The America Invents Act (AIA) of 2011 authorized the creation of a set of administrative trials (AIA Trials), including Inter Partes Review (IPR) proceedings, Post Grant Review (PGR) proceedings and transitional Covered Business Method Review (CBM) proceedings. In each of these proceedings, anyone can file a petition to challenge an issued patent, and, after instituting the trial, the Patent Trial and Appeal Board (PTAB) will decide whether the challenged claims should be confirmed or cancelled.
The USPTO currently has nine published notices and proposed rule changes that are open for comment. Most of these involve changes to USPTO procedure that implement aspects of the Leahy-Smith America Invents Act (AIA). Under the AIA, the USPTO has been granted broader authority through this notice-and-comment period.
Proposed Rule: Eliciting More Complete Patent Assignment Information – Comments Due January 23, 2012. The USPTO is proposing a rule that would require the timely recordation of patent and application ownership and changes to ownership. [DDC: This appears to be a straw-man proposal and will likely be significantly changed or dropped based upon public input.]
Notice: Request for Comments on Additional USPTO Satellite Offices for the Nationwide Workforce Program – Comments Due January 30, 2012. The USPTO is planning to open additional satellite offices in 2012-2013 and is seeking input on the proper location.
Proposed Rule: Changes to Implement the Pre-issuance Submissions by Third Parties Provision of the Leahy-Smith America Invents Act – Comments Due March 5, 2012. Third party submissions will be allowed beginning in September 2012. The proposed rules sets up requirements that such a submission must include "a concise description of the asserted relevance of each document submitted." The proposed rule suggests that a fee of $180 for the submission of up to ten documents. In order to promote submissions, the Office has proposed a fee exemption for the first submission by each third-party for each application (with a limit of three documents in that submission). Under the new rules, submissions must be filed by the later of: (i) Six months after the date on which the application is first published by the Office or (ii) The date the first office action.
Proposed Rule: Implementation of Statute of Limitations Provisions for Office Disciplinary Proceedings – Comments Due March 5, 2012. The AIA sets a new statute of limitations for USPTO disciplinary proceedings at the earlier of (i) 10 years after the date on of the alleged misconduct; or (ii) one year from the date on which the misconduct was made known to an officer or employee of the USPTO. The rule proposed by the PTO would further define the one-year deadline as being triggered only once the USPTO has completed a preliminary review of the case and received a "complete, written response" from the accused practitioner. Depending upon the circumstances, the one-year deadline may otherwise be triggered by the OED's receipt of a certified copy of a record of censure from another Bar or conviction of a serious crime. [DDC: The USPTO's interpretation of the one-year deadline appears to be in tension to the text of the new statute, but the PTO may be fine because of the deference for OED matters under Lavacara v. Dudas.]
Notice: Changing the USPTO's Collection of Information in Matters Related to National Medal of Technology and Innovation Nomination Application – Comments Due February 6, 2012.
Time is flying and the newly revamped host of USPTO administrated post-grant patent procedures is on its way. As we speak, the USPTO is continuing to develop its rules and internal operating procedures for handling the new options. This post focuses on the new post-grant review (A.K.A. opposition proceeding), which is being created by splitting the current inter partes reexamination system into two parts: post-grant review and inter partes review. Current reexamination practice focuses solely on questions of novelty and obviousness based upon prior art in the form of printed publications. The new post-grant review system broadens the bases for review to virtually any validity challenge. However, post-grant reviews will only be available during a 9–month window following patent issuance.
Full implementation of the post-grant review system will not be until 2013 & 2014 because the review is only available for patents with a priority date on or after March 16, 2013. The 2013 date is also the implementation date of the new Filing-Date-Priority rules. We will, however, get a preview of the PGR system once it becomes available to go against Business Method patents beginning September 16, 2012.
EPO Opposition Popularity: Europe has a popular opposition system and there is a natural comparison between our new post-grant review and their oppositions. Around 5% to 7% of EPO-issued patents are opposed during the 9–month post-grant window. This figures are an order-of-magnitude greater than the proportion of US patents that go through the inter partes reexamination system.
Obstacles to US Post-Grant Popularity: I do not expect that the US system will see the same level of utilization – at least for some time. The major legal impediment to filing a post-grant review is the tough new threshold that requires a showing “that there is a reasonable likelihood that the petitioner will prevail with respect to at least one claim challenged.” If the threshold is not met, the petition for review will be rejected. This threshold is substantially greater than the USPTO’s historic standard requiring a “substantial new question of patentability.” The EPO does not have a similar threshold. Rather, so long as certain formalities are met, the opposition proceeds with a full review with opportunity for appeal, etc. That said, the EPO opposition proceeding results in cancellation or at least amendment in about 75% of cases.
The other major roadblock to popularity for US post-grant review will be cost. Current behind-the-scenes discussion peg the USPTO filing fees at over $40,000 for a post-grant review. The equivalent fee for an EPO opposition is under $1,000 (€705). The availability of limited discovery suggest that the legal fees for post-grant oppositions will also be fairly high.
Some of the most touted changes of the America Invents Act are its modifications to ex parte and inter partes reexaminations, modifications that are intended to fine tune these post-grant review mechanisms. Both ex parte and inter partes reexam requests have been on the rise for the past decade, as shown by the following two graphs:
Inter partes reexaminations, in particular, saw a dramatic increase in popularity over the last few years.
The above data may paint an overly rosy picture of reexams, however. Especially with respect to inter partes reexams, I am dubious that their rapid growth will continue. One of the AIA's most significant changes to inter partes reexams (inter partes review starting on September 16, 2012) is to raise the standard for successfully initiating a reexam from "a substantial new question of patentability" to "a reasonable likelihood that the requester would prevail." This change took effect when the AIA was enacted, and may lead to a decrease in the number of inter partes reexam requests filed – or at least, a slowing down of the rapid growth in this area.
Inter partes reexam requests may also plateau for another reason. The PTO reports that 70% of the patents involved in inter partes reexams are known to be in litigation. If the initiation of re-exams is largely a function of litigation, there is a soft cap on the number of potential reexams that will be initiated. In addition, AIA limitations on inter partes reexam requests involving patents that are the subject of infringement litigation, although easily avoided with foresight, may have a depressing impact on the number of requests filed.
The above graphs are corrected from an earlier version. The original graphs treated the PTO's fiscal year as running from January to December. It runs from October of the preceding year to September of the identified year.
Guest Post by Megan M. La Belle, Assistant Professor at Catholic University of America, Columbus School of Law.
Last Wednesday was an eventful day for patent cases at the Supreme Court. In addition to oral arguments in Mayo v. Prometheus, the plaintiffs in Ass’n for Molecular Pathology v. USPTO (Myriad Genetics) – another high-profile case concerning patentable subject matter – filed their petition for a writ of certiorari. The petition presents two questions. Predictably, the first question addresses the limits of patentable subject matter and asks the Court to decide whether human genes are patentable. The second and less obvious question focuses on plaintiffs’ standing to sue. Specifically, the petition asks: “Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)….?” Some might be surprised that plaintiffs are challenging standing, since the Federal Circuit held the Myriad case justiciable and decided it on the merits. Yet, as I argue in Standing to Sue in the Myriad Genetics Case, 2 Cal. L. Rev. Circuit 68 (2011), the Federal Circuit’s decision in Myriad raises compelling questions about standing in patent declaratory judgment actions that warrant the Court’s attention.
In MedImmune, the Supreme Court held that there is standing to bring a patent declaratory judgment action if “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” In announcing this all the circumstances standard, the Court criticized the Federal Circuit’s longstanding bright line test for standing, which required plaintiffs to show that: (1) the alleged infringer had a reasonable apprehension of suit at the time it filed the action; and (2) the alleged infringer is conducting infringing activity or has made meaningful preparations toward conducting infringing activity.
Initially, the Federal Circuit responded to MedImmune by abandoning its bright line test and announcing that it would use the all the circumstances standard instead. More recently, however, the Federal Circuit has backpedaled. In Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329 (Fed. Cir. 2008), the Federal Circuit held that “proving a reasonable apprehension of suit is one of multiple ways that a declaratory judgment plaintiff can satisfy the more general all-the-circumstances test.” Similarly, in Cat Tech LLC v. Tubemater, Inc., the court concluded that plaintiffs still must satisfy the second prong of the old test – i.e., the “meaningful preparations” prong – to establish standing. And finally, with its decision in Myriad, the Federal Circuit has come full circle and is evaluating standing in patent declaratory judgment actions according to a bright line test that is strikingly similar to the one utilized before MedImmune.
In Myriad, twenty plaintiffs filed a declaratory judgment action asking the court to declare certain gene patents invalid. The trial court held that all twenty plaintiffs had standing. On appeal, the Federal Circuit affirmed there was standing to sue, but only as to one plaintiff – Dr. Harry Ostrer – and on far narrower grounds. The Federal Circuit concluded that Dr. Ostrer was the only plaintiff who had suffered an injury-in-fact, a prerequisite for standing in federal court. In reaching this conclusion, the Federal Circuit claimed to be following MedImmune, yet in reality it had applied a bright line rule:
[T]o establish an injury in fact traceable to the patentee, a declaratory judgment plaintiff must allege both (1) an affirmative act by the patentee related to the enforcement of his patent rights, and (2) meaningful preparation to conduct potentially infringing activity….
Myriad, 653 F.3d at 1344. The Federal Circuit then found that none of the other plaintiffs had standing, either because they failed to allege “affirmative patent enforcement actions directed at them by Myriad,” or because they had not made “meaningful preparation to conduct potentially infringing activity.”
This return to a formalistic test for standing in patent declaratory judgment actions not only violates the letter and spirit of MedImmune, but it is problematic because it makes it more difficult for plaintiffs to challenge potentially bad patents. For years, the Supreme Court has adopted flexible legal standards that facilitate lawsuits brought by parties challenging patent validity, in view of the public benefit created when bad patents are eliminated. More recently, Congress and the President have signaled their intent to encourage patent validity challenges by enacting the America Invents Act, which provides for certain post-grant review proceedings. Yet, despite these strong messages, the Federal Circuit has heightened the standing requirements and created a procedural bar for many alleged patent infringers. Although the Supreme Court addressed this standing question just a few terms ago in MedImmune, it seems the Court needs to remind the Federal Circuit of the purpose of declaratory relief and its essentiality to a well-functioning patent system.
Guest Post by Jonas Anderson, Assistant Professor at American University Washington College of Law
Yesterday morning I attended the highly anticipated oral argument in Mayo v. Prometheus at the Supreme Court. The case raises the question of whether a patent claim that covers correlations between blood tests and patient health is 'patentable' under 35 U.S.C. § 101.
I assume most PatentlyO readers are familiar with this case, but will provide a very brief background before diving into today's argument. Prometheus is the owner of a patent that covers a method of analyzing the effectiveness of thiopurine drugs for treating gastrointestinal disorders. Claim 1 of the relevant patent reads as follows:
(1) A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and
(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
wherein the level of 6-thioguanine less than about 230 pmol per 8×10^8 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
wherein the level of 6-thioguanine greater than about 400 pmol per 8×10^8 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.
Prometheus offers a blood test which analyzes metabolite levels in patients. Mayo sought to offer a competing blood test at a lower price. Prometheus promptly sued Mayo for infringement.
I have divided my review into 7 topics. The topics are ranked based on my impression of the importance that the justices appeared to give to each topic. Although I have tried to transcribe the key statements made by the justices and advocates as accurately as possible, all quotations are approximate.
1. The preemption question
The justices and the parties focused much of their discussion on the issue of preemption. One of Mayo's principal arguments in its brief and at oral argument is that Prometheus's patent preempts the use of a law of nature — namely, the relationship between metabolite levels and patient health.
Justice Kennedy began the preemption questioning by asking whether a system of measurements that continually monitor drug retention would be patentable. Mayo's counsel responded that it would depend on the breadth of the claims. "Claim specificity is key." According to Mayo, if Prometheus's patent had provided competitors room to develop different, more accurate metabolite levels it may have passed the 101 test. But, in this case Prometheus's patent preempted any reduction in dosage if a patient's metabolite levels were above 400 pmol. In Mayo's view, "incidental" steps added to a natural phenomenon were insufficient to avoid preemption. Thus, any patent consisting only of a natural phenomenon and "incidental steps" would be preempted under Mayo's test.
Justice Breyer, the author of the famous LabCorp dissent, focused nearly all of his questions on the issue of differentiating between a patentable application of a law of nature and an unpatentable law of nature. He pressed both parties to identify a process by which the court could discern the difference. Mayo's counsel first suggested that a preemption test could be used to ferret out unpatentable laws of nature. Later, he suggested that Bilski suggests that courts can determine if the non-novel elements of a claim are "incidental." "You're getting warmer," Justice Breyer quipped.
Justice Scalia interrupted the exchange and scoffed "I'm not comfortable with that. It depends on how broad it is? Is up to 700 [pmol]? Is that OK? 550? 830? How are we supposed to apply that kind of rule? It just seems to me not a patent rule that we could apply." It seems fair to say that Scalia was not convinced by either party that a 101 standard based on preemption could be reliably applied by courts.
Despite Scalia's concerns, preemption seemed to carry the day — with both sides. Justice Breyer continued the preemption line of questioning with Prometheus's counsel. "What has to be added to a law of nature to make it a patentable process? If you put too little to the answer to that question, I believe I can take things like e=mc2 and make them patentable, and if you put too much in you'll wreck your case." Prometheus's counsel also advocated a preemption test, but its test would be much more limited than Mayo's. Whereas Mayo would consider any natural phenomenon with "incidental" transformational steps as preempted subject matter, Prometheus would only find preemption when no applicative steps were added. Prometheus repeatedly cited to the Morse telegraph case as a classic example of preemption under 101.
Of course, Prometheus's suggested application of the preemption test has an obvious problem: Bilski. The patented hedging method in Bilski was not a naked claim to an abstract idea; the claim was limited by both industry and analysis techniques. Prometheus's counsel acknowledged this difficulty, but argued that Bilski's abstract idea was merely coupled with other abstract ideas.
2. The 'creep' of novelty and obviousness
Many of the Justices, but primarily the Chief Justice, expressed concern about the blurred relationship between novelty, non-obviousness and the 101 inquiry. Chief Justice Roberts wanted to know what efficiencies would be gained, if any, by relying on Section 101 instead of obviousness or novelty to reject invalid patents. Mayo made the case that 101 is a much more manageable and predictable doctrine than 102 or 103. Prometheus countered by reference to the very case before the court — clearly Section 101 had not led to a quick resolution of this long-running case.
The Chief Justice asked Prometheus's counsel whether he was advocating for the elimination of a Section 101 limitation on patentability. In response, counsel conceded that he was urging that courts rely on other patent doctrines in most cases, but that there would be some instances, such as the Morse case, in which 101 would be the proper vehicle for rejecting or invalidating a patent.
3. The impact (or lack thereof) of LabCorp
In my view, one of the most surprising statements of the day came about as a result of Mayo's suggestion—in response to a question from Justice Scalia—that Justice Breyer's dissent in LabCorp could guide some of the analysis in this case. Justice Breyer quickly interrupted and seemed to distance himself from his dissent. Although he was convinced that the patent claims in the LabCorp case were merely directed to an observation of a law of nature, the dissenting opinion, he said, "lacked an explanation of why [the claims in that case were not] an application of the law of nature."
Throughout the argument, he was clearly wrestling with how much "extra" is needed in order to patent a newly discovered natural law. If, as many have predicted, Justice Breyer pens part of the Prometheus decision, I expect that he will attempt to give some guidance to this most difficult question.
4. The innovation question.
A healthy amount of discussion centered around the impact on innovation that a decision in this case will have. Justice Breyer, who had been extremely skeptical of diagnostic method patents in his dissent in LabCorp, noted that discovering laws of nature can be an incredibly expensive process. His search for a line between phenomenon and application seemed to center around balancing the incentive to discover new laws of nature with a desire to allow access to those laws to follow-on innovators.
Mayo repeatedly urged the court to overturn the patent at issue by arguing that Promtheus could limit others from developing new, improved, and cheaper alternatives to their blood test and was therefore preemptive. Mayo argued that if the claims incorrectly correlated metabolite levels and outcomes, "the public is stuck with the erroneous information." In response, Prometheus stated that there are ways that follow-on innovators can improve on Prometheus's patent; namely, by acquiring an improvement patent or by challenging Prometheus's patent under Section 101's utility requirement.
Finally, as any good appellate attorney would, Mayo's counsel attempted to limit the perceived impact of a reversal. When asked by Justice Sotomayor how many patents would be impacted by a ruling favoring Mayo, counsel responded "only a couple."
5. The scope of Prometheus's patent
The newest Justices, Sotomayor and Kagan, directed nearly all of their questions to the scope of the patent claims at issue. Although claim construction was no longer at issue, the Justices probed the extent to which Prometheus's patent foreclosed competitors. Justice Kagan wanted to know what, in Mayo's opinion, Prometheus's patent attorney could have done to make their invention patent-eligible. Mayo's counsel responded by saying that a claim with a more narrow range of relevant metabolite levels and a specified treatment protocol would satisfy 101. Justice Kagan followed-up by asking whether "the difference is the scope of the ranges, or the treatment protocol." "Both," Mayo responded.
Justice Kagan followed up with Prometheus. When asked why the patent drafter had failed to include a therapeutic step (which Mayo conceded would have made the claim patent-eligible), Prometheus's counsel responded that it was unnecessary. He pointed to numerous patents that merely claimed a method of gathering information: patents on identifying ore deposits (but not requiring removal); patents on navigating boats in fog (but not requiring redirecting the ship); patent to find leak in a water main (but not requiring repair).
6. Prior decisions: are they helpful?
Justice Scalia seemed genuinely dismissive of the Court's precedents that have held that laws of nature (or natural phenomenon) are not patentable. "Tell me why you can't patent nature?" he asked Mayo's counsel early in the proceeding. "Doesn't any medical patent rely on natural processes? Even if you invent a new drug, what that new drug does is natural. Whatís the difference [from this case]?" When Mayo's counsel responded that the specificity would be the key test for preemption, Justice Kennedy responded "I thought your answer to Justice Scalia would be…that [the claims here cover] the measurement of a result. That's how I would have answered the question. But that's obviously not the right way to do it."
In a related vein, Justice Breyer openly questioned whether the holdings in Flook and Diehr can be reconciled. "If you look at the Court's cases, they seem to say Flook, one thing, and Diehr another thing."
7. The transformation question
Almost no time was devoted to discussing whether the claims at issue meet the machine or transformation test. In fact, I can't recall hearing the words "Machine or Transformation" escape from the Justices. Perhaps the Court is going to distance itself from the MOT test — or at least give courts another "clue."
Conclusion
Predicting the outcome of Supreme Court rulings in patent cases is a treacherous hobby. If anything, the argument today revealed a Court troubled by the fact that both sides have urged an application of Section 101 that centers on preemption, but with little guidance on how to apply such a test. While I would expect a ruling to have some mention of preemption, none of the justices seemed comfortable with either side's suggested application of such a test, while Justice Scalia was dismissive of such an idea.
Perhaps most surprising was that the Court's most vocal critic of diagnostic patents, Justice Breyer, appeared to distance himself from LabCorp. I get the feeling that he is still troubled with the idea of granting patent rights covering natural phenomenon, he is genuinely concerned with the impact of the Court's decision in this case on the medical innovation community.
Byrne’s malpractice claim alleges that his former patent attorneys at WHE failed to secure broad enough patent protection for his weed trimming device. See RE 34,815. In 2004, Byrne sued Black & Decker but lost on summary judgment. In that case, the district court ruled that B&D’s device could not infringe because of it did not include a “generally planar outboard flail stabilizing surface” as required by Byrne’s patent claims.
In the subsequent legal malpractice claim, WHE filed a summary judgment motion arguing that the prosecution history showed clearly that the “generally planar” limitation was necessary in order to distinguish Byrne’s invention from the cited prior art. WHE also argued that Mr. Byrne’s claim should fail because he had so fully participated in the prosecution, including the addition of that limitation into the claim. In the responsive motion, Byrne filed an affidavit discussing the scope of the cited prior art and arguing that the limitation was not necessary for patentability. Acting sua sponte, the district court rejected Byrne’s testimony — holding that he was not qualified to offer expert testimony as one of ordinary skill in the art. Without any rebuttal evidence, the court then granted WHE’s motion for summary judgment of no malpractice.
Jurisdiction over Patent Prosecution Malpractice. In several recent cases, the Federal Circuit has expanded the scope of federal court and Federal Circuit jurisdiction over patent malpractice cases. Writing for a 2–1 majority, Judge O’Malley agreed that stare decisis compels federal jurisdiction in this case, but argued that the jurisdictional law should be revisited for cases like this where the cause of action is based upon state-law (malpractice) and the patent issue is only a question of a hypothetical patent claim.
Indeed, it is only the “special and small category” or “slim category” of cases in which a state law cause of action will trigger federal jurisdiction. . . .
[I]t is difficult to see teh federal interest in determining the validity of a hypothetical patent claim that is ancillary to a state law malpractice action. The outcome of such determinations invariably will rest on case-specific inquiries comparing prior art against patent claims that have not and will never issue. As such, these determinations, which involve only application and not interpretation of patent law, have little or no bearing on other cases. On the other hand, finding federal jurisdiction over malpractice cases involving questions of hypothetical patent claims opens the federal courthouse to an entire class of actions, thereby usurping state authority over this traditionally state law tort issue. . . .
Applying these federalism considerations, several courts either have outright disagreed with our analysis or have found a meaningful distinction when only hypothetical patent rights are at stake. . . . In many cases, the procedural posture prevents us from reviewing these decisions, thus allowing courts simply to ignore our law. We address the issues in this appeal, however, because our existing case law compels us to do so.
This is the type of issue that the Supreme Court tends to hear, and a high quality petition for certiorari would have a good chance of gaining the high court’s attention. Aiding this theory are the growing number of state and federal court decisions that have criticized the Federal Circuit jurisdictional holdings and the general rarity non-patent-related cases of finding federal question “arising under” jurisdiction where no federal cause of action is alleged.
On the merits, the Federal Circuit ruled that the lower court abused its discretion by refusing to let the inventor testify regarding the scope and content of the prior art and its relation to the invention. The particular problem with the lower court’s finding was that it made no finding of the qualifications of one of ordinary skill in the art and whether Byrne possessed that level of skill. In several prior cases, the Federal Circuit has held that inventors typically possess at least ordinary skill in the relevant art and therefore “it is especially inappropriate for the district court to strike Byrne’s affidavit without going through the exercise of identifying the requisite level of skill.” On remand, the district court will likely hear Byrne’s testimony and consequently reject WHE’s summary judgment motion.
The Federal Circuit recently updated its statistics webpage with information for FY 2011 (October 2010-September 2011). Unfortunately, much of the statistical information that the court previously provided has been removed and is no longer accessible. Nevertheless, the available data does allow for at least a partial picture of the CAFC's activity.
In terms of overall caseload, one of the court's graphs indicates that it appears to be on the upswing after falling over the past few years:
This rise appears to largely be the result of a modest uptick in appeals of both district court and PTO rulings, as well as challenges to CAVC and MSPB determinations, as shown in another CAFC graph:
While this information is unquestionably useful and well appreciated, statistical information that the CAFC previously provided is unfortunately no longer available. This includes: data about merit and non-merit dispositions in patent suits (see also), affirmance and reversal rates for district court patent infringement appeals (Download 2001-2010 data), charts showing the number of appeals adjudicated by merits panels broken down by category type (IP, admin, and claims), data about merit and non-merit dispositions in all suits, the percentage of appeals terminated in 90 days or less, data showing the number of petitions for rehearing filed and granted (Download 2001-2010 data), and data showing the number of petitions for writ of certiorari filed and granted by the Supreme Court. Some of this information may be derivable from the court's output, but much of it is difficult to obtain.
I gave the court clerk's office a call, and was told that this information had been removed and would not be updated. The information that is currently on the website is the statistical information that will continue to be updated. I have provided some of the court's past statistical data above; if any readers happen to have other old CAFC data in your possession (particularly information that is not available via review of the court's opinions themselves), please send me an email.
Update: The first two graphs will now open into larger views.
This is an important administrative patent law case holding that when the Board of Patent Appeals (BPAI) affirms a rejection based upon a new factual finding, it must identify the holding as a new ground for rejection. This holding benefits patent applicants because it creates a right to either reopen prosecution or request a rehearing based upon the new ground.
Here, the examiner rejected Stepan's claims as anticipated and obvious. Stepan had submitted a Rule 1.131 affidavit claiming a prior invention date in order to antedate one of the references. However, the examiner gave the affidavit no legal effect based upon the judgment that a prior public use of a portion of the invention qualified as 102(b) prior art because it occurred more than one year before the application filing date.
In the administrative appeal, the Board ruled that the applicant could claim priority to an earlier application and that, therefore the the prior art was no longer 102(b) prior art. However, the Board affirmed the rejection after holding that the prior use was still 102(a) prior art because the content of the Rule 1.131 affidavit was insufficient to prove Stepan's prior invention rights.
Writing for the Court of Appeals for the Federal Circuit, Judge Prost vacated the Board's decision — holding that the Board's factual finding on the sufficiency of the content of the affidavit was a new factual finding that was not a basis of the examiner's rejection being reviewed and, therefore, that the Board must identify the affirmed rejection as a new ground of rejection.
Notice does not focus on the applicant’s arguments divorced from the examiner’s rejections of record that are actually appealed to the Board. Instead, it focuses on the “adverse decisions of examiners” during prosecution which form the basis of the Board’s scope of review. 35 U.S.C. § 6(b). Because Stepan did not have prior notice of the Board’s intent to craft and rely on new findings of fact to support a §§ 102(a)/103(a) rejection and because it failed to identify this rejection as a new ground, Stepan’s notice rights were violated. 5 U.S.C. § 554(b)(3); 35 U.S.C. § 6(b). Had the Board labeled its rejection as a new ground of rejection, Stepan could have reopened prosecution to address the newly-alleged deficiencies in its Declaration with the examiner.
Note: Although this case involves an ex parte reexamination, the principles here apply equally with ordinary ex parte examination. However, the decision will not apply to the new post grant review proceedings under the Leahy-Smith AIA because the review goes directly to the Board (the newly named Patent Trial and Appeal Board or PTAB) rather than an examiner.
The Federal Circuit has before it an unusual petition for rehearing en banc. It involves an issue that, to my knowledge, has never before been heard by this court, and it's one that hardly anyone who practices patent law even knows about. Indeed, the reason that this issue is arising now is the U.S. Patent and Trademark Office has made an extraordinary (and heretofore successful) effort to prevent inventors and the patent bar from understanding it.
For this reason, my nonprofit organization has filed an amicus briefasking the Court to uphold statutory rights that, until recently, possibly no patent lawyer knew how to defend. If the Court acts favorably, it can undo decades of rogue agency practice at the PTO.
In In re Lovin, the key issue is whether an examiner's failure to state a prima facie case of obviousness, as required by MPEP Chapter 2100, is sufficient ground for the Board of Patent Appeals and Interferences to vacate or reverse a rejection. Lovin's brief alleges that the Board abandoned its longstanding practice of vacating rejections when the examiner had not made this case, and instead required the appellant to make a substantive showing of patentability in their appeal brief—that is, to prove a negative. The amicus brief of CFPH, LLC, a business unit of Cantor Fitzgerald, offered a complementary explanation of why the Board's interpretation of PTO Rule 41.37 was incorrect.
Regulatory Checkbook, the nonprofit I manage, seeks leave to intervene because the PTO lacked any legal authority to compel Lovin to provide this information. In fact, until December 22, 2009, the PTO had no legal authority to require any appellant to comply with any of the material information collections contained in 37 C.F.R. Part 41.
How could that be? To understand why, let's take a short trip to the Office of Management and Budget, which occupies the tall red brick building across Lafayette Park from the tall red brick building housing the Court of Appeals for the Federal Circuit.
New Fees – 15% increase: The USPTO has announced new fees that will become effective on September 26, 2011. These fees represent an across-the-board 15% increase for almost all PTO fees. The effective date of the fees will be applied based upon the associated underlying filing date. Thus, a new application properly filed by Express Mail on September 25, 2011 will be charged under the old regime even if it does not arrive at the USPTO until September 26. Likewise, for most other responses, the date of the certificate of mailing will be used to calculate the fees due. [Link]
New Fees – Micro Entity: A new micro entity status has been created by the AIA that provides for a 75% discount on fees for certain applicants (including universities with operating budgets of more than $1 billion). However, the USPTO has announced that the micro entity status will only become effective after it implements final regulations on the topic.
Inter Partes Reexamination: Already effective is a new standard for initiating an inter partes reexamination. The new standard requires a showing that there is a reasonable likelihood that the requester will prevail with respect to at least one of the patent claims challenged in the request. This is a stricter standard that the old requirement of a substantial new question of patentability. The standard for ex parte reexamination remains unchanged. In one year (on September 16, 2012), the USPTO will stop accepting inter partes reexamination requests and instead move to the new inter partes review procedure. The new review proceeding will be conducted before the new Patent Trial and Appeal Board rather than before an examiner. At the one-year anniversary, new post-grant review proceedings, transitional business method review proceedings, and supplemental examination proceedings will also be implemented.
Tax Strategies: As part of the AIA, all tax strategies have been deemed to be within the prior art and therefore a tax strategy cannot be used to distinguish the claimed invention from the prior art. There are some limits so that developers of certain software can still obtain patents. This provision applies to any application now pending or yet to be filed. In his memo to examiners, Robert Bahr indicated that examiners should treat tax strategy limitations in the same way that printed matter limitations are treated under MPEP 2112.01 (III).
Human Organisms: The USPTO has taken the position that the ban on the patenting of human organisms does not change its longstanding policy in any way. Thus, under the rule a claim is not patentable if, when interpreted as a whole, it "encompasses a human being."
By Shubha Ghosh, Vilas Research Fellow and Professor of Law at the University of Wisconsin Law School
Whether the "Leahy-Smith America Invents Act' will help to create jobs is a complicated empirical question. The logic supporting those who think it will goes something like this. The recently enacted patent reforms streamlines the prosecution process resulting in better quality patents that will allow patent owners to commercialize them more effectively to create companies that will employ people. There are several leaps in this logic. But whether the argument is true or not, the underlying emphasis on improving patent quality is the right one, whether or not another recession is avoided.
But will patent quality improve? There are some features which support that improvement. The creation of post-grant review proceedings has the potential of providing a more effective mechanism for the introduction and review of prior art to invalidate a poor quality patent than the process of litigation. Such administrative review might limit the ability of non-practicing entities to use patents of dubious value to hinder effective use of technology and innovations. Over all the new process might provide better assurance about issued patents and confidence in their durability. The expansion of the prior user right defense might also soften the effects litigation, threatened or actual, on business development. Although there is some empirical evidence from the Canadian experience that the shift to a first to file system may reduce the volume of patenting, there is some possibility that the quality of patents will improve.
The Act however could have gone further. The limitation on tax avoidance patents, implemented through a broader definition of the prior art, is a good move in reducing the number of applications for inventions that arguably provide little boon to the type of manufacturing and service industries that produce jobs. But Congress could have gone further in clarifying the Bilski v Kappos decision, which seemed to place some limits on the types of processes that could be patented. Congress could have gone one of two ways in helping to clarify Bilski. One is by clarifying the meaning of process so as to avoid the amorphous standard the Court created. The 2010 opinion speaks to "machine or transformation" as one test to determine when a process is patentable and as an important clue to what the right approach might be. Congress could have added more certainty by removing abstract processes (e.g., a method of arbitration, hedging strategies) from patentable subject matter. The goal would be to reduce the number of applications a patent examiner has to shift through and provide tools for per se rejections that do not require extensive examinations of the prior art.
Congress also missed the opportunity to clarify the standard of review for decisions of the US Patent and Trademark Office. The big question is how the Federal Circuit (and eventually the Supreme Court) will interpret the Act. Arguably, the United States Patent Office has been given new tasks and, even with the open questions about fee diversion, greater authority. But as long as decisions from the Office are subject to a de novo review by the courts, it is not clear that this greater power of the agency will actually streamline the process. Congress could have made clear some of the issues raised explicitly and implicitly in the 2011 Microsoft v i4i decision, upholding the clear and convincing evidence standard for claims of patent invalidity. The controversy at the heart of that case has to do with the deference owed to agency decisions. When patent prosecution is ex parte and the main challenge to patent validity is through the courts, the presumption of validity is troubling for the goal of assuring patent quality. Now that we have a process for post grant opposition, some of the concerns with ex parte proceedings are alleviated. But I would make the case that greater deference to decisions of the agency may be a way to lessen the impact of the courts and to assure even more certainty in the process. One possible response is to change the standard of review for claim construction by the Federal Circuit from the current de novo standard. Another would be to set a high bar for challenging agency decisions, thereby limiting the power of the judiciary to overturn agency decisions. Thirty years ago Congress established the Federal Circuit. The passage of the America Invents Act could have been a vehicle to place some limits on its power and shift authority regarding patents to the USPTO, where it belongs.
The goal of promoting progress should not be taken lightly and should not be reduced to the mantra of "jobs, jobs, jobs." Using the patent system to create jobs is in some ways a misguided one. Improving patent quality can strengthen the process of innovation which can aid the economy at a fairly high level. But a better patent system is no substitute for jobs training and an industry targeted jobs bill that creates incentives for hiring and for investment. The America Invents Act brings in many changes, but it is no giant leap for improving confidence that the patent system helps to generate quality inventions.
Classen Immunotherapies, Inc. v. Biogen Idec (Fed. Cir. 2011) Download 06-1634-1649 Panel: Rader (offering "additional views"), Newman (author), Moore (dissent)
There is no doubt that the Federal Circuit continues to struggle mightily with Section 101. If Myriad were not enough evidence of this, Classen Immunotherapies – and Judge Rader's additional views in particular – should remove all doubt.
Classen Immunotherapies holds three patents that it contends are infringed by virtually everyone: Patent Nos. 6,638,739; 6,420,139; and 5,723,283. According to the patents, their inventor, Dr. Classen, has discovered that "the schedule of infant immunization for infectious diseases can affect the later occurrence of chronic immune-mediated disorders…and that immunization should be conducted on the schedule that presents the lowest risk with respect to such disorders." Slip Op. at 5. Claim 1 of the '739 patent is illustrative of Classen's broad claim scope:
1. A method of immunizing a mammalian subject which comprises:
(I) screening a plurality of immunization schedules, by
(a) identifying a first group of mammals and at least a second group of mammals, said mammals being of the same species, the first group of mammals having been immunized with one or more doses of one or more infectious disease-causing organism-associated immunogens according to a first screened immunization schedule, and the second group of mammals having been immunized with one or more doses of one or more infectious disease-causing organism-associated immunogens according to a second screened im-munization schedule, each group of mammals having been immunized according to a different immunization schedule, and
(b) comparing the effectiveness of said first and second screened immunization schedules in pro-tecting against or inducing a chronic immune-mediated disorder in said first and second groups, as a result of which one of said screened immuni-zation schedules may be identified as a lower risk screened immunization schedule and the other of said screened schedules as a higher risk screened immunization schedule with regard to the risk of developing said chronic immune mediated disorder(s),
(II) immunizing said subject according to a subject immunization schedule, according to which at least one of said infectious disease-causing organism-associated immunogens of said lower risk schedule is administered in accordance with said lower risk screened immunization schedule, which administration is associated with a lower risk of development of said chronic immune-mediated disorder(s) than when said immunogen was administered according to said higher risk screened immunization schedule.
Classen asserts that the '139 and '739 patents are infringed "when a health care provider reads the relevant literature and selects and uses an immunization schedule that is of lower risk for development of a chronic immune-mediated disorder." Slip Op. at 7. According to Classen, this includes "the act of reviewing the published information, whether or not any change in the immunization schedule is made upon such review." Id. The '283 patent is similar, except that it does not include the subsequent step of selecting an immunization schedule. Classen asserts that the '283 patent is infringed "when a person reviews relevant information, whether the person is a producer of vaccines, a health care provider, or a concerned parent." Slip Op. at 8. The three patents list several hundred preexisting references relating to immunization schedules, the occurrence of immune-mediated disorders, and studies and reports from the field.
The district court granted summary judgment of invalidity of the asserted claims on the ground that they claimed an abstract idea. On initial appeal, the CAFC affirmed, with Judge Moore penning an extremely short affirmance. Following Bilski, the Supreme Court grant-vacate-remanded the case to the Federal Circuit, where it was assigned to the panel of Rader, Newman, and Moore.
The Majority: Writing for herself and Judge Rader, Judge Newman concluded that while the '283 patent failed to satisfy Section 101, the '139 and '739 patent did. Although the '139/'739 patents included a mental step, "precedent has recognized that the presence of a mental step is not of itself fatal to § 101 eligibility." Slip Op. at 15. Because the claims of these patents include the physical step of immunization, the majority held, they were directed to a "specific, tangible application." Slip Op. at 18. This was sufficient to assure the majority, which declined to offer any additional reasoning, of their subject matter patentablity. On the other hand, the majority held, the '283 patent attempted to claim an abstract idea unfettered to any physical steps. Thus, it was invalid under Section 101.
The Dissent: Judge Moore disagreed entirely. "While I confess the precise line to be drawn between patentable subject matter and abstract idea is quite elusive, at least for me, this case is not even close." Dissent at 6. All three claims simply constitute abstract subject matter: "Having discovered a principle – that changing the timing of immunization may change the incidence of chronic immune mediated disorders – Classen now seeks to keep it for himself." Dissent at 8. While Judge Moore reserves her harshest criticism for the '283 patent, her views on the '139/'739 reach the same conclusion. "The immunization step of the '739 patent, like updating the alarm limit in Parker v. Flook, 437 U.S. 584 (1978), is nothing more than post-solution activity." Id. at 9. That post-solution activity "does not transform the unpatentable principle – that a correlation exists between vacination schedules and incidence of chronic immune disease – into a patentable process.' Id. at 10.
Judge Rader's Additional Views: In an unusual move, Judge Rader, joined by Judge Newman, wrote separately to express frustration with the constant use of Section 101 challenges by accused infringers.
In the last several years, this court has confronted a rising number of challenges under 35 U.S.C. § 101. The language of § 101 is very broad. Nevertheless, litigants continue to urge this court to impose limitations not present in the statute.
For a variety of policy reasons, Judge Rader urges, "[t]his court should decline to accept invitations to restrict subject matter eligibility." Rader additional views at 2. Chief among these is the problem that "eligibility restrictions usually engender a health dose of claim-drafting ingenuity," evasions that "add to the cost and complexity of the patent system and may cause technology research to shift to countries where protection is not so difficult or expensive." Id. at 3.
Comments: I am troubled by several aspects of the court's opinions. Particularly concerning is the majority's apparent desire to abdicate the subject matter inquiry altogether, a desire expressed both implicitly, in the majority opinion's unwillingness to offer any substantive reasoning to support its ruling on the '139/'739 patents, and explicitly in Judge Rader's policy statement. This approach seems problematic on its own, but becomes even more so when coupled with the numerous Supreme Court opinions relating to the issue of subject matter patentability – an area of traditional significance in the patent sphere. While the Court may have repeatedly suggested that broad categorical rules may be inpermissible, it has nowhere suggested that subject matter arguments lack merit as a class, or that subject matter arguments must fail as a matter of course. In particular, I find it difficult to see how the '139/'739 patents possibly survive scrutiny under Parker v. Flook, 437 U.S. 584 (1978). The mental step itself is not a patentable subject, so how can combining it with an act (or the lack of an act) that has previously been done without the mental step make it patentable?
Nor does Section 101 seem to present such a unique problem that the Federal Circuit should adopt a policy of declining to address arguments relating to it. Even as Judge Rader criticizes the case law limiting subject matter patentablity because it encourages costly legal design-arounds, he joins with an opinion that does precisely that by drawing the line between the two sets of claims. Mental step claims are now clearly out; mental step plus claims are now in. And since every process is simply a link in a longer process, claim drafters need only look one step forward to avoid the effects of the majority's ruling. Nor should the effects of Judge Rader's parade of horribles be limited to Section 101 – they strike me as equally applicable to Section 102, Section 103, and especially Section 112.
(1) DIRECTOR.—The term “Director” means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
(2) OFFICE.—The term “Office” means the United States Patent and Trademark Office.
(3) PATENT PUBLIC ADVISORY COMMITTEE.—The term “Patent Public Advisory Committee” means the Patent Public Advisory Committee established under section 5(a) of title 35, United States Code.
(4) TRADEMARK ACT OF 1946.—The term “Trademark Act of 1946” means the Act entitled “An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes”, approved July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly referred to as the “Trademark Act of 1946” or the “Lanham Act”).
(5) TRADEMARK PUBLIC ADVISORY COMMITTEE.—The term “Trademark Public Advisory Committee” means the Trademark Public Advisory Committee established under section 5(a) of title 35, United States Code.
SEC. 3. FIRST INVENTOR TO FILE.
(a) Definitions.—Section 100 of title 35, United States Code, is amended—
(1) in subsection (e), by striking “or inter partes reexamination under section 311”; and
(2) by adding at the end the following:
“(f) The term ‘inventor’ means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.
“(g) The terms ‘joint inventor’ and ‘coinventor’ mean any 1 of the individuals who invented or discovered the subject matter of a joint invention.
“(h) The term ‘joint research agreement’ means a written contract, grant, or cooperative agreement entered into by 2 or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.
“(i)(1) The term ‘effective filing date’ for a claimed invention in a patent or application for patent means—
“(A) if subparagraph (B) does not apply, the actual filing date of the patent or the application for the patent containing a claim to the invention; or
“(B) the filing date of the earliest application for which the patent or application is entitled, as to such invention, to a right of priority under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date under section 120, 121, or 365(c).
“(2) The effective filing date for a claimed invention in an application for reissue or reissued patent shall be determined by deeming the claim to the invention to have been contained in the patent for which reissue was sought.
“(j) The term ‘claimed invention’ means the subject matter defined by a claim in a patent or an application for a patent.”.
(b) Conditions For Patentability.—
(1) IN GENERAL.—Section 102 of title 35, United States Code, is amended to read as follows:
Ҥ 102. Conditions for patentability; novelty
“(a) Novelty; Prior Art.—A person shall be entitled to a patent unless—
“(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or
“(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.
“(b) Exceptions.—
“(1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—
“(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
“(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.
“(2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.—A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if—
“(A) the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;
“(B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
“(C) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.
“(c) Common Ownership Under Joint Research Agreements.—Subject matter disclosed and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of subsection (b)(2)(C) if—
“(1) the subject matter disclosed was developed and the claimed invention was made by, or on behalf of, 1 or more parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;
“(2) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and
“(3) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.
“(d) Patents And Published Applications Effective As Prior Art.—For purposes of determining whether a patent or application for patent is prior art to a claimed invention under subsection (a)(2), such patent or application shall be considered to have been effectively filed, with respect to any subject matter described in the patent or application—
“(1) if paragraph (2) does not apply, as of the actual filing date of the patent or the application for patent; or
“(2) if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b), or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter.”.
(2) CONTINUITY OF INTENT UNDER THE CREATE ACT.—The enactment of section 102(c) of title 35, United States Code, under paragraph (1) of this subsection is done with the same intent to promote joint research activities that was expressed, including in the legislative history, through the enactment of the Cooperative Research and Technology Enhancement Act of 2004 (Public Law 108–453; the “CREATE Act”), the amendments of which are stricken by subsection (c) of this section. The United States Patent and Trademark Office shall administer section 102(c) of title 35, United States Code, in a manner consistent with the legislative history of the CREATE Act that was relevant to its administration by the United States Patent and Trademark Office.
(3) CONFORMING AMENDMENT.—The item relating to section 102 in the table of sections for chapter 10 of title 35, United States Code, is amended to read as follows:
“102. Conditions for patentability; novelty.”.
(c) Conditions For Patentability; Nonobvious Subject Matter.—Section 103 of title 35, United States Code, is amended to read as follows:
Ҥ 103. Conditions for patentability; non-obvious subject matter
“A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.”.
(d) Repeal Of Requirements For Inventions Made Abroad.—Section 104 of title 35, United States Code, and the item relating to that section in the table of sections for chapter 10 of title 35, United States Code, are repealed.
(e) Repeal Of Statutory Invention Registration.—
(1) IN GENERAL.—Section 157 of title 35, United States Code, and the item relating to that section in the table of sections for chapter 14 of title 35, United States Code, are repealed.
(2) REMOVAL OF CROSS REFERENCES.—Section 111(b)(8) of title 35, United States Code, is amended by striking “sections 115, 131, 135, and 157” and inserting “sections 131 and 135”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect upon the expiration of the 18-month period beginning on the date of the enactment of this Act, and shall apply to any request for a statutory invention registration filed on or after that effective date.
(f) Earlier Filing Date For Inventor And Joint Inventor.—Section 120 of title 35, United States Code, is amended by striking “which is filed by an inventor or inventors named” and inserting “which names an inventor or joint inventor”.
(g) Conforming Amendments.—
(1) RIGHT OF PRIORITY.—Section 172 of title 35, United States Code, is amended by striking “and the time specified in section 102(d)”.
(2) LIMITATION ON REMEDIES.—Section 287(c)(4) of title 35, United States Code, is amended by striking “the earliest effective filing date of which is prior to” and inserting “which has an effective filing date before”.
(3) INTERNATIONAL APPLICATION DESIGNATING THE UNITED STATES: EFFECT.—Section 363 of title 35, United States Code, is amended by striking “except as otherwise provided in section 102(e) of this title”.
(4) PUBLICATION OF INTERNATIONAL APPLICATION: EFFECT.—Section 374 of title 35, United States Code, is amended by striking “sections 102(e) and 154(d)” and inserting “section 154(d)”.
(5) PATENT ISSUED ON INTERNATIONAL APPLICATION: EFFECT.—The second sentence of section 375(a) of title 35, United States Code, is amended by striking “Subject to section 102(e) of this title, such” and inserting “Such”.
(6) LIMIT ON RIGHT OF PRIORITY.—Section 119(a) of title 35, United States Code, is amended by striking “; but no patent shall be granted” and all that follows through “one year prior to such filing”.
(7) INVENTIONS MADE WITH FEDERAL ASSISTANCE.—Section 202(c) of title 35, United States Code, is amended—
(A) in paragraph (2)—
(i) by striking “publication, on sale, or public use,” and all that follows through “obtained in the United States” and inserting “the 1-year period referred to in section 102(b) would end before the end of that 2-year period”; and
(ii) by striking “prior to the end of the statutory” and inserting “before the end of that 1-year”; and
(B) in paragraph (3), by striking “any statutory bar date that may occur under this title due to publication, on sale, or public use” and inserting “the expiration of the 1-year period referred to in section 102(b)”.
(h) Derived Patents.—
(1) IN GENERAL.—Section 291 of title 35, United States Code, is amended to read as follows:
Ҥ 291. Derived Patents
“(a) In General.—The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an earlier effective filing date, if the invention claimed in such other patent was derived from the inventor of the invention claimed in the patent owned by the person seeking relief under this section.
“(b) Filing Limitation.—An action under this section may be filed only before the end of the 1-year period beginning on the date of the issuance of the first patent containing a claim to the allegedly derived invention and naming an individual alleged to have derived such invention as the inventor or joint inventor.”.
(2) CONFORMING AMENDMENT.—The item relating to section 291 in the table of sections for chapter 29 of title 35, United States Code, is amended to read as follows:
“291. Derived patents.”.
(i) Derivation Proceedings.—Section 135 of title 35, United States Code, is amended to read as follows:
Ҥ 135. Derivation proceedings
“(a) Institution Of Proceeding.—An applicant for patent may file a petition to institute a derivation proceeding in the Office. The petition shall set forth with particularity the basis for finding that an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application claiming such invention was filed. Any such petition may be filed only within the 1-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention, shall be made under oath, and shall be supported by substantial evidence. Whenever the Director determines that a petition filed under this subsection demonstrates that the standards for instituting a derivation proceeding are met, the Director may institute a derivation proceeding. The determination by the Director whether to institute a derivation proceeding shall be final and nonappealable.
“(b) Determination By Patent Trial And Appeal Board.—In a derivation proceeding instituted under subsection (a), the Patent Trial and Appeal Board shall determine whether an inventor named in the earlier application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application claiming such invention was filed. In appropriate circumstances, the Patent Trial and Appeal Board may correct the naming of the inventor in any application or patent at issue. The Director shall prescribe regulations setting forth standards for the conduct of derivation proceedings, including requiring parties to provide sufficient evidence to prove and rebut a claim of derivation.
“(c) Deferral Of Decision.—The Patent Trial and Appeal Board may defer action on a petition for a derivation proceeding until the expiration of the 3-month period beginning on the date on which the Director issues a patent that includes the claimed invention that is the subject of the petition. The Patent Trial and Appeal Board also may defer action on a petition for a derivation proceeding, or stay the proceeding after it has been instituted, until the termination of a proceeding under chapter 30, 31, or 32 involving the patent of the earlier applicant.
“(d) Effect Of Final Decision.—The final decision of the Patent Trial and Appeal Board, if adverse to claims in an application for patent, shall constitute the final refusal by the Office on those claims. The final decision of the Patent Trial and Appeal Board, if adverse to claims in a patent, shall, if no appeal or other review of the decision has been or can be taken or had, constitute cancellation of those claims, and notice of such cancellation shall be endorsed on copies of the patent distributed after such cancellation.
“(e) Settlement.—Parties to a proceeding instituted under subsection (a) may terminate the proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors of the claimed invention in dispute. Unless the Patent Trial and Appeal Board finds the agreement to be inconsistent with the evidence of record, if any, it shall take action consistent with the agreement. Any written settlement or understanding of the parties shall be filed with the Director. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents or applications, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.
“(f) Arbitration.—Parties to a proceeding instituted under subsection (a) may, within such time as may be specified by the Director by regulation, determine such contest or any aspect thereof by arbitration. Such arbitration shall be governed by the provisions of title 9, to the extent such title is not inconsistent with this section. The parties shall give notice of any arbitration award to the Director, and such award shall, as between the parties to the arbitration, be dispositive of the issues to which it relates. The arbitration award shall be unenforceable until such notice is given. Nothing in this subsection shall preclude the Director from determining the patentability of the claimed inventions involved in the proceeding.”.
(j) Elimination Of References To Interferences.—(1) Sections 134, 145, 146, 154, and 305 of title 35, United States Code, are each amended by striking “Board of Patent Appeals and Interferences” each place it appears and inserting “Patent Trial and Appeal Board”.
(2)(A) Section 146 of title 35, United States Code, is amended—
(i) by striking “an interference” and inserting “a derivation proceeding”; and
(ii) by striking “the interference” and inserting “the derivation proceeding”.
(B) The subparagraph heading for section 154(b)(1)(C) of title 35, United States Code, is amended to read as follows:
“(C) GUARANTEE OF ADJUSTMENTS FOR DELAYS DUE TO DERIVATION PROCEEDINGS, SECRECY ORDERS, AND APPEALS.—”.
(3) The section heading for section 134 of title 35, United States Code, is amended to read as follows:
“§ 134. Appeal to the Patent Trial and Appeal Board”.
(4) The section heading for section 146 of title 35, United States Code, is amended to read as follows:
“§ 146. Civil action in case of derivation proceeding”.
(5) The items relating to sections 134 and 135 in the table of sections for chapter 12 of title 35, United States Code, are amended to read as follows:
“134. Appeal to the Patent Trial and Appeal Board.
“135. Derivation proceedings.”.
(6) The item relating to section 146 in the table of sections for chapter 13 of title 35, United States Code, is amended to read as follows:
“146. Civil action in case of derivation proceeding.”.
(k) Statute Of Limitations.—
(1) IN GENERAL.—Section 32 of title 35, United States Code, is amended by inserting between the third and fourth sentences the following: “A proceeding under this section shall be commenced not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an officer or employee of the Office as prescribed in the regulations established under section 2(b)(2)(D).”.
(2) REPORT TO CONGRESS.—The Director shall provide on a biennial basis to the Judiciary Committees of the Senate and House of Representatives a report providing a short description of incidents made known to an officer or employee of the Office as prescribed in the regulations established under section 2(b)(2)(D) of title 35, United States Code, that reflect substantial evidence of misconduct before the Office but for which the Office was barred from commencing a proceeding under section 32 of title 35, United States Code, by the time limitation established by the fourth sentence of that section.
(3) EFFECTIVE DATE.—The amendment made by paragraph (1) shall apply in any case in which the time period for instituting a proceeding under section 32 of title 35, United States Code, had not lapsed before the date of the enactment of this Act.
(l) Small Business Study.—
(1) DEFINITIONS.—In this subsection—
(A) the term “Chief Counsel” means the Chief Counsel for Advocacy of the Small Business Administration;
(B) the term “General Counsel” means the General Counsel of the United States Patent and Trademark Office; and
(C) the term “small business concern” has the meaning given that term under section 3 of the Small Business Act (15 U.S.C. 632).
(2) STUDY.—
(A) IN GENERAL.—The Chief Counsel, in consultation with the General Counsel, shall conduct a study of the effects of eliminating the use of dates of invention in determining whether an applicant is entitled to a patent under title 35, United States Code.
(B) AREAS OF STUDY.—The study conducted under subparagraph (A) shall include examination of the effects of eliminating the use of invention dates, including examining—
(i) how the change would affect the ability of small business concerns to obtain patents and their costs of obtaining patents;
(ii) whether the change would create, mitigate, or exacerbate any disadvantages for applicants for patents that are small business concerns relative to applicants for patents that are not small business concerns, and whether the change would create any advantages for applicants for patents that are small business concerns relative to applicants for patents that are not small business concerns;
(iii) the cost savings and other potential benefits to small business concerns of the change; and
(iv) the feasibility and costs and benefits to small business concerns of alternative means of determining whether an applicant is entitled to a patent under title 35, United States Code.
(3) REPORT.—Not later than the date that is 1 year after the date of the enactment of this Act, the Chief Counsel shall submit to the Committee on Small Business and Entrepreneurship and the Committee on the Judiciary of the Senate and the Committee on Small Business and the Committee on the Judiciary of the House of Representatives a report on the results of the study under paragraph (2).
(m) Report On Prior User Rights.—
(1) IN GENERAL.—Not later than the end of the 4-month period beginning on the date of the enactment of this Act, the Director shall report, to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives, the findings and recommendations of the Director on the operation of prior user rights in selected countries in the industrialized world. The report shall include the following:
(A) A comparison between patent laws of the United States and the laws of other industrialized countries, including members of the European Union and Japan, Canada, and Australia.
(B) An analysis of the effect of prior user rights on innovation rates in the selected countries.
(C) An analysis of the correlation, if any, between prior user rights and start-up enterprises and the ability to attract venture capital to start new companies.
(D) An analysis of the effect of prior user rights, if any, on small businesses, universities, and individual inventors.
(E) An analysis of legal and constitutional issues, if any, that arise from placing trade secret law in patent law.
(F) An analysis of whether the change to a first-to-file patent system creates a particular need for prior user rights.
(2) CONSULTATION WITH OTHER AGENCIES.—In preparing the report required under paragraph (1), the Director shall consult with the United States Trade Representative, the Secretary of State, and the Attorney General.
(n) Effective Date.—
(1) IN GENERAL.—Except as otherwise provided in this section, the amendments made by this section shall take effect upon the expiration of the 18-month period beginning on the date of the enactment of this Act, and shall apply to any application for patent, and to any patent issuing thereon, that contains or contained at any time—
(A) a claim to a claimed invention that has an effective filing date as defined in section 100(i) of title 35, United States Code, that is on or after the effective date described in this paragraph; or
(B) a specific reference under section 120, 121, or 365(c) of title 35, United States Code, to any patent or application that contains or contained at any time such a claim.
(2) INTERFERING PATENTS.—The provisions of sections 102(g), 135, and 291 of title 35, United States Code, as in effect on the day before the effective date set forth in paragraph (1) of this subsection, shall apply to each claim of an application for patent, and any patent issued thereon, for which the amendments made by this section also apply, if such application or patent contains or contained at any time—
(A) a claim to an invention having an effective filing date as defined in section 100(i) of title 35, United States Code, that occurs before the effective date set forth in paragraph (1) of this subsection; or
(B) a specific reference under section 120, 121, or 365(c) of title 35, United States Code, to any patent or application that contains or contained at any time such a claim.
(o) Sense Of Congress.—It is the sense of the Congress that converting the United States patent system from “first to invent” to a system of “first inventor to file” will promote the progress of science and the useful arts by securing for limited times to inventors the exclusive rights to their discoveries and provide inventors with greater certainty regarding the scope of protection provided by the grant of exclusive rights to their discoveries.
(p) Sense Of Congress.—It is the sense of the Congress that converting the United States patent system from “first to invent” to a system of “first inventor to file” will improve the United States patent system and promote harmonization of the United States patent system with the patent systems commonly used in nearly all other countries throughout the world with whom the United States conducts trade and thereby promote greater international uniformity and certainty in the procedures used for securing the exclusive rights of inventors to their discoveries.
SEC. 4. INVENTOR’S OATH OR DECLARATION.
(a) Inventor’s Oath Or Declaration.—
(1) IN GENERAL.—Section 115 of title 35, United States Code, is amended to read as follows:
“§ 115. Inventor’s oath or declaration
“(a) Naming The Inventor; Inventor’s Oath Or Declaration.—An application for patent that is filed under section 111(a) or commences the national stage under section 371 shall include, or be amended to include, the name of the inventor for any invention claimed in the application. Except as otherwise provided in this section, each individual who is the inventor or a joint inventor of a claimed invention in an application for patent shall execute an oath or declaration in connection with the application.
“(b) Required Statements.—An oath or declaration under subsection (a) shall contain statements that—
“(1) the application was made or was authorized to be made by the affiant or declarant; and
“(2) such individual believes himself or herself to be the original inventor or an original joint inventor of a claimed invention in the application.
“(c) Additional Requirements.—The Director may specify additional information relating to the inventor and the invention that is required to be included in an oath or declaration under subsection (a).
“(d) Substitute Statement.—
“(1) IN GENERAL.—In lieu of executing an oath or declaration under subsection (a), the applicant for patent may provide a substitute statement under the circumstances described in paragraph (2) and such additional circumstances that the Director may specify by regulation.
“(2) PERMITTED CIRCUMSTANCES.—A substitute statement under paragraph (1) is permitted with respect to any individual who—
“(A) is unable to file the oath or declaration under subsection (a) because the individual—
“(i) is deceased;
“(ii) is under legal incapacity; or
“(iii) cannot be found or reached after diligent effort; or
“(B) is under an obligation to assign the invention but has refused to make the oath or declaration required under subsection (a).
“(3) CONTENTS.—A substitute statement under this subsection shall—
“(A) identify the individual with respect to whom the statement applies;
“(B) set forth the circumstances representing the permitted basis for the filing of the substitute statement in lieu of the oath or declaration under subsection (a); and
“(C) contain any additional information, including any showing, required by the Director.
“(e) Making Required Statements In Assignment Of Record.—An individual who is under an obligation of assignment of an application for patent may include the required statements under subsections (b) and (c) in the assignment executed by the individual, in lieu of filing such statements separately.
“(f) Time For Filing.—A notice of allowance under section 151 may be provided to an applicant for patent only if the applicant for patent has filed each required oath or declaration under subsection (a) or has filed a substitute statement under subsection (d) or recorded an assignment meeting the requirements of subsection (e).
“(g) Earlier-Filed Application Containing Required Statements Or Substitute Statement.—
“(1) EXCEPTION.—The requirements under this section shall not apply to an individual with respect to an application for patent in which the individual is named as the inventor or a joint inventor and who claims the benefit under section 120, 121, or 365(c) of the filing of an earlier-filed application, if—
“(A) an oath or declaration meeting the requirements of subsection (a) was executed by the individual and was filed in connection with the earlier-filed application;
“(B) a substitute statement meeting the requirements of subsection (d) was filed in connection with the earlier filed application with respect to the individual; or
“(C) an assignment meeting the requirements of subsection (e) was executed with respect to the earlier-filed application by the individual and was recorded in connection with the earlier-filed application.
“(2) COPIES OF OATHS, DECLARATIONS, STATEMENTS, OR ASSIGNMENTS.—Notwithstanding paragraph (1), the Director may require that a copy of the executed oath or declaration, the substitute statement, or the assignment filed in connection with the earlier-filed application be included in the later-filed application.
“(h) Supplemental And Corrected Statements; Filing Additional Statements.—
“(1) IN GENERAL.—Any person making a statement required under this section may withdraw, replace, or otherwise correct the statement at any time. If a change is made in the naming of the inventor requiring the filing of 1 or more additional statements under this section, the Director shall establish regulations under which such additional statements may be filed.
“(2) SUPPLEMENTAL STATEMENTS NOT REQUIRED.—If an individual has executed an oath or declaration meeting the requirements of subsection (a) or an assignment meeting the requirements of subsection (e) with respect to an application for patent, the Director may not thereafter require that individual to make any additional oath, declaration, or other statement equivalent to those required by this section in connection with the application for patent or any patent issuing thereon.
“(3) SAVINGS CLAUSE.—A patent shall not be invalid or unenforceable based upon the failure to comply with a requirement under this section if the failure is remedied as provided under paragraph (1).
“(i) Acknowledgment Of Penalties.—Any declaration or statement filed pursuant to this section shall contain an acknowledgment that any willful false statement made in such declaration or statement is punishable under section 1001 of title 18 by fine or imprisonment of not more than 5 years, or both.”.
(2) RELATIONSHIP TO DIVISIONAL APPLICATIONS.—Section 121 of title 35, United States Code, is amended by striking “If a divisional application” and all that follows through “inventor.”.
(3) REQUIREMENTS FOR NONPROVISIONAL APPLICATIONS.—Section 111(a) of title 35, United States Code, is amended—
(A) in paragraph (2)(C), by striking “by the applicant” and inserting “or declaration”;
(B) in the heading for paragraph (3), by inserting “OR DECLARATION” after “AND OATH”; and
(C) by inserting “or declaration” after “and oath” each place it appears.
(4) CONFORMING AMENDMENT.—The item relating to section 115 in the table of sections for chapter 11 of title 35, United States Code, is amended to read as follows:
“115. Inventor’s oath or declaration.”.
(b) Filing By Other Than Inventor.—
(1) IN GENERAL.—Section 118 of title 35, United States Code, is amended to read as follows:
Ҥ 118. Filing by other than inventor
“A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties. If the Director grants a patent on an application filed under this section by a person other than the inventor, the patent shall be granted to the real party in interest and upon such notice to the inventor as the Director considers to be sufficient.”.
(2) CONFORMING AMENDMENT.—Section 251 of title 35, United States Code, is amended in the third undesignated paragraph by inserting “or the application for the original patent was filed by the assignee of the entire interest” after “claims of the original patent”.
(c) Specification.—Section 112 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph—
(A) by striking “The specification” and inserting “(a) In General.—The specification”; and
(B) by striking “of carrying out his invention” and inserting “or joint inventor of carrying out the invention”;
(2) in the second undesignated paragraph—
(A) by striking “The specification” and inserting “(b) Conclusion.—The specification”; and
(B) by striking “applicant regards as his invention” and inserting “inventor or a joint inventor regards as the invention”;
(3) in the third undesignated paragraph, by striking “A claim” and inserting “(c) Form.—A claim”;
(4) in the fourth undesignated paragraph, by striking “Subject to the following paragraph,” and inserting “(d) Reference In Dependent Forms.—Subject to subsection (e),”;
(5) in the fifth undesignated paragraph, by striking “A claim” and inserting “(e) Reference In Multiple Dependent Form.—A claim”; and
(6) in the last undesignated paragraph, by striking “An element” and inserting “(f) Element In Claim For A Combination.—An element”.
(d) Conforming Amendments.—
(1) Sections 111(b)(1)(A) of title 35, United States Code, is amended by striking “the first paragraph of section 112 of this title” and inserting “section 112(a)”.
(2) Section 111(b)(2) of title 35, United States Code, is amended by striking “the second through fifth paragraphs of section 112,” and inserting “subsections (b) through (e) of section 112,”.
(e) Effective Date.—The amendments made by this section shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent application that is filed on or after that effective date.
SEC. 5. DEFENSE TO INFRINGEMENT BASED ON PRIOR COMMERCIAL USE.
(a) In General.—Section 273 of title 35, United States Code, is amended to read as follows:
Ҥ 273. Defense to infringement based on prior commercial use
“(a) In General.—A person shall be entitled to a defense under section 282(b) with respect to subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process, that would otherwise infringe a claimed invention being asserted against the person if—
“(1) such person, acting in good faith, commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm’s length sale or other arm’s length commercial transfer of a useful end result of such commercial use; and
“(2) such commercial use occurred at least 1 year before the earlier of either—
“(A) the effective filing date of the claimed invention; or
“(B) the date on which the claimed invention was disclosed to the public in a manner that qualified for the exception from prior art under section 102(b).
“(b) Burden Of Proof.—A person asserting a defense under this section shall have the burden of establishing the defense by clear and convincing evidence.
“(c) Additional Commercial Uses.—
“(1) PREMARKETING REGULATORY REVIEW.—Subject matter for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period specified in section 156(g), shall be deemed to be commercially used for purposes of subsection (a)(1) during such regulatory review period.
“(2) NONPROFIT LABORATORY USE.—A use of subject matter by a nonprofit research laboratory or other nonprofit entity, such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for purposes of subsection (a)(1), except that a defense under this section may be asserted pursuant to this paragraph only for continued and noncommercial use by and in the laboratory or other nonprofit entity.
“(d) Exhaustion Of Rights.—Notwithstanding subsection (e)(1), the sale or other disposition of a useful end result by a person entitled to assert a defense under this section in connection with a patent with respect to that useful end result shall exhaust the patent owner’s rights under the patent to the extent that such rights would have been exhausted had such sale or other disposition been made by the patent owner.
“(e) Limitations And Exceptions.—
“(1) PERSONAL DEFENSE.—
“(A) IN GENERAL.—A defense under this section may be asserted only by the person who performed or directed the performance of the commercial use described in subsection (a), or by an entity that controls, is controlled by, or is under common control with such person.
“(B) TRANSFER OF RIGHT.—Except for any transfer to the patent owner, the right to assert a defense under this section 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.
“(C) RESTRICTION ON SITES.—A defense under this section, when acquired by a person as part of an assignment or transfer described in subparagraph (B), may only be asserted for uses at sites where the subject matter that would otherwise infringe a claimed invention is in use before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business.
“(2) DERIVATION.—A person may not assert a defense under this section if the subject matter on which the defense is based was derived from the patentee or persons in privity with the patentee.
“(3) NOT A GENERAL LICENSE.—The defense asserted by a person under this section is not a general license under all claims of the patent at issue, but extends only to the specific subject matter for which it has been established that a commercial use that qualifies under this section occurred, except that the defense shall also extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent.
“(4) ABANDONMENT OF USE.—A person who has abandoned commercial use (that qualifies under this section) of subject matter may not rely on activities performed before the date of such abandonment in establishing a defense under this section with respect to actions taken on or after the date of such abandonment.
“(5) UNIVERSITY EXCEPTION.—
“(A) IN GENERAL.—A person commercially using subject matter to which subsection (a) applies may not assert a defense under this section if the claimed invention with respect to which the defense is asserted was, at the time the invention was made, owned or subject to an obligation of assignment to either an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such institutions of higher education.
“(B) EXCEPTION.—Subparagraph (A) shall not apply if any of the activities required to reduce to practice the subject matter of the claimed invention could not have been undertaken using funds provided by the Federal Government.
“(f) Unreasonable Assertion Of Defense.—If the defense under this section is pleaded by a person who is found to infringe the patent and who subsequently fails to demonstrate a reasonable basis for asserting the defense, the court shall find the case exceptional for the purpose of awarding attorney fees under section 285.
“(g) Invalidity.—A patent shall not be deemed to be invalid under section 102 or 103 solely because a defense is raised or established under this section.”.
(b) Conforming Amendment.—The item relating to section 273 in the table of sections for chapter 28 of title 35, United States Code, is amended to read as follows:
“273. Defense to infringement based on prior commercial use.”.
(c) Effective Date.—The amendments made by this section shall apply to any patent issued on or after the date of the enactment of this Act.
SEC. 6. POST-GRANT REVIEW PROCEEDINGS.
(a) Inter Partes Review.—Chapter 31 of title 35, United States Code, is amended to read as follows:
“(a) In General.—Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent. The Director shall establish, by regulation, fees to be paid by the person requesting the review, in such amounts as the Director determines to be reasonable, considering the aggregate costs of the review.
“(b) Scope.—A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.
“(c) Filing Deadline.—A petition for inter partes review shall be filed after the later of either—
“(1) the date that is 9 months after the grant of a patent or issuance of a reissue of a patent; or
“(2) if a post-grant review is instituted under chapter 32, the date of the termination of such post-grant review.
Ҥ 312. Petitions
“(a) Requirements Of Petition.—A petition filed under section 311 may be considered only if—
“(1) the petition is accompanied by payment of the fee established by the Director under section 311;
“(2) the petition identifies all real parties in interest;
“(3) the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim, including—
“(A) copies of patents and printed publications that the petitioner relies upon in support of the petition; and
“(B) affidavits or declarations of supporting evidence and opinions, if the petitioner relies on expert opinions;
“(4) the petition provides such other information as the Director may require by regulation; and
“(5) the petitioner provides copies of any of the documents required under paragraphs (2), (3), and (4) to the patent owner or, if applicable, the designated representative of the patent owner.
“(b) Public Availability.—As soon as practicable after the receipt of a petition under section 311, the Director shall make the petition available to the public.
Ҥ 313. Preliminary response to petition
“If an inter partes review petition is filed under section 311, the patent owner shall have the right to file a preliminary response to the petition, within a time period set by the Director, that sets forth reasons why no inter partes review should be instituted based upon the failure of the petition to meet any requirement of this chapter.
Ҥ 314. Institution of inter partes review
“(a) Threshold.—The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.
“(b) Timing.—The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after—
“(1) receiving a preliminary response to the petition under section 313; or
“(2) if no such preliminary response is filed, the last date on which such response may be filed.
“(c) Notice.—The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence.
“(d) No Appeal.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
Ҥ 315. Relation to other proceedings or actions
“(a) Infringer’s Civil Action.—
“(1) INTER PARTES REVIEW BARRED BY CIVIL ACTION.—An inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.
“(2) STAY OF CIVIL ACTION.—If the petitioner or real party in interest files a civil action challenging the validity of a claim of the patent on or after the date on which the petitioner files a petition for inter partes review of the patent, that civil action shall be automatically stayed until either—
“(A) the patent owner moves the court to lift the stay;
“(B) the patent owner files a civil action or counterclaim alleging that the petitioner or real party in interest has infringed the patent; or
“(C) the petitioner or real party in interest moves the court to dismiss the civil action.
“(3) TREATMENT OF COUNTERCLAIM.—A counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim of a patent for purposes of this subsection.
“(b) Patent Owner’s Action.—An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).
“(c) Joinder.—If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.
“(d) Multiple Proceedings.—Notwithstanding sections 135(a), 251, and 252, and chapter 30, during the pendency of an inter partes review, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.
“(e) Estoppel.—
“(1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
“(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
Ҥ 316. Conduct of inter partes review
“(a) Regulations.—The Director shall prescribe regulations—
“(1) providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall, if accompanied by a motion to seal, be treated as sealed pending the outcome of the ruling on the motion;
“(2) setting forth the standards for the showing of sufficient grounds to institute a review under section 314(a);
“(3) establishing procedures for the submission of supplemental information after the petition is filed;
“(4) establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title;
“(5) setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to—
“(A) the deposition of witnesses submitting affidavits or declarations; and
“(B) what is otherwise necessary in the interest of justice;
“(6) prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;
“(7) providing for protective orders governing the exchange and submission of confidential information;
“(8) providing for the filing by the patent owner of a response to the petition under section 313 after an inter partes review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;
“(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;
“(10) providing either party with the right to an oral hearing as part of the proceeding;
“(11) requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 315(c);
“(12) setting a time period for requesting joinder under section 315(c); and
“(13) providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.
“(b) Considerations.—In prescribing regulations under this section, the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.
“(c) Patent Trial And Appeal Board.—The Patent Trial and Appeal Board shall, in accordance with section 6, conduct each inter partes review instituted under this chapter.
“(d) Amendment Of The Patent.—
“(1) IN GENERAL.—During an inter partes review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways:
“(A) Cancel any challenged patent claim.
“(B) For each challenged claim, propose a reasonable number of substitute claims.
“(2) ADDITIONAL MOTIONS.—Additional motions to amend may be permitted upon the joint request of the petitioner and the patent owner to materially advance the settlement of a proceeding under section 317, or as permitted by regulations prescribed by the Director.
“(3) SCOPE OF CLAIMS.—An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.
“(e) Evidentiary Standards.—In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
Ҥ 317. Settlement
“(a) In General.—An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).
“(b) Agreements In Writing.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of an inter partes review under this section shall be in writing and a true copy of such agreement or understanding shall be filed in the Office before the termination of the inter partes review as between the parties. 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, and shall be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.
Ҥ 318. Decision of the Board
“(a) Final Written Decision.—If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).
“(b) Certificate.—If the Patent Trial and Appeal Board issues a final written decision under subsection (a) and the time for appeal has expired or any appeal has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.
“(c) Intervening Rights.—Any proposed amended or new claim determined to be patentable and incorporated into a patent following an inter partes review under this chapter shall have the same effect as that specified in section 252 for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparation therefor, before the issuance of a certificate under subsection (b).
“(d) Data On Length Of Review.—The Office shall make available to the public data describing the length of time between the institution of, and the issuance of a final written decision under subsection (a) for, each inter partes review.
Ҥ 319. Appeal
“A party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) may appeal the decision pursuant to sections 141 through 144. Any party to the inter partes review shall have the right to be a party to the appeal.”.
(b) Conforming Amendment.—The table of chapters for part III of title 35, United States Code, is amended by striking the item relating to chapter 31 and inserting the following:
“31. Inter Partes Review …………………………………………………………………….. 311”.
(c) Regulations And Effective Date.—
(1) REGULATIONS.—The Director shall, not later than the date that is 1 year after the date of the enactment of this Act, issue regulations to carry out chapter 31 of title 35, United States Code, as amended by subsection (a) of this section.
(2) APPLICABILITY.—
(A) IN GENERAL.—The amendments made by subsection (a) shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that effective date.
(B) GRADUATED IMPLEMENTATION.—The Director may impose a limit on the number of inter partes reviews that may be instituted underchapter 31 of title 35, United States Code, during each of the first 4 1-year periods in which the amendments made by subsection (a) are in effect, if such number in each year equals or exceeds the number of inter partes reexaminations that are ordered under chapter 31 of title 35, United States Code, in the last fiscal year ending before the effective date of the amendments made by subsection (a).
(3) TRANSITION.—
(A) IN GENERAL.—Chapter 31 of title 35, United States Code, is amended—
(i) in section 312—
(I) in subsection (a)—
(aa) in the first sentence, by striking “a substantial new question of patentability affecting any claim of the patent concerned is raised by the request,” and inserting “the information presented in the request shows that there is a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request,”; and
(bb) in the second sentence, by striking “The existence of a substantial new question of patentability” and inserting “A showing that there is a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request”; and
(II) in subsection (c), in the second sentence, by striking “no substantial new question of patentability has been raised,” and inserting “the showing required by subsection (a) has not been made,”; and
(ii) in section 313, by striking “a substantial new question of patentability affecting a claim of the patent is raised” and inserting “it has been shown that there is a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request”.
(B) APPLICATION.—The amendments made by this paragraph—
(i) shall take effect on the date of the enactment of this Act; and
(ii) shall apply to requests for inter partes reexamination that are filed on or after such date of enactment, but before the effective date set forth in paragraph (2)(A) of this subsection.
(C) CONTINUED APPLICABILITY OF PRIOR PROVISIONS.—The provisions of chapter 31 of title 35, United States Code, as amended by this paragraph, shall continue to apply to requests for inter partes reexamination that are filed before the effective date set forth in paragraph (2)(A) as if subsection (a) had not been enacted.
(d) Post-Grant Review.—Part III of title 35, United States Code, is amended by adding at the end the following:
“(a) In General.—Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute a post-grant review of the patent. The Director shall establish, by regulation, fees to be paid by the person requesting the review, in such amounts as the Director determines to be reasonable, considering the aggregate costs of the post-grant review.
“(b) Scope.—A petitioner in a post-grant review may request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).
“(c) Filing Deadline.—A petition for a post-grant review may only be filed not later than the date that is 9 months after the date of the grant of the patent or of the issuance of a reissue patent (as the case may be).
Ҥ 322. Petitions
“(a) Requirements Of Petition.—A petition filed under section 321 may be considered only if—
“(1) the petition is accompanied by payment of the fee established by the Director under section 321;
“(2) the petition identifies all real parties in interest;
“(3) the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim, including—
“(A) copies of patents and printed publications that the petitioner relies upon in support of the petition; and
“(B) affidavits or declarations of supporting evidence and opinions, if the petitioner relies on other factual evidence or on expert opinions;
“(4) the petition provides such other information as the Director may require by regulation; and
“(5) the petitioner provides copies of any of the documents required under paragraphs (2), (3), and (4) to the patent owner or, if applicable, the designated representative of the patent owner.
“(b) Public Availability.—As soon as practicable after the receipt of a petition under section 321, the Director shall make the petition available to the public.
Ҥ 323. Preliminary response to petition
“If a post-grant review petition is filed under section 321, the patent owner shall have the right to file a preliminary response to the petition, within a time period set by the Director, that sets forth reasons why no post-grant review should be instituted based upon the failure of the petition to meet any requirement of this chapter.
Ҥ 324. Institution of post-grant review
“(a) Threshold.—The Director may not authorize a post-grant review to be instituted unless the Director determines that the information presented in the petition filed under section 321, if such information is not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.
“(b) Additional Grounds.—The determination required under subsection (a) may also be satisfied by a showing that the petition raises a novel or unsettled legal question that is important to other patents or patent applications.
“(c) Timing.—The Director shall determine whether to institute a post-grant review under this chapter pursuant to a petition filed under section 321 within 3 months after—
“(1) receiving a preliminary response to the petition under section 323; or
“(2) if no such preliminary response is filed, the last date on which such response may be filed.
“(d) Notice.—The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a) or (b), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence.
“(e) No Appeal.—The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.
Ҥ 325. Relation to other proceedings or actions
“(a) Infringer’s Civil Action.—
“(1) POST-GRANT REVIEW BARRED BY CIVIL ACTION.—A post-grant review may not be instituted under this chapter if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.
“(2) STAY OF CIVIL ACTION.—If the petitioner or real party in interest files a civil action challenging the validity of a claim of the patent on or after the date on which the petitioner files a petition for post-grant review of the patent, that civil action shall be automatically stayed until either—
“(A) the patent owner moves the court to lift the stay;
“(B) the patent owner files a civil action or counterclaim alleging that the petitioner or real party in interest has infringed the patent; or
“(C) the petitioner or real party in interest moves the court to dismiss the civil action.
“(3) TREATMENT OF COUNTERCLAIM.—A counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim of a patent for purposes of this subsection.
“(b) Preliminary Injunctions.—If a civil action alleging infringement of a patent is filed within 3 months after the date on which the patent is granted, the court may not stay its consideration of the patent owner’s motion for a preliminary injunction against infringement of the patent on the basis that a petition for post-grant review has been filed under this chapter or that such a post-grant review has been instituted under this chapter.
“(c) Joinder.—If more than 1 petition for a post-grant review under this chapter is properly filed against the same patent and the Director determines that more than 1 of these petitions warrants the institution of a post-grant review under section 324, the Director may consolidate such reviews into a single post-grant review.
“(d) Multiple Proceedings.—Notwithstanding sections 135(a), 251, and 252, and chapter 30, during the pendency of any post-grant review under this chapter, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, transfer, consolidation, or termination of any such matter or proceeding. In determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.
“(e) Estoppel.—
“(1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.
“(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that post-grant review.
“(f) Reissue Patents.—A post-grant review may not be instituted under this chapter if the petition requests cancellation of a claim in a reissue patent that is identical to or narrower than a claim in the original patent from which the reissue patent was issued, and the time limitations in section 321(c) would bar filing a petition for a post-grant review for such original patent.
Ҥ 326. Conduct of post-grant review
“(a) Regulations.—The Director shall prescribe regulations—
“(1) providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall, if accompanied by a motion to seal, be treated as sealed pending the outcome of the ruling on the motion;
“(2) setting forth the standards for the showing of sufficient grounds to institute a review under subsections (a) and (b) of section 324;
“(3) establishing procedures for the submission of supplemental information after the petition is filed;
“(4) establishing and governing a post-grant review under this chapter and the relationship of such review to other proceedings under this title;
“(5) setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding;
“(6) prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;
“(7) providing for protective orders governing the exchange and submission of confidential information;
“(8) providing for the filing by the patent owner of a response to the petition under section 323 after a post-grant review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;
“(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;
“(10) providing either party with the right to an oral hearing as part of the proceeding;
“(11) requiring that the final determination in any post-grant review be issued not later than 1 year after the date on which the Director notices the institution of a proceeding under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 325(c); and
“(12) providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.
“(b) Considerations.—In prescribing regulations under this section, the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.
“(c) Patent Trial And Appeal Board.—The Patent Trial and Appeal Board shall, in accordance with section 6, conduct each post-grant review instituted under this chapter.
“(d) Amendment Of The Patent.—
“(1) IN GENERAL.—During a post-grant review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways:
“(A) Cancel any challenged patent claim.
“(B) For each challenged claim, propose a reasonable number of substitute claims.
“(2) ADDITIONAL MOTIONS.—Additional motions to amend may be permitted upon the joint request of the petitioner and the patent owner to materially advance the settlement of a proceeding under section 327, or upon the request of the patent owner for good cause shown.
“(3) SCOPE OF CLAIMS.—An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.
“(e) Evidentiary Standards.—In a post-grant review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
Ҥ 327. Settlement
“(a) In General.—A post-grant review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the post-grant review is terminated with respect to a petitioner under this section, no estoppel under section 325(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that post-grant review. If no petitioner remains in the post-grant review, the Office may terminate the post-grant review or proceed to a final written decision under section 328(a).
“(b) Agreements In Writing.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of a post-grant review under this section shall be in writing, and a true copy of such agreement or understanding shall be filed in the Office before the termination of the post-grant review as between the parties. 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, and shall be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.
Ҥ 328. Decision of the Board
“(a) Final Written Decision.—If a post-grant review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 326(d).
“(b) Certificate.—If the Patent Trial and Appeal Board issues a final written decision under subsection (a) and the time for appeal has expired or any appeal has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.
“(c) Intervening Rights.—Any proposed amended or new claim determined to be patentable and incorporated into a patent following a post-grant review under this chapter shall have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparation therefor, before the issuance of a certificate under subsection (b).
“(d) Data On Length Of Review.—The Office shall make available to the public data describing the length of time between the institution of, and the issuance of a final written decision under subsection (a) for, each post-grant review.
Ҥ 329. Appeal
“A party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 328(a) may appeal the decision pursuant to sections 141 through 144. Any party to the post-grant review shall have the right to be a party to the appeal.”.
(e) Conforming Amendment.—The table of chapters for part III of title 35, United States Code, is amended by adding at the end the following:
(1) REGULATIONS.—The Director shall, not later than the date that is 1 year after the date of the enactment of this Act, issue regulations to carry out chapter 32 of title 35, United States Code, as added by subsection (d) of this section.
(2) APPLICABILITY.—
(A) IN GENERAL.—The amendments made by subsection (d) shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and, except as provided in section 18 and in paragraph (3), shall apply only to patents described in section 3(n)(1).
(B) LIMITATION.—The Director may impose a limit on the number of post-grant reviews that may be instituted under chapter 32 of title 35, United States Code, during each of the first 4 1-year periods in which the amendments made by subsection (d) are in effect.
(3) PENDING INTERFERENCES.—
(A) PROCEDURES IN GENERAL.—The Director shall determine, and include in the regulations issued under paragraph (1), the procedures under which an interference commenced before the effective date set forth in paragraph (2)(A) is to proceed, including whether such interference—
(i) is to be dismissed without prejudice to the filing of a petition for a post-grant review under chapter 32 of title 35, United States Code; or
(ii) is to proceed as if this Act had not been enacted.
(B) PROCEEDINGS BY PATENT TRIAL AND APPEAL BOARD.—For purposes of an interference that is commenced before the effective date set forth in paragraph (2)(A), the Director may deem the Patent Trial and Appeal Board to be the Board of Patent Appeals and Interferences, and may allow the Patent Trial and Appeal Board to conduct any further proceedings in that interference.
(C) APPEALS.—The authorization to appeal or have remedy from derivation proceedings in sections 141(d) and 146 of title 35, United States Code, as amended by this Act, and the jurisdiction to entertain appeals from derivation proceedings in section 1295(a)(4)(A) of title 28, United States Code, as amended by this Act, shall be deemed to extend to any final decision in an interference that is commenced before the effective date set forth in paragraph (2)(A) of this subsection and that is not dismissed pursuant to this paragraph.
(g) Citation Of Prior Art And Written Statements.—
(1) IN GENERAL.—Section 301 of title 35, United States Code, is amended to read as follows:
Ҥ 301. Citation of prior art and written statements
“(a) In General.—Any person at any time may cite to the Office in writing—
“(1) prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent; or
“(2) statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim of a particular patent.
“(b) Official File.—If the person citing prior art or written statements pursuant to subsection (a) explains in writing the pertinence and manner of applying the prior art or written statements to at least 1 claim of the patent, the citation of the prior art or written statements and the explanation thereof shall become a part of the official file of the patent.
“(c) Additional Information.—A party that submits a written statement pursuant to subsection (a)(2) shall include any other documents, pleadings, or evidence from the proceeding in which the statement was filed that addresses the written statement.
“(d) Limitations.—A written statement submitted pursuant to subsection (a)(2), and additional information submitted pursuant to subsection (c), shall not be considered by the Office for any purpose other than to determine the proper meaning of a patent claim in a proceeding that is ordered or instituted pursuant to section 304, 314, or 324. If any such written statement or additional information is subject to an applicable protective order, such statement or information shall be redacted to exclude information that is subject to that order.
“(e) Confidentiality.—Upon the written request of the person citing prior art or written statements pursuant to subsection (a), that person’s identity shall be excluded from the patent file and kept confidential.”.
(2) CONFORMING AMENDMENT.—The item relating to section 301 in the table of sections for chapter 30 of title 35, United States Code, is amended to read as follows:
“301. Citation of prior art and written statements.”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that effective date.
(h) Reexamination.—
(1) DETERMINATION BY DIRECTOR.—
(A) IN GENERAL.—Section 303(a) of title 35, United States Code, is amended by striking “section 301 of this title” and inserting “section 301 or 302”.
(B) EFFECTIVE DATE.—The amendment made by this paragraph shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that effective date.
(2) APPEAL.—
(A) IN GENERAL.—Section 306 of title 35, United States Code, is amended by striking “145” and inserting “144”.
(B) EFFECTIVE DATE.—The amendment made by this paragraph shall take effect on the date of the enactment of this Act and shall apply to any appeal of a reexamination before the Board of Patent Appeals and Interferences or the Patent Trial and Appeal Board that is pending on, or brought on or after, the date of the enactment of this Act.
SEC. 7. PATENT TRIAL AND APPEAL BOARD.
(a) Composition And Duties.—
(1) IN GENERAL.—Section 6 of title 35, United States Code, is amended to read as follows:
Ҥ 6. Patent Trial and Appeal Board
“(a) In General.—There shall be in the Office a Patent Trial and Appeal Board. The Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board. The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary, in consultation with the Director. Any reference in any Federal law, Executive order, rule, regulation, or delegation of authority, or any document of or pertaining to the Board of Patent Appeals and Interferences is deemed to refer to the Patent Trial and Appeal Board.
“(b) Duties.—The Patent Trial and Appeal Board shall—
“(1) on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a);
“(2) review appeals of reexaminations pursuant to section 134(b);
“(3) conduct derivation proceedings pursuant to section 135; and
“(4) conduct inter partes reviews and post-grant reviews pursuant to chapters 31 and 32.
“(c) 3-Member Panels.—Each appeal, derivation proceeding, post-grant review, and inter partes review shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director. Only the Patent Trial and Appeal Board may grant rehearings.
“(d) Treatment Of Prior Appointments.—The Secretary of Commerce may, in the Secretary’s discretion, deem the appointment of an administrative patent judge who, before the date of the enactment of this subsection, held office pursuant to an appointment by the Director to take effect on the date on which the Director initially appointed the administrative patent judge. It shall be a defense to a challenge to the appointment of an administrative patent judge on the basis of the judge’s having been originally appointed by the Director that the administrative patent judge so appointed was acting as a de facto officer.”.
(2) CONFORMING AMENDMENT.—The item relating to section 6 in the table of sections for chapter 1 of title 35, United States Code, is amended to read as follows:
“6. Patent Trial and Appeal Board.”.
(b) Administrative Appeals.—Section 134 of title 35, United States Code, is amended—
(1) in subsection (b), by striking “any reexamination proceeding” and inserting “a reexamination”; and
(2) by striking subsection (c).
(c) Circuit Appeals.—
(1) IN GENERAL.—Section 141 of title 35, United States Code, is amended to read as follows:
Ҥ 141. Appeal to Court of Appeals for the Federal Circuit
“(a) Examinations.—An applicant who is dissatisfied with the final decision in an appeal to the Patent Trial and Appeal Board under section 134(a) may appeal the Board’s decision to the United States Court of Appeals for the Federal Circuit. By filing such an appeal, the applicant waives his or her right to proceed under section 145.
“(b) Reexaminations.—A patent owner who is dissatisfied with the final decision in an appeal of a reexamination to the Patent Trial and Appeal Board under section 134(b) may appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit.
“(c) Post-Grant And Inter Partes Reviews.—A party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) or 328(a) (as the case may be) may appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit.
“(d) Derivation Proceedings.—A party to a derivation proceeding who is dissatisfied with the final decision of the Patent Trial and Appeal Board in the proceeding may appeal the decision to the United States Court of Appeals for the Federal Circuit, but such appeal shall be dismissed if any adverse party to such derivation proceeding, within 20 days after the appellant has filed notice of appeal in accordance with section 142, files notice with the Director that the party elects to have all further proceedings conducted as provided in section 146. If the appellant does not, within 30 days after the filing of such notice by the adverse party, file a civil action under section 146, the Board’s decision shall govern the further proceedings in the case.”.
(2) JURISDICTION.—Section 1295(a)(4)(A) of title 28, United States Code, is amended to read as follows:
“(A) the Patent Trial and Appeal Board of the United States Patent and Trademark Office with respect to a patent application, derivation proceeding, reexamination, post-grant review, or inter partes review under title 35, at the instance of a party who exercised that party’s right to participate in the applicable proceeding before or appeal to the Board, except that an applicant or a party to a derivation proceeding may also have remedy by civil action pursuant to section 145 or 146 of title 35; an appeal under this subparagraph of a decision of the Board with respect to an application or derivation proceeding shall waive the right of such applicant or party to proceed under section 145 or 146 of title 35;”.
(3) PROCEEDINGS ON APPEAL.—Section 143 of title 35, United States Code, is amended—
(A) by striking the third sentence and inserting the following: “In an ex parte case, the Director shall submit to the court in writing the grounds for the decision of the Patent and Trademark Office, addressing all of the issues raised in the appeal. The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32.”; and
(B) by striking the last sentence.
(d) Conforming Amendments.—
(1) ATOMIC ENERGY ACT OF 1954.—Section 152 of the Atomic Energy Act of 1954 (42 U.S.C. 2182) is amended in the third undesignated paragraph—
(A) by striking “Board of Patent Appeals and Interferences” each place it appears and inserting “Patent Trial and Appeal Board”; and
(B) by inserting “and derivation” after “established for interference”.
(2) TITLE 51.—Section 20135 of title 51, United States Code, is amended—
(A) in subsections (e) and (f), by striking “Board of Patent Appeals and Interferences” each place it appears and inserting “Patent Trial and Appeal Board”; and
(B) in subsection (e), by inserting “and derivation” after “established for interference”.
(e) Effective Date.—The amendments made by this section shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to proceedings commenced on or after that effective date, except that—
(1) the extension of jurisdiction to the United States Court of Appeals for the Federal Circuit to entertain appeals of decisions of the Patent Trial and Appeal Board in reexaminations under the amendment made by subsection (c)(2) shall be deemed to take effect on the date of the enactment of this Act and shall extend to any decision of the Board of Patent Appeals and Interferences with respect to a reexamination that is entered before, on, or after the date of the enactment of this Act;
(2) the provisions of sections 6, 134, and 141 of title 35, United States Code, as in effect on the day before the effective date of the amendments made by this section shall continue to apply to inter partes reexaminations that are requested under section 311 of such title before such effective date;
(3) the Patent Trial and Appeal Board may be deemed to be the Board of Patent Appeals and Interferences for purposes of appeals of inter partes reexaminations that are requested under section 311 of title 35, United States Code, before the effective date of the amendments made by this section; and
(4) the Director’s right under the fourth sentence of section 143 of title 35, United States Code, as amended by subsection (c)(3) of this section, to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board shall be deemed to extend to inter partes reexaminations that are requested under section 311 of such title before the effective date of the amendments made by this section.
SEC. 8. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.
(a) In General.—Section 122 of title 35, United States Code, is amended by adding at the end the following:
“(e) Preissuance Submissions By Third Parties.—
“(1) IN GENERAL.—Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of—
“(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or
“(B) the later of—
“(i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or
“(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.
“(2) OTHER REQUIREMENTS.—Any submission under paragraph (1) shall—
“(A) set forth a concise description of the asserted relevance of each submitted document;
“(B) be accompanied by such fee as the Director may prescribe; and
“(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.”.
(b) Effective Date.—The amendments made by this section shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent application filed before, on, or after that effective date.
SEC. 9. VENUE.
(a) Technical Amendments Relating To Venue.—Sections 32, 145, 146, 154(b)(4)(A), and 293 of title 35, United States Code, and section 21(b)(4) of the Trademark Act of 1946 (15 U.S.C. 1071(b)(4)), are each amended by striking “United States District Court for the District of Columbia” each place that term appears and inserting “United States District Court for the Eastern District of Virginia”.
(b) Effective Date.—The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to any civil action commenced on or after that date.
SEC. 10. FEE SETTING AUTHORITY.
(a) Fee Setting.—
(1) IN GENERAL.—The Director may set or adjust by rule any fee established, authorized, or charged under title 35, United States Code, or the Trademark Act of 1946 (15 U.S.C. 1051 et seq.), for any services performed by or materials furnished by, the Office, subject to paragraph (2).
(2) FEES TO RECOVER COSTS.—Fees may be set or adjusted under paragraph (1) only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) and trademarks (in the case of trademark fees), including administrative costs of the Office with respect to such patent or trademark fees (as the case may be).
(b) Small And Micro Entities.—The fees set or adjusted under subsection (a) for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent with respect to the application of such fees to any small entity that qualifies for reduced fees under section 41(h)(1) of title 35, United States Code, and shall be reduced by 75 percent with respect to the application of such fees to any micro entity as defined in section 123 of that title (as added by subsection (g) of this section).
(c) Reduction Of Fees In Certain Fiscal Years.—In each fiscal year, the Director—
(1) shall consult with the Patent Public Advisory Committee and the Trademark Public Advisory Committee on the advisability of reducing any fees described in subsection (a); and
(2) after the consultation required under paragraph (1), may reduce such fees.
(d) Role Of The Public Advisory Committee.—The Director shall—
(1) not less than 45 days before publishing any proposed fee under subsection (a) in the Federal Register, submit the proposed fee to the Patent Public Advisory Committee or the Trademark Public Advisory Committee, or both, as appropriate;
(2)(A) provide the relevant advisory committee described in paragraph (1) a 30-day period following the submission of any proposed fee, in which to deliberate, consider, and comment on such proposal;
(B) require that, during that 30-day period, the relevant advisory committee hold a public hearing relating to such proposal; and
(C) assist the relevant advisory committee in carrying out that public hearing, including by offering the use of the resources of the Office to notify and promote the hearing to the public and interested stakeholders;
(3) require the relevant advisory committee to make available to the public a written report setting forth in detail the comments, advice, and recommendations of the committee regarding the proposed fee; and
(4) consider and analyze any comments, advice, or recommendations received from the relevant advisory committee before setting or adjusting (as the case may be) the fee.
(e) Publication In The Federal Register.—
(1) PUBLICATION AND RATIONALE.—The Director shall—
(A) publish any proposed fee change under this section in the Federal Register;
(B) include, in such publication, the specific rationale and purpose for the proposal, including the possible expectations or benefits resulting from the proposed change; and
(C) notify, through the Chair and Ranking Member of the Committees on the Judiciary of the Senate and the House of Representatives, the Congress of the proposed change not later than the date on which the proposed change is published under subparagraph (A).
(2) PUBLIC COMMENT PERIOD.—The Director shall, in the publication under paragraph (1), provide the public a period of not less than 45 days in which to submit comments on the proposed change in fees.
(3) PUBLICATION OF FINAL RULE.—The final rule setting or adjusting a fee under this section shall be published in the Federal Register and in the Official Gazette of the Patent and Trademark Office.
(4) CONGRESSIONAL COMMENT PERIOD.—A fee set or adjusted under subsection (a) may not become effective—
(A) before the end of the 45-day period beginning on the day after the date on which the Director publishes the final rule adjusting or setting the fee under paragraph (3); or
(B) if a law is enacted disapproving such fee.
(5) RULE OF CONSTRUCTION.—Rules prescribed under this section shall not diminish—
(A) the rights of an applicant for a patent under title 35, United States Code, or for a mark under the Trademark Act of 1946; or
(B) any rights under a ratified treaty.
(f) Retention Of Authority.—The Director retains the authority under subsection (a) to set or adjust fees only during such period as the Patent and Trademark Office remains an agency within the Department of Commerce.
(g) Micro Entity Defined.—
(1) IN GENERAL.—Chapter 11 of title 35, United States Code, is amended by adding at the end the following new section:
Ҥ 123. Micro entity defined
“(a) In General.—For purposes of this title, the term ‘micro entity’ means an applicant who makes a certification that the applicant—
“(1) qualifies as a small entity, as defined in regulations issued by the Director;
“(2) has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid;
“(3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and
“(4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.
“(b) Applications Resulting From Prior Employment.—An applicant is not considered to be named on a previously filed application for purposes of subsection (a)(2) if the applicant has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant’s previous employment.
“(c) Foreign Currency Exchange Rate.—If an applicant’s or entity’s gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant’s or entity’s gross income exceeds the threshold specified in paragraphs (3) or (4) of subsection (a).
“(d) Institutions Of Higher Education.—For purposes of this section, a micro entity shall include an applicant who certifies that—
“(1) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or
“(2) the applicant 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 applications to such an institution of higher education.
“(e) Director’s Authority.—In addition to the limits imposed by this section, the Director may, in the Director’s discretion, impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section if the Director determines that such additional limits are reasonably necessary to avoid an undue impact on other patent applicants or owners or are otherwise reasonably necessary and appropriate. At least 3 months before any limits proposed to be imposed pursuant to this subsection take effect, the Director shall inform the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate of any such proposed limits.”.
(2) CONFORMING AMENDMENT.—Chapter 11 of title 35, United States Code, is amended by adding at the end the following new item:
“123. Micro entity defined.”.
(h) Electronic Filing Incentive.—
(1) IN GENERAL.—Notwithstanding any other provision of this section, an additional fee of $400 shall be established for each application for an original patent, except for a design, plant, or provisional application, that is not filed by electronic means as prescribed by the Director. The fee established by this subsection shall be reduced by 50 percent for small entities that qualify for reduced fees under section 41(h)(1) of title 35, United States Code. All fees paid under this subsection shall be deposited in the Treasury as an offsetting receipt that shall not be available for obligation or expenditure.
(2) EFFECTIVE DATE.—This subsection shall take effect upon the expiration of the 60-day period beginning on the date of the enactment of this Act.
(i) Effective Date; Sunset.—
(1) EFFECTIVE DATE.—Except as provided in subsection (h), this section and the amendments made by this section shall take effect on the date of the enactment of this Act.
(2) SUNSET.—The authority of the Director to set or adjust any fee under subsection (a) shall terminate upon the expiration of the 7-year period beginning on the date of the enactment of this Act.
(3) PRIOR REGULATIONS NOT AFFECTED.—The termination of authority under this subsection shall not affect any regulations issued under this section before the effective date of such termination or any rulemaking proceeding for the issuance of regulations under this section that is pending on such date.
SEC. 11. FEES FOR PATENT SERVICES.
(a) General Patent Services.—Subsections (a) and (b) of section 41 of title 35, United States Code, are amended to read as follows:
“(a) General Fees.—The Director shall charge the following fees:
“(1) FILING AND BASIC NATIONAL FEES.—
“(A) On filing each application for an original patent, except for design, plant, or provisional applications, $330.
“(B) On filing each application for an original design patent, $220.
“(C) On filing each application for an original plant patent, $220.
“(D) On filing each provisional application for an original patent, $220.
“(E) On filing each application for the reissue of a patent, $330.
“(F) The basic national fee for each international application filed under the treaty defined in section 351(a) entering the national stage under section 371, $330.
“(G) In addition, excluding any sequence listing or computer program listing filed in an electronic medium as prescribed by the Director, for any application the specification and drawings of which exceed 100 sheets of paper (or equivalent as prescribed by the Director if filed in an electronic medium), $270 for each additional 50 sheets of paper (or equivalent as prescribed by the Director if filed in an electronic medium) or fraction thereof.
“(2) EXCESS CLAIMS FEES.—
“(A) IN GENERAL.—In addition to the fee specified in paragraph (1)—
“(i) on filing or on presentation at any other time, $220 for each claim in independent form in excess of 3;
“(ii) on filing or on presentation at any other time, $52 for each claim (whether dependent or independent) in excess of 20; and
“(iii) for each application containing a multiple dependent claim, $390.
“(B) MULTIPLE DEPENDENT CLAIMS.—For the purpose of computing fees under subparagraph (A), a multiple dependent claim referred to in section 112 or any claim depending therefrom shall be considered as separate dependent claims in accordance with the number of claims to which reference is made.
“(C) REFUNDS; ERRORS IN PAYMENT.—The Director may by regulation provide for a refund of any part of the fee specified in subparagraph (A) for any claim that is canceled before an examination on the merits, as prescribed by the Director, has been made of the application under section 131. Errors in payment of the additional fees under this paragraph may be rectified in accordance with regulations prescribed by the Director.
“(3) EXAMINATION FEES.—
“(A) IN GENERAL.—
“(i) For examination of each application for an original patent, except for design, plant, provisional, or international applications, $220.
“(ii) For examination of each application for an original design patent, $140.
“(iii) For examination of each application for an original plant patent, $170.
“(iv) For examination of the national stage of each international application, $220.
“(v) For examination of each application for the reissue of a patent, $650.
“(B) APPLICABILITY OF OTHER FEE PROVISIONS.—The provisions of paragraphs (3) and (4) of section 111(a) relating to the payment of the fee for filing the application shall apply to the payment of the fee specified in subparagraph (A) with respect to an application filed under section 111(a). The provisions of section 371(d) relating to the payment of the national fee shall apply to the payment of the fee specified in subparagraph (A) with respect to an international application.
“(4) ISSUE FEES.—
“(A) For issuing each original patent, except for design or plant patents, $1,510.
“(B) For issuing each original design patent, $860.
“(C) For issuing each original plant patent, $1,190.
“(D) For issuing each reissue patent, $1,510.
“(5) DISCLAIMER FEE.—On filing each disclaimer, $140.
“(6) APPEAL FEES.—
“(A) On filing an appeal from the examiner to the Patent Trial and Appeal Board, $540.
“(B) In addition, on filing a brief in support of the appeal, $540, and on requesting an oral hearing in the appeal before the Patent Trial and Appeal Board, $1,080.
“(7) REVIVAL FEES.—On filing each petition for the revival of an unintentionally abandoned application for a patent, for the unintentionally delayed payment of the fee for issuing each patent, or for an unintentionally delayed response by the patent owner in any reexamination proceeding, $1,620, unless the petition is filed under section 133 or 151, in which case the fee shall be $540.
“(8) EXTENSION FEES.—For petitions for 1-month extensions of time to take actions required by the Director in an application—
“(A) on filing a first petition, $130;
“(B) on filing a second petition, $360; and
“(C) on filing a third or subsequent petition, $620.
“(b) Maintenance Fees.—
“(1) IN GENERAL.—The Director shall charge the following fees for maintaining in force all patents based on applications filed on or after December 12, 1980:
“(A) Three years and 6 months after grant, $980.
“(B) Seven years and 6 months after grant, $2,480.
“(C) Eleven years and 6 months after grant, $4,110.
“(2) GRACE PERIOD; SURCHARGE.—Unless payment of the applicable maintenance fee under paragraph (1) is received in the Office on or before the date the fee is due or within a grace period of 6 months thereafter, the patent shall expire as of the end of such grace period. The Director may require the payment of a surcharge as a condition of accepting within such 6-month grace period the payment of an applicable maintenance fee.
“(3) NO MAINTENANCE FEE FOR DESIGN OR PLANT PATENT.—No fee may be established for maintaining a design or plant patent in force.”.
(b) Delays In Payment.—Subsection (c) of section 41 of title 35, United States Code, is amended—
(1) by striking “(c)(1) The Director” and inserting:
“(c) Delays In Payment Of Maintenance Fees.—
“(1) ACCEPTANCE.—The Director”; and
(2) by striking “(2) A patent” and inserting:
“(2) EFFECT ON RIGHTS OF OTHERS.—A patent”.
(c) Patent Search Fees.—Subsection (d) of section 41 of title 35, United States Code, is amended to read as follows:
“(d) Patent Search And Other Fees.—
“(1) PATENT SEARCH FEES.—
“(A) IN GENERAL.—The Director shall charge the fees specified under subparagraph (B) for the search of each application for a patent, except for provisional applications. The Director shall adjust the fees charged under this paragraph to ensure that the fees recover an amount not to exceed the estimated average cost to the Office of searching applications for patent by Office personnel.
“(B) SPECIFIC FEES.—The fees referred to in subparagraph (A) are—
“(i) $540 for each application for an original patent, except for design, plant, provisional, or international applications;
“(ii) $100 for each application for an original design patent;
“(iii) $330 for each application for an original plant patent;
“(iv) $540 for the national stage of each international application; and
“(v) $540 for each application for the reissue of a patent.
“(C) APPLICABILITY OF OTHER PROVISIONS.—The provisions of paragraphs (3) and (4) of section 111(a) relating to the payment of the fee for filing the application shall apply to the payment of the fee specified in this paragraph with respect to an application filed under section 111(a). The provisions of section 371(d) relating to the payment of the national fee shall apply to the payment of the fee specified in this paragraph with respect to an international application.
“(D) REFUNDS.—The Director may by regulation provide for a refund of any part of the fee specified in this paragraph for any applicant who files a written declaration of express abandonment as prescribed by the Director before an examination has been made of the application under section 131.
“(2) OTHER FEES.—
“(A) IN GENERAL.—The Director shall establish fees for all other processing, services, or materials relating to patents not specified in this section to recover the estimated average cost to the Office of such processing, services, or materials, except that the Director shall charge the following fees for the following services:
“(i) For recording a document affecting title, $40 per property.
“(ii) For each photocopy, $.25 per page.
“(iii) For each black and white copy of a patent, $3.
“(B) COPIES FOR LIBRARIES.—The yearly fee for providing a library specified in section 12 with uncertified printed copies of the specifications and drawings for all patents in that year shall be $50.”.
(d) Fees For Small Entities.—Subsection (h) of section 41 of title 35, United States Code, is amended to read as follows:
“(h) Fees For Small Entities.—
“(1) REDUCTIONS IN FEES.—Subject to paragraph (3), fees charged under subsections (a), (b), and (d)(1) shall be reduced by 50 percent with respect to their application to any small business concern as defined under section 3 of the Small Business Act, and to any independent inventor or nonprofit organization as defined in regulations issued by the Director.
“(2) SURCHARGES AND OTHER FEES.—With respect to its application to any entity described in paragraph (1), any surcharge or fee charged under subsection (c) or (d) shall not be higher than the surcharge or fee required of any other entity under the same or substantially similar circumstances.
“(3) REDUCTION FOR ELECTRONIC FILING.—The fee charged under subsection (a)(1)(A) shall be reduced by 75 percent with respect to its application to any entity to which paragraph (1) applies, if the application is filed by electronic means as prescribed by the Director.”.
(e) Technical Amendments.—Section 41 of title 35, United States Code, is amended—
(1) in subsection (e), in the first sentence, by striking “The Director” and inserting “Waiver Of Fees; Copies Regarding Notice.—The Director”;
(2) in subsection (f), by striking “The fees” and inserting “Adjustment Of Fees.—The fees”;
(3) by repealing subsection (g); and
(4) in subsection (i)—
(A) by striking “(i)(1) The Director” and inserting the following:
“(i) Electronic Patent And Trademark Data.—
“(1) MAINTENANCE OF COLLECTIONS.—The Director”;
(B) by striking “(2) The Director” and inserting the following:
“(2) AVAILABILITY OF AUTOMATED SEARCH SYSTEMS.—The Director”;
(C) by striking “(3) The Director” and inserting the following:
“(3) ACCESS FEES.—The Director”; and
(D) by striking “(4) The Director” and inserting the following:
“(4) ANNUAL REPORT TO CONGRESS.—The Director”.
(f) Adjustment Of Trademark Fees.—Section 802(a) of division B of the Consolidated Appropriations Act, 2005 (Public Law 108–447) is amended—
(1) in the first sentence, by striking “During fiscal years 2005, 2006, and 2007,”, and inserting “Until such time as the Director sets or adjusts the fees otherwise,”; and
(2) in the second sentence, by striking “During fiscal years 2005, 2006, and 2007, the” and inserting “The”.
(g) Effective Date, Applicability, And Transition Provisions.—Section 803(a) of division B of the Consolidated Appropriations Act, 2005 (Public Law 108–447) is amended by striking “and shall apply only with respect to the remaining portion of fiscal year 2005 and fiscal year 2006”.
(h) Prioritized Examination Fee.—
(1) IN GENERAL.—
(A) FEE.—
(i) PRIORITIZED EXAMINATION FEE.—A fee of $4,800 shall be established for filing a request, pursuant to section 2(b)(2)(G) of title 35, United States Code, for prioritized examination of a nonprovisional application for an original utility or plant patent.
(ii) ADDITIONAL FEES.—In addition to the prioritized examination fee under clause (i), the fees due on an application for which prioritized examination is being sought are the filing, search, and examination fees (including any applicable excess claims and application size fees), processing fee, and publication fee for that application.
(B) REGULATIONS; LIMITATIONS.—
(i) REGULATIONS.—The Director may by regulation prescribe conditions for acceptance of a request under subparagraph (A) and a limit on the number of filings for prioritized examination that may be accepted.
(ii) LIMITATION ON CLAIMS.—Until regulations are prescribed under clause (i), no application for which prioritized examination is requested may contain or be amended to contain more than 4 independent claims or more than 30 total claims.
(iii) LIMITATION ON TOTAL NUMBER OF REQUESTS.—The Director may not accept in any fiscal year more than 10,000 requests for prioritization until regulations are prescribed under this subparagraph setting another limit.
(2) REDUCTION IN FEES FOR SMALL ENTITIES.—The Director shall reduce fees for providing prioritized examination of nonprovisional applications for original utility and plant patents by 50 percent for small entities that qualify for reduced fees under section 41(h)(1) of title 35, United States Code.
(3) DEPOSIT OF FEES.—All fees paid under this subsection shall be credited to the United States Patent and Trademark Office Appropriation Account, shall remain available until expended, and may be used only for the purposes specified in section 42(c)(3)(A) of title 35, United States Code.
(4) EFFECTIVE DATE AND TERMINATION.—
(A) EFFECTIVE DATE.—This subsection shall take effect on the date that is 10 days after the date of the enactment of this Act.
(B) TERMINATION.—The fee imposed under paragraph (1)(A)(i), and the reduced fee under paragraph (2), shall terminate on the effective date of the setting or adjustment of the fee under paragraph (1)(A)(i) pursuant to the exercise of the authority under section 10 for the first time with respect to that fee.
(i) Appropriation Account Transition Fees.—
(1) SURCHARGE.—
(A) IN GENERAL.—There shall be a surcharge of 15 percent, rounded by standard arithmetic rules, on all fees charged or authorized by subsections (a), (b), and (d)(1) of section 41, and section 132(b), of title 35, United States Code. Any surcharge imposed under this subsection is, and shall be construed to be, separate from and in addition to any other surcharge imposed under this Act or any other provision of law.
(B) DEPOSIT OF AMOUNTS.—Amounts collected pursuant to the surcharge imposed under subparagraph (A) shall be credited to the United States Patent and Trademark Appropriation Account, shall remain available until expended, and may be used only for the purposes specified in section 42(c)(3)(A) of title 35, United States Code.
(2) EFFECTIVE DATE AND TERMINATION OF SURCHARGE.—The surcharge provided for in paragraph (1)—
(A) shall take effect on the date that is 10 days after the date of the enactment of this Act; and
(B) shall terminate, with respect to a fee to which paragraph (1)(A) applies, on the effective date of the setting or adjustment of that fee pursuant to the exercise of the authority under section 10 for the first time with respect to that fee.
(j) Effective Date.—Except as otherwise provided in this section, this section and the amendments made by this section shall take effect on the date of the enactment of this Act.
SEC. 12. SUPPLEMENTAL EXAMINATION.
(a) In General.—Chapter 25 of title 35, United States Code, is amended by adding at the end the following:
Ҥ 257. Supplemental examinations to consider, reconsider, or correct information
“(a) Request For Supplemental Examination.—A patent owner may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent, in accordance with such requirements as the Director may establish. Within 3 months after the date a request for supplemental examination meeting the requirements of this section is received, the Director shall conduct the supplemental examination and shall conclude such examination by issuing a certificate indicating whether the information presented in the request raises a substantial new question of patentability.
“(b) Reexamination Ordered.—If the certificate issued under subsection (a) indicates that a substantial new question of patentability is raised by 1 or more items of information in the request, the Director shall order reexamination of the patent. The reexamination shall be conducted according to procedures established by chapter 30, except that the patent owner shall not have the right to file a statement pursuant to section 304. During the reexamination, the Director shall address each substantial new question of patentability identified during the supplemental examination, notwithstanding the limitations in chapter 30 relating to patents and printed publication or any other provision of such chapter.
“(c) Effect.—
“(1) IN GENERAL.—A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent. The making of a request under subsection (a), or the absence thereof, shall not be relevant to enforceability of the patent under section 282.
“(2) EXCEPTIONS.—
“(A) PRIOR ALLEGATIONS.—Paragraph (1) shall not apply to an allegation pled with particularity in a civil action, or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the date of a supplemental examination request under subsection (a) to consider, reconsider, or correct information forming the basis for the allegation.
“(B) PATENT ENFORCEMENT ACTIONS.—In an action brought under section 337(a) of the Tariff Act of 1930 (19 U.S.C. 1337(a)), or section 281 of this title, paragraph (1) shall not apply to any defense raised in the action that is based upon information that was considered, reconsidered, or corrected pursuant to a supplemental examination request under subsection (a), unless the supplemental examination, and any reexamination ordered pursuant to the request, are concluded before the date on which the action is brought.
“(d) Fees And Regulations.—
“(1) FEES.—The Director shall, by regulation, establish fees for the submission of a request for supplemental examination of a patent, and to consider each item of information submitted in the request. If reexamination is ordered under subsection (b), fees established and applicable to ex parte reexamination proceedings under chapter 30 shall be paid, in addition to fees applicable to supplemental examination.
“(2) REGULATIONS.—The Director shall issue regulations governing the form, content, and other requirements of requests for supplemental examination, and establishing procedures for reviewing information submitted in such requests.
“(e) Fraud.—If the Director becomes aware, during the course of a supplemental examination or reexamination proceeding ordered under this section, that a material fraud on the Office may have been committed in connection with the patent that is the subject of the supplemental examination, then in addition to any other actions the Director is authorized to take, including the cancellation of any claims found to be invalid under section 307 as a result of a reexamination ordered under this section, the Director shall also refer the matter to the Attorney General for such further action as the Attorney General may deem appropriate. Any such referral shall be treated as confidential, shall not be included in the file of the patent, and shall not be disclosed to the public unless the United States charges a person with a criminal offense in connection with such referral.
“(f) Rule Of Construction.—Nothing in this section shall be construed—
“(1) to preclude the imposition of sanctions based upon criminal or antitrust laws (including section 1001(a) of title 18, the first section of the Clayton Act, and section 5 of the Federal Trade Commission Act to the extent that section relates to unfair methods of competition);
“(2) to limit the authority of the Director to investigate issues of possible misconduct and impose sanctions for misconduct in connection with matters or proceedings before the Office; or
“(3) to limit the authority of the Director to issue regulations under chapter 3 relating to sanctions for misconduct by representatives practicing before the Office.”.
(b) Conforming Amendment.—The table of sections for chapter 25 of title 35, United States Code, is amended by adding at the end the following new item:
“257. Supplemental examinations to consider, reconsider, or correct information.”.
(c) Effective Date.—The amendments made by this section shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that effective date.
(1) by striking “75 percent” and inserting “15 percent”;
(2) by striking “25 percent” and inserting “85 percent”; and
(3) by striking “as described above in this clause (D);” and inserting “described above in this clause;”.
(b) Effective Date.—The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that date.
SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR ART.
(a) In General.—For purposes of evaluating an invention under section 102 or 103 of title 35, United States Code, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art.
(b) Definition.—For purposes of this section, the term “tax liability” refers to any liability for a tax under any Federal, State, or local law, or the law of any foreign jurisdiction, including any statute, rule, regulation, or ordinance that levies, imposes, or assesses such tax liability.
(c) Exclusions.—This section does not apply to that part of an invention that—
(1) is a method, apparatus, technology, computer program product, or system, that is used solely for preparing a tax or information return or other tax filing, including one that records, transmits, transfers, or organizes data related to such filing; or
(2) is a method, apparatus, technology, computer program product, or system used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor.
(d) Rule Of Construction.—Nothing in this section shall be construed to imply that other business methods are patentable or that other business method patents are valid.
(e) Effective Date; Applicability.—This section shall take effect on the date of the enactment of this Act and shall apply to any patent application that is pending on, or filed on or after, that date, and to any patent that is issued on or after that date.
SEC. 15. BEST MODE REQUIREMENT.
(a) In General.—Section 282 of title 35, United States Code, is amended in the second undesignated paragraph by striking paragraph (3) and inserting the following:
“(3) Invalidity of the patent or any claim in suit for failure to comply with—
“(A) any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or
“(B) any requirement of section 251.”.
(b) Conforming Amendment.—Sections 119(e)(1) and 120 of title 35, United States Code, are each amended by striking “the first paragraph of section 112 of this title” and inserting “section 112(a) (other than the requirement to disclose the best mode)”.
(c) Effective Date.—The amendments made by this section shall take effect upon the date of the enactment of this Act and shall apply to proceedings commenced on or after that date.
SEC. 16. MARKING.
(a) Virtual Marking.—
(1) IN GENERAL.—Section 287(a) of title 35, United States Code, is amended by striking “or when,” and inserting “or by fixing thereon the word ‘patent’ or the abbreviation ‘pat.’ together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when,”.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to any case that is pending on, or commenced on or after, the date of the enactment of this Act.
(3) REPORT.—Not later than the date that is 3 years after the date of the enactment of this Act, the Director shall submit a report to Congress that provides—
(A) an analysis of the effectiveness of “virtual marking”, as provided in the amendment made by paragraph (1) of this subsection, as an alternative to the physical marking of articles;
(B) an analysis of whether such virtual marking has limited or improved the ability of the general public to access information about patents;
(C) an analysis of the legal issues, if any, that arise from such virtual marking; and
(D) an analysis of the deficiencies, if any, of such virtual marking.
(b) False Marking.—
(1) CIVIL PENALTY.—Section 292(a) of title 35, United States, Code, is amended by adding at the end the following: “Only the United States may sue for the penalty authorized by this subsection.”.
(2) CIVIL ACTION FOR DAMAGES.—Subsection (b) of section 292 of title 35, United States Code, is amended to read as follows:
“(b) A person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury.”.
(3) EXPIRED PATENTS.—Section 292 of title 35, United States Code, is amended by adding at the end the following:
“(c) The marking of a product, in a manner described in subsection (a), with matter relating to a patent that covered that product but has expired is not a violation of this section.”.
(4) EFFECTIVE DATE.—The amendments made by this subsection shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act.
SEC. 17. ADVICE OF COUNSEL.
(a) In General.—Chapter 29 of title 35, United States Code, is amended by adding at the end the following:
Ҥ 298. Advice of counsel
“The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.”.
(b) Conforming Amendment.—The table of sections for chapter 29 of title 35, United States Code, is amended by adding at the end the following:
“298. Advice of counsel.”.
SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS METHOD PATENTS.
(a) Transitional Program.—
(1) ESTABLISHMENT.—Not later than the date that is 1 year after the date of the enactment of this Act, the Director shall issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of covered business method patents. The transitional proceeding implemented pursuant to this subsection shall be regarded as, and shall employ the standards and procedures of, a post-grant review under chapter 32 of title 35, United States Code, subject to the following:
(A) Section 321(c) of title 35, United States Code, and subsections (b), (e)(2), and (f) of section 325 of such title shall not apply to a transitional proceeding.
(B) A person may not file a petition for a transitional proceeding with respect to a covered business method patent unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.
(C) A petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a covered business method patent on a ground raised under section 102 or 103 of title 35, United States Code, as in effect on the day before the effective date set forth in section 3(n)(1), may support such ground only on the basis of—
(i) prior art that is described by section 102(a) of such title of such title (as in effect on the day before such effective date); or
(ii) prior art that—
(I) discloses the invention more than 1 year before the date of the application for patent in the United States; and
(II) would be described by section 102(a) of such title (as in effect on the day before the effective date set forth in section 3(n)(1)) if the disclosure had been made by another before the invention thereof by the applicant for patent.
(D) The petitioner in a transitional proceeding that results in a final written decision under section 328(a) of title 35, United States Code, with respect to a claim in a covered business method patent, or the petitioner’s real party in interest, may not assert, either in a civil action arising in whole or in part under section 1338 of title 28, United States Code, or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), that the claim is invalid on any ground that the petitioner raised during that transitional proceeding.
(E) The Director may institute a transitional proceeding only for a patent that is a covered business method patent.
(2) EFFECTIVE DATE.—The regulations issued under paragraph (1) shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any covered business method patent issued before, on, or after that effective date, except that the regulations shall not apply to a patent described in section 6(f)(2)(A) of this Act during the period in which a petition for post-grant review of that patent would satisfy the requirements of section 321(c) of title 35, United States Code.
(3) SUNSET.—
(A) IN GENERAL.—This subsection, and the regulations issued under this subsection, are repealed effective upon the expiration of the 8-year period beginning on the date that the regulations issued under to paragraph (1) take effect.
(B) APPLICABILITY.—Notwithstanding subparagraph (A), this subsection and the regulations issued under this subsection shall continue to apply, after the date of the repeal under subparagraph (A), to any petition for a transitional proceeding that is filed before the date of such repeal.
(b) Request For Stay.—
(1) IN GENERAL.—If a party seeks a stay of a civil action alleging infringement of a patent under section 281 of title 35, United States Code, relating to a transitional proceeding for that patent, the court shall decide whether to enter a stay based on—
(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.
(2) REVIEW.—A party may take an immediate interlocutory appeal from a district court’s decision under paragraph (1). The United States Court of Appeals for the Federal Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.
(c) ATM Exemption For Venue Purposes.—In an action for infringement under section 281 of title 35, United States Code, of a covered business method patent, an automated teller machine shall not be deemed to be a regular and established place of business for purposes of section 1400(b) of title 28, United States Code.
(d) Definition.—
(1) IN GENERAL.—For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.
(2) REGULATIONS.—To assist in implementing the transitional proceeding authorized by this subsection, the Director shall issue regulations for determining whether a patent is for a technological invention.
(e) Rule Of Construction.—Nothing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101 of title 35, United States Code.
SEC. 19. JURISDICTION AND PROCEDURAL MATTERS.
(a) State Court Jurisdiction.—Section 1338(a) of title 28, United States Code, is amended by striking the second sentence and inserting the following: “No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights. For purposes of this subsection, the term ‘State’ includes any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, American Samoa, Guam, and the Northern Mariana Islands.”.
(b) Court Of Appeals For The Federal Circuit.—Section 1295(a)(1) of title 28, United States Code, is amended to read as follows:
“(1) of an appeal from a final decision of a district court of the United States, the District Court of Guam, the District Court of the Virgin Islands, or the District Court of the Northern Mariana Islands, in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents or plant variety protection;”.
(c) Removal.—
(1) IN GENERAL.—Chapter 89 of title 28, United States Code, is amended by adding at the end the following new section:
Ҥ 1454. Patent, plant variety protection, and copyright cases
“(a) In General.—A civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights may be removed to the district court of the United States for the district and division embracing the place where the action is pending.
“(b) Special Rules.—The removal of an action under this section shall be made in accordance with section 1446, except that if the removal is based solely on this section—
“(1) the action may be removed by any party; and
“(2) the time limitations contained in section 1446(b) may be extended at any time for cause shown.
“(c) Clarification Of Jurisdiction In Certain Cases.—The court to which a civil action is removed under this section is not precluded from hearing and determining any claim in the civil action because the State court from which the civil action is removed did not have jurisdiction over that claim.
“(d) Remand.—If a civil action is removed solely under this section, the district court—
“(1) shall remand all claims that are neither a basis for removal under subsection (a) nor within the original or supplemental jurisdiction of the district court under any Act of Congress; and
“(2) may, under the circumstances specified in section 1367(c), remand any claims within the supplemental jurisdiction of the district court under section 1367.”.
(2) CONFORMING AMENDMENT.—The table of sections for chapter 89 of title 28, United States Code, is amended by adding at the end the following new item:
“1454. Patent, plant variety protection, and copyright cases.”.
(d) Procedural Matters In Patent Cases.—
(1) JOINDER OF PARTIES AND STAY OF ACTIONS.—Chapter 29 of title 35, United States Code, as amended by this Act, is further amended by adding at the end the following new section:
Ҥ 299. Joinder of parties
“(a) Joinder Of Accused Infringers.—With respect to any civil action arising under any Act of Congress relating to patents, other than an action or trial in which an act of infringement under section 271(e)(2) has been pled, parties that are accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if—
“(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and
“(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.
“(b) Allegations Insufficient For Joinder.—For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.
“(c) Waiver.—A party that is an accused infringer may waive the limitations set forth in this section with respect to that party.”.
(2) CONFORMING AMENDMENT.—The table of sections for chapter 29 of title 35, United States Code, as amended by this Act, is further amended by adding at the end the following new item:
“299. Joinder of parties.”.
(e) Effective Date.—The amendments made by this section shall apply to any civil action commenced on or after the date of the enactment of this Act.
SEC. 20. TECHNICAL AMENDMENTS.
(a) Joint Inventions.—Section 116 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph, by striking “When” and inserting “(a) Joint Inventions.—When”;
(2) in the second undesignated paragraph, by striking “If a joint inventor” and inserting “(b) Omitted Inventor.—If a joint inventor”; and
(3) in the third undesignated paragraph—
(A) by striking “Whenever” and inserting “(c) Correction Of Errors In Application.—Whenever”; and
(B) by striking “and such error arose without any deceptive intention on his part,”.
(b) Filing Of Application In Foreign Country.—Section 184 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph—
(A) by striking “Except when” and inserting “(a) Filing In Foreign Country.—Except when”; and
(B) by striking “and without deceptive intent”;
(2) in the second undesignated paragraph, by striking “The term” and inserting “(b) Application.—The term”; and
(3) in the third undesignated paragraph, by striking “The scope” and inserting “(c) Subsequent Modifications, Amendments, And Supplements.—The scope”.
(c) Filing Without A License.—Section 185 of title 35, United States Code, is amended by striking “and without deceptive intent”.
(d) Reissue Of Defective Patents.—Section 251 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph—
(A) by striking “Whenever” and inserting “(a) In General.—Whenever”; and
(B) by striking “without any deceptive intention”;
(2) in the second undesignated paragraph, by striking “The Director” and inserting “(b) Multiple Reissued Patents.—The Director”;
(3) in the third undesignated paragraph, by striking “The provisions” and inserting “(c) Applicability Of This Title.—The provisions”; and
(4) in the last undesignated paragraph, by striking “No reissued patent” and inserting “(d) Reissue Patent Enlarging Scope Of Claims.—No reissued patent”.
(e) Effect Of Reissue.—Section 253 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph, by striking “Whenever, without any deceptive intention,” and inserting “(a) In General.—Whenever”; and
(2) in the second undesignated paragraph, by striking “In like manner” and inserting “(b) Additional Disclaimer Or Dedication.—In the manner set forth in subsection (a),”.
(f) Correction Of Named Inventor.—Section 256 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph—
(A) by striking “Whenever” and inserting “(a) Correction.—Whenever”; and
(B) by striking “and such error arose without any deceptive intention on his part”; and
(2) in the second undesignated paragraph, by striking “The error” and inserting “(b) Patent Valid If Error Corrected.—The error”.
(g) Presumption Of Validity.—Section 282 of title 35, United States Code, is amended—
(1) in the first undesignated paragraph—
(A) by striking “A patent” and inserting “(a) In General.—A patent”; and
(B) by striking the third sentence;
(2) in the second undesignated paragraph—
(A) by striking “The following” and inserting “(b) Defenses.—The following”;
(B) in paragraph (1), by striking “uneforceability,” and inserting “unenforceability.”; and
(C) in paragraph (2), by striking “patentability,” and inserting “patentability.” ; and
(3) in the third undesignated paragraph—
(A) by striking “In actions involving the validity or infringement of a patent” and inserting “(c) Notice Of Actions; Actions During Extension Of Patent Term.—In an action involving the validity or infringement of a patent”; and
(B) by striking “Claims Court” and inserting “Court of Federal Claims”.
(h) Action For Infringement.—Section 288 of title 35, United States Code, is amended by striking “, without deceptive intention,”.
(i) Reviser’s Notes.—
(1) Section 3(e)(2) of title 35, United States Code, is amended by striking “this Act,” and inserting “that Act,”.
(2) Section 202 of title 35, United States Code, is amended—
(A) in subsection (b)(3), by striking “the section 203(b)” and inserting “section 203(b)”; and
(B) in subsection (c)(7)(D), by striking “except where it proves” and all that follows through “small business firms; and” and inserting: “except where it is determined to be infeasible following a reasonable inquiry, a preference in the licensing of subject inventions shall be given to small business firms; and”.
(3) Section 209(d)(1) of title 35, United States Code, is amended by striking “nontransferrable” and inserting “nontransferable”.
(4) Section 287(c)(2)(G) of title 35, United States Code, is amended by striking “any state” and inserting “any State”.
(5) Section 371(b) of title 35, United States Code, is amended by striking “of the treaty” and inserting “of the treaty.”.
(j) Unnecessary References.—
(1) IN GENERAL.—Title 35, United States Code, is amended by striking “of this title” each place that term appears.
(2) EXCEPTION.—The amendment made by paragraph (1) shall not apply to the use of such term in the following sections of title 35, United States Code:
(A) Section 1(c).
(B) Section 101.
(C) Subsections (a) and (b) of section 105.
(D) The first instance of the use of such term in section 111(b)(8).
(E) Section 161.
(F) Section 164.
(G) Section 171.
(H) Section 251(c), as so designated by this section.
(I) Section 261.
(J) Subsections (g) and (h) of section 271.
(K) Section 287(b)(1).
(L) Section 289.
(M) The first instance of the use of such term in section 375(a).
(k) Additional Technical Amendments.—Sections 155 and 155A of title 35, United States Code, and the items relating to those sections in the table of sections for chapter 14 of such title, are repealed.
(l) Effective Date.—The amendments made by this section shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to proceedings commenced on or after that effective date.
SEC. 21. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE JUDGES.
(a) Authority To Cover Certain Travel Related Expenses.—Section 2(b)(11) of title 35, United States Code, is amended by inserting “, and the Office is authorized to expend funds to cover the subsistence expenses and travel-related expenses, including per diem, lodging costs, and transportation costs, of persons attending such programs who are not Federal employees” after “world”.
(b) Payment Of Administrative Judges.—Section 3(b) of title 35, United States Code, is amended by adding at the end the following:
“(6) ADMINISTRATIVE PATENT JUDGES AND ADMINISTRATIVE TRADEMARK JUDGES.—The Director may fix the rate of basic pay for the administrative patent judges appointed pursuant to section 6 and the administrative trademark judges appointed pursuant to section 17 of the Trademark Act of 1946 (15 U.S.C. 1067) at not greater than the rate of basic pay payable for level III of the Executive Schedule under section 5314 of title 5. The payment of a rate of basic pay under this paragraph shall not be subject to the pay limitation under section 5306(e) or 5373 of title 5.”.
SEC. 22. PATENT AND TRADEMARK OFFICE FUNDING.
(a) In General.—Section 42(c) of title 35, United States Code, is amended—
(1) by striking “(c)” and inserting “(c)(1)”;
(2) in the first sentence, by striking “shall be available” and inserting “shall, subject to paragraph (3), be available”;
(3) by striking the second sentence; and
(4) by adding at the end the following:
“(2) There is established in the Treasury a Patent and Trademark Fee Reserve Fund. If fee collections by the Patent and Trademark Office for a fiscal year exceed the amount appropriated to the Office for that fiscal year, fees collected in excess of the appropriated amount shall be deposited in the Patent and Trademark Fee Reserve Fund. To the extent and in the amounts provided in appropriations Acts, amounts in the Fund shall be made available until expended only for obligation and expenditure by the Office in accordance with paragraph (3).
“(3)(A) Any fees that are collected under sections 41, 42, and 376, and any surcharges on such fees, may only be used for expenses of the Office relating to the processing of patent applications and for other activities, services, and materials relating to patents and to cover a share of the administrative costs of the Office relating to patents.
“(B) Any fees that are collected under section 31 of the Trademark Act of 1946, and any surcharges on such fees, may only be used for expenses of the Office relating to the processing of trademark registrations and for other activities, services, and materials relating to trademarks and to cover a share of the administrative costs of the Office relating to trademarks.”.
(b) Effective Date.—The amendments made by this section shall take effect on October 1, 2011.
SEC. 23. SATELLITE OFFICES.
(a) Establishment.—Subject to available resources, the Director shall, by not later than the date that is 3 years after the date of the enactment of this Act, establish 3 or more satellite offices in the United States to carry out the responsibilities of the Office.
(b) Purposes.—The purposes of the satellite offices established under subsection (a) are to—
(1) increase outreach activities to better connect patent filers and innovators with the Office;
(2) enhance patent examiner retention;
(3) improve recruitment of patent examiners;
(4) decrease the number of patent applications waiting for examination; and
(5) improve the quality of patent examination.
(c) Required Considerations.—
(1) IN GENERAL.—In selecting the location of each satellite office to be established under subsection (a), the Director—
(A) shall ensure geographic diversity among the offices, including by ensuring that such offices are established in different States and regions throughout the Nation;
(B) may rely upon any previous evaluations by the Office of potential locales for satellite offices, including any evaluations prepared as part of the Office’s Nationwide Workforce Program that resulted in the 2010 selection of Detroit, Michigan, as the first satellite office of the Office;
(C) shall evaluate and consider the extent to which the purposes of satellite offices listed under subsection (b) will be achieved;
(D) shall consider the availability of scientific and technically knowledgeable personnel in the region from which to draw new patent examiners at minimal recruitment cost; and
(E) shall consider the economic impact to the region.
(2) OPEN SELECTION PROCESS.—Nothing in paragraph (1) shall constrain the Office to only consider its evaluations in selecting the Detroit, Michigan, satellite office.
(d) Report To Congress.—Not later than the end of the third fiscal year that begins after the date of the enactment of this Act, the Director shall submit a report to Congress on—
(1) the rationale of the Director in selecting the location of any satellite office required under subsection (a), including an explanation of how the selected location will achieve the purposes of satellite offices listed under subsection (b) and how the required considerations listed under subsection (c) were met;
(2) the progress of the Director in establishing all such satellite offices; and
(3) whether the operation of existing satellite offices is achieving the purposes under subsection (b).
SEC. 24. DESIGNATION OF DETROIT SATELLITE OFFICE.
(a) Designation.—The satellite office of the United States Patent and Trademark Office to be located in Detroit, Michigan, shall be known and designated as the “Elijah J. McCoy United States Patent and Trademark Office”.
(b) References.—Any reference in a law, map, regulation, document, paper, or other record of the United States to the satellite office of the United States Patent and Trademark Office to be located in Detroit, Michigan, referred to in subsection (a) shall be deemed to be a reference to the “Elijah J. McCoy United States Patent and Trademark Office”.
SEC. 25. PRIORITY EXAMINATION FOR IMPORTANT TECHNOLOGIES.
Section 2(b)(2) of title 35, United States Code, is amended—
(1) in subparagraph (E), by striking “and” after the semicolon;
(2) in subparagraph (F), by inserting “and” after the semicolon; and
(3) by adding at the end the following:
“(G) may, subject to any conditions prescribed by the Director and at the request of the patent applicant, provide for prioritization of examination of applications for products, processes, or technologies that are important to the national economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization, notwithstanding section 41 or any other provision of law;”.
SEC. 26. STUDY ON IMPLEMENTATION.
(a) PTO Study.—The Director shall conduct a study on the manner in which this Act and the amendments made by this Act are being implemented by the Office, and on such other aspects of the patent policies and practices of the Federal Government with respect to patent rights, innovation in the United States, competitiveness of United States markets, access by small businesses to capital for investment, and such other issues, as the Director considers appropriate.
(b) Report To Congress.—The Director shall, not later than the date that is 4 years after the date of the enactment of this Act, submit to the Committees on the Judiciary of the House of Representatives and the Senate a report on the results of the study conducted under subsection (a), including recommendations for any changes to laws and regulations that the Director considers appropriate.
SEC. 27. STUDY ON GENETIC TESTING.
(a) In General.—The Director shall conduct a study on effective ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist.
(b) Items Included In Study.—The study shall include an examination of at least the following:
(1) The impact that the current lack of independent second opinion testing has had on the ability to provide the highest level of medical care to patients and recipients of genetic diagnostic testing, and on inhibiting innovation to existing testing and diagnoses.
(2) The effect that providing independent second opinion genetic diagnostic testing would have on the existing patent and license holders of an exclusive genetic test.
(3) The impact that current exclusive licensing and patents on genetic testing activity has on the practice of medicine, including but not limited to: the interpretation of testing results and performance of testing procedures.
(4) The role that cost and insurance coverage have on access to and provision of genetic diagnostic tests.
(c) Confirming Genetic Diagnostic Test Activity Defined.—For purposes of this section, the term “confirming genetic diagnostic test activity” means the performance of a genetic diagnostic test, by a genetic diagnostic test provider, on an individual solely for the purpose of providing the individual with an independent confirmation of results obtained from another test provider’s prior performance of the test on the individual.
(d) Report.—Not later than 9 months after the date of enactment of this Act, the Director shall report to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives on the findings of the study and provide recommendations for establishing the availability of such independent confirming genetic diagnostic test activity.
SEC. 28. PATENT OMBUDSMAN PROGRAM FOR SMALL BUSINESS CONCERNS.
Using available resources, the Director shall establish and maintain in the Office a Patent Ombudsman Program. The duties of the Program’s staff shall include providing support and services relating to patent filings to small business concerns and independent inventors.
SEC. 29. ESTABLISHMENT OF METHODS FOR STUDYING THE DIVERSITY OF APPLICANTS.
The Director shall, not later than the end of the 6-month period beginning on the date of the enactment of this Act, establish methods for studying the diversity of patent applicants, including those applicants who are minorities, women, or veterans. The Director shall not use the results of such study to provide any preferential treatment to patent applicants.
SEC. 30. SENSE OF CONGRESS.
It is the sense of Congress that the patent system should promote industries to continue to develop new technologies that spur growth and create jobs across the country which includes protecting the rights of small businesses and inventors from predatory behavior that could result in the cutting off of innovation.
SEC. 31. USPTO STUDY ON INTERNATIONAL PATENT PROTECTIONS FOR SMALL BUSINESSES.
(a) Study Required.—The Director, in consultation with the Secretary of Commerce and the Administrator of the Small Business Administration, shall, using the existing resources of the Office, carry out a study—
(1) to determine how the Office, in coordination with other Federal departments and agencies, can best help small businesses with international patent protection; and
(2) whether, in order to help small businesses pay for the costs of filing, maintaining, and enforcing international patent applications, there should be established either—
(A) a revolving fund loan program to make loans to small businesses to defray the costs of such applications, maintenance, and enforcement and related technical assistance; or
(B) a grant program to defray the costs of such applications, maintenance, and enforcement and related technical assistance.
(b) Report.—Not later than 120 days after the date of the enactment of this Act, the Director shall issue a report to the Congress containing—
(1) all findings and determinations made in carrying out the study required under subsection (a);
(2) a statement of whether the determination was made that—
(A) a revolving fund loan program described under subsection (a)(2)(A) should be established;
(B) a grant program described under subsection (a)(2)(B) should be established; or
(C) neither such program should be established; and
(3) any legislative recommendations the Director may have developed in carrying out such study.
SEC. 32. PRO BONO PROGRAM.
(a) In General.—The Director shall work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.
(b) Effective Date.—This section shall take effect on the date of the enactment of this Act.
SEC. 33. LIMITATION ON ISSUANCE OF PATENTS.
(a) Limitation.—Notwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.
(b) Effective Date.—
(1) IN GENERAL.—Subsection (a) shall apply to any application for patent that is pending on, or filed on or after, the date of the enactment of this Act.
(2) PRIOR APPLICATIONS.—Subsection (a) shall not affect the validity of any patent issued on an application to which paragraph (1) does not apply.
SEC. 34. STUDY OF PATENT LITIGATION.
(a) GAO Study.—The Comptroller General of the United States shall conduct a study of the consequences of litigation by non-practicing entities, or by patent assertion entities, related to patent claims made under title 35, United States Code, and regulations authorized by that title.
(b) Contents Of Study.—The study conducted under this section shall include the following:
(1) The annual volume of litigation described in subsection (a) over the 20-year period ending on the date of the enactment of this Act.
(2) The volume of cases comprising such litigation that are found to be without merit after judicial review.
(3) The impacts of such litigation on the time required to resolve patent claims.
(4) The estimated costs, including the estimated cost of defense, associated with such litigation for patent holders, patent licensors, patent licensees, and inventors, and for users of alternate or competing innovations.
(5) The economic impact of such litigation on the economy of the United States, including the impact on inventors, job creation, employers, employees, and consumers.
(6) The benefit to commerce, if any, supplied by non-practicing entities or patent assertion entities that prosecute such litigation.
(c) Report To Congress.—The Comptroller General shall, not later than the date that is 1 year after the date of the enactment of this Act, submit to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate a report on the results of the study required under this section, including recommendations for any changes to laws and regulations that will minimize any negative impact of patent litigation that was the subject of such study.
SEC. 35. EFFECTIVE DATE.
Except as otherwise provided in this Act, the provisions of this Act shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued on or after that effective date.
SEC. 36. BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled “Budgetary Effects of PAYGO Legislation” for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.
SEC. 37. CALCULATION OF 60-DAY PERIOD FOR APPLICATION OF PATENT TERM EXTENSION.
(a) In General.—Section 156(d)(1) of title 35, United States Code, is amended by adding at the end the following flush sentence:
“For purposes of determining the date on which a product receives permission under the second sentence of this paragraph, if such permission is transmitted after 4:30 P.M., Eastern Time, on a business day, or is transmitted on a day that is not a business day, the product shall be deemed to receive such permission on the next business day. For purposes of the preceding sentence, the term ‘business day’ means any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any legal holiday under section 6103 of title 5.”.
(b) Applicability.—The amendment made by subsection (a) shall apply to any application for extension of a patent term under section 156 of title 35, United States Code, that is pending on, that is filed after, or as to which a decision regarding the application is subject to judicial review on, the date of the enactment of this Act.
Passed the House of Representatives June 23, 2011.
Attest:
Karen L. Haas,
Clerk.
Calendar No. 87
112th CONGRESS 1st Session
H. R. 1249
AN ACT
To amend title 35, United States Code, to provide for patent reform.
Guest post by the Honorable Paul Michel, former Chief Judge of the Court of Appeals for the Federal Circuit
Last month the House of Representatives passed the America Invents Act (H.R.1249), as the Senate had earlier, with the goal of streamlining patent law. Massive lobbying by Wall Street banks, however, produced not streamlining, but protection for financial firms who infringe other firms’ valid patents – so-called “business method patents”. Instead of simplicity and speed, this provision adds complexity and delay.
“Business method patents”, like all other patents, preserve the Constitutional right to exclusive use of one’s invention for a limited period. If another uses it without the owner’s permission, courts will enforce patent rights once violation of a valid patent is proven. The bill will make getting justice more difficult.
Of course not all business method patents are valid. Under present law, however, procedures are available to banks in both the courts and the patent office to invalidate patents that should not have been granted. They are often used and frequently successful.
This feature of the bill, Section 18, however, adds a special new procedure in the patent office that favors financial firms in several unjustified ways. First, it allows patents to be invalidated even though properly granted under the laws applicable at the time, even when they have been upheld by the courts or after re-examination in the Patent Office. Second, it allows lawsuits to be stalled for years while the patent office reviews the old patents under the new laws. It does so by skewing the standards courts normally apply in deciding whether to freeze (“stay”) the lawsuit until the patent office completes all reviews. Further, it creates an automatic right of appeal if the stay is denied, guaranteeing further delay and burdening the appeals court with reviewing trial court orders not normally appealable.
No other industry is so protected, no other type of patent so degraded. That is not equal justice under law, but special interest legislation at its worst. Favoritism for financial firms will encourage other industries likewise to seek legislative exemption from normal rules and equal justice. That will further fragment patent law, expanding complexity and delay just when simplicity and expedition are needed to spur recovery and create jobs.
Furthermore, Section 18 is not even a necessary measure, since a recent Supreme Court decision already establishes a standard to identify those methods patents that were improperly granted.
It is important that the U.S. patent system and the businesses and jobs it supports be protected from overzealous advocates who would try to use Section 18 beyond even the banks’ specially requested favors. There are three ways of accomplishing this. First, the Senate could and should simply remove Section 18 from the bill. If the banks are too powerful for that to be achieved, then the Senate should amend Section 18 to restrict it explicitly as described above – to abstract business concepts applying particularly to the operations of financial institutions (which by definition would preserve their special-interest “private legislation”). If the banks are too powerful for even that to happen, then the Senate should make it clear in legislative history that Section 18 in fact is intended to have such a narrow focus, and the U.S. Patent Office should implement Section 18 in a manner consistent with that narrow focus – or otherwise be faced with a great number of challenges to validly issued patents that, according to the banks, were not their targets. This would add a great many new proceedings to the Patent Office’s workload, placing considerable weight on a system already under heavy stress. And the challenges to valid patents could lower the value of U.S. inventions, and threaten your business, your patents and your job.
In the bill, Section 18 provides an exemption for “technological” inventions, but nowhere in the bill is that word defined. Instead, the bill directs that the Patent Office is to decide by regulation what “technological” means. But that flies in the face of settled law that the Patent Office lacks legal authority to issue substantive regulations. The competence of the office to make such legislative judgments may also be questioned. Here, again, if Section 18 is not removed altogether the Senate should at least fill in the gaps by clarifying this term and confining the “business method patents” provision to the narrow special interests – banks and financial services companies – that were accommodated here.
A similar provision in Section 14 categorically invalidates all so-called “tax strategy patents,” favoring a few businesses as no others – this time lawyers and accountants providing tax services. Again, it is unnecessary because court decisions already identify which of this class of patents are invalid as obvious. These favored firms are legislatively immunized even when they plainly infringe patents the courts and the patent office have found valid or would under normal rules, just because Congress says so. That is not rule of law, but rule of lobbyists, again leading to favoritism to a select group of firms.
Again, this provision could cover far more than intended, and be argued to apply to all patents that refer to taxes regardless of how limited they may otherwise be. A new computer application to calculate taxes could be blocked from patenting although the patent would be directed to the machine, not the tax strategy. And although patents are exempted where the tax avoidance strategy is “severable,” the term has no clear meaning in this context.
While this would not be an appropriate reading, it behooves the Senate to restrict the “tax strategy” provision with simple modifications to spell out an appropriately narrow definition. Otherwise, as with business method patents, years of litigation over tax strategy patents could follow, creating uncertainty and threatening jobs just when everyone agrees we need more certainty to promote growth. And it will increase delays just when everyone agrees we must reduce them.
Before Congress finalizes the patent reform bill, its best course is to strip out all special interest sections that bail out big banks, Wall Street investment firms, and tax lawyers and accountants. Failing that, amendments as described above are important, or at least legislative history that explains the narrow applicability of Section 18. Without these, the harms can easily outweigh the benefits of this complex 150-page bill. In that event, I say better to reject the current bill and start over.
SEC. 18.TRANSITIONAL PROGRAM FOR COVERED BUSINESS METHOD PATENTS.
(a)Transitional Program.—
(1)ESTABLISHMENT.—Not later than the date that is 1 year after the date of the enactment of this Act, the Director shall issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of covered business method patents. The transitional proceeding implemented pursuant to this subsection shall be regarded as, and shall employ the standards and procedures of, a post-grant review underchapter 32of title 35, United States Code, subject to the following:
(A) Section 321(c) of title 35, United States Code, and subsections (b), (e)(2), and (f) of section 325 of such title shall not apply to a transitional proceeding.
(B) A person may not file a petition for a transitional proceeding with respect to a covered business method patent unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.
(C) A petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a covered business method patent on a ground raised under section 102 or 103 of title 35, United States Code, as in effect on the day before the effective date set forth in section 3(n)(1), may support such ground only on the basis of—
(i) prior art that is described by section 102(a) of such title of such title (as in effect on the day before such effective date); or
(ii) prior art that—
(I) discloses the invention more than 1 year before the date of the application for patent in the United States; and
(II) would be described by section 102(a) of such title (as in effect on the day before the effective date set forth in section 3(n)(1)) if the disclosure had been made by another before the invention thereof by the applicant for patent.
(D) The petitioner in a transitional proceeding that results in a final written decision under section 328(a) of title 35, United States Code, with respect to a claim in a covered business method patent, or the petitioner’s real party in interest, may not assert, either in a civil action arising in whole or in part under section 1338 of title 28, United States Code, or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), that the claim is invalid on any ground that the petitioner raised during that transitional proceeding.
(E) The Director may institute a transitional proceeding only for a patent that is a covered business method patent.
(2)EFFECTIVE DATE.—The regulations issued under paragraph (1) shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any covered business method patent issued before, on, or after that effective date, except that the regulations shall not apply to a patent described in section 6(f)(2)(A) of this Act during the period in which a petition for post-grant review of that patent would satisfy the requirements ofsection 321(c)of title 35, United States Code.
(3)SUNSET.—
(A)IN GENERAL.—This subsection, and the regulations issued under this subsection, are repealed effective upon the expiration of the 8-year period beginning on the date that the regulations issued under to paragraph (1) take effect.
(B)APPLICABILITY.—Notwithstanding subparagraph (A), this subsection and the regulations issued under this subsection shall continue to apply, after the date of the repeal under subparagraph (A), to any petition for a transitional proceeding that is filed before the date of such repeal.
(b)Request For Stay.—
(1)IN GENERAL.—If a party seeks a stay of a civil action alleging infringement of a patent under section 281 of title 35, United States Code, relating to a transitional proceeding for that patent, the court shall decide whether to enter a stay based on—
(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.
(2)REVIEW.—A party may take an immediate interlocutory appeal from a district court’s decision under paragraph (1). The United States Court of Appeals for the Federal Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.
(c)ATM Exemption For Venue Purposes.—In an action for infringement under section 281 of title 35, United States Code, of a covered business method patent, an automated teller machine shall not be deemed to be a regular and established place of business for purposes of section 1400(b) of title 28, United States Code.
(d)Definition.—
(1)IN GENERAL.—For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.
(2)REGULATIONS.—To assist in implementing the transitional proceeding authorized by this subsection, the Director shall issue regulations for determining whether a patent is for a technological invention.
(e)Rule Of Construction.—Nothing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101 of title 35, United States Code.
Well known patent attorney Hal Milton recently published a new article in John Marshall’s Review of Intellectual Property Law (RIPL) that argues for the presentation of a “new result” within every patent application. The majority of newly drafted patent applications do not follow Milton’s approach and instead seem to obscure the innovative elements of the claimed invention and fail to identify the problem being solved by the invention. Milton writes:
Fifty years of examining, drafting, and prosecuting patents, including the patent at issue in KSR International Co. v. Teleflex, Inc., coupled with the KSR opinion and the lessons therefrom, led the author herein to the objective standard of a new result. Inventors should be counseled that a new result should be sought out to justify the exclusive right of a patent.
Milton’s approach builds upon Paul Cole’s 2008 post-KSR article also published in RIPL. In that article, Cole reiterated that that evidence showing a new result is “necessary” under the European Patent Convention (EPC).
Milton’s approach also complements Ron Slusky’s approach to claim drafting that focuses a claim drafter’s attention first on the problem being solved by the invention. A major difference, however, is that Slusky does not explicitly advocate identifying the new result as part of the application itself.
Milton again:
In addition to identifying the new result or function to justify the exclusive right of a patent, … that new result [should be] systematically recited throughout all sections of a patent application. Because a court may interpret a patent based upon the intrinsic patent alone, without regard to extrinsic evidence presented in advocacy outside the patent document, extreme care should be exercised in preparing the original patent application with consistency throughout. It is important to realize that patent offices, for the most part, grant patents based upon claims whereas the courts enforce patents based upon the entire patent.
Guest post by Nigel Hanley, Senior Examiner at the Intellectual Property Office (IPO), working on the UK Peer To Patent pilot.
I would like to thank Patently-O for giving me the opportunity to post about the UK Peer To Patent pilot, which we launched this morning at www.peertopatent.org.uk.
To many readers, the concept of Peer To Patent needs no explaining and it has been discussed in previous articles on this site. The USPTO has already run one pilot and is well into a second that began in October 2010. IP Australia has run a successful pilot and there have been more limited exercises in Japan and South Korea. Some you may also be aware that Professor Beth Noveck, who was the driving force behind the Peer to Patent concept, has recently been asked to become an advisor to the UK Government.
Our pilot will run for the next six months and over that time we will load about 200 UK patent applications onto the website. We started with 20 this morning and these will be followed by about 10 more every week over the next few months. In common with the US and IP Australia pilots, the applications all come from the field of computing. We are also working with the New York Law School who were the same team that established the US pilot.
Each application will remain open for comment for three months after which time a report will be prepared by the system and sent to the IPO. An examiner will then consider the report when dealing with the application. However, the decisions on whether to grant a patent or not will always remain with the examiner.
There are several differences to the USPTO pilot website that I would like to mention.
Firstly, in the UK we have a separate search and examination procedure. This means that all patent applications are published with a search report. These have been made available on the website so reviewers can see and comment on the prior art that the examiner has already managed to identify.
Secondly, a major difference between the US and UK law is that the UK allows "third party observations" on patent applications. This has not always been as widely used as it could. What Peer To Patent gives the IPO is a method by which we can make information available to the scientific and technology communities and provide them with a way to contribute to the examination process using up to date technology.
We have not asked any specific universities or groups of people to act as reviewers. Some may ask why, but we want to see if there is genuinely a community of people in the UK and beyond, who are prepared to give their time and use their undoubted skill and knowledge to get involved in the patent process.
The IPO has set up an information page at www.ipo.gov.uk/peertopatent with some more details about the project. We also have a pilot blog at www.ipo.gov.uk/peertopatentblog– over the next few months I will post on the blog about how the project is going and hopefully give people and insight into how a UK examiner works. You can also follow the pilot on #peertopatent_uk on twitter.
Micron Technology, Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1263 Hynix Semiconductor Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1299-1347 Panel: Newman (concurring and dissenting in part on Hynix), Lourie, Bryson, Gajarsa (concurring and dissenting in part on Micron and Hynix), and Linn (author of both Micron and Hynix)
Rambus is a company founded to commercialize inventions related to DRAM computer memory, including its RDRAM product. It is currently engaged in several patent suits against manufacturers of SDRAM, an alternate type of memory technology. Central to these cases is the issue of whether Rambus's destruction of documents – particularly a "shred day" during which thousands of pounds of documents were destroyed – prior to the commencement of the litigation constituted spoliation. Given this case's discussion of document retention obligations, it has particular relevance for in-house counsel and outside counsel advising companies prior to the commencement of litigation. Irrespective of the legal question discussed below, the specific factors discussed at pages 16-23 of Micron are worth reading.
Procedural Posture Although addressing the same fundamental issue, Micron and Hynix arrived at the court in diametrically opposed postures. In the district court proceedings on appeal in Hynix, Judge Whyte of the Northern District of California concluded that no spoliation occurred, while in the proceedings leading to Micron, Judge Robinson of the District of Delaware ruled that Rambus had engaged in spoliation and entered judgment in Micron's favor as a sanction.
Litigation Must Be Reasonably Forseeable The resolution of the two appeals turned on the issue of when litigation became "reasonably forseeable," thus triggering Rambus's duty to preserve evidence. Rambus argued that "to be reasonably forseeable, the litigation must be imminent, at least in the sense that it is probable and free of significant contingencies." Micron and Hynix, on the other hand, aruged that reasonable forseeability incorporates no requirement of imminence.
The five-judge panel unanimously concluded that the "reasonably forseeable" standard does not carry an imminence requirement. While "[t]his standard does not trigger the duty to preserve documents from the mere existence of a potential claim or the distant possibility of litigation…it is not so inflexible as to require that litigation be imminent, or probable without significant contingencies,' as Rambus suggests." Micron Slip Op. at 12-13.
Applying this standard, the CAFC determined that the Micron district court had not clearly erred when it concluded that litigation was reasonably foreseeable prior to the critical 'shred day.' In particular, the CAFC noted that (1) Rambus's document retention policy was not adopted for purposes of business management, but instead to further Rambus's litigation strategy; (2) Rambus was on notice of potentially infringing activities by particular manufacturers; (3) Rambus took several steps in furtherance of litigation prior to the key shredding party; (4) Rambus is the plaintiff-patentee [but see note below], and its decision whether to litigate or not was the determining factor in whether or not litigation would ensue; and (5) the relationship between Rambus and the DRAM manufacturers was not one of mutual benefit that subsequently turned sour, but rather was naturally adversarial.
Arriving at a consistent outcome in Hynix, three of the five judges (Lourie, Byrson, and Linn) concluded that Judge Whyte erred in determining that litigation was not reasonably forseeable by inappropriately applying the stricter "imminent, or probable without significant contingencies" requirement for reasonable foreseeability. "In Micron II, this court held that that standard does not carrry a gloss requiring that litigation be "imminent, or probable without significant contingencies….The district court here applied just such a standard. This is evident for three reasons." Hynix Slip Op. at 13 (internal citation omitted).
Yet although the reversal is clear, the majority's reasoning for its conclusion is not. The majority first held that the district court erred not by considering the presence of contingencies at all, as one might expect given its preceding statement, but by failing to decide "that the resolution of these contingencies was reasonably foreseeable." Id. at 14. The majority's reason thus implicitly assumes that contingencies are, in fact, relevant to the foreseeability inquiry. The second and third reasons – that the evidence of non-foreseeability was insufficient and the Hynix district court was the only court out of four to conclude that litigation was not reasonably foreseeable as of the critical date – similarly have little to do with whether the Hynix district court applied the correct legal standard. The majority's actual analysis thus seems at odds with its statement that the foreseeability standard does not include a 'probable without significant contingencies' requirement given that its only relevant basis for reversal applies exactly such an analytical framework. It is further puzzling because it involves an assessment of purely factual issues, not legal standards, to which it applies a de novo standard of review.
The Dissent Writing in dissent in Hynix, Judge Gajarsa joined by Judge Newman takes the majority to task for its overriding drive to arrive at a consistent result in Hynix and Micron, a drive that in their view produced an erroneous result:
Seizing on the district court’s alleged grafting of an overly strict “gloss” on the reasonably foreseeable litigation standard, the majority claims that the district court erred as a matter of law by applying the wrong standard for spoliation. In so doing, the majority ignores the district court’s well-articulated understanding of the relevant Ninth Circuit law and its factual findings, which demonstrate that the district court applied the very standard that the majority now requires. The majority obtenebrates the facts presented in the district court’s opinion to resolve the conflict between the spoliation determinations in this case and in Micron.
Hynix dissent at 2. In particular, the dissent criticizes what it perceives to be the majority's attempt to cloak its review of a factual determination as a legal issue in order to avoid applying a deferential standard of review, thus leading to an inconsistent result:
The majority created this standard in Micron with the intention of reconciling the district court’s spoliation determination in that case with the present one. The desires of an appellate tribunal, however, should not drive the outcome of decisions. Divergent district court opinions do not necessarily mean that the trial courts applied different “glosses” on a particular standard. Rather, this court must review district court opinions with the applicable standard of appellate review, which, in this case, is clear error or an abuse of discretion. In refusing to do so, the majority shirks its duties and performs its own factual analysis. The majority castigates the district court here for using a narrower “gloss” on the standard for spoliation just as the majority in Micron castigates the district court for holding the asserted patents unenforceable as a sanction for spoliation.
Id. at 3.
A Meaningless Remand? Although affirming the Micron district court's conclusion that litigation was reasonably foreseeable, the majority nevertheless vacated the district court's sanction determination. This move is unlikely to produce in any meaningful change. The majority's basis for the remand was that the Micron district court opinion failed to provide sufficient detail or analysis in support of its conclusion that Rambus acted in bad faith, that Micron suffered prejudice, or that judgment in Micron's favor was the appropriate sanction to impose. Given Judge Robinson's prior opinion, however, the inevitable result will be a more detailed opinion that reaches precisely the same conclusion on these issues.
Judge Gajarsa dissented from this determination as well, again criticizing the majority for reviewing the facts and weighing the evidence "before it substitutes its judgment for that of the district court, deciding that based on the district court's thorough factual analysis, it would not have granted the dispositve sanctions." Micron dissent at 2.
Note on consistency: In concluding that the Micron district court correctly concluded that litigation was reasonably foreseeable, the CAFC relied on the fact that Rambus was the plaintiff-patentee (and thus controlled the initiation of the litigation). Micron Slip Op. at 22. Yet both the caption and the opinion's procedural background indicate that Rambus did not initate the lawsuits; rather they were declaratory judgment actions brought by Micron and Hynix.
Disclosure: Although I had minimal exposure to the Rambus litigations while an attorney with Munger, Tolles, & Olson, note that my former employer did and continues to represent Rambus.
Although the US Patent & Trademark Office (USPTO) and the Department of Justice (DOJ) have been at odds on the issue of the patent eligibility of genetic material isolated from a living organism, the two agencies are speaking with one voice against the Federal Circuit's recent decision in Hyatt v. Kappos. In that en banc opinion, the court broadened a patent applicant's rights associated with the "remedy by civil action" provided by Section 145 of the Patent Act. Under § 145, an applicant can file a civil action in DC District Court whenever "[a]n applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences."
In a 6-2-1 decision, the Federal Circuit reversed its prior precedent and held that a patent applicant is allowed to introduce new evidence in a Section 145 civil action filed to challenge a USPTO refusal to grant patent rights and that the issues implicated by the new facts must be considered de novo.
Judge Moore wrote in the majority opinion that:
[W]e hold that the only limitations on the admissibility of evidence applicable to a § 145 proceeding are the limitations imposed by the Federal Rules of Evidence and Federal Rules of Civil Procedure. Therefore, we hold that the district court applied the wrong legal standard for the admissibility of evidence in a § 145 proceeding and abused its discretion when it excluded Mr. Hyatt's declaration. . . .
The particular significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administrative proceedings—and once an applicant introduces new evidence on an issue, the district court reviews that issue de novo.
However, the Court also held that an applicant may still be barred from presenting new "issues" in the civil action and that, when no new evidence is presented, that BPAI findings and rulings should be given deference under the Administrative Procedures Act.
Petition for Writ of Certiorari: In its petition to the Supreme Court, the US Government argues that the Federal Circuit decision is faulty because it "disregards fundamental principles of administrative law" and diverges from the traditional understanding of the statute.
Getting from the PTO to the Court: After losing at the Board, an applicant has two primary avenues for challenging the Board's decision: (1) Appeal to the Court of Appeals for the Federal Circuit under 35 U.S.C. § 141; or (2) File a civil action in district court under 35 U.S.C. § 145. In Dickinson v. Zurko, the Supreme Court held that Federal Circuit direct review of BPAI decisions under Section 141 must follow the deferential standards that govern judicial review of final agency action under the Administrative Procedure Act (APA). 527 U.S. 150 (1999). In that decision, the Supreme Court distinguished between Section 145 and Section 141 actions – noting that Section 145 actions "permit the disappointed applicant to present to the court evidence that the applicant did not present to the PTO." However, the court did not address the particular circumstances in which new evidence may be permitted nor did it address how the new evidence should be treated.
Here, the government asks the Supreme Court to fill the gap in Zurko by holding that:
The plaintiff in a Section 145 action may not introduce new evidence that could have been presented to the PTO in the first place; and
When new evidence is introduced, the district court should still give deference to the prior decisions of the PTO.
Background: Gilbert Hyatt is a well-known inventor and successful patentee. Hyatt filed a civil action in 2003 after the BPAI sustained written description and enablement rejections for seventy-nine of Hyatt's claims. The examiner had issued "2546 separate rejections of Mr. Hyatt's 117 claims" based on the doctrines of inadequate "written description, lack of enablement, double patenting, anticipation, and obviousness." The Board reversed all of the examiner rejections except for the § 112 p1 arguments. Complicating this case is the fact that the application's claimed priority date is 1975. Hyatt has aggressively pushed the bounds of USPTO practice. This decision is one of more than a dozen Federal Circuit decisions focusing on Hyatt's patent rights. If the Supreme Court takes the case, it will be the second for Hyatt who won a 2002 case against California income tax collectors. In that case, California was pursuing Hyatt for tax revenue for his patent licenses. Hyatt took the case to the Supreme Court and eventually won a $388 million judgment against the state of California for invasion of privacy.
Representatives Lamar Smith, Bob Goodlatte, and Darrell Issa have introduced their version of the America Invents Act (AIA) to the House of Representatives. H.R. 1249. [AIA.pdf] The AIA closely tracks the Senate’s bill on comprehensive patent reform (S. 23) that was passed in the Senate earlier this year on a 95-5 vote. Parallel changes include a switch to a first-to-file system (with the retention of a limited one-year grace period); establishment of a modified inter partes reexamination and post grant opposition system; providing USPTO with fee-setting authority; neutering of the false marking provision; allowing pre-issuance submissions by third-parties; creating a supplemental examination system to correct inequitable conduct; and elimination of best mode failure as an invalidity defense.
The statute continues to include a substantial error in its codification of the grace period. Namely, the grace period only applies to “disclosures” and not to other commercialization activities such as sales and offers for sale. In addition, it is unclear whether the grace period would apply situations such as the original public use case of Pennock v. Dialogue, 27 U.S. 1, 23, 7 L. Ed. 327 (1829). In that case, the Supreme Court ruled that the inventor could not obtain a patent on its hose-making process because the inventor had sold the product (hoses) for several years before filing for patent protection.
Some key differences from the Senate version that will lead to substantial debate include:
Details of the Post Grant Opposition Provisions…
Prior User Rights: Whether “prior user rights” should be expanded to accompany the switch to a first-to-file regime. This issue arises when, for instance, a manufacturing company is using a particular process as a trade secret before another party invented and patented the process. Under our current first-to-invent regime if the prior-user was sued for infringement, the patent would likely be invalidated under Section 102(g). See Dunlop Holdings Ltd v. Ram Golf Corp., 524 F.2d 33 (7th Cir. 1975). The invention-date priority contests of Section 102(g) are eliminated in a first-to-file system, raising the question of whether a non-patent-filing manufacturer should be given some prior user rights that would continue to allow these trade-secret uses. Currently, the patent statute also has a prior user right codified in Section 273. That section, however, is limited purely to business method patents. The proposed legislation would expand Section 273 to cover all patents.
Special Business Method Proceedings, venue restrictions, interlocutory appeals, and attorney fee shifting.
Automatic stay of litigation for inter partes reviews.
Elimination of Tax Strategy patents (by considering the subject matter within the prior art).
Codification of Knorr Bremse (failure to present advice of counsel cannot be used as evidence of willful infringement).
Stephen Byrne v. Wood, Herron & Evans (
In re Stepan Co. (
Guest post by the Honorable Paul Michel, former Chief Judge of the Court of Appeals for the Federal Circuit 
I would like to thank Patently-O for giving me the opportunity to post about the UK Peer To Patent pilot, which we launched this morning at 
Our pilot will run for the next six months and over that time we will load about 200 UK patent applications onto the website. We started with 20 this morning and these will be followed by about 10 more every week over the next few months. In common with the US and IP Australia pilots, the applications all come from the field of computing. We are also working with the New York Law School who were the same team that established the US pilot.