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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3818 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 3818

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 3, 2006

 Mr. Hatch (for himself and Mr. Leahy) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patent Reform Act 
of 2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reference to title 35, United States Code.
Sec. 3. Right of the first inventor to file.
Sec. 4. Inventor's oath or declaration.
Sec. 5. Remedies for infringement and affirmative defenses thereto.
Sec. 6. Post-grant procedures.
Sec. 7. Submissions by third parties and other quality enhancements.
Sec. 8. Venue and jurisdiction.
Sec. 9. Other statutory and conforming amendments.
Sec. 10. Effective date.

SEC. 2. REFERENCE TO TITLE 35, UNITED STATES CODE.

    Whenever in this Act a section or other provision is amended or 
repealed, that amendment or repeal shall be considered to be made to 
that section or other provision of title 35, United States Code.

SEC. 3. RIGHT OF THE FIRST INVENTOR TO FILE.

    (a) Definitions.--Section 100 is amended by adding at the end the 
following:
    ``(f) The term `inventor' means the individual or, if a joint 
invention, the individuals collectively who invented or discovered the 
subject matter of the invention.
    ``(g) The terms `joint inventor' and `coinventor' mean any 1 of the 
individuals who invented or discovered the subject matter of a joint 
invention.
    ``(h) The `effective filing date of a claimed invention' is--
            ``(1) the filing date of the patent or the application for 
        patent containing the claim to the invention; or
            ``(2) if the patent or application for patent is entitled 
        to a right of priority of any other application under section 
        119, 365(a), or 365(b) or to the benefit of an earlier filing 
        date in the United States under section 120, 121, or 365(c), 
        the filing date of the earliest such application in which the 
        claimed invention is disclosed in the manner provided by the 
        first paragraph of section 112.
    ``(i) The term `claimed invention' means the subject matter defined 
by a claim in a patent or an application for a patent.
    ``(j) The term `joint invention' means an invention resulting from 
the collaboration of inventive endeavors of 2 or more persons working 
toward the same end and producing an invention by their collective 
efforts.''.
    (b) Conditions for Patentability.--
            (1) In general.--Section 102 is amended to read as follows:
``Sec. 102. Conditions for patentability; novelty
    ``(a) Novelty; Prior Art.--A patent for a claimed invention may not 
be obtained if--
            ``(1) the claimed invention was patented, described in a 
        printed publication, or otherwise publicly known--
                    ``(A) more than 1 year before the effective filing 
                date of the claimed invention; or
                    ``(B) 1 year or less before the effective filing 
                date of the claimed invention, if the invention was 
                patented or described in a printed publication or 
                otherwise publicly known before the invention thereof 
                by the applicant for a patent; or
            ``(2) the claimed invention was described in a patent 
        issued under section 151, or in an application for patent 
        published or deemed published under section 122(b), in which 
        the patent or application, as the case may be, names another 
        inventor and was effectively filed before the effective filing 
        date of the claimed invention.
    ``(b) Limitation on Prior Art.--
            ``(1) Derivation and common assignment exceptions.--Subject 
        matter that would otherwise qualify as prior art only under 
        subsection (a)(2) shall not be prior art to a claimed invention 
        if--
                    ``(A) the subject matter was obtained directly or 
                indirectly from the inventor or a joint inventor; or
                    ``(B) the subject matter and the claimed invention 
                were, not later than the effective filing date of the 
                claimed invention, owned by the same person or subject 
                to an obligation of assignment to the same person.
            ``(2) Grace period.--Subject matter disclosed in the prior 
        art less than 1 year before the effective filing date of the 
        claimed invention shall not preclude the patenting of a claimed 
        invention under subsection (a) or section 103 if the claimed 
        invention was made prior to the date the subject matter becomes 
        prior art pursuant to section 102(b), if the subject matter 
        disclosed was obtained directly or indirectly from an inventor 
        of the claimed subject matter or the applicant.
            ``(3) Patents and published applications effectively 
        filed.--A patent or application for patent is effectively filed 
        under subsection (a)(2) with respect to any subject matter 
        described in the patent or application--
                    ``(A) as of the filing date of the patent or the 
                application for patent; or
                    ``(B) if the patent or application for patent is 
                entitled to claim a right of priority under section 
                119, 365(a), or 365(b) or to claim the benefit of an 
                earlier filing date under section 120, 121, or 365(c), 
                based upon 1 or more prior filed applications for 
                patent, as of the filing date of the earliest such 
                application that describes the subject matter.''.
            (2) Conforming amendment.--The item relating to section 102 
        in the table of sections for chapter 10 is amended to read as 
        follows:

``102. Conditions for patentability; novelty.''.
    (c) Conditions for Patentability; Nonobvious Subject Matter.--
Section 103 is amended--
            (1) in subsection (a)--
                    (A) by striking ``A patent may not be obtained 
                through the invention'' and inserting ``A patent for 
                the claimed invention may not be obtained through the 
                claimed invention'';
                    (B) by striking ``sought to be patented'' and 
                inserting ``of the claimed invention''; and
                    (C) by striking ``at the time the invention was 
                made'' and inserting ``before the effective filing date 
                of the claimed invention'';
            (2) by striking subsection (b) and redesignating subsection 
        (c) as subsection (b);
            (3) by amending subsection (b)(1), as so redesignated, to 
        read as follows:
    ``(d)(1) Subject matter developed by another person, which is 
disqualified as prior art under section 102(b), shall not preclude 
patentability under this section if the subject matter and the claimed 
invention were owned by the same person, or subject to an obligation of 
assignment to the same person, on or before the effective filing date 
of the claimed invention.''; and
            (4) in subsection (b)(2)(A), as so redesignated, by 
        striking ``the date the claimed invention was made'' and 
        inserting ``the effective filing date of the claimed 
        invention''.
    (d) Repeal of Requirements for Inventions Made Abroad.--Section 
104, and the item relating to that section in the table of sections for 
chapter 10, are repealed.
    (e) Repeal of Statutory Invention Registration.--
            (1) In general.--Section 157, and the item relating to that 
        section in the table of sections for chapter 14, are repealed.
            (2) Removal of cross references.--Section 111(b)(8) is 
        amended by striking ``sections 115, 131, 135, and 157'' and 
        inserting ``sections 131 and 135''.
    (f) Earlier Filing Date for Inventor and Joint Inventor.--Section 
120 is amended by striking ``which is filed by an inventor or inventors 
named'' and inserting ``which names an inventor or joint inventor''.
    (g) Conforming Amendments.--
            (1) Right of priority.--Section 172 is amended by striking 
        ``and the time specified in section 102(d)''.
            (2) Limitation on remedies.--Section 287(c)(4) is amended 
        by striking ``the earliest effective filing date of which is 
        prior to'' and inserting ``which has an effective filing date 
        before''.
            (3) International application designating the united 
        states: effect.--Section 363 is amended by striking ``except as 
        otherwise provided in section 102(e) of this title''.
            (4) Publication of international application: effect.--
        Section 374 is amended by striking ``sections 102(e) and 
        154(d)'' and inserting ``section 154(d)''.
            (5) Patent issued on international application: effect.--
        The second sentence of section 375(a) is amended by striking 
        ``Subject to section 102(e) of this title, such'' and inserting 
        ``Such''.
            (6) Limit on right of priority.--Section 119(a) is amended 
        by striking ``; but no patent shall be granted'' and all that 
        follows through ``one year prior to such filing''.
            (7) Inventions made with federal assistance.--Section 
        202(c) is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``publication, on sale, or 
                        public use,'' and all that follows through 
                        ``obtained in the United States'' and inserting 
                        ``the 1-year period referred to in section 
                        102(a) would end before the end of such 2-year 
                        period''; and
                            (ii) by striking ``the statutory'' and 
                        inserting ``the 1-year''; and
                    (B) in paragraph (3), by striking ``any statutory 
                bar date that may occur under this title due to 
                publication, on sale, or public use'' and inserting 
                ``the expiration of the 1-year period referred to in 
                section 102(a)''.
    (h) Repeal of Interfering Patent Remedies.--Section 291, and the 
item relating to that section in the table of sections for chapter 29, 
are repealed.
    (i) Action for Claim to Patent on Derived Invention.--Section 
135(a) is amended to read as follows:
    ``(a) Dispute Over Right to Patent.--
            ``(1) Institution of inventor's rights contest.--An 
        applicant may request initiation of a derivation proceeding to 
        determine the right of the applicant to a patent by filing a 
        request which sets forth with particularity the basis for 
        finding that an earlier applicant derived the claimed invention 
        and without authorization filed an application claiming such 
        invention. Any such request shall be made within 12 months of 
        the date of first publication of an application containing a 
        claim that is the same or is substantially the same as the 
        claimed invention, under oath and supported by substantial 
        evidence. Whenever patents or applications for patent naming 
        different individuals as the inventor are determined by the 
        Director to interfere because of a dispute over the right to 
        patent under section 101, the Director shall institute an 
        inventor's rights contest for the purpose of determining which 
        applicant is entitled to a patent.
            ``(2) Requirements.--No proceeding shall be commenced under 
        this subsection unless the party requesting the proceeding has 
        filed an application that--
                    ``(A) was filed not later than 18 months after the 
                effective filing date of the application or patent 
                deemed to interfere with the subsequent application or 
                patent; and
                    ``(B) did not, within 1 year of the earliest 
                effective filing date of the application, contain a 
                claim that is the same or substantially the same as the 
                invention claimed in the earlier filed application;
            ``(3) Determination by patent trial and appeal board.--In 
        any proceeding under this subsection, the Patent Trial and 
        Appeal Board--
                    ``(A) shall determine the question of the right to 
                patent;
                    ``(B) in appropriate circumstances, may correct the 
                naming of the inventor in any application or patent at 
                issue; and
                    ``(C) shall issue a final decision on the right to 
                patent.
            ``(4) Derivative proceeding.--The Board may defer action on 
        a request to initiate a derivation proceeding until 3 months 
        after the date on which the Director issues a patent to the 
        applicant that filed the earlier application.
            ``(5) Effect of final decision.--The final decision of the 
        Patent Trials and Appeal Board, if adverse to the claim of an 
        applicant, shall constitute the final refusal by the Patent and 
        Trademark Office on the claims involved. The Director may issue 
        a patent to an applicant who is judged to have the right to 
        patent. The final decision of the Board, if adverse to a 
        patentee, shall, if no appeal or other review of the decision 
        has been or can be taken or had, constitute cancellation of the 
        claims involved in the patent, and notice of such cancellation 
        shall be endorsed on copies of the patent distributed after 
        such cancellation by the Patent and Trademark Office.''.
    (j) Patent Trial and Appeal Board.--
            (1) Elimination of references to interferences.--
                    (A) Sections 6, 41, 134, 141, 145, 146, 154, 305, 
                and 314 are each amended by striking ``Board of Patent 
                Appeals'' each place it appears and inserting ``Patent 
                Trial and Appeal Board''.
                    (B) Sections 135, 141, 146, and 154 are each 
                amended by striking ``interference'' each place it 
                appears and inserting ``inventor's rights contest''.
                    (C) The item relating to section 146 in the table 
                of sections for chapter 13 is amended to read as 
                follows:

``146. Civil action in case of inventor's rights contest.''.
            (2) Technical and conforming amendments.--Section 135(c) is 
        amended--
                    (A) by striking ``(c) Any'' and inserting ``(c)(1) 
                Any'';
                    (B) in the second paragraph, by striking ``The 
                Director'' and inserting ``(2) The Director''; and
                    (C) in the third paragraph, by striking ``Any 
                discretionary'' and inserting ``(3) Any 
                discretionary''.

SEC. 4. INVENTOR'S OATH OR DECLARATION.

    (a) Inventor's Oath or Declaration.--
            (1) In general.--Section 115 is amended to read as follows:
``Sec. 115. Inventor's oath or declaration
    ``(a) Naming the Inventor; Inventor's Oath or Declaration.--An 
application for patent that is filed under section 111(a), that 
commences the national stage under section 363, or that is filed by an 
inventor for an invention for which an application has previously been 
filed under this title by that inventor shall include, or be amended to 
include, the name of the inventor of any claimed invention in the 
application. Except as otherwise provided in this section, an 
individual who is the inventor or a joint inventor of a claimed 
invention in an application for patent shall execute an oath or 
declaration in connection with the application.
    ``(b) Required Statements.--An oath or declaration under subsection 
(a) shall contain statements that--
            ``(1) the application was made or was authorized to be made 
        by the affiant or declarant; and
            ``(2) such individual believes himself or herself to be the 
        original inventor or an original joint inventor of a claimed 
        invention in the application.
    ``(c) Additional Requirements.--The Director may specify additional 
information relating to the inventor and the invention that is required 
to be included in an oath or declaration under subsection (a).
    ``(d) Substitute Statement.--
            ``(1) In general.--In lieu of executing an oath or 
        declaration under subsection (a), the applicant for patent may 
        provide a substitute statement under the circumstances 
        described in paragraph (2) and such additional circumstances 
        that the Director may specify by regulation.
            ``(2) Permitted circumstances.--A substitute statement 
        under paragraph (1) shall be permitted with respect to any 
        individual who, at the time the substitute statement is filed--
                    ``(A) is deceased;
                    ``(B) is under legal incapacity;
                    ``(C) is under an obligation to assign the 
                invention, but has refused to make the oath or 
                declaration required under subsection (a); or
                    ``(D) cannot be found or reached after diligent 
                effort.
            ``(3) Contents.--A substitute statement under this 
        subsection shall--
                    ``(A) identify the individual with respect to whom 
                the statement applies;
                    ``(B) set forth the circumstances representing the 
                permitted basis for the filing of the substitute 
                statement in lieu of the oath or declaration under 
                subsection (a); and
                    ``(C) contain any additional information, including 
                any showing, required by the Director.
    ``(e) Making Required Statements in Assignment of Record.--An 
individual who is under an obligation of assignment of an application 
for patent may include the required statements under subsections (b) 
and (c) in the assignment executed by the individual, in lieu of filing 
such statements separately.
    ``(f) Time for Filing.--A notice of allowance under section 151 may 
be provided to an applicant for patent only if the applicant for patent 
has filed each required oath or declaration under subsection (a) or has 
filed a substitute statement under subsection (d) or recorded an 
assignment meeting the requirements of subsection (e).
    ``(g) Earlier-Filed Application Containing Required Statements or 
Substitute Statement.--The requirements under this section shall not 
apply to an individual with respect to an application for patent in 
which the individual is named as the inventor or a joint inventor and 
that claims the benefit under section 120 or 365(c) of the filing of an 
earlier-filed application, if--
            ``(1) an oath or declaration meeting the requirements of 
        subsection (a) was executed by the individual and was filed in 
        connection with the earlier-filed application;
            ``(2) a substitute statement meeting the requirements of 
        subsection (d) was filed in the earlier filed application with 
        respect to the individual; or
            ``(3) an assignment meeting the requirements of subsection 
        (e) was executed with respect to the earlier-filed application 
        by the individual and was recorded in connection with the 
        earlier-filed application.
    ``(h) Supplemental and Corrected Statements; Filing Additional 
Statements.--
            ``(1) In general.--A statement made under this section may 
        be withdrawn, replaced, or otherwise corrected at any time. If 
        a change is made in the naming of the inventor requiring the 
        filing of 1 or more additional statements under this section, 
        the Director shall establish regulations under which such 
        additional statements may be filed.
            ``(2) Supplemental statements not required.--If an 
        individual has executed an oath or declaration under subsection 
        (a) or an assignment meeting the requirements of subsection (e) 
        with respect to an application for patent, no supplemental oath 
        or declaration or further substitute statement shall thereafter 
        be required in connection with the application for patent or 
        any patent issuing thereon.
            ``(3) Savings clause.--No patent shall be invalid or 
        unenforceable based upon the failure to comply with a 
        requirement under this section if the failure is remedied as 
        provided under paragraph (1).''.
            (2) Relationship to divisional applications.--Section 121 
        is amended by striking ``If a 3 divisional application'' and 
        all that follows through ``inventor.''.
            (3) Conforming amendment.--The item relating to section 115 
        in the table of sections for chapter 10 is amended to read as 
        follows:

``115. Inventor's oath or declaration.''.
    (b) Filing by Other Than Inventor.--Section 118 is amended to read 
as follows:
``Sec. 118. Filing by other than inventor
    ``A person to whom the inventor has assigned or is under an 
obligation to assign the invention may make an application for patent. 
A person who otherwise shows sufficient proprietary interest in the 
matter may make an application for patent on behalf of and as agent for 
the inventor on proof of the pertinent facts and a showing that such 
action is appropriate to preserve the rights of the parties. If the 
Director grants a patent on an application filed under this section by 
a person other than the inventor, the patent shall be granted to the 
real party in interest and upon such notice to the inventor as the 
Director considers to be sufficient.''.
    (c) Specification.--Section 112 is amended--
            (1) in the first paragraph by striking ``The 
        specification'' and inserting ``(a) In General.--The 
        specification'';
            (2) in the second paragraph--
                    (A) by striking ``The specifications'' and 
                inserting ``(b) Conclusion.--The specifications''; and
                    (B) by striking ``applicant regards as his 
                invention'' and inserting ``inventor or a joint 
                inventor regards as the invention'';
            (3) in the third paragraph, by striking ``A claim'' and 
        inserting ``(c) Form.--A claim'';
            (4) in the fourth paragraph, by striking ``Subject to the 
        following paragraph,'' and inserting ``(d) Reference in 
        Dependent Forms.--Subject to subsection (e),'';
            (5) in the fifth paragraph, by striking ``A claim'' and 
        inserting ``(e) Reference in Multiple Dependent Form.--A 
        claim''; and
            (6) in the last paragraph, by striking ``An element'' and 
        inserting ``(f) Element in Claim for a Combination.--An 
        element''.

SEC. 5. REMEDIES FOR INFRINGEMENT AND AFFIRMATIVE DEFENSES THERETO.

    (a) Damages.--Section 284 is amended by--
            (1) in the first paragraph--
                    (A) by striking ``Upon'' and inserting ``(a) Award 
                of Damages.--(1) Upon''; and
                    (B) by adding at the end the following:
            ``(2) In determining a reasonable royalty consideration 
        shall be given to--
                    ``(A) the economic value that should be attributed 
                to the novel and non-obvious feature or features of the 
                invention, as distinguished from the economic value 
                attributable to other features, improvements added by 
                the infringer, and the business risks the infringer 
                undertook in commercialization;
                    ``(B) the terms of non-exclusive marketplace 
                licensing of the invention; and
                    ``(C) other relevant factors in applicable law.'';
            (2) by amending the second paragraph to read as follows:
    ``(b) Willful Infringement.--
            ``(1) Increased damages.--A court that has determined that 
        the infringer has willfully infringed a patent or patents may 
        increase the damages up to 3 times the amount of damages found 
        or assessed under subsection (a), except that increased damages 
        under this paragraph shall not apply to provisional rights 
        under section 154(d).
            ``(2) Permitted grounds for willfulness.--A court may find 
        that an infringer has willfully infringed a patent only if the 
        patent owner presents clear and convincing evidence that--
                    ``(A) the infringer, having received adequate 
                written notice from the patentee, after a reasonable 
                opportunity to investigate, thereafter performed 1 or 
                more of the alleged acts of infringement;
                    ``(B) the infringer intentionally copied the 
                patented invention with knowledge that it was patented; 
                or
                    ``(C) after having been found by a court to have 
                infringed that patent, the infringer engaged in conduct 
                that was not colorably different from the conduct 
                previously found to have infringed the patent, and 
                which resulted in a separate finding of infringement of 
                the same patent.
            ``(3) Written notice.--For purposes of paragraph (2), 
        written notice shall be adequate only if such notice--
                    ``(A) alleges acts of infringement in a manner 
                sufficient to give the infringer an objectively 
                reasonable apprehension of suit on such patent, and
                    ``(B) identifies with particularity each claim of 
                the patent, each product or process that the patent 
                owner alleges infringes the patent, and the 
                relationship of such product or process to such claim, 
                the infringer.
            ``(4) Limitations on willfulness.--
                    ``(A) In general.--A court shall not find that an 
                infringer has willfully infringed a patent under 
                paragraph (2) for any period of time during which the 
                infringer had an informed good faith belief that the 
                patent was invalid or unenforceable, or would not be 
                infringed by the conduct later shown to constitute 
                infringement of the patent.
                    ``(B) Informed good faith belief.--For purposes of 
                this paragraph, an informed good faith belief may be 
                established by--
                            ``(i) reasonable reliance on advice of 
                        counsel;
                            ``(ii) evidence that the infringer sought 
                        to modify its conduct to avoid infringement 
                        once it had discovered the patent; or
                            ``(iii) other evidence a court may find 
                        sufficient to establish such good faith belief.
                    ``(C) Evidence.--The decision of the infringer not 
                to present evidence of advice of counsel shall have no 
                relevance to a determination of willful infringement 
                under paragraph (2).
            ``(5) Limitation on pleading.--Before the date on which a 
        determination has been made that the patent in suit is not 
        invalid, is enforceable, and has been infringed by the 
        infringer, a patentee may not plead, and a court may not 
        determine, that an infringer has willfully infringed the 
        patent. The court's determination of an infringer's willfulness 
        shall be made without a jury.''; and
            (3) in the third paragraph, by striking ``The court'' and 
        inserting ``(c) Expert Testimony.--The court''.
    (b) Attorney's Fees.--Section 285 is amended to read:
    ``(a) The court shall award, to a prevailing party, fees and other 
expenses incurred by that party in connection with that proceeding, 
unless the court finds that the position of the nonprevailing party or 
parties was substantially justified or that special circumstances make 
an award unjust.''.
    (c) Unenforceability.--Section 282 of title 35, United States Code, 
is amended--
            (1) by inserting ``(a) In General.--'' before ``A patent 
        shall be presumed valid.''; and
            (2) by adding at the end the following:
    ``(b) Unenforceability.--
            ``(1) Permitted grounds for unenforceability.--A court may 
        find that a patent is unenforceable only if the patent owner 
        presents clear and convincing evidence that, with respect to 
        the patent at issue the patentee, or a patentee's agent, or 
        privy before issuance of the patent--
                    ``(A) failed to disclose material information, or 
                submitted false material information or statements; and
                    ``(B) did so with an intent to mislead or deceive 
                the United States Patent and Trademark Office.
            ``(2) Limitations on unenforceability.--A court shall not 
        find that a patent in unenforceable under paragraph (1) if--
                    ``(A) the patentee, agent, or privy had an informed 
                good faith belief that the specific information that 
                was not disclosed was not material;
                    ``(B) the patentee had no actual or constructive 
                knowledge of the misconduct of an agent or privy, 
                exercised due care in selecting and supervising such 
                agent or privy, and reasonably relied on counsel in 
                obtaining the patent;
                    ``(C) establishes good faith by other evidence a 
                court may find sufficient; or
                    ``(D) the court has not determined 1 or more claims 
                in the patent at issue in the action to be invalid.
            ``(3) Limitation on pleading.--Before the date on which a 
        determination has been made that the patent in suit is not 
        invalid in whole and has been infringed by the infringer, a 
        defendant may not plead, and a court may not determine, that 
        the patent in question is unenforceable.''.
    (d) Defense to Infringement Based on Earlier Inventor.--Section 273 
of title 35, United States Code, is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``of a method''; and
                            (ii) by striking ``review period;'' and 
                        inserting ``review period; and'';
                    (B) in paragraph (2)(B), by striking the semicolon 
                at the end and inserting a period; and
                    (C) by striking paragraphs (3) and (4);
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking ``for a method''; and
                            (ii) by striking ``at least 1 year before 
                        the effective filing date of such patent, and'' 
                        and all that follows through the period and 
                        inserting ``and commercially used, or made 
                        substantial preparations for commercial use of, 
                        the subject matter before the effective filing 
                        date of the claimed invention.'';
                    (B) in paragraph (2)--
                            (i) by striking ``The sale or other 
                        disposition of a useful end result produced by 
                        a patented method'' and inserting ``The sale or 
                        other disposition of subject matter that 
                        qualifies for the defense set forth in this 
                        section''; and
                            (ii) by striking ``a defense under this 
                        section with respect to that useful end 
                        result'' and inserting ``such defense''; and
                    (C) in paragraph (3)--
                            (i) by striking subparagraph (A); and
                            (ii) by redesignating subparagraphs (B) and 
                        (C) as subparagraphs (A) and (B), respectively;
            (3) in paragraph (7), by striking ``of the patent'' and 
        inserting ``of the claimed invention''; and
            (4) by amending the heading to read as follows:
``Sec. 273. Special defenses to and exemptions from infringement''.
    (e) Table of Sections.--The item related to section 273 in the 
table of sections for chapter 28 is amended to read as follows:

``Sec. 273. Special defenses to and exemptions from infringement.''.
    (f) Effect of Extraterritorial Infringement.--Section 271(f) is 
repealed.

SEC. 6. POST-GRANT PROCEDURES.

    (a) Post-Grant Opposition Procedures.--
            (1) In general.--Chapter 31 is amended to read as follows:

              ``CHAPTER 31--POST-GRANT REVIEW PROCEEDINGS

``Sec.
``311. Petition for post-grant review.
``312. Timing of petition.
``313. Submission of petition.
``314. Prohibited filings.
``315. Conduct of post-grant review proceedings.
``316. Proof and evidentiary standards.
``317. Showing of sufficient grounds; institution of post-grant review 
                            proceedings.
``318. Amendment of the patent.
``319. Decision of the Patent Trial and Appeal Board.
``320. Effect of decision.
``321. Relationship to other pending proceedings.
``322. Effect of decisions rendered in civil action on future post-
                            grant review proceedings.
``323. Effect of final decision on future proceedings.
``Sec. 311. Petition for post-grant review
    ``Any person who is not the patent owner may file a petition for 
cancellation seeking to institute a post-grant review proceeding before 
the Patent Trial and Appeal Board to cancel as unpatentable any claim 
of a patent on any ground which might be raised under section 282(a) 
(2) and (3) (relating to invalidity of the patent or any claim).
``Sec. 312. Timing of petition
    ``A post-grant review proceeding may be instituted only if the 
petition for cancellation is filed by a cancellation petitioner--
            ``(1) not later than 12 months after the date the patent 
        was issued or reissued; or
            ``(2) who establishes a substantial reason to believe that 
        the continued existence of the challenged claim causes or is 
        likely to cause the petitioner significant economic harm.
``Sec. 313. Submission of petition
    ``The petition for cancellation shall--
            ``(1) be accompanied by payment of the post-grant review 
        fee set forth in subsection 41(a);
            ``(2) identify the cancellation petitioner; and
            ``(3) set forth in writing the basis for the cancellation, 
        identifying each claim challenged and providing such 
        information as the Director may require by regulation.
``Sec. 314. Prohibited filings
    ``No post-grant review proceeding shall be instituted--
            ``(1) under subsection (a) of section 312 if the petition 
        for cancellation identifies the same cancellation petitioner 
        and the same patent as a previous petition for cancellation 
        filed under subsection (a) of section 312; or
            ``(2) under subsection (b) of section 312 if the petition 
        for cancellation identifies the same cancellation petitioner 
        and the same patent as a previous petition for cancellation 
        filed under subsection (b) of section 312.
``Sec. 315. Conduct of post-grant review proceedings
    ``(a) In General.--The Director shall--
            ``(1) establish regulations, in accordance with section 
        2(b)(2), to govern post-grant review proceedings and their 
        relationship to other proceedings;
            ``(2) prescribe regulations setting forth the standards for 
        showings of substantial reason to believe and significant 
        economic harm under section 312(b) and sufficient grounds in 
        section 317; and
            ``(3) prescribe regulations setting forth procedures for 
        discovery of relevant evidence, including that such discovery 
        shall be limited to evidence directly related to factual 
        assertions advanced by either party in the proceeding, and the 
        procedures for obtaining such evidence shall be consistent with 
        the purpose and nature of the proceeding.
    ``(b) Post-Grant Regulations.--Regulations under subsection 
(a)(1)--
            ``(1) shall be designed to result in a final decision on a 
        petition for cancellation within 12 months of the institution 
        of the post-grant review proceeding;
            ``(2) shall provide for discovery upon order of the Board;
            ``(3) may prescribe sanctions for abuse of discovery or 
        abuse of process to the extent authorized in United States 
        district courts by rule 11 and rule 37 of the Federal Rules of 
        Civil Procedure;
            ``(4) may provide for protective orders governing the 
        exchange and submission of confidential information; and
            ``(5) shall ensure that any information submitted by the 
        patent owner in support of any amendment entered under section 
        318 shall be made available to the public as part of the 
        prosecution history of the patent.
    ``(c) Considerations.--In prescribing regulations under this 
section, the Director shall take into consideration the effect on the 
economy, the integrity of the patent system, and the efficient 
administration of the Office.
``Sec. 316. Proof and evidentiary standards
    ``(a) In General.--The presumption of validity set forth in section 
282 shall not apply in a challenge to any patent claim under this 
chapter.
    ``(b) Burden of Proof.--The party advancing a proposition under 
this chapter shall have the burden of proving that proposition.
``Sec. 317. Showing of sufficient grounds; institution of post-grant 
              review proceedings
    ``Within such time as may be prescribed by regulation, the 
cancellation petitioner shall file any information known to it that 
supports its allegation of the unpatentability of any challenged claim. 
The Patent Trial and Appeal Board shall not institute a post-grant 
review proceeding unless it determines that the information presented 
provides sufficient grounds to proceed. If the Patent Trial and Appeal 
Board does not institute a post-grant review proceeding under this 
section then the cancellation petitioner may not assert the same 
grounds against the same claims in any other proceeding within the 
Office.
``Sec. 318. Amendment of the patent
    ``(a) In General.--In response to a challenge in a petition for 
cancellation, the patent owner may file 1 motion to amend the patent in 
1 or more of the following ways:
            ``(1) Cancel any challenged patent claim.
            ``(2) For each challenged claim, propose a substitute claim 
        that includes all the limitations of the challenged claim.
            ``(3) Amend the patent drawings or otherwise amend the 
        patent other than the claims.
    ``(b) Additional Motions.--Additional motions to amend may be 
permitted only for good cause shown.
    ``(c) Scope of Claims.--No amendment shall enlarge the scope of the 
claims of the patent. No amendment shall introduce new matter.
``Sec. 319. Decision of the Patent Trial and Appeal Board
    ``If the post-grant review proceeding is instituted under section 
317 and not dismissed under section 320 or subsection (b) of section 
323, the Patent Trial and Appeal Board shall issue a final decision 
with respect to patentability of any patent claim challenged and any 
new claim added under this section 318.
``Sec. 320. Effect of decision
    ``(a) In General.--Where a final decision of the Patent Trial and 
Appeal Board is issued under section 319 and the time for appeal has 
expired or any appeal proceeding has terminated, the Director shall 
issue and publish a certificate canceling any claim of the patent 
finally determined to be unpatentable and incorporating in the patent 
by operation of the certificate any new claim determined to be 
patentable.
    ``(b) New Claims.--Any new claim held to be patentable and 
incorporated into a patent in a post-grant review proceeding shall have 
the same effect as that specified in section 252 for reissued patents 
on the right of any person who made, purchased, offered to sell, or 
used within the United States, or imported into the United States, 
anything patented by such new claim, or who made substantial 
preparations therefore, prior to issuance of a certificate under the 
provisions of subsection (a) of this section.
``Sec. 321. Relationship to other pending proceedings
    ``Notwithstanding subsection 135(a), sections 251 and 252, and 
chapter 30, the Director may determine the manner in which any 
reexamination proceeding, reissue proceeding, interference proceeding, 
or post-grant review proceeding that is pending during a post-grant 
review proceeding, may proceed, including providing for stay, transfer, 
consolidation, or termination of such proceedings.
``Sec. 322. Effect of decisions rendered in civil action on future 
              post-grant review proceedings
    ``If a final decision has been entered against a party in a civil 
action arising in whole or in part under section 1338 of title 28 
establishing that the party has not sustained its burden of proving the 
invalidity of any patent claim--
            ``(1) that party to the civil action and the privies of 
        that party may not thereafter request a post-grant review 
        proceeding on such patent claim on the basis of any grounds, 
        under the provisions of section 311, which that party or the 
        privies of that party raised or could have raised in such civil 
        action; and
            ``(2) the Office may not thereafter maintain a post-grant 
        review proceeding previously requested by that party or the 
        privies of that party on the basis of such grounds.
``Sec. 323. Effect of final decision on future proceedings
    ``(a) In General.--If a final decision under section 319 is 
favorable to the patentability of any original or new claim of the 
patent, the cancellation petitioner may not thereafter, based on any 
ground which the cancellation petitioner raised during the post-grant 
review proceeding--
            ``(1) request or pursue a reexamination of such claims;
            ``(2) request or pursue an interference of such claims;
            ``(3) request or pursue a post-grant review proceeding of 
        such claims; or
            ``(4) assert the invalidity of any such claims, in any 
        civil action arising in whole or in part under section 1338 of 
        title 28.
    ``(b) Extension of Prohibition.--If the final decision is the 
result of a petition for cancellation under section 312(b), the 
prohibition under this section shall extend to any ground which the 
cancellation petitioner raised or could have raised during the post-
grant review proceeding.''.
    (b) Technical and Conforming Amendment.--The table of chapters is 
amended to read as follows:

``31. Post-grant review proceedings.''.

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

    (a) Publication.--Section 122(b)(2) is amended--
            (1) by striking subparagraph (B); and
            (2) in subparagraph (A)--
                    (A) by striking ``(A) An application'' and 
                inserting ``An application''; and
                    (B) by redesignating clauses (i) through (iv) as 
                subparagraphs (A) through (D), respectively.
    (b) Reexamination.--Subsection 303(a) is amended to read as 
follows:
    ``(a) Within 3 months following the filing of a request for 
reexamination under the provisions of section 302, by the owner of the 
patent, the Director shall determine whether a substantial new question 
of patentability affecting any claim of the patent concerned is raised 
by the request, with or without consideration of other patents or 
printed publications. On his own initiative, and at any time, the 
Director may determine whether a substantial new question of 
patentability is raised by patents and publications discovered by him, 
cited under the provisions of section 301, or cited by any person other 
than the owner of the patent under the provisions of section 302 or 
section 311. The existence of a substantial new question of 
patentability is not precluded by the fact that a patent or printed 
publication was previously cited by or to the Office or considered by 
the Office.''.
    (c) Preissuance Submissions by Third Parties.--Section 122 is 
amended by adding at the end the following:
    ``(e) Preissuance Submissions by Third Parties.--
            ``(1) In general.--Any person may submit for consideration 
        and inclusion in the record of a patent application, any 
        patent, published patent application, or other publication of 
        potential relevance to the examination of the application, if 
        such submission is made in writing before the earlier of--
                    ``(A) the date a notice of allowance under section 
                151 is mailed in the application for patent; or
                    ``(B) either--
                            ``(i) 6 months after the date on which the 
                        application for patent is published under 
                        section 122; or
                            ``(ii) the date of the first rejection 
                        under section 132 of any claim by the examiner 
                        during the examination of the application for 
                        patent, whichever occurs later.
            ``(2) Other requirements.--Any submission under paragraph 
        (1) shall--
                    ``(A) set forth a concise description of the 
                asserted relevance of each submitted document;
                    ``(B) be accompanied by such fee as the Director 
                may prescribe; and
                    ``(C) include a statement by the submitter 
                affirming that the submission was made in compliance 
                with this section.''.
    (d) Effective Dates.--Notwithstanding any other provision of law, 
sections 311 through 318 of title 35, United States Code, as amended by 
this Act, shall apply to any patent that issues from an original 
application filed on any date.

SEC. 8. VENUE AND JURISDICTION.

    (a) Venue for Patent Cases.--Section 1400 of title 28, United 
States Code, is amended by striking subsection (b) and inserting the 
following:
    ``(b) Any civil action arising under any Act of Congress relating 
to patents, other than an action for declaratory judgment or an action 
seeking review of a decision of the Patent Trial and Appeal Board under 
chapter 13 of title 35, may be brought only--
            ``(1) in the judicial district where either party resides; 
        or
            ``(2) in the judicial district where the defendant has 
        committed acts of infringement and has a regular and 
        established place of business.
    ``(c) Notwithstanding section 1391(c) of this title, for purposes 
of venue under subsection (b), a corporation shall be deemed to reside 
in the judicial district in which the corporation has its principal 
place of business or in the State in which the corporation is 
incorporated.''.
    (b) Interlocutory Appeals.--Subsection (c)(2) of section 1292 of 
title 28, United States Code, is amended by adding at the end:
            ``(3) of an appeal from an interlocutory order or decree 
        determining construction of claims in a civil action for patent 
        infringement under section 271 of title 35.
                    ``(A) Application for an appeal hereunder shall be 
                made to the court within 10 days after entry of the 
                order or decree.
                    ``(B) Proceedings in the district court shall be 
                stayed during pendency of the appeal.''.

SEC. 9. OTHER STATUTORY AND CONFORMING AMENDMENTS.

    (a) Fees.--Section 41(a) of title 35, United States Code is 
amended--
            (1) by redesignating paragraphs (8), (9), (10), (11), (12), 
        (13), (14), and (15) as paragraphs (10), (11), (12), (13), 
        (14), (15), (16), and (17) respectively; and
            (2) by inserting after paragraph (7) the following:
            ``(8) On filing a petition for cancellation under 
        subsection (a) of section 312, a fee established by the 
        Director to recover \1/2\ the estimated average cost to the 
        Office of a post-grant review proceeding.
            ``(9) On filing a petition for cancellation under 
        subsection (b) of section 312, a fee established by the 
        Director to recover the estimated average cost to the Office of 
        a post-grant review proceeding.''.
    (b) Definitions.--Section 100 (as amended by this Act) is further 
amended--
            (1) in subsection (e), by striking ``or inter partes 
        reexamination under section 311'';
            (2) by inserting the following:
    ``(k) The term `cancellation petitioner' means the real party in 
interest requesting cancellation of any claim of a patent under chapter 
31 of this title and the privies of the real party in interest.''.
    (c) Patent Trial and Appeal Board.--
            (1) Section 6 is amended to read as follows:
``Sec. 6. Patent Trial and Appeal Board
    ``(a) Establishment and Composition.--There shall be in the Office 
a Patent Trial and Appeal Board. The Director, the Deputy Director, the 
Commissioner for Patents, the Commissioner for Trademarks, and the 
administrative patent judges shall constitute the Patent Trial and 
Appeal Board. The administrative patent judges shall be persons of 
competent legal knowledge and scientific ability who are appointed by 
the Director. Any reference in any Federal law, Executive order, rule, 
regulation, or delegation of authority, or any document of or 
pertaining to the Board of Patent Appeals and Interferences is deemed 
to refer to the Patent Trial and Appeal Board.
    ``(b) Duties.--The Patent Trial and Appeal Board shall, on written 
appeal of an applicant, review adverse decisions of examiners upon 
application for patents; shall, on written appeal of a patent owner, 
review adverse decisions of examiners upon patents in reexamination 
proceedings under chapter 30; shall determine priority and 
patentability of invention in inventor's rights contests declared under 
subsection 135(a); and shall preside over post-grant review proceedings 
under chapter 31. Each appeal, inventor's rights contest, and post-
grant review proceeding shall be heard by at least 3 members of the 
Patent Trial and Appeal Board, who shall be designated by the Director. 
Only the Patent Trial and Appeal Board may grant rehearings.''.
            (2) Title 35, United States Code, is amended by striking 
        ``Board of Patent Appeals'' each place it appears and inserting 
        in its place ``Patent Trial and Appeal Board''.
    (d) Authority of Panels of Administrative Patent Judges.--Section 6 
(as amended by this section) is further amended by adding at the end 
the following:
    ``(c) Additional Responsibilities of Administrative Patent 
Judges.--Panels of administrative patent judges, once assigned by the 
Director, shall have the responsibilities under chapter 32 in 
connection with post-grant opposition proceedings.''.
    (e) Rulemaking Authority.--Section 3(a) is amended by adding at the 
end the following:
            ``(5) Rulemaking authority.--In addition to the authority 
        conferred by other provisions of this title, the Director may 
        promulgate such rules, regulations, and orders as the Director 
        determines appropriate to carry out the provisions of this 
        title or any other law applicable to the United States Patent 
        and Trademark Office or that the Director determines necessary 
        to govern the operation and organization of the Office.''.
    (f) Reexamination.--
            (1) Section 304 is amended by striking the final 3 
        sentences.
            (2) Section 305 is amended by striking, in the first 
        sentence, ``and reply'' and also striking ``have'' and 
        inserting ``has'' in its place.
            (3) Section 315(c) is amended by striking ``or could have 
        raised''.
            (4) Section 4607 of the Intellectual Property and 
        Communications Omnibus Reform Act of 1999, as enacted by 
        section 1000(a)(9) of Public Law 106-113, is repealed.
    (g) Appeal to the Court of Appeals for the Federal Circuit.--
            (1) In general.--Section 141 is amended to read as follows:
``Sec. 141. Appeal to the Court of Appeals for the Federal Circuit
    ``(a) Examinations.--An applicant dissatisfied with the final 
decision in an appeal to the Patent Trial and Appeal Board under 
section 134 may appeal the decision to the United States Court of 
Appeals for the Federal Circuit. By filing such an appeal, the 
applicant waives his right to proceed under section 145.
    ``(b) Reexaminations.--A patent owner in any reexamination 
proceeding who is dissatisfied with the final decision in an appeal to 
the Patent Trial and Appeal Board under section 134 may appeal the 
decision to the United States Court of Appeals for the Federal Circuit.
    ``(c) Inventor's Rights Contest.--A party to an inventor's rights 
contest dissatisfied with the final decision of the Patent Trial and 
Appeal Board on the interference may appeal the decision to the United 
States Court of Appeals for the Federal Circuit.
    ``(d) Post-Grant Review.--A party to a post-grant review proceeding 
dissatisfied with the final decision of the Patent Trial and Appeal 
Board under section 319 may appeal the decision only to the United 
States Court of Appeals for the Federal Circuit. Any decision of the 
Patent Trial and Appeal Board under subsection 312(b) or section 317 
shall be final and nonappealable. A decision by the Board under section 
320 not to issue a final decision under subsection 319 as a result of 
settlement shall also be final and nonappealable.''.
            (2) Certain appeals.--Subsection 1295(a)(4)(A) of title 28, 
        United States Code, is amended to read as follows:
                    ``(A) the Patent Trial and Appeal Board of the 
                United States Patent and Trademark Office with respect 
                to patent applications, reexaminations, and inventor's 
                rights contests, at the instance of an applicant for a 
                patent or any party to a patent interference, 
                reexamination, or post-grant review proceeding, and any 
                such appeal shall waive any right of such applicant or 
                party to proceed under section 145 or 146 of title 
                35;''.

SEC. 10. EFFECTIVE DATE.

    Except as otherwise provided in this Act, the provisions of this 
Act shall take effect 12 months after the date of enactment of this Act 
and shall apply to any patent issued on or after that effective date.
                                 <all>
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