49–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 114–235 

INNOVATION ACT 

JULY 29, 2015.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. GOODLATTE, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 9] 

[Including cost estimate of the Congressional Budget Office] 

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

(H.R. 9) to amend title 35, United States Code, and the LeahySmith America Invents Act to make improvements and technical 

corrections, and for other purposes, having considered the same, reports favorably thereon with an amendment and recommends that 

the bill as amended do pass. 

CONTENTS 

Page 

The Amendment ...................................................................................................... 2 

Purpose and Summary ............................................................................................ 21 

Background and Need for the Legislation ............................................................. 23 

Hearings ................................................................................................................... 53 

Committee Consideration ........................................................................................ 54 

Committee Votes ...................................................................................................... 54 

Committee Oversight Findings ............................................................................... 58 

New Budget Authority and Tax Expenditures ...................................................... 58 

Congressional Budget Office Cost Estimate .......................................................... 58 

Duplication of Federal Programs ............................................................................ 60 

Disclosure of Directed Rule Makings ..................................................................... 60 

Performance Goals and Objectives ......................................................................... 60 

Advisory on Earmarks ............................................................................................. 61 

Section-by-Section Analysis .................................................................................... 61 

Agency Views ........................................................................................................... 81 

Changes in Existing Law Made by the Bill, as Reported ..................................... 89 

Dissenting Views ..................................................................................................... 167 


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The Amendment 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Innovation Act’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Patent infringement actions. 

Sec. 4. Transparency of patent ownership. 

Sec. 5. Customer-suit exception. 

Sec. 6. Procedures and practices to implement recommendations of the Judicial Conference. 

Sec. 7. Small business education, outreach, and information access. 

Sec. 8. Studies on patent transactions, quality, and examination. 

Sec. 9. Improvements and technical corrections to the Leahy-Smith America Invents Act. 

Sec. 10. Effective date. 

SEC. 2. DEFINITIONS. 

In this Act: 

(1) DIRECTOR.—The term ‘‘Director’’ means the Under Secretary of Commerce 

for Intellectual Property and Director of the United States Patent and Trademark Office. 

(2) OFFICE.—The term ‘‘Office’’ means the United States Patent and Trademark Office. 

SEC. 3. PATENT INFRINGEMENT ACTIONS. 

(a) PLEADING REQUIREMENTS.— (1) AMENDMENT.—Chapter 29 of title 35, United States Code, is amended by 

inserting after section 281 the following: 

‘‘§ 281A. Pleading requirements for patent infringement actions 

‘‘(a) PLEADING REQUIREMENTS.—Except as provided in subsection (b), in a civil action in which a party asserts a claim for relief arising under any Act of Congress 

relating to patents, a party alleging infringement shall include in the initial complaint, counterclaim, or cross-claim for patent infringement, unless the information 

is not reasonably accessible to such party, the following: 

‘‘(1) An identification of each patent allegedly infringed. 

‘‘(2) An identification of all claims necessary to produce the identification 

(under paragraph (3)) of each process, machine, manufacture, or composition of 

matter (referred to in this section as an ‘accused instrumentality’) that is alleged to infringe any claim of each patent that is identified under paragraph 

(1). 

‘‘(3) For each claim identified under paragraph (2), an identification of each 

accused instrumentality alleged to infringe the claim. 

‘‘(4) For each accused instrumentality identified under paragraph (3), an identification with particularity, if known, of— 

‘‘(A) the name or model number (or a representative model number) of 

each accused instrumentality; or 

‘‘(B) if there is no name or model number, a description of each accused 

instrumentality. 

‘‘(5) For each accused instrumentality identified under paragraph (3), a clear 

and concise statement of— 

‘‘(A) where each element of each claim identified under paragraph (2) is 

found within the accused instrumentality; and 

‘‘(B) with detailed specificity, how each limitation of each claim identified 

under paragraph (2) is met by the accused instrumentality. 

‘‘(6) For each claim of indirect infringement, a description of the acts of the 

alleged indirect infringer that contribute to or are inducing the direct infringement. 

‘‘(7) A description of the authority of the party alleging infringement to assert 

each patent identified under paragraph (1) and of the grounds for the court’s 

jurisdiction. 

‘‘(b) INFORMATION NOT READILY ACCESSIBLE.—If information required to be disclosed under subsection (a) is not readily accessible to a party after an inquiry reasonable under the circumstances, as required by Rule 11 of the Federal Rules of 

Civil Procedure, that information may instead be generally described, along with an 

explanation of why such undisclosed information was not readily accessible, and of 

any efforts made by such party to access such information. 

‘‘(c) AMENDMENT OF PLEADINGS.—Nothing in this section shall be construed to affect a party’s ability to amend pleadings as specified in the Federal Rules of Civil 


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Procedure. Amendments permitted by the court are subject to the pleading requirements set forth in this section. 

‘‘(d) CONFIDENTIAL INFORMATION.—A party required to disclose information described under subsection (a) may file, under seal, information believed to be confidential, with a motion setting forth good cause for such sealing. If such motion is 

denied by the court, the party may seek to file an amended complaint. 

‘‘(e) EXEMPTION.—A civil action that includes a claim for relief arising under section 271(e)(2) shall not be subject to the requirements of subsection (a).’’. 

(2) CONFORMING AMENDMENT.—The table of sections for chapter 29 of title 35, 

United States Code, is amended by inserting after the item relating to section 

281 the following new item: 

‘‘281A. Pleading requirements for patent infringement actions.’’. 

(b) FEES AND OTHER EXPENSES.— (1) AMENDMENT.—Section 285 of title 35, United States Code, is amended to 

read as follows: 

‘‘§ 285. Fees and other expenses 

‘‘(a) AWARD.—The court shall award, to a prevailing party, reasonable fees and 

other expenses incurred by that party in connection with a civil action in which any 

party asserts a claim for relief arising under any Act of Congress relating to patents, unless the court finds that the position and conduct of the nonprevailing party 

or parties were reasonably justified in law and fact or that special circumstances 

(such as severe economic hardship to a named inventor) make an award unjust. 

‘‘(b) CERTIFICATION AND RECOVERY.—Upon motion of any party to the action, the 

court shall require another party to the action to certify whether or not the other 

party will be able to pay an award of fees and other expenses if such an award is 

made under subsection (a). If a nonprevailing party is unable to pay an award that 

is made against it under subsection (a), the court may make a party that has been 

joined under section 299(d) with respect to such party liable for the unsatisfied portion of the award. 

‘‘(c) COVENANT NOT TO SUE.—A party to a civil action who asserts a claim for relief arising under any Act of Congress relating to patents against another party, and 

who subsequently unilaterally (i) seeks dismissal of the action without consent of 

the other party and (ii) extends to such other party a covenant not to sue for infringement with respect to the patent or patents at issue, may be the subject of a 

motion for attorneys fees under subsection (a) as if it were a non-prevailing party, 

unless the party asserting such claim would have been entitled, at the time that 

such covenant was extended, to dismiss voluntarily the action without a court order 

under Rule 41 of the Federal Rules of Civil Procedure, or the interests of justice 

require otherwise.’’. 

(2) CONFORMING AMENDMENT AND AMENDMENT.— (A) CONFORMING AMENDMENT.—The item relating to section 285 of the 

table of sections for chapter 29 of title 35, United States Code, is amended 

to read as follows: 

‘‘285. Fees and other expenses.’’. 

(B) AMENDMENT.—Section 273 of title 35, United States Code, is amended 

by striking subsection (f). 

(C) AMENDMENT.— 

(i) IN GENERAL.—Section 273 of title 35, United States Code, as 

amended by subparagraph (B), is further amended by striking subsection (g). 

(ii) EFFECTIVE DATE.—The amendment made by this subparagraph 

shall be effective as if included in the amendment made by section 

3(b)(1) of the Leahy-Smith America Invents Act (Public Law 112–29). 

(3) EFFECTIVE DATE.—Except as otherwise provided in this subsection, the 

amendments made by this subsection shall take effect on the date of the enactment of this Act and shall apply to any action for which a complaint is filed 

on or after the first day of the 6-month period ending on that effective date. 

(c) JOINDER OF INTERESTED PARTIES.—Section 299 of title 35, United States Code, 

is amended by adding at the end the following new subsection: 

‘‘(d) JOINDER OF INTERESTED PARTIES.— 

‘‘(1) JOINDER.—Except as otherwise provided under this subsection, in a civil 

action arising under any Act of Congress relating to patents in which fees and 

other expenses have been awarded under section 285 to a prevailing party defending against an allegation of infringement of a patent claim, and in which 

the nonprevailing party alleging infringement is unable to pay the award of fees 

and other expenses, the court shall grant a motion by the prevailing party to 

join an interested party if such prevailing party shows that the nonprevailing 


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party has no substantial interest in the subject matter at issue other than asserting such patent claim in litigation. 

‘‘(2) LIMITATION ON JOINDER.— ‘‘(A) DISCRETIONARY DENIAL OF MOTION.—The court may deny a motion 

to join an interested party under paragraph (1) if— 

‘‘(i) the interested party is not subject to service of process; or 

‘‘(ii) joinder under paragraph (1) would deprive the court of subject 

matter jurisdiction or make venue improper. 

‘‘(B) REQUIRED DENIAL OF MOTION.—The court shall deny a motion to join 

an interested party under paragraph (1) if— 

‘‘(i) the interested party did not timely receive the notice required by 

paragraph (3); or 

‘‘(ii) within 30 days after receiving the notice required by paragraph 

(3), the interested party renounces, in writing and with notice to the 

court and the parties to the action, any ownership, right, or direct financial interest (as described in paragraph (4)) that the interested 

party has in the patent or patents at issue. 

‘‘(3) NOTICE REQUIREMENT.—An interested party may not be joined under 

paragraph (1) unless it has been provided actual notice, within 30 days after 

the expiration of the time period during which a certification under paragraph 

(4)(B) is required to be filed, that the interested party has been identified in 

the initial disclosure under section 290(b) and that such party may therefore 

be an interested party subject to joinder under this subsection. Such notice shall 

be provided by the party who subsequently moves to join the interested party 

under paragraph (1), and shall include language that— 

‘‘(A) identifies the action, the parties thereto, the patent or patents at 

issue, and the pleading or other paper that identified the party under section 290(b); and 

‘‘(B) informs the party that it may be joined in the action and made subject to paying an award of fees and other expenses under section 285(b) if— 

‘‘(i) fees and other expenses are awarded in the action against the 

party alleging infringement of the patent or patents at issue under section 285(a); 

‘‘(ii) the party alleging infringement is unable to pay the award of 

fees and other expenses; 

‘‘(iii) the party receiving notice under this paragraph is determined 

by the court to be an interested party; and 

‘‘(iv) the party receiving notice under this paragraph has not, within 

30 days after receiving such notice, renounced in writing, and with notice to the court and the parties to the action, any ownership, right, or 

direct financial interest (as described in paragraph (4)) that the interested party has in the patent or patents at issue. 

‘‘(4) ADDITIONAL REQUIREMENTS FOR JOINDER.— 

‘‘(A) INITIAL STATEMENT.—This subsection shall not apply to an action unless a party defending against an allegation of infringement of a patent 

claim files, not later than 14 days before the date on which a scheduling 

conference is held or the date on which a scheduling order is due under 

Rule 16(b) of the Federal Rules of Civil Procedure, a statement that such 

party holds a good faith belief, based on publicly available information and 

any other information known to such party, that the party alleging infringement has no substantial interest in the subject matter at issue other 

than asserting the patent in litigation. 

‘‘(B) CERTIFICATION.—This subsection shall not apply to an action if the 

party alleging infringement files, not later than 45 days after the date on 

which such party is served with the initial statement described under subparagraph (A), a certification that— 

‘‘(i) establishes and certifies to the court, under oath, that such party 

will have sufficient funds available to satisfy any award of reasonable 

attorney’s fees and expenses under section 285 if an award is assessed; 

‘‘(ii) demonstrates that such party has a substantial interest in the 

subject matter at issue other than asserting the patent in litigation; or 

‘‘(iii) is made under oath that there are no other interested parties. 

‘‘(5) EXCEPTION FOR UNIVERSITY TECHNOLOGY TRANSFER ORGANIZATIONS.—This 

subsection shall not apply to a technology transfer organization whose primary 

purpose is to facilitate the commercialization of technologies developed by one 

or more institutions of higher education (as defined in section 101(a) of the 

Higher Education Act of 1965 (20 U.S.C. 1001(a))) if such technology transfer 

organization is alleging infringement on behalf of an entity that would not be 

subject to this subsection. 


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‘‘(6) INTERESTED PARTY DEFINED.—In this subsection, the term ‘interested 

party’ means a person, other than the party alleging infringement, that— 

‘‘(A) is an assignee of the patent or patents at issue; 

‘‘(B) has a right, including a contingent right, to enforce or sublicense the 

patent or patents at issue; or 

‘‘(C) has a direct financial interest in the patent or patents at issue, including the right to any part of an award of damages or any part of licensing revenue, except that a person with a direct financial interest does not 

include— 

‘‘(i) an employee of the party alleging infringement— 

‘‘(I) whose principal source of income or employment is employment with the party alleging infringement; or 

‘‘(II) whose sole financial interest in the patent or patents at 

issue is a salary or hourly wage paid by the party alleging infringement; 

‘‘(ii) an attorney or law firm providing legal representation in the 

civil action described in paragraph (1) if the sole basis for the financial 

interest of the attorney or law firm in the patent or patents at issue 

arises from the attorney or law firm’s receipt of compensation reasonably related to the provision of the legal representation; or 

‘‘(iii) a person whose sole financial interest in the patent or patents 

at issue is ownership of an equity or security interest in the party alleging infringement, unless such person also has the right or ability to 

direct or control (membership on the board of directors alone is not sufficient to demonstrate such right or ability) the civil action. 

‘‘(7) SUBSTANTIAL INTEREST.—In this subsection, the term ‘substantial interest’ includes an interest in the subject matter of a patent at issue if the party— 

‘‘(A) invented the subject matter; or 

‘‘(B) commercially practices or implements, made substantial preparations 

directed particularly to commercially practicing or implementing, or is engaged in research and development in, technology in the field of the subject 

matter.’’. 

(d) DISCOVERY STAY.— 

(1) AMENDMENT.—Chapter 29 of title 35, United States Code, as amended by 

subsection (a), is further amended by inserting after section 281A (as added by 

such subsection) the following new section: 

‘‘§ 281B. Stay of discovery pending a preliminary motion. 

‘‘(a) IN GENERAL.—Except as provided in subsection (d), in an action for patent 

infringement under section 271 or an action for a declaratory judgement that a patent is invalid or not infringed, discovery shall be stayed if— 

‘‘(1) the defendant moves to— 

‘‘(A) sever a claim or drop a party for misjoinder under Rule 21 of the 

Federal Rules of Civil Procedure; 

‘‘(B) transfer the action under section 1404(a) of title 28; 

‘‘(C) transfer or dismiss the action under section 1406(a) of title 28; or 

‘‘(D) dismiss the action pursuant to Federal Rule of Civil Procedure 12(b); 

and 

‘‘(2) such motion is filed within 90 days after service of the complaint and includes a declaration or other evidence in support of the motion. 

‘‘(b) EXPIRATION OF STAY.—A stay entered under subsection (a) shall expire when 

all motions that are the basis for the stay are decided by the court. 

‘‘(c) PRIORITY OF DECISION.—In an action described in subsection (a), the court 

shall decide a motion to sever a claim or drop a party for misjoinder under Rule 

21 of the Federal Rules of Civil Procedure, to transfer under section 1404(a) to title 

28, to transfer or dismiss under 1406(a) of title 28, or to dismiss the action pursuant 

to Federal Rule of Civil Procedure 12(b) before the earlier of the date on which the 

court— 

‘‘(1) decides any other substantive motion, provided however that the court 

may decide a question of its own jurisdiction at any time; or 

‘‘(2) issues a scheduling order under Rule 16(b) of the Federal Rules of Civil 

Procedure. 

‘‘(d) EXCEPTION.— 

‘‘(1) DISCOVERY NECESSARY TO DECIDE MOTION.—Notwithstanding subsection 

(a), the court may allow such discovery as the court determines to be necessary 

to decide a motion to sever, drop a party, dismiss, or transfer. 

‘‘(2) COMPETITIVE HARM.—Subsections (a) and (c) shall not apply to an action 

in which the patentee is granted a preliminary injunction to prevent harm arising from the manufacture, use, sale, offer for sale, or importation of an allegedly 


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infringing product or process that competes with a product or process made, 

sold, or offered for sale by the patentee. 

‘‘(3) CONSENT OF THE PARTIES.—The patentee and an opposing party shall be 

excluded, in whole or in part, from the limitations of subsections (a) and (c) 

upon such parties’ filing with the court a signed stipulation agreeing to such 

exclusion. 

‘‘(4) FDA AND BIOLOGICAL PRODUCT APPLICATION.—Subsections (a) and (c) 

shall not apply to an action that includes a cause of action described under section 271(e)(2).’’. 

(2) CONFORMING AMENDMENT.—The table of sections for chapter 29 of title 35, 

United States Code, is amended by inserting after the item relating to section 

281A, as added by subsection (a), the following new item: 

‘‘281B. Stay of discovery pending a preliminary motion.’’. 

(e) SENSE OF CONGRESS.—It is the sense of Congress that it is an abuse of the 

patent system and against public policy for a party to send out purposely evasive 

demand letters to end users alleging patent infringement. Demand letters sent 

should, at the least, include basic information about the patent in question, what 

is being infringed, and how it is being infringed. Any actions or litigation that stem 

from these types of purposely evasive demand letters to end users should be considered a fraudulent or deceptive practice and an exceptional circumstance when considering whether the litigation is abusive. 

(f) DEMAND LETTERS.—Section 284 of title 35, United States Code, is amended— 

(1) in the first undesignated paragraph, by striking ‘‘Upon finding’’ and inserting ‘‘(a) IN GENERAL.—Upon finding’’; 

(2) in the second undesignated paragraph, by striking ‘‘When the damages’’ 

and inserting ‘‘(b) ASSESSMENT BY COURT; TREBLE DAMAGES.—When the damages’’; 

(3) by inserting after subsection (b), as designated by paragraph (2) of this 

subsection, the following: 

‘‘(c) WILLFUL INFRINGEMENT.—A claimant seeking to establish willful infringement may not rely on evidence of pre-suit notification of infringement unless that 

notification identifies with particularity the asserted patent, identifies the product 

or process accused, identifies the ultimate parent entity of the claimant, and explains with particularity, to the extent possible following a reasonable investigation 

or inquiry, how the product or process infringes one or more claims of the patent.’’; 

and 

(4) in the last undesignated paragraph, by striking ‘‘The court’’ and inserting 

‘‘(d) EXPERT TESTIMONY.—The court’’. 

(g) VENUE.— 

(1) AMENDMENT.—Subsection (b) of section 1400 of title 28, United States 

Code, is amended to read as follows: 

‘‘(b) VENUE FOR ACTION RELATING TO PATENTS.—Notwithstanding subsections (b) 

and (c) of section 1391 of this title, any civil action for patent infringement or any 

action for a declaratory judgment that a patent is invalid or not infringed may be 

brought only in a judicial district— 

‘‘(1) where the defendant has its principal place of business or is incorporated; 

‘‘(2) where the defendant has committed an act of infringement of a patent 

in suit and has a regular and established physical facility that gives rise to the 

act of infringement; 

‘‘(3) where the defendant has agreed or consented to be sued in the instant 

action; 

‘‘(4) where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit; 

‘‘(5) where a party has a regular and established physical facility that such 

party controls and operates, not primarily for the purpose of creating venue, 

and has— 

‘‘(A) engaged in management of significant research and development of 

an invention claimed in a patent in suit prior to the effective filing date of 

the patent; 

‘‘(B) manufactured a tangible product that is alleged to embody an invention claimed in a patent in suit; or 

‘‘(C) implemented a manufacturing process for a tangible good in which 

the process is alleged to embody an invention claimed in a patent in suit; 

or 

‘‘(6) for foreign defendants that do not meet the requirements of paragraphs 

(1) or (2), according to section 1391(d) of this title.’’. 

(2) MANDAMUS RELIEF.—For the purpose of determining whether relief may 

issue under section 1651 of title 28, United States Code, a clearly and indisVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6621 E:\HR\OC\HR235.XXX HR235

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putably erroneous denial of a motion under section 1406(a) of such title to dismiss or transfer a case on the basis of section 1400(b) of such title shall be 

deemed to cause irremediable interim harm. 

(3) RETAILERS NOT ELIGIBLE FOR CUSTOMER STAY.—If a defendant does not 

meet the definition of a retailer under section 296(a)(6) of title 35, United States 

Code, as added by section 5, solely because the defendant manufacturers or 

causes the manufacture of the covered product or process in suit, the retail facilities of such defendant shall not constitute a regular and established physical 

facility for purposes of section 1400(b)(2) of title 28, United Code, as added by 

paragraph (1). 

(4) TELEWORKERS.—The dwelling or residence of an employee or contractor of 

a defendant who works at such dwelling or residence shall not constitute a regular and established physical facility of the defendant for purposes of section 

1400(b)(2) of title 28, United Code, as added by paragraph (1). 

(h) EFFECTIVE DATE.—Except as otherwise provided in this section, the amendments made by this section shall take effect on the date of the enactment of this 

Act and shall apply to any action for which a complaint is filed on or after that date. 

SEC. 4. TRANSPARENCY OF PATENT OWNERSHIP. 

(a) AMENDMENTS.—Section 290 of title 35, United States Code, is amended— 

(1) in the heading, by striking ‘‘suits’’ and inserting ‘‘suits; disclosure of interests’’; 

(2) by striking ‘‘The clerks’’ and inserting ‘‘(a) NOTICE OF PATENT SUITS.—The 

clerks’’; and 

(3) by adding at the end the following new subsections: 

‘‘(b) INITIAL DISCLOSURE.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), upon the filing of an 

initial complaint for patent infringement, the plaintiff shall disclose to the Patent and Trademark Office, the court, and each adverse party the identity of 

each of the following: 

‘‘(A) The assignee of the patent or patents at issue. 

‘‘(B) Any entity with a right to sublicense or enforce the patent or patents 

at issue. 

‘‘(C) Any entity, other than the plaintiff, that the plaintiff knows to have 

a financial interest in the patent or patents at issue or the plaintiff. 

‘‘(D) The ultimate parent entity of any assignee identified under subparagraph (A) and any entity identified under subparagraph (B) or (C). 

‘‘(E) A clear and concise description of the principal business, if any, of 

the party alleging infringement. 

‘‘(F) A list of each complaint filed, of which the party alleging infringement has knowledge, that asserts or asserted any of the patents identified 

under subparagraph (A). 

‘‘(G) For each patent identified under subparagraph (A), whether a standard-setting body has specifically declared such patent to be essential, potentially essential, or having potential to become essential to that standardsetting body, and whether the United States Government or a foreign government has imposed specific licensing requirements with respect to such 

patent. 

‘‘(2) EXEMPTION.—The requirements of paragraph (1) shall not apply with respect to a civil action filed under subsection (a) that includes a cause of action 

described under section 271(e)(2). 

‘‘(c) DISCLOSURE COMPLIANCE.— 

‘‘(1) PUBLICLY TRADED.—For purposes of subsection (b)(1)(C), if the financial 

interest is held by a corporation traded on a public stock exchange, an identification of the name of the corporation and the public exchange listing shall satisfy the disclosure requirement. 

‘‘(2) NOT PUBLICLY TRADED.—For purposes of subsection (b)(1)(C), if the financial interest is not held by a publicly traded corporation, the disclosure shall 

satisfy the disclosure requirement if the information identifies— 

‘‘(A) in the case of a partnership, the name of the partnership and the 

name and correspondence address of each partner or other entity that holds 

more than a 5-percent share of that partnership; 

‘‘(B) in the case of a corporation, the name of the corporation, the location 

of incorporation, the address of the principal place of business, and the 

name of each officer of the corporation; and 

‘‘(C) for each individual, the name and correspondence address of that individual. 

‘‘(d) ONGOING DUTY OF DISCLOSURE TO THE PATENT AND TRADEMARK OFFICE.— 


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‘‘(1) IN GENERAL.—A plaintiff required to submit information under subsection 

(b) or a subsequent owner of the patent or patents at issue shall, not later than 

90 days after any change in the assignee of the patent or patents at issue or 

an entity described under subparagraph (B) or (D) of subsection (b)(1), submit 

to the Patent and Trademark Office the updated identification of such assignee 

or entity. 

‘‘(2) FAILURE TO COMPLY.—With respect to a patent for which the requirement 

of paragraph (1) has not been met— 

‘‘(A) the plaintiff or subsequent owner shall not be entitled to recover reasonable fees and other expenses under section 285 or increased damages 

under section 284 with respect to infringing activities taking place during 

any period of noncompliance with paragraph (1), unless the denial of such 

damages or fees would be manifestly unjust; and 

‘‘(B) the court shall award to a prevailing party accused of infringement 

reasonable fees and other expenses under section 285 that are incurred to 

discover the updated assignee or entity described under paragraph (1), unless such sanctions would be unjust. 

‘‘(e) DEFINITIONS.—In this section: 

‘‘(1) FINANCIAL INTEREST.—The term ‘financial interest’— 

‘‘(A) means— 

‘‘(i) with regard to a patent or patents, the right of a person to receive 

proceeds related to the assertion of the patent or patents, including a 

fixed or variable portion of such proceeds; and 

‘‘(ii) with regard to the plaintiff, direct or indirect ownership or control by a person of more than 5 percent of such plaintiff; and 

‘‘(B) does not mean— 

‘‘(i) ownership of shares or other interests in a mutual or common investment fund, unless the owner of such interest participates in the 

management of such fund; or 

‘‘(ii) the proprietary interest of a policyholder in a mutual insurance 

company or of a depositor in a mutual savings association, or a similar 

proprietary interest, unless the outcome of the proceeding could substantially affect the value of such interest. 

‘‘(2) PROCEEDING.—The term ‘proceeding’ means all stages of a civil action, including pretrial and trial proceedings and appellate review. 

‘‘(3) ULTIMATE PARENT ENTITY.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), the term ‘ultimate parent entity’ has the meaning given such term in section 801.1(a)(3) 

of title 16, Code of Federal Regulations, or any successor regulation. 

‘‘(B) MODIFICATION OF DEFINITION.—The Director may modify the definition of ‘ultimate parent entity’ by regulation.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—The item relating to section 290 

in the table of sections for chapter 29 of title 35, United States Code, is amended 

to read as follows: 

‘‘290. Notice of patent suits; disclosure of interests.’’. 

(c) REGULATIONS.—The Director may promulgate such regulations as are necessary to establish a registration fee in an amount sufficient to recover the estimated costs of administering subsections (b) through (e) of section 290 of title 35, 

United States Code, as added by subsection (a), to facilitate the collection and maintenance of the information required by such subsections, and to ensure the timely 

disclosure of such information to the public. 

(d) EFFECTIVE DATE.—The amendments made by this section shall take effect 

upon the expiration of the 6-month period beginning on the date of the enactment 

of this Act and shall apply to any action for which a complaint is filed on or after 

such effective date. 

SEC. 5. CUSTOMER-SUIT EXCEPTION. 

(a) AMENDMENT.—Section 296 of title 35, United States Code, is amended to read 

as follows: 

‘‘§ 296. Stay of action against customer 

‘‘(a) DEFINITIONS.—In this section: 

‘‘(1) COVERED CUSTOMER.—The term ‘covered customer’ means a retailer or 

end user that is accused of infringing a patent or patents in dispute based on— 

‘‘(A) the sale, or offer for sale, of a covered product or covered process 

without material modification of the product or process in a manner that 

is alleged to infringe a patent or patents in dispute; or 

‘‘(B) the use by such retailer, the retailer’s end user customer, or an end 

user of a covered product or covered process without material modification 


emcdonald on DSK67QTVN1PROD with HEARING
9 

of the product or process in a manner that is alleged to infringe a patent 

or patents in dispute. 

‘‘(2) COVERED MANUFACTURER.—The term ‘covered manufacturer’ means a 

person that manufactures or supplies, or causes the manufacture or supply of, 

a covered product or covered process, or a relevant part thereof. 

‘‘(3) COVERED PROCESS.—The term ‘covered process’ means a process, method, 

or a relevant part thereof, that is alleged to infringe a patent or patents in dispute where such process, method, or relevant part thereof is implemented by 

an apparatus, material, system, software, or other instrumentality that is provided by the covered manufacturer. 

‘‘(4) COVERED PRODUCT.—The term ‘covered product’ means a product, system, 

service, component, material, or apparatus, or relevant part thereof, that— 

‘‘(A) is alleged to infringe a patent or patents in dispute; or 

‘‘(B) implements a process alleged to infringe the patent or patents in dispute. 

‘‘(5) END USER.—The term ‘end user’ includes an affiliate of an end user, but 

does not include an entity that manufacturers or causes the manufacture of a 

covered product or covered process, or a relevant part thereof. 

‘‘(6) RETAILER.—The term ‘retailer’ means an entity that generates revenues 

predominately through the sale to the public of consumer goods or services, or 

an affiliate of such entity, but does not include an entity that manufacturers 

or causes the manufacturer of a covered product or covered process, or a relevant part thereof. 

‘‘(b) STAY OF ACTION AGAINST CUSTOMER.—Except as provided in subsection (d), 

in any civil action in which a party asserts a claim for relief arising under any Act 

of Congress relating to patents, the court shall grant a motion to stay at least the 

portion of the action against a covered customer related to infringement of a patent 

involving a covered product or covered process if the following requirements are 

met: 

‘‘(1) PARTY TO THE ACTION.—The covered manufacturer is a party to the action 

or to a separate action (in which a party asserts a claim for relief arising under 

any Act of Congress relating to patents) involving the same patent or patents 

related to the same covered product or covered process. 

‘‘(2) AGREEMENT TO BE BOUND BY ISSUES DETERMINED.—The covered customer 

agrees to be bound as to issues determined in an action described in paragraph 

(1) without a full and fair opportunity to separately litigate any such issue, but 

only as to those issues for which all other elements of the common law doctrine 

of issue preclusion are met. 

‘‘(3) DEADLINE TO FILE MOTION.—The motion is filed after the first pleading 

in the action but not later than the later of— 

‘‘(A) the 120th day after the date on which the first pleading or paper in 

the action is served that specifically identifies the covered product or covered process as a basis for the covered customer’s alleged infringement of 

the patent and that specifically identifies how the covered product or covered process is alleged to infringe the patent; or 

‘‘(B) the date on which the first scheduling order in the case is entered. 

‘‘(4) MANUFACTURER CONSENT IN CERTAIN CASES.—In a case in which the covered manufacturer has been made a party to the action on motion by the covered customer, the covered manufacturer and the covered customer consent in 

writing to the stay. 

‘‘(c) LIFT OF STAY.— 

‘‘(1) IN GENERAL.—A stay entered under this section may be lifted upon grant 

of a motion based on a showing that— 

‘‘(A) the action involving the covered manufacturer will not resolve a 

major issue in the suit against the covered customer (such as a covered 

product or covered process identified in the motion to lift the stay is not 

a material part of the claimed invention or inventions in the patent or patents in dispute); or 

‘‘(B) the stay unreasonably prejudices or would be manifestly unjust to 

the party seeking to lift the stay. 

‘‘(2) SEPARATE MANUFACTURER ACTION INVOLVED.—In the case of a stay entered under this section based on the participation of the covered manufacturer 

in a separate action described in subsection (b)(1), a motion under paragraph 

(1) may only be granted if the court in such separate action determines that 

the showing required under paragraph (1) has been made. 

‘‘(d) EXEMPTION.—This section shall not apply to an action that includes a cause 

of action described under section 271(e)(2). 

‘‘(e) WAIVER OF ESTOPPEL EFFECT.—The court may, upon motion, determine that 

a consent judgment or an unappealed final order shall not be binding on the covered 


emcdonald on DSK67QTVN1PROD with HEARING
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customer with respect to one or more of the issues that gave rise to the stay based 

on a showing that such consent judgment or unappealed final order would unreasonably prejudice or be manifestly unjust to the covered customer in light of the circumstances of the case if, following the grant of a motion to stay under this section, 

the covered manufacturer described in subsection (b)(1)— 

‘‘(1) obtains or consents to entry of a consent judgment relating to such issue 

that gave rise to the stay; or 

‘‘(2) fails to prosecute to a final, non-appealable judgment such issue that gave 

rise to the stay. 

‘‘(f) RULE OF CONSTRUCTION.—Nothing in this section shall be construed to limit 

the ability of a court to grant any stay, expand any stay granted under this section, 

or grant any motion to intervene, if otherwise permitted by law.’’. 

(b) CONFORMING AMENDMENT.—The table of sections for chapter 29 of title 35, 

United States Code, is amended by striking the item relating to section 296 and inserting the following: 

‘‘296. Stay of action against customer.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section shall take effect on 

the date of the enactment of this Act and shall apply to any action for which a complaint is filed on or after the first day of the 30-day period that ends on that date. 

SEC. 6. PROCEDURES AND PRACTICES TO IMPLEMENT RECOMMENDATIONS OF THE JUDICIAL CONFERENCE. 

(a) PILOT PROGRAM FOR RULES AND PROCEDURES ON DISCOVERY BURDENS AND

COSTS AND CASE MANAGEMENT.— 

(1) DEFINITIONS.—In this subsection, the term ‘‘electronic communication’’ 

means any form of electronic communication, including email, text message, 

and instant message. 

(2) DEVELOPMENT OF RULES AND PROCEDURES.—Not later than 3 months after 

the date of the enactment of this Act, the Director of the Administrative Office 

of the United States Courts shall designate not fewer than 6 of the district 

courts of the United States that are participating in the patent cases pilot program established under section 1 of Public Law 111–349 (28 U.S.C.137 note) to 

develop rules and procedures to implement the proposals described in paragraphs (3) through (5) to address the asymmetries in discovery burdens and 

costs, and to establish case management procedures, in any civil action arising 

under any Act of Congress relating to patents. 

(3) TYPES OF DISCOVERY RULES AND PROCEDURES TO BE CONSIDERED.—The discovery rules and procedures required under paragraph (2) shall address each of 

the following: 

(A) DISCOVERY OF CORE DOCUMENTARY EVIDENCE.—Whether and to what 

extent each party to the action is entitled to receive core documentary evidence and should be responsible for the costs of producing core documentary evidence within the possession or control of each such party, and 

whether and to what extent each party may seek non-core documentary discovery as otherwise provided in the Federal Rules of Civil Procedure. 

(B) ELECTRONIC COMMUNICATION.—If the parties request discovery of 

electronic communication, how such discovery should be phased to occur 

relative to the exchange of initial disclosures and core documentary evidence, and appropriate limitations to apply to such discovery. 

(C) SCOPE OF DOCUMENTARY EVIDENCE.—The kinds of evidence that 

should constitute ‘‘core documentary evidence’’. 

(4) SPECIFIC DISCOVERY RULES AND PROCEDURES TO BE CONSIDERED FOR ADDITIONAL DOCUMENT DISCOVERY.—The discovery rules and procedures required 

under paragraph (2) shall address whether the following provisions, or variations on the following provisions, should apply: 

(A) IN GENERAL.—Whether each party to the action may seek any additional document discovery otherwise permitted under the Federal Rules of 

Civil Procedure beyond core documentary evidence, if such party bears the 

reasonable costs, including reasonable attorney’s fees, of the additional document discovery. 

(B) REQUIREMENTS FOR ADDITIONAL DOCUMENT DISCOVERY.—Whether, unless the parties mutually agree otherwise, no party may be permitted additional document discovery unless such a party posts a bond, or provides 

other security, in an amount sufficient to cover the expected costs of such 

additional document discovery, or makes a showing to the court that such 

party has the financial capacity to pay the costs of such additional document discovery. 


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(C) GOOD CAUSE MODIFICATION.—Whether a court, upon motion and for 

good cause shown, may modify the requirements of subparagraphs (A) and 

(B) and any definition of core documentary evidence. 

(D) COMPUTER CODE.—Whether a court, upon motion and for good cause 

shown, may determine that computer code should be included in the discovery of core documentary evidence, and whether the discovery of computer code shall occur after the parties have exchanged initial disclosures 

and other core documentary evidence. 

(E) DISCOVERY SEQUENCE AND SCOPE.—Whether the parties shall discuss 

and address in the written report filed pursuant to rule 26(f) of the Federal 

Rules of Civil Procedure the views and proposals of each party on the following: 

(i) When the discovery of core documentary evidence should be completed. 

(ii) Whether additional document discovery described in subparagraphs (A) and (B) will be sought. 

(iii) Any issues about infringement, invalidity, or damages that, if resolved before the additional document discovery described in subparagraphs (A) and (B) commences, might simplify or streamline the case. 

(5) CASE MANAGEMENT RULES AND PROCEDURES TO BE CONSIDERED.—The rules 

and procedures required under paragraph (2) shall also address case management procedures for any civil action arising under any Act of Congress relating 

to patents, including initial disclosure and early case management conference 

practices that— 

(A) will identify any potential dispositive issues of the case; and 

(B) focus on early summary judgment motions when resolution of issues 

may lead to expedited disposition of the case. 

(b) IMPLEMENTATION OF RULES AND PROCEDURES.—Within 18 months after the 

designation by the Director of the Administrative Office of the 6 district courts to 

develop the rules and procedures pursuant to subsection (a), the 6 district courts 

shall complete the development of the rules and procedures, and begin to implement 

them. 

(c) EXPANSION OF PILOT PROGRAM FOR RULES AND PROCEDURES ON DISCOVERY

BURDENS AND COSTS AND CASE MANAGEMENT.—After the rules and procedures developed by the pilot program pursuant to subsection (a) have been in effect for at 

least 2 years, the Judicial Conference of the United States, using existing resources, 

may expand the application of some or all of those rules and procedures to be implemented by all the district courts, and the United States Court of Federal Claims, 

for any civil action arising under any Act of Congress relating to patents. 

(d) REVISION OF FORM FOR PATENT INFRINGEMENT.— 

(1) ELIMINATION OF FORM.—The Supreme Court, using existing resources, 

shall eliminate Form 18 in the Appendix to the Federal Rules of Civil Procedure 

(relating to Complaint for Patent Infringement), effective on the date of the enactment of this Act. 

(2) REVISED FORM.—The Supreme Court may prescribe a new form or forms 

setting out model allegations of patent infringement that, at a minimum, notify 

accused infringers of the asserted claim or claims, the products or services accused of infringement, and the plaintiff’s theory for how each accused product 

or service meets each limitation of each asserted claim. The Judicial Conference 

should exercise the authority under section 2073 of title 28, United States Code, 

to make recommendations with respect to such new form or forms. 

(e) PROTECTION OF INTELLECTUAL-PROPERTY LICENSES IN BANKRUPTCY.— 

(1) IN GENERAL.—Section 1522 of title 11, United States Code, is amended by 

adding at the end the following: 

‘‘(e) Section 365(n) shall apply to cases under this chapter. If the foreign representative rejects or repudiates a contract under which the debtor is a licensor of 

intellectual property, the licensee under such contract shall be entitled to make the 

election and exercise the rights described in section 365(n).’’. 

(2) TRADEMARKS.— 

(A) IN GENERAL.—Section 101(35A) of title 11, United States Code, is 

amended— 

(i) in subparagraph (E), by striking ‘‘or’’; 

(ii) in subparagraph (F), by striking ‘‘title 17;’’ and inserting ‘‘title 17; 

or’’; and 

(iii) by adding after subparagraph (F) the following new subparagraph: 

‘‘(G) a trademark, service mark, or trade name, as those terms are defined in section 45 of the Act of July 5, 1946 (commonly referred to as the 

‘Trademark Act of 1946’) (15 U.S.C. 1127);’’. 


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(B) CONFORMING AMENDMENT.—Section 365(n)(2) of title 11, United 

States Code, is amended— 

(i) in subparagraph (B)— 

(I) by striking ‘‘royalty payments’’ and inserting ‘‘royalty or other 

payments’’; and 

(II) by striking ‘‘and’’ after the semicolon; 

(ii) in subparagraph (C), by striking the period at the end of clause 

(ii) and inserting ‘‘; and’’; and 

(iii) by adding at the end the following new subparagraph: 

‘‘(D) in the case of a trademark, service mark, or trade name, the licensee 

shall not be relieved of any of its obligations to maintain the quality of the 

products and services offered under or in connection with the licensed 

trademark, service mark, or trade name, and the trustee shall retain the 

right to oversee and enforce quality control for such products or services, 

or both.’’. 

(3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the date of the enactment of this Act and shall apply to any case that 

is pending on, or for which a petition or complaint is filed on or after, such date 

of enactment. 

(f) IN GENERAL.—Not later than 12 months after the date of the enactment of this 

Act, the Judicial Conference of the United States, with the assistance of the Director 

of the Federal Judicial Center and the Director of the Administrative Office of the 

United States Courts, shall prepare and transmit to the Committees on the Judiciary of the Senate and the House of Representatives a report on discovery proceedings in cases pertaining to litigation involving patent laws of the United States. 

The report shall contain, after looking at data compiled for the previous two years 

before the date of the enactment of this Act, the following: 

(1) The percentage of courts that have distinct phases of discovery in the 

court rules. 

(2) A description of at least two of the definitions of such phases. 

(3) Identify by name any court that does not have such distinct phases and 

a description of why such courts have not implemented such phases. 

(4) With regard to proceedings in courts that have phases, in the case of a 

discovery proceeding that extends beyond the core documents phase, a description of— 

(A) what additional discovery was requested and any consistent pattern 

or trend in the reasons or justifications for the request; 

(B) how much longer, on average, the proceedings lasted than those settled within the first phase; and 

(C) any patterns for the courts that repeatedly have extended requests. 

(5) Looking at proceedings in the courts that do not have phase rules, a description of— 

(A) how long, on average, the discovery proceedings last; and 

(B) the scope of the requests. 

SEC. 7. SMALL BUSINESS EDUCATION, OUTREACH, AND INFORMATION ACCESS. 

(a) SMALL BUSINESS EDUCATION AND OUTREACH.— 

(1) RESOURCES FOR SMALL BUSINESS.—Using existing resources, the Director 

shall develop educational resources for small businesses to address concerns 

arising from patent infringement. 

(2) SMALL BUSINESS PATENT OUTREACH.—The existing small business patent 

outreach programs of the Office, and the relevant offices at the Small Business 

Administration and the Minority Business Development Agency, shall provide 

education and awareness on abusive patent litigation practices. The Director 

may give special consideration to the unique needs of small firms owned by disabled veterans, service-disabled veterans, women, and minority entrepreneurs 

in planning and executing the outreach efforts by the Office. 

(b) IMPROVING INFORMATION TRANSPARENCY FOR SMALL BUSINESS AND THE

UNITED STATES PATENT AND TRADEMARK OFFICE USERS.— 

(1) WEB SITE.—Using existing resources, the Director shall create a userfriendly section on the official Web site of the Office to notify the public when 

a patent case is brought in Federal court and, with respect to each patent at 

issue in such case, the Director shall include— 

(A) information disclosed under subsections (b) and (d) of section 290 of 

title 35, United States Code, as added by section 4(a) of this Act; and 

(B) any other information the Director determines to be relevant. 

(2) FORMAT.—In order to promote accessibility for the public, the information 

described in paragraph (1) shall be searchable by patent number, patent art 

area, and entity. 


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SEC. 8. STUDIES ON PATENT TRANSACTIONS, QUALITY, AND EXAMINATION. 

(a) STUDY ON SECONDARY MARKET OVERSIGHT FOR PATENT TRANSACTIONS TO PRO- MOTE TRANSPARENCY AND ETHICAL BUSINESS PRACTICES.— (1) STUDY REQUIRED.—The Director, in consultation with the Secretary of 

Commerce, the Secretary of the Treasury, the Chairman of the Securities and 

Exchange Commission, the heads of other relevant agencies, and interested parties, shall, using existing resources of the Office, conduct a study— 

(A) to develop legislative recommendations to ensure greater transparency and accountability in patent transactions occurring on the secondary market; 

(B) to examine the economic impact that the patent secondary market 

has on the United States; 

(C) to examine licensing and other oversight requirements that may be 

placed on the patent secondary market, including on the participants in 

such markets, to ensure that the market is a level playing field and that 

brokers in the market have the requisite expertise and adhere to ethical 

business practices; and 

(D) to examine the requirements placed on other markets. 

(2) REPORT ON STUDY.—Not later than 18 months after the date of the enactment of this Act, the Director shall submit a report to the Committee on the 

Judiciary of the House of Representatives and the Committee on the Judiciary 

of the Senate on the findings and recommendations of the Director from the 

study required under paragraph (1). 

(b) STUDY ON PATENTS OWNED BY THE UNITED STATES GOVERNMENT.— 

(1) STUDY REQUIRED.—The Director, in consultation with the heads of relevant agencies and interested parties, shall, using existing resources of the Office, conduct a study on patents owned by the United States Government that— 

(A) examines how such patents are licensed and sold, and any litigation 

relating to the licensing or sale of such patents; 

(B) provides legislative and administrative recommendations on whether 

there should be restrictions placed on patents acquired from the United 

States Government; 

(C) examines whether or not each relevant agency maintains adequate 

records on the patents owned by such agency, specifically whether such 

agency addresses licensing, assignment, and Government grants for technology related to such patents; and 

(D) provides recommendations to ensure that each relevant agency has an 

adequate point of contact that is responsible for managing the patent portfolio of the agency. 

(2) REPORT ON STUDY.—Not later than 1 year after the date of the enactment 

of this Act, the Director shall 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 findings and recommendations of the Director from the study required under paragraph (1). 

(c) STUDY ON PATENT QUALITY AND ACCESS TO THE BEST INFORMATION DURING

EXAMINATION.— 

(1) GAO STUDY.—The Comptroller General of the United States shall, using 

existing resources, conduct a study on patent examination at the Office and the 

technologies available to improve examination and improve patent quality. 

(2) CONTENTS OF THE STUDY.—The study required under paragraph (1) shall 

include the following: 

(A) An examination of patent quality at the Office. 

(B) An examination of ways to improve patent quality, specifically 

through technology, that shall include examining best practices at foreign 

patent offices and the use of existing off-the-shelf technologies to improve 

patent examination. 

(C) A description of how patents are classified. 

(D) An examination of procedures in place to prevent double patenting 

through filing by applicants in multiple art areas. 

(E) An examination of the types of off-the-shelf prior art databases and 

search software used by foreign patent offices and governments, particularly in Europe and Asia, and whether those databases and search tools 

could be used by the Office to improve patent examination. 

(F) An examination of any other areas the Comptroller General determines to be relevant. 

(3) REPORT ON STUDY.—Not later than 1 year after the date of the enactment 

of this Act, the Comptroller General shall 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 findings and recommendations from the study reVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6621 E:\HR\OC\HR235.XXX HR235

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quired by this subsection, including recommendations for any changes to laws 

and regulations that will improve the examination of patent applications and 

patent quality. 

(d) STUDY ON PATENT SMALL CLAIMS COURT.— 

(1) STUDY REQUIRED.— 

(A) IN GENERAL.—The Director of the Administrative Office of the United 

States Courts, in consultation with the Director of the Federal Judicial Center and the United States Patent and Trademark Office, shall, using existing resources, conduct a study to examine the idea of developing a pilot program for patent small claims procedures in certain judicial districts within 

the existing patent pilot program mandated by Public Law 111–349. 

(B) CONTENTS OF STUDY.—The study under subparagraph (A) shall examine— 

(i) the necessary criteria for using small claims procedures; 

(ii) the costs that would be incurred for establishing, maintaining, 

and operating such a pilot program; and 

(iii) the steps that would be taken to ensure that the procedures used 

in the pilot program are not misused for abusive patent litigation. 

(2) REPORT ON STUDY.—Not later than 1 year after the date of the enactment 

of this Act, the Director of the Administrative Office of the United States Courts 

shall submit a report to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate on the findings 

and recommendations of the Director of the Administrative Office from the 

study required under paragraph (1). 

(e) STUDY ON DEMAND LETTERS.— 

(1) STUDY.—The Director, in consultation with the heads of other appropriate 

agencies, shall, using existing resources, conduct a study of the prevalence of 

the practice of sending patent demand letters in bad faith and the extent to 

which that practice may, through fraudulent or deceptive practices, impose a 

negative impact on the marketplace. 

(2) REPORT TO CONGRESS.—Not later than 1 year after the date of the enactment of this Act, the Director shall submit a report to the Committee on the 

Judiciary of the House of Representatives and the Committee on the Judiciary 

of the Senate on the findings and recommendations of the Director from the 

study required under paragraph (1). 

(3) PATENT DEMAND LETTER DEFINED.—In this subsection, the term ‘‘patent 

demand letter’’ means a written communication relating to a patent that states 

or indicates, directly or indirectly, that the recipient or anyone affiliated with 

the recipient is or may be infringing the patent. 

(f) STUDY ON BUSINESS METHOD PATENT QUALITY.— 

(1) GAO STUDY.—The Comptroller General of the United States shall, using 

existing resources, conduct a study on the volume and nature of litigation involving business method patents. 

(2) CONTENTS OF STUDY.—The study required under paragraph (1) shall focus 

on examining the quality of business method patents asserted in suits alleging 

patent infringement, and may include an examination of any other areas that 

the Comptroller General determines to be relevant. 

(3) REPORT TO CONGRESS.—Not later than 1 year after the date of the enactment of this Act, the Comptroller General shall 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 findings and recommendations from the study required by this subsection, including recommendations for any changes to laws 

or regulations that the Comptroller General considers appropriate on the basis 

of the study. 

(g) STUDY ON IMPACT OF LEGISLATION ON ABILITY OF INDIVIDUALS AND SMALL

BUSINESSES TO PROTECT EXCLUSIVE RIGHTS TO INVENTIONS AND DISCOVERIES.— 

(1) STUDY REQUIRED.—The Director, in consultation with the Secretary of 

Commerce, the Director of the Administrative Office of the United States 

Courts, the Director of the Federal Judicial Center, the heads of other relevant 

agencies, and interested parties, shall, using existing resources of the Office, 

conduct a study to examine the economic impact of sections 3, 4, and 5 of this 

Act, and any amendments made by such sections, on the ability of individuals 

and small businesses owned by women, veterans, and minorities to assert, secure, and vindicate the constitutionally guaranteed exclusive right to inventions 

and discoveries by such individuals and small business. 

(2) REPORT ON STUDY.—Not later than 2 years after the date of the enactment 

of this Act, the Director shall submit to the Committee on the Judiciary of the 

House of Representatives and the Committee on the Judiciary of the Senate a 


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report on the findings and recommendations of the Director from the study required under paragraph (1). 

SEC. 9. IMPROVEMENTS AND TECHNICAL CORRECTIONS TO THE LEAHY-SMITH AMERICA INVENTS ACT. 

(a) POST-GRANT REVIEW AMENDMENT.—Section 325(e)(2) of title 35, United States 

Code is amended by striking ‘‘or reasonably could have raised’’. 

(b) REFORM OF PATENT TRIAL AND APPEAL BOARD PROCEEDINGS.— (1) INTER PARTES REVIEW.—Section 316(a) of title 35, United States Code, is 

amended— 

(A) in paragraph (12), by striking ‘‘; and’’ and inserting a semicolon; 

(B) in paragraph (13), by striking the period at the end and inserting a 

semicolon; and 

(C) by adding at the end the following new paragraphs: 

‘‘(14) providing that for all purposes under this chapter— 

‘‘(A) each claim of a patent shall be construed as such claim would be in 

a civil action to invalidate a patent under section 282(b), including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the 

art and the prosecution history pertaining to the patent; and 

‘‘(B) if a court has previously construed the claim or a claim term in a 

civil action in which the patent owner was a party, the Office shall consider 

such claim construction; and 

‘‘(15) providing that a review may not be instituted unless the petitioner certifies that the petitioner and the real parties in interest of the petitioner— 

‘‘(A) do not own and will not acquire a financial instrument (including a 

prepaid variable forward contract, equity swap, collar, or exchange fund) 

that is designed to hedge or offset any decrease in the market value of an 

equity security of the patent owner or an affiliate of the patent owner, during a period following the filing of the petition to be determined by the Director; and 

‘‘(B) have not demanded payment, monetary or otherwise, from the patent 

owner or an affiliate of the patent owner in exchange for a commitment not 

to file a petition under section 311 with respect to the patent that is the 

subject of the petition, unless the petitioner or the real party in interest of 

the petitioner has been sued for or charged with infringement of the patent, 

during a period to be determined by the Director.’’. 

(2) POST-GRANT REVIEW.—Section 326(a) of title 35, United States Code, is 

amended— 

(A) in paragraph (11), by striking ‘‘; and’’ and inserting a semicolon; 

(B) in paragraph (12), by striking the period at the end and inserting a 

semicolon; and 

(C) by adding at the end the following new paragraphs: 

‘‘(13) providing that for all purposes under this chapter— 

‘‘(A) each claim of a patent shall be construed as such claim would be in 

a civil action to invalidate a patent under section 282(b), including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the 

art and the prosecution history pertaining to the patent; and 

‘‘(B) if a court has previously construed the claim or a claim term in a 

civil action in which the patent owner was a party, the Office shall consider 

such claim construction; and 

‘‘(14) providing that a review may not be instituted unless the petitioner certifies that the petitioner and the real parties in interest of the petitioner— 

‘‘(A) do not own and will not acquire a financial instrument (including a 

prepaid variable forward contract, equity swap, collar, or exchange fund) 

that is designed to hedge or offset any decrease in the market value of an 

equity security of the patent owner or an affiliate of the patent owner, during a period following the filing of the petition to be determined by the Director; and 

‘‘(B) have not demanded payment, monetary or otherwise, from the patent 

owner or an affiliate of the patent owner in exchange for a commitment not 

to file a petition under section 311 with respect to the patent that is the 

subject of the petition, unless the petitioner or the real party in interest of 

the petitioner has been sued for or charged with infringement of the patent, 

during a period to be determined by the Director.’’. 

(3) TECHNICAL AND CONFORMING AMENDMENT.—Section 18(a)(1)(A) of the 

Leahy-Smith America Invents Act (Public Law 112–29; 126 Stat. 329; 35 U.S.C. 

321 note) is amended by striking ‘‘Section 321(c)’’ and inserting ‘‘Sections 321(c) 

and 326(a)(13)’’. 


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(4) DECLARATION EVIDENCE.— 

(A) PRELIMINARY RESPONSE TO PETITION FOR INTER PARTES REVIEW.—Section 313 of title 35, United States Code, is amended by striking the period 

at the end and inserting ‘‘, including affidavits or declarations of supporting 

evidence and opinions.’’. 

(B) PRELIMINARY RESPONSE TO PETITION FOR POST-GRANT REVIEW.—Section 323 of title 35, United States Code, is amended by striking the period 

at the end and inserting ‘‘, including affidavits or declarations of supporting 

evidence and opinions.’’. 

(5) RIGHT OF DUE PROCESS.— 

(A) INTER PARTES REVIEW.—Section 316(b) of title 35, United States Code, 

is amended by striking ‘‘and the ability’’ and inserting ‘‘the rights to due 

process of the patent owner and the petitioner, and the ability’’. 

(B) POST-GRANT REVIEW.—Section 326(b) of title 35, United States Code, 

is amended by striking ‘‘and the ability’’ and inserting ‘‘the rights to due 

process of the patent owner and the petitioner, and the ability’’. 

(6) SERIAL OR REDUNDANT PETITIONS.—The Director shall designate as precedential (and may change the designation as the Director determines to be appropriate), with respect to the application of subsections (d) and (e) of section 

325 of title 35, United States Code, the decisions of the Patent Trial and Appeal 

Board in each of the following decisions: 

(A) Dell Inc. v. Electronics and Telecomms. Research Inst., IPR2015– 

00549, Paper 10 (PTAB Mar. 26, 2015). 

(B) Zimmer Holdings, Inc. v. Bonutti Skeletal Innovations LLC, IPR2014– 

01080, Paper 17 (PTAB Oct. 31, 2014). 

(C) Prism Pharma Co., Ltd. v. Choongwae Pharma Corp., IPR2014– 

00315, Paper 14 (PTAB July 8, 2014). 

(D) Unilever, Inc. v. The Procter & Gamble Co., IPR2014–00506, Paper 

17 (PTAB July 7, 2014). 

(7) PRELIMINARY RESPONSE TO INTER PARTES REVIEW AMENDMENT.— 

(A) AMENDMENT.—Section 313 of title 35, United States Code, is amended 

by adding at the end the following new sentence: ‘‘The Director may accept 

a reply by the petitioner to new issues raised in the preliminary response, 

upon request by the petitioner to file such reply, within a time period set 

by the Director.’’ 

(B) CONFORMING AMENDMENTS.—Section 314 of title 35, United States 

Code, is amended— 

(i) in subsection (a), by striking ‘‘any response’’ and inserting ‘‘any response or reply’’; and 

(ii) in subsection (b)— 

(I) in paragraph (1), by striking ‘‘receiving a preliminary response to the petition’’ and inserting ‘‘receiving the later of a preliminary response to the petition or a reply to such preliminary response’’; and 

(II) by amending paragraph (2) to read as follows: 

‘‘(2) if— 

‘‘(A) no such preliminary response is filed, the last date on which such 

response may be filed; and 

‘‘(B) such preliminary response is filed and no such reply is requested, the 

last day on which such reply may be requested.’’. 

(8) EFFECTIVE DATE, REGULATIONS, AND TRANSITION FOR SHORT SALES.— 

(A) EFFECTIVE DATE.—Sections 316(a)(15) and 326(a)(14) of title 35, 

United States Code, as added by paragraphs (1) and (2) shall take effect 

on the date of the enactment of this Act. 

(B) REGULATIONS REQUIRED.—Not later than one year after the date of 

the enactment of this Act, the Director shall issue regulations to carry out 

sections 316(a)(15) and 326(a)(14) of title 35, United States Code, as added 

by paragraphs (1) and (2). 

(C) TRANSITION.—During the period that begins on the date of the enactment of this Act and ends on the date of the issuance of the regulations 

required pursuant to subparagraph (B), a petition filed under chapter 31 or 

32 of title 35, United States Code, on or after the date of the enactment 

of this Act may not be instituted unless the petitioner certifies that the petitioner and the real parties in interest of such petitioner— 

(i) do not own a financial instrument described in sections 316(a)(15) 

and 326(a)(14) of title 35, United States Code, as added by paragraphs 

(1) and (2), during the one-week period following the date on which the 

petition is filed; and 


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(ii) have not demanded anything of value from the patent owner or 

an affiliate of the patent owner during the period between September 

16, 2012, and the date of the filing of the petition. 

(9) EFFECTIVE DATE.—Except as otherwise provided, the amendments made 

by this subsection shall take effect upon the expiration of the 90-day period beginning on the date of the enactment of this Act, and shall apply to any proceeding under chapter 31 or 32 of title 35, United States Code, as the case may 

be, for which the petition for review is filed on or after such effective date. 

(c) CODIFICATION OF THE DOUBLE-PATENTING DOCTRINE.— (1) AMENDMENTS.— (A) CONDITIONS FOR PATENTABILITY; NOVELTY.—Section 102 of title 35, 

United States Code, is amended by inserting at the end the following new 

subsection: 

‘‘(e) DOUBLE-PATENTING PRIOR ART.—If a first claimed invention in a first patent 

was effectively filed on or before the effective filing date of a second claimed invention in a second patent or in the application on which the second patent issues, and 

the first claimed invention is not otherwise prior art to the second claimed invention 

under this section, then the first claimed invention shall, notwithstanding the other 

subsections of this section, constitute prior art to the second claimed invention 

under this subsection unless— 

‘‘(1) the second claimed invention is consonant with a requirement for restriction under the first sentence of section 121 with respect to the claims issued 

in the first patent; or 

‘‘(2) an election has been recorded in the Office by the owner of the second 

patent or the application on which the second patent issues disclaiming the 

right to bring or maintain a civil action under section 281 to enforce the second 

patent, except that such disclaimer shall not apply if— 

‘‘(A) the relief being sought in the civil action would not constitute a 

cause of action barred by res judicata had the asserted claims of the second 

patent been issued in the first patent; and 

‘‘(B) the owner of the first patent or the application on which the first 

patent issues has recorded an election limiting the enforcement of the first 

patent relative to the second patent in the manner described in this paragraph, the owner of the first patent is a party to the civil action, or a separate action under section 281 to enforce the first patent can no longer be 

brought or maintained.’’. 

(B) DIVISIONAL APPLICATIONS.—Section 121 of title 35, United States 

Code, is amended by striking the third sentence. 

(C) LIMITATIONS.—Paragraph (2) of section 154(b) of title 35, United 

States Code, is amended by inserting at the end the following new subparagraph: 

‘‘(D) PATENTS SUBJECT TO ELECTION.—If a patent is subject to an election 

as described in section 102(e)(2) with respect to one or more other patents, 

the adjusted term of the patent under this subsection may not exceed a period of 17 years from the date of issuance of any of such other patents and 

the portion of any adjustment of the term of the patent under this subsection that extends beyond the expiration of such 17-year period years 

shall be void.’’. 

(2) EFFECTIVE DATE, IMPLEMENTATION, AND OTHER TRANSITION PROVISIONS.— 

(A) IN GENERAL.—The amendments made by paragraph (1) shall be effective as if included in the amendment made by section 3(b)(1) of the LeahySmith America Invents Act (Public Law 112–29). 

(B) SAVINGS CLAUSE.—If a second claimed invention in a second patent 

issued before the date of the enactment of this Act is subject to the amendments made by paragraph (1) and would not have been invalid had the 

amendments made by paragraph (1) and the provisions of this paragraph 

not been enacted, then, notwithstanding section 102(e) of title 35, United 

States Code, as added by paragraph (1), prior art under such section 102(e) 

may not be considered in determining the validity of such second claimed 

invention. 

(C) PROVISIONAL REJECTIONS TO CONTINUE.—If a first claimed invention 

in a first application for patent subject to the amendments under paragraph 

(1) would, if issued as a patent, constitute prior art under section 102(e) of 

title 35, United States Code, as added by paragraph (1), with respect to a 

second claimed invention in a second application, the first claimed invention may be provisionally cited by the Office as prior art in a notice under 

section 132 of title 35, United States Code, in connection with the examination of the second claimed invention. 

(D) PATENT TERM; RULE OF CONSTRUCTION.— 


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(i) IN GENERAL.—If the term of a patent is based upon the amendments made to subsection (a) of section 154, title 35, United States 

Code, by the Uruguay Round Agreements Act (Public Law 103–465; 

108 Stat. 4809)— 

(I) the patent term as provided under subsection (a) of such section 154, any adjustment to said term as provided under subsection 

(b) of such section 154, and any extension of such term as provided 

under section 156 of title 35, United States Code, shall not constitute, nor be deemed by the Office or the courts to constitute, an 

unjustified period of protection under the patent or an unjustified 

extension of the right to exclude under the patent relative to an 

earlier-expiring patent; 

(II) the Office shall not condition the issuance of such a patent 

on a disclaimer of any portion of the term of the patent; and 

(III) the Office may condition the issuance of such a patent on 

the making of an election as described in section 102(e)(2) of title 

35, United States Code, as added by paragraph (1) in lieu of the 

filing of a disclaimer with respect to the ownership or separate enforcement of the patent that would otherwise be required by the 

Office in cases of non-statutory double patenting. 

(ii) DISCLAIMERS IN PENDING APPLICATIONS.—A terminal disclaimer 

made in connection with an application for patent with respect to one 

or more other applications or patents shall be given no effect and shall 

be treated as having never been made if— 

(I) within one year after the date of the enactment of this Act, 

an election as described in section 102(e)(2) of title 35, United State 

Code, as added by paragraph (1), has been made in connection with 

the application or any patent issuing thereon and has effect with 

respect to each such other application or patent with respect to 

which the disclaimer was made; 

(II) the application was pending before the Office on or after July 

1, 2015; and 

(III) the term of a patent issued on the application would be 

based upon the amendments made to subsection (a) of section 154 

of title 35, United States Code, by the Uruguay Round Agreements 

Act. 

(iii) DISCLAIMERS OTHERWISE UNAFFECTED.—Except as provided in 

clause (ii), nothing in this subsection shall be construed to negate the 

effect of a terminal disclaimer limiting the enforcement of a patent 

issued on or before the date of the enactment of this Act. 

(iv) TERMINAL DISCLAIMER DEFINED.—In this subparagraph, the term 

‘‘terminal disclaimer’’ has the meaning as such term is described in section 1.321 of title 37, Code of Federal Regulations. 

(E) EXCLUSIVE RULES.— 

(i) FIRST-INVENTOR-TO-FILE PATENTS.—A claimed invention of a patent described in section 3(n)(1) of the Leahy-Smith America Invents Act 

(35 U.S.C. 100 note) and issued before, on, or after the date of the enactment of this Act may not be held invalid on any nonstatutory double-patenting ground. 

(ii) FIRST-TO-INVENT PATENTS.—A claimed invention of a patent not 

described in section 3(n)(1) of the Leahy-Smith America Invents Act 

and issued before, on, or after the date of the enactment of this Act 

may not be held invalid with respect to a claimed invention of another 

patent based on any nonstatutory double patenting ground if one of the 

claimed inventions is prior art to the other claimed invention under 

section 102 of title 35, United States Code, as in effect on the day prior 

to the effective date of the amendments made by section 3(b)(1) of the 

Leahy-Smith America Invents Act. 

(F) EFFECT OF RULE OF CONSTRUCTION AND EXCLUSIVE RULES.—Subparagraphs (D) and (E) shall take effect on the date of the enactment of this 

Act, except that they shall not apply to any defense raised in a civil action 

brought before such date. 

(d) PTO PATENT REVIEWS.— 

(1) CLARIFICATION.— 

(A) SCOPE OF PRIOR ART.—Section 18(a)(1)(C)(i) of the Leahy-Smith America Invents Act (35 U.S.C. 321 note) is amended by striking ‘‘section 102(a)’’ 

and inserting ‘‘subsection (a) or (e) of section 102’’. 


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(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall 

take effect on the date of the enactment of this Act and shall apply to any 

proceeding pending on, or filed on or after, such date of enactment. 

(2) AUTHORITY TO WAIVE FEE.—Subject to available resources, the Director 

may waive payment of a filing fee for a transitional proceeding described under 

section 18(a) of the Leahy-Smith America Invents Act (35 U.S.C. 321 note). 

(3) PROCEEDING CONSOLIDATION CLARIFICATION.—Section 315(c) of title 35, 

United States Code, is amended to read as follows: 

‘‘(c) JOINDER.— ‘‘(1) JOINDER OF PARTY.—If the Director institutes an inter partes review, the 

Director, in his or her discretion, may join as a party to that inter partes review 

any person who meets the requirement of properly filing a petition under section 311 that the Director, after receiving a preliminary response under section 

313 or the expiration of the time for filing such a response, determines warrants 

the institution of an inter partes review under section 314. 

‘‘(2) JOINDER OF LATER FILED PETITION.—For good cause shown, the Director 

may allow a party who files a petition that meets the requirement described in 

paragraph (1) and concerns the patent of a pending inter partes review to join 

the petition to the pending review.’’. 

(e) CLARIFICATION OF JURISDICTION.— (1) IN GENERAL.—An action or claim arises under an Act of Congress relating 

to patents if such action or claim— 

(A) necessarily requires resolution of a disputed question as to the validity of a patent or the scope of a patent claim; or 

(B) is an action or claim for legal malpractice that arises from an attorney’s conduct in relation to an action or claim arising under an Act of Congress relating to patents (including as described in paragraph (1)). 

(2) APPLICABILITY.—Paragraph (1)— 

(A) shall apply to all cases filed on or after, or pending on, the date of 

the enactment of this Act; and 

(B) shall not apply to a case in which a Federal court has issued a ruling 

on whether the case or a claim arises under any Act of Congress relating 

to patents or plant variety protection before the date of the enactment of 

this Act. 

(f) PATENT PILOT PROGRAM IN CERTAIN DISTRICT COURTS DURATION.— 

(1) DURATION.—Section 1(c) of Public Law 111–349 (124 Stat. 3674; 28 U.S.C. 

137 note) is amended to read as follows: 

‘‘(c) DURATION.—The program established under subsection (a) shall be maintained using existing resources, and shall terminate 20 years after the end of the 

6-month period described in subsection (b).’’. 

(2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall take effect on the date of the enactment of this Act. 

(g) MANAGEMENT OF THE UNITED STATES PATENT AND TRADEMARK OFFICE.— 

(1) IN GENERAL.—Section 3(b)(1) of title 35, United States Code, is amended 

in the first sentence— 

(A) by striking ‘‘be vested with the authority to act in the capacity of the’’ 

and inserting ‘‘serve as Acting,’’; and 

(B) by inserting before the period ‘‘or in the event of a vacancy in the office of the Director’’. 

(2) EFFECTIVE DATE.—The amendments made by paragraph (1) shall take effect on the date of the enactment of this Act and shall apply with respect to 

appointments and vacancies occurring before, on, or after the date of the enactment of this Act. 

(h) TECHNICAL CORRECTIONS.— 

(1) NOVELTY.— 

(A) AMENDMENT.—Section 102(b)(1)(A) of title 35, United States Code, is 

amended by striking ‘‘the inventor or joint inventor or by another’’ and inserting ‘‘the inventor or a joint inventor or another’’. 

(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall 

be effective as if included in the amendment made by section 3(b)(1) of the 

Leahy-Smith America Invents Act (Public Law 112–29). 

(2) INVENTOR’S OATH OR DECLARATION.— 

(A) AMENDMENT.—The second sentence of section 115(a) of title 35, 

United States Code, is amended by striking ‘‘shall execute’’ and inserting 

‘‘may be required to execute’’. 

(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall 

be effective as if included in the amendment made by section 4(a)(1) of the 

Leahy-Smith America Invents Act (Public Law 112–29). 

(3) ASSIGNEE FILERS.— 


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(A) BENEFIT OF EARLIER FILING DATE; RIGHT OF PRIORITY.—Section 

119(e)(1) of title 35, United States Code, is amended, in the first sentence, 

by striking ‘‘by an inventor or inventors named’’ and inserting ‘‘that names 

the inventor or a joint inventor’’. 

(B) BENEFIT OF EARLIER FILING DATE IN THE UNITED STATES.—Section 120 

of title 35, United States Code, is amended, in the first sentence, by striking ‘‘names an inventor or joint inventor’’ and inserting ‘‘names the inventor 

or a joint inventor’’. 

(C) EFFECTIVE DATE.—The amendments made by this paragraph shall 

take effect on the date of the enactment of this Act and shall apply to any 

patent application, and any patent issuing from such application, that is 

filed on or after September 16, 2012. 

(4) DERIVED PATENTS.— (A) AMENDMENT.—Section 291(b) of title 35, United States Code, is 

amended by striking ‘‘or joint inventor’’ and inserting ‘‘or a joint inventor’’. 

(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall 

be effective as if included in the amendment made by section 3(h)(1) of the 

Leahy-Smith America Invents Act (Public Law 112–29). 

(5) SPECIFICATION.—Notwithstanding section 4(e) of the Leahy-Smith America 

Invents Act (Public Law 112–29; 125 Stat. 297), the amendments made by subsections (c) and (d) of section 4 of such Act shall apply to any proceeding or matter that is pending on, or filed on or after, the date of the enactment of this 

Act. 

(6) TIME LIMIT FOR COMMENCING MISCONDUCT PROCEEDINGS.— 

(A) AMENDMENT.—Section 32 of title 35, United States Code, is amended 

by striking the fourth sentence and inserting the following new sentences: 

‘‘A proceeding under this section shall be commenced not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 18 months after 

the date on which the Director of the Office of Enrollment and Discipline 

received a written grievance (as prescribed in the regulations established 

under section 2(b)(2)(D)) about a specified individual that describes the misconduct forming the basis for the proceeding. If the misconduct that forms 

the basis for the proceeding under this section is at issue in a court or administrative-agency proceeding, the 18-month period for commencing the 

proceeding under this section shall be tolled until the court or agency’s decision regarding the misconduct becomes final and non-appealable. The 18- 

month period for commencing a proceeding under this section also may be 

tolled by agreement between the parties.’’ 

(B) EFFECTIVE DATE.—The amendment made by this paragraph shall take 

effect on the date of the enactment of this Act and shall apply to any action 

in which the Office files a complaint on or after such date of enactment. 

(7) PATENT OWNER RESPONSE.— 

(A) CONDUCT OF INTER PARTES REVIEW.—Paragraph (8) of section 316(a) 

of title 35, United States Code, is amended by striking ‘‘the petition under 

section 313’’ and inserting ‘‘the petition under section 311’’. 

(B) CONDUCT OF POST-GRANT REVIEW.—Paragraph (8) of section 326(a) of 

title 35, United States Code, is amended by striking ‘‘the petition under section 323’’ and inserting ‘‘the petition under section 321’’. 

(C) EFFECTIVE DATE.—The amendments made by this paragraph shall 

take effect on the date of the enactment of this Act. 

(8) INTERNATIONAL APPLICATIONS.— 

(A) AMENDMENTS.—Section 202(b) of the Patent Law Treaties Implementation Act of 2012 (Public Law 112–211; 126 Stat. 1536) is amended— 

(i) by striking paragraph (7); and 

(ii) by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), 

respectively. 

(B) EFFECTIVE DATE.—The amendments made by subparagraph (A) shall 

be effective as if included in title II of the Patent Law Treaties Implementation Act of 2012 (Public Law 112–21). 

(9) GLOBAL WORKSHARING.— 

(A) AMENDMENT.—Section 122 of title 35, United States Code, is amended 

by adding at the end the following new subsection: 

‘‘(f) FOREIGN OR INTERNATIONAL FILING.— 

‘‘(1) PROVISION OF INFORMATION.—The Director may provide information concerning an application for patent to a foreign or international intellectual property office if a corresponding application is filed with such foreign or international intellectual property office. If the corresponding application is an international application, such information may also be provided to an International 


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Searching Authority, an International Preliminary Examining Authority, or the 

International Bureau. 

‘‘(2) DEFINITIONS.—For purposes of this subsection, the terms ‘international 

application’, ‘International Searching Authority’, ‘International Preliminary Examining Authority’, and ‘International Bureau’ have the same meaning given 

those terms under section 351.’’. 

(B) CONFORMING AMENDMENT.—Section 122(a) of title 35, United States 

Code, is amended by striking ‘‘subsection (b)’’ and inserting ‘‘subsections (b) 

and (f)’’. 

(C) EFFECTIVE DATE.—The amendments made by this paragraph shall 

take effect on the date of the enactment of this Act and shall apply to applications for patent that are pending on, or filed on or after, such effective 

date. 

(10) JURISDICTION FOR APPEALS OF TRADEMARK CASES.— 

(A) COURT OF APPEALS.—Section 1295(a)(4)(C) of title 28, United States 

Code, is amended by striking ‘‘title 35’’ and inserting ‘‘title 35 or section 

21(b) of the Act of July 5, 1946 (commonly referred to as the ‘Trademark 

Act of 1946’) (15 U.S.C. 1071(b))’’; 

(B) CONFORMING AMENDMENT.—Section 39(a) of the Act of July 5, 1946 

(commonly referred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C. 1121(a)) 

is amended by striking ‘‘under this Act’’ and inserting ‘‘under this Act (except as provided in section 1295(a)(4) of title 28, United States Code)’’. 

(C) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall 

apply in any case in which a final judgment is entered by the district court 

on or after the date of enactment of this Act. 

(11) OFFICERS AND EMPLOYEES AMENDMENT.— 

(A) AMENDMENT.—Section 3(b)(3)(A) of title 35, United States Code, is 

amended by striking ‘‘appoint’’ and inserting ‘‘appoint, or nominate for appointment by the Secretary of Commerce,’’. 

(B) APPLICABILITY.—Section 3(b)(3)(B) of title 35, United States Code, as 

added by subparagraph (A) shall apply to all officers nominated for appointment by the Secretary of Commerce before, on, or after the date of the enactment of this Act. 

(i) EXTENSION OF FEE-SETTING AUTHORITY.—Section 10(i)(2) of the Leahy-Smith 

America Invents Act (Public Law 112–29; 125 Stat. 319; 35 U.S.C. 41 note) is 

amended by striking ‘‘7-year’’ and inserting ‘‘17-year’’. 

SEC. 10. EFFECTIVE DATE. 

Except as otherwise provided in this Act, the provisions of this Act shall take effect on the date of the enactment of this Act, and shall apply to any patent issued, 

or any action filed, on or after that date. 

Purpose and Summary 

The Leahy-Smith America Invents Act (‘‘AIA’’), signed into law 

just over 31⁄2 years ago, was a landmark Act that made fundamental changes to American patent law. Its principal provisions, 

such as its adoption of the first-inventor-to-file system of establishing a patent’s priority date, its simplified definition of prior art, 

and its creation of a limited prior user right, are reforms that were 

literally decades in the making. Other provisions, such as the AIA’s 

revision of existing administrative proceedings for post-issuance review of patents, and its creation of several new administrative proceedings, will ensure that such proceedings are efficient alternatives to civil litigation that are fair to both patent owners and 

accused infringers. 

Despite the breadth and depth of the AIA’s reforms, however, it 

was apparent even before the Act was signed into law that further 

legislative work remained to be done. The harm inflicted on American innovation and manufacturing by various abusive patent-enforcement practices has been widely known and acknowledged for 

most of the last decade. Some of these problems clearly have grown 

worse even since the AIA’s enactment. What has been absent in 

the past, however, is a consensus among different American indusVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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1See Abusive Patent Litigation: The Impact on American Innovation and Jobs, and Potential 

Solutions: Hearing Before the Subcomm. on Courts, Intellectual Property, and the Internet of the 

H. Comm. on the Judiciary, 113th Cong. (2013) [hereinafter March 2013 hearing]; Abusive Patent Litigation: The Issues Impacting American Competitiveness and Job Creation at the International Trade Commission and Beyond: Hearing Before the Subcomm. on Courts, Intellectual 

Property, and the Internet of the H. Comm. on the Judiciary, 113th Cong. (2013) [hereinafter 

April 2013 hearing]; H.R. 3309: Improving the Patent System to Promote American Innovation 

and Competitiveness: Hearing Before the H. Comm. on the Judiciary, 113th Cong. (2013) [hereinafter October 2013 hearing]; Protecting Small Businesses and Promoting Innovation by Limiting 

Patent Troll Abuse: Hearing Before the S. Comm. on the Judiciary, 113th Cong. (2013); Examining Recent Supreme Court Cases in the Patent Arena: Hearing Before the Subcomm. on Courts, 

Intellectual Property, and the Internet of the H. Comm. on the Judiciary, 114th Cong. (2015) 

[hereinafter February 2015 hearing]; The Impact of Abusive Patent Litigation Practices on the 

American Economy: Hearing Before the S. Comm. on the Judiciary, 114th Cong. (2015); Patent 

Reform: Protecting American Innovators and Job Creators from Abusive Patent Litigation: Hearing Before the Subcomm. on Courts, Intellectual Property, and the Internet of the H. Comm. on 

the Judiciary, 114th Cong. (2015) [hereinafter March 2015 hearing]; H.R. 9, the ‘‘Innovation 

Act:’’ Hearing Before the H. Comm. on the Judiciary, 114th Cong. (2015) [hereinafter April 2015 

hearing]; S. 1137, the ‘‘PATENT ACT:’’ Finding Effective Solutions to Address Abusive Patent 

Practices: Hearing Before the S. Comm. on the Judiciary, 114th Cong. (2015) [hereinafter May 

2015 Senate hearing]. 2March 2013 hearing at 61 (Statement of Philip S. Johnson, Chief Intellectual Property Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform); see also 

April 2015 hearing, Statement of the Honorable Michelle K. Lee, Under Secretary of Commerce 

for Intellectual Property and Director of the United States Patent and Trademark Office [hereinafter Director Lee’s testimony], at *3 (‘‘[A]ny legislative reform must preserve a patentee’s ability 

to reliably and efficiently enforce its patent rights. Legislation must achieve a balance, preventing abuse while ensuring that any patent owner, large or small, will be able to enforce a 

patent that is valid and infringed.’’) Because the record of the April 14, 2015 hearing has not 

been published as of the filing of this report, citations to the testimony in that record are to 

trial and technological sectors as to how to cure these abuses without undermining the patent system’s purpose of encouraging research and innovation. 

The present bill—the Innovation Act—represents the emergence 

of a new consensus. As reflected in hearings held in the House and 

Senate during this and the previous Congress,1 industry leaders 

from different sectors have reached broad agreement on a common 

set of reforms that will address the most serious abuses currently 

afflicting the patent-enforcement system. Some of these reforms reflect new thinking about ways of addressing the burden and expense of litigation. Others are variants of proposals that were included in preliminary versions of the AIA itself or its various precursors, but which were omitted from the final public law. Still others address problems that have arisen only in the time since the 

AIA’s enactment. Finally, the Innovation Act corrects several important technical problems that have become apparent during the 

course of the implementation of the AIA. 

Every member of this Committee wishes to see the patent system 

fulfill its constitutional mandate to ‘‘promote the progress of science 

and the useful arts.’’ As one industry leader noted during the hearings, the proper goal of reform legislation 

is to ensure that the patent system fairly rewards those 

who contribute to our society through the invention and 

development of new and useful products and processes. A 

fair, efficient, and reliable patent system will continue to 

stimulate the investment in innovation that is necessary 

in today’s technologically complex world to create the new 

products and processes that will lead to better lives for 

Americans and the rest of the world. In addition, the best 

promise for preserving and enhancing our place in an increasingly competitive global marketplace will be to stimulate U.S. investment in research by universities and small 

and large companies.2


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the material as submitted, rather than to the pages of the GPO print, and are identified by asterisks. Director Lee’s responses to questions posed by members during the hearing are cited 

according to the time at which they were made during the webcast of the hearing. The webcast 

is available at http://judiciary.house.gov/index.cfm/2015/4/hearing-hr-9-innovation-act. 3 Id.; see also February 2015 hearing at 55 (Statement of Robert P. Taylor, on behalf of National Venture Capital Association) (‘‘For thousands of . . . companies, . . . patents are the only 

way to insure a return on investment sufficient to justify the risks involved.); March 2013 hearing at 81 (Statement of Dana Rao, Vice President of Intellectual Property and Litigation, Adobe 

Systems) (‘‘the patent system gives us the freedom to invest in R&D, knowing that our key differentiating innovations can be protected and that the patent system will be there to help us 

earn a return on that investment.’’). 

While the particular focus of the Innovation Act is to cure the 

misuse of various patent-enforcement mechanisms, the Committee 

remains mindful of the importance of preserving a strong and efficient patent system. As the same witness noted, 

Research based companies are rational decision makers 

when it comes to deciding whether and how much to invest 

in R&D. . . . In determining the expected return on investment, a critical element is the likelihood that meaningful patent protection will be accorded to deserving inventions resulting from the project, the degree and duration of 

exclusivity that resulting products or processes will enjoy, 

and the likelihood that the involved patents will either be 

respected by competitors, or can be promptly and successfully enforced in the event of infringement. When such projections indicate that the return on investment exceeds a 

threshold commensurate with the risk involved, the investment is, or continues to be, made. When it does not, the 

project is not begun, or is cancelled.3

It is the goal of this Committee to ensure that American manufacturing, small businesses, and start-up companies are protected 

against patent-enforcement abuse, while also ensuring that the 

patent system continues to protect and encourage American ingenuity. The Innovation Act, which has earned the support of a broad 

coalition of America’s most innovative companies, recalibrates the 

Nation’s patent-enforcement mechanisms in a manner that strikes 

a balance between these overlapping and sometimes conflicting 

goals, and that ensures that the Nation’s patent system continues 

to drive technological innovation and economic growth. 

Background and Need for the Legislation 

Testimony before Senate and House Committees has established 

that misuse of various patent-enforcement mechanisms is a serious 

problem—and one that has grown worse in recent years. One witness described how the cost of patent litigation—driven by its technical nature and complexity—can lead to settlements driven by the 

economics of litigation rather than the merits of the case. He noted 

the ‘‘common complaint’’ that in patent litigation, 

too many specious claims or defenses are filed solely for 

the purpose of forcing an unjust settlement, typically at a 

cost that is less than the cost of successfully completing 

the litigation. While this type of abuse no doubt exists in 

other types of litigation, it may be more effective in patent 

litigation, where the subject matter is complex, extensive 

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4March 2013 hearing at 64 (Statement of Philip S. Johnson, Chief Intellectual Property Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform). 5 April 2015 hearing, Statement of Robert A. Armitage, Former General Counsel, Eli Lilly & 

Co., at *4. 6 Id. 

7October 2013 hearing at 27 (Statement of Kevin Kramer, Vice President and Deputy General 

Counsel for Intellectual Property, Yahoo! Inc.); see also id. at 28 (‘‘Along with the increase in 

numbers, Yahoo has seen a decrease in the substantive merits of the cases filed against it.’’). 

tial witnesses may be deposed, and expert testimony is a 

practical necessity. Coupled with the difficulty in patent 

cases of distinguishing specious from meritorious claims 

and defenses, many parties choose to settle rather than 

litigate to a final conclusion.4

Another witness described how improper patent litigation tactics 

can negatively affect both accused infringers and patent owners: 

I have been involved in situations where a simple reading 

of a patent was enough to establish an overwhelming likelihood of ultimate success in defeating a patent infringement claim, only to see the accused infringer—sometimes 

after spending millions of dollars in attorney fees—make a 

rational business decision to abandon its defenses and seek 

a settlement. 

. . . I have also seen patent infringers use litigation tactics calculated to inflict remarkable pain on patent holders. 

Between pleading any conceivable defense to validity or 

enforceability—and seeking any and all possible discovery—the patent owner’s time and expense to vindication of its valid patent rights can be so great that the patent owner can be forced to consider stepping away from 

the fight and offering a settlement that greatly undervalues the patent’s intrinsic worth. Litigation burdens can 

put the inventor holding a strong patent in a weak position—just as litigation burdens can convert a weak patent—or a portfolio of weak patents—into an overvalued 

asset.5

This witness concluded by noting that ‘‘it cannot be a good sign 

for any property rights system if the litigation/enforcement regime 

often operates to weaken the strongest property rights and 

strengthen the negotiating hand of those holding the least meritorious property claims.’’ 6

Other witnesses noted that the volume and character of patent 

litigation has grown worse in the last several years. One witness 

described his company’s recent experience: 

Growing and systematic abuse has led to increasing waste, 

inefficiency, and unfairness. The historical trend of litigation illustrates the problem well. . . . [F]rom 1995, when 

Yahoo was founded, through 2006, Yahoo had between two 

to four defensive patent cases on its active docket at any 

given time. In stark contrast, since the beginning of 2007, 

Yahoo has had between 20 to 25 cases on its active docket 

at any given time. That is a tenfold increase in patent litigation.7


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8March 2013 hearing at 39 (statement of Janet L. Dhillon, Executive Vice President, General 

Counsel and Corporate Secretary, J.C. Penney). 9 Id. at 122 (‘‘In recent years, over 200 retailers have contacted NRF about this issue because 

they have been, or are currently, the target of patent trolls’ abusive practices.’’). 10 Id. at 163. 11March 2013 hearing at 160. 12 Id. at 220–221. 13Director Lee’s testimony at *2; see also id. at 2:21:05 (colloquy with Ms. DelBene). 

Similarly, a witness testifying on behalf of a major retailer described the growth in patent litigation and misuse that her company has seen: 

When I joined the company 4 years ago, JCPenney had no 

patent cases. Over the last 4 years, the company has had 

to defend or settle over two dozen patent infringement 

lawsuits that have nothing to do with the products 

JCPenney actually sells. . . . [T]his number does not include those claims that are settled upon receipt of demand 

letters.8

The fact that a representative of a major retailer testified before 

a congressional Committee about patent-litigation abuses is illustrative of another recent phenomenon: problems with the patentenforcement system have reached beyond the industrial sectors 

that are directly involved in technological innovation. Increasingly, 

patent lawsuits have affected businesses that one ordinarily would 

not expect to be involved with the patent system. Concerns about 

abusive litigation practices have been expressed to this Committee 

by constituencies as diverse as the National Retail Federation,9 the 

Food Marketing Institute (which conducts programs on food safety 

for food retailers and wholesalers),10 the National Association of 

Realtors,11 and the American Bankers Association.12

During her recent testimony before the Committee, USPTO Director Michelle Lee confirmed the existence of problems with the 

current patent-enforcement system: 

the past several years have seen the growth of patent litigation practices which have the potential to hurt innovation. These abusive litigation practices can be particularly 

harmful to new and small businesses, which often lack the 

resources to defend themselves in these often highly complex and expensive cases. There have been reports of widespread mailing of ‘‘demand letters’’ with vague allegations 

of patent infringement to people otherwise unfamiliar with 

patents and patent law. In addition, there is a continuing 

need to find ways to strengthen the patent system by leveling the playing field for innovators and increasing the 

transparency of patent ownership information.13

Other witnesses who appeared before the Committee also described how recent trends in patent litigation have negatively affected small businesses: 

In response to the wave of patent troll cases, we have 

changed our business practices. [F]or example, in the 

past, . . . we might have considered licensing technology 

from a small inventor, . . . [a] few guys in a garage who 

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14March 2013 hearing at 140–141 (statement of Janet L. Dhillon, Executive Vice President, 

General Counsel and Corporate Secretary, jcpenney); see also April 2013 hearing at 46 (Statement of Colleen V. Chien, Assistant Professor, Santa Clara University Law School) (‘‘Allowing 

suits against customers as we currently do puts small suppliers in a difficult position— . . . they make small suppliers unattractive, because of their inability to indemnify large companies.’’). 15 April 2013 hearing at 42 (Statement of Colleen V. Chien, Assistant Professor, Santa Clara 

University Law School); see also February 2015 hearing at 30, 32 (Statement of Krish Gupta, 

Senior Vice President and Deputy General Counsel, EMC Corporation). 16Director Lee’s testimony at *2. 17 Id. at *2–3. 18 Id. at *3. 

nology. . . . [But now,] we are taking a second look at 

that. . . . [W]e [often] do not license that technology because we are concerned that that young inventor, that 

startup, may not have the wherewithal to defend and indemnify us in a patent troll case. And I think that that is 

a very unfortunate thing for innovation in general.14

Similarly, other witnesses have noted that ‘‘[c]ompanies that 

make $10 million or less in revenue are the majority of unique defendants’’—and that ‘‘[s]tartups are particularly vulnerable. Although startups are a crucial source of new jobs, [patent-troll] demands have impacted their ability to hire and meet other milestones, caused them to change their products, and shut down lines 

of business.’’ 15

Director Lee also addressed the argument made by some opponents of the Innovation Act that recent events have obviated the 

need for legislative reform. Director Lee acknowledged that ‘‘[s]ince 

December 2013, when the House of Representatives passed the Innovation Act, H.R. 3309, . . . there have been a number of changes 

to the patent landscape.’’ 16 She described actions undertaken by 

the USPTO, the courts, and others, but went on to note: 

Many of these actions have made progress in clarifying 

patent rights and curtailing some patent litigation abuses, 

but they are not a complete solution. The recent judicial 

decisions are limited in their effect because of the limitations of the statutes that those cases interpret. And other 

actions—particularly the passage of some state laws—have 

added to the need for Federal legislation that provides a 

uniform national approach. The USPTO also believes that 

legislation remains necessary to realize the full potential 

of the changes enacted in the AIA. Although the AIA made 

a large number of important reforms to the patent system, 

that law did not address all currently outstanding problems—some of which have become more apparent since the 

AIA’s enactment.17

Director Lee concluded that ‘‘the USPTO believes that legislation 

to curtail abusive patent litigation is necessary and appropriate at 

this time.’’ 18

Finally, one witness with deep experience with the patent system 

offered the following stark warning about the risks posed by litigation abuses to the system as a whole: 

Absent resolution, the concerns over the existing patent 

litigation rules and procedures—producing litigation consequences that often bedevil both plaintiffs and defendants 


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19October 2013 hearing at 61 (Statement of Robert A. Armitage, Former General Counsel, Eli 

Lilly & Co.). 20March 2013 hearing at 89 (Statement of Dana Rao, Vice President of Intellectual Property 

and Litigation, Adobe Systems); see also October 2013 hearing at 31 (Statement of Kevin Kramer, Vice President and Deputy General Counsel for Intellectual Property, Yahoo! Inc.) (‘‘Without that threat of fees, there is no disincentive for plaintiffs to file weak cases or, worse yet, 

bring weak cases to trial. Congress’s providing clarity as to when courts should shift fees will 

force patent plaintiffs to act more responsibly during litigation and when contemplating whether 

to file suit at all.’’); March 2013 hearing at 105 (Statement of John Boswell, Senior Vice President and General Counsel, SAS) (‘‘If Congress did something to [expand the availability of fee 

awards], then we would have less incentive to settle. We would be inclined to take the cases 

until you got a decision. As soon as you do that, the entire business model of the patent trolls 

changes, because they use early settlements to fund litigation. And as soon as people stop settling, the whole paradigm shifts.’’); April 2015 hearing, Statement of Robert A. Armitage, 

Former General Counsel, Eli Lilly & Co., at *5 (‘‘[Default fee shifting] could further discourage 

procuring bundles of low-quality patents—they would no longer be valued based upon the cost 

of defense if each accused infringer had a reasonable certainty of recovering defense costs. At 

its opposite pole, it could assure a well-conceived, high-quality patent would garner respect— 

and serve as a rock-solid asset for attracting investments to proceed with development and commercialization of the new technology it protects.’’); id. at *4 (‘‘[A] more uniformly applied ‘‘loserpays’’ system for civil actions involving patents could be the single most important patent litigation reform that this Congress might enact at the present time.’’). 

alike—seem certain to doom the broad public support for 

the patent system.19

The inefficiencies and inequities currently afflicting the Nation’s 

patent-enforcement system are a problem that calls for this Committee’s attention. 

I. PATENT INFRINGEMENT ACTIONS

1. Attorney’s Fees 

Witnesses who appeared before the Committee have repeatedly 

described how the high cost of mounting a defense to a complaint 

of patent infringement can force a defendant to settle the case and 

pay the plaintiff—even when the defendant has good reason to believe that it would have prevailed at trial on a defense of noninfringement or invalidity. Witnesses also predicted that allowing 

more liberal shifting of attorney’s fees against losing parties would 

reduce the frequency of such nuisance settlements, and would 

allow more defendants to challenge patents that are invalid or that 

have been asserted beyond what their claims reasonably allow. As 

one witness stated at a March 14, 2013 hearing: 

Given that it costs $5 million to defend [against] a patent 

through trial, and the average settlement demand is less 

than $1 million, the [patent-assertion entities] have an 

economic advantage over the targeted defendants. If, however, the PAEs faced the real possibility that the $5 million would be shifted to them if they were unsuccessful, I 

believe they would think twice about bringing lawsuits 

based on meritless patents. And it would just take one defendant out of the hundreds of targets to challenge them 

to take the profit out of the aggressive litigation model.20

Witnesses also urged that any new fee-shifting standard be applied evenhandedly to plaintiffs and defendants, and recommended 

that the law not attempt to discriminate among patent business 

models. As one witness noted, ‘‘non-meritorious litigation positions 

are no more acceptable coming in the form of specious infringement 

defenses or counterclaims pled by an accused infringer, and no 


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21 April 2013 hearing at 14 (Statement of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company); see also March 2013 hearing at 74 (Statement of Philip 

S. Johnson, Chief Intellectual Property Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform) (‘‘abusive litigation behavior should be targeted regardless of 

the party that engages in it. With respect to patent owners, there is no basis to single out [nonpracticing entities] for special treatment as opposed to patent owners who practice their inventions—if either type of patent owner takes an unjustified litigation position, fee shifting is warranted.’’). 22March 2013 hearing at 241 (Answer of John G. Boswell, Senior Vice President, Chief Legal 

Officer, and Corporate Secretary, SAS, to Questions for the Record from Ranking Member Melvin Watt). Such concerns militate against adoption of the standard employed by the Copyright 

Act, which one Court of Appeals has interpreted to provide that ‘‘[a] district court has discretion 

to decline to award attorney’s fees even when the plaintiff’s copyright infringement case is quite 

weak.’’ Airframe Sys., Inc. v. L–3 Commc’ns, 658 F.3d 100, 109 (1st Cir. 2011). 23March 2013 hearing at 74 (Statement of Philip S. Johnson, Chief Intellectual Property 

Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform) 

(‘‘[S]ince 2006, the 21st Century Coalition has supported amending 35 U.S.C § 285 to require 

fee awards to prevailing parties, unless the court makes a finding that the losing party’s position was ‘substantially justified’ or that ‘special circumstances’ make the fee award ‘unjust.’ 

Similar language to amend 35 U.S.C § 285 was proposed first in the Patent Reform Act of 2006, 

S. 3818, 109th Cong., 2d Sess. (introduced August 3, 2006).’’); see also April 2015 hearing, Statement of Hans Sauer, Ph.D., Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization, at *9–10. 24 28 U.S.C. sec. 2412(d). 25Director Lee’s testimony at *3. 26 Id. The Committee is aware that legislation that was introduced in the Senate recently includes a provision that is similar to § 3(b), but that would award fees on the basis of whether 

the losing party’s conduct was ‘‘objectively reasonable.’’ See S. 1137, 114th Cong., § 7(b). The 

Committee perceives no reason to adopt this approach, given that there is no substantive difference between ‘‘objectively reasonable’’ and the standard imposed by EAJA. See Pierce v. 

Underwood, 487 U.S. 552, 565 (1988) (holding that a litigation position is substantially justified 

if it ‘‘justified to a degree that could satisfy a reasonable person’’) (citation omitted); Aqua Shield 

v. Inter Pool Cover Team, 774 F.3d 766, 774 (Fed. Cir. 2014) (holding that litigation positions 

are ‘‘objectively unreasonable’’ if ‘‘no reasonable litigant could realistically expect them to succeed’’) (citation omitted). 

more acceptable coming from a patent owner that practices its patent than from a non-practicing entity.’’ 21

Another industry witness has urged the Committee to adopt a 

clear standard for fee awards, rather than leaving such matters to 

the whim of district judges. He noted that ‘‘patent trolls file cases 

in jurisdictions where judges are disinclined to award attorney fees. 

Providing greater discretion to judges who are not using the discretion they currently have does not seem to be particularly helpful.’’ 22

One leading industry coalition urged the Committee to enact a 

rule that shifts fees and costs to the losing party unless its litigation position was ‘‘substantially justified’’ or special circumstances 

would make a fee award unjust.23 This is the standard that is employed by the Equal Access to Justice Act,24 which has been applied since 1980 to allow awards of attorney’s fees against the Federal Government. 

Finally, the Committee is pleased to note that USPTO Director 

Michelle Lee testified at the April 14 hearing that ‘‘[t]he USPTO 

generally supports the approach taken in § 3(b) of H.R. 9.’’ 25 As Director Lee noted: 

This proposal would create a fault-based standard under 

which fees and expenses would be awarded in appropriate 

cases but would not be automatic. Rather, an award would 

be made only if the court finds that the non-prevailing party’s litigation position was one that no reasonable litigant 

would have believed would succeed, or that the non-prevailing party’s conduct was otherwise unreasonable.26


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27Director Lee’s testimony at *3. 28Director Lee’s testimony at *3; see, e.g., Home Gambling Network, Inc. v. Piche, No. 2:05– 

CV–610–DAE (D. Nev. May 22, 2014) (patentee’s legal theory was clearly precluded by controlling law and his theory of infringement was based on claim scope that was clearly disclaimed 

during prosecution); Lumen View Tech., LLC v. Findthebest.com, Inc., No. 13 CIV. 3599 (DLC) 

(S.D.N.Y. May 30, 2014) (even under patentee’s claim construction, no reasonable defendant 

would have found infringement); Kilopass Tech. Inc. v. Sidense Corp., No. 3:10–cv–02066–SI 

(N.D. Cal. Aug. 12, 2014) (patentee’s doctrine-of-equivalents theory was not supported by presuit investigation and lacked a reasonable basis); LendingTree, LLC v. Zillow, Inc., No. 3:10– 

cv–00439–FDW–DCK (W.D.N.C. Oct. 9, 2014) (‘‘The Court cannot help but construe 

LendingTree’s pursuit of this case against NexTag after producing and reviewing the electronic 

discovery and witness testimony as an indication of at least a moderate level of unreasonableness.’’); IPVX Patent Holdings, Inc. v. Voxernet LLC, Case No. 5:13–cv–01708 HRL (N.D. Cal. 

Nov. 5, 2014) (‘‘It was unreasonable of IPVX to assert literal infringement without comparing 

the elements of the claim to the accused product in more than a wholly conclusory fashion.’’); 

Bayer CropScience AG et al., v. Dow AgroSciences LLC, Civil No. 12–256 (RMB/JS) (D. Del. Jan. 

5, 2015) (patentee’s suit was precluded by a license that was susceptible to only one reasonable 

interpretation); Lugus IP, LLC v. Volvo Car Corp., Civil Action No. 12–2906 (JEI/JS) (D.N.J. 

March 26, 2015) (patentee’s case was objectively unreasonable because ‘‘the prosecution history 

of the patent . . . specifically distinguished [the patentee’s] product from prior art . . . [that 

was] similar to Defendant’s product’’); Brilliant Optical Solutions, LLC v. Comcast Corp., Civil 

Action No. 13–cv–00886–REB (D. Colo. March 27, 2015) (‘‘A careful reading of [the] agreement 

demonstrates that Comcast had a license to use the covered device. . . . Prosecution of an infringement claim in the fact of such a license is objectively unreasonable.’’); Cognex Corp. v. 

Microscan Sys., Inc., No. 13–cv–2027 (JSR) (S.D.N.Y. June 30, 2014) (defenses offered were particularly weak and lacked support in the evidence, and defendant engaged in unreasonable litigation tactics). 29 Id.; see also February 2015 hearing at 13 (Statement of Herbert C. Wamsley, Executive Director, Intellectual Property Owners Association) (‘‘[Despite Octane and Highmark,] we conclude 

that legislation is still needed. The existing statute still requires a case to be ‘exceptional’ for 

an attorney fee award. Octane fails to provide a clear, objective test for lower courts to 

apply. . . . Some judges will not be inclined to award fees despite this lower standard.’’); id. 

at 39 (Statement of Dana Rao, Vice President of Intellectual Property and Litigation, Adobe Systems) (‘‘[Under Octane], much is left to the discretion of district courts—discretion that is exercised very differently be different judges.’’). 

Director Lee noted that § 3(b)’s test ‘‘is generally consistent with 

that already being applied in at least some district courts pursuant 

to the Supreme Court’s recent decision in Octane Fitness, LLC v. 

ICON Health & Fitness, Inc., 134 S. Ct. 1749 (April 29, 2014).’’ 27

These courts ‘‘have awarded fees on the basis that the non-prevailing litigant advanced legal and factual theories that no reasonable litigant would advance or that otherwise lacked a reasonable 

basis, or engaged in unreasonable litigation tactics and conduct.’’ 28

Director Lee emphasized that: 

under the current statutory regime as interpreted by the 

Supreme Court, district courts retain wide discretion to determine whether a case is exceptional. In particular, district courts have discretion to deny a fee award even after 

finding that a case is exceptional. Accordingly, some courts 

may decline to award fees in circumstances when other 

courts would do so. This uncertainty makes it more difficult for parties to decide whether to vindicate their rights 

through to a final decision in cases where the other side’s 

position appears indefensible. Section 3(b) of H.R. 9 would 

help bring consistency and predictability to this area of the 

law by codifying a standard (namely unreasonable conduct 

or unreasonable positions) for when courts would be required to award fees.29

Director Lee concluded by noting that ‘‘[t]he USPTO . . . believes 

that the approach taken along the lines of § 3(b) of H.R. 9 is needed 

and would help curtail litigation abuses committed by plaintiffs 


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30Director Lee’s testimony at *4; see also id. at 2:23:15 (colloquy with Mr. Gohmert) (noting 

that fault-based fee shifting will lead to ‘‘heightened discipline’’ among the attorneys litigating 

patent cases). 31 April 2015 hearing, Statement of David M. Simon, Senior Vice President of Intellectual 

Property, Salesforce.com, Inc., at *3; see also id., Statement of Kevin Kramer, Vice President 

and Deputy General Counsel for Intellectual Property, Yahoo! Inc., at *5; October 2013 hearing 

at 32–33 (Statement of Kevin Kramer, Vice President and Deputy General Counsel for Intellectual Property, Yahoo! Inc.); March 2015 hearing at 14 (Statement of Mark Griffin, General 

Counsel, Overstock.com, Inc.) (‘‘Currently, courts do not require that a patent holder explain 

how a patent is infringed, or even identify the product involved, which makes it nearly impossible for someone who has been sued to evaluate the case and decide how to respond.’’). 32 April 2015 hearing, Statement of David M. Simon, Senior Vice President of Intellectual 

Property, Salesforce.com, Inc., at *3. 

and defendants because it would encourage each side to prepare 

and analyze their cases responsibly.’’ 30

2. Heightened Pleading Standards 

An industry witness described the burdens placed on patent-infringement defendants by vague, uninformative complaints: 

Faced with a boilerplate pleading, the defendant has no 

way of knowing which of potentially hundreds of claims in 

the patent it is allegedly infringing. It will not know which 

features among thousands of product features in its offerings are alleged to infringe those claims. And until the 

court forces the plaintiff to identify which patent claims 

are infringed and why they are infringed, the defendant 

will have no idea how the plaintiff is construing the claims 

to read on the accused products. As a result, the defendant 

upon being served has to place expensive document retention holds on employees relating to products that ultimately will not be in the lawsuit, interview engineers and 

scientists about products that will ultimately not be in the 

lawsuit and search for prior art on patent claims that will 

never be in the lawsuit. This only serves to contribute to 

the already absurdly high cost of defending a patent litigation.31

The same witness cited as an example a recent patent complaint 

that had been filed against 132 different defendants and that 

broadly alleges that, ‘‘alone and in conjunction with others, the defendant has in the past and continues to infringe and/or induce infringement of the ‘606 patent by using traffic information systems, 

software, products and/or services (‘Accused Products’) that alone or 

in combination with other devices or products are covered by at 

least one claim of the ’606 patent.’’ The witness noted: 

[T]he 132 hapless defendants—who include computer companies, insurance companies, hotels, coffee shops, pharmacies and banks—do not know which claims are infringed. Nor do they know whether their ‘‘Accused Products’’ infringe. They do not know if the infringement is 

alone or in combination with a third party product. And if 

a third party product is involved, they do not know which 

third party is involved. Nor do they know which third party’s products are involved so they cannot determine if they 

have the right to an indemnity.32


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33 Id. The Committee is aware that some have questioned Congress’s authority to prescribe 

pleading standards and other aspects of Federal judicial procedure. The Committee notes, however, that ‘‘[f]rom almost the founding days of this country, it has been firmly established that 

Congress, acting pursuant to its authority to make all laws ‘necessary and proper’ to the[] establishment [of the lower Federal courts], also may enact laws regulating the conduct of those 

courts and the means by which their judgments are enforced.’’ Willy v. Coastal Corp., 503 U.S. 

131, 136 (1992); see also Sibbach v. Wilson & Co., 312 U.S. 1, 9 (1941) (‘‘Congress has undoubted 

power to regulate the practice and procedure of Federal courts . . .’’); Paul Taylor, Congress’s 

Power to Regulate the Federal Judiciary: What the First Congress and the First Federal Courts 

Can Teach Today’s Congress and Courts, 37 Pepp. L. Rev. 847 (2010). 34October 2013 hearing at 20 (Statement of Krish Gupta, Senior Vice President and Deputy 

General Counsel, EMC Corporation); see also April 2015 hearing, Statement of David M. Simon, 

Senior Vice President of Intellectual Property, Salesforce.com, Inc., at *4 (‘‘[S]ection 281A would 

for the first time permit defendants who make complex products with billions of lines of computer software or billions of parts such as advanced semiconductors to be able to determine 

what portion of their offerings are infringed from the complaint. It is a question of due process. 

None of these requirements is unfair because the plaintiff would have to provide this information anyway to prove its case.’’). 

The witness concluded by stating that ‘‘[s]uch clear absence of 

notice pleading is to my knowledge not tolerated in any other area 

of the law.’’ 33

Another industry witness explained that enhanced pleading 

standards will not impose a greater burden on patent plaintiffs 

than that already created by the duty to conduct an investigation 

and develop a reasonable, good-faith case before filing a complaint 

for infringement: 

While current law does not require the disclosure of infringement theories in a plaintiff’s complaint, Rule 11 does 

require that the plaintiff have conducted due diligence and 

arrived at a tenable, good-faith theory of infringement before filing suit. The bill’s heightened pleading requirement, 

therefore, imposes no new burden on diligent plaintiffs; 

they merely need to disclose the results of their required 

analysis. But [proposed § 281A] will have a real effect on 

those plaintiffs who are not as diligent, barring them at 

the outset from filing suit where they have conducted no 

proper due diligence and ensuring that the plaintiff has in 

fact conducted an analysis, and that the plaintiff has a 

real basis for filing suit.34

Another witness described the expected ‘‘salutary effects’’ of proposed § 281A’s heightened pleading standards: 

Defendants would know which features of which offerings 

are being accused and know what documents they need to 

retain. They would not search for prior art needlessly for 

hundreds of claims that will not be asserted. They would 

not waste valuable engineers and scientists time discussing products that are not actually in the lawsuit. 

Also, Main Street customers who are often the target of 

[abusive] lawsuits would know whether they have an indemnity claim against their technology purveyors. Providers of technology would know whether they owe a duty 

to defend at the start of the litigation because the complaint would make that readily apparent. Thus, the providers would know whether they should intervene in the 

lawsuit and not have to turn down claims until after the 

patentee finally makes its infringement allegations which 


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35 April 2015 hearing, Statement of David M. Simon, Senior Vice President of Intellectual 

Property, Salesforce.com, Inc., at *4; see also Director Lee’s testimony at *4 (‘‘The USPTO supports heightening pleading requirements in patent infringement cases beyond what is currently 

required to ensure that defendants have—as soon as the case is filed in court—a basic understanding of why they are allegedly infringing a patent. Thus, the USPTO generally supports the 

requirement in § 3(a) of H.R. 9 that a complaint explain how each element of a patent claim 

is met by an accused product or process, or address why such information is not readily accessible.’’). 36See, e.g., Director Lee’s testimony at *4 (‘‘Any requirement to plead additional claims in a 

patent at this early stage of litigation should be considered in light of the burdens that it would 

place on the patent owner, the potential that it creates for procedural motions that do not materially advance the case, and the incentive that it creates to ‘overplead’ marginally relevant patent claims.’’); id. at 1:07:50 (colloquy with Mr. Nadler) (noting that in cases ‘‘with multiple patents, . . . sometimes there are tens or hundreds of claims. That would be a voluminous complaint if you are going element by element.’’); April 2015 hearing, Statement of Hans Sauer, 

Ph.D., Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization, 

at *8–9 (‘‘There is no need to additionally require the inclusion within the initial complaint itself 

of dozens of alternative grounds, or to litigate the sufficiency of such alternative grounds, when 

it is already clear that there is ‘enough’ for a lawsuit to proceed.’’); id., Statement of Robert A. 

Armitage, Former General Counsel, Eli Lilly & Co., at *11. 37 April 2015 hearing, Statement of David M. Simon, Senior Vice President of Intellectual 

Property, Salesforce.com, Inc., at *5. 38 Id. 39 Id. 

could be years later. This benefits both large and small defendants.35

The Committee is mindful that some witnesses, though generally 

supportive of § 3(a)’s heightened pleading requirements, have noted 

that different claims in a patent may be substantially similar, and 

have questioned the utility of requiring heightened pleading of all 

such claims that infringe only the same accused products and processes.36 These concerns have been addressed in an amendment 

that was adopted during the Committee’s executive session. 

3. Joinder of Interested Parties 

A witness testifying before the Committee described how abusive 

litigants’ ability to operate through limited-liability entities could 

undermine the effectiveness of the Innovation Act’s fee-shifting provisions. He noted that such litigants often operate through a shell 

corporation whose only asset is the patent that was asserted—and 

if an award has been made against that litigant under § 285, ‘‘that 

sole asset [necessarily] has . . . been established to either not be 

infringed or to be invalid.’’ 37 As a result, an award of attorney’s 

fees ‘‘is truly a pyrrhic victory’’ for the prevailing party.38 The witness went on to note that § 3(c) of the Innovation Act: 

would provide a new joinder process that permits trolls’ 

financiers to be put in harm’s way for the first time. Those 

who want to profit from patent litigation would be joined 

to the litigation after a defendant prevails and the court 

determines attorney’s fees are appropriate. The financiers 

of this unjustified litigation could avoid this liability by renouncing their financial interest. They will have notice 

and an opportunity to determine whether they really want 

to be at financial risk for those shell entities who cannot 

pay for their litigation. If they disclaim their interest, they 

suffer no harm. If they decide to keep their interest and 

the defendant ultimately establishes that the patentee’s 

position is unjustified, the defendant can be effectively 

compensated.39


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40See Director Lee’s testimony at *7 (‘‘Overriding [the limited liability of corporate employees 

and shareholders] may serve as a substantial deterrent to investment in new enterprises and 

potentially job creation, particularly in a number of high-growth sectors. Individual investors, 

for example, may not be willing to invest in a start-up company if the risks of doing so included 

not just the loss of their initial investment, but also personal liability to the investor for the 

company’s subsequent patent litigation decisions.’’); April 2015 hearing, Statement of Hans 

Sauer, Ph.D., Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization, at *13 (asserting that proposed § 299(d) limitations ‘‘do[] not clearly limit the provision 

to litigation that was brought by patent assertion entities, but could capture R&D businesses 

that have to enforce patents they were not yet able to develop or commercialize.’’); id. at *14 

(‘‘the joinder provisions . . . have the potential for significant negative business impact on investment-intensive innovation, especially for smaller companies and non-profit and academic 

innovators.’’); March 2015 hearing at 38 (Statement of Bryan Pate, Co-Founder and CEO, ElliptiGO, Inc.) (‘‘It’s one thing to lose $50,000 in an investment. It’s another thing to be on 

the hook personally for over a million dollars in legal fees. That’s a huge shift in the risk profile 

of an already risky investment. There are many safer places to put that money and I doubt we 

would have landed our initial investors under those conditions.’’). 41March 2015 hearing at 38 (Statement of Bryan Pate, Co-Founder and CEO, ElliptiGO, Inc.) 

(‘‘[O]ne of the first employees we hired had recently earned her MBA from Stanford’s Graduate 

School of Business. She could have worked for any number of great companies. If she knew that 

one of the many risks of working for ElliptiGO included the potential loss of her house from 

a failed patent enforcement action, I doubt she would have come onboard.’’). 42Director Lee’s testimony at *7 (‘‘[T]o help ensure that the prospect of joinder does not chill 

investment in new companies, § 3(c) should include . . . [a] clear exemption for passive investors—those who lack the ability to direct or control a company’s litigation. Such an exemption 

would better allow an investor to know whether investing in a company may subject her to personal liability.’’); id. at 1:03:02 (colloquy with Mr. Goodlatte), 1:23:05 (colloquy with Mr. Conyers), 2:15:50 (colloquy with Mr. Deutch); April 2015 hearing, Statement of Hans Sauer, Ph.D., 

Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization, at *14 

(‘‘Business partners, patent owners, financing companies, and others who engage only in arm’s 

length business with the patentee should not be subjected to potential liability or forced to renounce all of their rights in a patent. . . . On the other hand, with proper safeguards it may 

be fair to permit liability of entities that directly benefit from and have the right to control the 

patentee’s litigation conduct.’’). 

Section 3(c) of the Innovation Act provides courts with a limited 

ability to pierce the corporate veil and assign liability for attorney’s-fee awards to financiers who seek to profit from abusive patent litigation. The Committee acknowledges that the provision has 

been the subject of criticism. Some have suggested that it would 

apply to start-up companies, and thus would deter investment in 

such companies.40 Others have suggested that the provision would 

also assign personal liability to the employees of a start-up company.41 And it has been proposed that the provision be clarified to 

more clearly protect passive investors in an enterprise.42 It is not 

the intent of the Committee to allow proposed § 299(d) to operate 

against start-up companies, or to ever extend personal liability to 

bona fide employees or passive investors in or lenders to an enterprise. Section 3(c) has been clarified in the Committee’s executive 

session to address these and other concerns, and to ensure that the 

provision does not deter investment in small technology companies. 

4. Venue 

During the Committee’s April 14 hearing, several witnesses recommended that the Committee consider proposals to stay discovery 

in patent cases during the pendency of a motion to transfer venue, 

and suggested that current law’s restrictions on venue for patent 

cases be clarified. In response to a question from Mr. Farenthold, 

USPTO Director Michelle Lee stated that staying discovery pending a motion to transfer venue: 

[Is] an idea worthy of consideration. . . . A motion to 

transfer occurs early in a patent case. Often, it doesn’t 

take long for a judge to rule on it. And it doesn’t involve 

extensive discovery [on the merits of the case]. . . . [Instead, the issue will be] where is the [defendant’s] prinVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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43Director Lee’s testimony, at 1:47:55; see also id. at 1:04:56 (colloquy with Mr. Goodlatte); id. 

at 2:28:27 (colloquy with Mr. Jeffries); id. at 2:33:55 (colloquy with Mr. Cicilline) (‘‘[T]ightening 

venue requirements, . . . in combination with a stay of discovery pending a ruling on a motion 

to transfer, would encourage judges to rule quickly and promptly [on the motion and] get the 

litigation in the proper district.’’). 44 April 2015 hearing, Statement of David M. Simon, Senior Vice President of Intellectual 

Property, Salesforce.com, Inc., at *11. 45 April 2015 hearing, Statement of Robert A. Armitage, Former General Counsel, Eli Lilly 

& Co., at *8–10. 46 917 F.2d 1574 (Fed. Cir. 1990). 

cipal place of business, do [the parties] have an R&D center [in the district], do they have ties to the area? Staying 

discovery pending a motion to transfer venue, in combination with [tighter] venue restrictions, . . . will improve 

the system.43

A leading industry witness also noted that the non-enforcement 

of current law’s venue restrictions allows litigants to file a large 

number of cases in particular districts, thereby ‘‘plac[ing] undue 

burdens on those courts’’ and the residents of those districts.44 Another witness noted that: 

[A] mandatory discovery stay pending the resolution of a 

venue transfer motion can be particularly important in situations where the discovery burdens that might be imposed on a defendant can render its continued patent defense problematic. Since venue moves are done for good 

reason—often convenience and availability of evidence factors—they play into easing the burdens that might otherwise impair the ability to defend.45

The Committee notes that existing statutory provisions already 

restrict the venue where a patent-infringement action may be 

brought. Indeed, such statutory limits have been in place since 

1897. These limits were designed to protect parties from the burden and inconvenience of litigating patent actions in districts that 

are remote from any of the underlying events in the case. The 1897 

Act is now codified at § 1400(b) of title 28—it has never been repealed. In 1990, however, the U.S. Court of Appeals for the Federal 

Circuit ‘‘reinterpreted’’ the statute in a way that robbed it of all effect. In its infamous decision in VE Holding Corp. v. Johnson Gas 

Appliance Co.,46 the court construed § 1400 to allow venue for a 

corporate defendant wherever personal jurisdiction is proper. In effect, the Federal Circuit collapsed the tests for personal jurisdiction 

and venue, rendering § 1400 a nullity. It is long past time for Congress to restore § 1400 to its role of protecting patent owners and 

accused infringers from the burden of being forced to litigate in remote locations, and ensuring that patent lawsuits do not unfairly 

burden particular courts. Congress must correct the Federal Circuit’s mistake, and clarify that patent lawsuits may only be 

brought in districts with some reasonable connection to the dispute. 

II. TRANSPARENCY OF PATENT OWNERSHIP

A Committee witness catalogued the reasons why the patent law 

should require greater disclosure as to who owns or has a financial 

interest in a patent. The witness explained that greater transparency would allow a party seeking to practice a technology to 

more readily and completely determine whether other patents also 


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47March 2013 hearing at 98 (Statement of Dana Rao, Vice President of Intellectual Property 

and Litigation, Adobe Systems); see also id. at 99 (‘‘as defendants, we should know who is getting the ultimate economic benefit from the patents that are being asserted against us.’’). 48 Id. 

need to be evaluated and possibly licensed, and noted that such 

ownership information would aid in identifying relevant prior art: 

There are many costs associated with an incomplete ownership record, as well as benefits associated with a complete ownership record. First, the lack of transparency 

throughout the life of the patent hinders the public’s ability to accurately assess the risk of entering into a new 

technology market and increases the cost of performing 

patent clearance analyses. Second, parties may not necessarily achieve a meaningful ‘‘patent peace’’ in settlements or licenses because they have no way of doublechecking the true extent of the other party’s patent holdings, and therefore might not negotiate a broad enough license to foreclose future conflicts. Third, a similar doublechecking problem may occur in the context of standard setting, where some entities may try to hide standard-essential patents. Fourth, a complete ownership record would 

benefit the USPTO by providing examiners with another 

tool to search for prior art, and to make accurate prior art 

determinations in the context of the [common-ownership] 

exceptions. Finally, having a complete ownership record 

would facilitate the use of post-grant proceedings at the 

USPTO by giving potential petitioners more information to 

assess the benefits or risks of filing petitions and to locate 

the most relevant prior art (which is crucial because of the 

estoppel provisions of these proceedings). 47

The same witness also described how some patent owners try to 

conceal information about which patents they own or hold a financial interest in, in order to forestall review of those patents: 

[T]he large patent aggregation entities are typically holding the patents in other names or shell companies, because 

they don’t want to draw attention to the size of their portfolio. . . . [T]hey also want to ensure that . . . declaratory 

judgment actions and reexamination proceedings [are not] 

initiated against them.48

Another Committee witness described the difficulties posed when 

ownership and financial-interest information is withheld: defendants do not know whom they are negotiating with or who has the 

authority to settle the case. 

In most cases, a defendant goes to court knowing who is 

on the other side. In stark contrast, the [patent-assertion 

entity] model is such that a patent defendant often does 

not know, beyond the name of a shell corporation plaintiff, 

who has an interest in the litigation and the patent at 

issue. Yet this is knowledge that will inform decisions 

around every facet of a case, including key decisions such 

as when and whether to settle a case. 


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49October 2013 hearing at 34 (Statement of Kevin Kramer, Vice President and Deputy General Counsel for Intellectual Property, Yahoo! Inc.). 50 Id. 51March 2013 hearing at 65 (Statement of Philip S. Johnson, Chief Intellectual Property 

Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform); see 

also id. at 250 (Answers of Philip S. Johnson, Chief Intellectual Property Counsel, Johnson & 

Johnson, to Questions for the Record from Ranking Member Melvin Watt); April 2013 hearing 

at 45 (Statement of Colleen V. Chien, Assistant Professor, Santa Clara University Law School). 

[O]ur experience plays a role in our viewpoint on this 

issue. In several cases, settlement has been complicated by 

the ‘‘investors’’ or ‘‘partners’’ that had a financial interest 

in a litigation. . . . This often comes to light during mediation or settlement talks when a plaintiff reveals that it 

cannot accept a lower offer because it would not satisfy 

unnamed investors in the endeavor. Transparency into the 

ownership stakes in a patent or in the plaintiff would help 

to avoid these issues and help to ensure that the parties 

at the bargaining table are the ones with the power and 

authority to settle the litigation.49

The same witness also emphasized the special obligation of 

transparency and disclosure that attends any government-granted 

property right: 

[A] patent is a government grant. Like real property or 

any other government grant, it is reasonable to expect that 

the government’s records disclose who owns that right. If 

anything, the expectation [of transparency] should be 

greater in patent cases given the ability to enforce that 

right through litigation and the strict liability for infringement.50

III. THE CUSTOMER-SUIT EXCEPTION

A leading industry witness described the phenomenon of patent 

infringement suits that are filed against the customer who uses an 

allegedly infringing product, rather than against the manufacturer 

who made the product. The witness noted the potentially coercive 

nature of such suits—and their potential to overcompensate the 

plaintiff: 

A patent litigation practice that has been sharply criticized 

is the institution of suits against large numbers of assemblers, distributors, or retailers rather than the original 

manufacturer or provider of the component or product alleged to infringe. This tactic takes advantage of the fact 

that such suits threaten defendants with the disruption of 

aspects of their businesses that are at best tangentially related to the invention which is the subject of the patent, 

and that each individual defendant has less motivation to 

litigate the issue to final conclusion that the manufacturer 

of the product at issue. The result can be to collect enormous sums as the result of a very large number of small 

settlements whose cumulative value far exceeds the 

amount that could have been recovered from the original 

manufacturer.51


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52 April 2013 hearing at 36–38 (Statement of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company); see also March 2013 hearing at 76 (Statement of 

Philip S. Johnson, Chief Intellectual Property Counsel, Johnson & Johnson, on behalf of the 21st 

Century Coalition for Patent Reform); October 2013 hearing at 21–22 (Statement of Krish 

Gupta, Senior Vice President and Deputy General Counsel, EMC Corporation). 53 April 2013 hearing at 36–38 (Statement of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company). 54March 2013 hearing at 15–16 (Statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems Inc.). Although the suits described by this witness clearly appear 

to be abusive, the Committee recognizes that in some situations, a patent owner will have legitimate reason to sue users of a product rather than the manufacturer of the product. For example, 

as one witness who appeared before the Subcommittee noted, ‘‘[w]hen a product is made and 

sold abroad but then used in the U.S., the downstream user may be the only entity that is subject to U.S. patent law.’’ March 2013 hearing at 244 (Answer of Graham Gerst, Partner, Global 

IP Law Group, LLC to Questions for the Record from Ranking Member Melvin Watt). The same 

Continued 

Similarly, another witness described how ‘‘[b]y targeting multiple 

customers or end users, a [patent-assertion entity] may create increased settlement opportunities, particularly when the customers 

or end users lack sufficient technical knowledge of the accused 

product or sufficient resources to litigate.’’ 52 The same witness 

noted that current law’s remedies for such abuses have proven inadequate: ‘‘the stay of a customer suit . . . is not automatic, but 

rather is committed to the discretion of the district court. Unfortunately, courts have been inconsistent in their willingness to stay 

such customer suits, thus encouraging their filing.’’ 53

Another witness described the following infamous example of the 

abuse of lawsuits against customers. His example involved infringement actions that have been brought by a patent owner 

against small businesses that offer their customers wireless Internet access: 

The [patent-assertion entity’s] plan was to assert the patents against users of equipment that provides a form of 

wireless Internet access commonly known as ‘‘Wi-Fi.’’ By 

the time the patents were assigned to the PAE, however, 

the patents had already been broadly cross-licensed to 

competitors and were nearing the end of their patent 

terms. Additionally, the prior owners [of the patents] had 

made binding contractual commitments to license all 

comers on fair and reasonable terms. 

Its targets—it has sent over 13,000 letters threatening litigation—often are nonprofits, local and state governments, 

and small and medium-sized businesses including retirement homes, children’s health clinics, coffee shops, cafes, 

restaurants, and convenience stores. These entities are 

targets because they (like most every modern business) 

provide Wi-Fi on their premises, using equipment supplied 

by Cisco and other manufacturers. Some of this equipment 

is already licensed under the patents-in-suit because of 

broad licenses previously granted by the previous owners. 

But the PAE doesn’t tell their targets this, or that the patents are subject to commitments to license on a reasonable 

and nondiscriminatory basis to all comers. Instead, the 

PAE tells these targets, who may have spent as little as 

$40 on their wireless equipment, that, unless they pay at 

least $2,000 or $3,000 per location within 2 weeks, they 

will be sued and have to engage counsel to review thousands of pages of documents.54


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witness also described a scenario in which ‘‘it is clear that the downstream user is infringing, 

but there is no way to know who manufactured the device the downstream user is using. In 

those cases, the end user is the only one to sue.’’ Id. Another Subcommittee witness explained 

why the law should not immunize end users against suits for infringement: ‘‘It may be the case 

that, due to the nature of the patented invention, infringement depends on how a customer uses, 

installs, or integrates a product with other products.’’ April 2013 hearing at 36–38 (Statement 

of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company). 

The same witness also noted that ‘‘end user immunity might run the risk that would-be infringers could game the system, with the manufacturer stopping just short of selling an infringing 

product so that the customer who is immune from infringement can complete the assembly of 

what would otherwise be an infringing device.’’ Id. 55March 2013 hearing at 86 (Statement of Dana Rao, Vice President of Intellectual Property 

and Litigation, Adobe Systems); see also March 2013 hearing at 246 (Answer of Graham Gerst, 

Partner, Global IP Law Group, LLC to Questions for the Record from Ranking Member Melvin 

Watt) (‘‘[T]he tactic of suing a large number of targets with bogus claims only became common 

over the last few years.’’). 56See Katz v. Lear Siegler, Inc., 909 F.2d 1459 (Fed. Cir. 1990). 57The customer is liable for infringement in such a situation under 35 U.S.C. § 271(g). 58See, e.g., Heinz Kettler GmbH & Co. v. Indian Indus., Inc., 575 F. Supp. 2d 728, 730 (E.D. 

Va. 2008) (‘‘the customer suit exception is inapplicable in this case . . . [b]ecause plaintiffs have 

simultaneously sued both the manufacturer (Escalade) and the customer (Sears) of the allegedly 

infringing table-tennis tables’’) (emphasis in original); Alloc, Inc. v. Unilin Decor N.V., No. 02– 

C–1266, 03–C–342, 04–C–121, at *3 (E.D. Wis. Dec. 15, 2005) (no customer-suit stay because 

‘‘the allegedly infringing manufacturers . . . and the allegedly infringing customer . . . are defending claims of infringement in the same consolidated suit in the same jurisdiction’’) (emphasis 

in original); IP Innovation L.L.C. v. Dell Computer Corp., No. 03–C–3245, at *2 (N.D. Ill. Apr. 

9, 2004); Watson Indus., Inc. v. Canon, Inc., No. 03–C–422–C, at *1 (W.D. Wis. Nov. 24, 2003); 

Beck Sys., Inc. v. Marimba, Inc., No. 01–C–5207, at *2 (N.D. Ill. Nov. 20, 2001) (‘‘When all parties are joined in one simultaneous action, the same problems are not presented, and the rationale underlying the customer suit exception does not apply.’’); Bingo Brain, Inc. v. California Concepts, Inc., No. 99C6139, at *2 (N.D. Ill. May 24, 2000). Contra, In re Papst Licensing GmbH 

& Co. KG Litig., 767 F. Supp. 2d 1 (D.D.C. 2011) (allowing a stay despite the manufacturer 

and customer’s being sued in the same district). 

Other industry witnesses noted that the phenomenon of abusive 

suits brought against customers who use allegedly infringing products is a problem that has grown worse in recent years: 

Increasingly, these suits are directed at our customers, 

who in turn look to us to indemnify them of liability for 

using our products. Since 2009, Adobe has received more 

than 100 such indemnification requests. In one recent example, hundreds of retailers were sued by a particular 

[patent-assertion entity]. Each of these retailers faced the 

choice of settling for relatively low amounts, less than 

$100,000, or ending up in expensive protracted litigation 

costing as much as $5 million per suit.55

Despite Federal Circuit precedent recognizing a customer-suit exception,56 a review of recent district court decisions confirms witnesses’ characterization of the courts as inconsistent in their application of the law. The current caselaw is a dog’s breakfast of overlapping, inconsistent, and conflicting decisions. Even in the relatively simple scenario of the customer who uses or sells the manufacturer’s product, and a patent that has claims covering that very 

product or the process used to make the product,57 courts have refused to stay an infringement suit against the customer despite the 

participation of the manufacturer in a suit involving the same patent. Some courts have denied a stay in such circumstances on the 

ground that the manufacturer has been sued in the same court as 

the customer.58 Other courts, by contrast, have denied a stay when 

the manufacturer files a declaratory-judgment action challenging 

the patent in another district. These courts have held that a stay 

should be denied if the manufacturer could have intervened in the 


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59See, e.g., Largan Precision Co., Ltd. v. Fujinon Corp., No. C–10–1318 SBA (JL), at *5 (N.D. 

Cal. Mar. 31, 2011); BBC Int’l Ltd. v. Lumino Designs, Inc., 441 F. Supp. 2d 438, 443 (E.D.N.Y. 

2006) (‘‘[T]he customer suit exception does not apply because BBC could have been sued for infringement in the Northern District of Illinois.’’); Air Prods. and Chems., Inc. v. MG Nitrogen 

Servs., Inc., 133 F. Supp.2d 354, 356–57 (D. Del. 2001); Emerson Elec. Co. v. The Black & Decker 

Mfg. Co., 606 F.2d 234, 242 (8th Cir. 1979) (Markey, J). 60See 35 U.S.C. § 271(c). 61See, e.g., Lodsys, LLC v. Brother Int’l Corp., No. 2:11–cv–90–JRG, at *11 (E.D. Tex. Jan. 

14, 2013); Teleconference Sys. v. Proctor & Gamble Pharm., Inc., 676 F. Supp. 2d 321, 327 (D. 

Del. 2009) (customer-suit exception inapplicable ‘‘because plaintiff alleges that Cisco’s customer 

are not mere resellers but are direct infringers’’); Privasys, Inc. v. Visa Int’l, No. C–07–03257 

SI, at *4 (N.D. Cal. Nov. 14, 2007) (agreeing that parties ‘‘are not mere customers’’ if they are 

‘‘involved in carrying out the infringement of the patented method’’); In re Laughlin Prods., Inc., 

265 F. Supp. 2d 525, 537 (E.D. Pa. 2003) (‘‘[W]here the patentee alleges that the customers 

themselves have directly infringed the method or process disclosed in the patent, the customer 

suit exception does not apply.’’); Air Prods. and Chems., Inc. v. MG Nitrogen Servs., Inc., 133 

F. Supp. 2d 354, 357 (D. Del. 2001) (denying a stay where the customer’s use of a product ‘‘directly infringes the claims-in-suit, while [the manufacturer’s] sale of the equipment only induces 

or contributes to infringement’’); Am. Acad. of Sci. v. Novell, Inc., No. C–91–4300 EFL, at *3 

(N.D. Cal. July 9, 1992) (customer-suit exception inapplicable ‘‘where the patent owner seeks 

to hold the manufacturer liable solely on a theory of inducement/contributory infringement, 

claiming direct infringement only against the customer’’). 62See, e.g., Select Retrieval, LLC v. L.L. Bean, Inc., Civil No. 2:12–cv–00003–NT, at *5 (D. 

Me. Mar. 15, 2013); Thermapure, Inc. v. Temp-Air, Inc., No. 10–cv–4724, at *9–10 (N.D. Ill. Dec. 

22, 2010); Card Activation Techs. v. Pier 1 Imports, Inc., No. 09–C–2021, at *4 (N.D. Ill. Sep. 

14, 2009). 

suit against the customer.59 Of course, these competing lines of 

cases could be alternately applied in every customer case to deny 

a stay regardless of whether the manufacturer filed suit in another 

district or intervened in the customer action. 

Another source of inconsistency in courts’ application of customer-suit stays has been patent infringement actions that assert 

only method claims. In this scenario, the customer uses or sells the 

manufacturer’s product, and that product is uniquely made to carry 

out the patented process. For example, if a patent claims the use 

of wireless Internet access, and the product is a router that enables 

such access, the router itself does not directly infringe under 

§ 271(a) because the patent does not claim the product. Instead, it 

is the customer who purchases the router and installs it at home 

who is the only direct infringer, because he is the one who is ‘using 

wireless Internet access.’ The retailer is liable only ‘‘indirectly,’’ as 

a contributory infringer,60 because he sells a product that is specially made or adapted to implement the patented process and that 

lacks substantial noninfringing use. 

Although a customer who buys and uses a router is the only direct infringer of a method claim, the true infringer in this scenario 

is the manufacturer of the router. Typically, it is the manufacturer 

who understands the product and is in the best position to defend 

against allegations of infringement. 

A number of courts, unfortunately, have held that when the customer is sued as a direct infringer of a process patent, and the 

manufacturer could only be sued as an indirect infringer, the customer-suit exception is inapplicable and no stay of the customer 

suit is permitted. These cases effectively immunize almost all 

method patent claims against the customer-suit exception.61 Other 

courts, by contrast, have recognized that a customer accused of infringing a method claim by using a manufacturer’s product is still 

a customer, and that a stay of the customer suit in favor of an action to which the manufacturer is a party is appropriate.62

Another scenario that has resulted in inconsistent application of 

the customer-suit exception involves a component that causes a 

larger product to infringe when the component is incorporated into 


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63See, e.g., GeoTag, Inc. v. Frontier Commc’ns Corp., No. 2:10–CV–265–JRG, at *2 n.2 (E.D. 

Tex. Feb. 26, 2013) (customer-suit exception inapplicable where no evidence that ‘‘Microsoft and 

Google supply the entire accused system’’); Cadence Design Sys., Inc. v. OEA Int’l, Inc., No. 

CV11–0713 SBA, at *2 (N.D. Cal. Sep. 20, 2011) (‘‘The [customer suit] exception is . . . inapplicable when a manufacturer makes but a component of an end product, where the end product 

is accused of infringement’’); Microsoft Corp. v. Commonwealth Scientific and Indus. Research 

Org., No. 6:06–CV–549, at *2–3 (E.D. Tex. Dec. 13, 2007) (even though manufacturer’s computer 

chip ‘‘does the ‘inventive magic,’’ customer-suit stay is denied because chip is ‘‘only a component 

of the end product and therefore does not and cannot directly infringe’’); Viking Injector Co., Inc. 

v. Chemtron, Inc., Civ. A. No. 3:CV–93–0791, at *3 (M.D. Pa. Nov. 9, 1993). 64See, e.g., Pragmatus Telecom, LLC v. Advanced Store Co., Inc., Civil Action No. 12–088– 

RGA, at *3–4 (D.Del. July 10, 2012); Honeywell Int’l Inc. v. Audivox Commc’ns Corp., No. Civ.A. 

04–1337–KAJ, at *1, 3 (D. Del. May 18, 2005); Commissariat a L’Energie Atomique v. Dell Computer Corp., No. Civ.A. 03–484–KAJ (D. Del. May 13, 2004); Ricoh Co., Ltd. v. Aeroflex Inc., 279 

F. Supp. 2d 554 (D. Del. 2003). 65See, e.g., Alloc, Inc. v. Unilin Decor N.V., No. 02–C–1266, at *3 (E.D. Wis. Dec. 15, 2005). 66See, e.g., Ultra Prods., Inc. v. Best Buy Co., Inc., Civil Action No. 09–1095 (MLC), at *4– 

6 (D.N.J. Sep. 1, 2009); Delphi Corp. v. Auto. Techs. Int’l, Inc., No. 08–CV–11048, at *5 (E.D. 

Mich. July 25, 2008); Beck Sys., Inc. v. Marimba, Inc., No. 01–C–5207, at *1 (N.D. Ill. Nov. 20, 

2001) (customer-suit stay denied on other grounds); Tri-Tronics Co., Inc. v. MacGregor & Co., 

Inc., No. 90–C–0630, at *3 (N.D. Ill. July 25, 1990). 67See MGA, Inc. v. General Motors Corp., 827 F.2d 729, 734 (Fed. Cir. 1987) (‘‘The Kessler 

doctrine bars a patent infringement action against a customer of a seller who has previously 

prevailed against the patentee because of invalidity or noninfringement of the patent’’) (citing 

the product. If patent claims are drafted broadly to cover the final 

product ‘‘with’’ the component, the component itself does not directly infringe the patent—only the final product incorporating the 

component directly infringes. Unfortunately, a line of cases holds 

that even if a component incorporated into the final product is the 

principal cause of infringement, and the manufacturer of the component is a party to a suit involving the patent, a customer-suit 

stay must be denied if the patent’s claims are drawn to cover the 

larger product.63 Other courts, however, have recognized that a 

stay remains appropriate in such a scenario.64

A final circumstance that has bedeviled the district courts is that 

of a customer who is also accused of inducement of infringement. 

As an illustrative example, consider again the case of the router 

and the patent that covers the process of using wireless Internet 

access. If the owner of such a patent sues a retailer under § 271(c) 

for selling routers that infringe a claim to using wireless Internet 

access, the patent owner also could sue the retailer, per § 271(b), 

for inducing infringement by purchasers of the router who install 

the router and directly infringe the patent by using wireless Internet service. Some district courts have held that when such a retailer-customer provides instructions to downstream customers 

(which would normally support an inducement claim), this creates 

a ‘‘separate interest’’ in proceeding against the retailer-customer 

that precludes a customer-suit stay.65 Other courts, however, have 

recognized that adding inducement claims to an action should not 

defeat the customer-suit exception with respect to a party that otherwise qualifies as a customer.66

Finally, the Committee notes that although the Innovation Act’s 

new § 296 only stays, rather than terminates, suits against customers—and thus contemplates the possibility of subsequent actions against customers after the manufacturer suit is concluded— 

in the vast majority of cases, a suit involving the manufacturer will 

eliminate all potential infringement liability of the customer. 

First, if the patent is found invalid or not infringed by the manufacturer’s goods in the suit between the patent owner and the manufacturer, no further cause of action lies against the customer with 

respect to the same patents and goods.67 On the other hand, if the 


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Kessler v. Eldred, 206 U.S. 285 (1907)); Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 

U.S. 313, 349–50 (1971). 68See Transclean Corp. v. Jiffy Lube Int’l, Inc., 474 F.3d 1298, 1306 (Fed. Cir. 2007) (‘‘[A] 

manufacturer or seller of a product who is sued for patent infringement typically is not in privity with a party, otherwise unrelated, who does no more than purchase and use the product. . . . [and therefore] a patentee’s suit against one would [not] bar a second action against 

the other under the doctrine of claim preclusion.’’). 69See Shockley v. Arcan, Inc., 248 F.3d 1349, 1364 (Fed. Cir. 2001). 70 Jerry R. Selinger & Jessica W. Young, Suing an Infringing Competitor’s Customers: Or, Life 

under the Single Recovery Rule, 31 J. Marshall L.Rev. 19, 29 (1997). 71Transclean, 474 F.3d at 1303. 72See Glenayre Elecs., Inc. v. Jackson, 443 F.3d 851, 858–59 (Fed. Cir. 2006) (citing Selinger, 

supra) (‘‘[W]here a patentee alleges that a manufacturer contributes to and induces infringement 

by its customers simply because it sells infringing products to its customers, damages assessed 

for indirect infringement normally will be the same as damages that would be assessed had the 

patentee sued and obtained a judgment against the customers.’’). 73See id. at 872 (‘‘[W]here a patentee has enforced its patent against a direct infringer and 

collected damages sufficient to put him in the same position he would have been in had there 

not been infringement, the patentee cannot thereafter collect actual damages from an alleged 

indirect infringer.’’); see also Selinger, supra, at 52 (‘‘In view of the modern theory of damages, 

it appears that efforts to procure recovery from different levels in the distribution (or user) chain 

will be difficult to accomplish, so long as the manufacturer is solvent.’’); October 2013 hearing 

at 66–67 (Statement of Robert A. Armitage, Former General Counsel, Eli Lilly & Co.) (‘‘In many 

situations, the patent owner can be—and ultimately will be—made whole for any acts of infringement that have taken place, or will take place, by suing the manufacturer of an accused 

product. In this and like situations, separate infringement lawsuits brought against customers 

may serve no legitimate purpose—at least where the manufacturer is willing and able to stand 

in the shoes of its customers and the customer agrees that its interests would be served by having the manufacturer take over the defense of the patent.’’). 

patent is found infringed and not invalid in the suit between the 

patent owner and the manufacturer, a cause of action still lies 

against the customer—but in the vast majority of cases, no further 

damages can be recovered from the customer. Principles of claim 

preclusion do not bar litigating a second action against the customer.68 Rather, while the patent owner who prevails in his action 

against the manufacturer may proceed with a suit against the customer,69 any such customer suit is sharply limited by the singlerecovery rule. That rule provides that while ‘‘a patentee is entitled 

to full compensation for related acts of infringement, . . . the patentee, like any tort victim, is not entitled to multiple recoveries for 

the same injury.’’ 70 Therefore, ‘‘a patentee may not sue users of an 

infringing product for damages if he has collected actual damages 

from a manufacturer or seller, and those damages fully compensate 

the patentee for infringement by users.’’ 71 And in almost all cases, 

a successful suit against the manufacturer will fully compensate 

the patent owner for infringing activity by the manufacturer’s customers. This is true whether indirect-infringement claims 72 or direct-infringement claims were successfully litigated against the 

manufacturer.73

Therefore, although § 296 only stays (rather than terminates) a 

separate cause of action against the customer, the Committee anticipates that in almost all cases, resolution of the manufacturer 

suit pending the stay will eliminate the possibility of any further 

litigation against the customer. 

IV. RECOMMENDATIONS TO THE JUDICIAL CONFERENCE

1. Discovery 

An industry witness aptly summarized the problems posed by 

some discovery requests in patent-infringement litigation. He noted 

that plaintiffs who do not practice the claimed invention often lack 

reciprocal discovery burdens, and therefore feel unconstrained in 

their imposition of such burdens on defendants: 


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74 April 2013 hearing at 32–33 (Statement of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company). 75Other witnesses also emphasized the lack of reciprocal burdens borne by patent plaintiffs 

who do not practice the claimed technology. See, e.g., April 2013 hearing at 114 (Statement of 

Russell W. Binns, Jr., Associate General Counsel, IP Law & Litigation, Avaya Inc.) (‘‘A licensing 

entity typically doesn’t have very many employees. It doesn’t have a terribly large number of 

documents. It usually has all the documents prepared on a CD before they even start the 

suit . . .’’); March 2013 hearing at 74–75 (Statement of Philip S. Johnson, Chief Intellectual 

Property Counsel, Johnson & Johnson, on behalf of the 21st Century Coalition for Patent Reform) (‘‘[Patent plaintiffs who do not practice the invention] typically have few documents and 

little to disclose in discovery, so they may propound extremely burdensome discovery to corporations without fearing that they will be on the receiving end of corresponding burdens.’’); March 

2013 hearing at 86 (Statement of Dana Rao, Vice President of Intellectual Property and Litigation, Adobe Systems) (‘‘Suits by [patent-assertion entities] take advantage of lopsidedness in our 

litigation system. . . . PAEs typically have very little in discovery costs but at the same time 

they have the ability to make defendants like Adobe spend a lot of resources responding to very 

broad discovery requests.’’). 76March 2013 hearing at 44–47 (statement of John Boswell, Senior Vice President and General Counsel, SAS). 

The costs and burdens of discovery can be enormous in any 

patent case. But in cases brought by [patent-assertion entities], the asymmetry of such costs and burdens increases 

the risk of litigation abuse. Such patent owners typically 

have few documents and witnesses, so they may propound 

extremely burdensome discovery to corporate defendants 

without fearing that they will be on the receiving end of 

corresponding burdens. Exacerbating that burden are frequently vague and overreaching infringement allegations, 

making it difficult for a defendant to determine the metes 

and bounds of its obligation to preserve evidence and highly disruptive to comply with that obligation. Coupled with 

the growth of electronically stored information that is an 

easy target for burdensome discovery requests, the costs of 

litigation can mushroom out of control and force defendants to settle simply to avoid intrusive discovery.74

Another witness described the particular burden imposed by requests for electronic discovery—and again emphasized the lack of 

reciprocal burdens confronted by non-practicing plaintiffs: 

In the case of my company, it is really not an overstatement to say that we communicate almost completely electronically—by email, text, IM, you name it. So, when, in 

the context of patent litigation, we must respond to an 

electronic discovery request, we are instantly looking at 

legal and consulting bills that will run into the millions of 

dollars if we choose not to settle. In contrast, patent trolls 

have no witnesses, they have no documents, they have no 

evidence to discover. In short, there is an asymmetry in 

the patent troll context.75 Patent trolls can and do pursue 

litigation strategies that make the litigation as expensive 

as possible because that same tactic cannot be used 

against them. With no documents to produce and no witnesses to depose, they have very little cost associated with 

their obligation to respond to discovery requests.76

The same witness offered the following example of the massive 

costs imposed by wasteful and unnecessary discovery in a particular case—and the Hobson’s choice that faces a company confronted with such costs: 


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77See also October 2013 hearing at 32 (Statement of Kevin Kramer, Vice President and Deputy General Counsel for Intellectual Property, Yahoo! Inc. (‘‘In a typical troll case, we are asked 

to provide hundreds of thousands of pages of documents, including emails from anyone with relevant information, their attachments to those emails, such as word processing documents, 

spreadsheets, and presentations. . . . [I]n my experience, less than 1 percent of the electronic 

documents that get produced actually get used at trial.’’) (emphasis in original); April 2015 hearing, Statement of Kevin Kramer, Vice President and Deputy General Counsel for Intellectual 

Property, Yahoo! Inc., at *7 (‘‘In the typical case, what is needed to assess whether a Yahoo 

product infringes a patent claim is the source code for the product or feature at issue. In fact, 

in each of the three trials we have had where our infringement was at issue . . . , our source code was a central part of the case.’’). 78March 2013 hearing at 44–47 (statement of John Boswell, Senior Vice President and General Counsel, SAS). 

The number of electronic documents that we had to collect 

exceeded 10 million. The cost to collect those documents, 

before considering the attorney’s fees to review and make 

production determinations, was about $1.5 million. Again, 

$1.5 million was just the cost to collect; considering attorney’s fees, the cost of the collection was easily double that 

amount. Of those documents, only 1,873 documents, or 

.000183%, appeared on an evidence list as possibly being 

introduced at trial. These are not documents that were actually used, and it is debatable whether any of the 10 million documents collected were even read by the [plaintiff].77

SAS won summary judgment in this case and it is now on 

appeal to the Federal Circuit. So far this case has cost us 

in excess of $8 million. If SAS ultimately wins this case, 

it will be a Pyrrhic victory at best. We spent $8 million 

and huge amounts of developer time and executive time, 

for what? This victory does not resolve the other patent 

troll cases that we face, or will face in the future. This $8 

million and the millions more that we are spending on 

other cases is money that SAS no longer has to invest in 

people, facilities, research, or product development; and we 

are a relatively small player in this world. In short, the 

cost to us, and to the economy as a whole, is simply staggering. 

The dilemma here is that when a company like SAS receives a complaint from a patent troll, it is faced with a 

Hobson’s choice: defend the litigation, which will cost literally millions of dollars, or settle, for a smaller, but not 

insignificant, amount of money. If you do settle, then the 

company develops a reputation for being an easy target, 

which just invites more extortion attempts from the patent-troll community.78

2. Protection of Intellectual Property Licenses in Bankruptcy 

Section 365(n) of title 11 prevents a bankruptcy trustee from terminating licenses to patents and other intellectual property of the 

debtor. When the 100th Congress enacted § 365(n) in 1989, it recognized that allowing patent and other intellectual property licenses 

to be revoked in bankruptcy would be extremely disruptive to the 

economy and damaging both to patent owners and licensing manufacturers. 

Manufacturers often invest billions of dollars in reliance on their 

right to practice a technology pursuant to a license. Allowing the 


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79S. REP. NO. 100–505, at 3 (1989). 80See 11 U.S.C. § 1506. 81Section 6(d) has received the support of the USPTO and industry leaders. See Director Lee’s 

testimony at *7; April 2015 hearing, Statement of Robert A. Armitage, Former General Counsel, 

Eli Lilly & Co., at *16–17. 

license to be eliminated in bankruptcy would create commercial uncertainty and would undermine manufacturing investment. Also, 

under such a regime, inventors would be pressured to transfer 

their entire interest in a patent, rather than simply provide a license, because only a complete transfer would provide a secure 

right to practice the patented technology. Use of transfers rather 

than licensing would both reduce the inventor’s return on a valuable patent, and would effectively limit who could practice the technology. For all of these reasons, the 100th Congress concluded that 

allowing intellectual property licenses to be voided in bankruptcy 

‘‘is a fundamental threat to the creative process that has nurtured 

innovation in the United States,’’ 79 and enacted § 365(n) to put an 

end to such bankruptcy practices. 

In recent years, some parties have tried to subvert the protections of § 365(n) by filing for bankruptcy in a foreign country, and 

requesting that U.S. courts extend ‘‘comity’’ to the foreign court’s 

termination of licenses to U.S. intellectual property. Chapter 15 of 

the Bankruptcy Code creates procedures for recognizing and extending comity to foreign bankruptcy proceedings. Foreign trustees 

have cited the fact that Chapter 15 does not list § 365(n) among the 

mandatory provisions that must apply when a U.S. court recognizes a foreign proceeding as a reason to deny such protections to 

U.S. licensees when a patent owner files for bankruptcy abroad. 

They also have argued that § 365(n) does not fall within Chapter 

15’s public-policy exception to recognizing foreign proceedings.80

This determination currently must be litigated on a case-by-case 

basis, and district courts are given discretion in applying the public-policy exception. Such piecemeal litigation and its inherent risks 

create uncertainty that undermines intellectual property licensees’ 

ability to rely on their licenses—and, ultimately, undermines the 

fundamental purposes of § 365(n). 

U.S. law’s failure to clearly protect intellectual property licenses 

in Chapter 15 proceedings also creates disincentives for manufacturers to invest in the United States. If the right to practice a technology under a U.S. patent remains uncertain—while other Nations provide firm guarantees that licenses to their patents will be 

protected in a bankruptcy proceeding, whether domestic or foreign 

to such Nation—a manufacturer contemplating building a fabrication plant would face powerful incentives to invest his resources 

overseas rather than in the United States. U.S. bankruptcy law 

must not be permitted to deter investment in plants, equipment, 

and manufacturing jobs in the United States.81

V. CORRECTIONS AND IMPROVEMENTS TO THE AMERICA INVENTS ACT

1. Repeal of Could-have-raised Estoppel for Civil Actions Following 

Post-grant Review 

The Committee remains persuaded that the AIA’s authorization 

of post-grant review of patents should be amended to limit the estoppel that ensues from those proceedings in civil litigation to only 


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82See The Coalition for 21st Century Patent Reform, ‘‘ ‘Reasonably Could Have Raised’ Estoppel: A Technical Error that Should Be Corrected,’’ and ‘‘A ‘Reasonably Could Have Raised’ Estoppel in Litigation Following Post-Grant Review Will Prevent the Envisioned Benefits of the 

New Procedure From Being Achieved.’’ Both papers are printed in the record of the October 29 

hearing, at pp. 203–211, and are currently available on the website www.patentsmatter.com. 83Mr. Lamar Smith and Senator Leahy, the eponymous sponsors of the Leahy-Smith America 

Invents Act, each have stated that the addition of ‘‘reasonably could have raised’’ to the 

§ 325(e)(2) estoppel was an error. See 158 Cong. Rec. H6843 (daily ed. December 18, 2012) 

(Statement of Rep. Smith); 158 Cong.Rec. S8517 (daily ed. December 28, 2012) (Statement of 

Sen. Leahy). 84Patent Quality Improvement: Post-Grant Opposition: Hearing before the Subcomm. on 

Courts, the Internet, and Intellectual Prop. of the H. Comm. on the Judiciary, 108th Cong. (2004) 

at 32 (Statement of Michael Kirk, Executive Director, AIPLA); see also id. at 17 (Statement of 

Jeffrey Kushan, Sidley Austin Brown & Wood, on behalf of Genentech, Inc.); Patent Reform Act 

of 2007: Hearing on H.R. 1908 Before the Subcomm. on Courts, the Internet, and Intellectual 

Prop., 110th Cong. 56 (2007) at 98 (Statement of Anthony Peterman, Director, Patent Counsel, 

Continued 

those issues that were actually raised and decided in the post-grant 

review.82

First, the overlap in the membership and staffing of this Committee between the present Congress and the 112th is too thorough 

to permit any doubt that the addition of the words ‘‘or reasonably 

could have raised’’ to § 325(e)(2) of title 35, when the House Judiciary Committee-reported bill was engrossed in June 2011, was, indeed, a mistake.83 More fundamentally, however, the preservation 

of a civil-litigation could-have-raised estoppel following post-grant 

review threatens to fatally undermine the new proceeding. Unlike 

an inter partes review, a post-grant review must be sought within 

9 months of when the patent issues, and the proceeding extends to 

all potential defenses of invalidity. The issues that a petitioner 

‘‘reasonably could have raised’’ in a post-grant review thus include 

all challenges to the validity of the patent (to the extent that they 

might later be deemed to have been reasonably accessible to the 

petitioner). This includes not only challenges to obviousness based 

on prior patents and printed publications, but evidence of uses and 

sales that made the invention accessible to the interested public 

and questions of the description and enablement of the invention 

and whether patentable subject matter has been claimed. Some of 

these issues likely will only become apparent with time, and may 

require some discovery to develop. But only limited time is available before a post-grant review petition must be filed, and petitioners are required to present a preponderance case at the outset 

of the proceeding. There is no pre-petition discovery before, or the 

opportunity to develop and expand challenges after, a post-grant 

review has been instituted. 

Applying a litigation could-have-raised estoppel to post-grant review thus would present petitioners with a daunting prospect: once 

such a review is instituted, the petitioner effectively would be 

barred from challenging the validity of the patent on any ground 

should he later be sued for its infringement, but he would be required to file his petition before he had more than a very limited 

time—and no discovery—to identify the bases of his petition. 

For all these reasons, the Committee concurs with the views expressed by industry leaders and representatives of patent professional associations, who have broadly agreed—both during the development of the AIA and since—that limiting the litigation estoppel that follows a post-grant review to those issues that were actually raised and decided in the proceeding is the approach that 

‘‘strike[s] the right balance.’’ 84


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Dell Inc.); Perspectives on Patents: Post-Grant Review Procedures and other Litigation Reforms: 

Hearing before the Subcomm. on Intellectual Prop. of the S. Comm. on the Judiciary, 109th 

Cong. (2006) at 45–46 (Statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems); Director Lee’s testimony at *7–8; April 2015 hearing, Statement of Robert 

A. Armitage, Former General Counsel, Eli Lilly & Co., at *17–18; March 2013 hearing at 22 

(Statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems Inc.) 

(‘‘If left uncorrected, this error will unfortunately greatly limit the utility and use of the new 

procedure to fulfill its intended purpose of pruning or narrowing newly issued patents that are 

in fact invalid. Because of the broad range of issues available, a potential patent challenger will 

have to weigh very heavy risks to later civil litigation on the same patent.’’). 85See 37 C.F.R. § 42.300(b); see generally SAP America, Inc. v. Versata Dev. Group, Inc., 

CBM2012–00001, Paper 70, at 7–19 (June 11, 2013). 86See Phillips v. AWH Corp., 415 F.3d 1303, 1328 (Fed. Cir. 2005). 87 An exhaustive explanation of the reasons why use of district court claim construction is better suited to inter partes and post-grant review than is the broadest reasonable interpretation 

of claims is provided in a paper prepared by The Coalition for 21st Century Patent Reform, 

‘‘Why the PTO’s Use of the Broadest Reasonable Interpretation of Patent Claims in Post-Grant 

and Inter Partes Review Is Inappropriate Under the America Invents Act.’’ This paper is printed 

in the record of the October 29, 2013 hearing, at pp. 212–230, and is currently available on the 

website www.patentsmatter.com. 88See Microsoft Corp. v. Proxyconn, Inc., No. 2014–1542 (Fed. Cir. June 16, 2015) (‘‘The PTO 

should also consult the patent’s prosecution history in proceedings in which the patent has been 

brought back to the agency for a second review’’); Tempo Lighting, Inc. v. Tivoli, LLC, 742 F.3d 

973, 977–78 (Fed. Cir. 2014) (applying prosecution history to construe claims under the BRI approach); Phillips v. AWH Corp., 415 F.3d 1303, 1317 (‘‘[A] court should also consider the patent’s 

prosecution history, if it is in evidence.’’) (citation omitted). 

2. Use of District Court Claim Construction in Inter Partes and 

Post-grant Reviews 

In its regulations implementing the AIA’s new inter partes and 

post-grant reviews, the USPTO instructed the PTAB to read patent 

claims for their broadest reasonable interpretation (‘‘BRI’’),85 rather 

than use the district court’s Phillips approach.86 The BRI approach 

is eminently reasonable in examination and reexamination, where 

the applicant or patentee has a broad right to amend after a rejection. In inter partes and post-grant reviews, however, the right to 

amend is much more limited. Also, amendments come at the cost 

of subjecting the patent to intervening rights and voidance of years 

of accrued damages. Moreover, these reviews can be invoked after 

the patent has been in force for years, and when its claims could 

be, or even have been, given a more limited construction in civil 

litigation. 

Use of the BRI approach to claim construction in inter partes 

and post-grant review can thus potentially produce results that are 

unfair to patent owners. It could subject a patentee to a review, 

and even force him to amend his claims, by construing them to include matter that the claims would not be construed to include in 

a civil action. As a practical matter, however, the patentee has no 

more patent than what the courts will enforce. Applying the broadest reasonable interpretation of claims in inter partes and postgrant reviews could thus force the patent owner to amend claims 

to eliminate claim scope that effectively does not exist.87

The Committee acknowledges that, over the course of its consideration of this issue, it has become increasingly less apparent how 

the claim constructions that are produced under the BRI approach 

differ from those produced under the Phillips standard. The original prosecution history of a patent, for example, may be considered 

under either approach.88 And despite the fact that over a thousand 

IPRs have been instituted since the program was inaugurated in 

2012, there is a paucity of examples where use of the BRI approach 

rather than district court claim construction appears to have affected either the Board’s decision to institute or its final written deVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00046 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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89See Patents Post-Grant Blog, ‘‘PTAB Finds BRI Claim Construction No Different Under 

Phillips,’’ July 15, 2014. 90See May 2015 Senate hearing, Statement of Kevin H. Rhodes, Vice President and Chief Intellectual Property Counsel of 3M Company, on Behalf of the Coalition for 21st Century Patent 

Reform, at *25 (discussing IPR2015–00858). 91The Committee is aware of the Supreme Court’s recent pronouncement that inventions relying on the application natural laws are unpatentable when ‘‘the relation itself exists in principle 

apart from any human action.’’ Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 

1289, 1297 (2012). The Court applied the ‘‘laws of nature’’ exception to subject-matter patentability to invalidate a patent that disclosed determining the appropriate dose of a drug to treat 

an autoimmune disease on the basis of measurements of the levels of metabolites in the patient’s blood. See id. at 1295. Mayo poses several quandaries, however. It is not entirely clear 

why the Court concluded that the discovery of a means of determining the amount of a drug 

that will cure—rather than kill—the patient is an invention inherently unworthy of a patent. 

The Court’s reliance on the trio of Benson, Flook, and Diehr to guide its § 101 analysis—despite 

the fact that the latter clearly overruled the first two, and that none of the three is particularly 

coherent—does not contribute to clarity in this area of the law. But most fundamentally, were 

the Committee to take seriously the suggestion that an invention is unpatentable if it adds 

‘‘nothing of significance’’ to the natural laws that control its operation, id. at 1302, it must also 

conclude that the Patent Office should be deauthorized, for nothing would remain patentable 

other than whatever business methods survive Alice. It is thus unsurprising that the patent bar, 

particularly in the life sciences, has greeted Mayo as the jurisprudential equivalent of the bombing of Dresden. The Committee will continue to monitor developments in this area. 92 561 U.S. 593 (2010). The respondent in that case, during the October 29, 2013 hearing, described another problematic aspect of the patenting of business methods: ‘‘patents covering 

methods of doing business . . . inherently cover all technology solving the affected business 

problem.’’ October 2013 hearing at 43 (Statement of David J. Kappos, Former Under Secretary 

of Commerce for Intellectual Property and Director of the United States Patent and Trademark 

Office). Such patents inevitably are parasitic of the hard work and ingenuity of the inventor of 

the technological product or feature that implements the business-method ‘‘invention.’’ 93 134 S.Ct. 2347 (June 19, 2014). 94The earliest appearance of the double-patenting doctrine—at least in the Supreme Court’s 

opinions—appears to be in O’Reilly v. Morse, 56 U.S. 62 (1853). See id. at 114 (observing that 

if Morse’s broad claim to ‘‘the use of the motive power of . . . electro-magnetism, however developed, for making or printing intelligible characters, letters, or signs, at any distance’’ were valid, 

Continued 

cision.89 The Committee nevertheless concludes that discontinuation of the use of the BRI approach in AIA trials is warranted. 

Adoption of the Phillips standard will, at the least, protect patentees from attempts to institute review on the basis of claim constructions that already have been rejected by the Federal Circuit.90

And the Board’s claim interpretations will more readily provide 

guidance to district courts if the Board and the courts employ the 

same approach to claim construction. 

Finally, although covered business method reviews are a subspecies of post-grant review, the Committee finds that the unique 

nature of those proceedings precludes a need to employ district 

court standards of claim construction there. Only business-method 

patents are eligible for CBM review. Because such patents are not 

directed to the application of scientific or mathematical principles,91 they are generally incapable of creating reproducible results, and are inherently unpatentably abstract, as that standard 

has been clarified in Bilski v. Kappos 92 and Alice Corp. Pty. Ltd. 

v. CLS Bank Int’l.93 In light of these cases’ restoration of the historic bar on the patenting of business methods, the Committee 

finds it unnecessary to burden the Board with applying the district 

courts’ claim-construction approach to define the precise metes and 

bounds of the unpatentable subject matter claimed in such patents. 

3. Obviousness-type Double Patenting 

The double-patenting doctrine was developed by the courts to 

control the effects of exceptions to prior art that permit a patentee 

to obtain multiple patents for obvious variations of the same invention.94 An inventor can obtain such obvious-variant patents beVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00047 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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then a second, narrower improvement patent would necessarily be ‘‘illegal and void’’ as 

‘‘extend[ing] his monopoly beyond the period limited by law’’). 95The Uruguay Round Agreements Act, PUB. L. NO. 103–465, 108 Stat. 4809 (1994). 96 80 F. 712 (6th Cir. 1897). 97 Id. at 727. 98 Id. 99 Id. at 724. 100 Id. at 727. 

cause his own earlier-filed patent applications are not prior art to 

his subsequent applications until a year after the earlier-filed applications publish. As a result, absent the double-patenting doctrine, an inventor could obtain multiple patents for what is basically the same invention, and then sell those patents to different 

parties, requiring others to obtain multiple licenses from multiple 

parties in order to practice what is substantially the same invention. 

Also, under the pre-URAA 95 system, in which a patent’s term 

ran 17 years from its issuance, patents could expire 30, 40, or even 

50 years after the date that the patent was originally sought. Inventors, by filing a series of continuing applications, could delay 

prosecution. Without double-patenting rules, patent protection for 

essentially the same subject matter could remain in force for decades. 

The double-patenting doctrine has historically precluded such 

practices by requiring patentees to disclaim the right to enforce 

any later-issued obvious-variant patents separately through a common-ownership requirement, and to disclaim the right to enforce 

such later-issued patents beyond the term of the earliest-issuing 

(and therefore, earliest expiring) obvious-variant patent. 

As recently as the 1980’s, double patenting was a relatively simple and straightforward doctrine, and was limited by several key 

principles. The first among these—which traces its origins to Judge 

Taft’s 1897 decision in Thomson-Houston Elec. Co. v. Ohio Brass 

Co.96—is that the double-patenting bar does not apply to an inventor’s patents if the same patents could have validly issued to separate inventors. Ohio Brass recognized that if ‘‘the personality of the 

owner of two different patents [were to] affect the validity of either, 

then the anomalous result would follow that the owner of one patent would avoid it by acquiring ownership of another.’’ 97 The court 

dismissed the notion that such a ‘‘unity of title avoid[s] the main 

patent’’ as a ‘‘reductio ad absurdum.’’ 98

Ohio Brass also recognized that it is ‘‘well settled that a patent 

may issue for an improvement on an earlier invention either to the 

original inventor or a stranger’’—and rejected the notion that ‘‘if, 

by some chance, the application for the fundamental patent is delayed in its course through the patent office until a patent on the 

avowed improvement has issued, then the patent on the fundamental invention is void.’’ 99 Noting that the ‘‘the course of an application for a generic or broad invention may legitimately take 

longer in its course through the patent office than a comparatively 

unimportant improvement,’’ 100 Ohio Brass established that the inventor had the right to rely on the order of invention (i.e., pre-AIA 

priority), rather than the order of issuance, to determine if the 

later-issued patent should be subject to a double-patenting limit. 

A final double-patenting principle, reflected in the PTO’s 1967 

Official Gazette Notice, is that ‘‘[t]he term ‘double patenting’ is 


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101Double Patenting, 834 O.G. 1615 (Jan. 31, 1967). 102See Robert A. Armitage, Everything You Ever Wanted to Know About Double Patenting . . . 

But Never Realized that You Needed to Ask (From The Makers Of Prozac), 2001, at *8–17 [hereinafter Armitage ODP article]. This paper was presented at a conference of the Intellectual Property Owners Association; a revised and updated version is printed in the record of the October 

29 hearing at pp. 170–202. 103PUB. L. NO. 98–622 (1984). 104See Armitage ODP article at *18–19. 105 Id. at *19–28. 106See, e.g., Eli Lilly and Co. v. Barr Labs., 251 F.3d 955, 967–68 (Fed. Cir. 2001). Under 

the two-way test, the double-patenting bar does not apply unless the later-filed but earlierissued patent also is obvious in view of the earlier-filed but later-issued patent. See In re Berg, 

140 F.3d 1428, 1432 (Fed. Cir. 1998). 107Lilly v. Barr, 251 F.3d at 968 n.7 (emphasis in original). 108 In re Fallaux, 564 F.3d 1313, 1317 (Fed. Cir. 2009). 

properly applicable only to cases involving two or more applications 

and/or patents of the same inventive entity.’’ 101 The Notice emphasized that in cases involving different inventors, sections 102 and 

103 of title 35 already operate to prevent the issuance of patents 

that are the same or obvious in view of one another, thus precluding the need to apply double-patenting principles. 

These three fundamental principles—that double patenting is not 

a bar where the patents could have validly issued to separate inventors, does not apply where § 103 already operates to prevent the 

issuance of obvious-variant patents, and that order of priority 

(rather than issuance) must be used to determine which patent is 

subject to a double-patenting limit—found expression in a series of 

the United States Court of Customs and Patent Appeals (‘‘CCPA’’) 

decisions following the adoption of the 1952 Act, creating a relatively simple and rational double-patenting landscape.102

The Patent Law Amendments Act of 1984,103 by enacting the 

common-ownership exception to prior art that now appears at 

§ 102(b)(1)(C), unsettled this landscape by requiring the courts to 

expand the double-patenting doctrine to encompass this new, 

broader exception to prior art.104 This resulted in a series of court 

decisions during the 1990’s that drastically restricted access to the 

‘‘two-way’’ test for double patenting—and that ultimately congealed 

into a rule that violates basic principles of the double-patenting 

doctrine that trace their origins to Ohio Brass.105

Under the so-called one-way test, an earlier-filed but laterissuing commonly owned patent or application can be invalidated 

for double patenting even if the earlier-issued patent is nonobvious 

over the later-issuing patent as prior art.106 In other words, the related inventors of the two patents are punished for making two 

separate and nonobvious inventions that, had they been made separately by unrelated inventors, would have been entirely valid and 

separately enforceable for their full respective terms. 

Under current jurisprudence, the two-way test is available only 

in the ‘‘unusual circumstance’’ where the USPTO is ‘‘solely responsible for the delay in causing the second-filed application to issue 

prior to the first’’ 107—it is a ‘‘narrow exception’’ that is rendered 

inapplicable even when the timing of two applications is driven not 

by ‘‘nefarious intent,’’ but rather by ordinary business decisions.108

By reversing Ohio Brass’s allowance of an order-of-priority test, 

the recent jurisprudence also abandons the principle that doublepatenting does not apply if the patents could have validly issued 

to separate inventors—embracing a principle that Ohio Brass itself 

had dismissed as a ‘‘reductio ad absurdum.’’ In addition, a recent 


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109See, e.g., Lilly v. Barr, 251 F.3d 955; In re Hubbell, 709 F.3d 1140, 1146–48 (Fed. Cir. 

2013); see also Armitage ODP article at *27 (‘‘[under these cases,] double patenting would now 

infect two patents even if the two patented inventions were patentably distinct because the nonobviousness test operated, i.e., one of the two patented inventions was prior art to the other.’’). 110 In re Hubbell, 709 F.3d at 1142–43, 1146–48. 111 753 F. 3d 1208 (Fed. Cir. 2014). 112See, e.g., In re Basell Poliolefine Italia, S.P.A., 547 F.3d 1371, 1373–74 (Fed. Cir. 2008) (invalidating for double patenting a patent that issued in 2002 from an application claiming priority to 1954). 113See Takeda Pharm. Co., Ltd. v. Doll, 561 F.3d 1372, 1377 n.1 (Fed. Cir. 2009); Boehringer 

Ingelheim Int’l GmbH v. Barr Labs., Inc., 592 F.3d 1340, 1346 (Fed. Cir. 2010). 114 Hill v. Colorado, 530 U.S. 703, 742 (2000) (Scalia, J., dissenting). 115 In re Fallaux, 564 F.3d at 1318–1319. 

decision has also extend the double-patenting doctrine to cases 

where the patents did, in fact, issue to separate inventors, and 

thus already operated as prior art against one another.109 In re 

Hubbell applied the double-patenting doctrine to destroy the earlier-filed application of a university research team for a broad invention because two of its joint inventors later participated in another research team that filed a later, narrow improvement application that issued before the first application did.110 The court 

reached the absurd result of invalidating the earlier-sought basic 

invention because of a later-discovered improvement that already 

was required to be nonobvious over the basic invention. 

In another recent decision—one issued since the House of Representative’s passage of the Innovation Act in the 113th Congress 

on December 5, 2013—the Federal Circuit departed from more 

than 100 years of consistent jurisprudence that had applied double 

patenting consequences solely to invalidate the later-issuing of two 

patents granted on different dates. Gilead Sciences, Inc. v. Natco 

Pharma Ltd.111 determined that the first-issued patent’s later expiration date produced an unjustified timewise extension of the right 

to exclude over the later-issued patent with an earlier expiration 

date. Where, however, such a first-issued patent can be valid only 

if it is non-obvious as of the filing (or priority) date that is used 

to determine its patent term, there is no policy justification for the 

application of double patenting principles to that patent. 

The one-way test, when properly applied, serves the salutary 

purpose of allowing the courts to rein in the potential for abuse of 

rules that fail to limit the filing of continuing applications—even 

decades after an initial patent on an invention has issued.112 Some 

of the courts’ decisions took note of this special justification for employing the one-way test, suggesting that this approach might be 

confined to the pre-URAA patents.113

In 2009, however, the Federal Circuit made clear that it would 

not ‘‘disregard’’ its recent precedents—as opposed to the logic underpinning the double-patenting doctrine—and would continue to 

apply the one-way test’s ‘‘ad hoc nullification machine’’ 114 to modern patents that run 20 years from their filing.115

The URAA makes it all but impossible for applicants to obtain 

the type of pre-URAA patent-term extensions that have been cited 

as justifying a liberal application of the one-way test. Given the unfairness of invalidating an earlier-filed patent because of a laterfiled patent, especially in the case of first-inventor-to-file patents 

for which prior art is dictated by the order of patent filing, it is appropriate to eliminate continuing application of the one-way test in 

favor of a rule of law that is consistent with Ohio Brass and the 

double-patenting doctrine’s foundational principles. 


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116See April 2014 Hearing, Statement of Robert A. Armitage, Former General Counsel, Eli 

Lilly & Co., at *21 (‘‘I would urge the Committee to consider a simpler and more comprehensive 

statutory text . . . , as well as a separate statutory amendment limiting any ‘patent term adjustment’ for a patent subject to double patenting constraints so that the adjusted term of the 

double patent could not extend the combined patent life of both patents beyond 17 years.’’). 117See Patents Post-Grant Blog, ‘‘The Statutory Defect That May Doom Your CBM Petition,’’ 

Sept. 23, 2013. 118See MPEP § 2126; In re Ekenstam, 256 F.2d 321, 325 (CCPA 1958); 78 FR 11059, 11074 

(Feb. 14, 2013). 119See H.R. REP. NO. 112–98, at 54 (2011). 

The Committee has been urged to revisit the provisions of the Innovation Act relating to double patenting to account for recent judicial developments. In particular, the Committee was asked to consider both broadening and simplifying the double-patenting provisions that appeared in Innovation Act in the 113th Congress.116

The amendments in section 9(c) of this bill reflect these recommendations. 

4. PTO patent reviews 

During the course of the Committee’s consideration of the 

present bill, a ‘‘technical’’ but serious defect in AIA § 18 was 

brought to the Committee’s attention.117 AIA § 18(a)(1)(C) delineates the types of prior art that may be employed in a covered business method patent review of a first-to-invent business-method patent. Subparagraph (C) ensures that the Metallizing Engineering 

doctrine, and other discovery-intensive pre-AIA loss-of-right rules, 

cannot be asserted in a CBM proceeding. Subparagraph (C) bases 

its definition of the prior art that may be cited against a first-toinvent patent on pre-AIA § 102(a) and (b). The subparagraph neglects, however, to incorporate pre-AIA § 102(e). 

This omission precludes using patents and published applications 

in a CBM proceeding as of their effective filing dates, rather than 

as of their publication or grant dates. The word ‘‘patented,’’ as used 

in pre-AIA § 102(a) and (b), makes a patent effective as prior art 

only as of its publication or grant date, and in any event extends 

only to issued patents rather than published applications—the 

former are mere ‘‘printed publications,’’ and thus effective as prior 

art only as of their publication dates.118 Section 9(e) of the Innovation Act corrects this legislative oversight, ensuring that the swarm 

of business-method patents and abandoned-but-published applications that followed the Federal Circuit’s State Street decision can 

serve as prior art in a CBM proceeding as of the date that they 

were filed, rather than as of when they were published. 

As the Committee noted in its report accompanying the AIA, a 

petition to initiate a CBM review may be granted if the petitioner 

is either sued for or accused of infringement.119 The Committee reaffirms that a demand letter or other pre-litigation communication 

suggesting that infringement may have occurred constitutes an accusation of infringement and satisfies AIA § 18(a)(1)(B)’s prerequisite for filing a petition for review. 

5. ‘‘Arising Under’’ Jurisdiction and Gunn v. Minton 

Prior to 2013, Federal Circuit and regional circuit caselaw recognized that certain causes of action, though created by state law, effectively determine the legal force or effect of the claims in a patent—and therefore ‘‘arise under’’ Federal patent law and are within 


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120See, e.g. Scherbatskoy v. Halliburton Co., 125 F.3d 288 (5th Cir. 1997) (transferring appeal 

to the Federal Circuit); U.S. Valves, Inc. v. Dray, 190 F.3d 811 (7th Cir. 1999) (same). 121See, e.g., Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc., 986 F.2d 476 (Fed. 

Cir. 1993); Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998), over- ruled on other grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir. 

1999). 122 133 S.Ct. 1059 (Feb. 20, 2013). 123See Gunn, 133 S.Ct. at 1066–67. 124Forrester Envtl. Servs., Inc. v. Wheelabrator Techs., Inc., 715 F.3d 1329, 1334 (Fed. Cir. 

2013). 125See MDS (Canada) Inc. v. Rad Source Technologies, Inc., 720 F.3d 833, 842–43 (11th Cir. 

2013) (‘‘The substantiality inquiry under Grable looks [ ] to the importance of the issue to the 

the exclusive jurisdiction of the Federal district courts and the Federal Circuit. 

These causes of action include, for example, state-law actions for 

breach of a licensing agreement in which liability turns on whether 

a party has sold products that infringe a patent.120 Other such 

causes of action include state-law actions for business disparagement, unfair competition, injurious falsehood, or interference with 

prospective economic advantage in which liability depends on 

whether a patent is infringed by a product or whether the patent 

is invalid or unenforceable. Typically in such cases, a competitor 

sues the patentee because the patentee has informed the competitor’s customers that the products that they have purchased from 

the competitor infringe the patentee’s patent.121

Because the Federal Circuit and regional circuits agreed that 

these types of state-law causes of action, which effectively assign 

legal liability based on a determination of the scope and the validity of the claims in a patent, ‘‘arise under’’ Federal patent law, the 

Federal district courts had original (and removal) jurisdiction over 

such actions, and the Federal Circuit had appellate jurisdiction 

over them. 

The Supreme Court’s recent decision in Gunn v. Minton,122 however, has cast doubt over whether such actions continue to ‘‘arise 

under’’ Federal patent law. The Court’s opinion concluded that 

‘‘arising under’’ jurisdiction exists when the validity or construction 

of a Federal statute is in question, when a case’s resolution will affect numerous other Federal cases, or when a case affects the Federal Government.123

None of these factors, however, necessarily captures the case of 

a state contract or tort action posing the possibility of inconsistent 

determinations regarding the legal effect of a patent’s claims. Such 

a case does not typically turn on an interpretation of Federal law 

or affect numerous other cases or the Federal Government. If 

Gunn’s enumeration of ‘‘arising under’’ factors is thus treated as an 

exclusive listing of such factors, ‘‘arising under’’ jurisdiction could 

be deemed to no longer extend to the case merely threatening inconsistent determinations as to the effect of a patent. 

The Federal Circuit recently has suggested that its past cases 

finding ‘‘arising under’’ jurisdiction for patent-related state-law 

business disparagement and injurious falsehood claims ‘‘may well 

have survived the Supreme Court’s decision in Gunn.’’ 124 That 

statement, however, is only dicta, and the matter remains unresolved in the Federal Circuit. Moreover, some regional courts of appeals have begun to apply Gunn broadly. They effectively have 

treated Gunn’s partial enumeration of the factors that can render 

a patent issue ‘‘substantial’’ for purposes of arising under jurisdiction as an exclusive list of such factors.125 Courts such as the ElevVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00052 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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Federal system as a whole,’’ Gunn v. Minton, ___ U.S. __, 133 S.Ct. 1059, 1066, 185 L.Ed.2d 

72 (2013), and the Supreme Court has identified three factors to assist in this inquiry. First, 

a pure question of law is more likely to be a substantial Federal question. Empire Healthchoice 

Assur., Inc. v. McVeigh, 547 U.S. 677, 700–01, 126 S.Ct. 2121, 2137, 165 L.Ed.2d 131 (2006). 

Second, a question that will control many other cases is more likely to be a substantial Federal 

question. Id. Third, a question that the government has a strong interest in litigating in a Federal forum is more likely to be a substantial Federal question. Grable, 545 U.S. at 315–16, 125 

S.Ct. at 2368–69. All of these factors establish that the issue of patent infringement here is not 

a substantial Federal question for the purpose of section 1338.’’). 126See id. at 846. 127 April 2015 hearing, Statement of Robert A. Armitage, Former General Counsel, Eli Lilly 

& Co., at *25. 128See, e.g., ‘‘Antonelli Says Alice Kills Protostorm’s $8M Malpractice Win,’’ Law360, January 

13, 2015; ‘‘Dickstein Says Alice Shields It in IP Malpractice Case,’’ Law360, March 30, 2015. 

enth Circuit in MDS (Canada) Inc. have thus held that even a case 

in which liability turns on whether a particular product infringes 

a claim in a patent does not ‘‘arise under’’ the Federal patent 

laws.126

It is important that ‘‘arising under’’ jurisdiction continue to extend to these types of cases. If it were otherwise, a patent owner 

could successfully prosecute an infringement action in Federal 

court with respect to a product, yet simultaneously be held liable 

for ‘‘business disparagement’’ in state court for asserting that the 

same product infringes the same patent. Similarly, a licensee manufacturer could successfully assert a defense of noninfringement in 

Federal court, yet be held liable for breach of contract in state 

court with respect to the same patent and the same product. One 

of the principal reasons for creating the Federal Circuit in 1982 

was to prevent inconsistent adjudications as to the legal effect of 

a patent—that is, to avoid situations where one circuit finds a patent infringed by a product and valid and another circuit finds the 

opposite. But a broad reading of Gunn effectively threatens this 

very result. 

Finally, the Committee has become persuaded that the Supreme 

Court’s holding in Gunn should be abrogated in its entirety, and 

that Federal courts’ jurisdiction over legal malpractice suits that 

arise out of patent litigation or prosecution should be restored.127

The more difficult questions that are posed by such actions typically are ones of patent law, rather than legal-malpractice law. 

Some recent malpractice cases, for example, have involved questions of whether a patent application was directed to patent-eligible 

subject matter under the Supreme Court’s decision in Alice Corp. 

Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (June 19, 2014).128

State judges, however, do not hear patent cases. Federal courts, 

particularly with review centralized in the U.S. Court of Appeals 

for the Federal Circuit, typically have more experience with patent 

law cases and therefore are a better forum for evaluating whether 

an attorney’s patent litigation or prosecution practices were unreasonable. 

Hearings 

The House Committee on the Judiciary held a hearing on H.R. 

9 on April 14, 2015. Testimony was received from the Honorable 

Michelle K. Lee, Under Secretary of Commerce for Intellectual 

Property and Director of the United States Patent and Trademark 

Office; David M. Simon, Senior Vice President of Intellectual Property, Salesforce.com, Inc.; Hans Sauer, Ph.D., Deputy General 

Counsel for Intellectual Property, Biotechnology Industry OrganizaVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00053 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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tion; Kevin Kramer, Vice President and Deputy General Counsel 

for Intellectual Property, Yahoo! Inc.; and Robert A. Armitage, 

Former General Counsel, Eli Lilly & Co. 

The Committee’s Subcommittee on Courts, Intellectual Property, 

and the Internet also conducted two separate but related hearings 

on February 12, 2015 (‘‘Examining Recent Supreme Court Cases in 

the Patent Arena,’’ Serial No. 114–2), and March 25, 2015 (‘‘Patent 

Reform: Protecting American Innovators and Job Creators from 

Abusive Patent Litigation,’’ Serial No. 114–17). 

In the previous Congress, the Committee held a hearing on patent reform: ‘‘Innovation Act: Hearing on H.R. 3309’’ (October 29, 

2013, Serial No. 113–58). The Subcommittee also held two hearings: ‘‘Abusive Patent Litigation: The Impact on American Innovation & Jobs, and Potential Solutions’’ (March 14, 2013, Serial No. 

113–13); and ‘‘Abusive Patent Litigation: The Issues Impacting 

American Competitiveness and Job Creation at the International 

Trade Commission and Beyond’’ (April 16, 2013, Serial No. 113– 

24). 

Committee Consideration 

On June 11, 2015, the Committee met in open session and ordered the bill H.R. 9 favorably reported with an amendment, by a 

rollcall vote of 24 to 8, a quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the following 

rollcall votes occurred during the Committee’s consideration of H.R. 

9. 

1. Amendment #3 to the Amendment in the Nature of a Substitute, offered by Mr. Conyers. This amendment creates a revolving fund for USPTO fees and extends the USPTO’s authority to set 

its own fees by an additional 10 years. Failed by a rollcall vote of 

11 to 16. 

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) .........................................................

Mr. Gohmert (TX) ......................................................

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) ..............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) .........................................................

Mr. Labrador (ID) ......................................................

Mr. Farenthold (TX) .................................................. X 


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ROLLCALL NO. 1—Continued 

Ayes Nays Present 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) .....................................................

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) ....................................................... X 

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) ....................................................... X 

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 11 16 

2. Amendment #6 to the Amendment in the Nature of a Substitute, offered by Mr. Issa. This amendment extends the Transitional Program for Covered Business Method Patents by an additional 6 years. Failed by a rollcall vote of 13 to 18. 

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) .........................................................

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 


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ROLLCALL NO. 2—Continued 

Ayes Nays Present 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) ....................................................... X 

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) ....................................................... X 

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 13 18 

3. Amendment #5 to the Amendment in the Nature of a Substitute, offered by Mr. Johnson. This amendment requires a prevailing party seeking a fee award to show that the position or conduct of the nonprevailing party was not objectively reasonable, and 

precludes fee awards for positions or actions that are de minimis 

or are not material to the outcome of the case. Failed by a rollcall 

vote of 10 to 22. 

ROLLCALL NO. 3 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) .........................................................

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 


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ROLLCALL NO. 3—Continued 

Ayes Nays Present 

Mr. Gowdy (SC) .........................................................

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) ....................................................... X 

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) ....................................................... X 

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 10 22 

4. Reporting H.R. 9 as amended. This bill makes improvements 

and technical corrections to title 35 and the Leahy-Smith America 

Invents Act. Reported by a rollcall vote of 24 to 8. 

ROLLCALL NO. 4 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) .........................................................


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ROLLCALL NO. 4—Continued 

Ayes Nays Present 

Mr. Labrador (ID) ......................................................

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ...........................................................

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) ....................................................... X 

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ...................................................... X 

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................ X 

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) ....................................................... X 

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 24 8 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

New Budget Authority and Tax Expenditures 

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

Congressional Budget Office Cost Estimate 

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 9, the following estimate and comparison prepared by 

the Director of the Congressional Budget Office under section 402 

of the Congressional Budget Act of 1974: 


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U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 10, 2015. 

Hon. BOB GOODLATTE, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 9, the ‘‘Innovation Act.’’ 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Marin Burnett and 

Susan Willie who can be reached at 226–2860. 

Sincerely, 

KEITH HALL, 

DIRECTOR. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 9—Innovation Act. 

As ordered reported by the House Committee on the Judiciary 

on June 11, 2015. 

H.R. 9 would change administrative and judicial processes that 

support the protection of intellectual property rights. The bill also 

would require reports by the Administrative Office of the United 

States Courts (AOUSC) and the Government Accountability Office. 

Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 9 would cost $3 million over the 

2016–2020 period, mainly for reports and administrative costs incurred by the AOUSC associated with new judicial procedures. Additionally, based on information from the Patent and Trademark 

Office (PTO), CBO estimates that implementing the bill would cost 

PTO about $7 million per year to comply with the bill’s requirements. However, PTO is authorized to collect fees sufficient to offset its operating expenses; therefore, CBO estimates that the net 

budgetary effect of PTO’s activities undertaken to implement H.R. 

9 would not be significant, assuming appropriation actions consistent with the agency’s authorities. Pay-as-you-go procedures do 

not apply to this legislation because it would not affect direct 

spending or revenues. 

The bill would change procedures that PTO has in place to examine patent applications, award patents, and determine the validity 

of a patent that has already been granted. Among other things, 

H.R. 9 would specify that the agency use methods similar to those 

used in district courts to evaluate the validity of a patent. The bill 

also would require the agency to develop new databases to make 

information about patent ownership and litigation available on its 

website. Finally, the bill would require PTO, the Government Accountability Office and the AOUSC to prepare several studies and 

reports on topics ranging from patent ownership to the behavior of 

certain patent owners. 


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H.R. 9 would make several adjustments to judicial procedures for 

patent infringement cases, including which parties may join a suit 

and when a court is required to grant a motion to stay an action. 

Further, the bill would require the courts to award the prevailing 

party reasonable fees and other expenses incurred in connection 

with such cases. The bill also would require the AOUSC to develop 

rules and procedures related to the discovery of evidence in lawsuits for patent infringement. CBO expects that, by requiring inventors to be more specific in pleadings to the court, awarding attorney fees to the prevailing party, and limiting discovery early in 

an infringement proceeding, the bill would affect the decisions of 

inventors to initiate lawsuits for patent infringement. 

H.R. 9 would impose a mandate as defined in the Unfunded 

Mandates Reform Act (UMRA) on both public and private entities 

because PTO would charge fees to offset the costs incurred to collect and make some information related to patent ownership and 

litigation publically available. Other provisions in the bill that 

change administrative procedures related to patents also would result in increased patent fees. The requirement to pay those fees 

would be a mandate because the Federal Government controls the 

patent and trademark system and no reasonable alternatives to the 

system exist. 

Based on information from PTO, CBO estimates that the average 

annual cost to comply with the mandate would be about $7 million, 

with less than $150,000 of those costs accruing to public entities 

and the rest accruing to private entities. Therefore, the cost for 

public and private entities to comply with the mandate would fall 

well below the annual thresholds established in UMRA for both 

intergovernmental and private-sector mandates ($77 million and 

$154 million in 2015, respectively, adjusted annually for inflation). 

The CBO contacts for this estimate are Susan Willie and Marin 

Burnett (for Federal costs), Melissa Merrell (for the impact on state 

and local governments), and Logan Smith (for the private-sector 

impact). The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

Duplication of Federal Programs 

No provision of H.R. 9 establishes or reauthorizes a program of 

the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

Disclosure of Directed Rule Makings 

The Committee estimates that H.R. 9 specifically directs to be 

completed two specific rule makings within the meaning of 5 U.S.C. 

551. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 9 amends title 

35, United States Code, and the Leahy-Smith America Invents Act, 


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129Section 281A was modified in the Committee’s executive session to address the concerns 

noted in the background section of this report. The Committee amendment eliminates requirements, for a given patent, to plead additional claims when another claim is pleaded with detailed specificity with respect to the same product or process. It has become clear over the course 

of the Committee’s consideration of this issue that an ‘‘all claims’’ pleading requirement would 

result in massively long complaints, would force the pleading of marginally relevant claims, and 

would inevitably lead to expensive and pointless motions practice. Paragraph (3)’s requirement 

to identify all accused instrumentalities, and paragraph (5)’s requirement to provide a detailed 

and specific explanation of how all claim limitations are met, is sufficient to identify which products, features, or components are accused of infringement and thus allow a defendant to determine whether it is already licensed to practice the asserted patents or is entitled to an indemnity from a supplier. Such information will effectively be disclosed because, for a given product 

or process, the complaint will make the defendant aware of all patents that such product or 

process allegedly infringes, and will provide a detailed, element-by-element explanation of why 

the product or process is alleged to infringe each such patent. 

Some have suggested that an all-claims pleading requirement is desirable because a defendant 

would not be able to challenge asserted claims in an IPR if it does not have notice of all potentially asserted claims early in the litigation, given § 315(b)’s 1-year bar on seeking an IPR after 

being sued for infringement. The Innovation Act squarely addresses this concern in targeted and 

efficient fashion in its § 9(d)(3), which amends § 315(c) of title 35 to allow a defendant, upon receiving notice of newly-asserted patent claims later in the litigation, to challenge these claims 

in an IPR through joinder to an earlier petition. In contrast, a requirement to plead all claims 

in the complaint would incentivize plaintiffs to plead even marginally relevant patent claims, 

thereby forcing defendants to seek IPR against a long list of patent claims that ultimately will 

not be pursued in the litigation. Moreover, since some amendments to pleadings must be allowed, the patent owner would still have the opportunity to assert new patent claims outside 

of § 315(b)’s 1-year bar, leaving a defendant with no sure recourse to an IPR. Section 9(c)(3)’s 

amendments to § 315(c) are a better solution to this problem. 

Finally, it has become apparent—particularly since the since the House of Representative’s 

passage of the Innovation Act in the 113th Congress on December 5, 2013—that a proper application of Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 

544 (2007), does not require that all asserted patent claims be identified in a complaint. A patent claim is akin to a legal theory of liability, and the Supreme Court has made clear that the 

‘‘[f]ederal pleading rules . . . do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.’’ Johnson v. City of Shelby, Mississippi, 

135 S.Ct. 346 (Nov. 10, 2014); see also Skinner v. Switzer, 562 U.S. 521, ___, 131 S.Ct. 1289, 

1296 (2011) (‘‘under the Federal Rules of Civil Procedure, a complaint need not pin plaintiff’s 

claim for relief to a precise legal theory’’). The Supreme Court has particularly emphasized that 

Continued 

to curb abusive patent litigation practices, and to make improvements and technical corrections. 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 9 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in 

clause 9(e), 9(f), or 9(g) of Rule XXI. 

Section-by-Section Analysis 

Section 1. Short title; table of contents. 

This Act may be cited as the ‘‘Innovation Act.’’ 

Section 2. Definitions. 

Section 2 defines the terms ‘‘Director’’ and ‘‘Office.’’ 

Section 3. Patent infringement actions. 

(a) pleading requirements 

New § 281A establishes heightened pleading requirements for 

claims of patent infringement. Subsection (a) requires a party asserting a claim of patent infringement to identify all patents that 

are alleged to be infringed, each product or process that is alleged 

to infringe each patent, and provide a detailed and specific explanation of how each limitation of a claim is met by the product or 

process, per patent.129 For claims of indirect infringement, the comVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00061 Fmt 6659 Sfmt 5602 E:\HR\OC\HR235.XXX HR235

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‘‘[o]ur decisions in . . . Twombly and . . . Iqbal are not in point, for they concern the factual 

allegations a complaint must contain to survive a motion to dismiss.’’ City of Shelby, 135 S.Ct. 

at 347 (emphasis in original). A patent claim, of course, is not a fact—it forms no part of the 

defendant’s conduct. Rule 8 does not regulate which theories of liability are asserted or limit 

the parties to their ‘‘theory of the pleadings,’’ see 5 C. Wright & A. Miller, Federal Practice & 

Procedure § 1219—and certainly does not require that all such possible theories be stated in a 

complaint. 130See Wright & Miller, supra, at § 1219; City of Shelby, supra, at 347. 131 28 U.S.C. § 2412(d). 132 Norris v. SEC, 695 F.3d 1261, 1265 (Fed. Cir. 2012). 133Pierce v. Underwood, 487 U.S. 552, 565 (1988). 134 Id. 135 Norris v. SEC, 695 F.3d 1261, 1265 (Fed. Cir. 2012). 136 Id. 137DGR Assocs., Inc. v. United States, 690 F.3d 1335, 1342 (Fed. Cir. 2012). 138Patrick v. Shinseki, 668 F.3d 1325, 1330–31 (Fed. Cir. 2011). 

plaint or claim must also describe the acts of indirect infringement 

that contribute to or induce the direct infringement. The complaint 

must also describe the authority of the party to assert the patent 

(i.e., facts establishing an ownership interest in the patent sufficient to support standing) and the grounds for the court’s jurisdiction. 

Subsection (b) allows a party to only generally describe information that is not readily accessible to it after a reasonable inquiry, 

though it must explain why the information is not accessible and 

describe what efforts it has made to obtain the information. 

Subsection (c) preserves the liberal right to amend pleadings 

under the Federal Rules of Civil Procedure.130

Subsection (d) provides for the filing of confidential information 

under seal. 

(b) attorney’s fees 

Subsection (a) of revised § 285 provides that fees and expenses 

shall be awarded to a prevailing party unless the position and conduct of the nonprevailing party was reasonably justified in law and 

fact or special circumstances (such as economic hardship to the inventor) make a fee award unjust. This standard reflects the Supreme Court’s clarification of the standard employed by the Equal 

Access to Justice Act (EAJA),131 which governs the award of fees 

against the Federal Government. Enacted over 30 years ago, EAJA 

offers a well-developed body of caselaw to guide application of revised § 285, and sets a standard that is predictable and fair. 

Under this standard, there is no presumption that the nonprevailing party’s position was not reasonably justified simply because 

it lost the case.132 Even if a plaintiff’s allegations are rejected by 

the judge or jury, the plaintiff is immune from a fee award so long 

as its position had a reasonable basis in law and fact.133 Fees cannot be awarded if the nonprevailing party’s case was justified to a 

degree that could satisfy a reasonable person,134 or there was at 

least a dispute over which reasonable minds could differ.135

When a case turns on a legal question, courts have looked to the 

clarity of the governing law—that is, whether judicial decisions on 

the issue left the status of the law unsettled, and whether the legal 

issue was novel or difficult.136 On questions of statutory interpretation, for example, courts have asked whether the Federal courts 

were split on the matter,137 or whether the nonprevailing party interpreted a statute in a manner that is contrary to its plain language and unsupported by its legislative history.138


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139The term ‘‘inventor’’ is defined at § 100(f) of title 35. 140DGR Assocs., 690 F.3d at 1343. 141 Id. (quoting I.N.S. v. Jean, 496 U.S. 154, 161–62 (1990)). 142See, e.g., Hubbard v. United States, 480 F.3d 1327 (Fed. Cir. 2007). 143Pierce v. Underwood, 487 U.S. at 562–63. 144 Koon v. U.S., 518 U.S. 81, 100 (1996) (citation omitted); see also Cooter & Gell v. Hartmarx 

Corp., 496 U.S. 384, 402 (1990). Plenary review of the reasonableness of a nonprevailing litigant’s position on a legal question is particularly appropriate in the context of patent infringement litigation because of the amounts likely to be at stake, the specialized nature of patent 

law and the Federal Circuit’s familiarity with it, and the need to provide guidance to litigants 

as to, for example, the types of claim-construction and obviousness arguments that, even if ultimately unsuccessful, are nevertheless objectively reasonable. 145 Buckhannon Bd. and Care Home, Inc. v. West Virginia Dep’t of Health and Human Resources, 532 U.S. 598, 604 (2001). 146 Id. at 605. 147 Highway Equipment Co., Inc. v. FECO, Ltd, 469 F.3d 1027 (Fed. Cir. 2006). 

Subsection (a) clarifies that the special circumstances that justify 

the denial of a fee award to a prevailing party may include situations involving severe economic hardship to the inventor.139 The 

courts have discretion in special circumstances to protect from a fee 

award, for example, the unsophisticated independent inventor who 

brought a lawsuit to protect what he may have understood to be 

his claimed invention but whose allegations were ultimately determined not to be reasonably justified. 

This analysis is not conducted issue by issue; rather, the nonprevailing party’s litigation position is reviewed in the overall context.140 While the parties’ postures on individual matters may be 

more or less justified, the reasonable-justification test favors treating a case as an inclusive whole, rather than as atomized lineitems.141 Also, when determining whether a party is a prevailing 

party that is entitled to a fee award, courts consider the degree of 

success obtained by that party. A party whose ‘‘success’’ consists of 

a damage award that is only a very small fraction of what it originally sought is not entitled to a fee award.142

As under the EAJA, a district court’s decision to grant or deny 

a fee award under § 285(a) is reviewed for an abuse of discretion.143

This deferential standard, however, ‘‘does not mean that a mistake 

of law is beyond appellate correction. A district court by definition 

abuses its discretion when it makes an error of law.’’ 144

Subsection (b) of § 285 provides that any party to the action may, 

upon motion, require another party to certify whether or not it will 

be able to satisfy a fee award in the event that such an award is 

made against such other party. This subsection also provides that 

a party joined in the action pursuant to § 299(d) may be required 

to pay the unsatisfied portion of a fee award. 

Subsection (c) of § 285 closes a potential loophole that an abusive 

litigant otherwise might be able to exploit to impose substantial 

costs on the opposing party with an unjustified complaint while 

evading accountability under subsection (a). Under the Supreme 

Court’s Buckhannon decision, the ‘‘prevailing party’’ that is potentially entitled to a fee award includes only a party that has obtained from the court an ‘‘enforceable judgment on the merits’’ or 

a ‘‘court-ordered consent decree.’’ 145 A defendant’s ‘‘voluntary 

change in conduct,’’ even if spurred by the plaintiff’s lawsuit, is insufficient to make the plaintiff a prevailing party.146

Under Federal Circuit precedent,147 moreover, a patent owner 

can deprive a court of Article III jurisdiction over an accused infringer’s counterclaims for invalidity or noninfringement by giving 

the accused infringer a covenant not to sue for infringement—and 


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148 Id. at 1033 n.1; see also Cisco Sys., Inc. v. Alberta Telecomms. Research Ctr., 538 Fed. 

App’x 894, 898 (Fed. Cir. Aug. 29, 2013). 149 Highway Equip. Co., 469 F.3d at 1033 n.1. 150 Id. at 1035–36. 151See Jeroski v. Federal Mine Safety and Health Review Comm’n, 697 F.3d 651 (7th Cir. 

2012); Newport News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423, 444 (4th Cir. 

2011). 152See Highway Equip. Co., 469 F.3d at 1034; Wright & Miller’s Federal Practice and Procedure § 2364. 153See Highway Equip. Co., 469 F.3d at 1032, 1036. 154Doe v. Nixon, 716 F.3d 1041, 1050–51 (8th Cir. 2013); Dionne v. Floormasters Enters., Inc., 

667 F.3d 1199, 1205–06 (11th Cir. 2012); Demis v. Sniezek, 558 F.3d 508, 513 (6th Cir. 2009); 

Ma v. Chertoff, 547 F.3d 342, 344 (2nd Cir. 2008); Biodiversity Conservation Alliance v. Stem, 

519 F.3 1226, 1230 (10th Cir. 2008) (O’Connor, J.). A dismissal on account of the plaintiff’s extension of a covenant not to sue—whether with or without prejudice—also appears to tread 

closely to mooting the action through a voluntary cessation of conduct—the scenario that 

Buckhannon found to make a party immune from a fee award. 

thereby preclude the defendant from becoming a ‘‘prevailing party’’ 

on the basis of those counterclaims.148 Highway Equipment also 

held, however, that such a covenant does not deprive the court of 

jurisdiction over the patent owner’s infringement complaint,149 and 

that fees may be awarded to the defendant if the covenant results 

in dismissal of the complaint with prejudice.150 Highway Equipment would thus appear to allow a defendant to obtain prevailingparty status and hold a plaintiff accountable for an unjustified litigation position. 

Courts have also held, however, that a defendant is not a prevailing party if a complaint is dismissed without prejudice 151—and 

district courts have discretion to determine whether a complaint is 

dismissed with or without prejudice.152 Moreover, Highway Equipment itself notes that the regional courts of appeals are divided as 

to whether even a dismissal with prejudice makes the defendant a 

prevailing party and potentially eligible for a fee award.153 And finally, several regional courts of appeals have held that when a case 

is dismissed as moot—which a covenant not to sue would appear 

to require—the defendant is not a prevailing party and no fees may 

be awarded.154

To avoid subjecting patent litigants to the uncertainty surrounding this still-developing area of the law, subsection (c) provides that an infringement claimant who unilaterally extends a 

covenant not to sue to the opposing party shall be deemed to be the 

nonprevailing party for purposes of subsection (a). Subsection (c) 

applies only if the plaintiff acts unilaterally—it does not apply if, 

for example, the parties jointly stipulate to dismissal of the case. 

Subsection (c), by deeming the defendant the prevailing party, preserves only the possibility of a fee award. A plaintiff deemed nonprevailing under subsection (c) would not be subject to a fee award 

if its position and conduct were reasonably justified or special circumstances would make an award unjust. Subsection (c) protects 

the rights of a defendant who believes that he has been the target 

of an abusive complaint, and who would have preferred to continue 

the litigation in order to hold the plaintiff accountable for his position or conduct under subsection (a). 

An exception is made to subsection (c) for a plaintiff who seeks 

dismissal of his claims early in the litigation, when he would be allowed to do so without a court order under Rule 41. A patentee who 

timely reconsiders the wisdom of his infringement claims, extends 

a covenant not to sue to the opposing party, and seeks such early 

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155 It is clear that a defendant in an infringement action whose success in a copending reexamination or review proceeding results in dismissal of the civil action is regarded as the prevailing party in the civil action. See, e.g., Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 

1320–21 (Fed. Cir. 2004). This rule is legally well-grounded and is sound policy, given the extent 

to which such proceedings increasingly serve as an alternative to, and are statutorily intertwined with, district court actions. See, e.g., 35 U.S.C. § 315(b). The Committee thus declines 

to displace or disturb this rule. 156 New Idea Farm Equip. Corp. v. Sperry Corp., 916 F.2d 1561, 1566 (Fed. Cir. 1990); Woodland Trust v. Flowertree Nursery, Inc., 148 F.3d 1370–71 (Fed. Cir. 1998). 157See Examination Guidelines for Implementing the First Inventor To File Provisions of the 

Leahy-Smith America 

Invents Act, 78 Fed. Reg. 11059, 11062, 11075 (Feb. 14, 2013). Subsection (g) is preserved 

with respect to the limited universe of pre-AIA patents to which § 273 applies. 158See Bradley v. School Bd. of City of Richmond, 416 U.S. 696 (1974); Hutto v. Finney, 437 

U.S. 678, 694 n.23 (1978) (‘‘this court’s general practice’’ is to apply newly enacted fee-shifting 

statutes to ‘‘all cases pending on the date of enactment’’). 159Start-up companies and research universities are protected by paragraph (7)(B), which excludes from § 299(d)’s reach those who commercially practice, make substantial preparations to 

commercially practice, or conduct research in ‘‘technology in the field of the subject matter.’’ 

‘‘Technology’’ has the same meaning in paragraph (7)(B) as in § 18 of the AIA, and does not include mere business methods. See Leahy-Smith America Invents Act, PUB. L. NO. 112–29, 

§ 18(d)(1) (2011); Transitional Program for Covered Business Method Patents—Definitions of 

Covered Business Method Patent and Technological Invention, 77 Fed. Reg. 48,734, 48,735 (Aug. 

14, 2012) (discussing 37 C.F.R. § 42.301). 

bility of an award of attorney’s fees. The abusive litigant, however, 

who delays and forces the defendant to incur large costs—and who 

subsequently dismisses his complaint and unilaterally extends a 

covenant not to sue in order to moot the defendant’s counterclaims—could be held to account under subsection (a).155

Section 3(b)(2)(B) of the Innovation Act strikes subsections (f) 

and (g) of § 273 of title 35. Subsection (f) deems particular cases 

‘‘exceptional’’ for purposes of § 285—a standard that will no longer 

be employed by § 285. Subsection (g) provides that a patent shall 

not be deemed invalid solely because a defense is established under 

§ 273. The subsection ensures that the fact that a patent owner or 

third party made secret use of an invention that qualifies as a prior 

commercial use within the meaning of § 273 will not necessarily result in a loss of right to patent.156 Because such uses, however, are 

not invalidating under current law, subsection (g) no longer serves 

any purpose and is repealed.157

Section 3(b)(3) of the Act applies revised § 285 to cases filed on 

or after the date that is 6 months prior to the enactment of the Act. 

This is in accord with precedents applying new fee-shifting statutes 

to pending cases,158 and will preclude an unseemly rush to file 

cases in the period immediately prior to the enactment of the Act. 

(c) joinder of interested parties 

New § 299(d) of title 35 provides that if a plaintiff is unable to 

pay fees and expenses awarded pursuant to § 285, the court may 

join in the action and hold liable for fees any interested party of 

that plaintiff. The provision was modified in the Committee’s executive session to make clear that it applies only to patent assertion 

entities, and does not apply to start-up companies or to named inventors or coinventors who are asserting their patents.159 Section 

299(d) also does not extend liability to bona fide employees of the 

plaintiff, law firms compensated in relation to the legal services 

provided, or passive investors who lack the ability to direct or control the patentee’s litigation. New paragraph (4) provides that the 

provision is not triggered unless the defendant files an initial statement indicating that the patentee is a patent assertion entity, and 


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160 In assessing whether activities are undertaken primarily for purposes of establishing 

venue, courts should consider the nature of the plaintiff and the place where venue is sought. 

An operating company should be presumed to undertake its activities primarily in pursuit of 

those operations, and discovery into its motives for establishing its facilities in an area is unnecessary. For an entity that lacks a substantial interest in the patent other than asserting it in 

litigation, the court should consider the district where venue is sought. If the chosen venue is 

not one that is disproportionately burdened with patent litigation, and the plaintiff engages in 

significant research and development or manufacturing, the choice of venue should be presumed 

bona fide and discovery is unnecessary absent substantial initial evidence to the contrary. 

When, however, an entity that lacks a substantial non-litigation interest in the patent asserts 

that venue is present in a district that is disproportionately burdened with patent cases, the 

plaintiff should bear the burden of demonstrating that it satisfies all of paragraph (5)’s requirements, and some discovery may be appropriate. 161 Because such activities must be significant, bona fide, and result in the production of tangible goods, merely replicating software or running a website is not sufficient to satisfy subparagraphs (B) and (C). 

the patentee fails to certify and demonstrate that it is not a patent 

assertion entity or that it will be able to satisfy a fee award. 

(d) stay of discovery pending preliminary motions 

New § 281B stays discovery in patent cases during the pendency 

of certain preliminary motions. Such a stay only applies if the preliminary motion is filed within 90 days of the service of the complaint. The stay expires when all motions are decided, and the motions must be decided before a scheduling order is issued or other 

substantive motions are decided. An exception to the stay of discovery is allowed for discovery necessary to decide the preliminary 

motion, when necessary to prevent competitive harm to the patent 

owner, or when the parties consent to an exception. 

(e) sense of congress 

Subsection (e) expresses the sense of congress with respect to 

patent demand letters. 

(f) demand letters 

Subsection (f) adds an undesignated paragraph to the end of 

§ 284 of title 35 that provides that pre-suit notification of infringement may not be relied on to establish willfulness unless such notification identifies with particularity the patent and the accused 

products or process and explains why a claim is infringed to the extent possible following a reasonable inquiry. 

(g) venue 

Paragraph (1) establishes limits on the venue where a patent-infringement action or declaratory-judgment invalidity or non-infringement action may be brought. Amended § 1400(b) limits patent 

venue to the district where the defendant is headquartered or incorporated, where it has a regular and established physical facility 

that gives rise to the acts of infringement, where the defendant has 

agreed or consented to be sued for the action in question, where the 

named inventor or a co-inventor conducted research and development that led to the patent in suit, or where a party has a regular 

and established physical facility that it controls and operates, not 

primarily for purposes of creating venue,160 and from which such 

party managed research and development that led to the patent or 

where it made a tangible product that embodies the patent in 

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162 Id. (citations omitted). 163 516 F.3d 1003, 1004 (Fed. Cir. 2008). 164 In assessing whether issuance of the writ is appropriate, the Court may consider, for example, whether relief is sought from a district that is burdened with a disproportionate number 

of patent infringement actions, and whether the passage of time and the development of caselaw 

applying amended § 1400(b) has resulted in a proportionate distribution of patent litigation 

across judicial districts and thus rendered continued enhanced access to mandamus relief unnecessary. 165To further conserve Federal appellate resources, the Court may dispose of mandamus petitions by remand for reconsideration in view of intervening authority, or by summary reversal. 166The Committee is aware that some industry representatives have recommended that decisions on motions to transfer be made subject to interlocutory appeal. See May 2015 Senate hearing, Statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems 

Inc., at *12. The Committee is at the present time persuaded that enhanced access to mandamus relief will be sufficient to ensure that the amended § 1400(b) is consistently and effectively enforced. Should this prove not to be the case, however, the Committee will revisit the 

question of whether an interlocutory appeal should be authorized. 

lished physical facility in the United States, venue is provided 

under § 1391(d) of title 28. 

Paragraph (2) provides enhanced access to mandamus relief for 

a party whose motion to transfer on the basis of new § 1400(b) has 

been improperly denied. Under Federal Circuit precedent, ‘‘three 

conditions must be satisfied before [mandamus relief] may issue.’’ 

In re Procter & Gamble Co., 749 F.3d 1376 (Fed. Cir. 2014). ‘‘The 

petitioner must show a clear and indisputable right to relief. The 

petitioner must lack adequate alternative means to obtain the relief it seeks. And even if the first two prerequisites have been met, 

the issuing court, in the exercise of its discretion, must be satisfied 

that the writ is appropriate under the circumstances.’’ 162

The P&G case involved a request by a patent owner for mandamus to prevent the USPTO from instituting an IPR for a patent. 

The court denied relief, partly on the basis that ‘‘this is not one of 

the rare situations in which irremediable interim harm can justify 

mandamus, which is unavailable simply to relieve P&G of the burden of going through the inter partes review.’’ In support of this 

proposition, the court cited In re Roche Molecular Sys., Inc.,163

which it characterized as holding that a mandamus ‘‘petitioner’s 

hardship and inconvenience in going through trial d[oes] not provide a basis for mandamus.’’ 

Paragraph (2) removes a barrier to mandamus review of denials 

of motions to transfer or dismiss on the basis of new § 1400(b). It 

does so by stating that being subjected to trial in a district where 

venue is improper does constitute irremediable interim harm. To 

obtain relief, however, the mandamus petitioner still must show a 

clear and indisputable right to relief—this requirement is repeated 

in paragraph (2) in order to make clear that the paragraph does 

not displace this element of the P&G test. The third prong of that 

test also remains in place: the issuing court must be satisfied that 

the writ is appropriate under the circumstances.164 This element of 

the P&G test ensures that the Federal Circuit will retain the ability to control its docket and will not be forced to entertain an overwhelming number of petitions.165 By placing a proverbial thumb on 

the scale in favor of mandamus relief, however, paragraph (2) ensures that new § 1400(b)’s writ will run in all judicial districts.166

Paragraph (3) provides that the retail facilities of a defendant 

who also manufactures the accused product—and who is thus ineligible for a customer stay under new § 296—cannot serve as the 

basis for venue under new paragraph (2) of § 1400(b). Amended 

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167Subsection (b)(2) limits the estoppel effect of the manufacturer’s suit to those issues for 

which the other elements of the doctrine of issue preclusion are met. Issue preclusion bars an 

action when ‘‘(1) the issue is identical to one decided in the first action; (2) the issue was actually litigated in the first action; (3) resolution of the issue was essential to a final judgment in 

the first action; and (4) the plaintiff had a full and fair opportunity to litigate the issue in the 

first action.’’ Laguna Hermosa Corp. v. United States, 671 F.3d 1284, 1288 (Fed. Cir. 2012). Thus 

a customer who obtains a § 296 stay will be bound as to identical and actually litigated issues 

whose resolution was essential to the final judgment in the manufacturer’s suit. 168 Because the reported version of § 296 precludes intermediate manufacturers or distributors 

who supply retailers (rather than sell to the public) from obtaining a stay, it moots concerns 

that were raised by a witness at a Subcommittee hearing that the statutory customary stay 

would allow a series of successive stays to be obtained by distributors and manufacturers of the 

infringing product. See March 2015 hearing at 33–35 (Statement of Bryan Pate, Co-Founder and 

tailers are disfavored. Consistent with that principle, paragraph (3) 

provides that a manufacturer’s retail facilities alone cannot serve 

as a basis for venue. Paragraph (3) also ensures that such retailermanufacturers are not deterred from establishing retail facilities in 

locations where they prefer not to be amenable to suit. 

Paragraph (4) clarifies that the presence of a defendant’s teleworkers in a district cannot serve as a basis for patent-infringement venue. 

(h) effective date 

This subsection applies the amendments made by section 3 to 

cases filed on or after the enactment of the Innovation Act, except 

where the individual subsections of section 3 supply their own effective dates. 

Section 4. Transparency of patent ownership. 

New § 290(b) of title 35 requires disclosure, upon the filing of an 

infringement action, of the real-parties-in interest to the patent 

and its enforcement. In the event of noncompliance, awards of attorney’s fees, and recovery of enhanced damages incurred during 

periods of non-compliance, are barred, and the adverse party may 

recover attorney’s fees that it incurred in the course of uncovering 

correct ownership information. 

Section 5. Customer-suit exception. 

New § 296 codifies and strengthens the common-law customersuit exception to a patent plaintiff’s presumptive entitlement to her 

choice of venue. It requires grant of a timely motion to stay the suit 

against the customer if the manufacturer has joined the suit or 

filed a related suit and the customer agrees to be bound by the 

final resolution of common issues in the manufacturer’s suit without the opportunity to separately litigate such issues.167 In addition, if the manufacturer was made a party to the action on motion 

by the customer, a stay is mandatory only if the manufacturer and 

customer agree in writing to the stay. 

Section 296 was narrowed in the Committee’s executive session 

to provide that only a retailer or consumer end user can qualify as 

the ‘‘covered customer’’ who may seek a mandatory stay. The definition of covered customer at paragraph (1) makes clear that the 

term does not include a party that has modified the accused product or process in a manner that is alleged to infringe the patent 

in suit, and the definitions of ‘‘retailer’’ and ‘‘end user’’ at paragraphs (5) and (6) make clear that covered customers do not include those who make or cause the making of the infringing product.168 Paragraph (2)’s definition of the covered manufacturer does, 


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CEO, ElliptiGO, Inc.). Because only retailers and customers can obtain the stay, the first stay 

will have been obtained in favor of an action involving a supplier that will not itself be able 

to seek a stay. 169Per subsection (c)(1)(A), however, a stay may not be maintained if the part that was supplied by the manufacturer is not a material part of the claimed invention. A part is ‘‘relevant’’ 

only if it is what infringes the asserted claim. 170 ‘‘[E]fficiency and judicial economy’’ have been described as the ‘‘guiding principles’’ for interpreting and applying the common-law customer suit exception. Lonestar Inventions, L.P. v. 

Sony Elecs. Inc., Civil Action No. 6:10–CV–588–LED–JDL (E.D. Tex. 2011). To ensure that this 

type of judicial solipsism does not infect the interpretation of § 296, the Committee emphasizes 

that the guiding principles for interpreting and applying the statutory customer-suit stay—as 

expressed by witnesses testifying before the Committee 

and Subcommittee—is to protect customers against the inherently coercive nature of infringement suits directed at products or processes that the defendant did not develop or design. 

however, include those who make or supply the covered product or 

a relevant part thereof. Thus a downstream manufacturer or 

wholesaler may not seek the stay, but the customer or retailer may 

obtain a stay based on the participation in the action or a separate 

action of the upstream supplier of the relevant part.169

Section 296 eliminates the inconsistencies in current law’s application of the customer-suit exception that are described in the 

background section of this report. It authorizes a stay, for example, 

whether the manufacturer is a party to the customer suit or to a 

separate related action, and it allows the customer and manufacturer to obtain a stay despite the fact that the customer is the only 

party accused of directly infringing a method claim or the customer 

has been accused of inducement of infringement.170

Subsection (c)(1) creates limited exceptions to the customer and 

manufacturer’s entitlement to a stay. Subparagraph (A) allows an 

exception for situations in which the manufacturer’s action will not 

resolve a major issue in the suit against the customer. This would 

include, for example, a suit involving only method claims in which 

the manufacturer does not contest the validity of the patent or its 

alleged infringement by the customer, and instead contends only 

that it is not liable for infringement because its product has substantial non-infringing use. It would also include a case in which 

it is clear that the major dispute over infringement or invalidity 

will concern components or materials in the covered customer’s 

product or process other than those supplied by the covered manufacturer. 

Subparagraph (B) allows an exception where a stay unreasonably 

prejudices or would be manifestly unjust to a party seeking to lift 

the stay. This would include, for example, a case in which it is 

clear that the manufacturer would be unable to satisfy a substantial damages judgment and the patent owner’s only true recourse 

is against infringing customers. A stay may also unreasonably prejudice a party if it is clear that the purported customer provided the 

infringing specifications, or the stay would be contrary to a negotiated agreement between the parties that is more than a mere 

contract of adhesion. 

Once a stay is imposed, the customer nevertheless remains a 

party to the suit, and limited discovery may be sought from the 

customer to the extent necessary to prove the case against the 

manufacturer. Thus, for example, when the manufacturer is sued 

for indirect infringement, discovery may be necessary to show that 

prerequisite direct infringement has, in fact, occurred. Customer 

discovery also may be necessary to identify all suppliers of allegedly infringing products, components, or materials. 


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171The pre-Innovation Act version of § 296, which was enacted in 1992 and attempted to address the Eleventh Amendment immunity of states, was voided in its entirety in 1999 by the 

Supreme Court in its decision in Florida Prepaid Postsecondary Education Expense Board v. 

College Savings Bank, 527 U.S. 627 (1999). The Innovation Act reclaims this long-dormant code 

section. To the extent that states and their subdivisions do not enjoy Eleventh Amendment immunity against patent-infringement actions, that liability is codified and preserved by § 271(h) 

of title 35, which continues to provide that liability for patent infringement extends to ‘‘any 

State, any instrumentality of a State, and any officer or employee of a State or instrumentality 

of a State acting in his official capacity.’’ 172 686 F.3d 372 (7th Cir. 2012) (Easterbrook, J.). 

Subsection (f) makes clear that § 296 only prescribes the conditions for a mandatory stay, and that courts retain discretion to 

grant a customer stay in other circumstances, including under the 

authority of § 296 itself. A court exercising its discretionary authority to grant a stay or expand a stay under § 296 should disregard 

the arbitrary limitations on customer stays described in the background section of this report, such as rules followed by some courts 

that stays may not be entered in component cases or when the 

manufacturer only induces infringement. Rather, courts exercising 

the discretionary stay authority preserved by subsection (f) should 

be guided by the principles embodied by § 296: that a customer stay 

is appropriate when it is clear that a manufacturer who is willing 

to litigate the case is in a better position to understand and defend 

against the allegations of infringement.171

Section 6. Procedures and practices to implement and recommendations to the Judicial Conference. 

Subsection (a) requires six or more district courts that are currently participating in the patent pilot program to develop rules 

and procedures to address the asymmetries in discovery burdens 

and costs in patent cases and address case management procedures 

in patent cases. Subsection (b) requires the six courts to implement 

these rules as a pilot program. Subsection (c) authorizes the Judicial Conference to apply all or some of the rules and procedures to 

all district courts after they have been in effect for 2 years. 

Subsection (d) requires the Supreme Court to eliminate its current short-form patent complaint—Form 18—from the Appendix of 

the Federal Rules of Civil Procedure, and provides that the Court 

may prescribe a new form that, at minimum, notifies accused infringers of the asserted claim or claims, the products or services accused of infringement, and the plaintiff’s theory as to how an accused product or service meets each limitation of each asserted 

claim. 

Subsection (e), by adding 11 U.S.C. § 365(n) to the mandatory 

provisions that must apply in a Chapter 15 bankruptcy proceeding 

when relevant, provides certainty to licensees of patents and other 

intellectual property by guaranteeing that such licenses cannot be 

terminated in the United States via a foreign bankruptcy proceeding. The amendment also clarifies that trademark licenses are 

protected against being voided in bankruptcy, effectively codifying 

the Seventh Circuit’s approach in Sunbeam Prods., Inc. v. Chicago 

Am. Mfg., LLC.172 Because of the importance of providing certainty 

to manufacturers that they will be allowed to practice licensed 

technology in the United States, the amendment is made fully retroactive, applying to cases pending at any level of appeal or review. 

Subsection (f) requires the Judicial Conference to prepare a report on discovery in patent cases. 


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173 415 F.3d 1303 (Fed. Cir. 2005). 

Section 7. Small business education, outreach, and information access. 

Subsection (a) establishes a small business education and outreach program and directs the USPTO to provide information to 

small businesses to address concerns arising from patent infringement. Subsection (b) directs the USPTO to provide to the public on 

a website information about patent ownership that has been disclosed to the Office as a result of litigation. 

Section 8. Studies on patent transactions, quality, and examination. 

Subsection (a) directs the USPTO to conduct a study of the developing secondary market for patents in the United States, and to 

make recommendations as to how to promote transparency and 

fairness in such markets. 

Subsection (b) directs the USPTO to conduct a study of patents 

owned by the United States, how such patents are licensed, and 

how different agencies maintain records of such licenses, and to 

provide recommendations as to whether restrictions should be imposed on the transfer of patents by the United States. 

Subsection (c) directs the Comptroller General to conduct a study 

of patent examination and relevant technology. 

Subsection (d) requires the Director of the Administrative Office 

of the United States Courts to conduct a study regarding proposals 

to create a patent small-claims court. 

Subsection (e) requires the USPTO to conduct a study on patent 

demand letters. 

Subsection (f) directs the Comptroller General to conduct a study 

of litigation involving business-method patents. 

Subsection (g) requires the USPTO to conduct a study on the impact of the Innovation Act on individuals and small businesses 

owned by women, minorities, and veterans to secure and assert 

patents. 

Section 9. Improvements and corrections to the America Invents Act. 

(a) repeal of could-have-raised estoppel for civil litigation following post-grant review 

This subsection corrects the so-called scrivener’s error in 

§ 325(e)(2) of title 35, repealing the could-have-raised estoppel that 

was inadvertently applied by the AIA to civil litigation following 

the completion of a post-grant review. Estoppel in civil litigation 

will henceforth be limited to those issues that were actually raised 

and decided in the post-grant review. Could-have-raised estoppel 

will continue to apply to other USPTO proceedings following the 

completion of a post-grant review, and to all proceedings following 

completion of an inter partes review. 

(b) reform of PTAB proceedings 

Paragraphs (1) and (2) direct the USPTO to follow civil-litigation 

standards of claim construction, currently authoritatively described 

in Phillips v. AWH Corp.,173 when construing claims in AIA trials. 

The USPTO will be permitted to continue to give claims their 

broadest reasonable interpretation during examination and in 


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174 Use of the broadest reasonable interpretation of claims is appropriate during prosecution 

and reexamination of a patent because, during such proceedings, ‘‘a patent applicant has the 

opportunity and the responsibility to remove any ambiguity in claim term meaning by amending 

the application.’’ In re Bigio, 381 F.3d 1320, 1324 (Fed. Cir. 2004). ‘‘Only in this way can uncertainties of claim scope be removed, as much as possible, during the administrative process.’’ In 

re Zletz, 893 F.2d 319, 321 (Fed. Cir. 1990). By requiring the patentee or applicant to address 

at least those ambiguities identified by the examiner during the administrative process, the 

PTO thus avoids leaving ‘‘the public to guess about which language the drafter deems necessary 

to his claimed invention and which language is merely superfluous, nonlimiting elaboration.’’ 

Bicon, Inc. v. The Straumann Co., 441 F.3d 945, 950 (Fed. Cir. 2006). 175See, e.g., Research in Motion Corp. v. Multimedia Ideas LLC, IPR2013–00036, Paper 15 

(PTAB Mar. 18, 2013). 

other administrative proceedings.174 This subsection also requires 

the PTAB to consider an existing district court claim construction 

of relevant terms in a patent when the PTAB is construing those 

terms, but allows the Board to reject a district court interpretation 

that it finds to be clearly erroneous. 

Regulations implementing this subsection’s amendments, like all 

regulations promulgated pursuant to §§ 316 and 326 of title 35, 

must, pursuant to subsection (b) of those sections, be implemented 

with consideration of ‘‘the efficient administration of the Office’’ 

and ‘‘the ability of the Office to timely complete proceedings instituted under’’ chapters 31 and 32. District court claim construction 

therefore must be adapted to the unique nature of inter partes and 

post-grant reviews, and should not be accompanied in those proceedings by unnecessary and time-consuming procedures such as a 

formal Markman hearing. 

Paragraphs (1) and (2) also require a petitioner for an AIA trial 

to certify that she does not hold a short position in the stock of the 

patent owner, and has not demanded anything of value from the 

patent owner in exchange for not filing the petition. The Committee anticipates that the prospect of disciplinary proceedings 

under § 32 and sanctions under §§ 316(a)(6) and 326(a)(6) will be 

sufficient to ensure accurate certifications, and thus discovery into 

such matters under §§ 316(a)(5) and 326(a)(5) will not be warranted. 

Paragraph (3) exempts CBM proceedings from the first of the 

new requirements applied by paragraph (2). 

Paragraph (4) requires the USPTO to allow patent owners to 

present the same type of declaration evidence in their preliminary 

responses under §§ 313 and 323 that petitioners are permitted to 

include in a petition for an AIA trial. 

Paragraph (5) requires the USPTO to consider the rights of due 

process of patent owners and petitioners when promulgating and 

applying regulations implementing AIA trials. 

Paragraph (6) makes precedential several PTAB decisions applying §§ 325(d) and 315(e)’s restrictions on serial or redundant petitions. Section 325(d) in particular is an important guarantee of 

‘‘patent peace’’—it applies when the same or substantially the same 

prior art or arguments have been considered by the Office, and 

does not depend on an identity between the parties asserting such 

art or arguments. The more recent PTAB decisions made precedential by this paragraph signal a departure from early Board decisions that inappropriately relied on § 325(d)’s discretionary nature 

to simply ignore its limitations without explanation,175 or that suggested that mere inclusion of a declaration or a new but cumulative 

secondary reference necessarily defeats application of § 325(d)’s 


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176See, e.g., Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd., IPR2013–00064, Paper 11 

(PTAB April 30, 2013). 177 Under § 9(c)(2)(A), the new statutory double patenting provisions for first-inventor-to-file 

patents apply to the same extent as though these new provisions had been enacted as part of 

the America Invents Act. This effect for the amendments to 35 U.S.C. § 102 assures that all 

first-inventor-to-file patents will be subject to the same prior art provision within the patent 

statute. 178 New 35 U.S.C. § 102(e) establishes a claim-by-claim prior art relationship between each 

pair of claims of the two patents for which neither of the pair of claims was otherwise prior 

art to the other. It does so by making the claim (the ‘‘first claim’’) from the earlier-filed patent 

(the ‘‘first patent’’) prior art to the claim (the ‘‘second claim’’) from the later-filed patent (the 

‘‘second patent’’). If the pair of claims from the two patents were both effectively filed on the 

same day, then each is made prior art to the other (i.e., each claim becomes both a ‘‘first claim’’ 

from a ‘‘first patent’’ and a ‘‘second claim’’ from a ‘‘second patent’’). 179 A ‘‘restriction requirement’’ is an administrative finding by a patent examiner that the 

claims of a single patent application properly belong in separate patents. It is grounded on the 

examiner’s determination that division of the claims into separate patents is appropriate because the respective claimed inventions that would issue in separate patents are independent 

and distinct. See 35 U.S.C. § 121. 180See St. Jude Medical, Inc. v. Access Closure, Inc., 729 F. 3d 1369, 1377 (Fed. Cir. 2013). 

strictures regarding petitions presenting the same or substantially 

the same prior art.176

Paragraph (7) authorizes the Director to allow a petitioner’s 

reply to the patent owner’s preliminary response under § 313, and 

adjusts other time limits to accommodate such a reply. Such a 

reply may only be allowed, however, if the preliminary response 

raises new issues—for example, if the patent owner alleges that the 

petition is barred by § 315(b) or should be rejected because the petitioner has not disclosed all of its real parties in interest. 

(c) obviousness-type double patenting 

Section 9(c) codifies double patenting principles that heretofore 

have been almost entirely administered through non-statutory, judicially imposed grounds for invalidating patents.177 This codification will supersede the entirety of the judge-made double patenting 

doctrine for first-inventor-to-file patents. 

The new statutory provisions will implement a fundamental principle underlying all of U.S. patent law—specifically, that each of 

the valid claims of any one issued U.S. patent should be 

‘‘patentably distinct’’ (i.e., differ in some inventive manner) from 

each of the valid claims of every other issued U.S. patent. When 

existing statutory prior art limitations would otherwise fail to ensure this result, the new double patenting prior art provisions for 

first-inventor-to-file patents will apply to require that any two such 

patents containing patentably indistinct claims cannot both be 

valid absent enforcement-related restrictions that operate to prevent the separate enforcement of the two patents. 

The new prior art provisions in 35 U.S.C. § 102(e) apply to any 

pair of first-inventor-to-file patents that are not otherwise prior art 

to one another by rendering the claims from one (or both) of the 

respective patents prior art with respect to the claims of the other 

patent.178 This prior art effect is subject to two exceptions. 

First, under proposed § 102(e)(1), if the issuance of separate patents resulted from a ‘‘restriction requirement’’ imposed by the Office,179 the prior art relationship under § 102(e) is avoided to the 

extent that the claims of the two patents are limited in a manner 

consonant with a requirement for restriction. 180 This ‘‘restriction 

requirement’’ exception supersedes a corresponding statutory ‘‘safe 

harbor’’ provision contained in the third sentence in 35 U.S.C. 


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181 Under 35 U.S.C. § 121, third sentence, double patenting is made inapplicable to divisional 

applications where claims are consonant with a restriction requirement. This sentence is unnecessary given the codification contained in 35 U.S.C. § 102(e)(1). 182For example, the ‘‘divisional application’’ limitation contained in the 35 U.S.C. § 121 (third 

sentence) ‘‘safe harbor’’ is not present in the 35 U.S.C. § 102(e)(1) exception, and thus the holding in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc., 518 F. 3d 1353, 1362 (Fed. Cir. 2008), 

that is based on this limitation is inapplicable to § 102(e)(1). 183For convenience, a patent in which an election under 35 U.S.C. § 102(e)(2) has been made 

is referred to as an ‘‘election patent’’ herein. As noted supra, it is described in 35 U.S.C. § 102(e) 

itself as a ‘‘second patent.’’ 184See § 102(e)(2)(A). 185See § 102(e)(2)(B). The second component of the election requirement is inherently satisfied 

when the two patents involved in the double patenting are owned by the same person. In double 

patenting situations, other than those arising under § 102(c), common ownership of both patents 

involved in the double patenting is typically present. 186See 35 U.S.C. § 154(b). 187See 35 U.S.C. § 154(b)(1)(B), setting forth a ‘‘GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY,’’ a provision designed to ensure that 17 years of the 20-year patent term would 

remain once the pending application issued as a patent. Nothing in the patent term adjustment 

§ 121.181 Section 9(c)(1)(B) repeals that sentence in § 121 for firstinventor-to-file patents. The repeal eliminates the possibility of any 

confusion that might otherwise arise as to the possible continued 

relevance of the repealed text or its possible inconsistency with the 

exception set forth in new § 102(e)(1).182

Second, when the owner of the later-sought of the two patents (or 

each of the respective owners of the two patents if their patents 

were effectively filed on the same day) has elected to limit the separate enforcement of its patent, the prior art relationship that 

would otherwise be imposed under 35 U.S.C. § 102(e) is removed. 

This election requirement is provided in proposed § 102(e)(2) and 

has two separate components. 

Under the first component, the right to bring an action to enforce 

a patent for which the § 102(e)(2) election has been made, i.e., an 

‘‘election patent,’’ 183 is disclaimed to the extent that such an enforcement action would have been barred by res judicata had the 

asserted claims of the election patent instead been issued in the 

other patent involved in the double patenting.184 This requirement 

limits the ability to bring a separate enforcement action asserting 

the election patent where the other patent has already been enforced. 

The second component of the election establishes requirements 

that apply to the owner of the other patent involved in the double 

patenting. These requirements must be met by the owner of the 

other patent before the election patent can be enforced, and they 

apply to the owner of the other patent until it is no longer possible 

to bring or maintain an action to enforce that patent. This second 

component requires that the owner of the other patent either must 

have filed its own election to limit separate enforcement of the 

other patent under § 102(e)(2), or it must be a party to the action 

to enforce the election patent.185

Any election patent is subject to a further limitation with respect 

to the term of the patent. Patents subject to the 20-year patent 

term provision of the URAA may qualify for patent term adjustments that can move the expiration date of the patent beyond the 

end of the 20-year term measured from the priority date.186 Patent 

term adjustment can result in situations where the combined protection period for the two patents involved in the double patenting 

could exceed the 17-year maximum term of protection that the patent term adjustment provisions were intended to secure.187


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provisions of 35 U.S.C. § 154(b) operates to secure more than this 17-year period for any individual patent that might issue. 188 If the term of the election patent would be longer than 17 years in the absence of any patent term adjustment, i.e., based upon the prompt issuance of the patent after the initial patent 

filing, § 9(c)(1)(D)’s limitation on patent term adjustment would have no impact on the term of 

the election patent. 189 If one of two patents involved in double patenting issues within 3 years from its nonprovisional filing date, patent term adjustment would be unavailable for the election patent. In this 

situation, the limitation in § 9(c)(1)(D) supersedes any other patent term adjustment for which 

the election patent might have qualified. 190These policy justifications are discussed in the background section of this report. 191Gilead Sciences, Inc. v. Natco Pharma Ltd., 753 F. 3d 1208 (Fed. Cir. 2014), is legislatively 

abrogated to the extent that the holding in that appeal was based on a finding that the 20- 

year URAA term of the invalidated patent constituted an unjustified timewise extension of the 

patent owner’s exclusive rights. 192See 37 C.F.R. § 1.321. 193See § 9(c)(2)(D)(i)(III). 194See § 9(c)(2)(D)(ii). 195See § 9(c)(2)(D)(iii). 196These rules of construction, like those in § 9(C)(2)(D), take effect upon enactment, but do 

not apply to any invalidity defense raised in a patent infringement action brought before the 

date of enactment. See § 9(c)(2)(F). 

Section 9(c)(1)(D) provides a limitation on patent term adjustment that voids any adjusted patent term for an election patent to 

the extent that the combined post-issuance patent term for both 

patents involved in the double patenting would exceed 17 years.188

This limitation can eliminate eligibility for patent term adjustment 

for an elected patent altogether in certain situations.189 Subparagraph (D) operates to remove the last vestige of the type of preURAA extensions of patent rights that justified limiting the patent 

terms of URAA patents in situations of double patenting.190

Because the new prior art provisions of § 102(e) will apply to all 

first-inventor-to-file patents, including patents issued before the 

date of enactment, a ‘‘savings clause’’ in § 9(c)(2)(B) of the Innovation Act makes new § 102(e) inapplicable to any patent issued before the date of enactment that would not have been invalid absent 

the enactment of § 102(e). 

Section 9(c)(2)(C) reaffirms the Office’s practice of making provisional rejections for double patenting. This provision expressly authorizes the Office to continue to make provisional rejections for 

double patenting prior to the issuance of patents on applications 

containing patentably indistinct claims. 

Section 9(c)(2)(D) discontinues the Office’s practice of requiring 

disclaimers of patent term in situations involving double patenting 

for patents subject to the 20-year URAA patent term.191 In lieu of 

the current ‘‘terminal disclaimer’’ 192 requirements, the Office is 

permitted to condition the issuance of a patent subject to the 20- 

year URAA patent term on the filing of an election under 35 U.S.C. 

§ 102(e)(2).193 Additionally, for terminal disclaimers filed in patent 

applications pending on or after July 1, 2015, the effect of such a 

disclaimer can be nullified if an election under 35 U.S.C. § 102(e)(2) 

is made with respect to the application or the patent issuing on the 

application within 1 year from the date of enactment.194 Terminal 

disclaimers currently in effect are otherwise unaffected.195

Section 9(c)(E) provides further rules of construction.196 Under 

clause (i), all non-statutory double patenting grounds for invalidating first-inventor-to-file patents are barred. Under clause (ii), 

non-statutory double patenting grounds for invalidating first-to-invent patents are barred to the extent a prior art relationship exists 

between the claims of the respective patents. This limitation is imposed because such a prior art relationship assures that the respecVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00075 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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197 In re Hubbell, 709 F.3d 1140 (Fed. Cir. 2013), is legislatively abrogated given that the facts 

of the case indicate that the claims of the respective patents had a prior art relationship under 

pre-AIA § 102(g). 198 133 S.Ct. 1059 (Feb. 20, 2013). 199 715 F.3d 1329, 1334 (Fed. Cir. 2013) (noting that ‘‘arising under’’ jurisdiction over particular ‘‘state law claims premised on allegedly false statements about patents. . . . may well 

have survived the Supreme Court’s decision in Gunn’’). 200See, e.g., Scherbatskoy v. Halliburton Co., 125 F.3d 288 (5th Cir. 1997); U.S. Valves, Inc. 

v. Dray, 190 F.3d 811 (7th Cir. 1999); Additive Controls & Measurement Sys., Inc. v. Flowdata, 

Inc., 986 F.2d 476 (Fed. Cir. 1993); Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 

1318 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 

175 F.3d 1356 (Fed. Cir. 1999). 

tive claims of the two patents can be valid only if directed to 

patentably distinct subject matter.197

(d) PTO patent reviews 

Paragraph (1) amends AIA § 18(a)(1)(C) to allow patents and 

published applications to be effective as prior art against a firstto-invent business-method patent as of their effective filing dates. 

Paragraph (2) authorizes the Director to waive the fee for filing 

a CBM proceeding. 

Paragraph (3) allows a petitioner to employ § 315(c) joinder to 

join a new petition to a pending inter partes review to which it is 

already a party. Such same party joinder, which is not subject to 

the § 315(b) time limitation, may be exercised for good cause 

shown. Good cause would necessarily include situations where a 

patent owner has submitted contentions asserting additional claims 

of a patent in litigation only after the defendant has filed a petition 

under § 311 challenging the claims that were initially asserted. 

This will allow an IPR petitioner to limit its petition to those 

claims asserted against it in litigation, without fear that § 315(b) 

may preclude it from challenging additional patent claims that are 

asserted later. 

(e) clarification of jurisdiction 

This subsection abrogates Gunn v. Minton,198 restoring the Federal courts’ jurisdiction over patent legal-malpractice cases. It also 

establishes that actions that necessarily require resolution of a disputed question as to the validity or scope of a patent ‘‘arise under’’ 

the patent laws. The subsection thus clarifies that it is not necessary to exclusive Federal patent jurisdiction that a case also require interpretation of a Federal statute or affect numerous parties 

or the Federal Government. The provision effectively codifies the 

Federal Circuit’s recent dicta in Forrester Environmental Services,199 and ensures the continuing vitality of the Federal Circuit 

and regional circuits’ pre-Gunn precedents recognizing patents 

‘‘arising under’’ jurisdiction over certain state-law business-disparagement and breach-of-contract actions.200

This clarification is applied to all pending and future cases. It is 

applied to pending cases so that courts will not be required to determine whether Gunn’s enumeration of ‘‘substantiality’’ factors is 

intended to be exclusive, or what exactly Gunn means with respect 

to state-law breach of contract and unfair competition cases that 

turn on whether a product or process infringes a patent. An exception is made, however, for cases in which a Federal court already 

has determined its ‘‘arising under’’ patents jurisdiction—those 


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courts will not be required to revisit such determinations for those 

cases, despite the enactment of this provision. 

(f) extension of patent pilot program 

This subsection extends by an additional 10 years the duration 

of the patent pilot program operating in certain district courts that 

was established by Public Law No. 111–349 (2011). 

(g) management of the USPTO 

This subsection clarifies the authority of the Deputy Director to 

serve as Acting Director. 

(h) technical corrections 

(1) § 102 

This paragraph makes a nonsubstantive stylistic correction to 

the Patent Code. It amends § 102 so that it consistently uses the 

term ‘‘the inventor or a joint inventor or another,’’ rather than alternating between that phrase and ‘‘the inventor or joint inventor 

or by another.’’ The change has no substantive effect, and creates 

linguistic uniformity and eliminates a potential ambiguity in the 

section. 

(2) inventor’s oath or declaration 

This paragraph allows the Director to dispense with the filing of 

an oath or declaration under § 115 of title 35 as she deems appropriate. This could include, for example, with respect to continuing 

applications for patent under §§ 120 and 121, where the separate 

§ 115 requirement can be a redundancy. The amendments thus remove unnecessary paperwork from the patent examination process. 

(3) assignee filers 

Section 4(b) of the AIA amended 35 U.S.C. § 118 to broadly authorize assignees (rather than just inventors) to file their own patent applications. Per section 4(e) of the AIA, this authorization applies to all applications filed on or after the date that is 1 year 

after the enactment of the AIA (i.e., September 16, 2012). 

The AIA neglected, however, to make a conforming change to 

§ 119(e)(1) to allow the assignee filer to claim the benefit of the filing date of an earlier provisional application. That section still requires that the application claiming the earlier date be filed ‘‘by an 

inventor or inventors named’’ in the provisional application. Although the courts might overlook this legislative mistake (which 

would otherwise vitiate the effect of the AIA’s changes to § 118 for 

provisional filers), the Committee thinks it best to simply correct 

this oversight in the present bill. 

This paragraph also amends the language of § 120 to make a stylistic change similar to that made by paragraph (1), while also reenacting AIA § 3(f)’s conforming amendment for assignee filers and 

giving the new conforming amendment a proper effective date. The 

AIA amended § 120 that authorized assignee applicants (rather 

than just inventor applicants) to claim the benefit of the filing date 

of a parent application in a continuation application. Unfortunately, however, this conforming change to § 120 was included in 

§ 3(f) of the AIA. Per § 3(n) of the AIA, the changes made by AIA 


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201 715 F.3d 891 (Fed. Cir. 2013). 202See id. at 897, n.3. 

§ 3(f) apply only to first-inventor-to-file patents. A large number of 

patents filed after September 16, 2012, however, will continue to be 

first-to-invent patents. Absent the revision made by this paragraph, there could be a substantial number of first-to-invent patents filed by assignees after September 16, 2012 whose owners 

would later discovered that they are unable to claim the benefit of 

a parent application’s priority date. The revisions made by this 

paragraph ensure that the conforming change accommodating assignee filers will apply to all patents (including first-to-invent patents) for which § 4(b) of the AIA authorizes assignee filing. 

This paragraph also conforms § 120 to the proper linguistic formulation: ‘‘the inventor or a joint inventor.’’ Sections 100(f) and (g) 

of title 35 now define ‘‘inventor’’ and ‘‘joint inventor.’’ The former 

refers to the entire inventive entity (i.e., all of the joint inventors), 

and thus should always be preceded by the definite article. The latter (‘‘a joint inventor’’) is necessarily one of the several who invented the subject matter. This paragraph’s edits, though nonsubstantive, ensure usage consistent with these meanings. 

(4) derived patents 

This paragraph makes the same nonsubstantive stylistic change 

to § 291(b) of title 35 that paragraph (1) makes to § 102 of that title. 

(5) specification 

This paragraph amends the effective date of the AIA’s addition 

of subsections and titles to § 112 so that the new citation format 

will be used in all proceedings and matters after enactment of the 

present bill. This will simplify citation to § 112, which currently is 

understood to be required to be cited by its pre-AIA, undesignated 

paragraphs for patents issuing from an application filed before September 16, 2012: Biosig Instruments, Inc. v. Nautilus, Inc.,201 recently held that the AIA’s addition of substructure to § 112 applies 

only with respect to patents issued after September 16, 2012.202

The only rational purpose of adding substructure to § 112, however, 

is to simplify citation to it—a purpose that is entirely defeated by 

the current approach. Under Biosig, the patent bar would be required, for the next quarter century, to first identify the issue date 

of a patent before it could determine whether to cite to the subsections of current § 112 or to the undesignated paragraphs of preAIA § 112. This paragraph avoids such absurdities by making the 

AIA’s addition of subsections and titles to § 112 immediately applicable in all proceedings and matters, and thereby eliminating the 

need to ever again cite to the undesignated paragraphs of pre-AIA 

§ 112. 

(6) time limit for commencing misconduct proceedings 

This paragraph addresses several problems that the USPTO’s Office of Enrollment and Discipline has encountered under the AIA’s 

new 1-year deadline for commencing misconduct proceedings. 

These amendments to § 32 ensure that the deadline only runs from 

when the USPTO receives a written grievance about an attorney’s 

misconduct, rather than from when the USPTO receives any 


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203 Changes to Implement the Patent Law Treaty, 78 Fed. Reg. 62368, 62390 (Oct. 21, 2013). 

knowledge of the misconduct (such as from a news story). The 

amendments also toll the deadline while a trial court’s finding of 

misconduct is appealed, so that the USPTO is not required to commence a misconduct proceeding before an appeals court can review, 

for example, a trial court’s finding that inequitable conduct has occurred. The amendments also allow the parties to agree to toll the 

deadline. Finally, these amendments add an additional 6 months 

to the time by which the Director must commence a misconduct 

proceeding once a written grievance has been received. These 

amendments apply to all misconduct proceedings commenced after 

the enactment of the Innovation Act. 

(7) patent owner response 

Sections 316(a)(8) and 326(a)(8) of title 35 each provide for ‘‘the 

filing by the patent owner of a response to the petition under section 313 [or 323] after a . . . review has been instituted.’’ The citation to §§ 313 and 323 is incorrect—reviews are instituted under 

§§ 311 and 321. Sections 313 and 323 only authorize the patent 

owner to file a preliminary response to the petition before the review is instituted. These amendments correct this miscitation. 

(8) international applications 

Paragraph (7) of section 202(b) of the Patent Law Treaties Implementation Act (‘‘PLTIA’’) amends 35 U.S.C. § 361(c) to ‘‘authorize’’ 

the Director to allow the filing of a PCT application in a language 

other than English. The PCT and its regulations would require the 

USPTO to review such an application for errors and to process requests for incorporation by reference. The USPTO has indicated, 

however, that 

[t]he United States Receiving Office is simply not currently 

capable of conducting the review and processing required 

by the PCT for PCT applications filed in a language other 

than English. Creating a procedure under the PCT to provide for the initial filing of a non-English-language PCT 

application and later filing of an English-language translation for the purpose of subsequent review and processing 

would, under the provisions of the PCT and PCT Regulations, result in the resetting of the International Filing 

Date to the later date of submission of the English-language translation of the non-English-language PCT application.203

This paragraph repeals PLTIA § 202(b)(7)’s amendments to 35 

U.S.C. § 361(c), thereby relieving the United States Receiving Office 

of its authority to review PCT applications for errors and process 

requests for incorporation by reference in a language other than 

English. 

(9) global worksharing 

This paragraph amends § 122 to allow the USPTO to share information about a pending application with a foreign or international 

intellectual property office if a corresponding application has been 

filed with such office. 


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204See Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985, 988–89 (Fed. Cir. 1993). 

(10) jurisdiction for appeals of trademark cases 

This paragraph gives the U.S. Court of Appeals for the Federal 

Circuit exclusive jurisdiction over appeals of trademark 

registrability decisions under § 21(b) of the Lanham Act. Inter 

partes trademark cases (i.e., challenges to trademarks brought by 

private parties) can still be brought in any appropriate district. 

While Federal Circuit law will govern the registrability determinations in such cases, if infringement or other claims are joined to the 

§ 21(b) claim, regional circuit law will continue to govern those additional claims and any equitable or monetary relief in such 

cases.204 Centralizing appeals of § 21(b) actions in the Federal Circuit will end current law’s practice of subjecting examiner’s 

registrability decisions to the inconsistent and conflicting standards 

adopted by the regional circuits with regard to issues such as the 

relevance of evidence of marketplace conditions that may conflict 

with facts set forth on the application or registration involved, and 

what set of factors governs the likelihood-of-confusion analysis. 

(11) officers and employees 

This paragraph’s amendment to § 3 of title 35 clarifies that in addition to appointing officers to carry out the functions of the Office, 

the Director may nominate officers for appointment by the Secretary of Commerce to carry out such functions. By specifying that 

the Secretary of Commerce has statutory authority to appoint officers nominated by the Director, the amendment provides a clear 

mechanism for obtaining constitutional appointments for officers 

whose duties would make them ‘‘inferior officers’’ under the Constitution’s Appointments Clause. 

(i) extension of fee-setting authority 

This subsection extends by an additional 10 years the USPTO’s 

authority to adjust its own fees that was created by § 10(a) of the 

Leahy-Smith America Invents Act, PUB. L. NO. 112–29 (2011). 

Section 10. Effective date. 

Except as otherwise provided in this Act, the amendments made 

by the Act shall be effective upon enactment of the Act, and shall 

apply to any patent issued or any action filed on or after such effective date. 


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Changes in Existing Law Made by the Bill, as Reported 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 35, UNITED STATES CODE 

* * * * * * * 

PART I—UNITED STATES PATENT AND 

TRADEMARK OFFICE 

* * * * * * * 

CHAPTER 

* * * * * * * 

§ 3. Officers and employees 

(a) UNDER SECRETARY AND DIRECTOR.— 

(1) IN GENERAL.—The powers and duties of the United 

States Patent and Trademark Office shall be vested in an 

Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in 

this title referred to as the ‘‘Director’’), who shall be a citizen 

of the United States and who shall be appointed by the President, by and with the advice and consent of the Senate. The 

Director shall be a person who has a professional background 

and experience in patent or trademark law. 

(2) DUTIES.— 

(A) IN GENERAL.—The Director shall be responsible for 

providing policy direction and management supervision for 

the Office and for the issuance of patents and the registration of trademarks. The Director shall perform these duties in a fair, impartial, and equitable manner. 

(B) CONSULTING WITH THE PUBLIC ADVISORY COMMITTEES.—The Director shall consult with the Patent Public 

Advisory Committee established in section 5 on a regular 

basis on matters relating to the patent operations of the 

Office, shall consult with the Trademark Public Advisory 

Committee established in section 5 on a regular basis on 

matters relating to the trademark operations of the Office, 

and shall consult with the respective Public Advisory Committee before submitting budgetary proposals to the Office 

of Management and Budget or changing or proposing to 

change patent or trademark user fees or patent or trademark regulations which are subject to the requirement to 

provide notice and opportunity for public comment under 

section 553 of title 5, as the case may be. 


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(3) OATH.—The Director shall, before taking office, take an 

oath to discharge faithfully the duties of the Office. 

(4) REMOVAL.—The Director may be removed from office by 

the President. The President shall provide notification of any 

such removal to both Houses of Congress. 

(b) OFFICERS AND EMPLOYEES OF THE OFFICE.— (1) DEPUTY UNDER SECRETARY AND DEPUTY DIRECTOR.—The 

Secretary of Commerce, upon nomination by the Director, shall 

appoint a Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent 

and Trademark Office who shall øbe vested with the authority 

to act in the capacity of the¿ serve as Acting, Director in the 

event of the absence or incapacity of the Director or in the 

event of a vacancy in the office of the Director. The Deputy Director shall be a citizen of the United States who has a professional background and experience in patent or trademark law. 

(2) COMMISSIONERS.— 

(A) APPOINTMENT AND DUTIES.—The Secretary of Commerce shall appoint a Commissioner for Patents and a 

Commissioner for Trademarks, without regard to chapter 

33, 51, or 53 of title 5. The Commissioner for Patents shall 

be a citizen of the United States with demonstrated management ability and professional background and experience in patent law and serve for a term of 5 years. The 

Commissioner for Trademarks shall be a citizen of the 

United States with demonstrated management ability and 

professional background and experience in trademark law 

and serve for a term of 5 years. The Commissioner for Patents and the Commissioner for Trademarks shall serve as 

the chief operating officers for the operations of the Office 

relating to patents and trademarks, respectively, and shall 

be responsible for the management and direction of all aspects of the activities of the Office that affect the administration of patent and trademark operations, respectively. 

The Secretary may reappoint a Commissioner to subsequent terms of 5 years as long as the performance of the 

Commissioner as set forth in the performance agreement 

in subparagraph (B) is satisfactory. 

(B) SALARY AND PERFORMANCE AGREEMENT.—The 

Commissioners shall be paid an annual rate of basic pay 

not to exceed the maximum rate of basic pay for the Senior 

Executive Service established under section 5382 of title 5, 

including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(C) 

of title 5. The compensation of the Commissioners shall be 

considered, for purposes of section 207(c)(2)(A) of title 18, 

to be the equivalent of that described under clause (ii) of 

section 207(c)(2)(A) of title 18. In addition, the Commissioners may receive a bonus in an amount of up to, but not 

in excess of, 50 percent of the Commissioners’ annual rate 

of basic pay, based upon an evaluation by the Secretary of 

Commerce, acting through the Director, of the Commissioners’ performance as defined in an annual performance 

agreement between the Commissioners and the Secretary. 

The annual performance agreements shall incorporate 


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measurable organization and individual goals in key operational areas as delineated in an annual performance plan 

agreed to by the Commissioners and the Secretary. Payment of a bonus under this subparagraph may be made to 

the Commissioners only to the extent that such payment 

does not cause the Commissioners’ total aggregate compensation in a calendar year to equal or exceed the 

amount of the salary of the Vice President under section 

104 of title 3. 

(C) REMOVAL.—The Commissioners may be removed 

from office by the Secretary for misconduct or nonsatisfactory performance under the performance agreement described in subparagraph (B), without regard to the provisions of title 5. The Secretary shall provide notification of 

any such removal to both Houses of Congress. 

(3) OTHER OFFICERS AND EMPLOYEES.—The Director 

shall— 

(A) øappoint¿ appoint, or nominate for appointment by 

the Secretary of Commerce, such officers, employees (including attorneys), and agents of the Office as the Director 

considers necessary to carry out the functions of the Office; 

and 

(B) define the title, authority, and duties of such officers and employees and delegate to them such of the powers vested in the Office as the Director may determine. 

The Office shall not be subject to any administratively or 

statutorily imposed limitation on positions or personnel, and no 

positions or personnel of the Office shall be taken into account 

for purposes of applying any such limitation. 

(4) TRAINING OF EXAMINERS.—The Office shall submit to 

the Congress a proposal to provide an incentive program to retain as employees patent and trademark examiners of the primary examiner grade or higher who are eligible for retirement, 

for the sole purpose of training patent and trademark examiners. 

(5) NATIONAL SECURITY POSITIONS.—The Director, in consultation with the Director of the Office of Personnel Management, shall maintain a program for identifying national security positions and providing for appropriate security clearances, 

in order to maintain the secrecy of certain inventions, as described in section 181, and to prevent disclosure of sensitive 

and strategic information in the interest of national security. 

(6) ADMINISTRATIVE PATENT JUDGES AND ADMINISTRATIVE

TRADEMARK JUDGES.—The Director may fix the rate of basic 

pay for the administrative patent judges appointed pursuant to 

section 6 and the administrative trademark judges appointed 

pursuant to section 17 of the Trademark Act of 1946 (15 U.S.C. 

1067) at not greater than the rate of basic pay payable for level 

III of the Executive Schedule under section 5314 of title 5. The 

payment of a rate of basic pay under this paragraph shall not 

be subject to the pay limitation under section 5306(e) or 5373 

of title 5. 

(c) CONTINUED APPLICABILITY OF TITLE 5.—Officers and employees of the Office shall be subject to the provisions of title 5, relating to Federal employees. 


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(d) ADOPTION OF EXISTING LABOR AGREEMENTS.—The Office 

shall adopt all labor agreements which are in effect, as of the day 

before the effective date of the Patent and Trademark Office Efficiency Act, with respect to such Office (as then in effect). 

(e) CARRYOVER OF PERSONNEL.— 

(1) FROM PTO.—Effective as of the effective date of the Patent and Trademark Office Efficiency Act, all officers and employees of the Patent and Trademark Office on the day before 

such effective date shall become officers and employees of the 

Office, without a break in service. 

(2) OTHER PERSONNEL.—Any individual who, on the day 

before the effective date of the Patent and Trademark Office 

Efficiency Act, is an officer or employee of the Department of 

Commerce (other than an officer or employee under paragraph 

(1)) shall be transferred to the Office, as necessary to carry out 

the purposes of that Act, if— 

(A) such individual serves in a position for which a 

major function is the performance of work reimbursed by 

the Patent and Trademark Office, as determined by the 

Secretary of Commerce; 

(B) such individual serves in a position that performed 

work in support of the Patent and Trademark Office during at least half of the incumbent’s work time, as determined by the Secretary of Commerce; or 

(C) such transfer would be in the interest of the Office, 

as determined by the Secretary of Commerce in consultation with the Director. 

Any transfer under this paragraph shall be effective as of the 

same effective date as referred to in paragraph (1), and shall 

be made without a break in service. 

(f) TRANSITION PROVISIONS.— 

(1) INTERIM APPOINTMENT OF DIRECTOR.—On or after the 

effective date of the Patent and Trademark Office Efficiency 

Act, the President shall appoint an individual to serve as the 

Director until the date on which a Director qualifies under subsection (a). The President shall not make more than one such 

appointment under this subsection. 

(2) CONTINUATION IN OFFICE OF CERTAIN OFFICERS.—(A) 

The individual serving as the Assistant Commissioner for Patents on the day before the effective date of the Patent and 

Trademark Office Efficiency Act may serve as the Commissioner for Patents until the date on which a Commissioner for 

Patents is appointed under subsection (b). 

(B) The individual serving as the Assistant Commissioner 

for Trademarks on the day before the effective date of the Patent and Trademark Office Efficiency Act may serve as the 

Commissioner for Trademarks until the date on which a Commissioner for Trademarks is appointed under subsection (b). 

* * * * * * * 

CHAPTER 3—PRACTICE BEFORE PATENT AND 

TRADEMARK OFFICE 

* * * * * * * 


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§ 32. Suspension or exclusion from practice 

The Director may, after notice and opportunity for a hearing, 

suspend or exclude, either generally or in any particular case, from 

further practice before the Patent and Trademark Office, any person, agent, or attorney shown to be incompetent or disreputable, or 

guilty of gross misconduct, or who does not comply with the regulations established under section 2(b)(2)(D), or who shall, by word, 

circular, letter, or advertising, with intent to defraud in any manner, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective business 

before the Office. The reasons for any such suspension or exclusion 

shall be duly recorded. The Director shall have the discretion to 

designate any attorney who is an officer or employee of the United 

States Patent and Trademark Office to conduct the hearing required by this section. øA proceeding under this section shall be 

commenced not later than the earlier of either the date that is 10 

years after the date on which the misconduct forming the basis for 

the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an 

officer or employee of the Office as prescribed in the regulations established under section 2(b)(2)(D).¿ A proceeding under this section 

shall be commenced not later than the earlier of either the date that 

is 10 years after the date on which the misconduct forming the basis 

for the proceeding occurred, or 18 months after the date on which 

the Director of the Office of Enrollment and Discipline received a 

written grievance (as prescribed in the regulations established under 

section 2(b)(2)(D)) about a specified individual that describes the 

misconduct forming the basis for the proceeding. If the misconduct 

that forms the basis for the proceeding under this section is at issue 

in a court or administrative-agency proceeding, the 18-month period 

for commencing the proceeding under this section shall be tolled 

until the court or agency’s decision regarding the misconduct becomes final and non-appealable. The 18-month period for commencing a proceeding under this section also may be tolled by 

agreement between the parties. The United States District Court for 

the Eastern District of Virginia, under such conditions and upon 

such proceedings as it by its rules determines, may review the action of the Director upon the petition of the person so refused recognition or so suspended or excluded. 

* * * * * * * 

PART II—PATENTABILITY OF INVENTIONS 

AND GRANT OF PATENTS 

* * * * * * * 

CHAPTER 10—PATENTABILITY OF INVENTIONS 

* * * * * * * 

§ 102. Conditions for patentability; novelty 

(a) NOVELTY; PRIOR ART.—A person shall be entitled to a patent unless— 


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(1) the claimed invention was patented, described in a 

printed publication, or in public use, on sale, or otherwise 

available to the public before the effective filing date of the 

claimed invention; 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) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure 

made 1 year or less before the effective filing date of a claimed 

invention shall not be prior art to the claimed invention under 

subsection (a)(1) if— 

(A) the disclosure was made by øthe inventor or joint 

inventor or by another¿ the inventor or a joint inventor or 

another who obtained the subject matter disclosed directly 

or indirectly from the inventor or a joint inventor; or 

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint 

inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. 

(2) DISCLOSURES APPEARING IN APPLICATIONS AND PAT- ENTS.—A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if— 

(A) the subject matter disclosed was obtained directly 

or indirectly from the inventor or a joint inventor; 

(B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), 

been publicly disclosed by the inventor or a joint inventor 

or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; 

or 

(C) the subject matter disclosed 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. 

(c) COMMON OWNERSHIP UNDER JOINT RESEARCH AGREEMENTS.—Subject matter disclosed 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 subsection (b)(2)(C) if— 

(1) the subject matter disclosed was developed and the 

claimed invention was made by, or on behalf of, 1 or more parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention; 

(2) the claimed invention was made as a result of activities 

undertaken within the scope of the joint research agreement; 

and 

(3) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the 

joint research agreement. 


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(d) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVE AS

PRIOR ART.—For purposes of determining whether a patent or application for patent is prior art to a claimed invention under subsection (a)(2), such patent or application shall be considered to 

have been effectively filed, with respect to any subject matter described in the patent or application— 

(1) if paragraph (2) does not apply, as of the actual filing 

date of the patent or the application for patent; or 

(2) if the patent or application for patent is entitled to 

claim a right of priority under section 119, 365(a), or 365(b), 

or to claim the benefit of an earlier filing date under section 

120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter. 

(e) DOUBLE-PATENTING PRIOR ART.—If a first claimed invention 

in a first patent was effectively filed on or before the effective filing 

date of a second claimed invention in a second patent or in the application on which the second patent issues, and the first claimed 

invention is not otherwise prior art to the second claimed invention 

under this section, then the first claimed invention shall, notwithstanding the other subsections of this section, constitute prior art to 

the second claimed invention under this subsection unless— 

(1) the second claimed invention is consonant with a requirement for restriction under the first sentence of section 121 

with respect to the claims issued in the first patent; or 

(2) an election has been recorded in the Office by the owner 

of the second patent or the application on which the second patent issues disclaiming the right to bring or maintain a civil action under section 281 to enforce the second patent, except that 

such disclaimer shall not apply if— 

(A) the relief being sought in the civil action would not 

constitute a cause of action barred by res judicata had the 

asserted claims of the second patent been issued in the first 

patent; and 

(B) the owner of the first patent or the application on 

which the first patent issues has recorded an election limiting the enforcement of the first patent relative to the second patent in the manner described in this paragraph, the 

owner of the first patent is a party to the civil action, or 

a separate action under section 281 to enforce the first patent can no longer be brought or maintained. 

* * * * * * * 

CHAPTER 11—APPLICATION FOR PATENT 

* * * * * * * 

§ 115. Inventor’s oath or declaration 

(a) NAMING THE INVENTOR; INVENTOR’S OATH OR DECLARA- TION.—An application for patent that is filed under section 111(a) 

or commences the national stage under section 371 shall include, 

or be amended to include, the name of the inventor for any invention claimed 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 øshall execute¿ 


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may be required to execute an oath or declaration in connection 

with the application. 

(b) REQUIRED STATEMENTS.—An oath or declaration under subsection (a) shall contain statements that— 

(1) the application was made or was authorized to be made 

by the affiant or declarant; and 

(2) such individual believes himself or herself to be the 

original inventor or an original joint inventor of a claimed invention in the application. 

(c) ADDITIONAL REQUIREMENTS.—The Director may specify additional information relating to the inventor and the invention that 

is required to be included in an oath or declaration under subsection (a). 

(d) SUBSTITUTE STATEMENT.— 

(1) IN GENERAL.—In lieu of executing an oath or declaration under subsection (a), the applicant for patent may provide 

a substitute statement under the circumstances described in 

paragraph (2) and such additional circumstances that the Director may specify by regulation. 

(2) PERMITTED CIRCUMSTANCES.—A substitute statement 

under paragraph (1) is permitted with respect to any individual who— 

(A) is unable to file the oath or declaration under subsection (a) because the individual— 

(i) is deceased; 

(ii) is under legal incapacity; or 

(iii) cannot be found or reached after diligent effort; or 

(B) is under an obligation to assign the invention but 

has refused to make the oath or declaration required 

under subsection (a). 

(3) CONTENTS.—A substitute statement under this subsection shall— 

(A) identify the individual with respect to whom the 

statement applies; 

(B) set forth the circumstances representing the permitted basis for the filing of the substitute statement in 

lieu of the oath or declaration under subsection (a); and 

(C) contain any additional information, including any 

showing, required by the Director. 

(e) MAKING REQUIRED STATEMENTS IN ASSIGNMENT OF

RECORD.—An individual who is under an obligation of assignment 

of an application for patent may include the required statements 

under subsections (b) and (c) in the assignment executed by the individual, in lieu of filing such statements separately. 

(f) TIME FOR FILING.—The applicant for patent shall provide 

each required oath or declaration under subsection (a), substitute 

statement under subsection (d), or recorded assignment meeting 

the requirements of subsection (e) no later than the date on which 

the issue fee for the patent is paid. 

(g) EARLIER-FILED APPLICATION CONTAINING REQUIRED STATE- MENTS OR SUBSTITUTE STATEMENT.— (1) EXCEPTION.—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 


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joint inventor and that claims the benefit under section 120, 

121, or 365(c) of the filing of an earlier-filed application, if— 

(A) 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; 

(B) a substitute statement meeting the requirements 

of subsection (d) was filed in connection with the earlier 

filed application with respect to the individual; or 

(C) 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. 

(2) COPIES OF OATHS, DECLARATIONS, STATEMENTS, OR AS- SIGNMENTS.—Notwithstanding paragraph (1), the Director may 

require that a copy of the executed oath or declaration, the 

substitute statement, or the assignment filed in connection 

with the earlier-filed application be included in the later-filed 

application. 

(h) SUPPLEMENTAL AND CORRECTED STATEMENTS; FILING ADDI- TIONAL STATEMENTS.— (1) IN GENERAL.—Any person making a statement required 

under this section may withdraw, replace, or otherwise correct 

the statement at any time. If a change is made in the naming 

of the inventor requiring the filing of 1 or more additional 

statements under this section, the Director shall establish regulations under which such additional statements may be filed. 

(2) SUPPLEMENTAL STATEMENTS NOT REQUIRED.—If an individual has executed an oath or declaration meeting the requirements of 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.—A patent shall not 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 pursuant to this section shall contain an acknowledgment that any willful false statement made in such declaration 

or statement is punishable under section 1001 of title 18 by fine 

or imprisonment of not more than 5 years, or both. 

* * * * * * * 

§ 119. Benefit of earlier filing date; right of priority 

(a) An application for patent for an invention filed in this country by any person who has, or whose legal representatives or assigns have, previously regularly filed an application for a patent for 

the same invention in a foreign country which affords similar privileges in the case of applications filed in the United States or to citizens of the United States, or in a WTO member country, shall have 

the same effect as the same application would have if filed in this 

country on the date on which the application for patent for the 

same invention was first filed in such foreign country, if the appliVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00097 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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cation in this country is filed within 12 months from the earliest 

date on which such foreign application was filed. The Director may 

prescribe regulations, including the requirement for payment of the 

fee specified in section 41(a)(7), pursuant to which the 12-month 

period set forth in this subsection may be extended by an additional 2 months if the delay in filing the application in this country 

within the 12-month period was unintentional. 

(b)(1) No application for patent shall be entitled to this right 

of priority unless a claim is filed in the Patent and Trademark Office, identifying the foreign application by specifying the application number on that foreign application, the intellectual property 

authority or country in or for which the application was filed, and 

the date of filing the application, at such time during the pendency 

of the application as required by the Director. 

(2) The Director may consider the failure of the applicant to 

file a timely claim for priority as a waiver of any such claim. The 

Director may establish procedures, including the payment of a surcharge, to accept an unintentionally delayed claim under this section. 

(3) The Director may require a certified copy of the original foreign application, specification, and drawings upon which it is 

based, a translation if not in the English language, and such other 

information as the Director considers necessary. Any such certification shall be made by the foreign intellectual property authority 

in which the foreign application was filed and show the date of the 

application and of the filing of the specification and other papers. 

(c) In like manner and subject to the same conditions and requirements, the right provided in this section may be based upon 

a subsequent regularly filed application in the same foreign country instead of the first filed foreign application, provided that any 

foreign application filed prior to such subsequent application has 

been withdrawn, abandoned, or otherwise disposed of, without having been laid open to public inspection and without leaving any 

rights outstanding, and has not served, nor thereafter shall serve, 

as a basis for claiming a right of priority. 

(d) Applications for inventors’ certificates filed in a foreign 

country in which applicants have a right to apply, at their discretion, either for a patent or for an inventor’s certificate shall be 

treated in this country in the same manner and have the same effect for purpose of the right of priority under this section as applications for patents, subject to the same conditions and requirements of this section as apply to applications for patents, provided 

such applicants are entitled to the benefits of the Stockholm Revision of the Paris Convention at the time of such filing. 

(e)(1) An application for patent filed under section 111(a) or 

section 363 for an invention disclosed in the manner provided by 

section 112(a) (other than the requirement to disclose the best 

mode) in a provisional application filed under section 111(b), øby 

an inventor or inventors named¿ that names the inventor or a joint 

inventor in the provisional application, shall have the same effect, 

as to such invention, as though filed on the date of the provisional 

application filed under section 111(b), if the application for patent 

filed under section 111(a) or section 363 is filed not later than 12 

months after the date on which the provisional application was 

filed and if it contains or is amended to contain a specific reference 


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to the provisional application. The Director may prescribe regulations, including the requirement for payment of the fee specified in 

section 41(a)(7), pursuant to which the 12-month period set forth 

in this subsection may be extended by an additional 2 months if 

the delay in filing the application under section 111(a) or section 

363 within the 12-month period was unintentional. No application 

shall be entitled to the benefit of an earlier filed provisional application under this subsection unless an amendment containing the 

specific reference to the earlier filed provisional application is submitted at such time during the pendency of the application as required by the Director. The Director may consider the failure to 

submit such an amendment within that time period as a waiver of 

any benefit under this subsection. The Director may establish procedures, including the payment of the fee specified in section 

41(a)(7), to accept an unintentionally delayed submission of an 

amendment under this subsection. 

(2) A provisional application filed under section 111(b) may not 

be relied upon in any proceeding in the Patent and Trademark Office unless the fee set forth in subparagraph (A) or (C) of section 

41(a)(1) has been paid. 

(3) If the day that is 12 months after the filing date of a 

provisional application falls on a Saturday, Sunday, or Federal 

holiday within the District of Columbia, the period of pendency 

of the provisional application shall be extended to the next succeeding secular or business day. For an application for patent 

filed under section 363 in a Receiving Office other than the 

Patent and Trademark Office, the 12-month and additional 2- 

month period set forth in this subsection shall be extended as 

provided under the treaty and Regulations as defined in section 351. 

(f) Applications for plant breeder’s rights filed in a WTO member country (or in a foreign UPOV Contracting Party) shall have 

the same effect for the purpose of the right of priority under subsections (a) through (c) of this section as applications for patents, 

subject to the same conditions and requirements of this section as 

apply to applications for patents. 

(g) As used in this section— 

(1) the term ‘‘WTO member country’’ has the same meaning as the term is defined in section 104(b)(2); and 

(2) the term ‘‘UPOV Contracting Party’’ means a member 

of the International Convention for the Protection of New Varieties of Plants. 

§ 120. Benefit of earlier filing date in the United States 

An application for patent for an invention disclosed in the 

manner provided by section 112(a) (other than the requirement to 

disclose the best mode) in an application previously filed in the 

United States, or as provided by section 363, which ønames an inventor or joint inventor¿ names the inventor or a joint inventor in 

the previously filed application shall have the same effect, as to 

such invention, as though filed on the date of the prior application, 

if filed before the patenting or abandonment of or termination of 

proceedings on the first application or on an application similarly 

entitled to the benefit of the filing date of the first application and 

if it contains or is amended to contain a specific reference to the 


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earlier filed application. No application shall be entitled to the benefit of an earlier filed application under this section unless an 

amendment containing the specific reference to the earlier filed application is submitted at such time during the pendency of the application as required by the Director. The Director may consider 

the failure to submit such an amendment within that time period 

as a waiver of any benefit under this section. The Director may establish procedures, including the payment of a surcharge, to accept 

an unintentionally delayed submission of an amendment under this 

section. 

§ 121. Divisional applications 

If two or more independent and distinct inventions are claimed 

in one application, the Director may require the application to be 

restricted to one of the inventions. If the other invention is made 

the subject of a divisional application which complies with the requirements of section 120 it shall be entitled to the benefit of the 

filing date of the original application. øA patent issuing on an application with respect to which a requirement for restriction under 

this section has been made, or on an application filed as a result 

of such a requirement, shall not be used as a reference either in 

the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent 

issued on either of them, if the divisional application is filed before 

the issuance of the patent on the other application.¿ The validity 

of a patent shall not be questioned for failure of the Director to require the application to be restricted to one invention. 

§ 122. Confidential status of applications; publication of patent applications 

(a) CONFIDENTIALITY.—Except as provided in øsubsection (b)¿ 

subsections (b) and (f), applications for patents shall be kept in confidence by the Patent and Trademark Office and no information 

concerning the same given without authority of the applicant or 

owner unless necessary to carry out the provisions of an Act of 

Congress or in such special circumstances as may be determined by 

the Director. 

(b) PUBLICATION.— 

(1) IN GENERAL.—(A) Subject to paragraph (2), each application for a patent shall be published, in accordance with procedures determined by the Director, promptly after the expiration of a period of 18 months from the earliest filing date for 

which a benefit is sought under this title. At the request of the 

applicant, an application may be published earlier than the 

end of such 18-month period. 

(B) No information concerning published patent applications shall be made available to the public except as the Director determines. 

(C) Notwithstanding any other provision of law, a determination by the Director to release or not to release information concerning a published patent application shall be final 

and nonreviewable. 

(2) EXCEPTIONS.—(A) An application shall not be published 

if that application is— 

(i) no longer pending; 


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(ii) subject to a secrecy order under section 181; 

(iii) a provisional application filed under section 

111(b); or 

(iv) an application for a design patent filed under 

chapter 16. 

(B)(i) If an applicant makes a request upon filing, certifying that the invention disclosed in the application has not 

and will not be the subject of an application filed in another 

country, or under a multilateral international agreement, that 

requires publication of applications 18 months after filing, the 

application shall not be published as provided in paragraph (1). 

(ii) An applicant may rescind a request made under clause 

(i) at any time. 

(iii) An applicant who has made a request under clause (i) 

but who subsequently files, in a foreign country or under a 

multilateral international agreement specified in clause (i), an 

application directed to the invention disclosed in the application filed in the Patent and Trademark Office, shall notify the 

Director of such filing not later than 45 days after the date of 

the filing of such foreign or international application. A failure 

of the applicant to provide such notice within the prescribed 

period shall result in the application being regarded as abandoned, unless it is shown to the satisfaction of the Director 

that the delay in submitting the notice was unintentional. 

(iv) If an applicant rescinds a request made under clause 

(i) or notifies the Director that an application was filed in a 

foreign country or under a multilateral international agreement specified in clause (i), the application shall be published 

in accordance with the provisions of paragraph (1) on or as 

soon as is practical after the date that is specified in clause (i). 

(v) If an applicant has filed applications in one or more foreign countries, directly or through a multilateral international 

agreement, and such foreign filed applications corresponding to 

an application filed in the Patent and Trademark Office or the 

description of the invention in such foreign filed applications is 

less extensive than the application or description of the invention in the application filed in the Patent and Trademark Office, the applicant may submit a redacted copy of the application filed in the Patent and Trademark Office eliminating any 

part or description of the invention in such application that is 

not also contained in any of the corresponding applications 

filed in a foreign country. The Director may only publish the 

redacted copy of the application unless the redacted copy of the 

application is not received within 16 months after the earliest 

effective filing date for which a benefit is sought under this 

title. The provisions of section 154(d) shall not apply to a claim 

if the description of the invention published in the redacted application filed under this clause with respect to the claim does 

not enable a person skilled in the art to make and use the subject matter of the claim. 

(c) PROTEST AND PRE-ISSUANCE OPPOSITION.—The Director 

shall establish appropriate procedures to ensure that no protest or 

other form of pre-issuance opposition to the grant of a patent on 

an application may be initiated after publication of the application 

without the express written consent of the applicant. 


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(d) NATIONAL SECURITY.—No application for patent shall be 

published under subsection (b)(1) if the publication or disclosure of 

such invention would be detrimental to the national security. The 

Director shall establish appropriate procedures to ensure that such 

applications are promptly identified and the secrecy of such inventions is maintained in accordance with chapter 17. 

(e) PREISSUANCE SUBMISSIONS BY THIRD PARTIES.— (1) IN GENERAL.—Any third party may submit for consideration and inclusion in the record of a patent application, any 

patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier 

of— 

(A) the date a notice of allowance under section 151 is 

given or mailed in the application for patent; or 

(B) the later of— 

(i) 6 months after the date on which the application for patent is first published under section 122 by 

the Office, 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. 

(2) OTHER REQUIREMENTS.—Any submission under paragraph (1) shall— 

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

(B) be accompanied by such fee as the Director may 

prescribe; and 

(C) include a statement by the person making such 

submission affirming that the submission was made in 

compliance with this section. 

(f) FOREIGN OR INTERNATIONAL FILING.— 

(1) PROVISION OF INFORMATION.—The Director may provide 

information concerning an application for patent to a foreign or 

international intellectual property office if a corresponding application is filed with such foreign or international intellectual 

property office. If the corresponding application is an international application, such information may also be provided to 

an International Searching Authority, an International Preliminary Examining Authority, or the International Bureau. 

(2) DEFINITIONS.—For purposes of this subsection, the 

terms ‘‘international application’’, ‘‘International Searching Authority’’, ‘‘International Preliminary Examining Authority’’, and 

‘‘International Bureau’’ have the same meaning given those 

terms under section 351. 

* * * * * * * 

CHAPTER 14—ISSUE OF PATENT 

* * * * * * * 

§ 154. Contents and term of patent; provisional rights 

(a) IN GENERAL.— 

(1) CONTENTS.—Every patent shall contain a short title of 

the invention and a grant to the patentee, his heirs or assigns, 


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of the right to exclude others from making, using, offering for 

sale, or selling the invention throughout the United States or 

importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, 

offering for sale or selling throughout the United States, or importing into the United States, products made by that process, 

referring to the specification for the particulars thereof. 

(2) TERM.—Subject to the payment of fees under this title, 

such grant shall be for a term beginning on the date on which 

the patent issues and ending 20 years from the date on which 

the application for the patent was filed in the United States or, 

if the application contains a specific reference to an earlier 

filed application or applications under section 120, 121, or 

365(c), from the date on which the earliest such application 

was filed. 

(3) PRIORITY.—Priority under section 119, 365(a), or 365(b) 

shall not be taken into account in determining the term of a 

patent. 

(4) SPECIFICATION AND DRAWING.—A copy of the specification and drawing shall be annexed to the patent and be a part 

of such patent. 

(b) ADJUSTMENT OF PATENT TERM.— (1) PATENT TERM GUARANTEES.— (A) GUARANTEE OF PROMPT PATENT AND TRADEMARK

OFFICE RESPONSES.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due 

to the failure of the Patent and Trademark Office to— 

(i) provide at least one of the notifications under 

section 132 or a notice of allowance under section 151 

not later than 14 months after— 

(I) the date on which an application was filed 

under section 111(a); or 

(II) the date of commencement of the national 

stage under section 371 in an international application; 

(ii) respond to a reply under section 132, or to an 

appeal taken under section 134, within 4 months after 

the date on which the reply was filed or the appeal 

was taken; 

(iii) act on an application within 4 months after 

the date of a decision by the Patent Trial and Appeal 

Board under section 134 or 135 or a decision by a Federal court under section 141, 145, or 146 in a case in 

which allowable claims remain in the application; or 

(iv) issue a patent within 4 months after the date 

on which the issue fee was paid under section 151 and 

all outstanding requirements were satisfied, 

the term of the patent shall be extended 1 day for each 

day after the end of the period specified in clause (i), (ii), 

(iii), or (iv), as the case may be, until the action described 

in such clause is taken. 

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION

PENDENCY.—Subject to the limitations under paragraph 

(2), if the issue of an original patent is delayed due to the 

failure of the United States Patent and Trademark Office 


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to issue a patent within 3 years after the actual filing date 

of the application under section 111(a) in the United 

States or, in the case of an international application, the 

date of commencement of the national stage under section 

371 in the international application, not including— 

(i) any time consumed by continued examination 

of the application requested by the applicant under 

section 132(b); 

(ii) any time consumed by a proceeding under section 135(a), any time consumed by the imposition of an 

order under section 181, or any time consumed by appellate review by the Patent Trial and Appeal Board 

or by a Federal court; or 

(iii) any delay in the processing of the application 

by the United States Patent and Trademark Office requested by the applicant except as permitted by paragraph (3)(C), 

the term of the patent shall be extended 1 day for each 

day after the end of that 3-year period until the patent is 

issued. 

(C) GUARANTEE OF ADJUSTMENTS FOR DELAYS DUE TO

DERIVATION PROCEEDINGS, SECRECY ORDERS, AND AP- PEALS.—Subject to the limitations under paragraph (2), if 

the issue of an original patent is delayed due to— 

(i) a proceeding under section 135(a); 

(ii) the imposition of an order under section 181; 

or 

(iii) appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which 

the patent was issued under a decision in the review 

reversing an adverse determination of patentability, 

the term of the patent shall be extended 1 day for each 

day of the pendency of the proceeding, order, or review, as 

the case may be. 

(2) LIMITATIONS.— (A) IN GENERAL.—To the extent that periods of delay 

attributable to grounds specified in paragraph (1) overlap, 

the period of any adjustment granted under this subsection shall not exceed the actual number of days the 

issuance of the patent was delayed. 

(B) DISCLAIMED TERM.—No patent the term of which 

has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer. 

(C) REDUCTION OF PERIOD OF ADJUSTMENT.— 

(i) The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period 

equal to the period of time during which the applicant 

failed to engage in reasonable efforts to conclude prosecution of the application. 

(ii) With respect to adjustments to patent term 

made under the authority of paragraph (1)(B), an applicant shall be deemed to have failed to engage in 

reasonable efforts to conclude processing or examination of an application for the cumulative total of any 


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periods of time in excess of 3 months that are taken 

to respond to a notice from the Office making any rejection, objection, argument, or other request, measuring such 3-month period from the date the notice 

was given or mailed to the applicant. 

(iii) The Director shall prescribe regulations establishing the circumstances that constitute a failure of 

an applicant to engage in reasonable efforts to conclude processing or examination of an application. 

(D) PATENTS SUBJECT TO ELECTION.—If a patent is 

subject to an election as described in section 102(e)(2) with 

respect to one or more other patents, the adjusted term of 

the patent under this subsection may not exceed a period of 

17 years from the date of issuance of any of such other patents and the portion of any adjustment of the term of the 

patent under this subsection that extends beyond the expiration of such 17-year period years shall be void. 

(3) PROCEDURES FOR PATENT TERM ADJUSTMENT DETERMINATION.— 

(A) The Director shall prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection. 

(B) Under the procedures established under subparagraph (A), the Director shall— 

(i) make a determination of the period of any patent term adjustment under this subsection, and shall 

transmit a notice of that determination no later than 

the date of issuance of the patent; and 

(ii) provide the applicant one opportunity to request reconsideration of any patent term adjustment 

determination made by the Director. 

(C) The Director shall reinstate all or part of the cumulative period of time of an adjustment under paragraph 

(2)(C) if the applicant, prior to the issuance of the patent, 

makes a showing that, in spite of all due care, the applicant was unable to respond within the 3-month period, but 

in no case shall more than three additional months for 

each such response beyond the original 3-month period be 

reinstated. 

(D) The Director shall proceed to grant the patent 

after completion of the Director’s determination of a patent 

term adjustment under the procedures established under 

this subsection, notwithstanding any appeal taken by the 

applicant of such determination. 

(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION.— 

(A) An applicant dissatisfied with the Director’s decision on the applicant’s request for reconsideration under 

paragraph (3)(B)(ii) shall have exclusive remedy by a civil 

action against the Director filed in the United States District Court for the Eastern District of Virginia within 180 

days after the date of the Director’s decision on the applicant’s request for reconsideration. Chapter 7 of title 5 shall 

apply to such action. Any final judgment resulting in a 

change to the period of adjustment of the patent term shall 


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be served on the Director, and the Director shall thereafter 

alter the term of the patent to reflect such change. 

(B) The determination of a patent term adjustment 

under this subsection shall not be subject to appeal or 

challenge by a third party prior to the grant of the patent. 

(c) CONTINUATION.— 

(1) DETERMINATION.—The term of a patent that is in force 

on or that results from an application filed before the date that 

is 6 months after the date of the enactment of the Uruguay 

Round Agreements Act shall be the greater of the 20-year term 

as provided in subsection (a), or 17 years from grant, subject 

to any terminal disclaimers. 

(2) REMEDIES.—The remedies of sections 283, 284, and 285 

shall not apply to acts which— 

(A) were commenced or for which substantial investment was made before the date that is 6 months after the 

date of the enactment of the Uruguay Round Agreements 

Act; and 

(B) became infringing by reason of paragraph (1). 

(3) REMUNERATION.—The acts referred to in paragraph (2) 

may be continued only upon the payment of an equitable remuneration to the patentee that is determined in an action 

brought under chapter 28 and chapter 29 (other than those 

provisions excluded by paragraph (2)). 

(d) PROVISIONAL RIGHTS.—.— 

(1) IN GENERAL.—In addition to other rights provided by 

this section, a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning 

on the date of publication of the application for such patent 

under section 122(b), or in the case of an international application filed under the treaty defined in section 351(a) designating 

the United States under Article 21(2)(a) of such treaty, the 

date of publication of the application, and ending on the date 

the patent is issued— 

(A)(i) makes, uses, offers for sale, or sells in the 

United States the invention as claimed in the published 

patent application or imports such an invention into the 

United States; or 

(ii) if the invention as claimed in the published patent 

application is a process, uses, offers for sale, or sells in the 

United States or imports into the United States products 

made by that process as claimed in the published patent 

application; and 

(B) had actual notice of the published patent application and, in a case in which the right arising under this 

paragraph is based upon an international application designating the United States that is published in a language 

other than English, had a translation of the international 

application into the English language. 

(2) RIGHT BASED ON SUBSTANTIALLY IDENTICAL INVENTIONS.—The right under paragraph (1) to obtain a reasonable 

royalty shall not be available under this subsection unless the 

invention as claimed in the patent is substantially identical to 

the invention as claimed in the published patent application. 


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(3) TIME LIMITATION ON OBTAINING A REASONABLE ROY- ALTY.—The right under paragraph (1) to obtain a reasonable 

royalty shall be available only in an action brought not later 

than 6 years after the patent is issued. The right under paragraph (1) to obtain a reasonable royalty shall not be affected 

by the duration of the period described in paragraph (1). 

(4) REQUIREMENTS FOR INTERNATIONAL APPLICATIONS.— (A) EFFECTIVE DATE.—The right under paragraph (1) 

to obtain a reasonable royalty based upon the publication 

under the treaty defined in section 351(a) of an international application designating the United States shall 

commence on the date of publication under the treaty of 

the international application, or, if the publication under 

the treaty of the international application is in a language 

other than English, on the date on which the Patent and 

Trademark Office receives a translation of the publication 

in the English language. 

(B) COPIES.—The Director may require the applicant 

to provide a copy of the international application and a 

translation thereof. 

* * * * * * * 

PART III—PATENTS AND PROTECTION OF 

PATENT RIGHTS 

* * * * * * * 

CHAPTER 28—INFRINGEMENT OF PATENTS 

* * * * * * * 

§ 273. Defense to infringement based on prior commercial 

use 

(a) IN GENERAL.—A person shall be entitled to a defense under 

section 282(b) with respect to subject matter consisting of a process, or consisting of a machine, manufacture, or composition of 

matter used in a manufacturing or other commercial process, that 

would otherwise infringe a claimed invention being asserted 

against the person if— 

(1) such person, acting in good faith, commercially used 

the subject matter in the United States, either in connection 

with an internal commercial use or an actual arm’s length sale 

or other arm’s length commercial transfer of a useful end result of such commercial use; and 

(2) such commercial use occurred at least 1 year before the 

earlier of either— 

(A) the effective filing date of the claimed invention; or 

(B) the date on which the claimed invention was disclosed to the public in a manner that qualified for the exception from prior art under section 102(b). 

(b) BURDEN OF PROOF.—A person asserting a defense under 

this section shall have the burden of establishing the defense by 

clear and convincing evidence. 

(c) ADDITIONAL COMMERCIAL USES.— 


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(1) PREMARKETING REGULATORY REVIEW.—Subject matter 

for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period 

specified in section 156(g), shall be deemed to be commercially 

used for purposes of subsection (a)(1) during such regulatory 

review period. 

(2) NONPROFIT LABORATORY USE.—A use of subject matter 

by a nonprofit research laboratory or other nonprofit entity, 

such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for 

purposes of subsection (a)(1), except that a defense under this 

section may be asserted pursuant to this paragraph only for 

continued and noncommercial use by and in the laboratory or 

other nonprofit entity. 

(d) EXHAUSTION OF RIGHTS.—Notwithstanding subsection 

(e)(1), the sale or other disposition of a useful end result by a person entitled to assert a defense under this section in connection 

with a patent with respect to that useful end result shall exhaust 

the patent owner’s rights under the patent to the extent that such 

rights would have been exhausted had such sale or other disposition been made by the patent owner. 

(e) LIMITATIONS AND EXCEPTIONS.— (1) PERSONAL DEFENSE.— (A) IN GENERAL.—A defense under this section may be 

asserted only by the person who performed or directed the 

performance of the commercial use described in subsection 

(a), or by an entity that controls, is controlled by, or is 

under common control with such person. 

(B) TRANSFER OF RIGHT.—Except for any transfer to 

the patent owner, the right to assert a defense under this 

section shall not be licensed or assigned or transferred to 

another person except as an ancillary and subordinate part 

of a good-faith assignment or transfer for other reasons of 

the entire enterprise or line of business to which the defense relates. 

(C) RESTRICTION ON SITES.—A defense under this section, when acquired by a person as part of an assignment 

or transfer described in subparagraph (B), may only be asserted for uses at sites where the subject matter that 

would otherwise infringe a claimed invention is in use before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such 

enterprise or line of business. 

(2) DERIVATION.—A person may not assert a defense under 

this section if the subject matter on which the defense is based 

was derived from the patentee or persons in privity with the 

patentee. 

(3) NOT A GENERAL LICENSE.—The defense asserted by a 

person under this section is not a general license under all 

claims of the patent at issue, but extends only to the specific 

subject matter for which it has been established that a commercial use that qualifies under this section occurred, except 

that the defense shall also extend to variations in the quantity 

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ments in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent. 

(4) ABANDONMENT OF USE.—A person who has abandoned 

commercial use (that qualifies under this section) of subject 

matter may not rely on activities performed before the date of 

such abandonment in establishing a defense under this section 

with respect to actions taken on or after the date of such abandonment. 

(5) UNIVERSITY EXCEPTION.— 

(A) IN GENERAL.—A person commercially using subject 

matter to which subsection (a) applies may not assert a defense under this section if the claimed invention with respect to which the defense is asserted was, at the time the 

invention was made, owned or subject to an obligation of 

assignment to either an institution of higher education (as 

defined in section 101(a) of the Higher Education Act of 

1965 (20 U.S.C. 1001(a)), or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such 

institutions of higher education. 

(B) EXCEPTION.—Subparagraph (A) shall not apply if 

any of the activities required to reduce to practice the subject matter of the claimed invention could not have been 

undertaken using funds provided by the Federal Government. 

ø(f) UNREASONABLE ASSERTION OF DEFENSE.—If the defense 

under this section is pleaded by a person who is found to infringe 

the patent and who subsequently fails to demonstrate a reasonable 

basis for asserting the defense, the court shall find the case exceptional for the purpose of awarding attorney fees under section 285. 

ø(g) INVALIDITY.—A patent shall not be deemed to be invalid 

under section 102 or 103 solely because a defense is raised or established under this section.¿ 

* * * * * * * 

CHAPTER 29—REMEDIES FOR INFRINGEMENT OF 

PATENT, AND OTHER ACTIONS 

Sec. 

281. Remedy for infringement of patent. 

281A. Pleading requirements for patent infringement actions. 

281B. Stay of discovery pending a preliminary motion. 

* * * * * * * 

ø285. Attorney fees.¿ 

285. Fees and other expenses. 

* * * * * * * 

ø290. Notice of patent suits.¿ 

290. Notice of patent suits; disclosure of interests. 

* * * * * * * 

ø296. Liability of States, instrumentalities of States, and State officials for infringement of patents.¿ 

296. Stay of action against customer. 

* * * * * * * 


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§ 281A. Pleading requirements for patent infringement actions 

(a) PLEADING REQUIREMENTS.—Except as provided in subsection (b), in a civil action in which a party asserts a claim for relief arising under any Act of Congress relating to patents, a party 

alleging infringement shall include in the initial complaint, counterclaim, or cross-claim for patent infringement, unless the information is not reasonably accessible to such party, the following: 

(1) An identification of each patent allegedly infringed. 

(2) An identification of all claims necessary to produce the 

identification (under paragraph (3)) of each process, machine, 

manufacture, or composition of matter (referred to in this section as an ‘accused instrumentality’) that is alleged to infringe 

any claim of each patent that is identified under paragraph (1). 

(3) For each claim identified under paragraph (2), an identification of each accused instrumentality alleged to infringe the 

claim. 

(4) For each accused instrumentality identified under paragraph (3), an identification with particularity, if known, of— 

(A) the name or model number (or a representative 

model number) of each accused instrumentality; or 

(B) if there is no name or model number, a description 

of each accused instrumentality. 

(5) For each accused instrumentality identified under paragraph (3), a clear and concise statement of— 

(A) where each element of each claim identified under 

paragraph (2) is found within the accused instrumentality; 

and 

(B) with detailed specificity, how each limitation of 

each claim identified under paragraph (2) is met by the accused instrumentality. 

(6) For each claim of indirect infringement, a description of 

the acts of the alleged indirect infringer that contribute to or 

are inducing the direct infringement. 

(7) A description of the authority of the party alleging infringement to assert each patent identified under paragraph (1) 

and of the grounds for the court’s jurisdiction. 

(b) INFORMATION NOT READILY ACCESSIBLE.—If information required to be disclosed under subsection (a) is not readily accessible 

to a party after an inquiry reasonable under the circumstances, as 

required by Rule 11 of the Federal Rules of Civil Procedure, that information may instead be generally described, along with an explanation of why such undisclosed information was not readily accessible, and of any efforts made by such party to access such information. 

(c) AMENDMENT OF PLEADINGS.—Nothing in this section shall 

be construed to affect a party’s ability to amend pleadings as specified in the Federal Rules of Civil Procedure. Amendments permitted 

by the court are subject to the pleading requirements set forth in 

this section. 

(d) CONFIDENTIAL INFORMATION.—A party required to disclose 

information described under subsection (a) may file, under seal, information believed to be confidential, with a motion setting forth 

good cause for such sealing. If such motion is denied by the court, 

the party may seek to file an amended complaint. 


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(e) EXEMPTION.—A civil action that includes a claim for relief 

arising under section 271(e)(2) shall not be subject to the requirements of subsection (a). 

§ 281B. Stay of discovery pending a preliminary motion. 

(a) IN GENERAL.—Except as provided in subsection (d), in an 

action for patent infringement under section 271 or an action for a 

declaratory judgement that a patent is invalid or not infringed, discovery shall be stayed if— 

(1) the defendant moves to— 

(A) sever a claim or drop a party for misjoinder under 

Rule 21 of the Federal Rules of Civil Procedure; 

(B) transfer the action under section 1404(a) of title 28; 

(C) transfer or dismiss the action under section 1406(a) 

of title 28; or 

(D) dismiss the action pursuant to Federal Rule of 

Civil Procedure 12(b); and 

(2) such motion is filed within 90 days after service of the 

complaint and includes a declaration or other evidence in support of the motion. 

(b) EXPIRATION OF STAY.—A stay entered under subsection (a) 

shall expire when all motions that are the basis for the stay are decided by the court. 

(c) PRIORITY OF DECISION.—In an action described in subsection (a), the court shall decide a motion to sever a claim or drop 

a party for misjoinder under Rule 21 of the Federal Rules of Civil 

Procedure, to transfer under section 1404(a) to title 28, to transfer 

or dismiss under 1406(a) of title 28, or to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b) before the earlier of the 

date on which the court— 

(1) decides any other substantive motion, provided however 

that the court may decide a question of its own jurisdiction at 

any time; or 

(2) issues a scheduling order under Rule 16(b) of the Federal Rules of Civil Procedure. 

(d) EXCEPTION.— (1) DISCOVERY NECESSARY TO DECIDE MOTION.—Notwithstanding subsection (a), the court may allow such discovery as 

the court determines to be necessary to decide a motion to sever, 

drop a party, dismiss, or transfer. 

(2) COMPETITIVE HARM.—Subsections (a) and (c) shall not 

apply to an action in which the patentee is granted a preliminary injunction to prevent harm arising from the manufacture, 

use, sale, offer for sale, or importation of an allegedly infringing 

product or process that competes with a product or process 

made, sold, or offered for sale by the patentee. 

(3) CONSENT OF THE PARTIES.—The patentee and an opposing party shall be excluded, in whole or in part, from the limitations of subsections (a) and (c) upon such parties’ filing with 

the court a signed stipulation agreeing to such exclusion. 

(4) FDA AND BIOLOGICAL PRODUCT APPLICATION.—Subsections (a) and (c) shall not apply to an action that includes 

a cause of action described under section 271(e)(2). 

* * * * * * * 


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§ 284. Damages 

øUpon finding¿ (a) IN GENERAL.—Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. 

øWhen the damages¿ (b) ASSESSMENT BY COURT; TREBLE DAM- AGES.—When the damages are not found by a jury, the court shall 

assess them. In either event the court may increase the damages 

up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights 

under section 154(d). 

(c) WILLFUL INFRINGEMENT.—A claimant seeking to establish 

willful infringement may not rely on evidence of pre-suit notification 

of infringement unless that notification identifies with particularity 

the asserted patent, identifies the product or process accused, identifies the ultimate parent entity of the claimant, and explains with 

particularity, to the extent possible following a reasonable investigation or inquiry, how the product or process infringes one or more 

claims of the patent. 

øThe court¿ (d) EXPERT TESTIMONY.—The court may receive 

expert testimony as an aid to the determination of damages or of 

what royalty would be reasonable under the circumstances. 

ø§ 285. Attorney fees 

øThe court in exceptional cases may award reasonable attorney 

fees to the prevailing party.¿ 

§ 285. Fees and other expenses 

(a) AWARD.—The court shall award, to a prevailing party, reasonable fees and other expenses incurred by that party in connection 

with a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, unless the court 

finds that the position and conduct of the nonprevailing party or 

parties were reasonably justified in law and fact or that special circumstances (such as severe economic hardship to a named inventor) 

make an award unjust. 

(b) CERTIFICATION AND RECOVERY.—Upon motion of any party 

to the action, the court shall require another party to the action to 

certify whether or not the other party will be able to pay an award 

of fees and other expenses if such an award is made under subsection (a). If a nonprevailing party is unable to pay an award that 

is made against it under subsection (a), the court may make a party 

that has been joined under section 299(d) with respect to such party 

liable for the unsatisfied portion of the award. 

(c) COVENANT NOT TO SUE.—A party to a civil action who asserts a claim for relief arising under any Act of Congress relating 

to patents against another party, and who subsequently unilaterally 

(i) seeks dismissal of the action without consent of the other party 

and (ii) extends to such other party a covenant not to sue for infringement with respect to the patent or patents at issue, may be the 

subject of a motion for attorneys fees under subsection (a) as if it 

were a non-prevailing party, unless the party asserting such claim 

would have been entitled, at the time that such covenant was extended, to dismiss voluntarily the action without a court order 


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under Rule 41 of the Federal Rules of Civil Procedure, or the interests of justice require otherwise. 

* * * * * * * 

§ 290. Notice of patent øsuits¿ suits; disclosure of interests 

øThe clerks¿ (a) NOTICE OF PATENT SUITS.—The clerks of the 

courts of the United States, within one month after the filing of an 

action under this title shall give notice thereof in writing to the Director, setting forth so far as known the names and addresses of 

the parties, name of the inventor, and the designating number of 

the patent upon which the action has been brought. If any other 

patent is subsequently included in the action he shall give like notice thereof. Within one month after the decision is rendered or a 

judgment issued the clerk of the court shall give notice thereof to 

the Director. The Director shall, on receipt of such notices, enter 

the same in the file of such patent. 

(b) INITIAL DISCLOSURE.— (1) IN GENERAL.—Except as provided in paragraph (2), 

upon the filing of an initial complaint for patent infringement, 

the plaintiff shall disclose to the Patent and Trademark Office, 

the court, and each adverse party the identity of each of the following: 

(A) The assignee of the patent or patents at issue. 

(B) Any entity with a right to sublicense or enforce the 

patent or patents at issue. 

(C) Any entity, other than the plaintiff, that the plaintiff knows to have a financial interest in the patent or patents at issue or the plaintiff. 

(D) The ultimate parent entity of any assignee identified under subparagraph (A) and any entity identified 

under subparagraph (B) or (C). 

(E) A clear and concise description of the principal 

business, if any, of the party alleging infringement. 

(F) A list of each complaint filed, of which the party alleging infringement has knowledge, that asserts or asserted 

any of the patents identified under subparagraph (A). 

(G) For each patent identified under subparagraph (A), 

whether a standard-setting body has specifically declared 

such patent to be essential, potentially essential, or having 

potential to become essential to that standard-setting body, 

and whether the United States Government or a foreign 

government has imposed specific licensing requirements 

with respect to such patent. 

(2) EXEMPTION.—The requirements of paragraph (1) shall 

not apply with respect to a civil action filed under subsection 

(a) that includes a cause of action described under section 

271(e)(2). 

(c) DISCLOSURE COMPLIANCE.— (1) PUBLICLY TRADED.—For purposes of subsection (b)(1)(C), 

if the financial interest is held by a corporation traded on a 

public stock exchange, an identification of the name of the corporation and the public exchange listing shall satisfy the disclosure requirement. 

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ed corporation, the disclosure shall satisfy the disclosure requirement if the information identifies— 

(A) in the case of a partnership, the name of the partnership and the name and correspondence address of each 

partner or other entity that holds more than a 5-percent 

share of that partnership; 

(B) in the case of a corporation, the name of the corporation, the location of incorporation, the address of the 

principal place of business, and the name of each officer of 

the corporation; and 

(C) for each individual, the name and correspondence 

address of that individual. 

(d) ONGOING DUTY OF DISCLOSURE TO THE PATENT AND TRADEMARK OFFICE.— 

(1) IN GENERAL.—A plaintiff required to submit information under subsection (b) or a subsequent owner of the patent 

or patents at issue shall, not later than 90 days after any 

change in the assignee of the patent or patents at issue or an 

entity described under subparagraph (B) or (D) of subsection 

(b)(1), submit to the Patent and Trademark Office the updated 

identification of such assignee or entity. 

(2) FAILURE TO COMPLY.—With respect to a patent for 

which the requirement of paragraph (1) has not been met— 

(A) the plaintiff or subsequent owner shall not be entitled to recover reasonable fees and other expenses under 

section 285 or increased damages under section 284 with 

respect to infringing activities taking place during any period of noncompliance with paragraph (1), unless the denial of such damages or fees would be manifestly unjust; 

and 

(B) the court shall award to a prevailing party accused 

of infringement reasonable fees and other expenses under 

section 285 that are incurred to discover the updated assignee or entity described under paragraph (1), unless such 

sanctions would be unjust. 

(e) DEFINITIONS.—In this section: 

(1) FINANCIAL INTEREST.—The term ‘‘financial interest’’— 

(A) means— 

(i) with regard to a patent or patents, the right of 

a person to receive proceeds related to the assertion of 

the patent or patents, including a fixed or variable portion of such proceeds; and 

(ii) with regard to the plaintiff, direct or indirect 

ownership or control by a person of more than 5 percent of such plaintiff; and 

(B) does not mean— 

(i) ownership of shares or other interests in a mutual or common investment fund, unless the owner of 

such interest participates in the management of such 

fund; or 

(ii) the proprietary interest of a policyholder in a 

mutual insurance company or of a depositor in a mutual savings association, or a similar proprietary interest, unless the outcome of the proceeding could substantially affect the value of such interest. 


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(2) PROCEEDING.—The term ‘‘proceeding’’ means all stages 

of a civil action, including pretrial and trial proceedings and 

appellate review. 

(3) ULTIMATE PARENT ENTITY.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘‘ultimate parent entity’’ has the meaning 

given such term in section 801.1(a)(3) of title 16, Code of 

Federal Regulations, or any successor regulation. 

(B) MODIFICATION OF DEFINITION.—The Director may 

modify the definition of ‘‘ultimate parent entity’’ by regulation. 

§ 291. Derived Patents 

(a) IN GENERAL.—The owner of a patent may have relief by 

civil action against the owner of another patent that claims the 

same invention and has an earlier effective filing date, if the invention claimed in such other patent was derived from the inventor of 

the invention claimed in the patent owned by the person seeking 

relief under this section. 

(b) FILING LIMITATION.—An action under this section may be 

filed only before the end of the 1-year period beginning on the date 

of the issuance of the first patent containing a claim to the allegedly derived invention and naming an individual alleged to have 

derived such invention as the inventor øor joint inventor¿ or a joint 

inventor. 

* * * * * * * 

ø§ 296. Liability of States, instrumentalities of States, and 

State officials for infringement of patents 

ø(a) IN GENERAL.—Any State, any instrumentality of a State, 

and any officer or employee of a State or instrumentality of a State 

acting in his official capacity, shall not be immune, under the eleventh amendment of the Constitution of the United States or under 

any other doctrine of sovereign immunity, from suit in Federal 

court by any person, including any governmental or nongovernmental entity, for infringement of a patent under section 271, or 

for any other violation under this title. 

ø(b) REMEDIES.—In a suit described in subsection (a) for a violation described in that subsection, remedies (including remedies 

both at law and in equity) are available for the violation to the 

same extent as such remedies are available for such a violation in 

a suit against any private entity. Such remedies include damages, 

interest, costs, and treble damages under section 284, attorney fees 

under section 285, and the additional remedy for infringement of 

design patents under section 289.¿ 

§ 296. Stay of action against customer 

(a) DEFINITIONS.—In this section: 

(1) COVERED CUSTOMER.—The term ‘‘covered customer’’ 

means a retailer or end user that is accused of infringing a patent or patents in dispute based on— 

(A) the sale, or offer for sale, of a covered product or 

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uct or process in a manner that is alleged to infringe a patent or patents in dispute; or 

(B) the use by such retailer, the retailer’s end user customer, or an end user of a covered product or covered process without material modification of the product or process 

in a manner that is alleged to infringe a patent or patents 

in dispute. 

(2) COVERED MANUFACTURER.—The term ‘‘covered manufacturer’’ means a person that manufactures or supplies, or causes 

the manufacture or supply of, a covered product or covered 

process, or a relevant part thereof. 

(3) COVERED PROCESS.—The term ‘‘covered process’’ means 

a process, method, or a relevant part thereof, that is alleged to 

infringe a patent or patents in dispute where such process, 

method, or relevant part thereof is implemented by an apparatus, material, system, software, or other instrumentality that 

is provided by the covered manufacturer. 

(4) COVERED PRODUCT.—The term ‘‘covered product’’ means 

a product, system, service, component, material, or apparatus, 

or relevant part thereof, that— 

(A) is alleged to infringe a patent or patents in dispute; 

or 

(B) implements a process alleged to infringe the patent 

or patents in dispute. 

(5) END USER.—The term ‘‘end user’’ includes an affiliate of 

an end user, but does not include an entity that manufacturers 

or causes the manufacture of a covered product or covered process, or a relevant part thereof. 

(6) RETAILER.—The term ‘‘retailer’’ means an entity that 

generates revenues predominately through the sale to the public 

of consumer goods or services, or an affiliate of such entity, but 

does not include an entity that manufacturers or causes the 

manufacturer of a covered product or covered process, or a relevant part thereof. 

(b) STAY OF ACTION AGAINST CUSTOMER.—Except as provided 

in subsection (d), in any civil action in which a party asserts a 

claim for relief arising under any Act of Congress relating to patents, the court shall grant a motion to stay at least the portion of 

the action against a covered customer related to infringement of a 

patent involving a covered product or covered process if the following requirements are met: 

(1) PARTY TO THE ACTION.—The covered manufacturer is a 

party to the action or to a separate action (in which a party asserts a claim for relief arising under any Act of Congress relating to patents) involving the same patent or patents related to 

the same covered product or covered process. 

(2) AGREEMENT TO BE BOUND BY ISSUES DETERMINED.—The 

covered customer agrees to be bound as to issues determined in 

an action described in paragraph (1) without a full and fair opportunity to separately litigate any such issue, but only as to 

those issues for which all other elements of the common law 

doctrine of issue preclusion are met. 

(3) DEADLINE TO FILE MOTION.—The motion is filed after 

the first pleading in the action but not later than the later of— 


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(A) the 120th day after the date on which the first 

pleading or paper in the action is served that specifically 

identifies the covered product or covered process as a basis 

for the covered customer’s alleged infringement of the patent and that specifically identifies how the covered product 

or covered process is alleged to infringe the patent; or 

(B) the date on which the first scheduling order in the 

case is entered. 

(4) MANUFACTURER CONSENT IN CERTAIN CASES.—In a case 

in which the covered manufacturer has been made a party to 

the action on motion by the covered customer, the covered manufacturer and the covered customer consent in writing to the 

stay. 

(c) LIFT OF STAY.— (1) IN GENERAL.—A stay entered under this section may be 

lifted upon grant of a motion based on a showing that— 

(A) the action involving the covered manufacturer will 

not resolve a major issue in the suit against the covered 

customer (such as a covered product or covered process 

identified in the motion to lift the stay is not a material 

part of the claimed invention or inventions in the patent or 

patents in dispute); or 

(B) the stay unreasonably prejudices or would be manifestly unjust to the party seeking to lift the stay. 

(2) SEPARATE MANUFACTURER ACTION INVOLVED.—In the 

case of a stay entered under this section based on the participation of the covered manufacturer in a separate action described 

in subsection (b)(1), a motion under paragraph (1) may only be 

granted if the court in such separate action determines that the 

showing required under paragraph (1) has been made. 

(d) EXEMPTION.—This section shall not apply to an action that 

includes a cause of action described under section 271(e)(2). 

(e) WAIVER OF ESTOPPEL EFFECT.—The court may, upon motion, determine that a consent judgment or an unappealed final 

order shall not be binding on the covered customer with respect to 

one or more of the issues that gave rise to the stay based on a showing that such consent judgment or unappealed final order would 

unreasonably prejudice or be manifestly unjust to the covered customer in light of the circumstances of the case if, following the grant 

of a motion to stay under this section, the covered manufacturer described in subsection (b)(1)— 

(1) obtains or consents to entry of a consent judgment relating to such issue that gave rise to the stay; or 

(2) fails to prosecute to a final, non-appealable judgment 

such issue that gave rise to the stay. 

(f) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed to limit the ability of a court to grant any stay, expand 

any stay granted under this section, or grant any motion to intervene, if otherwise permitted by law. 

* * * * * * * 

§ 299. Joinder of parties 

(a) JOINDER OF ACCUSED INFRINGERS.—With respect to any 

civil action arising under any Act of Congress relating to patents, 

other than an action or trial in which an act of infringement under 


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section 271(e)(2) has been pled, parties that are accused infringers 

may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, only if— 

(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out 

of the same transaction, occurrence, or series of transactions or 

occurrences relating to the making, using, importing into the 

United States, offering for sale, or selling of the same accused 

product or process; and 

(2) questions of fact common to all defendants or counterclaim defendants will arise in the action. 

(b) ALLEGATIONS INSUFFICIENT FOR JOINDER.—For purposes of 

this subsection, accused infringers may not be joined in one action 

as defendants or counterclaim defendants, or have their actions 

consolidated for trial, based solely on allegations that they each 

have infringed the patent or patents in suit. 

(c) WAIVER.—A party that is an accused infringer may waive 

the limitations set forth in this section with respect to that party. 

(d) JOINDER OF INTERESTED PARTIES.— 

(1) JOINDER.—Except as otherwise provided under this subsection, in a civil action arising under any Act of Congress relating to patents in which fees and other expenses have been 

awarded under section 285 to a prevailing party defending 

against an allegation of infringement of a patent claim, and in 

which the nonprevailing party alleging infringement is unable 

to pay the award of fees and other expenses, the court shall 

grant a motion by the prevailing party to join an interested 

party if such prevailing party shows that the nonprevailing 

party has no substantial interest in the subject matter at issue 

other than asserting such patent claim in litigation. 

(2) LIMITATION ON JOINDER.— (A) DISCRETIONARY DENIAL OF MOTION.—The court 

may deny a motion to join an interested party under paragraph (1) if— 

(i) the interested party is not subject to service of 

process; or 

(ii) joinder under paragraph (1) would deprive the 

court of subject matter jurisdiction or make venue improper. 

(B) REQUIRED DENIAL OF MOTION.—The court shall 

deny a motion to join an interested party under paragraph 

(1) if— 

(i) the interested party did not timely receive the 

notice required by paragraph (3); or 

(ii) within 30 days after receiving the notice required by paragraph (3), the interested party renounces, in writing and with notice to the court and 

the parties to the action, any ownership, right, or direct 

financial interest (as described in paragraph (4)) that 

the interested party has in the patent or patents at 

issue. 

(3) NOTICE REQUIREMENT.—An interested party may not be 

joined under paragraph (1) unless it has been provided actual 

notice, within 30 days after the expiration of the time period 

during which a certification under paragraph (4)(B) is required 


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to be filed, that the interested party has been identified in the 

initial disclosure under section 290(b) and that such party may 

therefore be an interested party subject to joinder under this 

subsection. Such notice shall be provided by the party who subsequently moves to join the interested party under paragraph 

(1), and shall include language that— 

(A) identifies the action, the parties thereto, the patent 

or patents at issue, and the pleading or other paper that 

identified the party under section 290(b); and 

(B) informs the party that it may be joined in the action and made subject to paying an award of fees and other 

expenses under section 285(b) if— 

(i) fees and other expenses are awarded in the action against the party alleging infringement of the patent or patents at issue under section 285(a); 

(ii) the party alleging infringement is unable to 

pay the award of fees and other expenses; 

(iii) the party receiving notice under this paragraph is determined by the court to be an interested 

party; and 

(iv) the party receiving notice under this paragraph has not, within 30 days after receiving such notice, renounced in writing, and with notice to the court 

and the parties to the action, any ownership, right, or 

direct financial interest (as described in paragraph (4)) 

that the interested party has in the patent or patents 

at issue. 

(4) ADDITIONAL REQUIREMENTS FOR JOINDER.— 

(A) INITIAL STATEMENT.—This subsection shall not 

apply to an action unless a party defending against an allegation of infringement of a patent claim files, not later than 

14 days before the date on which a scheduling conference 

is held or the date on which a scheduling order is due 

under Rule 16(b) of the Federal Rules of Civil Procedure, 

a statement that such party holds a good faith belief, based 

on publicly available information and any other information known to such party, that the party alleging infringement has no substantial interest in the subject matter at 

issue other than asserting the patent in litigation. 

(B) CERTIFICATION.—This subsection shall not apply to 

an action if the party alleging infringement files, not later 

than 45 days after the date on which such party is served 

with the initial statement described under subparagraph 

(A), a certification that— 

(i) establishes and certifies to the court, under 

oath, that such party will have sufficient funds available to satisfy any award of reasonable attorney’s fees 

and expenses under section 285 if an award is assessed; 

(ii) demonstrates that such party has a substantial 

interest in the subject matter at issue other than asserting the patent in litigation; or 

(iii) is made under oath that there are no other interested parties. 


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(5) EXCEPTION FOR UNIVERSITY TECHNOLOGY TRANSFER ORGANIZATIONS.—This subsection shall not apply to a technology 

transfer organization whose primary purpose is to facilitate the 

commercialization of technologies developed by one or more institutions of higher education (as defined in section 101(a) of 

the Higher Education Act of 1965 (20 U.S.C. 1001(a))) if such 

technology transfer organization is alleging infringement on behalf of an entity that would not be subject to this subsection. 

(6) INTERESTED PARTY DEFINED.—In this subsection, the 

term ‘‘interested party’’ means a person, other than the party alleging infringement, that— 

(A) is an assignee of the patent or patents at issue; 

(B) has a right, including a contingent right, to enforce 

or sublicense the patent or patents at issue; or 

(C) has a direct financial interest in the patent or patents at issue, including the right to any part of an award 

of damages or any part of licensing revenue, except that a 

person with a direct financial interest does not include— 

(i) an employee of the party alleging infringement— 

(I) whose principal source of income or employment is employment with the party alleging infringement; or 

(II) whose sole financial interest in the patent 

or patents at issue is a salary or hourly wage paid 

by the party alleging infringement; 

(ii) an attorney or law firm providing legal representation in the civil action described in paragraph 

(1) if the sole basis for the financial interest of the attorney or law firm in the patent or patents at issue 

arises from the attorney or law firm’s receipt of compensation reasonably related to the provision of the 

legal representation; or 

(iii) a person whose sole financial interest in the 

patent or patents at issue is ownership of an equity or 

security interest in the party alleging infringement, unless such person also has the right or ability to direct 

or control (membership on the board of directors alone 

is not sufficient to demonstrate such right or ability) 

the civil action. 

(7) SUBSTANTIAL INTEREST.—In this subsection, the term 

‘‘substantial interest’’ includes an interest in the subject matter 

of a patent at issue if the party— 

(A) invented the subject matter; or 

(B) commercially practices or implements, made substantial preparations directed particularly to commercially 

practicing or implementing, or is engaged in research and 

development in, technology in the field of the subject matter. 

* * * * * * * 

CHAPTER 31—INTER PARTES REVIEW 

* * * * * * * 


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§ 313. Preliminary response to petition 

If an inter partes review petition is filed under section 311, the 

patent owner shall have the right to file a preliminary response to 

the petition, within a time period set by the Director, that sets 

forth reasons why no inter partes review should be instituted based 

upon the failure of the petition to meet any requirement of this 

chapterø.¿, including affidavits or declarations of supporting evidence and opinions. The Director may accept a reply by the petitioner to new issues raised in the preliminary response, upon request by the petitioner to file such reply, within a time period set 

by the Director. 

§ 314. Institution of inter partes review 

(a) THRESHOLD.—The Director may not authorize an inter 

partes review to be instituted unless the Director determines that 

the information presented in the petition filed under section 311 

and øany response¿ any response or reply filed under section 313 

shows that there is a reasonable likelihood that the petitioner 

would prevail with respect to at least 1 of the claims challenged in 

the petition. 

(b) TIMING.—The Director shall determine whether to institute 

an inter partes review under this chapter pursuant to a petition 

filed under section 311 within 3 months after— 

(1) øreceiving a preliminary response to the petition¿ receiving the later of a preliminary response to the petition or a 

reply to such preliminary response under section 313; or 

ø(2) if no such preliminary response is filed, the last date 

on which such response may be filed.¿ 

(2) if— 

(A) no such preliminary response is filed, the last date 

on which such response may be filed; and 

(B) such preliminary response is filed and no such 

reply is requested, the last day on which such reply may be 

requested. 

(c) NOTICE.—The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a), and shall make such notice available to the public as 

soon as is practicable. Such notice shall include the date on which 

the review shall commence. 

(d) NO APPEAL.—The determination by the Director whether to 

institute an inter partes review under this section shall be final 

and nonappealable. 

§ 315. Relation to other proceedings or actions 

(a) INFRINGER’S CIVIL ACTION.— 

(1) INTER PARTES REVIEW BARRED BY CIVIL ACTION.—An 

inter partes review may not be instituted if, before the date on 

which the petition for such a review is filed, the petitioner or 

real party in interest filed a civil action challenging the validity of a claim of the patent. 

(2) STAY OF CIVIL ACTION.—If the petitioner or real party 

in interest files a civil action challenging the validity of a claim 

of the patent on or after the date on which the petitioner files 

a petition for inter partes review of the patent, that civil action 

shall be automatically stayed until either— 


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(A) the patent owner moves the court to lift the stay; 

(B) the patent owner files a civil action or counterclaim alleging that the petitioner or real party in interest 

has infringed the patent; or 

(C) the petitioner or real party in interest moves the 

court to dismiss the civil action. 

(3) TREATMENT OF COUNTERCLAIM.—A counterclaim challenging the validity of a claim of a patent does not constitute 

a civil action challenging the validity of a claim of a patent for 

purposes of this subsection. 

(b) PATENT OWNER’S ACTION.—An inter partes review may not 

be instituted if the petition requesting the proceeding is filed more 

than 1 year after the date on which the petitioner, real party in 

interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the 

preceding sentence shall not apply to a request for joinder under 

subsection (c). 

ø(c) JOINDER.—If the Director institutes an inter partes review, 

the Director, in his or her discretion, may join as a party to that 

inter partes review any person who properly files a petition under 

section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing 

such a response, determines warrants the institution of an inter 

partes review under section 314.¿ 

(c) JOINDER

(1) JOINDER OF PARTY If the Director institutes an inter 

partes review, the Director, in his or her discretion, may join as 

a party to that inter partes review any person who meets the requirement of properly filing a petition under section 311 that 

the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, 

determines warrants the institution of an inter partes review 

under section 314. 

(2) JOINDER OF LATER FILED PETITION For good cause 

shown, the Director may allow a party who files a petition that 

meets the requirement described in paragraph (1) and concerns 

the patent of a pending inter partes review to join the petition 

to the pending review. 

(d) MULTIPLE PROCEEDINGS.—Notwithstanding sections 135(a), 

251, and 252, and chapter 30, during the pendency of an inter 

partes review, if another proceeding or matter involving the patent 

is before the Office, the Director may determine the manner in 

which the inter partes review or other proceeding or matter may 

proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding. 

(e) ESTOPPEL.— 

(1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in 

an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), 

or the real party in interest or privy of the petitioner, may not 

request or maintain a proceeding before the Office with respect 

to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 

(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in an inter partes review of a claim in a patent under 


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this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole 

or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of 

the Tariff Act of 1930 that the claim is invalid on any ground 

that the petitioner raised or reasonably could have raised during that inter partes review. 

§ 316. Conduct of inter partes review 

(a) REGULATIONS.—The Director shall prescribe regulations— 

(1) providing that the file of any proceeding under this 

chapter shall be made available to the public, except that any 

petition or document filed with the intent that it be sealed 

shall, if accompanied by a motion to seal, be treated as sealed 

pending the outcome of the ruling on the motion; 

(2) setting forth the standards for the showing of sufficient 

grounds to institute a review under section 314(a); 

(3) establishing procedures for the submission of supplemental information after the petition is filed; 

(4) establishing and governing inter partes review under 

this chapter and the relationship of such review to other proceedings under this title; 

(5) setting forth standards and procedures for discovery of 

relevant evidence, including that such discovery shall be limited to— 

(A) the deposition of witnesses submitting affidavits or 

declarations; and 

(B) what is otherwise necessary in the interest of justice; 

(6) prescribing 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 an unnecessary increase in the cost of the proceeding; 

(7) providing for protective orders governing the exchange 

and submission of confidential information; 

(8) providing for the filing by the patent owner of a response to øthe petition under section 313¿ the petition under 

section 311 after an inter partes review has been instituted, 

and requiring that the patent owner file with such response, 

through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in 

support of the response; 

(9) setting forth standards and procedures for allowing the 

patent owner to move to amend the patent under subsection 

(d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information 

submitted by the patent owner in support of any amendment 

entered under subsection (d) is made available to the public as 

part of the prosecution history of the patent; 

(10) providing either party with the right to an oral hearing as part of the proceeding; 

(11) requiring that the final determination in an inter 

partes review be issued not later than 1 year after the date on 

which the Director notices the institution of a review under 


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this chapter, except that the Director may, for good cause 

shown, extend the 1-year period by not more than 6 months, 

and may adjust the time periods in this paragraph in the case 

of joinder under section 315(c); 

(12) setting a time period for requesting joinder under section 315(c)ø; and¿; 

(13) providing the petitioner with at least 1 opportunity to 

file written comments within a time period established by the 

Directorø.¿; 

(14) providing that for all purposes under this chapter— 

(A) each claim of a patent shall be construed as such 

claim would be in a civil action to invalidate a patent 

under section 282(b), including construing each claim of 

the patent in accordance with the ordinary and customary 

meaning of such claim as understood by one of ordinary 

skill in the art and the prosecution history pertaining to the 

patent; and 

(B) if a court has previously construed the claim or a 

claim term in a civil action in which the patent owner was 

a party, the Office shall consider such claim construction; 

and 

(15) providing that a review may not be instituted unless 

the petitioner certifies that the petitioner and the real parties in 

interest of the petitioner— 

(A) do not own and will not acquire a financial instrument (including a prepaid variable forward contract, equity 

swap, collar, or exchange fund) that is designed to hedge 

or offset any decrease in the market value of an equity security of the patent owner or an affiliate of the patent owner, 

during a period following the filing of the petition to be determined by the Director; and 

(B) have not demanded payment, monetary or otherwise, from the patent owner or an affiliate of the patent 

owner in exchange for a commitment not to file a petition 

under section 311 with respect to the patent that is the subject of the petition, unless the petitioner or the real party in 

interest of the petitioner has been sued for or charged with 

infringement of the patent, during a period to be determined by the Director. 

(b) CONSIDERATIONS.—In prescribing regulations under this 

section, the Director shall consider the effect of any such regulation 

on the economy, the integrity of the patent system, the efficient administration of the Office, øand the ability¿ the rights to due process of the patent owner and the petitioner, and the ability of the Office to timely complete proceedings instituted under this chapter. 

(c) PATENT TRIAL AND APPEAL BOARD.—The Patent Trial and 

Appeal Board shall, in accordance with section 6, conduct each 

inter partes review instituted under this chapter. 

(d) AMENDMENT OF THE PATENT.— (1) IN GENERAL.—During an inter partes review instituted 

under this chapter, the patent owner may file 1 motion to 

amend the patent in 1 or more of the following ways: 

(A) Cancel any challenged patent claim. 

(B) For each challenged claim, propose a reasonable 

number of substitute claims. 


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(2) ADDITIONAL MOTIONS.—Additional motions to amend 

may be permitted upon the joint request of the petitioner and 

the patent owner to materially advance the settlement of a 

proceeding under section 317, or as permitted by regulations 

prescribed by the Director. 

(3) SCOPE OF CLAIMS.—An amendment under this subsection may not enlarge the scope of the claims of the patent 

or introduce new matter. 

(e) EVIDENTIARY STANDARDS.—In an inter partes review instituted under this chapter, the petitioner shall have the burden of 

proving a proposition of unpatentability by a preponderance of the 

evidence. 

* * * * * * * 

CHAPTER 32—POST-GRANT REVIEW 

* * * * * * * 

§ 323. Preliminary response to petition 

If a post-grant review petition is filed under section 321, the 

patent owner shall have the right to file a preliminary response to 

the petition, within a time period set by the Director, that sets 

forth reasons why no post-grant review should be instituted based 

upon the failure of the petition to meet any requirement of this 

chapterø.¿, including affidavits or declarations of supporting evidence and opinions. 

* * * * * * * 

§ 325. Relation to other proceedings or actions 

(a) INFRINGER’S CIVIL ACTION.— (1) POST-GRANT REVIEW BARRED BY CIVIL ACTION.—A postgrant review may not be instituted under this chapter if, before 

the date on which the petition for such a review is filed, the 

petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent. 

(2) STAY OF CIVIL ACTION.—If the petitioner or real party 

in interest files a civil action challenging the validity of a claim 

of the patent on or after the date on which the petitioner files 

a petition for post-grant review of the patent, that civil action 

shall be automatically stayed until either— 

(A) the patent owner moves the court to lift the stay; 

(B) the patent owner files a civil action or counterclaim alleging that the petitioner or real party in interest 

has infringed the patent; or 

(C) the petitioner or real party in interest moves the 

court to dismiss the civil action. 

(3) TREATMENT OF COUNTERCLAIM.—A counterclaim challenging the validity of a claim of a patent does not constitute 

a civil action challenging the validity of a claim of a patent for 

purposes of this subsection. 

(b) PRELIMINARY INJUNCTIONS.—If a civil action alleging infringement of a patent is filed within 3 months after the date on 

which the patent is granted, the court may not stay its consideration of the patent owner’s motion for a preliminary injunction 

against infringement of the patent on the basis that a petition for 


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post-grant review has been filed under this chapter or that such a 

post-grant review has been instituted under this chapter. 

(c) JOINDER.—If more than 1 petition for a post-grant review 

under this chapter is properly filed against the same patent and 

the Director determines that more than 1 of these petitions warrants the institution of a post-grant review under section 324, the 

Director may consolidate such reviews into a single post-grant review. 

(d) MULTIPLE PROCEEDINGS.—Notwithstanding sections 135(a), 

251, and 252, and chapter 30, during the pendency of any postgrant review under this chapter, if another proceeding or matter 

involving the patent is before the Office, the Director may determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, 

transfer, consolidation, or termination of any such matter or proceeding. In determining whether to institute or order a proceeding 

under this chapter, chapter 30, or chapter 31, the Director may 

take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments 

previously were presented to the Office. 

(e) ESTOPPEL.— (1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in a 

post-grant review of a claim in a patent under this chapter 

that results in a final written decision under section 328(a), or 

the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect 

to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review. 

(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in a post-grant review of a claim in a patent under this 

chapter that results in a final written decision under section 

328(a), or the real party in interest or privy of the petitioner, 

may not assert either in a civil action arising in whole or in 

part under section 1338 of title 28 or in a proceeding before the 

International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the 

petitioner raised øor reasonably could have raised¿ during that 

post-grant review. 

(f) REISSUE PATENTS.—A post-grant review may not be instituted under this chapter if the petition requests cancellation of a 

claim in a reissue patent that is identical to or narrower than a 

claim in the original patent from which the reissue patent was 

issued, and the time limitations in section 321(c) would bar filing 

a petition for a post-grant review for such original patent. 

§ 326. Conduct of post-grant review 

(a) REGULATIONS.—The Director shall prescribe regulations— 

(1) providing that the file of any proceeding under this 

chapter shall be made available to the public, except that any 

petition or document filed with the intent that it be sealed 

shall, if accompanied by a motion to seal, be treated as sealed 

pending the outcome of the ruling on the motion; 

(2) setting forth the standards for the showing of sufficient 

grounds to institute a review under subsections (a) and (b) of 

section 324; 


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(3) establishing procedures for the submission of supplemental information after the petition is filed; 

(4) establishing and governing a post-grant review under 

this chapter and the relationship of such review to other proceedings under this title; 

(5) setting forth standards and 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; 

(6) prescribing 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 an unnecessary increase in the cost of the proceeding; 

(7) providing for protective orders governing the exchange 

and submission of confidential information; 

(8) providing for the filing by the patent owner of a response to øthe petition under section 323¿ the petition under 

section 321 after a post-grant review has been instituted, and 

requiring that the patent owner file with such response, 

through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in 

support of the response; 

(9) setting forth standards and procedures for allowing the 

patent owner to move to amend the patent under subsection 

(d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information 

submitted by the patent owner in support of any amendment 

entered under subsection (d) is made available to the public as 

part of the prosecution history of the patent; 

(10) providing either party with the right to an oral hearing as part of the proceeding; 

(11) requiring that the final determination in any postgrant review be issued not later than 1 year after the date on 

which the Director notices the institution of a proceeding under 

this chapter, except that the Director may, for good cause 

shown, extend the 1-year period by not more than 6 months, 

and may adjust the time periods in this paragraph in the case 

of joinder under section 325(c)ø; and¿; 

(12) providing the petitioner with at least 1 opportunity to 

file written comments within a time period established by the 

Directorø.¿; 

(13) providing that for all purposes under this chapter— 

(A) each claim of a patent shall be construed as such 

claim would be in a civil action to invalidate a patent 

under section 282(b), including construing each claim of 

the patent in accordance with the ordinary and customary 

meaning of such claim as understood by one of ordinary 

skill in the art and the prosecution history pertaining to the 

patent; and 

(B) if a court has previously construed the claim or a 

claim term in a civil action in which the patent owner was 

a party, the Office shall consider such claim construction; 

and 


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(14) providing that a review may not be instituted unless 

the petitioner certifies that the petitioner and the real parties in 

interest of the petitioner— 

(A) do not own and will not acquire a financial instrument (including a prepaid variable forward contract, equity 

swap, collar, or exchange fund) that is designed to hedge 

or offset any decrease in the market value of an equity security of the patent owner or an affiliate of the patent owner, 

during a period following the filing of the petition to be determined by the Director; and 

(B) have not demanded payment, monetary or otherwise, from the patent owner or an affiliate of the patent 

owner in exchange for a commitment not to file a petition 

under section 311 with respect to the patent that is the subject of the petition, unless the petitioner or the real party in 

interest of the petitioner has been sued for or charged with 

infringement of the patent, during a period to be determined by the Director. 

(b) CONSIDERATIONS.—In prescribing regulations under this 

section, the Director shall consider the effect of any such regulation 

on the economy, the integrity of the patent system, the efficient administration of the Office, øand the ability¿ the rights to due process of the patent owner and the petitioner, and the ability of the Office to timely complete proceedings instituted under this chapter. 

(c) PATENT TRIAL AND APPEAL BOARD.—The Patent Trial and 

Appeal Board shall, in accordance with section 6, conduct each 

post-grant review instituted under this chapter. 

(d) AMENDMENT OF THE PATENT.— 

(1) IN GENERAL.—During a post-grant review instituted 

under this chapter, the patent owner may file 1 motion to 

amend the patent in 1 or more of the following ways: 

(A) Cancel any challenged patent claim. 

(B) For each challenged claim, propose a reasonable 

number of substitute claims. 

(2) ADDITIONAL MOTIONS.—Additional motions to amend 

may be permitted upon the joint request of the petitioner and 

the patent owner to materially advance the settlement of a 

proceeding under section 327, or upon the request of the patent 

owner for good cause shown. 

(3) SCOPE OF CLAIMS.—An amendment under this subsection may not enlarge the scope of the claims of the patent 

or introduce new matter. 

(e) EVIDENTIARY STANDARDS.—In a post-grant review instituted 

under this chapter, the petitioner shall have the burden of proving 

a proposition of unpatentability by a preponderance of the evidence. 

* * * * * * * 

TITLE 28, UNITED STATES CODE 

* * * * * * * 


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PART IV—JURISDICTION AND VENUE 

* * * * * * * 

CHAPTER 83—COURTS OF APPEALS 

* * * * * * * 

§ 1295. Jurisdiction of the United States Court of Appeals for 

the Federal Circuit 

(a) The United States Court of Appeals for the Federal Circuit 

shall have exclusive jurisdiction— 

(1) of an appeal from a final decision of a district court of 

the United States, the District Court of Guam, the District 

Court of the Virgin Islands, or the District Court of the Northern Mariana Islands, in any civil action arising under, or in 

any civil action in which a party has asserted a compulsory 

counterclaim arising under, any Act of Congress relating to 

patents or plant variety protection; 

(2) of an appeal from a final decision of a district court of 

the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, or the District Court for the 

Northern Mariana Islands, if the jurisdiction of that court was 

based, in whole or in part, on section 1346 of this title, except 

that jurisdiction of an appeal in a case brought in a district 

court under section 1346(a)(1), 1346(b), 1346(e), or 1346(f) of 

this title or under section 1346(a)(2) when the claim is founded 

upon an Act of Congress or a regulation of an executive department providing for internal revenue shall be governed by sections 1291, 1292, and 1294 of this title; 

(3) of an appeal from a final decision of the United States 

Court of Federal Claims; 

(4) of an appeal from a decision of— 

(A) the Patent Trial and Appeal Board of the United 

States Patent and Trademark Office with respect to a patent application, derivation proceeding, reexamination, 

post-grant review, or inter partes review under title 35, at 

the instance of a party who exercised that party’s right to 

participate in the applicable proceeding before or appeal to 

the Board, except that an applicant or a party to a derivation proceeding may also have remedy by civil action pursuant to section 145 or 146 of title 35; an appeal under 

this subparagraph of a decision of the Board with respect 

to an application or derivation proceeding shall waive the 

right of such applicant or party to proceed under section 

145 or 146 of title 35; 

(B) the Under Secretary of Commerce for Intellectual 

Property and Director of the United States Patent and 

Trademark Office or the Trademark Trial and Appeal 

Board with respect to applications for registration of 

marks and other proceedings as provided in section 21 of 

the Trademark Act of 1946 (15 U.S.C. 1071); or 

(C) a district court to which a case was directed pursuant to section 145, 146, or 154(b) of øtitle 35¿ title 35 or 


emcdonald on DSK67QTVN1PROD with HEARING
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section 21(b) of the Act of July 5, 1946 (commonly referred 

to as the ‘‘Trademark Act of 1946’’) (15 U.S.C. 1071(b)); 

(5) of an appeal from a final decision of the United States 

Court of International Trade; 

(6) to review the final determinations of the United States 

International Trade Commission relating to unfair practices in 

import trade, made under section 337 of the Tariff Act of 1930 

(19 U.S.C. 1337); 

(7) to review, by appeal on questions of law only, findings 

of the Secretary of Commerce under U.S. note 6 to subchapter 

X of chapter 98 of the Harmonized Tariff Schedule of the 

United States (relating to importation of instruments or apparatus); 

(8) of an appeal under section 71 of the Plant Variety Protection Act (7 U.S.C. 2461); 

(9) of an appeal from a final order or final decision of the 

Merit Systems Protection Board, pursuant to sections 

7703(b)(1) and 7703(d) of title 5; 

(10) of an appeal from a final decision of an agency board 

of contract appeals pursuant to section 7107(a)(1) of title 41; 

(11) of an appeal under section 211 of the Economic Stabilization Act of 1970; 

(12) of an appeal under section 5 of the Emergency Petroleum Allocation Act of 1973; 

(13) of an appeal under section 506(c) of the Natural Gas 

Policy Act of 1978; and 

(14) of an appeal under section 523 of the Energy Policy 

and Conservation Act. 

(b) The head of any executive department or agency may, with 

the approval of the Attorney General, refer to the Court of Appeals 

for the Federal Circuit for judicial review any final decision rendered by a board of contract appeals pursuant to the terms of any 

contract with the United States awarded by that department or 

agency which the head of such department or agency has concluded 

is not entitled to finality pursuant to the review standards specified 

in section 7107(b) of title 41. The head of each executive department or agency shall make any referral under this section within 

one hundred and twenty days after the receipt of a copy of the final 

appeal decision. 

(c) The Court of Appeals for the Federal Circuit shall review 

the matter referred in accordance with the standards specified in 

section 7107(b) of title 41. The court shall proceed with judicial review on the administrative record made before the board of contract appeals on matters so referred as in other cases pending in 

such court, shall determine the issue of finality of the appeal decision, and shall, if appropriate, render judgment thereon, or remand 

the matter to any administrative or executive body or official with 

such direction as it may deem proper and just. 

* * * * * * * 

CHAPTER 87—DISTRICT COURTS; VENUE 

* * * * * * * 


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§ 1400. Patents and copyrights, mask works, and designs 

(a) Civil actions, suits, or proceedings arising under any Act of 

Congress relating to copyrights or exclusive rights in mask works 

or designs may be instituted in the district in which the defendant 

or his agent resides or may be found. 

ø(b) Any civil action for patent infringement may be brought 

in the judicial district where the defendant resides, or where the 

defendant has committed acts of infringement and has a regular 

and established place of business.¿ 

(b) VENUE FOR ACTION RELATING TO PATENTS.—Notwithstanding subsections (b) and (c) of section 1391 of this title, any 

civil action for patent infringement or any action for a declaratory 

judgment that a patent is invalid or not infringed may be brought 

only in a judicial district— 

(1) where the defendant has its principal place of business 

or is incorporated; 

(2) where the defendant has committed an act of infringement of a patent in suit and has a regular and established 

physical facility that gives rise to the act of infringement; 

(3) where the defendant has agreed or consented to be sued 

in the instant action; 

(4) where an inventor named on the patent in suit conducted research or development that led to the application for 

the patent in suit; 

(5) where a party has a regular and established physical 

facility that such party controls and operates, not primarily for 

the purpose of creating venue, and has— 

(A) engaged in management of significant research and 

development of an invention claimed in a patent in suit 

prior to the effective filing date of the patent; 

(B) manufactured a tangible product that is alleged to 

embody an invention claimed in a patent in suit; or 

(C) implemented a manufacturing process for a tangible good in which the process is alleged to embody an invention claimed in a patent in suit; or 

(6) for foreign defendants that do not meet the requirements 

of paragraphs (1) or (2), according to section 1391(d) of this 

title. 

* * * * * * * 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 1—GENERAL PROVISIONS 

§ 101. Definitions 

In this title the following definitions shall apply: 

(1) The term ‘‘accountant’’ means accountant authorized 

under applicable law to practice public accounting, and includes professional accounting association, corporation, or partnership, if so authorized. 

(2) The term ‘‘affiliate’’ means— 


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(A) entity that directly or indirectly owns, controls, or 

holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than an entity that holds such securities— 

(i) in a fiduciary or agency capacity without sole 

discretionary power to vote such securities; or 

(ii) solely to secure a debt, if such entity has not 

in fact exercised such power to vote; 

(B) corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, 

controlled, or held with power to vote, by the debtor, or by 

an entity that directly or indirectly owns, controls, or holds 

with power to vote, 20 percent or more of the outstanding 

voting securities of the debtor, other than an entity that 

holds such securities— 

(i) in a fiduciary or agency capacity without sole 

discretionary power to vote such securities; or 

(ii) solely to secure a debt, if such entity has not 

in fact exercised such power to vote; 

(C) person whose business is operated under a lease or 

operating agreement by a debtor, or person substantially 

all of whose property is operated under an operating 

agreement with the debtor; or 

(D) entity that operates the business or substantially 

all of the property of the debtor under a lease or operating 

agreement. 

(3) The term ‘‘assisted person’’ means any person whose 

debts consist primarily of consumer debts and the value of 

whose nonexempt property is less than $150,000. 

(4) The term ‘‘attorney’’ means attorney, professional law 

association, corporation, or partnership, authorized under applicable law to practice law. 

(4A) The term ‘‘bankruptcy assistance’’ means any goods or 

services sold or otherwise provided to an assisted person with 

the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance at 

a creditors’ meeting or appearing in a case or proceeding on behalf of another or providing legal representation with respect 

to a case or proceeding under this title. 

(5) The term ‘‘claim’’ means— 

(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or 

(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, 

whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, 

disputed, undisputed, secured, or unsecured. 

(6) The term ‘‘commodity broker’’ means futures commission merchant, foreign futures commission merchant, clearing 

organization, leverage transaction merchant, or commodity options dealer, as defined in section 761 of this title, with respect 

to which there is a customer, as defined in section 761 of this 

title. 


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(7) The term ‘‘community claim’’ means claim that arose 

before the commencement of the case concerning the debtor for 

which property of the kind specified in section 541(a)(2) of this 

title is liable, whether or not there is any such property at the 

time of the commencement of the case. 

(7A) The term ‘‘commercial fishing operation’’ means— 

(A) the catching or harvesting of fish, shrimp, lobsters, 

urchins, seaweed, shellfish, or other aquatic species or 

products of such species; or 

(B) for purposes of section 109 and chapter 12, aquaculture activities consisting of raising for market any species or product described in subparagraph (A). 

(7B) The term ‘‘commercial fishing vessel’’ means a vessel 

used by a family fisherman to carry out a commercial fishing 

operation. 

(8) The term ‘‘consumer debt’’ means debt incurred by an 

individual primarily for a personal, family, or household purpose. 

(9) The term ‘‘corporation’’— 

(A) includes— 

(i) association having a power or privilege that a 

private corporation, but not an individual or a partnership, possesses; 

(ii) partnership association organized under a law 

that makes only the capital subscribed responsible for 

the debts of such association; 

(iii) joint-stock company; 

(iv) unincorporated company or association; or 

(v) business trust; but 

(B) does not include limited partnership. 

(10) The term ‘‘creditor’’ means— 

(A) entity that has a claim against the debtor that 

arose at the time of or before the order for relief concerning the debtor; 

(B) entity that has a claim against the estate of a kind 

specified in section 348(d), 502(f), 502(g), 502(h) or 502(i) 

of this title; or 

(C) entity that has a community claim. 

(10A) The term ‘‘current monthly income’’— 

(A) means the average monthly income from all 

sources that the debtor receives (or in a joint case the 

debtor and the debtor’s spouse receive) without regard to 

whether such income is taxable income, derived during the 

6-month period ending on— 

(i) the last day of the calendar month immediately 

preceding the date of the commencement of the case if 

the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or 

(ii) the date on which current income is determined by the court for purposes of this title if the 

debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and 

(B) includes any amount paid by any entity other than 

the debtor (or in a joint case the debtor and the debtor’s 

spouse), on a regular basis for the household expenses of 


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the debtor or the debtor’s dependents (and in a joint case 

the debtor’s spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity 

on account of their status as victims of such crimes, and 

payments to victims of international terrorism (as defined 

in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status 

as victims of such terrorism. 

(11) The term ‘‘custodian’’ means— 

(A) receiver or trustee of any of the property of the 

debtor, appointed in a case or proceeding not under this 

title; 

(B) assignee under a general assignment for the benefit of the debtor’s creditors; or 

(C) trustee, receiver, or agent under applicable law, or 

under a contract, that is appointed or authorized to take 

charge of property of the debtor for the purpose of enforcing a lien against such property, or for the purpose of general administration of such property for the benefit of the 

debtor’s creditors. 

(12) The term ‘‘debt’’ means liability on a claim. 

(12A) The term ‘‘debt relief agency’’ means any person who 

provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, 

or who is a bankruptcy petition preparer under section 110, 

but does not include— 

(A) any person who is an officer, director, employee, or 

agent of a person who provides such assistance or of the 

bankruptcy petition preparer; 

(B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code 

of 1986; 

(C) a creditor of such assisted person, to the extent 

that the creditor is assisting such assisted person to restructure any debt owed by such assisted person to the 

creditor; 

(D) a depository institution (as defined in section 3 of 

the Federal Deposit Insurance Act) or any Federal credit 

union or State credit union (as those terms are defined in 

section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such depository institution or credit 

union; or 

(E) an author, publisher, distributor, or seller of works 

subject to copyright protection under title 17, when acting 

in such capacity. 

(13) The term ‘‘debtor’’ means person or municipality concerning which a case under this title has been commenced. 

(13A) The term ‘‘debtor’s principal residence’’— 

(A) means a residential structure if used as the principal residence by the debtor, including incidental property, without regard to whether that structure is attached 

to real property; and 


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(B) includes an individual condominium or cooperative 

unit, a mobile or manufactured home, or trailer if used as 

the principal residence by the debtor. 

(14) The term ‘‘disinterested person’’ means a person 

that— 

(A) is not a creditor, an equity security holder, or an 

insider; 

(B) is not and was not, within 2 years before the date 

of the filing of the petition, a director, officer, or employee 

of the debtor; and 

(C) does not have an interest materially adverse to the 

interest of the estate or of any class of creditors or equity 

security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or 

for any other reason. 

(14A) The term ‘‘domestic support obligation’’ means a debt 

that accrues before, on, or after the date of the order for relief 

in a case under this title, including interest that accrues on 

that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is— 

(A) owed to or recoverable by— 

(i) a spouse, former spouse, or child of the debtor 

or such child’s parent, legal guardian, or responsible 

relative; or 

(ii) a governmental unit; 

(B) in the nature of alimony, maintenance, or support 

(including assistance provided by a governmental unit) of 

such spouse, former spouse, or child of the debtor or such 

child’s parent, without regard to whether such debt is expressly so designated; 

(C) established or subject to establishment before, on, 

or after the date of the order for relief in a case under this 

title, by reason of applicable provisions of— 

(i) a separation agreement, divorce decree, or 

property settlement agreement; 

(ii) an order of a court of record; or 

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; 

and 

(D) not assigned to a nongovernmental entity, unless 

that obligation is assigned voluntarily by the spouse, 

former spouse, child of the debtor, or such child’s parent, 

legal guardian, or responsible relative for the purpose of 

collecting the debt. 

(15) The term ‘‘entity’’ includes person, estate, trust, governmental unit, and United States trustee. 

(16) The term ‘‘equity security’’ means— 

(A) share in a corporation, whether or not transferable 

or denominated ‘‘stock’’, or similar security; 

(B) interest of a limited partner in a limited partnership; or 

(C) warrant or right, other than a right to convert, to 

purchase, sell, or subscribe to a share, security, or interest 

of a kind specified in subparagraph (A) or (B) of this paragraph. 


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(17) The term ‘‘equity security holder’’ means holder of an 

equity security of the debtor. 

(18) The term ‘‘family farmer’’ means— 

(A) individual or individual and spouse engaged in a 

farming operation whose aggregate debts do not exceed 

$3,237,000 and not less than 50 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for 

the principal residence of such individual or such individual and spouse unless such debt arises out of a farming 

operation), on the date the case is filed, arise out of a 

farming operation owned or operated by such individual or 

such individual and spouse, and such individual or such 

individual and spouse receive from such farming operation 

more than 50 percent of such individual’s or such individual and spouse’s gross income for— 

(i) the taxable year preceding; or 

(ii) each of the 2d and 3d taxable years preceding; 

the taxable year in which the case concerning such individual or such individual and spouse was filed; or 

(B) corporation or partnership in which more than 50 

percent of the outstanding stock or equity is held by one 

family, or by one family and the relatives of the members 

of such family, and such family or such relatives conduct 

the farming operation, and 

(i) more than 80 percent of the value of its assets 

consists of assets related to the farming operation; (ii) its aggregate debts do not exceed $3,237,000 

and not less than 50 percent of its aggregate noncontingent, liquidated debts (excluding a debt for one 

dwelling which is owned by such corporation or partnership and which a shareholder or partner maintains 

as a principal residence, unless such debt arises out of 

a farming operation), on the date the case is filed, 

arise out of the farming operation owned or operated 

by such corporation or such partnership; and 

(iii) if such corporation issues stock, such stock is 

not publicly traded. 

(19) The term ‘‘family farmer with regular annual income’’ 

means family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under chapter 12 of this title. 

(19A) The term ‘‘family fisherman’’ means— 

(A) an individual or individual and spouse engaged in 

a commercial fishing operation— 

(i) whose aggregate debts do not exceed 

$1,500,000 and not less than 80 percent of whose aggregate noncontingent, liquidated debts (excluding a 

debt for the principal residence of such individual or 

such individual and spouse, unless such debt arises 

out of a commercial fishing operation), on the date the 

case is filed, arise out of a commercial fishing operation owned or operated by such individual or such individual and spouse; and 

(ii) who receive from such commercial fishing operation more than 50 percent of such individual’s or 


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such individual’s and spouse’s gross income for the 

taxable year preceding the taxable year in which the 

case concerning such individual or such individual and 

spouse was filed; or 

(B) a corporation or partnership— 

(i) in which more than 50 percent of the outstanding stock or equity is held by— 

(I) 1 family that conducts the commercial fishing operation; or 

(II) 1 family and the relatives of the members 

of such family, and such family or such relatives 

conduct the commercial fishing operation; and 

(ii)(I) more than 80 percent of the value of its assets consists of assets related to the commercial fishing operation; (II) its aggregate debts do not exceed $1,500,000 

and not less than 80 percent of its aggregate noncontingent, liquidated debts (excluding a debt for 1 

dwelling which is owned by such corporation or partnership and which a shareholder or partner maintains 

as a principal residence, unless such debt arises out of 

a commercial fishing operation), on the date the case 

is filed, arise out of a commercial fishing operation 

owned or operated by such corporation or such partnership; and 

(III) if such corporation issues stock, such stock is 

not publicly traded. 

(19B) The term ‘‘family fisherman with regular annual income’’ means a family fisherman whose annual income is sufficiently stable and regular to enable such family fisherman to 

make payments under a plan under chapter 12 of this title. 

(20) The term ‘‘farmer’’ means (except when such term appears in the term ‘‘family farmer’’) person that received more 

than 80 percent of such person’s gross income during the taxable year of such person immediately preceding the taxable 

year of such person during which the case under this title concerning such person was commenced from a farming operation 

owned or operated by such person. 

(21) The term ‘‘farming operation’’ includes farming, tillage 

of the soil, dairy farming, ranching, production or raising of 

crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state. 

(21A) The term ‘‘farmout agreement’’ means a written 

agreement in which— 

(A) the owner of a right to drill, produce, or operate 

liquid or gaseous hydrocarbons on property agrees or has 

agreed to transfer or assign all or a part of such right to 

another entity; and 

(B) such other entity (either directly or through its 

agents or its assigns), as consideration, agrees to perform 

drilling, reworking, recompleting, testing, or similar or related operations, to develop or produce liquid or gaseous 

hydrocarbons on the property. 

(21B) The term ‘‘Federal depository institutions regulatory 

agency’’ means— 


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(A) with respect to an insured depository institution 

(as defined in section 3(c)(2) of the Federal Deposit Insurance Act) for which no conservator or receiver has been appointed, the appropriate Federal banking agency (as defined in section 3(q) of such Act); 

(B) with respect to an insured credit union (including 

an insured credit union for which the National Credit 

Union Administration has been appointed conservator or 

liquidating agent), the National Credit Union Administration; 

(C) with respect to any insured depository institution 

for which the Resolution Trust Corporation has been appointed conservator or receiver, the Resolution Trust Corporation; and 

(D) with respect to any insured depository institution 

for which the Federal Deposit Insurance Corporation has 

been appointed conservator or receiver, the Federal Deposit Insurance Corporation. 

(22) The term ‘‘financial institution’’ means— 

(A) a Federal reserve bank, or an entity that is a commercial or savings bank, industrial savings bank, savings 

and loan association, trust company, federally-insured 

credit union, or receiver, liquidating agent, or conservator 

for such entity and, when any such Federal reserve bank, 

receiver, liquidating agent, conservator or entity is acting 

as agent or custodian for a customer (whether or not a 

‘‘customer’’, as defined in section 741) in connection with 

a securities contract (as defined in section 741) such customer; or 

(B) in connection with a securities contract (as defined 

in section 741) an investment company registered under 

the Investment Company Act of 1940. 

(22A) The term ‘‘financial participant’’ means— 

(A) an entity that, at the time it enters into a securities contract, commodity contract, swap agreement, repurchase agreement, or forward contract, or at the time of the 

date of the filing of the petition, has one or more agreements or transactions described in paragraph (1), (2), (3), 

(4), (5), or (6) of section 561(a) with the debtor or any other 

entity (other than an affiliate) of a total gross dollar value 

of not less than $1,000,000,000 in notional or actual principal amount outstanding (aggregated across counterparties) at such time or on any day during the 15-month period preceding the date of the filing of the petition, or has 

gross mark-to-market positions of not less than 

$100,000,000 (aggregated across counterparties) in one or 

more such agreements or transactions with the debtor or 

any other entity (other than an affiliate) at such time or 

on any day during the 15-month period preceding the date 

of the filing of the petition; or 

(B) a clearing organization (as defined in section 402 

of the Federal Deposit Insurance Corporation Improvement Act of 1991). 

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ing an interim proceeding, under a law relating to insolvency 

or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation. 

(24) The term ‘‘foreign representative’’ means a person or 

body, including a person or body appointed on an interim basis, 

authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or 

to act as a representative of such foreign proceeding. 

(25) The term ‘‘forward contract’’ means— 

(A) a contract (other than a commodity contract, as defined in section 761) for the purchase, sale, or transfer of 

a commodity, as defined in section 761(8) of this title, or 

any similar good, article, service, right, or interest which 

is presently or in the future becomes the subject of dealing 

in the forward contract trade, or product or byproduct 

thereof, with a maturity date more than two days after the 

date the contract is entered into, including, but not limited 

to, a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a ‘‘repurchase agreement’’, as defined in this section) consignment, lease, swap, hedge transaction, deposit, 

loan, option, allocated transaction, unallocated transaction, 

or any other similar agreement; 

(B) any combination of agreements or transactions referred to in subparagraphs (A) and (C); 

(C) any option to enter into an agreement or transaction referred to in subparagraph (A) or (B); 

(D) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), 

or (C), together with all supplements to any such master 

agreement, without regard to whether such master agreement provides for an agreement or transaction that is not 

a forward contract under this paragraph, except that such 

master agreement shall be considered to be a forward contract under this paragraph only with respect to each agreement or transaction under such master agreement that is 

referred to in subparagraph (A), (B), or (C); or 

(E) any security agreement or arrangement, or other 

credit enhancement related to any agreement or transaction referred to in subparagraph (A), (B), (C), or (D), including any guarantee or reimbursement obligation by or 

to a forward contract merchant or financial participant in 

connection with any agreement or transaction referred to 

in any such subparagraph, but not to exceed the damages 

in connection with any such agreement or transaction, 

measured in accordance with section 562. 

(26) The term ‘‘forward contract merchant’’ means a Federal reserve bank, or an entity the business of which consists 

in whole or in part of entering into forward contracts as or 

with merchants in a commodity (as defined in section 761) or 

any similar good, article, service, right, or interest which is 

presently or in the future becomes the subject of dealing in the 

forward contract trade. 


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(27) The term ‘‘governmental unit’’ means United States; 

State; Commonwealth; District; Territory; municipality; foreign 

state; department, agency, or instrumentality of the United 

States (but not a United States trustee while serving as a 

trustee in a case under this title), a State, a Commonwealth, 

a District, a Territory, a municipality, or a foreign state; or 

other foreign or domestic government. 

(27A) The term ‘‘health care business’’— 

(A) means any public or private entity (without regard 

to whether that entity is organized for profit or not for 

profit) that is primarily engaged in offering to the general 

public facilities and services for— 

(i) the diagnosis or treatment of injury, deformity, 

or disease; and 

(ii) surgical, drug treatment, psychiatric, or obstetric care; and 

(B) includes— 

(i) any— 

(I) general or specialized hospital; 

(II) ancillary ambulatory, emergency, or surgical treatment facility; 

(III) hospice; 

(IV) home health agency; and 

(V) other health care institution that is similar to an entity referred to in subclause (I), (II), 

(III), or (IV); and 

(ii) any long-term care facility, including any— 

(I) skilled nursing facility; 

(II) intermediate care facility; 

(III) assisted living facility; 

(IV) home for the aged; 

(V) domiciliary care facility; and 

(VI) health care institution that is related to 

a facility referred to in subclause (I), (II), (III), 

(IV), or (V), if that institution is primarily engaged in offering room, board, laundry, or personal assistance with activities of daily living and 

incidentals to activities of daily living. 

(27B) The term ‘‘incidental property’’ means, with respect 

to a debtor’s principal residence— 

(A) property commonly conveyed with a principal residence in the area where the real property is located; 

(B) all easements, rights, appurtenances, fixtures, 

rents, royalties, mineral rights, oil or gas rights or profits, 

water rights, escrow funds, or insurance proceeds; and 

(C) all replacements or additions. 

(28) The term ‘‘indenture’’ means mortgage, deed of trust, 

or indenture, under which there is outstanding a security, 

other than a voting-trust certificate, constituting a claim 

against the debtor, a claim secured by a lien on any of the 

debtor’s property, or an equity security of the debtor. 

(29) The term ‘‘indenture trustee’’ means trustee under an 

indenture. 

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able such individual to make payments under a plan under 

chapter 13 of this title, other than a stockbroker or a commodity broker. 

(31) The term ‘‘insider’’ includes— 

(A) if the debtor is an individual— 

(i) relative of the debtor or of a general partner of 

the debtor; 

(ii) partnership in which the debtor is a general 

partner; 

(iii) general partner of the debtor; or 

(iv) corporation of which the debtor is a director, 

officer, or person in control; 

(B) if the debtor is a corporation— 

(i) director of the debtor; 

(ii) officer of the debtor; 

(iii) person in control of the debtor; 

(iv) partnership in which the debtor is a general 

partner; 

(v) general partner of the debtor; or 

(vi) relative of a general partner, director, officer, 

or person in control of the debtor; 

(C) if the debtor is a partnership— 

(i) general partner in the debtor; 

(ii) relative of a general partner in, general partner of, or person in control of the debtor; 

(iii) partnership in which the debtor is a general 

partner; 

(iv) general partner of the debtor; or 

(v) person in control of the debtor; 

(D) if the debtor is a municipality, elected official of 

the debtor or relative of an elected official of the debtor; 

(E) affiliate, or insider of an affiliate as if such affiliate 

were the debtor; and 

(F) managing agent of the debtor. 

(32) The term ‘‘insolvent’’ means— 

(A) with reference to an entity other than a partnership and a municipality, financial condition such that the 

sum of such entity’s debts is greater than all of such entity’s property, at a fair valuation, exclusive of— 

(i) property transferred, concealed, or removed 

with intent to hinder, delay, or defraud such entity’s 

creditors; and 

(ii) property that may be exempted from property 

of the estate under section 522 of this title; 

(B) with reference to a partnership, financial condition 

such that the sum of such partnership’s debts is greater 

than the aggregate of, at a fair valuation— 

(i) all of such partnership’s property, exclusive of 

property of the kind specified in subparagraph (A)(i) of 

this paragraph; and 

(ii) the sum of the excess of the value of each general partner’s nonpartnership property, exclusive of 

property of the kind specified in subparagraph (A) of 

this paragraph, over such partner’s nonpartnership 

debts; and 


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(C) with reference to a municipality, financial condition such that the municipality is— 

(i) generally not paying its debts as they become 

due unless such debts are the subject of a bona fide 

dispute; or 

(ii) unable to pay its debts as they become due. 

(33) The term ‘‘institution-affiliated party’’— 

(A) with respect to an insured depository institution 

(as defined in section 3(c)(2) of the Federal Deposit Insurance Act), has the meaning given it in section 3(u) of the 

Federal Deposit Insurance Act; and 

(B) with respect to an insured credit union, has the 

meaning given it in section 206(r) of the Federal Credit 

Union Act. 

(34) The term ‘‘insured credit union’’ has the meaning 

given it in section 101(7) of the Federal Credit Union Act. 

(35) The term ‘‘insured depository institution’’— 

(A) has the meaning given it in section 3(c)(2) of the 

Federal Deposit Insurance Act; and 

(B) includes an insured credit union (except in the 

case of paragraphs (21B) and (33)(A) of this subsection). 

(35A) The term ‘‘intellectual property’’ means— 

(A) trade secret; 

(B) invention, process, design, or plant protected under 

title 35; 

(C) patent application; 

(D) plant variety; 

(E) work of authorship protected under title 17; øor¿ 

(F) mask work protected under chapter 9 of øtitle 17;¿ 

title 17; or 

(G) a trademark, service mark, or trade name, as those 

terms are defined in section 45 of the Act of July 5, 1946 

(commonly referred to as the ‘‘Trademark Act of 1946’’) (15 

U.S.C. 1127); 

to the extent protected by applicable nonbankruptcy law. 

(36) The term ‘‘judicial lien’’ means lien obtained by judgment, levy, sequestration, or other legal or equitable process or 

proceeding. 

(37) The term ‘‘lien’’ means charge against or interest in 

property to secure payment of a debt or performance of an obligation. 

(38) The term ‘‘margin payment’’ means, for purposes of 

the forward contract provisions of this title, payment or deposit 

of cash, a security or other property, that is commonly known 

in the forward contract trade as original margin, initial margin, maintenance margin, or variation margin, including markto-market payments, or variation payments. 

(38A) The term ‘‘master netting agreement’’— 

(A) means an agreement providing for the exercise of 

rights, including rights of netting, setoff, liquidation, termination, acceleration, or close out, under or in connection 

with one or more contracts that are described in any one 

or more of paragraphs (1) through (5) of section 561(a), or 

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ing any guarantee or reimbursement obligation related to 

1 or more of the foregoing; and 

(B) if the agreement contains provisions relating to 

agreements or transactions that are not contracts described in paragraphs (1) through (5) of section 561(a), 

shall be deemed to be a master netting agreement only 

with respect to those agreements or transactions that are 

described in any one or more of paragraphs (1) through (5) 

of section 561(a). 

(38B) The term ‘‘master netting agreement participant’’ 

means an entity that, at any time before the date of the filing 

of the petition, is a party to an outstanding master netting 

agreement with the debtor. 

(39) The term ‘‘mask work’’ has the meaning given it in 

section 901(a)(2) of title 17. 

(39A) The term ‘‘median family income’’ means for any 

year— 

(A) the median family income both calculated and reported by the Bureau of the Census in the then most recent year; and 

(B) if not so calculated and reported in the then current year, adjusted annually after such most recent year 

until the next year in which median family income is both 

calculated and reported by the Bureau of the Census, to 

reflect the percentage change in the Consumer Price Index 

for All Urban Consumers during the period of years occurring after such most recent year and before such current 

year. 

(40) The term ‘‘municipality’’ means political subdivision or 

public agency or instrumentality of a State. 

(40A) The term ‘‘patient’’ means any individual who obtains or receives services from a health care business. 

(40B) The term ‘‘patient records’’ means any record relating to a patient, including a written document or a record recorded in a magnetic, optical, or other form of electronic medium. 

(41) The term ‘‘person’’ includes individual, partnership, 

and corporation, but does not include governmental unit, except that a governmental unit that— 

(A) acquires an asset from a person— 

(i) as a result of the operation of a loan guarantee 

agreement; or 

(ii) as receiver or liquidating agent of a person; 

(B) is a guarantor of a pension benefit payable by or 

on behalf of the debtor or an affiliate of the debtor; or 

(C) is the legal or beneficial owner of an asset of— 

(i) an employee pension benefit plan that is a governmental plan, as defined in section 414(d) of the Internal Revenue Code of 1986; or 

(ii) an eligible deferred compensation plan, as defined in section 457(b) of the Internal Revenue Code of 

1986; 

shall be considered, for purposes of section 1102 of this title, 

to be a person with respect to such asset or such benefit. 


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(41A) The term ‘‘personally identifiable information’’ 

means— 

(A) if provided by an individual to the debtor in connection with obtaining a product or a service from the 

debtor primarily for personal, family, or household purposes— 

(i) the first name (or initial) and last name of such 

individual, whether given at birth or time of adoption, 

or resulting from a lawful change of name; 

(ii) the geographical address of a physical place of 

residence of such individual; 

(iii) an electronic address (including an e-mail address) of such individual; 

(iv) a telephone number dedicated to contacting 

such individual at such physical place of residence; 

(v) a social security account number issued to such 

individual; or 

(vi) the account number of a credit card issued to 

such individual; or 

(B) if identified in connection with 1 or more of the 

items of information specified in subparagraph (A)— 

(i) a birth date, the number of a certificate of birth 

or adoption, or a place of birth; or 

(ii) any other information concerning an identified 

individual that, if disclosed, will result in contacting or 

identifying such individual physically or electronically. 

(42) The term ‘‘petition’’ means petition filed under section 

301, 302, 303 and 1504 of this title, as the case may be, commencing a case under this title. 

(42A) The term ‘‘production payment’’ means a term overriding royalty satisfiable in cash or in kind— 

(A) contingent on the production of a liquid or gaseous 

hydrocarbon from particular real property; and 

(B) from a specified volume, or a specified value, from 

the liquid or gaseous hydrocarbon produced from such 

property, and determined without regard to production 

costs. 

(43) The term ‘‘purchaser’’ means transferee of a voluntary 

transfer, and includes immediate or mediate transferee of such 

a transferee. 

(44) The term ‘‘railroad’’ means common carrier by railroad 

engaged in the transportation of individuals or property or 

owner of trackage facilities leased by such a common carrier. 

(45) The term ‘‘relative’’ means individual related by affinity or consanguinity within the third degree as determined by 

the common law, or individual in a step or adoptive relationship within such third degree. 

(46) The term ‘‘repo participant’’ means an entity that, at 

any time before the filing of the petition, has an outstanding 

repurchase agreement with the debtor. 

(47) The term ‘‘repurchase agreement’’ (which definition 

also applies to a reverse repurchase agreement)— 

(A) means— 

(i) an agreement, including related terms, which 

provides for the transfer of one or more certificates of 


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deposit, mortgage related securities (as defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage related securities or 

mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (defined as a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the 

Organization for Economic Cooperation and Development), or securities that are direct obligations of, or 

that are fully guaranteed by, the United States or any 

agency of the United States against the transfer of 

funds by the transferee of such certificates of deposit, 

eligible bankers’ acceptances, securities, mortgage 

loans, or interests, with a simultaneous agreement by 

such transferee to transfer to the transferor thereof 

certificates of deposit, eligible bankers’ acceptance, securities, mortgage loans, or interests of the kind described in this clause, at a date certain not later than 

1 year after such transfer or on demand, against the 

transfer of funds; 

(ii) any combination of agreements or transactions 

referred to in clauses (i) and (iii); 

(iii) an option to enter into an agreement or transaction referred to in clause (i) or (ii); 

(iv) a master agreement that provides for an 

agreement or transaction referred to in clause (i), (ii), 

or (iii), together with all supplements to any such master agreement, without regard to whether such master 

agreement provides for an agreement or transaction 

that is not a repurchase agreement under this paragraph, except that such master agreement shall be 

considered to be a repurchase agreement under this 

paragraph only with respect to each agreement or 

transaction under the master agreement that is referred to in clause (i), (ii), or (iii); or 

(v) any security agreement or arrangement or 

other credit enhancement related to any agreement or 

transaction referred to in clause (i), (ii), (iii), or (iv), including any guarantee or reimbursement obligation by 

or to a repo participant or financial participant in connection with any agreement or transaction referred to 

in any such clause, but not to exceed the damages in 

connection with any such agreement or transaction, 

measured in accordance with section 562 of this title; 

and 

(B) does not include a repurchase obligation under a 

participation in a commercial mortgage loan. 

(48) The term ‘‘securities clearing agency’’ means person 

that is registered as a clearing agency under section 17A of the 

Securities Exchange Act of 1934, or exempt from such registration under such section pursuant to an order of the Securities 

and Exchange Commission, or whose business is confined to 

the performance of functions of a clearing agency with respect 

to exempted securities, as defined in section 3(a)(12) of such 

Act for the purposes of such section 17A. 


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(48A) The term ‘‘securities self regulatory organization’’ 

means either a securities association registered with the Securities and Exchange Commission under section 15A of the Securities Exchange Act of 1934 or a national securities exchange 

registered with the Securities and Exchange Commission 

under section 6 of the Securities Exchange Act of 1934. 

(49) The term ‘‘security’’— 

(A) includes— 

(i) note; 

(ii) stock; 

(iii) treasury stock; 

(iv) bond; 

(v) debenture; 

(vi) collateral trust certificate; 

(vii) pre-organization certificate or subscription; 

(viii) transferable share; 

(ix) voting-trust certificate; 

(x) certificate of deposit; 

(xi) certificate of deposit for security; 

(xii) investment contract or certificate of interest 

or participation in a profit-sharing agreement or in an 

oil, gas, or mineral royalty or lease, if such contract or 

interest is required to be the subject of a registration 

statement filed with the Securities and Exchange 

Commission under the provisions of the Securities Act 

of 1933, or is exempt under section 3(b) of such Act 

from the requirement to file such a statement; 

(xiii) interest of a limited partner in a limited 

partnership; 

(xiv) other claim or interest commonly known as 

‘‘security’’; and 

(xv) certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant 

or right to subscribe to or purchase or sell, a security; 

but 

(B) does not include— 

(i) currency, check, draft, bill of exchange, or bank 

letter of credit; 

(ii) leverage transaction, as defined in section 761 

of this title; 

(iii) commodity futures contract or forward contract; 

(iv) option, warrant, or right to subscribe to or 

purchase or sell a commodity futures contract; 

(v) option to purchase or sell a commodity; 

(vi) contract or certificate of a kind specified in 

subparagraph (A)(xii) of this paragraph that is not required to be the subject of a registration statement 

filed with the Securities and Exchange Commission 

and is not exempt under section 3(b) of the Securities 

Act of 1933 from the requirement to file such a statement; or 

(vii) debt or evidence of indebtedness for goods 

sold and delivered or services rendered. 


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(50) The term ‘‘security agreement’’ means agreement that 

creates or provides for a security interest. 

(51) The term ‘‘security interest’’ means lien created by an 

agreement. 

(51A) The term ‘‘settlement payment’’ means, for purposes 

of the forward contract provisions of this title, a preliminary 

settlement payment, a partial settlement payment, an interim 

settlement payment, a settlement payment on account, a final 

settlement payment, a net settlement payment, or any other 

similar payment commonly used in the forward contract trade. 

(51B) The term ‘‘single asset real estate’’ means real property constituting a single property or project, other than residential real property with fewer than 4 residential units, which 

generates substantially all of the gross income of a debtor who 

is not a family farmer and on which no substantial business 

is being conducted by a debtor other than the business of operating the real property and activities incidental thereto. 

(51C) The term ‘‘small business case’’ means a case filed 

under chapter 11 of this title in which the debtor is a small 

business debtor. 

(51D) The term ‘‘small business debtor’’— 

(A) subject to subparagraph (B), means a person engaged in commercial or business activities (including any 

affiliate of such person that is also a debtor under this title 

and excluding a person whose primary activity is the business of owning or operating real property or activities incidental thereto) that has aggregate noncontingent liquidated secured and unsecured debts as of the date of the 

filing of the petition or the date of the order for relief in 

an amount not more than $2,000,000 (excluding debts 

owed to 1 or more affiliates or insiders) for a case in which 

the United States trustee has not appointed under section 

1102(a)(1) a committee of unsecured creditors or where the 

court has determined that the committee of unsecured 

creditors is not sufficiently active and representative to 

provide effective oversight of the debtor; and 

(B) does not include any member of a group of affiliated debtors that has aggregate noncontingent liquidated 

secured and unsecured debts in an amount greater than 

$2,000,000 (excluding debt owed to 1 or more affiliates or 

insiders). 

(52) The term ‘‘State’’ includes the District of Columbia 

and Puerto Rico, except for the purpose of defining who may 

be a debtor under chapter 9 of this title. 

(53) The term ‘‘statutory lien’’ means lien arising solely by 

force of a statute on specified circumstances or conditions, or 

lien of distress for rent, whether or not statutory, but does not 

include security interest or judicial lien, whether or not such 

interest or lien is provided by or is dependent on a statute and 

whether or not such interest or lien is made fully effective by 

statute. 

(53A) The term ‘‘stockbroker’’ means person— 

(A) with respect to which there is a customer, as defined in section 741 of this title; and 


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(B) that is engaged in the business of effecting transactions in securities— 

(i) for the account of others; or 

(ii) with members of the general public, from or 

for such person’s own account. 

(53B) The term ‘‘swap agreement’’— 

(A) means— 

(i) any agreement, including the terms and conditions incorporated by reference in such agreement, 

which is— 

(I) an interest rate swap, option, future, or 

forward agreement, including a rate floor, rate 

cap, rate collar, cross-currency rate swap, and 

basis swap; 

(II) a spot, same day-tomorrow, tomorrownext, forward, or other foreign exchange, precious 

metals, or other commodity agreement; 

(III) a currency swap, option, future, or forward agreement; 

(IV) an equity index or equity swap, option, 

future, or forward agreement; 

(V) a debt index or debt swap, option, future, 

or forward agreement; 

(VI) a total return, credit spread or credit 

swap, option, future, or forward agreement; 

(VII) a commodity index or a commodity 

swap, option, future, or forward agreement; 

(VIII) a weather swap, option, future, or forward agreement; 

(IX) an emissions swap, option, future, or forward agreement; or 

(X) an inflation swap, option, future, or forward agreement; 

(ii) any agreement or transaction that is similar to 

any other agreement or transaction referred to in this 

paragraph and that— 

(I) is of a type that has been, is presently, or 

in the future becomes, the subject of recurrent 

dealings in the swap or other derivatives markets 

(including terms and conditions incorporated by 

reference therein); and 

(II) is a forward, swap, future, option, or spot 

transaction on one or more rates, currencies, commodities, equity securities, or other equity instruments, debt securities or other debt instruments, 

quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic 

consequence, or economic or financial indices or 

measures of economic or financial risk or value; 

(iii) any combination of agreements or transactions referred to in this subparagraph; 

(iv) any option to enter into an agreement or 

transaction referred to in this subparagraph; 


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(v) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), 

or (iv), together with all supplements to any such master agreement, and without regard to whether the 

master agreement contains an agreement or transaction that is not a swap agreement under this paragraph, except that the master agreement shall be considered to be a swap agreement under this paragraph 

only with respect to each agreement or transaction 

under the master agreement that is referred to in 

clause (i), (ii), (iii), or (iv); or 

(vi) any security agreement or arrangement or 

other credit enhancement related to any agreements 

or transactions referred to in clause (i) through (v), including any guarantee or reimbursement obligation by 

or to a swap participant or financial participant in 

connection with any agreement or transaction referred 

to in any such clause, but not to exceed the damages 

in connection with any such agreement or transaction, 

measured in accordance with section 562; and 

(B) is applicable for purposes of this title only, and 

shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any 

swap agreement under any other statute, regulation, or 

rule, including the Gramm-Leach-Bliley Act, the Legal 

Certainty for Bank Products Act of 2000, the securities 

laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934) and the Commodity Exchange Act. 

(53C) The term ‘‘swap participant’’ means an entity that, 

at any time before the filing of the petition, has an outstanding 

swap agreement with the debtor. 

(56A) The term ‘‘term overriding royalty’’ means an interest in liquid or gaseous hydrocarbons in place or to be produced from particular real property that entitles the owner 

thereof to a share of production, or the value thereof, for a 

term limited by time, quantity, or value realized. 

(53D) The term ‘‘timeshare plan’’ means and shall include 

that interest purchased in any arrangement, plan, scheme, or 

similar device, but not including exchange programs, whether 

by membership, agreement, tenancy in common, sale, lease, 

deed, rental agreement, license, right to use agreement, or by 

any other means, whereby a purchaser, in exchange for consideration, receives a right to use accommodations, facilities, or 

recreational sites, whether improved or unimproved, for a specific period of time less than a full year during any given year, 

but not necessarily for consecutive years, and which extends 

for a period of more than three years. A ‘‘timeshare interest’’ 

is that interest purchased in a timeshare plan which grants 

the purchaser the right to use and occupy accommodations, facilities, or recreational sites, whether improved or unimproved, 

pursuant to a timeshare plan. 

(54) The term ‘‘transfer’’ means— 

(A) the creation of a lien; 

(B) the retention of title as a security interest; 


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(C) the foreclosure of a debtor’s equity of redemption; 

or 

(D) each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting 

with— 

(i) property; or 

(ii) an interest in property. 

(54A) The term ‘‘uninsured State member bank’’ means a 

State member bank (as defined in section 3 of the Federal Deposit Insurance Act) the deposits of which are not insured by 

the Federal Deposit Insurance Corporation. 

(55) The term ‘‘United States’’, when used in a geographical sense, includes all locations where the judicial jurisdiction of the United States extends, including territories and 

possessions of the United States. 

* * * * * * * 

CHAPTER 3—CASE ADMINISTRATION 

* * * * * * * 

Subchapter IV—ADMINISTRATIVE POWERS 

* * * * * * * 

§ 365. Executory contracts and unexpired leases 

(a) Except as provided in sections 765 and 766 of this title and 

in subsections (b), (c), and (d) of this section, the trustee, subject 

to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor. 

(b)(1) If there has been a default in an executory contract or 

unexpired lease of the debtor, the trustee may not assume such 

contract or lease unless, at the time of assumption of such contract 

or lease, the trustee— 

(A) cures, or provides adequate assurance that the trustee 

will promptly cure, such default other than a default that is a 

breach of a provision relating to the satisfaction of any provision (other than a penalty rate or penalty provision) relating 

to a default arising from any failure to perform nonmonetary 

obligations under an unexpired lease of real property, if it is 

impossible for the trustee to cure such default by performing 

nonmonetary acts at and after the time of assumption, except 

that if such default arises from a failure to operate in accordance with a nonresidential real property lease, then such default shall be cured by performance at and after the time of assumption in accordance with such lease, and pecuniary losses 

resulting from such default shall be compensated in accordance 

with the provisions of this paragraph; 

(B) compensates, or provides adequate assurance that the 

trustee will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to 

such party resulting from such default; and 

(C) provides adequate assurance of future performance 

under such contract or lease. 


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(2) Paragraph (1) of this subsection does not apply to a default 

that is a breach of a provision relating to— 

(A) the insolvency or financial condition of the debtor at 

any time before the closing of the case; 

(B) the commencement of a case under this title; 

(C) the appointment of or taking possession by a trustee 

in a case under this title or a custodian before such commencement; or 

(D) the satisfaction of any penalty rate or penalty provision relating to a default arising from any failure by the debtor 

to perform nonmonetary obligations under the executory contract or unexpired lease. 

(3) For the purposes of paragraph (1) of this subsection and 

paragraph (2)(B) of subsection (f), adequate assurance of future 

performance of a lease of real property in a shopping center includes adequate assurance— 

(A) of the source of rent and other consideration due under 

such lease, and in the case of an assignment, that the financial 

condition and operating performance of the proposed assignee 

and its guarantors, if any, shall be similar to the financial condition and operating performance of the debtor and its guarantors, if any, as of the time the debtor became the lessee under 

the lease; 

(B) that any percentage rent due under such lease will not 

decline substantially; 

(C) that assumption or assignment of such lease is subject 

to all the provisions thereof, including (but not limited to) provisions such as a radius, location, use, or exclusivity provision, 

and will not breach any such provision contained in any other 

lease, financing agreement, or master agreement relating to 

such shopping center; and 

(D) that assumption or assignment of such lease will not 

disrupt any tenant mix or balance in such shopping center. 

(4) Notwithstanding any other provision of this section, if there 

has been a default in an unexpired lease of the debtor, other than 

a default of a kind specified in paragraph (2) of this subsection, the 

trustee may not require a lessor to provide services or supplies incidental to such lease before assumption of such lease unless the lessor is compensated under the terms of such lease for any services 

and supplies provided under such lease before assumption of such 

lease. 

(c) The trustee may not assume or assign any executory contract or unexpired lease of the debtor, whether or not such contract 

or lease prohibits or restricts assignment of rights or delegation of 

duties, if— 

(1)(A) applicable law excuses a party, other than the debtor, to such contract or lease from accepting performance from 

or rendering performance to an entity other than the debtor or 

the debtor in possession, whether or not such contract or lease 

prohibits or restricts assignment of rights or delegation of duties; and 

(B) such party does not consent to such assumption or assignment; or 


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(2) such contract is a contract to make a loan, or extend 

other debt financing or financial accommodations, to or for the 

benefit of the debtor, or to issue a security of the debtor; or 

(3) such lease is of nonresidential real property and has 

been terminated under applicable nonbankruptcy law prior to 

the order for relief. 

(d)(1) In a case under chapter 7 of this title, if the trustee does 

not assume or reject an executory contract or unexpired lease of 

residential real property or of personal property of the debtor within 60 days after the order for relief, or within such additional time 

as the court, for cause, within such 60-day period, fixes, then such 

contract or lease is deemed rejected. 

(2) In a case under chapter 9, 11, 12, or 13 of this title, the 

trustee may assume or reject an executory contract or unexpired 

lease of residential real property or of personal property of the 

debtor at any time before the confirmation of a plan but the court, 

on the request of any party to such contract or lease, may order 

the trustee to determine within a specified period of time whether 

to assume or reject such contract or lease. 

(3) The trustee shall timely perform all the obligations of the 

debtor, except those specified in section 365(b)(2), arising from and 

after the order for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected, notwithstanding section 503(b)(1) of this title. The court may extend, for 

cause, the time for performance of any such obligation that arises 

within 60 days after the date of the order for relief, but the time 

for performance shall not be extended beyond such 60-day period. 

This subsection shall not be deemed to affect the trustee’s obligations under the provisions of subsection (b) or (f) of this section. Acceptance of any such performance does not constitute waiver or relinquishment of the lessor’s rights under such lease or under this 

title. 

(4)(A) Subject to subparagraph (B), an unexpired lease of nonresidential real property under which the debtor is the lessee shall 

be deemed rejected, and the trustee shall immediately surrender 

that nonresidential real property to the lessor, if the trustee does 

not assume or reject the unexpired lease by the earlier of— 

(i) the date that is 120 days after the date of the order for 

relief; or 

(ii) the date of the entry of an order confirming a plan. 

(B)(i) The court may extend the period determined under subparagraph (A), prior to the expiration of the 120-day period, for 90 

days on the motion of the trustee or lessor for cause. 

(ii) If the court grants an extension under clause (i), the court 

may grant a subsequent extension only upon prior written consent 

of the lessor in each instance. 

(5) The trustee shall timely perform all of the obligations of the 

debtor, except those specified in section 365(b)(2), first arising from 

or after 60 days after the order for relief in a case under chapter 

11 of this title under an unexpired lease of personal property (other 

than personal property leased to an individual primarily for personal, family, or household purposes), until such lease is assumed 

or rejected notwithstanding section 503(b)(1) of this title, unless the 

court, after notice and a hearing and based on the equities of the 

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formance thereof. This subsection shall not be deemed to affect the 

trustee’s obligations under the provisions of subsection (b) or (f). 

Acceptance of any such performance does not constitute waiver or 

relinquishment of the lessor’s rights under such lease or under this 

title. 

(e)(1) Notwithstanding a provision in an executory contract or 

unexpired lease, or in applicable law, an executory contract or unexpired lease of the debtor may not be terminated or modified, and 

any right or obligation under such contract or lease may not be terminated or modified, at any time after the commencement of the 

case solely because of a provision in such contract or lease that is 

conditioned on— 

(A) the insolvency or financial condition of the debtor at 

any time before the closing of the case; 

(B) the commencement of a case under this title; or 

(C) the appointment of or taking possession by a trustee 

in a case under this title or a custodian before such commencement. 

(2) Paragraph (1) of this subsection does not apply to an executory contract or unexpired lease of the debtor, whether or not such 

contract or lease prohibits or restricts assignment of rights or delegation of duties, if— 

(A)(i) applicable law excuses a party, other than the debtor, to such contract or lease from accepting performance from 

or rendering performance to the trustee or to an assignee of 

such contract or lease, whether or not such contract or lease 

prohibits or restricts assignment of rights or delegation of duties; and 

(ii) such party does not consent to such assumption or assignment; or 

(B) such contract is a contract to make a loan, or extend 

other debt financing or financial accommodations, to or for the 

benefit of the debtor, or to issue a security of the debtor. 

(f)(1) Except as provided in subsections (b) and (c) of this section, notwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable law, that prohibits, restricts, or conditions the assignment of such contract or lease, the 

trustee may assign such contract or lease under paragraph (2) of 

this subsection. 

(2) The trustee may assign an executory contract or unexpired 

lease of the debtor only if— 

(A) the trustee assumes such contract or lease in accordance with the provisions of this section; and 

(B) adequate assurance of future performance by the assignee of such contract or lease is provided, whether or not 

there has been a default in such contract or lease. 

(3) Notwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable law that terminates or 

modifies, or permits a party other than the debtor to terminate or 

modify, such contract or lease or a right or obligation under such 

contract or lease on account of an assignment of such contract or 

lease, such contract, lease, right, or obligation may not be terminated or modified under such provision because of the assumption 

or assignment of such contract or lease by the trustee. 


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(g) Except as provided in subsections (h)(2) and (i)(2) of this 

section, the rejection of an executory contract or unexpired lease of 

the debtor constitutes a breach of such contract or lease— 

(1) if such contract or lease has not been assumed under 

this section or under a plan confirmed under chapter 9, 11, 12, 

or 13 of this title, immediately before the date of the filing of 

the petition; or 

(2) if such contract or lease has been assumed under this 

section or under a plan confirmed under chapter 9, 11, 12, or 

13 of this title— 

(A) if before such rejection the case has not been converted under section 1112, 1208, or 1307 of this title, at 

the time of such rejection; or 

(B) if before such rejection the case has been converted 

under section 1112, 1208, or 1307 of this title— 

(i) immediately before the date of such conversion, 

if such contract or lease was assumed before such conversion; or 

(ii) at the time of such rejection, if such contract 

or lease was assumed after such conversion. 

(h)(1)(A) If the trustee rejects an unexpired lease of real property under which the debtor is the lessor and— 

(i) if the rejection by the trustee amounts to such a breach 

as would entitle the lessee to treat such lease as terminated 

by virtue of its terms, applicable nonbankruptcy law, or any 

agreement made by the lessee, then the lessee under such 

lease may treat such lease as terminated by the rejection; or 

(ii) if the term of such lease has commenced, the lessee 

may retain its rights under such lease (including rights such 

as those relating to the amount and timing of payment of rent 

and other amounts payable by the lessee and any right of use, 

possession, quiet enjoyment, subletting, assignment, or 

hypothecation) that are in or appurtenant to the real property 

for the balance of the term of such lease and for any renewal 

or extension of such rights to the extent that such rights are 

enforceable under applicable nonbankruptcy law. 

(B) If the lessee retains its rights under subparagraph (A)(ii), 

the lessee may offset against the rent reserved under such lease for 

the balance of the term after the date of the rejection of such lease 

and for the term of any renewal or extension of such lease, the 

value of any damage caused by the nonperformance after the date 

of such rejection, of any obligation of the debtor under such lease, 

but the lessee shall not have any other right against the estate or 

the debtor on account of any damage occurring after such date 

caused by such nonperformance. 

(C) The rejection of a lease of real property in a shopping center with respect to which the lessee elects to retain its rights under 

subparagraph (A)(ii) does not affect the enforceability under applicable nonbankruptcy law of any provision in the lease pertaining 

to radius, location, use, exclusivity, or tenant mix or balance. 

(D) In this paragraph, ‘‘lessee’’ includes any successor, assign, 

or mortgagee permitted under the terms of such lease. 

(2)(A) If the trustee rejects a timeshare interest under a 

timeshare plan under which the debtor is the timeshare interest 

seller and— 


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(i) if the rejection amounts to such a breach as would entitle the timeshare interest purchaser to treat the timeshare 

plan as terminated under its terms, applicable nonbankruptcy 

law, or any agreement made by timeshare interest purchaser, 

the timeshare interest purchaser under the timeshare plan 

may treat the timeshare plan as terminated by such rejection; 

or 

(ii) if the term of such timeshare interest has commenced, 

then the timeshare interest purchaser may retain its rights in 

such timeshare interest for the balance of such term and for 

any term of renewal or extension of such timeshare interest to 

the extent that such rights are enforceable under applicable 

nonbankruptcy law. 

(B) If the timeshare interest purchaser retains its rights under 

subparagraph (A), such timeshare interest purchaser may offset 

against the moneys due for such timeshare interest for the balance 

of the term after the date of the rejection of such timeshare interest, and the term of any renewal or extension of such timeshare interest, the value of any damage caused by the nonperformance 

after the date of such rejection, of any obligation of the debtor 

under such timeshare plan, but the timeshare interest purchaser 

shall not have any right against the estate or the debtor on account 

of any damage occurring after such date caused by such nonperformance. 

(i)(1) If the trustee rejects an executory contract of the debtor 

for the sale of real property or for the sale of a timeshare interest 

under a timeshare plan, under which the purchaser is in possession, such purchaser may treat such contract as terminated, or, in 

the alternative, may remain in possession of such real property or 

timeshare interest. 

(2) If such purchaser remains in possession— 

(A) such purchaser shall continue to make all payments 

due under such contract, but may, offset against such payments any damages occurring after the date of the rejection of 

such contract caused by the nonperformance of any obligation 

of the debtor after such date, but such purchaser does not have 

any rights against the estate on account of any damages arising after such date from such rejection, other than such offset; 

and 

(B) the trustee shall deliver title to such purchaser in accordance with the provisions of such contract, but is relieved 

of all other obligations to perform under such contract. 

(j) A purchaser that treats an executory contract as terminated 

under subsection (i) of this section, or a party whose executory contract to purchase real property from the debtor is rejected and 

under which such party is not in possession, has a lien on the interest of the debtor in such property for the recovery of any portion 

of the purchase price that such purchaser or party has paid. 

(k) Assignment by the trustee to an entity of a contract or 

lease assumed under this section relieves the trustee and the estate from any liability for any breach of such contract or lease occurring after such assignment. 

(l) If an unexpired lease under which the debtor is the lessee 

is assigned pursuant to this section, the lessor of the property may 

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or’s obligations under the lease substantially the same as would 

have been required by the landlord upon the initial leasing to a 

similar tenant. 

(m) For purposes of this section 365 and sections 541(b)(2) and 

362(b)(10), leases of real property shall include any rental agreement to use real property. 

(n)(1) If the trustee rejects an executory contract under which 

the debtor is a licensor of a right to intellectual property, the licensee under such contract may elect— 

(A) to treat such contract as terminated by such rejection 

if such rejection by the trustee amounts to such a breach as 

would entitle the licensee to treat such contract as terminated 

by virtue of its own terms, applicable nonbankruptcy law, or 

an agreement made by the licensee with another entity; or 

(B) to retain its rights (including a right to enforce any exclusivity provision of such contract, but excluding any other 

right under applicable nonbankruptcy law to specific performance of such contract) under such contract and under any 

agreement supplementary to such contract, to such intellectual 

property (including any embodiment of such intellectual property to the extent protected by applicable nonbankruptcy law), 

as such rights existed immediately before the case commenced, 

for— 

(i) the duration of such contract; and 

(ii) any period for which such contract may be extended by the licensee as of right under applicable nonbankruptcy law. 

(2) If the licensee elects to retain its rights, as described in 

paragraph (1)(B) of this subsection, under such contract— 

(A) the trustee shall allow the licensee to exercise such 

rights; 

(B) the licensee shall make all øroyalty payments¿ royalty 

or other payments due under such contract for the duration of 

such contract and for any period described in paragraph (1)(B) 

of this subsection for which the licensee extends such contract; 

øand¿ 

(C) the licensee shall be deemed to waive— 

(i) any right of setoff it may have with respect to such 

contract under this title or applicable nonbankruptcy law; 

and 

(ii) any claim allowable under section 503(b) of this 

title arising from the performance of such contractø.¿; and 

(D) in the case of a trademark, service mark, or trade 

name, the licensee shall not be relieved of any of its obligations 

to maintain the quality of the products and services offered 

under or in connection with the licensed trademark, service 

mark, or trade name, and the trustee shall retain the right to 

oversee and enforce quality control for such products or services, 

or both. 

(3) If the licensee elects to retain its rights, as described in 

paragraph (1)(B) of this subsection, then on the written request of 

the licensee the trustee shall— 

(A) to the extent provided in such contract, or any agreement supplementary to such contract, provide to the licensee 


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any intellectual property (including such embodiment) held by 

the trustee; and 

(B) not interfere with the rights of the licensee as provided 

in such contract, or any agreement supplementary to such contract, to such intellectual property (including such embodiment) including any right to obtain such intellectual property 

(or such embodiment) from another entity. 

(4) Unless and until the trustee rejects such contract, on the 

written request of the licensee the trustee shall— 

(A) to the extent provided in such contract or any agreement supplementary to such contract— 

(i) perform such contract; or 

(ii) provide to the licensee such intellectual property 

(including any embodiment of such intellectual property to 

the extent protected by applicable nonbankruptcy law) 

held by the trustee; and 

(B) not interfere with the rights of the licensee as provided 

in such contract, or any agreement supplementary to such contract, to such intellectual property (including such embodiment), including any right to obtain such intellectual property 

(or such embodiment) from another entity. 

(o) In a case under chapter 11 of this title, the trustee shall 

be deemed to have assumed (consistent with the debtor’s other obligations under section 507), and shall immediately cure any deficit 

under, any commitment by the debtor to a Federal depository institutions regulatory agency (or predecessor to such agency) to maintain the capital of an insured depository institution, and any claim 

for a subsequent breach of the obligations thereunder shall be entitled to priority under section 507. This subsection shall not extend 

any commitment that would otherwise be terminated by any act of 

such an agency. 

(p)(1) If a lease of personal property is rejected or not timely 

assumed by the trustee under subsection (d), the leased property 

is no longer property of the estate and the stay under section 

362(a) is automatically terminated. 

(2)(A) If the debtor in a case under chapter 7 is an individual, 

the debtor may notify the creditor in writing that the debtor desires to assume the lease. Upon being so notified, the creditor may, 

at its option, notify the debtor that it is willing to have the lease 

assumed by the debtor and may condition such assumption on cure 

of any outstanding default on terms set by the contract. 

(B) If, not later than 30 days after notice is provided under 

subparagraph (A), the debtor notifies the lessor in writing that the 

lease is assumed, the liability under the lease will be assumed by 

the debtor and not by the estate. 

(C) The stay under section 362 and the injunction under section 524(a)(2) shall not be violated by notification of the debtor and 

negotiation of cure under this subsection. 

(3) In a case under chapter 11 in which the debtor is an individual and in a case under chapter 13, if the debtor is the lessee 

with respect to personal property and the lease is not assumed in 

the plan confirmed by the court, the lease is deemed rejected as of 

the conclusion of the hearing on confirmation. If the lease is rejected, the stay under section 362 and any stay under section 1301 


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is automatically terminated with respect to the property subject to 

the lease. 

* * * * * * * 

CHAPTER 15—ANCILLARY AND OTHER CROSS-BORDER 

CASES 

* * * * * * * 

Subchapter III—RECOGNITION OF A FOREIGN 

PROCEEDING AND RELIEF 

* * * * * * * 

§ 1522. Protection of creditors and other interested persons 

(a) The court may grant relief under section 1519 or 1521, or 

may modify or terminate relief under subsection (c), only if the interests of the creditors and other interested entities, including the 

debtor, are sufficiently protected. 

(b) The court may subject relief granted under section 1519 or 

1521, or the operation of the debtor’s business under section 

1520(a)(3), to conditions it considers appropriate, including the giving of security or the filing of a bond. 

(c) The court may, at the request of the foreign representative 

or an entity affected by relief granted under section 1519 or 1521, 

or at its own motion, modify or terminate such relief. 

(d) Section 1104(d) shall apply to the appointment of an examiner under this chapter. Any examiner shall comply with the qualification requirements imposed on a trustee by section 322. 

(e) Section 365(n) shall apply to cases under this chapter. If the 

foreign representative rejects or repudiates a contract under which 

the debtor is a licensor of intellectual property, the licensee under 

such contract shall be entitled to make the election and exercise the 

rights described in section 365(n). 

* * * * * * * 

LEAHY-SMITH AMERICA INVENTS ACT 

* * * * * * * 

SEC. 10. FEE SETTING AUTHORITY. 

(a) FEE SETTING.— (1) IN GENERAL.—The Director may set or adjust by rule 

any fee established, authorized, or charged under title 35, 

United States Code, or the Trademark Act of 1946 (15 U.S.C. 

1051 et seq.), for any services performed by or materials furnished by, the Office, subject to paragraph (2). 

(2) FEES TO RECOVER COSTS.—Fees may be set or adjusted 

under paragraph (1) only to recover the aggregate estimated 

costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) and trademarks (in the case of trademark fees), including administrative 

costs of the Office with respect to such patent or trademark 

fees (as the case may be). 


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(b) SMALL AND MICRO ENTITIES.—The fees set or adjusted 

under subsection (a) for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be 

reduced by 50 percent with respect to the application of such fees 

to any small entity that qualifies for reduced fees under section 

41(h)(1) of title 35, United States Code, and shall be reduced by 75 

percent with respect to the application of such fees to any micro entity as defined in section 123 of that title (as added by subsection 

(g) of this section). 

(c) REDUCTION OF FEES IN CERTAIN FISCAL YEARS.—In each fiscal year, the Director— 

(1) shall consult with the Patent Public Advisory Committee and the Trademark Public Advisory Committee on the 

advisability of reducing any fees described in subsection (a); 

and 

(2) after the consultation required under paragraph (1), 

may reduce such fees. 

(d) ROLE OF THE PUBLIC ADVISORY COMMITTEE.—The Director 

shall— 

(1) not less than 45 days before publishing any proposed 

fee under subsection (a) in the Federal Register, submit the 

proposed fee to the Patent Public Advisory Committee or the 

Trademark Public Advisory Committee, or both, as appropriate; 

(2)(A) provide the relevant advisory committee described in 

paragraph (1) a 30-day period following the submission of any 

proposed fee, in which to deliberate, consider, and comment on 

such proposal; 

(B) require that, during that 30-day period, the relevant advisory committee hold a public hearing relating to 

such proposal; and 

(C) assist the relevant advisory committee in carrying 

out that public hearing, including by offering the use of 

the resources of the Office to notify and promote the hearing to the public and interested stakeholders; 

(3) require the relevant advisory committee to make available to the public a written report setting forth in detail the 

comments, advice, and recommendations of the committee regarding the proposed fee; and 

(4) consider and analyze any comments, advice, or recommendations received from the relevant advisory committee 

before setting or adjusting (as the case may be) the fee. 

(e) PUBLICATION IN THE FEDERAL REGISTER.— 

(1) PUBLICATION AND RATIONALE.—The Director shall— 

(A) publish any proposed fee change under this section 

in the Federal Register; 

(B) include, in such publication, the specific rationale 

and purpose for the proposal, including the possible expectations or benefits resulting from the proposed change; and 

(C) notify, through the Chair and Ranking Member of 

the Committees on the Judiciary of the Senate and the 

House of Representatives, the Congress of the proposed 

change not later than the date on which the proposed 

change is published under subparagraph (A). 


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(2) PUBLIC COMMENT PERIOD.—The Director shall, in the 

publication under paragraph (1), provide the public a period of 

not less than 45 days in which to submit comments on the proposed change in fees. 

(3) PUBLICATION OF FINAL RULE.—The final rule setting or 

adjusting a fee under this section shall be published in the 

Federal Register and in the Official Gazette of the Patent and 

Trademark Office. 

(4) CONGRESSIONAL COMMENT PERIOD.—A fee set or adjusted under subsection (a) may not become effective— 

(A) before the end of the 45-day period beginning on 

the day after the date on which the Director publishes the 

final rule adjusting or setting the fee under paragraph (3); 

or 

(B) if a law is enacted disapproving such fee. 

(5) RULE OF CONSTRUCTION.—Rules prescribed under this 

section shall not diminish— 

(A) the rights of an applicant for a patent under title 

35, United States Code, or for a mark under the Trademark Act of 1946; or 

(B) any rights under a ratified treaty. 

(f) RETENTION OF AUTHORITY.—The Director retains the authority under subsection (a) to set or adjust fees only during such 

period as the Patent and Trademark Office remains an agency 

within the Department of Commerce. 

(g) [omitted-amendatory] 

(h) ELECTRONIC FILING INCENTIVE.— (1) IN GENERAL.—Notwithstanding any other provision of this section, an additional fee of $400 shall be established for 

each application for an original patent, except for a design, 

plant, or provisional application, that is not filed by electronic 

means as prescribed by the Director. The fee established by 

this subsection shall be reduced by 50 percent for small entities that qualify for reduced fees under section 41(h)(1) of title 

35, United States Code. All fees paid under this subsection 

shall be deposited in the Treasury as an offsetting receipt that 

shall not be available for obligation or expenditure. 

(2) EFFECTIVE DATE.—This subsection shall take effect 

upon the expiration of the 60-day period beginning on the date 

of the enactment of this Act. 

(i) EFFECTIVE DATE; SUNSET.— 

(1) EFFECTIVE DATE.—Except as provided in subsection (h), 

this section and the amendments made by this section shall 

take effect on the date of the enactment of this Act. 

(2) SUNSET.—The authority of the Director to set or adjust 

any fee under subsection (a) shall terminate upon the expiration of the ø7-year¿ 17-year period beginning on the date of the 

enactment of this Act. 

(3) PRIOR REGULATIONS NOT AFFECTED.—The termination 

of authority under this subsection shall not affect any regulations issued under this section before the effective date of such 

termination or any rulemaking proceeding for the issuance of 

regulations under this section that is pending on such date. 

* * * * * * * 


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SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS METHOD 

PATENTS. 

(a) TRANSITIONAL PROGRAM.— 

(1) ESTABLISHMENT.—Not later than the date that is 1 

year after the date of the enactment of this Act, the Director 

shall issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of 

covered business method patents. The transitional proceeding 

implemented pursuant to this subsection shall be regarded as, 

and shall employ the standards and procedures of, a post-grant 

review under chapter 32 of title 35, United States Code, subject to the following: 

(A) øSection 321(c)¿ Sections 321(c) and 326(a)(13) of 

title 35, United States Code, and subsections (b), (e)(2), 

and (f) of section 325 of such title shall not apply to a transitional proceeding. 

(B) A person may not file a petition for a transitional 

proceeding with respect to a covered business method patent unless the person or the person’s real party in interest 

or privy has been sued for infringement of the patent or 

has been charged with infringement under that patent. 

(C) A petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a covered business method patent on a ground raised under section 102 

or 103 of title 35, United States Code, as in effect on the 

day before the effective date set forth in section 3(n)(1), 

may support such ground only on the basis of— 

(i) prior art that is described by øsection 102(a)¿ 

subsection (a) or (e) of section 102 of such title (as in 

effect on the day before such effective date); or 

(ii) prior art that— 

(I) discloses the invention more than 1 year 

before the date of the application for patent in the 

United States; and 

(II) would be described by section 102(a) of 

such title (as in effect on the day before the effective date set forth in section 3(n)(1)) if the disclosure had been made by another before the invention thereof by the applicant for patent. 

(D) The petitioner in a transitional proceeding that results in a final written decision under section 328(a) of 

title 35, United States Code, with respect to a claim in a 

covered business method patent, or the petitioner’s real 

party in interest, may not assert, either in a civil action 

arising in whole or in part under section 1338 of title 28, 

United States Code, or in a proceeding before the International Trade Commission under section 337 of the Tariff 

Act of 1930 (19 U.S.C. 1337), that the claim is invalid on 

any ground that the petitioner raised during that transitional proceeding. 

(E) The Director may institute a transitional proceeding only for a patent that is a covered business method patent. 

(2) EFFECTIVE DATE.—The regulations issued under paragraph (1) shall take effect upon the expiration of the 1-year peVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00161 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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riod beginning on the date of the enactment of this Act and 

shall apply to any covered business method patent issued before, on, or after that effective date, except that the regulations 

shall not apply to a patent described in section 6(f)(2)(A) of this 

Act during the period in which a petition for post-grant review 

of that patent would satisfy the requirements of section 321(c) 

of title 35, United States Code. 

(3) SUNSET.— (A) IN GENERAL.—This subsection, and the regulations 

issued under this subsection, are repealed effective upon 

the expiration of the 8-year period beginning on the date 

that the regulations issued under to paragraph (1) take effect. 

(B) APPLICABILITY.—Notwithstanding subparagraph 

(A), this subsection and the regulations issued under this 

subsection shall continue to apply, after the date of the repeal under subparagraph (A), to any petition for a transitional proceeding that is filed before the date of such repeal. 

(b) REQUEST FOR STAY.— 

(1) IN GENERAL.—If a party seeks a stay of a civil action 

alleging infringement of a patent under section 281 of title 35, 

United States Code, relating to a transitional proceeding for 

that patent, the court shall decide whether to enter a stay 

based on— 

(A) whether a stay, or the denial thereof, will simplify 

the issues in question and streamline the trial; 

(B) whether discovery is complete and whether a trial 

date has been set; 

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and 

(D) whether a stay, or the denial thereof, will reduce 

the burden of litigation on the parties and on the court. 

(2) REVIEW.—A party may take an immediate interlocutory 

appeal from a district court’s decision under paragraph (1). The 

United States Court of Appeals for the Federal Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo. 

(c) ATM EXEMPTION FOR VENUE PURPOSES.—In an action for 

infringement under section 281 of title 35, United States Code, of 

a covered business method patent, an automated teller machine 

shall not be deemed to be a regular and established place of business for purposes of section 1400(b) of title 28, United States Code. 

(d) DEFINITION.— 

(1) IN GENERAL.—For purposes of this section, the term 

‘‘covered business method patent’’ means a patent that claims 

a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, 

or management of a financial product or service, except that 

the term does not include patents for technological inventions. 

(2) REGULATIONS.—To assist in implementing the transitional proceeding authorized by this section, the Director shall 

issue regulations for determining whether a patent is for a 

technological invention. 


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(e) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed as amending or interpreting categories of patent-eligible 

subject matter set forth under section 101 of title 35, United States 

Code. 

* * * * * * * 

PUBLIC LAW 111-349 

AN ACT To establish a pilot program in certain United States district courts to 

encourage enhancement of expertise in patent cases among district judges. 

SECTION 1. PILOT PROGRAM IN CERTAIN DISTRICT COURTS. 

(a) ESTABLISHMENT.— (1) IN GENERAL.—There is established a program, in each 

of the United States district courts designated under subsection (b), under which— 

(A) those district judges of that district court who request to hear cases under which 1 or more issues arising 

under any Act of Congress relating to patents or plant variety protection are required to be decided, are designated 

by the chief judge of the court to hear those cases; 

(B) cases described in subparagraph (A) are randomly 

assigned to the judges of the district court, regardless of 

whether the judges are designated under subparagraph 

(A); 

(C) a judge not designated under subparagraph (A) to 

whom a case is assigned under subparagraph (B) may decline to accept the case; and 

(D) a case declined under subparagraph (C) is randomly reassigned to 1 of those judges of the court designated under subparagraph (A). 

(2) SENIOR JUDGES.—Senior judges of a district court may 

be designated under paragraph (1)(A) if at least 1 judge of the 

court in regular active service is also so designated. 

(3) RIGHT TO TRANSFER CASES PRESERVED.—This section 

shall not be construed to limit the ability of a judge to request 

the reassignment of or otherwise transfer a case to which the 

judge is assigned under this section, in accordance with otherwise applicable rules of the court. 

(b) DESIGNATION.— 

(1) IN GENERAL.—Not later than 6 months after the date 

of the enactment of this Act, the Director of the Administrative 

Office of the United States Courts shall designate not less than 

6 United States district courts, in at least 3 different judicial 

circuits, in which the program established under subsection (a) 

will be carried out. 

(2) CRITERIA FOR DESIGNATIONS.— 

(A) IN GENERAL.—The Director shall make designations under paragraph (1) from— 

(i) the 15 district courts in which the largest number of patent and plant variety protection cases were 

filed in the most recent calendar year that has ended; 

or 


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(ii) the district courts that have adopted, or certified to the Director the intention to adopt, local rules 

for patent and plant variety protection cases. 

(B) SELECTION OF COURTS.—From amongst the district 

courts that satisfy the criteria for designation under this 

subsection, the Director shall select— 

(i) 3 district courts that each have at least 10 district judges authorized to be appointed by the President, whether under section 133(a) of title 28, United 

States Code, or on a temporary basis under any other 

provision of law, and at least 3 judges of the court 

have made the request under subsection (a)(1)(A); and 

(ii) 3 district courts that each have fewer than 10 

district judges authorized to be appointed by the President, whether under section 133(a) of title 28, United 

States Code, or on a temporary basis under any other 

provision of law, and at least 2 judges of the court 

have made the request under subsection (a)(1)(A). 

ø(c) DURATION.—The program established under subsection (a) 

shall terminate 10 years after the end of the 6-month period described in subsection (b).¿ 

(c) DURATION.—The program established under subsection (a) 

shall be maintained using existing resources, and shall terminate 

20 years after the end of the 6-month period described in subsection 

(b). 

(d) APPLICABILITY.—The program established under subsection 

(a) shall apply in a district court designated under subsection (b) 

only to cases commenced on or after the date of such designation. 

(e) REPORTS TO CONGRESS.— 

(1) IN GENERAL.—At the times specified in paragraph (2), 

the Director of the Administrative Office of the United States 

Courts, in consultation with the chief judge of each of the district courts designated under subsection (b) and the Director of 

the Federal Judicial Center, shall 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 pilot program established under subsection (a). The report shall include— 

(A) an analysis of the extent to which the program has 

succeeded in developing expertise in patent and plant variety protection cases among the district judges of the district courts so designated; 

(B) an analysis of the extent to which the program has 

improved the efficiency of the courts involved by reason of 

such expertise; 

(C) with respect to patent cases handled by the judges 

designated pursuant to subsection (a)(1)(A) and judges not 

so designated, a comparison between the 2 groups of 

judges with respect to— 

(i) the rate of reversal by the Court of Appeals for 

the Federal Circuit, of such cases on the issues of 

claim construction and substantive patent law; and 

(ii) the period of time elapsed from the date on 

which a case is filed to the date on which trial begins 

or summary judgment is entered; 


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(D) a discussion of any evidence indicating that litigants select certain of the judicial districts designated 

under subsection (b) in an attempt to ensure a given outcome; and 

(E) an analysis of whether the pilot program should be 

extended to other district courts, or should be made permanent and apply to all district courts. 

(2) TIMETABLE FOR REPORTS.—The times referred to in 

paragraph (1) are— 

(A) not later than the date that is 5 years and 3 

months after the end of the 6-month period described in 

subsection (b); and 

(B) not later than 5 years after the date described in 

subparagraph (A). 

(3) PERIODIC REPORTS.—The Director of the Administrative 

Office of the United States Courts, in consultation with the 

chief judge of each of the district courts designated under subsection (b) and the Director of the Federal Judicial Center, 

shall keep the committees referred to in paragraph (1) informed, on a periodic basis while the pilot program is in effect, 

with respect to the matters referred to in subparagraphs (A) 

through (E) of paragraph (1). 

* * * * * * * 

PATENT LAW TREATIES IMPLEMENTATION ACT OF 2012 

* * * * * * * 

TITLE II—PATENT LAW TREATY 

IMPLEMENTATION 

* * * * * * * 

SEC. 202. CONFORMING AMENDMENTS. 

(a) IN GENERAL.—Section 171 of title 35, United States Code, 

is amended— 

(1) by striking ‘‘Whoever’’ and inserting ‘‘(a) In General.— 

Whoever’’; 

(2) by striking ‘‘The provisions’’ and inserting ‘‘(b) Applicability of This Title.—The provisions’’; and 

(3) by adding at the end the following: 

‘‘(c) FILING DATE.—The filing date of an application for patent 

for design shall be the date on which the specification as prescribed 

by section 112 and any required drawings are filed.’’. 

(b) RELIEF IN RESPECT OF TIME LIMITS AND REINSTATEMENT OF

RIGHT.—Title 35, United States Code, is amended— 

(1) in section 41— 

(A) in subsection (a), by striking paragraph (7) and inserting the following: 

‘‘(7) REVIVAL FEES.—On filing each petition for the revival 

of an abandoned application for a patent, for the delayed payment of the fee for issuing each patent, for the delayed response by the patent owner in any reexamination proceeding, 


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for the delayed payment of the fee for maintaining a patent in 

force, for the delayed submission of a priority or benefit claim, 

or for the extension of the 12-month period for filing a subsequent application, $1,700.00. The Director may refund any part 

of the fee specified in this paragraph, in exceptional circumstances as determined by the Director’’; and 

(B) in subsection (c), by striking paragraph (1) and inserting the following: 

‘‘(1) ACCEPTANCE.—The Director may accept the payment 

of any maintenance fee required by subsection (b) after the 6- 

month grace period if the delay is shown to the satisfaction of 

the Director to have been unintentional. The Director may require the payment of the fee specified in subsection (a)(7) as 

a condition of accepting payment of any maintenance fee after 

the 6-month grace period. If the Director accepts payment of 

a maintenance fee after the 6-month grace period, the patent 

shall be considered as not having expired at the end of the 

grace period.’’; 

(2) in section 119(b)(2), in the second sentence, by striking 

‘‘including the payment of a surcharge’’ and inserting ‘‘including the requirement for payment of the fee specified in section 

41(a)(7)’’; 

(3) in section 120, in the fourth sentence, by striking ‘‘including the payment of a surcharge’’ and inserting ‘‘including 

the requirement for payment of the fee specified in section 

41(a)(7)’’; 

(4) in section 122(b)(2)(B)(iii), in the second sentence, by 

striking ‘‘, unless it is shown’’ and all that follows through ‘‘unintentional’’; 

(5) in section 133, by striking ‘‘, unless it be shown’’ and 

all that follows through ‘‘unavoidable’’; 

(6) by striking section 151 and inserting the following:’’; 

ø(7) in section 361, by striking subsection (c) and inserting 

the following: 

ø‘‘(c) International applications filed in the Patent and Trademark Office shall be filed in the English language, or an English 

translation shall be filed within such later time as may be fixed by 

the Director.’’;¿ 

ø(8)¿ (7) in section 364, by striking subsection (b) and inserting the following: 

‘‘(b) An applicant’s failure to act within prescribed time limits 

in connection with requirements pertaining to an international application may be excused as provided in the treaty and the Regulations.’’; and 

ø(9)¿ (8) in section 371(d), in the third sentence, by striking ‘‘, unless it be shown to the satisfaction of the Director that 

such failure to comply was unavoidable’’. 

* * * * * * * 

ACT OF JULY 5, 1946 

* * * * * * * 


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TITLE VI—REMEDIES 

* * * * * * * 

SEC. 39. (a) The district and territorial courts of the United 

States shall have original jurisdiction, the courts of appeals of the 

United States (other than the United States Court of Appeals for 

the Federal Circuit) and the United States Court of Appeals for the 

District of Columbia shall have appellate jurisdiction, of all actions 

arising øunder this Act¿ under this Act (except as provided in section 1295(a)(4) of title 28, United States Code), without regard to 

the amount in controversy or to diversity or lack of diversity of the 

citizenship of the parties. 

(b) No State or other jurisdiction of the United States or any 

political subdivision or any agency thereof may require alteration 

of a registered mark, or require that additional trademarks, service 

marks, trade names, or corporate names that may be associated 

with or incorporated into the registered mark be displayed in the 

mark in a manner differing from the display of such additional 

trademarks, service marks, trade names, or corporate names contemplated by the registered mark as exhibited in the certificate of 

registration issued by the United States Patent and Trademark Office. 

* * * * * * * 

Dissenting Views 

While we support reasonable changes to improve and enhance 

the patent system, we cannot support the changes included in H.R. 

9 which, taken as a whole, will undermine our Nation’s patent system. 

Without question, the problem of abusive patent litigation and 

the exploitation of the patent process demand a solution. Congress 

should respond with an approach that is effective and that targets 

the sources of this problem. Unfortunately, H.R. 9, the ‘‘Innovation 

Act,’’ is the wrong approach. The bill is overly broad, unbalanced, 

and will impede rather than promote innovation. In particular, we 

oppose the legislation because the bill: (1) includes one-sided 

changes to our civil justice system that limit the rights of all patent 

holders and fails to target so-called ‘‘patent trolls;’’ (2) fails to effectively address the extortionate use of demand letters; (3) does not 

fully address abuse of post grant proceedings at the U.S. Patent 

and Trademark Office (USPTO); (4) continues fee diversion from 

the USPTO; and (5) ignores the changing landscape in patent litigation. 

These concerns are shared by a broad cross-section of stakeholders in the patent system, representing a vast and diverse range 

of industry interests. These include organizations on behalf of the 

life sciences industries, the higher education community, agricultural interests, entrepreneurs, inventors, small businesses, venture 

capitalists, the patent law community, experts in civil litigation, 

the Federal judiciary, and constitutional and property rights advocates. Specifically, they include the Biotechnology Industry Organization (BIO), the Pharmaceutical Research and Manufacturers Association (PhRMA), the Medical Device Manufacturers Association 

(MDMA), the National Venture Capital Association (NVCA), the 

American Association for Justice (AAJ), the Association of AmerVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00167 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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1These and other well-regarded groups and individuals have expressed concerns with the bill. 

The following materials are on file with the House of Representatives Committee on the Judiciary, Democratic Staff, and are accessible on the minority website: Statement of PhRMA (June 

11, 2015) (announcing its opposition to H.R. 9); News Release from BIO (June 11, 2015) (urging 

‘‘Members of Congress to oppose the Innovation Act’’); Statement of Kevin Rhodes, Chairman 

of 21C and Chief Intellectual Property Counsel of 3M Company (June 12, 2015) (urging that 

‘‘H.R. 9 as reported by the House Judiciary Committee not be brought to the House Floor’’); Letter from Brian Pomper, Exec. Dir. of IA, to Rep. Bob Goodlatte, Chairman, H. Comm. on the 

Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 

2015) (‘‘The Innovation Alliance must continue to oppose the revised H.R. 9’’); Letter from Sharon A. Israel, Pres. of AIPLA, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & 

Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (‘‘the 

[manager’s amendment does] not achieve the desired balance of interests or alleviate the concerns we raised in our April 16, 2015 letter’’); Letter from Linda Lipsen, CEO of AAJ, to Rep. 

Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (submitting its ‘‘letter in strong opposition to 

H.R. 9’’); Letter from James A. Jefferies, Pres. of IEEE–USA, to Rep. Bob Goodlatte, Chairman, 

H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (‘‘H.R. 9 as introduced will have a significant negative impact on Americans’ ability to continue unsurpassed innovation.’’); Statement from Mark Leahey, Pres. and 

CEO of MDMA (June 10, 2015) (announcing its opposition to H.R. 9); Letter from Bobby Franklin, Pres. and CEO of NVCA, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, 

& Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (‘‘On 

behalf of ‘NVCA’, I am writing to express our opposition to H.R. 9, as it is currently written.’’); 

Statement from AAU, ACE, AAMC, APLU, AUTM, and COGR (June 10, 2015) (‘‘We unfortunately must oppose the legislation.’’); Letter from Juliette Bell, Chair of the 1890 Council of Universities, and RoSusan D. Bartee, Interim Vice President of Access and Success, to Rep. G.K. 

Butterfield, Chairman of the Congressional Black Caucus (July 17, 2015) (‘‘We urge your support for addressing patent troll abuses in a measured and balanced way and thus your opposition to H.R. 9’’); Letter from Todd McCracken, Pres. and CEO of the NSBA, to Rep. Michael 

Burgess & Rep. Marcy Kaptur (May 26, 2015) (opposing the Innovation Act); Letter from Robert 

N. Schmidt, Co-Chair of SBTC to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary 

(June 10, 2015) (‘‘writing to oppose H.R. 9’’); Letter from Charles Giancarlo, Chairman of the 

Board of Advisors for USIJ, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & 

Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (‘‘Without 

specific reforms to sections of the Innovation Act . . . USIJ must continue to strongly oppose 

the bill.’’); Statement from CLSA (June 12, 2015) (‘‘CLSA must therefore strongly urge members 

of our California congressional delegation to oppose the legislation.’’); Letter from Mary Woolley, 

President and CEO of Research!America, to Rep. Bob Goodlatte, Chairman, H. Comm. on the 

Judiciary, Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary, Sen. Charles 

Grassley, Chairman, S. Comm. on the Judiciary, & Sen. Patrick Leahy, Ranking Member, S. 

Comm. on the Judiciary (July 15, 2015) (several issues ‘‘merit further consideration and remedial action before legislation reaches the House or Senate floor.’’); Letter from John McIlwraith, 

Chairman of VentureOhio, to Rep. John Boehner, Speaker of the House (May 20, 2015) 

(‘‘VentureOhio does not support the current version of H.R. 9 and its overly broad provisions.’’); 

Letter from California’s agricultural community to Rep. Bob Goodlatte (May 21, 2015) (‘‘The Innovation Act/H.R. 9 actually reduces protections for patent holders and could ultimately weaken 

U.S. patents overall.’’); Letter from James C. Duff, Secretary of the Judicial Conference of the 

United States, to Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (May 

ican Universities (AAU), the American Council on Education 

(ACE), the Association of American Medical Colleges (AAMC), the 

Association of Public and Land-grant Universities (APLU), the 

Council of 1890 Universities, the Association of University Technology Managers (AUTM), the Council on Governmental Relations 

(COGR), the Coalition for 21st Century Patent Reform (21C), the 

Innovation Alliance (IA), the American Intellectual Property Law 

Association (AIPLA), the Institute of Electrical and Electronics Engineers-USA (IEEE–USA), the National Small Business Association 

(NSBA), the Small Business Technology Council (SBTC), the Alliance for U.S. Startups and Inventors for Jobs (USIJ), the California Life Sciences Association (CLSA), Entrepreneurs for Growth, 

Research!America, the U.S. Business & Industry Council, 

VentureOhio, the Inventor’s Project, the California Association of 

Wheat Growers, the California Farm Bureau Federation, the Western Agricultural Processors Association, the Judicial Conference of 

the United States, the American Bar Association (ABA), the Federal Bar Association, the Federal Circuit Bar Association, Heritage 

Action, the American Conservative Union, the Club for Growth, 

and the Eagle Forum, among many others.1


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28, 2015) (listing concerns with proposed rules for patent cases and the proposed expansion and 

extension of the patent pilot program); Letter from Matthew B. Moreland, Pres. of the Federal 

Bar Association, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. John 

Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Mar. 26, 2015) (‘‘[T]he necessity for 

legislation that overlaps with actions within the authority of the judiciary appears ill advised.’’); 

Letter from James E. Brookshire, Exec. Dir. of the Federal Circuit Bar Association, to Rep. Bob 

Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, 

H. Comm. on the Judiciary (Feb. 20, 2015) (‘‘H.R. 9 has now become both unnecessary and . . . 

problematic.’’); Statement of Michael A. Needham, CEO of Heritage Action (July 20, 2015) (‘‘Heritage Action opposes H.R. 9. The bill should not come to the floor.’’); Letter from Phyllis Schlafly, 

Chair of the Eagle Forum, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. 

John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015) (‘‘Eagle Forum 

must oppose the ‘Innovation Act’ and we urge Judiciary Committee members to vote against 

H.R. 9.’’); General Letter from Dan Schneider, Exec. Dir. of the American Conservative Union 

(June 10, 2015) (urging Members to ‘‘[p]lease vote ‘NO’ on H.R. 9’’); and Letter from 25 conservative advocates to Rep. John Boehner, Speaker of the House, Rep. Nancy Pelosi, Minority Leader of the House, Sen. Mitch McConnell, Sen. Majority Leader, and Sen. Harry Reid, Sen. Minority Leader (Mar. 11, 2015) (‘‘We ask that you support innovation and a strong patent system 

by opposing the ‘Innovation Act’ and stopping any such bill from reaching the floor.’’). 2See Patent Reform: Protecting American Innovators and Job Creators from Abusive Patent 

Litigation: Hearing Before the H. Comm. on the Judiciary, 114th Cong. 8 (2015) [hereinafter 

Mar. 25, 2015 Hearing] (testimony of Mark Griffin, General Counsel, Overstock.com). 3See id. at 17 (testimony of Kathryn Underwood, Pres. and CEO, Ledyard National Bank). 4See id. at 9 (testimony of Griffin). 

For these reasons, and those described below, we respectfully dissent and urge our colleagues to reject this flawed legislation. 

BACKGROUND OF ABUSIVE PATENT LITIGATION

H.R. 9 attempts to respond to abuses and asymmetries in the 

patent system by changing court rules and procedures for patent 

cases. Bad actors in the patent system, often referred to as ‘‘patent 

trolls,’’ own vague patents and use litigation, or the threat of litigation, to coerce a quick settlement from legitimate inventors.2 Their 

typical behavior includes sending out hundreds of vague patent infringement demand letters, offering a quick settlement, and when 

the recipients of the demand letters do not settle, the bad actors 

sometimes file lawsuits.3 Once in litigation, the so-called ‘‘patent 

trolls’’ generally seek to drive up costs through extensive discovery, 

hoping to encourage the defendant to settle even a frivolous claim 

early, rather than paying the significant costs that litigation may 

entail.4

CONCERNS WITH H.R. 9

I. THE INNOVATION ACT LIMITS THE RIGHTS OF ALL PATENT HOLDERS, 

NOT JUST SO–CALLED ‘‘PATENT TROLLS,’’ AND PRESENTS OTHER

POLICY CONCERNS

We support a targeted approach to curbing abusive patent litigation practices. However, the Innovation Act is overly broad and 

goes well beyond the problem of abusive patent litigation. It could 

harm legitimate patent holders and individual inventors by potentially weakening every single patent in America. Among its most 

pernicious provisions, the bill would: 

• Impose burdensome pleading requirements for plaintiffs that 

exceed what is required in other civil cases and which demand details plaintiffs may not know before conducting discovery (Section 3(a)); 

• Discourage, through a presumptive fee shifting standard, 

small businesses and individual inventors from bringing 

meritorious lawsuits because the risk of having to pay the 


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5Often the specific information required under this section may only be obtained through discovery which typically cannot be obtained prior to filing a complaint or other pleading. Even 

though the bill relieves a claimant of the obligation to provide the level of detail required if the 

information ‘‘is not reasonably accessible’’, there is no guidance for making that determination. 6Letter from Todd McCracken, Pres. and CEO of NSBA to Rep. John Boehner, Speaker of 

the House, and Rep. Nancy Pelosi, Minority Leader of the House (May 18, 2015) (on file with 

the H. Comm. on the Judiciary, Democratic Staff). 7Letter from Mark B. Leahey, Pres. and CEO of MDMA, to Rep. Bob Goodlatte, Chairman, 

H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Apr. 14, 2015) [hereinafter MDMA April 14, 2015 Letter] (on file with the H. Comm. on 

the Judiciary, Democratic Staff). 8Letter from Sharon A. Israel, Pres. of AIPLA, to Rep. Bob Goodlatte, Chairman, H. Comm. 

on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Apr. 

16, 2015) [hereinafter AIPLA April 16, 2015 Letter] (on file with the H. Comm. on the Judiciary, 

Democratic Staff). 

other side’s court costs may outweigh the benefits of winning 

(Section 3(b)); 

• Deter investments by venture capitalists in entrepreneurs, 

start-ups, and individual inventors through harsh joinder 

rules that may make the investors liable for paying attorneys’ fees (Section 3(c)); 

• Limit discovery for plaintiffs that will lead to costly litigation 

and case delays (Section 3(d)); and 

• Improperly shield some of the most culpable infringers 

through an over-broad stay of litigation for end users of infringing products (Section 5). 

A. The Bill’s Heightened Pleading Requirements Will Deny Legitimate Inventors Access to the Courts 

We oppose the heightened pleading requirements established by 

section 3(a) of the bill because they are unfair to all patent holders; 

are drafted in a one-sided manner; will prolong litigation; and are 

unnecessary because the courts are already addressing the issue. 

Supporters of the Innovation Act contend that plaintiffs in patent 

cases are not required to provide sufficient detail in their complaints to give defendants fair notice of what patents the defendants are alleged to have infringed and how the patents have been 

infringed. However, the information required by the heightened 

pleading standards in H.R. 9 is unduly burdensome on patent owners because the information may not be available to the patent 

holders at the time of the filing.5 As the NSBA explains, the bill’s 

heightened pleading standards ‘‘essentially requir[e] the inventor 

trying to protect her patent’’ to ‘‘prove her case before filing a 

case.’’ 6 Furthermore, as MDMA points out, ‘‘[t]he combination of 

heightened pleadings and limited discovery is a ‘double jeopardy’ of 

sorts that requires a petitioner to guess at detailed facts that may 

not be in their possession (e.g., how a product is manufactured), 

and then be penalized by not being able to obtain the facts, even 

those that may establish clear infringement.’’ 7 AIPLA expressed its 

concern about this provision as well, writing that ‘‘statutorily imposing detailed pleading requirements, as in the current draft, may 

deter legitimate infringement actions.’’ 8

Second, section 3(a) is drafted in a one-sided manner. As the 

ABA noted in writing about H.R. 3309, the ‘‘Innovation Act,’’ upon 

which H.R. 9 is modeled, the subsection applies ‘‘only to parties asserting patent infringement, either as a plaintiff or as a defendant 

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9 American Bar Association Section of Intellectual Property Law, 2013 Fall Council Meeting, 

Innovation Act Task Force Resolutions and Reports, at 5, Nov. 8, 2013. 10Letter from Marc T. Apter, Pres. of IEEE–USA to Rep. Robert Goodlatte, Chairman, H. 

Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Nov. 19, 2013) (on file with the H. Comm. on the Judiciary, Democratic Staff). 11Letter from James C. Greenwood, Pres. and CEO of BIO, to Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 19, 2015) [hereinafter BIO June 19, 2015 Letter] 

(on file with the H. Comm. on the Judiciary, Democratic Staff). 12Letter from Linda Lipsen, CEO of AAJ, to Rep. Bob Goodlatte, Chairman, H. Comm. on 

the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 

10, 2015) [hereinafter AAJ June 10, 2015 Letter] (on file with the H. Comm. on the Judiciary, 

Democratic Staff). 13Letter from Brian Pomper, Exec. Dir. of IA, to Rep. Bob Goodlatte, Chairman, H. Comm. 

on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 

10, 2015) (on file with the H. Comm. on the Judiciary, Democratic Staff). 14 AIPLA April 16, 2015 Letter. 15Summary of 21C’s Positions on Provisions of the Innovation Act of 2015, at 5, available at 

http://patentsmatter.com/issue/pdfs/20150316_21CKeyProvisionsChartTalkingPoints.pdf [hereinafter 21C Position Summary on H.R. 9]. 

ened pleading standards for asserting non-infringement or invalidity in a complaint or counterclaim for Declaratory Judgment.’’ 9

Under this provision, a small inventor will be required to provide 

detailed information in their complaint. However, an alleged infringer does not bear the same burden to explain with specificity 

to that inventor why they believe they have not infringed the patent or why they believe the patent is invalid. As IEEE–USA has 

written, ‘‘[s]ince most patent infringement complaints draw a 

counter-claim of patent invalidity, any such counter-claim should 

also be pleaded with comparable particularity (e.g., citing applied 

prior art references to all claim terms) that would support the invalidity contention.’’ 10 In addition, BIO has noted that the pleading 

requirements in H.R. 9, ‘‘remain overly burdensome and will impede the ability of all patent owners to timely bring suit to protect 

against infringement. We believe that the new language regarding 

identification of claims is too ambiguous and does not provide sufficient guidance to parties or courts on what a sufficient complaint 

would require, creating too many opportunities for abusive motions 

by accused infringers challenging the sufficiency of complaints and 

delaying enforcement against them.’’ 11

Third, although the stated goal of the legislation is to reduce and 

shorten litigation, the heightened pleading requirement may well 

have the opposite effect by fostering litigation over whether the 

patent owner has met the heightened pleading standard or had 

reasonable access to the required information if they admittedly 

did not comply. AAJ has noted that the ‘‘excessively-detailed pleadings’’ required under the bill ‘‘would lead to additional litigation 

and challenges even before the case begins.’’ 12 In addition, IA has 

warned that H.R. 9’s ‘‘overly broad and burdensome’’ pleadings requirements will impose ‘‘massive costs and delays in patent cases’’ 

to both plaintiffs and defendants.13 In the same vein, AIPLA explained that ‘‘[t]hese requirements could raise enforcement costs 

and prolong litigation by increasing preliminary motion practice, 

among other things.’’ 14 Similarly, 21C contends that ‘‘this provision 

is also likely to raise costs and prolong case resolutions by fostering 

more preliminary motion practice.’’ 15 The ABA, commenting on 

similar provisions in S. 1137, the ‘‘Protecting American Talent and 

Entrepreneurship (PATENT) Act,’’ suggested that heightened 

pleading requirements will ‘‘generate extensive motion practice, reVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00171 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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16Letter from William C. Hubbard, Pres. of the American Bar Assocation, to Sen. Chuck 

Grassley, Chairman, S. Comm. on the Judiciary, & Sen. Patrick Leahy, Ranking Member, S. 

Comm. on the Judiciary (June 1, 2015) (on file with the H. Comm. on the Judiciary, Democratic 

Staff). 17 Unofficial Tr. of Markup of H.R. 9, ‘‘The Innovation Act,’’ by the H. Comm on the Judiciary, 

114th Cong. at 158 (June 11, 2015) [hereinafter H.R. 9 Markup Unofficial Transcript] (Amendment #15 by Representative Scott H. Peters) (failed by voice vote), available at http:// 

judiciary.house.gov/_cache/files/ec171c22-04d4-4c0f-91ac-8b6ecc5859f1/06.11.15-markuptranscript.pdf. 18 28 U.S.C. §§ 2071–77 (2015). 19Fed. R. Civ. P. 84 provides: ‘‘The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.’’ Form 18 in the Appendix is the 

template for a complaint for patent infringement. 20See Amendments to the Federal Rules of Civil Procedure Adopted by the Supreme Court 

of the United States pursuant to Section 2072 of Title 28, United States Code (Apr. 29, 2015) 

[hereinafter Supreme Court Adopts Rules Changes], available at http://www.supremecourt.gov/ 

orders/courtorders/frcv15%28update%29_1823.pdf; Judicial Conference of the United States. 21 Id. 22 550 U.S. 544 (2007). 23 556 U.S. 662 (2009). 24Leslie Gordon, For Federal Plaintiffs, Twombly and Iqbal Still Present a Catch-22, ABA 

JOURNAL, Jan. 1, 2011, available at http://abajournal.com/magazine/article/for_federal_plaintiffs_ twombly_and_iqbal_still_present_a_catch-22. 25Letter from Matthew B. Moreland, Pres. of the Federal Bar Association, to Rep. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. 

Comm. on the Judiciary (Mar. 26, 2015) [hereinafter Federal Bar Association Mar. 26, 2015 Letter] (on file with the H. Comm. on the Judiciary, Democratic Staff). 

sulting in increased delays and expenses of the proceedings.’’ 16

Recognizing the particular burden that these requirements would 

place on individuals and small entities, Representative Scott Peters 

(D-CA) offered an amendment during the markup of H.R. 9 to exempt small businesses, independent inventors, and non-profit organizations from section 3(a), but it was rejected by voice vote.17

Finally, as with many other provisions in section 3, it is unnecessary for Congress to change the pleadings requirements because 

the federal judiciary is already addressing the issue. The Supreme 

Court has approved the Judicial Conference’s recommendation 

under the Rules Enabling Act 18 to eliminate Form 18 19 of the Federal Rules of Civil Procedure, which provides for very basic notice 

pleading in patent cases.20 This change will take effect on December 1, 2015, unless Congress acts to reject, modify, or defer it.21

When Form 18 is eliminated, patent infringement suits will be subject to the already heightened pleading requirements provided for 

under the Supreme Court’s decisions in Bell Atlantic v. Twombly 22

and Ashcroft v. Iqbal. 23 In these cases, the Court held that plaintiffs must include enough facts in their complaint to show that 

their claim is ‘‘plausible on its face.’’ 24 As the Federal Bar Association has explained, ‘‘[f]reed from the strictures of Form 18, the judiciary will be able to develop a body of common law as to the proper 

pleading standard under the evolving Twombly/Iqbal standard. 

The federal judiciary should be given the chance to do so.’’ 25

B. The Bill’s Fee Shifting Standard Will Favor Wealthy Parties 

and will Chill Potential Meritorious Claims 

We oppose section 3(b)’s fee shifting requirement because it will 

favor wealthy corporate parties over individual inventors; deprives 

courts of discretion; is drafted in an over-broad manner to apply beyond patent infringement actions; would lead to increased litigation 

costs; and is unnecessary because the Federal courts have already 

made it easier for prevailing parties to be awarded fees. 

Supporters of the Innovation Act claim that abusive litigation 

can be deterred if bad actors face a significant risk that they will 


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26 AAJ June 10, 2015 Letter. 27MDMA April 14, 2015 Letter. 28Patent troll legislation: a closer look (pt. 2)—fee shifting, Tech Policy Daily, Nov. 26, 2013, 

available at http://www.techpolicydaily.com/technology/patent-troll-legislation-closer-look-pt-2- 

fee-shifting. 29See H.R. 9 Markup Unofficial Transcript, at 88–89 (statement of Chairman Bob Goodlatte). 

be forced to pay the other party’s attorneys’ fees and court costs if 

they are found to have brought a frivolous case. To the extent that 

fee shifting can, in fact, deter abusive litigation, H.R. 9’s provision 

goes too far. Instead of requiring that fees be shifted in exceptional 

cases, as set forth in current law, this provision would create a presumption of fee shifting in every single case, not just cases involving so-called ‘‘patent trolls.’’ The non-prevailing party will carry the 

burden of establishing that fees should not be imposed. 

Our first concern is that fee-shifting always favors the party with 

greater financial resources, and thus could chill potential meritorious claims. Enacting a mandatory regime into our patent law 

system is not only unfair to independent inventors and entrepreneurs, it would set a dangerous precedent in our civil justice 

system generally. AAJ calls section 3(b) a ‘‘drastic provision that 

would have a significant impact on who can bring a patent case. 

The parties who would be affected are the small inventors who 

would now be less likely to sue for patent infringement out of fear 

of losing and not being able to pay the vast attorney fees of the infringing party.’’ 26 Similarly, MDMA has warned that ‘‘[f]aced with 

the prospect of having to cover the legal expenses of larger companies, start-up companies with limited capital either will not bring 

otherwise meritorious cases against infringers of their patents or 

will be forced into early settlements when defending against alleged infringement.’’ 27

The dangerous nature of this provision was highlighted in an article by the American Enterprise Institute discussing H.R. 3309, 

upon which H.R. 9 is modeled. The article noted: 

By shifting the burden of proof onto the losing party, it 

will require courts to examine the justification of each and 

every case. . . . it won’t be just patent trolls who pay but, 

at times, the legitimate companies who occasionally are 

found to infringe [patent trolls’] patents. . . . [O]ur unique 

justice system, dedicated as it is to allowing every American person and company its ‘day in court’ would be immutably changed in the area of patent litigation. We’d be one 

step closer to adopting the loser-pays model.28

In this regard, we would dispute the Majority’s assertion that 

section 3(b) is fairly based on the Equal Access to Justice Act 

(EAJA).29 EAJA was developed as a means to allow private citizens 

to obtain legal fees when they prevail in litigation against the U.S. 

government, not to serve as a model for fee shifting in private lawsuits. 

Further, although the bill purports to align itself with EAJA, the 

fees and expenses scheme established by EAJA is far more balanced than section 3(b). For example, EAJA permits the court ‘‘in 

its discretion [to] reduce . . . or deny an award, to the extent that 

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*ERR14*30 28 U.S.C. § 2412(d)(1)(c) (2015). 31See H.R. 9 Markup Unofficial Transcript, at 105 (Amendment #5 by Rep. Henry C. ‘‘Hank’’ 

Johnson, Jr.). 32Statement from the Higher Education Community on H.R. 3309, The Innovation Act (Nov. 

8, 2013) (on file with the H. Comm. on the Judiciary, Democratic Staff). 33 Higher Education Association Statement on Scheduled House Judiciary Committee Markup 

of Innovation Act (H.R. 9) June 10, 2015. 34 Id. 35Letter from American universities and associated technology transfer foundations and organizations to Sen. Chuck Grassley, Chairman, S. Comm. on the Judiciary, Sen. Patrick Leahy, 

Ranking Member, S. Comm. on the Judiciary, Rep. Bob Goodlatte, Chairman, H. Comm. on the 

Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Feb. 24, 

2015) (on file with the H. Comm. on the Judiciary, Democratic Staff). 

reasonably protracted the final resolution of the matter in controversy.’’ 30 H.R. 9 provides the court no such balance or flexibility. 

During the markup of H.R. 9, Representative Henry C. ‘‘Hank’’ 

Johnson, Jr. (D-GA) offered an amendment to substitute the more 

reasonable fee shifting provision contained in the Senate’s PATENT Act, which would have required the prevailing party to bear 

the burden of demonstrating that it is entitled to fees. The amendment would have also adopted a more reasonable standard for determining whether fees are appropriate, i.e., whether the position 

and conduct of the non-prevailing party were objectively reasonable. In addition, the amendment would have exempted positions 

or actions that are de minimus or are not material to the consideration or outcome of the litigation. Unfortunately, the amendment 

failed, by a vote of 10 to 22.31

Third, section 3(b) is drafted in an overly broad manner. The 

higher education community, writing about H.R. 3309, upon which 

H.R. 9 is modeled, noted that the language is so broad that it could 

potentially apply: 

to any civil action in which any party asserts a claim for 

relief arising under any Act of Congress relating to patents. That scope sweeps in over 25 statutes containing patent law clauses, including the Space Act, the Atomic Energy Act, the Non-Nuclear R&D Act as well as all titles of 

the omnibus bills in which the Bayh-Dole Act and amendments became law. The breadth of the proposed amendment will impair parties’ ordinary enforcement procedures 

and litigation activities outside the scope of abusive patent 

litigation.32

The higher education community has more recently warned that 

H.R. 9’s fee shifting provision would ‘‘substantially increase the financial risks associated with patent enforcement and consequently 

discourage universities and other patent holders lacking extensive 

litigation resources from legitimately defending their intellectual 

property.’’ 33 Moreover, they note that ‘‘[t]his amplified risk would 

deter potential licensees and venture capitalists from investing in 

university patents, reducing the number of research discoveries 

that advance to the marketplace.’’ 34 This concern was echoed by a 

coalition of more than 140 universities.35 The universities comprising the Big Ten Conference also expressed concern, writing that 

the fee shifting and joinder provisions together ‘‘would have the effect of making patent licensing negotiations more complex and likely discourage at least some of our members from licensing their inventions at all. In addition, these provisions would make litigation 

so potentially risky that few legitimate patent holders without deep 


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36Letter from the Big Ten Conference to Rep. John Conyers, Jr. (Jan. 20, 2015) (on file with 

the H. Comm. on the Judiciary, Democratic Staff). 37 H.R. 9 Markup Unofficial Transcript, at 137 (Amendment #13 of Rep. David N. Cicilline) 

(failed by voice vote). 38 AIPLA Apr. 16, 2015 Letter. 39Federal Bar Association Mar. 26, 2015 Letter. 40 21C Position Summary on H.R. 9, at 7. 41 134 S. Ct. 1749 (2014). 42 134 S. Ct. 1744 (2014). 43See Mallun Yen, Fee Shifting Before and After the Supreme Court Decisions, INSIDE COUNSEL, Feb. 25, 2015 (reporting that in the 8 months prior to Octane Fitness and Highmark fees 

were awarded in 6 of the 31 cases in which they were requested while in the 8 months after 

the decision fees were awarded in 21 of the 43 cases in which they were requested) [hereinafter 

Mallun Yen, Fee Shifting Before and After the Supreme Court Decisions]; Posting of Hannah 

Jiam to PatentlyO.com, Emerging Trends Post-Octane Fitness (May 13, 2015), available at http:// 

patentlyo.com/patent/2015/05/emerging-octane-fitness.html [hereinafter Hannah Jiam, Emerging 

Trends Post-Octane Fitness]. 44Some reports put the decrease in filings since 2013 as high as 40%. See Letter from ACE, 

AAMC, AAU, APLU, AUTM, BIO, IA, MDMA, PhRMA, and USBIC Educational Forum to Rep. 

Bob Goodlatte, Chairman, H. Comm. on the Judiciary, Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary, Sen. Patrick Leahy, Chairman, S. Comm. on the Judiciary, & 

Sen. Chuck Grassley, Ranking Member, S. Comm. on the Judiciary (Dec. 10, 2014) [hereinafter 

Patent Protections Coalition Letter] (on file with the H. Comm. on the Judiciary, Democratic 

Staff); Letter from Charles Giancarlo, Chairman of the Board of Advisors for USIJ, to Rep. Bob 

Goodlatte, Chairman, H. Comm. on the Judiciary, Rep. John Conyers, Jr., Ranking Member, H. 

Comm. on the Judiciary, Sen. Charles Grassley, Chairman, S. Comm. on the Judiciary, & Sen. 

Patrick Leahy, Ranking Member, S. Comm. On the Judiciary (Feb. 12, 2015) [hereinafter USIJ 

February 12, 2015 Letter] (on file with the H. Comm. on the Judiciary, Democratic Staff). 

pockets would dare risk doing so.’’ 36 To ensure that universities 

are not unfairly burdened by H.R. 9’s fee shifting requirements, 

Representative David Cicilline (D-RI) offered an amendment during 

the markup to clarify that the bill’s exception for special circumstances that would make an award unjust should include severe economic hardship to an institution of higher education or a 

university technology transfer organization. Unfortunately, the 

amendment failed by a voice vote.37

Fourth, the mandatory nature of H.R. 9’s fee shifting provision 

will lead to increased litigation costs for all parties. As AIPLA explains, ‘‘requiring courts to make an attorneys’ fees award determination in every case could unnecessarily prolong litigation and 

increase costs.’’ 38 The Federal Bar Association also notes that ‘‘[a] 

fee shifting presumption not only raises concerns about access to 

the courts, it encourages satellite disputes about fee-shifting because prevailing parties have a strong incentive to force the opposing party to rebut the presumption in situations where they would 

not otherwise seek a fee award.’’ 39 In addition, the inclusion of language defining a non-prevailing party as one who offers a ‘‘covenant not to sue’’ may also have the effect of increasing litigation, 

with 21C stating that ‘‘[s]imply put, this provision would not advance the interests of prompt and efficient resolution of patent disputes.’’ 40

Fifth, the fee shifting provision is again wholly unnecessary after 

the Supreme Court issued two decisions last year, Octane Fitness, 

LLC v. ICON Health & Fitness 41 and Highmark Inc. v. Allcare 

Health Mgmt. Sys. Inc.,42 that significantly lowered the threshold 

for when courts should award fees. Since those decisions, lower 

courts have awarded fees at a dramatically higher rate 43 and patent litigation filings have plummeted.44 Whatever deterrent effect 

fee shifting may have on abusive litigation has been adequately addressed by the courts, and any legislative action, particularly the 

drastic provisions contained in H.R. 9, are clearly unncessary. 


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45 BIO June 19, 2015 Letter. 46Press Release, 21C, 21C Opposes H.R, 9, the Innovation Act, After Yesterday’s Markup Tilted the Balance Against All Patent Owners (June 12, 2015) [hereinafter 21C June 12, 2015 Press 

Release] (on file with the H. Comm. on the Judiciary, Democratic Staff). 47Fact Sheet from the Innovation Alliance, Other Provisions of the Managers’ Amendment Remain Overbroad and Would Substantially Devalue Patent Rights [hereinafter Innovation Alliance Fact Sheet on H.R. 9] (on file with the H. Comm. on the Judiciary, Democratic Staff). 

C. The Bill’s Joinder Provision Will Deter Investments in Entrepreneurs and Individual Inventors 

The joinder provision, included in section 3(c) to help enforce the 

fee shifting provision, although improved by the Manager’s Amendment, still raises a host of potential additional concerns. Among 

other things, it is drafted in a one-way manner that only benefits 

alleged infringers. Deep pocketed defendants would be guaranteed 

satisfaction of fee awards but small companies, startups, and independent inventors would not be similarly protected when they prevail as plaintiffs against defendant infringers that hide their assets, file for bankruptcy, or otherwise evade payment of fee awards. 

This provision also raises constitutional concerns because it creates standing for parties that would otherwise not have it. In other 

words, a defendant may join a third-party at the end of the case 

for purposes of fee shifting, even though the third-party had no 

standing to assert or defend themselves during the course of the 

legal proceedings. BIO notes that ‘‘the language is too vague in critical respects and could potentially sweep in many legitimate patent 

owners and their assignees, licensees, and investors’’ and will ‘‘chill 

investment in areas like biotechnology that require partnerships 

and collaborations among researchers, investors, and companies.’’ 45

Furthermore, defendants already have other avenues to join 

plaintiffs, including through Federal Rules of Civil Procedure 19 

and 20. Rule 19 mandates that the court join parties whenever feasible and Rule 20 permits, but does not require, a court to join parties. 

When combined with H.R. 9’s overly expansive fee shifting provision, the joinder provision could devastate inventors and their investors, and should be rejected. 

D. The Bill’s Discovery Limitations Invite Abuse and Can be Better 

Addressed by the Courts 

The legislation’s limitations on discovery pending resolution of 

certain preliminary motions, as set forth in section 3(d), are objectionable because they will lead to abuse and gamesmanship by the 

parties and can be more properly dealt with by the courts. 

This provision, as modified by the Manager’s Amendment, is an 

improvement over the bill as introduced, but is still seriously 

flawed. According to 21C, section 3(d) ‘‘is a recipe for delay, gamesmanship and abuse’’ because a stay may be granted based on motions filed a full 3 months after the case begins.46 Similarly, IA 

warns that the provision ‘‘would still invite abuse by parties’’ because it does not set a deadline to file preliminary motions or to 

lift the stay, which ‘‘would invite attorneys to manipulate the discovery stay by filing triggering motions back to back in order to 

prolong the stay.’’ 47

BIO also expressed concerns with the discovery stay provision, 

especially with regard to the competitive harm exception, which 

‘‘only covers companies with products already on the market, failVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00176 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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48 BIO June 19, 2015 Letter. 49 21C June 12, 2015 Press Release. 50 Innovation Alliance Fact Sheet on H.R. 9. 51 Id. 52Letter from James C. Duff, Secretary of the Judicial Conference of the United States, to 

Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (May 28, 2015). 53See Mar. 25, 2015 Hearing (testimony of Bryan Pate, CEO of Elliptigo). 54See id. 55Fact Sheet, Innovation Alliance, Priority Concerns with H.R. 9 Manager’s Amendment [Innovation Alliance Priority Concerns] (on file with the H. Comm. on the Judiciary, Democratic 

Staff). 

ing to protect the thousands of start-up companies on the cusp of 

commercial marketing from being able to timely enforce their patents against infringers who are trying to destroy their businesses 

before they even make it to market.’’ 48 Likewise, 21C writes that 

the competitive harm exception ‘‘was rendered effectively meaningless by an amendment that requires a preliminary injunction be 

granted before discovery may proceed.’’ 49

Second, these new limitations on discovery ignore the role of the 

courts in setting proper discovery time lines. As IA notes, ‘‘[j]udges 

already have significant discretion to manage discovery including 

through grant of stays.’’ 50 Furthermore, ‘‘[a]dditional legislation is 

unnecessary and carries potential to increase costs and delays.’’ 51

The Judicial Conference shares this concern and pointed out that 

‘‘the Supreme Court recently transmitted to Congress a package of 

revisions to the Federal Rules of Civil Procedure that aim to reduce 

discovery costs and burdens in all civil litigation, including patent 

litigation. In light of these pending rule changes, it is not clear that 

additional discovery reforms are necessary at this time.’’ 52

E. The Bill’s Customer Stay Provision Could Deprive Legitimate 

Patent Owners of Meaningful Relief 

We support the concept of a true customer stay that enables end 

users and small businesses to have lawsuits against them stayed 

pending resolution of litigation against an upstream manufacturer 

who is better positioned to defend the lawsuit. However, some 

stakeholders have expressed serious concerns about section 5 of 

H.R. 9, as drafted, because it is over-broad and often would improperly shield the most culpable infringers from litigation, effectively 

denying patent owners a remedy for infringement. 

Rather than being targeted at true end users, section 5 could 

sweep in many large companies and retailers who, as a matter of 

policy, should not receive a stay. For example, it would protect both 

sophisticated device makers that reap huge profits by incorporating 

infringing components into their products and large retailers who 

sell infringing knock-off products at the expense of the patent 

owner.53 In testimony before the Subcommittee on Courts, Intellectual Property, and the Internet, Bryan Pate, CEO of Elliptigo, stated that ‘‘the stay begs to be abused by infringers and will have the 

unintended result of crippling the ability of American businesses to 

fight manufacturers that copy their patented products and flood 

U.S. markets with cheap, poor quality knock-offs.’’ 54

Although we think that protecting innocent end users from frivolous litigation is a worthy objective, IA warns that the provision 

would have ‘‘unintended consequences’’ 55 because it ‘‘fails to ensure 

that only truly ‘innocent’ end users of products receive a stay, and 

that a stay will only be granted if the upstream manufacturer is 


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56 Id. 57Letter from James A. Jefferies, Pres. of IEEE–USA, to Rep. Bob Goodlatte, Chairman, H. 

Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015). 58See Mar. 25, 2015 Hearing (testimony of Bryan Pate, CEO of Elliptigo). 59See, e.g., 35 U.S.C. § 271(b), (c) (2015); Arris Group, Inc. v. British Telecomms. PLC, 639 

F. 3d 1368, 1376 n.8 (Fed. Cir. 2011) (‘‘Claims which recite a ‘system,’ ‘apparatus,’ ‘combination,’ 

or the like are all analytically similar in the sense that their claim limitations include elements 

rather than method steps. All such claims can be contributorily infringed by a component supplier.’’; SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1373 (Fed. Cir. 2013) (‘‘SynQor asserted claims for induced and contributory infringement under 35 U.S.C. § 271(b) and (c), alleging Defendants sold the power supply components with knowledge that they would be used in, 

or were especially made to be used in, infringing systems imported into the United States.’’); 

see generally, TecSec, Inc. v. IBM, 731 F.3d 1336, 1351 (Fed. Cir. 2013) (‘‘An act of infringement 

occurs when all of the elements of a claimed product or method are met by the accused device 

or process. This is the familiar ‘‘all elements’’ rule.’’). 60See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011). 61Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111, 2117 (2014). 62 H.R. 9 Markup Unofficial Transcript (Amendment #23 by Representative Scott H. Peters). 

directly infringing a patent.’’ 56 IEEE–USA also opposes this provision because, as currently drafted, it ‘‘creates an exemption for 

many points in a distribution chain and makes enforcement essentially impossible for some classes of infringing exports.’’ 57

We also have concerns that where the manufacturer of an infringing component of a larger product is located overseas, it will 

be difficult, or even impossible, to enforce a U.S. judgment against 

it.58 Even where a patent owner could obtain jurisdiction over a 

‘‘covered manufacturer,’’ courts in certain foreign jurisdictions are 

unlikely to recognize a U.S. judgment, and collection mechanisms 

could be ineffective or non-existent as a practical matter. 

Patent owners’ ability to obtain relief for infringement could also 

be impaired if they were forced to defend their rights against manufacturers upstream in a supply chain. A manufacturer of a component of a larger product is likely to be only an indirect infringer 

of a patent when the patent is not infringed until the component 

is incorporated into a larger system.59 The Supreme Court has 

made it extremely difficult to bring indirect infringement actions, 

including by adding knowledge requirements that are not required 

to prove direct infringement.60 Proving indirect infringement also 

requires proof of direct infringement.61 However, H.R. 9 would 

grant a stay to the direct infringer, thereby forcing patent owners 

to prove indirect infringement against upstream manufacturers 

while their real case of direct infringement by the covered customer 

is stayed. Ultimately, this could leave large companies that profit 

most from the infringement at issue free to continue infringing 

without consequences while their case is stayed, leaving patent 

owners without any recourse for the most damaging aspects of the 

ongoing infringement. 

We are eager to work with our colleagues to ensure that small 

businesses and true end users receive appropriate stays of litigation. Indeed, during the markup, we supported an amendment by 

Representative Scott Peters that would have limited the definition 

of covered customers under this provision to a small business concern, as defined by section 3 of the Small Business Act, but the 

amendment was withdrawn.62 However, as drafted, the customer 

stay provision in H.R. 9 is over-broad. It goes far beyond protecting 

innocent end users at the end of a supply chain and could instead 

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63See Letter from Brian Pomper, Exec. Dir. of IA, to Rep. Bob Goodlatte, Chairman, H. 

Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (June 10, 2015). 64 H.R. 9 Markup Unofficial Transcript, at 167 (statement of Chairman Bob Goodlatte). 65 Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call 

for Legislative Restraint, 2012 Patently-O Patent Law Review 23–25. 66Oversight of the U.S. Patent and Trademark Office: Hearing on the Implementation of the 

Leahy-Smith America Invents Act and Int’l Harmonization Effort Before the S. Comm. on the 

Judiciary, 112th Cong. 3 (June 20, 2012) (statement of Sen. Chuck Grassley, Ranking Member, 

S. Comm. on the Judiciary). 67 Id. at 17 (statement of Sen. Tom Coburn). 68Leahy-Smith America Invents Technical Corrections, Pub. L. No. 112–274 (2013). 

tion of infringing products and inflict the most harm on patent 

owners—what is in effect a shield against meritorious litigation.63

F. The Bill Includes Extraneous Measures That Were Not Given 

Proper Consideration 

H.R. 9 includes a number of provisions that are unrelated to the 

bill’s goal of curbing abusive litigation, but which have important 

policy implications. These range from significant changes in the 

post-grant review (PGR) proceeding at the USPTO to a troubling 

change in bankruptcy law. None of these provisions were the subject of a hearing or any deliberative process, and demand more consideration before being included in any patent reform legislation. 

i. H.R. 9 Makes a Controversial Change to the Estoppel Provision in Post-Grant Review Proceedings 

Section 9 of the bill sets forth technical corrections to the LeahySmith America Invents Act. Subsection (a) contains an amendment 

to 35 U.S.C. § 325(e)(2), which relates to PGR, by striking the 

words ‘‘or reasonably could have raised.’’ This clause was added to 

the Patent Act by the Leahy-Smith America Invents Act (AIA). 

Currently, a participant in a PGR proceeding is prohibited from 

asserting in a subsequent civil action any claims that were ‘‘raised 

or reasonably could have raised’’ during the PGR proceeding. The 

striking of the clause by Section 9(a) would effectively prohibit only 

those claims that a participant actually raised in the PGR proceeding. 

Supporters of this change state that it is needed to correct a socalled ‘‘scrivener’s error’’ in the drafting of the AIA.64 Setting aside 

aspersions of blame for the inclusion of the language in the AIA, 

section 9(a) is controversial and therefore not a mere technical 

change.65 Then-Ranking Member of the Senate Judiciary Committee Senator Chuck Grassley has indicated ‘‘hopefully nobody 

will try to use technical or clarifying language to get something 

done that they couldn’t get done during the 6 years that this process was being negotiated.’’ 66 Former Senator Tom Coburn similarly 

stated that he supported ‘‘a pure technical correction bill, but anything that significantly changes the estoppel provisions in the bill 

we passed needs to have the full consideration of all the stakeholders and all the members of this Committee before we would do 

that.’’ 67 Further, a technical corrections bill to the AIA was enacted 16 months after enactment of the AIA, and it did not include 

language similar to H.R. 9’s Section 9(a).68

Additional Congressional review of this issue is necessary before 

making such a controversial change through legislation. 


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69 11 U.S.C. § 1522 (2015). 70 Enacted in 2005, chapter 15 is intended to ‘‘provide effective mechanisms for dealing with 

cases of cross-border insolvency’’ through various statutorily mandated objectives. 11 U.S.C. 

§ 1501(a) (2015). 71The text of the Model Law and the Report of UNCITRAL on its adoption are found at U.N. 

G.A., 52d Sess., Supp. No. 17 (A/52/17). As explained in this Committee’s report that accompanied the legislation which led to the enactment of chapter 15, ‘‘[c]ases brought under chapter 

15 are intended to be ancillary to cases brought in a debtor’s home country, unless a full United 

States bankruptcy case is brought under another chapter.’’ H. Rep. No. 109–31, at 105–06 

(2005). 72 11 U.S.C. § 1501(a)(3) (2015). 73 11 U.S.C. § 365(n) (2015). 74 11 U.S.C. § 1506 (2015). 75Memorandum from the International Aspects Comm. to the National Bankruptcy Conference Exec. Comm. 2 (Nov. 12, 2013) (on file with the Judiciary Committee Democratic Staff). 76 11 U.S.C. § 101(35A) (2015). 

ii. H.R. 9 Overrides Important Bankruptcy Policy 

Section 6(e) makes three substantive amendments to the Bankruptcy Code. Of particular concern is section 6(e)(1) which amends 

section 1522 of the Bankruptcy Code. Bankruptcy Code section 

1522 specifies various protections for creditors and other interested 

persons in chapter 15 cross-border insolvency cases.69 By way of 

background, chapter 15 of the Bankruptcy Code 70 codifies the 

Model Law on Cross-Border Insolvency (Model Law) promulgated 

by the United Nations Commission on International Trade Law.71

Chapter 15 reflects a very carefully crafted international agreement that guides bankruptcy courts throughout the world about 

how to manage transnational insolvencies implicating the laws of 

other nations. To achieve the law’s goal of reciprocal recognition, 

cooperation is fostered inter alia through ‘‘fair and efficient administration of cross-border insolvencies that protects the interests of 

all creditors, and other interested entities, including the debtor.’’ 72

Specifically, section 6(e)(1) would make section 365(n) of the 

Bankruptcy Code, which sets forth the rights of a licensee pursuant 

to an intellectual property executory contract that is rejected in a 

bankruptcy case, applicable to chapter 15 cases.73 Pursuant to section 6(e)(1), a U.S. court would be required to apply Bankruptcy 

Code section 365(n) to ‘‘foreign main proceedings,’’ a type of chapter 

15 case ‘‘pending in the country where the debtor has the center 

of its main interests.’’ 74

Unfortunately, section 6(e), by adding a provision to chapter 15 

that deals with a special situation, would alter a fundamental principle of chapter 15, namely, that it not favor a particular country’s 

law. As the nonpartisan National Bankruptcy Conference observed 

with respect to a similar provision included in legislation considered in the last Congress, the provision ‘‘violates the principle of 

uniformity that makes the Model Law a valuable mechanism for 

greater legal certainty for trade and investment.’’ 75 This change effectively imposes U.S. law whether or not it should apply to a particular license. For example, a U.S. bankruptcy court would be required to apply U.S. law to a license owned by a foreign company 

and issued under another country’s law even if the intellectual 

property that is the subject of the license agreement is not located 

in the U.S. 

In addition, section 6(e)(2)(A) amends Bankruptcy Code section 

101(35A), which defines the term ‘‘intellectual property.’’ 76 The bill 

expands this definition to include a trademark, service mark, and 

trade name, as those terms are defined in the Trademark Act of 


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77 15 U.S.C. § 1127 (2015). 78 ‘‘Trolls also send deceptive patent infringement letters demanding a licensing fee with no 

intention to ever file a lawsuit.’’ The Innovation Act: Hearing on H.R. 3309 Before the H. Comm. 

on the Judiciary, 113th Cong. 247 (Oct. 29, 2013) [hereinafter Innovation Act 2013 Hearing] (letter for the record from David French, Senior Vice Pres. of Government Relations at the National 

Retail Federation). 

1946.77 We note, however, that the Committee has not to any 

meaningful degree examined the policy ramifications of expanding 

the Bankruptcy Code’s definition of intellectual property. As a result of the changes made by H.R. 9, such a definition would apply 

to all forms of bankruptcy relief, not just chapter 15. Thus, it would 

apply to chapter 7 (liquidation), chapter 9 (municipal), chapter 11 

(business reorganization), chapter 12 (family farmer reorganization), and chapter 13 (individual reorganization) bankruptcy cases. 

Finally, section 6(e)(2)(B) amends Bankruptcy Code section 

365(n)(2), to impose an affirmative duty on the licensee to maintain 

the quality of the products and services offered under or in connection with the licensed trademark, service mark, or trade name. 

And, it provides that the debtor-licensor retains its right to oversee 

and enforce quality control for such products or services. As with 

section 6(e)(1), this provision would apply to all types of bankruptcy 

cases. 

Congress should carefully consider the effects of these provisions 

on the Bankruptcy Code before including them in this legislation. 

II. THE INNOVATION ACT DOES NOT EFFECTIVELY ADDRESS THE DECEPTIVE USE OF DEMAND LETTERS, STOP ABUSE OF POST-GRANT

PROCEEDINGS AT THE USPTO, OR IMPROVE PATENT EXAMINATION

QUALITY AT THE USPTO

To the extent there are asymmetries in the patent litigation system, H.R.9 does not effectively address the root causes of such 

problems. 

The Innovation Act fails to take an effective approach to curtail 

the problem of abusive demand letters based on vague patents. In 

addition, the bill does nothing to ensure that the USPTO has all 

of the resources it needs to train its examiners to stop issuing 

vague patents in the first place. And, H.R. 9 does not prevent further abuses targeting the biopharmaceutical industries of postgrant proceedings at the USPTO. 

A. Congress Must Make a Serious Effort to Stop the Extortionate 

Use of Demand Letters 

Because civil litigation can be costly, would-be plaintiffs often notify by letter would-be defendants of an issue that could be resolved 

outside of court amicably. In the context of the patent system, the 

patent holder’s pre-suit notification letter typically includes details 

about the patent the recipient is alleged to be infringing and either 

requests the recipient to stop infringing the patent or offers the recipient a licensing arrangement. This process sometimes helps the 

parties avoid litigation. 

Nevertheless, some patent holders have abused the process by 

sending letters to end users having no knowledge that the off-theshelf products they are using may be allegedly infringing a patent. 

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79 ‘‘A growing number of credit unions are reporting receipt of demand letters from law firms 

representing ‘patent trollers’ claiming patent infringement with an option to settle or face litigation.’’ Id. at 266 (letter for the record from Brad Thaler, Vice Pres. of Legislative Affairs at the 

National Association of Federal Credit Unions). 80 ‘‘Vaguely-worded demand letters wreak havoc on small businesses where every dollar 

counts.’’ Mar. 25, 2015 Hearing, at 17 (written statement of Underwood). 81 ‘‘As primary targets of the trolls, retailers seek an effective resolution to this abusive patent 

litigation strategy by trolls.’’ Innovation Act 2013 Hearing, at 247 (letter for the record from 

David French, Senior Vice Pres. of Government Relations at the National Retail Federation). 82 Id. at 2 (statement of Chairman Bob Goodlatte). 83 H.R. 9 Markup Unofficial Transcript, at 126 (statement of Representative Tom Marino). 84Letter from James A. Jefferies, Pres. of IEEE–USA, to Rep. Bob Goodlatte, Chairman, H. 

Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary) (June 10, 2015) (‘‘Abusive demand letters are the lynchpin of the entire troll business 

model. Enacting carefully targeted fixes provides time to carefully evaluate further targeted 

measures that may be needed.’’); Letter from the Electronic Frontier Foundation, Engine Advocacy, Public Knowledge, and the R Street Institute, to Rep. Fred Upton, Chairman, H. Comm. 

on Energy & Commerce, & Rep. Frank Pallone, Jr., Ranking Member, H. Comm on Energy & 

Commerce (Apr. 28, 2015) (‘‘Abusive patent demand letters are a major problem today, and we 

support legislation that curbs such abuses and strongly protects the public.’’); Letter from Phyllis Schlafly, Chair, Eagle Forum, to Rep. Michael Burgess, Chairman, Subcomm. on Commerce, 

Manufacturing, & Trade of the H. Comm. on Energy & Commerce, & Rep. Jan Schakowsky, 

Ranking Member, Subcomm. on Commerce, Manufacturing, & Trade of the H. Comm. on Energy 

& Commerce (Apr. 22, 2015) (‘‘We also favor relieving mom-and-pop retailers of the abusive use 

of demand letters that make false, misleading claims of patent infringement by components of 

off-the-shelf goods.’’); Mar. 25, 2015 Hearing, at 57 (testimony of Underwood) (‘‘I think reforming 

the demand letter process is key to stopping most of these frivolous attempts to extort money 

from small businesses.’’); Mar. 25, 2015 Hearing at 59 (testimony of Mark Griffin, General Counsel of Overstock.com, Inc.) (‘‘Demand letters are a problem, and that problem should be fixed.’’); 

Mar. 25, 2015 Hearing, at 49 (testimony of Bryan Pate, CEO of ElliptiGO, Inc.) (‘‘Well, I think 

the demand letter is a great place to focus just listening to the conversation and reading the 

testimony. It still seems to be the crux of where these extortion settlements come from, and it 

seems to be an unfair business practice.’’); Innovation Act 2013 Hearing, at 247 (letter for the 

record from David French, Senior Vice Pres. of Government Relations at the National Retail 

Federation) (‘‘It is important to the retail community that legislation addressing patent litigation reform also addresses the misleading correspondence trolls use.’’). 85 H.R. 1896, the Demand Letter Transparency Act of 2015; H.R. 2045, the Targeting Rogue 

and Opaque Letters Act of 2015; S. 632, the Support Technology and Research for Our Nation’s 

Growth Patents Act of 2015; and S. 1137, the Protecting American Talent and Entrepreneurship 

Act of 2015. 86 H.R. 9, § 3(e). 87 H.R. 9, § 3(f). ‘‘This provision is designed to make the award of enhanced damages more 

difficult in situations where ‘purposefully evasive demand letters’ or other defective pre-suit notification efforts have been undertaken by the patent owner.’’ The Innovation Act: Hearing on 

H.R. 9 Before the H. Comm. on the Judiciary, 114th Cong. (Apr. 14, 2015) [hereinafter Innovation Act 2015 Hearing] (written statement of Robert A. Armitage, at 14). 

date and extort settlements from small and medium sized businesses such as credit unions,79 community banks,80 and retailers.81

These bad actors ‘‘target a settlement just under what it would cost 

for litigation, knowing that these businesses will want to avoid 

costly litigation and probably pay up.’’ 82 Essentially, the ‘‘demand 

letters are in all reality thinly-veiled threat letters that use excessive legal jargon and litigation scare tactics to trick recipients into 

cutting big checks, even if no infringement has occurred.’’ 83

Several witnesses at Committee hearings, as well as other stakeholders, have called for Congress to legislate an end to the abusive 

use of deceptive demand letters.84 In response, several legislative 

proposals have been introduced that could effectively curtail the 

abuse.85

Unfortunately, H.R. 9 is not one of those proposals. The bill contains three provisions targeting the use of demand letters: a sense 

of Congress that it is an abuse of the patent system to send out 

purposely evasive demand letters;86 new language barring plaintiffs from enhanced damages for willful infringement if preceded by 

a vague demand letter in the pre-suit notification stage;87 and a requirement that the USPTO conduct a study on the prevalence of 


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88 H.R. 9, § 8(e). 89 ‘‘This [legislation] only refers to demand letters once we are in litigation.’’ Mar. 25, 2015 

Hearing, at 59 (statement of Rep. Ted Deutch). 90 BIO June 19, 2015 Letter. 91Patent Trial and Appeal Board AIA Progress, Statistics, available at http://www.uspto.gov/ 

sites/default/files/documents/aia_statistics_06-18-2015.pdf. 92Patent Public Adv. Comm. Quarterly Meeting, Patent Trial and Appeal Board Update, 

at 13, 15, available at http://www.uspto.gov/sites/default/files/documents/20150219_PPAC_ 

PTAB_Update.pdf. 93The PATENT Act: Finding Effective Solutions to Address Abusive Patent Practices: Hearing 

on S. 1137 Before the S. Comm. on the Judiciary, 114th Cong. (May 7, 2015) (written statement 

of Henry Hadad, Senior Vice Pres. and Deputy General Counsel-Intellectual Property for Bristol-Myers Squibb, at 4). 94 Innovation Act 2015 Hearing (written statement of Hans Sauer, Deputy General Counsel 

for Intellectual Property, at 1). The cases hedge funds have filed include: Coalition for Affordable 

Drugs (ADROCA), LLC. v. ACORDA Therapeutics, INC., Petition for Inter Partes Review of U.S. 

Patent No. 8,663,685 (February 11, 2015); Coalition for Affordable Drugs (ADROCA), LLC. v. 

ACORDA Therapeutics, INC., Petition for Inter Partes Review of U.S. Patent No. 8,007,826 

(February 27, 2015); Coalition for Affordable Drug (ADROCA), LLC. v. Shire, INC., Petition for 

Inter Partes Review of U.S. Patent No. 6,773,720 (April 1, 2015); Coalition for Affordable Drugs 

II, LLC. v. NPS Pharmaceuticals, INC., Inter Partes Review of U.S. Patent No. 7,056,886 (April 

1, 2015); Coalition for Affordable Drugs III, LLC. v. Jazz Pharmaceuticals, INC., Petition for 

Inter Partes Review of U.S. Patent No. 7,895,059 (April 6, 2015); Coalition for Affordable Drugs 

IV, LLC. v. Pharmacyclics, INC., Petition for Inter Partes Review of U.S. Patent No. 8,754,090 

(April 20, 2015); Coalition for Affordable Drugs V, LLC. v. Biogen IDEC International GmbH, 

Petition for Inter Partes Review of U.S. Patent No. 8,759,393 (April 22, 2015); Coalition for Affordable Drugs IV, LLC. v. Celgene Corporation, Petition for Inter Partes Review of U.S. Patent 

No. 6,045,501 (April 22, 2015); Coalition for Affordable Drugs II, LLC. v. NPS Pharmaceuticals, 

Petition for Inter Partes Review of U.S. Patent No. 7,056,886 (April 23, 2015); Coalition for Affordable Drugs VI, LLC. v. Celgene, Petition for Inter Partes Review of U.S. Patent No. 

6,315,720 (April 23, 2015); Coalition for Affordable Drugs VI, LLC. v. Celgene Corporation, Petition for Inter Partes Review of U.S. Patent No. 6,315,720 (April 23, 2015); Coalition for Affordable Drugs VI, LLC. v. Celgene Corporation, Petition for Inter Partes Review of U.S. Patent No. 

Continued 

the sending of patent demand letters and their negative effect on 

the marketplace.88

These provisions are not serious efforts to address the demand 

letter issue. The bill will not deter the sending of the letters because it focuses on the litigation stage and many of the bad actors 

never intend to litigate.89 Congress should take a more thorough 

and effective approach than H.R. 9. Such an approach should carefully balance the needs of legitimate patent holders to protect their 

patents from infringement while stopping the prevalent use of deceptive demand letters. 

B. Patent Reform Legislation Should Effectively Rein in Abuses of 

Post-grant Proceedings at the USPTO 

The AIA created new post-grant proceedings before the Patent 

Trial and Appeal Board (PTAB), including inter partes review (IPR) 

and PGR proceedings. They were intended to be efficient and fair 

for patent owners and challengers. And they ‘‘were designed to provide a quicker, cost-effective alternative to district court litigation.’’ 90

These proceedings, however, have turned out to be arguably unfair for many patent owners. Recent statistics reveal that the 

PTAB grants approximately 75% of petitions 91 and finds at least 

some challenged claims unpatentable in nearly 85% of final written 

decisions.92 These one-sided statistics have drawn bad actors to 

abuse the proceedings. ‘‘Litigants are subverting a well-intended 

but unfairly implemented system of adjudicating patents for their 

financial gain and to the detriment of innovation, investment and 

our economy.’’ 93 For example, hedge funds have shorted the stock 

of biopharmaceuticals and then filed IPR petitions to drive down 

share prices.94 According to PhRMA, ‘‘[i]f this abuse is not adVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00183 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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6,315,720 (April 23, 2015); Coalition for Affordable Drugs V, LLC v. Biogen MA, Inc., Petition 

for Inter Partes Review of U.S. Patent No.8,399,514 (May 1, 2015). 95Statement of PhRMA (June 11, 2015) [hereinafter PhRMA June 11, 2015 Statement] (on 

file with the House Committee on the Judiciary, Democratic Staff). 96 H.R. 9, § 9(b)(1) and 9(b)(2). 97 21C June 12, 2015 Press Release. 98 ‘‘BIO appreciates the IPR reforms in the bill, but we believe they are insufficient to address 

the fundamental problems and abuses within the IPR system.’’ BIO June 19, 2015 Letter. 99 ‘‘Unfortunately, the bill as approved fails to address the serious problems with the Inter 

Partes Review process (IPR) at the Patent and Trademark Office (PTO), which is a top priority 

of PhRMA and the entire biopharmaceutical industry.’’ PhRMA June 11, 2015 Statement. 100Letter from Mary Woolley, President and CEO of Research!America, to Rep. Bob Goodlatte, 

Chairman, H. Comm. on the Judiciary, Rep. John Conyers, Jr., Ranking Member, H. Comm. on 

the Judiciary, Sen. Charles Grassley, Chairman, S. Comm. on the Judiciary, & Sen. Patrick 

Leahy, Ranking Member, S. Comm. on the Judiciary (July 15, 2015) (on file with the H. Comm. 

on the Judiciary, Democratic Staff). 101Letter from over 90 patient advocacy organizations to Rep. Bob Goodlatte, Chairman, H. 

Comm. on the Judiciary, Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary, 

Sen. Charles Grassley, Chairman, S. Comm. on the Judiciary, & Sen. Patrick Leahy, Ranking 

Member, S. Comm. on the Judiciary (May 21, 2015) (on file with the H. Comm. on the Judiciary, 

Democratic Staff). 102 H.R. 9 Markup Unofficial Transcript, at 112 (Amendment #12 of Representative Mimi Walters). 103 Id. at 115–119, 171–175 (statements of Reps. Doug Collins, Henry C. ‘‘Hank’’ Johnson, Jr., 

Zoe Lofgren, & Scott H. Peters). 104 Id, at 114, 174–175 (statements of Chairman Bob Goodlatte). 105Letter signed by 79 Representatives to Rep. John Boehner, Speaker of the House, Rep. 

Nancy Pelosi, Minority Leader of the House, Rep. Kevin McCarthy, Majority Leader of the 

House, & Rep. Steny Hoyer, Minority Whip of the House (July 24, 2015) (on file with the H. 

Comm. on the Judiciary, Democratic Staff). 

dressed, the end result will be to discourage the investment needed 

to develop new treatments and cures for patients.’’ 95

Unfortunately, H.R. 9 does not effectively prevent further abuse 

of the IPR and PGR proceedings. The bill requires that challengers 

in IPR and PGR proceedings certify that they ‘‘do not own or will 

not require a financial instrument’’ as a hedge against any decrease in the market value of the stock of the patent owner it is 

challenging.96 However, this language is too narrowly tailored to 

address what has actually been occurring: where a hedge fund sells 

or shorts the stock of the patent holder before filing for the IPR or 

PGR of the patent holder’s patent. It also would not cover situations where the challenger ‘‘tips off’’ a friend, colleague, or family 

member to sell or short the stock of the patent holder before the 

hedge fund files for IPR or PGR. 

21C states that the bill ‘‘falls short in terms of meaningful reforms to the procedures used’’ at the USPTO in IPR and PGR proceedings.97 BIO,98 PhRMA,99 Research!America,100 and more than 

90 patient advocacy organizations 101 concur. 

For those reasons, Representative Mimi Walters (R-CA) offered, 

but later withdrew, an amendment at the Committee markup of 

H.R. 9 to exclude biopharmaceutical patents covering approved 

drug and biological products from IPR proceedings.102 Several 

Members spoke in favor of the amendment 103 and Chairman Bob 

Goodlatte assured them that this issue would be addressed.104

Since the Committee’s markup of H.R. 9, 79 members have urged 

that Congress address the issue along the lines of Rep. Walters’ 

amendment before the bill is considered on the floor.105 Until an 

effective solution is incorporated into H.R. 9, the legislation continues to fail at protecting patent holders from abuses in post-grant 

proceedings at the USPTO. 


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106 Unofficial Tr. of Markup of H.R. 1249, ‘‘The America Invents Act,’’ by the H. Comm on the 

Judiciary, 112th Cong. at 45 (Apr. 14, 2011) (statement of Representative Jim Sensenbrenner), 

available at http://judiciary.house.gov/_files/hearings/pdf/04142011MarkupTranscript.pdf. See 

also H.R. Rep. No. 112–98, pt. 1, at 55 (2011). 107 H.R. 1249, 112th Cong. § 22 (2011). 108Pub. L. No. 112–29, § 22, 125 Stat. 326 (2011). 109 ‘‘Over the last two decades the government has withheld, diverted or sequestered about $1 billion in USPTO user fee collections.’’ Letter from Herbert C. Wamsley, Exec. Dir. of the 

Intellectual Property Owners Association (IPO), to Rep. John Conyers, Jr., Ranking Member, H. 

Comm. on the Judiciary, & Rep. Doug Collins, Vice Chair of the Subcomm. on Courts, Intellectual Property and the Internet of the H. Comm. on the Judiciary (April 16, 2015) [hereinafter 

IPO Apr. 16, 2015 Letter] (on file with the House Committee on the Judiciary, Democratic 

Staff). 110 IPO Daily News for Friday, Nov. 22, 2013, available at http://www.ipo.org. 111 Innovation Act 2013 Hearing, at 40 (written statement of David J. Kappos, Partner at 

Cravath, Swaine & Moore LLP) (emphasis added). 

C. Any Legislation to Reform the Patent System Must Improve Patent Examination Quality by Ending Fee Diversion 

H.R. 9 fails to improve patent examination quality because it 

does not prevent the continuing diversion of fees from the USPTO. 

When the Judiciary Committee reported the AIA in 2011, there 

was bipartisan consensus that diverting user fees from the USPTO 

to the Treasury to be used for purposes unrelated to the services 

and functions of the USPTO undermined the USPTO’s efforts to reduce its backlog.106 For that reason, the AIA included a provision 

which created a permanent revolving fund for the USPTO.107 Unfortunately, the provision was substantially altered by replacing 

the permanent revolving fund with a much weaker reserve fund before the AIA was brought to the floor.108

The failure to end fee diversion after enactment of the AIA in 

2011 led to nearly $150 million in badly needed user fees being diverted in Fiscal Year 2013 because of the sequester. This loss is on 

top of the estimated $1 billion in fees diverted over the last two 

decades.109 By failing to provide patent examiners the resources 

they need to review and analyze effectively the hundreds of thousands of complex and interrelated patent applications they receive 

every year, ongoing efforts at the USPTO to keep pace with innovation and to continue to enhance patent quality will be stymied. 

This diversion prevented improvements to IT projects and resulted 

in the hiring of about 1000 less patent examiners.110

There is widespread agreement by observers of the system and 

stakeholders that this is an unacceptable and harmful situation. In 

2013, former USPTO Director David Kappos testified at a hearing 

on the Innovation Act: 

Less than 2 years after the passage of the AIA and all the 

accompanying focus on USPTO fee diversion, we found 

ourselves again looking at an Agency having its lifeblood, 

the user fees that come with the work asked of USPTO by 

American innovators drained away. I simply cannot overstate the destruction that is causing, as the work remains 

without funding to handle it, creating an innovation deficit 

that will require future generations of innovators to pay 

into the Agency again in hopes their fees are paid. Nor will 

it be possible for the USPTO to accomplish the mandates 

of the AIA, much less the added responsibilities contemplated by parts of H.R. 3309, without access to the 

user fees calculated to meet those challenges.111


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112Letter from Lisa K. Jorgenson, Exec. Dir. of AIPLA, to House Committee on the Judiciary 

Representatives John Conyers, Jr. & Jim Sensenbrenner, Jr. (April 20, 2015) (on file with the 

House Committee on the Judiciary, Democratic Staff). 113 Innovation Act 2015 Hearing (written statement of Sauer, at 22); Examining Recent Supreme Court Cases in the Patent Arena: Hearing Before the Subcomm. on Courts, Intellectual 

Property and the Internet of the H. Comm. on the Judiciary, 114th Cong. 70 (Feb. 12, 2015) (testimony of Herb C. Wamsley, Exec. Dir. of IPO; Andrew J. Pincus, Partner at Mayer Brown, LLP; 

Krish Gupta, Senior Vice Pres. and Deputy General Counsel of EMC Corp.). 114Letter from Kevin Rhodes, 21C, to Rep. John Conyers, Jr., Ranking Member, H. Comm. 

on the Judiciary, & Rep. F. James Sensenbrenner, Jr. (Apr. 16, 2015) (on file with the H. Comm. 

on the Judiciary, Democratic Staff). 115 ‘‘Our members have long felt that the diversion of revenues derived from intellectual property applications was a detriment to the quality of patents and trademarks.’’ Letter from James 

Jefferies, Pres. of IEEE–USA, to Rep. John Conyers, Ranking Member, H. Comm. on the Judiciary (Apr. 16, 2015) (on file with the H. Comm. on the Judiciary, Democratic Staff). 116 ‘‘We have long maintained that ending fee diversion, and thereby giving the [USPTO] all 

of the fees it is paid by patent applicants, is the single most important change policymakers 

can make to improve the U.S. patent system.’’ Letter from Brian Pomper, Exec. Dir. of IA, to 

to Rep. John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary, & Rep. F. James Sensenbrenner, Jr. (Apr. 16, 2015) (on file with the H. Comm. on the Judiciary, Democratic Staff). 117 ‘‘The U.S. needs a fully funded USPTO to keep our nation competitive, encourage innovation, and create new jobs.’’ IPO Apr. 16, 2015 Letter. 118Letter from Mark B. Leahey, Pres. and CEO of MDMA, to Rep. John Conyers, Ranking 

Member, H. Comm. on the Judiciary (June 2, 2015) (on file with the H. Comm. on the Judiciary, 

Democratic Staff). 119The amendment is modeled after H.R. 1832, the ‘‘Innovation Protection Act,’’ which Ranking Member Conyers and Representative Sensenbrenner, along with an evenly divided biparAIPLA concurred: ‘‘This denial of fund access had serious negative consequences, such as the cancellation of much-needed IT improvements, significant delays in the rollout of satellite offices, and 

a slowing down of examiner hiring, all of which are critical to improvements in quality and pendency.’’ 112 Many witnesses at the 

Committee hearings on abusive patent litigation have agreed that 

fee diversion has had a serious adverse impact on the patent system.113

Similarly, 21C has written that there is a continuing need to prevent ‘‘user fees from being sequestered or diverted to support other 

government programs.’’ 114 This view is shared by the IEEE– 

USA,115 IA,116 and IPO.117

Further, ending fee diversion will help prevent so-called ‘‘patent 

trolls’’ from obtaining vague patents to use as a threat in demand 

letters or in litigation. MDMA described the importance of ending 

fee diversion to combating abusive patent litigation: 

Many complaints about ‘‘patent trolls’’ include allegations 

that these entities are asserting ‘‘bad patents’’ that should 

never have been granted. The most effective action that 

can be taken to improve patent quality is to allow the 

USPTO to retain its revenues to allow it to improve the examination process, hire more and better-qualified examiners, increase examiner training, and upgrade the 

USPTO’s IT infrastructure. This should be a core element 

of any legislation aimed at addressing the ‘‘troll’’ problem.118

For those reasons, Ranking Member John Conyers, Jr. (D-MI) offered an amendment at the Committee markup to prevent future 

fee diversion from the USPTO. The amendment would have established a revolving fund in the United States Treasury that would 

allow the USPTO to retain and use all of the user fees it collected 

by applicants and still provide for Congressional oversight of the 

USPTO.119 Even though the subject of the amendment received 


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tisan group of 6 additional members, introduced on April 16, 2015. The legislation currently has 

22 cosponsors. 120 H.R. 9 Markup Unofficial Transcript, at 54 (Amendment #20 of Ranking Member John 

Conyers, Jr.) (failed 11–16). 121 H.R. 3309, 113th Cong. (2013). 122 H.R. 3309 was introduced on October 23, 2013 and the House Committee on the Judiciary 

held a hearing on the bill on October 29, 2013. Thereafter, the Committee marked up the bill 

on November 20, 2013 and the House passed the bill on December 5, 2013. 123The Protecting American Talent and Entrepreneurship (PATENT) Act: Markup of S. 1137 

Before the S. Comm. on the Judiciary, 114th Cong. (June 4, 2015). 124 H.R. 9, 114th Cong. § 3(b) (2015). 125See, e.g., Letter from United for Patent Reform to Sen. Charles Grassley, Chairman, S. 

Comm. on the Judiciary, Patrick Leahy, Ranking Member, S. Comm. on the Judiciary, Rep. Bob 

Goodlatte, Chairman, H. Comm. on the Judiciary, & Rep. John Conyers, Jr., Ranking Member, 

H. Comm. on the Judiciary (Jan. 15, 2015) (on file with the H. Comm. on the Judiciary, Democratic Staff). 126 393 F.3d 1378, 1381 (Fed. Cir. 2005). 127 134 S. Ct. 1749 (2014). 

widespread support by the Members, the amendment failed because some Members posited that a point of order would be raised 

on the floor and hinder passage of the legislation.120

Failure to include language ending USPTO fee diversion once 

and for all belies any serious and responsible effort to reform and 

update the patent system. 

III. RECENT DEVELOPMENTS MAKE MANY OF THE PROVISIONS IN THE

INNOVATION ACT UNNECESSARY

When a substantially similar version of the Innovation Act was 

introduced in October 2013,121 the bill was rushed through the 

House of Representatives in a matter of weeks.122 Since then, the 

courts and the executive branch have taken a number of actions to 

reduce abusive patent litigation, rendering many of the provisions 

contained in H.R. 9 unnecessary. 

In addition, H.R. 9 is even more objectionable than the more deliberate and cautious approach in the Senate’s PATENT Act, which 

the Senate Committee on the Judiciary recently reported.123 If the 

House chooses to pursue legislation to curb abusive patent litigation, it should consider some of the positive improvements reflected 

in the Senate’s approach. 

A. Courts are Already Awarding Fees at a Much Higher Rate 

A centerpiece of H.R. 9 is its mandatory presumptive fee shifting 

provision, which will force a non-prevailing party to demonstrate 

that it should not bear the court costs and attorneys’ fees of the 

prevailing party.124 Supporters of this legislation claim that a 

stronger fee shifting regime is necessary to deter litigation 

abuses.125 However, two recent Supreme Court cases make the 

need for H.R. 9’s fee shifting provision moot. 

Under 35 U.S.C. § 285, a court ‘‘in exceptional cases’’ may award 

reasonable attorneys’ fees to a prevailing party in a patent case. 

Before 2014, courts rarely awarded fees because of a strict standard set by the U.S. Court of Appeals for the Federal Circuit, in 

Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc. 126 In its 2014 decision in Octane Fitness,127 the Supreme Court held that the standard was unduly rigid. The Court explained that an ‘‘exceptional’’ 

case is one that merely ‘‘stands out from others with respect to the 

substantive strength of a party’s litigation position (considering 

both the governing law and the facts of the case) or unreasonable 


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128 Id. at 1756. 129 134 S. Ct. 1744 (2014). 130Mallun Yen, Fee Shifting Before and After the Supreme Court Decisions, INSIDE COUNSEL, Feb. 25, 2015 (reporting that in the 8 months prior to Octane Fitness and Highmark fees were 

awarded in 6 of the 31 cases in which they were requested while in the 8 months after the decision fees were awarded in 21 of the 43 cases in which they were requested). 131Posting of Hannah Jiam to PatentlyO.com, Emerging Trends Post-Octane Fitness (May 13, 

2015), available at http://patentlyo.com/patent/2015/05/emerging-octane-fitness.html. 132See Study by Lex Machina, available at https://lexmachina.com/2014/10/september-2014- 

new-patent-case-filings-40-september-2013/(showing that monthly patent filings decreased by 

40% (549 to 329) between September 2013 and September 2014); Andrew S. Baluch, Esq. and 

Eoin Connolly, Attorney fee awards in patent cases after Octane Fitness, Westlaw Journal Intellectual Property, vol. 21, issue 17 at 14 (Dec. 10, 2014) (finding that at least 40 motions for 

attorneys’ fees were filed since the Supreme Court decided Octane Fitness and fees were awarded in 18 of those cases). See also Patent Protections Coalition Letter; USIJ February 12, 2015 

Letter. 133 134 S. Ct. 2347 (2014). 134 Id. 

manner in which the case was litigated.’’ 128 The decision makes it 

easier for a court to award fees. 

On the same day, the Court also ruled, in Highmark,129 that the 

Federal Circuit’s review of a district court’s fee award should be reviewed for abuse of discretion rather than de novo. The decision 

made it more difficult for the Federal Circuit to reverse district 

court decisions on fee awards. 

Since the Supreme Court’s decisions in these two cases, courts 

have been awarding fees at a substantially higher rate. According 

to one study, in the 8 months prior to these decisions, fees were 

awarded in almost 20% of the cases in which they were requested. 

In the 8 months following the decisions, however, fees were awarded in almost half the cases in which they were requested.130 Another study reported a jump in cases in which fees were awarded 

from 13% in the period analyzed prior to Octane Fitness and 

Highmark to 43% after those cases.131

Although we have strong concerns about the impact of loser pays 

provisions on legitimate plaintiffs, to the extent that the threat of 

fee shifting acts as a deterrent to filing abusive litigation, the stringent provisions of the Innovation Act are clearly unnecessary. The 

Supreme Court loosened the standard for when fees should be 

awarded and district courts have responded, in short order, with a 

significant increase in the frequency of fee awards. There is no 

need for the mandatory presumptive fee shifting contained in H.R. 

9, which would make fee awards the default rule and discourage 

inventors from enforcing their patent rights in court. 

B. Patent Case Filings Have Decreased Significantly Over the Last 

Year 

One of the primary arguments for supporters of H.R. 9 is that 

patent litigation rates have skyrocketed. However, statistics reveal 

that there has been a dramatic decrease in the number of patent 

cases filed, with some reports finding that infringement cases 

dropped by as much as 40% between September 2013 and September 2014.132

Although a number of factors may be behind this trend, one important contributor was likely the Supreme Court’s decision in 

Alice Corp. v. CLS Bank Int’l.133 In Alice, the Court held that simply implementing an abstract idea using a generic computer is not 

enough to turn that abstract idea into a patentable invention.134 As 


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135 USIJ February 12, 2015 Letter. 136 James Bessen, What the Courts Did to Curb Patent Trolling—For Now, THE ATLANTIC

(Dec. 1, 2014). 137Supreme Court Adopts Rules Changes; ‘‘Summary of the Report of the Judicial Conference 

Committee on Rules of Practice and Procedure 14,’’ (Sept. 2014), available at http:// 

www.uscourts.gov/uscourts/RulesAndPolicies/rules/Reports/ST09-2014.pdf. 138 550 U.S. 544 (2007). 139 556 U.S. 662 (2009). 140Leslie Gordon, For Federal Plaintiffs, Twombly and Iqbal Still Present a Catch-22, 

ABA JOURNAL, Jan. 1, 2011, available at http://abajournal.com/magazine/article/for_federal_ 

plaintiffs_twombly_and_iqbal_still_present_a_catch-22. 141Dina Hayes & James Lyons, Judges’ Use of Case Management to Effect [sic] Patent Reform, 

INSIDE COUNSEL, Dec. 22, 2014. 

a result, the scope of patentable subject matter for many softwarebased inventions has been significantly narrowed.135

Consequently, abusive litigants, who often hold this type of 

vague and over-broad patent, will have many of their suits dismissed at an early stage of litigation and the USPTO will issue 

fewer of these weak patents going forward.136

C. Pleading Standards are Already Set to Increase Due to the 

Elimination of Form 18 

A central provision in H.R. 9 calls for heightened pleading requirements because defendants contend that plaintiffs in patent 

cases are not required to provide sufficient detail in their complaints to give defendants fair notice of what patents they are allegedly infringing and how the patents have been infringed. However, the Federal courts have taken administrative actions that 

render this provision in the Innovation Act unnecessary. 

Currently, patent holding plaintiffs merely need to file Form 18 

of the Federal Rules of Civil Procedure as their complaint. That 

form requires plaintiffs to include minimal information. There is 

widespread agreement that this requirement provides insufficient 

notice to defendants. Fortunately, Form 18 should be eliminated by 

December 1 of this year.137 After Form 18 is eliminated, patent infringement suits will be subject to the already heightened pleading 

requirements provided for under the Supreme Court’s decisions in 

Twombly 138 and Iqbal 139 that applies to all other civil actions. 

Under Twombly and Iqbal, plaintiffs must include enough facts to 

show that their claim is ‘‘plausible on its face.’’ 140

Once Form 18 is eliminated, the alleged need for H.R. 9’s heightened pleading requirements will be unnecessary and if allowed to 

remain, would unfairly burden plaintiffs seeking to enforce their 

patent rights by requiring them to provide more details in their 

complaints beyond what is required under Twombly and Iqbal. 

D. District Courts Have Developed Local Case Management Rules 

Supporters of H.R. 9 contend that courts hearing patent cases 

have not imposed structures to limit discovery and prevent abuse 

of the litigation system. However, individual district courts have 

taken steps in recent years to lower the costs and improve the efficiency of patent cases by establishing local case management rules. 

More than 30 courts currently have local case management rules 

for patent cases, up from just 12 in 2008, with more districts expected to follow.141 Rather than Congress legislating burdensome 

and heavy-handed rules governing patent litigation that will harm 

all plaintiffs, we should allow the courts, which have expertise in 


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142 Request for Comments on Enhancing Patent Quality, 80 Fed. Reg. 6475 (proposed Feb. 5, 

2015). 143 Id. 144 Id. 145See, e.g., Press Release, 21C, 21C Commends Senate Introduction of the PATENT Act 

(April 29, 2015), available at http://patentsmatter.com/issue/pdfs/21CStatementon 

IntroductionoftheSenateBill.pdf; Press Release, PhRMA, PhRMA Response to Introduction of 

Senate Patent Bill (April 29, 2015), available at http://www.phrma.org/media-releases/phrmaresponse-to-introduction-of-senate-patent-bill; Press Release, United for Patent Reform, Bipartisan Senate Judiciary Bill Will Protect America’s Businesses from Continued Patent Troll 

Extortion (April 29, 2015), available at http://www.unitedforpatentreform.com/patent-reformnews/65/Press+Release+Bipartisan+Senate+Judiciary+Leadership+Bill+Will+Protect+America+ 

s+Businesses+From; Press Release, Association of American Universities, American Council on 

Education, Association of American Medical Colleges, Association of Public and Land-grant Universities, Association of University Technology Managers, and Council on Government Relations, 

Higher Education Association Statement on Introduction of Patent Act (April 30, 2015), available at http://www.aplu.org/news-and-media/News/higher-education-association-statement-on-introduction-of-patent-act; Niels Lesniewski, Senate Bill Gets White House Plaudits, ROLLCALL, 

May 1, 2015, available at http://blogs.rollcall.com/white-house/senate-patent-bill-gets-whitehouse-plaudits/?dcz=; Editorial, Curbing Abusive Patent Lawsuits, N.Y. TIMES, May 6, 2015. 146S. 1137, 114th Cong. § 7(b) (2015). 147 H.R. 9, 114th Cong. § 3(b) (2015). 

managing patent cases, to continue developing policies that will improve the litigation process. 

E. The USPTO Has Begun an Enhanced Patent Quality Initiative 

Innovation Act proponents have expressed concerns that so-called 

‘‘patent trolls’’ rely on vague patents for the subjects of their demand letters and lawsuits. Recognizing that high quality patents 

bring certainty and clarity of rights, which reduces needless litigation and the issuance of vague patents, the USPTO recently announced an important initiative to enhance patent quality.142

Beginning with a ‘‘Quality Summit’’ that was held in March of 

this year, the USPTO has proposed a variety of measures, including increased training of its examiners, better customer service, 

and new technology that will significantly improve the quality of 

the patents it issues.143 These proposed initiatives join a host of 

other efforts already underway at the USPTO to enhance patent 

quality.144 As the agency continues to increase the quality of the 

patents it issues, fewer vague and over-broad patents will be available to bad actors that seek to abuse the litigation system. Over 

time, this will be far more effective than the unfair and unnecessary measures contained in H.R. 9. 

F. H.R. 9 Is More Objectionable than the Senate’s PATENT Act 

Although S. 1137, the PATENT Act, which the Senate Judiciary 

Committee recently reported, still has room for improvement, we, 

along with many stakeholders, believe it provides much stronger 

protection for legitimate inventors than H.R. 9.145 In particular, S. 

1137 requires a prevailing party to demonstrate that it is entitled 

to fees. In addition, the Senate bill would require a court to determine whether the non-prevailing party’s claim and conduct were 

objectively reasonable.146 H.R. 9, on the other hand, would require 

a court to award fees unless it found the non-prevailing party’s position and conduct to be reasonably justified.147

On this and a few other issues, the Senate bill is preferable to 

the Innovation Act. Instead of pressing forward with H.R. 9, the 

House should take up and improve the Senate’s PATENT Act. 


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148 550 U.S. 544 (2007). 149 556 U.S. 662 (2009). 150Supreme Court Adopts Rules Changes. 

DETAILED SECTION-BY-SECTION ANALYSIS OF H.R. 9

The following explains the pertinent provisions of H.R. 9. 

Section 3(a) imposes heightened pleading requirements on parties asserting patent infringement claims whether in an initial 

complaint, counterclaim or cross-claim. It requires patent holders 

to identify the patents and claims infringed and to provide more 

specificity as to how they are infringed. Current law governing 

pleading in all civil actions, including patent infringement claims, 

is somewhat fluid following the decisions of the U.S. Supreme 

Court in Twombly,148 and Iqbal.149 Those cases moved away from 

the traditional ‘‘notice’’ pleading regime and moved towards more 

fact-based pleading requirements. In addition, Form 18, which calls 

for simple notice pleading in patent cases, is set to be eliminated 

on December 1 of this year.150

Section 3(b) amends Section 285 of title 35 to provide that the 

court shall award reasonable fees and other expenses to a prevailing party, unless the court finds that the position and conduct 

of the non-prevailing party or parties were reasonably justified in 

law and fact or that special circumstances (such as severe economic 

hardship to a named inventor) make an award unjust. Section 3(b) 

would replace the current discretionary statutory provision with a 

mandatory fee-shifting provision. The language requires that fees 

shift to the non-prevailing party unless they can meet the burden 

of establishing that their position was ‘‘reasonably justified’’ or that 

‘‘special circumstances’’ make an award unjust. The provision also 

defines a non-prevailing party to include a plaintiff patentee who 

‘‘subsequently unilaterally extends . . . a covenant not to sue for 

infringement with respect to the patent or patents at issue.’’ 

Section 3(c) establishes an additional mechanism for joinder of 

additional plaintiffs notwithstanding Federal Rules of Civil Procedure 19 and 20, which already provide for the permissive and mandatory joinder of parties, respectively. This subsection provides that 

in a civil action arising under any Act of Congress relating to patents in which fees and other expenses have been awarded under 

section 285 to a prevailing party defendant against an allegation 

of infringement of a patent claim, and in which the non-prevailing 

party alleging infringement is unable to pay the award of fees and 

other expenses, the court shall grant a motion by the prevailing 

party to join an interested party if such prevailing party shows 

that the non-prevailing party has no substantial interest in the 

subject matter at issue other than asserting such patent claim in 

litigation. 

The court may deny a motion to join an interested party if: (1) 

the interested party is not subject to service of process; or (2) joinder would deprive the court of subject matter jurisdiction or make 

venue improper. The court must deny a motion to join an interested party if: (1) the interested party did not timely receive the 

notice required; or (2) within 30 days after receiving the notice required, the interested party renounces, in writing and with notice 

to the court and the parties to the action, any ownership, right, or 


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direct financial interest that the interested party has in the patent 

or patents at issue. 

An interested party may not be joined unless it has been provided actual notice, within 30 days after the expiration of the time 

period during which a certification is required to be filed, that the 

interested party has been identified in the initial disclosure. This 

subsection defines an interested party to mean a person other than 

the party alleging infringement that: (1) is an assignee of the patent or patents at issue; (2) has a right, including a contingent 

right, to enforce or sublicense the patent or patents at issue; or (3) 

has a direct financial interest in the patent or patents at issue, including the right to any part of an award of damages or any part 

of the licensing revenue, except that a person with a direct financial interest does not include: (i) an employee of the party alleging 

infringement—(I) whose principal source of income or employment 

is employment with the party alleging infringement; or (II) whose 

sole financial interest in the patent or patents at issue is a salary 

or hourly wage paid by the party alleging infringement; (ii) an attorney or law firm providing legal representation in the civil action 

described in paragraph (1) if the sole basis for the financial interest 

of the attorney or law firm in the patent or patents at issue arises 

from the attorney or law firm’s receipt of compensation reasonably 

related to the provision of the legal representation; or (iii) a person 

whose sole financial interest in the patent or patents at issue is 

ownership of an equity or security interest in the party alleging infringement, unless such person also has the right or ability to direct or control (membership on the board of directors alone is not 

sufficient to demonstrate such right or ability) the civil action. 

The term substantial interest in the subsection includes an interest in the subject matter of a patent at issue if the party: (1) invented the subject matter; or (2) commercially practices or implements, made substantial preparations directed particularly to commercially practicing or implementing, or is engaged in research and 

development in, technology in the field of the subject matter. 

This subsection does not apply to an action if the party alleging 

infringement files, not later than 45 days after the date on which 

the party is served with the intial statement a certification that: 

(1) establishes and certifies to the court, under oath, that the party 

will have sufficient funds available to satisfy any award of reasonable attorneys’ fees and expenses under section 285 if an award is 

assessed; (2) demonstrates that such party has a substantial interest in the subject matter at issue other than asserting the patent 

in the litigation; or (3) is made under oath that there are no other 

interested parties. 

Section 3(c) does not apply to a technology transfer organization 

whose primary purpose is to facilitate the commercialization of 

technologies developed by one or more institutions of higher education (as defined in section 101(a) of the Higher Education Act of 

1965 (20 U.S.C. 1001 § (a)) if such technology transfer organization 

is alleging infringement on behalf of an entity that would not be 

subject to this subsection. 

Section 3(d) requires a judge, with limited exceptions, to stay all 

discovery if the defendant moves within 90 after service of a complaint to: (1) sever or drop a party for misjoinder; (2) transfer or 

dismiss the action due to improper venue; or (3) dismiss the action 


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pursuant to Federal Rule of Civil Procedure 12(b). A judge must 

decide a motion that is the basis for the stay before deciding any 

other substantive motion or issues a scheduling order. Section 3(d) 

permits discovery only when necessary for a court to decide a motion to sever, dismiss a party, or dismiss or transfer the action; 

when a preliminary injunction is granted to prevent competitive 

harm; or with the consent of the parties. This provision does not 

apply to an action that includes a cause of action described under 

section 271(e)(2). 

Section 3(e) expresses a sense of Congress that it is an abuse of 

the patent system and against public policy to send out evasive demand letters to end users alleging patent infringement. 

Section 3(f) adds a paragraph at the end of section 284 of title 

35 providing that pre-suit notification of infringement may not be 

relied on to establish willfulness unless such notification identifies 

with particularity the patent and the accused products or process 

and explains why a claim is infringed to the extent possible following a reasonable inquiry. 

Section 3(g)(1) amends section 1400 of title 28 to state that notwithstanding subsections (b) and (c) of section 1391, any civil action for patent infringement or any action for a declaratory judgment that a patent is invalid or not infringed may be brought only 

in a judicial district: (1) where the defendant has its principal place 

of business or is incorporated; (2) where the defendant has committed an act of infringement of a patent in suit and has a regular 

and established physical facility that gives rise to the act of infringement; (3) where the defendant has agreed or consented to be 

sued in the instant action; (4) where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit; (5) where a party has a regular and 

established physical facility that such party controls and operates, 

not primarily for the purpose of creating venue, and has: (A) engaged in management of significant research and development of 

an invention claimed in a patent in suit prior to the effective filing 

date of the patent; (B) manufactured a tangible product that is alleged to embody an invention claimed in a patent in suit; or (C) implemented a manufacturing process for a tangible good in which 

the process is alleged to embody an invention claimed in a patent 

in suit; or (6) for foreign defendants that do not meet the requirements of paragraphs (1) or (2), according to section 1391(d) of this 

title. 

Section 3(g)(2) provides that for the purpose of determining 

whether relief may issue under section 1651 of title 28, a clearly 

and indisputably erroneous denial of a motion under section 

1406(a) to dismiss or transfer a case on the basis of section 1400(b) 

shall be deemed to cause irremediable interim harm. 

Section 3(g)(3) provides that if a defendant does not meet the definition of a retailer under section 296(a)(6) of title 35, as added by 

section 5 of the bill, solely because the defendant manufactures or 

causes the manufacture of the covered product or process in suit, 

the retail facilities of such defendant shall not constitute a regular 

and established physical facility for purposes of section 1400(b)(2) 

of title 28 as added by paragraph (1). 

Section 3(g)(4) provides that the dwelling or residence of an employee or contractor of a defendant who works at such dwelling or 


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residence shall not constitute a regular and established physical facility of the defendant for purposes of section 1400(b)(2) of title 28, 

as added by paragraph (1). 

Section 3(h) applies the amendments made by section 3 to cases 

filed on or after the date of enactment of the Innovation Act, except 

where the individual subsections of section 3 supply their own effective dates. 

Section 4(a) requires a patent owner who asserts an infringement 

claim in court to provide detailed information about all persons or 

entities having an interest in the patent. Specifically, the patent 

owner has an ongoing duty to inform the parties, the court, and the 

USPTO of: (1) any assignee of the patent; (2) any entity with the 

right to sublicense or enforce the patent; (3) any entity with any 

financial interest in the patent or in the patentee; (4) the ultimate 

parent entity of the assignee; (5) a clear and concise description of 

the principal business, if any, of the party alleging infringement; 

(6) a list of each complaint filed, of which the party alleging infringement has knowledge; and (7) for each patent identified, 

whether a standard-setting body has declared such patent to be essential, potentially essential, or having potential to become essential to that standard-setting body, and whether the United States 

Government or a foreign government has imposed specific licensing 

requirements with respect to the patent. These requirements shall 

not apply with respect to a civil action filed under subsection (a) 

that includes a cause of action described under Section 271(e)(2). 

The patent owner is encouraged to comply with these requirements because failure to do so will cause them to forfeit attorneys’ 

fees under section 285 or pay enhanced damages. In addition, the 

patent owner may also be required to pay the opposing party’s 

costs and attorney’s fees incurred to determine the identity of the 

real parties at interest in the patent if the patent owner fails to 

comply with this section. Fees may be shifted even if the identity 

of additional parties was immaterial to the proceedings and may 

only be avoided if the court determines they are ‘‘unjust.’’ 

Section 4(d) states that the amendments made by section 4 shall 

take effect upon the expiration of the 6-month period beginning on 

the date of enactment of the bill and shall apply to any action for 

which a complaint is filed on or after such effective date. 

Section 5(a) requires the court to grant a motion to stay at least 

the portion of the action against a covered customer related to infringement of a patent involving a covered product or covered process if: (1) the covered manufacturer is a party to the action or to 

a separate action (in which a party asserts a claim for relief arising 

under any Act of Congress relating to patents) involving the same 

patent or patent related to the same covered product or covered 

process; (2) the covered customer agrees to be bound as to the 

issues determined in an action described in paragraph (1) without 

a full and fair opportunity to separately litigate any such issue, but 

only as to those issues for which all other elements of the common 

law doctrine of issue preclusion are met; (3) the motion for a stay 

is brought within 120 days of service of the first infringement 

pleading; and (4) in a case where the covered manufacturer has 

been made a party to the action on motion by the covered customer, the covered manufacturer and the covered customer consent 

in writing to the stay. A stay entered into under this section may 


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be lifted upon a grant of a motion based on a showing that: (1) the 

action involving the covered manufacturer will not resolve a major 

issue in the suit against the covered customer (such as a covered 

product or covered process identified in the motion to lift the stay 

is not a material part of the claimed invention or inventions in the 

patent or patents in dispute); or (2) the stay unreasonably prejudices or would be manifestly unjust to the party seeking to lift the 

stay. 

In the case of a stay entered under this section based on the participation of the covered manufacturer in a separate action in subsection (b)(1), a motion may only be granted if the court determines 

that the showing required under paragraph (1) has been made. 

This section shall not apply to an action that includes a cause of 

action described under section 271(e)(2). The court may upon motion, determine that a consent judgment or an unappealed final 

order shall not be binding on the covered customer with respect to 

one or more of the issues that gave rise to the stay based on a 

showing that such consent judgment or unappealed final order 

would unreasonably prejudice or be manifestly unjust to the covered customer in light of the circumstances of the case if, following 

the grant of a motion to stay under this section, the covered manufacturer: (1) obtains or consents to entry of a consent judgment relating to such issue that gave rise to the stay; or (2) fails to prosecute to a final, non-appealable judgment such issue that gave rise 

to the stay. Nothing in this section shall be construed to limit the 

ability of a court to grant any stay, expand any stay granted under 

this section, or grant any motion to intervene, if otherwise permitted by law. 

Currently, manufacturers or suppliers may seek leave to intervene in patent infringement actions against their customers or end 

users. They may also seek a declaratory judgment where a case or 

controversy exist, or pursue administrative legal action against a 

patent owner. 

Section 6(a) requires that not later than 3 months after the date 

of enactment of the bill the Director of the Administrative Office 

of the United States Courts (Administrative Office) shall designate 

not fewer than six of the district courts of the United States that 

are participating in the patent cases pilot program established 

under section 1 of Public Law 111–349 to develop rules and procedures to implement proposals to address the asymmetries in discovery burdens and costs, and to establish case management procedures, in any civil actions arising under any Act of Congress relating to patents. 

Section 6(b) requires that within 18 months after the designation 

by the Director of the Administrative Office of the six district 

courts to develop the rules and procedures pursuant to subsection 

(a), the six district courts shall complete the development of the 

rules and procedures, and begin to implement them. 

Section 6(c) states that after the rules and procedures developed 

by the pilot program have been in effect for at least 2 years, the 

Judicial Conference of the United States (Judicial Conference), 

using existing resources, may expand the application of some or all 

of those rules and procedures to be implemented by all the district 

courts, and the United States Court of Federal Claims, for any civil 

action arising under any Act of Congress relating to patents. 


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151 11 U.S.C. § 1522 (2015). 152 11 U.S.C. § 365(n) (2015). 153 11 U.S.C. § 1506 (2015). 154 11 U.S.C. § 101(35A) (2015). 155 15 U.S.C. § 1127 (2015). 

Section 6(d) directs the Supreme Court to eliminate Form 18 

(concerning patent pleadings) and authorizes the Court to replace 

Form 18 with specific minimum contents. 

Section 6(e) makes three substantive amendments to the Bankruptcy Code. First, section 6(e)(1) amends section 1522 of the Bankruptcy Code, which specifies various protections for creditors and 

other interested persons in chapter 15 cross-border insolvency 

cases.151 Specifically, section 6(e)(1) would make section 365(n) of 

the Bankruptcy Code, which sets forth the rights of a licensee pursuant to an intellectual property executory contract that is rejected 

in a bankruptcy case, applicable to chapter 15 cases.152 Pursuant 

to section 6(e)(1), a U.S. court would be required to apply Bankruptcy Code section 365(n) to ‘‘foreign main proceedings,’’ a type of 

chapter 15 case ‘‘pending in the country where the debtor has the 

center of its main interests.’’ 153

Section 6(e)(2)(A) amends Bankruptcy Code section 101(35A), 

which defines the term ‘‘intellectual property.’’ 154 The bill expands 

this definition to include a trademark, service mark, and trade 

name, as those terms are defined in the Trademark Act of 1946.155

In turn, section 6(e)(2)(B) amends Bankruptcy Code section 

365(n)(2), to impose an affirmative duty on the licensee to maintain 

the quality of the products and services offered under or in connection with the licensed trademark, service mark, or trade name. 

And, it provides that the debtor-licensor retains its right to oversee 

and enforce quality control for such products or services. 

Section 6(f) states that not later than 12 months after the date 

of enactment of the bill, the Judicial Conference, with assistance of 

the Director of the Federal Judicial Center and Director of the Administrative Office, must prepare and transmit to the Committees 

on the Judiciary of the Senate and House of Representatives a report on discovery proceedings in cases pertaining to litigation involving patent laws in the United States. The report shall: (1) provide the percentage of courts that have distinct phases of discovery 

in the court rules; (2) provide a description of at least two of the 

definitions of such phases; (3) identify by name any court that does 

not have such distinct phases and a description of why such courts 

have not implemented such phases; (4) provide with regard to proceedings in courts that have phases, in the cases of a discovery proceeding that extends beyond the core documents phases, a description of: (A) what additional discovery was requested and any consistent pattern or trend in the reasons or justifications for the request; (B) how much longer on average, the proceedings lasted than 

those settled within the first phase; and (C) any patterns for the 

courts that do not have phase rules; and (5) looking at proceedings 

in the courts that do not have phase rules, provide a description 

of how long, on average, the discovery proceedings last; and the 

scope of the requests. 

Section 7(a) requires the USPTO to develop educational resources and outreach programs for small business concerns arising 

from patent infringement and abusive patent litigation practices. 


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The existing small business patent outreach programs of the office, 

and relevant offices at the Small Business Administration and the 

Minority Business Development Agency, shall provide education 

and awareness on abusive patent litigation practices. The Director 

may give special consideration to the unique needs of small firms 

owned by disabled veterans, service-disabled veterans, women, and 

minority entrepreneurs in planning and executing the outreach efforts. 

Section 7(b) requires the USPTO to develop a website for small 

businesses that includes patent transparency information required 

under the bill whenever a patentee sues on a patent. 

Section 8(a) requires the USPTO, in consultation with the Secretary of Commerce, the Secretary of Treasury, the Chairman of 

the Securities and Exchange Commission, the heads of other relevant agencies, and interested parties to conduct a study on oversight of the secondary market for patent transactions to promote 

transparency and ethical business practices. The study is due no 

later than 18 months after enactment of the bill. 

Section 8(b) requires the USPTO, in consultation with the heads 

of relevant agencies and interested parties to conduct a study on 

patents owned by the U.S. government. The study must examine 

how patents are licensed and sold, and any litigation relating to 

the licensing or sale of the patents. The study is due no later than 

1 year after enactment of the bill. 

Section 8(c) requires the Government Accountability Office 

(GAO) to conduct a study on patent quality and access to the best 

information during examination. The GAO is also directed to evaluate the patent examination process at the USPTO and to assess the 

available technologies. The GAO study is due no later than 1 year 

after enactment of the bill. 

Section 8(d) requires an additional study by the Administrative 

Office, in consultation with the Director of the Federal Judicial 

Center and the Director of the USPTO to examine the feasibility 

of developing a pilot program for patent small claims proceedings 

in certain judicial districts within the existing patent pilot program 

mandated by Public Law 111–349. The study is due no later than 

1 year after enactment of the bill. 

Section 8(e) requires the USPTO, in consultation with the heads 

of other appropriate agencies, to conduct a study on the prevalence 

of the practice of sending patent demand letters in bad faith and 

the extent to which the practice may, through fundamental or deceptive practices, impose a negative impact on the marketplace. 

The report is due within 1 year of enactment of the bill. 

Section 8(f) requires the GAO to conduct a study to examine the 

quality of business method patents asserted in suits alleging patent 

infringement and may include an examination of any other areas 

that the Comptroller General determines to be relevant. The report 

is due no later than 1 year after enactment of the bill. 

Section 8(g) requires the USPTO, in consultation with the Secretary of Commerce, the Director of the Administrative Office, the 

Director of the Federal Judicial Center, and the heads of other relevant agencies, to examine the economic impact of sections 3, 4, 

and 5 of the bill, and any amendments made by these sections on 

the ability of individuals and small businesses owned by women, 

veterans, and minorities to assert, secure, and vindicate the conVerDate Sep 11 2014 04:23 Jul 30, 2015 Jkt 049006 PO 00000 Frm 00197 Fmt 6659 Sfmt 6601 E:\HR\OC\HR235.XXX HR235

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stitutionally guaranteed exclusive right to inventions and discoveries by such individuals and small businesses. The report must be 

submitted no later than 2 years after enactment of the bill. 

Section 9(a) deletes ‘‘or reasonably could have raised’’ from section 325(e)(2) in the AIA’s PGR procedure. The AIA established this 

new first window procedure to enable early challenge of patents. 

Section 325(e)(2) of the AIA currently contains an estoppel provision that prohibits a participant in PGR from asserting claims ‘‘on 

any ground that the petitioner raised or reasonably could have 

raised during that post-grant review’’ in a subsequent civil action. 

The revision would prevent a PGR petitioner from raising in a later 

lawsuit the claims the petitioner raised in the PGR. 

Subsection 9(b) amends section 316(a) of title 35 by stating that 

each claim of a patent shall be construed as such claim would be 

in a civil action to invalidate a patent under section 282(b), including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one 

of ordinary skill in the art and the prosecution history pertaining 

to the patent; and if a court has previously construed the claim or 

a claim term in a civil action in which the patent owner was a 

party, the USPTO shall consider such claim construction. This subsection eliminates the ‘‘Broadest Reasonable Interpretation’’ (BRI) 

standard and requires that claims of issued patents be construed 

in PGR and IPR proceedings under the same standard used in district court. Patents before the district courts are presumed valid 

and subject to a ‘‘clear and convincing’’ standard of proof to establish validity. BRI is an administrative rule that the USPTO has 

used and the courts have sanctioned since the 1930’s. After enactment of the AIA, however, the USPTO issued a rulemaking proceeding to determine the rules of practice to implement the newly 

created IPR proceeding, the PGR proceeding, and the transitional 

post-grant review proceeding for covered business method patents 

(Section 18/CBM program). The final rule requires the USPTO to 

apply BRI to construe certain patent claims before the agency, including those in the new IPR and PGR proceedings. This subsection, in effect, repeals the agency rulemaking and replaces the 

BRI standard with the same standard used in the district courts. 

Subsection (b) also provides that an inter partes review and post 

grant review may not be instituted unless the petitioner certifies 

that the petitioner and the real parties in interest of the petitioner: 

(1) do not own and will not acquire a financial instrument (including a prepaid variable forward contract, equity swap, collar, or exchange fund) that is designed to hedge or offset any decrease in the 

market value of an equity security of the patent owner or an affiliate of the patent owner, during a period following the filing of the 

petition to be determined by the Director of the USPTO; and (2) 

have not demanded payment, monetary or otherwise from the patent owner or an affiliate of the patent owner in exchange for a commitment not to file a petition under section 311 with respect to the 

patent that is subject of the petition, unless the petitioner or the 

real party in interest of the petitioner has been sued for or charged 

with infringement of the patent, during a period to be determined 

by the Director of the USPTO. 

In addition, subsection (b) states that for serial or redundant petitions the Director shall designate as precedential (and may 


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change the designation as the Director determines to be appropriate), with respect to the application of subsections (d) and (e) of 

section 325 of title 35, the decisions of the Patent Trial and Appeal 

Board in each of the following decisions: (A) Dell Inc. v. Electronics 

and Telecomms. Research Inst., IPR2015–00549, Paper 10 (PTAB 

Mar. 26, 2015); (B) Zimmer Holdings, Inc. v. Bonutti Skeletal Innovations LLC, IPR2014–01080, Paper 17 (PTAB Oct. 31, 2014); (C) 

Prism Pharma Co., Ltd. v. Choongwae Pharma Corp., IPR2014– 

00315, Paper 14 (PTAB July 8, 2014); (D) Unilever, Inc. v. The 

Procter & Gamble Co., IPR2014–00506, Paper 17 (PTAB July 7, 

2014). 

Further, subsection (b) provides that not later than 1 year after 

the date of enactment of the bill, the Director shall issue regulations to carry out sections 316(a)(15) and 326(a)(14) of title 35, as 

added by paragraphs (1) and (2). During the period that begins on 

the date of the enactment of the bill and ends on the date of 

issuance of the regulations, a petition filed under chapter 31 or 32 

of title 35 on or after the date of enactment of this bill may not 

be instituted unless the petitioner certifies that the petitioner and 

real parties in interest: (1) do not own a financial instrument described in sections 316(a)(15) and 326(a)(14) of title 35 as added by 

paragraphs (1) and (2), during the 1-week period following the date 

on which the petition is filed; and (2) have not demanded anything 

of value from the patent owner or an affiliate of the patent owner 

during the period between September 16, 2012, and the date of the 

filing of the petition. 

Subsection (b) also states that except as otherwise provided, the 

amendments made by this subsection shall take effect upon the expiration of the 90 day period beginning on the date of the enactment of the bill, and shall apply to any proceeding under chapter 

31 or 32 of title 35, as the case may be, for which the petition for 

review is filed on or after such effective date. 

Section 9(c) codifies the judicial doctrine against double-patenting and applies it to patents issued after AIA under the first to 

file system. Current law prohibits two types of double patenting. 

One type is based on 35 U.S.C. § 101, which has been construed to 

disallow multiple patents for the ‘‘same invention.’’ The other type 

is judicially created. The judicial doctrine against double patenting 

prevents a patentee from prolonging the life of a patent by rejecting claims in a second patent that are obvious variations from 

claims in a first patent. 

Section 9(d) redefines and expands the scope of prior art under 

the transitional covered business method program and allows the 

Director of the USPTO to waive payment of a filing fee for a transitional proceeding as described under section 18(a) of the AIA. 

Section 9(e) states that an action or claim arises under an Act 

of Congress relating to patents if such action or claim: (1) necessarily requires resolution of a disputed question as to the validity 

of a patent or the scope of a patent claim; or (2) is an action or 

claim for legal malpractice that arises from an attorney’s conduct 

in relation to an action or claim arising under an Act of Congress 

relating to patents. This provision applies to all cases filed on or 

after, or pending on, the date of the enactment of this bill, but not 

to a case in which a Federal court has issued a ruling on whether 

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ents or plant variety protection before the date of the enactment 

of this bill. 

Section 9(f) extends the life of the patent pilot program from 10 

to 20 years. 

Section 9(g) amends section 3(b)(1) of title 35, to provide that the 

Secretary of Commerce, upon nomination by the Director of the 

USPTO, shall appoint a Deputy Under Secretary of Commerce for 

Intellectual Property and Deputy Director of the USPTO who shall 

serve as Acting Director in the event of the absence or incapacity 

of the Director or in the event of a vacancy in the office of the Director of the USPTO. 

Section 9(h) makes a series of 11 additional changes it classifies 

as ‘‘technical,’’ including one that extends the time limit for bringing disciplinary proceedings before the USPTO. 

Section 9(i) extends USPTO fee setting authority in section 

10(i)(2) of the Leahy-Smith America Invents Act for 10 years. 

Section 10 provides that, unless otherwise specified in the bill, 

the provisions become effective on the date of enactment and apply 

to any patent issued or any case filed on or after the date of enactment. 

CONCLUSION

Congress must respond to the problems of abusive patent litigation in the courts and the gaming of the patent process at the 

USPTO, and we are willing to work with any and all stakeholders 

and interested parties to develop a fair process to find common 

sense solutions. That is why we supported amendments at the 

Committee markup to make reasonable improvements that would 

protect patent rights, while still curtailing abusive patent litigation 

and exploitation of the patent process. We must take a targeted approach that includes deterring further abuses of IPR proceedings 

and ending fee diversion from the USPTO to ensure adequate hiring, proper training of examiners, and sustained patent quality. 

And, serious patent reform legislation must stop the extortionate 

use of deceptive demand letters. Unfortunately, we cannot support 

H.R. 9 because it includes changes that go well beyond the problems of so-called ‘‘patent trolls;’’ it creates an imbalance in the patent system tilted against individual inventors and small businesses; and it will have a chilling effect on innovation. 

Accordingly, we dissent from H.R. 9 for these reasons and urge 

our colleagues to oppose this flawed measure. 

MR. CONYERS, JR. 

MS. JACKSON LEE. 

MR. JOHNSON, JR. 

MR. DEUTCH. 

MS. BASS. 

MR. CICILLINE. 

MR. PETERS. 

Æ 


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