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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1249 Placed on Calendar Senate (PCS)]

                                                        Calendar No. 87
112th CONGRESS
  1st Session
                                H. R. 1249

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 27, 2011

                    Received and read the first time

                             June 28, 2011

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 AN ACT

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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Leahy-Smith 
America Invents 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. First inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Defense to infringement based on prior commercial use.
Sec. 6. Post-grant review proceedings.
Sec. 7. Patent Trial and Appeal Board.
Sec. 8. Preissuance submissions by third parties.
Sec. 9. Venue.
Sec. 10. Fee setting authority.
Sec. 11. Fees for patent services.
Sec. 12. Supplemental examination.
Sec. 13. Funding agreements.
Sec. 14. Tax strategies deemed within the prior art.
Sec. 15. Best mode requirement.
Sec. 16. Marking.
Sec. 17. Advice of counsel.
Sec. 18. Transitional program for covered business method patents.
Sec. 19. Jurisdiction and procedural matters.
Sec. 20. Technical amendments.
Sec. 21. Travel expenses and payment of administrative judges.
Sec. 22. Patent and Trademark Office funding.
Sec. 23. Satellite offices.
Sec. 24. Designation of Detroit satellite office.
Sec. 25. Priority examination for important technologies.
Sec. 26. Study on implementation.
Sec. 27. Study on genetic testing.
Sec. 28. Patent Ombudsman Program for small business concerns.
Sec. 29. Establishment of methods for studying the diversity of 
                            applicants.
Sec. 30. Sense of Congress.
Sec. 31. USPTO study on international patent protections for small 
                            businesses.
Sec. 32. Pro bono program.
Sec. 33. Limitation on issuance of patents.
Sec. 34. Study of patent litigation.
Sec. 35. Effective date.
Sec. 36. Budgetary effects.
Sec. 37. Calculation of 60-day period for application of patent term 
                            extension.

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.
            (3) Patent public advisory committee.--The term ``Patent 
        Public Advisory Committee'' means the Patent Public Advisory 
        Committee established under section 5(a) of title 35, United 
        States Code.
            (4) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means the Act entitled ``An Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out the provisions of certain international conventions, 
        and for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 
        et seq.) (commonly referred to as the ``Trademark Act of 1946'' 
        or the ``Lanham Act'').
            (5) Trademark public advisory committee.--The term 
        ``Trademark Public Advisory Committee'' means the Trademark 
        Public Advisory Committee established under section 5(a) of 
        title 35, United States Code.

SEC. 3. FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 of title 35, United States Code, is 
amended--
            (1) in subsection (e), by striking ``or inter partes 
        reexamination under section 311''; and
            (2) by adding at the end the following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of the invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any 1 of the 
individuals who invented or discovered the subject matter of a joint 
invention.
    ``(h) The term `joint research agreement' means a written contract, 
grant, or cooperative agreement entered into by 2 or more persons or 
entities for the performance of experimental, developmental, or 
research work in the field of the claimed invention.
    ``(i)(1) The term `effective filing date' for a claimed invention 
in a patent or application for patent means--
            ``(A) if subparagraph (B) does not apply, the actual filing 
        date of the patent or the application for the patent containing 
        a claim to the invention; or
            ``(B) the filing date of the earliest application for which 
        the patent or application is entitled, as to such invention, to 
        a right of priority under section 119, 365(a), or 365(b) or to 
        the benefit of an earlier filing date under section 120, 121, 
        or 365(c).
    ``(2) The effective filing date for a claimed invention in an 
application for reissue or reissued patent shall be determined by 
deeming the claim to the invention to have been contained in the patent 
for which reissue was sought.
    ``(j) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.''.
    (b) Conditions for Patentability.--
            (1) In general.--Section 102 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 102. Conditions for patentability; novelty
    ``(a) Novelty; Prior Art.--A person shall be entitled to a patent 
unless--
            ``(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 the inventor or 
                joint inventor or by 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 patents.--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.
    ``(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.''.
            (2) Continuity of intent under the create act.--The 
        enactment of section 102(c) of title 35, United States Code, 
        under paragraph (1) of this subsection is done with the same 
        intent to promote joint research activities that was expressed, 
        including in the legislative history, through the enactment of 
        the Cooperative Research and Technology Enhancement Act of 2004 
        (Public Law 108-453; the ``CREATE Act''), the amendments of 
        which are stricken by subsection (c) of this section. The 
        United States Patent and Trademark Office shall administer 
        section 102(c) of title 35, United States Code, in a manner 
        consistent with the legislative history of the CREATE Act that 
        was relevant to its administration by the United States Patent 
        and Trademark Office.
            (3) Conforming amendment.--The item relating to section 102 
        in the table of sections for chapter 10 of title 35, United 
        States Code, is amended to read as follows:

``102. Conditions for patentability; novelty.''.
    (c) Conditions for Patentability; Nonobvious Subject Matter.--
Section 103 of title 35, United States Code, is amended to read as 
follows:
``Sec. 103. Conditions for patentability; non-obvious subject matter
    ``A patent for a claimed invention may not be obtained, 
notwithstanding that the claimed invention is not identically disclosed 
as set forth in section 102, if the differences between the claimed 
invention and the prior art are such that the claimed invention as a 
whole would have been obvious before the effective filing date of the 
claimed invention to a person having ordinary skill in the art to which 
the claimed invention pertains. Patentability shall not be negated by 
the manner in which the invention was made.''.
    (d) Repeal of Requirements for Inventions Made Abroad.--Section 104 
of title 35, United States Code, and the item relating to that section 
in the table of sections for chapter 10 of title 35, United States 
Code, are repealed.
    (e) Repeal of Statutory Invention Registration.--
            (1) In general.--Section 157 of title 35, United States 
        Code, and the item relating to that section in the table of 
        sections for chapter 14 of title 35, United States Code, are 
        repealed.
            (2) Removal of cross references.--Section 111(b)(8) of 
        title 35, United States Code, is amended by striking ``sections 
        115, 131, 135, and 157'' and inserting ``sections 131 and 
        135''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect upon the expiration of the 18-month period 
        beginning on the date of the enactment of this Act, and shall 
        apply to any request for a statutory invention registration 
        filed on or after that effective date.
    (f) Earlier Filing Date for Inventor and Joint Inventor.--Section 
120 of title 35, United States Code, is amended by striking ``which is 
filed by an inventor or inventors named'' and inserting ``which names 
an inventor or joint inventor''.
    (g) Conforming Amendments.--
            (1) Right of priority.--Section 172 of title 35, United 
        States Code, is amended by striking ``and the time specified in 
        section 102(d)''.
            (2) Limitation on remedies.--Section 287(c)(4) of title 35, 
        United States Code, is amended by striking ``the earliest 
        effective filing date of which is prior to'' and inserting 
        ``which has an effective filing date before''.
            (3) International application designating the united 
        states: effect.--Section 363 of title 35, United States Code, 
        is amended by striking ``except as otherwise provided in 
        section 102(e) of this title''.
            (4) Publication of international application: effect.--
        Section 374 of title 35, United States Code, is amended by 
        striking ``sections 102(e) and 154(d)'' and inserting ``section 
        154(d)''.
            (5) Patent issued on international application: effect.--
        The second sentence of section 375(a) of title 35, United 
        States Code, is amended by striking ``Subject to section 102(e) 
        of this title, such'' and inserting ``Such''.
            (6) Limit on right of priority.--Section 119(a) of title 
        35, United States Code, is amended by striking ``; but no 
        patent shall be granted'' and all that follows through ``one 
        year prior to such filing''.
            (7) Inventions made with federal assistance.--Section 
        202(c) of title 35, United States Code, is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``publication, on sale, or 
                        public use,'' and all that follows through 
                        ``obtained in the United States'' and inserting 
                        ``the 1-year period referred to in section 
                        102(b) would end before the end of that 2-year 
                        period''; and
                            (ii) by striking ``prior to the end of the 
                        statutory'' and inserting ``before the end of 
                        that 1-year''; and
                    (B) in paragraph (3), by striking ``any statutory 
                bar date that may occur under this title due to 
                publication, on sale, or public use'' and inserting 
                ``the expiration of the 1-year period referred to in 
                section 102(b)''.
    (h) Derived Patents.--
            (1) In general.--Section 291 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 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 or joint inventor.''.
            (2) Conforming amendment.--The item relating to section 291 
        in the table of sections for chapter 29 of title 35, United 
        States Code, is amended to read as follows:

``291. Derived patents.''.
    (i) Derivation Proceedings.--Section 135 of title 35, United States 
Code, is amended to read as follows:
``Sec. 135. Derivation proceedings
    ``(a) Institution of Proceeding.--An applicant for patent may file 
a petition to institute a derivation proceeding in the Office. The 
petition shall set forth with particularity the basis for finding that 
an inventor named in an earlier application derived the claimed 
invention from an inventor named in the petitioner's application and, 
without authorization, the earlier application claiming such invention 
was filed. Any such petition may be filed only within the 1-year period 
beginning on the date of the first publication of a claim to an 
invention that is the same or substantially the same as the earlier 
application's claim to the invention, shall be made under oath, and 
shall be supported by substantial evidence. Whenever the Director 
determines that a petition filed under this subsection demonstrates 
that the standards for instituting a derivation proceeding are met, the 
Director may institute a derivation proceeding. The determination by 
the Director whether to institute a derivation proceeding shall be 
final and nonappealable.
    ``(b) Determination by Patent Trial and Appeal Board.--In a 
derivation proceeding instituted under subsection (a), the Patent Trial 
and Appeal Board shall determine whether an inventor named in the 
earlier application derived the claimed invention from an inventor 
named in the petitioner's application and, without authorization, the 
earlier application claiming such invention was filed. In appropriate 
circumstances, the Patent Trial and Appeal Board may correct the naming 
of the inventor in any application or patent at issue. The Director 
shall prescribe regulations setting forth standards for the conduct of 
derivation proceedings, including requiring parties to provide 
sufficient evidence to prove and rebut a claim of derivation.
    ``(c) Deferral of Decision.--The Patent Trial and Appeal Board may 
defer action on a petition for a derivation proceeding until the 
expiration of the 3-month period beginning on the date on which the 
Director issues a patent that includes the claimed invention that is 
the subject of the petition. The Patent Trial and Appeal Board also may 
defer action on a petition for a derivation proceeding, or stay the 
proceeding after it has been instituted, until the termination of a 
proceeding under chapter 30, 31, or 32 involving the patent of the 
earlier applicant.
    ``(d) Effect of Final Decision.--The final decision of the Patent 
Trial and Appeal Board, if adverse to claims in an application for 
patent, shall constitute the final refusal by the Office on those 
claims. The final decision of the Patent Trial and Appeal Board, if 
adverse to claims in a patent, shall, if no appeal or other review of 
the decision has been or can be taken or had, constitute cancellation 
of those claims, and notice of such cancellation shall be endorsed on 
copies of the patent distributed after such cancellation.
    ``(e) Settlement.--Parties to a proceeding instituted under 
subsection (a) may terminate the proceeding by filing a written 
statement reflecting the agreement of the parties as to the correct 
inventors of the claimed invention in dispute. Unless the Patent Trial 
and Appeal Board finds the agreement to be inconsistent with the 
evidence of record, if any, it shall take action consistent with the 
agreement. Any written settlement or understanding of the parties shall 
be filed with the Director. At the request of a party to the 
proceeding, the agreement or understanding shall be treated as business 
confidential information, shall be kept separate from the file of the 
involved patents or applications, and shall be made available only to 
Government agencies on written request, or to any person on a showing 
of good cause.
    ``(f) Arbitration.--Parties to a proceeding instituted under 
subsection (a) may, within such time as may be specified by the 
Director by regulation, determine such contest or any aspect thereof by 
arbitration. Such arbitration shall be governed by the provisions of 
title 9, to the extent such title is not inconsistent with this 
section. The parties shall give notice of any arbitration award to the 
Director, and such award shall, as between the parties to the 
arbitration, be dispositive of the issues to which it relates. The 
arbitration award shall be unenforceable until such notice is given. 
Nothing in this subsection shall preclude the Director from determining 
the patentability of the claimed inventions involved in the 
proceeding.''.
    (j) Elimination of References to Interferences.--(1) Sections 134, 
145, 146, 154, and 305 of title 35, United States Code, are each 
amended by striking ``Board of Patent Appeals and Interferences'' each 
place it appears and inserting ``Patent Trial and Appeal Board''.
    (2)(A) Section 146 of title 35, United States Code, is amended--
                    (i) by striking ``an interference'' and inserting 
                ``a derivation proceeding''; and
                    (ii) by striking ``the interference'' and inserting 
                ``the derivation proceeding''.
            (B) The subparagraph heading for section 154(b)(1)(C) of 
        title 35, United States Code, is amended to read as follows:
                            ``(C) Guarantee of adjustments for delays 
                        due to derivation proceedings, secrecy orders, 
                        and appeals.--''.
    (3) The section heading for section 134 of title 35, United States 
Code, is amended to read as follows:
``Sec. 134. Appeal to the Patent Trial and Appeal Board''.
    (4) The section heading for section 146 of title 35, United States 
Code, is amended to read as follows:
``Sec. 146. Civil action in case of derivation proceeding''.
    (5) The items relating to sections 134 and 135 in the table of 
sections for chapter 12 of title 35, United States Code, are amended to 
read as follows:

``134. Appeal to the Patent Trial and Appeal Board.
``135. Derivation proceedings.''.
    (6) The item relating to section 146 in the table of sections for 
chapter 13 of title 35, United States Code, is amended to read as 
follows:

``146. Civil action in case of derivation proceeding.''.
    (k) Statute of Limitations.--
            (1) In general.--Section 32 of title 35, United States 
        Code, is amended by inserting between the third and fourth 
        sentences the following: ``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 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).''.
            (2) Report to congress.--The Director shall provide on a 
        biennial basis to the Judiciary Committees of the Senate and 
        House of Representatives a report providing a short description 
        of incidents made known to an officer or employee of the Office 
        as prescribed in the regulations established under section 
        2(b)(2)(D) of title 35, United States Code, that reflect 
        substantial evidence of misconduct before the Office but for 
        which the Office was barred from commencing a proceeding under 
        section 32 of title 35, United States Code, by the time 
        limitation established by the fourth sentence of that section.
            (3) Effective date.--The amendment made by paragraph (1) 
        shall apply in any case in which the time period for 
        instituting a proceeding under section 32 of title 35, United 
        States Code, had not lapsed before the date of the enactment of 
        this Act.
    (l) Small Business Study.--
            (1) Definitions.--In this subsection--
                    (A) the term ``Chief Counsel'' means the Chief 
                Counsel for Advocacy of the Small Business 
                Administration;
                    (B) the term ``General Counsel'' means the General 
                Counsel of the United States Patent and Trademark 
                Office; and
                    (C) the term ``small business concern'' has the 
                meaning given that term under section 3 of the Small 
                Business Act (15 U.S.C. 632).
            (2) Study.--
                    (A) In general.--The Chief Counsel, in consultation 
                with the General Counsel, shall conduct a study of the 
                effects of eliminating the use of dates of invention in 
                determining whether an applicant is entitled to a 
                patent under title 35, United States Code.
                    (B) Areas of study.--The study conducted under 
                subparagraph (A) shall include examination of the 
                effects of eliminating the use of invention dates, 
                including examining--
                            (i) how the change would affect the ability 
                        of small business concerns to obtain patents 
                        and their costs of obtaining patents;
                            (ii) whether the change would create, 
                        mitigate, or exacerbate any disadvantages for 
                        applicants for patents that are small business 
                        concerns relative to applicants for patents 
                        that are not small business concerns, and 
                        whether the change would create any advantages 
                        for applicants for patents that are small 
                        business concerns relative to applicants for 
                        patents that are not small business concerns;
                            (iii) the cost savings and other potential 
                        benefits to small business concerns of the 
                        change; and
                            (iv) the feasibility and costs and benefits 
                        to small business concerns of alternative means 
                        of determining whether an applicant is entitled 
                        to a patent under title 35, United States Code.
            (3) Report.--Not later than the date that is 1 year after 
        the date of the enactment of this Act, the Chief Counsel shall 
        submit to the Committee on Small Business and Entrepreneurship 
        and the Committee on the Judiciary of the Senate and the 
        Committee on Small Business and the Committee on the Judiciary 
        of the House of Representatives a report on the results of the 
        study under paragraph (2).
    (m) Report on Prior User Rights.--
            (1) In general.--Not later than the end of the 4-month 
        period beginning on the date of the enactment of this Act, the 
        Director shall report, to the Committee on the Judiciary of the 
        Senate and the Committee on the Judiciary of the House of 
        Representatives, the findings and recommendations of the 
        Director on the operation of prior user rights in selected 
        countries in the industrialized world. The report shall include 
        the following:
                    (A) A comparison between patent laws of the United 
                States and the laws of other industrialized countries, 
                including members of the European Union and Japan, 
                Canada, and Australia.
                    (B) An analysis of the effect of prior user rights 
                on innovation rates in the selected countries.
                    (C) An analysis of the correlation, if any, between 
                prior user rights and start-up enterprises and the 
                ability to attract venture capital to start new 
                companies.
                    (D) An analysis of the effect of prior user rights, 
                if any, on small businesses, universities, and 
                individual inventors.
                    (E) An analysis of legal and constitutional issues, 
                if any, that arise from placing trade secret law in 
                patent law.
                    (F) An analysis of whether the change to a first-
                to-file patent system creates a particular need for 
                prior user rights.
            (2) Consultation with other agencies.--In preparing the 
        report required under paragraph (1), the Director shall consult 
        with the United States Trade Representative, the Secretary of 
        State, and the Attorney General.
    (n) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        section, the amendments made by this section shall take effect 
        upon the expiration of the 18-month period beginning on the 
        date of the enactment of this Act, and shall apply to any 
        application for patent, and to any patent issuing thereon, that 
        contains or contained at any time--
                    (A) a claim to a claimed invention that has an 
                effective filing date as defined in section 100(i) of 
                title 35, United States Code, that is on or after the 
                effective date described in this paragraph; or
                    (B) a specific reference under section 120, 121, or 
                365(c) of title 35, United States Code, to any patent 
                or application that contains or contained at any time 
                such a claim.
            (2) Interfering patents.--The provisions of sections 
        102(g), 135, and 291 of title 35, United States Code, as in 
        effect on the day before the effective date set forth in 
        paragraph (1) of this subsection, shall apply to each claim of 
        an application for patent, and any patent issued thereon, for 
        which the amendments made by this section also apply, if such 
        application or patent contains or contained at any time--
                    (A) a claim to an invention having an effective 
                filing date as defined in section 100(i) of title 35, 
                United States Code, that occurs before the effective 
                date set forth in paragraph (1) of this subsection; or
                    (B) a specific reference under section 120, 121, or 
                365(c) of title 35, United States Code, to any patent 
                or application that contains or contained at any time 
                such a claim.
    (o) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent system from ``first to invent'' to 
a system of ``first inventor to file'' will promote the progress of 
science and the useful arts by securing for limited times to inventors 
the exclusive rights to their discoveries and provide inventors with 
greater certainty regarding the scope of protection provided by the 
grant of exclusive rights to their discoveries.
    (p) Sense of Congress.--It is the sense of the Congress that 
converting the United States patent system from ``first to invent'' to 
a system of ``first inventor to file'' will improve the United States 
patent system and promote harmonization of the United States patent 
system with the patent systems commonly used in nearly all other 
countries throughout the world with whom the United States conducts 
trade and thereby promote greater international uniformity and 
certainty in the procedures used for securing the exclusive rights of 
inventors to their discoveries.

SEC. 4. INVENTOR'S OATH OR DECLARATION.

    (a) Inventor's Oath or Declaration.--
            (1) In general.--Section 115 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 115. Inventor's oath or declaration
    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a) 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 shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration under subsection 
(a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by the affiant or declarant; and
            ``(2) such individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) is permitted with respect to any individual 
        who--
                    ``(A) is unable to file the oath or declaration 
                under subsection (a) because the individual--
                            ``(i) is deceased;
                            ``(ii) is under legal incapacity; or
                            ``(iii) cannot be found or reached after 
                        diligent effort; or
                    ``(B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--
            ``(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 
        joint inventor and who 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 
        assignments.--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 Additional 
Statements.--
            ``(1) In general.--Any person making a statement required 
        under this section may withdraw, replace, or otherwise correct 
        the statement at any time. If a change is made in the naming of 
        the inventor requiring the filing of 1 or more additional 
        statements under this section, the Director shall establish 
        regulations under which such additional statements may be 
        filed.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration 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.''.
            (2) Relationship to divisional applications.--Section 121 
        of title 35, United States Code, is amended by striking ``If a 
        divisional application'' and all that follows through 
        ``inventor.''.
            (3) Requirements for nonprovisional applications.--Section 
        111(a) of title 35, United States Code, is amended--
                    (A) in paragraph (2)(C), by striking ``by the 
                applicant'' and inserting ``or declaration'';
                    (B) in the heading for paragraph (3), by inserting 
                ``or declaration'' after ``and oath''; and
                    (C) by inserting ``or declaration'' after ``and 
                oath'' each place it appears.
            (4) Conforming amendment.--The item relating to section 115 
        in the table of sections for chapter 11 of title 35, United 
        States Code, is amended to read as follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--
            (1) In general.--Section 118 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 118. Filing by other than inventor
    ``A person to whom the inventor has assigned or is under an 
obligation to assign the invention may make an application for patent. 
A person who otherwise shows sufficient proprietary interest in the 
matter may make an application for patent on behalf of and as agent for 
the inventor on proof of the pertinent facts and a showing that such 
action is appropriate to preserve the rights of the parties. If the 
Director grants a patent on an application filed under this section by 
a person other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as the 
Director considers to be sufficient.''.
            (2) Conforming amendment.--Section 251 of title 35, United 
        States Code, is amended in the third undesignated paragraph by 
        inserting ``or the application for the original patent was 
        filed by the assignee of the entire interest'' after ``claims 
        of the original patent''.
    (c) Specification.--Section 112 of title 35, United States Code, is 
amended--
            (1) in the first undesignated paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(a) In General.--The specification''; and
                    (B) by striking ``of carrying out his invention'' 
                and inserting ``or joint inventor of carrying out the 
                invention'';
            (2) in the second undesignated paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(b) Conclusion.--The specification''; and
                    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';
            (3) in the third undesignated paragraph, by striking ``A 
        claim'' and inserting ``(c) Form.--A claim'';
            (4) in the fourth undesignated paragraph, by striking 
        ``Subject to the following paragraph,'' and inserting ``(d) 
        Reference in Dependent Forms.--Subject to subsection (e),'';
            (5) in the fifth undesignated paragraph, by striking ``A 
        claim'' and inserting ``(e) Reference in Multiple Dependent 
        Form.--A claim''; and
            (6) in the last undesignated paragraph, by striking ``An 
        element'' and inserting ``(f) Element in Claim for a 
        Combination.--An element''.
    (d) Conforming Amendments.--
            (1) Sections 111(b)(1)(A) of title 35, United States Code, 
        is amended by striking ``the first paragraph of section 112 of 
        this title'' and inserting ``section 112(a)''.
            (2) Section 111(b)(2) of title 35, United States Code, is 
        amended by striking ``the second through fifth paragraphs of 
        section 112,'' and inserting ``subsections (b) through (e) of 
        section 112,''.
    (e) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent application 
that is filed on or after that effective date.

SEC. 5. DEFENSE TO INFRINGEMENT BASED ON PRIOR COMMERCIAL USE.

    (a) In General.--Section 273 of title 35, United States Code, is 
amended to read as follows:
``Sec. 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.--
            ``(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 or volume of use of the claimed subject matter, and to 
        improvements 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.
    ``(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.
    ``(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.''.
    (b) Conforming Amendment.--The item relating to section 273 in the 
table of sections for chapter 28 of title 35, United States Code, is 
amended to read as follows:

``273. Defense to infringement based on prior commercial use.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any patent issued on or after the date of the enactment of 
this Act.

SEC. 6. POST-GRANT REVIEW PROCEEDINGS.

    (a) Inter Partes Review.--Chapter 31 of title 35, United States 
Code, is amended to read as follows:

                   ``CHAPTER 31--INTER PARTES REVIEW

``Sec.
``311. Inter partes review.
``312. Petitions.
``313. Preliminary response to petition.
``314. Institution of inter partes review.
``315. Relation to other proceedings or actions.
``316. Conduct of inter partes review.
``317. Settlement.
``318. Decision of the Board.
``319. Appeal.
``Sec. 311. Inter partes review
    ``(a) In General.--Subject to the provisions of this chapter, a 
person who is not the owner of a patent may file with the Office a 
petition to institute an inter partes review of the patent. The 
Director shall establish, by regulation, fees to be paid by the person 
requesting the review, in such amounts as the Director determines to be 
reasonable, considering the aggregate costs of the review.
    ``(b) Scope.--A petitioner in an inter partes review may request to 
cancel as unpatentable 1 or more claims of a patent only on a ground 
that could be raised under section 102 or 103 and only on the basis of 
prior art consisting of patents or printed publications.
    ``(c) Filing Deadline.--A petition for inter partes review shall be 
filed after the later of either--
            ``(1) the date that is 9 months after the grant of a patent 
        or issuance of a reissue of a patent; or
            ``(2) if a post-grant review is instituted under chapter 
        32, the date of the termination of such post-grant review.
``Sec. 312. Petitions
    ``(a) Requirements of Petition.--A petition filed under section 311 
may be considered only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 311;
            ``(2) the petition identifies all real parties in interest;
            ``(3) the petition identifies, in writing and with 
        particularity, each claim challenged, the grounds on which the 
        challenge to each claim is based, and the evidence that 
        supports the grounds for the challenge to each claim, 
        including--
                    ``(A) copies of patents and printed publications 
                that the petitioner relies upon in support of the 
                petition; and
                    ``(B) affidavits or declarations of supporting 
                evidence and opinions, if the petitioner relies on 
                expert opinions;
            ``(4) the petition provides such other information as the 
        Director may require by regulation; and
            ``(5) the petitioner provides copies of any of the 
        documents required under paragraphs (2), (3), and (4) to the 
        patent owner or, if applicable, the designated representative 
        of the patent owner.
    ``(b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 311, the Director shall make the 
petition available to the public.
``Sec. 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 chapter.
``Sec. 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 any 
response 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) receiving a preliminary response to the petition 
        under section 313; or
            ``(2) if no such preliminary response is filed, the last 
        date on which such response may be filed.
    ``(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.
``Sec. 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--
                    ``(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).
    ``(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.
    ``(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 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.
``Sec. 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 the petition under section 313 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 
        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); and
            ``(13) providing the petitioner with at least 1 opportunity 
        to file written comments within a time period established 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, 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.
            ``(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.
``Sec. 317. Settlement
    ``(a) In General.--An inter partes review instituted under this 
chapter shall be terminated with respect to any petitioner upon the 
joint request of the petitioner and the patent owner, unless the Office 
has decided the merits of the proceeding before the request for 
termination is filed. If the inter partes review is terminated with 
respect to a petitioner under this section, no estoppel under section 
315(e) shall attach to the petitioner, or to the real party in interest 
or privy of the petitioner, on the basis of that petitioner's 
institution of that inter partes review. If no petitioner remains in 
the inter partes review, the Office may terminate the review or proceed 
to a final written decision under section 318(a).
    ``(b) Agreements in Writing.--Any agreement or understanding 
between the patent owner and a petitioner, including any collateral 
agreements referred to in such agreement or understanding, made in 
connection with, or in contemplation of, the termination of an inter 
partes review under this section shall be in writing and a true copy of 
such agreement or understanding shall be filed in the Office before the 
termination of the inter partes review as between the parties. At the 
request of a party to the proceeding, the agreement or understanding 
shall be treated as business confidential information, shall be kept 
separate from the file of the involved patents, and shall be made 
available only to Federal Government agencies on written request, or to 
any person on a showing of good cause.
``Sec. 318. Decision of the Board
    ``(a) Final Written Decision.--If an inter partes review is 
instituted and not dismissed under this chapter, the Patent Trial and 
Appeal Board shall issue a final written decision with respect to the 
patentability of any patent claim challenged by the petitioner and any 
new claim added under section 316(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Intervening Rights.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following an 
inter partes review under this chapter shall have the same effect as 
that specified in section 252 for reissued patents on the right of any 
person who made, purchased, or used within the United States, or 
imported into the United States, anything patented by such proposed 
amended or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each inter partes review.
``Sec. 319. Appeal
    ``A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 318(a) may appeal the 
decision pursuant to sections 141 through 144. Any party to the inter 
partes review shall have the right to be a party to the appeal.''.
    (b) Conforming Amendment.--The table of chapters for part III of 
title 35, United States Code, is amended by striking the item relating 
to chapter 31 and inserting the following:

``31. Inter Partes Review...................................     311''.
    (c) Regulations and Effective Date.--
            (1) Regulations.--The Director shall, not later than the 
        date that is 1 year after the date of the enactment of this 
        Act, issue regulations to carry out chapter 31 of title 35, 
        United States Code, as amended by subsection (a) of this 
        section.
            (2) Applicability.--
                    (A) In general.--The amendments made by subsection 
                (a) shall take effect upon the expiration of the 1-year 
                period beginning on the date of the enactment of this 
                Act and shall apply to any patent issued before, on, or 
                after that effective date.
                    (B) Graduated implementation.--The Director may 
                impose a limit on the number of inter partes reviews 
                that may be instituted under chapter 31 of title 35, 
                United States Code, during each of the first 4 1-year 
                periods in which the amendments made by subsection (a) 
                are in effect, if such number in each year equals or 
                exceeds the number of inter partes reexaminations that 
                are ordered under chapter 31 of title 35, United States 
                Code, in the last fiscal year ending before the 
                effective date of the amendments made by subsection 
                (a).
            (3) Transition.--
                    (A) In general.--Chapter 31 of title 35, United 
                States Code, is amended--
                            (i) in section 312--
                                    (I) in subsection (a)--
                                            (aa) in the first sentence, 
                                        by striking ``a substantial new 
                                        question of patentability 
                                        affecting any claim of the 
                                        patent concerned is raised by 
                                        the request,'' and inserting 
                                        ``the information presented in 
                                        the request shows that there is 
                                        a reasonable likelihood that 
                                        the requester would prevail 
                                        with respect to at least 1 of 
                                        the claims challenged in the 
                                        request,''; and
                                            (bb) in the second 
                                        sentence, by striking ``The 
                                        existence of a substantial new 
                                        question of patentability'' and 
                                        inserting ``A showing that 
                                        there is a reasonable 
                                        likelihood that the requester 
                                        would prevail with respect to 
                                        at least 1 of the claims 
                                        challenged in the request''; 
                                        and
                                    (II) in subsection (c), in the 
                                second sentence, by striking ``no 
                                substantial new question of 
                                patentability has been raised,'' and 
                                inserting ``the showing required by 
                                subsection (a) has not been made,''; 
                                and
                            (ii) in section 313, by striking ``a 
                        substantial new question of patentability 
                        affecting a claim of the patent is raised'' and 
                        inserting ``it has been shown that there is a 
                        reasonable likelihood that the requester would 
                        prevail with respect to at least 1 of the 
                        claims challenged in the request''.
                    (B) Application.--The amendments made by this 
                paragraph--
                            (i) shall take effect on the date of the 
                        enactment of this Act; and
                            (ii) shall apply to requests for inter 
                        partes reexamination that are filed on or after 
                        such date of enactment, but before the 
                        effective date set forth in paragraph (2)(A) of 
                        this subsection.
                    (C) Continued applicability of prior provisions.--
                The provisions of chapter 31 of title 35, United States 
                Code, as amended by this paragraph, shall continue to 
                apply to requests for inter partes reexamination that 
                are filed before the effective date set forth in 
                paragraph (2)(A) as if subsection (a) had not been 
                enacted.
    (d) Post-Grant Review.--Part III of title 35, United States Code, 
is amended by adding at the end the following:

                    ``CHAPTER 32--POST-GRANT REVIEW

``Sec.
``321. Post-grant review.
``322. Petitions.
``323. Preliminary response to petition.
``324. Institution of post-grant review.
``325. Relation to other proceedings or actions.
``326. Conduct of post-grant review.
``327. Settlement.
``328. Decision of the Board.
``329. Appeal.
``Sec. 321. Post-grant review
    ``(a) In General.--Subject to the provisions of this chapter, a 
person who is not the owner of a patent may file with the Office a 
petition to institute a post-grant review of the patent. The Director 
shall establish, by regulation, fees to be paid by the person 
requesting the review, in such amounts as the Director determines to be 
reasonable, considering the aggregate costs of the post-grant review.
    ``(b) Scope.--A petitioner in a post-grant review may request to 
cancel as unpatentable 1 or more claims of a patent on any ground that 
could be raised under paragraph (2) or (3) of section 282(b) (relating 
to invalidity of the patent or any claim).
    ``(c) Filing Deadline.--A petition for a post-grant review may only 
be filed not later than the date that is 9 months after the date of the 
grant of the patent or of the issuance of a reissue patent (as the case 
may be).
``Sec. 322. Petitions
    ``(a) Requirements of Petition.--A petition filed under section 321 
may be considered only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 321;
            ``(2) the petition identifies all real parties in interest;
            ``(3) the petition identifies, in writing and with 
        particularity, each claim challenged, the grounds on which the 
        challenge to each claim is based, and the evidence that 
        supports the grounds for the challenge to each claim, 
        including--
                    ``(A) copies of patents and printed publications 
                that the petitioner relies upon in support of the 
                petition; and
                    ``(B) affidavits or declarations of supporting 
                evidence and opinions, if the petitioner relies on 
                other factual evidence or on expert opinions;
            ``(4) the petition provides such other information as the 
        Director may require by regulation; and
            ``(5) the petitioner provides copies of any of the 
        documents required under paragraphs (2), (3), and (4) to the 
        patent owner or, if applicable, the designated representative 
        of the patent owner.
    ``(b) Public Availability.--As soon as practicable after the 
receipt of a petition under section 321, the Director shall make the 
petition available to the public.
``Sec. 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 chapter.
``Sec. 324. Institution of post-grant review
    ``(a) Threshold.--The Director may not authorize a post-grant 
review to be instituted unless the Director determines that the 
information presented in the petition filed under section 321, if such 
information is not rebutted, would demonstrate that it is more likely 
than not that at least 1 of the claims challenged in the petition is 
unpatentable.
    ``(b) Additional Grounds.--The determination required under 
subsection (a) may also be satisfied by a showing that the petition 
raises a novel or unsettled legal question that is important to other 
patents or patent applications.
    ``(c) Timing.--The Director shall determine whether to institute a 
post-grant review under this chapter pursuant to a petition filed under 
section 321 within 3 months after--
            ``(1) receiving a preliminary response to the petition 
        under section 323; or
            ``(2) if no such preliminary response is filed, the last 
        date on which such response may be filed.
    ``(d) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection (a) 
or (b), 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.
    ``(e) No Appeal.--The determination by the Director whether to 
institute a post-grant review under this section shall be final and 
nonappealable.
``Sec. 325. Relation to other proceedings or actions
    ``(a) Infringer's Civil Action.--
            ``(1) Post-grant review barred by civil action.--A post-
        grant 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 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 post-grant 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 or 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.
``Sec. 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;
            ``(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 the petition under section 323 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 post-
        grant 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); and
            ``(12) providing the petitioner with at least 1 opportunity 
        to file written comments within a time period established 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, 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.
``Sec. 327. Settlement
    ``(a) In General.--A post-grant review instituted under this 
chapter shall be terminated with respect to any petitioner upon the 
joint request of the petitioner and the patent owner, unless the Office 
has decided the merits of the proceeding before the request for 
termination is filed. If the post-grant review is terminated with 
respect to a petitioner under this section, no estoppel under section 
325(e) shall attach to the petitioner, or to the real party in interest 
or privy of the petitioner, on the basis of that petitioner's 
institution of that post-grant review. If no petitioner remains in the 
post-grant review, the Office may terminate the post-grant review or 
proceed to a final written decision under section 328(a).
    ``(b) Agreements in Writing.--Any agreement or understanding 
between the patent owner and a petitioner, including any collateral 
agreements referred to in such agreement or understanding, made in 
connection with, or in contemplation of, the termination of a post-
grant review under this section shall be in writing, and a true copy of 
such agreement or understanding shall be filed in the Office before the 
termination of the post-grant review as between the parties. At the 
request of a party to the proceeding, the agreement or understanding 
shall be treated as business confidential information, shall be kept 
separate from the file of the involved patents, and shall be made 
available only to Federal Government agencies on written request, or to 
any person on a showing of good cause.
``Sec. 328. Decision of the Board
    ``(a) Final Written Decision.--If a post-grant review is instituted 
and not dismissed under this chapter, the Patent Trial and Appeal Board 
shall issue a final written decision with respect to the patentability 
of any patent claim challenged by the petitioner and any new claim 
added under section 326(d).
    ``(b) Certificate.--If the Patent Trial and Appeal Board issues a 
final written decision under subsection (a) and the time for appeal has 
expired or any appeal has terminated, the Director shall issue and 
publish a certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the patent 
determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable.
    ``(c) Intervening Rights.--Any proposed amended or new claim 
determined to be patentable and incorporated into a patent following a 
post-grant review under this chapter shall have the same effect as that 
specified in section 252 of this title for reissued patents on the 
right of any person who made, purchased, or used within the United 
States, or imported into the United States, anything patented by such 
proposed amended or new claim, or who made substantial preparation 
therefor, before the issuance of a certificate under subsection (b).
    ``(d) Data on Length of Review.--The Office shall make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under subsection (a) 
for, each post-grant review.
``Sec. 329. Appeal
    ``A party dissatisfied with the final written decision of the 
Patent Trial and Appeal Board under section 328(a) may appeal the 
decision pursuant to sections 141 through 144. Any party to the post-
grant review shall have the right to be a party to the appeal.''.
    (e) Conforming Amendment.--The table of chapters for part III of 
title 35, United States Code, is amended by adding at the end the 
following:

``32. Post-Grant Review.....................................     321''.
    (f) Regulations and Effective Date.--
            (1) Regulations.--The Director shall, not later than the 
        date that is 1 year after the date of the enactment of this 
        Act, issue regulations to carry out chapter 32 of title 35, 
        United States Code, as added by subsection (d) of this section.
            (2) Applicability.--
                    (A) In general.--The amendments made by subsection 
                (d) shall take effect upon the expiration of the 1-year 
                period beginning on the date of the enactment of this 
                Act and, except as provided in section 18 and in 
                paragraph (3), shall apply only to patents described in 
                section 3(n)(1).
                    (B) Limitation.--The Director may impose a limit on 
                the number of post-grant reviews that may be instituted 
                under chapter 32 of title 35, United States Code, 
                during each of the first 4 1-year periods in which the 
                amendments made by subsection (d) are in effect.
            (3) Pending interferences.--
                    (A) Procedures in general.--The Director shall 
                determine, and include in the regulations issued under 
                paragraph (1), the procedures under which an 
                interference commenced before the effective date set 
                forth in paragraph (2)(A) is to proceed, including 
                whether such interference--
                            (i) is to be dismissed without prejudice to 
                        the filing of a petition for a post-grant 
                        review under chapter 32 of title 35, United 
                        States Code; or
                            (ii) is to proceed as if this Act had not 
                        been enacted.
                    (B) Proceedings by patent trial and appeal board.--
                For purposes of an interference that is commenced 
                before the effective date set forth in paragraph 
                (2)(A), the Director may deem the Patent Trial and 
                Appeal Board to be the Board of Patent Appeals and 
                Interferences, and may allow the Patent Trial and 
                Appeal Board to conduct any further proceedings in that 
                interference.
                    (C) Appeals.--The authorization to appeal or have 
                remedy from derivation proceedings in sections 141(d) 
                and 146 of title 35, United States Code, as amended by 
                this Act, and the jurisdiction to entertain appeals 
                from derivation proceedings in section 1295(a)(4)(A) of 
                title 28, United States Code, as amended by this Act, 
                shall be deemed to extend to any final decision in an 
                interference that is commenced before the effective 
                date set forth in paragraph (2)(A) of this subsection 
                and that is not dismissed pursuant to this paragraph.
    (g) Citation of Prior Art and Written Statements.--
            (1) In general.--Section 301 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 301. Citation of prior art and written statements
    ``(a) In General.--Any person at any time may cite to the Office in 
writing--
            ``(1) prior art consisting of patents or printed 
        publications which that person believes to have a bearing on 
        the patentability of any claim of a particular patent; or
            ``(2) statements of the patent owner filed in a proceeding 
        before a Federal court or the Office in which the patent owner 
        took a position on the scope of any claim of a particular 
        patent.
    ``(b) Official File.--If the person citing prior art or written 
statements pursuant to subsection (a) explains in writing the 
pertinence and manner of applying the prior art or written statements 
to at least 1 claim of the patent, the citation of the prior art or 
written statements and the explanation thereof shall become a part of 
the official file of the patent.
    ``(c) Additional Information.--A party that submits a written 
statement pursuant to subsection (a)(2) shall include any other 
documents, pleadings, or evidence from the proceeding in which the 
statement was filed that addresses the written statement.
    ``(d) Limitations.--A written statement submitted pursuant to 
subsection (a)(2), and additional information submitted pursuant to 
subsection (c), shall not be considered by the Office for any purpose 
other than to determine the proper meaning of a patent claim in a 
proceeding that is ordered or instituted pursuant to section 304, 314, 
or 324. If any such written statement or additional information is 
subject to an applicable protective order, such statement or 
information shall be redacted to exclude information that is subject to 
that order.
    ``(e) Confidentiality.--Upon the written request of the person 
citing prior art or written statements pursuant to subsection (a), that 
person's identity shall be excluded from the patent file and kept 
confidential.''.
            (2) Conforming amendment.--The item relating to section 301 
        in the table of sections for chapter 30 of title 35, United 
        States Code, is amended to read as follows:

``301. Citation of prior art and written statements.''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect upon the expiration of the 1-year period 
        beginning on the date of the enactment of this Act and shall 
        apply to any patent issued before, on, or after that effective 
        date.
    (h) Reexamination.--
            (1) Determination by director.--
                    (A) In general.--Section 303(a) of title 35, United 
                States Code, is amended by striking ``section 301 of 
                this title'' and inserting ``section 301 or 302''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall take effect upon the expiration of the 
                1-year period beginning on the date of the enactment of 
                this Act and shall apply to any patent issued before, 
                on, or after that effective date.
            (2) Appeal.--
                    (A) In general.--Section 306 of title 35, United 
                States Code, is amended by striking ``145'' and 
                inserting ``144''.
                    (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 appeal of 
                a reexamination before the Board of Patent Appeals and 
                Interferences or the Patent Trial and Appeal Board that 
                is pending on, or brought on or after, the date of the 
                enactment of this Act.

SEC. 7. PATENT TRIAL AND APPEAL BOARD.

    (a) Composition and Duties.--
            (1) In general.--Section 6 of title 35, United States Code, 
        is amended to read as follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) In General.--There shall be in the Office a Patent Trial and 
Appeal Board. The Director, the Deputy Director, the Commissioner for 
Patents, the Commissioner for Trademarks, and the administrative patent 
judges shall constitute the Patent Trial and Appeal Board. The 
administrative patent judges shall be persons of competent legal 
knowledge and scientific ability who are appointed by the Secretary, in 
consultation with the Director. Any reference in any Federal law, 
Executive order, rule, regulation, or delegation of authority, or any 
document of or pertaining to the Board of Patent Appeals and 
Interferences is deemed to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon applications for patents pursuant 
        to section 134(a);
            ``(2) review appeals of reexaminations pursuant to section 
        134(b);
            ``(3) conduct derivation proceedings pursuant to section 
        135; and
            ``(4) conduct inter partes reviews and post-grant reviews 
        pursuant to chapters 31 and 32.
    ``(c) 3-Member Panels.--Each appeal, derivation proceeding, post-
grant review, and inter partes review shall be heard by at least 3 
members of the Patent Trial and Appeal Board, who shall be designated 
by the Director. Only the Patent Trial and Appeal Board may grant 
rehearings.
    ``(d) Treatment of Prior Appointments.--The Secretary of Commerce 
may, in the Secretary's discretion, deem the appointment of an 
administrative patent judge who, before the date of the enactment of 
this subsection, held office pursuant to an appointment by the Director 
to take effect on the date on which the Director initially appointed 
the administrative patent judge. It shall be a defense to a challenge 
to the appointment of an administrative patent judge on the basis of 
the judge's having been originally appointed by the Director that the 
administrative patent judge so appointed was acting as a de facto 
officer.''.
            (2) Conforming amendment.--The item relating to section 6 
        in the table of sections for chapter 1 of title 35, United 
        States Code, is amended to read as follows:

``6. Patent Trial and Appeal Board.''.
    (b) Administrative Appeals.--Section 134 of title 35, United States 
Code, is amended--
            (1) in subsection (b), by striking ``any reexamination 
        proceeding'' and inserting ``a reexamination''; and
            (2) by striking subsection (c).
    (c) Circuit Appeals.--
            (1) In general.--Section 141 of title 35, United States 
        Code, is amended to read as follows:
``Sec. 141. Appeal to Court of Appeals for the Federal Circuit
    ``(a) Examinations.--An applicant who is dissatisfied with the 
final decision in an appeal to the Patent Trial and Appeal Board under 
section 134(a) may appeal the Board's decision to the United States 
Court of Appeals for the Federal Circuit. By filing such an appeal, the 
applicant waives his or her right to proceed under section 145.
    ``(b) Reexaminations.--A patent owner who is dissatisfied with the 
final decision in an appeal of a reexamination to the Patent Trial and 
Appeal Board under section 134(b) may appeal the Board's decision only 
to the United States Court of Appeals for the Federal Circuit.
    ``(c) Post-Grant and Inter Partes Reviews.--A party to an inter 
partes review or a post-grant review who is dissatisfied with the final 
written decision of the Patent Trial and Appeal Board under section 
318(a) or 328(a) (as the case may be) may appeal the Board's decision 
only to the United States Court of Appeals for the Federal Circuit.
    ``(d) Derivation Proceedings.--A party to a derivation proceeding 
who is dissatisfied with the final decision of the Patent Trial and 
Appeal Board in the proceeding may appeal the decision to the United 
States Court of Appeals for the Federal Circuit, but such appeal shall 
be dismissed if any adverse party to such derivation proceeding, within 
20 days after the appellant has filed notice of appeal in accordance 
with section 142, files notice with the Director that the party elects 
to have all further proceedings conducted as provided in section 146. 
If the appellant does not, within 30 days after the filing of such 
notice by the adverse party, file a civil action under section 146, the 
Board's decision shall govern the further proceedings in the case.''.
            (2) Jurisdiction.--Section 1295(a)(4)(A) of title 28, 
        United States Code, is amended to read as follows:
                    ``(A) the Patent Trial and Appeal Board of the 
                United States Patent and Trademark Office with respect 
                to 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;''.
            (3) Proceedings on appeal.--Section 143 of title 35, United 
        States Code, is amended--
                    (A) by striking the third sentence and inserting 
                the following: ``In an ex parte case, the Director 
                shall submit to the court in writing the grounds for 
                the decision of the Patent and Trademark Office, 
                addressing all of the issues raised in the appeal. The 
                Director shall have the right to intervene in an appeal 
                from a decision entered by the Patent Trial and Appeal 
                Board in a derivation proceeding under section 135 or 
                in an inter partes or post-grant review under chapter 
                31 or 32.''; and
                    (B) by striking the last sentence.
    (d) Conforming Amendments.--
            (1) Atomic energy act of 1954.--Section 152 of the Atomic 
        Energy Act of 1954 (42 U.S.C. 2182) is amended in the third 
        undesignated paragraph--
                    (A) by striking ``Board of Patent Appeals and 
                Interferences'' each place it appears and inserting 
                ``Patent Trial and Appeal Board''; and
                    (B) by inserting ``and derivation'' after 
                ``established for interference''.
            (2) Title 51.--Section 20135 of title 51, United States 
        Code, is amended--
                    (A) in subsections (e) and (f), by striking ``Board 
                of Patent Appeals and Interferences'' each place it 
                appears and inserting ``Patent Trial and Appeal 
                Board''; and
                    (B) in subsection (e), by inserting ``and 
                derivation'' after ``established for interference''.
    (e) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to proceedings commenced 
on or after that effective date, except that--
            (1) the extension of jurisdiction to the United States 
        Court of Appeals for the Federal Circuit to entertain appeals 
        of decisions of the Patent Trial and Appeal Board in 
        reexaminations under the amendment made by subsection (c)(2) 
        shall be deemed to take effect on the date of the enactment of 
        this Act and shall extend to any decision of the Board of 
        Patent Appeals and Interferences with respect to a 
        reexamination that is entered before, on, or after the date of 
        the enactment of this Act;
            (2) the provisions of sections 6, 134, and 141 of title 35, 
        United States Code, as in effect on the day before the 
        effective date of the amendments made by this section shall 
        continue to apply to inter partes reexaminations that are 
        requested under section 311 of such title before such effective 
        date;
            (3) the Patent Trial and Appeal Board may be deemed to be 
        the Board of Patent Appeals and Interferences for purposes of 
        appeals of inter partes reexaminations that are requested under 
        section 311 of title 35, United States Code, before the 
        effective date of the amendments made by this section; and
            (4) the Director's right under the fourth sentence of 
        section 143 of title 35, United States Code, as amended by 
        subsection (c)(3) of this section, to intervene in an appeal 
        from a decision entered by the Patent Trial and Appeal Board 
        shall be deemed to extend to inter partes reexaminations that 
        are requested under section 311 of such title before the 
        effective date of the amendments made by this section.

SEC. 8. PREISSUANCE SUBMISSIONS BY THIRD PARTIES.

    (a) In General.--Section 122 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(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.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent application 
filed before, on, or after that effective date.

SEC. 9. VENUE.

    (a) Technical Amendments Relating to Venue.--Sections 32, 145, 146, 
154(b)(4)(A), and 293 of title 35, United States Code, and section 
21(b)(4) of the Trademark Act of 1946 (15 U.S.C. 1071(b)(4)), are each 
amended by striking ``United States District Court for the District of 
Columbia'' each place that term appears and inserting ``United States 
District Court for the Eastern District of Virginia''.
    (b) 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 
civil action commenced on or after that date.

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).
    (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).
            (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) Micro Entity Defined.--
            (1) In general.--Chapter 11 of title 35, United States 
        Code, is amended by adding at the end the following new 
        section:
``Sec. 123. Micro entity defined
    ``(a) In General.--For purposes of this title, the term `micro 
entity' means an applicant who makes a certification that the 
applicant--
            ``(1) qualifies as a small entity, as defined in 
        regulations issued by the Director;
            ``(2) has not been named as an inventor on more than 4 
        previously filed patent applications, other than applications 
        filed in another country, provisional applications under 
        section 111(b), or international applications filed under the 
        treaty defined in section 351(a) for which the basic national 
        fee under section 41(a) was not paid;
            ``(3) did not, in the calendar year preceding the calendar 
        year in which the applicable fee is being paid, have a gross 
        income, as defined in section 61(a) of the Internal Revenue 
        Code of 1986, exceeding 3 times the median household income for 
        that preceding calendar year, as most recently reported by the 
        Bureau of the Census; and
            ``(4) has not assigned, granted, or conveyed, and is not 
        under an obligation by contract or law to assign, grant, or 
        convey, a license or other ownership interest in the 
        application concerned to an entity that, in the calendar year 
        preceding the calendar year in which the applicable fee is 
        being paid, had a gross income, as defined in section 61(a) of 
        the Internal Revenue Code of 1986, exceeding 3 times the median 
        household income for that preceding calendar year, as most 
        recently reported by the Bureau of the Census.
    ``(b) Applications Resulting From Prior Employment.--An applicant 
is not considered to be named on a previously filed application for 
purposes of subsection (a)(2) if the applicant has assigned, or is 
under an obligation by contract or law to assign, all ownership rights 
in the application as the result of the applicant's previous 
employment.
    ``(c) Foreign Currency Exchange Rate.--If an applicant's or 
entity's gross income in the preceding calendar year is not in United 
States dollars, the average currency exchange rate, as reported by the 
Internal Revenue Service, during that calendar year shall be used to 
determine whether the applicant's or entity's gross income exceeds the 
threshold specified in paragraphs (3) or (4) of subsection (a).
    ``(d) Institutions of Higher Education.--For purposes of this 
section, a micro entity shall include an applicant who certifies that--
            ``(1) the applicant's employer, from which the applicant 
        obtains the majority of the applicant's income, is 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
            ``(2) the applicant has assigned, granted, conveyed, or is 
        under an obligation by contract or law, to assign, grant, or 
        convey, a license or other ownership interest in the particular 
        applications to such an institution of higher education.
    ``(e) Director's Authority.--In addition to the limits imposed by 
this section, the Director may, in the Director's discretion, impose 
income limits, annual filing limits, or other limits on who may qualify 
as a micro entity pursuant to this section if the Director determines 
that such additional limits are reasonably necessary to avoid an undue 
impact on other patent applicants or owners or are otherwise reasonably 
necessary and appropriate. At least 3 months before any limits proposed 
to be imposed pursuant to this subsection take effect, the Director 
shall inform the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate of any 
such proposed limits.''.
            (2) Conforming amendment.--Chapter 11 of title 35, United 
        States Code, is amended by adding at the end the following new 
        item:

``123. Micro entity defined.''.
    (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 7-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.

SEC. 11. FEES FOR PATENT SERVICES.

    (a) General Patent Services.--Subsections (a) and (b) of section 41 
of title 35, United States Code, are amended to read as follows:
    ``(a) General Fees.--The Director shall charge the following fees:
            ``(1) Filing and basic national fees.--
                    ``(A) On filing each application for an original 
                patent, except for design, plant, or provisional 
                applications, $330.
                    ``(B) On filing each application for an original 
                design patent, $220.
                    ``(C) On filing each application for an original 
                plant patent, $220.
                    ``(D) On filing each provisional application for an 
                original patent, $220.
                    ``(E) On filing each application for the reissue of 
                a patent, $330.
                    ``(F) The basic national fee for each international 
                application filed under the treaty defined in section 
                351(a) entering the national stage under section 371, 
                $330.
                    ``(G) In addition, excluding any sequence listing 
                or computer program listing filed in an electronic 
                medium as prescribed by the Director, for any 
                application the specification and drawings of which 
                exceed 100 sheets of paper (or equivalent as prescribed 
                by the Director if filed in an electronic medium), $270 
                for each additional 50 sheets of paper (or equivalent 
                as prescribed by the Director if filed in an electronic 
                medium) or fraction thereof.
            ``(2) Excess claims fees.--
                    ``(A) In general.--In addition to the fee specified 
                in paragraph (1)--
                            ``(i) on filing or on presentation at any 
                        other time, $220 for each claim in independent 
                        form in excess of 3;
                            ``(ii) on filing or on presentation at any 
                        other time, $52 for each claim (whether 
                        dependent or independent) in excess of 20; and
                            ``(iii) for each application containing a 
                        multiple dependent claim, $390.
                    ``(B) Multiple dependent claims.--For the purpose 
                of computing fees under subparagraph (A), a multiple 
                dependent claim referred to in section 112 or any claim 
                depending therefrom shall be considered as separate 
                dependent claims in accordance with the number of 
                claims to which reference is made.
                    ``(C) Refunds; errors in payment.--The Director may 
                by regulation provide for a refund of any part of the 
                fee specified in subparagraph (A) for any claim that is 
                canceled before an examination on the merits, as 
                prescribed by the Director, has been made of the 
                application under section 131. Errors in payment of the 
                additional fees under this paragraph may be rectified 
                in accordance with regulations prescribed by the 
                Director.
            ``(3) Examination fees.--
                    ``(A) In general.--
                            ``(i) For examination of each application 
                        for an original patent, except for design, 
                        plant, provisional, or international 
                        applications, $220.
                            ``(ii) For examination of each application 
                        for an original design patent, $140.
                            ``(iii) For examination of each application 
                        for an original plant patent, $170.
                            ``(iv) For examination of the national 
                        stage of each international application, $220.
                            ``(v) For examination of each application 
                        for the reissue of a patent, $650.
                    ``(B) Applicability of other fee provisions.--The 
                provisions of paragraphs (3) and (4) of section 111(a) 
                relating to the payment of the fee for filing the 
                application shall apply to the payment of the fee 
                specified in subparagraph (A) with respect to an 
                application filed under section 111(a). The provisions 
                of section 371(d) relating to the payment of the 
                national fee shall apply to the payment of the fee 
                specified in subparagraph (A) with respect to an 
                international application.
            ``(4) Issue fees.--
                    ``(A) For issuing each original patent, except for 
                design or plant patents, $1,510.
                    ``(B) For issuing each original design patent, 
                $860.
                    ``(C) For issuing each original plant patent, 
                $1,190.
                    ``(D) For issuing each reissue patent, $1,510.
            ``(5) Disclaimer fee.--On filing each disclaimer, $140.
            ``(6) Appeal fees.--
                    ``(A) On filing an appeal from the examiner to the 
                Patent Trial and Appeal Board, $540.
                    ``(B) In addition, on filing a brief in support of 
                the appeal, $540, and on requesting an oral hearing in 
                the appeal before the Patent Trial and Appeal Board, 
                $1,080.
            ``(7) Revival fees.--On filing each petition for the 
        revival of an unintentionally abandoned application for a 
        patent, for the unintentionally delayed payment of the fee for 
        issuing each patent, or for an unintentionally delayed response 
        by the patent owner in any reexamination proceeding, $1,620, 
        unless the petition is filed under section 133 or 151, in which 
        case the fee shall be $540.
            ``(8) Extension fees.--For petitions for 1-month extensions 
        of time to take actions required by the Director in an 
        application--
                    ``(A) on filing a first petition, $130;
                    ``(B) on filing a second petition, $360; and
                    ``(C) on filing a third or subsequent petition, 
                $620.
    ``(b) Maintenance Fees.--
            ``(1) In general.--The Director shall charge the following 
        fees for maintaining in force all patents based on applications 
        filed on or after December 12, 1980:
                    ``(A) Three years and 6 months after grant, $980.
                    ``(B) Seven years and 6 months after grant, $2,480.
                    ``(C) Eleven years and 6 months after grant, 
                $4,110.
            ``(2) Grace period; surcharge.--Unless payment of the 
        applicable maintenance fee under paragraph (1) is received in 
        the Office on or before the date the fee is due or within a 
        grace period of 6 months thereafter, the patent shall expire as 
        of the end of such grace period. The Director may require the 
        payment of a surcharge as a condition of accepting within such 
        6-month grace period the payment of an applicable maintenance 
        fee.
            ``(3) No maintenance fee for design or plant patent.--No 
        fee may be established for maintaining a design or plant patent 
        in force.''.
    (b) Delays in Payment.--Subsection (c) of section 41 of title 35, 
United States Code, is amended--
            (1) by striking ``(c)(1) The Director'' and inserting:
    ``(c) Delays in Payment of Maintenance Fees.--
            ``(1) Acceptance.--The Director''; and
            (2) by striking ``(2) A patent'' and inserting:
            ``(2) Effect on rights of others.--A patent''.
    (c) Patent Search Fees.--Subsection (d) of section 41 of title 35, 
United States Code, is amended to read as follows:
    ``(d) Patent Search and Other Fees.--
            ``(1) Patent search fees.--
                    ``(A) In general.--The Director shall charge the 
                fees specified under subparagraph (B) for the search of 
                each application for a patent, except for provisional 
                applications. The Director shall adjust the fees 
                charged under this paragraph to ensure that the fees 
                recover an amount not to exceed the estimated average 
                cost to the Office of searching applications for patent 
                by Office personnel.
                    ``(B) Specific fees.--The fees referred to in 
                subparagraph (A) are--
                            ``(i) $540 for each application for an 
                        original patent, except for design, plant, 
                        provisional, or international applications;
                            ``(ii) $100 for each application for an 
                        original design patent;
                            ``(iii) $330 for each application for an 
                        original plant patent;
                            ``(iv) $540 for the national stage of each 
                        international application; and
                            ``(v) $540 for each application for the 
                        reissue of a patent.
                    ``(C) Applicability of other provisions.--The 
                provisions of paragraphs (3) and (4) of section 111(a) 
                relating to the payment of the fee for filing the 
                application shall apply to the payment of the fee 
                specified in this paragraph with respect to an 
                application filed under section 111(a). The provisions 
                of section 371(d) relating to the payment of the 
                national fee shall apply to the payment of the fee 
                specified in this paragraph with respect to an 
                international application.
                    ``(D) Refunds.--The Director may by regulation 
                provide for a refund of any part of the fee specified 
                in this paragraph for any applicant who files a written 
                declaration of express abandonment as prescribed by the 
                Director before an examination has been made of the 
                application under section 131.
            ``(2) Other fees.--
                    ``(A) In general.--The Director shall establish 
                fees for all other processing, services, or materials 
                relating to patents not specified in this section to 
                recover the estimated average cost to the Office of 
                such processing, services, or materials, except that 
                the Director shall charge the following fees for the 
                following services:
                            ``(i) For recording a document affecting 
                        title, $40 per property.
                            ``(ii) For each photocopy, $.25 per page.
                            ``(iii) For each black and white copy of a 
                        patent, $3.
                    ``(B) Copies for libraries.--The yearly fee for 
                providing a library specified in section 12 with 
                uncertified printed copies of the specifications and 
                drawings for all patents in that year shall be $50.''.
    (d) Fees for Small Entities.--Subsection (h) of section 41 of title 
35, United States Code, is amended to read as follows:
    ``(h) Fees for Small Entities.--
            ``(1) Reductions in fees.--Subject to paragraph (3), fees 
        charged under subsections (a), (b), and (d)(1) shall be reduced 
        by 50 percent with respect to their application to any small 
        business concern as defined under section 3 of the Small 
        Business Act, and to any independent inventor or nonprofit 
        organization as defined in regulations issued by the Director.
            ``(2) Surcharges and other fees.--With respect to its 
        application to any entity described in paragraph (1), any 
        surcharge or fee charged under subsection (c) or (d) shall not 
        be higher than the surcharge or fee required of any other 
        entity under the same or substantially similar circumstances.
            ``(3) Reduction for electronic filing.--The fee charged 
        under subsection (a)(1)(A) shall be reduced by 75 percent with 
        respect to its application to any entity to which paragraph (1) 
        applies, if the application is filed by electronic means as 
        prescribed by the Director.''.
    (e) Technical Amendments.--Section 41 of title 35, United States 
Code, is amended--
            (1) in subsection (e), in the first sentence, by striking 
        ``The Director'' and inserting ``Waiver of Fees; Copies 
        Regarding Notice.--The Director'';
            (2) in subsection (f), by striking ``The fees'' and 
        inserting ``Adjustment of Fees.--The fees'';
            (3) by repealing subsection (g); and
            (4) in subsection (i)--
                    (A) by striking ``(i)(1) The Director'' and 
                inserting the following:
    ``(i) Electronic Patent and Trademark Data.--
            ``(1) Maintenance of collections.--The Director'';
                    (B) by striking ``(2) The Director'' and inserting 
                the following:
            ``(2) Availability of automated search systems.--The 
        Director'';
                    (C) by striking ``(3) The Director'' and inserting 
                the following:
            ``(3) Access fees.--The Director''; and
                    (D) by striking ``(4) The Director'' and inserting 
                the following:
            ``(4) Annual report to congress.--The Director''.
    (f) Adjustment of Trademark Fees.--Section 802(a) of division B of 
the Consolidated Appropriations Act, 2005 (Public Law 108-447) is 
amended--
            (1) in the first sentence, by striking ``During fiscal 
        years 2005, 2006, and 2007,'', and inserting ``Until such time 
        as the Director sets or adjusts the fees otherwise,''; and
            (2) in the second sentence, by striking ``During fiscal 
        years 2005, 2006, and 2007, the'' and inserting ``The''.
    (g) Effective Date, Applicability, and Transition Provisions.--
Section 803(a) of division B of the Consolidated Appropriations Act, 
2005 (Public Law 108-447) is amended by striking ``and shall apply only 
with respect to the remaining portion of fiscal year 2005 and fiscal 
year 2006''.
    (h) Prioritized Examination Fee.--
            (1) In general.--
                    (A) Fee.--
                            (i) Prioritized examination fee.--A fee of 
                        $4,800 shall be established for filing a 
                        request, pursuant to section 2(b)(2)(G) of 
                        title 35, United States Code, for prioritized 
                        examination of a nonprovisional application for 
                        an original utility or plant patent.
                            (ii) Additional fees.--In addition to the 
                        prioritized examination fee under clause (i), 
                        the fees due on an application for which 
                        prioritized examination is being sought are the 
                        filing, search, and examination fees (including 
                        any applicable excess claims and application 
                        size fees), processing fee, and publication fee 
                        for that application.
                    (B) Regulations; limitations.--
                            (i) Regulations.--The Director may by 
                        regulation prescribe conditions for acceptance 
                        of a request under subparagraph (A) and a limit 
                        on the number of filings for prioritized 
                        examination that may be accepted.
                            (ii) Limitation on claims.--Until 
                        regulations are prescribed under clause (i), no 
                        application for which prioritized examination 
                        is requested may contain or be amended to 
                        contain more than 4 independent claims or more 
                        than 30 total claims.
                            (iii) Limitation on total number of 
                        requests.--The Director may not accept in any 
                        fiscal year more than 10,000 requests for 
                        prioritization until regulations are prescribed 
                        under this subparagraph setting another limit.
            (2) Reduction in fees for small entities.--The Director 
        shall reduce fees for providing prioritized examination of 
        nonprovisional applications for original utility and plant 
        patents by 50 percent for small entities that qualify for 
        reduced fees under section 41(h)(1) of title 35, United States 
        Code.
            (3) Deposit of fees.--All fees paid under this subsection 
        shall be credited to the United States Patent and Trademark 
        Office Appropriation Account, shall remain available until 
        expended, and may be used only for the purposes specified in 
        section 42(c)(3)(A) of title 35, United States Code.
            (4) Effective date and termination.--
                    (A) Effective date.--This subsection shall take 
                effect on the date that is 10 days after the date of 
                the enactment of this Act.
                    (B) Termination.--The fee imposed under paragraph 
                (1)(A)(i), and the reduced fee under paragraph (2), 
                shall terminate on the effective date of the setting or 
                adjustment of the fee under paragraph (1)(A)(i) 
                pursuant to the exercise of the authority under section 
                10 for the first time with respect to that fee.
    (i) Appropriation Account Transition Fees.--
            (1) Surcharge.--
                    (A) In general.--There shall be a surcharge of 15 
                percent, rounded by standard arithmetic rules, on all 
                fees charged or authorized by subsections (a), (b), and 
                (d)(1) of section 41, and section 132(b), of title 35, 
                United States Code. Any surcharge imposed under this 
                subsection is, and shall be construed to be, separate 
                from and in addition to any other surcharge imposed 
                under this Act or any other provision of law.
                    (B) Deposit of amounts.--Amounts collected pursuant 
                to the surcharge imposed under subparagraph (A) shall 
                be credited to the United States Patent and Trademark 
                Appropriation Account, shall remain available until 
                expended, and may be used only for the purposes 
                specified in section 42(c)(3)(A) of title 35, United 
                States Code.
            (2) Effective date and termination of surcharge.--The 
        surcharge provided for in paragraph (1)--
                    (A) shall take effect on the date that is 10 days 
                after the date of the enactment of this Act; and
                    (B) shall terminate, with respect to a fee to which 
                paragraph (1)(A) applies, on the effective date of the 
                setting or adjustment of that fee pursuant to the 
                exercise of the authority under section 10 for the 
                first time with respect to that fee.
    (j) Effective Date.--Except as otherwise provided in this section, 
this section and the amendments made by this section shall take effect 
on the date of the enactment of this Act.

SEC. 12. SUPPLEMENTAL EXAMINATION.

    (a) In General.--Chapter 25 of title 35, United States Code, is 
amended by adding at the end the following:
``Sec. 257. Supplemental examinations to consider, reconsider, or 
              correct information
    ``(a) Request for Supplemental Examination.--A patent owner may 
request supplemental examination of a patent in the Office to consider, 
reconsider, or correct information believed to be relevant to the 
patent, in accordance with such requirements as the Director may 
establish. Within 3 months after the date a request for supplemental 
examination meeting the requirements of this section is received, the 
Director shall conduct the supplemental examination and shall conclude 
such examination by issuing a certificate indicating whether the 
information presented in the request raises a substantial new question 
of patentability.
    ``(b) Reexamination Ordered.--If the certificate issued under 
subsection (a) indicates that a substantial new question of 
patentability is raised by 1 or more items of information in the 
request, the Director shall order reexamination of the patent. The 
reexamination shall be conducted according to procedures established by 
chapter 30, except that the patent owner shall not have the right to 
file a statement pursuant to section 304. During the reexamination, the 
Director shall address each substantial new question of patentability 
identified during the supplemental examination, notwithstanding the 
limitations in chapter 30 relating to patents and printed publication 
or any other provision of such chapter.
    ``(c) Effect.--
            ``(1) In general.--A patent shall not be held unenforceable 
        on the basis of conduct relating to information that had not 
        been considered, was inadequately considered, or was incorrect 
        in a prior examination of the patent if the information was 
        considered, reconsidered, or corrected during a supplemental 
        examination of the patent. The making of a request under 
        subsection (a), or the absence thereof, shall not be relevant 
        to enforceability of the patent under section 282.
            ``(2) Exceptions.--
                    ``(A) Prior allegations.--Paragraph (1) shall not 
                apply to an allegation pled with particularity in a 
                civil action, or set forth with particularity in a 
                notice received by the patent owner under section 
                505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before 
                the date of a supplemental examination request under 
                subsection (a) to consider, reconsider, or correct 
                information forming the basis for the allegation.
                    ``(B) Patent enforcement actions.--In an action 
                brought under section 337(a) of the Tariff Act of 1930 
                (19 U.S.C. 1337(a)), or section 281 of this title, 
                paragraph (1) shall not apply to any defense raised in 
                the action that is based upon information that was 
                considered, reconsidered, or corrected pursuant to a 
                supplemental examination request under subsection (a), 
                unless the supplemental examination, and any 
                reexamination ordered pursuant to the request, are 
                concluded before the date on which the action is 
                brought.
    ``(d) Fees and Regulations.--
            ``(1) Fees.--The Director shall, by regulation, establish 
        fees for the submission of a request for supplemental 
        examination of a patent, and to consider each item of 
        information submitted in the request. If reexamination is 
        ordered under subsection (b), fees established and applicable 
        to ex parte reexamination proceedings under chapter 30 shall be 
        paid, in addition to fees applicable to supplemental 
        examination.
            ``(2) Regulations.--The Director shall issue regulations 
        governing the form, content, and other requirements of requests 
        for supplemental examination, and establishing procedures for 
        reviewing information submitted in such requests.
    ``(e) Fraud.--If the Director becomes aware, during the course of a 
supplemental examination or reexamination proceeding ordered under this 
section, that a material fraud on the Office may have been committed in 
connection with the patent that is the subject of the supplemental 
examination, then in addition to any other actions the Director is 
authorized to take, including the cancellation of any claims found to 
be invalid under section 307 as a result of a reexamination ordered 
under this section, the Director shall also refer the matter to the 
Attorney General for such further action as the Attorney General may 
deem appropriate. Any such referral shall be treated as confidential, 
shall not be included in the file of the patent, and shall not be 
disclosed to the public unless the United States charges a person with 
a criminal offense in connection with such referral.
    ``(f) Rule of Construction.--Nothing in this section shall be 
construed--
            ``(1) to preclude the imposition of sanctions based upon 
        criminal or antitrust laws (including section 1001(a) of title 
        18, the first section of the Clayton Act, and section 5 of the 
        Federal Trade Commission Act to the extent that section relates 
        to unfair methods of competition);
            ``(2) to limit the authority of the Director to investigate 
        issues of possible misconduct and impose sanctions for 
        misconduct in connection with matters or proceedings before the 
        Office; or
            ``(3) to limit the authority of the Director to issue 
        regulations under chapter 3 relating to sanctions for 
        misconduct by representatives practicing before the Office.''.
    (b) Conforming Amendment.--The table of sections for chapter 25 of 
title 35, United States Code, is amended by adding at the end the 
following new item:

``257. Supplemental examinations to consider, reconsider, or correct 
                            information.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to any patent issued 
before, on, or after that effective date.

SEC. 13. FUNDING AGREEMENTS.

    (a) In General.--Section 202(c)(7)(E)(i) of title 35, United States 
Code, is amended--
            (1) by striking ``75 percent'' and inserting ``15 
        percent'';
            (2) by striking ``25 percent'' and inserting ``85 
        percent''; and
            (3) by striking ``as described above in this clause (D);'' 
        and inserting ``described above in this clause;''.
    (b) 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 
patent issued before, on, or after that date.

SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR ART.

    (a) In General.--For purposes of evaluating an invention under 
section 102 or 103 of title 35, United States Code, any strategy for 
reducing, avoiding, or deferring tax liability, whether known or 
unknown at the time of the invention or application for patent, shall 
be deemed insufficient to differentiate a claimed invention from the 
prior art.
    (b) Definition.--For purposes of this section, the term ``tax 
liability'' refers to any liability for a tax under any Federal, State, 
or local law, or the law of any foreign jurisdiction, including any 
statute, rule, regulation, or ordinance that levies, imposes, or 
assesses such tax liability.
    (c) Exclusions.--This section does not apply to that part of an 
invention that--
            (1) is a method, apparatus, technology, computer program 
        product, or system, that is used solely for preparing a tax or 
        information return or other tax filing, including one that 
        records, transmits, transfers, or organizes data related to 
        such filing; or
            (2) is a method, apparatus, technology, computer program 
        product, or system used solely for financial management, to the 
        extent that it is severable from any tax strategy or does not 
        limit the use of any tax strategy by any taxpayer or tax 
        advisor.
    (d) Rule of Construction.--Nothing in this section shall be 
construed to imply that other business methods are patentable or that 
other business method patents are valid.
    (e) Effective Date; Applicability.--This section shall take effect 
on the date of the enactment of this Act and shall apply to any patent 
application that is pending on, or filed on or after, that date, and to 
any patent that is issued on or after that date.

SEC. 15. BEST MODE REQUIREMENT.

    (a) In General.--Section 282 of title 35, United States Code, is 
amended in the second undesignated paragraph by striking paragraph (3) 
and inserting the following:
            ``(3) Invalidity of the patent or any claim in suit for 
        failure to comply with--
                    ``(A) any requirement of section 112, except that 
                the failure to disclose the best mode shall not be a 
                basis on which any claim of a patent may be canceled or 
                held invalid or otherwise unenforceable; or
                    ``(B) any requirement of section 251.''.
    (b) Conforming Amendment.--Sections 119(e)(1) and 120 of title 35, 
United States Code, are each amended by striking ``the first paragraph 
of section 112 of this title'' and inserting ``section 112(a) (other 
than the requirement to disclose the best mode)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect upon the date of the enactment of this Act and shall apply to 
proceedings commenced on or after that date.

SEC. 16. MARKING.

    (a) Virtual Marking.--
            (1) In general.--Section 287(a) of title 35, United States 
        Code, is amended by striking ``or when,'' and inserting ``or by 
        fixing thereon the word `patent' or the abbreviation `pat.' 
        together with an address of a posting on the Internet, 
        accessible to the public without charge for accessing the 
        address, that associates the patented article with the number 
        of the patent, or when,''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to any case that is pending on, or commenced on or 
        after, the date of the enactment of this Act.
            (3) Report.--Not later than the date that is 3 years after 
        the date of the enactment of this Act, the Director shall 
        submit a report to Congress that provides--
                    (A) an analysis of the effectiveness of ``virtual 
                marking'', as provided in the amendment made by 
                paragraph (1) of this subsection, as an alternative to 
                the physical marking of articles;
                    (B) an analysis of whether such virtual marking has 
                limited or improved the ability of the general public 
                to access information about patents;
                    (C) an analysis of the legal issues, if any, that 
                arise from such virtual marking; and
                    (D) an analysis of the deficiencies, if any, of 
                such virtual marking.
    (b) False Marking.--
            (1) Civil penalty.--Section 292(a) of title 35, United 
        States, Code, is amended by adding at the end the following: 
        ``Only the United States may sue for the penalty authorized by 
        this subsection.''.
            (2) Civil action for damages.--Subsection (b) of section 
        292 of title 35, United States Code, is amended to read as 
        follows:
    ``(b) A person who has suffered a competitive injury as a result of 
a violation of this section may file a civil action in a district court 
of the United States for recovery of damages adequate to compensate for 
the injury.''.
            (3) Expired patents.--Section 292 of title 35, United 
        States Code, is amended by adding at the end the following:
    ``(c) The marking of a product, in a manner described in subsection 
(a), with matter relating to a patent that covered that product but has 
expired is not a violation of this section.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to all cases, without exception, that are pending 
        on, or commenced on or after, the date of the enactment of this 
        Act.

SEC. 17. ADVICE OF COUNSEL.

    (a) In General.--Chapter 29 of title 35, United States Code, is 
amended by adding at the end the following:
``Sec. 298. Advice of counsel
    ``The failure of an infringer to obtain the advice of counsel with 
respect to any allegedly infringed patent, or the failure of the 
infringer to present such advice to the court or jury, may not be used 
to prove that the accused infringer willfully infringed the patent or 
that the infringer intended to induce infringement of the patent.''.
    (b) Conforming Amendment.--The table of sections for chapter 29 of 
title 35, United States Code, is amended by adding at the end the 
following:

``298. Advice of counsel.''.

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) Section 321(c) 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 section 
                        102(a) of such title 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 period 
        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 subsection, the 
        Director shall issue regulations for determining whether a 
        patent is for a technological invention.
    (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.

SEC. 19. JURISDICTION AND PROCEDURAL MATTERS.

    (a) State Court Jurisdiction.--Section 1338(a) of title 28, United 
States Code, is amended by striking the second sentence and inserting 
the following: ``No State court shall have jurisdiction over any claim 
for relief arising under any Act of Congress relating to patents, plant 
variety protection, or copyrights. For purposes of this subsection, the 
term `State' includes any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, American Samoa, Guam, and the Northern Mariana Islands.''.
    (b) Court of Appeals for the Federal Circuit.--Section 1295(a)(1) 
of title 28, United States Code, is amended to read as follows:
            ``(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;''.
    (c) Removal.--
            (1) In general.--Chapter 89 of title 28, United States 
        Code, is amended by adding at the end the following new 
        section:
``Sec. 1454. Patent, plant variety protection, and copyright cases
    ``(a) In General.--A civil action in which any party asserts a 
claim for relief arising under any Act of Congress relating to patents, 
plant variety protection, or copyrights may be removed to the district 
court of the United States for the district and division embracing the 
place where the action is pending.
    ``(b) Special Rules.--The removal of an action under this section 
shall be made in accordance with section 1446, except that if the 
removal is based solely on this section--
            ``(1) the action may be removed by any party; and
            ``(2) the time limitations contained in section 1446(b) may 
        be extended at any time for cause shown.
    ``(c) Clarification of Jurisdiction in Certain Cases.--The court to 
which a civil action is removed under this section is not precluded 
from hearing and determining any claim in the civil action because the 
State court from which the civil action is removed did not have 
jurisdiction over that claim.
    ``(d) Remand.--If a civil action is removed solely under this 
section, the district court--
            ``(1) shall remand all claims that are neither a basis for 
        removal under subsection (a) nor within the original or 
        supplemental jurisdiction of the district court under any Act 
        of Congress; and
            ``(2) may, under the circumstances specified in section 
        1367(c), remand any claims within the supplemental jurisdiction 
        of the district court under section 1367.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 89 of title 28, United States Code, is amended by 
        adding at the end the following new item:

``1454. Patent, plant variety protection, and copyright cases.''.
    (d) Procedural Matters in Patent Cases.--
            (1) Joinder of parties and stay of actions.--Chapter 29 of 
        title 35, United States Code, as amended by this Act, is 
        further amended by adding at the end the following new section:
``Sec. 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 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, or counterclaim defendants 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.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 29 of title 35, United States Code, as amended by this 
        Act, is further amended by adding at the end the following new 
        item:

``299. Joinder of parties.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to any civil action commenced on or after the date of the 
enactment of this Act.

SEC. 20. TECHNICAL AMENDMENTS.

    (a) Joint Inventions.--Section 116 of title 35, United States Code, 
is amended--
                    (1) in the first undesignated paragraph, by 
                striking ``When'' and inserting ``(a) Joint 
                Inventions.--When'';
                    (2) in the second undesignated paragraph, by 
                striking ``If a joint inventor'' and inserting ``(b) 
                Omitted Inventor.--If a joint inventor''; and
                    (3) in the third undesignated paragraph--
                            (A) by striking ``Whenever'' and inserting 
                        ``(c) Correction of Errors in Application.--
                        Whenever''; and
                            (B) by striking ``and such error arose 
                        without any deceptive intention on his part,''.
    (b) Filing of Application in Foreign Country.--Section 184 of title 
35, United States Code, is amended--
            (1) in the first undesignated paragraph--
                    (A) by striking ``Except when'' and inserting ``(a) 
                Filing in Foreign Country.--Except when''; and
                    (B) by striking ``and without deceptive intent'';
            (2) in the second undesignated paragraph, by striking ``The 
        term'' and inserting ``(b) Application.--The term''; and
            (3) in the third undesignated paragraph, by striking ``The 
        scope'' and inserting ``(c) Subsequent Modifications, 
        Amendments, and Supplements.--The scope''.
    (c) Filing Without a License.--Section 185 of title 35, United 
States Code, is amended by striking ``and without deceptive intent''.
    (d) Reissue of Defective Patents.--Section 251 of title 35, United 
States Code, is amended--
            (1) in the first undesignated paragraph--
                    (A) by striking ``Whenever'' and inserting ``(a) In 
                General.--Whenever''; and
                    (B) by striking ``without any deceptive 
                intention'';
            (2) in the second undesignated paragraph, by striking ``The 
        Director'' and inserting ``(b) Multiple Reissued Patents.--The 
        Director'';
            (3) in the third undesignated paragraph, by striking ``The 
        provisions'' and inserting ``(c) Applicability of This Title.--
        The provisions''; and
            (4) in the last undesignated paragraph, by striking ``No 
        reissued patent'' and inserting ``(d) Reissue Patent Enlarging 
        Scope of Claims.--No reissued patent''.
    (e) Effect of Reissue.--Section 253 of title 35, United States 
Code, is amended--
            (1) in the first undesignated paragraph, by striking 
        ``Whenever, without any deceptive intention,'' and inserting 
        ``(a) In General.--Whenever''; and
            (2) in the second undesignated paragraph, by striking ``In 
        like manner'' and inserting ``(b) Additional Disclaimer or 
        Dedication.--In the manner set forth in subsection (a),''.
    (f) Correction of Named Inventor.--Section 256 of title 35, United 
States Code, is amended--
            (1) in the first undesignated paragraph--
                    (A) by striking ``Whenever'' and inserting ``(a) 
                Correction.--Whenever''; and
                    (B) by striking ``and such error arose without any 
                deceptive intention on his part''; and
            (2) in the second undesignated paragraph, by striking ``The 
        error'' and inserting ``(b) Patent Valid if Error Corrected.--
        The error''.
    (g) Presumption of Validity.--Section 282 of title 35, United 
States Code, is amended--
            (1) in the first undesignated paragraph--
                    (A) by striking ``A patent'' and inserting ``(a) In 
                General.--A patent''; and
                    (B) by striking the third sentence;
            (2) in the second undesignated paragraph--
                    (A) by striking ``The following'' and inserting 
                ``(b) Defenses.--The following'';
                    (B) in paragraph (1), by striking 
                ``uneforceability,'' and inserting 
                ``unenforceability.''; and
                    (C) in paragraph (2), by striking 
                ``patentability,'' and inserting ``patentability.'' ; 
                and
            (3) in the third undesignated paragraph--
                    (A) by striking ``In actions involving the validity 
                or infringement of a patent'' and inserting ``(c) 
                Notice of Actions; Actions During Extension of Patent 
                Term.--In an action involving the validity or 
                infringement of a patent''; and
                    (B) by striking ``Claims Court'' and inserting 
                ``Court of Federal Claims''.
    (h) Action for Infringement.--Section 288 of title 35, United 
States Code, is amended by striking ``, without deceptive intention,''.
    (i) Reviser's Notes.--
            (1) Section 3(e)(2) of title 35, United States Code, is 
        amended by striking ``this Act,'' and inserting ``that Act,''.
            (2) Section 202 of title 35, United States Code, is 
        amended--
                    (A) in subsection (b)(3), by striking ``the section 
                203(b)'' and inserting ``section 203(b)''; and
                    (B) in subsection (c)(7)(D), by striking ``except 
                where it proves'' and all that follows through ``small 
                business firms; and'' and inserting: ``except where it 
                is determined to be infeasible following a reasonable 
                inquiry, a preference in the licensing of subject 
                inventions shall be given to small business firms; 
                and''.
            (3) Section 209(d)(1) of title 35, United States Code, is 
        amended by striking ``nontransferrable'' and inserting 
        ``nontransferable''.
            (4) Section 287(c)(2)(G) of title 35, United States Code, 
        is amended by striking ``any state'' and inserting ``any 
        State''.
            (5) Section 371(b) of title 35, United States Code, is 
        amended by striking ``of the treaty'' and inserting ``of the 
        treaty.''.
    (j) Unnecessary References.--
            (1) In general.--Title 35, United States Code, is amended 
        by striking ``of this title'' each place that term appears.
            (2) Exception.--The amendment made by paragraph (1) shall 
        not apply to the use of such term in the following sections of 
        title 35, United States Code:
                    (A) Section 1(c).
                    (B) Section 101.
                    (C) Subsections (a) and (b) of section 105.
                    (D) The first instance of the use of such term in 
                section 111(b)(8).
                    (E) Section 161.
                    (F) Section 164.
                    (G) Section 171.
                    (H) Section 251(c), as so designated by this 
                section.
                    (I) Section 261.
                    (J) Subsections (g) and (h) of section 271.
                    (K) Section 287(b)(1).
                    (L) Section 289.
                    (M) The first instance of the use of such term in 
                section 375(a).
    (k) Additional Technical Amendments.--Sections 155 and 155A of 
title 35, United States Code, and the items relating to those sections 
in the table of sections for chapter 14 of such title, are repealed.
    (l) Effective Date.--The amendments made by this section shall take 
effect upon the expiration of the 1-year period beginning on the date 
of the enactment of this Act and shall apply to proceedings commenced 
on or after that effective date.

SEC. 21. TRAVEL EXPENSES AND PAYMENT OF ADMINISTRATIVE JUDGES.

    (a) Authority To Cover Certain Travel Related Expenses.--Section 
2(b)(11) of title 35, United States Code, is amended by inserting ``, 
and the Office is authorized to expend funds to cover the subsistence 
expenses and travel-related expenses, including per diem, lodging 
costs, and transportation costs, of persons attending such programs who 
are not Federal employees'' after ``world''.
    (b) Payment of Administrative Judges.--Section 3(b) of title 35, 
United States Code, is amended by adding at the end the following:
            ``(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.''.

SEC. 22. PATENT AND TRADEMARK OFFICE FUNDING.

    (a) In General.--Section 42(c) of title 35, United States Code, is 
amended--
            (1) by striking ``(c)'' and inserting ``(c)(1)'';
            (2) in the first sentence, by striking ``shall be 
        available'' and inserting ``shall, subject to paragraph (3), be 
        available'';
            (3) by striking the second sentence; and
            (4) by adding at the end the following:
    ``(2) There is established in the Treasury a Patent and Trademark 
Fee Reserve Fund. If fee collections by the Patent and Trademark Office 
for a fiscal year exceed the amount appropriated to the Office for that 
fiscal year, fees collected in excess of the appropriated amount shall 
be deposited in the Patent and Trademark Fee Reserve Fund. To the 
extent and in the amounts provided in appropriations Acts, amounts in 
the Fund shall be made available until expended only for obligation and 
expenditure by the Office in accordance with paragraph (3).
    ``(3)(A) Any fees that are collected under sections 41, 42, and 
376, and any surcharges on such fees, may only be used for expenses of 
the Office relating to the processing of patent applications and for 
other activities, services, and materials relating to patents and to 
cover a share of the administrative costs of the Office relating to 
patents.
    ``(B) Any fees that are collected under section 31 of the Trademark 
Act of 1946, and any surcharges on such fees, may only be used for 
expenses of the Office relating to the processing of trademark 
registrations and for other activities, services, and materials 
relating to trademarks and to cover a share of the administrative costs 
of the Office relating to trademarks.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2011.

SEC. 23. SATELLITE OFFICES.

    (a) Establishment.--Subject to available resources, the Director 
shall, by not later than the date that is 3 years after the date of the 
enactment of this Act, establish 3 or more satellite offices in the 
United States to carry out the responsibilities of the Office.
    (b) Purposes.--The purposes of the satellite offices established 
under subsection (a) are to--
            (1) increase outreach activities to better connect patent 
        filers and innovators with the Office;
            (2) enhance patent examiner retention;
            (3) improve recruitment of patent examiners;
            (4) decrease the number of patent applications waiting for 
        examination; and
            (5) improve the quality of patent examination.
    (c) Required Considerations.--
            (1) In general.--In selecting the location of each 
        satellite office to be established under subsection (a), the 
        Director--
                    (A) shall ensure geographic diversity among the 
                offices, including by ensuring that such offices are 
                established in different States and regions throughout 
                the Nation;
                    (B) may rely upon any previous evaluations by the 
                Office of potential locales for satellite offices, 
                including any evaluations prepared as part of the 
                Office's Nationwide Workforce Program that resulted in 
                the 2010 selection of Detroit, Michigan, as the first 
                satellite office of the Office;
                    (C) shall evaluate and consider the extent to which 
                the purposes of satellite offices listed under 
                subsection (b) will be achieved;
                    (D) shall consider the availability of scientific 
                and technically knowledgeable personnel in the region 
                from which to draw new patent examiners at minimal 
                recruitment cost; and
                    (E) shall consider the economic impact to the 
                region.
            (2) Open selection process.--Nothing in paragraph (1) shall 
        constrain the Office to only consider its evaluations in 
        selecting the Detroit, Michigan, satellite office.
    (d) Report to Congress.--Not later than the end of the third fiscal 
year that begins after the date of the enactment of this Act, the 
Director shall submit a report to Congress on--
            (1) the rationale of the Director in selecting the location 
        of any satellite office required under subsection (a), 
        including an explanation of how the selected location will 
        achieve the purposes of satellite offices listed under 
        subsection (b) and how the required considerations listed under 
        subsection (c) were met;
            (2) the progress of the Director in establishing all such 
        satellite offices; and
            (3) whether the operation of existing satellite offices is 
        achieving the purposes under subsection (b).

SEC. 24. DESIGNATION OF DETROIT SATELLITE OFFICE.

    (a) Designation.--The satellite office of the United States Patent 
and Trademark Office to be located in Detroit, Michigan, shall be known 
and designated as the ``Elijah J. McCoy United States Patent and 
Trademark Office''.
    (b) References.--Any reference in a law, map, regulation, document, 
paper, or other record of the United States to the satellite office of 
the United States Patent and Trademark Office to be located in Detroit, 
Michigan, referred to in subsection (a) shall be deemed to be a 
reference to the ``Elijah J. McCoy United States Patent and Trademark 
Office''.

SEC. 25. PRIORITY EXAMINATION FOR IMPORTANT TECHNOLOGIES.

    Section 2(b)(2) of title 35, United States Code, is amended--
            (1) in subparagraph (E), by striking ``and'' after the 
        semicolon;
            (2) in subparagraph (F), by inserting ``and'' after the 
        semicolon; and
            (3) by adding at the end the following:
                    ``(G) may, subject to any conditions prescribed by 
                the Director and at the request of the patent 
                applicant, provide for prioritization of examination of 
                applications for products, processes, or technologies 
                that are important to the national economy or national 
                competitiveness without recovering the aggregate extra 
                cost of providing such prioritization, notwithstanding 
                section 41 or any other provision of law;''.

SEC. 26. STUDY ON IMPLEMENTATION.

    (a) PTO Study.--The Director shall conduct a study on the manner in 
which this Act and the amendments made by this Act are being 
implemented by the Office, and on such other aspects of the patent 
policies and practices of the Federal Government with respect to patent 
rights, innovation in the United States, competitiveness of United 
States markets, access by small businesses to capital for investment, 
and such other issues, as the Director considers appropriate.
    (b) Report to Congress.--The Director shall, not later than the 
date that is 4 years after the date of the enactment of this Act, 
submit to the Committees on the Judiciary of the House of 
Representatives and the Senate a report on the results of the study 
conducted under subsection (a), including recommendations for any 
changes to laws and regulations that the Director considers 
appropriate.

SEC. 27. STUDY ON GENETIC TESTING.

    (a) In General.--The Director shall conduct a study on effective 
ways to provide independent, confirming genetic diagnostic test 
activity where gene patents and exclusive licensing for primary genetic 
diagnostic tests exist.
    (b) Items Included in Study.--The study shall include an 
examination of at least the following:
            (1) The impact that the current lack of independent second 
        opinion testing has had on the ability to provide the highest 
        level of medical care to patients and recipients of genetic 
        diagnostic testing, and on inhibiting innovation to existing 
        testing and diagnoses.
            (2) The effect that providing independent second opinion 
        genetic diagnostic testing would have on the existing patent 
        and license holders of an exclusive genetic test.
            (3) The impact that current exclusive licensing and patents 
        on genetic testing activity has on the practice of medicine, 
        including but not limited to: the interpretation of testing 
        results and performance of testing procedures.
            (4) The role that cost and insurance coverage have on 
        access to and provision of genetic diagnostic tests.
    (c) Confirming Genetic Diagnostic Test Activity Defined.--For 
purposes of this section, the term ``confirming genetic diagnostic test 
activity'' means the performance of a genetic diagnostic test, by a 
genetic diagnostic test provider, on an individual solely for the 
purpose of providing the individual with an independent confirmation of 
results obtained from another test provider's prior performance of the 
test on the individual.
    (d) Report.--Not later than 9 months after the date of enactment of 
this Act, the Director shall report to the Committee on the Judiciary 
of the Senate and the Committee on the Judiciary of the House of 
Representatives on the findings of the study and provide 
recommendations for establishing the availability of such independent 
confirming genetic diagnostic test activity.

SEC. 28. PATENT OMBUDSMAN PROGRAM FOR SMALL BUSINESS CONCERNS.

    Using available resources, the Director shall establish and 
maintain in the Office a Patent Ombudsman Program. The duties of the 
Program's staff shall include providing support and services relating 
to patent filings to small business concerns and independent inventors.

SEC. 29. ESTABLISHMENT OF METHODS FOR STUDYING THE DIVERSITY OF 
              APPLICANTS.

    The Director shall, not later than the end of the 6-month period 
beginning on the date of the enactment of this Act, establish methods 
for studying the diversity of patent applicants, including those 
applicants who are minorities, women, or veterans. The Director shall 
not use the results of such study to provide any preferential treatment 
to patent applicants.

SEC. 30. SENSE OF CONGRESS.

    It is the sense of Congress that the patent system should promote 
industries to continue to develop new technologies that spur growth and 
create jobs across the country which includes protecting the rights of 
small businesses and inventors from predatory behavior that could 
result in the cutting off of innovation.

SEC. 31. USPTO STUDY ON INTERNATIONAL PATENT PROTECTIONS FOR SMALL 
              BUSINESSES.

    (a) Study Required.--The Director, in consultation with the 
Secretary of Commerce and the Administrator of the Small Business 
Administration, shall, using the existing resources of the Office, 
carry out a study--
            (1) to determine how the Office, in coordination with other 
        Federal departments and agencies, can best help small 
        businesses with international patent protection; and
            (2) whether, in order to help small businesses pay for the 
        costs of filing, maintaining, and enforcing international 
        patent applications, there should be established either--
                    (A) a revolving fund loan program to make loans to 
                small businesses to defray the costs of such 
                applications, maintenance, and enforcement and related 
                technical assistance; or
                    (B) a grant program to defray the costs of such 
                applications, maintenance, and enforcement and related 
                technical assistance.
    (b) Report.--Not later than 120 days after the date of the 
enactment of this Act, the Director shall issue a report to the 
Congress containing--
            (1) all findings and determinations made in carrying out 
        the study required under subsection (a);
            (2) a statement of whether the determination was made 
        that--
                    (A) a revolving fund loan program described under 
                subsection (a)(2)(A) should be established;
                    (B) a grant program described under subsection 
                (a)(2)(B) should be established; or
                    (C) neither such program should be established; and
            (3) any legislative recommendations the Director may have 
        developed in carrying out such study.

SEC. 32. PRO BONO PROGRAM.

    (a) In General.--The Director shall work with and support 
intellectual property law associations across the country in the 
establishment of pro bono programs designed to assist financially 
under-resourced independent inventors and small businesses.
    (b) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.

SEC. 33. LIMITATION ON ISSUANCE OF PATENTS.

    (a) Limitation.--Notwithstanding any other provision of law, no 
patent may issue on a claim directed to or encompassing a human 
organism.
    (b) Effective Date.--
            (1) In general.--Subsection (a) shall apply to any 
        application for patent that is pending on, or filed on or 
        after, the date of the enactment of this Act.
            (2) Prior applications.--Subsection (a) shall not affect 
        the validity of any patent issued on an application to which 
        paragraph (1) does not apply.

SEC. 34. STUDY OF PATENT LITIGATION.

    (a) GAO Study.--The Comptroller General of the United States shall 
conduct a study of the consequences of litigation by non-practicing 
entities, or by patent assertion entities, related to patent claims 
made under title 35, United States Code, and regulations authorized by 
that title.
    (b) Contents of Study.--The study conducted under this section 
shall include the following:
            (1) The annual volume of litigation described in subsection 
        (a) over the 20-year period ending on the date of the enactment 
        of this Act.
            (2) The volume of cases comprising such litigation that are 
        found to be without merit after judicial review.
            (3) The impacts of such litigation on the time required to 
        resolve patent claims.
            (4) The estimated costs, including the estimated cost of 
        defense, associated with such litigation for patent holders, 
        patent licensors, patent licensees, and inventors, and for 
        users of alternate or competing innovations.
            (5) The economic impact of such litigation on the economy 
        of the United States, including the impact on inventors, job 
        creation, employers, employees, and consumers.
            (6) The benefit to commerce, if any, supplied by non-
        practicing entities or patent assertion entities that prosecute 
        such litigation.
    (c) Report to Congress.--The Comptroller General shall, not later 
than the date that is 1 year after the date of the enactment of this 
Act, 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 results of the study required under this section, 
including recommendations for any changes to laws and regulations that 
will minimize any negative impact of patent litigation that was the 
subject of such study.

SEC. 35. EFFECTIVE DATE.

    Except as otherwise provided in this Act, the provisions of this 
Act shall take effect upon the expiration of the 1-year period 
beginning on the date of the enactment of this Act and shall apply to 
any patent issued on or after that effective date.

SEC. 36. BUDGETARY EFFECTS.

    The budgetary effects of this Act, for the purpose of complying 
with the Statutory Pay-As-You-Go Act of 2010, shall be determined by 
reference to the latest statement titled ``Budgetary Effects of PAYGO 
Legislation'' for this Act, submitted for printing in the Congressional 
Record by the Chairman of the House Budget Committee, provided that 
such statement has been submitted prior to the vote on passage.

SEC. 37. CALCULATION OF 60-DAY PERIOD FOR APPLICATION OF PATENT TERM 
              EXTENSION.

    (a) In General.--Section 156(d)(1) of title 35, United States Code, 
is amended by adding at the end the following flush sentence:
``For purposes of determining the date on which a product receives 
permission under the second sentence of this paragraph, if such 
permission is transmitted after 4:30 P.M., Eastern Time, on a business 
day, or is transmitted on a day that is not a business day, the product 
shall be deemed to receive such permission on the next business day. 
For purposes of the preceding sentence, the term `business day' means 
any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any 
legal holiday under section 6103 of title 5.''.
    (b) Applicability.--The amendment made by subsection (a) shall 
apply to any application for extension of a patent term under section 
156 of title 35, United States Code, that is pending on, that is filed 
after, or as to which a decision regarding the application is subject 
to judicial review on, the date of the enactment of this Act.

            Passed the House of Representatives June 23, 2011.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.
                                                        Calendar No. 87

112th CONGRESS

  1st Session

                               H. R. 1249

_______________________________________________________________________

                                 AN ACT

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

_______________________________________________________________________

                             June 28, 2011

            Read the second time and placed on the calendar
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