the same time, there are important
societal and economic benefits that flow from the ingenuity of
small inventors, whether at universities, operating
independently, or within existing markets. In many instances,
the only avenue to bring their inventions to market and to the
public is through licensing agreements and leveraging
resources, often with pre-existing structures of larger
corporations.\37\
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\34\Quanta, _ U.S. at _; 128 S.Ct. at 2116, quoting Motion Picture
Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511 (1917).
\35\See Patent Reform in the 111th Congress: Legislation and Recent
Court Decisions: Hearing Before the Senate Comm. on the Judiciary,
111th Cong. (2009) (statement of Steven Appleton, Chairman and Chief
Executive Officer, Micron Technologies, Inc.); Patent Reform in the
111th Congress: Legislation and Recent Court Decisions: Hearing Before
the Senate Comm. on the Judiciary, 111th Cong. (2009) (statement of
David J. Kappos, Vice President and Assistant General Counsel, IBM
Corporation); Patent Reform in the 111th Congress: Legislation and
Recent Court Decisions: Hearing Before the Senate Comm. on the
Judiciary, 111th Cong. (2009) (statement of Mark A. Lemley, Professor,
Stanford Law School).
\36\ eBay, 547 U.S. at 396 (Kennedy J., concurring).
\37\Indeed, encouraging the commercialization of inventions
discovered at universities is the objective of the Patent and Trademark
Amendments Act of 1980 (commonly referred to as the Bayh-Dole Act),
P.L. 96-517.
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The current damage statute is vague and provides little
guidance to judges or juries determining the proper damage
award, particularly when the award is based on the reasonable
royalty standard.\38\ Juries are presented with all or several
of the 15 ``Georgia-Pacific'' factors\39\ and provided with
little or inadequate guidance to divine an appropriate
award.\40\
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\38\35 U.S.C. Sec. 284 provides in full:
Upon finding for the claimant the court shall award the claimant
damages adequate to compensate for the infringement but in no event
less than a reasonable royalty for the use made of the invention by the
infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury, the court shall assess
them. In either event the court may increase the damages up to three
times the amount found or assessed. Increased damages under this
paragraph shall not apply to provisional rights under section 154(d) of
this title.
The court may receive expert testimony as an aid to the
determination of damages or of what royalty would be reasonable under
the circumstances.
\39\See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp.
1116 (S.D.N.Y. 1970).
\40\A recent study has shown that, since 1980, there has been a
steady shift from bench trials to jury trials in patent cases, and that
juries typically award more than five times the damages awarded in
bench trials. See Pricewaterhousecoopers, 2007 Patent and Trademark
Damages Study (2007) at 14.
---------------------------------------------------------------------------
Given that the issue of damages is typically just one of
many issues in complex patent trials, and given that the jury
may have to examine as many as 15 different factors to
determine a reasonable royalty, commentators have correctly
questioned whether juries are being properly advised on the
evidence and factors to consider when determining damages.\41\
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\41\Given the significant reliance by litigants and courts on the
15 Georgia-Pacific factors, several points are worth noting. First, it
is difficult for the Committee (let alone a lay juror) to recite all 15
of the factors without reading them in print. Second, although there
are 15 factors, they tend to fall into only three categories: (i) the
royalty rates people have been willing to pay for this or other similar
inventions in the industry; (ii) the significance of the patented
invention to the product and to market demand; and (iii) expert
testimony as to the value of the patent. See Patent Holdup, 85 Tex. L.
Rev. at 2018-19. Third, the district court in Georgia-Pacific explained
that the 15 factors were meant to be non-exclusive, and were set out
because they were relevant to the facts of that case. Fourth, the
damage award in Georgia-Pacific was decided by a judge as part of a
bench trial in a lengthy opinion, not by a jury. And finally, despite
the valiant (and what appeared to be thorough) analysis by the district
court judge, his royalty determination using these factors was reduced
on appeal by approximately 30% (i.e., from $50 to $36.65 per thousand
square feet of wood). See Georgia-Pacific Corp. v. U.S. Plywood Corp,
446 F.2d at 298-300.
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The Committee adopted an amendment that takes a modest
approach to reforming the calculation of damages. The
legislation maintains the current provision that damage awards
should be adequate to compensate for the infringement but in no
case less than a reasonable royalty. The amendment
intentionally does not address whether the current
interpretation by courts of the damages statute for
compensating patent owners in reasonable royalty calculations
has been proper. As such, the Committee has not altered
existing substantive law on patent damages and the Committee
expects that the courts will develop the law of remedies in
patent cases consistent with the text of the statute.
The amendment responds to concerns the Committee has heard
regarding inconsistency in the quality and sufficiency of the
direction given by judges to juries to guide them in awarding
reasonable royalty damages in patent litigation. At the same
time, the amendment preserves the flexibility necessary for
courts to account for the vast differences in patent disputes
that arise from varying business models and distinctions
between industries impacted.
The amendment inserts a more robust, procedural, gate
keeping role for the court pursuant to which district court
judges will assess, based on the facts and evidence proffered
by the parties, the legal basis for the specific damages
theories and jury instructions sought by the parties. The gate
keeping provisions are intended to ensure consistency,
uniformity, and fairness in the way that courts administer
patent damages law, without encroaching on the parties' Seventh
Amendment rights to have patent damages determined by the jury,
and without substantively altering the law of patent damages.
Patent trials should not be unnecessarily burdened and
complicated by theories and methodologies that are based on
legally insufficient evidentiary support. The amendments made
by this section should ensure that both parties' damages
theories, and the bases thereof, are disclosed sufficiently in
advance of trial, unless otherwise ordered by the court, to
allow them to be challenged by pre-trial motion as lacking a
legally sufficient evidentiary basis.
This section will ensure both that the challenged bases
presented to the finder of fact are legally cognizable, and
that they are supported by sufficient evidence that a
reasonable jury could find for the party on that issue. In
fulfilling its gatekeeper responsibilities, the court shall
prevent consideration of an improper or unsupportable theory,
methodology or opinion submissions which would be unduly
burdensome to the judicial process and cause confusion among
juries.
Specifically, the amendment first makes clear that the
court may receive expert testimony as an aid to determining
damages. Second, the amendment requires the court to identify
the methodologies and factors that are relevant to the
determination of damages. Third, the amendment requires the
parties to state, in writing and with particularity, the
methodologies and factors the parties propose for jury
instructions in determining damages and the relevant underlying
legal and factual contentions. Fourth, prior to the
introduction of evidence concerning damages, the court is
required to consider whether one or more of a party's damages
contentions lacks a legally sufficient evidentiary basis and
identify on the record those methodologies and factors for
which there is a legally sufficient evidentiary basis. Fifth,
the court shall identify for the record those factors and
methodologies that are deemed relevant and possessing legally
sufficient evidentiary basis for a damages calculation. The
court or jury shall only consider those methodologies and
factors so identified as legally sufficient, and the court
shall only permit the introduction of evidence relating to the
determination of damages that is relevant to those factors.
Although this section will reinforce the district court's
gate keeping role with respect to admissibility of evidence and
jury instructions as they relate to the determination of patent
damages, it is not the Committee's intent to elevate the
court's role from gatekeeper to fact finder. Further, this
section does not require a preliminary hearing or ``mini-
trial'' on damages outside of the presence of the jury. Rather,
the Committee intends this provision to provide better guidance
to the court and jury so that damage awards are based on
sufficient evidence and appropriate factors and will preserve a
more detailed record for appeal.
Willfulness
The Act also addresses the issue of willfulness, adopting
the standard of In re Seagate, which requires that a party may
not be found to willfully infringe unless that party has acted
with respect to the infringement of a patent in a manner that
was objectively reckless. These provisions of S. 515 identify
certain conduct that can be deemed objectively reckless, as
well as certain mitigating conduct that will preclude a finding
of willfulness.
Current law allows for up to the trebling of damages when
it is determined the infringement was ``willful.''\42\ The
statute, however, provides no guidance regarding what
activities constitute willful infringement.\43\ The Committee
has heard that this lack of clarity has resulted in excessive
pleading,\44\ and inappropriate findings of willfulness which,
in turn, have inflated litigation and transaction costs as well
as damage awards.
---------------------------------------------------------------------------
\42\See In re Seagate Tech., LLC, 497 F.3d 1360, 1368 (Fed. Cir.
2007); Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383
F.3d 1337, 1342 (Fed. Cir. 2004) (en banc).
\43\In re Seagate, 497 F.3d at 1368 (``[T]he current statute,
similar to its predecessors, is devoid of any standard for awarding
[enhanced damages].'').
\44\See Kimberly A. Moore, Empirical Statistics on Willful Patent
Infringement, 14 Fed. Cir. B.J. 227, 232 (2004) (reporting that willful
infringement is plead in over 90% of all patent cases).
---------------------------------------------------------------------------
Lacking statutory guidance, courts have established the
principle that an infringement will not be found willful unless
the infringer was put on notice that it was infringing.
Unfortunately, courts have set that notice threshold quite low.
The patent holder may simply send a conclusory letter
suggesting the alleged infringer may be infringing one or more
of its patents, without providing any specifics alleging which
activities allegedly infringe which patents.\45\ Companies can
receive several such letters a week, potentially making them
liable for treble damages based on willfulness if they are
later found to have infringed a patent that was mentioned in
the conclusory letter.\46\
---------------------------------------------------------------------------
\45\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 251-
252 (2007) (statement of Mary E. Doyle, Senior Vice President and
General Counsel, Palm, Inc.); Patent Reform: The Future of American
Innovation: Hearing on S. 1145 Before the Senate Comm. on the
Judiciary, 110th Cong. 293 (2007) (statement of John A. Squires, Esq.,
Chief Intellectual Property Counsel, Goldman, Sachs & Co); Perspectives
on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Joel
Poppen, Deputy General Counsel, Micron Technologies, Inc.).
\46\See Perspectives on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Joel Poppen, Deputy General Counsel, Micron
Technologies, Inc.).
---------------------------------------------------------------------------
Courts have held that companies can also put themselves on
sufficient notice by becoming aware of the patent by a means
other than notice from the patentee.\47\ As a result, some
companies instruct their employees not to conduct patent
searches out of fear their actions may later be used against
them in a patentee's attempt to prove willful infringement.\48\
---------------------------------------------------------------------------
\47\See Perspectives on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of David Simon, Chief Patent Counsel, Intel
Corporation).
\48\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262
(2007) (statement of Mary E. Doyle, Senior Vice President and General
Counsel, Palm, Inc.); Patent Reform: The Future of American Innovation:
Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th
Cong. 294 (2007) (statement of John A. Squires, Esq., Chief
Intellectual Property Counsel, Goldman, Sachs & Co); Perspectives on
Patents: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of David
Simon, Chief Patent Counsel, Intel Corporation). If the doctrine of
willful infringement as currently applied discourages companies from
searching relevant patents, this is clearly an unintended, and harmful,
consequence of this doctrine. The patent system should encourage the
discovery and sharing of information, not discourage it as the current
system may be doing.
---------------------------------------------------------------------------
Notice may be easy to provide in the willfulness context,
but defense against such an allegation is difficult. The
question whether a patent is valid or infringed can often be a
close question with colorable arguments on both sides. This is
especially true given the Federal Circuit precedent that claim
construction is a question of law, which it reviews de
novo.\49\ Despite this uncertainty, a good faith belief by a
party that a patent is invalid or that it is not infringing,
based on advice of counsel, may still not be sufficient to
defend against a charge of willful infringement.\50\ In
addition, simply pleading willfulness\51\ can gain the patent
holder significant litigation advantages, including breaching
the attorney-client privilege, necessitating different trial
counsel, and resulting in costly additional discovery.\52\
Excessive royalty awards, combined with the possibility that
they will be trebled due to willfulness, can lead to
unreasonable posturing during licensing and settlement
negotiations that is not reflective of the compensation owed
the patentee due to the alleged infringement.\53\
---------------------------------------------------------------------------
\49\Various commentators have discussed the unpredictability and
high reversal rate of the Federal Circuit when it comes to deciding
patent issues, and in particular those involving claim construction.
See, e.g., Paul M. Schoenhard, Reversing the Reversal Rate: Using Real
Property Principles to Guide Federal Circuit Patent Jurisprudence, 17
Fordham Intel. Prop. Media & Ent. L.J. 299, 301-304 (2007); Paul M.
Janicke, On the Causes of Unpredictability of Federal Circuit Decisions
in Patent Cases, 3 Nw. J. of Tech. & Intell. Prop. 93 at 93-94 (2004);
R. Polk Wagner & Lee Petherbridge, Is the Federal Circuit Succeeding?
An Empirical Assessment of Judicial Performance, 152 U. Pa. L. Rev.
1105 (2004). Without endorsing these studies, at a minimum they
illustrate that there can be genuine and colorable disagreements
regarding the scope and validity of a patent not just between the
parties, but between judges as well.
\50\See Comark Communications, Inc. v. Harris Corp., 156 F.3d 1182,
1191 (Fed. Cir. 1998).
\51\A recent empirical study showed that willfulness was alleged in
over 92% of patent cases. See Empirical Statistics on Willful Patent
Infringement, 15 Fed. Cir. B. J. 227 (2004); see also Perspectives on
Patents: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Michael
K. Kirk, Executive Director, American Intellectual Property Law
Association).
\52\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262
(2007) (statement of Mary E. Doyle, Senior Vice President and General
Counsel, Palm, Inc.); Patent Law Reform: Injunctions and Damages:
Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm.
on the Judiciary, 109th Cong. (2005) (statement of Chuck Fish, Vice
President and Chief Patent Counsel, Time Warner, Inc.); Patent Law
Reform: Injunctions and Damages: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Jonathan Band, Counsel, on behalf of Visa and the
Financial Services Roundtable).
\53\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262-
263 (2007) (statement of Mary E. Doyle, Senior Vice President and
General Counsel, Palm, Inc.); Patent Law Reform: Injunctions and
Damages: Hearing Before the Subcomm. on Intellectual Prop. of the
Senate Comm. on the Judiciary, 109th Cong. (2005) (statement of Chuck
Fish, Vice President and Chief Patent Counsel, Time Warner, Inc.);
Perspectives on Patents: Hearing Before the Subcomm. on Intellectual
Prop. of the Senate Comm. on the Judiciary, 109th Cong. (2005)
(statement of Joel Poppen, Deputy General Counsel, Micron Technologies,
Inc.).
---------------------------------------------------------------------------
The Federal Circuit recently addressed the problem created
by the lack of statutory guidance as to when enhanced damages
are authorized, which has manifested itself in the case law. In
In re Seagate, the Federal Circuit abandoned its case law that
had imposed an affirmative duty of due care, emphasizing also
that there is no affirmative obligation to obtain opinion of
counsel.\54\ The court also instituted an objectively reckless
standard for finding willful infringement.\55\ The Committee
views this decision as a positive development, but one that
still leaves companies with no clear statutory guidance, and
which may, therefore, continue the unacceptable practice of
companies instructing employees not to conduct patent searches
for fear of subjecting such companies to treble damages.\56\
---------------------------------------------------------------------------
\54\In re Seagate, 497 F.3d at 1371.
\55\Id.
\56\The concurrence by Judge Gajarsa, joined by Judge Newman, makes
clear the need for a statutory standard. Id. at 1377 (Gajarsa J.,
concurring) (``Because the language of the statute unambiguously omits
any [willfulness] requirement, and because there is no principled
reason for continuing to engraft a willfulness requirement onto section
284, I believe we should adhere to the plain meaning of the statute and
leave the discretion to enhance damages in the capable hands of the
district courts.'') (internal citations omitted).
---------------------------------------------------------------------------
The Act improves the doctrine of willful infringement in
both procedural and substantive respects. These changes should
greatly reduce unwarranted allegations of willfulness, as well
as unnecessary costly discovery.
Unlike past practice where willfulness could be pleaded at
the outset, willfulness will now be decided only after finding
that the patent was valid and infringed. The Committee
recognizes the importance of preserving the attorney-client
privilege and its importance to the pursuit of justice by
enabling open communication between an attorney and client. The
consequence of not permitting pleading of willfulness until a
liability finding is that the infringer will not be forced to
disclose or identify on a privilege log its opinions of counsel
relating to the patent at issue unless the infringer waives
privilege for some other reason.
Pursuant to new paragraph (c)(2) of section 284,
willfulness must also be proven by clear and convincing
evidence. Moreover, conclusory allegations no longer suffice
for notice of infringement. Under subparagraph (c)(2)(A), the
patent holder must allege acts of infringement sufficient to
give the alleged infringer an objectively reasonable
apprehension of suit, and the patent holder must also plead
with particularity which products or processes allegedly
infringe which claims of the patent, as well as the basis for
such a belief. Subparagraph (c)(2)(B) permits a finding of
willfulness if the infringer intentionally copied the patented
invention with knowledge it was patented. Subparagraph
(c)(2)(C) permits such a finding if the infringer continued to
engage in infringing conduct after a court found the party to
be infringing the patent.
Paragraph (c)(3) provides a meaningful good faith defense
to willfulness. An infringer can establish a good faith defense
through reasonable reliance on the advice of counsel; evidence
that the infringer sought to modify its conduct to avoid
infringement once it had discovered the patent; or other
evidence a court may find sufficient. The decision of the
infringer not to present evidence of advice of counsel is not
relevant to a determination of willful infringement.
The good faith defenses to willful infringement were
amended in Committee to make clear that no inference should be
drawn that they create an affirmative duty or reverse in any
way the Federal Circuit's decision to abandon the affirmative
duty of due care and emphasis that there is no affirmative
obligation to obtain opinion of counsel.\57\
---------------------------------------------------------------------------
\57\Id. at 1371.
---------------------------------------------------------------------------
Prior user rights
Under current law, ``prior user rights'' may offer a
defense to patent infringement in certain limited
circumstances, including when the patent in question is a
``business method patent''\58\ and its inventor uses the
invention, but never files a patent application for it.\59\ If
the same invention is later patented by another party, the
prior user may not be liable for infringement to the new patent
holder, although all others may be.
---------------------------------------------------------------------------
\58\35 U.S.C. Sec. 273(a)(3) states: ``The term `method' means a
method of doing or conducting business.''
\59\See 35 U.S.C. Sec. 273.
---------------------------------------------------------------------------
The bill amends paragraph (b)(6) of section 273 to clarify
that ``affiliates'' of the user may also assert the defense to
include those who caused or controlled the acts that were
performed that give rise to the defense. Additionally, the Act
instructs the Director of the USPTO to conduct, and provide to
Congress, a study with recommendations on prior user rights
(both in the United States and abroad) within two years of
enactment of the Act, in order to determine whether further
congressional attention is warranted.
Virtual marking
In general, for patented ``articles,'' a patent holder must
give an alleged infringer notice of the claimed infringement,
and the infringer must continue to infringe, before the patent
holder may succeed in a suit for damages.\60\ Actual notice
requires the affirmative communication of infringement to the
defendant, which may include the filing of a lawsuit.
Constructive notice is possible by ``marking'' any patented
article that the patent holder (or its licensee) makes, uses,
sells or imports.\61\ Failure to appropriately mark an article
can preclude the recovery of damages until notice is effective.
---------------------------------------------------------------------------
\60\See 35 U.S.C. Sec. 287.
\61\See id.
---------------------------------------------------------------------------
The Committee adopted an amendment that will permit patent
holders to ``virtually mark'' a product by providing the
address of a publicly available website that associates the
patented article with the number of the patent. The burden will
remain on the patent holder to demonstrate that the marking was
effective. This amendment will save costs for producers of
products that include technology on which a patent issues after
the product is on the market, and will facilitate effective
marking on smaller products.
Post-grant procedures and other quality enhancements
The Act amends ex parte and inter partes reexamination and
establishes a new post-grant review procedure. Under current
law, there are two ways to challenge the validity and
enforceability of a patent that has issued. The patent may be
challenged in district court litigation or in a reexamination
at the USPTO.
Nearly 30 years ago, Congress created the administrative
``reexamination'' process, through which the USPTO could review
the validity of already-issued patents on the request of either
the patent holder or a third party,\62\ in the expectation that
it would serve as an effective and efficient alternative to
often costly and protracted district court litigation.\63\
Reexamination requires the USPTO to review the patent in light
of a substantial new question of patentability not presented
during the original examination.\64\ The initial reexamination
statute had several limitations that later proved to make it a
less viable alternative to litigation for evaluating patent
validity than Congress intended. First, a reexamination request
could only be based on prior art, and could not be based on
prior public use or prior sales. Moreover, the requestor could
not raise any challenge based on Sec. 101 (utility,
eligibility), Sec. 112 (indefiniteness, enablement, written
description, best mode) or inequitable conduct. A third party
alleging a patent is invalid, therefore, had fewer challenges
it could raise in the proceeding and, therefore, may instead
opt to risk infringement and litigate the validity of the
patent in court. Second, in the original reexamination system,
the third party challenger had no role once the proceeding was
initiated while the patent holder had significant input
throughout the entire process. Third, a challenger that lost at
the USPTO under reexamination had no right to appeal an
examiner's, or the Patent Board's, decision either
administratively or in court. Restrictions such as these made
reexamination a much less favored avenue to challenge
questionable patents than litigation. Reexamination proceedings
are also often costly, taking several years to complete,\65\
and are first conducted by examiners and, if the patent is
rejected, then by Patent Board judges. Thus, many patents must
go through two rounds of administrative review (one by the
examiner, and a second by the Patent Board) adding to the
length of the proceeding.\66\
---------------------------------------------------------------------------
\62\See 35 U.S.C. Sec. Sec. 301-307. A patent holder will typically
request reexamination to bolster the patent in view of new prior art. A
third party may request reexamination to challenge, and ultimately
invalidate, the patent.
\63\``Reexamination will permit efficient resolution of questions
about the validity of issued patents without recourse to expensive and
lengthy infringement litigation * * *. The reexamination of issued
patents could be conducted with a fraction of the time and cost of
formal legal proceedings and would help restore confidence in the
effectiveness of our patent system * * *. It is anticipated that these
measures provide a useful and necessary alternative for challengers and
for patent owners to test the validity of United States patents in an
efficient and relatively inexpensive manner.'' See H.R. Rep. No. 96-
1307(I) at 3 (1980), reprinted in 1980 U.S.C.C.A.N. 6460, 6462-63.
\64\See 35 U.S.C. Sec. 303.
\65\See Perspectives on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Jon W. Dudas, Undersecretary of Commerce for
Intellectual Property, Director of the U.S. Patent and Trademark
Office), explaining that ``a large number of reexamination proceedings
have been pending before the USPTO for more than four years'', and
questioning whether this amount of time is consistent with the
statutory requirement that ``[a]ll reexamination proceedings * * * will
be conducted with special dispatch within the Office.'' See also 35
U.S.C. Sec. 305.
\66\For several years, the standard practice at the USPTO was to
assign the reexamination to the patent examiner who had originally
examined that patent. In addition, the same third party requester could
file multiple, serial, reexaminations, based on the same ``substantial
new question of patentability,'' so long as the initial reexamination
was not completed. More recently, the USPTO ended some of these
procedures, and now reexaminations are handled by a Central
Reexamination Unit (CRU), and subsequent serial reexamination, based on
the same ``substantial new question of patentability,'' are no longer
permitted. See, e.g., Manual of Patent Examining Procedure (MPEP)
Sec. Sec. 2236 and 2240 (August 2006).
---------------------------------------------------------------------------
Congress has responded several times to criticisms of the
reexamination system by making amendments to the process.\67\
In 1999, Congress created a second reexamination procedure--
called inter partes reexamination--that gave third party
challengers greater input throughout the proceeding by
permitting them to respond to every pleading submitted by the
patent holder.\68\ At the same time, Congress imposed severe
estoppel provisions that preclude a later court challenge based
on issues not raised during an inter partes reexamination
proceeding.\69\ Congress also eventually gave third party
challengers the right to appeal adverse decisions.\70\
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\67\See e.g., 21st Century Dep't of Justice Appropriations
Authorization Act, Pub. L. No. 107-273, Sec. Sec. 13105-06, 13202, 116
Stat. 1758, 1761 (2002) (effective Nov. 2, 2002); American Inventors
Protection Act, Pub. L. 106-113, 113 Stat. 1536, 1501A et seq. (1999)
(creating inter partes reexamination) (hereafter referred to as the
``AIPA'').
\68\See 35 U.S.C. Sec. Sec. 311-318.
\69\See 35 U.S.C. Sec. 317(b).
\70\See 35 U.S.C. Sec. 315(b).
---------------------------------------------------------------------------
As part of the 1999 improvements to reexamination, Congress
directed the USPTO to submit a report to Congress evaluating
the inter partes reexamination process and making any
recommendations for changes.\71\ Initially, the USPTO projected
that in the first year after the creation of inter partes
reexamination, it would receive 400 such requests and it
projected that by 2004 it would receive nearly 600.\72\ Zero
inter partes reexamination requests were actually filed in 2000
and 27 such requests were filed by 2004.\73\ Over the five-year
period studied by the USPTO, it issued 900,000 patents and
received only 53 requests for inter partes reexamination.\74\
---------------------------------------------------------------------------
\71\AIPA, Sec. 4606.
\72\See United States Patent and Trademark Office Report to
Congress on Inter Partes Reexamination (2004) (hereinafter referred to
as ``Report on Inter Partes Reexamination''), at 4.
\73\Id. at 5.
\74\Id.
---------------------------------------------------------------------------
The 2004 Report to Congress, therefore, made a number of
important recommendations in response to inequities the USPTO
identified in the current inter partes reexamination process.
The USPTO Report identified the ``could have been raised'' part
of the estoppel bar as the primary deterrent to using the
procedure.\75\ The USPTO also recommended that third-party
requesters have an independent right to comment on each Office
action generated by the USPTO and that they have more than 30
days in which to comment.\76\ In addition, as part of the 21st
Century Strategic Plan, the USPTO recommended a new, first-
window opposition proceeding in which patents that should not
have issued can be challenged.\77\
---------------------------------------------------------------------------
\75\Id. at 9.
\76\Id.
\77\See United States Patent and Trademark Office, The 21st Century
Strategic Plan (2003).
---------------------------------------------------------------------------
The Act a post-grant review opposition proceeding, and
improves upon the current inter partes reexamination process,
in a manner consistent with the USPTO's recommendations, to
provide a more efficient mechanism to challenge patents that
should not have issued and are, therefore, not promoting the
purpose of the patent laws.
The Act expands the category of documents that may be cited
in a reexamination proceeding to include written statements of
the patent owner that have been filed in a proceeding before a
Federal court or the USPTO regarding the scope of claims. This
addition will counteract the ability of patent owners to offer
differing interpretations of prior art in different
proceedings. These written statements, which include documents,
pleadings or evidence from proceedings that address the patent
owner's statements, shall not be considered for any purpose
other than to determine the proper meaning of the claims that
are the subject of the request in a proceeding. Specifically,
the Committee does not intend these statements to be a basis
for the institution of a reexamination proceeding.
Reexaminations will continue to be available only on the basis
of ``patents or printed publications.''\78\
---------------------------------------------------------------------------
\78\The scope of ``patent and printed publication'' prior art in
the amended section 301 is intended to be coextensive with these terms
in current section 102 of the title 35. Further, amendments made by
Section 2 of the Act, which expand certain other forms of prior art,
are not intended to expand the particular ``patent or printed
publication'' prior art, which will continue to be the sole basis for
initiating reexamination proceedings.
---------------------------------------------------------------------------
The Act also amends the ex parte reexamination procedure to
allow the Director to institute a reexamination on the
Director's own initiative if a substantial new question of
patentability is raised by patents or publications.
The Act amends and improves the current inter partes
reexamination process in a number of respects:\79\ First, under
the revised procedures, reexamination will be heard by an
administrative patent judge (APJ) under procedures established
by the Director, rather than by a patent examiner. By
eliminating the requirement that inter partes reexamination be
conducted according to the procedures established for initial
examination under sections 132 and 133 of the Patent Act, the
USPTO will have authority to reshape the procedures for inter
partes reexamination in ways that address inefficiencies with
the current proceeding. Second, the third-party requester will
have 60 days to file written comments in response to any action
on the merits by the USPTO and responses by the patent owner.
Third, the APJ will conduct an oral hearing upon request by
either party, unless the APJ finds cause lacking for such a
hearing. An oral hearing is equivalent to an oral argument in
the presence of, and with participation by, the parties, as at
a motion hearing or appeal in civil litigation. It is not an
opportunity to present evidence or witnesses. Fourth, the
estoppel bar is retained but narrowed. A third-party requester
is still estopped from reasserting patent invalidity in court
on any ground actually raised in an inter partes reexamination,
but the ``or could have raised'' bar is struck. With respect to
serial requests for inter partes reexamination by the same
third party requester or its privies, a final decision in an
inter partes reexamination will continue to have claim-
preclusive effect against subsequent requests. Fifth, an inter
partes reexamination will no longer be able to be brought after
a district court decision has been entered. Finally, the inter
partes reexamination process will be available for all patents,
not just those issued after November 29, 1999.
---------------------------------------------------------------------------
\79\The minority draws heavily on the possibility that inter partes
reexamination can be used as a tool for abuse by infringers to harass
patent owners. The Committee is concerned about the potential for abuse
and, therefore, specifically directed the USPTO, in promulgating rules
for the new first-window, to prevent such misuse. The minority views
notes the puffery of a law firm that calls itself Patent Assassins as
an ``excellent demonstration'' of the alleged abuse. Were misuse of
inter partes reexamination a successful strategy for infringers, the
minority's concerns would be well taken. But the Committee is cognizant
that the USPTO issued 182,556 patents in 2008 and received only 168
requests for inter partes reexamination. Micron presented testimony
before the Committee that just nine companies received more than 1,200
licensing requests in 2008. If the Patent Assassins have a successful
model for harassing patent owners, it clearly is not one that alleged
infringers have adopted. In the nearly five years since the Committee
began hearings on proposed changes to the patent laws, no demonstrable
evidence of systematic abuse of the inter partes reexamination process
has been presented.
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The Act also creates a new post-grant opposition procedure
that can be utilized during the first 12 months after a patent
issues, or later if both parties consent. Unlike reexamination
proceedings, which have only a limited basis on which to
consider whether a patent should have issued, the post-grant
review proceeding permits a challenge on any ground related to
invalidity under section 282. The intent of the post-grant
review process is to enable early challenges to patents, while
still protecting the rights of inventors and patent owners
against new patent challenges unbounded in time and scope. The
Committee believes that this new early stage process for
challenging patent validity and its clear procedures for
submission of art will make the patent system more efficient
and improve the quality of patents and the patent system. This
new, but time-limited post-grant review procedure will provide
a meaningful opportunity to improve patent quality and restore
confidence in the presumption of validity that comes with
issued patents in court.
In utilizing the post-grant review process, the petitioner,
real party(ies) in interest, and their privies are precluded
from improperly mounting multiple challenges of a patent or
initiating a challenge after an unfavorable final decision in a
civil action based on grounds the petitioner raised or could
have raised. Further, a final decision in a post-grant review
process will prevent the petitioner, a real party in interest
and their privies from challenging any patent claim on a ground
that was raised in the post-grant review process. The post-
grant review procedure is not intended, however, to inhibit
patent owners from pursuing the various avenues of enforcement
of their rights under a patent, and the amendment makes clear
that the filing or institution of a post-grant review
proceeding does not limit a patent owner from commencing such
actions.
The Committee recognizes the importance of quiet title to
patent owners to ensure continued investment resources. While
this amendment is intended to remove current disincentives to
current administrative processes, the changes made by it are
not to be used as tools for harassment or a means to prevent
market entry through repeated litigation and administrative
attacks on the validity of a patent. Doing so would frustrate
the purpose of the section as providing quick and cost
effective alternatives to litigation. Further, such activity
would divert resources from the research and development of
inventions. As such, the Committee intends for the USPTO to
address potential abuses and current inefficiencies under its
expanded procedural authority.
Definitions; Patent Trial and Appeal Board
The Act renames the Patent Board the ``Patent Trial and
Appeal Board'' and sets forth its duties, which are expanded to
include jurisdiction over the new post-grant review and
derivation proceedings. This section strikes references to
proceedings eliminated by the Act, including interference
proceedings.
Preissuance submissions by third parties
After an application is published, members of the public--
most likely, a competitor or someone else familiar with the
patented invention's field--may realize they have information
relevant to a pending application. The relevant information may
include prior art that would prohibit the pending application
from issuing as a patent. Current USPTO rules permit the
submission of such prior art by third parties only if it is in
the form of a patent or publication,\80\ but the submitter is
precluded from explaining why the prior art was submitted or
what its relevancy to the application might be.\81\ Such
restrictions decrease the value of the information to the
examiner and may, as a result, deter such submissions.\82\
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\80\See 35 C.F.R. Sec. 1.99.
\81\See 35 C.F.R. Sec. 1.99(d) (``A submission under this section
shall not include any explanation of the patents or publications, or
any other information.'').
\82\See Perspectives on Patents: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of David Simon, Chief Patent Counsel, Intel
Corporation).
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The Act improves the process by which third parties submit
relevant information to the UPSTO by permitting those third
parties to make statements concerning the relevance of the
patents, patent applications, and other printed publications
they bring to the USPTO's attention.
Venue and jurisdiction
Venue
The Act amends the venue statute for patent cases. Venue
statutes generally place restrictions on where a plaintiff may
sue a defendant. A specific venue provision exists for patent
cases.\83\ Federal Circuit decisions have virtually eliminated
any meaningful distinction between the patent venue provision
and general venue.\84\ In VE Holding, the Federal Circuit held
that despite the specific patent venue statute, the general
venue statute applied to corporate defendants in patent
infringement cases.\85\ As a result, the Federal Circuit held
that venue for a corporate defendant in a patent infringement
case existed wherever personal jurisdiction existed. Four years
later, in Beverly Hills Fan Co., the Federal Circuit held that
personal jurisdiction for a patent defendant essentially exists
wherever an infringing product is made, used or sold.\86\ The
effect of these decisions is that venue for a patent
infringement defendant is proper wherever an alleged infringing
product can be found. In addition, the Federal Circuit applied
a different set of precedent in patent cases that were brought
pursuant to the Declaratory Judgment Act.\87\ Since most
products are sold nationally, a patent holder can often bring a
patent infringement action in any one of the 94 judicial
districts in the United States.
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\83\28 U.S.C. Sec. 1400.
\84\See, e.g., VE Holding Corp. v. Johnson Gas Appliance Co., 917
F.2d 1574 (Fed. Cir. 1990).
\85\See id.
\86\See Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d
1558, 1566 (Fed. Cir. 1994).
\87\See VE Holding, 917 F.2d at 1583.
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The Act as introduced contained significant restrictions on
the venue available to plaintiffs in patent cases which were
designed to prevent plaintiffs from manufacturing venue. The
venue restrictions in the Act as introduced were identical to
those adopted during Committee consideration of S. 1145 in the
110th Congress. In the time since the Committee reported S.
1145, the Federal Circuit and the Fifth Circuit have shown an
increased willingness to issue writs of mandamus to transfer
venue when another venue is clearly more convenient.\88\ As
approved by the Committee, the Act strikes the previous
modification to the patent venue statute and adopts the
standard articulated by the Federal Circuit in In re TS Tech
USA Corp., for transfers, applying the standard to patent cases
generally. The amendment to 28 U.S.C. Sec. 1400(b) provides
that patent cases shall be transferred to judicial districts
that are ``clearly more convenient'' for the parties and
witnesses.
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\88\See In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008); In
re Volkswagen, Inc., 545 F.3d 304 (5th Cir. 2008).
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Interlocutory appeals of claim construction orders
In many patent infringement cases, the proper meaning of a
patent claim (referred to as ``claim construction'') is a
vital, threshold determination. A finding of patent
infringement will often turn on the proper interpretation of
the patent claims, which may also determine the patent's
validity.\89\ A decade ago, the Supreme Court held in Markman
v. Westview Instruments, Inc.,\90\ that district court judges,
not juries, should determine the proper meaning of a patent
claim. Shortly thereafter, the Federal Circuit in Cybor Corp.
v. FAS Technologies, Inc.,\91\ held that the standard of review
of claim construction decisions by the district court was de
novo, giving no deference to the district court judges that
made those determinations. Determining the proper meaning of
the claims is vital to the outcome of most patent cases, and
should occur early in the litigation to avoid unnecessary
costs.\92\
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\89\See, e.g., Amgen Inc. v. Hoechst Marion Roussel, Inc., 457 F.3d
1293 (Fed. Cir. 2006) (reversing the district court's claim
construction and remanding for a second time for the district court to
determine whether the newly construed claim was anticipated by the
prior art).
\90\517 U.S. 370 (1996).
\91\138 F.3d 1448 (Fed. Cir. 1998) (en banc).
\92\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. (2007)
(statement of John A. Squires, Esq., Chief Intellectual Property
Counsel, Goldman, Sachs & Co.); Perspectives on Patents: Post-Grant
Review Procedures and Other Litigation Reforms: Hearing Before the
Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary,
109th Cong. 34 (2006) (statement of Andrew Cadel, Managing Director and
Chief Intellectual Property Counsel, JP Morgan Chase); Patent Law
Reform: Injunctions and Damages: Hearing Before the Subcomm. on
Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong.
(2005) (statement of Jonathan Band, Counsel, on behalf of Visa and the
Financial Services Roundtable); see also Cybor Corp. v. FAS Techs.,
Inc., 138 F.3d 1448, 1475-77 (Fed. Cir. 1998) (en banc) (Rader, J.,
dissenting).
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Following these decisions, many district courts began
holding separate claim construction hearings, which became
known as ``Markman'' hearings. District courts often then issue
Markman claim construction decisions.\93\ When a claims
construction order and ensuing summary judgment motion lead to
the entry of final judgment, an aggrieved party may immediately
appeal to the Federal Circuit. Such appeals, which now account
for approximately half of the Federal Circuit's docket of
patent appeals, typically lead to the early final disposition
of the action, to the adoption of a revised claims construction
or to other rulings that govern the case on remand. In those
cases where the district court's claims construction order does
not lead to final judgment, there is little opportunity for
appellate review. A party may appeal under 28 U.S.C.
Sec. 1292(b), but that provision requires the district judge to
determine that the ``order involves a controlling question of
law as to which there is substantial ground for difference of
opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the
litigation.'' Acceptance of such an appeal is within the
discretion of the appellate court, and, to date, the Federal
Circuit has refused to take most such requests. As a result,
full trials often had to be held before an appeal could be
taken of the claim construction issue.\94\
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\93\See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1479 (Fed.
Cir. 1998) (en banc) (``Although the district courts have extended
themselves, and so-called `Markman hearings' are common, this has not
been accompanied by interlocutory review of the trial judge's claim
interpretation. The Federal Circuit has thus far declined all such
certified questions.'').
\94\Unfortunately, there are also examples where the Federal
Circuit has had to hear multiple district court claim construction
related appeals, and has remanded the case back to the district court
several times based on new claim construction theories. See Amgen Inc.
v. Hoechst Marion Roussel, Inc., 457 F.3d 1293 (Fed. Cir. 2006) (a 10
year litigation that has to date already had two appeals and the case
is remanded back for a likely third district court decision, and
possible third appeal).
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Numerous studies have shown that the Federal Circuit's
reversal rate of district court claim construction decisions is
unusually high.\95\ District court decisions may place several
claim terms in dispute, and reversal by the Federal Circuit as
to the meaning of just one claim term may require that the case
be remanded to the district court for further proceedings.\96\
The Committee heard that the manner in which claim construction
determinations are currently reviewed increases litigation
costs, decreases certainty and predictability, and can prolong
settlement discussions.\97\
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\95\See, e.g., Paul M. Schoenhard, Reversing the Reversal Rate:
Using Real Property Principles to Guide Federal Circuit Patent
Jurisdiction, 17 Fordham Intel. Prop. Media & Ent. L.J. 299, 303 (2007)
(citing several studies of Federal Circuit reversal rates of claim
construction decisions, ranging from 33% to over 50%). Although the
exact number is subject to debate, it is safe to say the number is
relatively high, especially as compared to traditional reversal rates.
This is not entirely surprising since current Federal Circuit precedent
encourages the parties to contest the meaning of several different
claim terms both before the district court and the Federal Circuit. For
example, it is not uncommon for a party to appeal (or cross appeal) the
meaning of several terms, and if the Federal Circuit disagrees as to
just one, it is likely the case will need to be remanded to the
district court.
\96\See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1474 n. 2
(Fed. Cir. 1998) (Rader, J. dissenting, ``In the words of United States
District Court Judge Roderick McKelvie: [I]n spite of a trial judge's
ruling on the meaning of disputed words in a claim, should a three-
judge panel of the Federal Circuit disagree, the entire case could be
remanded for retrial on [a] different [claim interpretation],'' citing
Elf Atochem North Am., Inc. v. Libbey-Owens-Ford Co., 894 F.Supp. 844,
857, 37 USPQ2d 1065, 1075 (D.Del. 1995)).
\97\See Patent Reform: The Future of American Innovation: Hearing
on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 289-
291 (2007) (statement of John A. Squires, Esq., Chief Intellectual
Property Counsel, Goldman, Sachs & Co.).
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Even when a claims construction order does not lead to
immediate entry of final judgment, the Committee recognizes
that there are instances in which an immediate appeal of a
district court's final claims construction order is warranted.
Accordingly, the Act amends subsection (c) of section 1292 of
title 28, giving the district court discretion to certify
Markman claim construction final orders for interlocutory
review if the district court finds that there is a sufficient
evidentiary record and an immediate appeal from the order may
materially advance the termination of the litigation or will
likely control the outcome of the case, and such finding is not
clearly erroneous.
Venue for the USPTO
In 1999, as part of the American Inventors Protection Act
(AIPA), Congress established that as a general matter the venue
of the USPTO is the district where it resides.\98\ The USPTO
currently resides in the Eastern District of Virginia. However,
Congress inadvertently failed to make this change uniform
throughout the entire patent statute, so that certain sections
of the patent statute (and one section of the trademark
statute) continue to allow challenge of USPTO decisions to be
brought in the District of Columbia, where the USPTO has not
resided for decades.
---------------------------------------------------------------------------
\98\See 35 U.S.C. Sec. 1(b).
---------------------------------------------------------------------------
Since the USPTO no longer resides in the District of
Columbia, the sections that authorized venue for litigation
against the USPTO are changed to reflect the venue where the
USPTO currently resides.
Patent and trademark office regulatory authority
Although the USPTO has had the ability to set certain fees
by regulation, most fees (e.g., filing fee, issuance fee,
maintenance fees) are set by Congress.\99\ History has shown
that such a scheme does not allow the USPTO to respond promptly
to challenges facing it. The USPTO has argued for years that it
must have fee setting authority to administer properly the
agency and its growing workload.
---------------------------------------------------------------------------
\99\See, e.g., 35 U.S.C. Sec. 41.
---------------------------------------------------------------------------
The Act allows the USPTO to set or adjust all of its fees,
including those related to patents and trademarks, so long as
they do no more than reasonably compensate the USPTO for the
services performed. Prior to setting such fees, the Director
must give notice to, and receive input from, the Patent or
Trademark Public Advisory Committee (PPAC or TPAC). The
Director may also reduce fees for any given fiscal year, but
only after consultation with the PPAC or TPAC. The Act details
the procedures for how the Director shall consult with the PPAC
and TPAC, including providing for public hearings and the
dissemination to the public of any recommendations made by
either Committee. Fees shall be prescribed by rule. Any
proposed fee change shall be published in the Federal Register
and include the specific rationale and purpose for the proposed
change. The Director must seek public comments for no less than
45 days. The Director must also notify Congress of any final
decision regarding proposed fees. Congress shall have no more
than 45 days to consider and comment on any proposed fee, but
no proposed fee shall be effective prior to the expiration of
this 45-day period.
Residency of Federal Circuit Judges
Federal appellate judges in all of the regional circuits
must reside within the geographic region of the relevant
circuit's jurisdiction. A judge on the First Circuit, for
example, must reside in Massachusetts, Rhode Island, Maine, New
Hampshire or Puerto Rico. Judges on the District of Columbia
Circuit have no residency restrictions because it is not a
regional circuit. By contrast, since its creation in 1982, the
Federal Circuit has had an arbitrary restriction that all
active judges reside within 50 miles of the District of
Columbia.
The Committee believes that having an entire nation of
talent to draw upon in selecting these judges could only be a
benefit. The duty stations of the Federal Circuit judges will,
of course, remain in the District of Columbia. Judges in
regional circuits often travel considerable distances for court
sessions within the circuit, far from their homes and chambers,
and there is no practical reason why Federal Circuit judges
could not do so, as well.
The Act eliminates the residency restriction for Federal
Circuit judges by repealing the relevant portion of subsection
44(c) of title 28. The Act directs the Director of the
Administrative Office of the United States Courts to provide
appropriate facilities and administrative support in the
District of the District of Columbia to judges of the Federal
Circuit living within 50 miles of the District of Columbia and,
to judges who live more than 50 miles from the District of
Columbia, such services in the district in which that judge
resides or, if such facilities are not available, in the
closest district to the residence of the judge in which
facilities are available.
Micro-entity defined
As part of the ongoing effort to nurture U.S. innovation,
Congress has long recognized that certain groups, including
independent inventors, small business concerns, and non-profit
organizations (collectively referred to as ``small business
entities'') should not bear the same financial burden for
filing patent applications as larger corporate interests. The
current statute provides for a significant reduction in certain
fees for small business entities.\100\ The Committee was made
aware, however, that there is likely a benefit to describing
and then accommodating a group of inventors who are even
smaller, in order to be sure that the USPTO can tailor its
requirements, and its assistance, to the people with very
little capital, and just a few inventions, as they are starting
out.
---------------------------------------------------------------------------
\100\See 35 U.S.C. Sec. 41(h).
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This section of the Act defines an even smaller group--the
micro-entity--that comprises only true, independent inventors.
The Committee expects that the USPTO will make accommodations
under its authority in recognition of the special status of
micro-entities.
Funding agreements
The Patent and Trademark Amendments Act of 1980 (commonly
referred to as the Bayh-Dole Act)\101\ granted universities,
other non-profit organizations, and small businesses the right
to title to inventions developed using Federal funds. In 1984,
Congress amended the law to ensure that universities and small
businesses operating at Government facilities (GOCOs) reaped
the benefits of Bayh-Dole by giving them the right to elect
title to a subject invention.\102\ The 1984 Act permitted GOCOs
to retain the balance of any royalties or income earned from
licensing inventions, up to 5 percent of the annual budget of
the facility, for further research, development and related
activities. If the balance exceeds 5 percent of the facility's
annual budget, however, 75 percent of the excess is recouped by
the Government, with the remaining 25 percent of the excess
also retained by the GOCO for further research, development,
and related activities.\103\
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\101\P.L. 96-517.
\102\P.L. 98-620, Sec. 501.
\103\35 U.S.C. Sec. 202(c)(7).
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The Committee has considered testimony that the requirement
to repay the government 75 percent of the excess on royalty
payments may be causing a disincentive for universities and
small business operating under the GOCO provisions to
commercialize products.\104\ Based on these concerns, the
Committee adopted an amendment that maintains the essence of
the agreement GOCOs made with the taxpayers when they received
funding that they would reimburse the taxpayer if they are
sufficiently successful in commercializing a product invented
with taxpayer dollars, but which reduces the burden on
universities and small businesses, thereby encouraging
commercialization. Under the amendment, instead of reimbursing
75% of the excess to the Government, the GOCO will retain 85
percent for further research, development, and related
activities and reimburse the Government 15 percent.
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\104\See The Role of Federally-Funded University Research in the
Patent System: Hearing Before the Senate Comm. on the Judiciary, 110th
Cong. (2008) (statement of Dr. Elizabeth Hoffman, Executive Vice
President and Provost, Iowa State University).
---------------------------------------------------------------------------
Patent and trademark office travel expenses test program
The Act seeks to improve patent quality by empowering the
USPTO to hire and retain examiners nationwide through an
expanded telework program.
The USPTO currently has a successful telework program in
which both patent and trademark examiners participate.
Regulations continue to require each examiner to appear at his
or her duty station at least one day per week, which limits the
efficiency and the effectiveness of the program.\105\ The cost
associated with travelling to the duty station in Virginia once
a week is a major impediment to potential examiners living
beyond the Washington, D.C. metro area. Additionally, numerous
work hours are lost as the examiner is in transit. Furthermore,
the weekly appearance in Alexandria generally serves no
training or work quality enhancement purpose. The Patent Public
Advisory Committee (``PPAC'') noted that the result of the
regulation is that the ``number of such examiners who
participate in the [telework] program is vanishingly
small.''\106\
---------------------------------------------------------------------------
\105\Patent Public Advisory Committee 2008 Annual Report, p. 16.
http://www.uspto.gov/web/offices/com/advisory/reports/
ppac_2008annualrpt.pdf.
\106\Id.
---------------------------------------------------------------------------
The PPAC recommended that both the USPTO management and
labor unions ``place this issue among their highest priorities
and look for a concrete resolution'' to working around the
Federal regulations by agreement or seeking legislation to fix
it.\107\
---------------------------------------------------------------------------
\107\Id. at 18. PPAC clearly laid down the gauntlet: ``No more
studies; no more tentative steps. It is time to get the job done.'' Id.
---------------------------------------------------------------------------
The Act simply gives the USPTO the authority to implement a
telework pilot program that would address its specific needs.
It protects labor concerns by creating an oversight committee
to review telework implementation and gives labor an equal
membership in that committee. Examiners may still be required
to return to Alexandria, but the Act requires the oversight
committee to first explore ``reasonable technological or other
alternatives to employee travel . . . including
teleconferencing, videoconferencing or internet-based
technologies.'' These alternatives provide the right balance to
encourage hiring beyond the Washington, D.C. metro area but
still protect management needs for certain travel.
Section 13 provides the USPTO an important opportunity to
recruit and retain top talent that might be looking for
challenging employment around the country. These newly hired
telework employees will contribute significantly to the
reduction of the staggering patent backlog and pendency
challenges facing the USPTO and American industry.
Best mode requirement
The Act amends Sec. 282(b) to eliminate as a defense to
patent infringement the patentee's failure to comply with the
best mode requirement of Sec. 112. An applicant for a patent
must disclose: (1) a written description of the invention; (2)
a written description of the manner of making and using the
invention, sufficient to enable one skilled in the art to make
and use it (known as the ``enablement requirement''); and (3)
the best mode contemplated by the inventor of carrying out the
invention.\108\ The disclosures required of an applicant are
part of the important tradeoff that underlies the patent laws:
the grant of a limited-term monopoly in exchange for disclosure
of the invention.
---------------------------------------------------------------------------
\108\35 U.S.C. Sec. 112. Section 112 also requires an applicant to
disclose a written description of the invention and a written
description of the manner of making and using the invention, sufficient
to enable one skilled in the art to make and use it.
---------------------------------------------------------------------------
Under current law, the defense of patent invalidity is
available for failure to comply with any requirement of
Sec. 112 (specification) or Sec. 251 (reissued patents).
Further, a defendant in patent litigation may also allege an
intentional nondisclosure of the best mode, with intent to
deceive the Office, as a basis for an unenforceability defense.
Many have argued in recent years that the best mode
requirement, which is unique to American patent law, is
counterproductive.\109\ They argue that challenges to patents
based on best mode are inherently subjective and not relevant
by the time the patent is in litigation, because the best mode
contemplated at the time of the invention may not be the best
mode for practicing the invention years later.
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\109\National Academy of Sciences, the Biotechnology Industry
Organization, the American Intellectual Property Law Association, the
Intellectual Property Owners Association, and Pharmaceutical Research
and Manufacturers of America.
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In response to concerns, the Committee adopted an amendment
that eliminates best mode as a basis for both invalidity and
unenforceability defenses under Sec. 282; other defenses are
unaffected. However, the Committee views public disclosure as
an important part of the patent system, and the best mode
disclosure requirement will remain in Sec. 112, where it serves
as an affirmative requirement for patentability and as a basis
for rejection of a claim if it appears that the best mode
contemplated by the inventor has not been disclosed.
Pilot program in certain district courts
The Act establishes a pilot program in certain United
States district courts to encourage the enhancement of
expertise in patent cases among district judges. The intent of
this section is to authorize the creation of a patent
specialists' pilot program at the U.S. district court level, to
improve the adjudication of patent disputes.
``One of the most significant problems facing the United
States patent system is the spiraling cost and complexity
associated with enforcement of patent rights.''\110\ The
problems associated with providing efficient, stable, and
predictable adjudication of patent disputes present issues of
longstanding concern. The complex and dynamic nature of patent
law along with the increasing sophistication of technologies,
which tend to underlie determinations of prior art and whether
material is patentable, present unique challenges to those
responsible for adjudicating these disputes. These are
particularly acute at the trial court level where judges tend
to be generalists and lay jurors tend to be unfamiliar with
patent law concepts and untrained in the sophisticated
technologies that frequently lie at the heart of litigation.
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\110\The Advisory Commission on Patent Law Reform, Report to the
Secretary of Commerce 75 (1992).
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Over the years, judges, patent professionals and patent
owners have identified a number of judicial and litigation
reforms without endorsing one proposal to the exclusion of
others. Still, the vast majority of structural reforms have
something in common: they share a widespread perception that
patent litigation has become too expensive, too time-consuming,
and too uncertain.
District courts are trial courts that possess general civil
and criminal jurisdiction. Title 28 of the United States Code
grants U.S. district courts exclusive, original jurisdiction of
``any civil action arising under any Act of Congress relating
to patents.''
Within the United States, the adjudication of patent
interpretation and enforcement disputes typically commences
with the filing of a case in an appropriate U.S. district
court. Patent cases constitute an insubstantial number of the
total cases filed. The overwhelming majority of such cases are
settled or decided by motion with the rest, approximately 100
cases, going to trial in a given year. Due to their novelty and
complexity, the cases that are tried tend to be resource-
intensive and account for a disproportionate share of district
court judges' time and effort. As with other civil and criminal
cases, the standard practice is randomly to assign patent cases
to the various judges within a district.
Given this background--the relative infrequency of patent
litigation, early settlement of most suits, and random
assignment of cases--district court judges generally receive
little exposure to actual patent claim trials.
The right of exclusivity, which is critical to protecting
the economic benefit and inherent value of a patent, can be
protected only ``if patent owners have effective and
inexpensive access to an efficient judicial system''\111\ to
enforce their patent. There is substantial evidence that the
adjudication of patent cases is neither effective nor
inexpensive.\112\
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\111\The Advisory Comm'n On Patent Law Reform, Report to the
Secretary of Commerce 75 (1992).
\112\James F. Holderman, Judicial Patent Specialization: A View
from the Trial Bench, 2002 J. L. Tech. & Pol'y 425 (2002).
---------------------------------------------------------------------------
The Committee adopted an amendment that is intended to
increase judicial expertise in the area of patent law by
authorizing the creation of a pilot program in those districts
with judges interested in handling patent cases. It authorizes
the Director of the Administrative Office of the Courts to
designate not fewer than six U.S. district courts in at least
three different circuits to participate in a 10-year pilot
program that would permit district judges to request assignment
of patent-related cases, permit the Chief Judge to designate
requesting judges to hear such cases, allow `undesignated'
judges to decline such cases, and require random assignment of
such cases to either all of the judges of the district court or
only the designated judges in certain instances. The Director
of the Administrative Office of the United States Courts will
select pilot districts from those courts that: (1) were one of
the 15 with the largest volume of patent-related filings in the
previous year or have adopted local rules for handling patent
cases; and of those districts that qualify (2) (i) three have
at least 10 federally appointed judges sitting on the bench,
and at least three (3) of whom have expressed interest in
receiving specialized training for patent cases; and (ii) three
have fewer than 10 federally-appointed judges sitting on the
bench, and at least two of whom have expressed interest in
receiving specialized training for patent cases.
This section authorizes not less than $5,000,000 for each
of the 10 fiscal years to be expended for the educational and
professional development of designated judges and to compensate
law clerks who possess expertise in technical matters that
arise in patent cases. The section also requires the Director
of the Administrative Office of the Courts to compile
information on the pilot program and to provide periodic
reports to the Judiciary Committees of the House of
Representatives and the Senate.
Technical amendments
The Act contains technical amendments to improve the
organization of the patent statute.
Effective date; Rule of construction
The Act provides that, unless otherwise provided, it takes
effect 12 months after the date of enactment and applies to any
patent issued on or after that effective date. It also provides
that the enactment of section 102(b)(3) of title 35, under
section (2)(b) of the Act is done with the same intent to
promote joint research activities that was expressed in the
Cooperative Research and Technology Enhancement Act of 2004
(Public Law 108-453) and shall be administered in the manner
consistent with such.
II. History of the Bill and Committee Consideration
A. INTRODUCTION OF THE BILL
On August 3, 2006, in the 109th Congress, Senator Hatch
introduced the Patent Reform Act of 2006 (S. 3818) with Senator
Leahy. It was referred to the Committee on the Judiciary.
On April 18, 2007, in the 110th Congress, Senator Leahy,
along with Senator Hatch, introduced the Patent Reform Act of
2007 (S. 1145). Senator Schumer, Senator Whitehouse, and
Senator Cornyn were original cosponsors of the bill. Senator
Craig, Senator Crapo, Senator Bennett, Senator Salazar, and
Senator Smith joined as cosponsors. The bill was referred to
the Committee on the Judiciary, which considered the bill and
reported it with an amendment on January 24, 2008. See S. Rep.
110-259.
On March 3, 2009, Senator Leahy and Senator Hatch
introduced the Patent Reform Act of 2009. Senator Crapo,
Senator Gillibrand, Senator Risch, Senator Schumer, and Senator
Whitehouse were original cosponsors. Senator Cornyn, Senator
Feinstein, Senator Klobuchar, and Senator Specter joined as
cosponsors. This bill was referred to the Committee on the
Judiciary.
B. HEARINGS
The Senate Committee on the Judiciary held eight hearings
on patent reform from 2005 through 2009.
On April 25, 2005, the Senate Committee on the Judiciary
Subcommittee on Intellectual Property held a hearing on
``Perspectives on Patents.'' This first hearing was attended by
Chairman Hatch, Ranking Member Leahy, Senator Cornyn, and
Senator Feinstein. Testifying on Panel I was the Honorable Jon
W. Dudas, Under Secretary of Commerce for Intellectual
Property, and Director, U.S. Patent and Trademark Office.
Testifying on Panel II were Richard C. Levin, President, Yale
University, and Co-Chair, Committee on Intellectual Property
Rights in the Knowledge-Based Economy, Board on Science,
Technology, and Economic Policy, National Research Council; and
Mark B. Myers, Visiting Executive Professor, Management
Department, Wharton Business School, University of
Pennsylvania, and Co-Chair, Committee on Intellectual Property
Rights in the Knowledge-Based Economy, Board on Science,
Technology, and Economic Policy, National Research Council.
Testifying on Panel III were William Parker, Chief Executive
Office and Director of Research, Diffraction, Ltd.; Joel L.
Poppen, Deputy General Counsel, Micron Technology, Inc.; David
Simon, Chief Patent Counsel, Intel Corporation; Dean Kamen,
President, DEKA Research and Development Corp.; Robert A.
Armitage, Senior Vice President and General Counsel, Eli Lilly
and Company; and Michael K. Kirk, Executive Director, American
Intellectual Property Law Association (AIPLA). The following
materials were submitted for the record: Comments of the
National Association of Patent Practitioners on the Proposed
Patent Act of 2005, submitted by Tony Venturino, President, on
May 6, 2005; prepared statement of Jon W. Dudas; prepared
statement of Richard C. Levin; prepared statement of Mark B.
Myers; prepared statement of William Parker; prepared statement
of Joel L. Poppen; prepared statement of David Simon; prepared
statement of Dean Kamen; prepared statement of Robert A.
Armitage; and prepared statement of Michael K. Kirk.
On June 14, 2005, the Senate Committee on the Judiciary
Subcommittee on Intellectual Property held a hearing on
``Patent Law Reform: Injunctions and Damages.'' This second
hearing was attended by Chairman Hatch, Ranking Member Leahy,
and Senator Kennedy. The following witnesses testified: Carl
Gulbrandsen, Managing Director, Wisconsin Alumni Research
Foundation (WARF); Jonathan Band, Counsel on behalf of Visa and
the Financial Services Roundtable; Mark A. Lemley, Professor of
Law, Stanford Law School; Jeffrey P. Kushan, Sidley Austin
Brown and Wood, LLP; Chuck Fish, Vice President and Chief
Patent Counsel, Time Warner, Inc.; and J. Jeffrey Hawley,
President, Intellectual Property Owners Association, and Vice
President and Director, Patent Legal Staff, Eastman Kodak
Company. The following materials were submitted for the record:
prepared statement of Carl Gulbrandsen; the prepared statement
of Jonathan Band; the prepared statement of Mark A. Lemley; the
prepared statement of Jeffrey P. Kushan; the prepared statement
of Chuck Fish; and the prepared statement of J. Jeffrey Hawley.
On July 26, 2005, the Senate Committee on the Judiciary
Subcommittee on Intellectual Property held a hearing on
``Perspectives on Patents: Harmonization and Other Matters.''
Chairman Hatch attended this hearing and Ranking Member Leahy
submitted a statement for the record. The following witnesses
testified: The Honorable Gerald J. Mossinghoff, former
Assistant Secretary of Commerce and Commissioner of Patents and
Trademarks, and Senior Counsel, Oblon, Spivak, McClelland,
Maier & Neustadt; The Honorable Q. Todd Dickinson, former Under
Secretary of Commerce for Intellectual Property and Director of
the U.S. Patent and Trademark Office, and Vice President and
Chief Intellectual Property Counsel, General Electric Company;
Marshall C. Phelps, Corporate Vice President and Deputy General
Counsel for Intellectual Property, Microsoft Corporation;
Christine Siwik, Partner, Rakoczy Molino Mazzochi Siwik, LLP;
Charles E. Phelps, Provost, University of Rochester, on behalf
of the Association of American Universities, American Council
on Education, Association of American Medical Colleges and
Council on Governmental Relations; and David Beier, Senior Vice
President for Global Government Affairs, Amgen. The following
materials were submitted for the record: prepared statement of
David Beier; article, Bureau of National Affairs, Inc., Patent,
Trademark & Copyright Journal, C. Boyden Gray, former White
House Counsel and Partner, Wilmer Cutler Pickering Hale and
Dorr; prepared statement of Q. Todd Dickinson; prepared
statement of Gerald J. Mossinghoff; prepared statement of
Charles E. Phelps; prepared statement of Marshall C. Phelps;
prepared statement of Christine J. Siwik; and prepared
statement of Teva North America, Steven J. Lee, Partner, Kenyon
& Kenyon, Thomas L. Creel, Partner, Goodwin Procter LLP,
Outside Patent Counsel.
On May 23, 2006, the Senate Committee on the Judiciary
Subcommittee on Intellectual Property held a hearing on
``Perspectives on Patents: Post-Grant Review Procedures and
Other Litigation Reforms.'' Chairman Hatch and Ranking Member
Leahy attended, and the following witnesses testified: Mark
Chandler, Senior Vice President and General Counsel, Cisco
Systems, Inc.; Philip S. Johnson, Chief Patent Counsel, Johnson
& Johnson; Nathan P. Myhrvold, Chief Executive Officer,
Intellectual Ventures; John R. Thomas, Professor of Law,
Georgetown University Law Center; and Andrew Cadel, Managing
Director, Associate General Counsel, and Chief Intellectual
Property Counsel, JP Morgan Chase. The following materials were
submitted for the record: prepared statement of Andrew Cadel;
prepared statement of Mark Chandler; prepared statement of Jack
Haken, Vice President, Intellectual Property & Standards, U.S.
Phillips Corporation; prepared statement of Philip S. Johnson;
prepared statement of Nathan P. Myhrvold; and prepared
statement of John R. Thomas.
On May 1, 2007, the Senate Committee on the Judiciary held
a hearing on ``Process Patents.'' This hearing was attended by
Chairman Leahy, Ranking Member Specter, Senator Cardin, Senator
Whitehouse, Senator Graham, and Senator Coburn. Senator
Feinstein submitted a statement for the record. The following
witnesses testified: Wayne Herrington, Assistant General
Counsel, United States International Trade Commission; John R.
Thomas, Professor of Law, Georgetown University Law Center;
Mike Kirk, Executive Director, American Intellectual Property
Law Association; and Christopher A. Cotropia, Professor of Law,
Richmond School of Law. The following materials were submitted
for the record: prepared statement of Wayne Herrington;
prepared statement of John R. Thomas; prepared statement of
Mike Kirk; prepared statement of Christopher A. Cotropia;
letter from the United Steel Workers to Senator Leahy and
Senator Specter dated February 6, 2007; letter from the AFL-CIO
to Senator Leahy and Senator Specter dated February 21, 2007;
and an article by Mickey Kantor and Theodore B. Olsen titled
``Pet Food and Pool Cues,'' published May 13, 2006.
On June 6, 2007, the Senate Committee on the Judiciary held
a hearing on ``Patent Reform: The Future of American
Innovation.'' Chairman Leahy, Ranking Member Specter, Senator
Cardin, Senator Whitehouse, Senator Hatch, and Senator Coburn
attended the hearing. Testifying on Panel I was the Honorable
Jon W. Dudas, Undersecretary of Commerce for Intellectual
Property, Director of the U.S. Patent and Trademark Office.
Testifying on Panel II were Bruce G. Bernstein, Chief
Intellectual Property and Licensing Officer, InterDigital
Communications Corporation; Mary Doyle, Senior Vice President,
General Counsel and Secretary, Palm, Inc.; John A. Squires,
Chief Intellectual Property Counsel, Goldman, Sachs & Co.; and
Kathryn L. Biberstein, Senior Vice President, General Counsel
and Secretary, and Chief Compliance Officer, Alkermes, Inc. The
following materials were submitted for the record: letter from
the Department of Commerce to Senator Leahy and Senator Specter
dated May 18, 2007; letter from BIO to Senator Leahy and
Senator Specter dated May 29, 2007; letter from Chief Judge
Paul R. Michel of the Federal Circuit to Congressman Conyers
dated May 21, 2007; letter from the National Association of
Manufacturers to Congressman Conyers and Congressman Smith
dated May 18, 2007; letter from Chief Judge Paul R. Michel of
the Federal Circuit to Senator Leahy and Senator Specter dated
May 3, 2007; the prepared statement of Jon W. Dudas; the
prepared statement of Bruce G. Bernstein; prepared statement of
Mary Doyle; prepared statement of John A. Squires; and prepared
statement of Kathryn L. Biberstein.
On October 24, 2007, the Senate Committee on the Judiciary
held a hearing on ``The Role of Federally-Funded University
Research in the Patent System.'' Chairman Leahy, Senator
Cardin, and Senator Grassley attended the hearing. The
following witnesses testified: Arti K. Rai, Professor of Law,
Duke University Law School; Elizabeth Hoffman, Executive Vice
President and Provost, Iowa State University; Robert Weissman,
Director, Essential Action; and Dr. Charles Louis, Vice
Chancellor for Research, University of California, Riverside.
The following materials were submitted for the record:
statement of Senator Tom Harkin of Iowa; statement of
Representative Tom Latham of Iowa; statement of the
Biotechnology Industry Association; statement of the Wisconsin
Alumni Research Foundation; prepared statement of Elizabeth
Hoffman; prepared statement of Charles Louis; prepared
statement of Arti K. Rai; and the prepared statement of Robert
Weissman.
On March 10, 2009, the Senate Committee on the Judiciary
held a hearing on ``Patent Reform in the 111th Congress:
Legislation and Recent Court Decisions.'' Chairman Leahy
attended the hearing, along with Ranking Member Specter,
Senator Feinstein, Senator Cardin, Senator Whitehouse, Senator
Klobuchar, Senator Kaufman, Senator Hatch, Senator Kyl, and
Senator Coburn. The following witnesses testified: Steven R.
Appelton, Chairman and CEO of Micron Technologies, Inc.; Philip
S. Johnson, Chief Intellectual Property Counsel, Johnson &
Johnson; David J. Kappos, Vice President and Assistant General
Counsel, International Business Machines Corporation; Taraneh
Maghame, Vice President, Tessera, Incorporated; Herbert C.
Wamsley, Executive Director, Intellectual Property Owners
Association; and Mark A. Lemley, the William H. Neukom
Professor of Law, Stanford Law School. The following materials
were submitted for the record: statement of Robert T. Nelsen,
Managing Director, ARCH Venture Partners; letter from America's
Specialty Medicines Companies to Chairman Leahy and Ranking
Member Specter dated March 16, 2009; statement of the
Biotechnology Industry Association; paper by Mark Blaxill and
Ralph Eckardt entitled: ``The Innovation Imperative: Building
America's Invisible Edge for the 21st Century''; statement of
the Computing Technology Industry Association; statement of
FotoTime, Inc.; statement of the Generic Pharmaceutical
Association; letter from David J. Kappos of IBM to Members of
the Judiciary Committee dated March 19, 2009; letter from AARP,
Consumer Federation of America, Consumers Union, and U.S.
Public Interest Research Group to Chairman Leahy dated March 9,
2009; letter from Aetna Inc., Apotex Corporation, Generic
Pharmaceutical Association, Hospira Inc., Mylan
Pharmaceuticals, National Association of Chain Drug Stores,
Teva Pharmaceuticals, and Watson Pharmaceuticals to Senator
Leahy and Senator Hatch, dated March 9, 2009; statement of the
National Association of Realtors; and the statement of the
Wisconsin Alumni Research Foundation.
C. LEGISLATIVE HISTORY
The bill was on the agenda for the March 19, 2009 business
meeting but was held over. On March 26, 2009, the Senate
Judiciary Committee began its consideration of S. 515. Senator
Leahy offered an amendment cosponsored by Senator Hatch,
Senator Whitehouse, Senator Specter, Senator Feinstein and
Senator Kyl, which was adopted by unanimous consent. This
amendment included a number of technical changes and
clarifications. In particular, the amendment tightened the
language on prior art and derivation proceedings. It also
clarified that first-window, post-grant review proceedings must
be instituted by the Director. Finally, the amendment added a
provision permitting patent holders to ``virtually mark''
products by providing the address of a publicly available
website that associates the patented article with the number of
the patent.
On March 31, 2009, the Senate Judiciary Committee resumed
consideration of S. 515, as previously amended on March 26,
2009. Senators Leahy and Hatch offered an amendment, which was
adopted by unanimous consent. The first section of this
amendment modified the Bayh-Dole Act to allow nonprofit
organizations at government-owned-contractor-operated
facilities to retain a larger portion of licensing royalties in
excess of 5% of the facility's operating budget for scientific
research, development, and education. The second section of
this amendment authorized a pilot program at the USPTO for
teleworking.
The Committee concluded consideration of S. 515 on April 2,
2009. Three amendments were considered during this meeting:
Senator Leahy offered an amendment cosponsored by Senator
Specter, Senator Feinstein, Senator Whitehouse, Senator
Kaufman, and Senator Cornyn, which was adopted by unanimous
consent. This amendment struck the calculation of reasonable
royalty language in section 4 and replaced it with enhanced
procedural protections, which will provide more of a role for
the judge to identify the appropriate legal standards and
relevant factual contentions. The amendment also tightened the
provision in section 4 related to willfulness, to ensure it
does not detract from the Federal Circuit's recent Seagate
decision. In section 5, the amendment struck the language of
the original bill that would have permitted a challenger to
raise evidence that the claimed invention was in public use or
on sale in the United States as a basis for invalidating the
patent in an inter partes reexamination. In section 7, the
amendment provided the district court with specific standards
that it must certify have been met before certifying a claims
construction order for interlocutory appeal. The amendment also
struck the changes that would have been made by section 8 to
the patent venue statute, 28 U.S.C. 1400, in favor of a new
subsection (c), which requires the court to transfer venue in a
patent case if the transferee venue is clearly more convenient
than the venue in which the action is pending. The amendment
added a new section 14 to the bill, which retains the
requirement that a specification contain the best mode of
carrying out an invention as part of the patent application,
but does not allow best mode to be used as a basis for
invalidating an issued patent. The amendment added a new
section 15 to the bill, which creates a pilot program for
training district court judges in patent law, and for the
hiring of law clerks devoted to working on patent cases.
Senator Kyl offered an amendment that would have modified
the post-grant review section. This amendment was rejected by a
roll call vote.
The vote record was as follows:
Tally: 4 Yeas, 13 Nays, 2 Not Voting
Yeas (4): Coburn (R-OK), Feingold (D-WI), Grassley (R-IA),
Kyl (R-AZ).
Nays (13): Cardin (D-MD), Cornyn (R-TX), Durbin (D-IL),
Feinstein (D-CA), Hatch (R-UT), Kaufman (D-DE), Klobuchar (D-
MN), Kohl (D-WI), Leahy (D-VT), Schumer (D-NY), Specter (R-PA),
Whitehouse (D-RI), Wyden (D-OR).
Senator Coburn offered an amendment that would have removed
the United States Patent and Trademark Office from the regular
budget process. The amendment was tabled on a roll call vote.
The vote record was as follows:
Tally: 10 Yeas, 9 Nays
Yeas (10): Cardin (D-MD), Durbin, (D-IL), Feinstein (D-CA),
Kaufman (D-DE), Klobuchar (D-MN), Kohl (D-WI), Leahy (D-VT),
Schumer (D-NY), Whitehouse (D-RI), Wyden (D-OR).
Nays (9): Coburn (R-OK), Cornyn (R-TX), Feingold (D-WI),
Graham (R-SC), Grassley (R-IA), Hatch (R-UT), Kyl (R-AZ),
Sessions (R-AL), Specter (R-PA).
The Committee then voted to report the Patent Reform Act of
2009, as amended, favorably to the Senate. The Committee
proceeded by roll call vote as follows:
Tally: 15 Yeas, 4 Nays
Yeas (15): Cardin (D-MD), Cornyn (R-TX), Durbin (D-IL),
Feinstein (D-CA), Graham (R-SC), Grassley (R-IA), Kaufman (D-
DE), Klobuchar (D-MN), Kohl (D-WI), Leahy (D-VT), Schumer (D-
NY), Sessions (R-AL), Specter (R-PA), Whitehouse (D-RI), Wyden
(D-OR).
Nays (4): Coburn (R-OK), Feingold (D-WI), Hatch (R-UT), Kyl
(R-AZ).
III. Section-by-Section Summary of the Bill
Section 1. Short title; table of contents
This Act may be cited as the Patent Reform Act of 2009.
Section 2. Right of the first inventor to file
This section, inter alia, converts the United States patent
system into a first-inventor-to-file system, giving priority to
the earlier-filed application for a claimed invention.
Interference proceedings are replaced with a derivation
proceeding to determine whether the applicant of an earlier-
filed application was the proper applicant for the claimed
invention. This section also provides for a grace period for
publicly disclosing the subject matter of the claimed
invention, without losing priority.
Specifically, this section makes the following amendments:
Subsection (a)--Sec. 100 is amended to include definitions
for additional terms.
Subsection (b)--Sec. 102 is amended as follows:
(a)(1) A person is entitled to a patent unless the
invention was patented, described in a printed publication, or
in public use, on sale or otherwise available to the public (A)
more than a year before the filing date, or (B) anytime prior
to the filing date if not through disclosure by the inventor or
joint inventor, or by others who obtained the subject matter,
directly or indirectly, from the inventor or joint inventor. A
one-year grace period is provided for an inventor or joint
inventor that discloses the subject matter of the claimed
invention.
(2) A patent also may not be issued if the claimed
invention was described in a patent or patent application by
another inventor filed prior to the filing date of the claimed
invention.
(b) Exceptions:
Subject matter that would otherwise qualify as prior art
under (a)(1)(B) shall not be prior art if the subject matter
had, before such disclosure, been publicly disclosed by the
inventor, joint inventor, or others who obtained the subject
matter from the inventor/joint inventor. Subject matter that
would otherwise qualify as prior art under (a)(2) shall not be
prior art if (A) the subject matter was obtained directly or
indirectly from the inventor or joint inventor, (B) the subject
matter had been previously disclosed by the inventor or a joint
inventor or others who obtained the subject matter, directly or
indirectly, from the inventor or a joint inventor, or (C) prior
to the effective filing date, the subject matter and the
claimed invention was owned by the same person or subject to an
obligation of assignment to the same person.
The CREATE Act is preserved by including an exception for
subject matter of a claimed invention made by parties to a
joint research agreement.
The requirements for an effective filing date are set
forth.
Subsection (c)--Sec. 103 is amended consistent with moving
to a first-inventor-to-file system. Existing subsection (a) is
amended slightly; subsection (b) is deleted because it is no
longer needed; subsection (c), which is the CREATE Act, has
been moved, and slightly changed, to Sec. 102.
Subsection (d)--Repeals Sec. 104 (Inventions Made Abroad).
Subsection (e)--Repeals Sec. 157 (Statutory Invention
Registration).
Subsection (f)--Amends Sec. 120 related to filing dates to
conform with the CREATE Act.
Subsection (g)--Makes various conforming amendments.
Subsections (h), (i) & (j)--Repeals interference proceeding
and repeals Sec. 291. Amends Sec. 135(a) and provides for a
``derivation proceeding,'' designed to determine the inventor
with the right to file an application on a claimed invention.
An applicant requesting a derivation proceeding must set forth
the basis for finding that an earlier applicant derived the
claimed invention and without authorization filed an
application claiming such invention. The request must be filed
within 12 months of the date of first publication of an
application for a claim that is substantially the same as the
claimed invention. The Patent Trial and Appeal Board (the
``Board'') shall determine the right to patent and issue a
final decision thereon. Decisions of the Board may be appealed
to the Federal Circuit, or to district court pursuant to
Sec. 146.
Subsection (k)--Amends Sec. 131 to clarify that examination
and search duties for the grant of a United States patent are
sovereign functions to be performed by employees of the United
States Government, to the extent consistent with obligations
under international agreements.
Section 3. Inventor's oath or declaration
This section streamlines the requirement that the inventor
submit an oath as part of a patent application, and makes it
easier for patent owners to file applications.
Subsection (a)--Section 115 is amended to permit an
applicant to submit a substitute statement in lieu of the
inventor's oath or declaration in certain circumstances,
including if the inventor is (i) unable to do so, or (ii)
unwilling to do so and is under an obligation to assign the
invention. A savings clause provides that failure to comply
with the requirements of this section will not be a basis for
invalidity or unenforceability of the patent if the failure is
remedied by a supplemental and corrected statement. False
substitute statements are subject to the same penalties as
false oaths and declarations.
Subsection (b)--Section 118 is amended to allow the person
to whom the inventor has assigned (or is under an obligation to
assign) the invention to file a patent application. A person
who otherwise shows sufficient proprietary interest in the
invention may file a patent application as an agent of the
inventor to preserve the rights of the parties.
Section 4. Right of the inventor to obtain damages
Subsection (a)--Sec. 284, the patent damage statute, is
amended to provide as follows:
(a) The court shall award the claimant damages adequate to
compensate for the infringement, but in no event less than a
reasonable royalty, together with interest and costs. The court
may receive expert testimony to assist it in determining
damages.
(b) In determining damages, the court shall identify, and
the court or jury shall only consider, the methodologies and
factors that are relevant. The parties must state, in writing
and with particularity, the methodologies and factors they
propose for instruction to the jury by no later than the final
pretrial order, unless otherwise ordered by the court.
Prior to the introduction of evidence concerning damages,
the court shall consider whether one or more of a party's
damages contentions lacks a legally sufficient evidentiary
basis and identify on the record those methodologies and
factors for which there is a legally sufficient evidentiary
basis. The court or jury shall only consider those
methodologies and factors so identified, and the court shall
only permit the introduction of evidence relating to the
determination of damages that is relevant to those factors.
(c) A court may increase damages by up to three times based
on a finding of willful infringement. To prove willful
infringement, a patentee must prove by clear and convincing
evidence that acting with objective recklessness:
(A) the infringer received written notice from the
patentee (i) alleging acts of infringement in a manner
sufficient to give the infringer an objectively
reasonable apprehension of suit on such patent, and
(ii) identifying with particularity each claim of the
patent, each allegedly infringing product or process,
and the relationship of such product or process to such
claim, the infringer, after a reasonable opportunity to
investigate, thereafter performed one or more acts of
infringement;
(B) after receiving such notice and after a
reasonable opportunity to investigate, the infringer
intentionally copied the patented invention with
knowledge that it was patented; or
(C) after having been found by a court to infringe a
patent, the infringer engaged in conduct that was not
colorably different from the conduct previously found
to have infringed the patent, and which resulted in a
separate finding of infringement of the same patent.
Notwithstanding facts that may otherwise establish a prima
facie case of willful infringement, an infringer may not be
found to have acted with objective recklessness at a time
during which the infringer had an informed good faith belief
that the patent was invalid or unenforceable, or would not be
infringed, and: (i) there was reasonable reliance on advice of
counsel; (b) the infringer sought to modify its conduct to
avoid infringement once it had discovered the patent; or (c)
there is sufficient other evidence a court may find sufficient
to establish good faith. The decision of the infringer not to
present evidence of advice of counsel is not relevant to a
determination of willful infringement.
A patentee may not plead (and a court may not determine)
willful infringement before the date on which a court
determines that the patent in suit is not invalid, is
enforceable, and has been infringed by the infringer.
Subsection (b)--Prior user rights study--Within 2 years
from the date of enactment, the Director shall report to
Congress his findings and recommendations regarding the
operation of ``prior user rights'' in selected countries as
compared to the United States.
Subsection (c)--Subsection (b)(6) of Sec. 273 is amended to
also allow ``affiliates'' of the person who performed the
necessary prior user rights acts to assert the defense.
Subsection (d)--The amendments made by this section shall
apply to any civil action commenced on or after the date of
enactment of this Act.
Subsection (e)--Subsection (a) of Sec. 287 is amended to
permit patent holders to ``virtually mark'' a product by
providing the address of a publicly available website that
associates the patented article with the number of the patent.
Section 5. Post-grant procedures and other quality enhancements
Subsection (a)--Sec. 301 is amended to include written
statements of the patent owner filed in a proceedings before a
Federal court or the USPTO as citable prior art. The section is
further amended to provide rules for submitting such statements
and the limitations on their use.
Subsection (b)--Sec. 303 is amended to clarify that the
Director may determine whether to initiate reexamination on the
Director's own initiative based on citations by any person
other than the owner of the patent under section 302 or 311.
Subsection (c)--Sec. 314 is amended to provide that inter
partes reexamination proceedings will be heard by
administrative patent judges in accordance with procedures
established by the Director. Third-party requesters are given
60 days to respond in writing to any action on the merits by
the USPTO and to any response filed by the patent owner. A
patent owner may make amendments to the patent and submit new
claims that do not enlarge the patent's scope. This subsection
also authorizes oral hearings on request of either party.
Subsection (d)--Sec. 315 is amended to limit the estoppel
bar to those invalidity issues that the third-party requester
raised during the reexamination procedure.
Subsection (e)--Sec. 317 is amended to prohibit a request
for inter partes reexamination by any party against whom a
district court decision has been entered finding that the party
has not sustained its burden of proving the invalidity of any
patent claim in suit.
Subsection (f)--This subsection creates a new chapter 32 of
title 35, which provides as follows:
Sec. 321--A person who is not the patent owner may file a
petition for cancellation seeking to institute a post-grant
review proceeding based on any ground that could be raised
under section 282. The Director shall establish reasonable fees
to be paid by the person requesting the proceeding.
Sec. 322--A petition under this chapter may only be filed
within 12 months after the issuance or reissuance of the patent
or by consent of the patent owner.
Sec. 323--The petition may only be considered if it is
accompanied by the fee established by the Director; identifies
the petitioner; sets forth the basis for cancellation and the
evidence in support; and provides copies of such to the patent
owner or designated representative.
Sec. 324--A proceeding may not be instituted if the
petition identified the same petitioner and the same patent as
a previous petition or if the petition is based on the best
mode requirement.
Sec. 325--The Director shall determine what additional
information must be filed with a petition and, for each
petition, the Director shall determine whether the petition
establishes that a substantial question of patentability
exists. The director shall notify the patent owner and each
petition of the Director's determination, which shall be made
not later than 60 days after receiving the petition. Such
decision is not reviewable.
Sec. 326--The Director shall prescribe regulations
governing the conduct of post-grant review proceedings. Those
regulations shall, among other things, require that a final
determination issue not later than one year after instituting
the proceeding; provide for discovery upon order of the
Director; provide for publication of the petition and related
documents; and prescribe sanctions for abuse of discovery or
process, or any other improper use of the proceeding. The
Patent Trial and Appeal Board (the ``Board'') shall conduct
each proceeding instituted by the Director.
Sec. 327--The patent owner shall have a right to file a
response to a cancelation petition.
Sec. 328--The presumption of validity set forth in section
282 does not apply in a post-grant review proceeding, but the
party advancing a proposition shall have the burden of proving
that proposition by a preponderance of the evidence.
Sec. 329--In response to a cancellation petition, the
patent owner may file a motion to amend the patent by canceling
or substituting any challenged claim or by amending the drawing
or otherwise amend the patent other than the claims. The patent
owner may file one such motion as of right, but subsequent
motions will be permitted only for good cause. An amendment may
not enlarge the scope of the claims of the patent or introduce
new matter.
Sec. 330--Once the Director has initiated a proceeding, the
Board is required to issue a final written decision addressing
the patentability of any patent claim challenged and any new
claim added under section 329.
Sec. 331--The Director shall issue and publish a
certificate canceling any claim of a patent finally determined
by the Board to be unpatentable and incorporating in the patent
any new claim determined to be patentable. Any new claim held
to be patentable shall have the same effect as that specified
in Sec. 252 for reissued patents on prior users.
Sec. 332--The proceeding can be terminated with respect to
any petitioner upon the joint request of the petitioner and the
patent owner if such request is filed prior to the Board
issuing a written decision. Any agreement made in connection
with the termination of the proceeding must be in writing and
must be filed with the USPTO. Upon request, such agreements may
be kept separate from the file on the proceeding and made
available only to Government agencies on written request or to
any person on a showing of good cause.
Sec. 333--The Director may determine the manner in which
other proceedings that are pending during a post-grant review
proceeding may proceed, including providing for stay, transfer,
consolidation, or termination of any such proceeding. The
Director may stay the post-grant proceeding if a pending
infringement action addresses the same or substantially the
same questions of patentability. The commencement of a post-
grant review proceeding shall not limit the right of the patent
owner to commence an action for infringement and shall not be
cited as evidence relating to the validity of any claim of the
patent in a proceeding before a court or the International
Trade Commission.
Sec. 334--A final decision in a civil action establishing
that the party did not sustain its burden of proving the
invalidity of any patent claim shall preclude such party (and
privies of that party) from requesting a post-grant review
proceeding based on any grounds raised or that could have been
raised. Further, the Director may not maintain any post-grant
review proceeding after a final decision was entered on the
basis of such grounds.
Sec. 335--This section gives preclusive effect to a finding
favorable to the patentability of any claim based on any claim
the cancellation petitioner raised during the proceeding. Such
petitioner may not raise any such ground to request or pursue a
reexamination, derivation proceeding, or post-grant review
proceeding with respect to such claim. Nor can the cancellation
petitioner assert such ground as a basis for invalidity in a
civil action or before the International Trade Commission in a
section 337 action.
Sec. 336--Judicial review of a final decision of the Board
in a post-grant review proceeding may be obtained from the
Federal Circuit.
Subsection (g)--This subsection provides a conforming
amendment for the table of chapters for part III.
Subsection (h)--This subsection repeals Sec. 4607 of the
Optional Inter Partes Reexamination Procedures Act of 1999,
which describes the estoppel grounds in inter partes
reexamination. Estoppel resulting from inter partes
reexamination decisions is now governed by Sec. 315(c), as
amended by this Act.
Subsection (i)--The amendments made by this section become
effective 1 year after the date of enactment of the Act.
Section 301 (citation of prior art) and the reexamination
procedures of Sec. 311 through Sec. 318, however, apply to all
patents. The new, post-grant review proceeding, however, will
apply only to patents issued on or after the effective date,
which is 1 year after the date of enactment.
Subsection (j)--The Director is instructed to issue
regulations to carry out the post-grant review proceeding
within 1 year of the date of enactment of the Act.
Section 6. Definitions; patent trial and appeal board
The Board of Patent Appeals and Interferences is replaced
with the new Patent Trial and Appeal Board (``Board''). The
Board is charged with (i) reviewing adverse decisions of
examiners on applications and reexamination proceedings, (ii)
conducting derivation proceedings, and (iii) conducting the
post-grant review proceedings.
Section 7. Submissions by third parties and other quality enhancements
This section amends Sec. 122 to create a mechanism for
third parties to submit timely pre-issuance information
relevant to the examination of the application, including a
concise statement of the relevance of the submission.
Section 8. Venue and jurisdiction
Subsection (a)--The venue provision for patent cases,
section 1400 of title 28, is amended by adding at the end a new
subsection (c) providing that, for the convenience of parties
and witnesses, in the interest of justice, a district court
shall transfer a case upon a showing that the transferee venue
is clearly more convenient than the venue in which the case is
pending.
Subsection (b)--Interlocutory Appeals--Subsection (c) of
section 1292 of title 28, is amended to give the district court
discretion to certify a final order determining construction of
a patent claim for interlocutory review if the district court
finds that there is a sufficient evidentiary record and an
immediate appeal from the order may materially advance the
termination of the litigation or will likely control the
outcome of the case. A certification can be reversed if clearly
erroneous.
Subsection (c)--Technical Amendments Relating to USPTO
Venue--The venue for certain district court challenges of USPTO
decisions is changed from the District of Columbia to the
Eastern District of Virginia, the district where the USPTO
resides.
Section 9. Patent and Trademark Office regulatory authority
This section gives the director rulemaking authority to set
or adjust any fee under Sec. Sec. 41 and 376, and section 1113
of title 15, provided that such fee amounts are set to
reasonably compensate the USPTO for the services performed. The
Director may also reduce such fees. The Director shall consult
with the patent and trademark advisory committees as provided
for in this section. Any proposal for a change in fees
(including the rationale, purpose, and possible expectations or
benefits that will result) shall be published in the Federal
Register and shall seek public comment for a period of not less
than 45 days. The Director shall notify Congress of any final
proposed fee change and Congress shall have up to 45 days to
consider and comment before any proposed fee change becomes
effective.
Rules of construction are provided.
Section 10. Residency of Federal Circuit judges
The District of Columbia area residency requirement for
Federal Circuit judges in section 44(c) of title 28 is
repealed. A new subsection (e) is added at the end, which
directs the Director of the Administrative Office of the United
States Courts to provide appropriate facilities and
administrative support in the District of the District of
Columbia to judges of the Federal Circuit living within 50
miles of the District of Columbia and, to judges who live more
than 50 miles from the District of Columbia, such services in
the district in which that judge resides or, if such facilities
are not available, in the closest district to the residence of
the judge in which facilities are available.
Section 11. Micro-entity defined
This section adds a new Sec. 124 to define the
qualifications for ``micro-entity'' status.
Section 12. Funding agreements
Clause (i) of Sec. 202(c)(7)(E) is amended to permit a
nonprofit organization that has a funding agreement for the
operation of a Government-owned-contractor-operated facility to
retain 85%, rather than 25% under current law, of licensing
royalties in excess of the amount equal to 5% of the annual
budget of the facility.
Section 13. Patent and Trademark Office Travel Expenses Test Program
This section amends Sec. 5710 of title 5 to direct the
USPTO to create a teleworking test program. Pursuant to the
program, USPTO may pay certain travel expenses for an employee
for travel to and from the USPTO under the program. The USPTO
is directed to establish an oversight committee comprising an
equal number of members representing management and labor. The
oversight committee shall develop operating procedures. The
test program contains a number reporting requirements to ensure
it is designed to save costs and improve efficiency. The test
program terminates 20 years after the effective date of the
Travel and Transportation Reform Act of 1998, P.L. 105-264.
Section 14. Best mode requirement
This section amends Sec. 282(b) by removing the failure to
disclose the best mode under section 112 as a basis for
canceling or holding either invalid or unenforceable a patent
claim.
Section 15. Pilot Program in certain district courts
This section creates a pilot program in at least 6 district
courts from at least 3 different circuits that will receive
funding for training in patent law and to hire law clerks
devoted to working on patent cases. The section authorizes a
minimum of $5 million for the program annually for a period of
ten (10) years. The Director of the Administrative Office of
the United States Courts will select pilot districts from those
courts that: (1) were one of the fifteen with the largest
volume of patent-related filings in the previous year or have
adopted local rules for handling patent cases; and of those
districts that qualify (2) (i) 3 have at least ten federally
appointed judges sitting on the bench, and at least three of
whom have expressed interest in receiving specialized training
for patent cases; and (ii) 3 have fewer than ten federally
appointed judges sitting on the bench, and at least two of whom
have expressed interest in receiving specialized training for
patent cases.
Section 16. Technical amendments
This section sets forth technical amendments consistent
with this Act.
Section 17. Effective date; rule of construction
Except as otherwise provided, this Act takes effect 12
months after the date of enactment and applies to any patent
issued on or after that effective date.
The enactment of Sec. 102(b)(3), under section (2)(b) of
this Act, is done with the same intent to promote joint
research activities that was expressed in the CREATE Act
(Cooperative Research and Technology Enhancement Act of 2004
(Public Law 108-453; the ``CREATE Act''), and shall be
administered by the in the manner consistent with such.
Section 18. Severability
This section provides that if any provision of this Act is
held to be invalid or unenforceable, the remainder of the Act
shall not be affected by such holding.
IV. Congressional Budget Office Cost Estimate
The Committee sets forth, with respect to the bill, S. 515,
the following estimate and comparison prepared by the Director
of the Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974:
April 30, 2009.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 515, the Patent
Reform Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 515--The Patent Reform Act of 2009
Summary: S. 515 would amend various provisions of current
law that regulate how the Patent and Trademark Office (PTO)
awards patents. Among other things, the bill would alter the
rule that prioritizes the award of a patent from the ``first to
invent'' to the ``first inventor to file.'' As a result, PTO
would change certain procedures it follows in awarding patents
and establish new procedures that would allow individuals to
challenge the validity of patents that have been awarded.
Under current law, PTO is authorized to collect a variety
of fees for the services it performs. The fee rates are set in
statute, and the amounts collected are available to offset the
cost of PTO's operations. The bill would permanently set higher
fee rates for certain actions and authorize PTO to set or
adjust fees periodically. S. 515 also would authorize PTO to
establish fees to offset most of the costs associated with new
procedures it must follow when presented with a challenge to
the validity of a patent.
Subject to appropriation of the necessary amounts, CBO
estimates that implementing S. 515 would have a net
discretionary cost of $3 million in 2010, and would reduce
discretionary spending by $173 million over the 2010-2014
period. CBO estimates that enacting S. 515 also would increase
direct spending by about $3 million over the 2010-2019 period;
the bill would have no effect on revenues.
S. 515 contains an intergovernmental and private-sector
mandate, as defined in the Unfunded Mandates Reform Act (UMRA),
on certain patent applicants. Based on information from PTO,
CBO estimates that the costs of the mandate would fall below
the annual thresholds established in UMRA ($69 million for
intergovernmental mandates and $139 million for private-sector
mandates, in 2009, adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 515 is shown in the following table. The
costs of this legislation primarily fall within budget
functions 370 (commerce and housing credit) and 750
(administration of justice).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------
2010 2011 2012 2013 2014 2010-2014
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Inter Partes Reexaminations:
Estimated Authorization Level....................... 0 11 15 21 25 72
Estimated Outlays................................... 0 9 14 20 25 68
Post-grant Opposition Procedures:
Estimated Authorization Level....................... 0 3 4 9 10 26
Estimated Outlays................................... 0 2 4 8 10 24
Administrative Costs:
Estimated Authorization Level....................... 5 5 0 0 0 10
Estimated Outlays................................... 1 7 2 0 0 10
Pilot Program in District Courts:
Estimated Authorization Level....................... 5 5 5 5 5 25
Estimated Outlays................................... 2 5 5 5 5 22
Offsetting Collections:
Estimated Authorization Level....................... 0 -67 -68 -78 -84 -297
Estimated Outlays................................... 0 -67 -68 -78 -84 -297
Net Changes in Spending:
Estimated Authorization Level....................... 10 -43 -44 -43 -44 -164
Estimated Outlays................................... 3 -44 -43 -45 -44 -173
CHANGES IN DIRECT SPENDING\1\
Estimated Budget Authority.......................... 0 1 1 1 0 3
Estimated Outlays................................... 0 1 1 1 0 3
----------------------------------------------------------------------------------------------------------------
\1\CBO estimates that increases in direct spending under the bill would total $3 million over the 2010-2019
period.
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted near the end of fiscal year 2009, that the
necessary amounts will be appropriated each year, and that
spending will follow historical patterns for the agency.
Further, CBO assumes that most of the bill's provisions would
be effective one year after the date of enactment.
Spending subject to appropriation
S. 515 would change the basis that PTO uses to award
patents. Under current law, where two or more persons
independently develop identical or similar patents at
approximately the same time, the patent is awarded to the first
inventor established through the examination process. S. 515
would direct PTO, under the same circumstances, to award the
patent to the inventor whose application has the earliest
filing date. The bill also would establish a new procedure
(post-grant opposition) to challenge the validity of a patent
and would authorize PTO to collect fees to offset much of the
costs associated with that process.
Based on information from PTO, CBO expects that the volume
of requests for reconsideration of patents already granted
(inter partes reexaminations) would increase as a result of
changes S. 515 would make to the reexamination process. Under
current law, PTO is authorized to collect fees for those
reviews as well. The collection and spending of fees are
subject to provisions in annual appropriations acts, and the
fees are recorded on the budget as offsets to the discretionary
spending of PTO. For 2009, the PTO received a gross
appropriation of $2,010 million, and CBO estimates that amount
will be offset by $1,937 million in fee collections. Assuming
appropriation of the necessary amounts, CBO estimates that
implementing S. 515 would reduce PTO's net outlays by $195
million over the 2010-2014 period. Further, CBO estimates that
discretionary spending would increase by $22 million over the
2010-2014 period for a pilot program authorized within the
Department of Justice, assuming appropriation of the amounts
specified in the bill. In total, implementing S. 515 would
reduce net discretionary spending by $173 million over the
2010-2014 period.
Inter Partes Reexaminations. Under current law, an
individual may question the validity of an awarded patent
through an inter partes reexamination, which allows both the
challenger and the patent-holder to participate in the
proceedings by submitting arguments and filing appeals.
There is no time limit on raising an inter partes
challenge, however, such challenges may only be brought against
patent applications filed after a certain date. S. 515 would
expand the universe of awarded patents that could be challenged
through this proceeding; as a result, CBO expects that the
number of inter partes reexaminations would increase. Further,
the bill would require the inter partes proceedings to be
conducted by an administrative patent judge; under current law,
these proceedings are conducted by a patent examiner.
Based on information from PTO, CBO expects that around 80
additional employees would ultimately be necessary to handle an
increase in patent challenges. We estimate that implementing
the changes to the inter partes reexamination procedures would
cost about $9 million in 2011 to hire and train additional
staff and $68 million over the 2010-2014 period. PTO is
authorized to collect fees that would offset a portion of the
costs of conducting those examinations.
Post-grant Opposition Procedures. S. 515 would authorize
PTO to create a new procedure to review the validity of patents
already awarded. This opportunity for such a post-grant review
generally would be available within 12 months of the date the
patent was issued, and would take place in a court-like
proceeding in which both the challenger and the owner of the
patent would develop and present information regarding the
validity of an awarded patent. The bill would authorize PTO to
collect fees to offset the cost of this new process.
Based on information from PTO, CBO expects that the volume
of requests for post-grant reviews would grow each year once
regulations defining the process are complete. CBO estimates
that implementing this new process would cost $2 million in
2011 and $24 million over the 2010-2014 period, which would be
offset by fee collections starting in 2011. The cost would be
higher in the early years because we expect that the agency
would incur expenses to establish the system before cases would
be presented for review.
Administrative Costs. As a result of the switch to a
``first to file'' principle, PTO would incur additional
administrative costs, including updating its information
technology systems and training staff. CBO estimates that those
changes would increase discretionary spending by about $10
million over the 2010-2014 period.
Pilot Program in District Courts. Section 15 would create a
10-year pilot program in certain district courts to hone
judicial expertise in patent protection cases. The bill would
authorize the appropriation of not less than $5 million a year
for the professional development of district judges and
compensation of law clerks with expertise in such cases. After
2014, the Administrative Office of the United States Courts
would be required to submit two reports to the Congress
detailing the progress of the pilot program. CBO estimates that
implementing those activities would cost $22 million over the
2010-2014 period. After 2014, CBO estimates that the program
would cost an additional $31 million.
Offsetting Collections. Certain provisions of S. 515 would
permanently extend some, but not all, fee increases that have
been authorized in annual appropriations actions since fiscal
year 2005. Further, as noted above, the bill would authorize
PTO to set and collect fees for the new post-grant opposition
process. Finally, S. 515 would authorize PTO to adjust fees
periodically to offset the organization's costs of providing
its services.
Based on information from PTO and historical patterns of
collections, CBO estimates that those new authorities would
increase offsetting collections by $70 million in 2011 and $320
million over the 2010-2014 period. Of that amount, $277 million
would be generated through the permanent extension of fee
increases, the balance would result from fees related to the
increased volume in patent challenges (both inter partes re-
examinations and post-grant reviews).
Other provisions of S. 515 would expand the number of
patent applications filed in foreign countries that would be
reviewed in the course of PTO's examination process. Based on
information from PTO, CBO expects that some of the U.S.
applications that would be approved under current law would be
denied under the provisions of S. 515 because of information
made available in the foreign applications. CBO estimates that
fee collections would fall by $3 million in 2011 and by $23
million over the 2010-2014 period due to the loss of issuance
and maintenance fees due after a patent has been awarded. CBO
estimates that net offsetting collections would increase by $67
million in 2011 and by $297 million over the 2010-2014 period.
Direct spending and revenues
Section 12 would change the amount of royalties or income
earned by certain contractors that is required to be remitted
to the federal government. Under current law, funding
agreements between the federal government and contractors
operating government-owned-contractor-operated (GOCO)
laboratories allow contractors to retain, up to a certain
threshold, all royalty and other income earned from patents
received as a result of work performed under the contract.
Beyond that, 75 percent of royalties or income earned above the
threshold must be returned to the U.S. Treasury. The royalties
returned to the Treasury are recorded as offsetting receipts
(credits against direct spending). S. 515 would reduce that
amount to 15 percent.
Currently, only one entity operating a GOCO laboratory
returns excess royalties and license fees to the federal
government. Over the past several years, the Ames Laboratory,
operated by Iowa State University, has returned to the Treasury
approximately $1 million a year in license fees earned from
patents awarded under its contract with the federal government.
Based on information from the Department of Energy (which
operates most of the GOCO laboratories), CBO assumes that the
Ames Laboratory is the only facility that is expected to return
income to the federal government over the next five to ten
years. CBO estimates that reducing the percentage of income
that is returned to the Treasury would increase direct spending
(and would be recorded as a loss of offsetting receipts) by
about $3 million over the 2010-2014 and 2010-2019 periods.
Receipts would end after 2013 when the Ames patent generating
the bulk of the royalties expires.
Intergovernmental and private-sector impact: S. 515 would
impose a mandate on both intergovernmental and private-sector
entities, by allowing PTO to set or adjust certain fees and by
permanently extending other fee increases that are set to
expire at the end of fiscal year 2009. The requirement to pay
those fees is a mandate because the federal government controls
the patent and trademark systems, and no reasonable
alternatives to the systems exist.
Based on information from PTO, CBO estimates that the cost
to comply with the mandate would amount to less than $1 million
for public entities and between $70 million and $80 million for
private-sector entities in each of the first five years the
mandate is in effect. Therefore, the costs of the mandate would
fall below the annual thresholds established in UMRA ($69
million for intergovernmental mandates and $139 million for
private-sector mandates in 2009, adjusted annually for
inflation).
Estimate prepared by: Federal effects: Patent and Trademark
Office--Susan Willie; District Courts--Leigh Angres; Federal
Health Programs and Revenues--Julia Christensen; Impact on
state, local, and tribal governments: Elizabeth Cove Delisle;
Impact on the private sector: Paige Piper/Bach.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
V. Regulatory Impact Evaluation
In compliance with rule XXVI of the Standing Rules of the
Senate, the Committee finds that no significant regulatory
impact will result from the enactment of S. 515.
VI. Conclusion
The Patent Reform Act of 2009, S. 515, will establish a
more efficient and streamlined patent system that will improve
patent quality and limit unnecessary and counterproductive
litigation costs. By ensuring the patent system of the 21st
century accurately reflects the constitutional mandate to
``promote the progress of science and useful arts,'' the Patent
Reform Act will help ensure that the United States maintains
its competitive edge in the global economy.
VII. Additional, Supplemental, and Minority Views
----------
ADDITIONAL VIEWS OF SENATOR GRASSLEY
Intellectual property rights are extremely important to our
nation's economy, so it is important to proceed in a
deliberative and responsible manner to ensure that the American
patent system remains strong. Significant improvements to S.
515 were adopted in Committee which I was pleased to support.
In particular, the agreement to make changes to the damages
provision in the bill was critical to moving this legislation
forward. I also was pleased that the Committee adopted a
modified version of the Bayh Dole amendment that I circulated
at the markup to incentivize smaller institutions and
laboratories to continue investing in their research and
development endeavors. This amendment will go a long way in
increasing the ability of government-operated-contractor-owned
facilities to reinvest licensing royalties for crucial
scientific research, development and education.
However, I believe that more due diligence and work needs
to be done. I share several of the concerns expressed in the
views of Senator Kyl and others, in particular those dealing
with the provisions on post grant review. There are legitimate
concerns about the threshold for access to, and the open-ended
nature of, the expanded inter partes reexamination process. The
U.S. Patent and Trademark Office has expressed concerns that
they may not be able to administer the changes proposed in the
bill, and that they will be overwhelmed with filings. It would
be prudent for the Judiciary Committee to work with the PTO to
determine whether these provisions contained in the bill are
workable and can effectively be implemented.
In addition, I circulated an amendment at the markup that
would provide that certain tax planning inventions are not
patentable. There are strong policy reasons to ban tax strategy
patents. Tax strategy patents may lead to the marketing of
aggressive tax shelters or otherwise mislead taxpayers about
expected results. Tax strategy patents encumber the ability of
taxpayers and their advisors to use the tax law freely,
interfering with the voluntary tax compliance system. I believe
it is important to pass legislation that eliminates tax
strategy patents, and I look forward to working with Chairman
Leahy, Chairman Baucus and others to include this tax patent
ban in the bill.
Chuck Grassley.
SUPPLEMENTAL VIEWS OF SENATOR HATCH
For years I have been arguing if we are serious about
enacting comprehensive patent law reform, then we must take
steps to ensure that the inequitable conduct doctrine is
applied in a manner consistent with its original purpose: to
sanction true misconduct and to do so in a proportional and
fair manner. Inequitable conduct reform is core to patent
reform, as it dictates how patent applications are prosecuted
years before litigation.
Currently, any perceived transgression of the patent owner
is being painted as fraud. If an inequitable conduct claim
wins, a valid patent is held entirely void and the infringer
walks away without any liability. The inequitable conduct
defense is frequently pled, rarely proven, and always drives up
the cost of litigation. There is virtually no downside for the
infringer to raise this type of defense, even if it lacks a
true basis. For these reasons, inequitable conduct challenges
are raised in nearly every patent case.
The current law has made patent applicants over-disclose
information to the U.S. Patent and Trademark Office (USPTO) for
fear of missing something. During the 110th Congress, former
USPTO Director Jon Dudas testified before the Senate Judiciary
Committee. He brought with him a box of materials to show the
Committee what a patent examiner reviews when processing an
Information Disclosure Statement. There were about 2,600 pages
of material submitted in one box. And there were 27 other boxes
that had the same amount of material for the one patent
application. Such a deluge of information is not only
counterproductive, but it certainly does not help produce high-
quality patents.
Unfortunately, as things currently stand, anything an
applicant does to help the examiner focus on the most relevant
information during examination becomes the target of an
inequitable conduct challenge in court. This highly corrosive
result undermines the original intent of the doctrine.
Moreover, it precludes an open and interactive examination
process, which we would all agree would result in the granting
of high-quality patents. The development of a more objective
and clearer inequitable conduct standard will remove the
uncertainty and confusion that defines current patent
litigation. We cannot settle for mere codification of current
practices.
Some have suggested that those who seek to reform the
inequitable conduct defense condone fraudulent conduct before
the USPTO. Nothing could be further from the truth. That line
of reasoning could not be more misguided and is contrary to the
type of reform I have been advocating for years. Without
question, there need to be significant penalties for someone
who tries to perpetrate fraud on the Office, but sanctions
should be commensurate with the misconduct. Reform to the
inequitable conduct defense should focus on the nature of the
misconduct and not permit the unenforceability of a perfectly
valid patent on a meritorious invention. The very foundation of
our patent system is to reward invention. Yet, under our
current system, the inequitable conduct doctrine only stifles
innovation. This is something that our nation cannot afford,
especially during these challenging economic times.
In my opinion, true inequitable conduct reform has the
potential to single-handedly revolutionize the manner in which
patent applications are prosecuted. Arguably, reform in this
area will have the most favorable impact on patent quality and
will give the USPTO the ability to reduce its pendency, thereby
fostering a strong and vibrant environment for all innovation
and entrepreneurship. And that, after all, is one of the goals
for patent reform legislation as stated in the Committee
Report.
Orrin G. Hatch.
SUPPLEMENTAL VIEWS OF SENATORS COBURN, HATCH, GRASSLEY, AND KYL
Previous and current versions of the Patent Reform Act have
been stymied because of major disagreements among the varying,
competing interests within the patent community. For several
years, industry heavyweights from numerous sectors of the
American economy have battled multiple provisions of the bill.
However, the one area where Patent Reform Act combatants reach
near unanimous agreement is the need for Congress to
permanently end ``fee diversion.''
The United States Patent and Trademark Office (USPTO) is
different than nearly every other federal government agency in
that it is totally funded by user fees. For nearly two decades,
zero taxpayer dollars have been appropriated to fund the USPTO.
The user fees are generated as inventors, universities, small
businesses, other companies, and investors bring their idea to
the USPTO in return for a patent or trademark. Those patent and
trademark applicants hope for a quick response from the USPTO,
granting their idea protection and the chance to go build their
American Dream.
When the USPTO collects the fees from those applicants,
``it does not retain and spend those fees. Instead, the fees
are deposited in the Treasury and the USPTO is funded by annual
Congressional appropriations.''\1\ Although the user fees are
available and ready to be spent by the USPTO, USPTO is legally
restricted from accessing those fees until Congress determines
how much of those fees the USPTO can use. Unfortunately, for
more than a decade Congress mismanaged and misspent the user
fees USPTO collected by diverting those user fees to other
general revenue purposes in Congress' yearly appropriations
process. Such chronic diversion cost the USPTO more than three
quarters of a billion dollars.\2\ ``This lack of connection
between the monies flowing into the agency and those available
for expenditure has, according to the USPTO, contributed to (i)
the growing number of unexamined patent applications
(`backlog'), and (ii) the increased time it takes to have a
patent application examined (`pendency').''\3\
---------------------------------------------------------------------------
\1\U.S. Senate Judiciary Committee Majority Report, ``The Patent
Reform Act of 2007,'' Section I--Background and Purpose of S. 1145, p.
34.
\2\The latest calculations by the USPTO show a total of $762
million in user fees diverted by Congress.
\3\U.S. Senate Judiciary Committee Majority Report, ``The Patent
Reform Act of 2007,'' Section I--Background and Purpose of S. 1145, pp.
34-35.
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The most recent data from the USPTO show that the backlog
now consists of 1.2 million patent applications waiting to be
issued, with 771,000 of those applications waiting for an
examiner to pick up the application and begin examining it.\4\
Current pendency statistics show that it takes an examiner
anywhere from 19 to 32 months to pick up and start a first
action on the patent application.\5\ To fully dispose of the
patent application takes anywhere from 32 to 43 months
depending on the type of patent being sought.\6\ Thus,
Congress' chronic action to divert fees has resulted in an
``innovation tax''\7\ on the American economy. In these
challenging economic times, what great ideas are trapped in
that backlog, helplessly waiting to jumpstart America's economy
by creating jobs, expanding business, and bringing new products
and technology to market?
---------------------------------------------------------------------------
\4\USPTO 2008 Performance and Accountability Report, Table 3:
Patent Applications Pending Prior To Allowance.
\5\USPTO 2008 Performance and Accountability Report, Table 4:
Patent Pendency Statistics.
\6\Id.
\7\See generally, The Institute for Policy Innovation, Issue brief:
``Diversion of USPTO User Fees: A Tax on Innovation,'' April 30, 2009,
by Marla Page Grossman.
---------------------------------------------------------------------------
In order to remedy the problem, the Senate Judiciary
Committee again had before it an amendment that would
permanently secure funding for the USPTO by creating a new
revolving fund designated solely for receipt of USPTO user fees
and to be expended only by USPTO in the course of patent and
trademark issuance.\8\ The new revolving fund, or USPTO fee
lockbox, allows USPTO to retain all the user fees it collects
without relying on annual Congressional appropriations.
Consequently, the lockbox prevents Congress from misusing USPTO
user fees for other, unrelated general revenue purposes as has
repeatedly occurred in the past.
---------------------------------------------------------------------------
\8\See Amendment to create a USPTO fee lockbox offered by Senator
Coburn at the April 2, 2009 Judiciary Committee markup in this Report
under Section II, C. Legislative History. The Report mislabels the
Coburn Amendment as a ``budget process'' amendment.
---------------------------------------------------------------------------
In the 110th Congress, the Senate Judiciary Committee
passed essentially the same amendment by overwhelming voice
vote.\9\ Now as then, the USPTO fee lockbox amendment enjoyed
broad support and appeal. The American Bar Association sent a
letter to the Senate Judiciary Committee explaining that the
ABA
determined that such fee diversion drained away
essential resources from the PTO and threatened the
capacity of the agency to effectively operate the
patent and trademark systems that are critical to the
U.S. economy. In response, the ABA House of Delegates
adopted policy urging Congress to enact legislation to
prohibit such fee diversion and to guarantee that all
PTO fee revenue is used to provide services for which
the fees were collected.\10\
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\9\See Section 15 of S. 1145 as reported out of the Senate
Judiciary Committee in the 110th Congress.
\10\See March 26, 2009, letter from Thomas M. Susman, Director of
Governmental Affairs Office, of the American Bar Association, to
Chairman Leahy, Ranking Member Specter and the Senate Judiciary
Committee.
The ABA concluded that adoption of the Coburn Amendment to
create a USPTO fee lockbox ``would provide a significant
structural protection against future diversion, and we strongly
urge its enactment.''\11\ The National Treasury Employees
Union, which represents USPTO employees, expressed similar
concern regarding the negative impacts of Congressional fee
diversion:
---------------------------------------------------------------------------
\11\Id.
It is neither fair to applicants nor employees to
endure the problems resulting from PTO staff hiring
increases followed by lay-offs coupled with workload
speed-ups because of a lack of a stable funding source.
. . . it is our belief that PTO, its applicants, and
employees would be best served by legislation to create
a fee `lockbox.' This would permit the PTO to hire and
train sufficient staff to carry out its mission and
meet its need for staff stability.''\12\
---------------------------------------------------------------------------
\12\See March 28, 2009, letter from Colleen M. Kelley, National
President of the National Treasury Employees Union, to Chairman Leahy,
Ranking Member Specter and the Senate Judiciary Committee.
---------------------------------------------------------------------------
In expressing their ``strong support'' for the fee lockbox
amendment, the American Intellectual Property Law Association
trumpeted the theme of the USPTO's need for a permanent end to
fee diversion stating that,
Without the amendment, the USPTO has no assurance of
full funding, and perhaps more importantly, no way to
intelligently plan long term to meet the multitude of
challenges facing the Office. Given the importance of
our intellectual property system as a key economic
driver which attracts and protects investment in new
technology, our country's innovators who pay the fees
deserve no less. True patent law reform and
improvements at the USPTO depend on the Office's fiscal
ability to meet its growing challenges. The time has
come for Congress to once and for all provide the USPTO
with the ability to more predictably and intelligently
plan its fiscal operation by ending the possibility of
fee diversion.\13\
---------------------------------------------------------------------------
\13\See March 25, 2009, letter from Terry Rea, President of the
American Intellectual Property Law Association, to Chairman Leahy,
Ranking Member Specter and the Senate Judiciary Committee.
The witnesses at the hearing the Senate Judiciary Committee
held on S. 515 also stated that they supported a permanent end
to fee diversion.\14\ One witness, Phillip Johnson, made it
clear how important it is for Congress to include permanently
ending fee diversion in its patent reform effort in the 111th
Congress:
---------------------------------------------------------------------------
\14\Five out of the six witnesses that testified have responded to
Questions for the Record. All five witnesses strongly supported
permanently ending fee diversion.
Ensuring adequate, predictable funding for the USPTO
is perhaps the single most important step Congress
could take to enhance patent quality and begin to bring
the backlog under control. It would enable the Office
to develop a long-range strategic plan to address these
problems, something it has not been able to do with
year-to-year budgeting necessitated under the existing
appropriations process.\15\
---------------------------------------------------------------------------
\15\See answers from Phillip Johnson to Questions for the Record
from Senator Coburn after Senate Judiciary Committee hearing, March 10,
2009, Patent Reform in the 111th Congress.
These examples of support for creating a USPTO fee lockbox
and permanently ending fee diversion are just a sampling of
examples from the breadth of support for the proposition.\16\
---------------------------------------------------------------------------
\16\See various statements or letters from the Intellectual
Property Owners Association, USPTO Patent Public Advisory Committee,
both the Republican and Democratic High-Tech Taskforces, the University
of California and other universities, the Wisconsin Alumni Research
Foundation and other similar university research foundations, numerous
major stakeholders involved in the negotiations over S. 515 including
the 21st Century Coalition, the Coalition for Patent Fairness, the
Innovation Alliance, Bio, and Phrma, the National Academy of Sciences,
and the National Academy of Public Administration.
---------------------------------------------------------------------------
Although a few appropriators have raised the concern that
the Amendment does not provide adequate oversight of USPTO, a
plain reading of the amendment reveals that the amendment
requires the USPTO to provide Congress four different annual
reports. These reports give Congress oversight and
accountability tools to monitor the performance of the USPTO
and its use of user fees.\17\ Additionally, the witnesses at
the Senate Judiciary Committee hearing held on S. 515 believed
the Coburn Amendment provided Congress and themselves as
representatives of the USPTO user community, plenty of
information by which to monitor USPTO actions and
expenditures.\18\
---------------------------------------------------------------------------
\17\The Coburn Amendment to S. 515 and Section 15 of S. 1145 both
included requirements that USPTO produce an annual independent audit,
an annual spending plan, an annual report, and that the USPTO continue
to submit an annual business-type budget to the President in the
President's budget cycle.
\18\Four out of the six witnesses that testified answered the
relevant Question for the Record but all were in agreement.
---------------------------------------------------------------------------
Furthermore, the Coburn Amendment included a sunset which
forces Congress to reauthorize the lockbox in five years.\19\
The sunset gives the USPTO warning that Congress will be
closely watching how the USPTO handles the new responsibility
given to it by the lockbox. At any point during those five
years, the Appropriations Committee or the Judiciary Committee,
or both jointly, could require the USPTO Director to testify at
hearings and explain any questionable expenditures or policies.
Thus, the concerns regarding oversight simply ring hollow and
are unfounded.
---------------------------------------------------------------------------
\19\Senate appropriators chose not to accept an agreement for a
shorter sunset.
---------------------------------------------------------------------------
Without a substantial policy rationale for opposition, it
is time for the Senate to act in the best interest of the
economy and USPTO users and permanently end fee diversion.
Tom Coburn.
Orrin G. Hatch.
Chuck Grassley.
Jon Kyl.
MINORITY VIEWS OF SENATORS KYL, FEINGOLD, AND COBURN
American manufacturing is not going to succeed in future
years by paying low wages to American workers. Nor will it
thrive because of lax environmental and safety regulations in
this country. And our industrial dominance does not depend
solely on the success of the incumbent members of the Fortune
500--new companies are constantly rising to the top of that
list and becoming the reason why America still leads the
industrialized world.
What is critical to the health and strength of American
manufacturing is our ability to innovate. It is the products
that expand on the state of the art that produce high profit
margins and require skilled labor--both of which make it
possible for U.S. manufacturing to pay high wages. And it is
these innovative products that also dominate and define the
particular sectors--high technology, pharmaceuticals, aircraft,
chemicals, medical devices, and others--where American industry
remains pre-eminent. Indeed, reputable economists estimate that
historically, between 35 and 40 percent of all U.S.
productivity growth has been the result of innovation.
The legal foundation of American innovation is the U.S.
patent system. Its grant of a limited monopoly to the inventors
of new and useful products creates an incentive for our
scientists and engineers to innovate, while also drawing
capital to their efforts and talent. It is also the U.S. patent
system that allows a new company that has invented a better
product to reap the benefits of its ingenuity. If such a
company did not have a right to the exclusive use of its
invention, its established competitors would quickly copy that
invention and appropriate its market value for themselves. Not
only would a vigorous and innovative company be prevented from
rising in an otherwise stagnant field, but the incentive for
others to invest the time and resources to develop new and
better products would be destroyed.
The post-grant review proceedings authorized by this bill
would make it much more expensive to keep a patent, and would
also make it much more difficult to enforce the rights granted
by that patent. And the bill's changes to the doctrine of
willfulness would immunize even outrageous conduct that
infringes a patent, and would in some cases make the
intentional infringement of patents a viable business strategy.
Both of these changes go far beyond what is necessary to
achieve their legitimate objectives, and they are the primary
reason why we opposed this bill in the Judiciary Committee. We
urge our colleagues to join us in insisting that these
provisions be fixed before the Senate adopts this legislation.
Post-grant review
The bill creates one new administrative proceeding for
challenging a patent within 12 months of its issue, and greatly
expands the use of the existing system of inter partes re-
examination for challenging a patent during the course of its
life.
Current law bars inter partes re-examination for any patent
issued before November 22, 1999. Section 5(i) of the committee-
reported bill strikes this limitation, effectively doubling the
universe of patents that may be challenged by inter partes re-
examination.
Even more importantly, section 5(d) of the committee-
reported bill eliminates the ``could-have-raised estoppel''
standard that currently governs inter partes re-examination.
Under this test, a party that challenges a patent in an inter
partes re-examination is barred from subsequently raising in a
civil action any issues that it could have raised in the inter
partes re-examination. As the majority report notes, PTO has
identified could-have-raised estoppel as ``the primary
deterrent to using [inter partes re-examination].'' Many
businesses also have described could-have-raised estoppel as a
powerful brake on their use of inter partes re-examination.
They find this standard vague and uncertain, and fear that if
they challenge a patent in an inter partes re-examination, they
will lose the ability to raise later-discovered prior art
against the patent if they are subsequently sued for
infringement.
There can be little doubt that, by striking the 1999 limit
and eliminating could-have-raised estoppel, this bill will
result in the greatly expanded use of inter partes re-
examination.\1\
---------------------------------------------------------------------------
\1\It also appears that the deterrent effect of could-have-raised
estoppel is dissipating. The use of inter partes re-examination is
accelerating even in the absence of legislative change: according to
the latest data from the PTO, of the 609 requests for inter partes re-
examination that have been filed since 1999, over 70% (427 requests)
have been filed since the beginning of fiscal year 2007. See Inter
Partes Reexamination Filing Data, March 31, 2009, at http://
www.uspto.gov/web/patents/documents/inter_partes.pdf (last visited May
6, 2009). The same PTO data also show that of the 609 requests for
inter partes re-examination that have been granted, only 55 have
resulted in a final decision in the agency. As of this date, no inter
partes re-examination has ever been completed through final appeal.
---------------------------------------------------------------------------
It thus bears considering the problems with the current
system of inter partes re-examination and the burdens that it
imposes on patent owners. These are, in summary: it costs a
patent owner hundreds of thousands of dollars to defend his
patent in these proceedings; it is difficult to license or
enforce a patent during the pendency of a re-examination; the
threshold for initiating the proceeding is so low that 95% of
all requests are granted; the proceedings typically last for
several years; and competitors and infringers are allowed to
bring serial challenges to the same patent.
Although inter partes re-examination is an administrative
proceeding and is cheaper than litigation, it is still an
expensive process. A patent owner whose patent is challenged in
this proceeding must hire a patent lawyer to respond to the
challenge. And that patent lawyer must be careful in the
defense he mounts, as statements made during the proceeding can
later form the basis of a claim in civil litigation that the
patent should be held unenforceable because of inequitable
conduct. Such statements also become part of the patent's
history and can be used to construe its claims narrowly in
litigation. The end result is that it typically costs hundreds
of thousands of dollars to defend a patent in these
proceedings. One university patent owner recently told us that
it spent nearly a million dollars to successfully defend its
patent. And, unlike in civil litigation, a patent owner who
prevails in an inter partes re-examination receives--nothing.
(Other than could-have-raised estoppel against some challenges
in subsequent litigation--which this bill proposes to take
away.) A patent owner who prevails in an inter partes re-
examination otherwise simply gets the right to keep his patent,
and must pursue civil litigation if he wants to enjoin others
from infringing the patent or receive damages for its
infringement.
The fact that an inter partes re-examination is pending
also substantially undermines a patent owner's ability to
enforce his patent. Many district judges will stay a civil
action for infringement if a request for inter partes re-
examination of the patent has been granted. A pending re-
examination also casts a cloud over a patent and inevitably
reduces what it can command in licensing negotiations. These
problems are compounded by the fact that it typically takes
three or four years before the PTO decides an inter partes re-
examination. That decision can then be appealed, which can make
the process last from 5 to 8 years. And once one inter partes
re-examination is completed, nothing in the law prevents
another challenger from seeking an additional inter partes re-
examination of the same patent. It is not uncommon for the
competitors of a patent's owner or licensee to coordinate their
efforts and bring serial inter partes challenges to a patent,
one after the other, each raising a different set of prior art
in its challenge.
In sum, the current system of inter partes re-examination
can be misused to greatly devalue, if not effectively nullify,
a patent for most of its useful life, even if that patent is
perfectly valid and enforceable. This is the system that, by
doubling the universe of challengeable patents and eliminating
could-have-raised estoppel, the committee-reported bill
proposes to vastly expand.
An excellent demonstration that inter partes re-examination
is subject to abuse can be found on the website of a San
Fernando Valley-based law firm that calls itself the ``Patent
Assassins.''\2\ This law firm advertises its ability to ``use
reexaminations to effectively, inexpensively and quickly reduce
certain corporate risks;'' its website notes that the firm
``handles intellectual property matters for high technology
[firms]'' and that most of its clients are ``companies in the
$10 million to $2 billion range.''
---------------------------------------------------------------------------
\2\www.patentassassins.com. (Last visited May 6, 2009.)
---------------------------------------------------------------------------
One of the ways in which inter partes re-examination
currently can be used involves a strategy that this law firm
calls the ``traffic jam.'' A white paper that is available on
the firm's website describes how the ``traffic jam'' works:
British statesman and Prime Minister William E.
Gladstone said, ``Justice delayed is justice denied.''
The Patent Assassins turn this truth on its head in the
Traffic Jam Mission. By creating uncertainty about a
problem patent and tying it up in a long reexam
process, the Patent Assassins effectively nullify the
problem patent.
Sometimes the Traffic Jam Mission involves a series
of petitions for reexam. Though the USPTO's rules aim
for a speedy resolution, the Patent Assassins have an
arsenal of tactics that can keep a problem patent in
reexam for a long, long time.
Because of the uncertainty created, Traffic Jam
Missions are excellent during license negotiations.
You can argue against paying royalties until the
reexam is complete or for lower rates until the
uncertainty ends.
Traffic Jam Missions also work well in litigation. A
judge can ``stay'' a patent lawsuit pending the outcome
of a reexam. If the reexam is filed early, the judge is
more likely to stay the case, delaying any ruling
regarding the patent at issue.
The Patent Assassins' website describes other ways in which
re-examination can be used to abuse patent owners. It states
that challengers can ``deploy a number of covert tactics to
ensure absolute anonymity. We can even make it look like the
reexam was filed by someone else (e.g., one of your
competitors).'' The website notes that inter partes re-
examination can be used to ``reduce or defer royalty costs
without retribution.'' And the Patent Assassins even in effect
make a policy argument for preserving the current could-have-
raised estoppel standard in inter partes re-examination: their
website reveals that one of the firm's tactics in ex parte re-
examination (where could-have-raised estoppel does not apply)
is ``using one set of prior art in the reexam, and saving a
second set of prior art for use in litigation.''
In a recent article about the Patent Assassins in the
online journal EE Times, one of the firm's attorneys protests
that none of the firm's tactics are unethical. He notes that
``[i]f there are wrinkles in the rules created by Congress or
the patent office, we have every right to use them.''\3\ We
highlight this law firm's advertisements not to single out or
condemn this firm--indeed, as another observer quoted by the EE
Times notes, ``they are [simply] doing what many other law
firms are doing, but others are being a bit more discreet about
it.'' Rather, these statements show how the ``wrinkles'' in
current re-examination allow that system to be abused--and why
Congress should reform that system before allowing its use to
be vastly expanded.
---------------------------------------------------------------------------
\3\``Patent Assassins'' ad stirs reform debate, EE Times, April 21,
2009, at http://www.eetimes.com/showArticle.jhtml?articleID=217000005.
(Last visited May 6, 2009.)
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We should also note that the committee-reported bill's
post-grant review provisions would create serious problems for
the Patent and Trademark Office. Those provisions are almost
identical to post-grant review provisions that passed the House
of Representatives as part of a patent reform bill in 2007.
Shortly after that bill passed the House, senior career staff
at the PTO made clear to some of us that the post-grant review
system proposed by that bill was unadministrable, would strain
the PTO's resources, and would create an enormous backlog at
the Office. Representatives of the Patent Office Professional
Association and members of the Patent Public Advisory Committee
have expressed the same concerns to us.
Congress has an obligation to seriously consider the views
of those officials who will be charged with administering the
system that we create. The fact that PTO's experts believe that
the Office will not be able to manage the system that this bill
proposes alone is reason enough to insist that these proposals
be reformed.
The Congressional Budget Office's Cost Estimate for this
bill also should give the Senate pause. CBO believes that the
PTO will need an additional $9 million to implement the bill's
expanded inter partes re-examination, and that operating the
new post-grant review system will cost $2 million. At a time
when the PTO faces a potentially severe revenue shortfall and
is under a hiring freeze, it is unclear how the Office is
expected to implement these proposals without diverting
resources from its core mission of examining and issuing high-
quality patents.
To address the interests of patent owners and the needs of
the PTO, several changes should be made to section 5 of the
bill. We highlight the most important ones here. First, the
threshold for initiating a post-grant review proceeding needs
to elevated. The current standard--``substantial new question
of patentability''--simply requires the requester to raise some
interesting or noteworthy question about a patent, but does not
require that the request ever raise a serious doubt in the
examiner's mind as to the validity of the patent. This
threshold allows 95% of all requests for inter partes re-
examination to be granted. Even currently, this test overwhelms
the Office with re-examinations that do not merit its time--an
effect that would be compounded by the bill's elimination of
restraints on the use of inter partes re-examination.
Allowing 95% of all petitions to be granted also is unduly
burdensome to patent owners. It is not uncommon that a small
business or university will simply abandon a patent once a
request for re-examination is granted because it lacks the
resources to defend the patent in that proceeding. There have
also been incidents in which a large company, while negotiating
a license with a small company, has initiated an inter partes
re-examination for each of that small company's patents, simply
to strain that company's resources and force its hand in the
licensing negotiations (an effect of inter partes re-
examination that is noted on the Patent Assassins' website).
Given these dynamics and the fact that simply initiating an
inter partes re-examination amounts to a virtual death sentence
for some patents, the threshold for initiating the proceeding
should require presentation of evidence that raises serious
doubts about the patent's validity.
Another reform that is needed in order to reduce the burden
that inter partes re-examination places on the PTO is to allow
the Office to operate inter partes re-examination on an
oppositional, rather than examinational, model (while
continuing to limit the proceeding to patents and printed
publications). The examinational model places the burden on the
PTO to show that a claim is not patentable, and requires a
series of filings, office actions, and responses that make this
system inherently slow. By contrast, in an oppositional system,
the burden is always on the challenger to show that a claim is
not patentable. The parties present their evidence up front,
the patent owner offers any amendments, and the PTO simply
decides whether the challenger has met his burden of proving
invalidity. The PTO's career staff believe than an oppositional
system, accompanied by other reforms, would allow the PTO to
complete almost all of these proceedings within a year.
The committee-reported bill adopts an oppositional system
for the bill's first-window proceeding. Indeed, the bill even
partially authorizes the PTO to use an oppositional system in
inter partes re-examination. At section 5(c), the bill strikes
language from the current code that expressly requires use of
the examinational model, and instead allows inter partes re-
examination to be conducted ``in accordance with procedures
which the Director shall establish.'' Unfortunately, however,
the bill's recodification of 35 U.S.C. Sec. 314(b)(2)
effectively requires the continued use of an examinational
system. We do not think it too much to ask that this bill
simply complete the changes that it originally set out to make.
Further, this bill's post-grant review proceedings should
be accompanied by procedural reforms that restrict serial
challenges to a patent, coordinate these proceedings with
litigation, and otherwise prevent abuse and manipulation of
post-grant review proceedings. And since the bill authorizes a
new form of post-grant review--the first window proceeding in
proposed chapter 32 of title 35--and makes inter partes re-
examination available for all patents and eliminates barriers
to its use, it would be appropriate to restrict use of ex parte
re-examination to patent owners. Any challenge that a third
party could seek in ex parte re-examination, it will now be
able to seek through the first window or in inter partes re-
examination. Giving challengers three different administrative
proceedings for challenging patents after they have been
issued--in addition to civil litigation--simply invites serial
challenges to patents via different proceedings and allows
other forms of abuse.
Also, in light of the current economic recession and its
impact on the PTO's revenues, Congress should consider
authorizing the PTO to delay implementation of post-grant
review if the Director certifies that the Office lacks the
resources to start conducting such reviews. And finally, we
would note that section 5 of the bill should be edited to
eliminate several redundancies (compare the last clause of
proposed 323(3) with the first sentence of 325(a), and proposed
326(a)(3) with 326(b)(2)) and logical inconsistencies (see
proposed 331(b) in light of 329(c)), and to ensure that it is
logically and chronologically organized (passim). Whatever
post-grant review system this Congress creates will be endured
by thousands of patent owners, infringers, and lawyers, and
will generate hundreds of thousands of billable hours. We owe
it to these parties to take the time to see that this system is
fair, logical, and easy to use.
Willfulness
Section 4 of the bill sharply restricts the circumstances
under which a party that has infringed a patent may be found to
have done so willfully and be subject to enhanced damages.
Proposed section 284(c) effectively confines all findings of
willfulness to one of the following three scenarios: (1) the
infringer continued to infringe after receiving a demand letter
that describes with particularity how the infringer's product
infringes a patent; (2) the infringer intentionally copied the
patented invention and knew that it was patented; or (3) the
infringer continued its same infringing activities after having
been found by a court to infringe.
If the committee-reported bill were enacted into law,
consider the following examples of conduct that could never be
found to be willful and that would never subject the infringer
to enhanced damages:
The infringer did not copy the patent, but was
fully aware of it, knew that his product or process infringed
the patent, had no reason to think the patent invalid or
unenforceable, and continued to infringe because he thought
that his infringement would not be discovered and that he could
get away with it. (Note that this scenario is particularly
likely for industrial processes. A finished product may show no
sign that it was produced through the infringing use of a
patented process that, for example, reduces the cost or
increases the speed of producing the product.) Because this
infringer did not ``intentionally copy'' the patented
invention, under subparagraph (B) he cannot be found to have
willfully infringed.
A dozen different companies are producing
indistinguishable products that blatantly and unquestionably
infringe the same patent. The first ten companies are
successfully sued for infringement. The last two know that the
first ten have been found to infringe, and they know that their
own products are indistinguishable from the ten products that
have been found to infringe. But they continue to infringe
anyway. Because these two companies have not ``intentionally
copied'' the patented invention, they cannot be found to have
acted willfully under subparagraph (B), and because they
themselves have not yet been adjudicated to have infringed,
they have not willfully infringed under subparagraph (C).
A patent owner strongly suspects that a company is
infringing his patent. He sends a demand letter that describes
with particularity the patent claims that he believes to be
infringed, that describes the particular products or processes
that he believes may infringe, and that states his reasons for
suspecting that the product infringes (or is produced by an
infringing process). However, because the infringing product is
very difficult to open and reverse engineer, or because the
infringer is using a patented process inside a closed factory,
the demand letter does not describe with particularity how the
product or process infringes the patented invention. Even after
the infringer has received this demand letter and continues to
infringe, he cannot be found to have acted willfully under
subparagraph (A), because the letter did not describe with
particularity how the product or process infringes the patent.
An infringer becomes aware that one of its product
infringes a competitor's patented invention. It sends its
agents to break into the competitor's research laboratory in
order to learn better ways of enabling the invention that it is
infringing. Because the infringer did not copy the invention
itself, it cannot be found to have willfully infringed under
subparagraph (A).
By limiting willful infringement only to the three
scenarios described in the first paragraph of this section, the
bill's proposed paragraph (2) guts the doctrine of willfulness
and immunizes even outrageous infringing behavior. But the bill
does not stop at that. Paragraph (3) goes on to create an
absolute safe harbor for infringers if there is ``sufficient
evidence'' that an infringer had an ``informed good faith
belief'' that it did not infringe or that the patent was
invalid or unenforceable. Paragraph (3) also makes clear that
reliance on advice of counsel is one way to demonstrate an
``informed good faith belief.'' And the paragraph further
immunizes infringement accompanied by an ``informed good faith
belief''--even in the absence of ``sufficient evidence'' of
such a belief--if the infringer ``sought to modify its conduct
to avoid infringement.''
There are several problems with paragraph (3). First, by
imposing a test of ``good faith belief,'' the provision appears
to substantially unravel the progress made by the Seagate
decision. As the majority report notes, Seagate imposed an
``objective recklessness'' test for identifying willful
infringement, and also made clear that under this standard,
notice of possible infringement does not give rise to an
affirmative obligation to obtain opinion of counsel. But
paragraph (3), by defining willfulness in terms of the
infringer's good-faith belief, directs courts straight back
into the discovery-intensive inquiries into the infringer's
subjective intent that the Seagate standard was expected to
eliminate. And moreover, by expressly making receipt of opinion
of counsel an element of the safe harbor, clause (i) revives
the cottage industry of lawyers who provide non-infringement
opinions to companies that are accused of infringing a patent--
something, again, that Seagate was expected to shut down. And
finally, clause (ii)'s safe harbor for infringers who ``seek to
modify their conduct to avoid infringement'' is absurdly broad.
On its face, it extends a safe harbor even to obviously
ineffective and unreasonable efforts to avoid infringement--so
long as such efforts are accompanied by ``good faith.''
Of course, it is possible that all of paragraph (3)'s safe
harbors would be irrelevant because paragraph (2) so tightly
restricts the possible bases of willfulness that such a finding
would never be made and no safe harbor would ever be needed.
But the more likely course is that cautious corporate counsel
would look to the safe harbors as potentially useful defenses,
and, pursuant to clause (i), would seek opinion of counsel
whenever they receive a demand letter in order to protect
themselves against a finding of willfulness.
Although this part of the bill has been modified since
Seagate was decided, the new text does not appear to fully
assimilate the teachings of Seagate. (The fact that proposed
(c)(2)(A)(i) continues to incorporate the ``reasonable
apprehension of suit'' test that was eliminated by MedImmune v.
Genentech, 549 U.S. 118 (2007), tends to confirm this
supposition.) The bill's willfulness provisions not only unduly
restrict the bases of willfulness and immunize conduct that
merits enhanced damages; they also are a step backward for
accused infringers, returning us to the pre-Seagate world of
inquiries into the infringer's subjective intent and the
cottage industry of opinion counsel.
National Academies and ABA recommendations
Finally, before the Senate sends this bill to the House of
Representatives, it should consider amending it to implement
proposals that have been endorsed by the National Academies and
the American Bar Association to remove subjective elements from
patent law. These elements, such as various ``deceptive
intent'' exceptions and patent-forfeiture provisions that apply
only to non-public prior art, no longer serve any meaningful
purpose, are inconsistent with other industrialized nations'
patentability standards, and add greatly to the burden and
expense of patent litigation. Should this bill be enacted, it
will probably be another decade before Congress again musters
the will to consider patent legislation. Some of these
proposals are themselves nearly a decade old, and we know of no
reasonable argument against them. If we do not enact them via
this legislation, it will be at least another decade before
they are enacted. They should be considered for addition to
this bill.
Jon Kyl.
Russ Feingold.
Tom Coburn.
VIII. Changes to Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1145, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
UNITED STATES CODE
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
PART III--EMPLOYEES
* * * * * * *
Subpart D--Pay and Allowances
* * * * * * *
CHAPTER 57--TRAVEL, TRANSPORTATION, AND SUBSISTENCE
Subchapter I--Travel and Subsistence Expenses; Mileage Allowances
* * * * * * *
Sec. 5710. Authority for travel expenses test programs
(a)(1) Notwithstanding any other provision of this
subchapter, under a test program which the Administrator of the
General Services determines to be in the interest of the
Government and approves, an agency may pay through the proper
disbursing official [for a period not to exceed 24 months] any
necessary travel expenses in lieu of any payment otherwise
authorized or required under this subchapter. An agency shall
include in any request to the Administrator for approval of
such a test program an analysis of the expected costs and
benefits and a set of criteria for evaluating the effectiveness
of the program.
* * * * * * *
[(e) The authority to conduct test programs under this
section shall expire 7 years after the date of the enactment of
the Travel and Transportation Reform Act of 1998.] (e)(1) The
Patent and Trademark Office shall conduct a test program under
this section.
(2) In conducting the program under this subsection, the
Patent and Trademark Office may pay any travel expenses of an
employee for travel to and from a Patent and Trademark
worksite, if--
(A) the employee is employed at a Patent and
Trademark Office worksite and enters into an approved
telework arrangement;
(B) the employee requests to telework from a location
beyond the local commuting area of the Patent and
Trademark Office worksite; and
(C) the Patent and Trademark Office approves the
requested arrangement for reasons of employee
convenience instead of an agency need for the employee
to relocate in order to perform duties specific to the
new location.
(3)(A) The Patent and Trademark Office shall establish an
oversight committee comprising an equal number of members
representing management and labor, including representatives
from each collective bargaining unit.
(B) The oversight committee shall develop the operating
procedures for the program under this subsection to--
(i) provide for the effective and appropriate
function of the program; and
(ii) ensure that--
(I) reasonable technological or other
alternatives to employee travel are used before
requiring employee travel, including
teleconferencing, videoconferencing or
internet-based technologies;
(II) the program is applied consistently and
equitably throughout the Patent and Trademark
Office; and
(III) an optimal operating standard is
developed and implemented for maximizing the
use of the telework arrangement described under
paragraph (2) while minimizing agency travel
expenses and employee travel requirements.
(4)(A) The test program under this subsection shall be
designed to enhance cost savings or other efficiencies that
accrue to the Government.
(B) The Director of the Patent and Trademark Office shall--
(i) prepare an analysis of the expected costs and
benefits and a set of criteria for evaluating the
effectiveness of the program; and
(ii) before the test program is implemented, submit
the analysis and criteria to the Administrator of
General Services and to the appropriate committees of
Congress.
(C) With respect to an employee of the Patent and Trademark
Office who voluntarily relocates from the pre-existing duty
station of that employee, the operating procedures of the
program may include a reasonable maximum number of occasional
visits to the pre-existing duty station before that employee is
eligible for payment of any accrued travel expenses by the
Office.
(D)(i) Not later than 3 months after completion of the test
program under this subsection, the Director of the Patent and
Trademark Office shall provide a report on the results of the
program to the Administrator of General Services and to the
appropriate committees of Congress.
(ii) The results in the report described under paragraph
(1) may include--
(I) the number of visits an employee makes to the
pre-existing duty station of that employee;
(II) the travel expenses paid by the Office;
(III) the travel expenses paid by the employee; or
(IV) any other information that the Director
determines may be useful to aid the Administrator and
Congress in understanding the test program and the
impact of the program.
(E) In this paragraph, the term ``appropriate committees of
Congress'' means--
(i) the Committees on Homeland Security and
Governmental Affairs and the on Judiciary of the
Senate; and
(ii) the Committees on Government Oversight and
Reform and on the Judiciary of the House of
Representatives.
(f)(1) Except as provided under paragraph (2), the
authority to conduct test programs under this section shall
expire 7 years after the date of the enactment of the Travel
and Transportation Reform Act of 1998.
(2) The authority to conduct a test program by the Patent
and Trademark Office under this section shall expire 20 years
after the date of the enactment of the Travel and
Transportation Reform Act of 1998.
UNITED STATES CODE
TITLE 15--COMMERCE AND TRADE
* * * * * * *
CHAPTER 22--TRADEMARKS
Subchapter I--The Principal Register
* * * * * * *
Sec. 1071. Appeal to courts
* * * * * * *
(b) Civil action; persons entitled to; jurisdiction of
court; status of Director; procedure
* * * * * * *
(4) Where there is an adverse party, such suit may be
instituted against the party in interest as shown by
the records of the Patent and Trademark Office at the
time of the decision complained of, but any party in
interest may become a party to the action. If there be
adverse parties residing in a plurality of districts
not embraced within the same State, or an adverse party
residing in a foreign country, the [United States
District Court for the District of Columbia] United
States District Court for the Eastern District of
Virginia shall have jurisdiction and may issue summons
against the adverse parties directed to the marshal of
any district in which any adverse party resides.
Summons against adverse parties residing in foreign
countries may be served by publication or otherwise as
the court directs.
* * * * * * *
UNITED STATES CODE
TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE
PART I--ORGANIZATION OF COURTS
* * * * * * *
CHAPTER 3--COURTS OF APPEALS
* * * * * * *
Sec. 44. Appointment, tenure, residence and salary of circuit judges
* * * * * * *
(c) Except in the District of Columbia, each circuit judge
shall be a resident of the circuit for which appointed at the
time of his appointment and thereafter while in active service.
[While in active service, each circuit judge of the Federal
judicial circuit appointed after the effective date of the
Federal Courts Improvement Act of 1982, and the chief judge of
the Federal judicial circuit, whenever appointed, shall reside
within fifty miles of the District of Columbia.] In each
circuit (other than the Federal judicial circuit) there shall
be at least one circuit judge in regular active service
appointed from the residents of each state in that circuit.
* * * * * * *
(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.
PART IV--JURISDICTION AND VENUE
* * * * * * *
CHAPTER 83--COURTS OF APPEALS
* * * * * * *
Sec. 1292. Interlocutory decisions
* * * * * * *
(c) The United States Court of Appeals for the Federal
Circuit shall have exclusive jurisdiction--
(1) of an appeal from an interlocutory order or
decree described in subsection (a) or (b) of this
section in any case over which the court would have
jurisdiction of an appeal under section 1295 of this
title; [and]
(2) of an appeal from a judgment in a civil action
for patent infringement which would otherwise be
appealable to the United States Court of Appeals for
the Federal Circuit and is final except for an
accounting[.]; and
(3) of a final order or decree of a district court
determining construction of a patent claim in a civil
action for patent infringement under section 271 of
title 35, if the district court finds that there is a
sufficient evidentiary record and an immediate appeal
from the order (A) may materially advance the ultimate
termination of litigation, or (B) will likely control
the outcome of the case, unless such certification is
clearly erroneous.
* * * * * * *
Sec. 1295. Jurisdiction of the United States Court of Appeals for the
Federal Circuit
(a) The United States Court of Appeals for the Federal
Circuit shall have exclusive jurisdiction--
* * * * * * *
(4) of an appeal from a decision of--
(A) [the Board of Patent Appeals and
Interferences of the United States Patent and
Trademark Office with respect to patent
applications and interferences, at the instance
of an applicant for a patent or any party to a
patent interference, and any such appeal shall
waive the right of such applicant or party to
proceed under section 145 or 146 of title 35]
the Patent Trial and Appeal Board of the United
States Patent and Trademark Office with respect
to patent applications, interference
proceedings, derivation proceedings, and post-
grant review proceedings, at the instance of an
applicant for a patent or any party to a patent
interference (commenced before the effective
date of the Patent Reform Act of 2009),
derivation proceeding, or post-grant review
proceeding, and any such appeal shall waive any
right of such applicant or party to proceed
under section 145 or 146 of title 35;
(B) the Under Secretary of Commerce for
Intellectual Property and Director of the
United States Patent and Trademark Office or
the Trademark Trial and Appeal Board with
respect to applications for registration of
marks and other proceedings as provided in
section 21 of the Trademark Act of 1946 (15
U.S.C. 1071); or
(C) a district court to which a case was
directed pursuant to section 145, 146, or 154
(b) of title 35;
* * * * * * *
CHAPTER 87--DISTRICT COURTS; VENUE
* * * * * * *
Sec. 1400. Patents and copyrights, mask works, and designs
* * * * * * *
(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.
UNITED STATES CODE
TITLE 35--PATENTS
PART I--UNITED STATES PATENT AND TRADEMARK OFFICE
CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS
* * * * * * *
Sec. 6. [Board of Patent Appeals and Interferences] Patent Trial and
Appeal Board
(a) Establishment and Composition.--[There shall be in the
United States Patent and Trademark Office a Board of Patent
Appeals and Interferences. The Director, the Commissioner for
Patents, the Commissioner for Trademarks, and the
administrative patent judges shall constitute the Board. The
administrative patent judges shall be persons of competent
legal knowledge and scientific ability who are appointed by the
Director.] There shall be in the Office a Patent and Trial
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 of Commerce. Any reference
in any Federal law, Executive order, rule, regulation, or
delegation of authority, or any document of or pertaining to
the Board of Patent Appeals and Interferences is deemed to
refer to the Patent Trial and Appeal Board.
(b) Duties.--[The Board of Patent Appeals and Interferences
shall, on written appeal of an applicant, review adverse
decisions of examiners upon applications for patents and shall
determine priority and patentability of invention in
interferences declared under section 135(a). Each appeal and
interference shall be heard by at least three members of the
Board, who shall be designated by the Director. Only the Board
of Patent Appeals and Interferences may grant rehearings.]The
Patent Trial and Appeal Board shall--
(1) on written appeal of an applicant, review adverse
decisions of examiners upon application for patents;
(2) on written appeal of a patent owner, review
adverse decisions upon patents in reexamination
proceedings under chapter 30;
(3) conduct derivation proceedings under subsection
135(a); and
(4) conduct post-grant opposition proceedings under
chapter 32.
Each appeal, derivation, and post-grant review proceeding shall
be heard by at least 3 members of the Patent Trial and Appeal
Board, who shall be designated by the Director. Only the Patent
Trial and Appeal Board may grant rehearings. The Director shall
assign each post-grant review proceeding to a panel of 3
administrative patent judges. Once assigned, each such panel of
administrative patent judges shall have the responsibilities
under chapter 32 in connection with post-grant review
proceedings.
* * * * * * *
CHAPTER 3--PRACTICE BEFORE PATENT AND TRADEMARK OFFICE
* * * * * * *
Sec. 32. Suspension or exclusion from practice
The Director may, after notice and opportunity for a
hearing, suspend or exclude, either generally or in any
particular case, from further practice before the Patent and
Trademark Office, any person, agent, or attorney shown to be
incompetent or disreputable, or guilty of gross misconduct, or
who does not comply with the regulations established under
section 2(b)(2)(D) of this title, or who shall, by word,
circular, letter, or advertising, with intent to defraud in any
manner, deceive, mislead, or threaten any applicant or
prospective applicant, or other person having immediate or
prospective business before the Office. The reasons for any
such suspension or exclusion shall be duly recorded. The
Director shall have the discretion to designate any attorney
who is an officer or employee of the United States Patent and
Trademark Office to conduct the hearing required by this
section. The [United States District Court for the District of
Columbia] United States District Court for the Eastern District
of Virginia, under such conditions and upon such proceedings as
it by its rules determines, may review the action of the
Director upon the petition of the person so refused recognition
or so suspended or excluded.
* * * * * * *
CHAPTER 4--PATENT FEES; FUNDING; SEARCH SYSTEMS
* * * * * * *
Sec. 41. Patent fees; patent and trademark search systems
(a) The Director shall charge the following fees:
* * * * * * *
(6) * * *
(A) On filing an appeal from the examiner to
the [Board of Patent Appeals and Interferences]
Patent Trial and Appeal Board, $300.
(B) In addition, on filing a brief in support
of the appeal, $300, and on requesting an oral
hearing in the appeal before the [Board of
Patent Appeals and Interferences] Patent Trial
and Appeal Board, $260.
* * * * * * *
(d) Patent Search and Other Fees.--
(1) Patent search fees.--
(A) The Director shall charge a fee for the
search of each application for a patent, except
for provisional applications. The Director
shall establish the fees charged under this
paragraph to recover an amount not to exceed
the estimated average cost to the Office of
searching applications for patent either by
acquiring a search report from a qualified
search authority, or by causing a search by
Office personnel to be made, of each
application for patent. For the 3-year period
beginning on the date of enactment of this Act
(Dec. 8, 2004), the fee for a search by a
qualified search authority of a patent
application described in clause (i), (iv), or
(v) of subparagraph (B) may not exceed $500, of
a patent application described in clause (ii)
of subparagraph (B) may not exceed $100, and of
a patent application described in clause (iii)
of subparagraph (B) may not exceed $300. The
Director may not increase any such fee by more
than 20 percent in each of the next three 1-
year periods[, and the Director may not
increase any such fee thereafter].
* * * * * * *
PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
CHAPTER 10--PATENTABILITY OF INVENTIONS
Sec. 100. Definitions
* * * * * * *
(f) The term ``inventor'' means the individual or, if a
joint invention, the individuals collectively who invented or
discovered the subject matter of the invention.
(g) The terms ``joint inventor'' and ``coinventor'' mean
any 1 of the individuals who invented or discovered the subject
matter of a joint invention.
(h) The ``effective filing date of a claimed invention''
is--
(1) the filing date of the patent or the application
for patent containing a claim to the invention; or
(2) if the patent or application for patent is
entitled to a right of priority of any other
application under section 119, 365(a), or 365(b) or to
the benefit of an earlier filing date in the United
States under section 120, 121, or 365(c), the filing
date of the earliest such application in which the
claimed invention is disclosed in the manner provided
by the first paragraph of section 112.
(i) The term ``claimed invention'' means the subject matter
defined by a claim in a patent or an application for a patent.
(j) The term ``cancellation petitioner'' means the real
party in interest requesting cancellation of any claim of a
patent under chapter 32 of this title and the privies of the
real party in interest.
* * * * * * *
Sec. 102. [Conditions for patentability; novelty and loss of right to
patent
A person shall be entitled to a patent unless--
(a) the invention was known or used by others in this
country, or patented or described in a printed publication in
this or a foreign country, before the invention thereof by the
applicant for patent, or
(b) the invention was patented or described in a printed
publication in this or a foreign country or in public use or on
sale in this country, more than one year prior to the date of
the application for patent in the United States, or
(c) he has abandoned the invention, or
(d) the invention was first patented or caused to be
patented, or was the subject of an inventor's certificate, by
the applicant or his legal representatives or assigns in a
foreign country prior to the date of the application for patent
in this country on an application for patent or inventor's
certificate filed more than twelve months before the filing of
the application in the United States, or
(e) the invention was described in (1) an application for
patent, published under section 122(b), by another filed in the
United States before the invention by the applicant for patent
or (2) a patent granted on an application for patent by another
filed in the United States before the invention by the
applicant for patent, except that an international application
filed under the treaty defined in section 351(a) shall have the
effects for the purposes of this subsection of an application
filed in the United States only if the international
application designated the United States and was published
under Article 21(2) of such treaty in the English language, or
(f) he did not himself invent the subject matter sought to
be patented, or
(g) (1) during the course of an interference conducted
under section 135 or section 291, another inventor involved
therein establishes, to the extent permitted in section 104,
that before such person's invention thereof the invention was
made by such other inventor and not abandoned, suppressed, or
concealed, or (2) before such person's invention thereof, the
invention was made in this country by another inventor who had
not abandoned, suppressed, or concealed it. In determining
priority of invention under this subsection, there shall be
considered not only the respective dates of conception and
reduction to practice of the invention, but also the reasonable
diligence of one who was first to conceive and last to reduce
to practice, from a time prior to conception by the other.]
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--
(A) more than 1 year before the effective
filing date of the claimed invention; or
(B) 1 year or less before the effective
filing date of the claimed invention, other
than through disclosures made by the inventor
or a joint inventor or by others who obtained
the subject matter disclosed directly or
indirectly from the inventor or joint inventor;
or
(2) the claimed invention was described in a patent
issued under section 151, or in an application for
patent published or deemed published under section
122(b), in which the patent or application, as the case
may be, names another inventor and was effectively
filed before the effective filing date of the claimed
invention.
(b) Exceptions.--
(1) Prior inventor disclosure exception.--Subject
matter that would otherwise qualify as prior art based
upon a disclosure under subparagraph (B) of subsection
(a)(1) shall not be prior art to a claimed invention
under that subparagraph if the subject matter had,
before such disclosure, been publicly disclosed by the
inventor or a joint inventor or others who obtained the
subject matter disclosed directly or indirectly from
the inventor or joint inventor.
(2) Derivation, prior disclosure, and common
assignment exceptions.--Subject matter that would
otherwise qualify as prior art only under subsection
(a)(2), after taking into account the exception under
paragraph (1), shall not be prior art to a claimed
invention if--
(A) the subject matter was obtained directly
or indirectly from the inventor or a joint
inventor;
(B) the subject matter had been publicly
disclosed before the effective filing date of
the application or patent set forth under
subsection (a)(2) by the inventor or a joint
inventor, or by others who obtained the subject
matter disclosed, directly or indirectly, from
the inventor or joint inventor; or
(C) the subject matter and the claimed
invention, not later than the effective filing
date of the claimed invention, were owned by
the same person or subject to an obligation of
assignment to the same person.
(3) Joint research agreement exception.--
(A) In general.--Subject matter and a claimed
invention shall be deemed to have been owned by
the same person or subject to an obligation of
assignment to the same person in applying the
provisions of paragraph (2) if--
(i) the subject matter and the
claimed invention were made by or on
behalf of parties to a joint research
agreement that was in effect on or
before the effective filing date of the
claimed invention;
(ii) the claimed invention was made
as a result of activities undertaken
within the scope of the joint research
agreement; and
(iii) the application for patent for
the claimed invention discloses or is
amended to disclose the names of the
parties to the joint research
agreement.
(B) For purposes of subparagraph (A), the
term ``joint research agreement'' means a
written contract, grant, or cooperative
agreement entered into by 2 or more persons or
entities for the performance of experimental,
developmental, or research work in the field of
the claimed invention.
(4) Patents and published applications effectively
filed.--A patent or application for patent is
effectively filed under subsection (a)(2) with respect
to any subject matter described in the patent or
application--
(A) as of the filing date of the patent or
the application for patent; or
(B) if the patent or application for patent
is entitled to claim a right of priority under
section 119, 365(a), or 365(b) or to claim the
benefit of an earlier filing date under section
120, 121, or 365(c), based upon 1 or more prior
filed applications for patent, as of the filing
date of the earliest such application that
describes the subject matter.
Sec. 103. [Conditions for patentability; non-obvious subject matter
(a) A patent may not be obtained though the invention is
not identically disclosed or described as set forth in section
102 of this title, if the differences between the subject
matter sought to be patented and the prior art are such that
the subject matter as a whole would have been obvious at the
time the invention was made to a person having ordinary skill
in the art to which said subject matter pertains. Patentability
shall not be negatived by the manner in which the invention was
made.
(b)(1) Notwithstanding subsection (a), and upon timely
election by the applicant for patent to proceed under this
subsection, a biotechnological process using or resulting in a
composition of matter that is novel under section 102 and
nonobvious under subsection (a) of this section shall be
considered nonobvious if--
(A) claims to the process and the composition of
matter are contained in either the same application for
patent or in separate applications having the same
effective filing date; and
(B) the composition of matter, and the process at the
time it was invented, were owned by the same person or
subject to an obligation of assignment to the same
person.
(2) A patent issued on a process under paragraph (1)--
(A) shall also contain the claims to the composition
of matter used in or made by that process, or
(B) shall, if such composition of matter is claimed
in another patent, be set to expire on the same date as
such other patent, notwithstanding section 154.
(3) For purposes of paragraph (1), the term
``biotechnological process'' means--
(A) a process of genetically altering or otherwise
inducing a single- or multi-celled organism to--
(i) express an exogenous nucleotide sequence,
(ii) inhibit, eliminate, augment, or alter
expression of an endogenous nucleotide
sequence, or
(iii) express a specific physiological
characteristic not naturally associated with
said organism;
(B) cell fusion procedures yielding a cell line that
expresses a specific protein, such as a monoclonal
antibody; and
(C) a method of using a product produced by a process
defined by subparagraph (A) or (B), or a combination of
subparagraphs (A) and (B).
(c)(1) Subject matter developed by another person, which
qualifies as prior art only under one or more of subsections
(e), (f), and (g) of section 102 of this title, shall not
preclude patentability under this section where the subject
matter and the claimed invention were, at the time the claimed
invention was made, owned by the same person or subject to an
obligation of assignment to the same person.
(2) For purposes of this subsection, subject matter
developed by another person 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 if--
(A) the claimed invention was made by or on behalf of
parties to a joint research agreement that was in
effect on or before the date the claimed invention was
made;
(B) the claimed invention was made as a result of
activities undertaken within the scope of the joint
research agreement; and
(C) the application for patent for the claimed
invention discloses or is amended to disclose the names
of the parties to the joint research agreement.
(3) For purposes of paragraph (2), the term ``joint
research agreement'' means a written contract, grant, or
cooperative agreement entered into by two or more persons or
entities for the performance of experimental, developmental, or
research work in the field of the claimed invention.]
Conditions for patentability; nonobvious subject matter
A patent for a claimed invention may not be obtained though
the claimed invention is not identically disclosed as set forth
in section 102, if the differences between the claimed
invention and the prior art are such that the claimed invention
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.
[Sec. 104. Invention made abroad
(a) In General.--
(1) Proceedings.--In proceedings in the Patent and
Trademark Office, in the courts, and before any other
competent authority, an applicant for a patent, or a
patentee, may not establish a date of invention by
reference to knowledge or use thereof, or other
activity with respect thereto, in a foreign country
other than a NAFTA country or a WTO member country,
except as provided in sections 119 and 365 of this
title.
(2) Rights.--If an invention was made by a person,
civil or military--
(A) while domiciled in the United States, and
serving in any other country in connection with
operations by or on behalf of the United
States,
(B) while domiciled in a NAFTA country and
serving in another country in connection with
operations by or on behalf of that NAFTA
country, or
(C) while domiciled in a WTO member country
and serving in another country in connection
with operations by or on behalf of that WTO
member country, that person shall be entitled
to the same rights of priority in the United
States with respect to such invention as if
such invention had been made in the United
States, that NAFTA country, or that WTO member
country, as the case may be.
(3) Use of information.--To the extent that any
information in a NAFTA country or a WTO member country
concerning knowledge, use, or other activity relevant
to proving or disproving a date of invention has not
been made available for use in a proceeding in the
Patent and Trademark Office, a court, or any other
competent authority to the same extent as such
information could be made available in the United
States, the Director, court, or such other authority
shall draw appropriate inferences, or take other action
permitted by statute, rule, or regulation, in favor of
the party that requested the information in the
proceeding.
(b) Definitions.--As used in this section--
(1) the term ``NAFTA country'' has the meaning given
that term in section 2(4) of the North American Free
Trade Agreement Implementation Act; and
(2) the term ``WTO member country'' has the meaning
given that term in section 2(10) of the Uruguay Round
Agreements Act.]
* * * * * * *
CHAPTER 11--APPLICATION FOR PATENT
[Sec. 11. Application
(a) In General.--
* * * * * * *
(2) Contents.--Such application shall include--
(A) a specification as prescribed by section
112 of this title;
(B) a drawing as prescribed by section 113 of
this title; and
(C) an oath [by the applicant] or declaration
as prescribed by section 115 of this title.
(3) Fee [and oath].--The application must be
accompanied by the fee required by law. The fee [and
oath] may be submitted after the specification and any
required drawing are submitted, within such period and
under such conditions, including the payment of a
surcharge, as may be prescribed by the Director.
(4) Failure to submit.--Upon failure to submit the
fee [and oath] within such prescribed period, the
application shall be regarded as abandoned, unless it
is shown to the satisfaction of the Director that the
delay in submitting the fee [and oath] was unavoidable
or unintentional. The filing date of an application
shall be the date on which the specification and any
required drawing are received in the Patent and
Trademark Office.
(b) Provisional Application.--
* * * * * * *
(8) Applicable provisions.--The provisions of this
title relating to applications for patent shall apply
to provisional applications for patent, except as
otherwise provided, and except that provisional
applications for patent shall not be subject to
[sections 115, 131, 135, and 157] sections 131 and 135
of this title.
Sec. 112. Specification
[The specification] (a) In General._The specification shall
contain a written description of the invention, and of the
manner and process of making and using it, in such full, clear,
concise, and exact terms as to enable any person skilled in the
art to which it pertains, or with which it is most nearly
connected, to make and use the same, and shall set forth the
best mode contemplated by the inventor of carrying out his
invention or joint inventor of carrying out the invention.
[The specification] (b) Conclusion._The specification shall
conclude with one or more claims particularly pointing out and
distinctly claiming the subject matter which the applicant
regards as his invention inventor or a joint inventor regards
as the invention.
[A claim] (c) Form.--A claim may be written in independent
or, if the nature of the case admits, in dependent or multiple
dependent form.
[Subject to the following paragraph] (d) Reference in
Dependent Forms.--Subject to subsection (e), a claim in
dependent form shall contain a reference to a claim previously
set forth and then specify a further limitation of the subject
matter claimed. A claim in dependent form shall be construed to
incorporate by reference all the limitations of the claim to
which it refers.
[A claim] (e) Reference in Multiple Dependent Form.--A
claim in multiple dependent form shall contain a reference, in
the alternative only, to more than one claim previously set
forth and then specify a further limitation of the subject
matter claimed. A multiple dependent claim shall not serve as a
basis for any other multiple dependent claim. A multiple
dependent claim shall be construed to incorporate by reference
all the limitations of the particular claim in relation to
which it is being considered.
[An element] (f) Element in Claim for a Combination.--An
element in a claim for a combination may be expressed as a
means or step for performing a specified function without the
recital of structure, material, or acts in support thereof, and
such claim shall be construed to cover the corresponding
structure, material, or acts described in the specification and
equivalents thereof.
* * * * * * *
Sec. 115. [Oath of applicant] Inventor's oath or declaration
[The applicant shall make oath that he believes himself to
be the original and first inventor of the process, machine,
manufacture, or composition of matter, or improvement thereof,
for which he solicits a patent; and shall state of what country
he is a citizen. Such oath may be made before any person within
the United States authorized by law to administer oaths, or,
when, made in a foreign country, before any diplomatic or
consular officer of the United States authorized to administer
oaths, or before any officer having an official seal and
authorized to administer oaths in the foreign country in which
the applicant may be, whose authority is proved by certificate
of a diplomatic or consular officer of the United States, or
apostille of an official designated by a foreign country which,
by treaty or convention, accords like effect to apostilles of
designated officials in the United States, and such oath shall
be valid if it complies with the laws of the state or country
where made. When the application is made as provided in this
title by a person other than the inventor, the oath may be so
varied in form that it can be made by him. For purposes of this
section, a consular officer shall include any United States
citizen serving overseas, authorized to perform notarial
functions pursuant to section 1750 of the Revised Statutes, as
amended (22 U.S.C. 4221).] (a) Naming the Inventor; Inventor's
Oath or Declaration.--An application for patent that is filed
under section 111(a), that commences the national stage under
section 371 (including an application under section 111 that is
filed by an inventor for an invention for which an application
has previously been filed under this title by that inventor)
shall include, or be amended to include, the name of the
inventor of any claimed invention in the application. Except as
otherwise provided in this section, an individual who is the
inventor or a joint inventor of a claimed invention in an
application for patent shall execute an oath or declaration in
connection with the application.
(b) Required Statements.--An oath or declaration under
subsection (a) shall contain statements that--
(1) the application was made or was authorized to be
made by the affiant or declarant; and
(2) such individual believes himself or herself to be
the original inventor or an original joint inventor of
a claimed invention in the application.
(c) Additional Requirements.--The Director may specify
additional information relating to the inventor and the
invention that is required to be included in an oath or
declaration under subsection (a).
(d) Substitute Statement.--
(1) In general.--In lieu of executing an oath or
declaration under subsection (a), the applicant for
patent may provide a substitute statement under the
circumstances described in paragraph (2) and such
additional circumstances that the Director may specify
by regulation.
(2) Permitted circumstances.--A substitute statement
under paragraph (1) is permitted with respect to any
individual who--
(A) is unable to file the oath or declaration
under subsection (a) because the individual--
(i) is deceased;
(ii) is under legal incapacity; or
(iii) cannot be found or reached
after diligent effort; or
(B) is under an obligation to assign the
invention but has refused to make the oath or
declaration required under subsection (a).
(3) Contents.--A substitute statement under this
subsection shall--
(A) identify the individual with respect to
whom the statement applies;
(B) set forth the circumstances representing
the permitted basis for the filing of the
substitute statement in lieu of the oath or
declaration under subsection (a); and
(C) contain any additional information,
including any showing, required by the
Director.
(e) Making Required Statements in Assignment of Record.--An
individual who is under an obligation of assignment of an
application for patent may include the required statements
under subsections (b) and (c) in the assignment executed by the
individual, in lieu of filing such statements separately.
(f) Time for Filing.--A notice of allowance under section
151 may be provided to an applicant for patent only if the
applicant for patent has filed each required oath or
declaration under subsection (a) or has filed a substitute
statement under subsection (d) or recorded an assignment
meeting the requirements of subsection (e).
(g) Earlier-Filed Application Containing Required
Statements or Substitute Statement.--The requirements under
this section shall not apply to an individual with respect to
an application for patent in which the individual is named as
the inventor or a joint inventor and that claims the benefit
under section 120 or 365(c) of the filing of an earlier-filed
application, if--
(1) an oath or declaration meeting the requirements
of subsection (a) was executed by the individual and
was filed in connection with the earlier-filed
application;
(2) a substitute statement meeting the requirements
of subsection (d) was filed in the earlier filed
application with respect to the individual; or
(3) an assignment meeting the requirements of
subsection (e) was executed with respect to the
earlier-filed application by the individual and was
recorded in connection with the earlier-filed
application.
(h) Supplemental and Corrected Statements; Filing
Additional Statements.--
(1) In general.--Any person making a statement
required under this section may withdraw, replace, or
otherwise correct the statement at any time. If a
change is made in the naming of the inventor requiring
the filing of 1 or more additional statements under
this section, the Director shall establish regulations
under which such additional statements may be filed.
(2) Supplemental statements not required.--If an
individual has executed an oath or declaration under
subsection (a) or an assignment meeting the
requirements of subsection (e) with respect to an
application for patent, the Director may not thereafter
require that individual to make any additional oath,
declaration, or other statement equivalent to those
required by this section in connection with the
application for patent or any patent issuing thereon.
(3) Savings clause.--No patent shall be invalid or
unenforceable based upon the failure to comply with a
requirement under this section if the failure is
remedied as provided under paragraph (1).
(i) Acknowledgement of Penalties.--Any declaration or
statement filed pursuant to this section shall contain an
acknowledgement that any willful false statement made in such
declaration or statement is punishable under section 1001 of
title 18 by fine or imprisonment of not more than 5 years, or
both.
Sec. 116. Inventors
[When] (a) Joint Inventions.--When an invention is made by
two or more persons jointly, they shall apply for patent
jointly and each make the required oath, except as otherwise
provided in this title. Inventors may apply for a patent
jointly even though
(1) they did not physically work together or at the
same time,
(2) each did not make the same type or amount of
contribution, or
(3) each did not make a contribution to the subject
matter of every claim of the patent.
[If a joint inventor] (b) Omitted Inventor._If a joint
inventor refuses to join in an application for patent or cannot
be found or reached after diligent effort, the application may
be made by the other inventor on behalf of himself and the
omitted inventor. The Director, on proof of the pertinent facts
and after such notice to the omitted inventor as he prescribes,
may grant a patent to the inventor making the application,
subject to the same rights which the omitted inventor would
have had if he had been joined. The omitted inventor may
subsequently join in the application.
[Whenever] (c) Correction of Errors in Application._
Whenever through error a person is named in an application for
patent as the inventor, or through error an inventor is not
named in an application, and such error arose without any
deceptive intention on his part, the Director may permit the
application to be amended accordingly, under such terms as he
prescribes.
* * * * * * *
Sec. 118. Filing by other than inventor
[Whenever an inventor refuses to execute an application for
patent, or cannot be found or reached after diligent effort, a
person to whom the inventor has assigned or agreed in writing
to assign the invention or who otherwise shows sufficient
proprietary interest in the matter justifying such action, may
make 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 necessary to preserve the rights of the parties
or to prevent irreparable damage; and the Director may grant a
patent to such inventor upon such notice to him as the Director
deems sufficient, and on compliance with such regulations as he
prescribes.] 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.
Sec. 119. Benefit of earlier filing date; right of priority
(a) An application for patent for an invention filed in
this country by any person who has, or whose legal
representatives or assigns have, previously regularly filed an
application for a patent for the same invention in a foreign
country which affords similar privileges in the case of
applications filed in the United States or to citizens of the
United States, or in a WTO member country, shall have the same
effect as the same application would have if filed in this
country on the date on which the application for patent for the
same invention was first filed in such foreign country, if the
application in this country is filed within twelve months from
the earliest date on which such foreign application was filed[;
but no patent shall be granted on any application for patent
for an invention which had been patented or described in a
printed publication in any country more than one year before
the date of the actual filing of the application in this
country, or which had been in public use or on sale in this
country more than one year prior to such filing].
Sec. 120. Benefit of earlier filing date in the United States
An application for patent for an invention disclosed in the
manner provided by the first paragraph of section 112 of this
title in an application previously filed in the United States,
or as provided by section 363 of this title, [which is filed by
an inventor or inventors named] which names an inventor or
joint inventor in the previously filed application shall have
the same effect, as to such invention, as though filed on the
date of the prior application, if filed before the patenting or
abandonment of or termination of proceedings on the first
application or on an application similarly entitled to the
benefit of the filing date of the first application and if it
contains or is amended to contain a specific reference to the
earlier filed application. No application shall be entitled to
the benefit of an earlier filed application under this section
unless an amendment containing the specific reference to the
earlier filed application is submitted at such time during the
pendency of the application as required by the Director. The
Director may consider the failure to submit such an amendment
within that time period as a waiver of any benefit under this
section. The Director may establish procedures, including the
payment of a surcharge, to accept an unintentionally delayed
submission of an amendment under this section.
Sec. 121. Divisional applications
If two or more independent and distinct inventions are
claimed in one application, the Director may require the
application to be restricted to one of the inventions. If the
other invention is made the subject of a divisional application
which complies with the requirements of section 120 of this
title it shall be entitled to the benefit of the filing date of
the original application. A patent issuing on an application
with respect to which a requirement for restriction under this
section has been made, or on an application filed as a result
of such a requirement, shall not be used as a reference either
in the Patent and Trademark Office or in the courts against a
divisional application or against the original application or
any patent issued on either of them, if the divisional
application is filed before the issuance of the patent on the
other application. [If a divisional application is directed
solely to subject matter described and claimed in the original
application as filed, the Director may dispense with signing
and execution by the inventor.] The validity of a patent shall
not be questioned for failure of the Director to require the
application to be restricted to one invention.
Sec. 122. Confidential status of applications; publication of patent
applications
* * * * * * *
(e) Preissuance Submissions by Third Parties.--
(1) In general.--Any person may submit for
consideration and inclusion in the record of a patent
application, any patent, published patent application,
or other publication of potential relevance to the
examination of the application, if such submission is
made in writing before the earlier of--
(A) the date a notice of allowance under
section 151 is mailed in the application for
patent; or
(B) either--
(i) 6 months after the date on which
the application for patent is published
under section 122, or
(ii) the date of the first rejection
under section 132 of any claim by the
examiner during the examination of
the application for patent,
whichever occurs later.
(2) Other requirements.--Any submission under
paragraph (1) shall--
(A) set forth a concise description of the
asserted relevance of each submitted document;
(B) be accompanied by such fee as the
Director may prescribe; and
(C) include a statement by the person making
such submission affirming that the submission
was made in compliance with this section.
Sec. 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.
* * * * * * *
CHAPTER 12--EXAMINATION OF APPLICATION
* * * * * * *
131. Examination of Application.
[The Director shall cause] (a) In General.--The Director
shall cause an examination to be made of the application and
the alleged new invention; and if on such examination it
appears that the applicant is entitled to a patent under the
law, the Commissioner shall issue a patent therefor.
(b) Search and Examination Functions.--To the extent
consistent with the United States obligations under
international agreements, examination and search duties for the
grant of a United States patent are sovereign functions which
shall be performed within the United States by United States
citizens who are employees of the United States Government.
* * * * * * *
Sec. 134. [Appeal to the Board of Patent Appeals and Interferences]
Appeal to the Patent Trial and Appeal Board.
(a) Patent Applicant.--An applicant for a patent, any of
whose claims has been twice rejected, may appeal from the
decision of the primary examiner to the [Board of Patent
Appeals and Interferences] Patent Trial and Appeal Board,
having once paid the fee for such appeal.
(b) Patent Owner.--A patent owner in any reexamination
proceeding may appeal from the final rejection of any claim by
the primary examiner to the [Board of Patent Appeals and
Interferences] Patent Trial and Appeal Board, having once paid
the fee for such appeal.
(c) Third Party.--A third-party requester in an inter
partes proceeding may appeal to the [Board of Patent Appeals
and Interferences] Patent Trial and Appeal Board from the final
decision of the primary examiner favorable to the patentability
of any original or proposed amended or new claim of a patent,
having once paid the fee for such appeal.
Sec. 135. [Interferences] Derivation proceedings
(a) [Whenever an application is made for a patent which, in
the opinion of the Director, would interfere with any pending
application, or with any unexpired patent, an interference may
be declared and the Director shall give notice of such
declaration to the applicants, or applicant and patentee, as
the case may be. The Board of Patent Appeals and Interferences
shall determine questions of priority of the inventions and may
determine questions of patentability. Any final decision, if
adverse to the claim of an applicant, shall constitute the
final refusal by the Patent and Trademark Office of the claims
involved, and the Director may issue a patent to the applicant
who is adjudged the prior inventor. A final judgment adverse to
a patentee from which no appeal or other review has been or can
be taken or had shall constitute cancellation of the claims
involved in the patent, and notice of such cancellation shall
be endorsed on copies of the patent distributed after such
cancellation by the Patent and Trademark Office.] Dispute Over
Right to Patent._
(1) Institution of derivation proceeding.--An
applicant may request initiation of a derivation
proceeding to determine the right of the applicant to a
patent by filing a request which sets forth with
particularity the basis for finding that an earlier
applicant derived the claimed invention from the
applicant requesting the proceeding and, without
authorization, filed an application claiming such
invention. Any such request may only be made within 12
months after the date of first publication of an
application containing a claim that is the same or is
substantially the same as the claimed invention, must
be made under oath, and must be supported by
substantial evidence. Whenever the Director determines
that patents or applications for patent naming
different individuals as the inventor interfere with
one another because of a dispute over the right to
patent under section 102(a), the Director shall
institute a derivation proceeding for the purpose of
determining which applicant is entitled to a patent.
(2) Determination by patent trial and appeal board.--
In any proceeding instituted by the Director under this
subsection, the Patent Trial and Appeal Board--
(A) shall determine which applicant or patent
owner is entitled to a patent on the claimed
invention that is the subject of the request;
(B) in appropriate circumstances, may correct
the naming of the inventor in any application
or patent at issue; and
(C) shall issue a final decision on the right
to patent.
(3) Derivation proceeding.--The Board may defer
action on a request to initiate a derivation proceeding
until 3 months after the date on which the Director
issues a patent to the applicant whose application has
the earlier effective filing date.
(4) Effect of final decision.--The final decision of
the Patent Trial and Appeal Board, if adverse to the
claim of an applicant, shall constitute the final
refusal by the United States Patent and Trademark
Office on the claims involved. The Director may issue a
patent to an applicant who is determined by the Patent
Trial and Appeal Board to have the right to patent. The
final decision of the Board, if adverse to a patentee,
shall, if no appeal or other review of the decision has
been or can be taken or had, constitute cancellation of
the claims involved in the patent, and notice of such
cancellation shall be endorsed on copies of the patent
distributed after such cancellation by the United
States Patent and Trademark Office.
(b) Settlement.--Parties to a derivation proceeding 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, 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.
(c) Arbitration.--Parties to a derivation proceeding,
within such time as may be specified by the Director by
regulation, may 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
patentability of the invention involved in the derivation
proceeding.
* * * * * * *
CHAPTER 13--REVIEW OF PATENT AND TRADEMARK OFFICE DECISIONS
Sec. 141. Appeal to the Court of Appeals for the Federal Circuit
An applicant dissatisfied with the decision in an appeal to
the [Board of Patent Appeals and Interferences] Patent Trial
and Appeal Board under section 134 of this title may appeal the
decision to the United States Court of Appeals for the Federal
Circuit. By filing such an appeal the applicant waives his or
her right to proceed under section 145 of this title. A patent
owner, or a third-party requester in an inter partes
reexamination proceeding, who is in any reexamination
proceeding dissatisfied with the final decision in an appeal to
the [Board of Patent Appeals and Interferences] Patent Trial
and Appeal Board under section 134 may appeal the decision only
to the United States Court of Appeals for the Federal Circuit.
A party to [an interference] a derivation proceeding
dissatisfied with the decision of the [Board of Patent Appeals
and Interferences] Patent Trial and Appeal Board on the
[interference] derivation 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
[interference] derivation proceeding, within twenty days after
the appellant has filed notice of appeal in accordance with
section 142 of this title, files notice with the Director that
the party elects to have all further proceedings conducted as
provided in section 146 of this title. If the appellant does
not, within thirty days after filing of such notice by the
adverse party, file a civil action under section 146, the
decision appealed from shall govern the further proceedings in
the case.
* * * * * * *
Sec. 145. Civil action to obtain patent
An applicant dissatisfied with the decision of the [Board
of Patent Appeals and Interferences] Patent Trial and Appeal
Board in an appeal under section 134(a) of this title may,
unless appeal has been taken to the United States Court of
Appeals for the Federal Circuit, have remedy by civil action
against the Director in the [United States District Court for
the District of Columbia] United States District Court for the
Eastern District of Virginia if commenced within such time
after such decision, not less than sixty days, as the Director
appoints. The court may adjudge that such applicant is entitled
to receive a patent for his invention, as specified in any of
his claims involved in the decision of the [Board of Patent
Appeals and Interferences] Patent Trial and Appeal Board, as
the facts in the case may appear, and such adjudication shall
authorize the Director to issue such patent on compliance with
the requirements of law. All the expenses of the proceedings
shall be paid by the applicant.
Sec. 146. [Civil action in case of interference] Civil action in case
of derivation proceeding
Any party to [an interference] a derivation proceeding
dissatisfied with the decision of the [Board of Patent Appeals
and Interferences] Patent Trial and Appeal Board may have
remedy by civil action, if commenced within such time after
such decision, not less than sixty days, as the Director
appoints or as provided in section 141 of this title, unless he
has appealed to the United States Court of Appeals for the
Federal Circuit, and such appeal is pending or has been
decided. In such suits the record in the Patent and Trademark
Office shall be admitted on motion of either party upon the
terms and conditions as to costs, expenses, and the further
cross-examination of the witnesses as the court imposes,
without prejudice to the right of the parties to take further
testimony. The testimony and exhibits of the record in the
Patent and Trademark Office when admitted shall have the same
effect as if originally taken and produced in the suit.
Such suit may be instituted against the party in interest
as shown by the records of the Patent and Trademark Office at
the time of the decision complained of, but any party in
interest may become a party to the action. If there be adverse
parties residing in a plurality of districts not embraced
within the same state, or an adverse party residing in a
foreign country, the [United States District Court for the
District of Columbia] United States District Court for the
Eastern District of Virginia shall have jurisdiction and may
issue summons against the adverse parties directed to the
marshal of any district in which any adverse party resides.
Summons against adverse parties residing in foreign countries
may be served by publication or otherwise as the court directs.
The Director shall not be a necessary party but he shall be
notified of the filing of the suit by the clerk of the court in
which it is filed and shall have the right to intervene.
Judgment of the court in favor of the right of an applicant to
a patent shall authorize the Director to issue such patent on
the filing in the Patent and Trademark Office of a certified
copy of the judgment and on compliance with the requirements of
law.
* * * * * * *
CHAPTER 14--ISSUE OF PATENT
* * * * * * *
Sec. 154. Contents and term of patent; provisional rights
* * * * * * *
(b) Adjustment of Patent Term.--
(1) Patent term guarantees.
(A) Guarantee of prompt patent and trademark
office responses.--Subject to the limitations
under paragraph (2), if the issue of an
original patent is delayed due to the failure
of the Patent and Trademark Office to--
(i) provide at least one of the
notifications under section 132 of this
title or a notice of allowance under
section 151 of this title not later
than 14 months after--
(I) the date on which an
application was filed under
section 111 (a) of this title;
or
(II) the date on which an
international application
fulfilled the requirements of
section 3371 of this title;
(ii) respond to a reply under section
132, or to an appeal taken under
section 134, within 4 months after the
date on which the reply was filed or
the appeal was taken;
(iii) act on an application within 4
months after the date of a decision by
the [Board of Patent Appeals and
Interferences] Patent Trial and Appeal
Board under section 134 or 135 or a
decision by a Federal court under
section 141, 145, or 146 in a case in
which allowable claims remain in the
application; or
(iv) issue a patent within 4 months
after the date on which the issue fee
was paid under section 151 and all
outstanding requirements were
satisfied,
the term of the patent shall be extended 1 day
for each day after the end of the period
specified in clause (i), (ii), (iii), or (iv),
as the case may be, until the action described
in such clause is taken.
(B) Guarantee of no more than 3-year
application pendency.--Subject to the
limitations under paragraph (2), if the issue
of an original patent is delayed due to the
failure of the United States Patent and
Trademark Office to issue a patent within 3
years after the actual filing date of the
application in the United States, not
including--
(i) any time consumed by continued
examination of the application
requested by the applicant under
section 132(b);
(ii) any time consumed by a
proceeding under section 135(a), any
time consumed by the imposition of an
order under section 181, or any time
consumed by appellate review by the
[Board of Patent Appeals and
Interferences] Patent Trial and Appeal
Board or by a Federal court; or
(iii) any delay in the processing of
the application by the United States
Patent and Trademark Office requested
by the applicant except as permitted by
paragraph (3)(C),
the term of the patent shall be extended 1 day
for each day after the end of that 3-year
period until the patent is issued.
(C) Guarantee or adjustments for delays due
to [interferences] derivation proceedings,
secrecy orders, and appeals.--Subject to the
limitations under paragraph (2), if the issue
of an original patent is delayed due to--
(i) a proceeding under section
135(a);
(ii) the imposition of an order under
section 181; or
(iii) appellate review by the [Board
of Patent Appeals and Interferences]
Patent Trial and Appeal Board or by a
Federal court in a case in which the
patent was issued under a decision in
the review reversing an adverse
determination of patentability,
the term of the patent shall be extended 1 day
for each day of the pendency of the proceeding,
order, or review, as the case may be.
* * * * * * *
(4) Appeal of patent term adjustment determination.--
(A) An applicant dissatisfied with a
determination made by the Director under
paragraph (3) shall have remedy by a civil
action against the Director filed in the
[United States District Court for the District
of Columbia] United States District Court for
the Eastern District of Virginia within 180
days after the grant of the patent. Chapter 7
of title 5 shall apply to such action. Any
final judgment resulting in a change to the
period of adjustment of the patent term shall
be served on the Director, and the Director
shall thereafter alter the term of the patent
to reflect such change.
(B) The determination of a patent term
adjustment under this subsection shall not be
subject to appeal or challenge by a third party
prior to the grant of the patent.
* * * * * * *
[Sec. 157. Statutory invention registration
(a) Notwithstanding any other provision of this title, the
Director is authorized to publish a statutory invention
registration containing the specification and drawings of a
regularly filed application for a patent without examination if
the applicant--
(1) meets the requirements of section 112 of this
title;
(2) has complied with the requirements for printing,
as set forth in regulations of the Director;
(3) waives the right to receive a patent on the
invention within such period as may be prescribed by
the Director; and
(4) pays application, publication, and other
processing fees established by the Director.
If an interference is declared with respect to such an
application, a statutory invention registration may not be
published unless the issue of priority of invention is finally
determined in favor of the applicant.
(b) The waiver under subsection (a)(3) of this section by
an applicant shall take effect upon publication of the
statutory invention registration.
(c) A statutory invention registration published pursuant
to this section shall have all of the attributes specified for
patents in this title except those specified in section 183 and
sections 271 through 289 of this title. A statutory invention
registration shall not have any of the attributes specified for
patents in any other provision of law other than this title. A
statutory invention registration published pursuant to this
section shall give appropriate notice to the public, pursuant
to regulations which the Director shall issue, of the preceding
provisions of this subsection. The invention with respect to
which a statutory invention certificate is published is not a
patented invention for purposes of section 292 of this title.
(d) The Director shall report to the Congress annually on
the use of statutory invention registrations. Such report shall
include an assessment of the degree to which agencies of the
Federal Government are making use of the statutory invention
registration system, the degree to which it aids the management
of federally developed technology, and an assessment of the
cost savings to the Federal Government of the use of such
procedures.]
* * * * * * *
CHAPTER 16 DESIGNS
* * * * * * *
Sec. 172 Right of priority.
The right of priority provided for by subsections (a)
through (d) of section 119 of this title [and the time
specified in section 102(d)] shall be six months in the case of
designs. The right of priority provided for by section 119(e)
of this title shall not apply to designs.
* * * * * * *
CHAPTER 17--SECRECY OF CERTAIN INVENTIONS AND FILING APPLICATIONS IN
FOREIGN COUNTRY
* * * * * * *
Sec. 184. Filing of application in foreign country
[Except when] (a) Filing in Foreign Country._Except when
authorized by a license obtained from the Commissioner of
Patents a person shall not file or cause or authorize to be
filed in any foreign country prior to six months after filing
in the United States an application for patent or for the
registration of a utility model, industrial design, or model in
respect of an invention made in this country. A license shall
not be granted with respect to an invention subject to an order
issued by the Commissioner of Patents pursuant to section 181
of this title without the concurrence of the head of the
departments and the chief officers of the agencies who caused
the order to be issued. The license may be granted
retroactively where an application has been filed abroad
through error and without deceptive intent and the application
does not disclose an invention within the scope of section 181
of this title.
[The term] (b) Application.--The term ``application'' when
used in this chapter includes applications and any
modifications, amendments, or supplements thereto, or divisions
thereof.
[The scope] (c) Subsequent Modifications, Amendments, and
Supplements._The scope of a license shall permit subsequent
modifications, amendments, and supplements containing
additional subject matter if the application upon which the
request for the license is based is not, or was not, required
to be made available for inspection under section 181 of this
title and if such modifications, amendments, and supplements do
not change the general nature of the invention in a manner
which would require such application to be made available for
inspection under such section 181. In any case in which a
license is not, or was not, required in order to file an
application in any foreign country, such subsequent
modifications, amendments, and supplements may be made, without
a license, to the application filed in the foreign country if
the United States application was not required to be made
available for inspection under section 181 and if such
modifications, amendments, and supplements do not, or did not,
change the general nature of the invention in a manner which
would require the United States application to have been made
available for inspection under such section 181.
* * * * * * *
CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE
* * * * * * *
Sec. 202. Disposition of rights
* * * * * * *
(c) Each funding agreement with a small business firm or
nonprofit organization shall contain appropriate provisions to
effectuate the following:
* * * * * * *
(2) That the contractor make a written election
within two years after disclosure to the Federal agency
(or such additional time as may be approved by the
Federal agency) whether the contractor will retain
title to a subject invention: Provided, That in any
case where [publication, on sale, or public use, has
initiated the one year statutory period in which valid
patent protection can still be obtained in the United
States] the 1-year period referred to in section 102(a)
would end before the end of that 2-year period, the
period for election may be shortened by the Federal
agency to a date that is not more than sixty days prior
to the end of [the statutory] that 1-year period: And
provided further, That the Federal Government may
receive title to any subject invention in which the
contractor does not elect to retain rights or fails to
elect rights within such times.
(3) That a contractor electing rights in a subject
invention agrees to file a patent application prior to
[any statutory bar date that may occur under this title
due to publication, on sale, or public use] the
expiration of the 1-year period referred to in section
102(a), and shall thereafter file corresponding patent
applications in other countries in which it wishes to
retain title within reasonable times, and that the
Federal Government may receive title to any subject
inventions in the United States or other countries in
which the contractor has not filed patent applications
on the subject invention within such times.
* * * * * * *
(7) In the case of a nonprofit organization, (A) a
prohibition upon the assignment of rights to a subject
invention in the United States without the approval of
the Federal agency, except where such assignment is
made to an organization which has as one of its primary
functions the management of inventions (provided that
such assignee shall be subject to the same provisions
as the contractor); (B) a requirement that the
contractor share royalties with the inventor; (C)
except with respect to a funding agreement for the
operation of a Government-owned-contractor-operated
facility, a requirement that the balance of any
royalties or income earned by the contractor with
respect to subject inventions, after payment of
expenses (including payments to inventors) incidental
to the administration of subject inventions, be
utilized for the support of scientific research or
education; (D) a requirement that, except where it
proves infeasible after a reasonable inquiry, in the
licensing of subject inventions shall be given to small
business firms; and (E) with respect to a funding
agreement for the operation of a Government-owned-
contractor-operated facility, requirements (i) that
after payment of patenting costs, licensing costs,
payments to inventors, and other expenses incidental to
the administration of subject inventions, 100 percent
of the balance of any royalties or income earned and
retained by the contractor during any fiscal year up to
an amount equal to 5 percent of the annual budget of
the facility, shall be used by the contractor for
scientific research, development, and education
consistent with the research and development mission
and objectives of the facility, including activities
that increase the licensing potential of other
inventions of the facility; provided that if said
balance exceeds 5 percent of the annual budget of the
facility, that [75 percent] 15 percent of such excess
shall be paid to the Treasury of the United States and
the remaining [25 percent] 85 percent shall be used for
the same purposes as described above in this clause
(D); and (ii) that, to the extent it provides the most
effective technology transfer, the licensing of subject
inventions shall be administered by contractor
employees on location at the facility.
* * * * * * *
PART III--PATENTS AND PROTECTION OF PATENT RIGHTS
CHAPTER 25--AMENDMENT AND CORRECTION OF PATENTS
Sec. 251. Reissue of defective patents
[Whenever] (a) In General._Whenever any patent is, through
error without any deceptive intention, deemed wholly or partly
inoperative or invalid, by reason of a defective specification
or drawing, or by reason of the patentee claiming more or less
than he had a right to claim in the patent, the Director shall,
on the surrender of such patent and the payment of the fee
required by law, reissue the patent for the invention disclosed
in the original patent, and in accordance with a new and
amended application, for the unexpired part of the term of the
original patent. No new matter shall be introduced into the
application for reissue.
[The Director] (b) Multiple Reissued Patents._The Director
may issue several reissued patents for distinct and separate
parts of the thing patented, upon demand of the applicant, and
upon payment of the required fee for a reissue for each of such
reissued patents.
[The provisions] (c) Applicability of This Title._The
provisions of this title relating to applications for patent
shall be applicable to applications for reissue of a patent,
except that application for reissue may be made and sworn to by
the assignee of the entire interest if the application does not
seek to enlarge the scope of the claims of the original patent.
[No reissued patent] (d) Reissue Patent Enlarging Scope of
Claims._No reissued patent shall be granted enlarging the scope
of the claims of the original patent unless applied for within
two years from the grant of the original patent.
* * * * * * *
Sec. 253. Disclaimer
[Whenever] (a) In General._Whenever, without any deceptive
intention, a claim of a patent is invalid the remaining claims
shall not thereby be rendered invalid. A patentee, whether of
the whole or any sectional interest therein, may, on payment of
the fee required by law, make disclaimer of any complete claim,
stating therein the extent of his interest in such patent. Such
disclaimer shall be in writing, and recorded in the Patent and
Trademark Office; and it shall thereafter be considered as part
of the original patent to the extent of the interest possessed
by the disclaimant and by those claiming under him.
[In like manner] (b) Additional Disclaimer or Dedication._
In the manner set forth in subsection (a), any patentee or
applicant may disclaim or dedicate to the public the entire
term, or any terminal part of the term, of the patent granted
or to be granted.
* * * * * * *
Sec. 256. Correction of named inventor
[Whenever] (a) Correction._Whenever through error a person
is named in an issued patent as the inventor, or through error
an inventor is not named in an issued patent and such error
arose without any deceptive intention on his part, the Director
may, on application of all the parties and assignees, with
proof of the facts and such other requirements as may be
imposed, issued a certificate correcting such error.
[The error] (b) Patent Valid if Error Corrected._The error
of omitting inventors or naming persons who are not inventors
shall not invalidate the patent in which such error occurred if
it can be corrected as provided in this section. The court
before which such matter is called in question may order
correction of the patent on notice and hearing of all parties
concerned and the Director shall issue a certificate
accordingly.
* * * * * * *
CHAPTER 28--INFRINGEMENT OF PATENTS
* * * * * * *
Sec. 273. Defense to infringement based on earlier inventor
* * * * * * *
(b) Defense to Infringement.--
* * * * * * *
(6) Personal defense.--[The defense under this
section may be asserted only by the person who
performed the acts necessary to establish the defense
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.] 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.
* * * * * * *
CHAPTER 29--REMEDIES FOR INFRINGEMENT OF PATENT, AND OTHER ACTIONS
* * * * * * *
Sec. 282. Presumption of validity; defenses
[A patent] (a) In General._A patent shall be presumed
valid. Each claim of a patent (whether in independent,
dependent, or multiple dependent form) shall be presumed valid
independently of the validity of other claims; dependent or
multiple dependent claims shall be presumed valid even though
dependent upon an invalid claim. Notwithstanding the preceding
sentence, if a claim to a composition of matter is held invalid
and that claim was the basis of a determination of
nonobviousness under section 103(b)(1), the process shall no
longer be considered nonobvious solely on the basis of section
103(b)(1). The burden of establishing invalidity of a patent or
any claim thereof shall rest on the party asserting such
invalidity.
[The following] (b) Defenses._The following shall be
defenses in any action involving the validity or infringement
of a patent and shall be pleaded:
(1) Noninfringement, absence of liability for
infringement or unenforceability,
(2) Invalidity of the patent or any claim in suit on
any ground specified in part II of this title as a
condition for patentability,
[(3) Invalidity of the patent or any claim in suit
for failure to comply with any requirement of sections
112 or 251 of this title,] (3) Invalidity of the patent
or any claim in suit for failure to comply with--
(A) any requirement of section 112 of this
title, 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 of this
title.
(4) Any other fact or act made a defense by this
title.
[In actions] (c) Notice of Actions; Actions During
Extension of Patent Term._In actions involving the validity or
infringement of a patent the party asserting invalidity or
noninfringement shall give notice in the pleadings or otherwise
in writing to the adverse party at least thirty days before the
trial, of the country, number, date, and name of the patentee
of any patent, the title, date, and page numbers of any
publication to be relied upon as anticipation of the patent in
suit or, except in actions in the United States Court of
Federal Claims, as showing the state of the art, and the name
and address of any person who may be relied upon as the prior
inventor or as having prior knowledge of or as having
previously used or offered for sale the invention of the patent
in suit. In the absence of such notice proof of the said
matters may not be made at the trial except on such terms as
the court requires. Invalidity of the extension of a patent
term or any portion thereof under section 154(b) or 156 of this
title because of the material failure--
(1) by the applicant for the extension, or
(2) by the Director,
to comply with the requirements of such section shall be a
defense in any action involving the infringement of a patent
during the period of the extension of its term and shall be
pleaded. A due diligence determination under section 156 (d)(2)
is not subject to review in such an action.
* * * * * * *
Sec. 284. Damages
[Upon finding for the claimant the court shall award the
claimant damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty for the use made
of the invention by the infringer, together with interest and
costs as fixed by the court.
When the damages are not found by a jury, the court shall
assess them. In either event the court may increase the damages
up to three times the amount found or assessed. Increased
damages under this paragraph shall not apply to provisional
rights under section 154 (d) of this title.
The court may receive expert testimony as an aid to the
determination of damages or of what royalty would be reasonable
under the circumstances.]
(a) In General.--
(1) Compensatory damages authorized.--Upon finding
for the claimant the court shall award the claimant
damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty for the
use made of the invention by the infringer, together
with the interest and costs as fixed by the court.
(2) Use of experts permitted.--The court may receive
expert testimony as an aid to the determination of
damages or of what royalty would be reasonable under
the circumstances.
(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 legally sufficient evidentiary
basis, and the court or jury shall consider only those
methodologies and factors in making a 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) Willful Infringement.--
(1) Increased damages.--A court that has determined
that an infringer has willfully infringed a patent or
patents may increase damages up to 3 times the amount
of the damages found or assessed under subsection (a),
except that increased damages under this paragraph
shall not apply to provisional rights under section
154(d).
(2) Permitted grounds for willfulness.--A court may
find that an infringer has willfully infringed a patent
only if the patent owner proves by clear and convincing
evidence that acting with objective recklessness--
(A) after receiving written notice from the
patentee--
(i) alleging acts of infringement in
a manner sufficient to give the
infringer an objectively reasonable
apprehension of suit on such patent,
and
(ii) identifying with particularity
each claim of the patent, each product
or process that the patent owner
alleges infringes the patent, and the
relationship of such product or process
to such claim,
the infringer, after a reasonable opportunity
to investigate, thereafter performed 1 or more
of the alleged acts of infringement;
(B) the infringer intentionally copied the
patented invention with knowledge that it was
patented; or
(C) after having been found by a court to
have infringed that patent, the infringer
engaged in conduct that was not colorably
different from the conduct previously found to
have infringed the patent, and which resulted
in a separate finding of infringement of the
same patent.
(3) Limitations on willfulness.--
(A) In general.--Notwithstanding paragraph
(2), an infringer may not be found to have
acted with objective recklessness where for any
period of time during which the infringer had
an informed good faith belief that the patent
was invalid or unenforceable, or would not be
infringed by the conduct later shown to
constitute infringement of the patent, and--
(i) there was reasonable reliance on
advice of counsel;
(ii) the infringer sought to modify
its conduct to avoid infringement once
it had discovered the patent; or
(iii) there is sufficient evidence
that the infringer had a good faith
belief that the patent was invalid or
unenforceable, or would not be
infringed by conduct later shown to
constitute infringement of the patent.
(B) Relevance of not presenting certain
evidence.--The decision of the infringer not to
present evidence of advice of counsel is not
relevant to a determination of willful
infringement under paragraph (2).
(4) Limitation on pleading.--Before the date on which
a court determines that the patent in suit is not
invalid, is enforceable, and has been infringed by the
infringer, a patentee may not plead and a court may not
determine that an infringer has willfully infringed a
patent.
* * * * * * *
Sec. 287. Limitation on damages and other remedies; marking and notice
(a) Patentees, and persons making, offering for sale, or
selling within the United States any patented article for or
under them, or importing any patented article into the United
States, may give notice to the public that the same is
patented, either by fixing thereon the word ``patent'' or the
abbreviation ``pat.'', together with the number of the patent,
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, or when, from the character of the article, this
can not be done, by fixing to it, or to the package wherein one
or more of them is contained, a label containing a like notice.
In the event of failure so to mark, no damages shall be
recovered by the patentee in any action for infringement,
except on proof that the infringer was notified of the
infringement and continued to infringe thereafter, in which
event damages may be recovered only for infringement occurring
after such notice. Filing of an action for infringement shall
constitute such notice.
* * * * * * *
(c)
* * * * * * *
(4) This subsection shall not apply to any patent
issued based on an application [the earliest effective
filing date of which is prior to] which has an
effective filing date before September 30, 1996.
* * * * * * *
[Sec. 291. Interfering patents
The owner of an interfering patent may have relief against
the owner of another by civil action, and the court may adjudge
the question of the validity of any of the interfering patents,
in whole or in part. The provisions of the second paragraph of
section 146 of this title shall apply to actions brought under
this section.]
* * * * * * *
Sec. 293. Nonresident patentee; service and notice.
Every patentee not residing in the United States may file
in the Patent and Trademark Office a written designation
stating the name and address of a person residing within the
United States on whom may be served process or notice of
proceedings affecting the patent or rights thereunder. If the
person designated cannot be found at the address given in the
last designation, or if no person has been designated, the
[United States District Court for the District of Columbia]
United States District Court for the Eastern District of
Virginia shall have jurisdiction and summons shall be served by
publication or otherwise as the court directs. The court shall
have the same jurisdiction to take any action respecting the
patent or rights thereunder that it would have if the patentee
were personally within the jurisdiction of the court.
* * * * * * *
CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND EX PARTE REEXAMINATION OF
PATENTS
Sec. 301. Citation of prior art
[Any person at any time may cite to the Office in writing
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. If the person explains in
writing the pertinency and manner of applying such prior art to
at least one claim of the patent, the citation of such prior
art and the explanation thereof will become a part of the
official file of the patent. At the written request of the
person citing the prior art, his or her identity will be
excluded from the patent file and kept confidential.]
(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) written statements of the patent owner filed in a
proceeding before a Federal court or the Patent and
Trademark Office in which the patent owner takes a
position on the scope of one or more patent claims.
(b) Submissions Part of Official File.--If the person
citing prior art or written submissions under subsection (a)
explains in writing the pertinence and manner of applying the
prior art or written submission to at least one claim of the
patent, the citation of the prior art or written submissions
(as the case may be) and explanation thereof shall become a
part of the official file of the patent.
(c) Procedures for Written Statements.--
(1) Submission of additional materials.--A party that
submits written statements under subsection (a)(2) in a
proceeding shall include any other documents,
pleadings, or evidence from the proceeding that address
the patent owner's statements or the claims addressed
by the written statements.
(2) Limitation on use of statements.--Written
statements submitted under subsection (a)(2) shall not
be considered for any purpose other than to determine
the proper meaning of the claims that are the subject
of the request in a proceeding ordered pursuant to
section 304 or 313. Any such written statements, and
any materials submitted under paragraph (1), that are
subject to an applicable protective order shall be
redacted to exclude information subject to the order.
(d) Identity Withheld.--Upon the written request of the
person citing prior art or written statements under subsection
(a), the person's identity shall be excluded from the patent
file and kept confidential.
* * * * * * *
Sec. 303. Determination of issue by Director
(a) [Within three months following the filing of a request
for reexamination under the provisions of section 302 of this
title, the Director will determine whether a substantial new
question of patentability affecting any claim of the patent
concerned is raised by the request, with or without
consideration of other patents or printed publications. On his
own initiative, and any time, the Director may determine
whether a substantial new question of patentability is raised
by patents and publications discovered by him or cited under
the provisions of section 301 of this title. The existence of a
substantial new question of patentability is not precluded by
the fact that a patent or printed publication was previously
cited by or to the Office or considered by the Office.] Within
three months following the filing of a request for
reexamination under section 302, the Director shall determine
whether a substantial new question of patentability affecting
any claim of the patent concerned is raised by the request,
with or without consideration of other patents or printed
publications. On the Director's own initiative, and at any
time, the Director may determine whether a substantial new
question of patentability is raised by patents or publications
discovered by the Director, is cited under section 301, or is
cited by any person other than the owner of the patent under
section 302 or section 311. The existence of a substantial new
question of patentability is not precluded by the fact that a
patent or printed publication was previously considered by the
Office.
* * * * * * *
Sec. 305. Conduct of reexamination proceedings
After the times for filing the statement and reply provided
for by section 304 of this title have expired, reexamination
will be conducted according to the procedures established for
initial examination under the provisions of sections 132 and
133 of this title. In any reexamination proceeding under this
chapter, the patent owner will be permitted to propose any
amendment to his patent and a new claim or claims thereto, in
order to distinguish the invention as claimed from the prior
art cited under the provisions of section 301 of this title, or
in response to a decision adverse to the patentability of a
claim of a patent. No proposed amended or new claim enlarging
the scope of a claim of the patent will be permitted in a
reexamination proceeding under this chapter. All reexamination
proceedings under this section, including any appeal to the
[Board of Patent Appeals and Interferences] Patent Trial and
Appeal Board, will be conducted with special dispatch within
the Office.
* * * * * * *
CHAPTER 31--OPTIONAL INTER PARTES REEXAMINATION PROCEDURES
* * * * * * *
Sec. 314 Conduct of inter partes reexamination proceedings
(a) In General.--Except as otherwise provided in this
section, reexamination shall be [conducted according to the
procedures established for initial examination under the
provisions of sections 132 and 133] heard by an administrative
patent judge in accordance with procedures which the Director
shall establish. In any inter partes reexamination proceeding
under this chapter, the patent owner shall be permitted to
propose any amendment to the patent and a new claim or claims,
except that no proposed amended or new claim enlarging the
scope of the claims of the patent shall be permitted.
(b) Response.--
(1) With the exception of the inter partes
reexamination request, any document filed by either the
patent owner or the third-party requester shall be
served on the other party. In addition, the Office
shall send to the third-party requester a copy of any
communication sent by the Office to the patent owner
concerning the patent subject to the inter partes
reexamination proceeding.
(2) [Each time that the patent owner files a response
to an action on the merits from the Patent and
Trademark Office, the third-party requester shall have
one opportunity to file written comments addressing
issues raised by the action of the Office or the patent
owner's response thereto, if those written comments are
received by the Office within 30 days after the date of
service of the patent owner's response.] The third-
party requester shall have the opportunity to file
written comments on any action on the merits by the
Office in the inter partes reexamination proceeding,
and on any response that the patent owner files to such
an action, if those written comments are received by
the Office within 60 days after the date of service on
the third-party requester of the Office action or
patent owner response, as the case may be.
(c) Special Dispatch.--Unless otherwise provided by the
Director for good cause, all inter partes reexamination
proceedings under this section, including any appeal to the
[Board of Patent Appeals and Interferences] Patent Trial and
Appeal Board, shall be conducted with special dispatch within
the Office.
(d) Oral Hearing._At the request of a third-party requestor
or the patent owner, the administrative patent judge shall
conduct an oral hearing, unless the judge finds cause lacking
for such a hearing.
Sec. 315. Appeal
* * * * * * *
(c) Civil Action.--A third-party requester whose request
for an inter partes reexamination results in an order under
section 313 is estopped from asserting at a later time, in any
civil action arising in whole or in part under section 1338 of
title 28, the invalidity of any claim finally determined to be
valid and patentable on any ground which the third-party
requester raised [or could have raised] during the inter partes
reexamination proceedings. This subsection does not prevent the
assertion of invalidity based on newly discovered prior art
unavailable to the third-party requester and the Patent and
Trademark Office at the time of the inter partes reexamination
proceedings.
* * * * * * *
Sec. 317. Inter partes reexamination prohibited
* * * * * * *
(b) [Final Decision] District Court Decision.--[Once a
final decision has been entered] Once the judgement of the
district court has been entered against a party in a civil
action arising in whole or in part under section 1338 of title
28, that the party has not sustained its burden of proving the
invalidity of any patent claim in suit or if a final decision
in an inter partes reexamination proceeding instituted by a
third-party requester is favorable to the patentability of any
original or proposed amended or new claim of the patent, then
neither that party nor its privies may thereafter request an
inter partes reexamination of any such patent claim on the
basis of issues which that party or its privies raised or could
have raised in such civil action or inter partes reexamination
proceeding, and an inter partes reexamination requested by that
party or its privies on the basis of such issues may not
thereafter be maintained by the Office, notwithstanding any
other provision of this chapter. This subsection does not
prevent the assertion of invalidity based on newly discovered
prior art unavailable to the third-party requester and the
Patent and Trademark Office at the time of the inter partes
reexamination proceedings.
* * * * * * *
CHAPTER 32--POST-GRANT REVIEW PROCEDURES
Sec. 321. Petition for post-grant review
Subject to sections 322, 324, 332, and 333, a person who is
not the patent owner may file with the Office a petition for
cancellation seeking to institute a post-grant review
proceeding to cancel as unpatentable any claim of a patent on
any ground that could be raised under section 282 (relating to
invalidity of the patent or any claim). The Director shall
establish, by regulation, fees to be paid by the person
requesting the proceeding, in such amounts as the Director
determines to be reasonable.
Sec. 322. Timing and bases of petition
A post-grant proceeding may be instituted by the Director
under this chapter pursuant to a cancellation petition filed
under section 321. Such proceeding may be instituted only if--
(1) the petition is filed not later than 12 months
after the issuance of the patent or a reissue patent,
as the case may be; or
(2) the patent owner consents in writing to the
proceeding.
Sec. 323. Requirements of petition
A cancellation petition filed under section 321 may be
considered only if--
(1) the petition is accompanied by payment of the fee
established by the Director under section 321;
(2) the petition identifies the cancellation
petitioner;
(3) for each claim sought to be cancelled, the
petition sets forth in writing the basis for
cancellation and provides the evidence in support
thereof, including copies of patents and printed
publications, or written testimony of a witness
attested to under oath or declaration by the witness,
or any other information that the Director may require
by regulation; and
(4) the petitioner provides copies of the petition,
including any evidence submitted with the petition and
any other information submitted under paragraph (3), to
the patent owner or, if applicable, the designated
representative of the patent owner.
Sec. 324. Prohibited filings
A post-grant review proceeding may not be instituted under
section 322 if the petition for cancellation requesting the
proceeding--
(1) identifies the same cancellation petitioner and
the same patent as a previous petition for cancellation
under such section; or
(2) is based on the best mode requirement contained
in section 112.
Sec. 325. Submission of additional information; showing of sufficient
grounds
(a) In General.--The cancellation petitioner shall file
such additional information with respect to the petition as the
Director may require. For each petition submitted under section
321, the Director shall determine if the written statement, and
any evidence submitted with the request, establishes that a
substantial question of patentability exists for at least one
claim in the patent. The Director may institute a post-grant
review proceeding if the Director determines that the
information presented provides sufficient grounds to believe
that there is a substantial question of patentability
concerning one or more claims of the patent at issue.
(b) Notification; Determinations not Reviewable.--The
Director shall notify the patent owner and each petitioner in
writing of the Director's determination under subsection (a),
including a determination to deny the petition. The Director
shall make that determination in writing not later than 60 days
after receiving the petition. Any determination made by the
Director under subsection (a), including whether or not to
institute a post-grant review proceeding or to deny the
petition, shall not be reviewable.
Sec. 326. Conduct of post-grant review proceedings
(a) In General.--The Director shall prescribe regulations,
in accordance with section 2(b)(2)--
(1) establishing and governing post-grant review
proceedings under this chapter and their relationship
to other proceedings under this title;
(2) establishing procedures for the submission of
supplemental information after the petition for
cancellation is filed; and
(3) setting forth procedures for discovery of
relevant evidence, including that such discovery shall
be limited to evidence directly related to factual
assertions advanced by either party in the proceeding,
and the procedures for obtaining such evidence shall be
consistent with the purpose and nature of the
proceeding.
In carrying out paragraph (3), the Director shall bear in
mind that discovery must be in the interests of justice.
(b) Post-Grant Regulations.--Regulations under subsection
(a)(1)--
(1) shall require that the final determination in a
post-grant proceeding issue not later than one year
after the date on which the post-grant review
proceeding is instituted under this chapter, except
that, for good cause shown, the Director may extend the
1-year period by not more than six months;
(2) shall provide for discovery upon order of the
Director;
(3) shall provide for publication of notice in the
Federal Register of the filing of a petition for post-
grant review under this chapter, for publication of the
petition, and documents, orders, and decisions relating
to the petition, on the website of the Patent and
Trademark Office, and for filings under seal exempt
from publication requirements;
(4) shall prescribe sanctions for abuse of discovery,
abuse of process, or any other improper use of the
proceeding, such as to harass or to cause unnecessary
delay or unnecessary increase in the cost of the
proceeding;
(5) may provide for protective orders governing the
exchange and submission of confidential information;
and
(6) shall ensure that any information submitted by
the patent owner in support of any amendment entered
under section 329 is made available to the public as
part of the prosecution history of the patent.
(c) Considerations.--In prescribing regulations under this
section, the Director shall consider the effect on the economy,
the integrity of the patent system, and the efficient
administration of the Office.
(d) Conduct of Proceeding.--The Patent Trial and Appeal
Board shall, in accordance with section 6(b), conduct each
post-grant review proceeding instituted by the Director.
Sec. 327. Patent owner response
After a post-grant proceeding under this chapter has been
instituted with respect to a patent, the patent owner shall
have the right to file, within a time period set by the
Director, a response to the cancellation petition. The patent
owner shall file with the response, through affidavits or
declarations, any additional factual evidence and expert
opinions on which the patent owner relies in support of the
response.
Sec. 328. Proof and evidentiary standards
(a) In General.--The presumption of validity set forth in
section 282 shall not apply in a challenge to any patent claim
under this chapter.
(b) Burden of Proof.--The party advancing a proposition
under this chapter shall have the burden of proving that
proposition by a preponderance of the evidence.
Sec. 329. Amendment of the patent
(a) In General.--In response to a challenge in a petition
for cancellation, the patent owner may file one motion to amend
the patent in one or more of the following ways:
(1) Cancel any challenged patent claim.
(2) For each challenged claim, propose a substitute
claim.
(3) Amend the patent drawings or otherwise amend the
patent other than the claims.
(b) Additional Motions.--Additional motions to amend may be
permitted only for good cause shown.
(c) Scope of Claims.--An amendment under this section may
not enlarge the scope of the claims of the patent or introduce
new matter.
Sec. 330. Decision of the Board
If the post-grant review proceeding is instituted and not
dismissed under this chapter, the Patent Trial and Appeal Board
shall issue a final written decision addressing the
patentability of any patent claim challenged and any new claim
added under section 329.
Sec. 331. Effect of decision
(a) In General.--If the Patent Trial and Appeal Board
issues a final decision under section 330 and the time for
appeal has expired or any appeal proceeding has terminated, the
Director shall issue and publish a certificate canceling any
claim of the patent finally determined to be unpatentable and
incorporating in the patent by operation of the certificate any
new claim determined to be patentable.
(b) New Claims.--Any new claim held to be patentable and
incorporated into a patent in a post-grant review proceeding
shall have the same effect as that specified in section 252 for
reissued patents on the right of any person who made,
purchased, offered to sell, or used within the United States,
anything patented by such new claim, or who made substantial
preparations therefor, before a certificate under subsection
(a) of this section is issued.
Sec. 332. Settlement
(a) In General.--A post-grant review proceeding shall be
terminated with respect to any petitioner upon the joint
request of the petitioner and the patent owner, unless the
Patent Trial and Appeal Board has issued a written decision
before the request for termination is filed. If the post-grant
review proceeding is terminated with respect to a petitioner
under this paragraph, no estoppel shall apply to that
petitioner. If no petitioner remains in the proceeding, the
panel of administrative patent judges assigned to the
proceeding shall terminate the proceeding.
(b) Agreement in Writing.--Any agreement or understanding
between the patent owner and a petitioner, including any
collateral agreements referred to in the agreement or
understanding, that is made in connection with or in
contemplation of the termination of a post-grant review
proceeding, must be in writing. A post-grant review proceeding
as between the parties to the agreement or understanding may
not be terminated until a copy of the agreement or
understanding, including any such collateral agreements, has
been filed in the Office. If any party filing such an agreement
or understanding requests, the agreement or understanding shall
be kept separate from the file of the post-grant review
proceeding, and shall be made available only to Government
agencies on written request, or to any person on showing of
good cause.
Sec. 333. Relationship to other proceedings
(a) In General.--Notwithstanding subsection 135(a),
sections 251 and 252, and chapter 30, the Director may
determine the manner in which any reexamination proceeding,
reissue proceeding, interference proceeding (commenced with
respect to an application for patent filed before the effective
date provided in section 5(k) of the Patent Reform act of
2009), derivation proceeding, or post-grant review proceeding,
that is pending during a post-grant review proceeding, may
proceed, including providing for stay, transfer, consolidation,
or termination of any such proceeding.
(b) Stays.--The Director may stay a post-grant review
proceeding if a pending civil action for infringement of a
patent addresses the same or substantially the same questions
of patentability raised against the patent in a petition for
post-grant review proceeding.
(c) Effect of Commencement of Proceeding.--The commencement
of a post-grant review proceeding--
(1) shall not limit in any way the right of the
patent owner to commence an action for infringement of
the patent; and
(2) shall not be cited as evidence relating to the
validity of any claim of the patent in any proceeding
before a court or the International Trade Commission
concerning the patent.
Sec. 334. Effect of decisions rendered in civil action on post-grant
review proceedings
If a final decision is entered against a party in a civil
action arising in whole or in part under section 1338 of title
28 establishing that the party has not sustained its burden of
proving the invalidity of any patent claim--
(1) that party to the civil action and the privies of
that party may not thereafter request a post-grant
review proceeding on that patent claim on the basis of
any grounds, under the provisions of section 321, which
that party or the privies of that party raised or could
have raised; and
(2) the Director may not thereafter maintain a post-
grant review proceeding that was requested, before the
final decision was so entered, by that party or the
privies of that party on the basis of such grounds.
Sec. 335. Effect of final decision on future proceedings
If a final decision under section 330 is favorable to the
patentability of any original or new claim of the patent
challenged by the cancellation petitioner, the cancellation
petitioner may not thereafter, based on any ground that the
cancellation petitioner raised during the post-grant review
proceeding--
(1) request or pursue a reexamination of such claim
under chapter 31;
(2) request or pursue a derivation proceeding with
respect to such claim;
(3) request or pursue a post-grant review proceeding
under this chapter with respect to such claim;
(4) assert the invalidity of any such claim in any
civil action arising in whole or in part under section
1338 of title 28; or
(5) assert the invalidity of any such claim in
defense to an action brought under section 337 of the
Tariff Act of 1930 (19 U.S.C. 1337).
Sec. 336. Appeal
A party dissatisfied with the final determination of the
Patent Trial and Appeal Board in a post-grant proceeding under
this chapter may appeal the determination under sections 141
through 144. Any party to the post-grant proceeding shall have
the right to be a party to the appeal.
* * * * * * *
PART IV--PATENT COOPERATION TREATY
* * * * * * *
CHAPTER 36--INTERNATIONAL STAGE
* * * * * * *
Sec. 363. International application designating the United States:
Effect
An international application designating the United States
shall have the effect, from its international filing date under
article 11 of the treaty, of a national application for patent
regularly filed in the Patent and Trademark Office [except as
otherwise provided in section 102(e) of this title].
* * * * * * *
CHAPTER 37--NATIONAL STAGE
* * * * * * *
Sec. 374. Publication of international application
The publication under the treaty defined in section 351(a)
of this title, of an international application designating the
United States shall be deemed a publication under section
122(b), except as provided in [sections 102(e) and 154(d)]
section 154(d) of this title.
Sec. 375. Patent issued on international application: Effect
(a) A patent may be issued by the Director based on an
international application designating the United States, in
accordance with the provisions of this title. [Subject to
section 102(e) of this title, such] Such patent shall have the
force and effect of a patent issued on a national application
filed under the provisions of chapter 11 of this title.
* * * * * * *
CONSOLIDATED APPROPRIATIONS ACT OF 2000 (P.L. 106-113)
* * * * * * *
Appendix I--S. 1948
* * * * * * *
TITLE IV--INVENTOR PROTECTION
* * * * * * *
Subtitle F--Optional inter partes Reexamination Procedure
* * * * * * *
[SEC. 4607. ESTOPPEL EFFECT OF REEXAMINATION
Any party who requests an inter partes reexamination under
section 311 of title 35, United States Code, is estopped from
challenging at a later time, in any civil action, any fact
determined during the process of such reexamination, except
with respect to a fact determination later proved to be
erroneous based on information unavailable at the time of the
inter partes reexamination decision. If this section is held to
be unenforceable, the enforceability of the remainder of this
subtitle or of this title shall not be denied as a result.]
* * * * * * *
CONSOLIDATED APPROPRIATIONS ACT OF 2005 (P.L. 108-447)
* * * * * * *
DIVISION B--DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY,
AND RELATED AGENCIES APPROPRIATIONS ACT OF 2005
* * * * * * *
TITLE VIII--PATENT AND TRADEMARK FEES
SEC. 801. FEES FOR PATENT SERVICES
(a) General Patent Fees.--[During fiscal years 2005 and
2006] Until such time as the Director sets or adjusts the fees
otherwise, subsection (a) of section 41 of title 35, United
States Code, shall be administered as though that subsection
reads as follows:
* * * * * * *
SEC. 802. ADJUSTMENT OF TRADEMARK FEES
(a) Fee for Filing Application.--[During fiscal years 2005
and 2006] Until such time as the Director sets or adjusts the
fees otherwise, under such conditions as may be prescribed by
the Director, the fee under section 31(a) of the Trademark Act
of 1946 (15 U.S.C. 1113(a)) for: (1) the filing of a paper
application for the registration of a trademark shall be $375;
(2) the filing of an electronic application shall be $325; and
(3) the filing of an electronic application meeting certain
additional requirements prescribed by the Director shall be
$275. During fiscal years 2005, 2006 and 2007, the provisions
of the second and third sentences of section 31(a) of the
Trademark Act of 1946 shall apply to the fees established by
this section.
* * * * * * *
SEC. 803. EFFECTIVE DATE, APPLICABILITY, AND TRANSITIONAL PROVISION
(a) Effective Date.--Except as otherwise provided in this
title (including in this section), the provisions of this title
shall take effect on the date of the enactment of this Act [and
shall apply only with respect to the remaining portion of
fiscal year 2005 and fiscal year 2006].
* * * * * * *