[United States Statutes at Large, Volume 125, 112th Congress, 1st Session]
[From the U.S. Government Printing Office, www.gpo.gov]


Public Law 112-29
112th Congress

An Act

 
To amend title 35, United States Code, to provide for patent
reform. <>

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This <> Act may be cited as
the ``Leahy-Smith America Invents Act''.

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

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. First inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Defense to infringement based on prior commercial use.
Sec. 6. Post-grant review proceedings.
Sec. 7. Patent Trial and Appeal Board.
Sec. 8. Preissuance submissions by third parties.
Sec. 9. Venue.
Sec. 10. Fee setting authority.
Sec. 11. Fees for patent services.
Sec. 12. Supplemental examination.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Marking.
Sec. 17. Advice of counsel.
Sec. 18. Transitional program for covered business method patents.
Sec. 19. Jurisdiction and procedural matters.
Sec. 20. Technical amendments.
Sec. 21. Travel expenses and payment of administrative judges.
Sec. 22. Patent and Trademark Office funding.
Sec. 23. Satellite offices.
Sec. 24. Designation of Detroit satellite office.
Sec. 25. Priority examination for important technologies.
Sec. 26. Study on implementation.
Sec. 27. Study on genetic testing.
Sec. 28. Patent Ombudsman Program for small business concerns.
Sec. 29. Establishment of methods for studying the diversity of
applicants.
Sec. 30. Sense of Congress.
Sec. 31. USPTO study on international patent protections for small
businesses.
Sec. 32. Pro bono program.
Sec. 33. Limitation on issuance of patents.
Sec. 34. Study of patent litigation.
Sec. 35. Effective date.
Sec. 36. Budgetary effects.
Sec. 37. Calculation of 60-day period for application of patent term
extension.

SEC. 2. <> DEFINITIONS.

In this Act:
(1) Director.--The term ``Director'' means the Under
Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.

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(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:
``Sec. 102. Conditions for patentability; novelty

``(a) Novelty; Prior Art.--A person shall be entitled to a patent
unless--

[[Page 286]]

``(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

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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:
``Sec. 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''.

[[Page 288]]

(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:
``Sec. 291. Derived Patents

``(a) In General.--The owner of a patent may have relief by civil
action against the owner of another patent that claims the same
invention and has an earlier effective filing date, if the invention
claimed in such other patent was derived from the inventor

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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:
``Sec. 135. Derivation proceedings

``(a) Institution of Proceeding.--An applicant for patent may file a
petition to institute a derivation proceeding in the Office. The
petition shall set forth with particularity the basis for finding that
an inventor named in an earlier application derived the claimed
invention from an inventor named in the petitioner's application and,
without authorization, the earlier application claiming such invention
was filed. <> Any such petition may 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

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

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

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``Sec. 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

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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.

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

``(a) Naming the Inventor; Inventor's Oath or Declaration.--An
application for patent that is filed under section 111(a) or commences
the national stage under section 371 shall include, or be amended to
include, the name of the inventor for any invention claimed in the
application. Except as otherwise provided in this section, each
individual who is the inventor or a joint inventor

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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

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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.

[[Page 296]]

(4) Conforming amendment.--The item relating to section 115
in the table of sections for chapter 11 of title 35, United
States Code, is amended to read as follows:

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

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

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

(c) Specification.--Section 112 of title 35, United States Code, is
amended--
(1) in the first 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

[[Page 297]]

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:
``Sec. 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

[[Page 298]]

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.

[[Page 299]]

``(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:

``CHAPTER 31--INTER PARTES REVIEW

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

``Sec. 311. Inter partes review

``(a) In General.--Subject <> to the provisions
of this chapter, a person who is not the 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.

[[Page 300]]

``Sec. 312. Petitions

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

``(b) Public Availability.--As soon as practicable after the receipt
of a petition under section 311, the Director shall make the petition
available to the public.
``Sec. 313. Preliminary response to petition

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

``(a) Infringer's Civil Action.--

[[Page 301]]

``(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

[[Page 302]]

ground that the petitioner raised or reasonably could have
raised during that inter partes review.
``Sec. 316. Conduct of inter partes review

``(a) Regulations.--The Director shall prescribe regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that any
petition or document filed with the intent that it be sealed
shall, 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.

[[Page 303]]

``(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.
``Sec. 317. Settlement

``(a) In General.--An inter partes review instituted under this
chapter shall be terminated with respect to any petitioner upon the
joint request of the petitioner and the patent owner, unless the Office
has decided the merits of the proceeding before the request for
termination is filed. If the inter partes review is terminated with
respect to a petitioner under this section, no estoppel under section
315(e) shall 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.
``Sec. 318. Decision of the Board

``(a) Final Written Decision.--If an inter partes review is
instituted and not dismissed under this chapter, the Patent Trial

[[Page 304]]

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.
``Sec. 319. Appeal

``A party dissatisfied with the final written decision of the Patent
Trial and Appeal Board under section 318(a) may appeal the decision
pursuant to sections 141 through 144. Any party to the inter partes
review shall have the right to be a party to the appeal.''.
(b) 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 under chapter 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.--

[[Page 305]]

(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:

``CHAPTER 32--POST-GRANT REVIEW

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


[[Page 306]]


``Sec. 321. Post-grant review

``(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).
``Sec. 322. Petitions

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

``(b) Public Availability.--As soon as practicable after the receipt
of a petition under section 321, the Director shall make the petition
available to the public.
``Sec. 323. Preliminary response to petition

``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.
``Sec. 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.

[[Page 307]]

``(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.
``Sec. 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-

[[Page 308]]

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

``(a) Regulations.--The Director shall prescribe regulations--
``(1) providing that the file of any proceeding under this
chapter shall be made available to the public, except that any
petition or document filed with the intent that it be sealed
shall, 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

[[Page 309]]

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.

[[Page 310]]

``Sec. 327. Settlement

``(a) In General.--A post-grant review instituted under this chapter
shall be terminated with respect to any petitioner upon the joint
request of the petitioner and the patent owner, unless the Office has
decided the merits of the proceeding before the request for termination
is filed. If the post-grant review is terminated with respect to a
petitioner under this section, no estoppel under section 325(e) shall
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.
``Sec. 328. Decision of the Board

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

[[Page 311]]

``Sec. 329. Appeal

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

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

(f) Regulations and Effective Date.--
(1) Regulations.--The <> Director
shall, not later than the date that is 1 year 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:

[[Page 312]]

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

``(a) In General.--Any person at any time may cite to the Office in
writing--
``(1) prior art consisting of patents or printed
publications which that person believes to have a bearing on the
patentability of any claim of a particular patent; or
``(2) statements of the patent owner filed in a proceeding
before a Federal court or the Office in which the patent owner
took a position on the scope of any claim of a particular
patent.

``(b) Official File.--If the person citing prior art or written
statements pursuant to subsection (a) explains in writing the pertinence
and manner of applying the prior art or written statements to at least 1
claim of the patent, the citation of the prior art or written statements
and the explanation thereof shall become a part of the official file of
the patent.
``(c) Additional Information.--A party that submits a written
statement pursuant to subsection (a)(2) shall include any other
documents, pleadings, or evidence from the proceeding in which the
statement was filed that addresses the written statement.
``(d) Limitations.--A written statement submitted pursuant to
subsection (a)(2), and additional information submitted pursuant to
subsection (c), shall not be considered by the Office for any purpose
other than to determine the proper meaning of a patent claim in a
proceeding that is ordered or instituted pursuant to section 304, 314,
or 324. If any such written statement or additional information is
subject to an applicable protective order, 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

[[Page 313]]

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:
``Sec. 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

[[Page 314]]

(2) by striking subsection (c).

(c) Circuit Appeals.--
(1) In general.--Section 141 of title 35, United States
Code, is amended to read as follows:
``Sec. 141. Appeal to 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

[[Page 315]]

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.--

[[Page 316]]

``(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

[[Page 317]]

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

[[Page 318]]

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:
``Sec. 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.

[[Page 319]]

``(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.

[[Page 320]]

(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

[[Page 321]]

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.

[[Page 322]]

``(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.

[[Page 323]]

``(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:

[[Page 324]]

``(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.--

[[Page 325]]

(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:
``Sec. 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,

[[Page 326]]

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

[[Page 327]]

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.
SEC. 13. FUNDING AGREEMENTS.

(a) In General.--Section 202(c)(7)(E)(i) of title 35, United States
Code, is amended--
(1) by striking ``75 percent'' and inserting ``15 percent'';
(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

[[Page 328]]

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;

[[Page 329]]

(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:
``Sec. 298. Advice of counsel

``The failure of an infringer to obtain the advice of counsel with
respect to any allegedly infringed patent, or the failure of the
infringer to present such advice to the court or jury, may not be used
to prove that the accused infringer willfully infringed the patent or
that the infringer intended to induce infringement of the patent.''.
(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.

[[Page 330]]

(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

[[Page 331]]

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:

[[Page 332]]

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

``(a) In General.--A civil action in which any party asserts a claim
for relief arising under any Act of Congress relating to patents, plant
variety protection, or copyrights may be removed to the district court
of the United States for the district and division embracing the place
where 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:
``Sec. 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--

[[Page 333]]

``(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

[[Page 334]]

(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--

[[Page 335]]

(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''.

[[Page 336]]

(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;

[[Page 337]]

(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

[[Page 338]]

(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

[[Page 339]]

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

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(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.

[[Page 341]]

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.

Approved September 16, 2011.

LEGISLATIVE HISTORY--H.R. 1249:
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HOUSE REPORTS: No. 112-98, Pt. 1 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 157 (2011):
June 22, 23, considered and passed House.
Sept. 7, 8, considered and passed Senate.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2011):
Sept. 16, Presidential remarks.