I

107TH CONGRESS

1ST SESSION H. R. 1332

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

the quality of patents on certain inventions.

IN THE HOUSE OF REPRESENTATIVES

APRIL 3, 2001

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

which was referred to the Committee on the Judiciary

A BILL

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

improvements in the quality of patents on certain inventions.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Business Method Pat5 ent Improvement Act of 2001’’.

6 SEC. 2. DEFINITIONS.

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

8 amended by adding at the end the following:

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

10 ‘‘(1) a method—
2

•HR 1332 IH

1 ‘‘(A) of—

2 ‘‘(i) processing data; or

3 ‘‘(ii) performing calculation oper4 ations; and

5 ‘‘(B) which is uniquely designed for or uti6 lized in the practice, administration, or manage7 ment of an enterprise;

8 ‘‘(2) any technique used in athletics, instruc9 tion, or personal skills; and

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

11 method described in paragraph (1) or a technique

12 described in paragraph (2).

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

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

15 (including any software or other apparatus); and

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

17 claim that is a business method.’’.

18 SEC. 3. PATENTS ON BUSINESS METHOD INVENTIONS.

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

20 amended by inserting after chapter 31 the following new

21 chapter:

22 ‘‘CHAPTER 32—PATENTS ON BUSINESS

23 METHOD INVENTIONS

‘‘Sec.

‘‘321. Business method invention determinations.

‘‘322. Opposition procedures.

‘‘323. Effect on other proceedings.

‘‘324. Burden of proof.
3

•HR 1332 IH

1 ‘‘§ 321. Business method invention determinations

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

4 method invention shall be kept in confidence by the Patent

5 and Trademark Office and no information concerning the

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

8 of an Act of Congress or in such special circumstances

9 as may be determined by the Director.

10 ‘‘(b) PUBLICATION.—

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

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

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

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

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

21 date of an application in the United States for a

22 patent under this title, the Director shall make a de23 termination of whether any invention claimed in the

24 application is a business method invention.

25 ‘‘(C) After making a determination under sub26 paragraph (B) that an invention is a business meth-
4

•HR 1332 IH

1 od invention, the Director shall notify the applicant

2 of the determination and shall provide the applicant

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

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

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

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

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

11 for making determinations under subparagraph (B),

12 and for addressing amendments to any application

13 that may affect the Director’s determination of

14 whether the invention claimed in the application is

15 a business method invention.

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

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

19 to the application under section 122.

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

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

23 ‘‘(i) no longer pending;

24 ‘‘(ii) subject to a secrecy order under sec25 tion 181 of this title;
5

•HR 1332 IH

1 ‘‘(iii) a provisional application filed under

2 section 111(b) of this title; or

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

4 filed under chapter 16 of this title.

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

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

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

12 17 of this title.

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

14 have the opportunity to submit to the Director for

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

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

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

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

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

21 under section 103. The Director shall conduct such

22 a proceeding if the petition—

23 ‘‘(i) is in writing;

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

25 set forth in section 41(a) of this title; and
6

•HR 1332 IH

1 ‘‘(iii) sets forth in detail the basis on which

2 the proceeding is requested.

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

5 considered during the examination of the patent ap6 plication.

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

8 of pendency of an application after publication, an

9 applicant shall have provisional rights pursuant to

10 section 154 of this title.

11 ‘‘§ 322. Opposition procedures

12 ‘‘(a) ADMINISTRATIVE OPPOSITION PANEL.—

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

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

15 Business Method Patent Improvement Act of 2001,

16 establish an Administrative Opposition Panel. The

17 Administrative Opposition Panel shall be comprised

18 of not less than 18 administrative opposition judges,

19 each of whom shall be an individual of competent

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

22 Director shall publish notice of the establishment of

23 the Panel in the Federal Register.

24 ‘‘(2) ASSIGNMENT OF PATENT EXAMINERS TO

25 PANEL.—Patent examiners may be assigned on de-
7

•HR 1332 IH

1 tail to assist the Administrative Opposition Panel in

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

6 establish procedures by which an opposition is heard

7 under subsection (b).

8 ‘‘(b) OPPOSITION PROCEDURES.—

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

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

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

15 the date of issuance of the patent;

16 ‘‘(ii) is in writing;

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

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

19 title; and

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

21 the opposition is requested.

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

23 valid request under subparagraph (A), the Director

24 shall issue an order for an opposition proceeding to

25 be held on the record after opportunity for a hear-
8

•HR 1332 IH

1 ing, and shall promptly send a copy of the request

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

3 owner shall be provided a reasonable period, but in

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

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

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

11 statement, the patent owner shall promptly serve a

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

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

16 statement filed by the patent owner.

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

19 administrative opposition judge, and no party shall

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

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

23 the administrative opposition judge may consider

24 evidence that the judge considers relevant, including

25 evidence that is presented in any oral testimony (in-
9

•HR 1332 IH

1 cluding exhibits and expert testimony) in direct or

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

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

5 Rules of Evidence shall apply.

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

7 patent applicant may propose to amend a patent

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

9 opposition proceeding, except that no proposed

10 amended or new claim enlarging the scope of a claim

11 of the patent may be permitted at any time during

12 an opposition proceeding under this section.

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

14 months after the filing of a request for an opposition

15 under this section, the administrative opposition

16 judge in the opposition proceeding shall determine

17 the patentability of the subject matter of the patent,

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

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

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

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

24 may appeal a decision of the Administrative Opposi25 tion Panel under the provisions of section 134 of
10

•HR 1332 IH

1 this title, and may seek court review under the pro2 visions of sections 141 through 145 of this title, with

3 respect to any decision in regard to the patentability

4 of any original or proposed amended or new claim

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

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

8 by a patent owner.

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

10 an opposition proceeding under this chapter, when

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

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

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

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

22 opposition proceeding shall have the same effect as

23 that specified in section 252 of this title for reissued

24 patents on the right of any person who made, pur25 chased, or used within the United States, or im-
11

•HR 1332 IH

1 ported into the United States, anything patented by

2 such proposed amended or new claim, or who made

3 substantial preparations therefor, prior to issuance

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

6 ‘‘§ 323. Effect on other proceedings

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

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

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

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

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

12 an opposition proceeding under this section, the court may

13 consider any matter independently of any opposition pro14 ceeding under this section.

15 ‘‘(b) EFFECT OF FINAL DECISIONS.—

16 ‘‘(1) IN FUTURE OPPOSITION PROCEEDINGS.—

17 If a final decision has been entered against a party

18 in a civil action arising in whole or in part under

19 section 1338 of title 28, establishing that the party

20 has not sustained its burden of proving the invalidity

21 of any patent claim, or if a final decision in an inter

22 partes reexamination proceeding instituted by a

23 third-party requester is favorable to the patentability

24 of any original or proposed amended or new claim

25 of the patent—
12

•HR 1332 IH

1 ‘‘(A) neither that party to the civil action,

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

3 party or third-party requester may thereafter

4 request an opposition to such patent claim on

5 the basis of issues which that party, third-party

6 requester, or the privies of that party or third7 party requester raised in such civil action or

8 inter partes reexamination proceeding (as the

9 case may be); and

10 ‘‘(B) an opposition requested by that

11 party, third-party requester, or the privies of

12 that party or third-party requester on the basis

13 of such issues may not thereafter be maintained

14 by the Office.

15 ‘‘(2) EFFECT OF FINAL DECISION IN OPPOSI16 TION.—If a final decision in an opposition pro17 ceeding instituted by a third-party requester is fa18 vorable to the patentability of any original or pro19 posed amended or new claim of the patent—

20 ‘‘(A) neither the third-party requester, nor

21 the privies of that third-party requester, may

22 thereafter bring a civil action under section

23 1338 of title 28, or request an inter partes re24 examination of, or an opposition to, such patent

25 claim on the basis of issues which that third-
13

•HR 1332 IH

1 party requester, or the privies of that third2 party requester, raised in such opposition pro3 ceeding; and

4 ‘‘(B) an inter partes reexamination or op5 position requested by that third-party requester,

6 or the privies of that third-party requester, on

7 the basis of such issues may not thereafter be

8 maintained by the Office.

9 ‘‘(3) NEW EVIDENCE.—Paragraphs (1) and (2)

10 do not prevent the assertion by a party to a civil ac11 tion or a third-party requester of invalidity based on

12 newly discovered prior art, or other evidence, un13 available to that party or third-party requester, as

14 the case may be, and the Patent and Trademark Of15 fice, at the time of the civil action, inter partes reex16 amination, or opposition proceeding (as the case

17 may be).

18 ‘‘(c) STAY OF LITIGATION.—Once an order for an op19 position proceeding with respect to a patent has been

20 issued under section 322(b)(1)(B), any party to the pro21 ceeding may obtain a stay of any pending court proceeding

22 (other than an appeal to the Court of Appeals for the Fed23 eral Circuit) which involves an issue of patentability of any

24 claims of the patent which are the subject of the opposi25 tion proceeding, unless the court before which such litiga-
14

•HR 1332 IH

1 tion is pending determines that a stay would not serve the

2 interests of justice.

3 ‘‘§ 324. Burden of proof

4 ‘‘(a) BURDEN OF PROOF.—In the case of reexamina5 tion, interference, opposition, or other legal challenge (in6 cluding a civil action brought in whole or in part under

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

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

9 producing evidence of invalidity or ineligibility shall have

10 the burden of showing by a preponderance of the evidence

11 the invalidity of the patent or ineligibility of the subject

12 matter of the application.’’.

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

14 Code, is amended—

15 (1) by redesignating paragraphs (7) through

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

17 and

18 (2) by inserting after paragraph (6) the fol19 lowing:

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

21 32 to a patent on a business method invention based

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

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

24 to a patent on a business method invention on any

25 other basis, a fee of $5,000.
15

•HR 1332 IH

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

2 an individual of fees under this paragraph if such

3 waiver is in the public interest.

4 ‘‘(8) On filing a request for a proceeding to de5 termine whether an invention claimed in an applica6 tion was known or used, or has been in public use

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

8 (c) CLERICAL AMENDMENT.—The table of chapters

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

10 by adding at the end the following:

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

11 SEC. 4. NONOBVIOUSNESS.

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

13 amended by adding at the end the following:

14 ‘‘(d)(1) A business method invention shall be pre15 sumed obvious under this section if the only significant

16 difference between the combined teachings of the prior art

17 and the claimed invention is that the claimed invention

18 is appropriate for use with a computer technology,

19 unless—

20 ‘‘(A) the application of the computer technology

21 is novel; or

22 ‘‘(B) the computer technology is novel and not

23 the subject of another patent or patent application.

24 ‘‘(2)(A) An applicant or patentee may rebut the pre25 sumption under paragraph (1) upon a showing by a pre-
16

•HR 1332 IH

1 ponderance of the evidence that the invention is not obvi2 ous to persons of ordinary skill in all relevant arts.

3 ‘‘(B) Those areas of art which are relevant for pur4 poses of subparagraph (A) include the field of the business

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

6 SEC. 5. REQUIREMENT TO DISCLOSE SEARCH.

7 The Director of the Patent and Trademark Office

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

9 Act, publish notice of rulemaking proceedings to amend

10 the rules of the Patent and Trademark Office to require

11 an applicant for a patent for a business method invention

12 to disclose in the application the extent to which the appli13 cant searched for prior art to meet the requirements of

14 title 35, United States Code. Such amendment shall in15 clude appropriate penalties for failure to comply with such

16 requirement. The Director shall ensure that the amend17 ment is implemented as promptly as possible.

18 SEC. 6. CONFORMING AMENDMENTS.

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

20 States Code, is amended by striking ‘‘or inter partes reex21 amination under section 311’’ and inserting ‘‘, inter partes

22 reexamination under section 311, or an opposition under

23 section 322,’’.
17

•HR 1332 IH

1 (b) BOARD OF PATENT APPEALS AND INTER2 FERENCES.—Section 134 of title 35, United States Code,

3 is amended—

4 (1) in subsection (b)—

5 (A) by inserting ‘‘or opposition’’ after ‘‘re6 examination’’; and

7 (B) by inserting ‘‘or the Administrative

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

9 ‘‘administrative patent judge’’; and

10 (2) in subsection (c)—

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

12 ‘‘reexamination proceeding or an opposition

13 proceeding’’;

14 (B) by inserting ‘‘or the Administrative

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

16 ‘‘administrative patent judge’’; and

17 (C) in the last sentence, by inserting ‘‘in

18 an inter partes reexamination proceeding’’ after

19 ‘‘requester’’.

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

21 141 of title 35, United States Code, is amended in the

22 second sentence by inserting after ‘‘reexamination pro23 ceeding’’ the following: ‘‘, and any party in an opposition

24 proceeding, who is’’.
18

•HR 1332 IH

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

2 amended by inserting after the third sentence the fol3 lowing: ‘‘In any opposition proceeding, the Administrative

4 Opposition Panel shall submit to the court in writing the

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

6 issues involved in the appeal.’’.

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

8 title 35, United States Code, is amended—

9 (1) in subsection (a)—

10 (A) by striking paragraph (3) and redesig11 nating paragraph (4) as paragraph (3); and

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

13 ‘‘method’’ and inserting ‘‘business method’’;

14 and

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

16 each place it appears and inserting ‘‘business meth17 od’’.

18 (e) OTHER PUBLICATION OF PATENT APPLICA19 TIONS.—Section 122 of title 35, United States Code, is

20 amended by adding at the end the following:

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

22 of applications for business method inventions, section 321

23 of this title applies in lieu of this section.’’.
19

•HR 1332 IH

1 SEC. 7. EFFECTIVE DATE.

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

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

4 apply to—

5 (1) any application for patent that is pending

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

7 of this Act; and

8 (2) any patent issued on or after the date of en9 actment of this Act.

10 (b) PENDING APPLICATIONS.—In applying section

11 321 of title 35, United States Code, as added by section

12 3 of this Act, to an application for patent that is pending

13 on the date of enactment of this Act—

14 (1) the Director of the Patent and Trademark

15 Office shall make the determination required by sub16 section (b)(1)(B) of such section 321 within 12

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

18 on the date specified in such section 321, whichever

19 occurs later;

20 (2) subject to paragraph (3), such an applica21 tion shall be published—

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

23 title 35, United States Code, or

24 (B) the date on which the determination is

25 made pursuant to paragraph (1),

26 whichever occurs later; and
20

•HR 1332 IH

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

2 be published under section 122 of title 35, United

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

4 published later than the date specified in such sec5 tion 122, regardless of when the Director makes the

6 determination under paragraph (1).

7 (c) PATENTS ISSUED BEFORE ESTABLISHMENT OF

8 ADMINISTRATIVE OPPOSITION PANEL.—In the case of a

9 patent issued after the enactment of this Act but before

10 the date on which notice of the establishment of the Ad11 ministrative Opposition Panel is published under section

12 322(a)(1) of title 35, United States Code (as added by

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

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

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

16 9-month requirement set forth in clause (i) of that section,

17 if the request is filed not later than 9 months after the

18 date on which such notice is so published.

Æ