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[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5340 Introduced in House (IH)]

<DOC>

115th CONGRESS
  2d Session
                                H. R. 5340

To strengthen the position of the United States as the world's leading 
  innovator by amending title 35, United States Code, to protect the 
   property rights of the inventors that grow the country's economy.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 20, 2018

  Mr. Stivers (for himself, Mr. Foster, Mr. Davidson, Mr. Duffy, Mr. 
Cramer, Mr. King of New York, Ms. Velazquez, Mr. Huizenga, Mr. Joyce of 
  Ohio, Mr. Bilirakis, Mr. Danny K. Davis of Illinois, Mr. Rush, Mr. 
Brendan F. Boyle of Pennsylvania, Mr. Peters, Mrs. Watson Coleman, and 
  Mr. Gosar) introduced the following bill; which was referred to the 
Committee on the Judiciary, and in addition to the Committee on Energy 
    and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To strengthen the position of the United States as the world's leading 
  innovator by amending title 35, United States Code, to protect the 
   property rights of the inventors that grow the country's economy.

    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 ``Support Technology 
and Research for Our Nation's Growth and Economic Resilience Patents 
Act of 2018'' or the ``STRONGER Patents Act of 2018''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                     TITLE I--STRONGER PATENTS ACT

Sec. 101. Findings.
Sec. 102. Inter partes review.
Sec. 103. Post-grant review.
Sec. 104. Composition of post-grant review and inter partes review 
                            panels.
Sec. 105. Reexamination of patents.
Sec. 106. Restoration of patents as property rights.
Sec. 107. Elimination of USPTO fee diversion.
Sec. 108. Infringement of patent.
Sec. 109. Institutions of higher education.
Sec. 110. Assisting small businesses in the U.S. patent system.
              TITLE II--TARGETING ROGUE AND OPAQUE LETTERS

Sec. 201. Definitions.
Sec. 202. Unfair or deceptive acts or practices in connection with the 
                            assertion of a United States patent.
Sec. 203. Enforcement by Federal Trade Commission.
Sec. 204. Preemption of State laws on patent demand letters and 
                            enforcement by State attorneys general.

                     TITLE I--STRONGER PATENTS ACT

SEC. 101. FINDINGS.

    Congress finds that--
            (1) the patent property rights enshrined in the 
        Constitution of the United States provide the foundation for 
        the exceptional innovation environment in the United States;
            (2) strong patent rights encourage United States inventors 
        to invest their resources in creating new inventions;
            (3) patent protection has led to patient cures, positive 
        changes to the standard of living for all people in the United 
        States, and improvements to the agricultural, 
        telecommunications, and electronics industries, among others;
            (4) the United States patent system is an essential part of 
        the country's economic success;
            (5) strong patent protection improves the chances of 
        success for small companies and increases their chances of 
        securing financing from investors;
            (6) intellectual property-intensive industries in the 
        United States generate tens of millions of jobs for individuals 
        in the United States;
            (7) intellectual property-intensive industries in the 
        United States account for more than one-third of the country's 
        gross domestic product;
            (8) in the highly competitive global economy, the United 
        States needs to uphold strong patent protections to maintain 
        its position as the world's premier innovative country;
            (9) Congress last enacted comprehensive reforms of the 
        patent system just recently, in 2011;
            (10) unintended consequences of the comprehensive 2011 
        reform of patent laws are continuing to become evident, 
        including the strategic filing of post-grant review proceedings 
        to depress stock prices and extort settlements, the filing of 
        repetitive petitions for inter partes and post-grant reviews 
        that have the effect of harassing patent owners, and the 
        unnecessary duplication of work by the district courts of the 
        United States and the Patent Trial and Appeal Board;
            (11) the Judicial Conference of the United States has made 
        significant revisions to rules governing pleadings and 
        discovery in the Federal Rules of Civil Procedure, which took 
        effect in December 2015;
            (12) the Supreme Court recently issued rulings in Octane 
        Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749 
        (2014) and Highmark Inc. v. Allcare Health Management System, 
        Inc., 134 S.Ct. 1744 (2014) that significantly reduced the 
        burden on an alleged infringer to recover attorney fees from 
        the patent owner, and increased the incidence of fees shifted 
        to the losing party; and
            (13) efforts by Congress to reform the patent system 
        without careful scrutiny create a serious risk of making it 
        more costly and difficult for legitimate innovators to protect 
        their patents from infringement, thereby weakening United 
        States companies and the United States economy.

SEC. 102. INTER PARTES REVIEW.

    (a) Claim Construction.--Section 316(a) of title 35, United States 
Code, is amended--
            (1) in paragraph (9), by inserting after ``substitute 
        claims,'' the following: ``including the standard for how 
        substitute claims should be construed,'';
            (2) in paragraph (12), by striking ``; and'' and inserting 
        a semicolon;
            (3) in paragraph (13), by striking the period at the end 
        and inserting ``; and''; and
            (4) by adding at the end the following new paragraph:
            ``(14) providing that for all purposes under this chapter--
                    ``(A) each challenged claim of a patent shall be 
                construed as the claim would be construed under section 
                282(b) in an action to invalidate a patent, including 
                by construing each challenged claim of the patent in 
                accordance with--
                            ``(i) the ordinary and customary meaning of 
                        the claim as understood by a person having 
                        ordinary skill in the art to which the claimed 
                        invention pertains; and
                            ``(ii) the prosecution history pertaining 
                        to the patent; and
                    ``(B) if a court has previously construed a 
                challenged claim of a patent or a challenged claim term 
                in a civil action to which the patent owner was a 
                party, the Office shall consider that claim 
                construction.''.
    (b) Burden of Proof.--Section 316(e) of title 35, United States 
Code, is amended to read as follows:
    ``(e) Evidentiary Standards.--
            ``(1) Presumption of validity.--The presumption of validity 
        under section 282(a) shall apply to a previously issued claim 
        that is challenged during an inter partes review under this 
        chapter.
            ``(2) Burden of proof.--In an inter partes review 
        instituted under this chapter, the petitioner shall have the 
        burden of proving a proposition of unpatentability of a 
        previously issued claim by clear and convincing evidence.''.
    (c) Standing.--Section 311 of title 35, United States Code, is 
amended by adding at the end the following new subsection:
    ``(d) Persons That May Petition.--
            ``(1) Definition.--In this subsection, the term `charged 
        with infringement' means a real and substantial controversy 
        regarding infringement of a patent exists such that the 
        petitioner would have standing to bring a declaratory judgment 
        action in Federal court.
            ``(2) Necessary conditions.--A person may not file with the 
        Office a petition to institute an inter partes review of a 
        patent unless the person, or a real party in interest or privy 
        of the person, has been--
                    ``(A) sued for infringement of the patent; or
                    ``(B) charged with infringement under the 
                patent.''.
    (d) Limitation on Reviews.--Section 314(a) of title 35, United 
States Code, is amended to read as follows:
    ``(a) Threshold.--
            ``(1) Likelihood of prevailing.--Subject to paragraph (2), 
        the Director may not authorize an inter partes review to be 
        instituted unless the Director determines that the information 
        presented in the petition filed under section 311 and any 
        response filed under section 313 shows that there is a 
        reasonable likelihood that the petitioner would prevail with 
        respect to at least one of the claims challenged in the 
        petition.
            ``(2) Previous institution.--The Director may not authorize 
        an inter partes review to be instituted on a claim challenged 
        in a petition if the Director has previously instituted an 
        inter partes review or post-grant review with respect to that 
        claim.''.
    (e) Appeals From Institution Decisions.--Section 314 of title 35, 
United States Code, is amended by striking subsection (d) and inserting 
the following:
    ``(d) No Appeal.--A determination by the Director not to institute 
an inter partes review under this section shall be final and 
nonappealable.
    ``(e) Interlocutory Appeal.--
            ``(1) Right of appeal.--A determination by the Director to 
        institute an inter partes review under this section may be 
        appealed to the United States Court of Appeals for the Federal 
        Circuit.
            ``(2) Timing.--A party shall file a notice of interlocutory 
        appeal under paragraph (1) not later than 7 days after the date 
        on which the Director enters the institution decision.
            ``(3) Limitation.--An interlocutory appeal filed under 
        paragraph (1) may challenge the institution decision on any 
        basis except for the determination made under section 
        314(a)(1).
            ``(4) Effect on proceedings.--An interlocutory appeal filed 
        under paragraph (1) shall not stay proceedings in the inter 
        partes review unless the Director or the United States Court of 
        Appeals for the Federal Circuit so orders.
            ``(5) Decision.--An interlocutory appeal filed under 
        paragraph (1) may be granted by the United States Court of 
        Appeals for the Federal Circuit, which may include 
        consideration of whether--
                    ``(A) the institution decision appears to be in 
                error and mere institution of the inter partes review 
                presents a risk of immediate, irreparable injury to the 
                patent owner;
                    ``(B) the institution decision presents an 
                unsettled and fundamental issue of law, important both 
                to the specific proceeding and generally, that is 
                likely to evade end-of-the-proceeding review; or
                    ``(C) the institution decision is manifestly 
                erroneous.''.
    (f) Eliminating Repetitive Proceedings.--Section 315(e) of title 
35, United States Code, is amended to read as follows:
    ``(e) Estoppel.--
            ``(1) Proceedings before the office.--A person petitioning 
        for an inter partes review of a claim in a patent under this 
        chapter, or the real party in interest or privy of the 
        petitioner, may not petition for a subsequent inter partes 
        review before the Office with respect to that patent on any 
        ground that the petitioner raised or reasonably could have 
        raised in the initial petition, unless, after the filing of the 
        initial petition, the petitioner, or the real party in interest 
        or privy of the petitioner, is charged with infringement of 
        additional claims of the patent.
            ``(2) Civil actions and other proceedings.--A person 
        petitioning for an inter partes review of a claim in a patent 
        under this chapter that results in an institution decision 
        under section 314, or the real party in interest or privy of 
        the petitioner, may not assert either in a civil action arising 
        in whole or in part under section 1338 of title 28 or in a 
        proceeding before the International Trade Commission under 
        section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) that the 
        claim is invalid based on section 102 or 103 of this title, 
        unless the invalidity argument is based on allegations that the 
        claimed invention was in public use, on sale, or otherwise 
        available to the public before the effective filing date of the 
        claimed invention.''.
    (g) Real Party in Interest.--
            (1) Clarification of definition.--Section 315 of title 35, 
        United States Code, is amended by adding at the end the 
        following new subsection:
    ``(f) Petitioner.--For purposes of this chapter, a person that 
directly or through an affiliate, subsidiary, or proxy, makes a 
financial contribution to the preparation for, or conduct during, an 
inter partes review on behalf of the petitioner shall be considered a 
real party in interest of the petitioner.''.
            (2) Discovery of real party in interest.--Section 316(a)(5) 
        of title 35, United States Code, is amended to read as follows:
            ``(5) setting forth standards and procedures for discovery 
        of relevant evidence, including that such discovery shall be 
        limited to--
                    ``(A) the deposition of witnesses submitting 
                affidavits or declarations;
                    ``(B) evidence identifying the petitioner's real 
                parties in interest; and
                    ``(C) what is otherwise necessary in the interest 
                of justice;''.
    (h) Priority of Federal Court Validity Determinations.--
            (1) In general.--Section 315 of title 35, United States 
        Code, as amended by subsections (f) and (g), is further 
        amended--
                    (A) by redesignating subsections (c) through (f) as 
                subsections (d) through (g), respectively; and
                    (B) by inserting after subsection (b) the following 
                new subsection:
    ``(c) Federal Court Validity Determinations.--
            ``(1) Institution barred.--An inter partes review of a 
        patent claim may not be instituted if, in a civil action 
        arising in whole or in part under section 1338 of title 28 or 
        in a proceeding before the International Trade Commission under 
        section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court 
        has entered a final judgment--
                    ``(A) that decides the validity of the patent claim 
                with respect to section 102 or 103; and
                    ``(B) from which an appeal under section 1295 of 
                title 28 may be taken, or from which an appeal under 
                section 1295 of title 28 was previously available but 
                is no longer available.
            ``(2) Stay of proceedings.--
                    ``(A) In general.--If, in a civil action arising in 
                whole or in part under section 1338 of title 28 or in a 
                proceeding before the International Trade Commission 
                under section 337 of the Tariff Act of 1930 (19 U.S.C. 
                1337), a court has entered a final judgment that 
                decides the validity of a patent claim with respect to 
                section 102 or 103 and from which an appeal under 
                section 1295 of title 28 may be taken, the Patent Trial 
                and Appeal Board shall stay any ongoing inter partes 
                review of that patent claim pending a final decision of 
                the court or Commission, as applicable.
                    ``(B) Termination.--If the validity of a patent 
                claim described in subparagraph (A) is finally upheld 
                by a court or the International Trade Commission, as 
                applicable, the Patent Trial and Appeal Board shall 
                terminate the inter partes review.''.
            (2) Technical and conforming amendments.--Chapter 31 of 
        title 35, United States Code, is amended--
                    (A) in section 315(b), by striking ``subsection 
                (c)'' and inserting ``subsection (d)'';
                    (B) in section 316(a)--
                            (i) in paragraph (11), by striking 
                        ``section 315(c)'' and inserting ``section 
                        315(d)''; and
                            (ii) in paragraph (12), by striking 
                        ``section 315(c)'' and inserting ``section 
                        315(d)''; and
                    (C) in section 317(a), by striking ``section 
                315(e)'' and inserting ``section 315(f)''.
    (i) Amendment of Claims.--
            (1) Inter partes review amendment practice.--Chapter 31 of 
        title 35, United States Code, is amended by inserting after 
        section 316 the following new section:
``Sec. 316A. Inter partes review amendment practice
    ``(a) Actions Permitted.--During an inter partes review instituted 
under this chapter, the patent owner may move to take one or more of 
the following actions with respect to any challenged patent claim being 
reviewed:
            ``(1) Cancel the claim.
            ``(2) Propose a reasonable number of substitute claims 
        whose patentability will be adjudicated by the Patent Trial and 
        Appeal Board in accordance with subsection (c).
            ``(3) Propose a reasonable number of substitute claims to 
        be examined in an expedited inter partes review (in this 
        section referred to as `expedited IPR') reexamination in 
        accordance with subsection (d).
    ``(b) Scope of Claims.--An amendment to a patent under this section 
may not enlarge the scope of the claims of the patent or introduce new 
matter.
    ``(c) Amendment Practice Before the Patent Trial and Appeal 
Board.--
            ``(1) Patent owner's initial motion.--For each challenged 
        claim for which the patent owner seeks to propose a reasonable 
        number of substitute claims, the patent owner shall be required 
        to make a prima facie showing that each substitute claim--
                    ``(A) responds to each ground of unpatentability on 
                which the inter partes review was instituted;
                    ``(B) meets the written description requirement 
                under section 112(a); and
                    ``(C) meets the requirement under subsection (b) of 
                this section.
            ``(2) New evidence.--
                    ``(A) Petitioner.--The petitioner may respond to 
                the patent owner's initial motion under paragraph (1) 
                by presenting new evidence.
                    ``(B) Patent owner.--The patent owner shall have 
                not less than 1 opportunity to respond to any new 
                evidence presented under subparagraph (A).
            ``(3) Expedited patentability report.--
                    ``(A) In general.--Upon the filing of a motion 
                under paragraph (1), the Patent Trial and Appeal Board 
                may order an expedited patentability report from a 
                patent examiner on a substitute claim.
                    ``(B) Contents of report.--In ordering an expedited 
                patentability report, the Patent Trial and Appeal Board 
                may--
                            ``(i) order examination of any ground of 
                        patentability that is assessed by a patent 
                        examiner under chapter 12; and
                            ``(ii) request a non-binding recommendation 
                        as to the patentability of a substitute claim.
                    ``(C) Right of reply.--Any party to the inter 
                partes review may file supplemental briefing, including 
                new evidence, addressing the expedited patentability 
                report.
                    ``(D) Timing.--The production of the expedited 
                patentability report shall be expedited.
                    ``(E) Good cause.--The ordering of an expedited 
                patentability report shall constitute good cause, for 
                purposes of section 316(a)(11), to extend the 1-year 
                period for the inter partes review.
            ``(4) Adjudication of patentability.--
                    ``(A) No rebuttal.--A patent owner shall be 
                entitled to a substitute claim if the prima facie 
                showing required under paragraph (1) is not rebutted.
                    ``(B) Additional evidence.--If additional evidence 
                of record is presented, the patent owner shall be 
                entitled to a substitute claim unless a preponderance 
                of that evidence proves that the patent owner is not so 
                entitled.
            ``(5) Patent trial and appeal board's discretion to order 
        expedited ipr reexamination.--Upon issuing a final written 
        decision with respect to each challenged claim, the Patent 
        Trial and Appeal Board may order an expedited IPR reexamination 
        to be conducted under subsection (d)(2) to consider a 
        substitute claim in lieu of issuing a final written decision on 
        that claim.
            ``(6) Amendments to advance settlement.--The Patent Trial 
        and Appeal Board may consider additional motions to amend upon 
        the joint request of the petitioner and the patent owner to 
        materially advance the settlement of a proceeding under section 
        317 if the patent owner makes the prima facie showing required 
        under paragraph (1).
    ``(d) Amendment Practice Before a Patent Examiner.--
            ``(1) Motion to convert to expedited ipr examination.--
                    ``(A) In general.--If the Director determines to 
                institute an inter partes review on a challenged claim 
                under section 314, a patent owner may, before any 
                further substantive briefing on the patentability of an 
                instituted claim, move to terminate the inter partes 
                review in favor of an expedited IPR reexamination under 
                paragraph (2) of this subsection.
                    ``(B) Contents of motion.--A patent owner shall be 
                required to show good cause for why an expedited IPR 
                reexamination would further the goals of the patent 
                system, including consideration of whether there are 
                substantial--
                            ``(i) investments in research directly 
                        related to the claimed invention;
                            ``(ii) secondary indicia of non-
                        obviousness, such as commercial success, long-
                        felt but unsolved needs, or failures of persons 
                        skilled in the art to develop the claimed 
                        invention; or
                            ``(iii) changes in case law governing 
                        relevant substantive patentability requirements 
                        since the patent was issued.
                    ``(C) New evidence allowed.--The opening motion and 
                opposition briefs under this paragraph may include new 
                evidence, and further rebuttal evidence may be allowed 
                by the Patent Trial and Appeal Board.
            ``(2) Conduct of expedited ipr examination.--
                    ``(A) In general.--If the Patent Trial and Appeal 
                Board grants a motion filed under paragraph (1), the 
                patent owner shall cancel each instituted claim and 
                submit a reasonable number of substitute claims for 
                consideration by the patent examiner in an expedited 
                IPR examination under this paragraph.
                    ``(B) Timing.--A patent examiner shall complete an 
                expedited IPR examination, excluding any time for 
                appeals, within 18 months after the date on which any 
                substitute claim is submitted under subparagraph (A).
                    ``(C) Procedures.--Consideration of the substitute 
                claims in an expedited IPR examination shall follow the 
                procedures established for initial examination under 
                sections 132 and 133, subject to subsection (b) of this 
                section and modified as necessary to ensure that the 
                procedures are expedited.
                    ``(D) Appeal.--
                            ``(i) Patent examiner decision.--If the 
                        final decision of a patent examiner in an 
                        expedited IPR examination is adverse to the 
                        patentability of a substitute claim, the patent 
                        owner may appeal the decision to the Patent 
                        Trial and Appeal Board under section 134(c).
                            ``(ii) Patent trial and appeal board 
                        decision.--If the final decision in an appeal 
                        of an expedited IPR reexamination to the Patent 
                        Trial and Appeal Board under section 134(c) is 
                        adverse to the patentability of a substitute 
                        claim, the patent owner may appeal the decision 
                        to the United States Court of Appeals for the 
                        Federal Circuit in accordance with sections 141 
                        through 144.
                    ``(E) Certificate.--If the patent examiner 
                determines in an expedited IPR examination that a 
                substitute claim is patentable, and the time for appeal 
                has expired or any appeal proceeding has terminated, 
                the Director shall issue and publish a certificate 
                incorporating in the patent the substitute claim.
                    ``(F) Intervening rights.--Any substitute claim 
                determined to be patentable and incorporated into a 
                patent following an expedited IPR examination shall 
                have the same effect as that specified in section 252 
                for reissued patents on the right of any person who 
                made, purchased, or used within the United States, or 
                imported into the United States, anything patented by 
                the substitute claim, or who made substantial 
                preparation therefor, prior to issuance of a 
                certificate under subparagraph (E).''.
            (2) Technical and conforming amendments.--
                    (A) Expedited ipr examination appeals.--
                            (i) Appeals to patent trial and appeal 
                        board.--Section 134 of title 35, United States 
                        Code, is amended by adding at the end the 
                        following new subsection:
    ``(c) Patent Owner in Expedited IPR Examination.--A patent owner 
may appeal from the final rejection of any substitute claim by the 
primary examiner in an expedited IPR examination under section 316A(d) 
to the Patent Trial and Appeal Board, having once paid the fee for such 
appeal.''.
                            (ii) Appeals to federal circuit.--Section 
                        141 of title 35, United States Code, is 
                        amended--
                                    (I) by redesignating subsections 
                                (c) and (d) as subsections (d) and (e); 
                                and
                                    (II) by inserting after subsection 
                                (b) the following new subsection:
    ``(c) Expedited IPR Examinations.--A patent owner who is 
dissatisfied with the final decision in an appeal to the Patent Trial 
and Appeal Board under section 134(c) of an expedited IPR examination 
may appeal the Board's decision to the United States Court of Appeals 
for the Federal Circuit.''.
                    (B) Conduct of inter partes review.--Section 316 of 
                title 35, United States Code, is amended--
                            (i) in subsection (a)(9), by striking 
                        ``subsection (d)'' each place that term appears 
                        and inserting ``section 316A'';
                            (ii) by striking subsection (d); and
                            (iii) by redesignating subsection (e) as 
                        subsection (d).
                    (C) Decision of the board.--Section 318(a) of title 
                35, United States Code, is amended--
                            (i) by striking ``If'' and inserting 
                        ``Except as provided in section 316A(c)(5), 
                        if''; and
                            (ii) by striking ``section 316(d)'' and 
                        inserting ``section 316A''.
                    (D) Table of sections.--The table of sections for 
                chapter 31 of title 35, United States Code, is amended 
                by inserting after the item relating to section 316 the 
                following new item:

``316A. Inter partes review amendment practice.''.

SEC. 103. POST-GRANT REVIEW.

    (a) Claim Construction.--Section 326(a) of title 35, United States 
Code, is amended--
            (1) in paragraph (9), by inserting after ``substitute 
        claims,'' the following: ``including the standard for how 
        substitute claims should be construed,'';
            (2) in paragraph (11), by striking ``; and'' and inserting 
        a semicolon;
            (3) in paragraph (12), by striking the period at the end 
        and inserting ``; and''; and
            (4) by adding at the end the following new paragraph:
            ``(13) providing that for all purposes under this chapter--
                    ``(A) each challenged claim of a patent shall be 
                construed as the claim would be construed under section 
                282(b) in an action to invalidate a patent, including 
                by construing each challenged claim of the patent in 
                accordance with--
                            ``(i) the ordinary and customary meaning of 
                        the claim as understood by a person having 
                        ordinary skill in the art to which the claimed 
                        invention pertains; and
                            ``(ii) the prosecution history pertaining 
                        to the patent; and
                    ``(B) if a court has previously construed a 
                challenged claim of a patent or a challenged claim term 
                in a civil action to which the patent owner was a 
                party, the Office shall consider that claim 
                construction.''.
    (b) Burden of Proof.--Section 326(e) of title 35, United States 
Code, is amended to read as follows:
    ``(e) Evidentiary Standards.--
            ``(1) Presumption of validity.--The presumption of validity 
        under section 282(a) shall apply to a previously issued claim 
        that is challenged during a proceeding under this chapter.
            ``(2) Burden of proof.--In a post-grant review instituted 
        under this chapter, the petitioner shall have the burden of 
        proving a proposition of unpatentability of a previously issued 
        claim by clear and convincing evidence.''.
    (c) Standing.--Section 321 of title 35, United States Code, is 
amended by adding at the end the following new subsection:
    ``(d) Persons That May Petition.--
            ``(1) Definition.--In this subsection, the term `charged 
        with infringement' means a real and substantial controversy 
        regarding infringement of a patent exists such that the 
        petitioner would have standing to bring a declaratory judgment 
        action in Federal court.
            ``(2) Necessary conditions.--A person may not file with the 
        Office a petition to institute a post-grant review of the 
        patent unless the person, or a real party in interest or privy 
        of the person, demonstrates--
                    ``(A) a reasonable possibility of being--
                            ``(i) sued for infringement of the patent; 
                        or
                            ``(ii) charged with infringement under the 
                        patent; or
                    ``(B) a competitive harm related to the validity of 
                the patent.''.
    (d) Limitation on Reviews.--Section 324(a) of title 35, United 
States Code, is amended to read as follows:
    ``(a) Threshold.--
            ``(1) Likelihood of prevailing.--Subject to paragraph (2), 
        the Director may not authorize a post-grant review to be 
        instituted unless the Director determines that the information 
        presented in the petition filed under section 321, if such 
        information is not rebutted, would demonstrate that it is more 
        likely than not that at least one of the claims challenged in 
        the petition is unpatentable.
            ``(2) Previous institution.--The Director may not authorize 
        a post-grant review to be instituted on a claim challenged in a 
        petition if the Director has previously instituted an inter 
        partes or post-grant review with respect to that claim.''.
    (e) Appeals From Institution Decisions.--Section 324 of title 35, 
United States Code, is amended by striking subsection (e) and inserting 
the following:
    ``(e) No Appeal.--A determination by the Director not to institute 
a post-grant review under this section shall be final and 
nonappealable.
    ``(f) Interlocutory Appeal.--
            ``(1) Right of appeal.--A determination by the Director to 
        institute a post-grant review under this section may be 
        appealed to the United States Court of Appeals for the Federal 
        Circuit.
            ``(2) Timing.--A party shall file a notice of interlocutory 
        appeal under paragraph (1) not later than 7 days after the date 
        on which the Director enters the institution decision.
            ``(3) Limitation.--An interlocutory appeal filed under 
        paragraph (1) may challenge the institution decision on any 
        basis except for the determination made under section 
        324(a)(1).
            ``(4) Effect on proceedings.--An interlocutory appeal filed 
        under paragraph (1) shall not stay proceedings in the post-
        grant review unless the Director or the United States Court of 
        Appeals for the Federal Circuit so orders.
            ``(5) Decision.--An interlocutory appeal filed under 
        paragraph (1) may be granted by the United States Court of 
        Appeals for the Federal Circuit, which may include 
        consideration of whether--
                    ``(A) the institution decision appears to be in 
                error and mere institution presents a risk of 
                immediate, irreparable injury to the patent owner;
                    ``(B) the institution decision presents an 
                unsettled and fundamental issue of law, important both 
                to the specific proceeding and generally, that is 
                likely to evade end-of-the-proceeding review; or
                    ``(C) the institution decision is manifestly 
                erroneous.''.
    (f) Eliminating Repetitive Proceedings.--Section 325(e)(1) of title 
35, United States Code, is amended to read as follows:
            ``(1) Proceedings before the office.--A person petitioning 
        for a post-grant review of a claim in a patent under this 
        chapter, or the real party in interest or privy of the 
        petitioner, may not petition for a subsequent post-grant review 
        before the Office with respect to that patent on any ground 
        that the petitioner raised or reasonably could have raised in 
        the initial petition, unless, after the filing of the initial 
        petition, the petitioner, or the real party in interest or 
        privy of the petitioner, is charged with infringement of 
        additional claims of the patent.''.
    (g) Real Party in Interest.--
            (1) Clarification of definition.--Section 325 of title 35, 
        United States Code, is amended by adding at the end the 
        following new subsection:
    ``(g) Real Party in Interest.--For purposes of this chapter, a 
person that directly or through an affiliate, subsidiary, or proxy, 
makes a financial contribution to the preparation for, or conduct 
during, a post-grant review on behalf of the petitioner shall be 
considered a real party in interest of the petitioner.''.
            (2) Discovery of real party in interest.--Section 326(a)(5) 
        of title 35, United States Code, is amended to read as follows:
            ``(5) setting forth standards and procedures for discovery 
        of relevant evidence, including that such discovery shall be 
        limited to--
                    ``(A) the deposition of witnesses submitting 
                affidavits or declarations;
                    ``(B) evidence identifying the petitioner's real 
                parties in interest; and
                    ``(C) what is otherwise necessary in the interest 
                of justice;''.
    (h) Priority of Federal Court Validity Determinations.--
            (1) In general.--Section 325 of title 35, United States 
        Code, as amended by subsections (f) and (g), is further 
        amended--
                    (A) by redesignating subsections (c) through (g) as 
                subsections (d) through (h), respectively; and
                    (B) by inserting after subsection (b) the following 
                new subsection:
    ``(c) Federal Court Validity Determinations.--
            ``(1) Institution barred.--A post-grant review of a patent 
        claim may not be instituted if, in a civil action arising in 
        whole or in part under section 1338 of title 28 or in a 
        proceeding before the International Trade Commission under 
        section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court 
        has entered a final judgment--
                    ``(A) that decides the validity of the patent claim 
                with respect to section 102 or 103; and
                    ``(B) from which an appeal under section 1295 of 
                title 28 may be taken, or from which an appeal under 
                section 1295 of title 28 was previously available but 
                is no longer available.
            ``(2) Stay of proceedings.--
                    ``(A) In general.--If, in a civil action arising in 
                whole or in part under section 1338 of title 28 or in a 
                proceeding before the International Trade Commission 
                under section 337 of the Tariff Act of 1930 (19 U.S.C. 
                1337), a court has entered a final judgment that 
                decides the validity of a patent claim with respect to 
                section 102 or 103 and from which an appeal under 
                section 1295 of title 28 may be taken, the Patent Trial 
                and Appeal Board shall stay any ongoing post-grant 
                review of that patent claim pending a final decision of 
                the court or Commission, as applicable.
                    ``(B) Termination.--If the validity of a patent 
                claim described in subparagraph (A) is finally upheld 
                by a court or the International Trade Commission, as 
                applicable, the Patent Trial and Appeal Board shall 
                terminate the post-grant review.''.
            (2) Technical and conforming amendments.--Chapter 32 of 
        title 35, United States Code, is amended--
                    (A) in section 326(a)(11), by striking ``section 
                325(c)'' and inserting ``section 325(d)''; and
                    (B) in section 327(a), by striking ``section 
                325(e)'' and inserting ``section 325(f)''.
    (i) Amendment of Claims.--
            (1) Post-grant review amendment practice.--Chapter 32 of 
        title 35, United States Code, is amended by inserting after 
        section 326 the following new section:
``Sec. 326A. Post-grant review amendment practice
    ``(a) Actions Permitted.--During a post-grant review instituted 
under this chapter, the patent owner may move to take one or more of 
the following actions with respect to any challenged patent claim being 
reviewed:
            ``(1) Cancel the claim.
            ``(2) Propose a reasonable number of substitute claims 
        whose patentability will be adjudicated by the Patent Trial and 
        Appeal Board in accordance with subsection (c).
            ``(3) Propose a reasonable number of substitute claims to 
        be examined in an expedited PGR (in this section referred to as 
        `expedited PGR') reexamination in accordance with subsection 
        (d).
    ``(b) Scope of Claims.--An amendment to a patent under this section 
may not enlarge the scope of the claims of the patent or introduce new 
matter.
    ``(c) Amendment Practice Before the Patent Trial and Appeal 
Board.--
            ``(1) Patent owner's initial motion.--For each challenged 
        claim for which the patent owner seeks to propose a reasonable 
        number of substitute claims, the patent owner shall be required 
        to make a prima facie showing that each substitute claim--
                    ``(A) responds to each ground of unpatentability on 
                which the post-grant review was instituted;
                    ``(B) meets the written description requirement 
                under section 112(a); and
                    ``(C) meets the requirement under subsection (b) of 
                this section.
            ``(2) New evidence.--
                    ``(A) Petitioner.--The petitioner may respond to 
                the patent owner's initial motion under paragraph (1) 
                by presenting new evidence.
                    ``(B) Patent owner.--The patent owner shall have at 
                least 1 opportunity to respond to any new evidence 
                presented under subparagraph (A).
            ``(3) Expedited patentability report.--
                    ``(A) In general.--Upon the filing of a motion 
                under paragraph (1), the Patent Trial and Appeal Board 
                may order an expedited patentability report from a 
                patent examiner on a substitute claim.
                    ``(B) Contents of report.--In ordering an expedited 
                patentability report, the Patent Trial and Appeal Board 
                may--
                            ``(i) order examination of any ground of 
                        patentability that is assessed by a patent 
                        examiner under chapter 12; and
                            ``(ii) request a non-binding recommendation 
                        as to the patentability of a substitute claim.
                    ``(C) Right of reply.--Any party to the post-grant 
                review may file supplemental briefing, including new 
                evidence, addressing the expedited patentability 
                report.
                    ``(D) Timing.--The production of the expedited 
                patentability report shall be expedited.
                    ``(E) Good cause.--The ordering of an expedited 
                patentability report shall constitute good cause, for 
                purposes of section 326(a)(11), to extend the 1-year 
                period for the post-grant review.
            ``(4) Adjudication of patentability.--
                    ``(A) No rebuttal.--A patent owner shall be 
                entitled to a substitute claim if the prima facie 
                showing required under paragraph (1) is not rebutted.
                    ``(B) Additional evidence.--If additional evidence 
                of record is presented, the patent owner shall be 
                entitled to a substitute claim unless a preponderance 
                of that evidence proves that the patent owner is not so 
                entitled.
            ``(5) Patent trial and appeal board's discretion to order 
        expedited pgr reexamination.--Upon issuing a final written 
        decision with respect to each challenged claim, the Patent 
        Trial and Appeal Board may order an expedited PGR reexamination 
        to be conducted under section (d)(2) to consider a substitute 
        claim in lieu of issuing a final written decision on that 
        claim.
            ``(6) Amendments to advance settlement.--The Patent Trial 
        and Appeal Board may consider additional motions to amend upon 
        the joint request of the petitioner and the patent owner to 
        materially advance the settlement of a proceeding under section 
        327 if the patent owner makes the prima facie showing required 
        under paragraph (1).
    ``(d) Amendment Practice Before a Patent Examiner.--
            ``(1) Motion to convert to expedited pgr examination.--
                    ``(A) In general.--If the Director determines to 
                institute a post-grant review on a challenged claim 
                under section 324, a patent owner may, before any 
                further substantive briefing on the patentability of an 
                instituted claim, move to terminate the post-grant 
                review in favor of an expedited PGR reexamination under 
                paragraph (2) of this subsection.
                    ``(B) Contents of motion.--A patent owner shall be 
                required to show good cause for why an expedited PGR 
                reexamination would further the goals of the patent 
                system, including consideration of whether there are 
                substantial--
                            ``(i) investments in research directly 
                        related to the claimed invention;
                            ``(ii) secondary indicia of non-
                        obviousness, such as commercial success, long-
                        felt but unsolved needs, or failures of persons 
                        skilled in the art to develop the claimed 
                        invention; or
                            ``(iii) changes in case law governing 
                        relevant substantive patentability requirements 
                        since the patent was issued.
                    ``(C) New evidence allowed.--The opening motion and 
                opposition briefs under this paragraph may include new 
                evidence, and further rebuttal evidence may be allowed 
                by the Patent Trial and Appeal Board.
            ``(2) Conduct of expedited pgr examination.--
                    ``(A) In general.--If the Patent Trial and Appeal 
                Board grants a motion filed under paragraph (1), the 
                patent owner shall cancel each instituted claim and 
                submit a reasonable number of substitute claims for 
                consideration by the patent examiner in an expedited 
                PGR examination under this paragraph.
                    ``(B) Timing.--A patent examiner shall complete an 
                expedited PGR examination, excluding any time for 
                appeals, within 18 months after the date on which any 
                substitute claim is submitted under subparagraph (A).
                    ``(C) Procedures.--Consideration of the substitute 
                claims in an expedited PGR examination shall follow the 
                procedures established for initial examination under 
                sections 132 and 133, subject to subsection (b) of this 
                section and modified as necessary to ensure that the 
                procedures are expedited.
                    ``(D) Appeal.--
                            ``(i) Patent examiner decision.--If the 
                        final decision of a patent examiner in an 
                        expedited PGR examination is adverse to the 
                        patentability of a substitute claim, the patent 
                        owner may appeal the decision to the Patent 
                        Trial and Appeal Board under section 134(c).
                            ``(ii) Patent trial and appeal board 
                        decision.--If the final decision in an appeal 
                        of an expedited PGR reexamination to the Patent 
                        Trial and Appeal Board under section 134(c) is 
                        adverse to the patentability of a substitute 
                        claim, the patent owner may appeal the decision 
                        to the United States Court of Appeals for the 
                        Federal Circuit in accordance with sections 141 
                        through 144.
                    ``(E) Certificate.--If the patent examiner 
                determines in an expedited PGR examination that a 
                substitute claim is patentable, and the time for appeal 
                has expired or any appeal proceeding has terminated, 
                the Director shall issue and publish a certificate 
                incorporating in the patent the substitute claim.
                    ``(F) Intervening rights.--Any substitute claim 
                determined to be patentable and incorporated into a 
                patent following an expedited PGR examination shall 
                have the same effect as that specified in section 252 
                for reissued patents on the right of any person who 
                made, purchased, or used within the United States, or 
                imported into the United States, anything patented by 
                the substitute claim, or who made substantial 
                preparation therefor, prior to issuance of a 
                certificate under subparagraph (E).''.
            (2) Technical and conforming amendments.--
                    (A) Expedited pgr examination appeals.--
                            (i) Appeals to patent trial and appeal 
                        board.--Section 134 of title 35, United States 
                        Code, as amended by section 102(i)(2), is 
                        further amended by adding at the end the 
                        following new subsection:
    ``(d) Patent Owner in Expedited PGR Examination.--A patent owner 
may appeal from the final rejection of any substitute claim by the 
primary examiner in an expedited PGR examination under section 326A(d) 
to the Patent Trial and Appeal Board, having once paid the fee for such 
appeal.''.
                            (ii) Appeals to federal circuit.--Section 
                        141 of title 35, United States Code, as amended 
                        by section 102(i)(2), is further amended--
                                    (I) by redesignating subsections 
                                (d) and (e) as subsections (e) and (f); 
                                and
                                    (II) by inserting after subsection 
                                (c) the following new subsection:
    ``(d) Expedited PGR Examinations.--A patent owner who is 
dissatisfied with the final decision in an appeal to the Patent Trial 
and Appeal Board under section 134(c) of an expedited PGR examination 
may appeal the Board's decision to the United States Court of Appeals 
for the Federal Circuit.''.
                    (B) Conduct of post-grant review.--Section 326 of 
                title 35, United States Code, is amended--
                            (i) in subsection (a)(9), by striking 
                        ``subsection (d)'' each place that term appears 
                        and inserting ``section 326A'';
                            (ii) by striking subsection (d); and
                            (iii) by redesignating subsection (e) as 
                        subsection (d).
                    (C) Decision of the board.--Section 328(a) of title 
                35, United States Code, is amended--
                            (i) by striking ``If'' and inserting 
                        ``Except as provided in section 326A(c)(5), 
                        if''; and
                            (ii) by striking ``section 326(d)'' and 
                        inserting ``section 326A''.
                    (D) Table of sections.--The table of sections for 
                chapter 32 of title 35, United States Code, is amended 
                by inserting after the item relating to section 326 the 
                following new item:

``326A. Post-grant review amendment practice.''.

SEC. 104. COMPOSITION OF POST-GRANT REVIEW AND INTER PARTES REVIEW 
              PANELS.

    Section 6(c) of title 35, United States Code, is amended to read as 
follows:
    ``(c) 3-Member Panels.--
            ``(1) In general.--Each appeal, derivation proceeding, 
        post-grant review, and inter partes review shall be heard by at 
        least 3 members of the Patent Trial and Appeal Board, who shall 
        be designated by the Director.
            ``(2) Ineligibility to hear review.--A member of the Patent 
        Trial and Appeal Board who participates in the decision to 
        institute a post-grant review or an inter partes review of a 
        patent shall be ineligible to hear the review.
            ``(3) Rehearings.--Only the Patent Trial and Appeal Board 
        may grant rehearings.''.

SEC. 105. REEXAMINATION OF PATENTS.

    (a) Request for Reexamination.--Section 302 of title 35, United 
States Code, is amended to read as follows:
``Sec. 302. Request for reexamination
    ``Any person at any time may file a request for reexamination by 
the Office of any claim of a patent on the basis of any prior art cited 
under the provisions of section 301. The request must be in writing and 
must be accompanied by payment of a reexamination fee established by 
the Director pursuant to the provisions of section 41. The request must 
identify all real parties in interest and certify that reexamination is 
not barred under section 303(d). The request must set forth the 
pertinency and manner of applying cited prior art to every claim for 
which reexamination is requested. Unless the requesting person is the 
owner of the patent, the Director promptly will send a copy of the 
request to the owner of record of the patent.''.
    (b) Reexamination Barred by Civil Action.--Section 303 of title 35, 
United States Code, is amended by adding at the end the following new 
subsection:
    ``(d) An ex parte reexamination may not be instituted if the 
request for reexamination is filed more than 1 year after the date on 
which the requester or a real party in interest or privy of the 
requester is served with a complaint alleging infringement of the 
patent.''.

SEC. 106. RESTORATION OF PATENTS AS PROPERTY RIGHTS.

    Section 283 of title 35, United States Code, is amended--
            (1) by striking ``The several courts'' and inserting the 
        following:
    ``(a) In General.--The several courts''; and
            (2) by adding at the end the following:
    ``(b) Injunction.--Upon a finding by a court of infringement of a 
patent not proven invalid or unenforceable, the court shall presume 
that--
            ``(1) further infringement of the patent would cause 
        irreparable injury; and
            ``(2) remedies available at law are inadequate to 
        compensate for that injury.''.

SEC. 107. ELIMINATION OF USPTO FEE DIVERSION.

    (a) Funding.--Section 42 of title 35, United States Code, is 
amended--
            (1) in subsection (a), by striking ``All fees'' and 
        inserting ``Fees for Service by PTO.--All fees'';
            (2) in subsection (b)--
                    (A) by striking ``All fees'' and inserting 
                ```Innovation Promotion Fund.--All fees'''; and
                    (B) by striking ``Patent and Trademark Office 
                Appropriation Account'' and inserting ``United States 
                Patent and Trademark Office Innovation Promotion 
                Fund'';
            (3) in subsection (c)--
                    (A) by striking ``(c)'' and inserting ``(c) 
                Collection of Funds for PTO Activities.''
                    (B) in paragraph (1)--
                            (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, subject to paragraph (2), be 
                        available to the Director'' and inserting 
                        ``shall be collected by the Director and shall 
                        be available to the Director until expended'';
                    (C) by striking paragraph (2); and
                    (D) by redesignating paragraph (3) as paragraph 
                (2);
            (4) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively;
            (5) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Revolving Fund.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `Fund' means the United States 
                Patent and Trademark Office Innovation Promotion Fund 
                established under paragraph (2); and
                    ``(B) 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').
            ``(2) Establishment.--There is established in the Treasury 
        a revolving fund to be known as the `United States Patent and 
        Trademark Office Innovation Promotion Fund'.
            ``(3) Derivation of resources.--There shall be deposited 
        into the Fund any fees collected under--
                    ``(A) this title; or
                    ``(B) the Trademark Act of 1946.
            ``(4) Expenses.--Amounts deposited into the Fund under 
        paragraph (3) 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 
                subsection (c), including all administrative and 
                operating expenses, determined in the discretion of the 
                Director to be ordinary and reasonable, incurred by the 
                Director for the continued operation of all services, 
                programs, activities, and duties of the Office relating 
                to patents and trademarks, as such services, programs, 
                activities, and duties are described under--
                            ``(i) this title; and
                            ``(ii) the Trademark Act of 1946; and
                    ``(B) all expenses incurred pursuant to any 
                obligation, representation, or other commitment of the 
                Office.'';
            (6) in subsection (e), as redesignated, by striking ``The 
        Director'' and inserting ``Refunds.--The Director''; and
            (7) in subsection (f), as redesignated, by striking ``The 
        Secretary'' and inserting ``Report.--The Secretary''.
    (b) Effective Date; Transfer From and Termination of Obsolete 
Funds.--
            (1) Effective date.--The amendments made by subsection (a) 
        shall take effect on the first day of the first fiscal year 
        that begins on or after the date of the enactment of this Act.
            (2) Remaining balances.--There shall be deposited in the 
        Fund, on the effective date described in paragraph (1), any 
        available unobligated balances remaining in the Patent and 
        Trademark Office Appropriation Account, and in the Patent and 
        Trademark Fee Reserve Fund established under section 42(c)(2) 
        of title 35, United States Code, as in effect on the date 
        before the effective date.
            (3) Termination of reserve fund.--Upon the payment of all 
        obligated amounts in the Patent and Trademark Fee Reserve Fund 
        under paragraph (2), the Patent and Trademark Fee Reserve Fund 
        shall be terminated.

SEC. 108. INFRINGEMENT OF PATENT.

    Section 271 of title 35, United States Code, is amended--
            (1) by striking subsection (b) and inserting the following:
    ``(b) Whoever actively induces infringement of a patent shall be 
liable as an infringer upon a showing that the accused infringer 
intended to cause the acts that constitute infringement, without regard 
to whether the accused infringer knew of the patent.'';
            (2) in subsection (f), by adding at the end the following 
        new paragraph:
    ``(3)(A) Whoever, without authority, supplies or causes to be 
supplied in or from the United States a design for a product embodying 
a patented invention in such manner as to actively induce the making of 
that product outside the United States in a manner that would infringe 
the patent if made in the United States, shall be liable as an 
infringer.
    ``(B) Whoever, without authority, supplies or causes to be supplied 
in or from the United States a specification for performing a patented 
process or method in such manner as to actively induce the performance 
of that process or method outside the United States in a manner that 
would infringe the patent if performed in the United States, shall be 
liable as an infringer.''; and
            (3) by adding at the end the following:
    ``(j) For a finding of liability for actively inducing infringement 
of a process patent under subsection (b), or for contributory 
infringement of a process patent under subsection (c), it shall not be 
a requirement that the steps of the patented process be practiced by a 
single entity.''.

SEC. 109. INSTITUTIONS OF HIGHER EDUCATION.

    Section 123(d) of title 35, United States Code, is amended to read 
as follows:
    ``(d) Institutions of Higher Education.--For purposes of this 
section, a micro entity shall include an applicant who certifies that--
            ``(1) the applicant's employer, from which the applicant 
        obtains the majority of the applicant's income, is an 
        institution of higher education as defined in section 101(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1001(a));
            ``(2) the applicant has assigned, granted, conveyed, or is 
        under an obligation by contract or law, to assign, grant, or 
        convey, a license or other ownership interest in the particular 
        applications to such an institution of higher education;
            ``(3) the applicant is such an institution of higher 
        education; or
            ``(4) the applicant is an organization described in section 
        501(c)(3) of the Internal Revenue Code of 1986 and exempt from 
        taxation under section 501(a) of such Code that holds title to 
        patents and patent applications on behalf of such an 
        institution of higher education for the purpose of facilitating 
        commercialization of the technologies of the patents and patent 
        applications.''.

SEC. 110. ASSISTING SMALL BUSINESSES IN THE U.S. PATENT SYSTEM.

    (a) Definition.--In this section, the term ``small business 
concern'' has the meaning given the term in section 3 of the Small 
Business Act (15 U.S.C. 632).
    (b) Small Business Administration Report.--Not later than 1 year 
after the date of enactment of this Act, the Small Business 
Administration, using existing resources, shall submit to the Committee 
on Small Business and Entrepreneurship of the Senate and the Committee 
on Small Business of the House of Representatives a report analyzing 
the impact of--
            (1) patent ownership by small business concerns; and
            (2) civil actions against small business concerns arising 
        under title 35, United States Code, relating to patent 
        infringement.
    (c) Expansion of Patent Pilot Program in Certain District Courts.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Director of the Administrative 
        Office of the United States Courts shall designate not fewer 
        than 6 of the district courts of the United States that are 
        participating in the patent cases pilot program established 
        under section 1 of Public Law 111-349 (28 U.S.C. 137 note) for 
        the purpose of expanding that program to address special issues 
        raised in patent infringement suits against individuals or 
        small business concerns.
            (2) Procedures for small businesses.--Not later than 2 
        years after the date of the enactment of this Act, each 
        district court designated under paragraph (1) shall develop 
        procedures for expediting cases in which an individual or small 
        business concern is accused of patent infringement.
            (3) Participating judges.--
                    (A) In general.--In each district court designated 
                under paragraph (1), each district court judge 
                participating in the patent cases pilot program 
                established under section 1 of Public Law 111-349 may 
                appoint 1 additional law clerk or secretary in excess 
                of any other limitation on the number of such 
                employees.
                    (B) Education and training.--The Federal Judicial 
                Center, using existing resources, shall prepare 
                educational and training materials to assist district 
                court judges described in subparagraph (A) in 
                developing expertise in patent and plant variety 
                protection cases.
            (4) Funds.--There are authorized to be appropriated such 
        sums as may be necessary to carry out paragraph (3)(A).
    (d) Free Online Availability of Public Search Facility Materials.--
Section 41(i) of title 35, United States Code, is amended by adding at 
the end the following new paragraph:
            ``(5) Free online availability of public search facility 
        materials.--The Director shall make available online and at no 
        charge all patent and trademark information that is available 
        at the Public Search Facility of the Office located in 
        Alexandria, Virginia, including, except to the extent that 
        licenses with third-party contractors would make such provision 
        financially unviable--
                    ``(A) search tools and databases;
                    ``(B) informational materials; and
                    ``(C) training classes and materials.''.

              TITLE II--TARGETING ROGUE AND OPAQUE LETTERS

SEC. 201. DEFINITIONS.

    In this title:
            (1) Bad faith.--The term ``bad faith'' means, with respect 
        to section 202(a), that the sender--
                    (A) made knowingly false or knowingly misleading 
                statements, representations, or omissions;
                    (B) made statements, representations, or omissions 
                with reckless indifference as to the false or 
                misleading nature of such statements, representations, 
                or omissions; or
                    (C) made statements, representations, or omissions 
                with awareness of the high probability of the 
                statements, representations, or omissions to deceive 
                and the sender intentionally avoided the truth.
            (2) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (3) Final determination.--The term ``final determination'' 
        means, with respect to the invalidity or unenforceability of a 
        patent, that the invalidity or unenforceability has been 
        determined by a court of the United States or the United States 
        Patent and Trademark Office in a final decision that is 
        unappealable or for which any opportunity for appeal is no 
        longer available.

SEC. 202. UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN CONNECTION WITH THE 
              ASSERTION OF A UNITED STATES PATENT.

    (a) In General.--It shall be an unfair or deceptive act or practice 
within the meaning of section 5(a)(1) of the Federal Trade Commission 
Act (15 U.S.C. 45(a)(1)) for a person, in connection with the assertion 
of a United States patent, to engage in a pattern or practice of 
sending written communications that state or represent that the 
recipients are or may be infringing, or have or may have infringed, the 
patent and bear liability or owe compensation to another, if--
            (1) the sender of the communications, in bad faith, states 
        or represents in the communications that--
                    (A) the sender is a person with the right to 
                license or enforce the patent at the time the 
                communications are sent, and the sender is not a person 
                with such a right;
                    (B) a civil action asserting a claim of 
                infringement of the patent has been filed against the 
                recipient;
                    (C) a civil action asserting a claim of 
                infringement of the patent has been filed against other 
                persons;
                    (D) legal action for infringement of the patent 
                will be taken against the recipient;
                    (E) the sender is the exclusive licensee of the 
                patent asserted in the communications;
                    (F) persons other than the recipient purchased a 
                license for the patent asserted in the communications;
                    (G) persons other than the recipient purchased a 
                license, and the sender does not disclose that such 
                license is unrelated to the alleged infringement or the 
                patent asserted in the communications;
                    (H) an investigation of the recipient's alleged 
                infringement occurred; or
                    (I) the sender or an affiliate of the sender 
                previously filed a civil action asserting a claim of 
                infringement of the patent based on the activity that 
                is the subject of the written communication when the 
                sender knew such activity was held, in a final 
                determination, not to infringe the patent;
            (2) the sender of the communications, in bad faith, seeks 
        compensation for--
                    (A) a patent claim that has been held to be 
                unenforceable due to inequitable conduct, invalid, or 
                otherwise unenforceable against the recipient, in a 
                final determination;
                    (B) activities undertaken by the recipient after 
                expiration of the patent asserted in the 
                communications; or
                    (C) activity of the recipient that the sender knew 
                was authorized, with respect to the patent claim or 
                claims that are the subject of the communications, by a 
                person with the right to license the patent; or
            (3) the sender of the communications, in bad faith, fails 
        to include--
                    (A) the identity of the person asserting a right to 
                license the patent to, or enforce the patent against, 
                the recipient, including the identity of any parent 
                entity and the ultimate parent entity of such person, 
                unless such person is a public company and the name of 
                the public company is identified;
                    (B) an identification of at least one patent issued 
                by the United States Patent and Trademark Office 
                alleged to have been infringed;
                    (C) an identification, to the extent reasonable 
                under the circumstances, of at least one product, 
                service, or other activity of the recipient that is 
                alleged to infringe the identified patent;
                    (D) a description, to the extent reasonable under 
                the circumstances, of how the product, service, or 
                other activity of the recipient infringes an identified 
                patent and patent claim; or
                    (E) a name and contact information for a person the 
                recipient may contact about the assertions or claims 
                relating to the patent contained in the communications.
    (b) Affirmative Defense.--With respect to subsection (a), there 
shall be an affirmative defense that statements, representations, or 
omissions were not made in bad faith (as defined in subparagraphs (B) 
and (C) of section 201(1)) if the sender can demonstrate that such 
statements, representations, or omissions were mistakes made in good 
faith. Evidence that the sender in the usual course of business sends 
written communications that do not violate the provisions of this title 
shall be sufficient to demonstrate good faith. Good faith may also be 
demonstrated by other evidence.
    (c) Rule of Construction.--For purposes of sections 203 and 204, 
the commission of an act or practice that is declared under this 
section to be an unfair or deceptive act or practice within the meaning 
of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 
45(a)(1)) shall be considered to be a violation of this section.

SEC. 203. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

    (a) Violation of Rule.--A violation of section 202 shall be treated 
as a violation of a rule defining an unfair or deceptive act or 
practice prescribed under section 18(a)(1)(B) of the Federal Trade 
Commission Act (15 U.S.C. 57a(a)(1)(B)).
    (b) Powers of Commission.--The Commission shall enforce this title 
in the same manner, by the same means, and with the same jurisdiction, 
powers, and duties as though all applicable terms and provisions of the 
Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated 
into and made a part of this title. Any person who violates section 202 
shall be subject to the penalties and entitled to the privileges and 
immunities provided in the Federal Trade Commission Act.
    (c) Effect on Other Laws.--Nothing in this title shall be construed 
in any way to limit or affect the authority of the Commission under any 
other provision of law.

SEC. 204. PREEMPTION OF STATE LAWS ON PATENT DEMAND LETTERS AND 
              ENFORCEMENT BY STATE ATTORNEYS GENERAL.

    (a) Preemption.--
            (1) In general.--This title preempts any law, rule, 
        regulation, requirement, standard, or other provision having 
        the force and effect of law of any State, or political 
        subdivision of a State, expressly relating to the transmission 
        or contents of communications relating to the assertion of 
        patent rights.
            (2) Effect on other state laws.--Except as provided in 
        paragraph (1), this title shall not be construed to preempt or 
        limit any provision of any State law, including any State 
        consumer protection law, any State law relating to acts of 
        fraud or deception, and any State trespass, contract, or tort 
        law.
    (b) Enforcement by State Attorneys General.--
            (1) In general.--In any case in which the attorney general 
        of a State has reason to believe that an interest of the 
        residents of that State has been adversely affected by any 
        person who violates section 202, the attorney general of the 
        State, may bring a civil action on behalf of such residents of 
        the State in a district court of the United States of 
        appropriate jurisdiction--
                    (A) to enjoin further such violation by the 
                defendant; or
                    (B) to obtain civil penalties on behalf of 
                recipients who suffered actual damages as a result of 
                such violation.
            (2) Maximum civil penalty.--Notwithstanding the number of 
        actions which may be brought against a person under this 
        subsection, a person may not be liable for a total of more than 
        $5,000,000 for a series of related violations of section 202.
            (3) Intervention by the ftc.--
                    (A) Notice and intervention.--The attorney general 
                of a State shall provide prior written notice of any 
                action under paragraph (1) to the Commission and 
                provide the Commission with a copy of the complaint in 
                the action, except in any case in which such prior 
                notice is not feasible, in which case the attorney 
                general shall serve such notice immediately upon 
                instituting such action. The Commission shall have the 
                right--
                            (i) to intervene in the action;
                            (ii) upon so intervening, to be heard on 
                        all matters arising therein; and
                            (iii) to file petitions for appeal.
                    (B) Limitation on state action while federal action 
                is pending.--If the Commission has instituted a civil 
                action for violation of section 202, no State attorney 
                general may bring an action under this subsection 
                during the pendency of that action against any 
                defendant named in the complaint of the Commission for 
                any violation of such section alleged in the complaint.
            (4) Construction.--For purposes of bringing any civil 
        action under paragraph (1), nothing in this title shall be 
        construed to prevent the attorney general of a State from 
        exercising the powers conferred on the attorney general by the 
        laws of that State to--
                    (A) conduct investigations;
                    (B) administer oaths or affirmations; or
                    (C) compel the attendance of witnesses or the 
                production of documentary and other evidence.
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