ing 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 gov-
erning pleadings and discovery in the Federal Rules 
of Civil Procedure, which took effect in December 
2015; 
(12) the Supreme Court issued rulings in Oc-
tane 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 infringe-
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ment, 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 ‘‘sub-
stitute claims,’’ the following: ‘‘including the stand-
ard 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, or 
claim proposed in a motion to amend, shall be 
construed as the claim would be construed 
under section 282(b) in an action to invalidate 
a patent, including by construing each such 
claim in accordance with— 
‘‘(i) the ordinary and customary 
meaning of the claim as understood by a 
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person having ordinary skill in the art to 
which the claimed invention pertains; and 
‘‘(ii) the prosecution history per-
taining 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 pre-
sumption of validity under section 282(a) shall apply 
to a previously issued claim that is challenged dur-
ing 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 fol-
lowing new subsection: 
‘‘(d) PERSONS THAT MAY PETITION.— 
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‘‘(1) DEFINITION.—In this subsection, the term 
‘charged with infringement’ means a real and sub-
stantial controversy regarding infringement of a pat-
ent exists such that the petitioner would have stand-
ing to bring a declaratory judgment action in Fed-
eral 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 fol-
lows: 
‘‘(a) THRESHOLD.— 
‘‘(1) LIKELIHOOD OF PREVAILING.—Subject to 
paragraph (2), the Director may not authorize an 
inter partes review to be instituted unless the Direc-
tor determines that the information presented in the 
petition filed under section 311 and any response 
filed under section 313 show that there is a reason-
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able 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 insti-
tuted on a claim challenged in a petition if the Di-
rector has previously instituted an inter partes re-
view or post-grant review with respect to that 
claim.’’. 
(e) REVIEWABILITY OF INSTITUTION DECISIONS.— 
Section 314 of title 35, United States Code, is amended 
by striking subsection (d) and inserting the following: 
‘‘(d) NO APPEAL.— 
‘‘(1) NONAPPEALABLE DETERMINATIONS.— 
‘‘(A) 
THRESHOLD
DETERMINATION.—A 
determination by the Director on the reasonable 
likelihood that the petitioner will prevail under 
subsection (a)(1) shall be final and nonappeal-
able. 
‘‘(B) DENIALS OF INSTITUTION.—A deter-
mination by the Director not to institute an 
inter partes review under this section shall be 
final and nonappealable. 
‘‘(2) APPEALABLE DETERMINATIONS.—Any as-
pect of a determination by the Director to institute 
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an inter partes review under this section, other than 
a determination described in paragraph (1)(A), may 
be reviewed during an appeal of a final written deci-
sion issued under section 318(a).’’. 
(f) ELIMINATING REPETITIVE PROCEEDINGS.—Sec-
tion 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
PRO-
CEEDINGS.—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 peti-
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tioner, 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 oth-
erwise available to the public before the effective fil-
ing 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
INTER-
EST.—Section 316(a)(5) of title 35, United States 
Code, is amended to read as follows: 
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‘‘(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 in-
terest of justice;’’. 
(h) PRIORITY OF FEDERAL COURT VALIDITY DE-
TERMINATIONS.— 
(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), re-
spectively; and 
(B) by inserting after subsection (b) the 
following new subsection: 
‘‘(c) FEDERAL
COURT
VALIDITY
DETERMINA-
TIONS.— 
‘‘(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 sec-
tion 1338 of title 28 or in a proceeding before the 
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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 Inter-
national 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. 
‘‘(B) TERMINATION.—If the validity of a 
patent claim described in subparagraph (A) is 
finally upheld by a court or the International 
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Trade Commission, as applicable, the Patent 
Trial and Appeal Board shall terminate the 
inter partes review.’’. 
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—Chapter 31 of title 35, United States 
Code, is amended— 
(A) in section 315(b), by striking ‘‘sub-
section (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)’’. 
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 ‘‘sub-
stitute claims,’’ the following: ‘‘including the stand-
ard for how substitute claims should be construed,’’; 
(2) in paragraph (11), by striking ‘‘; and’’ and 
inserting a semicolon; 
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(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 con-
strued under section 282(b) in an action to in-
validate 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 per-
taining 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: 
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‘‘(e) EVIDENTIARY STANDARDS.— 
‘‘(1) PRESUMPTION
OF
VALIDITY.—The pre-
sumption of validity under section 282(a) shall apply 
to a previously issued claim that is challenged dur-
ing a proceeding under this chapter. 
‘‘(2) BURDEN OF PROOF.—In a post-grant re-
view 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 fol-
lowing new subsection: 
‘‘(d) PERSONS THAT MAY PETITION.— 
‘‘(1) DEFINITION.—In this subsection, the term 
‘charged with infringement’ means a real and sub-
stantial controversy regarding infringement of a pat-
ent exists such that the petitioner would have stand-
ing to bring a declaratory judgment action in Fed-
eral court. 
‘‘(2) NECESSARY CONDITIONS.—A person may 
not file with the Office a petition to institute a post- 
grant review of a patent unless the person, or a real 
party in interest or privy of the person, dem-
onstrates— 
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‘‘(A) a reasonable possibility of being— 
‘‘(i) sued for infringement of the pat-
ent; or 
‘‘(ii) charged with infringement under 
the patent; or 
‘‘(B) a competitive harm related to the va-
lidity of the patent.’’. 
(d) LIMITATION ON REVIEWS.—Section 324(a) of 
title 35, United States Code, is amended to read as fol-
lows: 
‘‘(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 pe-
tition filed under section 321, if such information is 
not rebutted, would demonstrate that it is more like-
ly 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 insti-
tuted on a claim challenged in a petition if the Di-
rector has previously instituted an inter partes re-
view or post-grant review with respect to that 
claim.’’. 
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(e) REVIEWABILITY OF INSTITUTION DECISIONS.— 
Section 324 of title 35, United States Code, is amended 
by striking subsection (e) and inserting the following: 
‘‘(e) NO APPEAL.— 
‘‘(1) NON-APPEALABLE DETERMINATIONS.— 
‘‘(A) 
THRESHOLD
DETERMINATION.—A 
determination by the Director on the likelihood 
that the petitioner will prevail under subsection 
(a)(1) shall be final and nonappealable. 
‘‘(B) EXERCISE OF DISCRETION.—A deter-
mination by the Director not to institute a post- 
grant review under this section shall be final 
and nonappealable. 
‘‘(2) APPEALABLE DETERMINATIONS.—Any as-
pect of a determination by the Director to institute 
a post-grant review under this section, other than a 
determination described in paragraph (1)(A), may be 
reviewed during an appeal of a final written decision 
issued under section 328(a).’’. 
(f) ELIMINATING REPETITIVE PROCEEDINGS.—Sec-
tion 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 
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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 ini-
tial petition, the petitioner, or the real party in in-
terest or privy of the petitioner, is charged with in-
fringement 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
INTER-
EST.—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— 
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‘‘(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 in-
terest of justice;’’. 
(h) PRIORITY OF FEDERAL COURT VALIDITY DE-
TERMINATIONS.— 
(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), re-
spectively; and 
(B) by inserting after subsection (b) the 
following new subsection: 
‘‘(c) FEDERAL
COURT
VALIDITY
DETERMINA-
TIONS.— 
‘‘(1) INSTITUTION BARRED.—A post-grant re-
view of a patent claim may not be instituted if, in 
a civil action arising in whole or in part under sec-
tion 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— 
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‘‘(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 Inter-
national 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. 
‘‘(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.’’. 
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(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—Chapter 32 of title 35, United States 
Code, is amended— 
(A) in section 326(a)(11), by striking ‘‘sec-
tion 325(c)’’ and inserting ‘‘section 325(d)’’; 
and 
(B) in section 327(a), by striking ‘‘section 
325(e)’’ and inserting ‘‘section 325(f)’’. 
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 re-
view shall be heard by at least 3 members of the 
Patent Trial and Appeal Board, who shall be des-
ignated 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.’’. 
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SEC. 105. REEXAMINATION OF PATENTS. 
(a) REQUEST FOR REEXAMINATION.—Section 302 of 
title 35, United States Code, is amended to read as fol-
lows: 
‘‘§ 302. Request for reexamination 
‘‘Any person at any time may file a request for reex-
amination 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 accom-
panied 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 reexam-
ination 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 com-
plaint alleging infringement of the patent.’’. 
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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 insert-
ing 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 in-
fringement of a patent not proven invalid or unenforce-
able, 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 
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‘‘United States Patent and Trademark Office 
Innovation Promotion Fund’’; 
(3) in subsection (c)— 
(A) by striking ‘‘(c)(1)’’ and all that fol-
lows through the end of paragraph (1) and in-
serting the following: ‘‘(c) COLLECTION
OF 
FUNDS FOR PTO ACTIVITIES.— 
‘‘(1) IN
GENERAL.—Fees authorized in this 
title or any other Act to be charged or established 
by the Director shall be collected by the Director 
and shall be available to the Director until expended 
to carry out the activities of the Patent and Trade-
mark Office.’’; 
(B) by striking paragraph (2); 
(C) by striking ‘‘(3)(A) Any’’ and inserting 
the following: ‘‘(2) USE OF FEES.— 
‘‘(A) PATENT FEES.—Any’’; and 
(D) by striking ‘‘(B) Any fees that are col-
lected under section 31 of the Trademark Act 
of 1946’’ and inserting the following: 
‘‘(B) TRADEMARK
FEES.—Any fees that 
are collected under section 31 of the Trademark 
Act of 1946 (as defined in subsection (d)) (15 
U.S.C. 1113)’’; 
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(4) by redesignating subsections (d) and (e) as 
subsections (e) and (f), respectively; 
(5) by inserting after subsection (c) the fol-
lowing 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 Inno-
vation Promotion Fund’. 
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‘‘(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, with-
out 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 dis-
cretion of the Director to be ordinary and rea-
sonable, incurred by the Director for the contin-
ued operation of all services, programs, activi-
ties, and duties of the Office relating to patents 
and trademarks, as such services, programs, ac-
tivities, 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.’’; 
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(6) in subsection (e), as redesignated, by strik-
ing ‘‘The Director’’ and inserting ‘‘REFUNDS.—The 
Director’’; and 
(7) in subsection (f), as redesignated, by strik-
ing ‘‘The Secretary’’ and inserting ‘‘REPORT.—The 
Secretary’’. 
(b) EFFECTIVE DATE; TRANSFER FROM AND TERMI-
NATION 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.—On the effective 
date described in paragraph (1), there shall be de-
posited in the United States Patent and Trademark 
Office Innovation Promotion Fund established under 
section 42(d)(2) of title 35, United States Code (as 
added by subsection (a)), any available unobligated 
balances remaining in the Patent and Trademark 
Office Appropriation Account, and in the Patent and 
Trademark Fee Reserve Fund established under sec-
tion 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 
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and Trademark Fee Reserve Fund under paragraph 
(2), the Patent and Trademark Fee Reserve Fund 
shall be terminated. 
SEC. 108. 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 in-
come, is an institution of higher education as de-
fined in section 101(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1001(a)); 
‘‘(2) the applicant has assigned, granted, con-
veyed, or is under an obligation by contract or law, 
to assign, grant, or convey, a license or other owner-
ship 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 
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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. 109. ASSISTING SMALL BUSINESSES IN THE U.S. PAT-
ENT SYSTEM. 
(a) DEFINITION.—In this section, the term ‘‘small 
business concern’’ has the meaning given the term in sec-
tion 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 the enactment of 
this Act, the Small Business Administration, using exist-
ing resources, shall submit to the Committee on Small 
Business and Entrepreneurship of the Senate and the 
Committee on Small Business of the House of Representa-
tives a report analyzing the impact of— 
(1) patent ownership by small business con-
cerns; 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 CER-
TAIN DISTRICT COURTS.— 
(1) IN
GENERAL.—Not later than 180 days 
after the date of the enactment of this Act, the Di-
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rector 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 partici-
pating 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 pro-
gram to address special issues raised in patent in-
fringement suits against individuals or small busi-
ness concerns. 
(2) PROCEDURES
FOR
SMALL
BUSINESSES.— 
Not later than 2 years after the date of the enact-
ment of this Act, each district court designated 
under paragraph (1) shall develop procedures for ex-
pediting cases in which an individual or small busi-
ness 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 re-
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sources, shall prepare educational and training 
materials to assist district court judges de-
scribed in subparagraph (A) in developing ex-
pertise in patent and plant variety protection 
cases. 
(4) FUNDS.—There are authorized to be appro-
priated 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 fol-
lowing 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 Alex-
andria, 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.’’. 
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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 omis-
sions; 
(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 prob-
ability of the statements, representations, or 
omissions to deceive and the sender inten-
tionally 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 
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Trademark Office in a final decision that is 
unappealable or for which any opportunity for ap-
peal 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 send-
ing 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 com-
pensation 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 in-
fringement of the patent has been filed against 
the recipient; 
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(C) a civil action asserting a claim of in-
fringement 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 pur-
chased a license for the patent asserted in the 
communications; 
(G) persons other than the recipient pur-
chased a license, and the sender does not dis-
close that such license is unrelated to the al-
leged infringement or the patent asserted in the 
communications; 
(H) an investigation of the recipient’s al-
leged 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 ac-
tivity that is the subject of the written commu-
nication when the sender knew such activity 
was held, in a final determination, not to in-
fringe the patent; 
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(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, in-
valid, or otherwise unenforceable against the re-
cipient, 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 com-
munications, by a person with the right to li-
cense 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 iden-
tity of any parent entity and the ultimate par-
ent entity of such person, unless such person is 
a public company and the name of the public 
company is identified; 
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(B) an identification of at least one patent 
issued by the United States Patent and Trade-
mark Office alleged to have been infringed; 
(C) an identification, to the extent reason-
able under the circumstances, of at least one 
product, service, or other activity of the recipi-
ent that is alleged to infringe the identified pat-
ent; 
(D) a description, to the extent reasonable 
under the circumstances, of how the product, 
service, or other activity of the recipient in-
fringes an identified patent and patent claim; or 
(E) a name and contact information for a 
person the recipient may contact about the as-
sertions or claims relating to the patent con-
tained in the communications. 
(b) AFFIRMATIVE DEFENSE.—With respect to sub-
section (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 
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to demonstrate good faith. Good faith may also be dem-
onstrated by other evidence. 
(c) RULE OF CONSTRUCTION.—For purposes of sec-
tions 203 and 204, the commission of an act or practice 
that is declared under this section to be an unfair or de-
ceptive 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 sec-
tion. 
SEC. 203. ENFORCEMENT BY FEDERAL TRADE COMMIS-
SION. 
(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 Fed-
eral 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. 
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(c) EFFECT ON OTHER LAWS.—Nothing in this title 
shall be construed in any way to limit or affect the author-
ity of the Commission under any other provision of law. 
SEC. 204. PREEMPTION OF STATE LAWS ON PATENT DE-
MAND 
LETTERS 
AND 
ENFORCEMENT 
BY 
STATE ATTORNEYS GENERAL. 
(a) PREEMPTION.— 
(1) IN GENERAL.—This title preempts any law, 
rule, regulation, requirement, standard, or other pro-
vision having the force and effect of law of any 
State, or political subdivision of a State, expressly 
relating to the transmission or contents of commu-
nications 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 decep-
tion, and any State trespass, contract, or tort law. 
(b) ENFORCEMENT
BY STATE ATTORNEYS GEN-
ERAL.— 
(1) IN GENERAL.—In any case in which the at-
torney 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 
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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 appro-
priate 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 re-
sult of such violation. 
(2) 
MAXIMUM
CIVIL
PENALTY.—Notwith-
standing 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 sec-
tion 202. 
(3) INTERVENTION BY THE FTC.— 
(A) NOTICE AND INTERVENTION.—The at-
torney general of a State shall provide prior 
written notice of any action under paragraph 
(1) to the Commission and provide the Commis-
sion 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 insti-
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