H.R. 1908 (110th): Patent Reform Act of 2007

The text of the bill below is as of Sep 11, 2007 (Placed on Calendar in the Senate).

Source: GPO

II

Calendar No. 348

110th CONGRESS

1st Session

H. R. 1908

IN THE SENATE OF THE UNITED STATES

September 10, 2007

Received and read the first time

September 11, 2007

Read the second time and placed on the calendar

AN ACT

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

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Patent Reform Act of 2007.

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Reference to title 35, United States Code.

Sec. 3. Right of the first inventor to file.

Sec. 4. Inventor’s oath or declaration.

Sec. 5. Right of the inventor to obtain damages.

Sec. 6. Post-grant procedures and other quality enhancements.

Sec. 7. Definitions; patent trial and appeal board.

Sec. 8. Study and report on reexamination proceedings.

Sec. 9. Submissions by third parties and other quality enhancements.

Sec. 10. Tax planning methods not patentable.

Sec. 11. Venue and jurisdiction.

Sec. 12. Additional information; inequitable conduct as defense to infringement.

Sec. 13. Best mode requirement.

Sec. 14. Regulatory authority.

Sec. 15. Technical amendments.

Sec. 16. Study of special masters in patent cases.

Sec. 17. Study on workplace conditions.

Sec. 18. Rule of construction.

Sec. 19. Study on patent damages.

Sec. 20. Severability.

2.

Reference to title 35, United States Code

Whenever in this Act a section or other provision is amended or repealed, that amendment or repeal shall be considered to be made to that section or other provision of title 35, United States Code.

3.

Right of the first inventor to file

(a)

Definitions

Section 100 is amended by adding at the end the following:

(f)

The term inventor means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of an invention.

(g)

The terms joint inventor and coinventor mean any one of the individuals who invented or discovered the subject matter of a joint invention.

(h)

The effective filing date of a claimed invention is—

(1)

the filing date of the patent or the application for patent containing the claim to the invention; or

(2)

if the patent or application for patent is entitled to a right of priority of any other application under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date in the United States under section 120, 121, or 365(c), the filing date of the earliest such application in which the claimed invention is disclosed in the manner provided by section 112(a).

(i)

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 is amended to read as follows:

102.

Conditions for patentability; novelty

(a)

Novelty; Prior Art

A patent for a claimed invention may not be obtained if—

(1)

the claimed invention was patented, described in a printed publication, in public use, or on sale—

(A)

more than one year before the effective filing date of the claimed invention; or

(B)

one year or less before the effective filing date of the claimed invention, other than through disclosures made by the inventor or a joint inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(2)

the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

(b)

Exceptions

(1)

Prior Inventor Disclosure Exception

Subject matter that would otherwise qualify as prior art based upon a disclosure under subparagraph (B) of subsection (a)(1) shall not be prior art to a claimed invention under that subparagraph if the subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

(2)

Derivation, prior disclosure, and common assignment exceptions

Subject matter that would otherwise qualify as prior art only under subsection (a)(2) shall not be prior art to a claimed invention if—

(A)

the subject matter was obtained directly or indirectly from the inventor or a joint inventor;

(B)

the subject matter had been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor before the date on which the application or patent referred to in subsection (a)(2) was effectively filed; or

(C)

the subject matter and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

(3)

Joint research agreement exception

(A)

In general

Subject matter and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of paragraph (2) if—

(i)

the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;

(ii)

the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

(iii)

the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(B)

For purposes of subparagraph (A), the term joint research agreement means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

(4)

Patents and published applications effectively filed

A patent or application for patent is effectively filed under subsection (a)(2) with respect to any subject matter described in the patent or application—

(A)

as of the filing date of the patent or the application for patent; or

(B)

if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b) or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon one or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter.

.

(2)

Conforming amendment

The item relating to section 102 in the table of sections for chapter 10 is amended to read as follows:

102. Conditions for patentability; novelty.

.

(c)

Conditions for patentability; non-obvious subject matter

Section 103 is amended to read as follows:

103.

Conditions for patentability; nonobvious subject matter

A patent for a claimed invention may not be obtained though the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention 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, and the item relating to that section in the table of sections for chapter 10, are repealed.

(e)

Repeal of statutory invention registration

(1)

In general

Section 157, and the item relating to that section in the table of sections for chapter 14, are repealed.

(2)

Removal of cross references

Section 111(b)(8) is amended by striking sections 115, 131, 135, and 157 and inserting sections 131 and 135.

(f)

Earlier filing date for inventor and joint inventor

Section 120 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 is amended by striking and the time specified in section 102(d).

(2)

Limitation on remedies

Section 287(c)(4) 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 is amended by striking except as otherwise provided in section 102(e) of this title.

(4)

Publication of International application: effect

Section 374 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) 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) 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) 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(a) would end before the end of that 2-year period; and

(ii)

by striking the statutory and inserting that 1-year; and

(B)

in paragraph (3), by striking any statutory bar date that may occur under this title due to publication, on sale, or public use and inserting the expiration of the 1-year period referred to in section 102(a).

(h)

Repeal of interfering patent remedies

Section 291, and the item relating to that section in the table of sections for chapter 29, are repealed.

(i)

Action for claim to patent on derived invention

Section 135 is amended to read as follows:

135.

Derivation proceedings

(a)

Dispute over right to patent

(1)

Institution of derivation proceeding

(A)

Request for proceeding

An applicant may request initiation of a derivation proceeding to determine the right of the applicant to a patent by filing a request that sets forth with particularity the basis for finding that another applicant derived the claimed invention from the applicant requesting the proceeding and, without authorization, filed an application claiming such invention.

(B)

Requirements for request

Any request under subparagraph (A)—

(i)

may only be made within 12 months after the earlier of—

(I)

the date on which a patent is issued containing a claim that is the same or substantially the same as the claimed invention; or

(II)

the date of first publication of an application containing a claim that is the same or is substantially the same as the claimed invention; and

(ii)

must be made under oath, and must be supported by substantial evidence.

(C)

Determination of director

Whenever the Director determines that patents or applications for patent naming different individuals as the inventor interfere with one another because of a dispute over the right to patent on the basis of a request under subparagraph (A), the Director shall institute a derivation proceeding for the purpose of determining which applicant is entitled to a patent.

(2)

Determination by Patent Trial and Appeal Board

In any proceeding under this subsection, the Patent Trial and Appeal Board—

(A)

shall determine the question of the right to patent;

(B)

in appropriate circumstances, may correct the naming of the inventor in any application or patent at issue; and

(C)

shall issue a final decision on the right to patent.

(3)

Derivation proceeding

The Patent Trial and Appeal Board may defer action on a request to initiate a derivation proceeding for up to three months after the date on which the Director issues a patent to the applicant that filed the earlier application.

(4)

Effect of final decision

The final decision of the Patent Trial and Appeal Board in a derivation proceeding, if adverse to the claim of an applicant, shall constitute the final refusal by the Patent and Trademark Office on the claims involved. The Director may issue a patent to an applicant who is determined by the Patent Trial and Appeal Board to have the right to a patent. The final decision of the Board, if adverse to a patentee, shall, if no appeal or other review of the decision has been or can be taken or had, constitute cancellation of the claims involved in the patent, and notice of such cancellation shall be endorsed on copies of the patent distributed after such cancellation by the Patent and Trademark Office.

(b)

Settlement

Parties to a derivation proceeding may terminate the proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors of the claimed invention in dispute. Unless the Patent Trial and Appeal Board finds the agreement to be inconsistent with the evidence of record, it shall take action consistent with the agreement. Any written settlement or understanding of the parties shall be filed with the Director. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents or applications, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

(c)

Arbitration

Parties to a derivation proceeding, within such time as may be specified by the Director by regulation, may determine such contest or any aspect thereof by arbitration. Such arbitration shall be governed by the provisions of title 9 to the extent such title is not inconsistent with this section. The parties shall give notice of any arbitration award to the Director, and such award shall, as between the parties to the arbitration, be dispositive of the issues to which it relates. The arbitration award shall be unenforceable until such notice is given. Nothing in this subsection shall preclude the Director from determining patentability of the invention involved in the derivation proceeding.

.

(j)

Elimination of references to interferences

(1)

Sections 41(a)(6), 134, 141, 145, 146, 154, 305, and 314 are each amended by striking Board of Patent Appeals and Interferences each place it appears and inserting Patent Trial and Appeal Board.

(2)

Section 141 is amended—

(A)

by striking an interference and inserting a derivation proceeding; and

(B)

by striking interference each additional place it appears and inserting derivation proceeding.

(3)

Section 146 is amended—

(A)

in the first paragraph—

(i)

by striking Any party and inserting (a) In general.—Any party;

(ii)

by striking an interference and inserting a derivation proceeding; and

(iii)

by striking interference each additional place it appears and inserting derivation proceeding; and

(B)

in the second paragraph, by striking Such suit and inserting (b) Procedure.—A suit under subsection (a).

(4)

The section heading for section 134 is amended to read as follows:

134.

Appeal to the Patent Trial and Appeal Board

.

(5)

The section heading for section 135 is amended to read as follows:

135.

Derivation proceedings

.

(6)

The section heading for section 146 is amended to read as follows:

146.

Civil action in case of derivation proceeding

.

(7)

Section 154(b)(1)(C) is amended by striking interferences and inserting derivation proceedings.

(8)

The item relating to section 6 in the table of sections for chapter 1 is amended to read as follows:

6. Patent Trial and Appeal Board.

.

(9)

The items relating to sections 134 and 135 in the table of sections for chapter 12 are amended to read as follows:

134. Appeal to the Patent Trial and Appeal Board.

135. Derivation proceedings.

.

(10)

The item relating to section 146 in the table of sections for chapter 13 is amended to read as follows:

146. Civil action in case of derivation proceeding.

.

(11)

Certain appeals

Subsection 1295(a)(4)(A) of title 28, United States Code, is amended to read as follows:

(A)

the Patent Trial and Appeal Board of the United States Patent and Trademark Office with respect to patent applications, derivation proceedings, and post-grant review proceedings, at the instance of an applicant for a patent or any party to a patent interference (commenced with respect to an application for patent filed before the effective date provided in section 3(k) of the Patent Reform Act of 2007), derivation proceeding, or post-grant review proceeding, and any such appeal shall waive any right of such applicant or party to proceed under section 145 or 146 of title 35;

.

(k)

Effective date

(1)

In general

The amendments made by this section—

(A)

shall take effect 90 days after the date on which the President issues an Executive order containing the President’s finding that major patenting authorities have adopted a grace period having substantially the same effect as that contained under the amendments made by this section; and

(B)

shall apply to all applications for patent that are filed on or after the effective date under subparagraph (A).

(2)

Definitions

In this subsection:

(A)

Major patenting authorities

The term major patenting authorities means at least the patenting authorities in Europe and Japan.

(B)

Grace period

The term grace period means the 1-year period ending on the effective filing date of a claimed invention, during which disclosures of the subject matter by the inventor or a joint inventor, or by others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor, do not qualify as prior art to the claimed invention.

(C)

Effective filing date

The term effective filing date of a claimed invention means, with respect to a patenting authority in another country, a date equivalent to the effective filing date of a claimed invention as defined in section 100(h) of title 35, United States Code, as added by subsection (a) of this section.

(3)

Retention of interference procedures with respect to applications filed before effective date

In the case of any application for patent that is filed before the effective date under paragraph (1)(A), the provisions of law repealed or amended by subsections (h), (i), and (j) shall apply to such application as such provisions of law were in effect on the day before such effective date.

(l)

Review every 7 years

Not later than the end of the 7-year period beginning on the effective date under subsection (k), and the end of every 7-year period thereafter, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this subsection referred to as the Director) shall—

(1)

conduct a study on the effectiveness and efficiency of the amendments made by this section; and

(2)

submit to the Committees on the Judiciary of the House of Representatives and the Senate a report on the results of the study, including any recommendations the Director has on amendments to the law and other recommendations of the Director with respect to the first-to-file system implemented under the amendments made by this section.

4.

Inventor’s oath or declaration

(a)

Inventor’s oath or declaration

(1)

In general

Section 115 is amended to read as follows:

115.

Inventor’s oath or declaration

(a)

Naming the inventor; inventor’s oath or declaration

An application for patent that is filed under section 111(a), that commences the national stage under section 363, or that is filed by an inventor for an invention for which an application has previously been filed under this title by that inventor shall include, or be amended to include, the name of the inventor of any claimed invention in the application. Except as otherwise provided in this section, each individual who is the inventor or a joint inventor of a claimed invention in an application for patent shall execute an oath or declaration in connection with the application.

(b)

Required statements

An oath or declaration by an individual under subsection (a) shall contain statements that—

(1)

the application was made or was authorized to be made by individual; and

(2)

the 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 and 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 has assigned rights in an application for patent may include the required statements under subsections (b) and (c) in the assignment executed by the individual, in lieu of filing such statements separately.

(f)

Time for filing

A notice of allowance under section 151 may be provided to an applicant for patent only if the applicant for patent has filed each required oath or declaration under subsection (a) or has filed a substitute statement under subsection (d) or recorded an assignment meeting the requirements of subsection (e).

(g)

Earlier-filed application containing required statements or substitute statement

The requirements under this section shall not apply to an individual with respect to an application for patent in which the individual is named as the inventor or a joint inventor and that claims the benefit of an earlier filing date under section 120 or 365(c), if—

(1)

an oath or declaration meeting the requirements of subsection (a) was executed by the individual and was filed in connection with the earlier-filed application;

(2)

a substitute statement meeting the requirements of subsection (d) was filed in the earlier filed application with respect to the individual; or

(3)

an assignment meeting the requirements of subsection (e) was executed with respect to the earlier-filed application by the individual and was recorded in connection with the earlier-filed application.

(h)

Supplemental and corrected statements; filing additional statements

(1)

In general

Any person making a statement required under this section may withdraw, replace, or otherwise correct the statement at any time. If a change is made in the naming of the inventor requiring the filing of 1 or more additional statements under this section, such additional statements shall be filed in accordance with regulations established by the Director.

(2)

Supplemental statements not required

If an individual has executed an oath or declaration under subsection (a) or an assignment meeting the requirements of subsection (e) with respect to an application for patent, the Director may not thereafter require that individual to make any additional oath, declaration, or other statement equivalent to those required by this section in connection with the application for patent or any patent issuing thereon.

(3)

Savings clause

No patent shall be invalid or unenforceable based upon the failure to comply with a requirement under this section if the failure is remedied as provided under paragraph (1).

(i)

Acknowledgment of penalties

Any declaration or statement filed under this section must contain an acknowledgment that any willful false statement is punishable by fine or imprisonment, or both, under section 1001 of title 18.

.

(2)

Relationship to divisional applications

Section 121 is amended by striking If a divisional application and all that follows through inventor..

(3)

Requirements for nonprovisional applications

Section 111(a) is amended—

(A)

in paragraph (2)(C), by striking by the applicant and inserting or declaration;

(B)

in the heading for paragraph (3), by striking and oath; and

(C)

by striking and oath each place it appears.

(4)

Conforming amendment

The item relating to section 115 in the table of sections for chapter 11 is amended to read as follows:

115. Inventor's oath or declaration..

(b)

Specification

Section 112 is amended—

(1)

in the first paragraph——

(A)

by striking The specification and inserting (a) In general.—The specification; and

(B)

by striking of carrying out his invention and inserting or joint inventor of carrying out the invention; and

(2)

in the second paragraph—

(A)

by striking The specification and inserting (b) Conclusion.—The specification; and

(B)

by striking applicant regards as his invention and inserting inventor or a joint inventor regards as the invention;

(3)

in the third paragraph, by striking A claim and inserting (c) Form.—A claim;

(4)

in the fourth paragraph, by striking Subject to the following paragraph, and inserting (d) Reference in dependent forms.—Subject to subsection (e),;

(5)

in the fifth paragraph, by striking A claim and inserting (e) Reference in multiple dependent form.—A claim; and

(6)

in the last paragraph, by striking An element and inserting (f) Element in claim for a combination.—An element.

(c)

Effective date

The amendments made by this section—

(1)

shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act; and

(2)

shall apply to any application for patent, or application for reissue patent, that is filed on or after the effective date under paragraph (1).

5.

Right of the inventor to obtain damages

(a)

Damages

Section 284 is amended—

(1)

in the first paragraph, by striking Upon and inserting (a) In general.—Upon;

(2)

by designating the second undesignated paragraph as subsection (c);

(3)

by inserting after subsection (a) (as designated by paragraph (1) of this subsection) the following:

(b)

Reasonable royalty

(1)

In general

An award pursuant to subsection (a) that is based upon a reasonable royalty shall be determined in accordance with this subsection. Based on the facts of the case, the court shall determine whether paragraph (2), (3), or (4) will be used by the court or the jury in calculating a reasonable royalty. The court shall identify the factors that are relevant to the determination of a reasonable royalty under the applicable paragraph, and the court or jury, as the case may be, shall consider only those factors in making the determination.

(2)

Relationship of damages to contributions over prior art

Upon a showing to the satisfaction of the court that a reasonable royalty should be based on a portion of the value of the infringing product or process, the court shall conduct an analysis to ensure that a reasonable royalty under subsection (a) is applied only to that economic value properly attributable to the patent's specific contribution over the prior art. The court shall exclude from the analysis the economic value properly attributable to the prior art, and other features or improvements, whether or not themselves patented, that contribute economic value to the infringing product or process.

(3)

Entire market value

Upon a showing to the satisfaction of the court that the patent's specific contribution over the prior art is the predominant basis for market demand for an infringing product or process, damages may be based upon the entire market value of the products or processes involved that satisfy that demand.

(4)

Other factors

If neither paragraph (2) or (3) is appropriate for determining a reasonable royalty, the court may consider, or direct the jury to consider, the terms of any nonexclusive marketplace licensing of the invention, where appropriate, as well as any other relevant factors under applicable law.

(5)

Combination inventions

For purposes of paragraphs (2) and (3), in the case of a combination invention the elements of which are present individually in the prior art, the patentee may show that the contribution over the prior art may include the value of the additional function resulting from the combination, as well as the enhanced value, if any, of some or all of the prior art elements resulting from the combination.

;

(4)

by amending subsection (c) (as designated by paragraph (1) of this subsection) to read as follows:

(c)

Willful infringement

(1)

Increased damages

A court that has determined that the infringer has willfully infringed a patent or patents may increase the damages up to three times the amount of damages found or assessed under subsection (a), except that increased damages under this paragraph shall not apply to provisional rights under section 154(d).

(2)

Permitted grounds for willfulness

A court may find that an infringer has willfully infringed a patent only if the patent owner presents clear and convincing evidence that—

(A)

after receiving written notice from the patentee—

(i)

alleging acts of infringement in a manner sufficient to give the infringer an objectively reasonable apprehension of suit on such patent, and

(ii)

identifying with particularity each claim of the patent, each product or process that the patent owner alleges infringes the patent, and the relationship of such product or process to such claim,

the infringer, after a reasonable opportunity to investigate, thereafter performed one or more of the alleged acts of infringement;
(B)

the infringer intentionally copied the patented invention with knowledge that it was patented; or

(C)

after having been found by a court to have infringed that patent, the infringer engaged in conduct that was not colorably different from the conduct previously found to have infringed the patent, and that resulted in a separate finding of infringement of the same patent.

(3)

Limitations on willfulness

(A)

A court may not find that an infringer has willfully infringed a patent under paragraph (2) for any period of time during which the infringer had an informed good faith belief that the patent was invalid or unenforceable, or would not be infringed by the conduct later shown to constitute infringement of the patent.

(B)

An informed good faith belief within the meaning of subparagraph (A) may be established by—

(i)

reasonable reliance on advice of counsel;

(ii)

evidence that the infringer sought to modify its conduct to avoid infringement once it had discovered the patent; or

(iii)

other evidence a court may find sufficient to establish such good faith belief.

(C)

The decision of the infringer not to present evidence of advice of counsel is not relevant to a determination of willful infringement under paragraph (2).

(4)

Limitation on pleading

Before the date on which a court determines that the patent in suit is not invalid, is enforceable, and has been infringed by the infringer, a patentee may not plead and a court may not determine that an infringer has willfully infringed a patent.

; and

(5)

in the third undesignated paragraph, by striking The court and inserting (d) Expert Testimony.—The court.

(b)

Report to congressional committees

Not later than June 30, 2009, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this subsection referred to as the Director) shall report to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate 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:

(1)

A comparison between the patent laws of the United States and the laws of other industrialized countries, including the European Union, Japan, Canada, and Australia.

(2)

An analysis of the effect of prior user rights on innovation rates in the selected countries.

(3)

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.

(4)

An analysis of the effect of prior user rights, if any, on small businesses, universities, and individual inventors.

(5)

An analysis of any legal or constitutional issues that arise from placing elements of trade secret law, in the form of prior user rights, in patent law.

In preparing the report, the Director shall consult with the Secretary of State and the Attorney General of the United States.
(c)

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.

(d)

Review every 7 years

Not later than the end of the 7-year period beginning on the date of the enactment of this Act, and the end of every 7-year period thereafter, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this subsection referred to as the Director) shall—

(1)

conduct a study on the effectiveness and efficiency of the amendments made by this section; and

(2)

submit to the Committees on the Judiciary of the House of Representatives and the Senate a report on the results of the study, including any recommendations the Director has on amendments to the law and other recommendations of the Director with respect to the right of the inventor to obtain damages for patent infringement.

6.

Post-grant procedures and other quality enhancements

(a)

Citation of prior art

(1)

In general

Section 301 is amended to read as follows:

301.

Citation of prior art

(a)

In general

Any person at any time may cite to the Office in writing—

(1)

prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent; or

(2)

written statements of the patent owner filed in a proceeding before a Federal court or the Patent and Trademark Office in which the patent owner takes a position on the scope of one or more patent claims.

(b)

Submissions part of official file

If the person citing prior art or written submissions under subsection (a) explains in writing the pertinence and manner of applying the prior art or written submissions to at least one claim of the patent, the citation of the prior art or written submissions (as the case may be) and the explanation thereof shall become a part of the official file of the patent.

(c)

Procedures for written statements

(1)

Submission of additional materials

A party that submits written statements under subsection (a)(2) in a proceeding shall include any other documents, pleadings, or evidence from the proceeding that address the patent owner’s statements or the claims addressed by the written statements.

(2)

Limitation on use of statements

Written statements submitted under subsection (a)(2) shall not be considered for any purpose other than to determine the proper meaning of the claims that are the subject of the request in a proceeding ordered pursuant to section 304 or 313. Any such written statements, and any materials submitted under paragraph (1), that are subject to an applicable protective order shall be redacted to exclude information subject to the order.

(d)

Identity withheld

Upon the written request of the person citing prior art or written statements under subsection (a), the person’s identity shall be excluded from the patent file and kept confidential.

.

(b)

Reexamination

Section 303(a) is amended to read as follows:

(a)

Within three months after the owner of a patent files a request for reexamination under section 302, the Director shall determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications. On the Director’s own initiative, and at any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications discovered by the Director, is cited under section 301, or is cited by any person other than the owner of the patent under section 302 or section 311. The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously considered by the Office.

.

(c)

Conduct of inter partes proceedings

Section 314 is amended—

(1)

in the first sentence of subsection (a), by striking conducted according to the procedures established for initial examination under the provisions of sections 132 and 133 and inserting heard by an administrative patent judge in accordance with procedures which the Director shall establish;

(2)

in subsection (b), by striking paragraph (2) and inserting the following:

(2)

The third-party requester shall have the opportunity to file written comments on any action on the merits by the Office in the inter partes reexamination proceeding, and on any response that the patent owner files to such an action, if those written comments are received by the Office within 60 days after the date of service on the third-party requester of the Office action or patent owner response, as the case may be.

; and

(3)

by adding at the end the following:

(d)

Oral hearing

At the request of a third party requestor or the patent owner, the administrative patent judge shall conduct an oral hearing, unless the judge finds cause lacking for such hearing.

.

(d)

Estoppel

Section 315(c) is amended by striking or could have raised.

(e)

Reexamination prohibited after district court decision

Section 317(b) is amended—

(1)

in the subsection heading, by striking Final decision and inserting District court decision; and

(2)

by striking Once a final decision has been entered and inserting Once the judgment of the district court has been entered.

(f)

Post-grant opposition procedures

(1)

In general

Part III is amended by adding at the end the following new chapter:

32

Post-Grant Review Procedures

Sec.

321. Petition for post-grant review.

322. Timing and bases of petition.

323. Requirements of petition.

324. Prohibited filings.

325. Submission of additional information; showing of sufficient grounds.

326. Conduct of post-grant review proceedings.

327. Patent owner response.

328. Proof and evidentiary standards.

329. Amendment of the patent.

330. Decision of the Board.

331. Effect of decision.

332. Settlement.

333. Relationship to other pending proceedings.

334. Effect of decisions rendered in civil action on post-grant review proceedings.

335. Effect of final decision on future proceedings.

336. Appeal.

321.

Petition for post-grant review

Subject to sections 322, 324, 332, and 333, a person who is not the patent owner may file with the Office a petition for cancellation seeking to institute a post-grant review proceeding to cancel as unpatentable any claim of a patent on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim). The Director shall establish, by regulation, fees to be paid by the person requesting the proceeding, in such amounts as the Director determines to be reasonable.

322.

Timing and bases of petition

A post-grant proceeding may be instituted under this chapter pursuant to a cancellation petition filed under section 321 only if—

(1)

the petition is filed not later than 12 months after the issuance of the patent or a reissue patent, as the case may be; or

(2)

the patent owner consents in writing to the proceeding.

323.

Requirements of petition

A cancellation petition filed under section 321 may be considered only if—

(1)

the petition is accompanied by payment of the fee established by the Director under section 321;

(2)

the petition identifies the cancellation petitioner;

(3)

for each claim sought to be canceled, the petition sets forth in writing the basis for cancellation and provides the evidence in support thereof, including copies of patents and printed publications, or written testimony of a witness attested to under oath or declaration by the witness, or any other information that the Director may require by regulation; and

(4)

the petitioner provides copies of the petition, including any evidence submitted with the petition and any other information submitted under paragraph (3), to the patent owner or, if applicable, the designated representative of the patent owner.

324.

Prohibited filings

A post-grant review proceeding may not be instituted under section 322 if the petition for cancellation requesting the proceeding—

(1)

identifies the same cancellation petitioner and the same patent as a previous petition for cancellation filed under such section; or

(2)

is based on the best mode requirement contained in section 112.

325.

Submission of additional information; showing of sufficient grounds

(a)

In general

The cancellation petitioner shall file such additional information with respect to the petition as the Director may require. For each petition submitted under section 321, the Director shall determine if the written statement, and any evidence submitted with the request, establish that a substantial question of patentability exists for at least one claim in the patent. The Director may initiate a post-grant review proceeding if the Director determines that the information presented provides sufficient grounds to believe that there is a substantial question of patentability concerning one or more claims of the patent at issue.

(b)

Notification; determinations not reviewable

The Director shall notify the patent owner and each petitioner in writing of the Director's determination under subsection (a), including a determination to deny the petition. The Director shall make that determination in writing not later than 60 days after receiving the petition. Any determination made by the Director under subsection (a), including whether or not to institute a post-grant review proceeding or to deny the petition, shall not be reviewable.

326.

Conduct of post-grant review proceedings

(a)

In general

The Director shall prescribe regulations, in accordance with section 2(b)(2)—

(1)

establishing and governing post-grant review proceedings under this chapter and their relationship to other proceedings under this title;

(2)

establishing procedures for the submission of supplemental information after the petition for cancellation is filed; and

(3)

setting forth procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding, and the procedures for obtaining such evidence shall be consistent with the purpose and nature of the proceeding.

In carrying out paragraph (3), the Director shall bear in mind that discovery must be in the interests of justice.
(b)

Post-grant regulations

Regulations under subsection (a)(1)—

(1)

shall require that the final determination in a post-grant proceeding issue not later than one year after the date on which the post-grant review proceeding is instituted under this chapter, except that, for good cause shown, the Director may extend the 1-year period by not more than six months;

(2)

shall provide for discovery upon order of the Director;

(3)

shall provide for publication of notice in the Federal Register of the filing of a petition for post-grant review under this chapter, for publication of the petition, and documents, orders, and decisions relating to the petition, on the website of the Patent and Trademark Office, and for filings under seal exempt from publication requirements;

(4)

shall prescribe sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or unnecessary increase in the cost of the proceeding;

(5)

may provide for protective orders governing the exchange and submission of confidential information; and

(6)

shall ensure that any information submitted by the patent owner in support of any amendment entered under section 329 is made available to the public as part of the prosecution history of the patent.

(c)

Considerations

In prescribing regulations under this section, the Director shall consider the effect on the economy, the integrity of the patent system, and the efficient administration of the Office.

(d)

Conduct of proceeding

The Patent Trial and Appeal Board shall, in accordance with section 6(b), conduct each post-grant review proceeding authorized by the Director.

327.

Patent owner response

After a post-grant proceeding under this chapter has been instituted with respect to a patent, the patent owner shall have the right to file, within a time period set by the Director, a response to the cancellation petition. The patent owner shall file with the response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response.

328.

Proof and evidentiary standards

(a)

In general

The presumption of validity set forth in section 282 shall not apply in a challenge to any patent claim under this chapter.

(b)

Burden of proof

The party advancing a proposition under this chapter shall have the burden of proving that proposition by a preponderance of the evidence.

329.

Amendment of the patent

(a)

In general

In response to a challenge in a petition for cancellation, the patent owner may file one motion to amend the patent in one or more of the following ways:

(1)

Cancel any challenged patent claim.

(2)

For each challenged claim, propose a substitute claim.

(3)

Amend the patent drawings or otherwise amend the patent other than the claims.

(b)

Additional motions

Additional motions to amend may be permitted only for good cause shown.

(c)

Scope of claims

An amendment under this section may not enlarge the scope of the claims of the patent or introduce new matter.

330.

Decision of the Board

If the post-grant review proceeding is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision addressing the patentability of any patent claim challenged and any new claim added under section 329.

331.

Effect of decision

(a)

In general

If the Patent Trial and Appeal Board issues a final decision under section 330 and the time for appeal has expired or any appeal proceeding has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable and incorporating in the patent by operation of the certificate any new claim determined to be patentable.

(b)

New claims

Any new claim held to be patentable and incorporated into a patent in a post-grant review proceeding shall have the same effect as that specified in section 252 for reissued patents on the right of any person who made, purchased, offered to sell, or used within the United States, or imported into the United States, anything patented by such new claim, or who made substantial preparations therefor, before a certificate under subsection (a) of this section is issued.

332.

Settlement

(a)

In general

A post-grant review proceeding shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Patent Trial and Appeal Board has issued a written decision before the request for termination is filed. If the post-grant review proceeding is terminated with respect to a petitioner under this paragraph, no estoppel shall apply to that petitioner. If no petitioner remains in the proceeding, the panel of administrative patent judges assigned to the proceeding shall terminate the proceeding.

(b)

Agreement in writing

Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in the agreement or understanding, that is made in connection with or in contemplation of the termination of a post-grant review proceeding, must be in writing. A post-grant review proceeding as between the parties to the agreement or understanding may not be terminated until a copy of the agreement or understanding, including any such collateral agreements, has been filed in the Office. If any party filing such an agreement or understanding requests, the agreement or understanding shall be kept separate from the file of the post-grant review proceeding, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

333.

Relationship to other proceedings

(a)

In general

Notwithstanding subsection 135(a), sections 251 and 252, and chapter 30, the Director may determine the manner in which any reexamination proceeding, reissue proceeding, interference proceeding (commenced with respect to an application for patent filed before the effective date provided in section 3(k) of the Patent Reform Act of 2007), derivation proceeding, or post-grant review proceeding, that is pending during a post-grant review proceeding, may proceed, including providing for stay, transfer, consolidation, or termination of any such proceeding.

(b)

Stays

The Director may stay a post-grant review proceeding if a pending civil action for infringement of a patent addresses the same or substantially the same questions of patentability raised against the patent in a petition for post-grant review.

(c)

Effect of commencement of proceeding

The commencement of a post-grant review proceeding—

(1)

shall not limit in any way the right of the patent owner to commence an action for infringement of the patent; and

(2)

shall not be cited as evidence relating to the validity of any claim of the patent in any proceeding before a court or the International Trade Commission concerning the patent.

334.

Effect of decisions rendered in civil action on post-grant review proceedings

If a final decision is entered against a party in a civil action arising in whole or in part under section 1338 of title 28 establishing that the party has not sustained its burden of proving the invalidity of any patent claim—

(1)

that party to the civil action and the privies of that party may not thereafter request a post-grant review proceeding on that patent claim on the basis of any grounds, under the provisions of section 321, which that party or the privies of that party raised or could have raised; and

(2)

the Director may not thereafter maintain a post-grant review proceeding that was requested, before the final decision was so entered, by that party or the privies of that party on the basis of such grounds.

335.

Effect of final decision on future proceedings

If a final decision under section 330 is favorable to the patentability of any original or new claim of the patent challenged by the cancellation petitioner, the cancellation petitioner may not thereafter, based on any ground that the cancellation petitioner raised during the post-grant review proceeding—

(1)

request or pursue a reexamination of such claim under chapter 31;

(2)

request or pursue a derivation proceeding with respect to such claim;

(3)

request or pursue a post-grant review proceeding under this chapter with respect to such claim;

(4)

assert the invalidity of any such claim in any civil action arising in whole or in part under section 1338 of title 28; or

(5)

assert the invalidity of any such claim in defense to an action brought under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337).

336.

Appeal

A party dissatisfied with the final determination of the Patent Trial and Appeal Board in a post-grant proceeding under this chapter may appeal the determination under sections 141 through 144. Any party to the post-grant proceeding shall have the right to be a party to the appeal.

.

(g)

Conforming amendment

The table of chapters for part III is amended by adding at the end the following:

32.Post-Grant Review Proceedings321

.

(h)

Repeal

Section 4607 of the Intellectual Property and Communications Omnibus Reform Act of 1999, as enacted by section 1000(a)(9) of Public Law 106–113, is repealed.

(i)

Effective dates

(1)

In general

The amendments and repeal made by this section shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act.

(2)

Applicability to ex parte and inter partes proceedings

Notwithstanding any other provision of law, sections 301 and 311 through 318 of title 35, United States Code, as amended by this section, shall apply to any patent that issues before, on, or after the effective date under paragraph (1) from an original application filed on any date.

(3)

Applicability to post-grant proceedings

The amendments made by subsections (f) and (g) shall apply to patents issued on or after the effective date under paragraph (1).

(j)

Regulations

The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this subsection referred to as 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 (f) of this section.

7.

Definitions; patent trial and appeal board

(a)

Definitions

Section 100 (as amended by this Act) is further amended by adding at the end the following:

(k)

The term cancellation petitioner means the real party in interest requesting cancellation of any claim of a patent under chapter 32 of this title and the privies of the real party in interest.

.

(a)

Patent Trial and Appeal board

Section 6 is amended to read as follows:

6.

Patent Trial and Appeal Board

(a)

Establishment and composition

There shall be in the Office a Patent Trial and Appeal Board. The administrative patent judges shall constitute the Patent Trial and Appeal Board. The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary of Commerce. Any reference in any Federal law, Executive order, rule, regulation, or delegation of authority, or any document of or pertaining to the Board of Patent Appeals and Interferences is deemed to refer to the Patent Trial and Appeal Board.

(b)

Duties

The Patent Trial and Appeal Board shall—

(1)

on written appeal of an applicant, review adverse decisions of examiners upon application for patents;

(2)

on written appeal of a patent owner, review adverse decisions of examiners upon patents in reexamination proceedings under chapter 30;

(3)

review appeals by patent owners and third-party requesters under section 315;

(4)

determine priority and patentability of invention in derivation proceedings under section 135(a); and

(5)

conduct post-grant opposition proceedings under chapter 32.

Each appeal and derivation proceeding shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director. Only the Patent Trial and Appeal Board may grant rehearings. The Director shall assign each post-grant review proceeding to a panel of 3 administrative patent judges. Once assigned, each such panel of administrative patent judges shall have the responsibilities under chapter 32 in connection with post-grant review proceedings.

.

(b)

Effective date

The amendments made by this section shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act.

8.

Study and report on reexamination proceedings

The Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office shall, not later than 2 years after the date of the enactment of this Act—

(1)

conduct a study of the effectiveness and efficiency of the different forms of proceedings available under title 35, United States Code, for the reexamination of patents; and

(2)

submit to the Committees on the Judiciary of the House of Representatives and the Senate a report on the results of the study, including any of the Director’s suggestions for amending the law, and any other recommendations the Director has with respect to patent reexamination proceedings.

9.

Submissions by third parties and other quality enhancements

(a)

Publication

Section 122(b)(2)(B)(i) is amended by striking published as provided in paragraph (1). and inserting the following:

published until the later of—

(I)

three months after a second action is taken pursuant to section 132 on the application, of which notice has been given or mailed to the applicant; or

(II)

the date specified in paragraph (1).

.

(b)

Preissuance submissions by third parties

Section 122 is amended by adding at the end the following:

(e)

Preissuance submissions by third parties

(1)

In general

Any person may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of—

(A)

the date a notice of allowance under section 151 is mailed in the application for patent; or

(B)

either—

(i)

6 months after the date on which the application for patent is published under section 122, or

(ii)

the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent,

whichever occurs later.
(2)

Other requirements

Any submission under paragraph (1) shall—

(A)

set forth a concise description of the asserted relevance of each submitted document;

(B)

be accompanied by such fee as the Director may prescribe;

(C)

include a statement by the submitter affirming that the submission was made in compliance with this section; and

(D)

identify the real party-in-interest making the submission.

.

(c)

Effective date

The amendments made by this section—

(1)

shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act; and

(2)

shall apply to any application for patent filed before, on, or after the effective date under paragraph (1).

10.

Tax planning methods not patentable

(a)

In general

Section 101 is amended—

(1)

by striking Whoever and inserting (a) Patentable inventions.—Whoever; and

(2)

by adding at the end the following:

(b)

Tax planning methods

(1)

Unpatentable subject matter

A patent may not be obtained for a tax planning method.

(2)

Definitions

For purposes of paragraph (1)—

(A)

the term tax planning method means a plan, strategy, technique, or scheme that is designed to reduce, minimize, or defer, or has, when implemented, the effect of reducing, minimizing, or deferring, a taxpayer’s tax liability, but does not include the use of tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns;

(B)

the term taxpayer means an individual, entity, or other person (as defined in section 7701 of the Internal Revenue Code of 1986) that is subject to taxation directly, is required to prepare a tax return or information statement to enable one or more other persons to determine their tax liability, or is otherwise subject to a tax law;

(C)

the terms tax, tax laws, tax liability, and taxation refer to any Federal, State, county, city, municipality, or other governmental levy, assessment, or imposition, whether measured by income, value, or otherwise; and

(D)

the term State means each of the several States, the District of Columbia, and any commonwealth, territory, or possession of the United States.

.

(b)

Applicability

The amendments made by this section—

(1)

shall take effect on the date of the enactment of this Act;

(2)

shall apply to any application for patent or application for a reissue patent that is—

(A)

filed on or after the date of the enactment of this Act; or

(B)

filed before that date if a patent or reissue patent has not been issued pursuant to the application as of that date; and

(3)

shall not be construed as validating any patent issued before the date of the enactment of this Act for an invention described in section 101(b) of title 35, United States Code, as amended by this section.

11.

Venue and jurisdiction

(a)

Venue for patent cases

Section 1400 of title 28, United States Code, is amended by striking subsection (b) and inserting the following:

(b)

In any civil action arising under any Act of Congress relating to patents, a party shall not manufacture venue by assignment, incorporation, joinder, or otherwise primarily to invoke the venue of a specific district court.

(c)

Notwithstanding section 1391 of this title, except as provided in paragraph (3) of this subsection, any civil action for patent infringement or any action for declaratory judgment relating to a patent may be brought only in a judicial district—

(1)

where the defendant has its principal place of business or is incorporated, or, for foreign corporations with a United States subsidiary, where the defendant’s primary United States subsidiary has its principal place of business or is incorporated;

(2)

where the defendant has committed a substantial portion of the acts of infringement and has a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the defendant’s operations;

(3)

for cases involving only foreign defendants with no United States subsidiary, according to section 1391(d) of this title;

(4)

where the plaintiff resides, if the plaintiff is—

(A)

an institution of higher education as defined under section 101(a) of the Higher Education Act of 1965 (20 U.S.C. section 1001(a)); or

(B)

a nonprofit organization that—

(i)

is described in section 501(c)(3) of the Internal Revenue Code of 1986;

(ii)

is exempt from taxation under section 501(a) of such Code; and

(iii)

serves primarily as the patent and licensing organization for an institution of higher education as defined under section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a));

(5)

where the plaintiff or a subsidiary has a place of business that is engaged in substantial—

(A)

research and development,

(B)

manufacturing activities, or

(C)

management of research and development or manufacturing activities,

related to the patent or patents in dispute;
(6)

where the plaintiff resides if the plaintiff is named as inventor or co-inventor on the patent and has not assigned, granted, conveyed, or licensed, and is under no obligation to assign, grant, convey, or license, any rights in the patent or in enforcement of the patent, including the results of any such enforcement; or

(7)

where any of the defendants has substantial evidence and witnesses if there is no other district in which the action may be brought under this section.

.

(b)

Interlocutory appeals

Subsection (c) of section 1292 of title 28, United States Code, is amended—

(1)

by striking and at the end of paragraph (1);

(2)

by striking the period at the end of paragraph (2) and inserting ; and; and

(3)

by adding at the end the following:

(3)

of an appeal from an interlocutory order or decree determining construction of claims in a civil action for patent infringement under section 271 of title 35.

Application for an appeal under paragraph (3) shall be made to the court within 10 days after entry of the order or decree. The district court shall have discretion whether to approve the application and, if so, whether to stay proceedings in the district court during pendency of the appeal.

.

(c)

Effective date

(1)

In general

The amendments made by this section—

(A)

shall take effect on the date of the enactment of this Act; and

(B)

shall apply to any civil action commenced on or after such date of enactment.

(2)

Pending cases

Any case commenced in a United States district court on or after September 7, 2007, in which venue is improper under section 1400 of title 28, United States Code, as amended by this section, shall be transferred pursuant to section 1404 of such title, unless—

(A)

one or more substantive rulings on the merits, or other substantial litigation, has occurred; and

(B)

the court finds that transfer would not serve the interests of justice.

12.

Additional information; inequitable conduct as defense to infringement

(a)

Disclosure requirements for applicants

(1)

In general

Chapter 11 is amended by adding at the end the following new section:

123.

Additional information

(a)

In general

The Director may, by regulation, require that applicants submit a search report and other information and analysis relevant to patentability. If the Director requires a search report to be submitted by applicants, and an applicant does not itself perform the search, the search must be performed by one or more individuals who are United States citizens or by a commercial entity that is organized under the laws of the United States or any State and employs United States citizens to perform such searches. An application shall be regarded as abandoned if the applicant fails to submit a search report, information, or an analysis in the manner and within the time period prescribed by the Director. Any search report required by the Director may not substitute in any way for a search by an examiner of the prior art during examination.

(b)

Exception for micro entities

Applications from micro-entities shall not be subject to the requirements of regulations issued under subsection (a).

124.

Micro entities

(a)

Definition

For purposes of this title, the term micro entity means an applicant for patent who makes a certification under either subsection (b) or (c).

(b)

Unassigned application

A certification under this subsection is a certification by each inventor named in the application that the inventor—

(1)

qualifies as a small entity as defined in regulations issued by the Director;

(2)

has not been named on five or more previously filed patent applications;

(3)

has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or any other ownership interest in the application; and

(4)

does not have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 2.5 times the median household income, as reported by the Bureau of the Census, for the most recent calendar year preceding the calendar year in which the examination fee is being paid.

(c)

Assigned application

A certification under this subsection is a certification by each inventor named in the application that the inventor—

(1)

qualifies as a small entity as defined in regulations issued by the Director and meets the requirements of subsection (b)(4);

(2)

has not been named on five or more previously filed patent applications; and

(3)

has assigned, granted, conveyed, or is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application to an entity that has five or fewer employees and has a gross taxable income, as defined in section 61(a) of the Internal Revenue Code of 1986, that does not exceed 2.5 times the median household income, as reported by the Bureau of the Census, for the most recent calendar year preceding the calendar year in which the examination fee is being paid.

.

(2)

Conforming amendment

The table of sections for chapter 11 is amended by adding at the end the following new items:

123. Additional information.

124. Micro entities.

.

(b)

Inequitable conduct as defense to infringement

Section 282 is amended—

(1)

in the first undesignated paragraph, by striking A patent and inserting (a) In general.—A patent;

(2)

in the second undesignated paragraph—

(A)

by striking The following and inserting (b) Defenses.—The following; and

(B)

by striking the comma at the end of each of paragraphs (1), (2), and (3) and inserting a period;

(3)

in the third undesignated paragraph—

(A)

by striking In actions and inserting (d) Notice of actions; pleading.—In actions;

(B)

by inserting after the second sentence the following: In an action involving any allegation of inequitable conduct under subsection (c), the party asserting this defense or claim shall comply with the pleading requirements set forth in Rule 9(b) of the Federal Rules of Civil Procedure.; and

(C)

by striking Invalidity and inserting (e) Extension of patent term.—Invalidity; and

(4)

by inserting after subsection (b), as designated by paragraph (2) of this subsection, the following:

(c)

Inequitable conduct

(1)

Defense

One or more claims of a patent may be held to be unenforceable, or other remedy imposed under paragraph (4), for inequitable conduct only if it is established, by clear and convincing evidence, that a person with a duty of disclosure to the Office, with the intent to mislead or deceive the patent examiner, misrepresented or failed to disclose material information to the examiner during examination of the patent.

(2)

Materiality

(A)

In general

Information is material under this section if—

(i)

a reasonable examiner would have made a prima facie finding of unpatentability, or maintained a finding of unpatentability, of one or more of the patent claims based on the information, and the information is not cumulative to information already of record or previously considered by the Office; or

(ii)

information that is otherwise material refutes or is inconsistent with a position the applicant takes in opposing a rejection of the claim or in asserting an argument of patentability.

(B)

Prima facie finding

A prima facie finding of unpatentability under this section is shown if a reasonable examiner, based on a preponderance of the evidence, would conclude that the claim is unpatentable based on the information misrepresented or not disclosed, when that information is considered alone or in conjunction with other information or record. In determining whether there is a prima facie finding of unpatentability, each term in the claim shall be given its broadest reasonable construction consistent with the specification, and rebuttal evidence shall not be considered.

(3)

Intent

To prove a person with a duty of disclosure to the Office intended to mislead or deceive the examiner under paragraph (1), specific facts beyond materiality of the information misrepresented or not disclosed must be proven that establish the intent of the person to mislead or deceive the examiner by the actions of the person. Facts support an intent to mislead or deceive if they show circumstances that indicate conscious or deliberate behavior on the part of the person to not disclose material information or to submit false material information in order to mislead or deceive the examiner. Circumstantial evidence may be used to prove that a person had the intent to mislead or deceive the examiner under paragraph (1).

(4)

Remedy

Upon a finding of inequitable conduct, the court shall balance the equities to determine which of the following remedies to impose:

(A)

Denying equitable relief to the patent holder and limiting the remedy for infringement to reasonable royalties.

(B)

Holding the claims-in-suit, or the claims in which inequitable conduct occurred, unenforceable.

(C)

Holding the patent unenforceable.

(D)

Holding the claims of a related patent unenforceable.

(5)

Attorney misconduct

Upon a finding of inequitable conduct, if there is evidence that the conduct is attributable to a person or persons authorized to practice before the Office, the court shall refer the matter to the Office for appropriate disciplinary action under section 32, and shall order the parties to preserve and make available to the Office any materials that may be relevant to the determination under section 32.

.

(c)

Effective date

(1)

Subsection (a)

The amendments made by subsection (a)—

(A)

shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act; and

(B)

shall apply to any application for patent filed on or after the effective date under subparagraph (A).

(2)

Subsection (b)

The amendments made by subsection (b) shall apply to any civil action commenced on or after the date of the enactment of this Act.

13.

Best mode requirement

Section 282(b) (as designated by section 12(b) of this Act) is amended 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 of this title, other than the requirement that the specification shall set forth the best mode contemplated by the inventor of carrying out his invention; or

(B)

any requirement of section 251 of this title.

.

14.

Regulatory authority

(a)

Regulatory authority

Section 2(c) is amended by adding at the end the following:

(6)

The powers granted under paragraph (2) of subsection (b) include the authority to promulgate regulations to ensure the quality and timeliness of applications and their examination, including specifying circumstances under which an application for patent may claim the benefit under sections 120, 121 and 365(c) of the filing date of a prior filed application for patent.

.

(b)

Clarification

The amendment made by subsection (a) clarifies the scope of power granted to the United States Patent and Trademark Office by paragraph (2) of section 2(b) of title 35, United States Code, as in effect since the enactment of Public Law 106–113.

(c)

Effective date of regulations

(1)

Review by congress

A regulation promulgated by the United States Patent and Trademark Office under section 2(b)(2) of title 35, United States Code, with respect to any matter described in section 2(c)(6) of such title, as added by subsection (a) of this section, may not take effect before the end of a period of 60 days beginning on the date on which the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office submits to each House of Congress a copy of the regulation, together with a report containing the reasons for its adoption. The regulation and report so submitted shall be referred to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate.

(2)

Joint Resolution of disapproval

If a joint resolution of disapproval with respect to the regulation is enacted into law, the regulation shall not become effective or continue in effect.

(3)

Joint resolution defined

For purposes of this subsection, the term a “joint resolution of disapproval” means a joint resolution, the matter after the resolving clause of which is as follows: “That Congress disapproves the regulation submitted by the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office on ___ relating to ___, and such regulation shall have no force or effect.”, with the first space being filled with the appropriate date, and the second space being filled with a description of the regulation at issue.

(4)

Referral

A joint resolution of disapproval shall be referred in the House of Representatives to the Committee on the Judiciary and in the Senate to the Committee on the Judiciary.

(5)

Floor consideration

A vote on final passage of a joint resolution of disapproval shall be taken in each House on or before the close of the 15th day after the bill or resolution is reported by the committee of that House to which it was referred or after such committee has been discharged from further consideration of the joint resolution of disapproval.

(6)

No inferences

If the Congress does not enact a joint resolution of disapproval, no court or agency may infer therefrom any intent of the Congress with regard to such regulation or action.

(7)

Calculation of days

The 60-day period referred to in paragraph (1) and the 15-day period referred to in paragraph (5) shall be computed by excluding—

(A)

the days on which either House of Congress is not in session because of an adjournment of the Congress sine die; and

(B)

any Saturday and Sunday, not excluded under subparagraph (A), when either House is not in session.

(8)

Rulemaking authority

This subsection is enacted by the Congress as an exercise of the rulemaking power of the Senate and House of Representatives respectively, and as such it is deemed a part of the rules of each House, respectively.

15.

Technical amendments

(a)

Joint inventions

Section 116 is amended—

(1)

in the first paragraph, by striking When and inserting (a) Joint Inventions.—When;

(2)

in the second paragraph, by striking If a joint inventor and inserting (b) Omitted Inventor.—If a joint inventor; and

(3)

in the third paragraph, by striking Whenever and inserting (c) Correction of Errors in Application.—Whenever.

(b)

Filing of application in foreign country

Section 184 is amended—

(1)

in the first paragraph, by striking Except when and inserting (a) Filing in Foreign Country.—Except when;

(2)

in the second paragraph, by striking The term and inserting (b) Application.—The term; and

(3)

in the third paragraph, by striking The scope and inserting (c) Subsequent modifications, amendments, and supplements.—The scope.

(c)

Reissue of defective patents

Section 251 is amended—

(1)

in the first paragraph, by striking Whenever and inserting (a) In general.—Whenever;

(2)

in the second paragraph, by striking The Director and inserting (b) Multiple reissued patents.—The Director;

(3)

in the third paragraph, by striking The provisions and inserting (c) Applicability of this title.—The provisions; and

(4)

in the last paragraph, by striking No reissued patent and inserting (d) Reissue patent enlarging scope of claims.—No reissued patent.

(d)

Effect of reissue

Section 253 is amended—

(1)

in the first paragraph, by striking Whenever and inserting (a) In general.—Whenever; and

(2)

in the second paragraph, by striking In like manner and inserting (b) Additional disclaimer or dedication.—In the manner set forth in subsection (a),.

(e)

Correction of named inventor

Section 256 is amended—

(1)

in the first paragraph, by striking Whenever and inserting (a) Correction.—Whenever; and

(2)

in the second paragraph, by striking The error and inserting (b) Patent valid if error corrected.—The error.

(f)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.

16.

Study of special masters in patent cases

(a)

In general

Not later than 1 year after the date of the enactment of this Act, the Director of the Administrative Office of the United States Courts shall conduct a study of, and 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 use of special masters in patent litigation who are appointed in accordance with Rule 53 of the Federal Rules of Civil Procedure.

(b)

Objective

In conducting the study under subsection (a), the Director shall consider whether the use of special masters has been beneficial in patent litigation and what, if any, program should be undertaken to facilitate the use by the judiciary of special masters in patent litigation.

(c)

Factors To consider

In conducting the study under subsection (a), the Director, in consultation with the Federal Judicial Center, shall consider—

(1)

the basis upon which courts appoint special masters under Rule 53(b) of the Federal Rules of Civil Procedure;

(2)

the frequency with which special masters have been used by the courts;

(3)

the role and powers special masters are given by the courts;

(4)

the subject matter at issue in cases that use special masters;

(5)

the impact on court time and costs in cases where a special master is used as compared to cases where no special master is used;

(6)

the legal and technical training and experience of special masters;

(7)

whether the use of special masters has an impact on the reversal rate of district court decisions at the Court of Appeals for the Federal Circuit; and

(8)

any other factors that the Director believes would assist in gauging the effectiveness of special masters in patent litigation.

17.

Study on workplace conditions

The Comptroller General shall, not later than 2 years after the date of the enactment of this Act—

(1)

conduct a study of workplace conditions for the examiner corps of the United States Patent and Trademark Office, including the effect, if any, of this Act and the amendments made by this Act on—

(A)

recruitment, retention, and promotion of employees; and

(B)

workload, quality assurance, and employee grievances; and

(2)

submit to the Committees on the Judiciary of the House of Representatives and the Senate a report on the results of the study, including any suggestions for improving workplace conditions, together with any other recommendations that the Comptroller General has with respect to patent reexamination proceedings.

18.

Rule of construction

The enactment of section 102(b)(3) of title 35, United States Code, under section (3)(b) of this Act is done with the same intent to promote joint research activities that was expressed, including in the legislative history, through the enactment of the Cooperative Research and Technology Enhancement Act of 2004 (Public Law 108–453; the CREATE Act), the amendments of which are stricken by section 3(c) of this Act. The United States Patent and Trademark Office shall administer section 102(b)(3) 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 Patent and Trademark Office.

19.

Study on patent damages

(a)

In general

The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this section referred to as the Director) shall conduct a study of patent damage awards in cases where such awards have been based on a reasonable royalty under section 284 of title 35, United States Code. The study should, at a minimum, consider cases from 1990 to the present.

(b)

Conduct

In conducting the study under subsection (a), the Director shall investigate, at a minimum, the following:

(1)

Whether the mean or median dollar amount of reasonable-royalty-based patent damages awarded by courts or juries, as the case may be, has significantly increased on a per case basis during the period covered by the study, taking into consideration adjustments for inflation and other relevant economic factors.

(2)

Whether there has been a pattern of excessive and inequitable reasonable-royalty-based damages during the period covered by the study and, if so, any contributing factors, including, for example, evidence that Federal courts have routinely and inappropriately broadened the scope of the entire market value rule, or that juries have routinely misapplied the entire market value rule to the facts at issue.

(3)

To the extent that a pattern of excessive and inequitable damage awards exists, measures that could guard against such inappropriate awards without unduly prejudicing the rights and remedies of patent holders or significantly increasing litigation costs, including legislative reforms or improved model jury instructions.

(4)

To the extent that a pattern of excessive and inequitable damage awards exists, whether legislative proposals that would mandate, or create a presumption in favor of, apportionment of reasonable-royalty-based patent damages would effectively guard against such inappropriate awards without unduly prejudicing the rights and remedies of patent holders or significantly increasing litigation costs.

(c)

Report

Not later than 1 year after the date of the enactment of this Act, the Director shall submit to the Congress a report on the study conducted under this section.

20.

Severability

If any provision of this Act or of any amendment or repeals made by this Act, or the application of such a provision to any person or circumstance, is held to be invalid or unenforceable, the remainder of this Act and the amendments and repeals made by this Act, and the application of this Act and such amendments and repeals to any other person or circumstance, shall not be affected by such holding.

Passed the House of Representatives September 7, 2007.

Lorraine C. Miller,

Clerk.

September 11, 2007

Read the second time and placed on the calendar