```

[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1908 Reported in House (RH)]

                                                 Union Calendar No. 200
110th CONGRESS
  1st Session
                                H. R. 1908

                          [Report No. 110-314]

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

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 18, 2007

 Mr. Berman (for himself, Mr. Smith of Texas, Mr. Conyers, Mr. Coble, 
 Mr. Boucher, Mr. Goodlatte, Ms. Zoe Lofgren of California, Mr. Issa, 
 Mr. Schiff, Mr. Cannon, and Ms. Jackson-Lee of Texas) introduced the 
  following bill; which was referred to the Committee on the Judiciary

                           September 4, 2007

 Additional sponsors: Mr. Simpson, Ms. Wasserman Schultz, Mr. Emanuel, 
    Ms. Eshoo, Mr. Wexler, Mr. Matheson, Mr. Crowley, Mr. Smith of 
 Washington, Mr. Moran of Virginia, Mr. Sali, Ms. Hooley, Mrs. Jo Ann 
                   Davis of Virginia, and Mr. Bachus

                           September 4, 2007

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                               18, 2007]

_______________________________________________________________________

                                 A BILL

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

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patent Reform Act 
of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reference to title 35, United States Code.
Sec. 3. Right of the first inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Right of the inventor to obtain damages.
Sec. 6. Post-grant procedures and other quality enhancements.
Sec. 7. Definitions; patent trial and appeal board.
Sec. 8. Study and report on reexamination proceedings.
Sec. 9. Submissions by third parties and other quality enhancements.
Sec. 10. Tax planning methods not patentable.
Sec. 11. Venue and jurisdiction.
Sec. 12. Additional information; inequitable conduct as defense to 
                            infringement.
Sec. 13. Best mode requirement.
Sec. 14. Regulatory authority.
Sec. 15. Technical amendments.
Sec. 16. Study of special masters in patent cases.
Sec. 17. Rule of construction.

SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE.

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

SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 is amended by adding at the end the 
following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of an invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any one of 
the individuals who invented or discovered the subject matter of a 
joint invention.
    ``(h) The `effective filing date of a claimed invention' is--
            ``(1) the filing date of the patent or the application for 
        patent containing the claim to the invention; or
            ``(2) if the patent or application for patent is entitled 
        to a right of priority of any other application under section 
        119, 365(a), or 365(b) or to the benefit of an earlier filing 
        date in the United States under section 120, 121, or 365(c), 
        the filing date of the earliest such application in which the 
        claimed invention is disclosed in the manner provided by 
        section 112(a).
    ``(i) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.
    ``(j) The term `joint invention' means an invention resulting from 
the collaboration of inventive endeavors of two or more persons working 
toward the same end and producing an invention by their collective 
efforts.''.
    (b) Conditions for Patentability.--
            (1) In general.--Section 102 is amended to read as follows:
``Sec. 102. Conditions for patentability; novelty
    ``(a) Novelty; Prior Art.--A patent for a claimed invention may not 
be obtained if--
            ``(1) the claimed invention was patented, described in a 
        printed publication, in public use, or on sale--
                    ``(A) more than one year before the effective 
                filing date of the claimed invention; or
                    ``(B) one year or less before the effective filing 
                date of the claimed invention, other than through 
                disclosures made by the inventor or a joint inventor or 
                by others who obtained the subject matter disclosed 
                directly or indirectly from the inventor or a joint 
                inventor; or
            ``(2) the claimed invention was described in a patent 
        issued under section 151, or in an application for patent 
        published or deemed published under section 122(b), in which 
        the patent or application, as the case may be, names another 
        inventor and was effectively filed before the effective filing 
        date of the claimed invention.
    ``(b) Exceptions.--
            ``(1) Prior inventor disclosure exception.--Subject matter 
        that would otherwise qualify as prior art based upon a 
        disclosure under subparagraph (B) of subsection (a)(1) shall 
        not be prior art to a claimed invention under that subparagraph 
        if the subject matter had, before such disclosure, been 
        publicly disclosed by the inventor or a joint inventor or 
        others who obtained the subject matter disclosed directly or 
        indirectly from the inventor or a joint inventor.
            ``(2) Derivation, prior disclosure, and common assignment 
        exceptions.--Subject matter that would otherwise qualify as 
        prior art only under subsection (a)(2) shall not be prior art 
        to a claimed invention if--
                    ``(A) the subject matter was obtained directly or 
                indirectly from the inventor or a joint inventor;
                    ``(B) the subject matter had been publicly 
                disclosed by the inventor or a joint inventor or others 
                who obtained the subject matter disclosed directly or 
                indirectly from the inventor or a joint inventor before 
                the date on which the application or patent referred to 
                in subsection (a)(2) was effectively filed; or
                    ``(C) the subject matter and the claimed invention, 
                not later than the effective filing date of the claimed 
                invention, were owned by the same person or subject to 
                an obligation of assignment to the same person.
            ``(3) Joint research agreement exception.--
                    ``(A) In general.--Subject matter and a claimed 
                invention shall be deemed to have been owned by the 
                same person or subject to an obligation of assignment 
                to the same person in applying the provisions of 
                paragraph (2) if--
                            ``(i) the claimed invention was made by or 
                        on behalf of parties to a joint research 
                        agreement that was in effect on or before the 
                        effective filing date of the claimed invention;
                            ``(ii) the claimed invention was made as a 
                        result of activities undertaken within the 
                        scope of the joint research agreement; and
                            ``(iii) the application for patent for the 
                        claimed invention discloses or is amended to 
                        disclose the names of the parties to the joint 
                        research agreement.
                    ``(B) For purposes of subparagraph (A), the term 
                `joint research agreement' means a written contract, 
                grant, or cooperative agreement entered into by two or 
                more persons or entities for the performance of 
                experimental, developmental, or research work in the 
                field of the claimed invention.
            ``(4) Patents and published applications effectively 
        filed.--A patent or application for patent is effectively filed 
        under subsection (a)(2) with respect to any subject matter 
        described in the patent or application--
                    ``(A) as of the filing date of the patent or the 
                application for patent; or
                    ``(B) if the patent or application for patent is 
                entitled to claim a right of priority under section 
                119, 365(a), or 365(b) or to claim the benefit of an 
                earlier filing date under section 120, 121, or 365(c), 
                based upon one or more prior filed applications for 
                patent, as of the filing date of the earliest such 
                application that describes the subject matter.''.
            (2) Conforming amendment.--The item relating to section 102 
        in the table of sections for chapter 10 is amended to read as 
        follows:

``102. Conditions for patentability; novelty.''.
    (c) Conditions for Patentability; Non-Obvious Subject Matter.--
Section 103 is amended to read as follows:
``Sec. 103. Conditions for patentability; nonobvious subject matter
    ``A patent for a claimed invention may not be obtained though the 
claimed invention is not identically disclosed as set forth in section 
102, if the differences between the claimed invention and the prior art 
are such that the claimed invention as a whole would have been obvious 
before the effective filing date of the claimed invention to a person 
having ordinary skill in the art to which the claimed invention 
pertains. Patentability shall not be negated by the manner in which the 
invention was made.''.
    (d) Repeal of Requirements for Inventions Made Abroad.--Section 
104, and the item relating to that section in the table of sections for 
chapter 10, are repealed.
    (e) Repeal of Statutory Invention Registration.--
            (1) In general.--Section 157, and the item relating to that 
        section in the table of sections for chapter 14, are repealed.
            (2) Removal of cross references.--Section 111(b)(8) is 
        amended by striking ``sections 115, 131, 135, and 157'' and 
        inserting ``sections 131 and 135''.
    (f) Earlier Filing Date for Inventor and Joint Inventor.--Section 
120 is amended by striking ``which is filed by an inventor or inventors 
named'' and inserting ``which names an inventor or joint inventor''.
    (g) Conforming Amendments.--
            (1) Right of priority.--Section 172 is amended by striking 
        ``and the time specified in section 102(d)''.
            (2) Limitation on remedies.--Section 287(c)(4) is amended 
        by striking ``the earliest effective filing date of which is 
        prior to'' and inserting ``which has an effective filing date 
        before''.
            (3) International application designating the united 
        states: effect.--Section 363 is amended by striking ``except as 
        otherwise provided in section 102(e) of this title''.
            (4) Publication of international application: effect.--
        Section 374 is amended by striking ``sections 102(e) and 
        154(d)'' and inserting ``section 154(d)''.
            (5) Patent issued on international application: effect.--
        The second sentence of section 375(a) is amended by striking 
        ``Subject to section 102(e) of this title, such'' and inserting 
        ``Such''.
            (6) Limit on right of priority.--Section 119(a) is amended 
        by striking ``; but no patent shall be granted'' and all that 
        follows through ``one year prior to such filing''.
            (7) Inventions made with federal assistance.--Section 
        202(c) is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``publication, on sale, or 
                        public use,'' and all that follows through 
                        ``obtained in the United States'' and inserting 
                        ``the 1-year period referred to in section 
                        102(a) would end before the end of that 2-year 
                        period''; and
                            (ii) by striking ``the statutory'' and 
                        inserting ``that 1-year''; and
                    (B) in paragraph (3), by striking ``any statutory 
                bar date that may occur under this title due to 
                publication, on sale, or public use'' and inserting 
                ``the expiration of the 1-year period referred to in 
                section 102(a)''.
    (h) Repeal of Interfering Patent Remedies.--Section 291, and the 
item relating to that section in the table of sections for chapter 29, 
are repealed.
    (i) Action for Claim to Patent on Derived Invention.--
            (1) In general.--Section 135(a) is amended to read as 
        follows:
    ``(a) Dispute Over Right to Patent.--
            ``(1) Institution of derivation proceeding.--
                    ``(A) Request for proceeding.--An applicant may 
                request initiation of a derivation proceeding to 
                determine the right of the applicant to a patent by 
                filing a request that sets forth with particularity the 
                basis for finding that another applicant derived the 
                claimed invention from the applicant requesting the 
                proceeding and, without authorization, filed an 
                application claiming such invention. Any such request--
                            ``(i) may only be made within 12 months 
                        after the earlier of--
                                    ``(I) the date on which a patent is 
                                issued containing a claim that is the 
                                same or substantially the same as the 
                                claimed invention; or
                                    ``(II) the date of first 
                                publication of an application 
                                containing a claim that is the same or 
                                is substantially the same as the 
                                claimed invention; and
                            ``(ii) must be made under oath, and must be 
                        supported by substantial evidence.
                    ``(B) Determination of director.-- Whenever the 
                Director determines that patents or applications for 
                patent naming different individuals as the inventor 
                interfere with one another because of a dispute over 
                the right to patent under section 101 on the basis of a 
                request under subparagraph (A), the Director shall 
                institute a derivation proceeding for the purpose of 
                determining which applicant is entitled to a patent.
            ``(2) Determination by patent trial and appeal board.--In 
        any proceeding under this subsection, the Patent Trial and 
        Appeal Board--
                    ``(A) shall determine the question of the right to 
                patent;
                    ``(B) in appropriate circumstances, may correct the 
                naming of the inventor in any application or patent at 
                issue; and
                    ``(C) shall issue a final decision on the right to 
                patent.
            ``(3) Derivation proceeding.--The Patent Trial and Appeal 
        Board may defer action on a request to initiate a derivation 
        proceeding for up to three months after the date on which the 
        Director issues a patent to the applicant that filed the 
        earlier application.
            ``(4) Effect of final decision.--The final decision of the 
        Patent Trial and Appeal Board in a derivation proceeding, if 
        adverse to the claim of an applicant, shall constitute the 
        final refusal by the Patent and Trademark Office on the claims 
        involved. The Director may issue a patent to an applicant who 
        is determined by the Patent Trial and Appeal Board to have the 
        right to a patent. The final decision of the Board, if adverse 
        to a patentee, shall, if no appeal or other review of the 
        decision has been or can be taken or had, constitute 
        cancellation of the claims involved in the patent, and notice 
        of such cancellation shall be endorsed on copies of the patent 
        distributed after such cancellation by the Patent and Trademark 
        Office.''.
            (2) Conforming amendments.--(A) Section 135 is further 
        amended--
                    (i) in subsection (b)--
                            (I) by striking ``(b)(1) A claim'' and 
                        inserting the following:
    ``(b) Same Claims.--
            ``(1) Issued patents.--A claim''; and
                            (II) by striking ``(2) A claim'' and 
                        inserting the following:
            ``(2) Published applications.--A claim''; and
                            (III) moving the remaining text of 
                        paragraphs (1) and (2) 2 ems to the right;
                    (ii) in subsection (c)--
                            (I) by striking ``(c) Any agreement'' and 
                        inserting the following:
    ``(c) Agreements To Terminate Proceedings.--
            ``(1) In general.--Any agreement'';
                            (II) by striking ``an interference'' and 
                        inserting ``a derivation proceeding'';
                            (III) by striking ``the interference'' each 
                        place it appears and inserting ``the derivation 
                        proceeding'';
                            (IV) in the second paragraph, by striking 
                        ``The Director'' and inserting the following:
            ``(2) Notice.--The Director'';
                            (V) by amending the third paragraph to read 
                        as follows:
            ``(3) Judicial review.--Any discretionary action of the 
        Director under this subsection shall be reviewable under 
        chapter 7 of title 5.''; and
                            (VI) by moving the remaining text of 
                        paragraphs (1) and (2) of subsection (c) 2 ems 
                        to the right; and
                    (iii) in subsection (d)--
                            (I) by striking ``(d) Parties'' and 
                        inserting ``(d) Arbitration.--Parties'';
                            (II) by striking ``a patent interference'' 
                        and inserting ``a derivation proceeding''; and
                            (III) by striking ``the interference'' and 
                        inserting ``the derivation proceeding''.
    (j) Elimination of References to Interferences.--(1) Sections 
41(a)(6), 134, 141, 145, 146, 154, 305, and 314 are each amended by 
striking ``Board of Patent Appeals and Interferences'' each place it 
appears and inserting ``Patent Trial and Appeal Board''.
    (2) Section 141 is amended--
            (A) by striking ``an interference'' and inserting ``a 
        derivation proceeding''; and
            (B) by striking ``interference'' each additional place it 
        appears and inserting ``derivation proceeding''.
    (3) Section 146 is amended--
            (A) in the first paragraph--
                    (i) by striking ``Any party'' and inserting ``(a) 
                In General.--Any party'';
                    (ii) by striking ``an interference'' and inserting 
                ``a derivation proceeding''; and
                    (iii) by striking ``interference'' each additional 
                place it appears and inserting ``derivation 
                proceeding''; and
            (B) in the second paragraph, by striking ``Such suit'' and 
        inserting ``(b) Procedure.--A suit under subsection (a)''
    (4) The section heading for section 134 is amended to read as 
follows:
``Sec. 134. Appeal to the Patent Trial and Appeal Board''.
    (5) The section heading for section 135 is amended to read as 
follows:
``Sec. 135. Derivation proceedings''.
    (6) The section heading for section 146 is amended to read as 
follows:
``Sec. 146. Civil action in case of derivation proceeding''.
    (7) Section 154(b)(1)(C) is amended by striking ``interferences'' 
and inserting ``derivation proceedings''.
    (8) The item relating to section 6 in the table of sections for 
chapter 1 is amended to read as follows:

``6. Patent Trial and Appeal Board.''.
    (9) The items relating to sections 134 and 135 in the table of 
sections for chapter 12 are amended to read as follows:

``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.
    (10) The item relating to section 146 in the table of sections for 
chapter 13 is amended to read as follows:

``146. Civil action in case of derivation proceeding.''.
    (11) Certain Appeals.--Subsection 1295(a)(4)(A) of title 28, United 
States Code, is amended to read as follows:
                    ``(A) the Patent Trial and Appeal Board of the 
                United States Patent and Trademark Office with respect 
                to patent applications, derivation proceedings, and 
                post-grant review proceedings, at the instance of an 
                applicant for a patent or any party to a patent 
                interference (commenced before the effective date 
                provided in section 3(k) of the Patent Reform Act of 
                2007), derivation proceeding, or post-grant review 
                proceeding, and any such appeal shall waive any right 
                of such applicant or party to proceed under section 145 
                or 146 of title 35;''.
    (k) Effective Date.--
            (1) In general.--The amendments made by this section--
                    (A) shall take effect 90 days after the date on 
                which the President transmits to the Congress a finding 
                that major patenting authorities have adopted a grace 
                period having substantially the same effect as that 
                contained under the amendments made by this section; 
                and
                    (B) shall apply to all applications for patent that 
                are filed on or after the effective date under 
                subparagraph (A).
            (2) Definitions.--In this subsection:
                    (A) Major patenting authorities.--The term ``major 
                patenting authorities'' means at least the patenting 
                authorities in Europe and Japan.
                    (B) Grace period.--The term ``grace period'' means 
                the 1-year period ending on the effective filing date 
                of a claimed invention, during which disclosures of the 
                subject matter by the inventor or a joint inventor, or 
                by others who obtained the subject matter disclosed 
                directly or indirectly from the inventor or a joint 
                inventor, do not qualify as prior art to the claimed 
                invention.
                    (C) Effective filing date.--The term ``effective 
                filing date of a claimed invention'' means, with 
                respect to a patenting authority in another country, a 
                date equivalent to the effective filing date of a 
                claimed invention as defined in section 100(h) of title 
                35, United States Code, as added by subsection (a) of 
                this section.
    (l) Review Every 7 Years.--Not later than the end of the 7-year 
period beginning on the effective date under subsection (k), and the 
end of every 7-year period thereafter, the Under Secretary of Commerce 
for Intellectual Property and Director of the United States Patent and 
Trademark Office (in this subsection referred to as the ``Director'') 
shall--
            (1) conduct a study on the effectiveness and efficiency of 
        the amendments made by this section; and
            (2) submit to the Committees on the Judiciary of the House 
        of Representatives and the Senate a report on the results of 
        the study, including any recommendations the Director has on 
        amendments to the law and other recommendations of the Director 
        with respect to the first-to-file system implemented under the 
        amendments made by this section.

SEC. 4. INVENTOR'S OATH OR DECLARATION.

    (a) Inventor's Oath or Declaration.--
            (1) In general.--Section 115 is amended to read as follows:
``Sec. 115. Inventor's oath or declaration
    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a), that 
commences the national stage under section 363, or that is filed by an 
inventor for an invention for which an application has previously been 
filed under this title by that inventor shall include, or be amended to 
include, the name of the inventor of any claimed invention in the 
application. Except as otherwise provided in this section, each 
individual who is the inventor or a joint inventor of a claimed 
invention in an application for patent shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration by an individual 
under subsection (a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by individual; and
            ``(2) the individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) is permitted with respect to any individual 
        who--
                    ``(A) is unable to file the oath or declaration 
                under subsection (a) because the individual--
                            ``(i) is deceased;
                            ``(ii) is under legal incapacity; or
                            ``(iii) cannot be found or reached after 
                        diligent effort; or
                    ``(B) is under an obligation to assign the 
                invention and has refused to make the oath or 
                declaration required under subsection (a).
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--The requirements under this section shall not 
apply to an individual with respect to an application for patent in 
which the individual is named as the inventor or a joint inventor and 
that claims the benefit of an earlier filing date under section 120 or 
365(c), if--
            ``(1) an oath or declaration meeting the requirements of 
        subsection (a) was executed by the individual and was filed in 
        connection with the earlier-filed application;
            ``(2) a substitute statement meeting the requirements of 
        subsection (d) was filed in the earlier filed application with 
        respect to the individual; or
            ``(3) an assignment meeting the requirements of subsection 
        (e) was executed with respect to the earlier-filed application 
        by the individual and was recorded in connection with the 
        earlier-filed application.
    ``(h) Supplemental and Corrected Statements; Filing Additional 
Statements.--
            ``(1) In general.--Any person making a statement required 
        under this section may withdraw, replace, or otherwise correct 
        the statement at any time. If a change is made in the naming of 
        the inventor requiring the filing of 1 or more additional 
        statements under this section, such additional statements shall 
        be filed in accordance with regulations established by the 
        Director.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration under subsection 
        (a) or an assignment meeting the requirements of subsection (e) 
        with respect to an application for patent, the Director may not 
        thereafter require that individual to make any additional oath, 
        declaration, or other statement equivalent to those required by 
        this section in connection with the application for patent or 
        any patent issuing thereon.
            ``(3) Savings clause.--No patent shall be invalid or 
        unenforceable based upon the failure to comply with a 
        requirement under this section if the failure is remedied as 
        provided under paragraph (1).
    ``(i) Acknowledgment of Penalties.--Any declaration or statement 
filed under this section must contain an acknowledgment that any 
willful false statement is punishable by fine or imprisonment, or both, 
under section 1001 of title 18.''.
            (2) Relationship to divisional applications.--Section 121 
        is amended by striking ``If a divisional application'' and all 
        that follows through ``inventor.''.
            (3) Requirements for nonprovisional applications.--Section 
        111(a) is amended--
                    (A) in paragraph (2)(C), by striking ``by the 
                applicant'' and inserting ``or declaration'';
                    (B) in the heading for paragraph (3), by striking 
                ``and oath''; and
                    (C) by striking ``and oath'' each place it appears.
            (4) Conforming amendment.--The item relating to section 115 
        in the table of sections for chapter 11 is amended to read as 
        follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--Section 118 is amended to read 
as follows:
``Sec. 118. Filing by other than inventor
    ``A person to whom the inventor has assigned or is under an 
obligation to assign the invention may make an application for patent. 
A person who otherwise shows sufficient proprietary interest in the 
matter may make an application for patent on behalf of and as agent for 
the inventor on proof of the pertinent facts and a showing that such 
action is appropriate to preserve the rights of the parties. If the 
Director grants a patent on an application filed under this section by 
a person other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as the 
Director considers to be sufficient.''.
    (c) Specification.--Section 112 is amended--
            (1) in the first paragraph----
                    (A) by striking ``The specification'' and inserting 
                ``(a) In General.--The specification''; and
                    (B) by striking ``of carrying out his invention'' 
                and inserting ``or joint inventor of carrying out the 
                invention''; and
            (2) in the second paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(b) Conclusion.--The specification''; and
                    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';
            (3) in the third paragraph, by striking ``A claim'' and 
        inserting ``(c) Form.--A claim'';
            (4) in the fourth paragraph, by striking ``Subject to the 
        following paragraph,'' and inserting ``(d) Reference in 
        Dependent Forms.--Subject to subsection (e),'';
            (5) in the fifth paragraph, by striking ``A claim'' and 
        inserting ``(e) Reference in Multiple Dependent Form.--A 
        claim''; and
            (6) in the last paragraph, by striking ``An element'' and 
        inserting ``(f) Element in Claim for a Combination.--An 
        element''.
    (d) Effective Date.--The amendments made by this section--
            (1) shall take effect at the end of the 1-year period 
        beginning on the date of the enactment of this Act; and
            (2) shall apply to any application for patent, or 
        application for reissue patent, that is filed on or after the 
        effective date under paragraph (1).

SEC. 5. RIGHT OF THE INVENTOR TO OBTAIN DAMAGES.

    (a) Damages.--Section 284 is amended--
            (1) in the first paragraph, by striking ``Upon'' and 
        inserting ``(a) In General.--Upon'';
            (2) by designating the second undesignated paragraph as 
        subsection (c);
            (3) by inserting after subsection (a) (as designated by 
        paragraph (1) of this subsection) the following:
    ``(b) Reasonable Royalty.--
            ``(1) In general.-- An award pursuant to subsection (a) 
        that is based upon a reasonable royalty shall be determined in 
        accordance with this subsection. Based on the facts of the 
        case, the court shall determine whether paragraph (2), (3), or 
        (5) will be used by the court or the jury in calculating a 
        reasonable royalty. The court shall identify the factors that 
        are relevant to the determination of a reasonable royalty under 
        the applicable paragraph, and the court or jury, as the case 
        may be, shall consider only those factors in making the 
        determination.
            ``(2) Relationship of damages to contributions over prior 
        art.--The court shall conduct an analysis to ensure that a 
        reasonable royalty under subsection (a) is applied only to that 
        economic value properly attributable to the patent's specific 
        contribution over the prior art. The court shall exclude from 
        the analysis the economic value properly attributable to the 
        prior art, and other features or improvements, whether or not 
        themselves patented, that contribute economic value to the 
        infringing product or process.
            ``(3) Entire market value.--Unless the claimant shows that 
        the patent's specific contribution over the prior art is the 
        predominant basis for market demand for an infringing product 
        or process, damages may not be based upon the entire market 
        value of the products or processes involved that satisfy that 
        demand.
            ``(4) Combination inventions.--For purposes of paragraphs 
        (2) and (3), in the case of a combination invention the 
        elements of which are present individually in the prior art, 
        the patentee may show that the contribution over the prior art 
        may include the value of the additional function resulting from 
        the combination, as well as the enhanced value, if any, of some 
        or all of the prior art elements resulting from the 
        combination.
            ``(5) Other factors.--In determining a reasonable royalty, 
        the court may also consider, or direct the jury to consider, 
        the terms of any nonexclusive marketplace licensing of the 
        invention, where appropriate, as well as any other relevant 
        factors under applicable law.'';
            (4) by amending subsection (c) (as designated by paragraph 
        (1) of this subsection) to read as follows:
    ``(c) Willful Infringement.--
            ``(1) Increased damages.--A court that has determined that 
        the infringer has willfully infringed a patent or patents may 
        increase the damages up to three times the amount of damages 
        found or assessed under subsection (a), except that increased 
        damages under this paragraph shall not apply to provisional 
        rights under section 154(d).
            ``(2) Permitted grounds for willfulness.--A court may find 
        that an infringer has willfully infringed a patent only if the 
        patent owner presents clear and convincing evidence that--
                    ``(A) after receiving written notice from the 
                patentee--
                            ``(i) alleging acts of infringement in a 
                        manner sufficient to give the infringer an 
                        objectively reasonable apprehension of suit on 
                        such patent, and
                            ``(ii) identifying with particularity each 
                        claim of the patent, each product or process 
                        that the patent owner alleges infringes the 
                        patent, and the relationship of such product or 
                        process to such claim,
                the infringer, after a reasonable opportunity to 
                investigate, thereafter performed one or more of the 
                alleged acts of infringement;
                    ``(B) the infringer intentionally copied the 
                patented invention with knowledge that it was patented; 
                or
                    ``(C) after having been found by a court to have 
                infringed that patent, the infringer engaged in conduct 
                that was not colorably different from the conduct 
                previously found to have infringed the patent, and that 
                resulted in a separate finding of infringement of the 
                same patent.
            ``(3) Limitations on willfulness.--(A) A court may not find 
        that an infringer has willfully infringed a patent under 
        paragraph (2) for any period of time during which the infringer 
        had an informed good faith belief that the patent was invalid 
        or unenforceable, or would not be infringed by the conduct 
        later shown to constitute infringement of the patent.
            ``(B) An informed good faith belief within the meaning of 
        subparagraph (A) may be established by--
                    ``(i) reasonable reliance on advice of counsel;
                    ``(ii) evidence that the infringer sought to modify 
                its conduct to avoid infringement once it had 
                discovered the patent; or
                    ``(iii) other evidence a court may find sufficient 
                to establish such good faith belief.
            ``(C) The decision of the infringer not to present evidence 
        of advice of counsel is not relevant to a determination of 
        willful infringement under paragraph (2).
            ``(4) Limitation on pleading.--Before the date on which a 
        court determines that the patent in suit is not invalid, is 
        enforceable, and has been infringed by the infringer, a 
        patentee may not plead and a court may not determine that an 
        infringer has willfully infringed a patent. The court's 
        determination of an infringer's willfulness shall be made 
        without a jury.''; and
            (5) in the third undesignated paragraph, by striking ``The 
        court'' and inserting ``(d) Expert Testimony.--The court''.
    (b) Defense to Infringement Based on Earlier Inventor.--Section 273 
is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``of a method''; and
                            (ii) by striking ``review period;'' and 
                        inserting ``review period; and'';
                    (B) in paragraph (2)(B), by striking the semicolon 
                at the end and inserting a period; and
                    (C) by striking paragraphs (3) and (4);
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking ``for a method''; and
                            (ii) by striking ``at least 1 year before 
                        the effective filing date of such patent, and'' 
                        and all that follows through the period and 
                        inserting ``and commercially used, or made 
                        substantial preparations for commercial use of, 
                        the subject matter before the effective filing 
                        date of the claimed invention.'';
                    (B) in paragraph (2)--
                            (i) by striking ``The sale or other 
                        disposition of a useful end product produced by 
                        a patented method'' and inserting ``The sale or 
                        other disposition of subject matter that 
                        qualifies for the defense set forth in this 
                        section''; and
                            (ii) by striking ``a defense under this 
                        section with respect to that useful end 
                        result'' and inserting ``such defense'';
                    (C) in paragraph (3)--
                            (i) by striking subparagraph (A); and
                            (ii) by redesignating subparagraphs (B) and 
                        (C) as subparagraphs (A) and (B), respectively; 
                        and
                    (D) in paragraph (7), by striking ``of the patent'' 
                and inserting ``of the claimed invention''; and
            (3) by amending the heading to read as follows:
``Sec. 273. Special defenses to and exemptions from infringement''.
    (c) Table of Sections.--The item relating to section 273 in the 
table of sections for chapter 28 is amended to read as follows:

``273. Special defenses to and exemptions from infringement.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to any civil action commenced on or after the date of the 
enactment of this Act.
    (e) Review Every 7 Years.--Not later than the end of the 7-year 
period beginning on the date of the enactment of this Act, and the end 
of every 7-year period thereafter, the Under Secretary of Commerce for 
Intellectual Property and Director of the United States Patent and 
Trademark Office (in this subsection referred to as the ``Director'') 
shall--
            (1) conduct a study on the effectiveness and efficiency of 
        the amendments made by this section; and
            (2) submit to the Committees on the Judiciary of the House 
        of Representatives and the Senate a report on the results of 
        the study, including any recommendations the Director has on 
        amendments to the law and other recommendations of the Director 
        with respect to the right of the inventor to obtain damages for 
        patent infringement.

SEC. 6. POST-GRANT PROCEDURES AND OTHER QUALITY ENHANCEMENTS.

    (a) Citation of Prior Art.--
            (1) In general.--Section 301 is amended to read as follows:
``Sec. 301. Citation of prior art
    ``(a) In General.--Any person at any time may cite to the Office in 
writing--
            ``(1) prior art consisting of patents or printed 
        publications which that person believes to have a bearing on 
        the patentability of any claim of a particular patent; or
            ``(2) written statements of the patent owner filed in a 
        proceeding before a Federal court or the Patent and Trademark 
        Office in which the patent owner takes a position on the scope 
        of one or more patent claims.
    ``(b) Submissions Part of Official File.--If the person citing 
prior art or written submissions under subsection (a) explains in 
writing the pertinence and manner of applying the prior art or written 
submissions to at least one claim of the patent, the citation of the 
prior art or written submissions (as the case may be) and the 
explanation thereof shall become a part of the official file of the 
patent.
    ``(c) Procedures for Written Statements.--
            ``(1) Submission of additional materials.--A party that 
        submits written statements under subsection (a)(2) in a 
        proceeding shall include any other documents, pleadings, or 
        evidence from the proceeding that address the patent owner's 
        statements or the claims addressed by the written statements.
            ``(2) Limitation on use of statements.--Written statements 
        submitted under subsection (a)(2) shall not be considered for 
        any purpose other than to determine the proper meaning of the 
        claims that are the subject of the request in a proceeding 
        ordered pursuant to section 304 or 313. Any such written 
        statements, and any materials submitted under paragraph (1), 
        that are subject to an applicable protective order shall be 
        redacted to exclude information subject to the order.
    ``(d) Identity Withheld.--Upon the written request of the person 
citing prior art or written statements under subsection (a), the 
person's identity shall be excluded from the patent file and kept 
confidential.''.
    (b) Reexamination.--Section 303(a) is amended to read as follows:
    ``(a) Within three months after the owner of a patent files a 
request for reexamination under section 302, the Director shall 
determine whether a substantial new question of patentability affecting 
any claim of the patent concerned is raised by the request, with or 
without consideration of other patents or printed publications. On the 
Director's own initiative, and at any time, the Director may determine 
whether a substantial new question of patentability is raised by 
patents and publications discovered by the Director, is cited under 
section 301, or is cited by any person other than the owner of the 
patent under section 302 or section 311. The existence of a substantial 
new question of patentability is not precluded by the fact that a 
patent or printed publication was previously cited by or to the Office 
or considered by the Office.''.
    (c) Conduct of Inter Partes Proceedings.--Section 314 is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``conducted according to the procedures established for initial 
        examination under the provisions of sections 132 and 133'' and 
        inserting ``heard by an administrative patent judge in 
        accordance with procedures which the Director shall 
        establish'';
            (2) in subsection (b), by striking paragraph (2) and 
        inserting the following:
    ``(2) The third-party requester shall have the opportunity to file 
written comments on any action on the merits by the Office in the inter 
partes reexamination proceeding, and on any response that the patent 
owner files to such an action, if those written comments are received 
by the Office within 60 days after the date of service on the third-
party requester of the Office action or patent owner response, as the 
case may be.''; and
            (3) by adding at the end the following:
    ``(d) Oral Hearing.--At the request of a third party requestor or 
the patent owner, the administrative patent judge shall conduct an oral 
hearing, unless the judge finds cause lacking for such hearing.''.
    (d) Estoppel.--Section 315(c) is amended by striking ``or could 
have raised''.
    (e) Reexamination Prohibited After District Court Decision.--
Section 317(b) is amended--
            (1) in the subsection heading, by striking ``Final 
        Decision'' and inserting ``District Court Decision''; and
            (2) by striking ``Once a final decision has been entered'' 
        and inserting ``Once the judgment of the district court has 
        been entered''.
    (f) Post-Grant Opposition Procedures.--
            (1) In general.--Part III is amended by adding at the end 
        the following new chapter:

               ``CHAPTER 32--POST-GRANT REVIEW PROCEDURES

``Sec.
``321. Petition for post-grant review.
``322. Timing and bases of petition.
``323. Requirements of petition.
``324. Prohibited filings.
``325. Submission of additional information; showing of sufficient 
                            grounds.
``326. Conduct of post-grant review proceedings.
``327. Patent owner response.
``328. Proof and evidentiary standards.
``329. Amendment of the patent.
``330. Decision of the Board.
``331. Effect of decision.
``332. Settlement.
``333. Relationship to other pending proceedings.
``334. Effect of decisions rendered in civil action on post-grant 
                            review proceedings.
``335. Effect of final decision on future proceedings.
``336. Appeal.
``Sec. 321. Petition for post-grant review
    ``Subject to sections 322, 324, 332, and 333, a person who is not 
the patent owner may file with the Office a petition for cancellation 
seeking to institute a post-grant review proceeding to cancel as 
unpatentable any claim of a patent on any ground that could be raised 
under paragraph (2) or (3) of section 282(b) (relating to invalidity of 
the patent or any claim). The Director shall establish, by regulation, 
fees to be paid by the person requesting the proceeding, in such 
amounts as the Director determines to be reasonable.
``Sec. 322. Timing and bases of petition
    ``A post-grant proceeding may be instituted under this chapter 
pursuant to a cancellation petition filed under section 321 only if--
            ``(1) the petition is filed not later than 12 months after 
        the grant of the patent or issuance of a reissue patent, as the 
        case may be; or
            ``(2) the patent owner consents in writing to the 
        proceeding.
``Sec. 323. Requirements of petition
    ``A cancellation petition filed under section 321 may be considered 
only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 321;
            ``(2) the petition identifies the cancellation petitioner; 
        and
            ``(3) the petition sets forth in writing the basis for the 
        cancellation, identifying each claim challenged and providing 
        such information as the Director may require by regulation, and 
        includes copies of patents and printed publications that the 
        cancellation petitioner relies upon in support of the petition; 
        and
            ``(4) the petitioner provides copies of those documents to 
        the patent owner or, if applicable, the designated 
        representative of the patent owner.
``Sec. 324. Prohibited filings
    ``A post-grant review proceeding may not be instituted under 
section 322 if the petition for cancellation requesting the proceeding 
identifies the same cancellation petitioner and the same patent as a 
previous petition for cancellation filed under such section.
``Sec. 325. Submission of additional information; showing of sufficient 
              grounds
    ``(a) In General.--The cancellation petitioner shall file such 
additional information with respect to the petition as the Director may 
require. For each petition submitted under section 321, the Director 
shall determine if the written statement, and any evidence submitted 
with the request, establish that a substantial question of 
patentability exists for at least one claim in the patent. The Director 
may initiate a post-grant review proceeding if the Director determines 
that the information presented provides sufficient grounds to believe 
that there is a substantial question of patentability concerning one or 
more claims of the patent at issue.
    ``(b) Notification; Determinations Not Reviewable.--The Director 
shall notify the patent owner and each petitioner in writing of the 
Director's determination under subsection (a), including a 
determination to deny the petition. The Director shall make that 
determination in writing not later than 60 days after receiving the 
petition. Any determination made by the Director under subsection (a), 
including whether or not to institute a post-grant review proceeding or 
to deny the petition, shall not be reviewable.
``Sec. 326. Conduct of post-grant review proceedings
    ``(a) In General.--The Director shall prescribe regulations, in 
accordance with section 2(b)(2)--
            ``(1) establishing and governing post-grant review 
        proceedings under this chapter and their relationship to other 
        proceedings under this title;
            ``(2) establishing procedures for the submission of 
        supplemental information after the petition for cancellation is 
        filed; and
            ``(3) setting forth procedures for discovery of relevant 
        evidence, including that such discovery shall be limited to 
        evidence directly related to factual assertions advanced by 
        either party in the proceeding, and the procedures for 
        obtaining such evidence shall be consistent with the purpose 
        and nature of the proceeding.
    ``(b) Post-Grant Regulations.--Regulations under subsection 
(a)(1)--
            ``(1) shall require that the final determination in a post-
        grant proceeding issue not later than one year after the date 
        on which the post-grant review proceeding is instituted under 
        this chapter, except that, for good cause shown, the Director 
        may extend the 1-year period by not more than six months;
            ``(2) shall provide for discovery upon order of the 
        Director;
            ``(3) shall provide for publication of notice in the 
        Federal Register of the filing of a petition for post-grant 
        review under this chapter, for publication of the petition, and 
        documents, orders, and decisions relating to the petition, on 
        the website of the Patent and Trademark Office, and for filings 
        under seal exempt from publication requirements;
            ``(4) shall prescribe sanctions for abuse of discovery, 
        abuse of process, or any other improper use of the proceeding, 
        such as to harass or to cause unnecessary delay or unnecessary 
        increase in the cost of the proceeding;
            ``(5) may provide for protective orders governing the 
        exchange and submission of confidential information; and
            ``(6) shall ensure that any information submitted by the 
        patent owner in support of any amendment entered under section 
        329 is made available to the public as part of the prosecution 
        history of the patent.
    ``(c) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect on the economy, the 
integrity of the patent system, and the efficient administration of the 
Office.
    ``(d) Conduct of Proceeding.--The Patent Trial and Appeal Board 
shall, in accordance with section 6(b), conduct each post-grant review 
proceeding authorized by the Director.
``Sec. 327. Patent owner response
    ``After a post-grant proceeding under this chapter has been 
instituted with respect to a patent, the patent owner shall have the 
right to file, within a time period set by the Director, a response to 
the cancellation petition. The patent owner shall file with the 
response, through affidavits or declarations, any additional factual 
evidence and expert opinions on which the patent owner relies in 
support of the response.
``Sec. 328. Proof and evidentiary standards
    ``(a) In General.--The presumption of validity set forth in section 
282 shall not apply in a challenge to any patent claim under this 
chapter.
    ``(b) Burden of Proof.--The party advancing a proposition under 
this chapter shall have the burden of proving that proposition by a 
preponderance of the evidence.
``Sec. 329. Amendment of the patent
    ``(a) In General.--In response to a challenge in a petition for 
cancellation, the patent owner may file one motion to amend the patent 
in one or more of the following ways:
            ``(1) Cancel any challenged patent claim.
            ``(2) For each challenged claim, propose a substitute 
        claim.
            ``(3) Amend the patent drawings or otherwise amend the 
        patent other than the claims.
    ``(b) Additional Motions.--Additional motions to amend may be 
permitted only for good cause shown.
    ``(c) Scope of Claims.--An amendment under this section may not 
enlarge the scope of the claims of the patent or introduce new matter.
``Sec. 330. Decision of the Board
    ``If the post-grant review proceeding is instituted and not 
dismissed under this chapter, the Patent Trial and Appeal Board shall 
issue a final written decision with respect to the patentability of any 
patent claim challenged and any new claim added under section 329.
``Sec. 331. Effect of decision
    ``(a) In General.--If the Patent Trial and Appeal Board issues a 
final decision under section 330 and the time for appeal has expired or 
any appeal proceeding has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable and incorporating in the patent by 
operation of the certificate any new claim determined to be patentable.
    ``(b) New Claims.--Any new claim held to be patentable and 
incorporated into a patent in a post-grant review proceeding shall have 
the same effect as that specified in section 252 for reissued patents 
on the right of any person who made, purchased, offered to sell, or 
used within the United States, or imported into the United States, 
anything patented by such new claim, or who made substantial 
preparations therefor, before a certificate under subsection (a) of 
this section is issued.
``Sec. 332. Settlement
    ``(a) In General.--A post-grant review proceeding shall be 
terminated with respect to any petitioner upon the joint request of the 
petitioner and the patent owner, unless the Patent Trial and Appeal 
Board has issued a written decision before the request for termination 
is filed. If the post-grant review proceeding is terminated with 
respect to a petitioner under this paragraph, no estoppel shall apply 
to that petitioner. If no petitioner remains in the proceeding, the 
panel of administrative patent judges assigned to the proceeding shall 
terminate the proceeding.
    ``(b) Agreement in Writing.--Any agreement or understanding between 
the patent owner and a petitioner, including any collateral agreements 
referred to in the agreement or understanding, that is made in 
connection with or in contemplation of the termination of a post-grant 
review proceeding, must be in writing. A post-grant review proceeding 
as between the parties to the agreement or understanding may not be 
terminated until a copy of the agreement or understanding, including 
any such collateral agreements, has been filed in the Office. If any 
party filing such an agreement or understanding requests, the agreement 
or understanding shall be kept separate from the file of the post-grant 
review proceeding, and shall be made available only to Government 
agencies on written request, or to any person on a showing of good 
cause.
``Sec. 333. Relationship to other pending proceedings
    ``(a) In General.--Notwithstanding subsection 135(a), sections 251 
and 252, and chapter 30, the Director may determine the manner in which 
any reexamination proceeding, reissue proceeding, interference 
proceeding (commenced before the effective date provided in section 
3(k) of the Patent Reform Act of 2007), derivation proceeding, or post-
grant review proceeding, that is pending during a post-grant review 
proceeding, may proceed, including providing for stay, transfer, 
consolidation, or termination of any such proceeding.
    ``(b) Stays.--The Director may stay a post-grant review proceeding 
if a pending civil action for infringement addresses the same or 
substantially the same questions of patentability.
``Sec. 334. Effect of decisions rendered in civil action on post-grant 
              review proceedings
    ``If a final decision is entered against a party in a civil action 
arising in whole or in part under section 1338 of title 28 establishing 
that the party has not sustained its burden of proving the invalidity 
of any patent claim--
            ``(1) that party to the civil action and the privies of 
        that party may not thereafter request a post-grant review 
        proceeding on that patent claim on the basis of any grounds, 
        under the provisions of section 321, which that party or the 
        privies of that party raised or could have raised; and
            ``(2) the Director may not thereafter maintain a post-grant 
        review proceeding that was requested, before the final decision 
        was so entered, by that party or the privies of that party on 
        the basis of such grounds.
``Sec. 335. Effect of final decision on future proceedings
    ``If a final decision under section 330 is favorable to the 
patentability of any original or new claim of the patent challenged by 
the cancellation petitioner, the cancellation petitioner may not 
thereafter, based on any ground that the cancellation petitioner raised 
during the post-grant review proceeding--
            ``(1) request or pursue a reexamination of such claim under 
        chapter 31;
            ``(2) request or pursue a derivation proceeding with 
        respect to such claim;
            ``(3) request or pursue a post-grant review proceeding 
        under this chapter with respect to such claim; or
            ``(4) assert the invalidity of any such claim in any civil 
        action arising in whole or in part under section 1338 of title 
        28.
``Sec. 336. Appeal
    ``A party dissatisfied with the final determination of the Patent 
Trial and Appeal Board in a post-grant proceeding under this chapter 
may appeal the determination under sections 141 through 144. Any party 
to the post-grant proceeding shall have the right to be a party to the 
appeal.''.
    (g) Conforming Amendment.--The table of chapters for part III is 
amended by adding at the end the following:

``32. Post-Grant Review Proceedings.........................     321''.
    (h) Repeal.--Section 4607 of the Intellectual Property and 
Communications Omnibus Reform Act of 1999, as enacted by section 
1000(a)(9) of Public Law 106-113, is repealed.
    (i) Effective Dates.--
            (1) In general.--The amendments and repeal made by this 
        section shall take effect at the end of the 1-year period 
        beginning on the date of the enactment of this Act.
            (2) Applicability to ex parte and inter partes 
        proceedings.--Notwithstanding any other provision of law, 
        sections 301 and 311 through 318 of title 35, United States 
        Code, as amended by this section, shall apply to any patent 
        that issues before, on, or after the effective date under 
        paragraph (1) from an original application filed on any date.
            (3) Applicability to post-grant proceedings.--The 
        amendments made by subsection (f) shall apply to patents issued 
        on or after the effective date under paragraph (1).
    (j) Regulations.--
            (1) Regulations.--The Under Secretary of Commerce for 
        Intellectual Property and Director of the United States Patent 
        and Trademark Office (in this subsection referred to as the 
        ``Director'') shall, not later than the date that is 1 year 
        after the date of the enactment of this Act, issue regulations 
        to carry out chapter 32 of title 35, United States Code, as 
        added by subsection (f) of this section.
            (2) Pending interferences.--The Director shall determine 
        the procedures under which interferences under title 35, United 
        States Code, that are commenced before the effective date under 
        subsection (i)(1) are to proceed, including whether any such 
        interference is to be dismissed without prejudice to the filing 
        of a cancellation petition for a post-grant opposition 
        proceeding under chapter 32 of title 35, United States Code, or 
        is to proceed as if this Act had not been enacted. The Director 
        shall include such procedures in regulations issued under 
        paragraph (1).

SEC. 7. DEFINITIONS; PATENT TRIAL AND APPEAL BOARD.

    (a) Definitions.--Section 100 (as amended by this Act) is further 
amended by adding at the end the following:
    ``(k) The term `cancellation petitioner' means the real party in 
interest requesting cancellation of any claim of a patent under chapter 
32 of this title and the privies of the real party in interest.''.
    (a) Patent Trial and Appeal Board.--Section 6 is amended to read as 
follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) Establishment and Composition.--There shall be in the Office 
a Patent Trial and Appeal Board. The Director, the Deputy Director, the 
Commissioner for Patents, the Commissioner for Trademarks, and the 
administrative patent judges shall constitute the Patent Trial and 
Appeal Board. The administrative patent judges shall be persons of 
competent legal knowledge and scientific ability who are appointed by 
the Director. Any reference in any Federal law, Executive order, rule, 
regulation, or delegation of authority, or any document of or 
pertaining to the Board of Patent Appeals and Interferences is deemed 
to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon application for patents;
            ``(2) on written appeal of a patent owner, review adverse 
        decisions of examiners upon patents in reexamination 
        proceedings under chapter 30;
            ``(3) review appeals by patent owners and third-party 
        requesters under section 315;
            ``(4) determine priority and patentability of invention in 
        derivation proceedings under section 135(a); and
            ``(5) conduct post-grant opposition proceedings under 
        chapter 32.
Each appeal and derivation proceeding shall be heard by at least 3 
members of the Patent Trial and Appeal Board, who shall be designated 
by the Director. Only the Patent Trial and Appeal Board may grant 
rehearings. The Director shall assign each post-grant review proceeding 
to a panel of 3 administrative patent judges. Once assigned, each such 
panel of administrative patent judges shall have the responsibilities 
under chapter 32 in connection with post-grant review proceedings.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect at the end of the 1-year period beginning on the date of the 
enactment of this Act.

SEC. 8. STUDY AND REPORT ON REEXAMINATION PROCEEDINGS.

    The Under Secretary of Commerce for Intellectual Property and 
Director of the Patent and Trademark Office shall, not later than 2 
years after the date of the enactment of this Act--
            (1) conduct a study of the effectiveness and efficiency of 
        the different forms of proceedings available under title 35, 
        United States Code, for the reexamination of patents; and
            (2) submit to the Committees on the Judiciary of the House 
        of Representatives and the Senate a report on the results of 
        the study, including any of the Director's suggestions for 
        amending the law, and any other recommendations the Director 
        has with respect to patent reexamination proceedings.

SEC. 9. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY ENHANCEMENTS.

    (a) Publication.--Section 122(b)(2) is amended--
            (1) by striking subparagraph (B); and
            (2) in subparagraph (A)--
                    (A) by striking ``(A) An application'' and 
                inserting ``An application''; and
                    (B) by redesignating clauses (i) through (iv) as 
                subparagraphs (A) through (D), respectively.
    (b) Preissuance Submissions by Third Parties.--Section 122 is 
amended by adding at the end the following:
    ``(e) Preissuance Submissions by Third Parties.--
            ``(1) In general.--Any person may submit for consideration 
        and inclusion in the record of a patent application, any 
        patent, published patent application, or other publication of 
        potential relevance to the examination of the application, if 
        such submission is made in writing before the earlier of--
                    ``(A) the date a notice of allowance under section 
                151 is mailed in the application for patent; or
                    ``(B) either--
                            ``(i) 6 months after the date on which the 
                        application for patent is published under 
                        section 122, or
                            ``(ii) the date of the first rejection 
                        under section 132 of any claim by the examiner 
                        during the examination of the application for 
                        patent,
                whichever occurs later.
            ``(2) Other requirements.--Any submission under paragraph 
        (1) shall--
                    ``(A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    ``(B) be accompanied by such fee as the Director 
                may prescribe; and
                    ``(C) include a statement by the submitter 
                affirming that the submission was made in compliance 
                with this section.''.
    (c) Effective Date.--The amendments made by this section--
            (1) shall take effect at the end of the 1-year period 
        beginning on the date of the enactment of this Act; and
            (2) shall apply to any application for patent filed before, 
        on, or after the effective date under paragraph (1).

SEC. 10. TAX PLANNING METHODS NOT PATENTABLE.

    (a) In General.--Section 101 is amended--
            (1) by striking ``Whoever'' and inserting ``(a) Patentable 
        Inventions.--Whoever''; and
            (2) by adding at the end the following:
    ``(b) Tax Planning Methods.--
            ``(1) Unpatentable subject matter.--A patent may not be 
        obtained for a tax planning method.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) the term `tax planning method' means a plan, 
                strategy, technique, or scheme that is designed to 
                reduce, minimize, or defer, or has, when implemented, 
                the effect of reducing, minimizing, or deferring, a 
                taxpayer's tax liability, but does not include the use 
                of tax preparation software or other tools used solely 
                to perform or model mathematical calculations or 
                prepare tax or information returns;
                    ``(B) the term `taxpayer' means an individual, 
                entity, or other person (as defined in section 7701 of 
                the Internal Revenue Code of 1986) that is subject to 
                taxation directly, is required to prepare a tax return 
                or information statement to enable one or more other 
                persons to determine their tax liability, or is 
                otherwise subject to a tax law;
                    ``(C) the terms `tax', `tax laws', `tax liability', 
                and `taxation' refer to any Federal, State, county, 
                city, municipality, or other governmental levy, 
                assessment, or imposition, whether measured by income, 
                value, or otherwise; and
                    ``(D) the term `State' means each of the several 
                States, the District of Columbia, and any commonwealth, 
                territory, or possession of the United States.''.
    (b) Applicability.--The amendments made by this section--
            (1) shall take effect on the date of the enactment of this 
        Act;
            (2) shall apply to any application for patent or 
        application for a reissue patent that is--
                    (A) filed on or after the date of the enactment of 
                this Act; or
                    (B) filed before that date if a patent or reissue 
                patent has not been issued pursuant to the application 
                as of that date; and
            (3) shall not be construed as validating any patent issued 
        before the date of the enactment of this Act for an invention 
        described in section 101(b) of title 35, United States Code, as 
        amended by this section.

SEC. 11. VENUE AND JURISDICTION.

    (a) Venue for Patent Cases.--Section 1400 of title 28, United 
States Code, is amended by striking subsection (b) and inserting the 
following:
    ``(b) 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--
            ``(1) where the defendant has its principal place of 
        business or in the location or place in which the defendant is 
        incorporated, or, for foreign corporations with a United States 
        subsidiary, where the defendant's primary United States 
        subsidiary has its principal place of business or in the 
        location or place in which the defendants primary United States 
        subsidiary is incorporated;
            ``(2) where the defendant has committed a substantial 
        portion of the acts of infringement and has a regular and 
        established physical facility that the defendant controls and 
        that constitutes a substantial portion of the operations of the 
        defendant;
            ``(3) where the primary plaintiff resides, if the primary 
        plaintiff in the action is 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 plaintiff or a 
        subsidiary of the plaintiff has an established physical 
        facility in such district dedicated to research, development, 
        or manufacturing that is operated by full-time employees of the 
        plaintiff or such subsidiary, or 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 under section 124 of title 35.
    ``(d) If the plaintiff brings a civil action for patent 
infringement in a judicial district under subsection (c), the district 
court may transfer that action to any other district or division 
where--
            ``(1) the defendant has substantial evidence or witnesses; 
        and
            ``(2) venue would be appropriate under section 1391 of this 
        title, if such transfer would be appropriate under section 1404 
        of this title.''.
    (b) Interlocutory Appeals.--Subsection (c) of section 1292 of title 
28, United States Code, is amended--
            (1) by striking ``and'' at the end of paragraph (1);
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(3) of an appeal from an interlocutory order or decree 
        determining construction of claims in a civil action for patent 
        infringement under section 271 of title 35.
Application for an appeal under paragraph (3) shall be made to the 
court within 10 days after entry of the order or decree. The district 
court shall have discretion whether to approve the application and, if 
so, whether to stay proceedings in the district court during pendency 
of the appeal.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any action commenced on or after the date of the enactment of 
this Act.

SEC. 12. ADDITIONAL INFORMATION; INEQUITABLE CONDUCT AS DEFENSE TO 
              INFRINGEMENT.

    (a) Disclosure Requirements for Applicants.--
            (1) In general.--Chapter 11 is amended by adding at the end 
        the following new section:
``Sec. 123. Additional information
    ``(a) In General.--The Director shall, by regulation, require that 
applicants submit a search report and other information and analysis 
relevant to patentability. An application shall be regarded as 
abandoned if the applicant fails to submit the required search report, 
information, and analysis in the manner and within the time period 
prescribed by the Director.
    ``(b) Exception for Micro Entities.--Applications from micro-
entities shall not be subject to the requirements of regulations issued 
under subsection (a).
``Sec. 124. Micro entities
    ``(a) Definition.--For purposes of this title, the term `micro 
entity' means an applicant for patent who makes a certification under 
either subsection (b) or (c).
    ``(b) Unassigned Application.--A certification under this 
subsection is a certification by each inventor named in the application 
that the inventor--
            ``(1) qualifies as a small entity as defined in regulations 
        issued by the Director;
            ``(2) has not been named on five or more previously filed 
        patent applications;
            ``(3) has not assigned, granted, or conveyed, and is not 
        under an obligation by contract or law to assign, grant, or 
        convey, a license or any other ownership interest in the 
        application; and
            ``(4) does not have a gross income, as defined in section 
        61(a) of the Internal Revenue Code of 1986, exceeding 2.5 times 
        the median household income, as reported by the Bureau of the 
        Census, for the most recent calendar year preceding the 
        calendar year in which the examination fee is being paid.
    ``(c) Assigned Application.--A certification under this subsection 
is a certification by each inventor named in the application that the 
inventor--
            ``(1) qualifies as a small entity as defined in regulations 
        issued by the Director and meets the requirements of subsection 
        (b)(4);
            ``(2) has not been named on five or more previously filed 
        patent applications; and
            ``(3) has assigned, granted, conveyed, or is under an 
        obligation by contract or law to assign, grant, or convey, a 
        license or other ownership interest in the application to an 
        entity that has five or fewer employees and has a gross taxable 
        income, as defined in section 61(a) of the Internal Revenue 
        Code of 1986, that does not exceed 2.5 times the median 
        household income, as reported by the Bureau of the Census, for 
        the most recent calendar year preceding the calendar year in 
        which the examination fee is being paid.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 11 is amended by adding at the end the following new 
        items:

``123. Additional information.
``124. Micro entities.''.
    (b) Inequitable Conduct as Defense to Infringement.--Section 282 is 
amended--
            (1) in the first undesignated paragraph, by striking ``A 
        patent'' and inserting ``(a) In General.--A patent'';
            (2) in the second undesignated paragraph--
                    (A) by striking ``The following'' and inserting 
                ``(b) Defenses.--The following''; and
                    (B) by striking the comma at the end of each of 
                paragraphs (1), (2), and (3) and inserting a period;
            (3) in the third undesignated paragraph--
                    (A) by striking ``In actions'' and inserting ``(d) 
                Notice of Actions; Pleading.--In actions'';
                    (B) by inserting after the second sentence the 
                following: ``In an action involving any allegation of 
                inequitable conduct under subsection (c), the party 
                asserting this defense or claim shall comply with the 
                pleading requirements set forth in Rule 9(b) of the 
                Federal Rules of Civil Procedure.''; and
                    (C) by striking ``Invalidity'' and inserting ``(e) 
                Extension of Patent Term.--Invalidity''; and
            (4) by inserting after subsection (b), as designated by 
        paragraph (2) of this subsection, the following:
    ``(c) Inequitable Conduct.--
            ``(1) Defense.--A patent may be held to be unenforceable, 
        or other remedy imposed under paragraph (3), for inequitable 
        conduct only if it is established, by clear and convincing 
        evidence, that--
                    ``(A) the patentee, its agents, or another person 
                with a duty of disclosure to the Office, with the 
                intent to mislead or deceive the patent examiner, 
                misrepresented or failed to disclose material 
                information concerning a matter or proceeding before 
                the Office; and
                    ``(B) in the absence of such deception, the Office, 
                acting reasonably, would, on the record before it, have 
                made a prima facie finding of unpatentability.
            ``(2) Intent.--In order to prove intent to mislead or 
        deceive under paragraph (1), specific facts beyond materiality 
        of the information submitted or not disclosed must be proven 
        that support an inference of intent to mislead or deceive the 
        Patent and Trademark Office. Facts support an inference of 
        intent if they show circumstances that indicate conscious or 
        deliberate behavior on the part of the patentee, its agents, or 
        another person with a duty of disclosure to the Office, to not 
        disclose material information or to submit materially false 
        information.
            ``(3) Remedy.--Upon a finding of inequitable conduct, the 
        court shall balance the equities to determine which of the 
        following remedies to impose:
                    ``(A) Denying equitable relief to the patent holder 
                and limiting the remedy for infringement to damages.
                    ``(B) Holding the claims-in-suit, or the claims in 
                which inequitable conduct occurred, unenforceable.
                    ``(C) Holding the patent unenforceable.
                    ``(D) Holding the claims of a related patent 
                unenforceable.
            ``(4) Attorney misconduct.--Upon a finding of inequitable 
        conduct, if there is evidence that the conduct can be 
        attributable to a person or persons authorized to practice 
        before the Office, the court shall refer the matter to the 
        Office for appropriate disciplinary action under section 32, 
        and shall order the parties to preserve and make available to 
        the Office any materials that may be relevant to the 
        determination under section 32.''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection 
        (a)--
                    (A) shall take effect at the end of the 1-year 
                period beginning on the date of the enactment of this 
                Act; and
                    (B) shall apply to any application for patent filed 
                on or after the effective date under subparagraph (A).
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to any civil action commenced on or after the date 
        of the enactment of this Act.

SEC. 13. BEST MODE REQUIREMENT.

    Section 282(b) (as designated by section 12(b) of this Act) is 
amended by striking paragraph (3) and inserting the following:
            ``(3) Invalidity of the patent or any claim in suit for 
        failure to comply with--
                    ``(A) any requirement of section 112 of this title, 
                other than the requirement that the specification shall 
                set forth the best mode contemplated by the inventor of 
                carrying out his invention; or
                    ``(B) any requirement of section 251 of this 
                title.''.

SEC. 14. REGULATORY AUTHORITY.

    (a) Regulatory Authority.--Section 2(c) is amended by adding at the 
end the following:
    ``(6) The powers granted under paragraph (2) of subsection (b) 
include the authority to promulgate regulations to ensure the quality 
and timeliness of applications and their examination, including 
specifying circumstances under which an application for patent may 
claim the benefit under sections 120, 121 and 365(c) of the filing date 
of a prior filed application for patent.''.
    (b) Clarification.--The amendment made by subsection (a) clarifies 
the scope of power granted to the United States Patent and Trademark 
Office by paragraph (2) of section 2(b) of title 35, United States 
Code, as in effect since the enactment of Public Law 106-113.

SEC. 15. TECHNICAL AMENDMENTS.

    (a) Joint Inventions.--Section 116 is amended--
                    (1) in the first paragraph, by striking ``When'' 
                and inserting ``(a) Joint Inventions.--When'';
                    (2) in the second paragraph, by striking ``If a 
                joint inventor'' and inserting ``(b) Omitted 
                Inventor.--If a joint inventor''; and
                    (3) in the third paragraph, by striking 
                ``Whenever'' and inserting ``(c) Correction of Errors 
                in Application.--Whenever''.
    (b) Filing of Application in Foreign Country.--Section 184 is 
amended--
            (1) in the first paragraph, by striking ``Except when'' and 
        inserting ``(a) Filing in Foreign Country.--Except when'';
            (2) in the second paragraph, by striking ``The term'' and 
        inserting ``(b) Application.--The term''; and
            (3) in the third paragraph, by striking ``The scope'' and 
        inserting ``(c) Subsequent Modifications, Amendments, and 
        Supplements.--The scope''.
    (c) Reissue of Defective Patents.--Section 251 is amended--
            (1) in the first paragraph, by striking ``Whenever'' and 
        inserting ``(a) In General.--Whenever'';
            (2) in the second paragraph, by striking ``The Director'' 
        and inserting ``(b) Multiple Reissued Patents.--The Director'';
            (3) in the third paragraph, by striking ``The provisions'' 
        and inserting ``(c) Applicability of This Title.--The 
        provisions''; and
            (4) in the last paragraph, by striking ``No reissued 
        patent'' and inserting ``(d) Reissue Patent Enlarging Scope of 
        Claims.--No reissued patent''.
    (d) Effect of Reissue.--Section 253 is amended--
            (1) in the first paragraph, by striking ``Whenever'' and 
        inserting ``(a) In General.--Whenever''; and
            (2) in the second paragraph, by striking ``In like manner'' 
        and inserting ``(b) Additional Disclaimer or Dedication.--In 
        the manner set forth in subsection (a),''.
    (e) Correction of Named Inventor.--Section 256 is amended--
            (1) in the first paragraph, by striking ``Whenever'' and 
        inserting ``(a) Correction.--Whenever''; and
            (2) in the second paragraph, by striking ``The error'' and 
        inserting ``(b) Patent Valid if Error Corrected.--The error''.
    (f) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 16. STUDY OF SPECIAL MASTERS IN PATENT CASES.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Director of the Administrative Office of the 
United States Courts shall conduct a study of, and submit to the 
Committee on the Judiciary of the House of Representatives and the 
Committee on the Judiciary of the Senate a report on, the use of 
special masters in patent litigation who are appointed in accordance 
with Rule 53 of the Federal Rules of Civil Procedure.
    (b) Objective.--In conducting the study under subsection (a), the 
Director shall consider whether the use of special masters has been 
beneficial in patent litigation and what, if any, program should be 
undertaken to facilitate the use by the judiciary of special masters in 
patent litigation.
    (c) Factors To Consider.--In conducting the study under subsection 
(a), the Director, in consultation with the Federal Judicial Center, 
shall consider--
            (1) the basis upon which courts appoint special masters 
        under Rule 53(b) of the Federal Rules of Civil Procedure;
            (2) the frequency with which special masters have been used 
        by the courts;
            (3) the role and powers special masters are given by the 
        courts;
            (4) the subject matter at issue in cases that use special 
        masters;
            (5) the impact on court time and costs in cases where a 
        special master is used as compared to cases where no special 
        master is used;
            (6) the legal and technical training and experience of 
        special masters;
            (7) whether the use of special masters has an impact on the 
        reversal rate of district court decisions at the Court of 
        Appeals for the Federal Circuit; and
            (8) any other factors that the Director believes would 
        assist in gauging the effectiveness of special masters in 
        patent litigation.

SEC. 17. RULE OF CONSTRUCTION.

    The enactment of section 102(b)(3) of title 35, United States Code, 
under section (3)(b) of this Act is done with the same intent to 
promote joint research activities that was expressed, including in the 
legislative history, through the enactment of the Cooperative Research 
and Technology Enhancement Act of 2004 (Public Law 108-453; the 
``CREATE Act''), the amendments of which are stricken by section 3(c) 
of this Act. The United States Patent and Trademark Office shall 
administer section 102(b)(3) of title 35, United States Code, in a 
manner consistent with the legislative history of the CREATE Act that 
was relevant to its administration by the Patent and Trademark Office.
                                                 Union Calendar No. 200

110th CONGRESS

  1st Session

                               H. R. 1908

                          [Report No. 110-314]

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                           September 4, 2007

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```