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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3600 Introduced in Senate (IS)]

110th CONGRESS
  2d Session
                                S. 3600

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

           September 25 (legislative day, September 17), 2008

    Mr. Kyl introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patent Reform Act 
of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Right of the first inventor to file.
Sec. 3. Inventor's oath or declaration.
Sec. 4. Damages.
Sec. 5. Post-grant review proceedings.
Sec. 6. Definition; patent trial and appeal board.
Sec. 7. Submissions by third parties and other quality enhancements.
Sec. 8. Venue.
Sec. 9. Patent and trademark office regulatory authority.
Sec. 10. Applicant quality submissions.
Sec. 11. Inequitable conduct and civil sanctions for misconduct before 
                            the Office.
Sec. 12. Authority of the Director of the Patent and Trademark Office 
                            to accept late filings.
Sec. 13. Limitation on damages and other remedies with respect to 
                            patents for methods in compliance with 
                            check imaging methods.
Sec. 14. Patent and trademark office funding.
Sec. 15. Technical amendments.
Sec. 16. Effective date; rule of construction.

SEC. 2. RIGHT OF THE FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of 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 `effective filing date of a claimed invention' is--
            ``(1) the filing date of the patent or the application for 
        patent containing the claim to the invention; or
            ``(2) if the patent or application for patent is entitled 
        to a right of priority of any other application under section 
        119, 365(a), or 365(b) or to the benefit of an earlier filing 
        date in the United States under section 120, 121, or 365(c), 
        the filing date of the earliest such application in which the 
        claimed invention is disclosed in the manner provided by the 
        first paragraph of section 112.
    ``(i) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.''.
    (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 patent for a claimed invention may not 
be obtained if--
            ``(1) the claimed invention was patented, described in a 
        printed publication, or otherwise made available to the public 
        (other than through testing undertaken to reduce the invention 
        to practice)--
                    ``(A) more than 1 year before the effective filing 
                date of the claimed invention; or
                    ``(B) 1 year or less before the effective filing 
                date of the claimed invention, other than through 
                disclosures made by the inventor or a joint inventor or 
                by others who obtained the subject matter disclosed 
                directly or indirectly from the inventor or a joint 
                inventor; or
            ``(2) the claimed invention was described in a patent 
        issued under section 151, or in an application for patent 
        published or deemed published under section 122(b), in which 
        the patent or application, as the case may be, names another 
        inventor and was effectively filed before the effective filing 
        date of the claimed invention.
    ``(b) Exceptions.--
            ``(1) Prior inventor disclosure exception.--Subject matter 
        that would otherwise qualify as prior art based upon a 
        disclosure under subparagraph (B) of subsection (a)(1) shall 
        not be prior art to a claimed invention under that subparagraph 
        if the subject matter had, before such disclosure, been 
        publicly disclosed by the inventor or a joint inventor or 
        others who obtained the subject matter disclosed directly or 
        indirectly from the inventor or a joint inventor.
            ``(2) Derivation, prior disclosure, and common assignment 
        exceptions.--Subject matter that would otherwise qualify as 
        prior art only under subsection (a)(2), after taking into 
        account the exception under paragraph (1), shall not be prior 
        art to a claimed invention if--
                    ``(A) the subject matter was obtained directly or 
                indirectly from the inventor or a joint inventor;
                    ``(B) the subject matter had been publicly 
                disclosed by the inventor or a joint inventor or others 
                who obtained the subject matter disclosed, directly or 
                indirectly, from the inventor or a joint inventor 
                before the effective filing date of the application or 
                patent set forth under subsection (a)(2); or
                    ``(C) the subject matter and the claimed invention, 
                not later than the effective filing date of the claimed 
                invention, were owned by the same person or subject to 
                an obligation of assignment to the same person.
            ``(3) Joint research agreement exception.--
                    ``(A) In general.--Subject matter and a claimed 
                invention shall be deemed to have been owned by the 
                same person or subject to an obligation of assignment 
                to the same person in applying the provisions of 
                paragraph (2) if--
                            ``(i) the subject matter and the claimed 
                        invention were 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;
                            ``(ii) the claimed invention was made as a 
                        result of activities undertaken within the 
                        scope of the joint research agreement; and
                            ``(iii) the application for patent for the 
                        claimed invention discloses or is amended to 
                        disclose the names of the parties to the joint 
                        research agreement.
                    ``(B) For purposes of subparagraph (A), the term 
                `joint research agreement' means a written contract, 
                grant, or cooperative agreement entered into by 2 or 
                more persons or entities for the performance of 
                experimental, developmental, or research work in the 
                field of the claimed invention.
            ``(4) Patents and published applications effectively 
        filed.--A patent or application for patent is effectively filed 
        under subsection (a)(2) with respect to any subject matter 
        described in the patent or application--
                    ``(A) as of the filing date of the patent or the 
                application for patent; or
                    ``(B) if the patent or application for patent is 
                entitled to claim a right of priority under section 
                119, 365(a), or 365(b) or to claim the benefit of an 
                earlier filing date under section 120, 121, or 365(c), 
                based upon 1 or more prior filed applications for 
                patent, as of the filing date of the earliest such 
                application that describes the subject matter.''.
            (2) 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; nonobvious subject matter
    ``A patent for a claimed invention may not be obtained though the 
claimed invention is not identically disclosed as set forth in section 
102, if the differences between the claimed invention and the prior art 
are such that the claimed invention as a whole would have been obvious 
before the effective filing date of the claimed invention to a person 
having ordinary skill in the art to which the claimed invention 
pertains. Patentability shall not be negated by the manner in which the 
invention was made.''.
    (d) Repeal of Requirements for Inventions Made Abroad.--Section 104 
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''.
    (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(a) would end before the end of that 2-year 
                        period''; and
                            (ii) by striking ``the statutory'' and 
                        inserting ``that 1-year''; and
                    (B) in paragraph (3), by striking ``any statutory 
                bar date that may occur under this title due to 
                publication, on sale, or public use'' and inserting 
                ``the expiration of the 1-year period referred to in 
                section 102(a)''.
    (h) Repeal of Interfering Patent Remedies.--Section 291 of title 
35, United States Code, and the item relating to that section in the 
table of sections for chapter 29 of title 35, United States Code, are 
repealed.
    (i) Action for Claim to Patent on Derived Invention.--Section 
135(a) of title 35, United States Code, is amended to read as follows:
    ``(a) Dispute Over Right to Patent.--
            ``(1) Institution of derivation proceeding.--An applicant 
        may request initiation of a derivation proceeding to determine 
        the right of the applicant to a patent by filing a request 
        which sets forth with particularity the basis for finding that 
        an earlier applicant derived the claimed invention from the 
        applicant requesting the proceeding and, without authorization, 
        filed an application claiming such invention. Any such request 
        may only be made within 1 year after the date of first 
        publication of an application or of the issuance of a patent, 
        whichever is earlier, containing a claim that is the same or is 
        substantially the same as the claimed invention, must be made 
        under oath, and must be supported by substantial evidence. 
        Whenever the Director determines that patents or applications 
        for patent naming different individuals as the inventor 
        interfere with one another because of a dispute over the right 
        to patent under section 101, the Director shall institute a 
        derivation proceeding for the purpose of determining which 
        applicant is entitled to a patent.
            ``(2) Determination by patent trial and appeal board.--In 
        any proceeding under this subsection, the Patent Trial and 
        Appeal Board--
                    ``(A) shall determine the question of the right to 
                patent;
                    ``(B) in appropriate circumstances, may correct the 
                naming of the inventor in any application or patent at 
                issue; and
                    ``(C) shall issue a final decision on the right to 
                patent.
            ``(3) Derivation proceeding.--The Board may defer action on 
        a request to initiate a derivation proceeding until 3 months 
        after the date on which the Director issues a patent to the 
        applicant whose application has the earlier effective filing 
        date of the commonly claimed invention.
            ``(4) Effect of final decision.--The final decision of the 
        Patent Trial and Appeal Board, if adverse to the claim of an 
        applicant, shall constitute the final refusal by the United 
        States Patent and Trademark Office on the claims involved. The 
        Director may issue a patent to an applicant who is determined 
        by the Patent Trial and Appeal Board to have the right to 
        patent. The final decision of the Board, if adverse to a 
        patentee, shall, if no appeal or other review of the decision 
        has been or can be taken or had, constitute cancellation of the 
        claims involved in the patent, and notice of such cancellation 
        shall be endorsed on copies of the patent distributed after 
        such cancellation by the United States Patent and Trademark 
        Office.''.
    (j) Elimination of References to Interferences.--(1) Sections 6, 
41, 134, 141, 145, 146, 154, 305, and 314 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) Sections 141, 146, and 154 of title 35, United States Code, are 
each amended--
            (A) by striking ``an interference'' each place it appears 
        and inserting ``a derivation proceeding''; and
            (B) by striking ``interference'' each additional place it 
        appears and inserting ``derivation proceeding''.
    (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 135 of title 35, United States 
Code, is amended to read as follows:
``Sec. 135. Derivation proceedings''.
    (5) 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''.
    (6) Section 154(b)(1)(C) of title 35, United States Code, is 
amended by striking ``interferences'' and inserting ``derivation 
proceedings''.
    (7) 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.''.
    (8) 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.''.
    (9) 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.''.
    (10) Certain Appeals.--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 patent applications, derivation proceedings, and 
                post-grant review proceedings, at the instance of an 
                applicant for a patent or any party to a patent 
                interference (commenced before the effective date of 
                the Patent Reform Act of 2008), derivation proceeding, 
                or post-grant review proceeding, and any such appeal 
                shall waive any right of such applicant or party to 
                proceed under section 145 or 146 of title 35;''.

SEC. 3. 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 that 
commences the national stage under section 371 (including an 
application under section 111 that is filed by an inventor for an 
invention for which an application has previously been filed under this 
title by that inventor) shall include, or be amended to include, the 
name of the inventor of any claimed invention in the application. 
Except as otherwise provided in this section, an individual who is the 
inventor or a joint inventor of a claimed invention in an application 
for patent shall execute an oath or declaration in connection with the 
application.
    ``(b) Required Statements.--An oath or declaration under subsection 
(a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by the affiant or declarant; and
            ``(2) such individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) is permitted with respect to any individual 
        who--
                    ``(A) is unable to file the oath or declaration 
                under subsection (a) because the individual--
                            ``(i) is deceased;
                            ``(ii) is under legal incapacity; or
                            ``(iii) cannot be found or reached after 
                        diligent effort; or
                    ``(B) is under an obligation to assign the 
                invention but has refused to make the oath or 
                declaration required under subsection (a).
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--The requirements under this section shall not 
apply to an individual with respect to an application for patent in 
which the individual is named as the inventor or a joint inventor and 
that claims the benefit under section 120 or 365(c) of the filing of an 
earlier-filed application, if--
            ``(1) an oath or declaration meeting the requirements of 
        subsection (a) was executed by the individual and was filed in 
        connection with the earlier-filed application;
            ``(2) a substitute statement meeting the requirements of 
        subsection (d) was filed in the earlier filed application with 
        respect to the individual; or
            ``(3) an assignment meeting the requirements of subsection 
        (e) was executed with respect to the earlier-filed application 
        by the individual and was recorded in connection with the 
        earlier-filed application.
    ``(h) Supplemental and Corrected Statements; Filing Additional 
Statements.--
            ``(1) In general.--Any person making a statement required 
        under this section may withdraw, replace, or otherwise correct 
        the statement at any time. If a change is made in the naming of 
        the inventor requiring the filing of 1 or more additional 
        statements under this section, the Director shall establish 
        regulations under which such additional statements may be 
        filed.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration under subsection 
        (a) or an assignment meeting the requirements of subsection (e) 
        with respect to an application for patent, the Director may not 
        thereafter require that individual to make any additional oath, 
        declaration, or other statement equivalent to those required by 
        this section in connection with the application for patent or 
        any patent issuing thereon.
            ``(3) Savings clause.--No patent shall be invalid or 
        unenforceable based upon the failure to comply with a 
        requirement under this section if the failure is remedied as 
        provided under paragraph (1).
    ``(i) 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 striking 
                ``and oath''; and
                    (C) by striking ``and oath'' each place it appears.
            (4) Conforming amendment.--The item relating to section 115 
        in the table of sections for chapter 10 of title 35, United 
        States Code, is amended to read as follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--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.''.
    (c) Specification.--Section 112 of title 35, United States Code, is 
amended--
            (1) in the first paragraph--
                    (A) by striking ``The specification'' and inserting 
                ``(a) In General.--The specification''; and
                    (B) by striking ``, and shall set forth'' and all 
                that follows through ``his invention''; and
            (2) in the second paragraph--
                    (A) by striking ``The specifications'' and 
                inserting ``(b) Conclusion.--The specifications''; and
                    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';
            (3) in the third paragraph, by striking ``A claim'' and 
        inserting ``(c) Form.--A claim'';
            (4) in the fourth paragraph, by striking ``Subject to the 
        following paragraph,'' and inserting ``(d) Reference in 
        Dependent Forms.--Subject to subsection (e),'';
            (5) in the fifth paragraph, by striking ``A claim'' and 
        inserting ``(e) Reference in Multiple Dependent Form.--A 
        claim''; and
            (6) in the last paragraph, by striking ``An element'' and 
        inserting ``(f) Element in Claim for a Combination.--An 
        element''.

SEC. 4. DAMAGES.

    (a) Damages.--Section 284 of title 35, United States Code, is 
amended to read as follows:
``Sec. 284. Damages
    ``(a) In General.--
            ``(1) Compensatory damages.--Upon finding for a claimant, 
        the court shall award the claimant damages adequate to 
        compensate for the infringement, but in no event less than a 
        reasonable royalty for the use made of the invention by the 
        infringer, together with interest and costs as determined by 
        the court.
            ``(2) Increased damages.--When the damages are not found by 
        a jury, the court shall assess them. In either event the court 
        may increase the damages up to 3 times the amount found or 
        assessed. Increased damages under this paragraph shall not 
        apply to provisional rights under section 154(d) of this title.
            ``(3) Limitation.--Subsections (b) through (i) of this 
        section apply only to the determination of the amount of 
        reasonable royalty and shall not apply to the determination of 
        other types of damages.
    ``(b) Hypothetical Negotiation.--For purposes of this section, the 
term `reasonable royalty' means the amount that the infringer would 
have agreed to pay and the claimant would have agreed to accept if the 
infringer and claimant had voluntarily negotiated a license for use of 
the invention at the time just prior to when the infringement began. 
The court or the jury, as the case may be, shall assume that the 
infringer and claimant would have agreed that the patent is valid, 
enforceable, and infringed.
    ``(c) Appropriate Factors.--The court or the jury, as the case may 
be, may consider any factors that are relevant to the determination of 
the amount of a reasonable royalty.
    ``(d) Standardized Measures.--The amount of a reasonable royalty 
shall not be determined by the use of a standard or average ratio for 
the division of profits, an industry average rate for royalties, or 
other methods that are not based on the particular benefits or 
advantages of the use of the invention, unless the party asserting the 
propriety of such a method demonstrates that--
            ``(1) the use made of the invention is the primary reason 
        for demand for the infringing product or process;
            ``(2) the method consists of the use of an established 
        royalty;
            ``(3) the method consists of the use of an industry average 
        range to confirm that an estimate of the amount of a reasonable 
        royalty that is produced by an independently allowable method 
        falls within a reasonable range; or
            ``(4) no other method is reasonably available to determine 
        the amount of a reasonable royalty and the use of the method is 
        otherwise appropriate.
    ``(e) Comparable Patents.--
            ``(1) In general.--The amount of a reasonable royalty shall 
        not be determined by comparison to royalties paid for patents 
        other than the patent in suit unless--
                    ``(A) such other patents are used in the same or an 
                analogous technological field;
                    ``(B) such other patents are found to be 
                economically comparable to the patent in suit; and
                    ``(C) evidence of the value of such other patents 
                is presented in conjunction with or as confirmation of 
                other evidence for determining the amount of a 
                reasonable royalty.
            ``(2) Factors.--Factors that may be considered to determine 
        whether another patent is economically comparable to the patent 
        in suit under paragraph (1)(A) include whether--
                    ``(A) the other patent is comparable to the patent 
                in suit in terms of the overall significance of the 
                other patent to the product or process licensed under 
                such other patent; and
                    ``(B) the product or process that uses the other 
                patent is comparable to the infringing product or 
                process based upon its profitability or a like measure 
                of value.
    ``(f) Financial Condition.--The financial condition of the 
infringer as of the time of the trial shall not be relevant to the 
determination of the amount of a reasonable royalty.
    ``(g) Sequencing.--Either party may request that a patent-
infringement trial be sequenced so that the court or the jury, as the 
case may be, decides questions of the patent's infringement and 
validity before the issue of the amount of a reasonable royalty is 
presented to the court or the jury, as the case may be. The court shall 
grant such a request absent good cause to reject the request, such as 
the absence of issues of significant damages or infringement and 
validity. The sequencing of a trial pursuant to this subsection shall 
not affect other matters, such as the timing of discovery.
    ``(h) Experts.--In addition to the expert disclosure requirements 
under rule 26(a)(2) of the Federal Rules of Civil Procedure, a party 
that intends to present the testimony of an expert relating to the 
amount of a reasonable royalty shall provide--
            ``(1) to the other parties to that civil action, the expert 
        report relating to damages, including all data and other 
        information considered by the expert in forming the opinions of 
        the expert; and
            ``(2) to the court, at the same time as to the other 
        parties, the complete statement of all opinions that the expert 
        will express and the basis and reasons for those opinions.
    ``(i) Jury Instructions.--On the motion of any party and after 
allowing any other party to the civil action a reasonable opportunity 
to be heard, the court shall determine whether there is no legally 
sufficient evidence to support 1 or more of the contentions of a party 
relating to the amount of a reasonable royalty. The court shall 
identify for the record those factors that are supported by legally 
sufficient evidence, and shall instruct the jury to consider only those 
factors when determining the amount of a reasonable royalty. The jury 
may not consider any factor for which legally sufficient evidence has 
not been admitted at trial.''.
    (b) Testimony by Experts.--Chapter 29 of title 35, United States 
Code, as amended by section 11, is further amended by adding at the end 
the following:
``Sec. 299A. Testimony by experts
    ``(a) Federal Rule.--In a patent case, the court shall ensure that 
the testimony of a witness qualified as an expert by knowledge, skill, 
experience, training, or education meets the requirements set forth in 
rule 702 of the Federal Rules of Evidence.
    ``(b) Determination of Reliability.--To determine whether an 
expert's principles and methods are reliable, the court may consider, 
among other factors--
            ``(1) whether the expert's theory or technique can be or 
        has been tested;
            ``(2) whether the theory or technique has been subjected to 
        peer review and publication;
            ``(3) the known or potential error rate of the theory or 
        technique, and the existence and maintenance of standards 
        controlling the technique's operation;
            ``(4) the degree of acceptance of the theory or technique 
        within the relevant scientific or specialized community;
            ``(5) whether the theory or technique is employed 
        independently of litigation; or
            ``(6) whether the expert has adequately considered or 
        accounted for readily available alternative theories or 
        techniques.
    ``(c) Required Explanation.--The court shall explain its reasons 
for allowing or barring the introduction of an expert's proposed 
testimony under this section.''.

SEC. 5. POST-GRANT REVIEW PROCEEDINGS.

    (a) Reexamination.--Section 303(a) of title 35, United States Code, 
is amended to read as follows:
    ``(a) Within 3 months after the owner of a patent files a request 
for reexamination under section 302, the Director shall determine 
whether a substantial new question of patentability affecting any claim 
of the patent concerned is raised by the request, with or without 
consideration of other patents or printed publications. The existence 
of a substantial new question of patentability is not precluded by the 
fact that a patent or printed publication was previously cited by or to 
the Office or considered by the Office.''.
    (b) Repeal of Optional Inter Partes Reexamination Procedures.--
            (1) In general.--Sections 311, 312, 313, 314, 315, 316, 
        317, and 318 of title 35, United States Code, and the items 
        relating to those sections in the table of sections, are 
        repealed.
            (2) Effective date.--Notwithstanding paragraph (1), the 
        provisions of sections 311, 312, 313, 314, 315, 316, 317, and 
        318 of title 35, United States Code, shall continue to apply to 
        any inter partes reexamination determination request filed on 
        or before the effective date of subsection (c).
    (c) Post-Grant Review Proceedings.--Part III of title 35, United 
States Code, is amended by adding at the end the following:

              ``CHAPTER 32--POST-GRANT REVIEW PROCEEDINGS

``Sec.
``321. Petition for post-grant review.
``322. Relation to other proceedings or actions.
``323. Requirements of petition.
``324. Publication and public availability of petition.
``325. Consolidation or stay of proceedings.
``326. Submission of additional information.
``327. Institution of post-grant review proceedings.
``328. Determination not appealable.
``329. Conduct of post-grant review proceedings.
``330. Patent owner response.
``331. Proof and evidentiary standards.
``332. Amendment of the patent.
``333. Settlement.
``334. Decision of the board.
``335. Effect of decision.
``336. Appeal.
``Sec. 321. Petition for post-grant review
    ``(a) In General.--Subject to the provisions of this chapter, a 
person who has a substantial economic interest adverse to a patent may 
file with the Office a petition to institute a post-grant review 
proceeding for that patent. If instituted, such a proceeding shall be 
deemed to be either a first-period proceeding or a second-period 
proceeding. The Director shall establish, by regulation, fees to be 
paid by the person requesting the proceeding, in such amounts as the 
Director determines to be reasonable, considering the aggregate costs 
of the post-grant review proceeding and the status of the petitioner.
    ``(b) First-Period Proceeding.--
            ``(1) Scope.--A petitioner in a first-period proceeding 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).
            ``(2) Filing deadline.--A petition for a first-period 
        proceeding shall be filed not later than 9 months after the 
        grant of the patent or issuance of a reissue patent.
    ``(c) Second-Period Proceeding.--
            ``(1) Scope.--A petitioner in a second-period proceeding 
        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.
            ``(2) Filing deadline.--A petition for a second-period 
        proceeding shall be filed after the later of either--
                    ``(A) 9 months after the grant of a patent or 
                issuance of a reissue of a patent; or
                    ``(B) if a first-period proceeding is instituted 
                under section 327, the date of the termination of such 
                first-period proceeding.
``Sec. 322. Relation to other proceedings or actions
    ``(a) Early Actions.--A first-period proceeding may not be 
instituted until after a civil action alleging infringement of the 
patent is finally concluded if--
            ``(1) the infringement action is filed within 3 months 
        after the grant of the patent;
            ``(2) a stay of the proceeding is requested by the patent 
        owner;
            ``(3) the Director determines that the infringement action 
        is likely to address the same or substantially the same 
        questions of patentability that would be addressed in the 
        proceeding; and
            ``(4) the Director determines that a stay of the proceeding 
        would not be contrary to the interests of justice.
    ``(b) Pending Civil Actions.--
            ``(1) Infringer's action.--A post-grant review proceeding 
        may not be instituted or maintained if the petitioner or real 
        party in interest has filed a civil action challenging the 
        validity of a claim of the patent.
            ``(2) Patent owner's action.--A second-period proceeding 
        may not be instituted if the petition requesting the proceeding 
        is filed more than 3 months after the date on which the 
        petitioner, real party in interest, or his privy is required to 
        respond to a civil action alleging infringement of the patent.
            ``(3) Stay or dismissal.--The Director may stay or dismiss 
        a second-period proceeding if the petitioner or real party in 
        interest challenges the validity of a claim of the patent in a 
        civil action.
    ``(c) Duplicative Proceedings.--A post-grant review or 
reexamination proceeding may not be instituted if--
            ``(1) the petition requesting the proceeding identifies the 
        same petitioner or real party in interest and the same patent 
        as a previous petition requesting a post-grant review 
        proceeding; or
            ``(2) the petition requests cancellation of a claim in a 
        reissue patent that is identical to a claim in the original 
        patent from which the reissue patent was issued, and the time 
        limitations in section 321 would bar filing a post-grant review 
        petition for such original patent.
    ``(d) Estoppel.--The petitioner in any post-grant review proceeding 
under this chapter may not request or maintain a proceeding before the 
Office with respect to a claim, or 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 that a claim in a 
patent is invalid, on any ground that--
            ``(1) the petitioner, real party in interest, or his privy 
        raised during a post-grant review proceeding resulting in a 
        final decision under section 334; or
            ``(2) the petitioner, real party in interest, or his privy 
        could have raised during a second-period proceeding resulting 
        in a final decision under section 334.
``Sec. 323. Requirements of petition
    ``A petition filed under section 321 may be considered only if--
            ``(1) the petition is accompanied by payment of the fee 
        established by the Director under section 321;
            ``(2) the petition identifies 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 each challenged claim, including--
                    ``(A) copies of patents and printed publications 
                that the petitioner relies upon in support of the 
                petition; and
                    ``(B) affidavits or declarations of supporting 
                evidence and opinions, if the petitioner relies on 
                other factual evidence or on expert opinions;
            ``(4) the petition provides such other information as the 
        Director may require by regulation; and
            ``(5) the petitioner provides copies of any of the 
        documents required under paragraphs (3) and (4) to the patent 
        owner or, if applicable, the designated representative of the 
        patent owner.
``Sec. 324. Publication and public availability of petition
    ``(a) In General.--As soon as practicable after the receipt of a 
petition under section 321, the Director shall--
            ``(1) publish the petition in the Federal Register; and
            ``(2) make that petition available on the website of the 
        United States Patent and Trademark Office.
    ``(b) Public Availability.--The file of any proceeding under this 
chapter shall be made available to the public except that any petition 
or document filed with the intent that it be sealed shall be 
accompanied by a motion to seal. Such petition or document shall be 
treated as sealed, pending the outcome of the ruling on the motion. 
Failure to file a motion to seal will result in the pleadings being 
placed in the public record.
``Sec. 325. Consolidation or stay of proceedings
    ``(a) First-Period Proceedings.--If more than 1 petition for a 
first-period proceeding is properly filed against the same patent and 
the Director determines that more than 1 of these petitions warrants 
the instituting of a first-period proceeding under section 327, the 
Director shall consolidate such proceedings into a single first-period 
proceeding.
    ``(b) Second-Period Proceedings.--If the Director institutes a 
second-period proceeding, the Director, in his discretion, may join as 
a party to that second-period proceeding any person who properly files 
a petition under section 321 that the Director, after receiving a 
preliminary response under section 330 or the expiration of the time 
for filing such a response, determines warrants the instituting of a 
second-period proceeding under section 327.
    ``(c) Other Proceedings.--Notwithstanding sections 135(a), 251, and 
252, and chapter 30, during the pendency of any post-grant review 
proceeding the Director may determine the manner in which any 
proceeding or matter involving the patent that is before the Office may 
proceed, including providing for stay, transfer, consolidation, or 
termination of any such proceeding or matter.
``Sec. 326. Submission of additional information
    ``A petitioner under this chapter shall file such additional 
information with respect to the petition as the Director may require by 
regulation.
``Sec. 327. Institution of post-grant review proceedings
    ``(a) Threshold.--The Director may not authorize a post-grant 
review proceeding to commence unless the Director determines that the 
information presented in the petition, if such information is not 
rebutted, would provide a sufficient basis to conclude that at least 1 
of the claims challenged in the petition is unpatentable.
    ``(b) Additional Grounds.--In the case of a petition for a first-
period proceeding, the determination required under subsection (a) may 
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) Successive Petitions.--The Director may not institute an 
additional second-period proceeding if a prior second-period proceeding 
has been instituted and the time period established under section 
329(b)(2) for requesting joinder under section 325(b) has expired, 
unless the Director determines that--
            ``(1) the additional petition satisfies the requirements 
        under subsection (a); and
            ``(2) either--
                    ``(A) the additional petition presents exceptional 
                circumstances; or
                    ``(B) such an additional proceeding is reasonably 
                required in the interests of justice.
    ``(d) Timing.--The Director shall determine whether to institute a 
post-grant review proceeding under this chapter within 3 months after 
receiving a preliminary response under section 330 or the expiration of 
the time for filing such a response.
    ``(e) Notice.--The Director shall notify the petitioner and patent 
owner, in writing, of the Director's determination under subsection 
(a). The Director shall publish each notice of institution of a post-
grant review proceeding in the Federal Register and make such notice 
available on the website of the United States Patent and Trademark 
Office. Such notice shall list the date on which the proceeding shall 
commence.
``Sec. 328. Determination not appealable
    ``The determination by the Director regarding whether to institute 
a post-grant review proceeding under section 327 shall not be 
appealable.
``Sec. 329. Conduct of post-grant review proceedings
    ``(a) In General.--The Director shall prescribe regulations--
            ``(1) in accordance with section 2(b)(2), establishing and 
        governing post-grant review proceedings under this chapter and 
        their relationship to other proceedings under this title;
            ``(2) for setting forth the standards for showings of 
        sufficient grounds to institute a proceeding under section 
        321(a) and subsections (a), (b), and (c) of section 327;
            ``(3) providing for the publication in the Federal Register 
        all requests for the institution of post-grant proceedings;
            ``(4) establishing procedures for the submission of 
        supplemental information after the petition is filed; and
            ``(5) setting forth procedures for discovery of relevant 
        evidence, including that such discovery shall be limited to 
        evidence directly related to factual assertions advanced by 
        either party in the proceeding.
    ``(b) Post-Grant Review Regulations.--The regulations required 
under subsection (a)(1) shall--
            ``(1) require that the final determination in any post-
        grant review proceeding be issued not later than 1 year after 
        the date on which the Director notices the institution of a 
        post-grant proceeding under this chapter, except that 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(b);
            ``(2) set a time period for requesting joinder under 
        section 325(b);
            ``(3) allow for discovery upon order of the Director, 
        provided that in a second-period proceeding 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;
            ``(4) prescribe sanctions for abuse of discovery, abuse of 
        process, or any other improper use of the proceeding, such as 
        to harass or to cause unnecessary delay or unnecessary increase 
        in the cost of the proceeding;
            ``(5) provide for protective orders governing the exchange 
        and submission of confidential information;
            ``(6) ensure that any information submitted by the patent 
        owner in support of any amendment entered under section 332 is 
        made available to the public as part of the prosecution history 
        of the patent; and
            ``(7) provide either party with the right to an oral 
        hearing as part of the proceeding.
    ``(c) Considerations.--In prescribing regulations under this 
section, the Director shall consider the effect on the economy, the 
integrity of the patent system, and the efficient administration of the 
Office.
    ``(d) Conduct of Proceeding.--The Patent Trial and Appeal Board 
shall, in accordance with section 6(b), conduct each proceeding 
authorized by the Director.
``Sec. 330. Patent owner response
    ``(a) Preliminary Response.--If a post-grant review petition is 
filed under section 321, the patent owner shall have the right to file 
a preliminary response--
            ``(1) in the case of a first-period proceeding, within 2 
        months of the expiration of the time for filing a petition for 
        a first-period proceeding; and
            ``(2) in the case of a second-period proceeding, within a 
        time period set by the Director.
    ``(b) Content of Response.--A preliminary response to a petition 
for a post-grant review proceeding shall set forth reasons why no post-
grant review proceeding should be instituted based upon the failure of 
the petition to meet any requirement of this chapter.
    ``(c) Additional Response.--After a post-grant review proceeding 
under this chapter has been instituted with respect to a patent, the 
patent owner shall have the right to file, within a time period set by 
the Director, a response to the petition. The patent owner shall file 
with the response, through affidavits or declarations, any additional 
factual evidence and expert opinions on which the patent owner relies 
in support of the response.
``Sec. 331. Proof and evidentiary standards
    ``(a) In General.--The presumption of validity set forth in section 
282 of this title shall apply in post-grant review proceedings 
instituted under this chapter.
    ``(b) Burden of Proof.--The petitioner shall have the burden of 
proving a proposition of invalidity by a preponderance of the evidence 
in a first-period proceeding and by clear and convincing evidence in a 
second-period proceeding.
``Sec. 332. Amendment of the patent
    ``(a) In General.--During a post-grant review proceeding instituted 
under this chapter, the patent owner may file 1 motion to amend the 
patent in 1 or more of the following ways:
            ``(1) Cancel any challenged patent claim.
            ``(2) For each challenged claim, propose a reasonable 
        number of substitute claims.
    ``(b) 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 333, 
or upon the request of the patent owner for good cause shown.
    ``(c) Scope of Claims.--An amendment under this section may not 
enlarge the scope of the claims of the patent or introduce new matter.
``Sec. 333. Settlement
    ``(a) In General.--A post-grant review proceeding 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 matter before the request for termination is 
filed. If the post-grant review proceeding is terminated with respect 
to a petitioner under this section, no estoppel under this chapter 
shall apply to that petitioner. If no petitioner remains in the post-
grant review proceeding, the Office may terminate the post-grant review 
proceeding or proceed to a final written decision under section 334.
    ``(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 proceeding under this section shall be in writing and a 
true copy of such agreement or understanding shall be filed in the 
United States Patent and Trademark Office before the termination of the 
post-grant review proceeding as between the parties to the agreement or 
understanding. If any party filing such agreement or understanding so 
requests, the copy shall be kept separate from the file of the post-
grant review proceeding, and shall be made available only to Federal 
Government agencies upon written request, or to any other person on a 
showing of good cause.
``Sec. 334. Decision of the board
    ``If the post-grant review proceeding is instituted and not 
dismissed under this chapter, the Patent Trial and Appeal Board shall 
issue a final written decision with respect to the patentability of any 
patent claim challenged and any new claim added under section 332.
``Sec. 335. Effect of decision
    ``If the Patent Trial and Appeal Board issues a final decision 
under section 334 and the time for appeal has expired or any appeal 
proceeding has terminated, the Director shall issue and publish a 
certificate canceling any claim of the patent finally determined to be 
unpatentable and incorporating in the patent by operation of the 
certificate any new claim determined to be patentable.
``Sec. 336. Appeal
    ``A party dissatisfied with the final determination of the Patent 
Trial and Appeal Board in a post-grant review proceeding instituted 
under this chapter may appeal the determination under sections 141 
through 144. Any party to the post-grant review proceeding shall have 
the right to be a party to the appeal.''.
    (d) Technical and 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 
                            Proceedings......................................
                            .....321.''.
    (e) Regulations and Effective Date.--
            (1) Regulations.--The Under Secretary of Commerce for 
        Intellectual Property and the Director of the United States 
        Patent and Trademark Office (in this subsection referred to as 
        the ``Director'') shall, not later than the date that is 1 year 
        after the date of the enactment of this Act, issue regulations 
        to carry out chapter 32 of title 35, United States Code, as 
        added by subsection (c) of this section.
            (2) Applicability.--The amendments made by subsection (c) 
        shall take effect on the date that is 1 year after the date of 
        the enactment of this Act and shall apply only to patents 
        issued on or after that date, except that, in the case of a 
        patent issued before the effective date of subsection (c) on an 
        application filed between September 15, 1999 and the effective 
        date of subsection (c), a petition for second-period review may 
        be filed.
            (3) Pending interferences.--The Director shall determine 
        the procedures under which interferences commenced before the 
        effective date under paragraph (2) are to proceed, including 
        whether any such interference is to be dismissed without 
        prejudice to the filing of a petition for a post-grant review 
        proceeding under chapter 32 of title 35, United States Code, or 
        is to proceed as if this Act had not been enacted. The Director 
        shall include such procedures in regulations issued under 
        paragraph (1).

SEC. 6. DEFINITION; PATENT TRIAL AND APPEAL BOARD.

    (a) Definition.--Section 100 of title 35, United States Code, as 
amended by section 2 of this Act, is further amended in subsection (e), 
by striking ``or inter partes reexamination under section 311''.
    (b) Patent Trial and Appeal Board.--Section 6 of title 35, United 
States Code, is amended to read as follows:
``Sec. 6. Patent trial and appeal board
    ``(a) Establishment and Composition.--There shall be in the Office 
a Patent Trial and Appeal Board. The Director, the Deputy Director, the 
Commissioner for Patents, the Commissioner for Trademarks, and the 
administrative patent judges shall constitute the Patent Trial and 
Appeal Board. The administrative patent judges shall be persons of 
competent legal knowledge and scientific ability who are appointed by 
the Secretary. Any reference in any Federal law, Executive order, rule, 
regulation, or delegation of authority, or any document of or 
pertaining to the Board of Patent Appeals and Interferences is deemed 
to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall--
            ``(1) on written appeal of an applicant, review adverse 
        decisions of examiners upon application for patents;
            ``(2) on written appeal of a patent owner, review adverse 
        decisions of examiners upon patents in reexamination 
        proceedings under chapter 30;
            ``(3) determine priority and patentability of invention in 
        derivation proceedings under subsection 135(a); and
            ``(4) conduct post-grant review proceedings under chapter 
        32.
Each appeal, derivation, and post-grant review proceeding shall be 
heard by at least 3 members of the Patent Trial and Appeal Board, who 
shall be designated by the Director. Only the Patent Trial and Appeal 
Board may grant rehearings.''.

SEC. 7. SUBMISSIONS BY THIRD PARTIES AND OTHER QUALITY ENHANCEMENTS.

    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 person may submit for consideration 
        and inclusion in the record of a patent application, any 
        patent, published patent application, or other publication of 
        potential relevance to the examination of the application, if 
        such submission is made in writing before the earlier of--
                    ``(A) the date a notice of allowance under section 
                151 is mailed in the application for patent; or
                    ``(B) either--
                            ``(i) 6 months after the date on which the 
                        application for patent is published under 
                        section 122, or
                            ``(ii) the date of the first rejection 
                        under section 132 of any claim by the examiner 
                        during the examination of the application for 
                        patent,
                whichever occurs later.
            ``(2) Other requirements.--Any submission under paragraph 
        (1) shall--
                    ``(A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    ``(B) be accompanied by such fee as the Director 
                may prescribe; and
                    ``(C) include a statement by the person making such 
                submission affirming that the submission was made in 
                compliance with this section.''.

SEC. 8. VENUE.

    (a) Venue for Patent Cases.--Section 1400 of title 28, United 
States Code, is amended by striking subsection (b) and inserting the 
following:
    ``(b) Notwithstanding subsections (b) and (c) of section 1391 of 
this title, any civil action for patent infringement or any action for 
declaratory judgment arising under any Act of Congress relating to 
patents may be brought only in a judicial district--
            ``(1) where the defendant has its principal place of 
        business or is incorporated;
            ``(2) where the defendant has committed acts of 
        infringement and has a regular and established physical 
        facility;
            ``(3) where the defendant has agreed or consented to be 
        sued;
            ``(4) where the invention claimed in a patent in suit was 
        conceived or actually reduced to practice;
            ``(5) where significant research and development of an 
        invention claimed in a patent in suit occurred at a regular and 
        established physical facility;
            ``(6) where a party has a regular and established physical 
        facility that such party controls and operates and has--
                    ``(A) engaged in management of significant research 
                and development of an invention claimed in a patent in 
                suit;
                    ``(B) manufactured a product that embodies an 
                invention claimed in a patent in suit; or
                    ``(C) implemented a manufacturing process that 
                embodies an invention claimed in a patent in suit;
            ``(7) where a nonprofit organization whose function is the 
        management of inventions on behalf of an institution of higher 
        education (as that term is defined under section 101(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1001(a))), including 
        the patent in suit, has its principal place of business; or
            ``(8) for foreign defendants that do not meet the 
        requirements of paragraphs (1) or (2), according to section 
        1391(d) of this title.''.
    (b) Technical Amendments Relating to Venue.--Sections 32, 145, 146, 
154(b)(4)(A), and 293 of title 35, United States Code, and section 
1071(b)(4) of an Act entitled ``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 (commonly referred to as the ``Trademark Act of 
1946'' or the ``Lanham Act'') 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''.

SEC. 9. PATENT AND TRADEMARK OFFICE REGULATORY AUTHORITY.

    (a) Fee Setting.--
            (1) In general.--The Director shall have authority to set 
        or adjust by rule any fee established or charged by the Office 
        under sections 41 and 376 of title 35, United States Code or 
        under section 31 of the Trademark Act of 1946 (15 U.S.C. 1113) 
        for the filing or processing of any submission to, and for all 
        other services performed by or materials furnished by, the 
        Office, provided that such fee amounts are set to reasonably 
        compensate the Office for the services performed.
            (2) Reduction of fees in certain fiscal years.--In any 
        fiscal year, the Director--
                    (A) shall consult with the Patent Public Advisory 
                Committee and the Trademark Public Advisory Committee 
                on the advisability of reducing any fees described in 
                paragraph (1); and
                    (B) after that consultation may reduce such fees.
            (3) Role of the public advisory committee.--The Director 
        shall--
                    (A) submit to the Patent or Trademark Public 
                Advisory Committee, or both, as appropriate, any 
                proposed fee under paragraph (1) not less than 45 days 
                before publishing any proposed fee in the Federal 
                Register;
                    (B) provide the relevant advisory committee 
                described in subparagraph (A) a 30-day period following 
                the submission of any proposed fee, on which to 
                deliberate, consider, and comment on such proposal, and 
                require that--
                            (i) during such 30-day period, the relevant 
                        advisory committee hold a public hearing 
                        related to such proposal; and
                            (ii) the Director shall assist the relevant 
                        advisory committee in carrying out such public 
                        hearing, including by offering the use of 
                        Office resources to notify and promote the 
                        hearing to the public and interested 
                        stakeholders;
                    (C) require the relevant advisory committee to make 
                available to the public a written report detailing the 
                comments, advice, and recommendations of the committee 
                regarding any proposed fee;
                    (D) consider and analyze any comments, advice, or 
                recommendations received from the relevant advisory 
                committee before setting or adjusting any fee; and
                    (E) notify, through the Chair and Ranking Member of 
                the Senate and House Judiciary Committees, the Congress 
                of any final decision regarding proposed fees.
            (4) Publication in the federal register.--
                    (A) In general.--Any rules prescribed under this 
                subsection shall be published in the Federal Register.
                    (B) Rationale.--Any proposal for a change in fees 
                under this section shall--
                            (i) be published in the Federal Register; 
                        and
                            (ii) include, in such publication, the 
                        specific rationale and purpose for the 
                        proposal, including the possible expectations 
                        or benefits resulting from the proposed change.
                    (C) Public comment period.--Following the 
                publication of any proposed fee in the Federal Register 
                pursuant to subparagraph (A), the Director shall seek 
                public comment for a period of not less than 45 days.
            (5) Congressional comment period.--Following the 
        notification described in paragraph (3)(E), Congress shall have 
        not more than 45 days to consider and comment on any proposed 
        fee under paragraph (1). No proposed fee shall be effective 
        prior to the end of such 45-day comment period.
            (6) Rule of construction.--No rules prescribed under this 
        subsection may diminish--
                    (A) an applicant's rights under this title or the 
                Trademark Act of 1946; or
                    (B) any rights under a ratified treaty.
    (b) Fees for Patent Services.--Division B of Public Law 108-447 is 
amended in title VIII of the Departments of Commerce, Justice and 
State, the Judiciary, and Related Agencies Appropriations Act, 2005, in 
section 801(a) by striking ``During fiscal years 2005, 2006, and 
2007,'', and inserting ``Until such time as the Director sets or 
adjusts the fees otherwise,''.
    (c) Adjustment of Trademark Fees.--Division B of Public Law 108-447 
is amended in title VIII of the Departments of Commerce, Justice and 
State, the Judiciary and Related Agencies Appropriations Act, 2005, in 
section 802(a) by striking ``During fiscal years 2005, 2006, and 
2007,'', and inserting ``Until such time as the Director sets or 
adjusts the fees otherwise,''.
    (d) Effective Date, Applicability, and Transitional Provision.--
Division B of Public Law 108-447 is amended in title VIII of the 
Departments of Commerce, Justice and State, the Judiciary and Related 
Agencies Appropriations Act, 2005, in section 803(a) by striking ``and 
shall apply only with respect to the remaining portion of fiscal year 
2005 and fiscal year 2006.''.
    (e) Rule of Construction.--Nothing in this section shall be 
construed to affect any other provision of Division B of Public Law 
108-447, including section 801(c) of title VII of the Departments of 
Commerce, Justice and State, the Judiciary and Related Agencies 
Appropriations Act, 2005.
    (f) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the United States Patent and Trademark Office.
            (2) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (3) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means an Act entitled ``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).

SEC. 10. APPLICANT QUALITY SUBMISSIONS.

    (a) In General.--Chapter 11 of title 35, United States Code, is 
amended by adding at the end the following new section:
``Sec. 123. Additional information
    ``(a) Incentives.--The Director may, by regulation, offer 
incentives to applicants who submit a search report, a patentability 
analysis, or other information relevant to patentability. Such 
incentives may include prosecution flexibility, modifications to 
requirements for adjustment of a patent term pursuant to section 154(b) 
of this title, or modifications to fees imposed pursuant to section 9 
of the Patent Reform Act of 2008.
    ``(b) Admissibility of Record.--If the Director certifies that an 
applicant has satisfied the requirements of the regulations issued 
pursuant to this section with regard to a patent, the record made in a 
matter or proceeding before the Office involving that patent or efforts 
to obtain the patent shall not be admissible to construe the patent in 
a civil action or in a proceeding before the International Trade 
Commission, except that such record may be introduced to demonstrate 
that the patent owner is estopped from asserting that the patent is 
infringed under the doctrine of equivalents. The Director may, by 
regulation, identify any material submitted in an attempt to satisfy 
the requirements of any regulations issued pursuant to this section 
that also shall not be admissible to construe the patent in a civil 
action or in a proceeding before the International Trade Commission.''.
    (b) Rule of Construction.--Nothing in this section shall be 
construed to imply that, prior to the date of enactment of this 
section, the Director either lacked or possessed the authority to offer 
incentives to applicants who submit a search report, a patentability 
analysis, or other information relevant to patentability.

SEC. 11. INEQUITABLE CONDUCT AND CIVIL SANCTIONS FOR MISCONDUCT BEFORE 
              THE OFFICE.

    (a) In General.--Chapter 29 of title 35, United States Code, is 
amended by adding at the end the following new sections:
``Sec. 298. Inequitable conduct
    ``(a) In General.--Except as provided under this section or section 
299, a patent shall not be held invalid or unenforceable based upon 
misconduct before the Office. Nothing in this section shall be 
construed to create a cause of action or a defense in a civil action.
    ``(b) Order To Reissue Patent.--
            ``(1) Finding of the court.--
                    ``(A) In general.--If a court in a civil action, 
                upon motion of a party to the action, finds that it is 
                more likely than not that a person who participated in 
                a matter or proceeding before the Office knowingly and 
                intentionally deceived the Office by concealing 
                material information or by submitting false material 
                information in such matter or proceeding, the court 
                shall order the patent to be made the subject of a 
                reissue application under section 251. The motion shall 
                set forth any basis upon which the moving party 
                contends 1 or more claims of the patent are invalid in 
                view of information relating to the conduct at issue 
                not previously considered by the Director. The decision 
                on a motion filed under this paragraph shall not be 
                subject to appellate review.
                    ``(B) Material information.--For purposes of this 
                paragraph, information is material if it is not part of 
                the record or cumulative to information in the record 
                and either establishes that a patent claim is not 
                patentable or refutes a position that the applicant or 
                patent owner took in response to a rejection of the 
                claim as unpatentable.
            ``(2) Timing of motion.--A motion described under paragraph 
        (1) shall be filed promptly after discovery of the conduct at 
        issue by the moving party.
            ``(3) Required specificity in court order.--An order issued 
        by a court under paragraph (1) shall contain findings of fact 
        setting out with specificity the information relating to the 
        conduct at issue not previously considered by the Director and 
        upon which the court based its order. The findings of fact 
        shall not be used by a court except as provided under this 
        paragraph.
            ``(4) Stays.--A court shall not stay a civil action by 
        reason of commencement of a reissue proceeding that was 
        authorized to be filed under this section unless--
                    ``(A) the Director in a notification under section 
                132 makes a rejection of 1 or more claims of the 
                patent;
                    ``(B) an allegation of infringement remains in the 
                civil action for at least 1 of the claims rejected; and
                    ``(C) the court determines that the interests of 
                justice require a stay of the action.
            ``(5) Judgment that patent is unenforceable.--If a patentee 
        involved in a civil action in which an order under this 
        subsection is issued does not seek reissue of the patent within 
        2 months of such order, the court shall enter judgment that the 
        patent is unenforceable.
    ``(c) Permitted Reissue by Patentee.--A patentee may request 
reissue of a patent on the basis of information not previously 
considered by the Director in connection with a patent, or the efforts 
to obtain such patent, by filing an application for reissue under 
section 251.
    ``(d) Required Statement, Amended Claims.--In any application for 
reissue of a patent authorized to be filed under this section, the 
patentee shall provide a statement to the Director containing the 
information described in subsections (b) and (c). The reissue 
application may be filed with the omission of 1 or more claims of the 
original patent and with a single substitute claim of equivalent or 
narrower scope replacing any omitted claim of the original patent. For 
a reissue application authorized to be filed under subsection (c), the 
statement shall identify with specificity the issues of patentability 
arising from the information and the basis upon which the claims in the 
reissue application are believed by the applicant to be patentable 
notwithstanding the information.
    ``(e) Conduct of Reissue Proceeding.--
            ``(1) Initial action.--The Director shall provide at least 
        1 of the notifications under section 132 or a notice of 
        allowance under section 151 not later than 3 months after the 
        filing date of an application for reissue authorized to be 
        filed under this section.
            ``(2) Scope of proceeding.--
                    ``(A) In general.--A reissue proceeding authorized 
                to be filed under this section shall, unless substitute 
                claims are submitted, address only whether original 
                claims continue to be patentable after consideration of 
                the additional information provided by the applicant 
                for reissue pursuant to subsection (d) in combination 
                with information already of record in the original 
                patent.
                    ``(B) Issues of patentability.--If the Director 
                determines during a reissue proceeding authorized to be 
                filed under this section that 1 or more of the original 
                claims of the patent cannot be reissued and the time 
                for appeal of such determination has expired or any 
                appeal proceeding related to such determination has 
                terminated, the Director shall notify the patentee of 
                the surrender of the patent in connection with the 
                termination of the reissue proceeding, subject to the 
                patentee's right to obtain a reissue for claims the 
                Director determines to be patentable.
            ``(3) Duration of proceeding.--For a reissue application 
        authorized to be filed under subsection (b), a final decision 
        on all issues of patentability shall be made by the Director 
        within 1 year from the date of the initial notification under 
        paragraph (1), subject to the right of the patentee to appeal 
        under section 134.
            ``(4) Termination of proceeding.--If the Director 
        determines that all of the original claims continue to be 
        patentable, the Director shall terminate the proceeding without 
        the surrender of the original patent.
            ``(5) Procedure and appeals.--
                    ``(A) In general.--A reissue application authorized 
                to be filed under this section may not be abandoned by 
                the applicant or otherwise terminated without surrender 
                of the original patent, except as provided under this 
                section, and shall be conducted as an ex parte matter 
                before the Office.
                    ``(B) Special procedures.--Subject to subsection 
                (d), no amendments other than an amendment presenting a 
                single substitute claim of equivalent or narrower scope 
                for each canceled claim in the first reply to the first 
                action under section 132 may be made during the 
                examination of a reissue application authorized to be 
                filed under this section. The Director may amend 
                pending claims at any time on agreement to a change 
                proposed by the Director to the applicant. The Director 
                may refuse to admit any paper filed after a second 
                notification under section 132.
                    ``(C) Continuing applications barred.--No 
                application shall be entitled to the benefit of the 
                filing date of an application authorized to be filed 
                under this section.
                    ``(D) Expanded examination.--The Director may 
                consider additional information introduced by the 
                Director if substitute claims are presented.
                    ``(E) Appeal.--An applicant in a reissue 
                application authorized to be filed by this section 
                dissatisfied with a decision by the Patent Trial and 
                Appeal Board may appeal only under the provisions of 
                sections 141 though 144.
    ``(f) Limitation on Enlarging Scope of Claims.--No patent may be 
reissued based upon the filing of a reissue application authorized to 
be filed under this section that enlarges the scope of the claims of 
the original patent.
    ``(g) Sanctions.--Except as provided under subsection (h), if a 
reissue proceeding authorized under this section concludes without the 
surrender of the original patent or with the grant of 1 or more 
reissued patents, no further sanctions may be imposed against the 
patentee in connection with the original patent or the reissued patents 
based upon misconduct arising from the concealment of information 
subsequently provided, or the misrepresentation of information 
subsequently corrected in the statement provided under subsection (d).
    ``(h) 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 promulgate 
        regulations under chapter 3 relating to sanctions for 
        misconduct by representatives practicing before the Office.
``Sec. 299. Civil sanctions for misconduct before the Office
    ``(a) Information Relating to Possible Misconduct.--The Director 
shall provide by regulation procedures for receiving and reviewing 
information indicating that parties to a matter or proceeding before 
the Office may have engaged in misconduct in connection with such 
matter or proceeding.
    ``(b) Administrative Proceeding.--
            ``(1) Probable cause.--The Director shall determine, based 
        on information received and reviewed under subsection (a), if 
        there is probable cause to believe that 1 or more individuals 
        or parties engaged in misconduct consisting of intentionally 
        deceptive conduct of a material nature in connection with a 
        matter or proceeding before the Office. A determination of 
        probable cause by the Director under this paragraph shall be 
        final and shall not be reviewable on appeal or otherwise.
            ``(2) Determination.--If the Director finds probable cause 
        under paragraph (1), the Director shall, after notice and an 
        opportunity for a hearing, and not later than 1 year after the 
        date of such finding, determine whether misconduct consisting 
        of intentionally deceptive conduct of a material nature in 
        connection with the applicable matter or proceeding before the 
        Office has occurred. The proceeding to determine whether such 
        misconduct occurred shall be before an individual designated by 
        the Director.
            ``(3) Civil sanctions.--
                    ``(A) In general.--If the Director determines under 
                paragraph (2) that misconduct has occurred, the 
                Director may levy a civil penalty against the party 
                that committed such misconduct.
                    ``(B) Factors.--In establishing the amount of any 
                civil penalty to be levied under subparagraph (A), the 
                Director shall consider--
                            ``(i) the materiality of the misconduct;
                            ``(ii) the impact of the misconduct on a 
                        decision of the Director regarding a patent, 
                        proceeding, or application; and
                            ``(iii) the impact of the misconduct on the 
                        integrity of matters or proceedings before the 
                        Office.
                    ``(C) Sanctions.--A civil penalty levied under 
                subparagraph (A) may consist of--
                            ``(i) a penalty of up to $150,000 for each 
                        act of misconduct;
                            ``(ii) in the case of a finding of a 
                        pattern of misconduct, a penalty of up to 
                        $1,000,000; or
                            ``(iii) in the case of a finding of 
                        exceptional misconduct establishing that an 
                        application for a patent amounted to a fraud 
                        practiced by or at the behest of a real party 
                        in interest of the application--
                                    ``(I) a determination that 1 or 
                                more claims of the patent is 
                                unenforceable; or
                                    ``(II) a penalty of up to 
                                $10,000,000.
                    ``(D) Joint and several liability.--Any party found 
                to have been responsible for misconduct in connection 
                with any matter or proceeding before the Office under 
                this section may be jointly and severally liable for 
                any civil penalty levied under subparagraph (A).
                    ``(E) Deposit with the treasury.--Any civil penalty 
                levied under subparagraph (A) shall--
                            ``(i) accrue to the benefit of the United 
                        States Government; and
                            ``(ii) be deposited under `Miscellaneous 
                        Receipts' in the United States Treasury.
                    ``(F) Authority to bring action for recovery of 
                penalties.--
                            ``(i) In general.--If any party refuses to 
                        pay or remit to the United States Government a 
                        civil penalty levied under this paragraph, the 
                        United States may recover such amounts in a 
                        civil action brought by the United States 
                        Attorney General on behalf of the Director in 
                        the United States District Court for the 
                        Eastern District of Virginia.
                            ``(ii) Injunctions.--In any action brought 
                        under clause (i), the United States District 
                        Court for the Eastern District of Virginia may, 
                        as the court determines appropriate, issue a 
                        mandatory injunction incorporating the relief 
                        sought by the Director.
            ``(4) Combined proceedings.--If the misconduct that is the 
        subject of a proceeding under this subsection is attributed to 
        a practitioner who practices before the Office, the Director 
        may combine such proceeding with any other disciplinary 
        proceeding under section 32 of this title.
    ``(c) Obtaining Evidence.--
            ``(1) In general.--During the period in which an 
        investigation for a finding of probable cause or for a 
        determination of whether misconduct occurred in connection with 
        any matter or proceeding before the Office is being conducted, 
        the Director may require, by subpoena issued by the Director, 
        persons to produce any relevant information, documents, 
        reports, answers, records, accounts, papers, and other 
        documentary or testimonial evidence.
            ``(2) Additional authority.--For the purposes of carrying 
        out this section, the Director--
                    ``(A) shall have access to, and the right to copy, 
                any document, paper, or record, the Director determines 
                pertinent to any investigation or determination under 
                this section, in the possession of any person;
                    ``(B) may summon witnesses, take testimony, and 
                administer oaths;
                    ``(C) may require any person to produce books or 
                papers relating to any matter pertaining to such 
                investigation or determination; and
                    ``(D) may require any person to furnish in writing, 
                in such detail and in such form as the Director may 
                prescribe, information in their possession pertaining 
                to such investigation or determination.
            ``(3) Witnesses and evidence.--
                    ``(A) In general.--The Director may require the 
                attendance of any witness and the production of any 
                documentary evidence from any place in the United 
                States at any designated place of hearing.
                    ``(B) Contumacy.--
                            ``(i) Orders of the court.--In the case of 
                        contumacy or failure to obey a subpoena issued 
                        under this subsection, any appropriate United 
                        States district court or territorial court of 
                        the United States may issue an order requiring 
                        such person--
                                    ``(I) to appear before the 
                                Director;
                                    ``(II) to appear at any other 
                                designated place to testify; and
                                    ``(III) to produce documentary or 
                                other evidence.
                            ``(ii) Failure to obey.--Any failure to 
                        obey an order issued under this subparagraph 
                        court may be punished by the court as a 
                        contempt of that court.
            ``(4) Depositions.--
                    ``(A) In general.--In any proceeding or 
                investigation under this section, the Director may 
                order a person to give testimony by deposition.
                    ``(B) Requirements of deposition.--
                            ``(i) Oath.--A deposition may be taken 
                        before an individual designated by the Director 
                        and having the power to administer oaths.
                            ``(ii) Notice.--Before taking a deposition, 
                        the Director shall give reasonable notice in 
                        writing to the person ordered to give testimony 
                        by deposition under this paragraph. The notice 
                        shall state the name of the witness and the 
                        time and place of taking the deposition.
                            ``(iii) Written transcript.--The testimony 
                        of a person deposed under this paragraph shall 
                        be under oath. The person taking the deposition 
                        shall prepare, or cause to be prepared, a 
                        written transcript of the testimony taken. The 
                        transcript shall be subscribed by the deponent. 
                        Each deposition shall be filed promptly with 
                        the Director.
    ``(d) Appeal.--
            ``(1) In general.--A party may appeal a determination under 
        subsection (b)(2) that misconduct occurred in connection with 
        any matter or proceeding before the Office to the United States 
        Court of Appeals for the Federal Circuit.
            ``(2) Notice to uspto.--A party appealing under this 
        subsection shall file in the Office a written notice of appeal 
        directed to the Director, within such time after the date of 
        the determination from which the appeal is taken as the 
        Director prescribes, but in no case less than 60 days after 
        such date.
            ``(3) Required actions of the director.--In any appeal 
        under this subsection, the Director shall transmit to the 
        United States Court of Appeals for the Federal Circuit a 
        certified list of the documents comprising the record in the 
        determination proceeding. The court may request that the 
        Director forward the original or certified copies of such 
        documents during the pendency of the appeal. The court shall, 
        before hearing the appeal, give notice of the time and place of 
        the hearing to the Director and the parties in the appeal.
            ``(4) Authority of the court.--The United States Court of 
        Appeals for the Federal Circuit shall have power to enter, upon 
        the pleadings and evidence of record at the time the 
        determination was made, a judgment affirming, modifying, or 
        setting aside, in whole or in part, the determination, with or 
        without remanding the case for a rehearing. The court shall not 
        set aside or remand the determination made under subsection 
        (b)(2) unless there is not substantial evidence on the record 
        to support the findings or the determination is not in 
        accordance with law. Any sanction levied under subsection 
        (b)(3) shall not be set aside or remanded by the court, unless 
        the court determines that such sanction constitutes an abuse of 
        discretion of the Director.
    ``(e) Definition.--For purposes of this section, the term `person' 
means any individual, partnership, corporation, company, association, 
firm, partnership, society, trust, estate, cooperative, association, or 
any other entity capable of suing and being sued in a court of law.''.
    (b) Suspension or Exclusion From Practice.--Section 32 of title 35, 
United States Code, is amended--
            (1) by striking ``The Director may'' and inserting the 
        following:
    ``(a) In General.--The Director may''; and
            (2) by adding at the end the following:
    ``(b) Tolling of Time Period.--The time period for instituting a 
proceeding under subsection (a), as provided in section 2462 of title 
28, shall not begin to run where fraud, concealment, or misconduct is 
involved until the information regarding fraud, concealment, or 
misconduct is made known in the manner set forth by regulation under 
section 2(b)(2)(D) to an officer or employee of the United States 
Patent and Trademark Office designated by the Director to receive such 
information.''.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided under 
        paragraph (2), the amendments made by this section shall take 
        effect on the date of enactment of this Act.
            (2) Inapplicability to pending litigation.--Subsections (a) 
        and (b) of section 298 of title 35, United States Code (as 
        added by the amendment made by subsection (a) of this section), 
        shall apply to any civil action filed on or after the date of 
        the enactment of this Act.

SEC. 12. AUTHORITY OF THE DIRECTOR OF THE PATENT AND TRADEMARK OFFICE 
              TO ACCEPT LATE FILINGS.

    (a) Authority.--Section 2 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(e) Discretion To Accept Late Filings in Certain Cases of 
Unintentional Delay.--
            ``(1) In general.--The Director may accept any application 
        or other filing made by--
                    ``(A) an applicant for, or owner of, a patent after 
                the applicable deadline set forth in this title with 
                respect to the application or patent; or
                    ``(B) an applicant for, or owner of, a mark after 
                the applicable deadline under the Trademark Act of 1946 
                with respect to the registration or other filing of the 
                mark,
        to the extent that the Director considers appropriate, if the 
        applicant or owner files a petition within 30 days after such 
        deadline showing, to the satisfaction of the Director, that the 
        delay was unintentional.
            ``(2) Treatment of director's actions on petition.--If the 
        Director has not made a determination on a petition filed under 
        paragraph (1) within 60 days after the date on which the 
        petition is filed, the petition shall be deemed to be denied. A 
        decision by the Director not to exercise, or a failure to 
        exercise, the discretion provided by this subsection shall not 
        be subject to judicial review.
            ``(3) Other provisions not affected.--This subsection shall 
        not apply to any other provision of this title, or to any 
        provision of the Trademark Act of 1946, that authorizes the 
        Director to accept, under certain circumstances, applications 
        or other filings made after a statutory deadline or to 
        statutory deadlines that are required by reason of the 
        obligations of the United States under any treaty.
            ``(4) Definition.--In this subsection, the term `Trademark 
        Act of 1946' means the Act entitled `An Act to provide for the 
        registration and protection of trademarks used in commerce, to 
        carry out 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).''.
    (b) Applicability.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to any application or other filing that--
                    (A) is filed on or after the date of the enactment 
                of this Act; or
                    (B) on such date of enactment, is pending before 
                the Director or is subject to judicial review.
            (2) Treatment of pending applications and filings.--In the 
        case of any application or filing described in paragraph 
        (1)(B), the 30-day period prescribed in section 2(e)(1) of 
        title 35, United States Code, as added by subsection (a) of 
        this section, shall be deemed to be the 30-day period beginning 
        on the date of the enactment of this Act.
    (c) Conversion of Day-Based Deadlines Into Month-Based Deadlines.--
            (1) Sections 141, 156(d)(2)(A), 156(d)(2)(B)(ii), 
        156(d)(5)(C), and 282 of title 35, United States Code, are each 
        amended by striking ``30 days'' or ``thirty days'' each place 
        that term appears and inserting ``1 month''.
            (2) Sections 135(c), 142, 145, 146, 156(d)(2)(B)(ii), 
        156(d)(5)(C), and the matter preceding clause (i) of section 
        156(d)(2)(A) of title 35, United States Code, are each amended 
        by striking ``60 days'' or ``sixty days'' each place that term 
        appears and inserting ``2 months''.
            (3) The matter preceding subparagraph (A) of section 
        156(d)(1) and sections 156(d)(2)(B)(ii) and 156(d)(5)(E) of 
        title 35, United States Code, are each amended by striking 
        ``60-day'' or ``sixty-day'' each place that term appears and 
        inserting ``2-month''.
            (4) Sections 155 and 156(d)(2)(B)(i) of title 35, United 
        States Code, are each amended by striking ``90 days'' or 
        ``ninety days'' each place that term appears and inserting ``3 
        months''.
            (5) Sections 154(b)(4)(A) and 156(d)(2)(B)(i) of title 35, 
        United States Code, are each amended by striking ``180 days'' 
        each place that term appears and inserting ``6 months''.

SEC. 13. LIMITATION ON DAMAGES AND OTHER REMEDIES WITH RESPECT TO 
              PATENTS FOR METHODS IN COMPLIANCE WITH CHECK IMAGING 
              METHODS.

    (a) Limitation.--Section 287 of title 35, United States Code, is 
amended by adding at the end the following:
    ``(d)(1) With respect to the use by a financial institution of a 
check collection system that constitutes an infringement under 
subsection (a) or (b) of section 271, the provisions of sections 281, 
283, 284, and 285 shall not apply against the financial institution 
with respect to such a check collection system.
    ``(2) For the purposes of this subsection--
            ``(A) the term `check' has the meaning given under section 
        3(6) of the Check Clearing for the 21st Century Act (12 U.S.C. 
        5002(6));
            ``(B) the term `check collection system' means the use, 
        creation, transmission, receipt, storing, settling, or 
        archiving of truncated checks, substitute checks, check images, 
        or electronic check data associated with or related to any 
        method, system, or process that furthers or effectuates, in 
        whole or in part, any of the purposes of the Check Clearing for 
        the 21st Century Act (12 U.S.C. 5001 et seq.);
            ``(C) the term `financial institution' has the meaning 
        given under section 509 of the Gramm-Leach-Bliley Act (15 
        U.S.C. 6809);
            ``(D) the term `substitute check' has the meaning given 
        under section 3(16) of the Check Clearing for the 21st Century 
        Act (12 U.S.C. 5002(16)); and
            ``(E) the term `truncate' has the meaning given under 
        section 3(18) of the Check Clearing for the 21st Century Act 
        (12 U.S.C. 5002(18)).
    ``(3) This subsection shall not limit or affect the enforcement 
rights of the original owner of a patent where such original owner--
            ``(A) is directly engaged in the commercial manufacture and 
        distribution of machinery or the commercial development of 
        software; and
            ``(B) has operated as a subsidiary of a bank holding 
        company, as such term is defined under section 2(a) of the Bank 
        Holding Company Act of 1956 (12 U.S.C. 1841(a)), prior to July 
        19, 2007.
    ``(4) A party shall not manipulate its activities, or conspire with 
others to manipulate its activities, for purposes of establishing 
compliance with the requirements of this subsection, including, without 
limitation, by granting or conveying any rights in the patent, 
enforcement of the patent, or the result of any such enforcement.''.
    (b) Takings.--If this section is found to establish a taking of 
private property for public use without just compensation, this section 
shall be null and void. The exclusive remedy for such a finding shall 
be invalidation of this section. In the event of such invalidation, for 
purposes of application of the time limitation on damages in section 
286 of title 35, United States Code, any action for patent infringement 
or counterclaim for infringement that could have been filed or 
continued but for this section, shall be considered to have been filed 
on the date of enactment of this Act or continued from such date of 
enactment.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to any civil action for patent infringement pending or filed on 
or after the date of enactment of this Act.

SEC. 14. PATENT AND TRADEMARK OFFICE FUNDING.

    (a) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the United States Patent and Trademark Office.
            (2) Fund.--The term ``Fund'' means the public enterprise 
        revolving fund established under subsection (c).
            (3) Office.--The term ``Office'' means the United States 
        Patent and Trademark Office.
            (4) Trademark act of 1946.--The term ``Trademark Act of 
        1946'' means an Act entitled ``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) Undersecretary.--The term ``Undersecretary'' means the 
        Under Secretary of Commerce for Intellectual Property.
    (b) Funding.--
            (1) In general.--Section 42 of title 35, United States 
        Code, is amended--
                    (A) in subsection (b), by striking ``Patent and 
                Trademark Office Appropriation Account'' and inserting 
                ``United States Patent and Trademark Office Public 
                Enterprise Fund''; and
                    (B) in subsection (c), in the first sentence--
                            (i) by striking ``To the extent'' and all 
                        that follows through ``fees'' and inserting 
                        ``Fees''; and
                            (ii) by striking ``shall be collected by 
                        and shall be available to the Director'' and 
                        inserting ``shall be collected by the Director 
                        and shall be available until expended''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on the later of--
                    (A) October 1, 2008; or
                    (B) the date of enactment of this Act.
    (c) USPTO Revolving Fund.--
            (1) Establishment.--There is established in the Treasury of 
        the United States a revolving fund to be known as the ``United 
        States Patent and Trademark Office Public Enterprise Fund''. 
        Any amounts in the Fund shall be available for use by the 
        Director without fiscal year limitation.
            (2) Derivation of resources.--There shall be deposited into 
        the Fund--
                    (A) any fees collected under sections 41, 42, and 
                376 of title 35, United States Code, provided that 
                notwithstanding any other provision of law, if such 
                fees are collected by, and payable to, the Director, 
                the Director shall transfer such amounts to the Fund; 
                and
                    (B) any fees collected under section 31 of the 
                Trademark Act of 1946 (15 U.S.C. 1113).
            (3) Expenses.--Amounts deposited into the Fund under 
        paragraph (2) shall be available, without fiscal year 
        limitation, to cover--
                    (A) all expenses to the extent consistent with the 
                limitation on the use of fees set forth in section 
                42(c) of title 35, United States Code, including all 
                administrative and operating expenses, determined in 
                the discretion of the Under Secretary to be ordinary 
                and reasonable, incurred by the Under Secretary and the 
                Director for the continued operation of all services, 
                programs, activities, and duties of the Office, as such 
                services, programs, activities, and duties are 
                described under--
                            (i) title 35, United States Code; and
                            (ii) the Trademark Act of 1946; and
                    (B) all expenses incurred pursuant to any 
                obligation, representation, or other commitment of the 
                Office.
            (4) Custodians of money.--Notwithstanding section 3302 of 
        title 31, United States Code, any funds received by the 
        Director and transferred to Fund, or any amounts directly 
        deposited into the Fund, may be used--
                    (A) to cover the expenses described in paragraph 
                (3); and
                    (B) to purchase obligations of the United States, 
                or any obligations guaranteed by the United States.
    (d) Annual Report.--Not later than 60 days after the end of each 
fiscal year, the Under Secretary and the Director shall submit a report 
to Congress which shall--
            (1) summarize the operations of the Office for the 
        preceding fiscal year, including financial details and staff 
        levels broken down by each major activity of the Office;
            (2) detail the operating plan of the Office, including 
        specific expense and staff needs for the upcoming fiscal year;
            (3) describe the long term modernization plans of the 
        Office;
            (4) set forth details of any progress towards such 
        modernization plans made in the previous fiscal year; and
            (5) include the results of the most recent audit carried 
        out under subsection (e).
    (e) Annual Spending Plan.--
            (1) In general.--Not later than 30 days after the beginning 
        of each fiscal year, the Director shall notify the Committees 
        on Appropriations of both Houses of Congress of the plan for 
        the obligation and expenditure of the total amount of the funds 
        for that fiscal year in accordance with section 605 of the 
        Science, State, Justice, Commerce, and Related Agencies 
        Appropriations Act, 2006 (Public Law 109-108; 119 Stat. 2334).
            (2) Contents.--Each plan under paragraph (1) shall--
                    (A) summarize the operations of the Office for the 
                current fiscal year, including financial details and 
                staff levels with respect to major activities; and
                    (B) detail the operating plan of the Office, 
                including specific expense and staff needs, for the 
                current fiscal year.
    (f) Audit.--The Under Secretary shall, on an annual basis, provide 
for an independent audit of the financial statements of the Office. 
Such audit shall be conducted in accordance with generally acceptable 
accounting procedures.
    (g) Budget.--In accordance with section 9103 of title 31, United 
States Code, the Fund shall prepare and submit each year to the 
President a business-type budget in a way, and before a date, the 
President prescribes by regulation for the budget program.

SEC. 15. TECHNICAL AMENDMENTS.

    (a) Joint Inventions.--Section 116 of title 35, United States Code, 
is amended--
                    (1) in the first paragraph, by striking ``When'' 
                and inserting ``(a) Joint Inventions.--When'';
                    (2) in the second paragraph, by striking ``If a 
                joint inventor'' and inserting ``(b) Omitted 
                Inventor.--If a joint inventor''; and
                    (3) in the third paragraph--
                            (A) by striking ``Whenever'' and inserting 
                        ``(c) Correction of Errors in Application.--
                        Whenever''; and
                            (B) by striking ``and such error arose 
                        without any deceptive intent on his part,''.
    (b) Filing of Application in Foreign Country.--Section 184 of title 
35, United States Code, is amended--
            (1) in the first 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 paragraph, by striking ``The term'' and 
        inserting ``(b) Application.--The term''; and
            (3) in the third paragraph, by striking ``The scope'' and 
        inserting ``(c) Subsequent Modifications, Amendments, and 
        Supplements.--The scope''.
    (c) 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 paragraph--
                    (A) by striking ``Whenever'' and inserting ``(a) In 
                General.--Whenever reissue of any patent is authorized 
                under section 298 or''; and
                    (B) by striking ``without deceptive intention'';
            (2) in the second paragraph, by striking ``The Director'' 
        and inserting ``(b) Multiple Reissued Patents.--The Director'';
            (3) in the third paragraph, by striking ``The provision'' 
        and inserting ``(c) Applicability of This Title.--The 
        provisions''; and
            (4) in the last paragraph, by striking ``No reissued 
        patent'' and inserting ``(d) Reissue Patent Enlarging Scope of 
        Claims.--No reissued patent''.
    (e) Effect of Reissue.--Section 253 of title 35, United States 
Code, is amended--
            (1) in the first paragraph, by striking ``Whenever, without 
        deceptive intention'' and inserting ``(a) In General.--
        Whenever''; and
            (2) in the second paragraph, by striking ``in like manner'' 
        and inserting ``(b) Additional Disclaimer or Dedication.--In 
        the manner set forth in subsection (a),''.
    (f) Correction of Named Inventor.--Section 256 of title 35, United 
States Code, is amended--
            (1) in the first paragraph, by striking ``Whenever'' and 
        inserting ``(a) Correction.--Whenever''; and
            (2) in the second paragraph, by striking ``The error'' and 
        inserting ``(b) Patent Valid if Error Corrected.--The error''.
    (g) Presumption of Validity.--Section 282 of title 35, United 
States Code, is amended--
            (1) in the first undesignated paragraph, by striking ``A 
        patent'' and inserting ``(a) In General.--A patent'';
            (2) in the second undesignated paragraph, by striking ``The 
        following'' and inserting ``(b) Defenses.--The following''; and
            (3) in the third undesignated paragraph, by striking ``In 
        actions'' and inserting ``(c) Notice of Actions; Actions During 
        Extension of Patent Term.--In actions''.
    (h) Action for Infringement.--Section 288 of title 35, United 
States Code, is amended by striking ``, without any deceptive 
intention,''.

SEC. 16. EFFECTIVE DATE; RULE OF CONSTRUCTION.

    (a) Effective Date.--Except as otherwise provided in this Act, the 
provisions of this Act shall take effect 12 months after the date of 
the enactment of this Act and shall apply to any patent issued on or 
after that effective date.
    (b) Special Provisions Relating to Determinations of Validity and 
Patentability.--
            (1) In general.--The amendments made by section 2 shall 
        apply to any application for a patent and any patent issued 
        pursuant to such an application that at any time--
                    (A) contained a claim to a claimed invention that 
                has an effective filing date, as such date is defined 
                under section 100(h) of title 35, United States Code, 1 
                year or more after the date of the enactment of this 
                Act;
                    (B) asserted a claim to a right of priority under 
                section 119, 365(a), or 365(b) of title 35, United 
                States Code, to any application that was filed 1 year 
                or more after the date of the enactment of this Act; or
                    (C) made a specific reference under section 120, 
                121, or 365(c) of title 35, United States Code, to any 
                application to which the amendments made by section 2 
                otherwise apply under this subsection.
            (2) Patentability.--For any application for patent and any 
        patent issued pursuant to such an application to which the 
        amendments made by section 2 apply, no claim asserted in such 
        application shall be patentable or valid unless such claim 
        meets the conditions of patentability specified in section 
        102(g) of title 35, United States Code, as such conditions were 
        in effect on the day prior to the date of enactment of this 
        Act, if the application at any time--
                    (A) contained a claim to a claimed invention that 
                has an effective filing date as defined in section 
                100(h) of title 35, United States Code, earlier than 1 
                year after the date of the enactment of this Act;
                    (B) asserted a claim to a right of priority under 
                section 119, 365(a), or 365(b) of title 35, United 
                States Code, to any application that was filed earlier 
                than 1 year after the date of the enactment of this 
                Act; or
                    (C) made a specific reference under section 120, 
                121, or 365(c) of title 35, United States Code, with 
                respect to which the requirements of section 102(g) 
                applied.
            (3) Validity of patents.--For the purpose of determining 
        the validity of a claim in any patent or the patentability of 
        any claim in a nonprovisional application for patent that is 
        made before the effective date of the amendments made by 
        sections 2 and 3, other than in an action brought in a court 
        before the date of the enactment of this Act--
                    (A) the provisions of subsections (c), (d), and (f) 
                of section 102 of title 35, United States Code, that 
                were in effect on the day prior to the date of 
                enactment of this Act shall be deemed to be repealed;
                    (B) the amendments made by section 3 of this Act 
                shall apply, except that a claim in a patent that is 
                otherwise valid under the provisions of section 102(f) 
                of title 35, United States Code, as such provision was 
                in effect on the day prior to the date of enactment of 
                this Act, shall not be invalidated by reason of this 
                paragraph; and
                    (C) the term ``in public use or on sale'' as used 
                in section 102(b) of title 35, United States Code, as 
                such section was in effect on the day prior to the date 
                of enactment of this Act shall be deemed to exclude the 
                use, sale, or offer for sale of any subject matter that 
                had not become available to the public.
            (4) Continuity of intent under the create act.--The 
        enactment of section 102(b)(3) of title 35, United States Code, 
        under section (2)(b) of this Act is done with the same intent 
        to promote joint research activities that was expressed, 
        including in the legislative history, through the enactment of 
        the Cooperative Research and Technology Enhancement Act of 2004 
        (Public Law 108-453; the ``CREATE Act''), the amendments of 
        which are stricken by section 2(c) of this Act. The United 
        States Patent and Trademark Office shall administer section 
        102(b)(3) of title 35, United States Code, in a manner 
        consistent with the legislative history of the CREATE Act that 
        was relevant to its administration by the United States Patent 
        and Trademark Office.
                                 <all>
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