GovTrack’s Bill Summary
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The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.
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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.
This summary can be found at http://www.gop.gov/bill/112/1/hr1249.
The Constitution explicitly grants Congress the power to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” According to the Committee on the Judiciary, Congress has responded by authorizing patents to issue to inventors of new and useful inventions or improvements on inventions. The patent law thus accomplishes two objectives, consistent with the authorization granted by the Constitution: first, it encourages inventors by granting them limited, but exclusive rights to their inventions; second, in exchange for the grant of those exclusive rights, the patent law requires disclosure of the invention and terminates the monopoly after a period of years.
This disclosure and limited time benefits both society and future inventors by making the details of the invention available to the public immediately, and the right to make use of that invention after the expiration of 20 years from the date the patent application was filed.
Congress has not enacted comprehensive patent law reform in nearly 60 years. For more information on patent reform, please refer to this Congressional Research Service (CRS) Report.
According to the Committee, “the object of the patent law today must remain true to the constitutional command, but its form needs to change, both to correct flaws in the system that have become unbearable, and to accommodate changes in the economy and the litigation practices in the patent realm.”
While highly technical, H.R. 1249 makes substantial changes to current U.S. patent law. One of the most substantive provisions in H.R. 1249 would change the current patent law system from first-to-invent to first-to-file, harmonizing the U.S. system with the nation’s international trading partners. The bill would also authorize the United States Patent and Trademark Office (PTO) to reexamine the process of previously granted patents.
H.R. 1249 would make the PTO budget subject to the annual appropriations process, and would ensure that any excess fees collected are retained for the agency in a PTO reserve fund at the U.S. Treasury. This would permit the PTO to keep the revenue it raises while still allowing Congressional appropriators to maintain traditional oversight of the agency. Furthermore, H.R. 1249 would authorize the PTO Director to adjust fees to meet market conditions, but such authority would sunset after seven years.
Finally, the bill would include the Weldon amendment that would prohibit the patenting of inventions “directed to or encompassing a human organism” (i.e., cloning).
First-to-file (Section 3): The current U.S. system, which has operated the same way for 220 years, awards a patent to the first-to-invent. The bill would change the current patent system to a first-to-file system.
The bill includes the following definitions:
The bill would set forth the conditions for patentability of both novelty and “non-obvious subject matter.” The bill would eliminate the current PTO interference proceeding and would create a new derivation proceeding within the PTO to settle disputes between two patent holders claiming the same patent. The bill would give the PTO Director non-reviewable authority to grant a proceeding that is adjudicated by the Patent Trial and Appeals Board (PTAB).
The bill would require the Director to provide to Congress on a biennial basis a short description of incidents that reflect evidence of misconduct before the Office. The bill would also require two PTO studies regarding how the change to first-to-file would affect small businesses and an analysis of prior-user rights and whether they should be expanded under the U.S. system. The bill would require the analysis of prior-user rights to compare patent laws of the U.S. and the laws of other industrialized countries.
H.R. 1249 would require the Comptroller General to conduct a study of the consequences of litigation, to include information on the annual volume of litigation, the volume of cases comprising such litigation, the impact, costs, economic impact, and benefit to commerce of such litigation.
The bill would include a Sense of Congress stating,
“It is the sense of the Congress that converting the United States patent registration system from `first inventor to use' to a system of `first inventor to file' will promote the progress of science by securing for limited times to inventors the exclusive rights to their discoveries and provide inventors with greater certainty regarding the scope of protection granted by the exclusive rights to their discoveries.
“It is the sense of the Congress that converting the United States patent registration system from `first inventor to use' to a system of `first inventor to file' will harmonize the United States patent registration system with the patent registration systems commonly used in nearly all other countries throughout the world with whom the United States conducts trade and thereby promote a greater sense of international uniformity and certainty in the procedures used for securing the exclusive rights of inventors to their discoveries.”
Inventor’s Oath or Declaration (Section 4): H.R. 1249 would require that an individual seeking patent protection must swear that “the application was made or was authorized to be made by the affiant or declarant; and such individual believes himself or herself to be the original inventor or an original joint inventor of a claimed invention in the application.”
Defense to Infringement Based on Earlier Inventor (Section 5): In 1999 Congress added §273 (“Defense to Infringement Based on Earlier Inventor”) to Title 35. This section would apply only to business methods and would allow continued use if the accused infringer “had, acting in good faith, actually reduced the subject matter to practice at least one year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.” The current defense prescribed in the Patent Act applies only to methods. H.R. 1249 would expand the defense to all patents. However, the bill would prohibit this defense from being asserted against universities and tech-transfer companies.
Post-Grant Review Proceedings (Section 6): The bill would create a new administrative construct called “post-grant review” that would allow disputes involving patent quality and scope to be settled. The bill would grant a person who is not the owner of a patent the right to file a petition to institute an inter partes review of such patent. The bill would give the Director the authority to establish the fees required to be paid by the person requesting the review. The bill would require that a petition for inter partes review be filed no later than one year after the patent was granted.
If an inter partes review petition is filed, the bill would authorize the patent owner 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 specific requirements.
The bill would prohibit the Director from authorizing an inter partes review to commence unless the Director determines that the information presented in the petition and any response shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.
H.R. 1249 would authorize the Director to determine whether to institute an inter partes review pursuant to a petition within three months after receiving a preliminary response to the petition; or if no such preliminary response is filed, the last date on which such response may be filed.
The bill would authorize the Director to notify the petitioner and patent owner, in writing, of the Director's determination and make the notice available to the public as soon as is practicable. The bill would prohibit the determination by the Director being appealed, and would require the Director to issue regulations on the conduct of the inter partes reviews. H.R. 1249 would require that such regulations consider the effect 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.
Patent Trial and Appeal Board (Section 7): The bill would authorize a Patent Trial and Appeal Board (to replace the Board of Patent Appeals and Interferences) to be made up of the Director, Deputy Director, Commissioner for Patents, Commissioner of Trademarks, and the administrative patent judges. The bill would require that the administrative patent judges be of “competent legal knowledge and scientific ability,” and appointed by the Secretary. H.R. 1249 would assign the Board with the following duties:
The bill would allow an applicant, a patent owner, a party to a derivation proceeding, or a party to an inter partes or post-grant review, who is dissatisfied with the final decision in an appeal to the Board, to appeal the Board’s decision to the U.S. Court of Appeals for the Federal Circuit.
Preissuance Submissions by Third Parties (Section 8): The bill would allow any third party to 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 within specified timelines.
H.R. 1249 would require that any submission must set forth a concise description of the asserted relevance of each submitted document; be accompanied by fees as determined by the Director; and include a statement by the person making the submission affirming that the submissions was in compliance with the Act.
Venue (Section 9): Decisions issued by the PTO in various administrative proceedings may be appealed to the U.S. District Court for the District of Columbia. This includes suspensions of attorneys or agents to practice before the PTO, actions to obtain a patent, and derivation decisions. H.R. 1249 would change the venue for these appeals from the U.S. District Court for the District of Columbia to the U.S. District Court for the Eastern District of Virginia, which is geographically closer to the agency.
Fee-Setting Authority (Section 10): The bill would authorize the PTO Director to establish patent and trademark fees to recover the costs of services rendered to inventors and trademark filers. The bill would require that any such proposed changes would be made pursuant to rulemaking, with special notice provisions and opportunity for comment afforded to Congress. H.R. 1249 would allow Congress 45 days to consider and comment before any proposed fee change becomes effective. H.R. 1249 would also include a 15 percent fee surcharge that would allow the PTO to ramp-up operations beginning in FY 2012.
The bill would clarify that institutions of higher education qualify for “micro entity” status when paying fees. This would allow an inventor who works for a university or who assigns or conveys an invention to a university to qualify for lower micro-entity fee status.
Fees for Patent Services (Section 11): The bill would include the current patent fee schedule in the text of the bill to be used as a reference point for any future adjustments to the fee schedule by the Director.
Supplemental Examination (Section 12): H.R. 1249 would prohibit the assertion of an inequitable conduct defense against the owner of a reissued patent based on information that was already considered during the reissue and before the owner sued for infringement. This provision would prohibit patent holders who practice fraud or attempt to practice fraud on the USPTO from availing themselves of supplemental examination. The bill would allow the PTO Director to establish fees, by regulation, to help defray the cost of a supplemental examination.
Funding Agreements (Section 13): The bill would increase the amount of licensing royalties that nonprofit organizations (often universities) may keep from their patented inventions. Under current law, nonprofits may keep 25 percent of their licensing royalties. H.R. 1249 would allow nonprofits to retain 85 percent of their licensing royalties in excess of the amount equal to five percent of the annual budget of the entity.
Tax Strategies Deemed Within the Prior Art (Section 14): H.R. 1249 would mandate that tax strategies are deemed “insufficient to differentiate a claimed invention from the prior art,” and would not be considered indistinguishable from other information available to the public that is relevant to a patent’s claim of originality. The bill would include an exclusion for software that enables individuals to file their income tax returns. H.R. 1249 would also permit the PTO to seek advice and assistance from the Department of Treasury and the Internal Revenue Service to ensure that patents to do not infringe on the ability of others to interpret the tax law and that implementing such interpretations remains in the public domain.
Best Mode Requirement (Section 15): The bill would remove as a defense to patent infringement the patentee’s failure to comply with the best mode requirement. (The “best mode” is currently required in patent applications to describe how an invention should be used).
Marking (Virtual and False) (Section 16): H.R. 1249 would allow a manufacturer to write the word “patent” or “pat.” on a product, along with a reference to an internet website that the public can access free of charge to learn more about the specific patent. The bill would also require the PTO to submit a report to Congress on the effectiveness of virtual marking that is due no later than three years after enactment of the bill.
H.R. 1249 would penalize “false marking” (i.e. misappropriation of a true inventor’s patent number or the fabrication of a patent number) by allowing a “qui tam” action, allowing anyone with knowledge of this misconduct to sue for up to a $500 penalty (to be split with the government). The bill would allow the U.S. to sue for a penalty under the statute, and that only a person who suffers a competitive injury as a result of false marking may bring a civil action in federal court for compensatory damages. H.R. 1249 would clarify that the patent holder would remain protected after the patent expires if he or she “virtually” marks the product or posts updated information on the internet.
Advice of Counsel (Section 17): The bill would require that the failure of a defendant to obtain advice of counsel or the failure to present such evidence to the court or jury cannot be used to prove that the defendant willfully infringed the patent.
Transitional Program for Covered Business-Method Patents (Section 18): The bill would create a transitional program to implement a provisional post-grant proceeding for review of the validity of any business-method patent. The functions of the program would be the same as other post-grant proceedings initiated by the bill, and would allow any party to request a stay of a civil action if a related post-grant proceeding is granted. H.R. 1249 would sunset the program after ten years.
The bill would deem that in an action for infringement of a covered business method patent, an automated teller machine (“ATM”) shall not be considered a regular and established place of business for purposes of the patent venue statute. H.R. 1249 defines “covered business method patent” as one 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 it does not include patents for technological inventions.
Jurisdiction and Procedural Matters (Section 19): The bill would stipulate that the U.S. Court of Appeals for the Federal Circuit has jurisdiction over appeals involving compulsory patent counterclaims. H.R. 1249 would also tighten existing requirements by prohibiting the joining of causes of action or defense in a suit by parties who have tenuous connections to the underlying dispute in a patent infringement action. The bill would stipulate that such joining of cases is not permitted if solely based on allegations that a defendant has infringed a patent.
Technical Amendments (Section 20): H.R. 1249 would make a number of grammatical, technical, and conforming amendments to title 35.
Travel Expenses and Payment of Administrative Judges (Section 21): H.R. 1249 would authorize the PTO Director to expend funds to cover the subsistence and travel expenses for non-federal employees who attend exchange programs pertaining to intellectual property law and protection “domestically and throughout the world.” The bill would also clarify that the Director may fix the pay for administrative patent judges and administrative trademark judges under the new PTAB.
Patent and Trademark Office Funding (Section 22): H.R. 1249 would make the PTO budget subject to the annual appropriations process, and would ensure that any excess fees collected are retained for the agency in a PTO reserve fund at the U.S. Treasury. This would permit the PTO to keep all the revenue it raises while still allowing Congressional appropriators to maintain traditional oversight of the agency. Furthermore, H.R. 1249 would authorize the PTO Director to adjust fees to meet market conditions, but such authority would sunset after seven years.
Satellite Offices (Section 23): H.R. 1249 would require the Director to establish three or more satellite offices within a three-year window, subject to available resources, to carry out the responsibilities of the PTO. The bill would require the PTO Director to submit a report to Congress on the rationale of the PTO Director in selecting the location of any satellite office, the progress in establishing any satellite offices, and whether the operation of any existing satellite office is achieving the purposes set forth in the bill.
Designation of Detroit Satellite Office (Section 24): The bill would designate the PTO satellite office in Detroit as the “Elijah J. McCoy United States Patent and Trademark Office.” Elijah McCoy was an African-Canadian inventor who spent much of his life in Michigan and earned 57 US patents. His work on an automatic lubricator to oil railroad steam engines gave rise to the expression, “the real McCoy.”
Patent Ombudsman Program for Small Business Concerns (Section 25): The bill would authorize the PTO Director to establish a Patent Ombudsman Program to provide support and services regarding patent filings to small business concerns.
Priority Examination for Technologies Important to American Competitiveness (Section 26): H.R. 1249 would require that the PTO establish regulations that prioritize 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. The bill would also create a “Track I” fee of $4,800 that would allow an inventor to receive a “prioritized” examination of his or her patent.
Calculation of 60-day Grace Period for Application of Patent-Term Extensions (Section 27): The bill would clarify PTO “counting” rules that are used to determine whether an application has been submitted to the agency in a timely manner to say that if an application is transmitted after 4:30PM, EST, on a business day, or is transmitted on a day that is not a business day, the product addressed by the application shall be deemed to receive “permission” on the next business day.
Study of Implementation (Section 28): The bill would require the PTO Director conduct a study regarding the implementation of the legislation and on such other aspects of federal patent policies and practices with respect to patent rights, innovation in the United States, competitiveness of US markets, access by small business to capital and investment, and such other issues as the Director deems appropriate. The study must be completed within four years and the results submitted to the House and Senate Committees on the Judiciary.
Pro Bono Program (Section 29): H.R. 1249 would require the PTO Director to support intellectual property law associations across the United States to establish pro bono programs to assist financially under-resourced independent inventors and small businesses.
Effective Date (Section 30): The bill would require that the provisions of the Act shall take effect one year after the date of enactment and shall apply to any patent issued on or after the effective date.
Budgetary Effects (Section 31): H.R. 1249 would include a provision that references the budgetary effects of the Act as it pertains to PAYGO compliance.
The Congressional Budget Office (CBO) estimates that enacting the bill would reduce net direct spending by $725 million and revenues by $8 million over the 2011-2021 period. Most of the change in direct spending would result from providing PTO with permanent authority to collect and spend certain fees. In total, the changes would decrease budget deficits by $717 million over the 2011-2021 period. Because enacting the legislation would affect direct spending and revenues, pay-as-you-go procedures apply. CBO estimates that implementing H.R. 1249 would have a discretionary cost of $446 million over the 2011-2016 period, assuming appropriation of the necessary amounts.
H.R. 1249 would impose both intergovernmental and private-sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on certain patent applicants and other entities. The bill also would preempt the authority of state courts to hear certain patent cases. Based on information from PTO, CBO estimates that the costs of complying with those mandates would exceed the annual threshold for private-sector mandates established in UMRA ($142 million in 2011, adjusted annually for inflation) in each of the first five years the mandate is in effect. CBO estimates that the cost to state, local, and tribal governments would fall below the annual threshold established in UMRA ($71 million in 2011, adjusted annually for inflation).
The House Democratic Caucus does not provide summaries of bills.
So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.
We’ll be looking for a source of summaries from the other side in the meanwhile.
The bill contains the following citations to other parts of U.S. law:
Slip laws refer to enacted bills and joint resolutions in their original form as enacted by Congress, that is, before other laws amend them. Slip laws are cited as “Public Law XXX-YYY”, where XXX is the number of the Congress in which the bill or resolution was introduced.
The United States Code is the compilation of permanent laws enacted by Congress. Temporary and other non-permanent laws do not appear in the United States Code. (About half of the United States Code is the law itself, called positive law. The other half is merely a compilation of the laws but has no legal significance.)