69–010 

Calendar No. 563 

110TH CONGRESS REPORT " ! SENATE 2d Session 110–259 

THE PATENT REFORM ACT OF 2007 

JANUARY 24, 2008.—Ordered to be printed 

Mr. LEAHY, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL AND MINORITY VIEWS 

[To accompany S. 1145] 

The Committee on the Judiciary, to which was referred the bill 

(S. 1145), to amend title 35, United States Code, to provide for patent reform, having considered the same, reports favorably thereon 

with an amendment and recommends that the bill (as amended) do 

pass. 

CONTENTS 

Page 

I. Background and Purpose of S. 1145, the Patent Reform Act of 2007 1 

II. History of the Bill and Committee Consideration ....................................... 35 

III. Section-by-Section Summary of the Bill ...................................................... 41 

IV. Congressional Budget Office Cost Estimate ................................................ 52 

V. Regulatory Impact Evaluation ...................................................................... 52 

VI. Conclusion ...................................................................................................... 52 

VII. Additional and Minority Views ..................................................................... 53 

VIII. Changes to Existing Law Made by the Bill, as Reported ........................... 78 

I. BACKGROUND AND PURPOSE OF THE PATENT REFORM ACT OF 2007 

PURPOSE AND SUMMARY OF LEGISLATION

Purpose 

The Constitution explicitly grants Congress the power to ‘‘promote the progress of science and useful arts, by securing for limited 

times to . . . inventors the exclusive right to their respective . . . 


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1 U.S. CONST. art. 1, § 8. 2See 35 U.S.C. § 101. 3See Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 68–97 (2006) (statement of Nathan P. Myhrvold, Chief Executive Officer, Intellectual Ventures); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 112–114 (2005) (statement of Dean Kamen, President, 

DEKA Research and Development Corp.). 4The last major revision of the patent laws was the Patent Act of 1952, P.L. 82–593. 5The National Academy of Science (NAS) and the Federal Trade Commission (FTC) conducted 

multi-year studies on the patent system and its need for reform. See Committee on Intellectual 

Prop. Rights, National Research Council, A Patent System for the 21st Century (2004) (hereinafter ‘‘NAS Report’’); and Federal Trade Comm’n, To Promote Innovation: The Proper Balance 

of Competition and Patent Law and Policy (2003) (hereinafter ‘‘FTC Report’’). 6See, e.g., Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. 

Rev. 1991 (2007); Donald S. Chisum, Reforming Patent Law Reform, 4 J. Marshall Rev. Intell. 

Prop. L. 336 (2005); Gerald J. Mossinghoff, The First-to-Invent Rule in the U.S. Patent System 

Has Provided No Advantage to Small Entities, 87 JPTOS 514 (2005); Joseph Farrell & Robert 

P. Merges, Incentives to Challenge and Defend Patents: Why Litigation Won’t Reliably Fix Patent 

Office Errors and Why Administrative Patent Review Might Help, 19 Berkeley Tech. L.J. 943, 

958 (2004); see also Adam B. Jaffe & Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It (2004); 

Kevin G. Rivette & David Kline, Rembrandts in the Attic, Unlocking the Hidden Value of Pat- ents (2000). 7See Microsoft Corp. v. AT&T Corp., 127 S. Ct. 1746 (2007) (holding copying computer software overseas does not constitute infringement under 35 U.S.C. § 271(f)); KSR Int’l Co. v. 

Teleflex, Inc., 127 S. Ct. 1727 (2007) (rejecting the United States Court of Appeals for the Federal Circuit’s ‘‘teaching-suggestion-motivation’’ test for obviousness, and reaffirming that the 

four factor inquiry set forth in Graham v. John Deere applied); eBay, Inc. v. MercExchange, 

L.L.C., 126 S. Ct. 1837 (2006) (rejecting the Federal Circuit’s test for determining permanent 

injunctions in patent cases, and explaining the traditional four part equitable test applied). In 

each of these cases, the Supreme Court reversed the Federal Circuit and changed the legal 

standard that the Federal Circuit had been applying. In addition, while the Committee Report 

was being prepared, the Federal Circuit decided two cases rejecting claims as unpatentable 

under § 101 of title 35. See In re Comiskey, 499 F.3d 1365 (Fed. Cir. 2007) and In re Nuijten, 

500 F.3d 1346 (Fed. Cir. 2007). In Comiskey, the Federal Circuit significantly restricted the patdiscoveries.’’ 1 Congress has responded by authorizing patents to 

issue to inventors of new and useful inventions or improvements on 

inventions.2 The patent law thus accomplishes two objectives, consistent with the authorization granted by the Constitution: first, it 

encourages inventors by granting them limited, but exclusive rights 

to their inventions; second, in exchange for the grant of those exclusive rights, the patent law requires disclosure of the invention 

and terminates the monopoly after a period of years.3 This disclosure and limited time benefits both society and future inventors by 

making the details of the invention available to the public immediately, and the right to work that invention available to the public 

after the expiration of 20 years from the date the patent application was filed. 

Congress has not enacted comprehensive patent law reform in 

more than 50 years.4 The object of the patent law today must remain true to the constitutional command, but its form needs to 

change, both to correct flaws in the system that have become unbearable, and to accommodate changes in the economy and the litigation practices in the patent realm. The need to update our patent 

laws has been meticulously documented in six hearings before the 

Senate Judiciary Committee, in addition to reports written by the 

Federal Trade Commission and the National Academy of Sciences,5

hearings before the House of Representatives Judiciary Committee’s Subcommittee on the Internet, Intellectual Property, and the 

Courts, and a plethora of academic commentary.6

The growing impetus towards modernizing and improving the 

patent system has found expression not only in Congress, but in 

the other branches of government as well, with the Supreme Court 

taking up an ever-increasing number of patent cases,7 and the 


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entability of business methods, severely narrowing the Federal Circuit’s controversial 1998 decision in State Street Bank. See State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 

F.3d 1368 (Fed. Cir. 1998), cert denied, 525 U.S. 1093 (1999). 8 Changes to Practice for Continuing Applications, Patent Applications Containing Patentably 

Indistinct Claims, and Examination of Claims in Patent Applications; Final Rule, 72 Fed. Reg. 

46716 (Aug. 21, 2007). 9The NAS reported that the number of patent litigations doubled between 1988 and 2001, 

from 1200 to nearly 2400. See NAS Report at 32. See also PricewaterhouseCoopers, 2006 Patent 

and Trademark Damages Study (2006) at 3 (‘‘[I]n the past 15 years, the number of patent infringement cases filed increased every year, from 1,171 in 1991 to 3,075 in 2004.’’) 10 USPTO annual reports indicate that in fiscal year 1952 (when the current patent statute 

was enacted), the USPTO received approximately 60,000 patent applications. In stark contrast, 

last year (FY 2006) the USPTO received over 440,000 applications, more than seven times the 

number in 1952. In addition, the 2006 filings increased 8% from the prior year. Although these 

numbers are a testament to the tremendous innovation in our country, they also raise the question of whether the USPTO is equipped to handle such large numbers of applications. 11See, e.g., Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 

109th Cong. 63 (2006) (statement of Philip S. Johnson, Chief Patent Counsel, Johnson & Johnson); Perspectives on Patents: Harmonization and Other Matters: Hearing Before the Subcomm. 

on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 30 (2005) (statement 

of David Beier, Senior Vice President of Global Government Affairs, Amgen); Perspectives on 

Continued 

United States Patent and Trademark Office (USPTO) addressing 

itself to regulatory changes through rulemaking.8 The voices heard 

in this debate are too numerous to list, but include representatives 

from all those who use, administer, study, teach, benefit from, report on, or are affected by the patent system: small inventors, academics, universities, government agencies, corporations, non-profit 

organizations, industry organizations, bar associations, and members of the general public. The proposed changes have been farreaching and hardly uniform, but they have focused Congressional 

attention on three major areas of concern: (i) appropriate procedures for prosecuting, and standards for allowing, patents; (ii) increasing rates, costs, and uncertainty in patent litigation,9 and (iii) 

inconsistencies between the U.S. patent system and the other 

major patent systems throughout the industrialized world which 

disadvantage U.S. patent holders. 

First, questions have been raised regarding whether the current 

scope of what is patentable is too broad, and whether the current 

standard for obtaining a patent is too low in practice. Many have 

questioned whether the current USPTO patent examination system 

is capable of handling the growing number,10 and increased complexity, of patent applications. In particular, questions have been 

repeatedly raised about how—and how much—the USPTO is funded, and about whether patent fees reflect the work necessary to ensure the issuance of high quality patents. A related concern focuses 

on whether patent applicants are bearing their burden of responsibility in searching the current state of the art and preparing and 

filing high quality applications. 

Second, in recent years the cost and uncertainty of patent litigation has escalated, leading many to believe that it is an unbearable 

drag on the innovation that the patent system is supposed to foster. Patent holders can often sue an alleged infringer anywhere 

they wish in the United States. They may allege damages that are 

not always commensurate with the value of their inventions, and 

then often argue that these sums should be tripled based on alleged acts of willful infringement by the accused infringer. There 

are also troubling, plaintiff-focused litigation concerns, including 

that the doctrine of inequitable conduct needs improvements and 

codification.11 Patent litigations typically take several years to comVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 45–71 (2005) (statement of Robert A. Armitage, Senior Vice President and General Patent Counsel, Eli Lilly and Company); Perspectives on Patents: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 137–145 

(2005) (statement of Richard C. Levin, President, Yale University). However, the testimony was 

not uniform as to whether inequitable conduct needed to be reformed, and if so how to do so. 

See, e.g., Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 86–102 

(2005) (statement of Christine Siwik, Partner, Rakoczy Molino Mazzochi Siwik LLP, on behalf 

of Barr Laboratories, Inc.); Patent Law Reform: Injunctions and Damages: Hearing Before the 

Subcomm. on Intellectual Property of the Senate Comm. on the Judiciary, 109th Cong. 157–170 

(2005) (statement of Mark Lemley, Professor, Stanford Law School). 12Where more than $25 million is at stake, the median litigation cost is $4 million for each 

party. See NAS Report at 38 (citing American Intellectual Property Law Association survey results). See also AIPLA Report of the Economic Survey 2007 at 25–26 (noting that the figure is 

now $5 million for such cases). 13See R. Carl Moy, 2 Moy’s Walker on Patents § 8:36 (4th ed. 2007); Gerald J. Mossinghoff, 

The U.S. First-to-Invent System Has Provided No Advantages to Small Entities, 84 JPTOS 425 

(2002). 

plete, if appealed may be remanded more than once, and can cost 

several million dollars.12 In addition, litigation concerns can encourage unreasonable posturing during licensing negotiations, as 

well as premature settlements simply to avoid the high cost and 

uncertainty of patent litigation. Moreover, currently, there is no 

viable, inexpensive, quick administrative alternative for resolving 

patent validity issues. 

Third, because business and competition are increasingly global, 

many patent applicants filing in the United States often seek patents in other countries for their inventions as well. Yet the United 

States’ patent system differs from every other patent system in the 

world in one major respect—it awards patents to the ‘‘first to invent,’’ while every other patent system uses a ‘‘first to file’’ rule.13

As a result, U.S. patent applicants who also file abroad are forced 

to navigate through two different patent filing systems, adding cost 

and uncertainty to their package of patent rights. 

The purpose of the Patent Reform Act of 2007, as reported by the 

Senate Judiciary Committee, is to ensure that the patent system 

in the 21st century accurately reflects the 18th century Constitutional imperative while ensuring that it does not unduly hinder innovation. Congress must promote innovation through the enticement to inventors of temporally limited monopolies on their inventions, and it must do so for the ultimate benefit of the public. The 

legislation is designed to establish a more efficient and streamlined 

patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs. If the United States is 

to maintain its competitive edge in the global economy, it needs a 

system that will support and reward all innovators with high quality patents. The time has come for Congress to reconsider the 50 

year old patent statute and how it is currently being applied. The 

Committee has heard from numerous interested parties and, given 

the complex nature of patent law as well as the often conflicting 

interests involved, has tried to consider all of those concerns and 

produce a balanced set of changes that will move the patent system 

into the 21st century. Moreover, and in response to various concerns raised before the Committee, the bill as originally introduced 

has been significantly modified to reflect a more balanced, modest 

approach. 


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Summary of Changes 

The Patent Reform Act of 2007 has three primary goals: (i) to improve patent quality and the patent application process; (ii) to improve and clarify several aspects of patent litigation, including the 

creation of a less expensive, more expeditious administrative alternative to litigating patent validity issues; and (iii) to make the 

United States’ patent system, where it is useful to do so, more consistent with patent systems throughout the rest of the industrialized world. 

In general, the numbered sections of the Act do the following: 

(1) title the Act the Patent Reform Act of 2007; 

(2) change the system to a ‘‘first-inventor-to-file’’ system; 

(3) make it simpler for patent applicants to file and prosecute 

their applications; 

(4) codify and clarify the standard for calculating reasonable royalty damage awards, as well as awards for willful infringement; 

(5) create a relatively efficient and inexpensive administrative 

system for resolution of patent validity issues before the USPTO; 

(6) establish the Patent Trial and Appeal Board; 

(7) provide for eventual publication of all applications and enhance the utility of third parties’ submissions of relevant information regarding filed applications; 

(8) improve venue in patent cases and provide for appeals of 

claim construction orders when warranted; 

(9) give the USPTO the ability to set its fees; 

(10) remove the residency restriction for judges on the United 

States Court of Appeals for the Federal Circuit; 

(11) authorize USPTO to require patent searches with explanations when a patent application is filed; 

(12) codify and improve the doctrine of inequitable conduct; 

(13) give the Director of the USPTO discretion to accept late filings in certain instances; 

(14) limit patent liability for institutions implementing the 

‘‘Check 21’’ program; 

(15) end USPTO ‘‘fee diversion’’; 

(16) make necessary technical amendments; and 

(17) set the effective date of the Act. 

SECTION 1: SHORT TITLE; TABLE OF CONTENTS

This section provides that the Act may be cited as the ‘‘Patent 

Reform Act of 2007.’’ It also provides a table of contents for the Act. 

SECTION 2: RIGHT OF THE FIRST INVENTOR TO FILE

First inventor to file; grace period; and prior art 

Background 

Every industrialized nation other than the United States uses a 

patent priority system commonly referred to as ‘‘first-to-file.’’ In a 

first-to-file system, when more than one application claiming the 

same invention is filed, the priority of a right to a patent is given 

to the earlier-filed application. The United States, by contrast, currently uses a ‘‘first-to-invent’’ system, in which priority is established through a proceeding to determine which applicant actually 

invented the claimed invention first. Differences between the two 


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14Wherever the term ‘‘filing date’’ is used herein, it is meant to also include, where appropriate, the effective filing date, i.e., the earliest date the claim in an application claims priority. 15See 35 U.S.C. § 135. 16See, e.g., Robert W. Pritchard, The Future is Now—The Case for Patent Harmonization, 20 

N.C. J. Int’l L. & Com. Reg. 291, 313 (1995). 17 35 U.S.C. § 102. 18 35 U.S.C. § 103. 19 Even in the first-to-invent system, the filing date is significant. See, e.g., 35 U.S.C. § 102(b). 

In addition, the filing date is often the date used until it becomes necessary to prove an earlier 

date of invention. However, in a first-to-invent system, the date of invention may ultimately be 

relied on by the patentee in his attempt to prove he is entitled to a patent. See, e.g., 35 U.S.C. 

§ 102 (a) and (g). 

systems arise in large part from the date that is most relevant to 

each respective system. In a first-to-file system, the filing date of 

the application is most relevant;14 the filing date of an application 

is an objective date, simple to determine, for it is listed on the face 

of the patent. In contrast, in a first-to-invent system, the date the 

invention claimed in the application was actually invented is the 

determinative date. Unlike the objective date of filing, the date 

someone invents something is often uncertain, and, when disputed, 

typically requires corroborating evidence as part of an adjudication. 

There are three significant, practical differences between the two 

systems. The first concerns the rare instance in which two different 

people file patent applications for the same invention. In a first-tofile system, the application with the earlier filing date prevails and 

will be awarded the patent, if one issues. In the first-to-invent system, a lengthy, complex and costly administrative proceeding 

(called an ‘‘interference proceeding’’) must be conducted to determine who actually invented first.15 Interference proceedings can 

take years to complete (even if there is no appeal to the United 

States Court of Appeals for the Federal Circuit), cost hundreds of 

thousands of dollars, and require extensive discovery.16 In addition, 

since it is always possible an applicant could be involved in an interference proceeding, U.S. patent holders must maintain extensive 

recording and document retention systems in case they are later required to prove the very day they invented the claimed invention. 

The second difference involves prior art. A patent will not issue 

if the invention is not new,17 or if it would have been obvious to 

someone in the relevant area of technology (commonly referred to 

as ‘‘a person of ordinary skill in the art’’).18 A patent issuing office 

will examine all prior art—that is, all relevant information that existed before the patented invention—to determine whether an invention is indeed new and not obvious. Traditionally, the most common form of prior art has been other patents and printed publications. In the first-to-file system, prior art includes all art that exists prior to the filing date—again, an objective inquiry. In contrast, in a first-to-invent system, prior art is measured from the 

more uncertain date of invention.19

Third, in some first-to-file systems, prior art can include the inventor’s own disclosure of his invention prior to the filing date of 

his application. Such systems typically do not provide the inventor 

any grace period during which time he is allowed to publish his invention without fear of it later being used against him as prior art. 

That is, if an inventor publishes the invention in an academic journal, that publication may act as prior art and bar the inventor’s 

own later-filed application. Thus, inventors in first-to-file systems 

must generally keep their inventions secret prior to filing applications for them, thereby sacrificing a significant part of one of the 


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20 Countries with first-to-file systems that also provide for some form of grace period include 

Japan (6 months), Canada (1 year) and Australia (1 year). In contrast, the European Patent Office (EPO) has a first-to-file system with no grace period (sometimes referred to as an ‘‘absolute 

novelty’’ requirement). See John A. O’Brien & Carl B. Wischhusen, Fundamentals of Patent 

Prosecution 2007: A Boot Camp for Claim Drafting & Amendment Writing, Taking Invention 

Disclosures, 906 PLI/Pat 9, 37 (2007); Michael S. Mireles, Jr., States As Innovation System Laboratories: California, Patents, And Stem Cell Technology, 28 Cardozo L. Rev. 1133, 1174 (2006). 21See 35 U.S.C. 102(b); see also R. Carl Moy, 2 Moy’s Walker on Patents § 8:199 (4th ed. 2007). 22See, e.g., Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Property of the Senate Comm. on the Judiciary, 109th Cong. 74–75 

(2005) (statement of Charles E. Phelps, Provost, University of Rochester, on behalf of the Association of American Universities); Patent Law Reform: Injunctions and Damages: Hearing Before 

the Subcomm. on Intellectual Property of the Senate Comm. on the Judiciary, 109th Cong. 89–

105 (2005) (statement of Carl Gulbrandsen, Managing Director, Wisconsin Alumni Research 

Foundation (WARF)); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual 

Property of the Senate Comm. on the Judiciary, 109th Cong. 146–155 (2005) (statement of William Parker, Diffraction, Ltd.). 23The Philippines, which was the only other country in the world to have a first-to-invent system, switched to a first-to-file system almost ten years ago. See Gerald J. Mossinghoff, The U.S. 

First-to-Invent System Has Provided No Advantages to Small Entities, 84 JPTOS 425 n.1 (2002). 24See, e.g., Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 64 (2005) 

(statement of Gerald J. Mossinghoff, Former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks); Perspectives on Patents: Harmonization and Other Matters: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 45–47 (2005) (statement of Q. Todd Dickinson, Former Under Secretary of Commerce for 

Intellectual Property and Director of the United States Patent and Trademark Office); Patent 

Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on Intellectual Prop. of 

the Senate Comm. on the Judiciary, 109th Cong. 132–153 (2005) (statement of Jeffrey P. 

Kushan, Partner, Sidley Austin Brown & Wood, LLP); Patent Law Reform: Injunctions and 

Damages: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 157–170 (2005) (statement of Mark A. Lemley, Professor, Stanford Law 

School); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 45–71 (2005) (statement of Robert A. Armitage, Senior 

Vice President and General Patent Counsel, Eli Lilly and Company); Perspectives on Patents: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 115–134 (2005) (statement of Michael K. Kirk, Executive Director, American Intellectual 

Property Law Association). 

benefits of the patent system—disclosure of inventions. Although 

some first-to-file systems do provide the inventor some sort of grace 

period, others do not.20 In contrast, the United States’ first-to-invent system provides the inventor a grace period of one year, during which an inventor’s prior disclosure of the invention cannot be 

used as prior art against the inventor’s application.21

The Committee heard from universities and small inventors, in 

particular, about the importance of maintaining that grace period 

in our system.22 They argued that the grace period affords the necessary time to prepare and file applications, and in some instances, 

to obtain the necessary funding that enables the inventor to prepare adequately the application. In addition, the grace period benefits the public by encouraging early disclosure of new inventions, 

regardless of whether an application may later be filed for a patent 

on it. 

The first-to-file system is used in every patent system, other than 

the United States,23 because it has the advantages of simplicity, efficiency and predictability. A first-to-file system avoids costly interference proceedings, provides better notice to the public, simplifies 

the prior art scheme that may preclude a patent from issuing, and 

provides more certainty to the patent system. In addition, a firstto-file system encourages the prompt filing of patent applications. 

Numerous organizations, institutions, and companies have advocated the U.S. adopt a first-to-file system similar to those used in 

the rest of the world.24 The NAS made a similar recommendation 


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25See NAS Report at 124; see also Perspectives on Patents: Hearing Before the Subcomm. on 

Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 137–145 (2005) (statement 

of Richard C. Levin, President, Yale University). 26See Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 61 (2005) 

(statement of Gerald J. Monssinghoff, Former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks). 27See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 137–145 (2005) (statement of Richard C. Levin, President, 

Yale University, and Mark B. Meyers, Visiting Executive Professor, Management Department 

at the Wharton Business School), estimating that it costs as much as $750,000 to $1 million 

to obtain worldwide patent protection on an important invention, and that the lack of harmonization regarding filing systems adds unnecessary cost and delay. 28The NAS recommended changing the U.S. to a first-to-file system, while maintaining a 

grace period. See NAS Report at 124–27. 

after an extensive study of the patent system.25 When the United 

States’ patent system was first adopted, inventors did not typically 

file in other countries. It is now common for inventors and companies to file for protection in several countries at the same time.26

Thus United States applicants, who also want to file abroad, are 

forced to follow and comply with two different filing systems. Maintaining a filing system so different from the rest of the world disadvantages United States’ applicants, the majority of which also 

file in other countries.27 A change is long overdue.28

Discussion of changes 

Section 2 of the Patent Reform Act of 2007, drawing on the best 

aspects of the two existing systems, creates a new ‘‘first-inventorto-file’’ system. This new system provides patent applicants in the 

United States the efficiency benefits of the first-to-file systems used 

in the rest of the world. The new system continues, however, to 

provide inventors the benefit of the one-year grace period. As part 

of the transition to a simpler, more efficient first-inventor-to-file 

system, this section eliminates costly, complex interference proceedings, because priority will be based on the first application. A 

new administrative proceeding—called a ‘‘derivation’’ proceeding—

is created to ensure that the first person to file the application is 

actually a true inventor. Section 2 also simplifies how prior art is 

determined, provides more certainty, and reduces the cost associated with filing and litigating patents. 

More specifically, Section 2 makes the following improvements. 

First, Section 2 moves the U.S. system much closer to a first-to-file 

system by making the filing date that which is most relevant in determining whether an application is patentable. In addition, Section 2 eliminates costly, complex interference proceedings since priority fights—who invented first—are no longer relevant. However, 

the new USPTO derivation proceeding is created to ensure that the 

first person to file the application is also actually a true inventor; 

someone who has not invented something will not be able to file 

a patent for the invention. If a dispute arises as to which of two 

applicants is a true inventor (as opposed to who invented it first), 

it will be resolved through an administrative proceeding by the 

Patent Board. 

Second, Section 2 maintains a one-year grace period for U.S. applicants. Applicants’ own publication or disclosure that occurs within one year prior to filing will not act as prior art against their applications. Similarly, disclosure by others during that time based 

on information obtained (directly or indirectly) from the inventor 


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29 Compare current 35 U.S.C. § 102(e) with new 35 U.S.C. § 102(a)(2). 30The CREATE Act refers to the Cooperative Research and Technology Enhancement Act of 

2004 (P.L. 108–453), passed by the 108th Congress. The relevant section is moved from § 103 

to § 102 of title 35 and shall be administered in a manner consistent with the CREATE Act. 31See John R. Allison & Mark A. Lemley, The Growing Complexity of the United States Patent 

System, 82 B.U.L. Rev. 77, 97 (2002) (study showing that approximately 85% of the patents 

issued between 1996–98 were assigned by inventors to corporations, an increase from 79% during the period between 1976–78). 32See Jerry C. Liu, Overview of Patent Ownership Considerations in Joint Technology Development, 2005 Syracuse Sci. & Tech. L. Rep. 1 (2005). 33 35 U.S.C. § 115. 34See 37 C.F.R. § 1.47 (permits an applicant to petition the Director of the USPTO to have 

the application accepted without every inventor’s signature in limited circumstances, e.g., where 

the inventor cannot be found or refuses to participate in the application). 

will not constitute prior art. This one-year grace period should continue to give U.S. applicants the time they need to prepare and file 

their applications. 

Third, this section also, and necessarily, modifies the prior art 

sections of the patent law. Prior art will be measured from the filing date of the application and will typically include all art that 

publicly exists prior to the filing date, other than disclosures by the 

inventor within one year of filing. Prior art also will no longer have 

any geographic limitations; thus in section 102 the ‘‘in this country’’ limitation as applied to ‘‘public use’’ and ‘‘on sale’’ is removed, 

and the phrase ‘‘available to the public’’ is added to clarify the 

broad scope of relevant prior art, as well as to emphasize the fact 

that it must be publicly available. Prior art based on earlier-filed 

United States applications is maintained.29

Sections (and subsections) of the existing statute are renumbered, modified, or deleted consistent with converting to a first-inventor-to-file system. Finally, the intent behind the CREATE Act 30

to promote joint research activities is preserved by including a 

prior art exception for subject matter invented by parties to a joint 

research agreement. 

SECTION 3: INVENTOR’S OATH OR DECLARATION

Background 

The U.S. patent system, when first adopted in 1790, contemplated that individual inventors would file their own patent applications, or would have a patent practitioner do so on their own 

behalf. It has become increasingly common for patent applications 

to be assigned to corporate entities, most commonly the employer 

of the inventor.31 In fact, many employment contracts require employees to assign their inventions to their employer.32

Current law still reflects the antiquated notion that it is the inventor who files the application, not the company-assignee. For example, every inventor must sign an oath as part of the patent application stating that the inventor believes he or she is the true inventor of the invention claimed in the application.33 By the time an 

application is eventually filed, however, the applicant filing as an 

assignee may have difficulty locating and obtaining every inventor’s signature for the statutorily required oath. Although the 

USPTO has adopted certain regulations to allow filing of an application when the inventor’s signature is unobtainable,34 many have 


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35See Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 31 (2005) 

(statement of David Beier, Senior Vice President of Global Government Affairs, Amgen). 36See 18 U.S.C. § 1001. 37 35 U.S.C. § 271(a) provides: ‘‘Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or 

imports into the United States any patented invention during the term of the patent therefore, 

infringes the patent.’’ 38See 35 U.S.C. § 271. 39While this legislation was pending, the Supreme Court addressed the proper standard to 

be applied in determining whether an injunction should issue when patent infringement is 

found. eBay, Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006). Therefore, the Committee refrained from addressing this issue in this Act at this time. 40See Donald S. Chisum, Chisum on Patents § 20.01, at 20–7 (2002); Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 507 (1963); Riles v. Shell Exploration and Prod. Co., 298 F.3d 1302, 

1312–13 (Fed. Cir. 2002). 41See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en banc). 

advocated that the statute be modernized to facilitate the filing of 

applications by assignees.35

Discussion of changes 

Section 3 of the Act updates the patent system by facilitating the 

process by which an assignee may file and prosecute patent applications. It provides similar flexibility for a person to whom the inventor is obligated to assign, but has not assigned, rights to the invention (the ‘‘obligated assignee’’). 

Section 115 of title 35 is amended to allow a substitute statement 

to be submitted in lieu of an inventor’s oath where either the inventor is (i) unable to do so, or (ii) is both unwilling to do so and 

under an obligation to assign the invention. If an error is discovered, the statement may be later corrected. A savings clause is included to prevent an invalidity or unenforceability challenge to the 

patent based on failure to comply with these requirements, provided any error has been remedied. Willful false statements may 

be punishable, however, under federal criminal laws.36

Section 118 is also amended to make it easier for an assignee to 

file a patent application. The amendment now allows obligated assignees—entities to which the inventor is obligated to assign the 

application—to file applications as well. It also allows a person who 

has a sufficient proprietary interest in the invention to file an application to preserve the person’s rights and those of the inventor. 

SECTION. 4: RIGHT OF THE INVENTOR TO OBTAIN DAMAGES

Reasonable Royalty 

Background 

Patent holders are granted the right to exclude others from making, using, selling and importing their patented inventions.37 When 

another party, without the inventor’s permission, commits one of 

these acts, or actively induces such act, that party infringes the 

patent.38 The remedies for infringement include an injunction 39

and damages. Damages are intended to compensate the patent 

holder for the infringement of patent rights; absent some egregious 

circumstances, damages are not meant to be punitive or excessive 

in nature.40

The measure for damages for infringement can be either (i) profits lost by the patent holder because of the infringement (‘‘lost profits’’), or (ii) ‘‘not less than a reasonable royalty.’’ 41 Patent holders 

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42 A recent study has shown that reasonable royalties have overtaken lost profits as a measure 

of damages in patent cases. ‘‘Since 2000, reasonable royalties have overtaken lost profits as the 

most frequent basis of damage awards in patent cases . . . Since 2000, 65 percent of awarded 

damages have been based on reasonable royalties and 32 percent have reflected lost profits. This 

is quite different than in the 1990s, when 24 percent of damage awards were based on reasonable royalties and 73 percent were based on lost profits.’’ See PricewaterhouseCoopers, 2007 Patent and Trademark Damages Study (2007) at 22. 43See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 156–166 (2005) (statement of Joel Poppen, Deputy General 

Counsel, Micron Technologies, Inc.). 44See PricewaterhouseCoopers, 2007 Patent and Trademark Damages Study (2007) at 24 (explaining that the one reason royalty awards have overtaken lost profits as a measure of damages is because more patent suits are being brought by entities that own patent rights but that 

do not have any manufacturing or distribution capabilities). 45 Although damage awards based on a reasonable royalty are requested more often, the total 

number of such awards is still fairly low in number. A recent study found that there were only 

58 reported cases over a 20 year period (1984–2005) where the decision clearly reflected an 

award based on a reasonable royalty. See Mark A. Lemley and Carl Shapiro, Patent Holdup and 

Royalty Stacking, 85 Tex. L. Rev. 1991, 2031 (2007). 46George-Pacific was a 1970 district court case, decided by a judge rather than a jury, which 

was reversed on appeal. The 15 Georgia-Pacific ‘‘factors’’ are: 1. Royalties received by patentee 

for the licensing of patent in suit, proving or tending to prove an established royalty; 2. Rates 

paid by licensee for use of other patents comparable to patent in suit; 3. Nature and scope of 

license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or 

with respect to whom manufactured product may be sold; 4. Licensor’s established policy and 

marketing program to maintain patent monopoly by not licensing others to use invention or by 

granting licenses under special conditions designed to preserve monopoly; 5. Commercial relationship between licensor and licensee, such as, whether they compete in same territory in same 

line of business; or whether they are inventor and promoter; 6. Effect of selling patented specialty in promoting sales of other products of licensee; existing value of invention to licensor as 

generator of sales of non-patented items; and extent of such derivative or convoyed sales; 7. Duration of patent and term of license; 8. Established profitability of product made under patent; 

its commercial success; and its current popularity; 9. Utility and advantages of patent property 

over old modes or devices, if any, that had been used for working out similar results; 10. Nature 

of patented invention; character of commercial embodiment of it as owned and produced by licensor; and benefits to those who have used invention; 11. Extent to which infringer has made 

use of invention; and any evidence probative of value of that use; 12. Portion of profit or of selling price that may be customary in particular business or in comparable businesses to allow 

for use of invention or analogous invention; 13. Portion of realized profit that should be credited 

to invention as distinguished from non-patented elements, manufacturing process, business 

risks, or significant features or improvements added by infringer; 14. Opinion testimony of 

qualified experts; and 15. Amount that a licensor (such as patentee) and a licensee (such as infringer) would have agreed upon (at time infringement began) if both had been reasonably and 

voluntarily trying to reach agreement. See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. 

Supp. 1116 (S.D.N.Y. 1970). 

ing competing products, so that sales of infringing products result 

in fewer sales of the patent holder’s competing product, and hence 

lost profits on those lost sales. The Committee has heard no concerns expressed with current determinations of lost profits, and 

therefore the Act does not alter the relevant law. 

Historically, the considerable majority of infringement cases were 

lost profits cases.42 However, in recent years it has become more 

common that the patent holder does not produce a competing product, either because the patent holder is focused on research and development rather than production (which is the case for many 

small inventors and universities), or because the patent at issue 

had been purchased, not for the purpose of manufacture, but for 

the purpose of licensing (or litigation),43 or because the infringed 

patent is so new to the marketplace that there has yet to be any 

real competition to it.44 Thus, an increasing number of cases require the calculation of an appropriate reasonable royalty.45

Juries are given little useful guidance in calculating that reasonable royalty, which provides the floor for a damages award; often, 

the jurors are presented with the fifteen ‘‘Georgia-Pacific’’ factors 46

and some version of the ‘‘entire market value’’ rule, and then left 


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47 A recent study has shown that, since 1980, there has been a steady shift from bench trials 

to jury trials in patent cases, and that juries typically award more than five times the damages 

awarded in bench trials. See PricewaterhouseCoopers, 2007 Patent and Trademark Damages 

Study (2007) at 14. 48See The Patent Reform Act of 2007: Hearing Before the Subcomm. on the Courts, the Internet, and Intellectual Prop. of the House Comm. on the Judiciary, 110th Cong. (2007) (statement 

of John R. Thomas, Professor, Georgetown University Law Center). 49See 35 U.S.C. § 284. 50 35 U.S.C. § 284 provides in full: 

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made 

of the invention by the infringer, together with interest and costs as fixed by the court. 

When the damages are not found by a jury, the court shall assess them. In either event the 

court may increase the damages up to three times the amount found or assessed. Increased 

damages under this paragraph shall not apply to provisional rights under section 154(d) of this 

title. 

The court may receive expert testimony as an aid to the determination of damages or of what 

royalty would be reasonable under the circumstances. 51Given the significant reliance by litigants and courts on the 15 Georgia-Pacific factors, several points are worth noting. First, it is difficult for the Committee (let along a lay juror) to 

recite all 15 of the factors without reading them in print. Second, although there are 15 factors, 

they tend to fall into only three categories: (i) the royalty rates people have been wiling to pay 

for this or other similar inventions in the industry; (ii) the significance of the patented invention 

to the product and to market demand; and (iii) expert testimony as to the value of the patent. 

See Patent Holdup, 85 Tex. L. Rev. at 2018–19. Third, the district court in Georgia-Pacific explained that the 15 factors were meant to be non-exclusive, and were set out because they were 

to divine an appropriate award.47 The Committee has no intention 

to degrade the utility of these factors when they are applied appropriately, but they do not represent the entire universe of useful instructions, nor have they been presented to juries with sufficient 

guidance to ensure appropriate damages awards. Juries (and perhaps judges) that lack adequate legal guidance to assess the harm 

to the patent holder caused by patent infringement are the focus 

of the problem the Committee seeks to address. 

No doubt several alarming cases, which have captured the attention of the public and the Congress, represent the tip of the iceberg; 

these, not surprisingly, involve out-sized damages awards.48 Leaving aside the ultimate, and appropriate, results in these cases, the 

purpose of this legislation is not to rectify judicial errors, nor is it 

to alter dramatically the substance of the standards by which a 

reasonable royalty may be calculated, but rather to bring clarity 

and guidance to the application of the law of damages. 

Long past is the day in which the typical invention is a sui generis creation; today’s patents are often combinations, and many 

products comprise dozens, if not hundreds or even thousands of 

patents, and the infringed patent may well be one smaller part of 

a much larger whole. Once infringement is proven, the patent holder is entitled to compensation for the use of the invention.49 But 

if juries award damages based on the value of the entire product, 

and not simply on the infringement—a danger exacerbated in some 

cases by overly expansive claim drafting—then damages awards 

will be disproportionate to the harm. 

The current damage statute is vague and provides little guidance 

to judges or juries determining the proper damage award, particularly when the award is based on the reasonable royalty standard.50 Given that damages are typically just one of many issues in 

a patent trial, and given that the jury typically has 15 different factors to consider just to determine a reasonable royalty, commentators have correctly questioned whether juries are being properly 

advised on the evidence and factors to consider when determining 

damages.51 The time has come to give judges, and juries, better 

guidance on the proper way to calculate a reasonable royalty. 


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relevant to the facts of that case. Fourth, the damage award in Georgia-Pacific was decided by 

a judge as part of a bench trial in a lengthy opinion, not by a jury. And finally, despite the 

valiant (and what appeared to be thorough) analysis by the district court judge, his royalty determination using these factors was reduced on appeal by approximately 30% (i.e., from $50 to 

$36.65 per thousand square feet of wood). See Georgia-Pacific Corp. v. U.S. Plywood Corp, 446 

F.2d at 298–300. 52See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (en banc). 53See, e.g., Nickson Industries, Inc. v. Rol Mfg. Co., 847 F.2d 795, 798 (Fed. Cir. 1988). 54 Concerns expressed about the introduced bill’s mandate of ‘‘apportionment’’ (closely associated with the 13th Georgia-Pacific factor) inspired an amendment in the Committee mark-up 

process to remove the mandate of apportionment (or any other methodology): ‘‘[t]he 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.’’ The term ‘‘specific contribution over the prior art’’ is meant 

simply to capture what has been variously described as ‘‘the actual invention,’’ ‘‘the gist of the 

patent,’’ ‘‘the reason a patent issued’’—there is a certain ‘‘I know it when I see it’’ (Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Steward J. concurring)) quality to the concept, but it is indisputable that a valid patent would not have issued if the inventor had not brought something 

novel and non-obvious to the world. The Committee recognizes the likelihood that calming fears 

in some of the patent-using communities requires amendment of this language yet again, but 

without compromising the basic principle that the damages awarded for an infringement must 

reflect the harm from the infringement, and that it is infringement of the actual invention upon 

which the jury should focus. 

Discussion of changes 

This section codifies the analysis the judge and jury should perform in determining an appropriate reasonable royalty. The judge 

is required to determine, from the liability phase of the trial and 

from any additional necessary hearings, whether the case is one 

that falls within the ‘‘entire market value’’ domain, the ‘‘marketplace licensing’’ domain, or outside both those realms. The judge 

must also identify for the jury all, and only, the relevant factors in 

determining a reasonable royalty. The Committee envisions a more 

active, and better documented, role for district courts (with the aid 

of the parties) in giving their juries guidance on the appropriate 

law for calculating reasonable royalties. 

In new subparagraph (c)(1)(A) of section 284, the entire market 

value rule may be applied if the patented invention’s contribution 

over the prior art is the predominant basis, and not just one of several bases, for the market demand of the infringing product or 

process. The Committee intends this section to be a codification of 

the existing law regarding the entire market value rule.52

New subparagraph (c)(1)(B) provides that the royalty may be 

based on other comparable, nonexclusive licenses of the patented 

invention if there has been a sufficient number of licenses to indicate a general marketplace recognition of the reasonableness of the 

licensing terms. The Committee heard that in many instances existing licenses of the patent can be one of the better indicators in 

determining an appropriate royalty to compensate for infringement.53

New subparagraph (c)(1)(C) requires that if neither (A) nor (B) 

is applicable, the trier of fact ensures that the damages award accurately reflects the harm caused by the infringement; no methodology is prescribed for this determination, but the jury is simply 

admonished to apply the reasonable royalty calculation only to the 

portion of the economic value of the infringing product or process 

properly attributable to the claimed invention’s specific contribution over the prior art. The Committee intends ‘‘specific contribution over the prior art’’ to mean the reason the patent was allowed 

in view of the existing information at the time of the invention.54

The Committee also intends that the damages be calculated in the 


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55See Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337, 1342 

(Fed. Cir. 2004) (en banc). 56See Kimberly A. Moore, Empirical Statistics on Willful Patent Infringement, 14 Fed. Cir. 

B.J. 227, 232 (2004) (reporting that willful infringement is pled in over 90% of all patent cases). 57See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 251–252 (2007) (statement of Mary E. Doyle, Senior 

Vice President and General Counsel, Palm, Inc.); Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 293 (2007) 

(statement of John A. Squires, Esq., Chief Intellectual Property Counsel, Goldman, Sachs & Co); 

Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. 

on the Judiciary, 109th Cong. 156–166 (2005) (statement of Joel Poppen, Deputy General Counsel, Micron Technologies, Inc.). 58See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 156–166 (2005) (statement of Joel Poppen, Deputy General 

Counsel, Micron Technologies, Inc.). 59See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 167–179 (2005) (statement of David Simon, Chief Patent 

Counsel, Intel Corporation). 

context of the infringement. In the case of a combination invention 

whose elements are present individually in the prior art, the contribution over the prior art may include the value of the additional 

function and enhanced value resulting from the combination, if 

any, if the patent holder demonstrates that value. 

New paragraph (c)(2) preserves the court’s authority to consider, 

or direct a jury to consider, other relevant factors in calculating the 

reasonable royalty, no matter which subparagraph is otherwise applicable. These include consideration of any of the 15 Georgia-Pacific factors that may be relevant to a given damage calculation, as 

well as any other factors courts determine relevant. 

Subsection (d) clarifies that these changes have no effect on damage awards not based on reasonable royalty calculations. The Committee intends that this subsection will ensure the changes made 

to section 284 of title 35 will not have any effect on damage calculations when, for example, the lost profit calculation is the appropriate damage remedy. 

Willfulness 

Background 

Current law allows for up to the trebling of damages when it is 

determined the infringement was ‘‘willful.’’ 55 The statute, however, 

provides no guidance regarding what activities constitute willful infringement. The Committee has heard that this lack of clarity has 

resulted in excessive pleading,56 and inappropriate findings, of willfulness which, in turn, have inflated litigation and transaction 

costs as well as damage awards. 

Lacking statutory guidance, courts have established the principle 

that an infringement will not be found willful unless the infringer 

was put on notice that it was infringing; unfortunately, courts have 

set that notice threshold quite low. The patent holder may simply 

send a conclusory letter suggesting the alleged infringer may be infringing one or more of its patents, without providing any specifics 

stating which activities allegedly infringe which patents.57 Companies can receive several such letters a week, potentially making 

them liable for treble damages based on willfulness if they are later 

found to have infringed a patent that was asserted in the conclusory letter.58

Courts have held that companies can also put themselves on sufficient notice by becoming aware of the patent by a means other 

than notice from the patentee.59 As a result, some companies inVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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60See FTC Report at 28–31; see also Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262 (2007) (statement 

of Mary E. Doyle, Senior Vice President and General Counsel, Palm, Inc.); Patent Reform: The 

Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 294 (2007) (statement of John A. Squires, Esq., Chief Intellectual Property Counsel, 

Goldman, Sachs & Co); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual 

Prop. of the Senate Comm. on the Judiciary, 109th Cong. 167–179 (2005) (statement of David 

Simon, Chief Patent Counsel, Intel Corporation). If the doctrine of willful infringement as currently applied discourages companies from searching relevant patents, this is clearly an unintended, and harmful, consequence of this doctrine. The patent system should encourage the discovery and sharing of information, not discourage it as the current system may be doing. 61 Various commentators have discussed the unpredictability and high reversal rate of the 

Federal Circuit when it comes to deciding patent issues, and in particular those involving claim 

construction. See, e.g., Paul M. Schoenhard, Reversing the Reversal Rate: Using Real Property 

Principles to Guide Federal Circuit Patent Jurisprudence, 17 Fordham Intel. Prop. Media & Ent. 

L.J. 299, 301–304 (2007); Paul M. Janicke, On the Causes of Unpredictability of Federal Circuit 

Decisions in Patent Cases, 3 Nw. J. of Tech. & Intell. Prop. 93 at 93–94 (2004); R. Polk Wagner 

& Lee Petherbridge, Is the Federal Circuit Succeeding? An Empirical Assessment of Judicial Performance, 152 U. Pa. L. Rev. 1105 (2004). Without endorsing these studies, at a minimum they 

illustrate that there can be genuine and colorable disagreements regarding the scope and validity of a patent not just between the parties, but between judges as well. 62See Comark Communications, Inc. v. Harris Corp., 156 F.3d 1182, 1191 (Fed. Cir. 1998). 63 A recent empirical study showed that willfulness was alleged in over 92% of patent cases. 

See Empirical Statistics on Willful Patent Infringement, 15 Fed. Cir. B. J. 227 (2004); see also 

Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. 

on the Judiciary, 109th Cong. 115–134 (2005) (statement of Michael K. Kirk, Executive Director, 

American Intellectual Property Law Association). 64See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262 (2007) (statement of Mary E. Doyle, Senior Vice 

President and General Counsel, Palm, Inc.); Patent Law Reform: Injunctions and Damages: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 79–88 (2005) (statement of Chuck Fish, Vice President and Chief Patent Counsel, Time 

Warner, Inc.); Patent Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on 

Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 68–78 (2005) (statement 

of Jonathan Band, Counsel, on behalf of Visa and the Financial Services Roundtable). 65See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 262–263 (2007) (statement of Mary E. Doyle, Senior 

Vice President and General Counsel, Palm, Inc.); Patent Law Reform: Injunctions and Damages: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 79–88 (2005) (statement of Chuck Fish, Vice President and Chief Patent Counsel, Time 

Warner, Inc.); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the 

Senate Comm. on the Judiciary, 109th Cong. 156–166 (2005) (statement of Joel Poppen, Deputy 

General Counsel, Micron Technologies, Inc.). 

struct their employees not to conduct patent searches out of fear 

their actions may later be used against them in a patentee’s attempt to prove willful infringement.60

Notice may be easy to provide in the willfulness context, but defense against such an allegation is difficult. The question of whether a patent is valid or infringed can often be a close question with 

colorable arguments on both sides. This is especially true given the 

Federal Circuit precedent that claim construction is a question of 

law, which they review de novo.61 Despite this uncertainty, a good 

faith belief by a party that a patent is invalid or that it is not infringing, based on advice of counsel, may still not be sufficient to 

defend against a charge of willful infringement.62 In addition, simply pleading willfulness 63 can gain the patent holder significant 

litigation advantages, including breaching the attorney client privilege, necessitating different trial counsel, and resulting in costly 

additional discovery.64 Excessive royalty awards, combined with 

the possibility that they will be trebled due to willfulness, can lead 

to unreasonable posturing during licensing and settlement negotiations that is not reflective of the compensation owed the patentee 

due to the alleged infringement.65

Discussion of changes 

Section 4 improves the doctrine of willful infringement in both 

procedural and substantive respects. These changes should greatly 


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66 After this bill emerged from Committee, the Federal Circuit raised the standard for willful 

infringement in In re Seagate Technology, 497 F.3d 1360 (in banc) (Fed. Cir. 2007), overruling 

its prior duty of care standard, see id. at 1371, reversing Underwater Devices v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983) (‘‘[W]illful infringement permitting enhanced damages 

requires at least a showing of objective recklessness’’ by the infringer.). 67 35 U.S.C. § 273(a)(3) states: ‘‘The term ‘method’ means a method of doing or conducting 

business.’’ 68See 35 USC § 273. 69See, e.g., Patent Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on 

Intellectual Property of the Senate Comm. on the Judiciary, 109th Cong. 89–105 (2005) (statement of Carl Gulbrandsen, Managing Director, Wisconsin Alumni Research Foundation 

(WARF)). 

reduce unwarranted allegations of willfulness, as well as unnecessary costly discovery. 

Unlike the current practice, where willfulness can be pleaded at 

the outset and is decided by a jury, willfulness will now be decided 

by the judge and only after finding that the patent was valid and 

infringed. Pursuant to new paragraph (e)(2) of section 284, willfulness must also be demonstrated by clear and convincing evidence. 

Moreover, conclusory allegations no longer suffice for notice of infringement; under subparagraph (e)(2)(A), the patent holder must 

allege acts of infringement sufficient to give the alleged infringer 

an objectively reasonable apprehension of suit, and the patent holder must also plead with particularity which products or processes 

allegedly infringe which claims of the patent, as well as the basis 

for such a belief. Subparagraph (e)(2)(B) permits a finding of willfulness if the infringer intentionally copied the patented invention 

with knowledge it was patented. Subparagraph (e)(2)(C) permits 

such a finding if the infringer continued to engage in infringing 

conduct after a court already found the party to be infringing the 

patent. 

Paragraph (e)(3) provides a meaningful good faith defense to willfulness. An infringer can establish a good faith defense through 

reasonable reliance on the advice of counsel; evidence that the infringer sought to modify its conduct to avoid infringement once it 

had discovered the patent; or other evidence a court may find sufficient. The decision of the alleged infringer not to present evidence 

of advice of counsel is not relevant to a determination of willful infringement.66

Prior User Rights 

Background 

Under current law, ‘‘prior user rights’’ may offer a defense to patent infringement in certain limited circumstances, including when 

the patent in question is a ‘‘business method patent’’ 67 and its inventor uses the invention, but never files a patent application for 

it.68 If the same invention is later patented by another party, the 

prior user may not be liable for infringement to the new patent 

holder, although all others will be. 

Discussion of Changes 

The bill, as introduced, would have extended prior user rights to 

all kinds of patents—not just business method patents—but the 

persuasive outcry from university and tech transfer advocates 69

limited the amendment of the prior user right defense to one that 

simply alters paragraph (b)(6) of section 273 to clarify that ‘‘affiliVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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70See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 292 (2007) (statement of John A. Squires, Esq., Chief 

Intellectual Property Counsel, Goldman, Sachs & Co.). 71See 35 U.S.C. § 287. 72See id. 73See Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193 at 1219 (Fed. Cir. 2002), citing 

Wine Railway Appliance Co. v. Enterprise Railway Equipment Co., 297 U.S. 387 (1936). 74Section 100(b) of title 35 defines ‘‘process’’ as ‘‘process, art, or method, and includes a new 

use of a known process, machine, manufacture, composition of matter, or material.’’ 75See American Medical Sys. Inc. v. Medical Eng’g Corp., 6 F.3d 1523, 1538 (Fed. Cir. 1993) 

(‘‘The law is clear that the notice provisions of section 287 do not apply where the patent is 

directed to a process or method.); Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. 

Cir. 1983) (‘‘In addition to the clear language of the statute, it is * * * also settled in the case 

law that the notice requirement of this statute does not apply where the patent is directed to 

a process or method.’’). 76The maximum recovery for past infringement of any patent is six years. See 35 U.S.C. § 286 

(‘‘Except as otherwise provided by law, no recovery shall be had for any infringement committed 

more than six years prior to the filing of the complaint or counterclaim for infringement in the 

action.’’). 

ates’’ of the user may also assert the defense.70 Affiliates include 

those who caused or controlled the acts that were performed that 

give rise to the defense. Additionally, Section 4 of the Act instructs 

the Director of the USPTO to conduct, and provide to Congress, a 

study with recommendations on prior user rights (both in the 

United States and abroad) within two years of enactment of the 

Act, in order to determine whether further Congressional attention 

is warranted. 

Notice and marking 

Background 

In general, for patented ‘‘articles,’’ a patent holder must give an 

alleged infringer notice of the claimed infringement, and the infringer must continue to infringe, before the patent holder may succeed in a suit for damages.71 Actual notice requires the affirmative 

communication of infringement to the defendant, which may include the filing of a lawsuit. Constructive notice is possible by 

‘‘marking’’ any patented article that the patent holder (or its licensee) makes, uses, sells or imports.72 Failure to appropriately 

mark an article can preclude the recovery of damages until notice 

is effective. 

However, neither marking nor actual notice is required to begin 

the accrual of damages if the patented invention is not made or 

sold by the patentee or someone acting under its authority.73 In addition, the courts have determined that patents on methods or 

processes 74—which are not ‘‘articles’’ and cannot be marked—are 

exempt from these notice and marking requirements.75 Thus, business methods patents are exempt. A patent holder of such a patent 

may recover up to six years 76 of past damages if infringement is 

proven for that period, despite the lack of notice to the alleged infringer. This creates a disparity in potential damage awards between different types of patents, and between patent holders that 

make and sell patented articles and those that do not. Neither disparity seems justified, and certainly poses a danger to the unknowing—and un-notified—infringer of an unmarkable patent. 

The Committee agrees that, after adequate notice is given, damages should begin to accrue if conduct continues that is later found 

to infringe, but was concerned that an infringer, who has not received notice and is genuinely unaware of the infringement, should 


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77See 35 U.S.C. § § 301–307. A patent holder will typically request reexamination to bolster 

the patent in view of new prior art. A third party may request reexamination to challenge, and 

ultimately invalidate, the patent. 78 ‘‘Reexamination will permit efficient resolution of questions about the validity of issued patents without recourse to expensive and lengthy infringement litigation . . . . The reexamination 

of issued patents could be conducted with a fraction of the time and cost of formal legal proceedings and would help restore confidence in the effectiveness of our patent system . . .. It is 

anticipated that these measures provide a useful and necessary alternative for challengers and 

for patent owners to test the validity of United States patents in an efficient and relatively inexpensive manner.’’ See H.R. Rep. No. 96–1307(I) at 3 (1980), reprinted in 1980 U.S.C.C.A.N. 

6460, 6462–63. 79See 35 U.S.C. § 303. 

not be treated identically with someone who was notified, or aware, 

or both. 

Discussion of changes 

The Committee considered extreme recommendations to improve 

this disparity, including eliminating the current marking statute 

and requiring actual notice before damages could begin to accrue 

for all patents, or requiring actual notice before damages could accrue for patents that cannot be marked. The Committee chose a 

more modest approach, however, and the changes in Section 4 only 

apply to patents that are not covered by the marking requirements 

of section 287(a). The change reduces the maximum period for 

which damages can be recovered for infringing such patents from 

6 years to 2 years from the date of actual notice, if infringement 

is proven during that period. 

Effective Date 

The amendments in Section 4 of the Act shall apply to any civil 

action commenced on or after the date of enactment of the Act. 

SECTION 5: POST-GRANT PROCEDURES AND OTHER QUALITY

ENHANCEMENTS

Background 

More than 25 years ago, Congress created the administrative ‘‘reexamination’’ process, through which the USPTO could review the 

validity of already-issued patents on the request of either the patent holder or a third party,77 in the expectation that it would serve 

as an effective and efficient alternative to often costly and protracted district court litigation.78 Reexamination requires the 

USPTO to review the patent in light of a substantial new question 

of patentability not presented during the original examination.79

The initial reexamination statute had several limitations that later 

proved to make it a less viable alternative to litigation for evaluating patent validity than Congress intended. First, a reexamination request can only be based on documentary prior art, and cannot be based on prior use or prior sales. Moreover, the requestor 

may not raise any challenge based on § 101 (utility, eligibility), 

§ 112 (indefiniteness, enablement, written description, best mode) 

or inequitable conduct. A third party alleging a patent is invalid, 

therefore, has fewer challenges it can raise in the proceeding and 

therefore may instead opt to risk infringement and litigate the validity of the patent in court. Second, in the original reexamination 

system, the third party challenger had no role once the proceeding 

was initiated while the patent holder had significant input 

throughout the entire process. Third, a challenger that lost at the 


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80Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 93–105 (2005) (statement of Jon W. Dudas, Undersecretary of Commerce for Intellectual Property, Director of the U.S. Patent and Trademark Office), 

explaining that ‘‘a large number of reexamination proceedings have been pending before the 

USPTO for more than four years’’, and questioning whether this amount of time is consistent 

with the statutory requirement that ‘‘[a]ll reexamination proceedings * * * will be conducted 

with special dispatch within the Office.’’ See 35 U.S.C. § 305. 81For several years, the standard practice at the USPTO was to assign the reexamination to 

the patent examiner who had originally examined that patent. In addition, the same third party 

requester could file multiple, serial, reexaminations, based on the same ‘‘substantial new question of patentability,’’ so long as the initial reexamination was not completed. More recently, the 

USPTO ended some of these procedures, and now reexaminations are handled by a Central Reexamination Unit (CRU), and subsequent serial reexamination, based on the same ‘‘substantial 

new question of patentability,’’ are no longer permitted. See, e.g., Manual of Patent Examining 

Procedure (MPEP) § § 2236 and 2240 (August 2006). 82See, e.g., 21st Century Dep’t of Justice Appropriations Authorization Act, Pub. L. No. 107- 

273, § § 13105–06, 13202, 116 Stat. 1758, 1761 (2002) (effective Nov. 2, 2002); American Inventors Protection Act, Pub.L. 106–113, 113 Stat. 1536, 1501A et seq. (1999) (creating inter partes 

reexamination) (hereafter referred to as the ‘‘AIPA’’). 83See 35 U.S.C. § § 311-318. 84See 35 U.S.C. § 317(b). 85See 35 U.S.C. § 315(b) 86See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 288 (2007) (statement of John A. Squires, Esq., Chief 

Intellectual Property Counsel, Goldman, Sachs & Co.), characterizing reexamination as ineffective and not widely used, and inter partes reexamination as a failure. 87 Reexaminations of patents that are simultaneously involved in district court litigation can 

take even longer, and as much as seven or eight years to complete measured from the petition 

to final resolution by the Federal Circuit. See, e.g., In re Translogic Tech., Inc., 504 F.3d 1249 

(Fed. Cir. 2007) (over eight years); In re Trans Texas Holdings Corp., 498 F.3d 1290 (Fed. Cir. 

2007) (approximately seven years); In re Curtis, 354 F.3d 1347 (Fed. Cir. 2004) (approximately 

eight years); In re Inland Steel, 265 F.3d 1354 (Fed. Cir. 2001) (approximately eight years). 

USPTO under reexamination had no right to appeal an examiner’s, 

or the Patent Board’s, decision either administratively or in court. 

Restrictions such as these made reexamination a much less favored 

avenue to challenge questionable patents than litigation. Reexamination proceedings are also often costly, take several years to complete,80 and are first conducted by examiners, and if the patent is 

rejected, then by Patent Board Judges. Thus many patents must go 

through two rounds of administrative review (one by the examiner, 

and a second by the Patent Board) adding to the length of the proceeding.81

Congress has responded several times to criticisms of the reexamination system by making amendments to the process.82 In 

1999, Congress created a second reexamination procedure—called 

inter partes reexamination—that gave third party challengers 

greater input throughout the proceeding by permitting them to respond to every pleading submitted by the patent holder.83 At the 

same time, Congress imposed severe estoppel provisions that preclude a later court challenge based on issues not even raised during 

an inter partes reexamination proceeding.84 Congress also eventually gave third party challengers the right to appeal adverse decisions.85

Despite Congress’s attempts to improve the reexamination system, it remains troublesomely inefficient and ineffective as a truly 

viable alternative for resolving questions of patent validity.86 The 

inefficiency is due, in part, to a reexamination first being conducted 

by a patent examiner (which can take two years or more); then, if 

the patent is rejected, there will have to be an appeal to the Patent 

Board (which can take another year or more to complete).87 Inter 

partes reexamination has also proven ineffective because a challenger may still only raise a limited number of basis to challenge 

the patent, and may not assert all of the challenges available under 

the patent statute. As a result, patents that should not have issued 


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88See, e.g., Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 

109th Cong. 44 (2006) (statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems, Inc.); Patent Law Reform: Injunctions and Damages: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 132–153 

(2005) (statement of Jeffrey P. Kushan, Partner, Sidley Austin Brown & Wood, LLP); Patent 

Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on Intellectual Prop. of 

the Senate Comm. on the Judiciary, 109th Cong. 111–131 (2005) (statement of J. Jeffrey Hawley, 

President, Intellectual Property Owners Association, Legal Division Vice President, Eastman 

Kodak Co.). 89The NAS came to a similar conclusion after its thorough study of the issue. See NAS Report 

at 96. 90 Ex-parte reexamination, based on a request by the patentee, is retained. See new Section 

303(a) of the Act. However, third parties may no longer request an ex-parte reexamination. 

Thus, third parties wishing to challenge the patent will use the new post grant review system; 

patentees wishing to have additional art considered will use the old ex-parte reexamination system. 91See new § 322 as added by S. 1145. 92See new § 322(1) and (2) as added by S. 1145. 93The post grant review system created by this Section adopts several of the recommendations, in whole or in part, made by the NAS Report. See NAS Report at 95–103. In addition, 

the post grant review system adopted by the Committee is similar in several respects to the 

post grant review system proposed by the USPTO. See Patent Reform: The Future of American 

Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 273 

(2007) (statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and 

Director of the USPTO). Moreover, changes were made by the Committee in direct response to 

concerns raised by the USPTO, including (i) raising the standing requirement for post grant review second window, and (ii) reducing the number of existing patents eligible for second window 

post grant review. 

must often be challenged in district court after the challenger has 

taken the risk of infringement, defeating the efficiency purpose of 

reexamination. 

Given the numerous problems and limitations with the reexamination system, and the chorus of concerns heard by the Committee 

about that process,88 the Committee determined not to try to adopt 

another, and necessarily massive, set of amendments to the current 

system.89 Rather, the Committee determined that it would be simpler, and ultimately better, to make a clean start. The time has 

come to eliminate the inter partes reexamination system and replace it with a new post-grant review system at the USPTO that 

will give third parties a quick, inexpensive, and reliable alternative 

to district court litigation to resolve questions of patent validity. 

Discussion of changes 

Section 5 of the Act creates a new post-grant review (PGR) system for United States patents, replacing and eliminating inter 

partes reexamination, in a new chapter 32 in title 35.90

There are three ways to initiate a PGR proceeding.91 They are 

often referred to as ‘‘windows’’ (first window and second window) 

in which a third party petitions the Director of the USPTO to initiate a PGR proceeding.92 These windows differ procedurally and 

substantively, as described below. The third means of initiating a 

PGR proceeding is based on the patentee’s consent.93

In a first window PGR, the petition must be filed within 12 

months of the patent’s issuing. The presumption of validity for the 

patent does not apply, but the petitioner has the burden of proving 

invalidity by a preponderance of the evidence. This window is designed as an extension of the examination process. The expectation 

is that those who are interested in certain technology fields—or in 

certain patent holders—will assiduously follow the issuance of the 

patents that interest them, and be ready to bring to the USPTO’s 

attention any immediate concerns. 


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94See Patent Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 68–78 (2005) (statement of Jonathan Band, Counsel, on behalf of Visa and the Financial Services Roundtable), explaining that 

without a 2nd window, post grant review would be ‘‘seldom used’’ in his industry. 95See Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 45 (2006) (statement of Mark Chandler, Senior Vice President and General Counsel, Cisco 

Systems, Inc.); Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 

109th Cong. 33 (2006) (statement of Andrew Cadel, Managing Director and Chief Intellectual 

Property Counsel, JP Morgan Chase); Perspectives on Patents: Hearing Before the Subcomm. on 

Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 167–179 (2005) (statement 

of David Simon, Chief Patent Counsel, Intel Corporation). 96See Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: 

Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th 

Cong. 45 (2006) (statement of Mark Chandler, Senior Vice President and General Counsel, Cisco 

Systems, Inc.); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the 

Senate Comm. on the Judiciary, 109th Cong. 167–179 (2005) (statement of David Simon, Chief 

Patent Counsel, Intel Corporation). 97See 35 U.S.C. § 311 (‘‘Any third party at any time may file a request for inter partes reexamination by the Office * * *’’). 98The Committee heard from a number of witnesses that the second window of post grant 

review was vital to patent reform, and that merely having the first window alone would be insufficient. They explained that given (i) the large number of potentially patented components 

that could make up any one product (e.g., a computer), (ii) the cost required to challenge every 

one, and (iii) the uncertainty as to what any one patent may cover (due to the uncertain doctrine 

of claim construction), it would be impractical or impossible to challenge every questionable patent within the 1-year first window time frame. The witnesses explained that they typically only 

learn of such allegations by way of a threat letter from, or lawsuit by, the patentee. See, e.g., 

Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. 

on the Judiciary, 110th Cong. 288–289 (2007) (statement of John A. Squires, Esq., Chief Intellectual Property Counsel, Goldman, Sachs & Co); Perspectives on Patents: Post-Grant Review 

Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual Prop. of 

Continued 

But not all issues of validity are obvious immediately upon 

issuance,94 and indeed the Committee assumes that the patents 

issued by the USPTO will generally lack any such blatant flaws. 

The Committee is aware, however, that patents may be asserted as 

covering uses and products that were not originally envisioned, or 

that an alleged infringer may well not have imagined possible, simply from the reading of the patent claims.95 With calculated infringement at one end of the spectrum, and devious claiming at the 

other end, the possibilities for mischief and disagreement are considerable.96 Especially given that the current inter partes reexamination process already permits a challenge to a patent’s validity 

throughout the life of the patent,97 the Committee has retained 

that time frame for second window challenges. No patent holder 

has a right to an invalid patent, however long that patent holder 

may have enjoyed that right inappropriately. At the same time, the 

values of certainty (and the consequent business decisions based on 

that certainty) are not insubstantial, and the Committee is not 

willing to assume that a patent is invalid simply because a third 

party has filed an administrative action to endeavor to prove invalidity. The provisions that now form this section of the Act underwent substantial change in the process of the Committee mark-up, 

and all those changes were in the direction of limiting the use and 

scope of the post-grant review process. Having begun with a significantly broader process, the Committee is confident that these 

changes have addressed the concerns in a prudent and balanced 

manner. 

As a result, in the second window, significant limitations are 

placed on such challenges, while preserving the core intent of the 

old reexamination process: creating an efficient and effective process for challenging the validity of a patent.98 A PGR petition may 


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the Senate Comm. on the Judiciary, 109th Cong. 45 (2006) (statement of Mark Chandler, Senior 

Vice President and General Counsel, Cisco Systems, Inc.); Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 167– 179 (2005) (statement of David Simon, Chief Patent Counsel, Intel Corporation). 99See new § 322(2) as added by S. 1145. 100See new § 331(a) as added by S. 1145. 101 New § 329 as added by S. 1145 states that the Director shall prescribe regulations regarding PGR, including the standard necessary to show that a ‘‘substantial new question of patentability’’ exists to initiate a PGR. The ‘‘substantial new question of patentability’’ standard to initiate a PGR is the same standard required to initiate a reexamination proceeding under current 

law. See 35 U.S.C. § 303(a). 102See Transcript of Proceedings of Business Meeting of the Senate Committee on the Judiciary, 110th Cong., 1st Sess. 4 (June 21, 2007). 103See new § 325(a) as added by S. 1145. 104See Transcript of Proceedings of Business Meeting of the Senate Committee on the Judiciary, 110th Cong., 1st Sess. 4 (June 21, 2007). 105See new § 338(a)(2) as added by S. 1145. 

be filed throughout the life of the patent in this second window, but 

only if (i) the continued existence of the challenged patent claim is 

likely to cause the petitioner significant economic harm, and (ii) the 

petitioner files the petition within 12 months after receiving notice 

of infringement.99 Thus, only a PGR petitioner who has a good deal 

at stake may bring such a challenge, and may do so only if the patent holder has already, on its own volition, placed the issue in play. 

The presumption of validity for the patent does apply in the second window.100 The petitioner may challenge a patent based on 

any defense the challenger could raise in district court litigation, 

but the existence, authentication, availability, and scope of any evidence offered to establish invalidity must be established by clear 

and convincing evidence. If such predicate facts are established, invalidity shall be proven only if the persuasive force of such facts 

demonstrates invalidity by a preponderance of the evidence. The 

PGR petition must specify in detail the claims of the patent being 

challenged and the basis for the challenge, with any necessary supporting documentation. PGR proceedings are open to the public unless determined otherwise by the Patent Board. 

After a PGR proceeding is initiated, the patent holder will have 

an opportunity to file a response. During the proceeding, the patent 

holder has one opportunity as a matter of right to amend the 

claims, and may only amend the claims subsequently on motion 

and a showing of good cause. No amendment during a PGR proceeding may enlarge the scope of a claim or add new matter. 

Various safeguards and estoppels have also been included to prevent the use of PGR for harassment. Every petition to institute a 

PGR must raise a substantial new question of patentability 101; this 

standard was elevated at mark-up to encourage only the most 

meaningful challenges.102 In addition, the same party who has once 

filed a PGR petition, whether in the first or the second window, regarding any claim in a patent, may not file another PGR on the 

same patent, regardless of the issues raised in the first PGR.103

This ‘‘one bite at the apple’’ provision was included in Committee 

to quell concerns that a party bent on harassing a patent holder 

might file serial PGR petitions.104 Moreover, once a petitioner has 

challenged the validity of a patent through a PGR, that party may 

not challenge validity in a court proceeding based on any ground 

it raised during the PGR.105 Additionally, a party who has challenged the validity of a patent in court may not file a PGR petition 

on any grounds they raised, or could have raised, in the district 


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106See new § 337 as added by S. 1145. 107See § 329 as added by S. 1145. 108The initial legislation contemplated that all patents in existence would be eligible for PGR 

second window. See § 321 as proposed to be added by S. 1145 as introduced. 

court.106 Because the district court action allows the challenger the 

full panoply of discovery (unlike the restricted discovery appropriate to the more limited PGR proceeding), the Committee believes that it is only reasonable to apply estoppel to claims the 

challenger was, or should have been, in a position to raise, whether 

or not it did so. 

The USPTO must complete its work on a PGR within one year 

in most cases, and 18 months in only those cases where the additional time is justified. The PGR proceedings are conducted in the 

first instance by three Patent Board judges, and not first by an examiner, thus reducing the pendency compared to reexamination 

proceedings. Any party dissatisfied with a Board PGR decision, 

may appeal to the Federal Circuit, and all parties to the PGR proceeding may participate in such an appeal. 

The Director is instructed to issue regulations that will more 

fully develop the rules and procedures governing PGR proceedings.107 The Committee intends that such rules will provide an 

efficient, streamlined, transparent proceeding that is trusted by the 

public. The goal is to encourage PGR challenges when warranted, 

not discourage them in view of complicated, expensive, and arcane 

procedures. The Director is admonished, among other regulatory 

tasks, to ensure that regulations forbidding and penalizing harassment are enacted and enforced. 

The PGR process shall take effect on the date that is one year 

after the date of the enactment of the Act. After that time, first 

window PGR petitions may be filed against any patent, so long as 

the other provisions of the Act are satisfied. Second window PGR 

petitions (as well as consented petitions), however, may only be 

filed on patents that issue based on applications filed after November 29, 1999. That date was chosen by the Committee because it 

is the date used to determine whether a patent could be eligible for 

inter partes reexaminations (which are eliminated under the Act). 

Thus, patents that were eligible for inter partes reexamination, are 

now eligible for second window PGRs.108

SECTION 6: DEFINITIONS; PATENT TRIAL AND APPEAL BOARD

This Section renames the Patent Board as the ‘‘Patent Trial and 

Appeal Board’’ and sets forth its duties, which are expanded to include jurisdiction over the new post grant review and derivation 

proceedings. This section strikes references to proceedings eliminated by the Act, including interference proceedings and review of 

inter partes decisions. 

SECTION 7: SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY

ENHANCEMENTS

18 month publication 

Background 

Most countries publish all patent applications filed in their jurisdictions within 18 months after filing. In 1999, Congress mandated 

this publication for most, but not all applications filed with the 


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109See 35 U.S.C. § 122. 110See 35 U.S.C. § 122(b)(2)(B). 111See Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 30 (2005) (statement of David Beier, Senior Vice President of Global Government Affairs, Amgen). 112Prior to requiring the publication of applications, the public would not learn of a patent 

until after it issued, which is often several years after the application was filed. Some patentees 

took advantage of this practice to the extreme (with ‘‘submarine’’ patents), and intentionally delayed their patents issuance, and thus publication, of the patent for several years to allow potentially infringing industries to develop and expand, having no way to learn of the pending application. See Mark A. Lemley and Kimberly A. Moore, Ending Abuse Of Patent Continuations, 84 

B.U. L. Rev. 63, 79–81 (2004). In contrast, publication of the application allows for the earlier 

dissemination of the information contained therein, as well as allowing competitors to make decisions based on what is attempting to be patented. 113 Both the NAS and the FTC advocated for the publication of all applications and the elimination of the exception. See NAS Report at 128 (explaining that publication of all applications 

would promote the disclosure purpose of the patent system and minimize the uncertainty associated with submarine patents); FTC Report at 15–16 ‘‘Recommendation 7: Enact Legislation to 

Require Publication of All Patent Applications 18 Months After Filing,’’ (explaining that publication of domestically filed applications will increase business certainty, promote rational planning, and reduce the problem of unanticipated ‘‘submarine patents’’ used to hold up competitors 

for unanticipated royalties); see also Perspectives on Patents: Hearing Before the Subcomm. on 

Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 137–145 (2005) (statement 

of Richard C. Levin, President, Yale University). 114See 35 C.F.R. § 1.99. 115See 35 C.F.R. § 1.99(d) (‘‘A submission under this section shall not include any explanation 

of the patents or publications, or any other information.’’). 116See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 167–179 (2005) (statement of David Simon, Chief Patent Counsel, Intel Corporation). 

USPTO.109 Applications that contain certifications stating a related 

application has not been and will not be filed in a foreign country 

are exempt from this publication.110

Discussion of changes 

The publication of patent applications is beneficial to both the 

patent community and the general public, since it promotes the disclosure benefit of the patent system 111 and allows the public (including competitors) to learn for which inventions patents are 

being sought.112 Therefore, Section 7 of the Act eliminates the previous exemptions. All applications filed at the USPTO will be published within 18 months of filing.113

Third party submissions 

Background 

After an application is published, members of the public—most 

likely, a competitor or someone else familiar with the patented invention’s field—may realize they have information relevant to a 

pending application. The relevant information may include prior 

art that would prohibit the pending application from issuing as a 

patent. Current USPTO rules permit the submission of such prior 

art by third parties only if it is in the form of a patent or publication,114 and the submitter is precluded from explaining why the 

prior art was submitted or what its relevancy to the application 

might be.115 Such restrictions decrease the value of the information 

to the examiner and may, as a result, deter such submissions.116

Discussion of changes 

Section 7 of the Act improves the process by which third parties 

submit relevant information to the USPTO by permitting those 

third parties to make statements concerning the relevance of the 


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117 28 U.S.C. § 1400. 118See, e.g., VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). 119See VE Holding, 917 F.2d at 1580. 120See Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir. 1994). 121See VE Holding, 917 F.2d at 1583. 122See Kimberly A. Moore, Forum Shopping in Patent Cases: Does Geographic Choice Affect 

Innovation?, 79 N.C. L. Rev. 889 (2001). 123See Roderick R. McKelvie, Forum Selection In Patent Litigation: A Traffic Report, 19 NO. 

8 Intell. Prop. & Tech. L.J. 1, 1 (2007). 124See 17 Moore’s Federal Practice § 110.01[5][a] (3d ed. 1997). 125See McKelvie, Forum Selection In Patent Litigation: A Traffic Report, 19 NO. 8 Intell. 

Prop. & Tech. L.J. at 3. 

patents, patent applications, and other printed publications they 

bring to the USPTO’s attention. 

SECTION 8: VENUE AND JURISDICTION

Venue 

Background 

Venue statutes generally place restrictions on where a plaintiff 

may sue a defendant. A specific venue provision has existed for 

patent cases since 1897.117 Yet, Federal Circuit decisions have virtually eliminated any meaningful distinction between the patent 

venue provision and general venue.118 In VE Holding, the Federal 

Circuit held that despite the specific patent venue statute, the expanded jurisdiction under the general venue statute also applied to 

corporate defendants in patent infringement cases.119 As a result, 

the Federal Circuit held that venue for a corporate defendant in a 

patent infringement case was proper wherever personal jurisdiction 

existed. Four years later, in Beverly Hills Fan Co., the Federal Circuit held that personal jurisdiction for a patent defendant essentially exists wherever an infringing product is made, used or 

sold.120 The effect of these decisions is that venue for a patent infringement defendant is proper wherever an alleged infringing 

product can be found. To compound matters, the Federal Circuit 

applied a different set of standards in patent cases that were 

brought pursuant to the declaratory judgment act.121

Since most patented products are sold nationally, a patent holder 

can often bring a patent infringement action in any one of the 94 

judicial districts in the United States. The judicial weakening of 

the patent venue statute has reportedly led to forum shopping in 

patent infringement suits. A comprehensive study revealed that approximately half of the patent infringement cases are filed in only 

10 of the districts, many of which have no significant relation to 

either the plaintiff or the defendant.122 A report issued last year 

indicates this pattern has continued and may even become more 

concentrated.123

Venue exists to ensure the case is brought where the defendant 

has more than minimum contacts in the forum the plaintiff has 

chosen.124 Moreover, judicial resources are best spent in locations 

where the evidence and witnesses are located. If a venue is chosen 

that has little or no relation to the defendant’s business, it can 

cause significant hardship to the defendant and increase already 

expensive litigation costs. In addition, court dockets can become 

backlogged where a disproportionate number of patent cases are 

brought in a small number of districts.125


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126See Transcript of Proceedings of Business Meeting of the Senate Committee on the Judiciary, 110th Cong., 1st Sess. 4 (June 21, 2007); Transcript of Proceedings of Business Meeting 

of the Senate Committee on the Judiciary, 110th Cong., 1st Sess. 5–7, 14–17, 19–20, 51–63 (July 

12, 2007); Transcript of Proceedings of Business Meeting of the Senate Committee on the Judiciary, 110th Cong., 1st Sess. 2, 12 (July 19, 2007). 127 28 U.S.C. § 1391(d) shall continue to determine venue for a foreign defendant that does 

not have a subsidiary in the United States. 

Discussion of changes 

As with other provisions in the Act, the venue language was 

changed considerably during the Committee process. The initial 

language worked a modest change to the venue statute in that patent infringement suits could be brought only in the judicial district 

where (i) either party resided (which for a corporation is its principal place of business or its state of incorporation), or (ii) where 

the defendant had committed acts of infringement and had a regular and established place of business. 

Amendments during the mark-ups made significant revisions.126

Section 8 of the Committee-passed bill limits the plaintiff-based 

venue available to certain plaintiffs in patent cases, namely individual inventors, institutions of higher education, and technologytransfer non-profit organizations affiliated with such institutions. 

The Committee also determined that the same venue rules shall 

apply for both patent declaratory judgment cases and patent infringement cases. 

Also, under the changes worked in the Act, parties will not be 

permitted to manufacture venue. Thus, for example, a company 

cannot establish venue in a given State simply by incorporating 

there. Section 1400 of title 28 is amended to provide that defendants in patent cases may be sued where the defendant has its principal place of business, or where it is incorporated or formed. They 

may also be sued where substantial acts of infringement occur, but 

only if the defendant also has a regular and established, substantial physical facility in that district, which the defendant controls, 

and which constitutes a substantial portion of the defendant’s overall operations in the district. A foreign defendant that has a U.S 

subsidiary may only be sued where its primary U.S. subsidiary is 

located, or its principal place of business in the U.S. is incorporated 

or formed.127

The Committee is sensitive to the unique position of universities, 

non-profit organizations and truly small inventors, for which certain venue restrictions could prove burdensome. Revised section 

1400 therefore creates an exception, permitting these parties to file 

their patent infringement or declaratory judgment actions in the 

district where they reside. 

Section 1400 also provides for limited requests for transfer of 

venue where the court deems it appropriate. 

Interlocutory appeals of claim construction orders 

Background 

In many patent infringement cases, the proper meaning of a patent claim (referred to as ‘‘claim construction’’) is a vital, threshold 

determination. A finding of patent infringement will often turn on 

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128See, e.g., Amgen Inc. v. Hoechst Marion Roussel, Inc., 457 F.3d 1293 (Fed. Cir. 2006) (reversing the district court’s claim construction and remanding for a second time for the district 

court to determine whether the newly construed claim was anticipated by the prior art). 129 517 U.S. 370 (1996). 130 138 F.3d 1448 (Fed. Cir. 1998) (en banc). 131See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 289–291 (2007) (statement of John A. Squires, Esq., 

Chief Intellectual Property Counsel, Goldman, Sachs & Co.); Perspectives on Patents: Post-Grant 

Review Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual 

Prop. of the Senate Comm. on the Judiciary, 109th Cong. 34 (2006) (statement of Andrew Cadel, 

Managing Director and Chief Intellectual Property Counsel, JP Morgan Chase); Patent Law Reform: Injunctions and Damages: Hearing Before the Subcomm. on Intellectual Prop. of the Senate 

Comm. on the Judiciary, 109th Cong. 68–78 (2005) (statement of Jonathan Band, Counsel, on 

behalf of Visa and the Financial Services Roundtable); see also Cybor Corp. v. FAS Techs., Inc., 

138 F.3d 1448, 1475–77 (Fed. Cir. 1998) (en banc) (dissenting opinion of Rader, J.). 132See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 289–290 (2007) (statement of John A. Squires, Esq., 

Chief Intellectual Property Counsel, Goldman, Sachs & Co.); Patent Law Reform: Injunctions 

and Damages: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the 

Judiciary, 109th Cong. 68–78 (2005) (statement of Jonathan Band, Counsel, on behalf of Visa 

and the Financial Services Roundtable). 133See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1479 (Fed. Cir. 1998) (en banc) (‘‘Although the district courts have extended themselves, and so-called ‘Markman hearings’ are com- mon, this has not been accompanied by interlocutory review of the trial judge’s claim interpretation. The Federal Circuit has thus far declined all such certified questions.’’). 134See V. Ajay Singh, Interlocutory Appeals In Patent Cases Under 28 U.S.C. § 1292(C)(2): Are 

They Still Justified And Are They Implemented Correctly?, Duke L.J. Vol. 55, 179, 196 (2005) 

(‘‘the Federal Circuit has thus far refused to hear permissive appeals related to claim construction’’). 135 Unfortunately, there are also examples where the Federal Circuit has had to hear multiple 

district court claim construction related appeals, and has remanded the case back to the district 

court several times based on new claim construction theories. See, e.g., Amgen Inc. v. Hoechst 

Marion Roussel, Inc., 457 F.3d 1293 (Fed. Cir. 2006) (a 10-year litigation that has to date already had two appeals, and the case is remanded back for a likely third district court decision, 

and possible third appeal). 

termine the patent’s validity.128 A decade ago, the Supreme Court 

held in Markman v. Westview Instruments, Inc.,129 that district 

court judges, not juries, should determine the proper meaning of a 

patent claim. Shortly thereafter, the Federal Circuit in Cybor Corp. 

v. FAS Technologies, Inc.,130 held that the standard of review of 

claim construction decisions by the district court was de novo, giving no deference to the district court judges that made those determinations. Determining the proper meaning of the claims is vital 

to the outcome of most patent cases, and should occur early in the 

litigation to avoid unnecessary costs.131 Moreover, since the Federal Circuit would review such decisions without giving deference 

to the district court, its view of the proper claim construction is 

paramount.132

Following these decisions, many district courts began holding 

separate claim construction hearings, which became known as 

‘‘Markman’’ hearings. District courts often then issue Markman 

claim construction decisions.133 In certain cases, parties requested, 

and district judges certified, Markman decisions for interlocutory 

appeal to the Federal Circuit. The parties, and the district courts, 

understood the importance of having a claim construction decision 

early in the process and, because of de novo review, that the Federal Circuit would have to rule on construction before the parties 

could accurately assess their liabilities. The Federal Circuit, however, refused to take most such requests.134 As a result, full trials 

often had to be held before an appeal could be taken of the claim 

construction issue.135

Numerous studies have shown that the Federal Circuit’s reversal 

rate of district court claim construction decisions is unusually 


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136See, e.g., Paul M. Schoenhard, Reversing the Reversal Rate: Using Real Property Principles 

to Guide Federal Circuit Patent Jurisdiction, 17 Fordham Intel. Prop. Media & Ent. L.J. 299, 

303 (2007) (citing several studies of Federal Circuit reversal rates of claim construction decisions, ranging from 33% to over 50%). Although the exact number is subject to debate, it is safe 

to say the number is relatively high, especially as compared to traditional reversal rates. This 

is not entirely surprising since current Federal Circuit precedent encourages the parties to contest the meaning of several different claim terms both before the district court and the Federal 

Circuit. For example, it is not uncommon for a party to appeal (or cross appeal) the meaning 

of several terms, and if the Federal Circuit disagrees as to just one, it is likely the case will 

need to be remanded to the district court. 137See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1474 n. 2 (Fed. Cir. 1998) (opinion 

by Rader, J. dissenting, ‘‘In the words of United States District Court Judge Roderick McKelvie: 

‘[I]n spite of a trial judge’s ruling on the meaning of disputed words in a claim, should a threejudge panel of the Federal Circuit disagree, the entire case could be remanded for retrial on 

[a] different [claim interpretation]’ ’’, citing Elf Atochem North Am., Inc. v. Libbey-Owens-Ford 

Co., 894 F.Supp. 844, 857, 37 USPQ2d 1065, 1075 (D. Del. 1995)). 

138See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 289–291 (2007) (statement of John A. Squires, Esq., 

Chief Intellectual Property Counsel, Goldman, Sachs & Co.). 139See 35 U.S.C. § 1(b). 

high.136 District court decisions may place several claim terms in 

dispute, and reversal by the Federal Circuit as to the meaning of 

just one claim term may require that the case be remanded to the 

district court for further proceedings.137 The Committee heard that 

the manner claim construction determinations are currently reviewed increases litigation costs, decreases certainty and predictability, and can prolong settlement discussions.138

Discussion of changes 

Section 8 of the Act amends subsection (c)(2) of section 1292 of 

title 28, giving district court judges discretion to certify Markman 

claim construction orders for interlocutory review. When such orders are certified, the Federal Circuit must decide the appeal. 

The Committee intends to transfer the discretion from the Federal Circuit to the district court judge as to whether—and when—

a claim construction order should be decided on appeal. The district 

court judges are in the best position to know when the evidence adduced, and the arguments marshaled by the litigants, have brought 

the case to a point at which a decision by the appellate court on 

claim construction could best promote resolution of the case. As a 

case management tool, the Committee is confident that the interlocutory appeal of a Markman decision could be both useful and effective. The district court also has the discretion to stay the case 

pending the appeal. 

Venue for the USPTO 

Background 

In 1999, as part of the American Inventors Protection Act 

(AIPA), Congress established that as a general matter the venue of 

the USPTO is the district where it resides.139 The USPTO currently resides in the Eastern District of Virginia. However, Congress inadvertently failed to make this change uniform throughout 

the entire patent statute, so that certain sections of the patent 

statute (and one section of the trademark statute) continue to allow 

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140See, e.g., 35 U.S.C. § 41. 

Discussion of changes 

Since the USPTO no longer resides in the District of Columbia, 

the sections that authorized venue for litigation against the 

USPTO are changed to reflect the venue where the USPTO currently resides. 

SECTION 9: PATENT AND TRADEMARK OFFICE REGULATORY AUTHORITY

Background 

Although the USPTO has had the ability to set certain fees by 

regulation, most fees (e.g., filing fee, issuance fee, maintenance 

fees) are set by Congress.140 History has shown that such a scheme 

does not allow the USPTO to respond promptly to challenges facing 

it. The USPTO has argued for years that it must have fee setting 

authority to administer properly the agency and its growing workload. 

Discussion of changes 

Section 9 of the Act allows the USPTO to set or adjust all of its 

fees, including those related to patents and trademarks, so long as 

they do no more than reasonably compensate the USPTO for the 

services performed. Prior to setting such fees, the Director must 

give notice to, and receive input from, the Patent or Trademark 

Public Advisory Committee (PPAC or TPAC). The Director may 

also reduce fees for any given fiscal year, but only after consultation with the PPAC or TPAC. Section 9 details the procedures for 

how the Director shall consult with the PPAC and TPAC, including 

providing for public hearings and the dissemination to the public 

of any recommendations made by either Committee. Fees shall be 

prescribed by rule. Any proposed fee change shall be published in 

the Federal Register and include the specific rationale and purpose 

for the proposed change. The Director must seek public comments 

for no less than 45 days. The Director must also notify, through the 

Chair and Ranking Member of the Senate and House Judiciary 

Committees, the Congress of any final decision regarding proposed 

fees. Congress shall have no more than 45 days to consider and 

comment on any proposed fee, but no proposed fee shall be effective 

prior to the expiration of this 45-day period. 

SECTION 10: RESIDENCY OF FEDERAL CIRCUIT JUDGES. 

Background 

Federal appellate judges in all of the regional circuits must reside within the geographic region of the relevant circuit’s jurisdiction. A judge on the First Circuit, for example, must reside in Massachusetts, Rhode Island, Maine, New Hampshire or Puerto Rico. 

Judges on the District of Columbia Circuit have no residency restrictions because it is not a regional circuit. By contrast, since its 

creation in 1982, the Federal Circuit has had an arbitrary restriction that all active judges reside within 50 miles of the District of 

Columbia. 

Without casting any aspersions on the current occupants of the 

Federal Circuit bench, the Committee believes that having an entire nation of talent to draw upon in selecting these judges could 


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141 35 U.S.C. § 131 provides: ‘‘The Director shall cause an examination to be made of the application and the alleged new invention; and if on such examination it appears that the applicant 

is entitled to a patent under the law, the Commissioner shall issue a patent therefore.’’ In practice, the Director empowers a ‘‘patent examiner’’ to examine the application and determine 

whether it meets the statutory requirements and USPTO guidelines for receiving a patent 

grant. See Christopher T. Kent, Reducing The Scope Of Patent Protection And Incentives For 

Innovation Through Unfair Application Of Prosecution History Estoppel And The Recapture, 10 

Geo. Mason L. Rev. 595, 596 n.7 (2002). 142See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 10–11 (2007) (statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the USPTO). 143See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 267 (2007) (statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the USPTO). 144See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 10–11 (2007) (statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the USPTO). 

only be a benefit. The duty stations of the Federal Circuit judges 

will, of course, remain in the District of Columbia. Judges in regional circuits often travel considerable distances for court sessions 

within the circuit, far from their homes and chambers, and there 

is no practical reason why Federal Circuit judges could not do so 

as well. 

Discussion of changes 

Section 10 of the Act eliminates the residency restriction for Federal Circuit judges by repealing the relevant portion of subsection 

44(c) of title 28. 

SECTION 11: APPLICANT QUALITY SUBMISSIONS

Search reports and explanations of submitted references 

Background 

In fiscal year 2006, the USPTO received over 440,000 patent applications, representing an 8 percent increase from the previous fiscal year. This rate of increase is expected to continue, a testament 

to U.S. inventiveness and a growing burden on the USPTO. 

Patent examiners at the USPTO are responsible for determining 

whether the inventions claimed in patent applications meet the 

statutory requirements of novelty and non-obviousness.141 Unfortunately, approximately 25% of the applications filed at the USPTO 

do not discuss or disclose any prior art.142 Many applicants do not 

search for prior art before filing their application.143 An examiner 

has only a limited amount of time to search for prior art, and the 

applicant is often in the best position to know the invention and 

the relevant art that may apply. At the other extreme, approximately 25% of the applications cite twenty or more references, typically with little or no explanation as to how the prior art is relevant, which is equally unhelpful to the examiner.144 Although patent examiners have excellent electronic search tools, and are well 

trained in the art of searching, added assistance from applicants 

citing relevant prior art and explaining how it applies to their applications will improve the quality of issued patents. In addition, 

requiring applicants to do their own initial research and disclosure 

will improve the quality of the application. 


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145The USPTO strongly advocated for inclusion of ‘‘applicant quality submissions’’ provision 

in the bill, stating it was one of its highest priorities in order to improve the patent examination 

process and the quality of issued patents. See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 265–267 (2007) 

(statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the USPTO). 146See 35 U.S.C. § 41(h). 147See 37 C.F.R. § 1.56. 

Discussion of changes 145

Section 11 of the Act gives the Director express authority to require by regulation the submission of search reports and other relevant information as the Director determines. Failure to comply 

with such requirements shall constitute abandonment of the applications. 

The Act exempts the truly small inventor (defined in the Act as 

a ‘‘micro-entity’’) from regulations prescribed pursuant to this authority. 

Micro-entity 

Background 

As part of the on-going effort to nurture U.S. innovation, Congress has long recognized that certain groups, including independent inventors, small business concerns, and non-profit organizations (collectively referred to as ‘‘small business entities’’) should 

not bear the same financial burden for filing patent applications as 

larger corporate interests. The current statute provides for a significant reduction in certain fees for small business entities.146 The 

Committee was made aware, however, that there is likely a benefit 

to describing—and then accommodating—a group of inventors who 

are even smaller, in order to be sure that the USPTO can tailor 

its requirements, and its assistance, to the people with very little 

capital, and just a few inventions, as they are starting out. 

Discussion of changes 

This section of the Act defines an even smaller group—the microentity—which comprises only true, independent inventors. This section exempts micro-entities from the requirement of submitting the 

search reports and other information that the Director may require 

under Section 11 of the Act. The Committee expects that the 

USPTO will make further accommodations under its authority in 

recognition of the special status of micro-entities. 

SECTION 12: INEQUITABLE CONDUCT

Background 

Candor and truthfulness are essential to the functioning of the 

patent application system. The application process is conducted ex 

parte; only the patent applicant participates in the patent prosecution proceeding before the USPTO. The agency’s rules require applicants to be honest and forthcoming and to disclose fully all relevant information to the USPTO during that proceeding.147 The judicially-created ‘‘inequitable conduct’’ doctrine is designed to enforce those requirements by permitting a judge to render a patent 

unenforceable, even if it is valid and infringed, if the patent was 

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148See Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1345 (Fed. Cir. 2007) (‘‘a patent may be 

rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive 

the examiner, fails to disclose material information or submits materially false information to 

the PTO during prosecution’’) (citations omitted). 149See J.P. Stevens & Co., Inc., v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1560 (Fed. Cir. 1984), 

cert. denied, 474 U.S. 822 (1985). 150See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 45–71 (2005) (statement of Robert A. Armitage, Senior 

Vice President and General Patent Counsel, Eli Lilly and Company). 151See Digital Control v. Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006), where the 

Federal Circuit held there is no single standard to define ‘‘materiality’’ for inequitable conduct. 

In fact, the Federal Circuit has discussed five different standards for materiality, stating that 

there is ‘‘no reason to be bound by any single standard’’: (1) the objective ‘‘but for’’ standard, 

where the misrepresentation was so material that the patent should not have issued; (2) the 

subjective ‘‘but for’’ test, where the misrepresentation actually caused the examiner to approve 

the patent application when he would not otherwise have done so; (3) the ‘‘but it may have’’ standard, where the misrepresentation may have influenced the parent examiner in the course 

of prosecution; (4) the old Rule 56 standard where it is likely a reasonable examiner would have 

considered the information important in deciding whether to issue of the patent; and (5) the new 

Rule 56 standard where the information is not cumulative and (i) establishes a prima facie case 

of unpatentability (either alone or in combination with other references), or (ii) refutes or is inconsistent with a position the applicant has taken (the new Rule 56 standard). See Digital Control at 1314–16; see also American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 

1362 (Fed. Cir. 1984). 152 As a practical matter, this has led to two types of conduct that frequently occur during 

patent prosecution. Either patent holders (i) ‘‘dump’’ everything they have on the USPTO (sometimes many boxes of printed documents), or (ii) do not search the prior art, and thus in turn 

have little or nothing to give the USPTO. Neither approach is helpful to the patent examiner 

or the patent system in general. 153See In re Metoprolol Succinate Patent Litigation, 494 F.3d 1011, 1019 (Fed. Cir. 2007) (‘‘We 

have stated that intent need not, and rarely can, be proven by direct evidence. Rather, intent 

to deceive is generally inferred from the facts and circumstances surrounding the applicant’s overall conduct.’’) (citations and quotations omitted). 154See Impax Laboratories, Inc. v. Aventis Pharmaceuticals Inc., 468 F.3d 1366, 1375 (Fed. 

Cir. 2006) (citing Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 877 (Fed. 

Cir. 1988) (en banc)). 

mation which were intended to deceive the USPTO.148 Courts have 

developed a two-part test in which inequitable conduct is found 

when (i) the undisclosed or misrepresented information was ‘‘material,’’ and (ii) it was not disclosed or was misrepresented with an ‘‘intent to deceive’’ the USPTO.149

The Act did not address inequitable conduct upon introduction, 

but during the Committee process the Committee heard several 

concerns about the doctrine as it has developed in the Federal Circuit.150 First, the Federal Circuit has failed to establish one clear 

standard of materiality for inequitable conduct purposes.151 Having 

multiple materiality standards is hardly helpful to the district 

courts that are charged with making inequitable conduct determinations in the first instance, and patent holders are left with 

less than clear guidance about what they should disclose to the 

USPTO.152 Second, direct evidence of an intent to deceive is uncommon, so some courts collapse the issue of intent into the issue 

of materiality, so that intent to deceive is often inferred from materiality.153 Third, if inequitable conduct is found, judges have no discretion as to the remedy—no claim of the patent can ever be enforced against anyone.154

Discussion of changes 

Section 12 of the Act inserts a new section 298 of title 35 that 

codifies and improves the doctrine of inequitable conduct. Subsection (a) of section 298 requires a party advancing an inequitable 

conduct argument to prove that claim by clear and convincing evidence. Subsection (b) provides that information is ‘‘material’’ if a 

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155The Committee noted that certain court decisions appear to emphasize improperly the first 

part of this definition (reasonably important to an examiner) without giving necessary consideration to the latter part of the definition (in deciding whether to allow the patent). See, e.g., 

Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223 (Fed. Cir. 2007); McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 487 F.3d 897 (Fed. Cir. 2007); Ferring v. Barr Labs, 437 F.3d 

1309 (Fed. Cir. 2006). As a result, when improperly applied, the materiality standard becomes 

essentially a relevancy standard. The codification of the definition makes clear the entire definition must be satisfied. 156The Committee heard some concerns that inequitable conduct is ‘‘over plead’’ and a tool 

of harassment. Presumably the requirements of pleading with particularity and clear and convincing evidence should help ameliorate any such concerns. 157See, e.g., 35 U.S.C. §§ 41(a)(7) (revival of an application for unintentional delay); 41(c)(1) 

(reinstatement of a patent for unintentional delay); 111(a)(4) (revival for unintentional or unavoidable delay in submitting the filing fee or inventor’s oath); 133 (revival if failure to prosecute was unavoidable). 

tion.155 Subsection (c) permits an intent to deceive the USPTO to 

be inferred, but it cannot be inferred solely on the basis of gross 

negligence of the applicant (or its representative), or on the materiality of the information misrepresented or not disclosed. Subsection 

(d) requires the party asserting the defense or claim to plead with 

particularity in accordance with Rule 9(b) of the Federal Rules of 

Civil Procedure.156

Finally, subsection (e) grants the court discretion to fashion the 

appropriate remedy if it finds inequitable conduct, which can include holding one, more than one, or all of the claims unenforceable, and/or that the patent holder is not entitled to the equitable 

relief of an injunction. 

The Committee views it as axiomatic that applicants should be 

honest and forthcoming in their dealings with the USPTO. The 

rules governing such conduct, however, should not chill meaningful 

disclosures with the Office for fear of a future allegation. New section 298 is intended to balance these interests. 

SECTION 13: AUTHORITY OF THE DIRECTOR OF THE PATENT AND

TRADEMARK OFFICE TO ACCEPT LATE FILINGS

Background 

There are numerous deadlines a patent applicant must comply 

with during prosecution and subsequent to the patent’s issuance. 

The Director has the authority to accept late filings (including payment of fees) in only a limited number of situations.157

Discussion of changes 

Section 13 of the Act expands the Director’s authority to accept 

any late-filed applications or other filings, if the filer satisfies the 

Director that the delay was unintentional. Any request by an applicant for the Director to accept a late-filed application under this 

section must be filed within 30 days of the missed deadline and 

must demonstrate that the delay was unintentional. The Director 

has the discretion to decide whether to grant such requests and the 

Director’s decision is not appealable. 

SECTION 14: LIMITATION ON DAMAGES AND OTHER REMEDIES WITH RESPECT TO PATENTS FOR METHODS IN COMPLIANCE WITH CHECK IMAGING METHODS

Background 

In 1994, the Federal Reserve proposed the idea of an electronic 

check image processing, archival, and retrieval system. In 1996, 


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158See Mark Hargrave, Check 21: A Year in the Life, 38 UCC L.J. 3 Art. 3 (2006). 159The Check Clearing for the 21st Century Act (Check 21 Act), P.L. 108–100, 117 Stat. 1177 

(2003) (codified at 12 U.S.C. §§ 5001–5018) (2000). 160See Jeffrey Barry, The Check Clearing For The 21st Century Act (‘‘Check 21’’), 24 Ann. Rev. 

Banking & Fin. L. 130, 132 (2005). 161For a thorough discussion of the Check 21 Act, see H.R. Rep. 108–132 (2003) and H.R. Rep. 

108–291 (2003). 162See Mark Hargrave, Check 21: A Year in the Life, 38 UCC L.J. 3 Art. 3 (2006). 163See Patent Reform: The Future of American Innovation: Hearing on S. 1145 Before the Senate Comm. on the Judiciary, 110th Cong. 291 (2007) (statement of John A. Squires, Esq., Chief 

Intellectual Property Counsel, Goldman, Sachs & Co.), explaining that the manner in which 

commercial banks currently process checks is effectively prescribed by the Check 21 Act. 

the American National Standard for Financial Image Interchange 

issued its architecture and design specification for such a system. 

The Federal Reserve implemented this technology in a check truncation pilot in 1999. Years later, this evolving technology became 

standard practice in the banking industry, and its importance became particularly noted in the days after September 11, 2001, 

when transporting paper checks by airplane was impossible for several days.158 In 1999 and 2000, several inventors sought a series 

of patents relating to a system/process for imaging and storing documents, building their technology around what the government 

was already doing. The patent claims relate to a three-tiered system for imaging, transferring, and storing (archiving) paper checks 

tendered for processing via the electronic payment system. 

The 108th Congress enacted the Check 21 Act of 2003, P.L. 108– 100,159 which allowed the recipient of a paper check to create a digital version to store and transfer (referred to as a ‘‘substitute 

check’’),160 thereby eliminating the need for further handling of the 

physical document.161 The Check 21 Act requires all banks to recognize and accept the digital images of checks it receives from 

other banks.162 The financial services industry (including banks) 

and their technology providers must be able to implement the 

Check 21 Act, which permits electronic check transfer based on 

technology developed by the federal government.163

Discussion of changes 

Because Congress has mandated implementation of the Check 21 

Act, the Committee accepted an amendment during the mark-up of 

the bill that declares practicing of the Check 21 industry standard 

should not constitute patent infringement. Section 14 of the Act 

amends section 287 of title 35 to limit the remedies available 

against a financial institution with respect to a check imaging and 

archival method or system that is called for under the Check 21 

Act, but not for any other uses of those methods or systems. This 

amendment shall apply to any civil action for patent infringement 

pending or filed on or after the date of enactment of this Act. 

SECTION 15: PATENT AND TRADEMARK OFFICE FUNDING. 

The USPTO collects user fees, but it does not retain and spend 

those fees. Instead, the fees are deposited in the Treasury and the 

USPTO is funded by annual Congressional appropriations. Although Congress has fully funded the user fees to USPTO for the 

last several years, it has not always done so—resulting in what is 

commonly termed ‘‘fee diversion.’’ This lack of connection between 

the monies flowing into the agency and those available for expenditure has, according to the USPTO, contributed to (i) the growing 


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164See Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 45–47 (2005) 

(statement of Q. Todd Dickinson, Former Under Secretary of Commerce for Intellectual Property 

and Director of the United States Patent and Trademark Office). 165See GAO 07–1102, Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog, 1 (September, 2007). The GAO Report explains that since fiscal year 2002 alone, the backlog 

has increased by nearly 73%. Moreover, the USPTO predicts the backlog could approach 1.4 million by 2012 unless something is done. See USPTO Strategic Plan, 2007–2112 at 11, available 

at http://www.uspto.gov/web/offices/com/strat2007/stratplan2007-2012.pdf. 166See USPTO Strategic Plan, 2007–2112 at 6, available at http://www.uspto.gov/web/offices/ 

com/strat2007/stratplan2007-2012.pdf. 167See Perspectives on Patents: Harmonization and Other Matters: Hearing Before the 

Subcomm. on Intellectual Prop. of the Senate Comm. on the Judiciary, 109th Cong. 45–47 (2005) 

(statement of Q. Todd Dickinson, Former Under Secretary of Commerce for Intellectual Property 

and Director of the United States Patent and Trademark Office). 

number of unexamined patent applications (‘‘backlog’’), and (ii) the 

increased time it takes to have a patent application examined 

(‘‘pendency’’).164 The current backlog of unexamined applications is 

approximately 730,000; 165 average pendency to have a patent examined is over 31 months.166 The USPTO has explained that the 

uncertainty of the annual funding process and the recurring possibility of fee diversion severely restricts its ability to plan strategically for long-term personnel and technology needs and to implement procedures to ensure that only high quality patents are 

awarded. In addition, the Committee heard that many patent users 

would be willing to pay increased fees for better examination, but 

only on the condition that all of those fees go to the USPTO, and 

that none be diverted.167

Discussion of changes 

Section 15 of the Act establishes a revolving fund that permits 

the USPTO to retain the fees it collects without relying on annual 

appropriations. Reporting, notification, and auditing requirements 

are put in place to assure fiscal discipline, responsibility and accountability. 

SECTION 16: TECHNICAL AMENDMENTS

Section 16 of the Act contains technical amendments consistent 

with the Act to improve the organization of the patent statute. 

SECTION 17: EFFECTIVE DATE; RULE OF CONSTRUCTION

Section 17 of the Act provides that, unless otherwise provided, 

the Act takes effect 12 months after the date of enactment and applies to any patent issued on or after that effective date. It also 

provides that the enactment of section 102(b)(3) of title 35, under 

section (2)(b) of the Act is done with the same intent to promote 

joint research activities that was expressed in the Cooperative Research and Technology Enhancement Act of 2004 (Public Law 108–

453) and shall be administered in a manner consistent with such. 

II. HISTORY OF THE BILL AND COMMITTEE CONSIDERATION

A. INTRODUCTION OF THE BILL

On August 3, 2006, in the 109th Congress, Senator Hatch introduced the Patent Reform Act of 2006 (S. 3818) with Senator Leahy. 

It was referred to the Committee on the Judiciary, where it stayed 

until the end of the session. 


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On April 18, 2007, in the 110th Congress, Senator Leahy, along 

with Senator Hatch, introduced the Patent Reform Act of 2007. 

Senator Schumer, Senator Whitehouse, and Senator Cornyn were 

original cosponsors of the bill; Senator Craig, Senator Crapo, Senator Bennett, Senator Salazar, and Senator Smith later joined as 

cosponsors. The bill was referred to the Committee on the Judiciary, and was first placed on the Committee’s agenda on June 14, 

2007. 

B. HEARINGS

The Senate Committee on the Judiciary held six hearings on patent reform from 2005 through 2007. 

On April 25, 2005, the Senate Committee on the Judiciary Subcommittee on Intellectual Property held a hearing on ‘‘Perspectives 

on Patents.’’ This first hearing was attended by Chairman Hatch, 

Ranking Member Leahy, Senator Cornyn, and Senator Feinstein. 

Testifying on Panel I was the Honorable Jon W. Dudas, Under Secretary of Commerce for Intellectual Property, and Director, U.S. 

Patent and Trademark Office. Testifying on Panel II were Richard 

C. Levin, President, Yale University, and Co-Chair, Committee on 

Intellectual Property Rights in the Knowledge-Based Economy, 

Board on Science, Technology, and Economic Policy, National Research Council; and Mark B. Myers, Visiting Executive Professor, 

Management Department, Wharton Business School, University of 

Pennsylvania, and Co-Chair, Committee on Intellectual Property 

Rights in the Knowledge-Based Economy, Board on Science, Technology, and Economic Policy, National Research Council. Testifying 

on Panel III were William Parker, Chief Executive Office and Director of Research, Diffraction, Ltd.; Joel L. Poppen, Deputy General Counsel, Micron Technology, Inc.; David Simon, Chief Patent 

Counsel, Intel Corporation; Dean Kamen, President, DEKA Research and Development Corp.; Robert A. Armitage, Senior Vice 

President and General Counsel, Eli Lilly and Company; and Michael K. Kirk, Executive Director, American Intellectual Property 

Law Association (AIPLA). The following materials were submitted 

for the record: Comments of the National Association of Patent 

Practitioners on the Proposed Patent Act of 2005, submitted by 

Tony Venturino, President, on May 6, 2005; prepared statement of 

Jon W. Dudas; prepared statement of Richard C. Levin; prepared 

statement of Mark B. Myers; prepared statement of William 

Parker; prepared statement of Joel L. Poppen; prepared statement 

of David Simon; prepared statement of Dean Kamen; prepared 

statement of Robert A. Armitage; and prepared statement of Michael K. Kirk. 

On June 14, 2005, the Senate Committee on the Judiciary Subcommittee on Intellectual Property held a hearing on ‘‘Patent Law 

Reform: Injunctions and Damages.’’ This second hearing was attended by Chairman Hatch, Ranking Member Leahy, and Senator 

Kennedy. The following witnesses testified: Carl Gulbrandsen, 

Managing Director, Wisconsin Alumni Research Foundation 

(WARF); Jonathan Band, Counsel on behalf of Visa and the Financial Services Roundtable; Mark A. Lemley, Professor of Law, Stanford Law School; Jeffrey P. Kushan, Sidley Austin Brown and 

Wood, LLP; Chuck Fish, Vice President and Chief Patent Counsel, 

Time Warner, Inc.; and J. Jeffrey Hawley, President, Intellectual 


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Property Owners Association, and Vice President and Director, Patent Legal Staff, Eastman Kodak Company. The following materials 

were submitted for the record: prepared statement of Carl 

Gulbrandsen; the prepared statement of Jonathan Band; the prepared statement of Mark A. Lemley; the prepared statement of Jeffrey P. Kushan; the prepared statement of Chuck Fish; and the 

prepared statement of J. Jeffrey Hawley. 

On July 26, 2005, the Senate Committee on the Judiciary Subcommittee on Intellectual Property held a hearing on ‘‘Perspectives 

on Patents: Harmonization and Other Matters.’’ Chairman Hatch 

attended this hearing and Ranking Member Leahy submitted a 

statement for the record. The following witnesses testified: The 

Honorable Gerald J. Mossinghoff, former Assistant Secretary of 

Commerce and Commissioner of Patents and Trademarks, and 

Senior Counsel, Oblon, Spivak, McClelland, Maier & Neustadt; The 

Honorable Q. Todd Dickinson, former Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and 

Trademark Office, and Vice President and Chief Intellectual Property Counsel, General Electric Company; Marshall C. Phelps, Corporate Vice President and Deputy General Counsel for Intellectual 

Property, Microsoft Corporation; Christine Siwik, Partner, Rakoczy 

Molino Mazzochi Siwik, LLP; Charles E. Phelps, Provost, University of Rochester, on behalf of the Association of American Universities, American Council on Education, Association of American 

Medical Colleges and Council on Governmental Relations; and 

David Beier, Senior Vice President for Global Government Affairs, 

Amgen. The following materials were submitted for the record: prepared statement of David Beier; article, Bureau of National Affairs, 

Inc., Patent, Trademark & Copyright Journal, C. Boyden Gray, 

former White House Counsel and Partner, Wilmer Cutler Pickering 

Hale and Dorr; prepared statement of Q. Todd Dickinson; prepared 

statement of Gerald J. Mossinghoff; prepared statement of Charles 

E. Phelps; prepared statement of Marshall C. Phelps; prepared 

statement of Christine J. Siwik; and prepared statement of Teva 

North America, Steven J. Lee, Partner, Kenyon & Kenyon, Thomas 

L. Creel, Partner, Goodwin Procter LLP, Outside Patent Counsel. 

On May 23, 2006, the Senate Committee on the Judiciary Subcommittee on Intellectual Property held a hearing on ‘‘Perspectives 

on Patents: Post-Grant Review Procedures and Other Litigation 

Reforms.’’ Chairman Hatch and Ranking Member Leahy attended, 

and the following witnesses testified: Mark Chandler, Senior Vice 

President and General Counsel, Cisco Systems, Inc.; Philip S. Johnson, Chief Patent Counsel, Johnson & Johnson; Nathan P. 

Myhrvold, Chief Executive Officer, Intellectual Ventures; John R. 

Thomas, Professor of Law, Georgetown University Law Center; and 

Andrew Cadel, Managing Director, Associate General Counsel, and 

Chief Intellectual Property Counsel, JP Morgan Chase. The following materials were submitted for the record: prepared statement of Andrew Cadel; prepared statement of Mark Chandler; prepared statement of Jack Haken, Vice President, Intellectual Property & Standards, U.S. Phillips Corporation; prepared statement of 

Philip S. Johnson; prepared statement of Nathan P. Myhrvold; and 

prepared statement of John R. Thomas. 

On May 1, 2007, the Senate Committee on the Judiciary held a 

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man Leahy, Ranking Member Specter, Senator Cardin, Senator 

Whitehouse, Senator Graham, and Senator Coburn. Senator Feinstein submitted a statement for the record. The following witnesses 

testified: Wayne Herrington, Assistant General Counsel, United 

States International Trade Commission; John R. Thomas, Professor 

of Law, Georgetown University Law Center; Mike Kirk, Executive 

Director, American Intellectual Property Law Association; and 

Christopher A. Cotropia, Professor of Law, Richmond School of 

Law. The following materials were submitted for the record: prepared statement of Wayne Herrington; prepared statement of John 

R. Thomas; prepared statement of Mike Kirk; prepared statement 

of Christopher A. Cotropia; letter from the United Steel Workers to 

Senator Leahy and Senator Specter dated February 6, 2007; letter 

from the AFL-CIO to Senator Leahy and Senator Specter dated 

February 21, 2007; and an article by Mickey Kantor and Theodore 

B. Olsen titled ‘‘Pet Food and Pool Cues,’’ published May 13, 2006. 

On June 6, 2007, the Senate Committee on the Judiciary held its 

sixth and final hearing on patent reform, entitled ‘‘Patent Reform: 

The Future of American Innovation.’’ Senator Leahy, Senator Specter, Senator Cardin, Senator Whitehouse, Senator Hatch, and Senator Coburn attended the hearing. Testifying on Panel I was the 

Honorable Jon W. Dudas, Undersecretary of Commerce for Intellectual Property, Director of the U.S. Patent and Trademark Office. 

Testifying on Panel II were Bruce G. Bernstein, Chief Intellectual 

Property and Licensing Officer, InterDigital Communications Corporation; Mary Doyle, Senior Vice President, General Counsel and 

Secretary, Palm, Inc.; John A. Squires, Chief Intellectual Property 

Counsel, Goldman, Sachs & Co.; and Kathryn L. Biberstein, Senior 

Vice President, General Counsel and Secretary, and Chief Compliance Officer, Alkermes, Inc. The following materials were submitted for the record: letter from the Department of Commerce to 

Senator Leahy and Senator Specter dated May 18, 2007; letter 

from BIO to Senator Leahy and Senator Specter dated May 29, 

2007; letter from Chief Judge Paul R. Michel of the Federal Circuit 

to Congressman Conyers dated May 21, 2007; letter from the National Association of Manufacturers to Congressman Conyers and 

Congressman Smith dated May 18, 2007; letter from Chief Judge 

Paul R. Michel of the Federal Circuit to Senator Leahy and Senator 

Specter dated May 3, 2007; the prepared statement of Jon W. 

Dudas; the prepared statement of Bruce G. Bernstein; prepared 

statement of Mary Doyle; prepared statement of John A. Squires; 

and prepared statement of Kathryn L. Biberstein. 

C. LEGISLATIVE HISTORY

On June 21, 2007, the Senate Judiciary Committee first considered S. 1145. Senator Leahy offered a Manager’s Amendment, 

which was adopted by unanimous consent. This Manager’s Amendment made several changes including eliminating inter partes reexamination; making denials of PGR petitions discretionary and not 

reviewable; raising the standard for initiating PGR to requiring 

both a showing of likely economic harm and notice of infringement; 

making technical changes regarding USPTO venue from the District of Columbia to the Eastern District of Virginia; limiting the 

venue choices against foreign defendants; clarifying that the apportionment language does not apply to lost profits calculations; proVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00038 Fmt 6659 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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viding that false substitute statements in 115 are subject to the 

same criminal penalties as false inventor oaths; eliminating the requirement that to request a derivation proceeding, the inventor had 

to have filed a patent application prior to the publication of the allegedly derived application; clarifying the one a year grace period 

set forth in 102; eliminating the DC-area residency requirement for 

Federal Circuit judges; establishing a new ‘‘micro-entity’’ status for 

truly small inventors; eliminating the provision in the Act that 

would have expanded the prior user rights defense to apply to all 

patents; and providing that a report on prior user rights be provided to Congress. 

On July 12, 2007, the Senate Judiciary Committee considered S. 

1145 as previously amended on June 21, 2007. The Committee accepted Senator Leahy’s Second Manager’s Amendment by unanimous consent. This Manager’s Amendment made several changes 

to post-grant review, including for both 1st and 2nd window raising 

the standard to initiate a PGR to ‘‘substantial new question of patentability’’; for both windows prohibiting the filing of a PGR petition by a party that has instituted a district court action challenging the validity of the same patent; for both windows providing 

for settlement; for 2nd window, providing that the challenged patent has a presumption of validity; and for 2nd window requiring 

that a PGR petition be filed within 12 months of receiving notice 

of infringement. This Manager’s Amendment also made changes to 

venue including clarifying that the new section would apply to declaratory judgment actions, as well as making changes regarding 

venue for foreign defendants. This Manager’s Amendment also expanded who has standing to assert the prior user rights defense to 

include affiliates of the person who performed the acts that constitute the defense. This Manager’s Amendment also eliminated 

the provision requesting a reexamination study; gave the USPTO 

fee setting authority; reduced the maximum number of years (from 

6 to 2) of past damages that a patentee could recover where the 

patent was not subject to the marking requirements of 287(a). This 

Manager’s Amendment also added the phrase ‘‘otherwise available 

to the public’’ to 102 to make clear that secret collaborative agreements, which are not available to the public, are not prior art. This 

Amendment added the applicant quality submission (AQS) provision to the Act; clarified the damage language regarding apportionment and the entire market value rule; and gave district court 

judges discretion as to when to certify claim construction decisions 

for interlocutory appeal, and when to stay the underlying case 

pending such appeal. Finally, this Manager’s Amendment eliminated the provision in the Act giving the USPTO substantive rulemaking authority. 

Senator Specter offered an amendment that changed the venue 

provision for civil actions relating to patents in several respects. 

The amendment prohibits a party from manufacturing venue by assignment, incorporation or otherwise. The amendment limits venue 

in patent infringement and declaratory judgment actions to the district in which (1) the defendant has its principal place of business 

or is incorporated, or, for a foreign defendant, where its primary 

United States subsidiary is located; (2) the defendant has committed substantial acts of infringement if the defendant has a regular and established physical facility in that district that conVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00039 Fmt 6659 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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stitutes a substantial portion of the defendant’s operations, or (3) 

the primary plaintiff resides if the plaintiff is a university or an individual inventor that qualifies as a micro-entity. The Specter 

venue amendment also provided for transfer of cases in limited situations where appropriate. 

The Committee concluded consideration of S. 1145 at a business 

meeting on July 19, 2007, at which 10 amendments were considered. 

Senator Leahy and Senator Hatch offered a Third Managers’ Amendment adopted by unanimous consent that made changes including clarifying that the venue provision applied to non-incorporated businesses; restoring the willfulness section of the bill that 

was inadvertently struck in the Second Managers’ Amendment due 

to a clerical error; narrowing the patents subject to 2nd window 

post-grant review to those that issue after the effective date of that 

section of the Act, as well as those that would have been subject 

to inter partes reexamination; making clear that PGR Board decisions were only appealable to the Federal Circuit and not to a federal district court; clarifying the burden of proof required to invalidate a patent under PGR 2nd window; and making a technical 

change to the conforming amendment in Section 9 regarding 

USPTO regulatory authority. 

Senator Specter offered an amendment that would have eliminated best mode as grounds for invalidating a patent. This amendment was rejected on a roll call vote. The vote record is as follows: 

YEAS (9)—Brownback (Kan.), Coburn (Okla.), Cornyn (Texas), 

Feinstein (Calif.), Graham (S.C.), Hatch (Utah), Kyl (Ariz.), Sessions, J. (Ala.), Specter (Pa.). 

NAYS (10)—Biden (Del.), Cardin (Md.), Durbin (Ill.), Feingold 

(Wis.), Grassley (Iowa), Kennedy (Mass.), Kohl (Wis.), Leahy (Vt.), 

Schumer (N.Y.), Whitehouse (R.I.). 

Senator Kennedy offered an amendment that would give the Director of the United States Patent and Trademark Office the discretion to accept late filings in limited circumstances when the 

delay is unintentional. The amendment was agreed to by unanimous consent; Senator Grassley and Senator Sessions later 

changed their votes to no votes, which did not affect the outcome 

of the vote. 

Senator Sessions offered an amendment that would limit liability 

for certain check imaging patents against certain potential defendants. The amendment was agreed to by unanimous consent. 

Senator Coburn offered an amendment that would eliminate fee 

diversion at the United States Patent and Trademark Office. The 

amendment was agreed to by a voice vote. 

Senator Hatch offered an amendment that would codify and raise 

the standard to prove inequitable conduct, including defining materiality as information that is considered would render a claim of 

the patent invalid. Senator Leahy then offered a second degree 

amendment that instead would define materiality as information 

that a patent examiner would consider important in deciding 

whether to allow the patent. The second degree amendment was 

accepted on a roll call vote. The vote record is as follows: 

YEAS (10)—Cardin (Md.), Cornyn (Texas), Durbin (Ill.), Feingold 

(Wis.), Graham (S.C.), Kennedy (Mass.), Kohl (Wis.), Leahy (Vt.), 

Schumer (N.Y.), Whitehouse (R.I.). 


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NAYS (9)—Biden (Del.), Brownback (Kan.), Coburn (Okla.), Feinstein (Calif.), Grassley (Iowa), Hatch (Utah), Kyl (Ariz.), Sessions 

(Ala.), Specter (Pa.). 

Senator Kyl offered an amendment that would have modified the 

bill’s damages language by defining how a reasonable royalty 

should be calculated as what a willing licensor/licensee would have 

voluntarily negotiated at the time of the infringement. This amendment was rejected on a roll call vote, with 2 not voting. The vote 

record was as follows: 

YEAS (7)—Brownback (Kan.), Coburn (Okla.), Feingold (Wis.), 

Grassley (Iowa), Kennedy (Mass.), Kyl (Ariz.), Specter (Pa.). 

NAYS (10)—Biden (Del.), Cardin (Md.), Cornyn (Texas), Durbin 

(Ill.), Hatch (Utah), Kohl (Wis.), Leahy (Vt.), Sessions (Ala.), Schumer (N.Y.), Whitehouse (R.I.). 

Senator Kyl offered an amendment that would strike Section 4 

(damages) from the bill. This amendment was rejected on a roll call 

vote, with 1 not voting. The vote record is as follows: 

YEAS (7)—Biden (Del.), Brownback (Kan.), Coburn (Okla.), Feingold (Wis.), Grassley (Iowa), Kyl (Ariz.), Specter (Pa.). 

NAYS (11)—Cardin (Md.), Cornyn (Texas), Durbin (Ill.), Feinstein (Calif.), Hatch (Utah), Kennedy (Mass.), Kohl (Wis.), Leahy 

(Vt.), Schumer (N.Y.), Sessions (Ala.), Whitehouse (R.I.). 

Senator Coburn offered an amendment that would strike Section 

5 (post-grant review) from the bill, and would require the USPTO 

and the Department of Justice conduct a 6-month study of postgrant review systems used by foreign countries. This amendment 

was rejected by a roll call vote, with 1 not voting. The vote record 

is as follows: 

YEAS (5)—Brownback (Kan.), Coburn (Okla.), Feingold (Wis.)*, 

Grassley (Iowa), Kyl (Ariz.). 

NAYS (13)—Cardin (Md.), Cornyn (Texas), Durbin (Ill.), Feinstein (Calif.), Graham (S.C.), Hatch (Utah), Kennedy (Mass.), Kohl 

(Wis.), Leahy (Vt.), Schumer (N.Y.)*, Sessions, J. (Ala.), Specter 

(Pa.), Whitehouse (R.I.). 

The Committee voted the Patent Reform Act of 2007 as amended 

to be reported favorably by a roll call vote of 13 yeas to 5 nays, 

with 1 not voting. 

YEAS (13)—Cardin (Md.), Cornyn (Texas), Durbin (Ill.), Feinstein (Calif.), Graham (S.C.), Hatch (Utah), Kennedy (Mass.), Kohl 

(Wis.), Leahy (Vt.), Schumer (N.Y.)*, Sessions, J. (Ala.), Specter 

(Pa.), Whitehouse (R.I.). 

NAYS (5)—Brownback (Kan.), Coburn (Okla.), Feingold (Wis.)*, 

Grassley (Iowa), Kyl (Ariz.). 

III. SECTION-BY-SECTION SUMMARY OF THE BILL

Sec. 1. Short title; table of contents 

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

Sec. 2. Right of the first inventor to file 

This section, inter alia, converts the United States’ patent system 

into a first-inventor-to-file system, giving priority to the earlierfiled application for a claimed invention. Interference proceedings 

are replaced with a derivation proceeding to determine whether the 

applicant of an earlier-filed application was the proper applicant 


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for the claimed invention. This section also provides for a grace period for publicly disclosing the subject matter of the claimed invention, without losing priority. 

Specifically, this section makes the following amendments: 

Subsection (a)—§ 100 is amended to include definitions for additional terms. 

Subsection (b)—§ 102 is amended as follows: 

(a)(1) A patent shall not issue for a claimed invention if the invention was patented, described in a printed publication, or in public use, on sale or otherwise available to the public (A) more than 

a year before the filing date, or (B) anytime prior to the filing date 

if not through disclosure by the inventor or joint inventor, or by 

others who obtained the subject matter, directly or indirectly, from 

the inventor or joint inventor. A one-year grace period is provided 

for an inventor or joint inventor that discloses the subject matter 

of the claimed invention. 

(2) A patent also may not be issued if the claimed invention was 

described in a patent or patent application by another inventor 

filed prior to the filing date of the claimed invention. 

(b) Exceptions: 

Subject matter that would otherwise qualify as prior art under 

(a)(1)(B) shall not be prior art if the subject matter had, before 

such disclosure, been publicly disclosed by the inventor, joint inventor, or others who obtained the subject matter from the inventor/ 

joint inventor. Subject matter that would otherwise qualify as prior 

art under (a)(2) shall not be prior art if (A) the subject matter was 

obtained directly or indirectly from the inventor or joint inventor, 

(B) the subject matter had been previously disclosed by the inventor or a joint inventor or others who obtained the subject matter, 

directly or indirectly, from the inventor or a joint inventor, or (C) 

prior to the effective filing date, the subject matter and the claimed 

invention was owned by the same person or subject to an obligation 

of assignment to the same person. 

The CREATE Act is preserved by including an exception for subject matter of a claimed invention made by parties to a joint research agreement. 

The requirements for an effective filing date are set forth. 

Subsection (c)—§ 103 is amended consistent with moving to a 

first-inventor-to-file system. Existing subsection (a) is amended 

slightly; subsection (b) is deleted because it is no longer needed; 

subsection (c), which is the CREATE Act, has been moved, and 

slightly changed, to § 102. 

Subsection (d)—Repeals § 104 (Inventions Made Abroad). 

Subsection (e)—Repeals § 157 (Statutory Invention Registration). 

Subsection (f)—Amends § 120 related to filing dates to conform 

with the CREATE Act. 

Subsection (g)—Makes various conforming amendments. 

Subsections (h), (i) & (j)—Repeals interference proceeding and repeals § 291. Amends § 135(a) and provides for a ‘‘derivation proceeding,’’ designed to determine the inventor with the right to file 

an application on a claimed invention. An applicant requesting a 

derivation proceeding must set forth the basis for finding that an 

earlier applicant derived the claimed invention and without authorization filed an application claiming such invention. The request 

must be filed within 12 months of the date of first publication of 


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an application for a claim that is substantially the same as the 

claimed invention. The Patent Trial and Appeal Board (the 

‘‘Board’’) shall determine the right to patent and issue a final decision thereon. Decisions of the Board may be appealed to the Federal Circuit, or to district court pursuant to § 146. 

Sec. 3. Inventor’s oath or declaration 

The section streamlines the requirement that the inventor submit an oath as part of a patent application, and makes it easier for 

patent owners to file applications. 

Subsection (a)—Section 115 is amended to permit an applicant to 

submit a substitute statement in lieu of the inventor’s oath or declaration in certain circumstances, including if the inventor is (i) unable to do so, or (ii) unwilling to do so and is under an obligation 

to assign the invention. A savings clause provides that failure to 

comply with the requirements of this section will not be a basis for 

invalidity or unenforceability of the patent if the failure is remedied by a supplemental and corrected statement. False substitute 

statements are subject to the same penalties as false oaths and 

declarations. 

Subsection (b)—Amends section 118 to allow the person to whom 

the inventor has assigned (or is under an obligation to assign) the 

invention to file a patent application. A person who otherwise 

shows sufficient proprietary interest in the invention may file a 

patent application as an agent of the inventor to preserve the 

rights of the parties. 

Sec. 4. Right of the inventor to obtain damages 

Subsection (a)—§ 284, the patent damage statute, is amended as 

follows: 

The court shall award the claimant damages adequate to compensate for the infringement but not less than a reasonable royalty, 

together with interest and costs. The court may receive expert testimony to assist it in determining damages. 

In determining a reasonable royalty, the court shall determine 

which of the following methods should be used, and should identify 

the factors that are relevant thereto: 

(A) Entire market value—the royalty may be based upon the entire market value of the larger apparatus/process, that incorporates 

the infringing product/process, if the claimed invention’s specific 

contribution over the prior art is the predominant basis for the 

market demand of the larger apparatus/process; 

(B) Established royalty based on marketplace licensing—the royalty may be based on other nonexclusive licenses of the patented 

invention if the claimed invention has been the subject of a nonexclusive license to a number of persons sufficient to indicate a 

general marketplace recognition of the reasonableness of the licensing terms, if the license was secured prior to the filing of the case, 

and if the infringer’s use is of substantially the same scope, volume 

and benefit of the rights granted under such license. 

(C) If showings under (A) and (B) have not been made, the court 

shall conduct an analysis to ensure that a reasonable royalty is applied only to the portion of the economic value of the infringing 

product or process properly attributable to the claimed invention’s 

specific contribution over the prior art. In the case of a combination 


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invention whose elements are present individually in the prior art, 

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 as part 

of the combination, if the patentee demonstrates that value. 

In determining a reasonable royalty, where appropriate, the 

court may also consider (or direct the jury to consider) any other 

relevant factors under applicable law. 

The methods set forth in this subsection shall only apply to calculation of damages based on a reasonable royalty. 

Willful infringement—§ 284 is amended by adding subsection (e) 

to codify, and change, the doctrine of willful infringement. 

A court may increase damages by up to three times based on a 

finding of willful infringement. A determination of willful infringement shall be made without a jury. To prove willful infringement, 

a patentee must prove by clear and convincing evidence that: 

(A) the infringer received written notice from the patentee (i) alleging acts of infringement in a manner sufficient to give the infringer an objectively reasonable apprehension of suit on such patent, and (ii) identifying with particularity each claim of the patent, 

each allegedly infringing product or process, and the relationship 

of such product or process to such claim, the infringer, after a reasonable opportunity to investigate, thereafter performed one or 

more acts of infringement; 

(B) after receiving such notice and after a reasonable opportunity 

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

(C) after having been found by a court to infringe a patent, the 

infringer engaged in conduct that was not colorably different from 

the conduct previously found to have infringed the patent, and 

which resulted in a separate finding of infringement of the same 

patent. 

The doctrine of willful infringement has the following limitations: 

(i) ‘‘Good faith’’—A court may not find that an infringer has willfully infringed a patent 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. An informed good 

faith belief may be established by (a) reasonable reliance on advice 

of counsel; (b) evidence that the infringer sought to modify its conduct to avoid infringement once it had discovered the patent; or (c) 

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

The decision of the infringer not to present evidence of advice of 

counsel is not relevant to a determination of willful infringement. 

(ii) Pleadings—A patentee may not plead (and a court may not 

determine) willful infringement before the date on which a court 

determines that the patent in suit is not invalid, is enforceable, 

and has been infringed by the infringer. 

Subsection (b)—Prior user rights study—Within 2 years from the 

date of enactment, the Director shall report to Congress his findings and recommendations regarding the operation of ‘‘prior user 

rights’’ in selected countries as compared to the United States. 

Subsection (c)—Marking and notice—Subsection (a) of § 287 is renumbered as (a)(1). Subsection (a)(2), which is added, provides that 

for patented inventions not covered under subsection (a)(1), past 

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plaint (or counterclaim) except upon proof that the infringer was 

notified of infringement by the patentee. In no case shall liability 

for past damages exceed 6 years. 

Subsection (d)—Subsection (b)(6) of § 273 is amended to also 

allow ‘‘affiliates’’ of the person who performed the necessary prior 

user rights acts to assert the defense. 

Subsection (e)—The amendments made by this section shall 

apply to any civil action commenced on or after the date of enactment of this Act. 

Sec. 5. Post-grant procedures and other quality enhancements 

This section creates a new post-grant review proceeding that allows third parties to petition the USPTO to review patents that 

may be invalid. There are two different ‘‘windows’’ for the filing of 

such petitions: 1st window petitions must be filed within 1 year of 

the patent issuing; 2nd window petitions may be filed at anytime 

after the patent issues. 

The procedures and standards for each window differ when expressly specified in the statute. 

In view of the creation of this new PGR system, § 303(a) is 

amended and inter partes reexamination is repealed. 

Subsection (a)—Amends § 303(a) to provide that, within three 

months of a request for reexamination of a patent by the patent 

owner, or at any time on the Director’s own initiative, the Director 

may determine whether a substantial new question of patentability 

is raised by patents discovered by the Director or cited by any 

other person. 

Subsection (b)—Repeals inter partes reexamination. 

Subsection (c)—Sets forth post-grant opposition procedures. The 

specific statutory sections are as follows: 

§ 321—Petition for post-grant review 

Permits a 3rd party to file a PGR petition with the PTO to cancel 

a claim as invalid based on any ground that might be raised under 

§ 282(b)(2) and (3). The Director shall establish fees to be paid by 

the person requesting the proceeding. 

§ 322—Timing and basis of petition 

A PGR petition may be filed in any one of three circumstances: 

(1) The petition is filed within 12 months of the patent’s issuance 

or reissuance (referred to as ‘‘1st window’’); 

(2)(i) There is substantial reason to believe that the continued existence of the challenged claim is likely to cause the petitioner significant economic harm, and (ii) the petitioner files the petition 

within 12 months after receiving notice (explicitly or implicitly) of 

infringement; or 

(3) The patent owner consents ((2) and (3) are referred to as ‘‘2nd 

window’’). 

§ 323—Requirements of petition 

A petition must, inter alia, include the necessary fee, identify the 

real parties in interest, specifically identify each claim challenged, 

the grounds for challenging it, and the evidence that supports each 

challenge, including, where applicable, copies of relevant patents 

and printed publications, or supporting affidavits or declarations. 

The Director may, by regulation, require additional information. 

The petitioner must provide a copy of the petition with supporting 

documents to the patent owner or his designated representative. 


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§ 324—Publication and public availability of petition 

The Director shall publish the petition in the Federal Register 

and make that petition available on the USPTO website. Any PGR 

file shall be made available to the public unless a petition or document is accompanied with a motion to seal. Such petition or document shall be treated as sealed, pending the outcome of the ruling 

on the motion. Failure to file a motion to seal will result in the 

pleading being placed in the public record. 

§ 325—Prohibited filings 

Successive petitions under any subsection of § 322, filed by the 

same party on the same patent, are prohibited. A PGR proceeding 

may not be instituted or maintained under paragraph (1) or (2) of 

§ 322 if the petitioner or real party in interest has instituted a civil 

action challenging the validity of a claim of the patent. 

§ 326—Submission of additional information 

A petitioner shall file such additional information as the Director 

may require by regulation. 

§ 327—Institution of post-grant review proceedings 

The Director may not authorize a post-grant review proceeding 

to commence unless the Director determines that the information 

presented in the petition raises a substantial new question of patentability for at least 1 of the challenged claims. The Director shall 

decide a petition within 90 days of its receipt, shall notify the petitioner and patent owner of the Director’s decision, and if granted 

shall publish each notice of PGR institution in the Federal Register 

and on the USPTO website, including the date the PGR proceeding 

shall commence. The determination by the Director whether to authorize a PGR proceeding is not appealable. The Director shall assign a PGR proceeding to a panel of 3 Board judges. 

§ 328—Consolidation of proceedings and joinder 

If more than 1 petition is submitted under § 322(1) against the 

same patent and each raises a substantial new question of patentability warranting commencement, the Director may consolidate 

such proceedings. If the Director commences a PGR proceeding on 

the basis of a petition filed under § 322(2), any person who files in 

compliance with section 322(2)(A) a petition that the Director finds 

sufficient to proceed under § 327 may be joined at the discretion of 

the Director, and such person shall participate in such PGR proceeding. 

§ 329—Conduct of post-grant review proceedings 

The Director shall prescribe regulations establishing and governing PGR proceedings under this chapter and their relationship 

to other proceedings under this title. The regulations shall set forth 

the standards for showings of substantial reason to believe and significant economic harm under § 322(2) and substantial new question of patentability under § 327(a). The regulations shall (i) provide for the publication in the Federal Register all requests for the 

institution of PGR, (ii) establish procedures for the submission of 

supplemental information after the petition is filed, and (iii) set 

forth procedures for discovery of relevant evidence. The regulations 

shall require that the final determination in a PGR proceeding 

issue not later than 1 year after the date on which the Director notices its institution, except that, for good cause shown, the Director 

may extend the 1-year period by not more than 6 months. The regulations shall (i) provide for discovery upon order of the Director, 


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as required in the interests of justice, (ii) prescribe sanctions for 

abuse of discovery, abuse of process, or any other improper use of 

the proceeding, (iii) provide for protective orders governing the exchange and submission of confidential information; and (iv) ensure 

that any information submitted by the patent owner in support of 

any amendment entered under § 332 is made available to the public as part of the prosecution history of the patent. 

In prescribing regulations, the Director shall consider the effect 

on the economy, the integrity of the patent system, and the efficient administration of the Office. The Patent Trial and Appeal 

Board shall conduct each proceeding authorized by the Director. 

§ 330—Patent owner response 

After a post-grant review proceeding has been instituted, the patent owner shall have the right to file a timely response, which may 

include affidavits, declarations and any additional factual evidence 

and expert opinions on which the patent owner relies in support of 

the response. 

§ 331—Proof and evidentiary standards 

The presumption of validity set forth in § 282 of this title shall 

not apply to challenges brought under § 322(1) but shall apply in 

a challenge brought under paragraph (2) or (3) of § 322 to any patent claim under this chapter. The petitioner under § 322(1) shall 

have the burden of proving a proposition of invalidity by a preponderance of the evidence. For petitions filed under paragraphs (2) or 

(3) of § 322, the existence, authentication, availability, and scope of 

any evidence offered to establish invalidity shall be established by 

clear and convincing evidence. If such predicate facts are so established, invalidity shall be proven only if the persuasive force of 

such facts demonstrates invalidity by a preponderance of the evidence. 

§ 332—Amendment of the patent 

During a post-grant review proceeding, the patent owner may file 

1 motion to amend the patent in 1 or more of the following ways: 

(1) cancel any challenged patent claim; (2) for each challenged 

claim, propose a substitute claim; or (3) amend the patent drawings 

or otherwise amend the patent other than the claims. Additional 

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

amendment under this section may not enlarge the scope of the 

claims of the patent or introduce new matter. 

§ 333—Settlement 

A PGR proceeding shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent 

owner, unless the Office has decided the matter before the request 

for termination is filed. If the PGR proceeding is terminated with 

respect to a petitioner under this section, no estoppel under this 

chapter shall apply to that petitioner. If no petitioner remains in 

the PGR proceeding, the Office shall terminate the PGR proceeding. Any agreement or understanding between the patent 

owner and a petitioner to terminate the proceeding, including any 

collateral agreements referred to therein, shall be in writing and 

a true copy shall be filed in the USPTO before the termination of 

the post-grant review proceeding. If any party filing such agreement or understanding so requests, the copy shall be kept separate 

from the file of the PGR proceeding, and made available only to 


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Federal Government agencies upon written request, or to any other 

person on a showing of good cause. 

§ 334—Decision of the board 

If the proceeding is not otherwise dismissed, the Patent Board 

shall issue a final written decision with respect to the patentability 

of any patent claim challenged and any new claim added. 

§ 335—Effect of decision 

If a final decision of the Board that is not timely appealed, or if 

that appeal is terminated, the Director shall publish a certificate 

canceling any claim determined unpatentable, and shall incorporate in the patent any new claim determined to be patentable. 

§ 336—Relationship to other pending proceedings 

The Director may determine rules relating to other ongoing proceedings. 

§ 337—Effect of decisions rendered in civil action on future postgrant review proceedings 

If a final decision has been entered against a party in a civil action arising under section 1338 of title 28 establishing that the 

party has not sustained its burden of proving the invalidity of any 

patent claim, that party to the civil action may not subsequently 

request a PGR proceeding on that patent claim on the basis of any 

grounds under § 322. In addition, the Director may not subsequently maintain a PGR proceeding previously requested by that 

party. 

§ 338—Effect of final decision on future proceedings 

If a final decision under § 334 is favorable to the patentability of 

any original or new claim of the patent challenged by the petitioner, the petitioner may not thereafter, based on any ground 

which the petitioner raised during the PGR proceeding (1) request 

or pursue a derivation proceeding with respect to such claim; or (2) 

assert the invalidity of any such claim in any civil action arising 

in whole or in part under section 1338 of title 28. If the final decision is the result of a petition filed on the basis of § 322(2), the prohibition under this section shall extend to any ground which the 

petitioner raised during the PGR proceeding. 

§ 339—Appeal 

A party dissatisfied with the final determination of the Board in 

a PGR proceeding may appeal the determinations under §§ 141 

through 144. Any party to the PGR proceeding shall have the right 

to be a party to the appeal. 

Subsection (d)—Sets forth technical and conforming amendments. 

Subsection (e)—Within 1 year after the enactment of this Act, 

the Director shall issue regulations to implement PGR, as added by 

this section. 

PGR shall take effect on the date that is 1 year after the date 

of the enactment of this Act and shall apply to patents issued on, 

or after that date, except that, in the case of a patent issued before 

the effective date of this Act on an application filed between November 29, 1999 and the effective date of this Act, a petition for 

post-grant review may only be filed under subsections (2) or (3) of 

§ 322. The Director shall determine the procedures under which 

interferences commenced before the effective date of this Section 

are to proceed and issue appropriate regulations. 


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Sec. 6. Definitions; patent trial and appeal board 

The Board of Patent Appeals and Interferences is replaced with 

the new Patent Trial and Appeal Board (‘‘Board’’). The Board is 

charged with (i) reviewing adverse decisions of examiners on applications and reexamination proceedings, (ii) conducting derivation 

proceedings, and (iii) conducting the post-grant review proceedings. 

Sec. 7. Submissions by third parties and other quality enhancements 

Subsection (a)—§ 122(b)(2), which provides an exception to the 

18-month publication requirement for an applicant who is not filing 

in another country, is repealed. 

Subsection (b)—Creates a mechanism in § 122 for third parties to 

submit timely pre-issuance information relevant to the examination 

of the application, including a concise statement of the relevance of 

the submission. 

Sec. 8. Venue and jurisdiction 

Subsection (a)—The venue provision for patent cases, section 

1400 of title 28, is amended as follows: 

Civil actions for patent infringement, including declaratory judgment actions, may only be brought in a judicial district (1) where 

the defendant has its principal place of business or is incorporated 

or formed, or, for a foreign corporation with a U.S. subsidiary, 

where its primary United States subsidiary has its principal place 

of business or is incorporated or formed; (2) where the defendant 

has committed substantial acts of infringement and has a regular 

and established physical facility that the defendant controls and 

that constitutes a substantial portion of the operations of the defendant; (3) where the primary plaintiff resides, if the primary 

plaintiff in the action is an institution of higher education or a nonprofit patent and licensing organization (as those terms are defined 

in this section); (4) where the plaintiff resides, if the sole plaintiff 

in the action is an individual inventor who qualifies as a ‘‘microentity’’ pursuant to section 123 of title 35. A defendant may request 

the case be transferred where (1) any of the parties has substantial 

evidence or witnesses that otherwise would present considerable 

evidentiary burdens to the defendant if such transfer were not 

granted, (2) transfer would not cause undue hardship to the plaintiff, and (3) venue would be otherwise appropriate under section 

1391 of title 28. 

Subsection (b)—Interlocutory Appeals—Subsection (c)(2) of section 1292 of title 28, is amended to require the Federal Circuit to 

accept all interlocutory appeals of claim construction orders when 

certified by the district court. A party wishing to appeal such an 

order shall file a motion with the district court within 10 days after 

entry of the order. The district court shall have discretion whether 

to certify such appeals, and if so, whether to stay the district court 

proceedings during such appeal. 

Subsection (c)—Technical Amendments Relating to USPTO 

Venue—The venue for certain district court challenges of USPTO 

decisions is changed from the District of Columbia to the Eastern 

District of Virginia, the district where the USPTO resides. 


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Sec. 9. Patent and Trademark Office regulatory authority 

This section gives the director rulemaking authority to set or adjust any fee under §§ 41 and 376, and section 1113 of title 15, provided that such fee amounts are set to reasonably compensate the 

USPTO for the services performed. The Director may also reduce 

such fees. The Director shall consult with the patent and trademark advisory committees as provided for in this section. Any proposal for a change in fees (including the rationale, purpose, and 

possible expectations or benefits that will result) shall be published 

in the Federal Register and shall seek public comment for a period 

of not less than 45 days. The Director shall notify Congress of any 

final proposed fee change and Congress shall have up to 45 days 

to consider and comment before any proposed fee change becomes 

effective. 

Rules of construction are provided. 

Sec. 10. Residency of Federal Circuit judges 

The District of Columbia area residency requirement for Federal 

Circuit judges in section 44(c) of title 28 is repealed. 

Sec. 11. Applicant quality submissions 

§ 123 is added to provide the Director authority to promulgate 

rules that require a patent applicant to submit a search report and 

analysis relevant to patentability and other relevant information as 

determined by the Director. Failure to comply with such requirements shall result in abandonment of the application. A ‘‘micro-entity’’, as defined in this section, is exempt from this requirement. 

§ 124 is added to define the qualifications for ‘‘micro-entity’’ status. 

Sec. 12. Inequitable conduct 

§ 298 is added to improve and codify the doctrine of ‘‘inequitable 

conduct’’. A party advancing the proposition that a patent should be cancelled or held unenforceable due to inequitable conduct shall prove 

independently, by clear and convincing evidence, that material information was misrepresented, or omitted, from the patent application with the intention of deceiving the USPTO. Information is material if a reasonable examiner would consider such information important in deciding whether to allow the patent application; any 

such information is not cumulative. Although intent to deceive the 

USPTO may be inferred, it may not be done so based solely on the 

gross negligence of the patent owner or its representative, or on the 

materiality of the information misrepresented or not disclosed. The 

party asserting the defense or claim shall comply with the pleading 

requirements set forth under Federal Rules of Civil Procedure 9(b). 

If the court finds inequitable conduct, the court has discretion to 

(1) hold the entire patent unenforceable, (2) hold 1 or more claims 

unenforceable, or (3) hold that patentee is not entitled an injunction. 

Sec.13. Authority of the Director of the Patent and Trademark Office to accept late filings 

Subsection (e) is added to § 2 to give the Director discretion to 

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cally the Director may accept a late filing if the applicant or owner 

of a patent or trademark (i) files a petition within 30 days after the 

missed deadline, and (ii) demonstrates to the satisfaction of the director the delay was unintentional. The petition shall be deemed 

denied if the Director has not made a determination within 60 days 

after the date of its filing. Director’s decisions on such petitions 

shall not be subject to judicial review. This subsection shall not 

apply to any other provision of the patent or trademark laws that 

allow the Director to accept late filings, or to statutory deadlines 

required by treaty. 

This amendment shall apply to any application or other filing 

that (i) is filed on or after the date of the enactment of this Act; 

or (ii) on such date of enactment, is pending before the Director or 

is subject to judicial review, and for such cases in (ii), the 30-day 

period shall begin on the date of the enactment of this Act. 

Sec. 14. Limitation on damages and other remedies with respect to 

patents for methods in compliance with check imaging methods 

§ 287 is amended by adding subsection (d)(1), which provides that 

use by a financial institution of a check collection system that constitutes an infringement under subsection (a) or (b) of section 271, 

the provisions of sections 281, 283, 284, and 285 shall not apply 

against the financial institution. Definitions are provided for various terms including ‘‘check,’’ ‘‘check collection system,’’ ‘‘financial 

institution,’’ ‘‘substitute check,’’ and ‘‘truncate.’’ This amendment 

shall apply to any civil action for patent infringement pending or 

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

Sec. 15. Patent and Trademark Office funding 

This section terminates appropriation of USPTO fees and shall 

take effect on October 1, 2008. All fees collected by the Director 

shall be available until expended. The provisions of any prior appropriation Act that makes amounts available pursuant to 42(c), 

and are in effect on the effective date set forth in subparagraph (A) 

shall cease to be effective on that effective date, and any unexpended amounts made available pursuant to such section shall be 

transferred in accordance with subsection (c)(5). A revolving fund 

is established in the Treasury of the United States and any 

amounts in the fund shall be available for use by the Director without fiscal year limitation. Any fees collected under sections 41, 42, 

and 376 of title 35, and section 1113 of title 15, shall be deposited 

in the fund. Amounts deposited into the fund shall be available to 

the Director without fiscal year limitation. Any unexpended balances in any accounts held on behalf of the Director, or the Office, 

shall be transferred to the fund and shall remain available until 

expended. The Director shall submit an annual report to Congress 

within 60 days after the end of each fiscal year. 

Within 30 days after the beginning of each fiscal year, the Director shall notify Congress the Office’s annual spending plan. 

The Director shall, on an annual basis, provide for an independent audit of the financial statements of the Office. Such audit 

shall be conducted in accordance with generally acceptable accounting procedures. 

In accordance with section 9301 of title 31, United States Code, 

the fund shall prepare and submit each year to the President a 


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business-type budget in such manner, and before such date, as the 

President prescribes by regulation for the budget program. 

Sec. 16. Technical amendments 

This section sets forth technical amendments consistent with this 

Act. 

Sec. 17. Effective date; rule of construction 

Except as otherwise provided, this Act takes effect 12 months 

after the date of enactment and applies to any patent issued on or 

after that effective date. 

The enactment of § 102(b)(3), under section (2)(b) of this Act, is 

done with the same intent to promote joint research activities that 

was expressed in the CREATE Act (Cooperative Research and 

Technology Enhancement Act of 2004 (Public Law 108–453; the ‘‘CREATE Act’’)), and shall be administered by the in the manner 

consistent with such. 

IV. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The cost estimate provided by the Congressional Budget Office 

pursuant to section 402 of the Congressional Budget Act of 1974 

was not available for inclusion in this report. The estimate will be 

printed in either a supplemental report or the Congressional 

Record when it is available. 

V. REGULATORY IMPACT EVALUATION

In compliance with rule XXVI of the Standing Rules of the Senate, the Committee finds that no significant regulatory impact will 

result from the enactment of S. 1145. 

VI. CONCLUSION

The Patent Reform Act of 2007, S. 1145, will establish a more efficient and streamlined patent system that will improve patent 

quality and limit unnecessary and counterproductive litigation 

costs. By ensuring the patent system in the 21st century accurately 

reflects the constitutional mandate to ‘‘promote the progress of 

science and useful arts’’, the Patent Reform Act will help ensure 

that the United States maintains its competitive edge in the global 

economy. 


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1S. Rep. No. 110–l, at 25 (2008). 2See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1580 (Fed. Cir. 1990). 3 28 U.S.C. 1338(a) (2000). 

4 29 Stat. 695, ch. 395 (1895). 

VII. ADDITIONAL AND MINORITY VIEWS

ADDITIONAL VIEWS FROM SENATOR SPECTER ON 

CHANGES TO THE VENUE STATUTE 

As the majority notes, current case law on the venue statute governing patent cases (28 U.S.C. aA1400(b)) permits a patent holder 

to ‘‘bring a patent infringement action in any one of the 94 judicial 

districts in the United States’’ 1 as long as the district court has 

personal jurisdiction over the defendant.2 This case law is contrary 

to the plain language of the patent venue statute as well as the intent behind the provision. More troubling, though, is the practical 

effect this interpretation has had on the patent litigation system by 

permitting plaintiffs to engage in ‘‘forum shopping,’’ resulting in 

patent infringement cases being brought in judicial districts that 

have little or no connection to the alleged infringement. 

While some of these districts may facilitate swifter resolution of 

patent cases with their ‘‘rocket dockets,’’ most cases are filed there 

because of the view that they are ‘‘plaintiff-friendly’’ locales. This 

has led to the perception that justice in patent cases can he 

‘‘gamed.’’ This does not serve the interests of justice, or the patent 

system as a whole. Section 8(a) of S. 1145, the Patent Reform Act 

of 2007, seeks to remedy this by establishing that venue in patent 

infringement cases, and declaratory judgment actions related to 

patents, should only be properly found in those jurisdictions that 

have a direct relationship to the underlying patent question. 

HISTORY OF THE VENUE STATUTE

Since 1800, the federal district courts have had original and exclusive jurisdiction ‘‘of any civil action arising under any Act of 

Congress relating to patents, plant variety protection, copyrights 

and trademarks.’’ 3 Recognizing the unique nature of patent infringement suits, Congress first enacted a special patent venue 

statute in 1897. The statute provided for venue ‘‘in the district of 

which the defendant is an inhabitant, or in any district in which 

the defendant, whether a person, partnership, or corporation, shall 

have committed acts of infringement and have a regular and established place of business.’’ 4 Similar language is now codified as 28 

U.S.C. 1400(b). 

Section 1400(b) currently provides that venue is proper in the judicial district: (1) ‘‘where the defendant resides,’’ or (2) ‘‘where the 

defendant has committed acts of infringement and has a regular 


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5See Bradford Novelty Co. v. Manheim, 156 F.Supp. 489 (SDNY 1957). 6See Fourco Class Co. v. Transmirra Products Corp., 353 U.S. 222 (1957). 7See Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260 (1961). 8 917 F.2d 1575 (Fed.Cir. 1990). 

and established place of business.’’ This venue provision was designed to serve as a counterpoint to other procedural requirements 

controlled by the plaintiff. For instance, the plaintiff generally determines when and where to file their case, so long as they establish personal jurisdiction over the defendant. For most patent defendants, this minimal test will be met in virtually all districts. 

The venue requirement is thus the protection provided to the defendant by ensuring that patent infringement suits are brought 

only in those locations ‘‘reasonably convenient to the defendant.’’ 5

In reviewing the provision, the Supreme Court has held that section 1400(b) exclusively governs venue in patent infringement 

suits.6 The Supreme Court reinforced its position when it held that 

section 28 U.S.C. 1391, which generally governs proper venue in 

other types of federal cases, cannot be used as the basis for venue 

in infringement suits.7

In 1988, Congress expanded the general venue statute (28 U.S.C. 

1391(c)) to provide: ‘‘For the purposes of venue under this chapter, 

a corporation that is a defendant shall be deemed to reside in any 

judicial district in which it is subject to personal jurisdiction at the 

time the action is commenced.’’ Despite significant Supreme Court 

precedent to the contrary, in 1990, the Federal Circuit held in VE 

Holding Corp. v. Johnson Gas Appliance Co. that the amendments 

made to the general venue statute also apply to the patent venue 

statute (28 U.S.C. 1400(b)).8 This ruling undermined the original 

purposes of 28 U.S.C. 1400(b)—which recognized the unique and 

complex nature of patent cases, deserving of a narrower venue statute. S. 1145 seeks to ensure that these cases are once again 

brought in more appropriate fora. 

THE NEED FOR CHANGE

After the Federal Circuit’s decision in VE Holding, plaintiffs no 

longer have to establish both personal jurisdiction over the defendant and proper venue for the case to proceed. It has effectively become a one step process—if the plaintiff establishes personal jurisdiction over a corporate defendant (a fairly low threshold), then the 

case may be brought in that district, even if the defendant has no 

significant ties or business operations in that location. 

This change in the law has brought with it significant changes 

in litigation tactics. Plaintiffs no longer have to bring patent suits 

in judicial districts that bear a direct relationship to the defendant, 

their business operations, or where a substantial share of the acts 

of infringement occurred. They can file patent suits in any district 

in which they establish some presence of the defendant, regardless 

of whether it is minimal in nature and without the actual knowledge of the defendant. While this has allowed some plaintiffs to file 

in districts with faster dockets, it has also opened the door to abusive forum shopping. 

Forum shopping is problematic not only for the defendants in 

these cases, but also for the U.S. judicial system for several reasons. First, Congress created the Federal Circuit to develop a uniVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00054 Fmt 6604 Sfmt 6604 E:\HR\OC\SR259.XXX SR259

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9The Federal Courts Improvement Act of 1982, 96 Stat. 25, 37–38. 10Michael C. Smith, ‘‘Rocket Docket: Marshall Court Leads Nation in Hearing Patent Cases,’’ 69 Tex. B.J. 1045 (2006). 11 2007 Patent and Trademark Damages Study 20, 29 (Pricewaterhoue Coopers). The top districts were: Western District of Wisconsin with an overall plaintiff success rate of 63% and trial 

success rate of 91%; Eastern District of Texas with an overall plaintiff success rate of 60% and 

a trial success rate of 83%; Eastern District of Virginia with an overall plaintiff success rate 

of 47% and trial success rate of 78%; Central District of California with an overall plaintiff success rate of 44% and a trial success rate of 74%; and District of Delaware with an overall plaintiff success rate of 42% and a trial success rate of 58%. Id. 

form national body of patent law to override the confusing, conflicting law of the different regional circuits.9 Yet, forum shopping 

that favors select district courts results in the development of localized bodies of law, thereby frustrating the national patent system, 

undermining the role of the Federal Circuit, and defeating the intent of Congress. Second, the ability to require a defendant to litigate in certain districts can inappropriately pressure defendants (or 

potential defendants) into settlement without regard to the underlying merits of the case. Third, forum shopping raises the cost of 

litigation by moving the court action away from the key witnesses 

and documents. 

Independent studies have also confirmed that, if permitted, 

plaintiffs file patent suits in the district court where they have the 

greatest likelihood of success rather than in districts that have 

some connection to the underlying patent question or relevant evidence. One commentator made just this point when he noted that 

patent ‘‘cases have traditionally moved from district to district as 

courts show themselves more or less efficient in processing these 

enormously complex cases.’’ 10 Further, a 2007 study conducted by 

PriceWaterhouseCoopers of 1,367 patent suits brought between 

1995–2006 found that plaintiffs filed in the five districts where 

they had significantly higher success rates, especially at trial.11

The gravity of the problem is underscored by the growing number of patent suits filed each year. In 1990, in the twenty busiest 

patent jurisdictions in the country there were only 626 patent cases 

filed nationwide against 1,085 defendants. By 2007, that number 

has grown exponentially in those same jurisdictions to 2,082 patent 

cases filed nationwide against 5,672 defendants. In other words, 

the number of patent suits filed has more than tripled since 1990. 

While the increasing number of patents issued by the Patent and 

Trademark Office accounts for some of these increases, many believe that the emergence of ‘‘plaintiff friendly’’ courts account for 

the bulk of the increase. For example, in 1990, only one patent suit 

was filed in the Eastern District of Texas. By 2007, this number 

had grown to 367, or approximately one-eighth of all of the patent 

suits brought nationwide. The Central District of California is another example. In 1990, there were only 30 patent suits filed in the 

district. By 2007, that number had jumped to 320. The question of 

whether forum shopping of patent suits has reached alarming levels cannot be denied when one considers that in 2007 two districts 

handled approximately one-quarter of the patent suits filed in the 

country. 

Some have argued that the emergence of one or two ‘‘magnet’’ jurisdictions does not warrant a wholesale change to the patent 

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12See proposed 28 U.S.C. § 1400(b), as modified by S. 1145. 13This provision is not intended to supersede the court’s ability to transfer or dismiss cases 

for lack of proper venue under 28 U.S.C. Sections 1404, 1406 or other relevant provisions. 14S. REP. No. 110–l, at 25 (2008) (citing 17 Moore’s Federal Practice § 110.01[5][a] (3d ed. 

1997)). 15See proposed 28 U.S.C. § 1400(c), as modified by S. 1145. 

fornia. Indeed, Congress has received evidence that a disproportionate number of patent suits are also being filed in the Western 

District of Wisconsin, and a few other jurisdictions. 

As the jurisdictions that attract plaintiffs change, so do the techniques for establishing venue. No case demonstrates the growing 

problem of forum shopping better than those involving the conglomeration of patent licensing companies known as ‘‘The Zodiac.’’

Named for the constellations, the ten related entities that comprise the Zodiac have asserted fifteen patents in 43 patent infringement suits against 488 defendants since August 2004. Although 

most of these suits were originally brought in the Eastern District 

of Texas, these licensing ‘‘corporations’’ later filed articles of incorporation for related entities in the Western District of Wisconsin, 

allowing them to sue in Madison. By establishing personal jurisdiction and meeting the current venue requirements merely by incorporating a new entity where they are likely to recover, the Zodiac 

has successfully forced numerous defendants to settle. It would 

seem only a matter of time before other companies follow suit. 

INTENT OF THE AMENDMENTS

The purpose of the amendments to the current patent venue statute (28 U.S.C. § 1400(b)) is not to penalize or demonize those districts with a growing patent docket and that have gained significant expertise in patent law. These districts are to be commended 

for taking on a formidable area of the law and other districts 

should be encouraged to do the same. Rather, the amendments will 

ensure that the patent venue statute operates as originally intended. Given the complexity of the issues involved in patent disputes, venue for patent cases warrants different treatment than 

general litigation. The proposed language attempts to balance the 

rights of patent holders with the need to ensure patent cases are 

brought where there is a true connection to the underlying dispute. 

Section 8(a) modifies 28 U.S.C. § 1400 by adding a new paragraph that explicitly states that: ‘‘a party shall not manufacture 

venue by assignment, incorporation, or otherwise to invoke the 

venue of a specific district court.’’ 12 This provision is intended to 

curb the growing trend of establishing venue in districts where 

venue would not otherwise be proper by incorporating there, transferring assets to that location, suing local defendants, or assigning 

assets to entities in those preferred districts.13 Such gamesmanship 

undermines the clear history of the patent venue provision which 

is ‘‘to protect the defendant where the defendant has no more than 

minimum contacts in the forum the plaintiff has chosen.’’ 14

The amendments provide that venue is proper, among other 

places, ‘‘where the defendant has its principal place of business or 

in the location or place in which the defendant is incorporated or 

formed.’’ 15 Further, the amendments also provide that venue for 

foreign corporations is proper where ‘‘defendant’s primary United 


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16See proposed 28 U.S.C. § 1400(c), as modified by S. 1145. 17 28 U.S.C. § 1391(d) (2000). 18 28 U.S.C. § 1400(b) (2000). 19 See proposed 28 U.S.C. § 1400(c), as modified by S. 1145. 20See Union Asbestos v. Evans, 328 F.2d 949, 953 (7th Cir. 1964); see also Hako Minuteman, 

Inc. v. Advance Machine Company, 729 F. Supp. 65, 67 (N.D. Ill. 1990) (determining that a continuous solicitation of sales combined with an activity such as the maintenance of a sales office 

and service center satisfies the ‘‘act of infringement’’ test). 

States subsidiary has its principal place of business or is incorporated or formed.’’ 16 Current law, which subjects alien defendants 

to venue anywhere in the U.S., would continue to apply to foreign 

corporations that lack U.S. based operations.17

The amendments to the venue provision also protect plaintiffs’ access to justice by providing that, under certain circumstances, 

venue will lie where the plaintiff resides. Thus, if the primary 

plaintiff is an institution of higher education, a non-profit technology transfer entity that serves as the licensing organization for 

an institution of higher education, or an individual inventor, then 

the plaintiff can claim venue where that entity resides, so long as 

it meets the other requirements under the Act. 

The amendments also address a significant ambiguity in the patent venue language. Under the second prong of the current patent 

venue test, cases can be heard ‘‘where the defendant has committed 

acts of infringement and has a regular and established place of 

business.’’ 18 The amendments specify that venue is only proper 

where ‘‘substantial acts of infringement’’ have occurred and where 

the defendant, ‘‘has a regular and established physical facility that 

the defendant controls and that constitutes a substantial portion of 

the operations of the defendant.’’ 19

Some courts have interpreted the existing ‘‘acts of infringement’’ language very broadly. For example, in 1990, the Northern District 

of Illinois held that the continuous solicitation of sales combined 

with an activity such as the maintenance of a sales office and service center satisfies the ‘‘acts of infringement’’ test.20 This has enabled plaintiffs to establish venue in districts that have no real 

connection to the defendant other than the fact that a national retail store sells its product there. In other words, under the current 

interpretation of the ‘‘acts of infringement test,’’ a plaintiff can establish venue in any district where the defendant’s product happens to flow in the stream of commerce. 

Proper venue should not be determined by downstream decisions 

of third parties. As such, the amendments to the venue provision 

provide that the defendant must have ‘‘committed substantial acts 

of infringement’’ in that district before a case may be heard there. 

This language seeks to prevent venue from being based solely on 

isolated or insubstantial acts of infringement by the defendant, 

such as the sale of a few allegedly infringing computers, medical 

devices, or farm equipment in that district, especially if these items 

are routinely sold throughout the U.S. 

In addition, some courts have also failed to apply the ‘‘regular 

and established place of business’’ test with appropriate rigor. 

Many courts have made clear that in order to satisfy the ‘‘regular 

and established place of business’’ requirement, ‘‘[a] defendant 

must be regularly engaged in carrying on a substantial part of its 

ordinary business on a permanent basis in a physical location withVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00057 Fmt 6604 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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21 Kinetic Instruments v. Lares, 802 F. Supp. 976, 987 (S.D.N.Y. 1992) (emphasis added; internal quotation marks and citations omitted). 22See, e.g., In re Cordis Corp., 769 F.2d 733 (Fed. Cit. 1985), cert. denied, 474 U.S. 851 (1985); 

Brunswick v. Suzuki Motor Co., 575 F. Supp. 1412, 1424 (E.D. Wisc. 1983). 23See Hako, 729 F. Supp. at 67. 24See generally the Class Action Fairness Act of 2005, Pub. L. 109–2, 119 Stat. 4, the Securities Litigation Reform Act of 1998, Pub. L. 105–353, 112 Stat. 3227 (legislation where Congress 

also sought to address forum shopping concerns). 

in the district over which it exercises some measure of control.’’ 21

However, other courts have found the requirement satisfied where 

a defendant simply does business through employees located in the 

district 22 or leases office space in the district.23 The amendments 

clarify that the requirement is satisfied only if the defendant ‘‘has 

a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the operations of 

the defendant.’’ For example, a few sales kiosks, one small office or 

some minor telecommunications infrastructure should not be sufficient to meet this test, especially if the defendant operates similar 

facilities throughout the U.S. This change will ensure that patent 

infringement cases are heard in appropriate forums. 

CONCLUSION

Although forum shopping is not unique to patent law, it has 

proven especially pernicious in patent litigation and is a practice 

that Congress has repeatedly addressed.24 Unfortunately, it is not 

a problem that will correct itself with time but is one that will continue to grow unless Congress intervenes. The proposed changes to 

the patent venue statute will restore balance to the patent system, 

by ensuring that these complex cases are heard in the most appropriate district. 

ARLEN SPECTER. 


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1S. REP. NO. 110–l, at 31 (2008). 2 Id. at 32. 3 Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 244 (1933). 4 Id. (citing Joseph Story, Story’s Equity Jurisprudence § 98 (14th ed. 1918)). 5 37 C.F.R. § 1.56 (2007). 6 Id. 

ADDITIONAL VIEWS OF SENATORS ARLEN SPECTER AND 

ORRIN HATCH ON THE INEQUITABLE CONDUCT DEFENSE, S. 1145 

As the Committee Report on S. 1145 notes, ‘‘candor and truthfulness are essential to the functioning of the patent examination 

process.’’ 1 Despite the importance of this fundamental principle, 

Congress has never addressed the matter legislatively. Rather, it 

has left the matter for the United States Patent and Trademark 

Office (USPTO) to infer and for the courts to interpret. The result 

has been, as the Committee Report notes,2 shifting standards that 

encourage improper challenges to patents based on assertions of inequitable conduct. Such challenges give rise to significant litigation 

costs and uncertainty about patent rights. They also chill communications between inventors and patent examiners during the patent examination process. Given this current state of affairs, it is 

imperative that Congress take steps to ensure that the inequitable 

conduct doctrine is applied in a manner consistent with its original 

purpose: to sanction true misconduct and to do so in a proportional 

and fair manner. 

HISTORY OF THE INEQUITABLE CONDUCT DEFENSE

The Supreme Court arguably first recognized the doctrine of inequitable conduct in the 1933 decision, Keystone Driller Co. v. Gen. 

Excavator Co.3 In that case, the Court noted, ‘‘It is one of the fundamental principles upon which equity jurisprudence is founded 

that, before a complainant can have a standing in court, he must 

first show that not only has he a good and meritorious cause of action, but he must come into court with clean hands.’’ 4 In so doing, 

the Court recognized that a patent could be rendered unenforceable 

when the patent holder engages in less than honest conduct. 

The most notable development following Keystone Driller occurred when the USPTO imposed a duty of candor.5 37 Code of 

Federal Regulations (C.F.R.) 1.56 (commonly referred to as ‘‘Rule 

56’’) states that ‘‘Each individual associated with the filing and 

prosecution of a patent application has a duty of candor and good 

faith in dealing with the Office, which includes a duty to disclose 

to the Office all information known to that individual to be material to patentability * * * .’’ 6 When applying Rule 56, lower courts 

have refused to enforce patents whenever material information is 

withheld from, or misrepresented to, the USPTO. However, as the 


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7S. Rep. No. 110–l, at 32 (2008). 8See Burlington Industries, Inc. v. Dayco Corp., 849 F.2d 1418 at 1422 (Fed. Cir. 1988) (‘‘the 

habit of charging inequitable conduct in almost every major patent case has become an absolute 

plague.’’). 9See Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223 (Fed. Cir. 2007); McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897 (Fed. Cit. 2007). 10See Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006). 

Committee Report notes, the type of information that is material 

to the patentability of an invention is far from clear.7

THE NEED FOR REFORM

We believe the inequitable conduct doctrine needs to be reformed 

because the modern examination environment is no longer confidential or closed to the public. Instead, the entire contents of applications, and their up-to-date status, are made available to the 

public in real-time by the USPTO. Moreover, additional provisions 

of S. 1145 advance greater participation by the public in the examination process and create a new administrative procedure to allow 

the public to challenge patent validity. 

As originally articulated by courts, the inequitable conduct doctrine required clear and convincing evidence that a person with a 

duty of disclosure to the USPTO concealed or misrepresented material information during examination of a patent application, and 

did so with the specific intent of misleading the Office into issuing 

the patent. Unfortunately, the law governing inequitable conduct 

today is far removed from its original legal foundations. The inequitable conduct defense today has become a convenient and frequently raised litigation tactic that is overpled and a quick route 

to taking down otherwise valid and commercially valuable patents. 

It has become, in the words of the Federal Circuit, a ‘‘plague’’ on 

the patent system.8

Reforms to several aspects of the law governing inequitable conduct doctrine are needed to correct the problems with current law. 

These reforms are needed to not only align the doctrine with its 

public policy justifications, but also to make the doctrine useful to 

the USPTO. It is timely for us to reform the inequitable conduct 

doctrine as part of S. 1145. 

Today, virtually any information can be characterized as ‘‘material’’ to the examination of a patent application. For example, 

courts have found the fact that an applicant paid the incorrect patent maintenance fee or failed to update the USPTO regarding the 

status of other pending applications to be ‘‘material’’ even though 

such information is unrelated to whether the invention at issue can 

be patented or is readily available and known to the USPTO.9 In 

other cases, courts have found an applicant’s failure to adequately 

disclose its relationship with an expert to be material even though 

the expert’s views were accurate and true.10 Given these cases, 

Congress must bring the doctrine of inequitable conduct back in 

line with its original purpose by limiting the standard for materiality to information that affects the patentability of an invention. 

We do not support the ambiguous language reported by the Committee defining material information as that which a ‘‘reasonable 

patent examiner would consider such information important.’’ This 

standard does not improve current law. Instead, it codifies current 

law, which will preclude any beneficial judicial developments that 


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11 Indeed, the Bill language codifies the materiality standard in precisely the way in which 

it has been explicated by the courts for decades. See, e.g. Nilssen v. Osram Sylvania, Inc. 504 

F.3d 1223, 1235 (Fed. Cir. 2007) (‘‘Information is material if there is a substantial likelihood 

that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent.’’); Honeywell Intern. Inc. v. Universal Avionics 

Systems Corp., 488 F.3d 982, 1000 (Fed. Cir. 2007) (same); Halliburton Co. v. Schlumberger 

Tech. Corp., 925 F.2d 1435, 1440 (Fed. Cir. 1991) (same); McKesson Information Solutions, Inc. 

v. Bridge Medical, Inc., 487 F.3d 897, 913 (Fed. Cir. 2007) (Materiality of information withheld 

during prosecution may be judged by ‘‘reasonable examiner’’ standard, in determining whether 

a patent is rendered unenforceable for inequitable conduct; that is, materiality embraces any 

information that a reasonable rexaminer would substantially likely consider important in deciding whether to allow an application to issue as a patent); Akron Polymer Container Corp. v. 

Exxel Container, Inc., 148 F.3d 1380, 1382 (Fed. Cir. 1998) (same). 12S. Rep. No. 110–l, at 32 (2008). 13 Concerns about this language are further compounded by the fact that at the time that the 

Committee Report on S. 1145 is filed, it is unclear what the standard for a ‘‘reasonable royalty’’

Continued 

might occur in the future.11 We consider this an unworkable solution. The language will make the problem worse for both the 

USPTO and for patent owners by allowing defendants to characterize irrelevant information as material. Under current law, patent applicants are compelled to provide too much information, 

much of it irrelevant, to the USPTO during examination. This state 

of affairs only leads to an inefficient patent examination process. 

A more appropriate standard will encourage applicants to provide 

only the most pertinent information to the Office, which will enable 

the USPTO to focus on truly material prior art and information 

that can affect the validity of a patent claim. 

Further, as the Committee Report states, courts often ignore the 

requirement of proving that the person accused of inequitable conduct specifically intended to deceive the USPTO so that it would 

grant the patent.12 Courts have done this by inferring the intent 

to deceive from the ‘‘materiality’’ of the information at issue. In 

order to have a viable fraud standard, we believe intent must be 

proven with independent evidence separate from and unrelated to 

the materiality of the information at issue. 

Additionally, holding an entire patent unenforceable is an excessive sanction and needs to be changed. This sanction, which provides a windfall to private litigants, is inconsistent with the nature 

of equitable remedies. The law should impose a sanction that is appropriate to the circumstances of each case. In this respect, we do 

not support the Committee-passed language, which simply lists 

possible sanctions that can be imposed by a court. Giving courts— and defendants—unfettered discretion to impose any of the enumerated sanctions, rather than providing guidance in the law as to 

when to impose more severe or less severe penalties, will do little 

to address the problems in the current law. Indeed, it can fairly be 

asked whether expanding the range of available sanctions for inequitable conduct in the absence of other meaningful changes to 

the doctrine will encourage more, not less, inequitable conduct litigation. 

We also believe the law needs to set an objective threshold showing regarding the significance of the information withheld or misrepresented to the USPTO before courts are authorized to impose 

the most severe sanction of unenforceability. With respect to remedies that limit damages, the standard should give the court the 

discretion to limit a damages award as it sees fit, rather than to 

require the court to simply impose a ‘‘reasonable royalty.’’ 13 These 


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will be under the bill, in light of the Committee Report’s note that the standard will have to 

be changed ‘‘yet again.’’ Id. at 13 n. 51. 

reforms to the sanctioning authority need to be sufficient to eliminate the strong incentive that exists under current law for defendants to assert inequitable conduct, regardless of the facts of the 

case. 

Finally, given that inequitable conduct contributes significantly 

to the complexity and cost of litigation, measures are needed to 

eliminate the use of this defense as a litigation tactic. Inserting an 

objective test for the relationship of any asserted misconduct to the 

patent claims being asserted is necessary, as are measures that 

will ensure that the defense is raised only in appropriate cases. In 

this context, it is important to remember that the doctrine must operate to serve the public interest as well as the interests of individual litigants. The public interest includes an interest in candid 

and truthful disclosures during the patent application process, but 

it also includes an interest in preserving commercial decisions 

which were correctly made in reliance on valid patents. Reformed 

standards for inequitable conduct must fairly balance these interests. 

CONCLUSION

Under current inequitable conduct law, every claim in a valid 

United States patent will be held to be unenforceable if ‘‘inequitable conduct’’ is established. This is true regardless of the merits 

of the invention, or the connection (if any) between the misconduct 

or information at issue and the claims of the patent. The defense 

has proven to be irresistible for litigants—if proven, it allows an infringer to escape any liability for infringing a valid patent. This 

powerful incentive leads defendants to raise even the most questionable inequitable conduct challenges on the remote chance that 

they will prevail. 

Reforms to several aspects of the law governing inequitable conduct doctrine are needed to correct the problems with current law. 

These reforms are needed to not only align the doctrine with its 

public policy justifications, but also to make the doctrine useful to 

the USPTO. It is timely for us to reform the inequitable conduct 

doctrine as part of S. 1145. 

The development of a more objective and clearer inequitable conduct standard will remove the uncertainty and confusion that defines current patent litigation. The Committee-passed language is 

consistent with existing law, and essentially maintains the status 

quo, rather than making meaningful reforms that address the 

abuses associated with the current inequitable conduct doctrine 

and that foster a strong and vibrant environment for innovators. 

ARLEN SPECTER. 

ORRIN HATCH. 


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1For a thorough defense of this viewpoint, see Jay Dratler, ‘‘Does Lord Darcy Yet Live? The 

Case Against Software and Business-method Patents,’’ 43 Santa Clara L. Rev. 823 (2003). 

ADDITIONAL VIEWS OF SENATOR KYL 

A few words about business-method patents: the justification for 

granting patents—and 20-year monopolies—to inventors is that the 

costs of innovation and development are so high in many fields that 

only the prospect of a limited monopoly is sufficient to persuade inventors to devote the time and money that is required for a socially 

beneficial level of innovation. The classic example is new drugs. It 

may easily cost $100 million to develop and win approval of a new 

drug. If a company could not get a limited monopoly on the drug 

once it is approved—if anyone could immediately start copying the 

drug—no one would develop the drug in the first place. 

This economic reality generally holds true throughout the hard 

sciences. It is generally true for mechanical inventions, new chemical compounds, and new computer hardware products. 

It is not true for business methods. Methods of conducting business have obviously been around since the first patent law was enacted in this country in 1790, but there had long been an understanding that methods of doing business are not patentable. It may 

take a lot of money and effort to develop a new mousetrap, but it 

does not require expensive R&D to think up new ways to market 

that new mousetrap.1 The PTO began to slip somewhat from this 

longtime recognition of a ‘‘business-methods exception’’ to patentability in the 1980s, and the Federal Circuit radically accelerated 

this shift when it eliminated the business-methods exception in its 

1998 State Street decision. 

Though a three judge panel of the Federal Circuit recently took 

a big step back from State Street, that decision remains on the 

books—as it must, since only an en banc panel could overrule it. 

Congress should act to restore the generally recognized limits on 

patentability that prevailed throughout the first 200 years of the 

history of patent law in this country. The costs of giving a monopoly to persons who think up new business methods are greater 

than the benefits derived from the resulting increase in invention 

of ‘‘business methods.’’ Business methods are not expensive to invent, and since, by definition, business is already engaged in business, there is little or no inherent barrier to commercialization of 

these methods. Business methods should not be patentable. 

JON KYL. 


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ADDITIONAL VIEWS OF SENATOR SPECTER JOINED WITH 

MINORITY VIEWS OF SENATORS KYL, GRASSLEY, 

COBURN, AND BROWNBACK 

Discussions over this bill, and our own understanding of patent 

law, evolved considerably over the course of 2007, and they continue to evolve. And as the committee notes in footnote 51 of the 

draft report—a footnote that undoubtedly will be carefully parsed 

by many sets of eyes—‘‘calming fears’’ of the many patent holders 

who are deeply concerned about the bill’s damages provision ‘‘requires amendment of this language yet again.’’ Thus the bill remains a work in progress, and there is no cause for belaboring in 

this statement any particular legislative language, as neither the 

bill text nor our own position on these issues is yet final. Nevertheless, the many parties whose livelihoods are affected by this legislation are entitled to know where things stand at the moment. With 

such limited objectives in mind, we present these minority views on 

the current legislative landscape. 

Earlier in the course of the consideration of this bill, there was 

much legislative head scratching over the phrase in the bill’s damages provision ‘‘specific contribution over the prior art.’’ Many of 

the principal parties advocating for this bill made clear early and 

consistently that this language was of central importance to them, 

but it remained unclear what the language means. Even the advocates for the language adhered to sharply different interpretations 

of what this phrase requires, which were of varying degrees of 

unacceptability. 

What this phrase means is very important. Although limited exceptions were created in the committee markup to the ‘‘specific contribution’’ test, the vast bulk of reasonable-royalty cases would still 

need to be litigated under that standard under the committee reported bill. The new exceptions to the ‘‘specific contribution’’ test— in subsection (c)(1)(B) of proposed section 284 of the reported bill— are for damages that are established either by way of established 

royalties or through the prices paid for noninfringing substitutes. 

Established royalties are rare in the world of patent litigation. To 

constitute ‘‘established royalties,’’ historical royalties paid for a patent must be for the very patent at issue, they must have been 

agreed to outside of the context of litigation, they must be non-exclusive, and there must be enough of them to demonstrate a market value for the patented invention. Few holders of even useful 

and valuable patents can make such a showing. Non-infringing 

substitutes are rare too. After all, the more that a patented invention is truly revolutionary and essential to a product’s market success, the less likely it will be that non-infringing substitutes are 

available. 

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lems. Under current law, ‘‘entire market value’’ is generally understood to mean the rule for expanding the damages base beyond the 

infringing product to also include other products sold with or in relation to the infringing product. Subparagraph (A) narrows this 

rule so that it limits when the infringing product itself may serve 

as the damages base, in effect repealing current law’s presumption 

that the infringing product is the damages base. Moreover, the bill 

predicates application of this new ‘‘entire market value’’ rule, which 

will now govern when the infringing product may serve as the 

damages base, to situations where demand for the infringing product is driven by those magic words, ‘‘specific contribution over the 

prior art.’’ Consider for a moment what this would do to the already quite 

limited exceptions to the ‘‘specific contribution’’ test that are enumerated in subparagraph (B). Suppose that a plaintiff is able to 

demonstrate the existence of an established royalty for his patent, 

thus entitling him to an exception to the ‘‘specific contribution’’ test. But now further suppose that this established royalty is expressed as a small percentage of the total price of the infringing 

product. Though the royalty is based on established royalties, and 

is thus freed from the ‘‘specific contribution’’ test by subparagraph 

(B), the royalty itself uses the infringing product as the damages 

base, and thus comes within the scope of subparagraph (A)’s ‘‘entire 

market value’’ rule, which bars use of the price of the infringing 

product as the damages base unless sales of the infringing product 

are driven by the patent’s ‘‘specific contribution over the prior art.’’ So which would control in this hypothetical situation, subparagraph (A) or (B)? Do the damages need to be proven under the 

‘‘specific contribution’’ test or don’t they? 

This hypothetical scenario would not be a minor matter. A number of experienced patent litigators have affirmed to us that the net 

sales price of the infringing product tends to be the most commonly 

employed damages base when royalties are negotiated at arm’s 

length. (This apparently stems from the fact that the net sales 

price usually is an easily and objectively verifiable datum. It is 

used as the damages base even when the value added by the patented invention to the product is minor. In such circumstances, the 

low significance of the invention is reflected in a royalty that is a 

very low percentage of the net sales price.) So this question could 

be expected to arise frequently under the proposed legislative text 

when damages are sought to be proven by way of established royalties. 

Most problematic of all, however, is what the phrase ‘‘specific 

contribution over the prior art’’ appears to be intended to mean. In 

recent weeks, it has become apparent to us that this language is 

designed to allow de facto relitigation of claim construction and validity issues during the damages phase of a lawsuit. This interpretation is confirmed by the committee report. Footnote 51 of the report and its accompanying text state that ‘‘specific contribution 

over the prior art’’ means ‘‘the reason why the patent was allowed 

in view of the existing information at the time of the invention;’’

that it is meant to capture ‘‘the actual invention,’’ ‘‘the gist of the 

patent,’’ ‘‘the reason a patent issued,’’ or even—in a nod to the crystalline clarity of obscenity jurisprudence—‘‘I know it when I see it;’’


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and finally, that it describes what is ‘‘novel and nonobvious’’ in the 

patent. 

All of these issues are validity issues. ‘‘Why the patent was allowed,’’ as well as novelty and nonobviousness, are issues that are 

properly raised as validity issues and, in a bifurcated trial, are resolved long before the jury begins to consider damages. To allow 

these issues to again be litigated as damages questions is to overlay a second (and presumably different) set of validity standards 

over current law at the damages phase of the trial. Allowing such 

relitigation immediately raises the question of what was the point 

of the earlier phase of the litigation where prior art, novelty, and 

obviousness were litigated in the first instance. To the extent that 

these legal tests need to be modified, this bill should amend sections 102, 103, and 112, not section 284. 

Nor is it apparent that the changes to validity standards that 

would be prescribed by the phrase ‘‘specific contribution over the 

prior art’’ are beneficial. ‘‘Gist of the patent,’’ for example, is a test 

that was used in the past under the doctrine of equivalents and 

that was discarded many years ago, because it tended to have the 

effect of unduly broadening the scope of the patent. Patent plaintiffs arguing doctrine of equivalents would reduce their patent 

claims to a back-of-the-envelope ‘‘gist’’ or ‘‘nub’’ of the patent, and 

then argue that the defendant’s product fell within that ‘‘gist,’’ the 

actual claims of the patent be damned. This test effectively allowed 

a plaintiff to broaden his patent and claim things that were not 

even the equivalent of what was described in the patent’s claims. 

If there is one thing on which we are certain that the advocates 

for this bill would agree, it is that they do not want to expand the 

reach of valid patents that are claimed to have been infringed. 

We remain open to exploring changes to damages law. Representatives of many manufacturers have complained to us about 

excessive awards of damages made for valid and infringed but relatively trivial patents. It is clear that these firms’ concerns about 

this matter are genuine and deep. That alone entitles this matter 

to our serious consideration. One proposal recently made to us that 

may have merit is that, at least in high-value cases, the law should 

favor estimates of damages that are based on economic analysis, 

rather than the usual shorthand of total product value multiplied 

by an expert’s unverifiable assertions about what constitutes a reasonable royalty. Such economic analyses are expensive. But especially when tens of millions of dollars are at stake, it is appropriate 

to favor the best available evidence of what a patent is worth. 

A few words about second window: opening up a second window 

for administrative challenges to a patent only makes sense if defending a patent in such proceedings is not unduly expensive, and 

if such proceedings substitute for a phase of district-court litigation. If second-window proceedings are expensive to participate in, 

a large manufacturer might abuse this system by forcing small 

holders of important patents into such proceedings and waiting 

until they run out of money. Defending oneself in these proceedings 

requires retention of patent lawyers who often charge $600 an 

hour, quickly exceeding the means of a brilliant inventor operating 

out of his garage—or even of a university or small research firm. 


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Second, if estoppel rules are unduly liberalized, second-window 

proceedings could easily be used as a delaying tactic. If estoppel is 

limited only to issues actually raised by the defendant, for example, 

a defendant with four possible prior art challenges to a patent 

might initiate second window proceedings with regard to only two 

of those pieces of prior art. The initiation of the proceedings is likely to lead to a stay in the litigation, which likely will remain in 

place through the appeal of the PTO’s second-window decision. 

Once those challenges are rejected, the defendant could then raise 

the two remaining prior-art challenges in the district court, starting the litigation again at the exact same place where it was 

stopped years earlier. If second window proceedings are to be permitted, they should generally serve as a complete substitute for at 

least some phase of the litigation. 

If a second-window provision is to be enacted into law, an appropriate solution to these dilemmas might be to limit second window 

proceedings to those types of issues that require very little discovery (and to only allow limited discovery), and to make estoppel 

rules more certain than the current ‘‘could have raised’’ test but to 

still require that defendants raise in the second window all of the 

claims of a particular type that are available to them. Perhaps, for 

example, a defendant who chooses to address prior-art issues in the 

second window might be required to raise all prior art identified to 

him as a result of a reasonable search request submitted to a commercial search firm. 

A very few words about interlocutory appeals: the committee has 

gone a long way toward addressing our concerns about these appeals. It has added language to the bill allowing such appeals only 

if the district court finds both that there is a sufficient evidentiary 

record to allow an appeal, and that such an appeal would save judicial resources. Advocates of allowing such appeals contend that if 

the Federal Circuit is allowed discretion to refuse such appeals, it 

will do so wantonly. Be that as it may, we nevertheless believe that 

the Federal Circuit should have some limited discretion to refuse 

an interlocutory appeal. Though some patent litigants criticize the 

inclinations of the Federal Circuit, a number of others have noted 

to us that some district judges do not enjoy patent litigation and 

will bend the rules to rid themselves of such cases. We cannot assume that every district judge will only certify an interlocutory appeal when the evidentiary record before him is in fact sufficient. If 

a district judge were to send up an appeal on a manifestly inadequate record, and the Federal Circuit were given no recourse, that 

appellate court would be forced to issue a ‘‘final’’ claim construction 

ruling—which would serve as the law of the case for the remainder 

of the litigation—without having enough information before the 

court to allow it to be certain that it had correctly construed the 

patent. The Federal Circuit should be permitted to reject the district court’s predicate interlocutory-appeal findings, and to refuse 

an interlocutory appeal, when those findings are clearly erroneous. 


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Patent law is a matter whose importance to the American economy is matched only by its complexity. This bill would work major 

changes to this area of the law—the biggest changes in at least 

half a century. We look forward to continuing to work carefully 

with Chairman Leahy on this important legislation. 

ARLEN SPECTER. 

JON KYL. 

CHUCK GRASSLEY. 

TOM COBURN. 

SAM BROWNBACK. 


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MINORITY VIEWS OF SENATORS FEINGOLD AND COBURN 

This legislation fails to strike a fair balance between patent holders and patent infringement defendants. In our view, it remains far 

too lenient on infringement. In its current form, it could potentially 

undermine one of the most important engines of American innovation. 

The Constitution gives 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.’’ The Framers understood that granting 

exclusive rights to license an invention was the key to spurring 

technological development. Just as your home is not worth much 

if neighbors are constantly entering, eating your food, and sleeping 

in your bed, so the value of intellectual property rights depends on 

their security. 

No system is immune from abuse, of course, and the more than 

five decades since the last major reform of the patent system have 

demonstrated some need for revisiting and reforming the law to 

deter strategic litigation and gamesmanship that little benefits the 

American people. We recognize that the Chairman has made an effort to bring competing interests to the table, soliciting the proposals of all groups, private and public, and presenting compromises that strive for a workable and just balance. 

Nonetheless, the two central provisions of the bill, in our view, 

are not balanced. S. 1145 still includes an unlimited opportunity to 

challenge a patent’s validity throughout its twenty-year life, the socalled ‘‘second window.’’ One could be forgiven for wondering what 

kind of window opens, but does not shut. Though shoddy patents 

do exist and must be addressed, after careful consideration, I decided that defending a patent’s validity throughout its life will be 

so burdensome that only patent owners with deep pockets could 

consider this a viable and attractive option. Moreover, since a patent will no longer be a presumptively valid seal of approval, but a 

mere opportunity to defend a claimed invention’s novelty over its 

entire life, patentees will find it much more difficult to secure the 

investment necessary to bring a novel idea to market. Patents will 

be devalued and many inventors will opt for trade secrecy instead, 

undermining the Framers’ intent to promote disclosure and public 

benefit through a strong patent system. S. 1145 borrowed its firstto-file system from other nations, but refuses to heed the experience of nations that experimented with second window review. 

Unfortunately, the bill put far less energy into crafting proposals 

for more rigorous pre-grant examination of prior art and novelty. 

That is a way to deal with the problem of so-called ‘‘junk patents’’

without threatening the value of legitimate patents. There are already some innovative programs operating on the front end to 

make the PTO’s application review more informed, accurate and efVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00069 Fmt 6604 Sfmt 6604 E:\HR\OC\SR259.XXX SR259

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ficient. Moving forward, I hope that Congress abandons ‘‘second 

window’’ reexamination and that fresh thinking on improving application examination will be forthcoming. 

Two other provisions in S. 1145 are very troubling: the mandatory apportionment of damages and the restriction of plaintiffs’ ability to sue infringers in their home venue. The law governing 

damages in patent infringement cases goes to the very core of the 

patent system. Shifting to mandatory apportionment will create a 

system of de facto compulsory licensing that will neither adequately compensate the patent holder nor adequately deter future 

infringers. Paying a royalty down the road will simply become the 

cost of doing business, unless the patented component part meets 

the high threshold of a ‘‘predominant basis’’ for market demand. 

The truth is that, with the exception of a few possibly excessive 

awards, current law on damages is working. The fifteen GeorgiaPacific factors, which the courts have adopted, preserve flexibility 

for jury calculations by covering a wide range of real business circumstances. The royalty base may exclude the value added by an 

infringer and include the full value of products and services in demand principally due to the patented invention. By contrast, S. 

1145’s ‘‘prior art subtraction’’ method is unworkable given the complexity of modern products and straitjackets deliberations that already struggle to accurately capture the harm of infringement. 

Though our preference was to strike the damages section altogether, we did support the defeated Kyl amendment, which largely 

preserves current law, and Senator Grassley’s proposal to codify all 

15 of the Georgia-Pacific factors, which was not offered. We would 

even have considered a form of enhanced inter partes reexamination, which the House Judiciary Committee adopted, but two-window, post-grant review unfortunately carried the day. 

Similarly, as reported, the bill’s venue provision is skewed heavily in favor of infringer-defendants. It may be true that forum-shopping is a problem in patent litigation, but this provision sweeps too 

broadly. Notwithstanding the carve-out for universities and nonprofit patent licensing institutions, we think S. 1145 unduly restricts plaintiffs’ choice of forum and will deter the filing of legitimate infringement suits. 

We want this legislation to succeed, but it is crucial that it not 

undermine the stability of the patent system that has put America 

at the cutting edge of innovation worldwide. We look forward to 

voting for patent reform that adequately and fairly addresses these 

problems. 

RUSS FEINGOLD. 

TOM COBURN. 


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MINORITY VIEWS ON POST GRANT REVIEW BY SENATORS 

COBURN, GRASSLEY, KYL AND BROWNBACK 

As one way to improve patent quality, the Committee is considering modification to the post grant review process, such as creating a brand new administrative system to review patents after 

their issuance or revising the current system. Such a process 

should serve to either solidify the patent’s validity or to catch a 

patent that should have been rejected during the initial examination. The process should be timely and streamlined and should take 

issues off the table that cannot be resurrected in subsequent litigation, providing a cost effective alternative to litigation. To protect 

patent holders from harassment and abuse by a competitor or infringer, the system must be narrowly crafted with appropriate safeguards. 

Additional consideration should be given to creating a system 

that is workable and manageable for the U.S. Patent and Trademark Office so that USPTO will not be overwhelmed with post 

grant challenges. If the system is too broad, USPTO resources will 

be stretched and will likely siphon resources away from the examination process. This would be a doubly destructive result. 

Whatever post grant system is ultimately devised, at some point 

the patent should be final and the inventor should enjoy the benefit 

of their invention without a cloud of uncertainty lingering over it 

during the full life of the patent. Although the Committee markup 

process incorporated some safeguards into the original broad and 

unfettered proposal, and because the ‘‘2nd window’’ is uncharted 

territory that provides the opportunity for abuse, more effort needs 

to be made to provide a tighter second window or none at all. 

The Committee Report at page 21 asserts that the changes that 

occurred during the Committee process ‘‘have addressed the concerns of the many interested aspects of the patent community.’’ This is simply not the case. 

Numerous inventor companies, industry organizations, patent attorney organizations, patent practitioner organizations, research 

universities, and life science industries continue to express deep 

concern with the current post grant scheme in S. 1145. Our own 

colleagues in the House of Representative considered the bill’s post 

grant scheme so suspect that they eliminated the 2nd window altogether and expanded the current reexamination process at USPTO. 

Furthermore, data from the USPTO suggests that the current reexamination process is gaining popularity. Since FY03, the number 

or requests for both inter partes reexamination and ex parte reexamination has steadily increased. Thus, someone in the patent 

community must think the current system has redeeming attributes. The overwhelming lack of consensus on whether or how 

to implement the 2nd window should signal to this Committee to 

proceed cautiously. 


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The post-grant opposition system proposed in 5.1145 would encompass a quasi-judicial proceeding with judges, experts, discovery, 

cross-examination and other costly aspects of litigation. However, 

it would lack the many safeguards of existing judicial and administrative reexamination procedures that protect patent owners 

against unwarranted, duplicative, and abusive post-grant challenges. As a result, the proposed post-grant opposition system could 

encourage patent litigation and significantly increase the costs, 

delays, and uncertainty of patent ownership instead of doing the 

opposite. Moreover, the threat of expansive opposition litigation 

would significantly undermine a patent’s value and enforceability 

if such procedures were available throughout a patent’s life. This 

uncertainty over the patent would limit the ability of inventors to 

attract capital investment and further develop their innovation and 

bring it to the marketplace. The Committee must not be so intent 

on creating a new process that they disregard the legitimate industries that need a more certain and final system. The U.S. economy 

needs and relies on these industries’ ability to continue to provide 

innovative products to improve our quality of life and continue providing jobs for our constituents. 

The Committee also needs to further assess the experiences of 

foreign countries as they have tinkered with their post grant opposition systems. We know that countries like Japan, Korea, China, 

Taiwan and the European Union faced various hurdles as they implemented or reformed their post grant systems. In fact, some of 

the countries scrapped their system and revised it to avoid some 

of the same problems that U.S. companies warn of today. The risk 

of harassment is more than theoretical. In the EU, Japan and 

other markets with a post-grant opposition system, U.S. patent 

holders have reported a pattern of practice where foreign competitors routinely use administrative opposition proceedings as a 

means of tying up issued patents in multiple challenges with the 

aim of depleting the useful life of the patent. News accounts in foreign markets have documented the eager interests of foreign competitors as they look forward to using the new post grant system 

in S. 1145 to gain a competitive business advantage against their 

U.S. competitors. If we know other countries had problems in their 

reform efforts, why wouldn’t we take the time available to us to 

more thoroughly study the issue to make sure we don’t repeat their 

mistakes? 

Where consensus does seem apparent is in implementing a ‘‘1st 

window’’. A more prudent course than launching into an unknown 

and potentially unnecessary 2nd window may be to enact the 1st 

window, make adjustments to the current reexamination system 

and monitor the results. If the changes are still inadequate, then 

maybe the need for a 2nd window, and the appropriate parameters, 

will be more apparent. It is safer for this Committee and the full 

Senate to tread cautiously and make adjustments in the future 

than it is to stumble into a thicket that we cannot easily escape. 


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We stand ready to assist the sponsors in their efforts to make the 

necessary adjustments to improve the post grant system in S. 1145. 

TOM COBURN. 

CHUCK GRASSLEY. 

JON KYL. 

SAM BROWNBACK. 


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MINORITY VIEWS BY SENATORS COBURN, SPECTER, 

GRASSLEY, KYL AND BROWNBACK 

GENERAL OBSERVATIONS

Primum non nocere is Latin phrase that means ‘‘First, do no 

harm.’’ This principal precept of medicine should be applied more 

often by Congress when debating the merits of proposed legislation. 

More specifically, the nation would be best served were the Committee on the Judiciary to consider further what harm might befall 

our patent system should the intervention proposed in S. 1145 ‘‘The 

Patent Reform Act of 2007’’ be enacted, and how does this harm 

compare to any potential benefits? 

Although the sponsors of S. 1145 have concluded that S. 1145 

will establish a ‘‘balanced set of changes,’’ we have come to a starkly different conclusion. In our opinion, the intervention the bill proposes will create real and certain damage to our patent system and 

the ability of America’s inventors and innovation industries to protect their intellectual property rights. As the U.S. battles to retain 

its status as the leader of the global economy, Congress can ill afford to misstep by passing S. 1145 as is, and further weaken the 

economy’s shifting foundation. 

Recently Congress has focused its attention on numerous issues 

through the lens of helping the ‘‘little guy’’ especially as he’s pitted 

directly against the ‘‘big guy’’ corporate interests. Without significant changes, S. 1145 will considerably tilt the intellectual property 

landscape to favor a few high-tech mega-corporations and some 

large financial service interests against a myriad of players including academia, agriculture, alternative energy, biotechnology, chemical, electronics, environmental technology, financial services, information technology, life sciences, manufacturing, nanotechnology, 

and telecommunications industries. Congress will send to the President a bill that picks winners and losers based on business models 

and not on protecting the Constitutional rights of patent holders. 

The interests of infringers will be elevated over the interests of inventors; the interests of those with deep pockets over the interests 

of start-ups; litigation over licensing; and the interests of foreign 

competitors over the interests of domestic innovators. 

As patents become more significant to U.S. industry, Congressional interest in the operation of our nation’s patent system has 

increased. As the United States becomes a knowledge-based, technology economy, the commercial significance of patents is at a premium. When Congress looks to the knowledge economy and contemplates our future, it must strengthen, not weaken, America’s intellectual property system because that system—the inventions it 

protects and the innovation systems it stimulates—will be the key 

to our nation’s future success in the knowledge economy lying 

ahead. 


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Economic growth depends upon the continued strength and reliability of the U.S. patent system, which has recognized and protected the rights of inventors for more than two centuries. Our 

Country’s Founders understood that property rights are as essential to the fruits of the mind as they are to the fruits of the land. 

Just as a deed creates legal incentives to cultivate and improve a 

plot of land, patent rights create incentives to invest in the development and commercialization of an idea. Patent certainty and reliability enables the collaborative development and funding required 

to nurture basic research through its upstream refinement to its 

downstream commercialization for the public benefit. That same 

certainty enables others to confidently invent around—or incrementally improve—published, patented technology. Thriving innovation 

is the key to a sound economy. It benefits the public while enhancing our nation’s security and economic leadership. Thus the focus 

of patent legislation should be improvement of patent quality and 

protection of intellectual property rights. Legislation should not inject uncertainty into the patent system which will take years of litigation to sort out and that creates unknown ramifications for 

American innovation. 

Proponents of the Senate bill have argued, and continue to 

argue, that the present patent regime is ‘‘broken’’ and sweeping reform is needed to right the ship. However, deficiencies cited with 

the U.S. Patent and Trademark Office’s patent production are 

being remedied. USPTO reports that the number of rejections of 

patent applications is at an all time high while new and creative 

methods to involve the applicant and accelerate examinations are 

showing success. If our shared objective is to improve patent quality while preserving incentives to innovate, we should instead pursue reforms that enhance patent examination resources and capabilities within the USPTO and make it harder for questionable patents to survive scrutiny. 

The USPTO has already taken important steps to achieve these 

goals, hiring thousands of new examiners, instituting new training 

programs and committing annually to performance benchmarks. 

But it needs Congress’s support in the form of a predictable flow 

of resources and hence the Committee was right to pass an amendment to permanently end fee diversion, which will further buttress 

USPTO in its efforts to improve patent quality for years to come. 

In addition, Congress should continue to pursue constructive but 

narrowly tailored reforms that would increase access to prior art 

and lessen the subjective aspects of litigation. Carefully structured 

measures of this type would ultimately fortify the health of our 

patent system without endangering the rights of American’s most 

innovative firms. 

Furthermore, since the inception of the legislative reform effort, 

the patent playing field has been dramatically altered by some of 

the most significant Supreme Court and Federal Circuit decisions 

on patent rights and remedies since the codification of the U.S. patent laws more than 200 years ago. These decisions have, among 

other changes, made it far more difficult for many patent holders 

to obtain injunctive relief (eBay v. MercExchange); significantly altered the patentability test of obviousness, calling into question the 

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mitted patent licensees to bring declaratory judgment actions challenging the validity and enforceability of issued patents 

(MedImmune v. Genentech); and heightened the standard for proving willful infringement (In re Seagate Technology LLC). These decisions signify an effort by the Supreme Court and Federal Circuit 

to rectify perceived imbalances in the patent system. At a minimum, this recent trend by the Courts in the patent field suggests 

that Congress should exercise extreme caution before tilting the 

playing field even further towards the interests of potential infringers. A far more prudent course would be to take the necessary time 

to further scrutinize and assess the combined impact of these key 

patent decisions before moving forward with particular reforms 

that may no longer be needed and will likely do more harm than 

good. 

COMMITTEE PROCESS

The sponsors of S. 1145 have worked diligently in pursuit of this 

legislation’s passage and we are grateful for their efforts and leadership. Over the previous Congresses, Senator Leahy and Senator 

Hatch have held a number of hearings on general patent issues. 

We appreciate their willingness to discuss our concerns in the 

weeks leading up to the Committee’s consideration of the bill. 

However, once the bill was actually filed in the Senate, with its 

House companion, the pace to passage was quick, with our Committee holding only one hearing before marking up the bill. The numerous provisions in the bill that require careful discussion and debate simply need more attention. In fact, in September of 2007, the 

sponsors of the bill convened a meeting with patent stakeholders 

to solicit concerns and possible revisions. At that meeting ten 

issues were identified as needing further refinement as follows: (1) 

how to determine damage awards in patent litigation, (2) post 

grant review, (3) venue, (4) inequitable conduct reform, (5) interlocutory appeal, (6) willful infringement, (7) permanently ending 

fee diversion, (8) applicant quality submissions, (9) first to file and 

(10) best mode. 

Throughout the advancement of this legislation, House sponsors, 

the Administration and Senate sponsors have said that more work 

needed to be done on the bill and that such work would certainly 

occur. The Majority Report even acknowledges at footnote 51 that 

the provision in the bill creating the most sweeping change in the 

patent litigation system—the provision regarding how damage 

awards are allocated in patent infringement cases—‘‘requires 

amendment * * * yet again.’’ With plenty of time left in the 2008 

Senate session, we stand ready and willing to assist the sponsors 

to make progress toward a consensus bill that can be supported by 

a broad cross-section of the patent community. 

CONCLUSION

Given the critical importance of our patent system to American 

innovation and economic leadership, it is imperative that changes 

to the patent system be cautiously tailored to achieve needed improvements. Congress should be cautious to accept changes to the 

patent system advanced by one industry sector at the expense of 

many others. The over-arching goal of patent quality is ill served 


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1 Allen, Joseph in ‘‘Swords Into Plowshares: How Tech Transfer (Unless We Mess It Up) Can 

Help Change the World,’’ les Nouvelles, December 2006, p. 219. 

by measures that would destabilize our current system of patent 

rights and remedies and, in turn, jeopardize the global leadership 

of this country’s most innovative industries. Moreover, by creating 

uncertainty as to the validity and enforceability of patent rights, 

Congress stands to encourage, not discourage, costly litigation and 

infringement. Added costs, delayed enforcement, and increased risk 

combined with reduced damages for infringement is a sure recipe 

for the withdrawal of private capital from early stage development 

or innovative research. 

In closing, the U.S. economy has long benefited from the strongest intellectual property laws in the world. Making dramatic 

changes to a patent system that is working well and, in so doing, 

risking capital investment in innovation is clearly not worth the 

risk. America’s system of patent rights and remedies is universally 

recognized as the gold standard, and, as such, it has given us the 

moral authority and credibility to fight for stronger protection of 

U.S. innovations in other markets. Maintaining that authority is 

critical in today’s increasingly competitive global economy. America’s leadership in this knowledge-based economy is critically dependent upon the ideas and innovations that constitute our most 

valuable natural resources and our most desirable exports. If the 

United States weakens patent rights and remedies at home, our 

ability to press foreign countries to respect American intellectual 

property will be greatly diminished. Indeed, we will embolden other 

countries to adopt even more damaging policies that could jeopardize the continued preeminence of America’s most productive industries. 

President Lincoln observed, ‘‘Any man might instantly use what 

another had invented; so that the inventor had no special advantage from his own invention. The patent system changed this; secured to the inventor, for a limited time, the exclusive use of his 

invention and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.’’ 1

Congress should be careful to act in such a way that the fuel of interest and the fire of genius are not snuffed out. 

TOM COBURN. 

CHUCK GRASSLEY. 

JON KYL. 

SAM BROWNBACK. 


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VIII. CHANGES TO EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 1145, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italic, and 

existing law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

TITLE 15—COMMERCE AND TRADE 

* * * * * * * 

CHAPTER 22—TRADEMARKS 

Subchapter I—The Principal Register 

* * * * * * * 

§ 1071. Appeal to courts 

* * * * * * * 

(b) Civil action; persons entitled to; jurisdiction of court; status 

of Director; procedure. 

* * * * * * * 

(4) Where there is an adverse party, such suit may be instituted against the party in interest as shown by the records of 

the Patent and Trademark Office at the time of the decision 

complained of, but any party in interest may become a party 

to the action. If there be adverse parties residing in a plurality 

of districts not embraced within the same State, or an adverse 

party residing in a foreign country, the øUnited States District 

Court for the District of Columbia¿ United States District 

Court for the Eastern District of Virginia shall have jurisdiction 

and may issue summons against the adverse parties directed 

to the marshal of any district in which any adverse party resides. Summons against adverse parties residing in foreign 

countries may be served by publication or otherwise as the 

court directs. 

* * * * * * * 


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UNITED STATES CODE 

TITLE 28—JUDICIARY AND JUDICIAL 

PROCEDURE 

PART I—ORGANIZATION OF COURTS 

* * * * * * * 

CHAPTER 3—COURTS OF APPEALS 

* * * * * * * 

§ 44. Appointment, tenure, residence and salary of circuit 

judges 

* * * * * * * 

(c) Except in the District of Columbia, each circuit judge shall be 

a resident of the circuit for which appointed at the time of his appointment and thereafter while in active service. øWhile in active 

service, each circuit judge of the Federal judicial circuit appointed 

after the effective date of the Federal Courts Improvement Act of 

1982, and the chief judge of the Federal judicial circuit, whenever 

appointed, shall reside within fifty miles of the District of Columbia.¿ In each circuit (other than the Federal judicial circuit) there 

shall be at least one circuit judge in regular active service appointed from the residents of each state in that circuit. 

* * * * * * * 

PART IV—JURISDICTION AND VENUE 

* * * * * * * 

CHAPTER 83—COURTS OF APPEALS 

* * * * * * * 

§ 1292. Interlocutory decisions 

* * * * * * * 

(c) The United States Court of Appeals for the Federal Circuit 

shall have exclusive jurisdiction—

(1) of an appeal from an interlocutory order or decree described in subsection (a) or (b) of this section in any case over 

which the court would have jurisdiction of an appeal under section 1295 of this title; and 

(2) of an appeal from a judgment in a civil action for patent 

infringement which would otherwise be appealable to the 

United States Court of Appeals for the Federal Circuit and is 

final except for an accounting. 

(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 


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have discretion whether to approve the application and, if so, 

whether to stay proceedings in the district court during the 

pendency of such appeal. 

* * * * * * * 

§ 1295. Jurisdiction of the United States Court of Appeals for 

the Federal Circuit 

(a) The United States Court of Appeals for the Federal Circuit 

shall have exclusive jurisdiction—

* * * * * * * 

(4) of an appeal from a decision of—

(A) øthe Board of Patent Appeals and Interferences of 

the United States Patent and Trademark Office with respect to patent applications and interferences, at the instance of an applicant for a patent or any party to a patent 

interference, and any such appeal shall waive the right of 

such applicant or party to proceed under section 145 or 

146 of title 35¿ the Patent Trial and Appeal Board of the 

United States Patent and Trademark Office with respect to 

patent applications, derivation proceedings, and post-grant 

review proceedings, at the instance of an applicant for a 

patent or any party to a patent interference (commenced before the effective date of the Patent Reform Act of 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; 

(B) the Under Secretary of Commerce for Intellectual 

Property and Director of the United States Patent and 

Trademark Office or the Trademark Trial and Appeal 

Board with respect to applications for registration of 

marks and other proceedings as provided in section 21 of 

the Trademark Act of 1946 (15 U.S.C. 1071); or 

(C) a district court to which a case was directed pursuant to section 145, 146, or 154 (b) of title 35; 

* * * * * * * 

CHAPTER 87—DISTRICT COURTS; VENUE 

* * * * * * * 

§ 1400. Patents and copyrights, mask works, and designs 

* * * * * * * 

(b) øAny civil action for patent infringement may be brought in 

the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and 

established place of business.¿ Notwithstanding section 1391 of this 

title, in any civil action arising under any Act of Congress relating 

to patents, a party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district 

court. 

(c) Notwithstanding section 1391 of this title, any civil action for 

patent infringement or any action for declaratory judgment may be 

brought only in a judicial district—


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(1) where the defendant has its principal place of business or 

in the location or place in which the defendant is incorporated 

or formed, 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 or formed. 

(2) where the defendant has committed substantial acts of infringement and has a regular and established physical facility 

that the defendant controls and that constitutes a substantial 

portion of the operations of the defendant; 

(3) where the primary plaintiff resides, if the primary plaintiff in the action is—

(A) an institution of higher education as defined under 

section 101(a) of the Higher Education Act of 1965 (20 

U.S.C. 1001(a)); or (B) a nonprofit organization that—

(i) qualifies for treatment under section 501(c)(3) of 

the Internal Revenue Code (26 U.S.C. 501(c)(3)); 

(ii) is exempt from taxation under section 501(a) of 

such Code; and 

(iii) serves 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)); or 

(4) where the plaintiff resides, if the sole plaintiff in the action is an individual inventor who is a natural person and who 

qualifies at the time such action is filed as a micro-entity pursuant to section 123 of title 35. 

(d) If a plaintiff brings a civil action for patent infringement or 

declaratory judgment relief under subsection (c), then the defendant 

may request the district court to transfer that action to another district or division where, in the court’s determination—

(1) any of the parties has substantial evidence or witnesses 

that otherwise would present considerable evidentiary burdens 

to the defendant if such transfer were not granted; 

(2) such transfer would not cause undue hardship to the 

plaintiff; and 

(3) venue would be otherwise appropriate under section 1391 

of this title. 

UNITED STATES CODE 

TITLE 35—PATENTS 

PART I—UNITED STATES PATENT AND 

TRADEMARK OFFICE 

CHAPTER 1—ESTABLISHMENT, OFFICERS AND 

EMPLOYEES, FUNCTIONS 

* * * * * * * 

§ 2. Powers and duties 

* * * * * * * 


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(e) DISCRETION TO ACCEPT LATE FILINGS IN CERTAIN CASES OF

UNINTENTIONAL DELAY.—

(1) IN GENERAL.—The Director may accept any application or 

other filing made by—

(A) an applicant for, or owner of, a patent after the applicable deadline set forth in this title with respect to the application or patent; or 

(B) an applicant for, or owner of, a mark after the applicable deadline under the Trademark Act of 1946 with respect to the registration or other filing of the mark, 

to the extent that the Director considers appropriate, if the applicant 

or owner files a petition within 30 days after such deadline showing, to the satisfaction of the Director, that the delay was unintentional. 

(2) TREATMENT OF DIRECTOR’S ACTIONS ON PETITION.—If the 

Director has not made a determination on a petition filed under 

paragraph (1) within 60 days after the date on which the petition is filed, the petition shall be deemed to be denied. A decision by the Director not to exercise, or a failure to exercise, the 

discretion provided by this subsection shall not be subject to judicial review. 

(3) OTHER PROVISIONS NOT AFFECTED.—This subsection shall 

not apply to any other provision of this title, or to any provisions of the Trademark Act of 1946, that authorizes the Director 

to accept, under certain circumstances, applications or other filings made after a statutory deadline or to statutory deadlines 

that are required by reason of the obligations of the United 

States under any treaty. 

(4) DEFINITIONS.—In this subsection, the term ‘‘Trademark 

Act of 1946’’ means the Act entitled ‘‘An Act to provide for the 

registration and protection of trademarks used in commerce, to 

carry out provisions of certain international conventions, and 

for other purposes’’, approved July 5, 1946 (15 U.S.C. 1051 et 

seq.) (commonly referred to as the Trademark Act of 1946 or the 

Lanham Act). 

* * * * * * * 

§ 6. øBoard of Patent Appeals and Interferences¿ Patent 

Trial and Appeal Board 

(a) ESTABLISHMENT AND COMPOSITION.—øThere shall be in the 

United States Patent and Trademark Office a Board of Patent Appeals and Interferences. The Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative 

patent judges shall constitute the Board. The administrative patent 

judges shall be persons of competent legal knowledge and scientific 

ability who are appointed by the Director.¿ There shall be in the 

Office a Patent and Trial Appeal Board. The Director, the Deputy 

Director, the Commission for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the 

Patent Trial and Appeal Board. The administrative patent judges 

shall be persons of competent legal knowledge and scientific ability 

who are appointed by the Director. Any reference in any Federal 

law, Executive order, rule, regulation, or delegation of authority, or 


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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.—øThe Board of Patent Appeals and Interferences 

shall, on written appeal of an applicant, review adverse decisions 

of examiners upon applications for patents and shall determine priority and patentability of invention in interferences declared under 

section 135(a). Each appeal and interference shall be heard by at 

least three members of the Board, who shall be designated by the 

Director. Only the Board of Patent Appeals and Interferences may 

grant rehearings.¿ The Patent Trial and Appeal Board shall—

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

(2) on written appeal of a patent owner, review adverse decisions of examiners upon patents in reexamination proceedings 

under chapter 30; 

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

(4) 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 postgrant review proceedings. 

* * * * * * * 

CHAPTER 3—PRACTICE BEFORE PATENT AND 

TRADEMARK OFFICE 

* * * * * * * 

§ 32. Suspension or exclusion from practice 

The Director may, after notice and opportunity for a hearing, 

suspend or exclude, either generally or in any particular case, from 

further practice before the Patent and Trademark Office, any person, agent, or attorney shown to be incompetent or disreputable, or 

guilty of gross misconduct, or who does not comply with the regulations established under section 2(b)(2)(D) of this title, or who shall, 

by word, circular, letter, or advertising, with intent to defraud in 

any manner, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective 

business before the Office. The reasons for any such suspension or 

exclusion shall be duly recorded. The Director shall have the discretion to designate any attorney who is an officer or employee of 

the United States Patent and Trademark Office to conduct the 

hearing required by this section. The øUnited States District Court 

for the District of Columbia)¿ United States District Court for the 

Eastern District of Virginia, under such conditions and upon such 

proceedings as it by its rules determines, may review the action of 


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the Director upon the petition of the person so refused recognition 

or so suspended or excluded. 

* * * * * * * 

CHAPTER 4—PATENT FEES; FUNDING; SEARCH 

SYSTEMS 

* * * * * * * 

§ 41. Patent fees; patent and trademark search systems 

(a) The Director shall charge the following fees: 

* * * * * * * 

(6)(A) On filing an appeal from the examiner to the øBoard 

of Patent Appeals and Interferences¿ Patent Trial and Appeal 

Board, $300. 

(B) In addition, on filing a brief in support of the appeal, $300, and on requesting an oral hearing in the appeal before 

the øBoard of Patent Appeals and Interferences¿ Patent Trial 

and Appeal Board, $260. 

* * * * * * * 

§ 42. Patent and Trademark Office funding 

* * * * * * * 

(b) All fees paid to the Director and all appropriations for defraying the costs of the activities of the Patent and Trademark Office 

will be credited to the øPatent and Trademark Office Appropriation 

Account¿ United States Patent and Trademark Office Public Enterprise Fund in the Treasury of the United States. 

(c) øTo the extent and in the amounts provided in advance in appropriations Acts, fees¿ Fees authorized in this title or any other 

Act to be charged or established by the Director øshall be collected 

by and shall be available to the Director¿ shall be collected by the 

Director and shall be available until expended to carry out the activities of the Patent and Trademark Office. All fees available to 

the Director under section 31 of the Trademark Act of 1946 shall 

be used only for the processing of trademark registrations and for 

other activities, services, and materials relating to trademarks and 

to cover a proportionate share of the administrative costs of the 

Patent and Trademark Office. 

* * * * * * * 

PART II—PATENTABILITY OF INVENTIONS 

AND GRANT OF PATENTS 

CHAPTER 10—PATENTABILITY OF INVENTIONS 

§ 100. Definitions 

* * * * * * * 

(f) The term ‘‘inventor’’ means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention. 


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(g) The terms ‘‘joint inventor’’ and ‘‘coinventor’’ mean any 1 of the 

individuals who invented or discovered the subject matter of a joint 

invention. 

(h) The ‘‘effective filing date of a claimed invention’’ is—

(1) the filing date of the patent or the application for patent 

containing 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 the first paragraph of section 

112. 

(i) The term ‘‘claimed invention’’ means the subject matter defined 

by a claim in a patent or an application for a patent. 

(j) The term ‘‘joint invention’’ means an invention resulting from 

the collaboration of inventive endeavors of 2 or more persons working toward the same end and producing an invention by their collective efforts. 

(k) The term ‘‘cancellation petitioner’’ means the real party in interest requesting cancellation of any claim of a patent under chapter 

31 of this title and the privies of the real party in interest. 

* * * * * * * 

§ 102. øConditions for patentability; novelty and loss of right 

to patent 

øA person shall be entitled to a patent unless—

ø(a) the invention was known or used by others in this country, 

or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or 

ø(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this 

country, more than one year prior to the date of the application for 

patent in the United States, or 

ø(c) he has abandoned the invention, or 

ø(d) the invention was first patented or caused to be patented, 

or was the subject of an inventor’s certificate, by the applicant or 

his legal representatives or assigns in a foreign country prior to the 

date of the application for patent in this country on an application 

for patent or inventor’s certificate filed more than twelve months 

before the filing of the application in the United States, or 

ø(e) the invention was described in 

ø(1) an application for patent, published under section 

122(b), by another filed in the United States before the invention by the applicant for patent or 

ø(2) a patent granted on an application for patent by another 

filed in the United States before the invention by the applicant 

for patent, except that an international application filed under 

the treaty defined in section 351(a) shall have the effects for 

the purposes of this subsection of an application filed in the 

United States only if the international application designated 


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the United States and was published under Article 21(2) of 

such treaty in the English language, or 

ø(f) he did not himself invent the subject matter sought to be patented, or 

ø(g)(1) during the course of an interference conducted under section 135 or section 291, another inventor involved therein establishes, to the extent permitted in section 104, that before such person’s invention thereof the invention was made by such other inventor and not abandoned, suppressed, or concealed, or 

ø(2) before such person’s invention thereof, the invention was 

made in this country by another inventor who had not abandoned, 

suppressed, or concealed it. In determining priority of invention 

under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception 

by the other.¿ 

Conditions for patentability; novelty 

(a) NOVELTY; PRIOR ART.—A patent for a claimed invention may 

not be obtained if—

(1) the claimed invention was patented, described in a printed 

publication, or in public use, on sale, or otherwise available to 

the public—

(A) more than 1 year before the effective filing date of the 

claimed invention; or 

(B) 1 year or less before the effective filing date of the 

claimed invention, other than through disclosures made by 

the inventor or a joint inventor or by others who obtained 

the subject matter disclosed directly or indirectly from the 

inventor or joint inventor; or 

(2) the claimed invention was described in a patent issued 

under section 151, or in an application for patent published or 

deemed published under section 122(b), in which the patent or 

application, as the case may be, names another inventor and 

was effectively filed before the effective filing date of the claimed 

invention. 

(b) EXCEPTIONS.—

(1) PRIOR INVENTOR DISCLOSURE EXCEPTION.—Subject matter 

that would otherwise qualify as prior art based upon a disclosure under subparagraph (B) of subsection (a)(1) shall not be 

prior art to a claimed invention under that subparagraph if the 

subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained 

the subject matter disclosed directly or indirectly from the inventor or joint inventor. 

(2) DERIVATION, PRIOR DISCLOSURE, AND COMMON ASSIGNMENT EXCEPTIONS.—Subject matter that would otherwise qualify as prior art only under subsection (a)(2), after taking into 

account the exception under paragraph (1), shall not be prior 

art to a claimed invention if—

(A) the subject matter was obtained directly or indirectly 

from the inventor or a joint inventor; 


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(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 effective filing date of the 

application or patent set forth under subsection (a)(2); or 

(C) the subject matter and the claimed invention, nor 

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 2 or more persons or entities for the performance of experimental, developmental, or 

research work in the field of the claimed invention. 

(4) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVELY

FILED.—A patent or application for patent is effectively filed 

under subsection (a)(2) with respect to any subject matter described in the patent or application— (A) as of the filing date of the patent or the application 

for patent; or 

(B) if the patent or application for patent is entitled to 

claim a right of priority under section 119, 365(a), or 

365(b) or to claim the benefit of an earlier filing date under 

section 120, 121, or 365(c), based upon 1 or more prior filed 

applications for patent, as of the filing date of the earliest 

such application describes the subject matter. 

§ 103. øConditions for patentability; non-obvious subject 

matter 

ø(a) A patent may not be obtained though the invention is not 

identically disclosed or described as set forth in section 102 of this 

title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole 

would have been obvious at the time the invention was made to a 

person having ordinary skill in the art to which said subject matter 

pertains. Patentability shall not be negatived by the manner in 

which the invention was made. 

ø(b) (1) Notwithstanding subsection (a), and upon timely election 

by the applicant for patent to proceed under this subsection, a bioVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00087 Fmt 6604 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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technological process using or resulting in a composition of matter 

that is novel under section 102 and nonobvious under subsection 

(a) of this section shall be considered nonobvious if— ø(A) claims to the process and the composition of matter are 

contained in either the same application for patent or in separate applications having the same effective filing date; and 

ø(B) the composition of matter, and the process at the time 

it was invented, were owned by the same person or subject to 

an obligation of assignment to the same person. 

ø(2) A patent issued on a process under paragraph (1)— ø(A) shall also contain the claims to the composition of matter used in or made by that process, or 

ø(B) shall, if such composition of matter is claimed in another patent, be set to expire on the same date as such other 

patent, notwithstanding section 154. 

ø(3) For purposes of paragraph (1), the term ‘‘biotechnological 

process’’ means— ø(A) a process of genetically altering or otherwise inducing 

a single- or multi-celled organism to— ø(i) express an exogenous nucleotide sequence, 

ø(ii) inhibit, eliminate, augment, or alter expression of 

an endogenous nucleotide sequence, or 

ø(iii) express a specific physiological characteristic not 

naturally associated with said organism; 

ø(B) cell fusion procedures yielding a cell line that expresses 

a specific protein, such as a monoclonal antibody; and 

ø(C) a method of using a product produced by a process defined by subparagraph (A) or (B), or a combination of subparagraphs (A) and (B). 

ø(c)(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and 

(g) of section 102 of this title, shall not preclude patentability 

under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by 

the same person or subject to an obligation of assignment to the 

same person. 

ø(2) For purposes of this subsection, subject matter developed by 

another person and a claimed invention shall be deemed to have 

been owned by the same person or subject to an obligation of assignment to the same person if—

ø(A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made; 

ø(B) the claimed invention was made as a result of activities 

undertaken within the scope of the joint research agreement; 

and 

ø(C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the 

joint research agreement. 

ø(3) For purposes of paragraph (2), the term ‘‘joint research 

agreement’’ means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the 

field of the claimed invention.¿ 


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Conditions for patentability; nonobvious subject matter 

A patent for a claimed invention may not be obtained though the 

claimed invention is not identically disclosed as set forth in section 

102, if the differences between the claimed invention and the prior 

art are such that the claimed invention and the prior art are such 

that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person 

having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the 

invention was made. 

ø§ 104. Invention made abroad 

ø(a) IN GENERAL.—

ø(1) PROCEEDINGS.—In proceedings in the Patent and Trademark Office, in the courts, and before any other competent authority, an applicant for a patent, or a patentee, may not establish a date of invention by reference to knowledge or use thereof, or other activity with respect thereto, in a foreign country 

other than a NAFTA country or a WTO member country, except as provided in sections 119 and 365 of this title. 

ø(2) RIGHTS.—If an invention was made by a person, civil or 

military—

ø(A) while domiciled in the United States, and serving 

in any other country in connection with operations by or 

on behalf of the United States, 

ø(B) while domiciled in a NAFTA country and serving in 

another country in connection with operations by or on behalf of that NAFTA country, or 

ø(C) while domiciled in a WTO member country and 

serving in another country in connection with operations 

by or on behalf of that WTO member country, that person 

shall be entitled to the same rights of priority in the 

United States with respect to such invention as if such invention had been made in the United States, that NAFTA 

country, or that WTO member country, as the case may 

be. 

ø(3) USE OF INFORMATION.—To the extent that any information in a NAFTA country or a WTO member country concerning knowledge, use, or other activity relevant to proving or 

disproving a date of invention has not been made available for 

use in a proceeding in the Patent and Trademark Office, a 

court, or any other competent authority to the same extent as 

such information could be made available in the United States, 

the Director, court, or such other authority shall draw appropriate inferences, or take other action permitted by statute, 

rule, or regulation, in favor of the party that requested the information in the proceeding. 

ø(b) DEFINITIONS.—As used in this section—

ø(1) the term ‘‘NAFTA country’’ has the meaning given that 

term in section 2(4) of the North American Free Trade Agreement Implementation Act; and 


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ø(2) the term ‘‘WTO member country’’ has the meaning given 

that term in section 2(10) of the Uruguay Round Agreements 

Act.¿ 

* * * * * * * 

CHAPTER 11—APPLICATION FOR PATENT 

§ 111. Application 

(a) IN GENERAL.—

* * * * * * * 

(2) CONTENTS.—Such application shall include— (A) a specification as prescribed by section 112 of this 

title; 

(B) a drawing as prescribed by section 113 of this title; 

and 

(C) an oath øby the applicant¿ or declaration as prescribed by section 115 of this title. 

(3) FEE øAND OATH¿.—The application must be accompanied 

by the fee required by law. The fee øand oath¿ may be submitted after the specification and any required drawing are 

submitted, within such period and under such conditions, including the payment of a surcharge, as may be prescribed by 

the Director. 

(4) FAILURE TO SUBMIT.—Upon failure to submit the fee øand 

oath¿ within such prescribed period, the application shall be 

regarded as abandoned, unless it is shown to the satisfaction 

of the Director that the delay in submitting the fee øand oath¿ 

was unavoidable or unintentional. The filing date of an application shall be the date on which the specification and any required drawing are received in the Patent and Trademark Office. 

(b) PROVISIONAL APPLICATION.—

* * * * * * * 

(8) APPLICABLE PROVISIONS.—The provisions of this title relating to applications for patent shall apply to provisional applications for patent, except as otherwise provided, and except 

that provisional applications for patent shall not be subject to 

øsections 115, 131, 135, and 157¿ sections 131 and 135 of this 

title. 

§ 112. Specification 

øThe specification¿ (a) IN GENERAL.—The specification shall contain a written description of the invention, and of the manner and 

process of making and using it, in such full, clear, concise, and 

exact terms as to enable any person skilled in the art to which it 

pertains, or with which it is most nearly connected, to make and 

use the same, and shall set forth the best mode contemplated by 

the inventor øof carrying out his invention¿ or joint inventor of carrying out the invention. 

øThe specification¿ (b) CONCLUSION.—The specifications shall 

conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the øapplicant regards as 

his invention¿ inventor or a joint inventor regards as the invention. 


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øA claim¿ (c) FORM.—A claim may be written in independent or, 

if the nature of the case admits, in dependent or multiple dependent form. 

øSubject to the following paragraph¿ (d) REFERENCE IN DEPENDENT FORMS.—Subject to subsection (e), a claim in dependent form 

shall contain a reference to a claim previously set forth and then 

specify a further limitation of the subject matter claimed. A claim 

in dependent form shall be construed to incorporate by reference all 

the limitations of the claim to which it refers. 

øA claim¿ (e) REFERENCE IN MULTIPLE DEPENDENT FORM.—A 

claim in multiple dependent form shall contain a reference, in the 

alternative only, to more than one claim previously set forth and 

then specify a further limitation of the subject matter claimed. A 

multiple dependent claim shall not serve as a basis for any other 

multiple dependent claim. A multiple dependent claim shall be construed to incorporate by reference all the limitations of the particular claim in relation to which it is being considered. 

øAn element¿ (f) ELEMENT IN CLAIM FOR A COMBINATION.—An 

element in a claim for a combination may be expressed as a means 

or step for performing a specified function without the recital of 

structure, material, or acts in support thereof, and such claim shall 

be construed to cover the corresponding structure, material, or acts 

described in the specification and equivalents thereof. 

* * * * * * * 

§ 115. øOath of applicant¿ Inventor’s oath or declaration 

øThe applicant shall make oath that he believes himself to be the 

original and first inventor of the process, machine, manufacture, or 

composition of matter, or improvement thereof, for which he solicits 

a patent; and shall state of what country he is a citizen. Such oath 

may be made before any person within the United States authorized by law to administer oaths, or, when, made in a foreign country, before any diplomatic or consular officer of the United States 

authorized to administer oaths, or before any officer having an official seal and authorized to administer oaths in the foreign country 

in which the applicant may be, whose authority is proved by certificate of a diplomatic or consular officer of the United States, or 

apostille of an official designated by a foreign country which, by 

treaty or convention, accords like effect to apostilles of designated 

officials in the United States, and such oath shall be valid if it complies with the laws of the state or country where made. When the 

application is made as provided in this title by a person other than 

the inventor, the oath may be so varied in form that it can be made 

by him. For purposes of this section, a consular officer shall include 

any United States citizen serving overseas, authorized to perform 

notarial functions pursuant to section 1750 of the Revised Statutes, 

as amended (22 U.S.C. 4221).¿ 

(a) NAMING THE INVENTOR; INVENTOR’S OATH OR DECLARATION.—

An application for patent that is filed under section 111(a), that 

commences the national stage under section 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 

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vention in the application. Except as otherwise provided in this section, an individual who is the inventor or a joint inventor of a 

claimed invention in an application for patent shall execute an oath 

or declaration in connection with the application. 

(b) REQUIRED STATEMENTS.—An oath or declaration under subsection (a) shall contain statements that— (1) the application was made or was authorized to be made 

by the affiant or declarant; and 

(2) such individual believes himself or herself to be the original inventor or an original joint inventor of a claimed invention 

in the application. 

(c) ADDITIONAL REQUIREMENTS.—The Director may specify additional information relating to the inventor and the invention that is 

required to be included in an oath or declaration under subsection 

(a). 

(d) SUBSTITUTE STATEMENT.—

(1) IN GENERAL.—In lieu of executing an oath or declaration 

under subsection (a), the applicant for patent may provide a 

substitute statement under the circumstances described in paragraph (2) and such additional circumstances that the Director 

may specify by regulation. 

(2) PERMITTED CIRCUMSTANCES.—A substitute statement 

under paragraph (1) is permitted with respect to any individual 

who—(A) is unable to file the oath or declaration under subsection (a) because the individual— (i) is deceased; 

(ii) is under legal incapacity; or 

(iii) cannot be found or reached after diligent effort; 

or 

(B) is under an obligation to assign the invention but has 

refused to make the oath or declaration required under subsection (a). 

(3) CONTENTS.—A substitute statement under this subsection 

shall—

(A) identify the individual with respect to whom the 

statement applies; 

(B) set forth the circumstances representing the permitted 

basis for the filing of the substitute statement in lieu of the 

oath or declaration under subsection (a); and 

(C) contain any additional information, including any 

showing, required by the Director. 

(e) MAKING REQUIRED STATEMENTS IN ASSIGNMENT OF

RECORD.—An individual who is under an obligation of assignment 

of an application for patent may include the required statements 

under subsections (b) and (c) and 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 


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section shall not apply to an individual with respect to an application for patent in which the individual is named as the inventor or 

a joint inventor and that claims the benefit under section 120 or 

365(c) of the filing of an earlier-filed application, if— (1) an oath or declaration meeting the requirements of subsection (a) was executed by the individual and was filed in connection with the earlier-filed application; 

(2) a substitute statement meeting the requirements of subsection (d) was filed in the earlier filed application with respect 

to the individual; or 

(3) an assignment meeting the requirements of subsection (e) 

was executed with respect to the earlier-filed application by the 

individual and was recorded in connection with the earlier-filed 

application. 

(h) SUPPLEMENTAL AND CORRECTED STATEMENTS; FILING ADDITIONAL STATEMENTS.—

(1) IN GENERAL.—Any person making a statement required 

under this section may withdraw, replace, or otherwise correct 

the statement at any time. If a change is made in the naming 

of the inventor requiring the filing of 1 or more additional 

statements under this section, the Director shall establish regulations under which such additional statements may be filed. 

(2) SUPPLEMENTAL STATEMENTS NOT REQUIRED.—If an individual has executed an oath or declaration under subsection (a) 

or an assignment meeting the requirements of subsection (e) 

with respect to an application for patent, the Director may not 

thereafter require that individual to make any additional oath, 

declaration, or other statement equivalent to those required by 

this section in connection with the application for patent or any 

patent issuing thereon. 

(3) SAVINGS CLAUSE.—No patent shall be invalid or unenforceable based upon the failure to comply with a requirement 

under this section if the failure is remedied as provided under 

paragraph (1). 

(i) ACKNOWLEDGEMENT OF PENALTIES.—Any declaration or statement filed pursuant to this section shall contain an acknowledgement that any willful false statement made in such declaration or 

statement is punishable under section 1001 of title 18 by fine or imprisonment of not more than 5 years, or both. 

§ 116. Inventors 

øWhen¿ (a) JOINT INVENTIONS.—When an invention is made by 

two or more persons jointly, they shall apply for patent jointly and 

each make the required oath, except as otherwise provided in this 

title. Inventors may apply for a patent jointly even though 

(1) they did not physically work together or at the same 

time, 

(2) each did not make the same type or amount of contribution, or 

(3) each did not make a contribution to the subject matter 

of every claim of the patent. 

øIf a joint inventor¿ (b) OMITTED INVENTOR.—If a joint inventor 

refuses to join in an application for patent or cannot be found or 

reached after diligent effort, the application may be made by the 


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other inventor on behalf of himself and the omitted inventor. The 

Director, on proof of the pertinent facts and after such notice to the 

omitted inventor as he prescribes, may grant a patent to the inventor making the application, subject to the same rights which the 

omitted inventor would have had if he had been joined. The omitted inventor may subsequently join in the application. 

øWhenever¿ (c) CORRECTION OF ERRORS IN APPLICATION.—Whenever through error a person is named in an application for patent 

as the inventor, or through error an inventor is not named in an 

application, and such error arose without any deceptive intention 

on his part, the Director may permit the application to be amended 

accordingly, under such terms as he prescribes. 

* * * * * * * 

§ 118. Filing by other than inventor 

øWhenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to 

whom the inventor has assigned or agreed in writing to assign the 

invention or who otherwise shows sufficient proprietary interest in 

the matter justifying such action, may make application for patent 

on behalf of and as agent for the inventor on proof of the pertinent 

facts and a showing that such action is necessary to preserve the 

rights of the parties or to prevent irreparable damage; and the Director may grant a patent to such inventor upon such notice to him 

as the Director deems sufficient, and on compliance with such regulations as he prescribes.¿ A person to whom the inventor has assigned or is under an obligation to assign the invention may make 

an application for patent. A person who otherwise shows sufficient 

proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve 

the rights of the parties. If the Director grants a patent on an application filed under this section by a person other than the inventor, 

the patent shall be granted to the real party in interest and upon 

such notice to the inventor as the Director considers to be sufficient. 

§ 119. Benefit of earlier filing date; right of priority 

(a) An application for patent for an invention filed in this country 

by any person who has, or whose legal representatives or assigns 

have, previously regularly filed an application for a patent for the 

same invention in a foreign country which affords similar privileges 

in the case of applications filed in the United States or to citizens 

of the United States, or in a WTO member country, shall have the 

same effect as the same application would have if filed in this 

country on the date on which the application for patent for the 

same invention was first filed in such foreign country, if the application in this country is filed within twelve months from the earliest date on which such foreign application was filedø; but no patent shall be granted on any application for patent for an invention 

which had been patented or described in a printed publication in 

any country more than one year before the date of the actual filing 

of the application in this country, or which had been in public use 

or on sale in this country more than one year prior to such filing¿. 


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§ 120. Benefit of earlier filing date in the United States 

An application for patent for an invention disclosed in the manner provided by the first paragraph of section 112 of this title in 

an application previously filed in the United States, or as provided 

by section 363 of this title, øwhich is filed by an inventor or inventors named¿ which names an inventor or joint inventor in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application, if filed 

before the patenting or abandonment of or termination of proceedings on the first application or on an application similarly entitled to the benefit of the filing date of the first application and if 

it contains or is amended to contain a specific reference to the earlier filed application. No application shall be entitled to the benefit 

of an earlier filed application under this section unless an amendment containing the specific reference to the earlier filed application is submitted at such time during the pendency of the application as required by the Director. The Director may consider the 

failure to submit such an amendment within that time period as 

a waiver of any benefit under this section. The Director may establish procedures, including the payment of a surcharge, to accept an 

unintentionally delayed submission of an amendment under this 

section. 

§ 121. Divisional applications 

If two or more independent and distinct inventions are claimed 

in one application, the Director may require the application to be 

restricted to one of the inventions. If the other invention is made 

the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the 

benefit of the filing date of the original application. A patent 

issuing on an application with respect to which a requirement for 

restriction under this section has been made, or on an application 

filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts 

against a divisional application or against the original application 

or any patent issued on either of them, if the divisional application 

is filed before the issuance of the patent on the other application. 

øIf a divisional application is directed solely to subject matter described and claimed in the original application as filed, the Director 

may dispense with signing and execution by the inventor.¿ The validity of a patent shall not be questioned for failure of the Director 

to require the application to be restricted to one invention. 

§ 122. Confidential status of applications; publication of patent applications 

* * * * * * * 

(b) PUBLICATION.—

* * * * * * * 

(2) EXCEPTIONS.—

ø(A) An application¿ An application shall not be published if that application is—

ø(i)¿ (A) no longer pending; 


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ø(ii)¿ (B) subject to a secrecy order under section 

181 of this title; 

ø(iii)¿ (C) a provisional application filed under section 111(b) of this title; or 

ø(iv)¿ (D) an application for a design patent filed 

under chapter 16 of this title. 

ø(B)(i) If an applicant makes a request upon filing, certifying that the invention disclosed in the application has 

not and will not be the subject of an application filed in 

another country, or under a multilateral international 

agreement, that requires publication of applications 18 

months after filing, the application shall not be published 

as provided in paragraph (1). 

ø(ii) An applicant may rescind a request made under 

clause (i) at any time. 

ø(iii) An applicant who has made a request under clause 

(i) but who subsequently files, in a foreign country or 

under a multilateral international agreement specified in 

clause (i), an application directed to the invention disclosed 

in the application filed in the Patent and Trademark Office, shall notify the Director of such filing not later than 

45 days after the date of the filing of such foreign or international application. A failure of the applicant to provide 

such notice within the prescribed period shall result in the 

application being regarded as abandoned, unless it is 

shown to the satisfaction of the Director that the delay in 

submitting the notice was unintentional. 

ø(iv) If an applicant rescinds a request made under 

clause (i) or notifies the Director that an application was 

filed in a foreign country or under a multilateral international agreement specified in clause (i), the application 

shall be published in accordance with the provisions of 

paragraph (1) on or as soon as is practical after the date 

that is specified in clause (i). 

ø(v) If an applicant has filed applications in one or more 

foreign countries, directly or through a multilateral international agreement, and such foreign filed applications 

corresponding to an application filed in the Patent and 

Trademark Office or the description of the invention in 

such foreign filed applications is less extensive than the 

application or description of the invention in the application filed in the Patent and Trademark Office, the applicant may submit a redacted copy of the application filed in 

the Patent and Trademark Office eliminating any part or 

description of the invention in such application that is not 

also contained in any of the corresponding applications 

filed in a foreign country. The Director may only publish 

the redacted copy of the application unless the redacted 

copy of the application is not received within 16 months 

after the earliest effective filing date for which a benefit is 

sought under this title. The provisions of section 154(d) 

shall not apply to a claim if the description of the invention published in the redacted application filed under this 

clause with respect to the claim does not enable a person 


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skilled in the art to make and use the subject matter of 

the claim.¿ 

* * * * * * * 

(e) PREISSUANCE SUBMISSIONS BY THIRD PARTIES.—

(1) IN GENERAL.—Any person may submit for consideration 

and inclusion in the record of a patent application, any patent, 

published patent application, or other publication of potential 

relevance to the examination of the application, if such submission is made in writing before the earlier of—

(A) the date a notice of allowance under section 151 is 

mailed in the application for patent; or 

(B) either—

(i) 6 months after the date on which the application 

for patent is published under section 122, or 

(ii) the date of the first rejection under section 132 of 

any claim by the examiner during the examination of 

the application for patent, 

whichever occurs later. 

(2) OTHER REQUIREMENTS.—Any submission under paragraph (1) shall—

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

(B) be accompanied by such fee as the Director may prescribe; and 

(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section. 

§ 123. Additional information; micro-entity exception 

(a) IN GENERAL.—The Director shall, by regulation, require that 

an applicant for a patent under this title submit to the Director—

(1) a search report and analysis relevant to patentability; and 

(2) any other information relevant to patentability that the 

Director, in his discretion, determines necessary. 

(b) FAILURE TO COMPLY.—If an applicant fails to submit the 

search report, analysis, or information required under subsection (a) 

in the manner and within the time period prescribed by the Director, such application shall be regarded as abandoned. 

(c) EXCEPTION.—Any application for a patent submitted by a 

micro-entity shall not be subject to the requirements of this section. 

(d) MICRO-ENTITY DEFINED.—

(1) IN GENERAL.—For purposes of this section, the term 

‘‘micro-entity’’ means an applicant who makes a certification 

under either paragraph (2) or (3). 

(2) UNASSIGNED APPLICATION.—For an unassigned application, each applicant shall certify that the applicant—

(A) qualifies as a small entity, as defined in regulations 

issued by the Director; 

(B) has not been named on 5 or more previously filed patent applications; 

(C) has not assigned, granted, or conveyed, and is not 

under an obligation by contract or law to assign, grant, or 


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convey, a license or any other ownership interest in the particular application; and 

(D) does not have a gross income, as defined in section 

61(a) of the Internal Revenue Code (26 U.S.C. 61(a)), exceeding 2.5 times the average gross income, as reported by 

the Department of Labor, in the calendar year immediately 

preceding the calendar year in which the examination fee 

is being paid. 

(3) ASSIGNED APPLICATION.—For an assigned application, 

each applicant shall certify that the applicant— (A) qualifies as a small entity, as defined in regulations 

issued by the Director, and meets the requirements of paragraph (2)(D); 

(B) has not been named on 5 or more previously filed patent applications; and 

(C) has assigned, granted, conveyed, or is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the particular application to an entity that has 5 or fewer employees and that 

such entity has a gross income, as defined in section 61(a) 

of the Internal Revenue Code (26 U.S.C. 61(a)), that does 

not exceed 2.5 times the average gross income, as reported 

by the Department of Labor, in the calendar year immediately preceding the calendar year in which the examination fee is being paid. 

(4) INCOME LEVEL ADJUSTMENT.—The gross income levels established under paragraphs (2) and (3) shall be adjusted by the 

Director on October 1, 2009, and every year thereafter, to reflect 

any fluctuations occurring during the previous 12 months in 

the Consumer Price Index, as determined by the Secretary of 

Labor. 

* * * * * * * 

CHAPTER 12—EXAMINATION OF APPLICATION 

* * * * * * * 

§ 134. øAppeal to the Board of Patent Appeals and Interferences¿ Appeal to the Patent Trial and Appeal 

Board. 

(a) PATENT APPLICANT.—An applicant for a patent, any of whose 

claims has been twice rejected, may appeal from the decision of the 

primary examiner to the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board, having once paid the fee 

for such appeal. 

(b) PATENT OWNER.—A patent owner in any reexamination proceeding may appeal from the final rejection of any claim by the primary examiner to the øBoard of Patent Appeals and Interferences¿ 

Patent Trial and Appeal Board, having once paid the fee for such 

appeal. 

(c) THIRD PARTY.—A third-party requester in an inter partes proceeding may appeal to the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board from the final decision of 

the primary examiner favorable to the patentability of any original 


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or proposed amended or new claim of a patent, having once paid 

the fee for such appeal. 

§ 135. øInterferences¿ Derivation proceedings 

(a) øWhenever an application is made for a patent which, in the 

opinion of the Director, would interfere with any pending application, or with any unexpired patent, an interference may be declared 

and the Director shall give notice of such declaration to the applicants, or applicant and patentee, as the case may be. The Board 

of Patent Appeals and Interferences shall determine questions of 

priority of the inventions and may determine questions of patentability. Any final decision, if adverse to the claim of an applicant, 

shall constitute the final refusal by the Patent and Trademark Office of the claims involved, and the Director may issue a patent to 

the applicant who is adjudged the prior inventor. A final judgment 

adverse to a patentee from which no appeal or other review has 

been or can be taken or had shall constitute cancellation of the 

claims involved in the patent, and notice of such cancellation shall 

be endorsed on copies of the patent distributed after such cancellation by the Patent and Trademark Office.¿ DISPUTE OVER RIGHT

TO PATENT.— (1) INSTITUTION OF DERIVATION PROCEEDING.—An applicant 

may request initiation of a derivation proceeding to determine 

the right of the applicant to a patent by filing a request which 

sets forth with particularity the basis for finding that an earlier 

applicant derived the claimed invention from the applicant requesting the proceeding and, without authorization, filed an application claiming such invention. Any such request may only 

be made within 12 months after the date of first publication of 

an application containing a claim that is the same or is substantially the same as the claimed invention, must be made 

under oath, and must be supported by substantial evidence. 

Whenever the Director determines that patents or applications 

for patent naming different individuals as the inventor interfere 

with one another because of a dispute over the right to patent 

under section 101, 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 Board may defer action 

on a request to initiate a derivation proceeding until 3 months 

after the date on which the Director issues a patent to the applicant that filed the earlier application. 

(4) EFFECT OF FINAL DECISION.—The final decision of the Patent Trial and Appeal Board, if adverse to the claim of an applicant, shall constitute the final refusal by the United States Patent and Trademark Office on the claims involved. The Director 

may issue a patent to an applicant who is determined by the 


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Patent Trial and Appeal Board to have the right to patent. The 

final decision of the Board, if adverse to a patentee, shall, if no 

appeal or other review of the decision has been or can be taken 

or had, constitute cancellation of the claims involved in the patent, and notice of such cancellation shall be endorsed on copies 

of the patent distributed after such cancellation by the United 

States Patent and Trademark Office. 

* * * * * * * 

CHAPTER 13—REVIEW OF PATENT AND TRADEMARK 

OFFICE DECISIONS 

§ 141. Appeal to the Court of Appeals for the Federal Circuit 

An applicant dissatisfied with the decision in an appeal to the 

øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board under section 134 of this title may appeal the decision 

to the United States Court of Appeals for the Federal Circuit. By 

filing such an appeal the applicant waives his or her right to proceed under section 145 of this title. A patent owner, or a thirdparty requester in an inter partes reexamination proceeding, who 

is in any reexamination proceeding dissatisfied with the final decision in an appeal to the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board under section 134 may 

appeal the decision only to the United States Court of Appeals for 

the Federal Circuit. A party to øan interference¿ a derivation proceeding dissatisfied with the decision of the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board on the øinterference¿ derivation proceeding may appeal the decision to the 

United States Court of Appeals for the Federal Circuit, but such 

appeal shall be dismissed if any adverse party to such øinterference¿ derivation proceeding, within twenty days after the appellant has filed notice of appeal in accordance with section 142 of this 

title, files notice with the Director that the party elects to have all 

further proceedings conducted as provided in section 146 of this 

title. If the appellant does not, within thirty days after filing of 

such notice by the adverse party, file a civil action under section 

146, the decision appealed from shall govern the further proceedings in the case. 

* * * * * * * 

§ 145. Civil action to obtain patent 

An applicant dissatisfied with the decision of the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board in 

an appeal under section 134(a) of this title may, unless appeal has 

been taken to the United States Court of Appeals for the Federal 

Circuit, have remedy by civil action against the Director in the 

øUnited States District Court for the District of Columbia¿ United 

States District Court for the Eastern District of Virginia if commenced within such time after such decision, not less than sixty 

days, as the Director appoints. The court may adjudge that such 

applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the øBoard of 

Patent Appeals and Interferences¿ Patent Trial and Appeal Board, 


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as the facts in the case may appear, and such adjudication shall 

authorize the Director to issue such patent on compliance with the 

requirements of law. All the expenses of the proceedings shall be 

paid by the applicant. 

§ 146. øCivil action in case of interference¿ Civil action in 

case of derivation proceeding 

Any party to øan interference¿ a derivation proceeding dissatisfied with the decision of the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal Board may have remedy by civil 

action, if commenced within such time after such decision, not less 

than sixty days, as the Director appoints or as provided in section 

141 of this title, unless he has appealed to the United States Court 

of Appeals for the Federal Circuit, and such appeal is pending or 

has been decided. In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party upon the 

terms and conditions as to costs, expenses, and the further crossexamination of the witnesses as the court imposes, without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken 

and produced in the suit. 

Such suit may be instituted against the party in interest as 

shown by the records of the Patent and Trademark Office at the 

time of the decision complained of, but any party in interest may 

become a party to the action. If there be adverse parties residing 

in a plurality of districts not embraced within the same state, or 

an adverse party residing in a foreign country, the øUnited States 

District Court for the District of Columbia¿ United States District 

Court for the Eastern District of Virginia shall have jurisdiction 

and may issue summons against the adverse parties directed to the 

marshal of any district in which any adverse party resides. Summons against adverse parties residing in foreign countries may be 

served by publication or otherwise as the court directs. The Director shall not be a necessary party but he shall be notified of the 

filing of the suit by the clerk of the court in which it is filed and 

shall have the right to intervene. Judgment of the court in favor 

of the right of an applicant to a patent shall authorize the Director 

to issue such patent on the filing in the Patent and Trademark Office of a certified copy of the judgment and on compliance with the 

requirements of law. 

* * * * * * * 

CHAPTER 14—ISSUE OF PATENT 

* * * * * * * 

§ 154. Contents and term of patent; provisional rights 

* * * * * * * 

(b) ADJUSTMENT OF PATENT TERM.— (1) PATENT TERM GUARANTEES.— (A) GUARANTEE OF PROMPT PATENT AND TRADEMARK OFFICE RESPONSES.—Subject to the limitations under paraVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00101 Fmt 6604 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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graph (2), if the issue of an original patent is delayed due 

to the failure of the Patent and Trademark Office to— (i) provide at least one of the notifications under section 132 of this title or a notice of allowance under section 151 of this title not later than 14 months after— (I) the date on which an application was filed 

under section 111 (a) of this title; or 

(II) the date on which an international application fulfilled the requirements of section 371 of 

this title; 

(ii) respond to a reply under section 132, or to an appeal taken under section 134, within 4 months after 

the date on which the reply was filed or the appeal 

was taken; 

(iii) act on an application within 4 months after the 

date of a decision by the øBoard of Patent Appeals and 

Interferences¿ Patent Trial and Appeal Board under 

section 134 or 135 or a decision by a Federal court 

under section 141, 145, or 146 in a case in which allowable claims remain in the application; or 

(iv) issue a patent within 4 months after the date on 

which the issue fee was paid under section 151 and all 

outstanding requirements were satisfied, 

the term of the patent shall be extended 1 day for each 

day after the end of the period specified in clause (i), (ii), 

(iii), or (iv), as the case may be, until the action described 

in such clause is taken. 

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION

PENDENCY.—Subject to the limitations under paragraph 

(2), if the issue of an original patent is delayed due to the 

failure of the United States Patent and Trademark Office 

to issue a patent within 3 years after the actual filing date 

of the application in the United States, not including— (i) any time consumed by continued examination of 

the application requested by the applicant under section 132(b); 

(ii) any time consumed by a proceeding under section 135(a), any time consumed by the imposition of an 

order under section 181, or any time consumed by appellate review by the øBoard of Patent Appeals and 

Interferences¿ Patent Trial and Appeal Board or by a 

Federal court; or 

(iii) any delay in the processing of the application by 

the United States Patent and Trademark Office requested by the applicant except as permitted by paragraph (3)(C), 

the term of the patent shall be extended 1 day for each 

day after the end of that 3-year period until the patent is 

issued. 

(C) GUARANTEE OR ADJUSTMENTS FOR DELAYS DUE TO

øINTERFERENCES¿ DERIVATION PROCEEDINGS, SECRECY OR- DERS, AND APPEALS.—Subject to the limitations under 

paragraph (2), if the issue of an original patent is delayed 

due to—


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(i) a proceeding under section 135(a); 

(ii) the imposition of an order under section 181; or 

(iii) appellate review by the øBoard of Patent Appeals and Interferences¿ Patent Trial and Appeal 

Board or by a Federal court in a case in which the 

patent was issued under a decision in the review reversing an adverse determination of patentability, 

the term of the patent shall be extended 1 day for each 

day of the pendency of the proceeding, order, or review, as 

the case may be. 

* * * * * * * 

(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION.— (A) An applicant dissatisfied with a determination made 

by the Director under paragraph (3) shall have remedy by 

a civil action against the Director filed in the øUnited 

States District Court for the District of Columbia¿ United 

States District Court for the Eastern District of Virginia 

within 180 days after the grant of the patent. Chapter 7 

of title 5 shall apply to such action. Any final judgment resulting in a change to the period of adjustment of the patent term shall be served on the Director, and the Director 

shall thereafter alter the term of the patent to reflect such 

change. 

(B) The determination of a patent term adjustment 

under this subsection shall not be subject to appeal or 

challenge by a third party prior to the grant of the patent. 

* * * * * * * 

ø§ 157. Statutory invention registration 

ø(a) Notwithstanding any other provision of this title, the Director is authorized to publish a statutory invention registration containing the specification and drawings of a regularly filed application for a patent without examination if the applicant—

ø(1) meets the requirements of section 112 of this title; 

ø(2) has complied with the requirements for printing, as set 

forth in regulations of the Director; 

ø(3) waives the right to receive a patent on the invention 

within such period as may be prescribed by the Director; and 

ø(4) pays application, publication, and other processing fees 

established by the Director. 

øIf an interference is declared with respect to such an application, 

a statutory invention registration may not be published unless the 

issue of priority of invention is finally determined in favor of the 

applicant. 

ø(b) The waiver under subsection (a)(3) of this section by an applicant shall take effect upon publication of the statutory invention 

registration. 

ø(c) A statutory invention registration published pursuant to this 

section shall have all of the attributes specified for patents in this 

title except those specified in section 183 and sections 271 through 

289 of this title. A statutory invention registration shall not have 

any of the attributes specified for patents in any other provision of 

law other than this title. A statutory invention registration pubVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00103 Fmt 6604 Sfmt 6602 E:\HR\OC\SR259.XXX SR259

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lished pursuant to this section shall give appropriate notice to the 

public, pursuant to regulations which the Director shall issue, of 

the preceding provisions of this subsection. The invention with respect to which a statutory invention certificate is published is not 

a patented invention for purposes of section 292 of this title. 

ø(d) The Director shall report to the Congress annually on the 

use of statutory invention registrations. Such report shall include 

an assessment of the degree to which agencies of the Federal Government are making use of the statutory invention registration system, the degree to which it aids the management of federally developed technology, and an assessment of the cost savings to the Federal Government of the use of such procedures.¿ 

* * * * * * * 

CHAPTER 16—DESIGNS 

* * * * * * * 

§ 172. Right of priority 

The right of priority provided for by subsections (a) through (d) 

of section 119 of this title øand the time specified in section 102(d)¿ 

shall be six months in the case of designs. The right of priority provided for by section 119(e) of this title shall not apply to designs. 

* * * * * * * 

CHAPTER 17—SECRECY OF CERTAIN INVENTIONS AND 

FILING APPLICATIONS IN FOREIGN COUNTRY 

* * * * * * * 

§ 184. Filing of application in foreign country 

øExcept when¿ (a) FILING IN FOREIGN COUNTRY.—Except when 

authorized by a license obtained from the Commissioner of Patents 

a person shall not file or cause or authorize to be filed in any foreign country prior to six months after filing in the United States 

an application for patent or for the registration of a utility model, 

industrial design, or model in respect of an invention made in this 

country. A license shall not be granted with respect to an invention 

subject to an order issued by the Commissioner of Patents pursuant to section 181 of this title without the concurrence of the head 

of the departments and the chief officers of the agencies who 

caused the order to be issued. The license may be granted retroactively where an application has been filed abroad through error 

and without deceptive intent and the application does not disclose 

an invention within the scope of section 181 of this title. 

øThe term¿ (b) APPLICATION.—The term ‘‘application’’ when used 

in this chapter includes applications and any modifications, amendments, or supplements thereto, or divisions thereof. 

øThe scope¿ (c) SUBSEQUENT MODIFICATIONS, AMENDMENTS, AND

SUPPLEMENTS.—The scope of a license shall permit subsequent 

modifications, amendments, and supplements containing additional 

subject matter if the application upon which the request for the license is based is not, or was not, required to be made available for 

inspection under section 181 of this title and if such modifications, 


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amendments, and supplements do not change the general nature of 

the invention in a manner which would require such application to 

be made available for inspection under such section 181. In any 

case in which a license is not, or was not, required in order to file 

an application in any foreign country, such subsequent modifications, amendments, and supplements may be made, without a license, to the application filed in the foreign country if the United 

States application was not required to be made available for inspection under section 181 and if such modifications, amendments, and 

supplements do not, or did not, change the general nature of the 

invention in a manner which would require the United States application to have been made available for inspection under such 

section 181. 

* * * * * * * 

CHAPTER 18—PATENT RIGHTS IN INVENTIONS MADE 

WITH FEDERAL ASSISTANCE 

* * * * * * * 

§ 202. Disposition of rights 

* * * * * * * 

(c) Each funding agreement with a small business firm or nonprofit organization shall contain appropriate provisions to effectuate the following: 

* * * * * * * 

(2) That the contractor make a written election within two 

years after disclosure to the Federal agency (or such additional 

time as may be approved by the Federal agency) whether the 

contractor will retain title to a subject invention: Provided, 

That in any case where øpublication, on sale, or public use, has 

initiated the one year statutory period in which valid patent 

protection can still be obtained in the United States¿ the 1-year 

period referred to in section 102(a) would end before the end of 

that 2-year period, the period for election may be shortened by 

the Federal agency to a date that is not more than sixty days 

prior to the end of øthe statutory¿ that 1-year period: And provided further, That the Federal Government may receive title 

to any subject invention in which the contractor does not elect 

to retain rights or fails to elect rights within such times. 

(3) That a contractor electing rights in a subject invention 

agrees to file a patent application prior to øany statutory bar 

date that may occur under this title due to publication, on sale, 

or public use¿ the expiration of the 1-year period referred to in 

section 102(a), and shall thereafter file corresponding patent 

applications in other countries in which it wishes to retain title 

within reasonable times, and that the Federal Government 

may receive title to any subject inventions in the United States 

or other countries in which the contractor has not filed patent 

applications on the subject invention within such times. 

* * * * * * * 


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PART III—PATENTS AND PROTECTION OF 

PATENT RIGHTS 

CHAPTER 25—AMENDMENT AND CORRECTION OF 

PATENTS 

§ 251. Reissue of defective patents 

øWhenever¿ (a) IN GENERAL.—Whenever any patent is, through 

error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had 

a right to claim in the patent, the Director shall, on the surrender 

of such patent and the payment of the fee required by law, reissue 

the patent for the invention disclosed in the original patent, and 

in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall 

be introduced into the application for reissue. 

øThe Director¿ (b) MULTIPLE REISSUED PATENTS.—The Director 

may issue several reissued patents for distinct and separate parts 

of the thing patented, upon demand of the applicant, and upon payment of the required fee for a reissue for each of such reissued patents. 

øThe provisions¿ (c) APPLICABILITY OF THIS TITLE.—The provisions of this title relating to applications for patent shall be applicable to applications for reissue of a patent, except that application 

for reissue may be made and sworn to by the assignee of the entire 

interest if the application does not seek to enlarge the scope of the 

claims of the original patent. 

øNo reissued patent¿ (d) REISSUE PATENT ENLARGING SCOPE OF

CLAIMS.—No reissued patent shall be granted enlarging the scope 

of the claims of the original patent unless applied for within two 

years from the grant of the original patent. 

* * * * * * * 

§ 253. Disclaimer 

øWhenever¿ (a) IN GENERAL.—Whenever, without any deceptive 

intention, a claim of a patent is invalid the remaining claims shall 

not thereby be rendered invalid. A patentee, whether of the whole 

or any sectional interest therein, may, on payment of the fee required by law, make disclaimer of any complete claim, stating 

therein the extent of his interest in such patent. Such disclaimer 

shall be in writing, and recorded in the Patent and Trademark Office; and it shall thereafter be considered as part of the original 

patent to the extent of the interest possessed by the disclaimant 

and by those claiming under him. 

øIn like manner¿ (b) ADDITIONAL DISCLAIMER OR DEDICATION.—

In the manner set forth in subsection (a), any patentee or applicant 

may disclaim or dedicate to the public the entire term, or any terminal part of the term, of the patent granted or to be granted. 

* * * * * * * 


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§ 256. Correction of named inventor 

øWhenever¿ (a) CORRECTION.—Whenever through error a person 

is named in an issued patent as the inventor, or through error an 

inventor is not named in an issued patent and such error arose 

without any deceptive intention on his part, the Director may, on 

application of all the parties and assignees, with proof of the facts 

and such other requirements as may be imposed, issued a certificate correcting such error. 

øThe error¿ (b) PATENT VALID IF ERROR CORRECTED.—The error 

of omitting inventors or naming persons who are not inventors 

shall not invalidate the patent in which such error occurred if it 

can be corrected as provided in this section. The court before which 

such matter is called in question may order correction of the patent 

on notice and hearing of all parties concerned and the Director 

shall issue a certificate accordingly. 

* * * * * * * 

CHAPTER 28—INFRINGEMENT OF PATENTS 

* * * * * * * 

§ 273. Defense to infringement based on earlier inventor 

* * * * * * * 

(b) DEFENSE TO INFRINGEMENT.—

* * * * * * * 

(6) PERSONAL DEFENSE.—øThe defense under this section may 

be asserted only by the person who performed the acts necessary to establish the defense and, except for any transfer to 

the patent owner, the right to assert the defense shall not be 

licensed or assigned or transferred to another person except as 

an ancillary and subordinate part of a good faith assignment 

or transfer for other reasons of the entire enterprise or line of 

business to which the defense relates.¿ The defense under this 

section may be asserted only by the person who performed or 

caused the performance of the acts necessary to establish the defense as well as any other entity that controls, is controlled by, 

or is under common control with such person and, except for 

any transfer to the patent owner, the right to assert the defense 

shall not be licensed or assigned or transferred to another person except as an ancillary and subordinate part of a good faith 

assignment or transfer for other reasons of the entire enterprise 

or line of business to which the defense relates. Notwithstanding the preceding sentence, any person may, on its own behalf, assert a defense based on the exhaustion of rights provided 

under paragraph (3), including any necessary elements thereof. 

* * * * * * * 

CHAPTER 29—REMEDIES FOR INFRINGEMENT OF 

PATENT, AND OTHER ACTIONS 

* * * * * * * 


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§ 282. Presumption of validity; defenses 

øA patent¿ (a) IN GENERAL.—A patent shall be presumed valid. 

Each claim of a patent (whether in independent, dependent, or 

multiple dependent form) shall be presumed valid independently of 

the validity of other claims; dependent or multiple dependent 

claims shall be presumed valid even though dependent upon an invalid claim. Notwithstanding the preceding sentence, if a claim to 

a composition of matter is held invalid and that claim was the 

basis of a determination of nonobviousness under section 103(b)(1), 

the process shall no longer be considered nonobvious solely on the 

basis of section 103(b)(1). The burden of establishing invalidity of 

a patent or any claim thereof shall rest on the party asserting such 

invalidity. 

øThe following¿ (b) DEFENSES.—The following shall be defenses 

in any action involving the validity or infringement of a patent and 

shall be pleaded: 

(1) Noninfringement, absence of liability for infringement or 

unenforceability, 

(2) Invalidity of the patent or any claim in suit on any 

ground specified in part II of this title as a condition for patentability, 

(3) Invalidity of the patent or any claim in suit for failure to 

comply with any requirement of sections 112 or 251 of this 

title, 

(4) Any other fact or act made a defense by this title. 

øIn actions¿ (c) NOTICE OF ACTIONS; ACTIONS DURING EXTENSION

OF PATENT TERM.—In actions involving the validity or infringement of a patent the party asserting invalidity or noninfringement 

shall give notice in the pleadings or otherwise in writing to the adverse party at least thirty days before the trial, of the country, 

number, date, and name of the patentee of any patent, the title, 

date, and page numbers of any publication to be relied upon as anticipation of the patent in suit or, except in actions in the United 

States Court of Federal Claims, as showing the state of the art, 

and the name and address of any person who may be relied upon 

as the prior inventor or as having prior knowledge of or as having 

previously used or offered for sale the invention of the patent in 

suit. In the absence of such notice proof of the said matters may 

not be made at the trial except on such terms as the court requires. 

Invalidity of the extension of a patent term or any portion thereof 

under section 154(b) or 156 of this title because of the material failure—

(1) by the applicant for the extension, or 

(2) by the Director, 

to comply with the requirements of such section shall be a defense 

in any action involving the infringement of a patent during the period of the extension of its term and shall be pleaded. A due diligence determination under section 156(d)(2) is not subject to review 

in such an action. 

* * * * * * * 


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§ 284. Damages 

øUpon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in 

no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed 

by the court. 

When the damages are not found by a jury, the court shall assess 

them. In either event the court may increase the damages up to 

three times the amount found or assessed. Increased damages 

under this paragraph shall not apply to provisional rights under 

section 154(d) of this title. 

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under 

the circumstances.¿ 

(a) IN GENERAL.—Upon finding for the claimant the court shall 

award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use 

made of the invention by the infringer, together with interests and 

costs as fixed by the court, subject to the provisions of this section. 

(b) DETERMINATION OF DAMAGES; EVIDENCE CONSIDERED; PROCE- DURE.—The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable 

under the circumstances. The admissibility of such testimony shall 

be governed by the rules of evidence governing expert testimony. 

When the damages are not found by a jury, the court shall assess 

them. 

(c) STANDARD FOR CALCULATING REASONABLE ROYALTY.— (1) IN GENERAL.—The court shall determine, based on the 

facts of the case and after adducing any further evidence the 

court deems necessary, which of the following methods shall be 

used by the court or the jury in calculating a reasonable royalty 

pursuant to subsection (a). The court shall also identify the factors that are relevant to the determination of a reasonable royalty, and the court or jury, as the case may be, shall consider 

only those factors in making such determination. 

(A) ENTIRE MARKET VALUE.—Upon a showing to the satisfaction of the court that the claimed invention’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 that infringing product or process. 

(B) ESTABLISHED ROYALTY BASED ON MARKETPLACE LICENSING.—Upon a showing to the satisfaction of the court 

that the claimed invention has been the subject of a nonexclusive license for the use made of the invention by the infringer, to a number of persons sufficient to indicate a general marketplace recognition of the reasonableness of the licensing terms, if the license was secured prior to the filing 

of the case before the court, and the court determines that 

the infringer’s use is of substantially the same scope, volume, and benefit of the rights granted under such license, 

damages may be determined on the basis of the terms of 

such license. Upon a showing to the satisfaction of the court 

that the claimed invention has sufficiently similar nonVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00109 Fmt 6604 Sfmt 6603 E:\HR\OC\SR259.XXX SR259

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infringing substitutes in the relevant market, which have 

themselves been the subject of such nonexclusive licenses, 

and the court determines that the infringer’s use is of substantially the same scope, volume, and benefit of the rights 

granted under such licenses, damages may be determined 

on the basis of the terms of such licenses. 

(C) VALUATION CALCULATION.—Upon a determination by 

the court that the showings required under subparagraphs 

(A) and (B) have not been made, the court shall conduct an 

analysis to ensure that a reasonable royalty is applied only 

to the portion of the economic value of the infringing product or process properly attributable to the claimed invention’s specific contribution over the prior art. In the case of 

a combination invention whose elements are present individually in the prior art, 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 as part of the 

combination, if the patentee demonstrates that value. 

(2) ADDITIONAL FACTORS.—Where the court determines it to 

be appropriate in determining a reasonable royalty under paragraph (1), the court may also consider, or direct the jury to consider, any other relevant factors under applicable law. 

(d) INAPPLICABILITY TO OTHER DAMAGES ANALYSIS.—The methods 

for calculating a reasonable royalty described in subsection (c) shall 

have no application to the calculation of an award of damages that 

does not necessitate the determination of a reasonable royalty as a 

basis for monetary relief sought by the claimant. 

(e) WILLFUL INFRINGEMENT.—

(1) INCREASED DAMAGES.—A court that has determined that 

an infringer has willfully infringed a patent or patents may increase damages up to 3 times the amount of the damages found 

or assessed under subsection (a), except that increased damages 

under this paragraph shall not apply to provisional rights 

under section 154(d). 

(2) PERMITTED GROUNDS FOR WILLFULNESS.—A court may 

find that an infringer has willfully infringed a patent only if 

the patent owner 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 1 or more of the alleged acts of infringement; 

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

(C) after having been found by a court to have infringed 

that patent, the infringer engaged in conduct that was not 

colorably different from the conduct previously found to 


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have infringed the patent, and which resulted in a separate 

finding of infringement of the same patent. 

(3) LIMITATION OF WILLFULNESS.—

(A) IN GENERAL.—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) GOOD FAITH ESTABLISHED.—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) RELEVANCE OF NOT PRESENTING CERTAIN EVI- DENCE.—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. The court’s determination of an 

infringer’s willfulness shall be made without a jury. 

* * * * * * * 

§ 287. Limitation on damages and other remedies; marking 

and notice 

(a) øPatentees, and persons making, offering for sale, or selling 

within the United States any patented article for or under them, 

or importing any patented article into the United States, may give 

notice to the public that the same is patented, either by fixing 

thereon the word ‘‘patent’’ or the abbreviation ‘‘pat.’’, together with 

the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein 

1 or more of them is contained, a label containing a like notice. In 

the event of failure so to mark, no damages shall be recovered by 

the patentee in any action for infringement, except on proof that 

the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only 

for infringement occurring after such notice. Filing of an action for 

infringement shall constitute such notice.¿ 

(1) Patentees, and persons making, offering for sale, or selling 

within the United States any patented article for or under them, or 

importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon 

the word ‘‘patent’’ or the abbreviation ‘‘pat.’’, together with the number of the patent, or when, from the character of the article, this 

cannot be done, by fixing to it, or to the package wherein 1 or more 


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of them is contained, a label containing a like notice. In the event 

of failure so to mark, no damages shall be recovered by the patentee 

in any action for infringement, except on proof that the infringer 

was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice. 

(2) In the case of a patented invention not covered under paragraph (1), no recovery shall be had for any infringement committed 

more than 2 years prior to the filing of the complaint or counterclaim for infringement in the action, except upon proof that the infringer was notified of the infringement by the patentee. Upon such 

proof, the patentee may recover damages for infringement for up to 

2 years prior to such notice, as well as for infringement after such 

notice. In no event may damages be recovered for more than 6 years 

prior to the filing of the complaint or counterclaim for infringement 

in the action. 

* * * * * * * 

(c) * * * 

* * * * * * * 

(4) This subsection shall not apply to any patent issued 

based on an application øthe earliest effective filing date of 

which is prior to¿ which has an effective date before September 

30, 1996. 

(d)(1) With respect to the use by a financial institution of a check 

collection system that constitutes an infringement under subsection 

(a) or (b) of section 271, the provisions of sections 281, 283, 284, and 

285 shall not apply against the financial institution with respect to 

such a check collection system. 

(2) For the purposes of this subsection—

(A) the term ‘‘check’’ has the meaning given under section 3(6) 

of the Check Clearing for the 21st Century Act (12 U.S.C. 

5002(6)); 

(B) the term ‘‘check collection system’’ means the use, creation, 

transmission, receipt, storing, settling, or archiving of truncated 

checks, substitute checks, check images, or electronic check data 

associated with or related to any method, system, or process 

that furthers or effectuates, in whole or in part, any of the purposes of the Check Clearing for the 21st Century Act (12 U.S.C. 

5001 et seq.); 

(C) the term ‘‘financial institution’’ has the meaning given 

under section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 

6809); 

(D) the term ‘‘substitute check’’ has the meaning given under 

section 3(16) of the Check Clearing for the 21st Century Act (12 

U.S.C. 5002(16)); and 

(E) the term ‘‘truncate’’ has the meaning given under section 

3(18) of the Check Clearing for the 21st Century Act (12 U.S.C. 

5002(18)). 

* * * * * * * 


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ø§ 291. Interfering patents 

øThe owner of an interfering patent may have relief against the 

owner of another by civil action, and the court may adjudge the 

question of the validity of any of the interfering patents, in whole 

or in part. The provisions of the second paragraph of section 146 

of this title shall apply to actions brought under this section.¿ 

* * * * * * * 

§ 293. Nonresident patentee; service and notice 

Every patentee not residing in the United States may file in the 

Patent and Trademark Office a written designation stating the 

name and address of a person residing within the United States on 

whom may be served process or notice of proceedings affecting the 

patent or rights thereunder. If the person designated cannot be 

found at the address given in the last designation, or if no person 

has been designated, the øUnited States District Court for the District of Columbia¿ United States District Court for the Eastern District of Virginia shall have jurisdiction and summons shall be 

served by publication or otherwise as the court directs. The court 

shall have the same jurisdiction to take any action respecting the 

patent or rights thereunder that it would have if the patentee were 

personally within the jurisdiction of the court. 

* * * * * * * 

§ 298. Inequitable conduct 

(a) IN GENERAL.—A party advancing the proposition that a patent 

should be cancelled or held unenforceable due to inequitable conduct in connection with a matter or proceeding before the United 

States Patent and Trademark Office shall prove independently by 

clear and convincing evidence that material information was misrepresented or omitted from the patent application of such patent 

with the intention of deceiving the Office. 

(b) MATERIALITY.—Information shall be considered material for 

purposes of subsection (a) if— (1) a reasonable patent examiner would consider such information important in deciding whether to allow the patent application; and 

(2) such information is not cumulative to information already 

of record in the application. 

(c) INTENT.—Intent to deceive the Office may be inferred under 

subsection (a), but the inference may not be based solely on the gross 

negligence of the patent owner or its representative, or on the materiality of the information misrepresented or not disclosed. 

(d) PLEADING.—In actions involving allegations of inequitable 

conduct before the Office, the party asserting the defense or claim 

shall comply with the pleading requirements set forth under Federal 

Rules of Civil Procedure 9(b). 

(e) REMEDIES.—If the court finds both that material information 

was misrepresented to, or withheld from, the Office and an intent 

to deceive, after balancing the equities, the court, using its discretion, shall impose 1 or more of the following remedies as it deems 

appropriate: 

(1) Hold the patent unenforceable. 


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(2) Hold 1 or more claims of the patent unenforceable. 

(3) Order that the patentee is not entitled to equitable relief 

and that the sole and exclusive remedy for infringement of the 

patent shall be a reasonable royalty. 

CHAPTER 30—PRIOR ART CITATIONS TO OFFICE AND EX 

PARTE REEXAMINATION OF PATENTS 

* * * * * * * 

§ 303. Determination of issue by Director 

(a) øWithin three months following the filing of a request for reexamination under the provisions of section 302 of this title, the 

Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by 

the request, with or without consideration of other patents or printed publications. On his own initiative, and any time, the Director 

may determine whether a substantial new question of patentability 

is raised by patents and publications discovered by him or cited 

under the provisions of section 301 of this title. The existence of a 

substantial new question of patentability is not precluded by the 

fact that a patent or printed publication was previously cited by or 

to the Office or considered by the Office.¿ Within 3 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 cited by or to the Office or considered by the Office. 

* * * * * * * 

§ 305. Conduct of reexamination proceedings 

After the times for filing the statement and reply provided for by 

section 304 of this title have expired, reexamination will be conducted according to the procedures established for initial examination under the provisions of sections 132 and 133 of this title. In 

any reexamination proceeding under this chapter, the patent owner 

will be permitted to propose any amendment to his patent and a 

new claim or claims thereto, in order to distinguish the invention 

as claimed from the prior art cited under the provisions of section 

301 of this title, or in response to a decision adverse to the patentability of a claim of a patent. No proposed amended or new claim 

enlarging the scope of a claim of the patent will be permitted in 

a reexamination proceeding under this chapter. All reexamination 

proceedings under this section, including any appeal to the øBoard 

of Patent Appeals and Interferences¿ Patent Trial and Appeal 

Board, will be conducted with special dispatch within the Office. 

* * * * * * * 


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øCHAPTER 31—OPTIONAL INTER PARTES 

REEXAMINATION PROCEDURES] 

ø§ 311. Request for inter partes reexamination 

ø(a) IN GENERAL.—Any third-party requester at any time may 

file a request for inter partes reexamination by the Office of a patent on the basis of any prior art cited under the provisions of section 301. 

ø(b) REQUIREMENTS.—The request shall— ø(1) be in writing, include the identity of the real party in 

interest, and be accompanied by payment of an inter partes reexamination fee established by the Director under section 41; 

and 

ø(2) set forth the pertinency and manner of applying cited 

prior art to every claim for which reexamination is requested. 

ø(c) COPY.—The Director promptly shall send a copy of the request to the owner of record of the patent. 

ø§ 312. Determination of issue by Director 

ø(a) REEXAMINATION.—Not later than 3 months after the filing of 

a request for inter partes reexamination under section 311, 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. The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by 

the Office. 

ø(b) RECORD.—A record of the Director’s determination under 

subsection (a) shall be placed in the official file of the patent, and 

a copy shall be promptly given or mailed to the owner of record of 

the patent and to the third-party requester. 

ø(c) FINAL DECISION.—A determination by the Director under 

subsection (a) shall be final and non-appealable. Upon a determination that no substantial new question of patentability has been 

raised, the Director may refund a portion of the inter partes reexamination fee required under section 311. 

ø§ 313. Inter partes reexamination order by Director 

øIf, in a determination made under section 312 (a), the Director 

finds that a substantial new question of patentability affecting a 

claim of a patent is raised, the determination shall include an 

order for inter partes reexamination of the patent for resolution of 

the question. The order may be accompanied by the initial action 

of the Patent and Trademark Office on the merits of the inter 

partes reexamination conducted in accordance with section 314. 

ø§ 314. Conduct of inter partes reexamination proceedings 

ø(a) IN GENERAL.—Except as otherwise provided in this section, 

reexamination shall be conducted according to the procedures established for initial examination under the provisions of sections 

132 and 133. In any inter partes reexamination proceeding under 

this chapter, the patent owner shall be permitted to propose any 

amendment to the patent and a new claim or claims, except that 


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no proposed amended or new claim enlarging the scope of the 

claims of the patent shall be permitted. 

ø(b) RESPONSE.—

ø(1) With the exception of the inter partes reexamination request, any document filed by either the patent owner or the 

third-party requester shall be served on the other party. In addition, the Office shall send to the third-party requester a copy 

of any communication sent by the Office to the patent owner 

concerning the patent subject to the inter partes reexamination 

proceeding. 

ø(2) Each time that the patent owner files a response to an 

action on the merits from the Patent and Trademark Office, 

the third-party requester shall have one opportunity to file 

written comments addressing issues raised by the action of the 

Office or the patent owner’s response thereto, if those written 

comments are received by the Office within 30 days after the 

date of service of the patent owner’s response. 

ø(c) SPECIAL DISPATCH.—Unless otherwise provided by the Director for good cause, all inter partes reexamination proceedings 

under this section, including any appeal to the øBoard of Patent 

Appeals and Interferences¿ Patent Trial and Appeal Board, shall 

be conducted with special dispatch within the Office. 

ø§ 315. Appeal 

ø(a) PATENT OWNER.—The patent owner involved in an inter 

partes reexamination proceeding under this chapter—

ø(1) may appeal under the provisions of section 134 and may 

appeal under the provisions of sections 141 through 144, with 

respect to any decision adverse to the patentability of any 

original or proposed amended or new claim of the patent; and 

ø(2) may be a party to any appeal taken by a third-party requester under subsection (b). 

ø(b) THIRD-PARTY REQUESTER.—A third-party requester—

ø(1) may appeal under the provisions of section 134, and 

may appeal under the provisions of sections 141 through 144, 

with respect to any final decision favorable to the patentability 

of any original or proposed amended or new claim of the patent; and 

ø(2) may, subject to subsection (c), be a party to any appeal 

taken by the patent owner under the provisions of section 134 

or sections 141 through 144. 

ø(c) CIVIL ACTION.—A third-party requester whose request for an 

inter partes reexamination results in an order under section 313 is 

estopped from asserting at a later time, in any civil action arising 

in whole or in part under section 1338 of title 28, the invalidity of 

any claim finally determined to be valid and patentable on any 

ground which the third-party requester raised or could have raised 

during the inter partes reexamination proceedings. This subsection 

does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings. 


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ø§ 316. Certificate of patentability, unpatentability, and 

claim cancellation 

ø(a) IN GENERAL.—In an inter partes reexamination proceeding 

under this chapter, when 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, confirming any claim of the patent determined to be patentable, and incorporating in the patent any proposed amended or new claim determined to be patentable. 

ø(b) AMENDED OR NEW CLAIM.—Any proposed amended or new 

claim determined to be patentable and incorporated into a patent 

following an inter partes reexamination proceeding shall have the 

same effect as that specified in section 252 of this title for reissued 

patents on the right of any person who made, purchased, or used 

within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who 

made substantial preparation therefor, prior to issuance of a certificate under the provisions of subsection (a) of this section. 

ø§ 317. Inter partes reexamination prohibited 

ø(a) ORDER FOR REEXAMINATION.—Notwithstanding any provision of this chapter, once an order for inter partes reexamination 

of a patent has been issued under section 313, neither the thirdparty requester nor its privies,1 may file a subsequent request for 

inter partes reexamination of the patent until an inter partes reexamination certificate is issued and published under section 316, unless authorized by the Director. 

ø(b) FINAL DECISION.—Once a final decision has been entered 

against a party in a civil action arising in whole or in part under 

section 1338 of title 28, that the party has not sustained its burden 

of proving the invalidity of any patent claim in suit or if a final decision in an inter partes reexamination proceeding instituted by a 

third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent, then neither 

that party nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which 

that party or its privies raised or could have raised in such civil 

action or inter partes reexamination proceeding, and an inter 

partes reexamination requested by that party or its privies on the 

basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly 

discovered prior art unavailable to the third-party requester and 

the Patent and Trademark Office at the time of the inter partes reexamination proceedings. 

ø§ 318. Stay of litigation 

øOnce an order for inter partes reexamination of a patent has 

been issued under section 313, the patent owner may obtain a stay 

of any pending litigation which involves an issue of patentability 

of any claims of the patent which are the subject of the inter partes 

reexamination order, unless the court before which such litigation 

is pending determines that a stay would not serve the interests of 

justice.¿ 


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CHAPTER 32—POST-GRANT REVIEW PROCEDURES 

§ 321. Petition for post-grant review 

Subject to sections 322, 324, 332, and 333 of this chapter, a person who is not the patent owner may file with the Office a petition 

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, considering the aggregate costs of the post-grant review proceeding and 

the status of the petitioner. 

§ 322. Timing and bases of petition 

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

(1) the petition is filed not later than 12 months after the 

grant of the patent or issuance of a reissue patent, as the case 

may be; 

(2)(A) the petitioner establishes in the petition a substantial 

reason to believe that the continued existence of the challenged 

claim in the petition causes or is likely to cause the petitioner 

significant economic harm; and 

(B) the petitioner files a petition not later than 12 months 

after receiving notice, explicitly or implicitly, that the patent 

holder alleges infringement; or 

(3) the patent owner consents in writing to the proceeding. 

§ 323. Requirements of petition 

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

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

(2) the petition identifies any real parties in interest; 

(3) the petition identifies, in writing and with particularity, 

each claim challenged, the grounds on which the challenge to 

each claim is based, and the evidence that supports the grounds 

for each challenged claim, including—

(A) copies of patents and printed publications that the petitioner relies upon in support of the petition; and 

(B) affidavits or declarations of supporting evidence and 

opinions, if the petitioner relies on other factual evidence or 

on expert opinions; 

(4) the petition provides such information as the Director may 

require by regulation; and 

(5) the petitioner provides copies of any of the documents required under paragraphs (3) and (4) to the patent owner or, if 

applicable, the designated representative of the patent owner. 

§ 324. Publication and public availability of petition 

(a) IN GENERAL.—As soon as practicable after the receipt of a petition under section 321, the Director shall—

(1) publish the petition in the Federal Register; and 


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(2) make that petition available on the website of the United 

States Patent and Trademark Office. 

(b) PUBLIC AVAILABILITY.—The file of any proceeding under this 

chapter shall be made available to the public except that any petition or document filed with the intent to be sealed shall be accompanied by a motion to seal. Such petition or document shall be 

treated as sealed, pending the outcome of the ruling on the motion. 

Failure to file a motion to seal will result in the pleading being 

placed in the public record. 

§ 325. Prohibited filings 

(a) IN GENERAL.—A post-grant review proceeding may not be instituted under paragraph (1), (2), or (3) of section 322 if the petition 

requesting the proceeding identifies the same petitioner or real party 

in interest and the same patent as a previous petition filed under 

any paragraph of section 322. 

(b) PREVIOUSLY FILED CIVIL ACTIONS.—A post-grant review proceeding may not be instituted or maintained under paragraph (1) 

or (2) of section 322 if the petitioner or real party in interest has 

instituted a civil action challenging the validity of a claim of the 

patent. 

§ 326. Submission of additional information 

A petitioner under this chapter shall file such additional information with respect to the petition as the Director may require by regulation. 

§ 327. Institution of post-grant review proceedings 

(a) IN GENERAL.—The Director may not authorize a post-grant review proceeding to commence unless the Director determines that 

the information presented in the petition raises a substantial new 

question of patentability for at least 1 of the challenged claims. The 

Director shall determine whether to authorize a post-grant proceeding within 90 days after receiving a petition. 

(b) NOTIFICATION.—The Director shall notify the petitioner and 

patent owner, in writing, of the Director’s determination under subsection (a). The Director shall publish each notice of institution of 

a post-grant review proceeding in the Federal Register and make 

such notice available on the website of the United States Patent and 

Trademark Office. Such notice shall list the date on which the proceeding shall commence. 

(c) DETERMINATION NOT APPEALABLE.—The determination by the 

Director regarding whether to authorize a post-grant review proceeding under subsection (a) shall not be appealable. 

(d) ASSIGNMENT OF THE PROCEEDING TO A PANEL.—Upon a determination of the Director to commence a post-grant review proceeding, the Director shall assign the proceeding to a panel of 3 administrative patent judges from the Patent Trial and Appeal Board. 

§ 328. Consolidation of proceedings and joinder 

(a) CONSOLIDATION OF POST-GRANT PROCEEDINGS.—If more than 

1 petition is submitted under section 322(1) against the same patent 

and the Director determines that each raises a substantial new 

question of patentability warranting the commencement of a postVerDate Aug 31 2005 08:57 Jan 31, 2008 Jkt 069010 PO 00000 Frm 00119 Fmt 6604 Sfmt 6603 E:\HR\OC\SR259.XXX SR259

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grant review proceeding under section 327, the Director may consolidate such proceedings into a single post-grant review proceeding. 

(b) JOINDER.—If the Director commences a post-grant review proceeding on the basis of a petition filed under section 322(2), any person who files in compliance with section 322(2)(A) a petition that 

the Director finds sufficient to proceed under section 327 may be 

joined at the discretion of the Director, and such person shall participate in such post-grant review proceeding. 

§ 329. Conduct of post-grant review proceedings 

(a) IN GENERAL.—The Director shall prescribe regulations—

(1) in accordance with section 2(b)(2), establishing and governing post-grant review proceedings under this chapter and 

their relationship to other proceedings under this title; 

(2) for setting forth the standards for showings of substantial 

reason to believe and significant economic harm under section 

322(2) and substantial new question of patentability under section 327(a); 

(3) providing for the publication in the Federal Register all 

requests for the institution of post-grant proceedings; 

(4) establishing procedures for the submission of supplemental information after the petition is filed; and 

(5) 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. 

(b) POST-GRANT REVIEW REGULATIONS.—Regulations under subsection (a)(1) shall—

(1) require that the final determination in a post-grant review 

proceeding issue not later than 1 year after the date on which 

the Director notices the institution of a post-grant proceeding 

under this chapter, except that, for cause shown, the Director 

may extend the 1-year period by not more than 6 months; 

(2) provide for discovery upon order of the Director, as required in the interests of justice; 

(3) 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; 

(4) provide for protective orders governing the exchange and 

submission of confidential information; and 

(5) ensure that any information submitted by the patent 

owner in support of any amendment entered under section 332 

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 proceeding authorized by the Director. 


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§ 330. Patent owner response 

After a post-grant review 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 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. 

§ 331. Proof and evidentiary standards 

(a) IN GENERAL.—The presumption of validity set forth in section 

282 of this title shall not apply to challenges brought under section 

322(1) but shall apply in a challenge brought under paragraph (2) 

or (3) of section 322 to any patent claim under this chapter. 

(b) BURDEN OF PROOF.—The petitioner under section 322(1) shall 

have the burden of proving a proposition of invalidity by a preponderance of the evidence. For petitions filed under paragraphs (2) or 

(3) of section 322, the existence, authentication, availability, and 

scope of any evidence offered to establish invalidity shall be established by clear and convincing evidence. If such predicate facts are 

so established, invalidity shall be proven only if the persuasive force 

of such facts demonstrates invalidity by a preponderance of the evidence. 

§ 332. Amendment of the patent 

(a) IN GENERAL.—During a post-grant review proceeding, the patent owner may file 1 motion to amend the patent in 1 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. 

§ 333. Settlement 

(a) IN GENERAL.—A post-grant review proceeding under this 

chapter shall be terminated with respect to any petitioner upon the 

joint request of the petitioner and the patent owner, unless the Office 

has decided the matter before the request for termination is filed. If 

the post-grant review proceeding is terminated with respect to a petitioner under this section, no estoppel under this chapter shall 

apply to that petitioner. If no petitioner remains in the post-grant 

review proceeding, the Office shall terminate the post-grant review 

proceeding. 

(b) AGREEMENTS IN WRITING.—Any agreement or understanding 

between the patent owner and a petitioner, including any collateral 

agreements referred to in such agreement or understanding, made 

in connection with, or in contemplation of, the termination of a postgrant review proceeding under this section shall be in writing and 

a true copy of such agreement or understanding shall be filed in the 


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United States Patent and Trademark Office before the termination 

of the post-grant review proceeding as between the parties to the 

agreement or understanding. If any party filing such agreement or 

understanding so requests, the copy shall be kept separate from the 

file of the post-grant review proceeding, and made available only to 

Federal Government agencies upon written request, or to any other 

person on a showing of good cause. 

§ 334. 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 with respect to the patentability of any patent claim challenged and any new claim added under section 322. 

§ 335. Effect of decision 

If the Patent Trial and Appeal Board issues a final decision 

under section 334 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. 

§ 336. Relationship to other pending proceedings 

Notwithstanding section 135(a), 251, and 252, and chapter 30, 

the Director may determine the manner in which any ex parte reexamination proceeding, reissue proceeding, interference proceeding 

(commenced before the effective date 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. 

§ 337. Effect of decisions rendered in civil action on future 

post-grant review proceedings 

If a final decision has been 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 burdens 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 section 

322; and 

(2) the Director may not thereafter maintain a post-grant review proceeding previously requested by that party or the real 

parties in interest of that party. 

§ 338. Effect of final decision on future proceedings 

(a) IN GENERAL.—If a final decision under section 334 is favorable to the patentability of any original or new claim of the patent 

challenged by the petitioner, the petitioner may not thereafter, based 

on any ground which the petitioner raised during the post-grant review proceeding—

(1) request or pursue a derivation proceeding with respect to 

such claim; or 


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(2) assert the invalidity of any such claim in any civil action 

arising in whole or in part under section 1338 of title 28. 

(b) EXTENSION OF PROHIBITION.—If the final decision is the result 

of a petition filed on the basis of section 322(2), the prohibition 

under this section shall extend to any ground which the petitioner 

raised during the post-grant review proceeding. 

§ 339. Appeal 

A party dissatisfied with the final determination of the Patent 

Trial and Appeal Board in a post-grant proceeding under this chapter may appeal the determination under sections 141 through 144. 

Any party to the post-grant proceeding shall have the right to be a 

party to the appeal. 

* * * * * * * 

PART IV—PATENT COOPERATION TREATY 

* * * * * * * 

CHAPTER 36—INTERNATIONAL STAGE 

* * * * * * * 

§ 363. International application designating the United 

States: Effect 

An international application designating the United States shall 

have the effect, from its international filing date under article 11 

of the treaty, of a national application for patent regularly filed in 

the Patent and Trademark Office øexcept as otherwise provided in 

section 102(e) of this title¿. 

* * * * * * * 

CHAPTER 37—NATIONAL STAGE 

* * * * * * * 

§ 374. Publication of international application 

The publication under the treaty defined in section 351(a) of this 

title, of an international application designating the United States 

shall be deemed a publication under section 122(b), except as provided in øsections 102(e) and 154(d)¿ section 154(d) of this title. 

§ 375. Patent issued on international application: Effect 

(a) A patent may be issued by the Director based on an international application designating the United States, in accordance 

with the provisions of this title. øSubject to section 102(e) of this 

title, such¿ Such patent shall have the force and effect of a patent 

issued on a national application filed under the provisions of chapter 11 of this title. 

* * * * * * * 


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CONSOLIDATED APPROPRIATIONS ACT OF 

2005 (P.L. 108–447) 

* * * * * * * 

DIVISION B—DEPARTMENTS OF COMMERCE, JUSTICE, 

AND STATE, THE JUDICIARY, AND RELATED AGENCIES APPROPRIATIONS ACT OF 2005 

* * * * * * * 

TITLE VIII—PATENT AND TRADEMARK FEES 

SEC. 801. FEES FOR PATENT SERVICES 

(a) GENERAL PATENT FEES.—øDuring fiscal years 2005, 2006 and 

2007¿ Until such time as the Director sets or adjusts the fees otherwise, subsection (a) of section 41 of title 35, United States Code, 

shall be administered as though that subsection reads as follows: 

* * * * * * * 

SEC. 802. ADJUSTMENT OF TRADEMARK FEES 

(a) FEE FOR FILING APPLICATION.—øDuring fiscal years 2005, 

2006 and 2007¿ Until such time as the Director sets or adjusts the 

fees otherwise, under such conditions as may be prescribed by the 

Director, the fee under section 31(a) of the Trademark Act of 1946 

(15 U.S.C. 1113(a)) for: (1) the filing of a paper application for the 

registration of a trademark shall be $375; (2) the filing of an electronic application shall be $325; and (3) the filing of an electronic 

application meeting certain additional requirements prescribed by 

the Director shall be $275. During fiscal years 2005, 2006 and 

2007, the provisions of the second and third sentences of section 

31(a) of the Trademark Act of 1946 shall apply to the fees established by this section. 

* * * * * * * 

SEC. 803. EFFECTIVE DATE, APPLICABILITY, AND TRANSITIONAL PROVISION 

(a) EFFECTIVE DATE.—Except as otherwise provided in this title 

(including in this section), the provisions of this title shall take effect on the date of the enactment of this Act øand shall apply only 

with respect to the remaining portion of fiscal year 2005, 2006 and 

2007¿. 

* * * * * * * 

Æ 


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