I

106TH CONGRESS

2D SESSION H. R. 5364

To amend title 35, United States Code, to provide for improvements in

the quality of patents on certain inventions.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 3, 2000

Mr. BERMAN (for himself and Mr. BOUCHER) introduced the following bill;

which was referred to the Committee on the Judiciary

A BILL

To amend title 35, United States Code, to provide for

improvements in the quality of patents on certain inventions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Business Method Pat5 ent Improvement Act of 2000’’.

6 SEC. 2. DEFINITIONS.

7 Section 100 of title 35, United States Code, is

8 amended by adding at the end the following:

9 ‘‘(f) The term ‘business method’ means—

10 ‘‘(1) a method of—
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1 ‘‘(A) administering, managing, or other2 wise operating an enterprise or organization, in3 cluding a technique used in doing or conducting

4 business; or

5 ‘‘(B) processing financial data;

6 ‘‘(2) any technique used in athletics, instruc7 tion, or personal skills; and

8 ‘‘(3) any computer-assisted implementation of a

9 method described in paragraph (1) or a technique

10 described in paragraph (2).

11 ‘‘(g) The term ‘business method invention’ means—

12 ‘‘(1) any invention which is a business method

13 (including any software or other apparatus); and

14 ‘‘(2) any invention which is comprised of any

15 claim that is a business method.’’.

16 SEC. 3. PATENTS ON BUSINESS METHOD INVENTIONS.

17 (a) IN GENERAL.—Title 35, United States Code, is

18 amended by inserting after chapter 31 the following new

19 chapter:

20 ‘‘CHAPTER 32—PATENTS ON BUSINESS

21 METHOD INVENTIONS

‘‘Sec.

‘‘321. Business method invention determinations.

‘‘322. Opposition procedures.

‘‘323. Effect on other proceedings.

‘‘324. Burden of proof.
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1 ‘‘§ 321. Business method invention determinations

2 ‘‘(a) CONFIDENTIALITY.—Except as provided in sub3 section (b), an application for a patent on a business

4 method invention shall be kept in confidence by the Patent

5 and Trademark Office and no information concerning the

6 application may be given without authority of the appli7 cant or owner unless necessary to carry out the provisions

8 of an Act of Congress or in such special circumstances

9 as may be determined by the Director.

10 ‘‘(b) PUBLICATION.—

11 ‘‘(1) IN GENERAL.—(A) Subject to subpara12 graph (E) and paragraph (2), each application for a

13 patent on a business method invention shall be pub14 lished, in accordance with procedures determined by

15 the Director, promptly after the expiration of a pe16 riod of 18 months after the earliest filing date for

17 which a benefit is sought under this title. At the re18 quest of the applicant, an application may be pub19 lished earlier than the end of that 18-month period.

20 ‘‘(B) Within 12 months after the earliest filing

21 date of an application for a patent under this title,

22 the Director shall make a determination of whether

23 any invention claimed in the application is a busi24 ness method invention.

25 ‘‘(C) After making a determination under sub26 paragraph (B) that an invention is a business meth-
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1 od invention, the Director shall notify the applicant

2 of the determination and shall provide the applicant

3 with a period of 60 days within which to respond to

4 the determination by amending the application, with5 drawing the application, or otherwise.

6 ‘‘(D) No information concerning patent applica7 tions published under this subsection shall be made

8 available to the public, except as the Director deter9 mines.

10 ‘‘(E)(i) The Director shall establish procedures

11 for making determinations under subparagraph (B),

12 and for addressing amendments to any application

13 that may affect the Director’s determination of

14 whether the invention claimed in the application is

15 a business method invention.

16 ‘‘(ii) In no case shall an application that would

17 be subject to section 122 but for this section be pub18 lished later than the date that would otherwise apply

19 to the application under section 122.

20 ‘‘(2) EXCEPTIONS.—(A) An application shall

21 not be published under paragraph (1) if that appli22 cation is—

23 ‘‘(i) no longer pending;

24 ‘‘(ii) subject to a secrecy order under sec25 tion 181 of this title;
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1 ‘‘(iii) a provisional application filed under

2 section 111(b) of this title; or

3 ‘‘(iv) an application for a design patent

4 filed under chapter 16 of this title.

5 ‘‘(B) No application for a patent shall be pub6 lished under paragraph (1) if the publication or dis7 closure of such invention would be detrimental to the

8 national security. The Director shall establish appro9 priate procedures to ensure that such applications

10 are promptly identified and the secrecy of such in11 ventions is maintained in accordance with chapter

12 17 of this title.

13 ‘‘(3) PUBLIC PARTICIPATION.—Any party shall

14 have the opportunity to submit to the Director for

15 the record prior art (including, but not limited to,

16 evidence of knowledge or use, or public use or sale,

17 under section 102), file a protest, or petition the Di18 rector to conduct a proceeding to determine whether

19 the invention was known or used, or was in public

20 use, or on sale, under section 102 or is obvious

21 under section 103. The Director shall conduct such

22 a proceeding if the petition—

23 ‘‘(i) is in writing;

24 ‘‘(ii) is accompanied by payment of the fee

25 set forth in section 41(a) of this title; and
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1 ‘‘(iii) sets forth in detail the basis on which

2 the proceeding is requested.

3 ‘‘(4) AVAILABILITY OF INFORMATION.—Infor4 mation submitted pursuant to paragraph (3) shall be

5 considered during the examination of the patent ap6 plication.

7 ‘‘(5) PROVISIONAL RIGHTS.—During the period

8 of pendency of an application after publication, an

9 applicant shall have provisional rights pursuant to

10 section 154 of this title.

11 ‘‘§ 322. Opposition procedures

12 ‘‘(a) ADMINISTRATIVE OPPOSITION PANEL.—

13 ‘‘(1) ESTABLISHMENT.—The Director shall, not

14 later than 1 year after the date of enactment of the

15 Business Method Patent Improvement Act of 2000,

16 establish an Administrative Opposition Panel. The

17 Administrative Opposition Panel shall be comprised

18 of not less than 18 administrative opposition judges,

19 each of whom shall be an individual of competent

20 legal knowledge and scientific ability. Upon estab21 lishment of the Administrative Opposition Panel, the

22 Director shall publish notice of the establishment of

23 the Panel in the Federal Register.

24 ‘‘(2) ASSIGNMENT OF PATENT EXAMINERS TO

25 PANEL.—Patent examiners may be assigned on de-
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1 tail to assist the Administrative Opposition Panel in

2 carrying out opposition proceedings under this sec3 tion, except that a patent examiner may not be as4 signed to assist in review of a patent application ex5 amined by that patent examiner. The Director shall

6 establish procedures by which an opposition is heard

7 under subsection (b).

8 ‘‘(b) OPPOSITION PROCEDURES.—

9 ‘‘(1) REQUEST FOR OPPOSITION.—(A) Any per10 son may file a request for an opposition to a patent

11 on a business method invention on the basis of sec12 tion 101, 102, 103, or 112 of this title. Such a re13 quest is valid only if the request—

14 ‘‘(i) is made not later than 9 months after

15 the date of issuance of the patent;

16 ‘‘(ii) is in writing;

17 ‘‘(iii) is accompanied by payment of the

18 opposition fee set forth in section 41(a) of this

19 title; and

20 ‘‘(iv) sets forth in detail the basis on which

21 the opposition is requested.

22 ‘‘(B) Not later than 60 days after receiving a

23 valid request under subparagraph (A), the Director

24 shall issue an order for an opposition proceeding to

25 be held on the record after opportunity for a hear-
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1 ing, and shall promptly send a copy of the request

2 to the owner of record of the patent. The patent

3 owner shall be provided a reasonable period, but in

4 no case less than 60 days after the date on which

5 a copy of the request is given or mailed to the pat6 ent owner, within which the owner may file a state7 ment in reply to the grounds for the request for op8 position, including any amendment to the patent and

9 new claim or claims, for consideration in the opposi10 tion proceeding. If the patent owner files such a

11 statement, the patent owner promptly shall serve a

12 copy of the statement on the third-party requester.

13 Not later than 2 months after the date of such serv14 ice, the third-party requester may file and have con15 sidered in the opposition proceeding a reply to the

16 statement filed by the patent owner.

17 ‘‘(2) CONDUCT OF OPPOSITION PRO18 CEEDINGS.—Each opposition shall be heard by one

19 administrative opposition judge, and no party shall

20 be permitted ex parte communication with the ad21 ministrative opposition judge. In addition to the

22 statements and replies set forth in paragraph (1),

23 the administrative opposition judge may consider

24 evidence that the judge considers relevant, including

25 evidence that is presented in any oral testimony (in-
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1 cluding exhibits and expert testimony) in direct or

2 cross examination, or in any deposition, affidavit, or

3 other documentary form, whether voluntary or com4 pelled. In any opposition proceeding, the Federal

5 Rules of Evidence shall apply.

6 ‘‘(3) AMENDMENTS TO PATENT CLAIMS.—A

7 patent applicant may propose to amend a patent

8 claim or propose a new claim at any time during the

9 opposition proceeding, except that no proposed

10 amended or new claim enlarging the scope of a claim

11 of the patent may be permitted at any time during

12 an opposition proceeding under this section.

13 ‘‘(4) DETERMINATION.—Not later than 18

14 months after the filing of a request for an opposition

15 under this section, the administrative opposition

16 judge in the opposition proceeding shall determine

17 the patentability of the subject matter of the patent,

18 a record of the administrative opposition judge’s de19 termination under this section shall be placed in the

20 official file of the patent, and a copy promptly shall

21 be given or mailed to the owner of record of the pat22 ent and to the third-party requester.

23 ‘‘(5) APPEALS.—Any party to the opposition

24 may appeal a decision of the Administrative Opposi25 tion Panel under the provisions of section 134 of
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1 this title, and may seek court review under the pro2 visions of section 141 to 145 of this title, with re3 spect to any decision in regard to the patentability

4 of any original or proposed amended or new claim

5 of the patent. A patent owner may be a party to an

6 appeal taken by a third-party requester. Any third7 party requester may be a party to an appeal taken

8 by a patent owner.

9 ‘‘(6) CERTIFICATION OF PATENTABILITY.—In

10 an opposition proceeding under this chapter, when

11 the time for appeal has expired or any appeal pro12 ceeding has terminated, the Director shall issue and

13 publish a certificate canceling any claim of the pat14 ent finally determined to be unpatentable, con15 firming any claim of the patent determined to be

16 patentable, and incorporating in the patent any pro17 posed amended or new claim determined to be pat18 entable.

19 ‘‘(7) EFFECT OF DETERMINATION.—Any pro20 posed, amended, or new claim determined to be pat21 entable and incorporated into a patent following an

22 opposition proceeding shall have the same effect as

23 that specified in section 252 of this title for reissued

24 patents on the right of any person who made, pur25 chased, or used within the United States, or im-
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1 ported into the United States, anything patented by

2 such proposed amended or new claim, or who made

3 substantial preparations therefor, prior to issuance

4 of a certificate under paragraph (6) of this sub5 section.

6 ‘‘§ 323. Effect on other proceedings

7 ‘‘(a) RIGHT TO LITIGATION.—Subject to subsections

8 (b), (c), and (d), proceedings under section 322 shall not

9 alter or prejudice any party’s right to pursue remedies

10 under provisions of law other than this section. In the case

11 of court proceedings, other than an appeal of a decision

12 in an opposition proceeding under this section, the court

13 may consider any matter independently of any opposition

14 proceeding under this section.

15 ‘‘(b) EFFECT OF FINAL DECISION.—

16 ‘‘(1) IN GENERAL.—If a final decision has been

17 entered against a party in a civil action arising in

18 whole or in part under section 1338 of title 28, es19 tablishing that the party has not sustained its bur20 den of proving the invalidity of any patent claim, or

21 if a final decision in an inter partes reexamination

22 proceeding or an opposition proceeding instituted by

23 a third-party requester is favorable to the patent24 ability of any original or proposed amended or new

25 claim of the patent—
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1 ‘‘(A) neither that party to the civil action,

2 the third-party requester, nor the privies of that

3 party or third-party requester may thereafter

4 bring a civil action under section 1338 of title

5 28, or request an inter partes reexamination of,

6 or an opposition to, such patent claim on the

7 basis of issues which that party, third-party re8 quester, or the privies of that party or third9 party requester raised or could have raised in

10 such civil action, inter partes reexamination

11 proceeding, or opposition proceeding (as the

12 case may be); and

13 ‘‘(B) an inter partes reexamination or op14 position requested by that party, third-party re15 quester, or the privies of that party or third16 party requester on the basis of such issues may

17 not thereafter be maintained by the Office.

18 ‘‘(2) NEW EVIDENCE.—Paragraph (1) does not

19 prevent the assertion by a party to a civil action or

20 a third-party requester of invalidity based on newly

21 discovered prior art, or other evidence, unavailable

22 to that party or third-party requester, as the case

23 may be, and the Patent and Trademark Office, at

24 the time of the civil action, inter partes reexamina25 tion, or opposition proceeding (as the case may be).
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1 ‘‘(c) STAY OF LITIGATION.—Once an order for an op2 position proceeding with respect to a patent has been

3 issued under section 322(b)(1), any party to the pro4 ceeding may obtain a stay of any pending court proceeding

5 (other than an appeal to the Court of Appeals for the Fed6 eral Circuit) which involves an issue of patentability of any

7 claims of the patent which are the subject of the opposi8 tion proceeding, unless the court before which such litiga9 tion is pending determines that a stay would not serve the

10 interests of justice.

11 ‘‘§ 324. Burden of proof

12 ‘‘(a) BURDEN OF PROOF.—In the case of reexamina13 tion, interference, opposition, or other legal challenge (in14 cluding a civil action brought in whole or in part under

15 section 1338 of title 28) to a patent (or an application

16 for a patent) on a business method invention, the party

17 producing evidence of invalidity or ineligibility shall have

18 the burden of showing by a preponderance of the evidence

19 the invalidity of the patent or ineligibility of the subject

20 matter of the application.’’.

21 (b) FEES.—Section 41(a) of title 35, United States

22 Code, is amended—

23 (1) by redesignating paragraphs (7) through

24 (15) as paragraphs (9) through (17), respectively;

25 and
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1 (2) by inserting after paragraph (6) the fol2 lowing:

3 ‘‘(7)(A) On filing an opposition under chapter

4 32 to a patent on a business method invention based

5 on prior art citations or obviousness, a fee of $200.

6 ‘‘(B) On filing an opposition under chapter 32

7 to a patent on a business method invention on any

8 other basis, a fee of $5,000.

9 ‘‘(C) The Director may waive the payment by

10 an individual of fees under this paragraph if such

11 waiver is in the public interest.

12 ‘‘(8) On filing a request for a proceeding to de13 termine whether an invention claimed in an applica14 tion was known or used, or has been in public use

15 or on sale, under section 102, a fee of $35.’’.

16 (b) CLERICAL AMENDMENT.—The table of chapters

17 for part III of title 35, United States Code, is amended

18 by adding at the end the following:

‘‘32. Patents on Business Method Inventions ......................... 321.’’.

19 SEC. 4. NONOBVIOUSNESS.

20 Section 103 of title 35, United States Code, is

21 amended by adding at the end the following:

22 ‘‘(d)(1) If—

23 ‘‘(A) subject matter within the scope of a claim

24 addressed to a business method invention would be
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1 obtained by combining or modifying one or more

2 prior art references, and

3 ‘‘(B) any of those prior art references discloses

4 a business method which differs from what is

5 claimed only in that the claim requires a computer

6 technology to implement the practice of the business

7 method invention,

8 the invention shall be presumed obvious to a person of

9 ordinary skill in the art at the time of the invention.

10 ‘‘(2)(A) An applicant or patentee may rebut the pre11 sumption under paragraph (1) upon a showing by a pre12 ponderance of the evidence that the invention is not obvi13 ous to persons of ordinary skill in all relevant arts.

14 ‘‘(B) Those areas of art which are relevant for pur15 poses of subparagraph (A) include the field of the business

16 method and the field of the computer implementation.’’.

17 SEC. 5. REQUIREMENT TO DISCLOSE SEARCH.

18 The Director of the Patent and Trademark Office

19 shall, within 30 days after the date of enactment of this

20 Act, publish notice of rulemaking proceedings to amend

21 the rules of the Patent and Trademark Office to require

22 an applicant for a patent for a business method invention

23 to disclose in the application the extent to which the appli24 cant searched for prior art to meet the requirements of

25 title 35, United States Code. Such amendment shall in-
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1 clude appropriate penalties for failure to comply with such

2 requirement. The Director shall ensure that the amend3 ment is implemented as promptly as possible.

4 SEC. 6. CONFORMING AMENDMENTS.

5 (a) DEFINITIONS.—Section 100(e) of title 35, United

6 States Code, is amended by striking ‘‘or inter partes reex7 amination under section 311’’ and inserting ‘‘, inter partes

8 reexamination under section 311, or an opposition under

9 section 322,’’.

10 (b) BOARD OF PATENT APPEALS AND INTER11 FERENCES.—Section 134 of title 35, United States Code,

12 is amended—

13 (1) in subsection (b)—

14 (A) by inserting ‘‘or opposition’’ after ‘‘re15 examination’’; and

16 (B) by inserting ‘‘or the Administrative

17 Opposition Panel (as the case may be)’’ after

18 ‘‘administrative patent judge’’; and

19 (2) in subsection (c)—

20 (A) by striking ‘‘proceeding’’ and inserting

21 ‘‘reexamination proceeding or an opposition

22 proceeding’’;

23 (B) by inserting ‘‘or the Administrative

24 Opposition Panel (as the case may be)’’ after

25 ‘‘administrative patent judge’’; and
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1 (C) in the last sentence, by inserting ‘‘in

2 an inter partes reexamination proceeding’’ after

3 ‘‘requester’’.

4 (c) APPEAL TO COURT OF APPEALS.—(1) Section

5 141 of title 35, United States Code, is amended in the

6 second sentence by inserting after ‘‘reexamination pro7 ceeding’’ the following: ‘‘, and any party in an opposition

8 proceeding, who is’’.

9 (2) Section 143 of title 35, United States Code, is

10 amended by inserting after the third sentence the fol11 lowing: ‘‘In any opposition proceeding, the Administrative

12 Opposition Panel shall submit to the court in writing the

13 grounds for the decision of the Panel, addressing all the

14 issues involved in the appeal.’’.

15 (d) DEFENSE TO INFRINGEMENT.—Section 273 of

16 title 35, United States Code, is amended—

17 (1) in subsection (a)—

18 (A) by striking paragraph (3) and redesig19 nating paragraph (4) as paragraph (3); and

20 (B) in paragraphs (1) and (2) by striking

21 ‘‘method’’ and inserting ‘‘business method’’;

22 and

23 (2) in subsection (b), by striking ‘‘method’’

24 each place it appears and inserting ‘‘business meth25 od’’.
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1 (e) OTHER PUBLICATION OF PATENT APPLICA2 TIONS.—Section 122 of title 35, United States Code, is

3 amended by adding at the end the following:

4 ‘‘(e) BUSINESS METHOD INVENTIONS.—In the case

5 of applications for business method inventions, section 321

6 of this title applies in lieu of this section.’’.

7 SEC. 7. EFFECTIVE DATE.

8 (a) IN GENERAL.—Subject to subsections (b), (c),

9 and (d), this Act and the amendments made by this Act

10 apply to—

11 (1) any application for patent that is pending

12 on, or that is filed on or after, the date of enactment

13 of this Act; and

14 (2) any patent issued on or after the date of en15 actment of this Act.

16 (b) PENDING APPLICATIONS.—In applying section

17 321 of title 35, United States Code, as added by section

18 3 of this Act, to an application for patent that is pending

19 on the date of enactment of this Act—

20 (1) the Director of the Patent and Trademark

21 Office shall make the determination required by sub22 section (b)(1)(B) of such section 321 within 12

23 months after the date of enactment of this Act, or

24 on the date specified in such section 321, whichever

25 occurs later;
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1 (2) subject to paragraph (3), such an applica2 tion shall be published—

3 (A) on the date specified in section 321 of

4 title 35, United States Code, or

5 (B) the date on which the determination is

6 made pursuant to paragraph (1),

7 whichever occurs later; and

8 (3) in no case shall an application that would

9 be published under section 122 of title 35, United

10 States Code, but for the enactment of this Act, be

11 published later than the date specified in such sec12 tion 122, regardless of when the Director makes the

13 determination under paragraph (1).

14 (c) PATENTS ISSUED BEFORE ESTABLISHMENT OF

15 ADMINISTRATIVE OPPOSITION PANEL.—In the case of a

16 patent issued after the enactment of this Act but before

17 the date on which notice of the establishment of the Ad18 ministrative Opposition Panel is published under section

19 322(a)(1) of title 35, United States Code (as added by

20 this Act), a request for an opposition to the patent may

21 be filed under section 322(b)(1)(A) of title 35, United

22 States Code (as added by this Act), notwithstanding the

23 9-month requirement set forth in clause (i) of that section,
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1 if the request is filed not later than 9 months after the

2 date on which such notice is so published.

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