S1360 CONGRESSIONAL RECORD — SENATE March 8, 2011 So if you vote for H.R. 1, you are cut- bill that we passed last year. Well, The assistant bill clerk proceeded to ting student aid. If you vote for H.R. 1, what does that mean? Well, that means call the roll. you are going to slash job training pro- right now, in law, because of the Af- Mr. LEAHY. I ask unanimous con- grams. The House bill that came over, fordable Care Act we passed last year, sent that the order for the quorum call H.R. 1, completely eliminates Federal kids can stay on their parents’ policy be rescinded. funding for adult training, dislocated until they are age 26. That would be The PRESIDING OFFICER. Without worker assistance and youth training gone. The question would be, the ones objection, it is so ordered. programs, completely eliminates it. who got on before this, will they be f These programs provide job training able to stay on? But I can tell you, no CONCLUSION OF MORNING and reemployment services to about 8 new kids would ever be allowed to stay BUSINESS million Americans every year, 8 mil- on their parents’ policy until they are The PRESIDING OFFICER. Morning lion. They just do away with it. age 26. If you vote for H.R. 1, you are voting We put in—and as you know, it is in business is closed. to slash the community services block law right now—that an insurance com- f grant. Well, they cut about $305 million pany cannot impose a lifetime limit on PATENT REFORM ACT OF 2011— from that. That provides services to individuals. That was in the bill last Continued some of our lowest income people and year. That would be gone. They can Mr. LEAHY. Mr. President, since the elderly. If you vote for H.R. 1, you are start reinstituting lifetime limits and Senate began this debate on the Amer- voting to cut investments in infra- annual limits. ican Invents Act more than a week structure, highway funding, sewer and Also we had a provision in the bill ago, I have talked about American in- drinking water funds, and rural eco- that provided for a medical loss provi- genuity and innovation. As this debate nomic development funding because sion. Let me try to explain that. comes to a close, I want to emphasize H.R. 1 slashes community development In our bill we said insurers and that this is legislation that should pro- block grants by 62 percent. health insurance companies have to mote innovation, help create jobs, and Now, I say go out and talk to your pay at least 80 cents of every dollar of help energize the economy as we con- mayors, talk to your city council, talk premium they collect on health care tinue our recovery. This legislation can to your boards of supervisors in your rather than profits, bonuses, overhead, be a key part of a jobs agenda. We can counties. Ask them if they can take a fancy buildings, and corporate jets and help unleash innovation an promote 62-percent cut in their community de- all of that. They had to pay—80 cents American invention, all without adding velopment block grants and what it is of every premium dollar has to go for a penny to the deficit. This is common- going to mean to them. health care. It is done away with under sense, bipartisan legislation. Well, I cannot help but also speak to H.R. 1. We cannot enforce that at all. Innovation has been a cornerstone of my own constituents in Iowa about So, again, for those who have seen the American economy from the time what this means for my own State. If benefits to themselves from the health Thomas Jefferson examined the first H.R. 1, the House bill which passed the care bill we passed, whether it is keep- patent to today. The Founders recog- House, if it were to be passed and en- ing their kids on their policy or elderly nized the importance of promoting in- acted into law—well, I mentioned people now who get free mammograms novation. A number were themselves about the cuts that we are having in and free colonoscopies and a free inventors. The Constitution explicitly the Job Corps. It would basically kill health checkup every year with no grants Congress the power to ‘‘promote the Denison, IA, Job Corps Center, copays, no deductibles, that ends. That the progress of science and useful arts, which employs 163 people. It provides ends with H.R. 1. by securing for limited times to . . . in- training to 450 at-risk students each So the bill passed by the House is ventors the exclusive right to their re- year, and we have a new Job Corps Cen- just, as I said, bad policy, and it is bad spective . . . discoveries.’’ The discov- ter just being built, just being opened values. It is not the values of our coun- eries made by American inventors and in Ottumwa. That will probably just try, and I hope the Senate will re- research institutions, commercialized come to a screeching halt. It is sup- soundingly—resoundingly—defeat H.R. by American companies, and protected posed to be opening later this year. 1, consign it to the scrap heap of his- and promoted by American patent laws It would shut down at least the com- tory, the history of ill-advised ideas, of have made our system the envy of the munity health center in Centerville, ill-advised programs. There have been world. The President has spoken all IA. That is H.R. 1. H.R. 1 would be cut- a lot of them that have come along in year about the need to win the future ting down the community services the history of this country. by out innovating our competition. block grant and would shut down the Fortunately, I think the Congress in This bill can play a key role in that ef- Red Rock Community Action Agency most instances has turned them down, fort. serving Boone, Jasper, Warren, Marion, and we moved ahead. We can’t afford to Yesterday, I commended Austan and rural Polk County. go backward. H.R. 1 would do that. It Goolsbee, the chair of the President’s H.R. 1, as I mentioned, would com- would take this country back. We Council of Economic Advisers, for his pletely eliminate funding for job train- would lose jobs. It would cut kids out white board presentation this week on ing programs, which assisted more of getting an education, close down the importance of patent reform to than 35,000 Iowans in the last year. As Head Start centers. It would widen help America win the global competi- I mentioned, it would slash Pell grants that gulf between the rich and the tion and create jobs. The creation of for our kids who go to all of our col- poor. We can’t continue to go down more than 220,000 jobs in the private leges in Iowa, the private not-for-prof- that road. We don’t want to wind up sector last month, the creation of 1.5 its and our Regents institutions. Two another Third World country where we million jobs over the last 12 months, thousand low-income Iowa kids who have a few at the top and everybody at and the unemployment rate finally now attend Head Start would be cut the bottom and nobody in between. The being reduced to 8.9 percent are all off. middle class built this country, and we signs that the efforts we have made Lastly, it is not only just the cuts cannot continue to erode the middle over the last 2 years to stave off the and the slashes to these vital programs class. That is what H.R. 1 would do, worst recession since the Great Depres- which will increase unemployment and erode the middle class and widen the sion are paying off and the economic send us back into another recession, gulf between the rich and poor. recovery is taking hold. The almost there are riders in this bill, what we I hope the Senate will recognize H.R. full percent point drop in the unem- call legislative riders, that are per- 1 for what it is, a detriment, a body ployment rate over the last 3 months is nicious. They do terrible damage to our blow to our recovery efforts. I hope the the largest decline in unemployment country. Senate will resoundingly defeat it. since 1983. Despite interruptions of eco- For example—just one—there is a I yield the floor and suggest the ab- nomic activity in many parts of the rider in the bill that says no money sence of a quorum. country caused by winter weather over can be used or spent to continue the The PRESIDING OFFICER. The the last months and in recent days, de- implementation of the health reform clerk will call the roll. spite the extraordinary rise in oil

VerDate Mar 15 2010 00:48 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00026 Fmt 0624 Sfmt 0634 E:\CR\FM\G08MR6.043 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1361 prices, the Dow Jones industrial aver- tion that can create jobs and help our I also thank the many individuals, age has climbed back to over 12,000 economy through common sense meas- companies, associations and coalitions from a low point of 6,500. Passage of ures. That is what this bill can do. It that have helped with this effort. This the America Invents Act should help relies on not one dollar of taxpayer legislation has been supported by both bolster our economic recovery and money. Let me emphasize, not a dime business and labor, including the Na- keep us on the right path toward busi- in taxpayer money is spent on the Pat- tional Association of Manufacturers, ness development and job creation. ent and Trademark Office, PTO, re- the United Steelworkers, the AFL–CIO, As we began this debate, I referred forms. They are all funded by patent the Association of American Univer- back to the President’s State of the fees, not taxes. sities, the American Bar Association, Union address and his challenge to the Innovation drives the Nation’s econ- the Association of Public and Land- Nation to out-innovate, out-build and omy, and that entrepreneurial spirit Grant Universities, the Association of out-educate our global competitors. can only be protected by a patent sys- American Medical Colleges, the Asso- Enacting the America Invents Act is a tem that promotes invention and spurs ciation of University Technology Man- key to meeting this challenge. Reform- new ideas. We need to reform our pat- agers, the American Council on Edu- ing the Nation’s antiquated patent sys- ent system so that these innovations cation, the Council on Government Re- tem will promote American innova- can more quickly get to market. A lations, PhRMA, BIO, the Intellectual tion, create American jobs, and grow modernized patent system—one that Property Owners Association, the America’s economy. I thank the Presi- puts American entrepreneurs on the American Intellectual Property Law dent and his administration for their same playing field as those throughout Association, the Coalition for 21st Cen- help and support for the Leahy-Hatch- the world—is a key to that success. tury Patent Reform, the Association Grassley America Invents Act. Com- This is an idea that cuts across the po- for Competitive Technology, the Coali- merce Secretary Locke has been a litical spectrum. tion for Patent and Trademark Infor- strong partner in our efforts, and Di- During Senate debate over the last mation Dissemination, IBM, General rector Kappos of the Patent and Trade- week our bill has been improved by a Electric, Eli Lilly and Company, Bose Corporation, Johnson and Johnson, 3M, mark Office has been an indispensable number of Senators who have contrib- General Mills, Honeywell, Monsanto, source of wise counsel. uted amendments. Senators BENNET, Motorola, Cargill, Inc., Caterpillar, The America Invents Act will keep COONS, SCHUMER, MENENDEZ, PRYOR, Enventys, Abbott, Astra Zeneca, America in its longstanding position at STABENOW, BAUCUS, BINGAMAN, COBURN AdvaMed, Air Liquide, Bayer, Beckman the pinnacle of innovation. This bill and KIRK have all contributed, and I Coulter, Boston Scientific, BP, will establish a more efficient and thank them for working with us. Sen- Bridgestone American Holdings, Inc., streamlined patent system that will ator CARDIN attempted to offer ger- Bristol-Myers Squibb, the California improve patent quality and limit un- mane amendments, and I regret that Healthcare Institute, the Colorado Bio- necessary and counterproductive liti- these were blocked. Science Association, Cummins, The I thank our ranking Republican on gation costs, while making sure no par- Dow Chemical Company, DuPont, East- the committee and the comanager of ty’s access to court is denied. man Chemical Company, ExxonMobil, The America Invents Act is the prod- this measure, Senator GRASSLEY, and Genentech, Genzyme, GlaxoSmith- uct of eight Senate hearings over the his staff, Kolan Davis and Rita Lari, Kline, the Healthcare Institute of New last three Congresses. Our bill is the for their dedication to this effort. I Jersey, Henkel Corporation, Hoffman- product of years of work and com- commend Senator HATCH for sticking LaRoche, Illinois Tool Works, Inter- promise. The Senate Judiciary Com- with it for these many years, and Sen- national Game Technology, Kodak, mittee has reported patent reform leg- ator KYL for helping get this done. Medtronic, Merck & Co., Inc., islation to the Senate in each of the I also extend my personal thanks, as Millenium Pharmaceuticals, Milliken last three Congresses, this year, unani- well, to Senator KLOBUCHAR of Min- and Company, Northrop Grumman, mously. And the House has seen efforts nesota who was active during com- Novartis, PepsiCo., Inc., Pfizer, Procter over the same period led by Congress- mittee consideration and helped man- & Gamble, SanDisk Corporation, men LAMAR SMITH of Texas and HOW- age this legislation effort in the Sen- Sangamo BioSciences, Inc., United ARD BERMAN of California. The legisla- ate. She has been outstanding. Technologies, USG Corporation, the tion we are acting on today, in fact, is The Senate’s action today could not Virginia Biotechnology Association, structured on the original House bill have been accomplished without the Weyerhaeuser, the American Institute and contains many of the original pro- hard work of many dedicated staffers. I for CPAs, the American Institute of visions. would like to thank in particular the Certified Public Accountants, the Tax From the beginning, we recognized steadfast work of Aaron Cooper of my Justice Network USA, the New Rules the need for a more effective and effi- Judiciary Committee staff. Aaron has for Global Finance, the American Col- cient patent system, one that improves spent countless hours in meetings and lege of Tax Counsel, Consumer Action, patent quality and provides incentives briefings, with Members, other staff, The American College of Trust and Es- for entrepreneurs to create jobs. A bal- and interested parties, working to help tate Counsel, the Partnership for Phil- anced and efficient intellectual prop- me ensure that the America Invents anthropic Planning, Global Financial erty system that rewards invention Act preserved the meaningful reforms Integrity, the International Associa- and promotes innovation through high we have been working toward since tion for Registered Financial Consult- quality patents is crucial to our Na- 2005. I would also like to thank Ed ants, the National Association of En- tion’s economic prosperity and job Pagano, my chief of staff, and Bruce rolled Agents, USPIRG, the Certified growth. That is how we win the fu- Cohen, my chief counsel, who have Financial Planner Board of Standards, ture—by unleashing the American in- worked on this issue since the start, as the Financial Planning Association, ventive spirit. This bill, the America well as Susan Davies who served as my the American Association of Attorney- Invents Act, will allow our inventors chief Intellectual Property counsel Certified Public Accountants, the Citi- and innovators to flourish. through the formative stages of this zens for Tax Justice, the National It is important to our country’s con- legislative effort. Erica Chabot, Curtis Treasury Employees Union, the Inde- tinued economic recovery, and to our LeGeyt and Scott Wilson of my Judici- pendent Community Bankers of Amer- successfully competing in the global ary Committee staff also deserve ica, and numerous other organizations economy. America needs a 21st century thanks for their committed work on and companies representing all sectors patent system to lead. The last exten- this legislation. of the patent community that have sive reform of our patent system was I also commend the hardworking been urging action on patent reform nearly 60 years ago. It is time. Senate floor staff, Tim Mitchell and proposals for years. While the Congress debates spending Trish Engle, as well as Dave Schiappa, The America Invents Act will accom- and budget measures in an often too and the staffs of other Senators, in- plish 3 important goals, which have partisan manner, the American people cluding Tim Molino, Joe Matal, and been at the center of the patent reform are craving—and the American econ- Matt Sandgren, for their dedicated ef- debate from the beginning: It will im- omy is demanding—bipartisan legisla- forts. prove and harmonize operations at the

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00027 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.010 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1362 CONGRESSIONAL RECORD — SENATE March 8, 2011 PTO; it will improve the quality of pat- ventors, for our consumers. Working The PRESIDING OFFICER. Without ents that are issued; and it will provide together, we can smooth the path for objection, it is so ordered. more certainty in litigation. In par- more interesting—and great—Amer- Mr. REID. Mr. President, with this ticular, the legislation will move this ican inventions. That is what this bi- agreement, I ask unanimous consent Nation’s patent system to a first-in- partisan, comprehensive patent reform that the cloture vote with respect to ventor-to-file system, make important bill will do. No one claims that ours is the motion to proceed to H.R. 1 be viti- quality enhancement mechanisms, and a perfect bill. It is a compromise that ated. provide the PTO with the resources it will make key improvements in the The PRESIDING OFFICER. Without needs to work through its backlog by patent system. Having coordinated objection, it is so ordered. providing it with fee setting authority, with the leaders in the House through Mr. REID. Mr. President, even this process, I hope that the House will subject to oversight. The America In- though there have been a few turns in look favorably on our work and adopt vents Act provides the tools the PTO the road, we are at the place where we this measure so that it can be sent to needs to separate the inventive wheat need to be. We need to be able to show the President without delay and its im- from the chaff, which will help business the American people where we are on provements can take effect in order to bring new products to market and cre- these two measures. I express my ap- encourage American innovation and ate jobs. preciation to my friend, the Republican promote American invention. Innovation has always been at the leader. As I said, things don’t always heart of America and American suc- I suggest the absence of a quorum. The PRESIDING OFFICER. The work smoothly around here, but they cess. From the founding of our Nation, usually work. Now we are at a point we recognized the importance of pro- clerk will call the roll. The assistant bill clerk proceeded to where we can vote on these two meas- moting and protecting innovation, and ures which is what we need to do. so the Constitution explicitly grants call the roll. Mr. REID. I ask unanimous consent The PRESIDING OFFICER. Under Congress the power to ‘‘promote the that the order for the quorum call be the previous order, amendment No. 152 progress and science and useful arts, by rescinded. is withdrawn. securing for limited times to . . . in- The PRESIDING OFFICER. Without Under the previous order, amend- ventors the exclusive right to their re- objection, it is so ordered. spective . . . discoveries.’’ The patent ment No. 143 is modified with the Mr. REID. Mr. President, I ask unan- changes at the desk. system plays a key role in encouraging imous consent the Reid amendment innovation and bringing new products The amendment, as modified, is as No. 152 be withdrawn; that the Reid follows: to market. The discoveries made by amendment No. 143 be modified with American inventors and research insti- the changes at the desk; the Senate (Purpose: To include public institutions of tutions, commercialized by our compa- proceed to vote on the amendment, as higher education in the definition of a micro entity) nies, and protected and promoted by modified, with no amendments in order our patent laws have made our system prior to the vote; that there then be 30 On page 93, before line 18, insert the fol- the envy of the world. minutes of debate equally divided be- lowing: High quality patents are the key to tween the two managers or their des- ‘‘(d) STATE INSTITUTIONS OF HIGHER EDU- CATION.— our economic growth. They benefit ignees; that S. 23 be read a third time; both patent owners and users who can ‘‘(1) IN GENERAL.—For purposes of this sec- that a budgetary pay-go statement be tion, a micro entity shall include an appli- be more confident in the validity of read; the Senate then proceed to a vote cant who certifies that— issued patents. Patents of low quality on passage of the bill, as amended; and ‘‘(A) the applicant’s employer, from which and dubious validity, by contrast, en- the motions to reconsider be consid- the applicant obtains the majority of the ap- able patent trolls who extort unreason- ered made and laid upon the table with plicant’s income, is a State public institu- able licensing fees from legitimate no intervening action or debate. tion of higher education, as defined in sec- businesses, and constitute a drag on in- Further, I ask unanimous consent tion 102 of the Higher Education Act of 1965 novation. Too many dubious patents that at 12 noon Wednesday, March 9, (20 U.S.C. 1002); or also unjustly cast doubt on truly high ‘‘(B) the applicant has assigned, granted, the Senate proceed to the consider- conveyed, or is under an obligation by con- quality patents. ation of Calendar No. 14, H.R. 1, the De- tract or law to assign, grant, or convey, a li- After 6 years of debate and discus- fense appropriations long-term con- cense or other ownership interest in the par- sion, more than a dozen hearings and tinuing resolution for fiscal year 2011; ticular application to such State public in- mark up sessions, and countless hours that there be 3 hours of debate on H.R. stitution. of member and staff meetings with two 1 and the Democratic alternative, the ‘‘(2) DIRECTOR’S AUTHORITY.—The Director presidential administrations and inter- Inouye substitute amendment No. 149, may, in the Director’s discretion, impose in- ested parties across the spectrum, the with the time equally divided between come limits, annual filing limits, or other Senate is finally acting to make the the two leaders or their designees prior limits on who may qualify as a micro entity first meaningful, comprehensive re- pursuant to this subsection if the Director to a vote on passage of H.R. 1; that the determines that such additional limits are forms to the nation’s patent system in vote on passage be subject to a 60-vote reasonably necessary to avoid an undue im- nearly 60 years. The Senate debate has threshold; that if the bill achieves 60 pact on other patent applicants or owners or now extended for more than a week. affirmative votes, the bill be read a are otherwise reasonably necessary and ap- Passage of the America Invents Act third time and passed; that if the bill propriate. At least 3 months before any lim- demonstrates what we can accomplish does not achieve 60 affirmative votes, its proposed to be imposed pursuant to this when we cast aside partisan rhetoric, the majority leader be recognized to paragraph shall take effect, the Director and focus on working together for the offer the Inouye substitute amendment shall inform the Committee on the Judiciary American people and for our future. No. 149; the Senate then proceed to a of the House of Representatives and the It has been almost 6 years since Committee on the Judiciary of the Senate of vote on the substitute amendment; any such proposed limits.’’. Chairman SMITH and Congressman that the substitute amendment be sub- BERMAN introduced the first version of ject to a 60-vote threshold; if the sub- The PRESIDING OFFICER. The patent reform legislation in 2005, but stitute amendment achieves 60 affirma- question is on agreeing to amendment the structure and guiding principles of tive votes, the substitute amendment No. 143, as modified. the legislation remain the same. The be agreed to; the bill, as amended, be The amendment (No. 143), as modi- bill will speed the process by which the read a third time and passed; if the fied, was agreed to. Patent Office considers applications substitute amendment does not achieve Mr. COBURN. I wish to express my and should improve the quality of pat- 60 affirmative votes, H.R. 1 be returned opposition to Reid amendment No. 143, ents it issues. to the calendar; that no motions or as modified. I do not believe public in- Innovation and economic develop- amendments be in order to the sub- stitutions of higher education, or any ment are not uniquely Democratic or stitute amendment or to the bill prior entity, should be carved out of the defi- Republican objectives, so we worked to the votes; further, that all of the nition of micro entity in the under- together to find the proper balance for above occur with no intervening action lying legislation. Had a rollcall vote America—for our economy, for our in- or debate. occurred, I would have voted no.

VerDate Mar 15 2010 00:48 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00028 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.011 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1363 Mr. LEAHY. Mr. President, I suggest Mr. LEAHY. That is correct. The pro- ods of conducting business, unlike in- the absence of a quorum, with unani- ceeding has a higher threshold than formation about other patents, is often mous consent that the time be equally current reexamination before the PTO not documented in patents or published divided. will even undertake a review of the in journals. This means a patent exam- The PRESIDING OFFICER. Without patent. So as a practical matter, a pat- iner has significantly less opportunity objection, it is so ordered. ent without any serious challenge to than he might with a traditional pat- The clerk will call the roll. its validity would never be subject to a ent to weed out undeserving applica- The assistant bill clerk proceeded to proceeding. tions. Unfortunately, that means the call the roll. Mr. PRYOR. Would the Senator agree burden falls on private individuals and Mr. LEAHY. Mr. President, I ask that in a case in which the validity of an expensive court process to clean up unanimous consent that the order for the patent has been upheld by a dis- the mess. the quorum call be rescinded. trict court but the case remains on ap- The ability to easily obtain business The PRESIDING OFFICER. Without peal, that this amendment would likely method patents without a rigorous and objection, it is so ordered. not affect the pending appeal? thorough review in the Patent Office CHECK 21 ACT PATENTS Mr. LEAHY. I would. The patent may has created a flood of poor quality Mr. PRYOR. I would like to clarify still be subject to the proceeding, but business method patents and a cottage some concerns I have about the Schu- since the court did not hold the patent industry of business method patent mer-Kyl program that was included in invalid or unforceable, it would not litigation. The Federal courts have rec- the managers’ amendment to the likely have an effect on the pending ap- ognized this problem, and indeed even America Invents Act, adopted on peal. the Supreme Court has begun to ad- March 1. I am specifically concerned Mr. SCHUMER. Mr. President, I want dress it. In KSR Intl Co. v. Teleflex, that this provision revives an amend- to take the opportunity to explain fur- Inc. and Bilski v. Kappos, the Court ar- ment that had been included in pre- ther a few elements of the Schumer- ticulated a new standard for obvious- vious versions of the bill—that amend- Kyl provision in the patent bill. The ness and made clear that abstract busi- ment specifically targeted patents re- Transitional Program for business ness methods are not patentable. While lated to the Check 21 Act and elimi- method patents addresses a critical these legal developments are impor- nated the ability of the holder of such problem in the patent world, and it is tant, the leave in limbo the many pat- patents to collect damages. Is that the crucial that it be administered and im- ents that were issued by the PTO since purpose of the Schumer-Kyl language? plemented appropriately by both the State Street that are not in fact valid. Mr LEAHY. No, the amendment is Patent and Trademark Office and the Litigation over invalid patents entirely different from the 2008 amend- courts. places a substantial burden on U.S. ment related to patents that place on Business method patents are the courts and the U.S. economy. Business- tax on implementation of the Check 21 bane of the patent world. The business method inventions generally are not Act. The Schumer-Kyl program ad- method problem began in 1998 with the and have not been patentable in coun- dresses certain business method pat- U.S. Court of Appeals for the Federal tries other than the United States. In ents and does not target any specific Circuit decision in State Street Bank & order to reduce the burden placed on patents. The Schumer-Kyl program is Trust Co. v. Signature Financial courts and the economy by this back- intended to provide a cost-effective al- Group, Inc. State Street created a sea- and-forth shift in judicial precedent, ternative to litigation to examine busi- change in the patentability of business- the Schumer-Kyl transitional pro- ness-method patents. methods, holding that any invention ceeding authorizes a temporary admin- Mr. PRYOR. Am I correct then that can be patented so long as it produces istrative alternative for reviewing the Schumer-Kyl program is simply a ‘‘useful, concrete, and tangible re- business method patents. trying to address the problem of busi- sult’’ and meets other requirements of It is important to clarify two ele- ness method patents of dubious valid- the patent laws. ments of the Schumer-Kyl program’s ity that are commonly associated with State Street launched an avalanche operation in particular. First, there is the Federal Circuit’s 1998 decision in of patent applications seeking protec- the issue of how a district court should State Street Bank v. Signature? tion for common business practices. treat a motion for a stay of litigation Mr. LEAHY. That is correct. It is The quality of these business method in the event the PTO initiates a pilot still unclear whether the subject mat- patents has been much lower than that program. Second, there is the issue of ter of these patents qualifies as patent- of other patents, as Justice Kennedy how the Federal circuit will treat in- able subject matter under current law. noted in his concurring opinion in eBay terlocutory appeals from stay deci- Patents of low quality and dubious va- Inc. v. MercExchange. Justice Kennedy sions. Finally, there is the issue of lidity, as you know, are a drag on inno- wrote about the ‘‘potential vagueness which patents should be considered to vation because they grant a monopoly and suspect validity’’ of some of ‘‘the be covered business method patents. right for an invention that should not burgeoning number of patents over The transition program created by be entitled to one under the patent business methods.’’ Commentators like the Schumer-Kyl amendment is de- law. Rochelle Dreyfuss have also lamented signed to provide a cheaper, faster al- Mr. PRYOR. Can the Senator de- ‘‘the frequency with which the Patent ternative to district court litigation scribe how the program would work in Office issues patents on shockingly over the validity of business-method practice? mundane business inventions.’’ Malla patents. This program should be used Mr. LEAHY. Certainly. If a peti- Pollack pointed out that ‘‘[M]any of instead of, rather than in addition to, tioner provides evidence to the PTO the recently-issued business method civil litigation. To that end, the and the PTO determines that the pat- patents are facially (even farcically) amendment expressly authorizes a stay ent is on a ‘‘covered business method obvious to persons outside the of litigation in relation to such pro- patent’’ then the PTO would institute a USPTO.’’ ceedings and places a very heavy post-grant review of that patent. In One of the main reasons for the poor thumb on the scale in favor of a stay this review, the PTO could consider quality of business method patents is being granted. It is congressional in- any challenge that could be heard in the lack of readily accessible prior art tent that a stay should only be denied court. references. Because business methods in extremely rare instances. Mr. PRYOR. Is it correct then that were not patentable prior to 1998 when When Congress initially created ex the Schumer proceeding would only the State Street decision was issued, parte reexamination, it did not ex- have an effect if the PTO determines it the library of prior art on business pressly provide for a stay of litigation is more likely than not that a claim of method patents is necessarily limited— pending the outcome of an ex parte re- the patent is invalid and, even then, as opposed, say, to more traditional examination proceeding. Rather, Con- the proceeding would have no effect on types of patents for which there can be gress relied on the courts’ inherent a patent unless the petitioner can dem- centuries of patents and literature power to grant stays and encouraged onstrate that under current law the about them for the PTO to examine. courts to liberally grant stays. How- patent is not valid? Furthermore, information about meth- ever, relying on the courts’ inherent

VerDate Mar 15 2010 00:48 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00029 Fmt 0624 Sfmt 0634 E:\CR\FM\G08MR6.049 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1364 CONGRESSIONAL RECORD — SENATE March 8, 2011 power to grant stays did not result in lack of the best prior art. And the pro- gram was developed in close consulta- courts liberally granting stays. For ex- ceeding will typically be completed tion with the PTO to capture all of the ample, one commentator who surveyed within 1 year. worst offenders in the field of business the grant rates on motions for stay In summary, it is expected that, if a method patents, including those that pending reexamination, Matthew A. proceeding against a business method are creatively drafted to appear to be Smith, found that numerous district patent is instituted, the district court true innovations when in fact they are courts granted stays less than half the would institute a stay of litigation un- not. time. In fact, Eastern District of Texas less there were an extraordinary and The amendment only applies to ‘‘cov- grants stays only 20 percent of the extremely rare set of circumstances ered business method patents.’’ If the time. Due to low grant rates for stays not contemplated in any of the existing PTO determines that a patent is a in several jurisdictions, this amend- case law related to stays pending reex- ‘‘covered business method patent’’— ment instructs courts to apply the amination. In the rare instance that a and the other applicable requirements four-factor test first announced in stay is not granted, the PTO should of this amendment and Chapter 32 are Broadcast Innovation, L.L.C. v. Char- make every effort to complete its re- met—the patent will be subject to post- ter Communications when evaluating view expeditiously. We encourage the grant review under this amendment re- stay motions. PTO Director to promulgate regula- gardless of whether the patent has been The amendment employs the Broad- tions to this effect to ensure that peti- through prior PTO proceedings, such as cast Innovation test, rather than other tioners know that in extreme cir- ex parte reexamination, or current or multifactor tests employed by other cumstance where a gay is not granted, prior litigation. district courts, because this test prop- the PTO will complete its review in a The definition of a ‘‘covered business erly emphasizes a fourth factor that is compressed timeframe, such as within method patent’’ includes ‘‘a method or often ignored by the courts: ‘‘whether a 6 months. corresponding apparatus.’’ The phrase stay will reduce the burden of litiga- To ensure consistent and rigorous ap- ‘‘method or corresponding apparatus’’ tion on the parties and on the court.’’ plication of the Broadcast Innovation is intended to encompass, but not be Too many district courts have been standard, the amendment also allows limited to, any type of claim contained content to allow litigation to grind on the parties, as of right, to have the in a patent, including, method claims, while a reexamination is being con- Federal Circuit closely review the ap- system claims, apparatus claims, ducted, forcing the parties to fight in plication of this test in a manner that graphical user interface claims, data two fora at the same time. This is un- ensures adherence to these precedents structure claims—Lowry claims—and acceptable, and would be contrary to and consistent results across cases. As set of instructions on storage media the fundamental purpose of the Schu- such, either party may file an inter- claims—Beauregard claims. A patent mer-Kyl amendment to provide a cost- locutory appeal directly with the Fed- qualifies as a covered business method efficient alternative to litigation. eral Circuit. Because this amendment patent regardless of the type or struc- Absent some exceptional cir- provides an automatic right to an in- ture of claims contained in the patent. cumstance, the institution of a busi- terlocutory appeal, the district court Clever drafting of patent applications ness-methods proceeding—which re- does not need to certify the appeal in should not allow a patent holder to quires a high up-front showing and will writing, as it would ordinarily need to avoid PTO review under this amend- be completed in a relatively short pe- do under 28 U.S.C. § 1292(b). Also, unlike ment. Any other result would elevate riod of time—should serve as a sub- the discretion typically afforded an ap- form over substance. stitute for litigation, and result in a pellate court under 28 U.S.C. § 1292(b), Not all business method patents are stay of co-pending district court litiga- under this amendment the Federal Cir- eligible for PTO review under this tion. cuit may not decline to hear an inter- amendment. Specifically, ‘‘patents for By adopting this four-factor test, locutory appeal. technological inventions’’ are out of rather than one of the three-factor Since the denial of a stay pending scope. The ‘‘patents for technological tests used by other courts, the amend- post-grant review under this amend- inventions’’ exception only excludes ment also precludes the use of addi- ment is an extraordinary and ex- those patents whose novelty turns on a tional factors that are not codified tremely rare circumstance, the filing technological innovation over the prior here and that have occasionally been of an interlocutory appeal should re- art and are concerned with a technical used by some district courts. For ex- sult in the stay of proceedings in the problem which is solved with a tech- ample, a few courts have occasionally district court pending the appeal. Stay- nical solution and which requires the employed a different de facto fourth ing the lower court proceedings while claims to state the technical features factor: whether the challenger offers the Federal Circuit reviews the ques- which the inventor desires to protect. ‘‘to forgo invalidity arguments based tion of whether the case should be It is not meant to exclude patents that on prior art patents and/or printed pub- stayed pending the post-grant review use known technology to accomplish a lications considered during an ex parte will help ensure that requests to stay business process or method of con- reexamination process.’’ The pro- are consistently applied across cases ducting business—whether or not that ceeding authorized by this amendment, and across the various district courts. process or method appears to be novel. at subsection (b)(1)(D), sets its own On appeal the Federal Circuit can The technological invention exception standard for determining what issues and should review the district court’s is also not intended to exclude a patent may still be raised in civil litigation if decision de novo. It is expected that simply because it recites technology. a patent survives PTO review. By codi- the Federal Circuit will review the dis- For example, the recitation of com- fying the exclusive set of factors that trict court’s decision regarding a stay puter hardware, communication or courts are to consider when granting de novo, unless there are unique cir- computer networks, software, memory, stays, the amendment precludes courts cumstances militating against a de computer-readable storage medium, from inventing new factors such as novo review, such as subsequent re- scanners, display devices or databases, extra-statutory estoppel tests. quests for an interlocutory appeal in specialized machines, such as an ATM Several unique features of this pro- the same case. A de novo review is cen- or point of sale device, or other known ceeding further make it appropriate to tral to the purpose of the interlocutory technologies, does not make a patent a grant stays in all but the most unusual appeal provision in the Schumer-Kyl technological invention. In other and rare circumstances. These pro- amendment, which is to ensure con- words, a patent is not a technological ceedings will only be instituted upon a sistent application of standards and invention because it combines known high up-front showing of likely inva- precedents across the country and to technology in a new way to perform lidity. The proceeding is limited to cer- avoid one particular court with a fa- data processing operations. tain business method patents, which, vorable bench becoming the preferred The amendment covers not only fi- as noted above, are generally of dubi- venue of business method patent plain- nancial products and services, but also ous quality because unlike other types tiffs. the ‘‘practice, administration and man- of patents, they have not been thor- The definition of covered business agement’’ of a financial product or oughly reviewed at the PTO due to a method patents in the transitional pro- service. This language is intended to

VerDate Mar 15 2010 00:48 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00030 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.014 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1365 make clear that the scope of patents of America (ICBA) and the nearly 5,000 com- fees to better ensure proper funding for its eligible for review under this program munity banks that we represent, we thank operations. is not limited to patents covering a you for your efforts to improve S. 23 the Pat- The Act makes a variety of changes to im- specific financial product or service. In ent Reform Act of 2011 through your amend- prove the quality of patents, including allow- addition to patents covering a financial ment to establish an oppositional proceeding ing for greater submission of information by at the United States Patent and Trademark third parties while a patent application is product or service, the ‘‘practice, ad- Office (PTO) where business-method patents pending and establishing a post-grant review ministration and management’’ lan- can be examined using the best available procedure for promptly raised challenges to guage is intended to cover any ancil- prior art. Such patents have, unfortunately, a patent. lary activities related to a financial become the preferred method of extracting Unlike prior patent reform bills, the Act product or service, including, without large settlements from community banks does not disturb substantive damages law; limitation, marketing, customer inter- and these practices threaten our bankers’ but it does take steps to improve the consist- faces, Web site management and ability to provide banking and banking re- ency and predictability of the application of functionality, transmission or manage- lated services to their local communities and that law. ment of data, servicing, underwriting, to local small businesses. BACKGROUND/OVERVIEW Under the current system, business method customer communications, and back patents of questionable quality are used to Innovation is a key facet of American eco- office operations—e.g., payment proc- force community banks to pay meritless set- nomic power, as our Founders recognized in essing, stock clearing. tlements to entities that may have patents the Constitution by giving Congress the The amendment also requires a pat- assigned to them, but who have invented power to ‘‘promote the progress of science ent to relate to a ‘‘financial product or nothing, offer no product or service and em- and useful arts’’ by granting inventors time service.’’ To meet this requirement, ploy no one. In addition, all public compa- limited monopolies—patents—on their dis- nies are required by accounting rules to re- coveries. This basic framework set the the patent need not recite a specific fi- course for centuries of American innovation, nancial product or service. Rather the serve capital against contingent liabilities. For community banks, this is money which but the law has not been substantially up- patent claims must only be broad dated since the Patent Act of 1952. Respond- enough to cover a financial product or cannot find its way into the hands of worthy borrowers, retarding economic growth and ing to concerns about the quality and timeli- service. For example, if a patent claims job creation as the precise time such activity ness of patents issued by the PTO, the last a general online marketing method but is most needed. The Schumer-Kyl amend- several Congresses have considered substan- does not specifically mention the mar- ment is critical to stopping this economic tial patent reform measures. [In the 109th keting of a financial product, such as a harm. Congress Senators Hatch and Leahy intro- savings account, if that marketing We appreciate that you have worked hard duced the Patent Reform Act of 2006 (S. method could be applied to marketing with the Patent and Trademark Office and 3818). The next year, Senators Leahy and Hatch introduced the Patent Reform Act of a financial product or service, the pat- other stakeholders to refine the amendment and make compromises to enable the amend- 2007 (S. 1145). This bill was reported from the ent would be deemed to cover a ‘‘finan- Judiciary Committee, as amended, on Janu- cial product or service.’’ Likewise, if a ment to move forward. We support those ef- forts and will continue to push to ensure ary 24, 2008, with a Committee Report (S. patent holder alleges that a financial that business method patents cannot be used Rep. 110–259), but it was not considered by product or service infringes its patent, as a weapon by those who seek to game the the full Senate. On March 3, 2009, Senators that patent shall be deemed to cover a patent granting and litigation system at the Leahy and Hatch introduced the Patent Re- ‘‘financial product or service’’ for pur- expense of legitimate businesses. form Act of 2009, which was reported with poses of this amendment regardless of We are pleased to learn that the Senate amendments on April 2, 2009, with a Com- whether the asserted claims specifi- has adopted much of the Schumer-Kyl mittee Report (S. Rep. 111–18). Again the bill amendment into the base text of S. 23. We was not considered by the full Senate. Dur- cally reference the type of product of ing this time, the Senate Judiciary Com- service accused of infringing. encourage the Senate to only strengthen this provision, where possible, for the good of our mittee has held eight hearings on patent re- In conclusion, I am very pleased that nation’s community banks and the countless form, and the House has held hearings on the the Senate has adopted the Schumer- neighborhoods and communities that they subject as well.] Kyl provision and trust that it will go serve. Over the course of these Congresses the a long way towards addressing the Thank you again. substance of the reform proposals evolved. havoc that frivolous business method Sincerely, On January 25, 2011, Senator Leahy and Sen- patent litigation has wreaked upon the STEPHEN J. VERDIER, ator Hatch introduced the current bill, the courts and the economy. Indeed, Sen- Executive Vice President, Patent Reform Act of 2011 (S. 23), which was Congressional Relations. reported with amendments on February 3, ator KYL and I received a letter of 2011. Significant features of the legislation thanks and appreciation from the Inde- Mr. KYL. Mr. President, I ask unani- mous consent to have printed in the include: a transition to a ‘‘First Inventor to pendent Community Bankers of Amer- File’’ patent regime consistent with other ica, who represent nearly 5,000 commu- RECORD materials concerning the industrialized countries; PTO fee setting au- nity banks. As they point out, the America Invents Act that were distrib- thority to ensure proper funding; and post- money they are required to spend de- uted by the Republican Policy Com- grant and supplemental review procedures to fending litigation from business meth- mittee last week. These consist of a improve patent quality. od patent trolls—and the capital they legislative notice describing the bill BILL PROVISIONS must reserve against these contingent that was brought to the Senate floor, Section 1. Title/Table of Contents liabilities—is money which ‘‘cannot and a summary of the Senate man- Section 2. First Inventor to File find its way into the hands of worthy agers’ amendment that was adopted on The United States, alone among advanced borrowers, retarding economic growth Tuesday. economies, currently operates under a ‘‘First and job creation at the time such ac- There being no objection, the mate- to Invent’’ rather than a ‘‘First Inventor to tivity is most needed.’’ rial was ordered to be printed in the File’’ patent regime in which the date of fil- To that end, I would ask unanimous RECORD, as follows: ing with the patent office is the most impor- consent that the letter from the Inde- [From the Republican Policy Committee, tant determinant of who is the legitimate pendent Community Bankers of Amer- U.S. Senate, Feb. 28, 2011] patent holder. Defenders of the First to In- vent regime claim that it has served Amer- Legislative Notice ica be printed in the RECORD. ica well, that it favors small inventors by al- There being no objection, the mate- S. 23—THE PATENT REFORM ACT OF 2011 lowing them to focus on inventing rather rial was ordered to be printed in the Calendar #6 than paperwork, and that it avoids overbur- RECORD, as follows: Reported by the Judiciary Committee with dening the PTO with prematurely filed appli- INDEPENDENT COMMUNITY amendments on February 3, 2011 by a vote cations. BANKERS OF AMERICA, of 15–0. No written report. However, the system poses challenges for Washington, DC, March 3, 2011. NOTEWORTHY American inventors who must operate under Hon. CHARLES E. SCHUMER, At 3:30 p.m. today, the Senate will begin one regime domestically and another if they U.S. Senate, consideration of S. 23. wish to profit from their innovation abroad. Washington, DC. The Act adopts a ‘‘First Inventor to File’’ The First to Invent system also results in Hon. JON KYL, patent regime. Currently the United States less certainty about the validity of patents U.S. Senate, is the only country in the world operating and often leads to expensive and lengthy liti- Washington, DC. under a ‘‘First to Invent’’ regime. gation. Many commentators and organiza- DEAR SENATORS SCHUMER AND KYL: On be- The Act grants the U.S. Patent and Trade- tions, including the National Academy of half of the Independent Community Bankers mark Office (PTO) authority to set its own Sciences, have urged the United States to

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00031 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.015 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1366 CONGRESSIONAL RECORD — SENATE March 8, 2011 adopt a First Inventor to File system. S. 23 evant information on pending patent appli- Section 17. Clarification of Jurisdiction moves the United States to a First Inventor cations. This section would permit third par- This section clarifies exclusive federal ju- to File regime. As part of that, it creates an ties, typically another innovator in the same risdiction over patent claims. administrative proceeding to ensure that the or a similar field, to submit relevant infor- Section 18. Effective Date first person to file is actually the true inven- mation and make statements explaining tor. It also preserves and strengthens current their submissions. Except where otherwise provided by spe- cific provisions in the Act, the effective date law’s grace period, by providing that disclo- Section 8. Venue of the Act is 12 months after enactment, sures made by the true inventor, or someone Codifies the standard for transfers of venue who got the information from the inventor, meaning it would apply to all patents issued established by the Federal Circuit in the on or after that date. less than one year before the application is case In re TS Tech USA Corp and applies it ADMINISTRATION POSITION filed will not be held against their applica- to patent cases generally. [551 F.3d 1315 (Fed. tion. Cir. 2008).] That standard provides for trans- As of the publication of this Notice, no Additionally, during the one-year period fer to the judicial district that is ‘‘clearly Statement of Administration Policy (SAP) before the application is filed, if the inventor more convenient’’ for both the parties and has been issued. publicly discloses his invention, no subse- witnesses. The section also clarifies that COST quently-disclosed ‘‘prior art,’’ regardless of venue for litigation against the PTO is the As of the publication of this Notice, no whether it is derived from the inventor, can Eastern District of Virginia, where the PTO be used to invalidate the patent. Prior art is Congressional Budget Office cost estimate is headquartered, rather than the District of for S. 23 has been issued. a term of art in intellectual property law. S. Columbia, where it used to be based. 23 defines ‘‘prior art’’ as actions by the pat- POSSIBLE AMENDMENTS Section 9. Fee Setting Authority ent owner or another (such as publication, At this time, there is no unanimous con- public use, or sale) that make the invention In order to provide sufficient funding to sent agreement with respect to consideration available to the public.] This effectively cre- the PTO’s operations, this section grants the of S. 23 or limiting the submission of amend- ates a ‘‘first to publish’’ rule within the one office the ability, and sets forth procedures, ments. year grace period. An inventor who publishes to set or adjust the fees it charges appli- cants. his invention retains an absolute right to SUMMARY OF THE MANAGERS’ AMENDMENT Section 10. Supplemental Examination priority if he files an application within one The title is changed to the ‘‘America In- year of his disclosure. No application effec- This provision authorizes a supplemental vents Act’’. tively filed after his disclosure, and no prior examination process by which patent holders The date of the repeal of statutory inven- art disclosed after his disclosure, can defeat can correct errors or omissions in past pro- tion registrations, which are used only in his patent application. ceedings with the PTO. During the process, first-to-invent, is changed to conform to the Section 3. Inventor’s Oath or Declaration additional information can be presented to date of the switch to first to file. U.S. patent law requires oaths or declara- the office and, if it does not undermine the All remaining damages language—gate- tions by inventors as part of the application original patent determination, the earlier keeper, sequencing, and recodification of process. This can be challenging when appli- omission of that information cannot be later current law as subsection (a)—is struck. The cations are pursued by company-assignees used in a lawsuit alleging inequitable con- bill now makes no changes to section 284. for whom a variety of past and present em- duct. In PGR, the subsection imposing a six- ployees may have played a role in developing Section 11. Residency Requirement for Federal month deadline on filing after litigation is the invention. This section makes it easier Circuit Judges commenced is replaced with the ‘‘shoot for assignees to file and prosecute a patent This section repeals the requirement that first’’ provision requiring a court to consider application where the inventor is unable to judges on the Federal Circuit reside within a PI request without taking a PGR petition do so or unwilling and contractually obli- 50 miles of Washington, DC. The duty station or its institution into account if the patent gated to do so. of Federal Circuit judges, however, will re- owner sues within 3 months of the issuance Section 4. Damages main in Washington. of patent. The six-month deadline did not Section 12. Micro-Entity Defined work well here—PGR can only be requested The current damage statute is vague, and within 9 months of patent issuance anyway, Under current law, the PTO charges small juries must evaluate up to 15 factors devel- and no suit can be brought until the patent businesses and nonprofits lower fees than it oped by the courts. This has led to incon- issues. Also, a much broader range of issues charges large corporations. This section es- sistent and unpredictable damage awards. can be raised in PGR than in IPR, justifying tablishes an even smaller category—truly Section 4 does not upset the existing sub- more time for filing. independent inventors—for which the PTO stantive law, but it makes certain changes PGR is limited to only FTF patents—no may make additional accommodations. to increase predictability in damages by au- FTI patents can be challenged in PGR. This thorizing courts to play a gatekeeper role, in Section 13. Funding Agreements is done because FTI patents raise discovery- which they will provide detailed instructions This section changes the formula for what intensive invention-date and secret-prior-art to juries on what factors are most relevant universities, nonprofits, and others may do issues that would be difficult to address in to the case before them. with royalties or other income generated by an administrative proceeding. This also ef- Section 5. Post-Grant Review inventions developed using federal funds. fectively gives PTO a much easier ramp up This section establishes a new administra- Under current law, if such royalties exceed for PGR. In light of this change, the time for tive procedure for challenging the validity of the annual budget of the entity, 75 percent of implementing PGR is moved back to 1 year granted patents within a nine-month post- the excess is returned to the government. In after enactment, so that it is done at the grant window, providing an early oppor- order to encourage innovation and commer- same time as new IPR is implemented, which tunity to improve the quality of patents. cialization, this section allows the entity to is PTO’s preference. The bill also changes procedures for later retain 85 percent of that excess for further During the first four years after new IPR is challenges by third parties to the validity of research. The remainder would be paid to the implemented, the Director has discretion to patents (the so-called ‘‘inter partes reexam- government. continue to use old inter partes reexam. This ination’’ process, under current law). These Section 14. Tax Strategies Deemed within Prior is done because the Director believes his re- reforms add additional procedural protec- Art forms of the CRU have greatly improved old tions to the process by converting the reex- This section ends the patentability of tax inter partes, and it may actually work more amination into an adjudicative proceeding to strategies. The bill, as reported, does not efficiently than new IPR during the ramp up. be known as ‘‘inter partes review.’’ Inter change the patentability of other forms of Old inter partes can also be used for PGR partes review must be completed within one business method patents. proceedings that are instituted only on the year of being instituted (though this dead- Section 15. Best Mode Requirement basis of patents and printed publications, line can be extended by six months for good which are the only issues that can be raised cause). The proceedings will take place be- As part of a patent application, an appli- in old inter partes (as well as new IPR). fore a panel of three administrative judges cant must disclose the ‘‘best mode’’ for car- The codification of the TS Tech transfer- whose decisions are appealable directly to rying out his or her invention. In subsequent of-venue rule is struck. TS Tech already ap- the Federal Circuit. litigation an accused infringer can offer as a plies as a matter of caselaw in the Fifth Cir- defense that the best mode was not properly Section 6. Patent Trial and Appeal Board cuit. (The Federal Circuit applies regional disclosed by the patent holder. This section circuit law to procedural matters, and reads This section renames the Patent Board the eliminates that defense, which many con- Fifth Circuit law as applying the transfer of ‘‘Patent Trial and Appeal Board’’ and clari- sider subjective and possibly irrelevant, as venue rule.) Complaints about venue gen- fies its role in administering the new pro- the best mode may change over time. Best erally focus on EDTX, so there is little need ceedings established by the Act. mode disclosure remains a requirement for to apply TS Tech nationally, and it seemed Section 7. Pre-Issuance Submissions by Third patentability. odd for Congress to regulate such matters in Parties Section 16. Technical Amendments any event. Current law restricts what third parties This section contains technical amend- A blue-slip fix to the Director’s fee setting can file with the PTO when they possess rel- ments to reorganize the patent statute. authority. The revised language identifies

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Improvements have also been Language is added making clear that the and compensating the travel of APJs. A made regarding damages. Finally, I am repeal of the Baldwin rule (which rule re- large number of APJs will need to be re- pleased that we were able to address quires Federal Circuit judges to live within cruited, trained, and retained to adjudicate the PTO’s funding needs in a way that 50 miles of Washington, D.C.) shall not be PGR and new IPR. This change’s enhance- maintains Congress’ duty to carefully construed to require the AOC to provide ments will be paid for out of existing funds. judges office space or staff outside of D.C. oversee the PTO while ensuring that it The Coburn end to fee diversion. Currently, has the resources necessary to issue A PTO-approved broadening of the defini- PTO fees go into a Treasury account and are tion of ‘‘microentity,’’ a status that entitles only available to the Office as provided in top quality patents in a timely man- applicants to reduced fees. appropriations. In the last two decades, ner. In the tax patents section, language is about $800 million in PTO user fees has been Again, I commend Senator LEAHY for added: [(1) clarifying that the language does diverted from PTO to other federal spending. his many years of work on this bill, not bar patenting of tax software that is The Coburn amendment creates a revolving novel as software—i.e., where the innovation and I look forward to the House taking fund, giving PTO direct access to its fees is in the software] (this may be dropped); and up this legislation. without the need for enactment of an appro- (2) establishing that making tax strategies Mr. LEVIN. Mr. President, I thank priations act. unpatentable shall not be construed to imply my colleagues, Senator LEAHY, who is Budget Committee paygo language is that other business methods are patentable the chairman of the Judiciary Com- added at the end. or valid. In Bilski v. Kappos, (2010), the Su- mittee, and Senator GRASSLEY, who is preme Court interpreted Congress’s 1999 en- Mr. KOHL. Mr. President, I rise the ranking Republican, for including actment of a prior-user right that only ap- today in support of S. 23, the America in the Patent Reform Act a provision plied against business-method patents as im- Invents Act. This bipartisan bill is the that a number of us have been working plying that business methods qualify as pat- product of a great deal of hard work on for several years to stop the grant- entable subject matter under section 101, and negotiation, and I congratulate which was enacted in 1793. ing of tax strategy patents. Language is added to the part of the Senators LEAHY, HATCH and GRASSLEY The key provision contains the text Holmes Group fix allowing removal of patent on their accomplishment. This bill is a of legislation that Senators BAUCUS, cases from state to federal court to clarify reasonable compromise that will up- GRASSLEY and I, as well as others, in- that derivative jurisdiction is not required in date and strengthen our U.S. Patent troduced earlier this year, S. 139, the such cases. Derivative jurisdiction is the system so that American businesses Equal Access to Tax Planning Act, to doctrine that, even if a federal district court can better compete in the 21st Century. end the troubling practice of persons would have had original jurisdiction over an The American system of patenting seeking patents for tax-avoidance action, on removal, the district court can inventions has helped make our coun- only have jurisdiction if the state court from strategies. Issuing such patents per- which the action is removed properly had ju- try the center of innovation for more verts the Tax Code by granting what risdiction. (In other words, the federal than two centuries. The America In- some could see as a government impri- court’s removal jurisdiction is regarded as vents Act will ensure that inventors matur of approval for questionable or derivative of the state court’s jurisdiction.) and those who invest in their discov- illegal tax strategies, while at the This silly form-over-substance doctrine was eries are able to rely on their most im- same time penalizing taxpayers seek- abrogated by Congress, but some courts have portant asset—their patent. Patents ing to use legitimate strategies. continued to read it into other parts of the are vital components in the research Since 1998, when Federal courts ruled law, and thus it was thought best to also and development cycle that help create make clear here that derivative jurisdiction that business practices were eligible is not required. small businesses and jobs. for patent protection, the Patent and The Schumer-Kyl business-methods pro- In my home State of Wisconsin, we Trademark Office has issued more than ceeding, as modified to accommodate indus- have a strong tradition of invention 130 patents for tax strategies, with try concerns and PTO needs. In its 1998 State and innovation—from the invention of more than 150 applications pending. Street decision, the Federal Circuit greatly the first practical typewriter in 1869 to These patents are a terrible idea for broadened the patenting of business meth- a cure for Rickets disease in 1925 to two reasons. ods. Recent court decisions, culminating in cutting edge drug therapies for the 21st last year’s Supreme Court decision in Bilski First, they may be providing unin- v. Kappos, have sharply pulled back on the Century. More than 50 Wisconsin based tended support for abusive tax shelters. patenting of business methods, emphasizing startup companies have been fueled by Some unscrupulous tax shelter pro- that these ‘‘inventions’’ are too abstract to patents that resulted from research at moters may claim that the patent rep- be patentable. In the intervening years, how- the University of Wisconsin. And there resents an official government endorse- ever, PTO was forced to issue a large number are countless other Wisconsin compa- ment of their tax scheme and evidence of business-method patents, many or pos- nies that rely on patents to sustain and that the scheme would withstand IRS sibly all of which are no longer valid. The grow their business. challenge. Given the well-documented Schumer proceeding offers a relatively cheap I am able to support the Patent Re- alternative to civil litigation for challenging problem we have with tax avoidance in these patents, and will reduce the burden on form Act because of the improvements this country, allowing persons to pat- the courts of dealing with the backwash of made to the bill since it was first intro- ent tax strategies is not only a waste invalid business-method patents. The pro- duced. As is the nature of compromise, of government resources needed else- ceeding has been limited since mark up so I recognize that we cannot all get where, but an invitation to wrongdoers that: (1) only defendants or accused infring- every change we want. I thank Senator to misuse those government resources ers may invoke the proceeding; (2) prior art LEAHY for making substantial changes to promote tax avoidance. is limited to old 102(a), which must be pub- to accommodate many of my concerns. Second, the granting of tax patents licly available, or prior art of old 102(a) scope Specifically, I appreciate your will- threatens to penalize taxpayers seek- that shall be presumed to beat old 102(a) in- vention-date limits but that falls outside the ingness to strike a major section of the ing to use legal tax strategies to mini- old 102(b) grace period (i.e., effectively, old bill regarding prior user rights—which mize their tax bills. If a tax practi- 102(b) prior art but limited to old 102(a)’s would have done serious harm to the tioner is the first to discover a legal publicly-available prior-art scope); (3) the University of Wisconsin and its patent advantage and secures a patent for it, proceeding may not be used to challenge a licensing business. The bill incor- that person could then effectively patent while it is eligible for a PGR chal- porates additional changes that were charge a toll for all other taxpayers to lenge (i.e., an FTF patent during the first 9 important to research universities, in- use the same strategy, even though as months after its issue); (4) the proceeding is cluding provisions related to venue, a matter of public policy all persons available only for four years; (5) district courts decide whether to stay litigation grace period for first inventor to file, ought to be able to take advantage of based on the four-factor Broadcast Innova- oath, and collaborative research. the law to minimize their taxes. Com- tion test, and the Federal Circuit reviews Patent protection will be stronger panies could even patent a legal meth- stay decision on interlocutory appeal to en- with the inclusion of ‘‘could have od to minimize their taxes and then

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00033 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.008 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1368 CONGRESSIONAL RECORD — SENATE March 8, 2011 refuse to license that patent to their In fact, a recent Federal court deci- When the word ‘‘filing date’’ is used in competitors in order to prevent them sion struck down the qui tam provi- current law, it is sometimes used to from lowering their operating costs. sions of the patent law as unconstitu- mean the actual filing date and some- Tax patents could be used to hinder tional because the false patent mark- times used to mean the effective filing productivity and competition rather ing statute does not give the executive date. Since section 100 is a definitional than foster it. branch sufficient control over the liti- section, it should be clear in its lan- Federal patent law is supposed to en- gation to ensure that the President can guage, and thus the word ‘‘actual’’ is courage innovation, productivity, and ‘‘take Care that the Laws be faithfully added in order to avoid a lingering am- competition by encouraging inventors executed.’’ biguity. Also, the language of subpara- to innovate, secure in the knowledge As I mentioned, the False Claims Act graph (B) is streamlined to clarify that that they can profit from their efforts. is completely different. The Justice a patent gets the benefit or priority of In the tax arena, there is already Department has the right to intervene, an earlier application if it is entitled ample incentive for taxpayers to seek to prosecute, or to dismiss a False to such benefit or priority as to the in- legitimate ways of reducing their tax Claims Act qui tam. I was instru- vention in question under the relevant burden, as the wealth of advice and mental in ensuring such controls on code sections, which require satisfac- consulting in this area demonstrates. frivolous lawsuits were inserted into tion of the requirements of section Injecting patents into the mix encour- the False Claims Act and the absence 112(a), a specific reference to the prior ages abusive tax avoidance while rais- of similar controls in the false patent application, and copendency. ing the cost of legal tax planning at marking law is problematic. The new language makes it clear the same time, both to society’s det- I would not want anyone watching that the definition of effective-filing riment. the patent reform bill to conclude that date does not create new rules for enti- I introduced the first bill to ban tax Congress will weaken or undermine the tlement to priority or the benefit of an patents back in 2007. Since then, Sen- False Claims Act qui tam statute be- earlier filing date. Rather, the defini- ators on both sides of the aisle have cause we have stricken a flawed qui tion simply incorporates the rules cre- been trying to get this problem fixed. tam provision in the patent bill. I will ated by existing code sections. Also, The language in the bill before us vigorously defend the False Claims Act since those rules expressly require an today is designed to put a halt to the and urge my colleagues to do the same. enabling disclosure, there is no need to issuance of patents for tax strategies The False Claims Act is the Federal separately require such disclosure in once and for all, including for the 155 Government’s strongest weapon to pro- this definition, and thus the reference pending applications. Although the bill tecting the taxpayer dollars from fraud at the end of subparagraph (B) to the does not apply on its face to the 130- and abuse. It would be a serious mis- first paragraph of section 112 that ap- plus tax patents already granted, if calculation for anyone to imply or at- peared in earlier versions of the bill is someone tries to enforce one of those tempt to characterize my support for dropped. Keeping that citation would patents in court by demanding that a the removal of the patent qui tam as a have created a negative implication taxpayer provide a fee before using it that unless such a requirement of sec- to reduce their taxes, I hope a court starting point for striking or reforming will consider this bill’s language and the False Claims Act qui tam provi- tion 120 was expressly incorporated policy determination and refuse to en- sions. into the definition of effective-filing The False Claims Act qui tam provi- force the patent as against public pol- date, then such requirement need not sions have helped the Federal Govern- icy. be satisfied in order to secure the ben- The tax patent provisions of this bill ment recover over $28 billion since I efit of an earlier effective-filing date. are significant, but they are not the amended it to add the qui tam provi- It should be noted that, for purposes only reasons to support passage. This sions in 1986. With the recent amend- of subparagraph (A) of section 100(i)(1), legislation will create jobs, help keep ments to the False Claims Act that I, a patent or application for patent con- our manufacturers competitive and along with Senator LEAHY, included in tains a claim to an invention even if strengthen and expand the ability of the Fraud Enforcement and Recovery the claim to the particular invention our universities to conduct research Act of 2009, the False Claims Act will was added via an amendment after the and turn that research into innovative continue to serve as the Federal Gov- application was filed. Of course, such products and processes that benefit ernment’s most valuable tool to com- an amendment may not introduce new Michigan and our Nation. It also will bat fraud in government programs for matter into the application—it may assist the new satellite Patent and decades to come. only claim that which was disclosed in Trade Office that will be established in Mr. KYL. Mr. President, I rise today the application. Detroit by modernizing the patent sys- to make a few comments about the Finally, new section 100(i)(2) of title tem and improving efficiency of patent present bill, which has now been re- 35 governs the effective date of reissued review and the hiring of patent exam- titled the ‘‘America Invents Act.’’ This patents. Consistent with section 251, iners. One objective of the new office in bill is almost identical to the man- this new paragraph effectively treats Detroit is to recruit patent examiners agers’ amendment that was negotiated the reissue as an amendment to the to reduce the backlog of patent appli- by Chairman LEAHY and then-Ranking patent, which is itself treated as if it cations. This legislation is a huge step Member Sessions during the last Con- were a still-pending application. It forward in that effort. gress and announced in March 2010. I bears emphasis that the first paragraph Mr. GRASSLEY. Mr. President, I cosponsored and strongly supported of section 251, which is designated as want to discuss an important compo- that managers’ amendment, which sub- subsection (a) by this bill, bars the in- nent of the patent reform legislation stantially addressed all of the concerns troduction of new matter in an applica- that protects against frivolous and vex- that Senators Feingold, COBURN, and I tion for reissue. Moreover, paragraph atious litigation arising from qui tam raised in our Minority Report to the (3) of section 251, now designated as suits for false patent markings. The 2009 committee report for the bill, Sen- section 251(c), makes the rules gov- bill before the Senate abolishes this ate Report 111-18, at pages 53 through erning applications generally applica- qui tam procedure and I would like to 61. As the bill was renegotiated in the ble to reissues. A reissue is treated as discuss why I support doing so, even fall of 2009 and early 2010, improve- an amendment to the patent, and the though I am generally a strong pro- ments and corrections were made last sentence of section 132(a) bars the ponent of using the qui tam mechanism throughout the bill, and a number of introduction of new matter in an to protect American taxpayers. new provisions were added. I would like amendment. See In re Rasmussen, 650 The qui tam provisions of the False to take a moment to comment on some F.2d 1212, 1214–15, CCPA 1981. Thus a Claims Act specifically allow the gov- of those changes and additions. claim that relies for its support on new ernment to intervene and control liti- In section 2(a) of the bill, the defini- matter introduced in a reissue would gation when the government has been tion of ‘‘effective filing date’’ in sec- be invalid. harmed through false or fraudulent tion 100(i) has been modified in several Section 2(b) of the bill recodifies sec- billing. The qui tam provisions of the ways. In subparagraph (A), the word tion 102 of title 35. In the present bill, patent law do not. ‘‘actual’’ is added before ‘‘filing date.’’ this recodification is reorganized by

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00034 Fmt 0624 Sfmt 0634 E:\CR\FM\G08MR6.052 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1369 consolidating all exceptions to the def- present bill departs from earlier parte Jo Anne Robbins, 2009 WL 3490271, inition of prior art in section 102(b)— versions of the bill by giving the CRE- BPAI October 26, 2009, confirm this and excluding from subsection (b) pro- ATE Act is own subsection and making overruling, holding that any applica- visions that do not define exceptions to several clarifying and technical tion that is ultimately published is prior art, such as the CREATE Act and changes. In particular, the citation at prior art as of its filing date, and that the definition of the effective date of the end of the chapeau is made more provisional applications—which typi- patents and applications cited as prior specific, and in paragraph (1) the words cally cannot become patents as filed— art. Thus what previously appeared as ‘‘was developed’’ are added because also are prior art. See Robbins at page section 102(a)(1)(B) in earlier versions subject matter is not always ‘‘made,’’ *4, noting that ‘‘[i]n our opinion, a pub- of the bill is now 102(b)(1)(A), and but is always ‘‘developed.’’ Also in the lished patent application which is former paragraphs (3) and (4) of sub- same paragraph, the reference to ‘‘par- statutorily destined to be published section (b) are now subsections (c) and ties’’ is replaced with ‘‘1 or more par- constitutes prior art for all that it dis- (d), respectively. ties’’, to further clarify that not all closes on its earliest filing date,’’ and Also, the wording of subparagraph parties to the joint research agreement Yamaguchi at page 9, noting that ‘‘a (B) of section 102(b)(2), which appeared need have participated in developing provisional application—like a regular at the same place in earlier versions of the prior art or making the invention. utility application—constitutes prior the bill, is changed so that it tracks Finally, as noted previously, the defini- art for all that it teaches,’’ and the the wording of subparagraph (B) of sub- tion of ‘‘joint research agreement’’ is same case at page 13, Judge Torczon section (b)(1). These two subparagraph moved to section 100, which contains concurring that ‘‘[i]f [the majority] is (B)s are intended to operate in the other definitions relevant to CREATE. correct, In re Wertheim is no longer same way, and their previous dif- As section 2(b)(2) of this bill notes, tenable authority.’’ Moreover, these ferences in wording, although not sub- these changes are made with the same BPAI decisions’ holding that a patent stantive, tended to create an implica- ‘‘intent’’ to promote joint-research ac- has a patent-defeating effect as of the tion that they were intended to operate tivities that animated the CREATE filing date of the provisional applica- tion to which it claims priority was re- in different ways. Act. None of the changes in this legis- cently affirmed by the Federal Circuit Under the first subparagraph (B), at lation alter the meaning of the original in In re Giacomini, 612 F.3d 1380 (Fed. section 102(b)(1)(B), if an inventor pub- law. licly discloses his invention, no subse- The present bill’s new subsection Cir. 2010). The caselaw also teaches that parent quent disclosure made by anyone, re- 102(d) of title 35 makes several changes applications to the published applica- gardless of whether the subsequent dis- to earlier bills’ version of this provi- tion set the effective date of the prior closer obtained the subject matter sion. Specifically, the chapeau of this art if they describe the invention and from the inventor, will constitute prior subsection, which defines the effective the invention is enabled before the fil- art against the inventor’s subsequent date of patents and applications cited ing of the patent under review, even if application for patent in the United as prior art, is modified in the first that prior-art description, standing States. The parallel provision at sec- clause by expressly stating the purpose alone, may not be adequate to show tion 102(b)(2)(B) applies the same rule of this subsection, and by otherwise enablement. This point is illustrated to subsequent applications: if the in- clarifying the language employed. In by Application of Samour, 571 F.2d 559, ventor discloses his invention, a subse- paragraph (1), a clause is added at the CCPA 1978, which holds that prior art quently filed application by another outset to make clear that the para- must be enabled before the effective fil- will not constitute prior art against graph applies only if paragraph (2) does ing date of the application or patent the inventor’s later-filed application not apply. Paragraph (2) is unmodified under review, but this enablement need for patent in the United States, even if save for the nonsubstantive addition of not be disclosed at the same place and the other filer did not obtain the sub- a comma. time as the primary reference relied on ject matter from the first-disclosing Though the language of section as prior art—and can even come later inventor. And of course, the inventor’s 102(d)(2) remains unchanged from ear- than the primary reference, so long as earlier disclosure will constitute prior lier versions of the bill, that language it still comes before the effective-filing art that invalidates the other filer’s deserves some comment. Paragraph (2) date of the application under review. subsequent application. is intended to overrule what remains of Samour at page 563, notes that: In other words, under the regime of In re Wertheim, 646 F.2d 527 (CCPA we do not believe that a reference showing the two subparagraph (B)s, an inven- 1981), which appeared to hold that only that a method of preparing the claimed sub- tor’s disclosure of his invention to the an application that could have become ject matter would have been known by, or public not only invalidates anyone a patent on the day that it was filed would have been obvious to, one of ordinary else’s subsequently filed application, can constitute prior art against an- skill in the pertinent art, must antedate the but no one else’s subsequent disclosure other application or patent. See id. at primary reference. The critical issue under 35 U.S.C. § 102(b) is whether the claimed sub- or filing of an application during the 1- 537, noting that: ject matter was in possession of the public year grace period will constitute prior If, for example, the PTO wishes to utilize more than one year prior to applicant’s fil- art against that inventor’s application. against an applicant a part of that patent ing date, not whether the evidence showing The bill thus effectively creates a disclosure found in an application filed ear- such possession came before or after the date ‘‘first to publish’’ rule that guarantees lier than the date of the application which of the primary reference. patent rights in the United States to became the patent, it must demonstrate that Technically, In re Wertheim still the earlier-filed application contains sec- whoever discloses the invention to the tions 120/112 support for the invention controls the prior-art effect of the lim- public first. claimed in the reference patent. For if a pat- ited universe of applications that are Of course, until the Europeans and ent could not theoretically have issued the not published before they are patented, the Japanese adopt a more substantial day the application was filed, it is not enti- but the Office’s examination guidelines grace period, an inventor’s pre-filing tled to be used against another as ‘secret ignore even this vestigial effect, and disclosure will prevent patenting in prior art,’ the rationale of Milburn being in- extend prior-art effect to all prior ap- Europe and Japan. An inventor who is applicable. plications that describe an invention as concerned about protecting his inven- Wertheim, however, was already al- of the date of their filing. MPEP tion from theft, but who also wants to most completely overruled by the 21360.03, part IV, which notes that: preserve his rights overseas, can in- American Inventors Protection Act of For prior art purposes, a U.S. patent or stead file a provisional application in 1999, Public Law 106–113, which, by patent application publication that claims the United States. This inexpensive al- making any published application prior the benefit of an earlier filing date under 35 ternative protects the inventor’s rights art, effectively displaced Wertheim’s U.S.C. 120 of a prior nonprovisional applica- requirement that the application have tion would be accorded the earlier filing date both in the United States and abroad. as its prior art date under 35 U.S.C. 102(e), Another change that this bill makes been capable of becoming a patent on provided the earlier-filed application prop- to chapter 10 is that the CREATE Act, the day that it was filed. Two recent erly supports the subject matter relied upon formerly at section 103(c) of title 35, BPAI decisions, Ex parte Yamaguchi, in any rejection in compliance with 35 U.S.C. has been moved to section 102(c). The 88 U.S.P.Q.2d 1606, BPAI 2008, and Ex § 112, first paragraph.

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00035 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.029 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1370 CONGRESSIONAL RECORD — SENATE March 8, 2011 A prior-art parent application, how- describe things that are of the same port, is consistent with the unanimous ever, must be copendent, have some quality or nature as the final clause— judicial construction of the same turn continuity of disclosure, and be specifi- that is, although different categories of of phrase. It appears that every court cally referred to in the patent or pub- prior art are listed, all of them are lim- that has considered this question lished application. The continuous dis- ited to that which makes the invention agrees with the committee’s under- closure must be a description of the ‘‘available to the public.’’ As the com- standing of the meaning of this lan- subject matter that is relied on as mittee report notes at page 9, ‘‘the guage. prior art. That description can become phrase ‘available to the public’ is added Moreover, the fact that the clause narrower in the intervening applica- to clarify the broad scope of relevant ‘‘or otherwise available to the public’’ tions. But so long as there is still some prior art, as well as to emphasize the is set off from its preceding clauses by description of the subject matter in the fact that it [i.e., the relevant prior art] a comma confirms that it applies to intervening applications, the Office can must be publicly available.’’ In other both ‘‘public use’’ and ‘‘on sale.’’ rely on an earlier application’s fuller words, as the report notes, ‘‘[p]rior art Finisar Corp. v. DirecTV Group, Inc., 523 description as prior art. will be measured from the filing date of F.3d 1323, 1336, Fed. Cir. 2008, notes that The language of paragraph (2) is the application and will include all art ‘‘when a modifier is set off from a se- somewhat indirect in its imposition of that publicly exists prior to the filing ries of antecedents by a comma, the these requirements. They are mostly date, other than disclosures by the in- modifier should be read to apply to incorporated through the paragraph’s ventor within one year of filing.’’ each of those antecedents.’’ Thus new mandate that the prior-art application The Committee’s understanding of section 102(a)(1) imposes a public-avail- be ‘‘entitled to claim * * * priority or the effect of adding the words ‘‘or oth- ability standard on the definition of all benefit’’ under section 120 et al. In sec- erwise available to the public’’ is con- prior art enumerated by the bill—an tion 100(i), which defines the effective- firmed by judicial construction of this understanding on which the remainder filing date of the patent under review, phraseology. Courts have consistently of the bill is predicated. the patent must be entitled to the pri- found that when the words ‘‘or other- Whether an invention has been made ority or benefit itself under the rel- wise’’ or ‘‘or other’’ are used to add a available to the public is the same in- evant sections. Here again in section modifier at the end of a string of quiry that is undertaken under exist- 102(d), however, the application need clauses, the modifier thus added re- ing law to determine whether a docu- only be entitled to claim the benefit or stricts the meaning of the preceding ment has become publicly accessible, priority under those sections. This dif- clauses. Strom v. Goldman, Sachs & Co., but is conducted in a more generalized ference in language, which offers an ex- 202 F.3d 138, 146–47, Second Cir. 1999, manner to account for disclosures of information that are not in the form of cellent example of why people hate states that: documents. lawyers, distinguishes between the core The position of the phrase ‘or any other eq- A document is publicly accessible if it has requirement of section 120 et al.—that uitable relief’ in the sentence in which it ap- been disseminated or otherwise made avail- the application include an enabling dis- pears indicates that it modifies one or both able to the extent that persons interested closure—and the ministerial require- of the two specific remedies referred to just and ordinarily skilled in the subject matter before it in the same sentence * * * [T]he use ments of that section—that the appli- or art, exercising reasonable diligence, can of the words ‘other’ immediately after the cation be copendent and specifically locate it and recognize and comprehend reference to back pay and before ‘equitable referenced. In effect, an application therefrom the essentials of the claimed in- relief’ demonstrated Congress’ understanding vention without need of further research or that meets the ministerial require- that the back pay remedy is equitable in na- experimentation. ments of copendency and specific ref- ture. erence is entitled to claim the benefit That is a quotation from Cordis Corp. Strom construed the phrase ‘‘may in- or priority, but only an application v. Boston Scientific Corp., 561 F.3d 1319, clude * * * back pay, * * * or any other that also offers an enabling disclosure 1333, Fed. Cir. 2009. That decision also equitable relief.’’ Universal City Studios, is actually entitled to the benefit or states that ‘‘[i]n general, accessibility Inc. v. Reimerdes, 111 F.Supp.2d 294, 325, priority itself. The language of para- goes to the issue of whether interested S.D.N.Y. 2000, holds that: graph (2) also expressly requires that members of the relevant public could the earliest application ‘‘describe’’ the The statute makes it unlawful to offer, obtain the information if they wanted provide or otherwise traffic in described subject matter, and the Office has tra- technology. To ‘traffic’ in something is to to.’’ See also In re Lister, 583 F.3d 1307, ditionally required that this disclosure engage in dealings in it, conduct that nec- Fed. Cir. 2009. be continuous, as discussed above. essarily involves awareness of the nature of Another important aspect of public Paragraph (2) can be criticized as the subject of the trafficking. * * * The availability or accessibility is the doc- codifying current BPAI common law phrase ‘or otherwise traffic in’ modifies and trine of inherency. ‘‘Under the doctrine and examination practice without fully gives meaning to the words ‘offer’ and ‘pro- of inherency, if an element is not ex- describing that practice. However, a vide.’ In consequence, the anti-trafficking pressly disclosed in a prior art ref- fully descriptive codification of the provision of the DMCA is implicated where erence, the reference will still be one presents, holds out or makes a cir- principles codified therein would be un- cumvention technology or device available, deemed to anticipate a subsequent duly long, requiring repetition of the knowing its nature, for the purpose of allow- claim if the missing element is nec- already somewhat inelegant language ing others to acquire it. essarily present in the thing described of section 120. Reimerdes construed the phrase in the reference, and that it would be Another aspect of the bill’s changes ‘‘offer to the public, provide, or other- so recognized by persons of ordinary to current section 102 also merits spe- wise traffic in any technology.’’ skill,’’ a point noted in Rosco, Inc. v. cial mention. New section 102(a)(1) Williamson v. Southern Regional Council, Mirror Lite Co., 304 F.3d 1373, 1380, Fed. makes two important changes to the Inc., 223 Ga. 179, 184, 154 S.E.2d 21, 25 Cir. 2002. This doctrine applies to prod- definition of non-patent prior art. (Ga. 1967), noted that: ucts sold to the public as well as pub- First, it lifts current law’s geographic lished references. Thus once a product The words ‘carrying on propaganda’ in this limits on what uses, knowledge, or statute must be construed in connection is sold on the market, any invention sales constitute prior art. And second, with the words following it, ‘or otherwise at- that is inherent to the product be- it limits all non-patent prior art to tempting to influence legislation.’ The use of comes publicly available prior art and that which is available to the public. the word ‘otherwise’ indicates that ‘carrying cannot be patented. This latter change is clearly identified on propaganda’ relates to ‘attempting to in- The present bill’s elimination of the in Senate Report 110–259, the report for fluence legislation.’ patent forfeiture doctrines in favor of a S. 1145, the predecessor to this bill in Williamson construed the phrase general public availability standard the 110th Congress. The words ‘‘other- ‘‘carrying on propaganda, or otherwise also limits and reconciles the various wise available to the public’’ were attempting to influence legislation.’’ purposes that previously have been as- added to section 102(a)(1) during that In other words, the Judiciary Com- cribed to section 102’s definition of Congress’s Judiciary Committee mark mittee’s design in adding the 2007 prior art. Current 102(b), which imposes up of the bill. The word ‘‘otherwise’’ amendment to section 102(a)(1), as ex- the forfeiture doctrines, has been de- makes clear that the preceding clauses pressed in the relevant committee re- scribed as being ‘‘primarily concerned

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00036 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.031 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1371 with the policy that encourages an in- the more unusual patent cases to come stitute prior art. A sale or use that dis- ventor to enter the patent system before the Supreme Court. That case closes an invention to the public is rel- promptly,’’ a quotation from Woodland held that: atively hard to falsify. If the invention Trust v. Flowertree Nursery, Inc., 148 whether the use of an invention is public or truly was made available to the public F.3d 1368, 1370, Fed. Cir. 1998. And the private does not necessarily depend upon the by sale or use, independent validation ‘‘overriding concern of the on-sale bar’’ number of persons to whom its use is known. of that sale or use should be readily has been described as ‘‘an inventor’s If an inventor, having made his device, gives available. By contrast, the existence of attempt to commercialize his inven- or sells it to another, to be used by the donee a secret offer for sale, or a nondis- tion beyond the statutory term,’’ as or vendee, without limitation or restriction, closing third-party use, largely will or injunction of secrecy, and it is so used, stated in Netscape Communications Corp. such use is public, even though the use and turn on the affidavits or statements of v. Konrad, 295 F.3d 1315, 1323, Fed. Cir. knowledge of the use may be confined to one the parties to such an occurrence. Un- 2002. person. fortunately, some foreign countries By adopting the first-to-file system, Egbert v. Lippman is another case continue to have weak business ethics however, the present bill already pro- whose result can fairly be character- and few scruples about bending the vides ample incentive for an inventor ized as extreme. The invention there rules to favor domestic interests over to enter the patent system promptly. was an improved corset spring. The evi- foreign competitors. A system that al- There is no need to also require for- dence showed only that the inventor lowed foreign interests to invalidate a feiture of patents simply because the had given the improved corset spring U.S. patent simply by securing state- inventor has made some use of the in- to one lady friend, who gave it to no ments from individuals that a secret vention that has not made the inven- other, and who used it in a corset, offer for sale or non-disclosing third- tion available to the public. And the which of course was worn under her party use of the invention had occurred current on-sale bar imposes penalties dress. The U.S. Supreme Court deemed in a foreign country would place U.S. not demanded by any legitimate public this to be a ‘‘public use’’ of the inven- inventors at grave risk of having their interest. There is no reason to fear tion within the meaning of section inventions stolen through fraud. That ‘‘commercialization’’ that merely con- 102(b). is not a risk that Congress is willing to sists of a secret sale or offer for sale Justice Miller dissented. He began by accept. but that does not operate to disclose noting that the word ‘‘public’’ in sec- In section 2(c), the present bill, for the invention to the public. tion 102(b) is ‘‘an important member of clarity’s sake, changes the previous The current forfeiture doctrines have the sentence.’’ Justice Miller went on bills’ recodification of section 103 of become traps for unwary inventors and to conclude: title 35 by replacing the word ‘‘though’’ impose extreme results to no real pur- A private use with consent, which could with ‘‘, notwithstanding that’’. The pose. In Beachcombers International, Inc. lead to no copy or reproduction of the ma- modified text reflects more conven- v. Wildewood Creative Products, Inc., 31 chine, which taught the nature of the inven- tional English usage. Also, in both the F.3d 1154, 1159–60, Fed. Cir. 1994, for ex- tion to no one but the party to whom such present bill and earlier versions, ample, an improved kaleidoscope was consent was given, which left the public at former subsection (b) of section 103 has held to be ‘‘in public use’’ within the large as ignorant of this as it was before the been dropped, since it has already been meaning of current section 102(b) be- author’s discovery, was no abandonment to subsumed in caselaw. And subsection cause the inventor had demonstrated the public, and did not defeat his claim for a (c), the CREATE Act, has been moved patent. If the little steep spring inserted in a the device to several guests at a party single pair of corsets, and used by only one to subsection (d) of section 102. in her own home. And in JumpSport, woman, covered by her outer-clothing, and In section 2(e) of the present bill, an Inc. v. Jumpking, Inc., 2006 WL 2034498, in a position always withheld from public ob- effective date is added to the repeal of Fed. Cir. July 21, 2006, the court of ap- servation, is a public use of that piece of statutory invention registrations. SIRs peals affirmed the forfeiture of a pat- steel, I am at a loss to know the line between are needed only so long as inter- ent for a trampoline enclosure on the a private and a public use. ferences exist. The bill repeals the au- ground that the enclosure had been in In this bill’s revisions to section 102, thority to initiate interferences 18 ‘‘public use’’ because neighbors had vindication has finally come to Justice months after the date of enactment. been allowed to use it in the inventor’s Miller, albeit 130 years late. The added effective-date language also back yard. Obviously, neither of these I emphasize these points about the repeals SIRs 18 months after enact- uses made the inventions accessible to bill’s imposition of a general public ment, making clear that preexisting persons interested and skilled in the availability standard and its elimi- SIRs will remain effective for purposes subject matter. The only effect of rul- nation of secret prior art because they of pending interferences, which may ings like these is to create heavy dis- are no small matter. A contrary con- continue under this bill. covery costs in every patent case, and struction of section 102(a)(1), which al- Section 2(e)(2) of the bill strikes the to punish small inventors who are un- lowed private and non-disclosing uses citation to section 115 from section aware of the pitfalls of the current def- and sales to constitute invalidating 111(b)(8)’s enumeration of application inition of prior art. prior art, would be fairly disastrous for requirements that do not apply to The present bill’s new section 102(a) the U.S. patent system. First, the bill’s provisionals. This conforming change precludes extreme results such as these new post-grant review, in which any is made because, in section 3 of the bill, and eliminates the use of the definition validity challenge can be raised, would section 115 itself has been amended so of prior art to pursue varied goals such be utterly unmanageable if the validity that it only applies to nonprovisionals. as encouraging prompt filing or lim- of all patents subject to review under In other words, there is no longer any iting commercialization. Instead, the the new system continued to depend on need for section 111(b)(8) to except out new definition of prior art will serve discovery-intensive searches for secret the oath requirement because that re- only one purpose: ‘‘to prevent the with- offers for sale and non-disclosing uses quirement no longer extends to drawal by an inventor of that which by third parties. Only patents issued provisionals. There is no need for an was already in the possession of the under the new prior-art rules can be ef- exception to a requirement that does public,’’ as noted in Bruckelmyer v. ficiently reviewed under chapter 32. not apply. Ground Heaters, Inc., 335 F.3d 1374, 1378, Second, a general public-availability Sections 2(h) and (i) of the present Fed. Cir. 2006. The new definition is standard is a necessary accompaniment bill make a number of changes to the ‘‘grounded on the principle that once to this bill’s elimination of geographic previous bills’ treatment of remedies an invention is in the public domain, it restrictions on the definition of prior for derivation. These changes are made is no longer patentable by anyone,’’ as art. As unwieldy as the current rules largely at the Patent Office’s sugges- stated in SRI International, Inc. v. Inter- may be, at least those rules allow only tion. In particular, the new section 135 net Security Systems, Inc., 511 F.3d 1186, those secret sales and private third- proceeding is simplified, the Office is 1194, Fed. Cir. 2008. party uses that occur in the United given authority to implement the pro- The present definition thus abrogates States to constitute prior art. Under ceeding through regulations, the Office the rule announced in Egbert v. the new regime, however, sales and is permitted to stay a derivation pro- Lippman, 104 U.S. 333, 336 (1881), one of uses occurring overseas will also con- ceeding pending an ex parte

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00037 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.033 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1372 CONGRESSIONAL RECORD — SENATE March 8, 2011 reexamintion, IPR, or PGR for the ear- able harm of allowing such products to Under this provision, a section 32 pro- lier-filed patent, and the Office is per- continue to circulate in commerce. ceeding must be initiated either within mitted but not required to institute a Indeed, it is not entirely clear how 10 years of when the underlying mis- proceeding if the Office finds substan- consumers would suffer any tangible conduct occurred, or within 1 year of tial evidence of derivation. In lieu of a harm from false marking that is dis- when the misconduct is reported to section 135 proceeding, parties will be tinct from that suffered when competi- that section of PTO charged with con- allowed to challenge a derived patent tors are deterred from entering a mar- ducting section 32 proceedings, which- through a civil action under a revised ket. Patent marking’s primary purpose ever is earlier. section 291. is to inform competitors, not con- It is not entirely clear how the time New section 2(k) of the bill elimi- sumers, that a product is patented. I limitation applies under present law. A nates the qui tam remedy for false doubt that consumers would take any recent D.C. Circuit case, 3M v. Browner, marking, while allowing a party that interest, for example, in whether a dis- 17 F.3d 1461 D.C. Cir. 1994, effectively has suffered a competitive injury as a posable plastic cup is subject to a pat- makes the 5-year statute of limitations result of such marking to seek compen- ent, to take one case recently decided that generally applies to enforcement satory damages. Section 292 of title 35 by the courts. Even less clear is how of civil penalties, at 28 U.S.C. § 2462, prohibits false patent marking and im- the consumer would be harmed by such run from the date when a violation oc- poses a penalty of $500 for each such of- marking, absent a deterrence of com- curred, rather than from the date when fense. Under current law, subsection (b) petition. Current section 292(b) creates the enforcement agency first learned of allows ‘‘any person’’ to sue for the pen- an incentive to litigate over false the violation or reasonably could have alty, and requires only that one half of marking that is far out of proportion learned of it. A recent Federal Circuit the proceeds of the suit shall go to the to the extent of any harm actually suf- case, Sheinbein v. Dudas, 465 F.3d 493, United States. Current subsection (b) fered or the culpability of a manufac- 496, Fed. Cir. 2006, applies the section is, in effect, a qui tam remedy for false turer’s conduct. 2462 5-year limitation to section 32 pro- marking, but without any of the pro- To the extent that false patent mark- ceedings, and applies 3M v. Browner’s tections and government oversight ing deters competition, the bill’s re- general rule, as described by Sheinbein, that normally accompany qui tam ac- vised section 292(b) allows those com- that ‘‘[a] claim normally accrues when tions. petitors to sue for relief. This remedy the factual and legal prerequisites for The changes made by section 2(k) of should be more than adequate to deter filing suit are in place.’’ However, an- the bill would allow the United States false marking that harms competition. other court case, S.E.C. v. Koenig, 557 to continue to seek the $500-per-article And to the extent that false marking F.3d 736, 739, 7th Cir. 2009, has recently fine, and would allow competitors to somehow harms the public in a manner held that when a fraud has occurred, recover in relation to actual injuries distinct from any injury to competi- section 2462 only runs from when the that they have suffered as a result of tors and competition, revised section fraud ‘‘could have been discovered by a false marking, but would eliminate 292(a) would allow the United States to person exercising reasonable dili- litigation initiated by unrelated, pri- seek relief on behalf of the public. The gence.’’ vate third parties. Justice Department can be expected to Although the Federal Circuit appears In recent years, patent attorneys be more judicious in its use of this to be inclined to follow 3M v. Browner, have begun to target manufacturers of remedy than is a private qui tam liti- it is not entirely clear that it would re- high-volume consumer products with gant seeking recovery that will benefit ject Koenig’s exception for cases of section 292(b) actions. Since the fine of him personally. These revisions to sec- fraud, Koenig having been decided sub- up to $500 is assessed for each article tion 292 should restore some equi- sequently to Sheinbein. In any event, that is falsely marked, such litigants librium to this field of litigation. neither rule would be entirely satisfac- have an incentive to target products Finally, because the Federal Circuit’s tory for section 32 proceedings. On the that are sold in high volume. Though recent decision in Forest Group, Inc. v. one hand, a strict five-year statute of one might assume that section 292 is Bon Tool Co., 590 F.3d 1295, Fed Cir. limitations that runs from when the targeted at parties that assert ficti- 2009, appears to have created a surge in misconduct occurred, rather than from tious patents in order to deter competi- false-marking qui tam litigation, the when it reasonably could have been dis- tors, such a scenario is almost wholly changes made by paragraph (1) of sec- covered, would appear to preclude a unknown to false-marking litigation. tion 2(k) of the bill are made fully ret- section 32 proceeding for a significant False-marking suits are almost always roactive by paragraph (2). Because the number of cases of serious misconduct, based on allegations that a valid pat- courts have had difficulty properly since prosecution misconduct often is ent that did cover the product has ex- construing effective-date language in not discovered until a patent is en- pired, but the manufacturer continued recent years, paragraph (2) employs the forced. On the other hand, a fraud ex- to sell products stamped with the pat- language of section 7(b) of Public Law ception that effectively tolls the stat- ent, or allegations that an existing pat- 109–366, the Military Commissions Act ute of limitations until the fraud rea- ent used to mark products is invalid or of 2006, which recently was given an au- sonably could have been discovered unenforceable, or that an existing and thoritative construction in Boumediene would be both overinclusive and under- valid patent’s claims should not be v. Bush, 476 F.3d 981, 987, D.C. Cir. 2007. inclusive. Such tolling could allow a construed to cover the product in ques- As that court noted when construing section 32 proceeding to be commenced tion. effective-date language identical to more than two decades after the attor- Indeed, a recent survey of such suits that of section 2(k)(2): ney’s misconduct occurred. This is well found that a large majority involved Section 7(b) could not be clearer. It states beyond the time period during which valid patents that covered the products that ‘‘the amendment made by subsection individuals can reasonably be expected in question but had simply expired. For (a)’’—which repeals habeas jurisdiction—ap- to maintain an accurate recollection of plies to ‘‘all cases, without exception’’ relat- many products, it is difficult and ex- ing to any aspect of detention. It is almost events and motivations. And yet, a pensive to change a mold or other as if the proponents of these words were fraud exception would also be under- means by which a product is marked as slamming their fists on the table shouting inclusive, since there is a substantial patented, and marked products con- ‘‘When we say ‘all,’ we mean all—without ex- range of misconduct that PTO should tinue to circulate in commerce for ception!’’ want to sanction that does not rise to some time after the patent expires. It It is anticipated that courts will find the level of fraud, which requires reli- is doubtful that the Congress that the same clarity in the language of sec- ance on the perpetrator’s misrepresen- originally enacted this section antici- tion 2(k)(2), and will apply the revised tations. pated that it would force manufactur- section 292(b) to cases pending at any Section 2(1) of the bill adopts neither ers to immediately remove marked level of appeal or review. 3M v. Browner nor Koenig’s approach, products from commerce once the pat- Section 2(l) of the present bill modi- but instead imposes an outward limit ent expired, given that the expense to fies the statute of limitations for initi- of 10 years from the occurrence of the manufacturers of doing so will gen- ating a proceeding to exclude an attor- misconduct for the initiation of a sec- erally greatly outweigh any conceiv- ney from practice before the Office. tion 32 proceeding. A 10-year limit

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00038 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.034 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1373 would appear to allow a proceeding for transitioning to the first-to-file sys- over, a later-filed application often will the vast bulk of misconduct that is dis- tem. Under this approach, if an appli- cite to multiple prior applications covered, while also staying within the cation contains or contained a claim to under section 120, each of which may limits of what attorneys can reason- an invention with an effective-filing list several inventors. Thus unless the ably be expected to remember. date that is 18 months after the date of Office can require the applicant to Paragraph (2) of section 2(l) requires enactment of the Act, the entire appli- identify which oath or other statement the Office to report to Congress every cation is subject to the first-to-file re- applies to the later-filed application, two years on incidents of misconduct gime. As a practical matter, this al- the Office may not be able to figure out that it becomes aware of and would lows applicants to flip their applica- who the inventor is for that later appli- have investigated but for the 10 year tions forward into the first-to-file sys- cation. limit. By providing a description of the tem, but prevents them from flipping In new section 115(h)(2), the present character and apparent seriousness of backward into the first-to-invent uni- bill replaces the word ‘‘under’’ with such incidents, these reports will alert verse once they are already subject to ‘‘meeting the requirements of’’ in order a future Congress if there is a need to first-to-file rules. to conform to the formulation used revisit the 10-year limit. If the number New section 100(i)(2) of title 35 en- later in the same sentence. and seriousness of such incidents is sures that reissues of first-to-invent In section 3(a)(3) of the bill, the substantial enough, it may outweigh patents will remain subject to first-to- changes to section 111(a) are modified the interest in repose with regard to invent rules. Also, continuations of to reflect that either an oath or dec- such matters. first-to-invent applications that do not laration may be submitted. Section 2(m) of the present bill re- introduce new matter will remain sub- In section 3(b), the present bill adds a quires the Small Business Administra- ject to first-to-invent rules. This last new paragraph (2) that modifies section tion to report to Congress on the ex- rule is important because if a continu- 251 to allow an assignee who applied for pected impact of the first-to-file sys- ation filed 18 months after the enact- a patent to also seek broadening re- tem on small businesses. On the one ment of the Act were automatically issue of the patent within two years of hand, some parties have suggested that subject to first-to-file rules, even if it its issue. Notwithstanding the lan- the first-to-file system will be rel- introduced no new matter, the Office guage of the fourth paragraph of cur- atively burdensome for small busi- likely would see a flood of continu- rent section 251, the Office currently nesses because it will require patent ation filings on the eve of the first-to- does allow assignees to seek broad- applicants to file their applications file effective date. Under subsection ening reissue, so long as the inventor earlier, and will require that more ap- (o), an applicant who wants to add to does not oppose the reissue. The Office plications be filed for a complex inven- his disclosure after this section’s 18- views such unopposed applications for tion. On the other hand, others have month effective date can choose to pull reissue as effectively being made ‘‘in suggested that the first-to-file system the whole invention into the first-to- the name’’ of the inventor. Expanding will be far simpler and cleaner to ad- file universe by including the new dis- an assignee’s right to seek broadening minister, that the ability to file provi- closure in a continuation of his pend- reissue is consistent with the bill’s sional applications mitigates the bur- ing first-to-invent application, or he changes to sections 115 and 118, which den of filing earlier, and that by induc- can choose to keep the pending appli- expand assignees’ rights by allowing ing American patent applicants to file cation in the first-to-file world by fil- assignees to apply for a patent against earlier, the first-to-file system is more ing the new disclosure as a separate in- the inventor’s wishes. If an assignee ex- likely to result in American patents vention. ercises his right to apply for a patent that are valid and have priority else- Paragraph (2) of subsection (o) pro- against the inventor’s wishes, there is where in the industrialized world. vides a remedy in situations in which no reason not to allow the same as- Under current law, even if an Amer- ican small business or independent in- interfering patents are issued, one of signee to also seek a broadening re- ventor is legally sophisticated enough which remains subject to first-to-in- issue within the section 251 time lim- to maintain the type of third-party vent rules, and the other of which was its. Turning to the issue of damages, at validation that will preserve his pri- filed earlier but has a later date of con- the end of the 110th Congress, I intro- ority under the first-to-invent system, ception and has transitioned into the duced a patent reform bill, S. 3600, that if that American inventor relies on first-to-file system. Paragraph (2) sub- proposed restrictions on the use of first-to-invent rules to delay filing his jects the latter patent to the first-to- some of the factors that are used to application, he runs a serious risk that invent rule, and allows the other pat- someone in another country will file an ent owner and even third parties to calculate a reasonable royalty. Discus- application for the same invention be- seek invalidation of that later-con- sions with patent-damages experts had fore the American does. Because the ceived interfering patent on that basis. persuaded me that several of the rest of the world uses the first-to-file In section 3(a) of the present bill, the metrics that are employed by litigants system, even if the American inventor language of section 115 of title 35, the are unsound, unduly manipulable and can prove that he was the first to have inventor’s oath requirement, has been subjective, and prone to producing ex- possession of the invention, the foreign tidied up from that appearing in earlier cessive awards. The most significant of filer would obtain the patent rights to versions of the bill. A grammatical the restrictions that I proposed in S. the invention everywhere outside of error is corrected, an unnecessary par- 3600 were limits on the use of sup- the United States. In today’s world, enthetical is struck, and stylistic posedly comparable licenses for other patent rights in Europe and Asia are changes are made. patents to value the patent in suit, and valuable and important and cannot be In the new section 115(g), a paragraph limits on the use of standardized meas- ignored. (2) has been added that allows the Di- ures such as the so-called rule of Section 2(n) of the bill requires the rector to require an applicant claiming thumb. These proposals are discussed Director to report on the desirability the benefit of an earlier-filed applica- in my statement accompanying the in- of authorizing prior-user rights, par- tion to include copies of previous in- troduction of S. 3600, at 154 CONGRES- ticularly in light of the adoption of a ventor’s oaths used in those applica- SIONAL RECORD S9982, S9984-85, daily ed. first-to-file system. tions. The Office cannot begin exam- September 27, 2008. I argued at the time In section 2(o) of the bill, the time ining an application until it knows who that the only way to ensure that courts for implementing the first-to-file sys- those inventors are, since their iden- and juries would stop using these tem has been moved to 18 months, so tity determines which prior art counts metrics ‘‘is for Congress to tell the that Congress might have an oppor- as prior art against the claimed inven- courts to disallow them.’’ tunity to act on the conclusions or rec- tion. However, a later-filed application It appears that I underestimated the ommendations of the reports required is not currently required to name in- courts’ ability and willingness to ad- by subsections (m) and (n) before first- ventors. Such information is included dress these problems on their own. And to-file rules are implemented. in an application data sheet, but such I certainly did not anticipate the speed Subsection (o) generally adopts the data sheets are not always filed—the with which they might do so. Three re- Office’s preferred approach to requirement is not statutory. More- cent decisions from the Federal Circuit

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00039 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.035 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1374 CONGRESSIONAL RECORD — SENATE March 8, 2011 have sharply restricted the use of li- The present bill also makes no party confronted by a strong patent is censes for supposedly comparable pat- changes to the standard for awards of to take a license—and where no one ents to value the patent in suit. Lucent treble damages. As noted in the Minor- thinks that he can get away with copy- Technologies, Inc. v. Gateway, Inc., 580 ity Report to the committee report for ing. F.3d 1301, 1328, Fed. Cir. 2009, makes the 2009 bill, Senate Report 111-18 at Section 4(c) of the present bill adds a clear that mere ‘‘kinship’’ in a field of pages 58-60, that bill’s grounds for al- new section 298 to title 35. This section technology is not enough to allow use lowing awards of treble damages were bars courts and juries from drawing an of evidence of licenses for other pat- exceedingly narrow, and its safe har- adverse inference from an accused in- ents. Lucent bars the use of other-pat- bors were overly broad. That bill would fringer’s failure to obtain opinion of ent licenses where there is no showing have created immunity from willful- counsel as to infringement or his fail- of the significance of such other pat- ness damages even for an infringer who ure to waive privilege and disclose such ented inventions to their licensed prod- was fully aware of a patent and had no an opinion. The provision is designed ucts, or no showing of how ‘‘valuable or real doubts as to its validity. It also to protect attorney-client privilege and essential’’ those other licensed inven- created immunity, in some cases, even to reduce pressure on accused infring- tions are. In a similar vein, for infringers who had engaged in wan- ers to obtain opinions of counsel for ResQNet.com, Inc. v. Lansa, Inc., 594 ton conduct such as deliberate copying. litigation purposes. It reflects a policy F.3d 860, 870, 872, Fed. Cir. 2010, con- Awards of enhanced damages play an choice that the probative value of this demns the use of ‘‘unrelated’’ licenses important role in the U.S. patent sys- type of evidence is outweighed by the for other patents as a measure of value tem. It is not uncommon that a manu- harm that coercing a waiver of attor- and makes clear that a supposedly facturer will find itself in a situation ney-client privilege inflicts on the at- comparable license must have ‘‘an eco- where it feels great pressure to copy a torney-client relationship. Permitting nomic or other link to the technology competitor’s patented invention. In a adverse inferences from a failure to procure an opinion or waive privilege in question.’’ And Wordtech Systems, typical scenario, the sales staff report undermines frank communication be- Inc. v. Integrated Network Solutions, that they are losing sales because the tween clients and counsel. It also feeds Inc., 609 F.3d 1308, 1320, Fed. Cir. 2010, competitor’s product has a particular the cottage industry of providing such recently reiterated that ‘‘comparisons feature. The manufacturer’s engineers opinions—an industry that is founded discover that the feature is protected of past patent licenses to the infringe- on an unhealthy relationship between by a valid patent, and they find that ment must account for the techno- clients and counsel and which amounts they are unable to produce the same logical and economic differences be- to a deadweight loss to the patent sys- feature without infringing the patent. tween them.’’ tem. Some lawyers develop a lucrative And just two months ago, I was par- The company then has two choices. It business of producing these opinions, ticularly pleased to see the Federal can choose to continue to try to repro- and inevitably become aware that con- Circuit announce, in Uniloc USA, Inc. v. duce or substitute for the patented fea- tinued requests for their services are Microsoft Corp.,llll F.3dllll, ture, and as it does so, continue to lose contingent on their opinions’ always 2011 WL 9738, Fed. Cir. 2011, that the market share, and in some cases, lose coming out the same way—that the ‘‘court now holds as a matter of Fed- convoyed sales of associated products patent is invalid or not infringed. Sec- eral Circuit law that the 25 percent or services. Or it can choose to infringe tion 298 reflects legislative skepticism rule of thumb is a fundamentally the competitor’s patent. of the probative value of such opinions. flawed tool for determining a baseline Treble damages are authorized in Section 298 applies to findings of both royalty rate in a hypothetical negotia- order to deter manufacturers from willfulness and intent to induce in- tion.’’ The court ruled that testimony choosing the second option. Absent the fringement—and thus legislatively ab- based on the rule of thumb is inadmis- threat of treble damages, many manu- rogates Broadcom Corp. v. Qualcomm sible under the Daubert standard. facturers would find that their most fi- Inc., 543 F.3d 683, Fed. Cir. 2008. That The rule of thumb is a particularly nancially reasonable option is simply case held, at page 699, that: arbitrary and inaccurate measure of to infringe patents. Lost-profits dam- Because opinion-of-counsel evidence, along patent value. I am glad to see that it ages are often hard to prove or unavail- with other factors, may reflect whether the will no longer be used. able. The patent owner is always enti- accused infringer ‘knew or should have The Lucent case that I quoted earlier tled to a reasonable royalty, but under known’ that its actions would cause another also struck down a damages award that that standard, the infringer often can to directly infringe, we hold that such evi- was based on the entire market value keep even some of the profits produced dence remains relevant to the second prong of the infringing product. The court did of the intent analysis. Moreover, we disagree by his infringing behavior. Without so because there was no substantial with Qualcomm’s argument and further hold treble damages, many companies would evidence that the patented invention that the failure to procure such an opinion was the basis for consumer demand for find it economically rational to in- may be probative of intent in this context. the product. See Lucent, 580 F.3d at fringe valid patents. Section 284’s au- Section 5 of the bill has been sub- 1337–38. This holding addresses one of thorization of treble damages is de- stantially reorganized and modified the principal complaints that I have signed to persuade these companies since the 2009 bill. In general, the heard about patent-damages calcula- that their best economic option is to changes to this part of the bill aim to tions. And it effects a reform that Con- respect valid patents. make inter partes and post-grant re- gress itself cannot enact. Existing law If patents were routinely ignored and view into systems that the Patent Of- already required that the invention be infringed, the patent system would fice is confident that it will be able to the basis for consumer demand before cease to be of use to many companies administer. The changes also impose damages can be assessed on the whole and other entities that do some of our procedural limits on post-grant admin- product, and the law already required nation’s most important research and istrative proceedings that will prevent parties to support their contentions development. These companies are abuse of these proceedings for purposes with legally sufficient evidence. Con- profitable because people respect their of harassment or delay. gress can change the underlying law, patents and voluntarily pay a license. Accused infringers, however, also will but it cannot make the courts enforce They would not be viable enterprises if benefit from some of the changes made it. The Lucent case did so. they always had to sue in order to get by the present bill. The bill eliminates The limits that I had proposed in S. paid for others’ use of their patented current law’s requirement, at section 3600 on the use of metrics such as the inventions. 317(b) of title 35, that an inter partes rule of thumb, and that bill’s restric- By dropping the 2009 bill’s restric- reexamination be terminated if litiga- tions on the use of licenses for com- tions on treble-damages awards, the tion results in a final judgment. It also parable patents to value the patent in present bill preserves these awards’ removes the bar on challenging pre-1999 suit, are rendered superfluous by these role as a meaningful deterrent to reck- patents in inter partes proceedings. All intervening judicial decisions. The less or wanton conduct. Ultimately, we patents can now be challenged in inter present bill appropriately leaves pat- want a treble-damages standard that partes review. ent-damages law to common law devel- creates an environment where the most In addition, the bill creates a new opment in the courts. economically reasonable option for a post-grant review in which a patent

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00040 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.036 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1375 can be challenged on any validity present bill, section 316(a)(4) gives the present bill are its elevated thresholds ground during the first nine months Office discretion in prescribing regula- for instituting inter partes and post- after its issue. Challengers who use tions governing the new proceeding. grant reviews. The present bill dis- this proceeding will be estopped in liti- The Office has made clear that it will penses with the test of ‘‘substantial gation from raising only those issues use this discretion to convert inter new question of patentability,’’ a that were raised and decided in the partes into an adjudicative proceeding. standard that currently allows 95% of post-grant review, rather than all This change also is effectively com- all requests to be granted. It instead issues that could have been raised, the pelled by new section 316(e), which as- imposes thresholds that require peti- standard employed in inter partes reex- signs to the petitioner the burden of tioners to present information that amination. proving a proposition of creates serious doubts about the pat- The present bill also softens the unpatentability by a preponderance of ent’s validity. Under section 314(a), could-have-raised estoppel that is ap- the evidence. Because of these changes, inter partes review will employ a rea- plied by inter partes review against the name of the proceeding is changed sonable-likelihood-of-success thresh- subsequent civil litigation by adding from ‘‘inter partes reexamination’’ to old, and under section 324(a), post- the modifier ‘‘reasonably.’’ It is pos- ‘‘inter partes review.’’ grant review will use a more-likely- sible that courts would have read this The present bill also makes changes than-not-invalidity threshold. limitation into current law’s estoppel. to the petition requirements that ap- Satisfaction of the inter partes re- Current law, however, is also amenable pear in new sections 312(a)(5) and view threshold of ‘‘reasonable likeli- to the interpretation that litigants are 322(a)(5). These sections have been hood of success’’ will be assessed based estopped from raising any issue that it modified to require petitioners to pro- on the information presented both in would have been physically possible to vide to the patent owner the same the petition for review and in the pat- raise in the inter partes reexamination, identification of any real parties in in- ent owner’s response to the petition. even if only a scorched-earth search terest or privies that is provided to the The ‘‘reasonable likelihood’’ test is around the world would have uncovered Office. The Office anticipates that pat- currently used in evaluating whether a the prior art in question. Adding the ent owners will take the initiative in party is entitled to a preliminary in- determining whether a petitioner is the modifier ‘‘reasonably’’ ensures that junction, and effectively requires the real party in interest or privy of a could-have-raised estoppel extends petitioner to present a prima facie case party that is barred from instituting a only to that prior art which a skilled justifying a rejection of the claims in proceeding with respect to the patent. searcher conducting a diligent search Language that previously appeared the patent. Post-grant review uses the ‘‘more reasonably could have been expected to as the last sentences of what are now likely than not invalid’’ test. This discover. sections 312(c) and 322(c), and which Section 5(a) of the 2009 version of the slightly higher threshold is used be- stated that failure to file a motion to bill, which would amend section 301, cause some of the issues that can be seal will result in pleadings’ being has been modified and moved to sec- raised in post-grant review, such as placed in the record, has been struck. tion 5(g) of the bill. This provision al- enablement and section 101 invention At best this sentence was redundant, lows written statements of the patent and at worst it created an ambiguity as issues, may require development owner regarding claim scope that have to whether material accompanying the through discovery. The Office wants to been filed in court or in the Office to be pleadings also would be made public ensure that petitioners raising such made a part of the official file of the absent a motion to seal. issues present a complete case at the patent, and allows those statements to Many of the procedural limits added outset, and are not relying on obtain- be considered in reexaminations and to inter partes and post-grant review ing information in discovery in the inter partes and post-grant reviews for by the present bill are borrowed from post-grant review in order to satisfy purposes of claim construction. This S. 3600, the bill that I introduced in the their ultimate burden of showing inva- information should help the Office un- 110th Congress. My comments accom- lidity by a preponderance of the evi- derstand and construe the key claims panying the introduction of that bill, dence. of a patent. It should also allow the Of- at 154 CONGRESSIONAL RECORD S9982– Subsections (a) and (b) of sections 315 fice to identify inconsistent state- S9993, daily ed. Sept. 27, 2008, are rel- and 325 impose time limits and other ments made about claim scope—for ex- evant to those provisions of the present restrictions when inter partes and ample, cases where a patent owner suc- bill that are carried over from S. 3600, post-grant review are sought in rela- cessfully advocated a claim scope in particularly to the extent that the tion to litigation. Sections 315(a) and district court that is broader than the comments disclose understandings 325(a) bar a party from seeking or ‘‘broadest reasonable construction’’ reached with the Patent Office, con- maintaining such a review if he has that he now urges in an inter partes re- scious use of terms of art, or the rea- sought a declaratory judgment that view. soning behind various provisions. Rel- the patent is invalid. This restriction The present bill preserves the agree- evant passages include page S9987’s dis- applies, of course, only if the review ment reached in the 2009 Judiciary cussion of the use of the adjudicative petitioner has filed the civil action. Committee mark up to maintain the or oppositional model of post-grant re- These two subsections (a) do not re- current scope of inter partes pro- view and estoppel against parties in strict the rights of an accused infringer ceedings: only patents and printed pub- privity, and page S9988’s discussion of who has been sued and is asserting in- lications may be used to challenge a what is now section 324(b)’s additional validity in a counterclaim. That situa- patent in an inter partes review. threshold for instituting a post-grant tion is governed by section 315(b), One important structural change review, the expectation that the Direc- which provides that if a party has been made by the present bill is that inter tor will identify the issues that satis- sued for infringement and wants to partes reexamination is converted into fied the threshold for instituting an seek inter partes review, he must do so an adjudicative proceeding in which inter partes or post-grant review, the within 6 months of when he was served the petitioner, rather than the Office, meaning of ‘‘properly filed’’ when used with the infringement complaint. bears the burden of showing in the joinder provisions in sections Section 325(b) provides that if a pat- unpatentability. Section 5(c) of the 315(c) and 325(c), the authorization to ent owner sues to enforce his patent previous bill eliminated language in consolidate proceedings in sections within three months after it is granted, section 314(a) that expressly required 315(d) and 325(d), and the standards for a court cannot refuse to consider a mo- inter partes reexamination to be run as discovery in sections 316(a)(6) and tion for a preliminary injunction on an examinational rather than adjudica- 326(a)(5). Also relevant is page S9991’s the basis that a post-grant review has tive proceeding, but failed to make discussion of the excesses and effects of been requested or instituted. A patent conforming changes eliminating provi- inequitable-conduct litigation, which owner who sues during this period is sions in section 314(b) that effectively informs this bill’s provisions relating likely to be a market participant who would have required inter partes reex- to that doctrine. already has an infringer intruding on amination to still be run as an Among the most important protec- his market, and who needs an injunc- examinational proceeding. In the tions for patent owners added by the tion in order to avoid irreparable harm.

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00041 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.038 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1376 CONGRESSIONAL RECORD — SENATE March 8, 2011 This provision strengthens and carries grant or inter partes review. This effec- view of strength of the second petition; over to post-grant review the rule of tively bars such a party or his real par- and whether the petitioner has offered Procter & Gamble Co. v. Kraft Foods ties in interest or privies from later to pay the patent owner’s costs. Global, Inc., 549 F.3d 842, Fed. Cir. 2008. using inter partes review or ex parte Sections 316(a)(6) and 326(a)(5) pre- Sections 315(c) and 325(c) allow join- reexamination against the same pat- scribe standards for discovery. In inter der of inter partes and post-grant re- ent, since the only issues that can be partes review, discovery is limited to views. The Office anticipates that join- raised in an inter partes review or ex deposition of witnesses submitting affi- der will be allowed as of right—if an parte reexamination are those that davits or declarations, and as other- inter partes review is instituted on the could have been raised in the earlier wise necessary in the interest of jus- basis of a petition, for example, a party post-grant or inter partes review. The tice. In post-grant review, discovery is that files an identical petition will be Office recognizes that it will need to broader, but must be limited to evi- joined to that proceeding, and thus al- change its regulations and require that dence directly related to factual asser- lowed to file its own briefs and make ex parte reexamination requesters tions advanced by either party. For its own arguments. If a party seeking identify themselves to the Office in commentary on these standards, which joinder also presents additional chal- order for the Office to be able to en- are adopted from S. 3600, see 154 CON- lenges to validity that satisfy the force this new restriction. GRESSIONAL RECORD S9988–89, daily ed. threshold for instituting a proceeding, The present bill also incorporates S. Sept. 27, 2008. the Office will either join that party 3600’s extension of the estoppels and Sections 316(a)(12) and 326(a)(11) pro- and its new arguments to the existing other procedural limits in sections 315 vide that inter partes and post-grant proceeding, or institute a second pro- and 325 to real parties in interest and reviews must be completed within 12 ceeding for the patent. The Director is privies of the petitioner. As discussed months of when the proceeding is insti- given discretion, however, over wheth- at 154 CONGRESSIONAL RECORD S9987, tuted, except that the Office can ex- er to allow joinder. This safety valve daily ed. Sept. 27, 2008, privity is an eq- tend this deadline by 6 months for good will allow the Office to avoid being uitable rule that takes into account cause. Currently, inter partes reexam- overwhelmed if there happens to be a the ‘‘practical situation,’’ and should inations usually last for 3 to 5 years. deluge of joinder petitions in a par- extend to parties to transactions and Because of procedural reforms made by ticular case. other activities relating to the prop- the present bill to inter partes pro- In the second sentence of section erty in question. Ideally, extending ceedings, the Patent Office is confident 325(d), the present bill also authorizes could-have-raised estoppel to privies that it will be able to complete these the Director to reject any request for will help ensure that if an inter partes proceedings within one year. Among ex parte reexamination or petition for review is instituted while litigation is the reforms that are expected to expe- post-grant or inter partes review on pending, that review will completely dite these proceedings are the shift the basis that the same or substan- substitute for at least the patents-and- from an examinational to an adjudica- tially the same prior art or arguments printed-publications portion of the tive model, and the elevated threshold previously were presented to the Office. civil litigation. Whether equity allows for instituting proceedings. The ele- This will prevent parties from mount- extending privity estoppel to codefend- vated threshold will require chal- ing attacks on patents that raise issues ants in litigation, however, will depend lengers to front load their case. Also, that are substantially the same as in large measure upon the actions of by requiring petitioners to tie their issues that were already before the Of- the patent owner, and whether he has challenges to particular validity argu- fice with respect to the patent. The made it reasonably and reliably clear ments against particular claims, the Patent Office has indicated that it cur- which patent claims he is asserting and new threshold will prevent challenges rently is forced to accept many re- what they mean. If one defendant has from ‘‘mushrooming’’ after the review quests for ex parte and inter partes re- instituted an inter partes review, but is instituted into additional arguments examination that raise challenges that other defendants do not have an oppor- employing other prior art or attacking are cumulative to or substantially tunity to join that review before it be- other claims. overlap with issues previously consid- comes reasonably clear which claims Although sections 316 and 326 do not ered by the Office with respect to the will be litigated and how they will be regulate when and how petitioners will patent. construed, it would be manifestly un- be allowed to submit written filings The second sentence of section 325(d) fair to extend privity estoppel to the once a review is instituted, the Office complements the protections against codefendants. has made clear that it will allow peti- abuse of ex parte reexamination that The Office also has the authority to tioners to do so via the regulations im- are created by sections 315(e) and address such scenarios via its author- plementing the proceedings. Sections 325(e). The estoppels in subsection (e) ity under section 316(a)(5), which gives 316 and 326 do clearly allow petitioners will prevent inter partes and post- the Office discretion in setting a time to obtain some discovery and to have grant review petitioners from seeking limit for allowing joinder. The Office an oral hearing. Obviously, it would ex parte reexamination of issues that has made clear that it intends to use make no sense to do so if petitioners were raised or could have been raised this authority to encourage early re- were not also allowed to submit writ- in the inter partes or post-grant re- quests for joinder and to discourage ten arguments. The bill conforms to view. The Office has generally declined late requests. The Office also has indi- the Office’s preference, however, that it to apply estoppel, however, to an issue cated that it may consider the fol- be given discretion in determining the that is raised in a request for inter lowing factors when determining procedures for written responses and partes reexamination if the request whether and when to allow joinder: dif- other filings, in order to avoid the for- was not granted with respect to that ferences in the products or processes malism of current chapter 31, which issue. Under section 325(d), second sen- alleged to infringe; the breadth or un- adds substantially to the delays in that tence, however, the Office could never- usualness of the claim scope that is al- proceeding. theless refuse a subsequent request for leged, particularly if alleged later in The bill also eliminates intermediate ex parte reexamination with respect to litigation; claim-construction rulings administrative appeals of inter partes such an issue, even if it raises a sub- that adopt claim interpretations that proceedings to the BPAI, instead allow- stantial new question of patentability, are substantially different from the ing parties to only appeal directly to because the issue previously was pre- claim interpretation used in the first the Federal Circuit. By reducing two sented to the Office in the petition for petition when that petition’s interpre- levels of appeal to just one, this change inter partes or post-grant review. tation was not manifestly in error; will substantially accelerate the reso- Under paragraph (1) of sections 315(e) whether large numbers of patents or lution of inter partes cases. and 325(e), a party that uses inter claims are alleged to be infringed by Sections 5(c)(2)(C) and 5(c)(3) of the partes or post-grant review is estopped one or more of the defendants; consent bill provide for a transition from cur- from raising in a subsequent PTO pro- of the patent owner; a request of the rent inter partes reexamination to new ceeding any issue that he raised or rea- court; a request by the first petitioner inter partes review. To protect the Of- sonably could have raised in the post- for termination of the first review in fice from being overwhelmed by the

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00042 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.040 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1377 new inter partes and post-grant pro- tion of de novo Review in Ex parte Pat- cuit jurisdiction over appeals from ap- ceedings, sections 5(c)(2)(C) and 5(f)(2) ent Reexaminations (circulated April plications and interferences. It appears allow the Director to place a limit on 16, 2010). This article criticizes the that Congress never gave the Federal the number of post-grant and inter draft managers’ amendment that Sen- Circuit jurisdiction over appeals from partes reviews that will be instituted ators LEAHY and SESSIONS circulated in reexaminations when it created those during the first four years that the pro- March 2010 on the ground that it elimi- proceedings. The language of subpara- ceedings are in effect. It is understood nates authority for a patent owner to graph (A) is also generalized and clari- that if the Office rejects a petition dur- have relief by civil action under sec- fied, recognizing that the details of ing this period because of this numer- tion 145 from an adverse decision in the what is appealable will be in sections ical limit, it will make clear that the BPAI on review of an ex parte reexam- 134 and 141. Also, for logical consist- rejection was made because of this ination. It is fairly apparent, however, ency, language is added to subpara- limit and not on the merits of the va- that this authority was intended to be graph (A) making clear that section 145 lidity challenges presented in the peti- eliminated by the amendments made and 146 proceedings are an exception to tion. Otherwise, even a challenger with by section 4605 of the American Inven- the Federal Circuit’s otherwise exclu- strong invalidity arguments might be tors Protection Act of 1999, Public Law sive appellate jurisdiction over applica- deterred from using inter partes or 106–113, to sections 134 and 141 of title tions and interferences under that sub- post-grant review by fear that his peti- 35. The 2010 managers’ amendment sim- paragraph. tion might be rejected because of the ply maintained the AIPA’s changes to In section 6(c)(3) of the bill, section numerical limit, and the fact of the re- sections 134 and 141. 143 of title 35 is modified to allow the jection would then be employed by the The AIPA neglected, however, to Director to intervene in the appeal of a patent owner in civil litigation to sug- eliminate a cross reference to section decision of the PTAB in an inter partes gest that the experts at the Patent Of- 145 in section 306 of title 35, which de- or post-grant review or a derivation fice found no merit in the challenger’s lineates the appeals available from ex proceeding. arguments. parte reexaminations. The mainte- In the effective-date provision at the Similarly, under subsection (a)(2) of nance of this cross reference in section end of section 6, various existing au- sections 316 and 326, the Office is re- 306 created an ambiguity as to whether thorities are extended so that they quired to implement the inter partes the AIPA did, in fact, eliminate a pat- may continue to apply to inter partes and post-grant review thresholds via ent owner’s right to seek remedy in the reexaminations commenced under the regulations, and under subsection (b) of district court under section 145 from an old system, and the apparent gap in those sections, in prescribing regula- adverse BPAI decision on review of an current section 1295(a)(4)(A)’s author- tions, the Office is required to take ex parte reexamination. See Sigram ization of jurisdiction is immediately into account, among other things, the Schindler Beteiligungsgesellschaft mbH v. filled with respect to all inter partes Office’s ability ‘‘to timely complete Kappos, 93 USPQ2d 1752, E.D. Va. 2009, and ex parte reexaminations. proceedings instituted under’’ those (Ellis, J.), notes that ‘‘the fact that In section 7, the present bill makes chapters. It is expected that the Office § 306 continues to cross-reference § 141 several PTO-recommended changes to will include in the threshold regula- to 145 following the AIPA’s enactment previous bill versions’ authorization to tions a safety valve that allows the Of- appears to be in tension with the AIPA make preissuance submissions of prior fice to decline to institute further pro- amendment to § 141.’’ art. In paragraph (1) of new section ceedings if a high volume of pending Section 5(h)(2) of the present bill 122(e) of title 35, the word ‘‘person’’ has proceedings threatens the Office’s abil- eliminates this ambiguity by striking been replaced with ‘‘third party,’’ so ity to timely complete all proceedings. the citation to section 145 from section that submissions may only be sub- The present bill’s inclusion of this reg- 306 of title 35. mitted by third parties. This addresses ulations consideration in subsection (b) Section 6 of the bill includes all pro- the Office’s concern that applicants reflects a legislative judgment that it visions of the bill addressing the juris- might otherwise use section 122(e) to is better that the Office turn away diction of the Patent Trial and Appeal submit prior art and thereby evade some petitions that otherwise satisfy Board and administrative and judicial other examination disclosure require- the threshold for instituting an inter appeals. In section 6(a), the recodifica- ments. partes or post-grant review than it is tion of section 6 of title 35 is modified In subparagraph (A) of section to allow the Office to develop a backlog so that all members of the PTAB can 122(e)(1), the word ‘‘given’’ has been of instituted reviews that precludes the participate in all proceedings. Also, added. This has the effect of including Office from timely completing all pro- subsection (d) is added to the recodifi- email notices of allowances. ceedings. Again, though, if the Office cation of section 6 of title 35. By omit- In clause (i) of section 122(e)(1)(B), rejects a petition on the basis of this ting this provision, the 2009 bill would the word ‘‘first’’ has been added. This subsection (b) consideration, rather have effectively repealed the APJ ‘‘ap- change was sought by the Office, which than on the basis of a failure to satisfy pointments fix’’ that had been enacted prefers to limit submissions to the first the substantive standards of the in 2008. publication for two reasons. First, re- thresholds in section 314 or 324, it is ex- In section 6(c) of the bill, section 141 publications overwhelmingly only nar- pected that Office will make this fact of title 35 is modified to allow appeals row the claims, and in such cases any- clear when rejecting the petition. of PTAB decisions in inter partes and one who would want to submit prior Section 5(c)(3) of the present bill ap- post-grant reviews, and the section is art could have done so at the first pub- plies the bill’s new threshold for insti- edited and reorganized. To address the lication. Second, and more impor- tuting an inter partes review to re- continuing need to allow appeals of tantly, most republications occur only quests for inter partes reexamination pending interferences, language has after the first office action, when there that are filed between the date of en- been added to section 5(f)(3) of the bill is usually rapid back-and-forth action actment of the bill and one year after that deems references to derivation on the application between the appli- the enactment of the bill. This is done proceedings in the current appeals cant and the Office. Allowing third par- to ensure that requesters seeking to statutes to extend to interferences ties to make prior-art submissions at take advantage of the lax standards of commenced before the effective date of this point would require the Office to the old system do not overwhelm the the bill’s repeal of interferences, and wait six months after the republication Office with requests for inter partes re- that allows the Director to deem the in order to allow such submissions, and examination during the year following PTAB to be the BPAI for purposes of would otherwise greatly slow down this enactment of the bill. pending interferences and to allow the otherwise relatively speedy final phase Finally, section 5(h)(2) of the bill ad- PTAB to conduct such interferences. of prosecution. dresses an issue raised by a recent pub- In section 6(c)(2) of the bill, section Also in clause (i) of section lication, Charles E. Miller & Daniel P. 1295(a)(4)(A) of title 28 is modified to 122(e)(1)(B), the words ‘‘by the Office’’ Archibald, The Destructive Potential authorize appeals of reexaminations are added to ensure that only publica- of the Senate Version of the Proposed and reviews. Interestingly, current tion by the United States Patent and Patent Reform Act of 2010: The Aboli- 1295(a)(4)(A) only gives the Federal Cir- Trademark Office begins the period for

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00043 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.041 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1378 CONGRESSIONAL RECORD — SENATE March 8, 2011 making pre-issuance submissions. The changeably with ‘‘invalidity’’ in this gation but also in post-grant reviews of Office sought this change because a for- bill as well. Obviously, Congress would patents under chapter 32. eign publication can be deemed a publi- not create a procedure for reexamining At subsections (a) through (h), sec- cation under section 122, and the Office patents that allowed them to be pro- tion 16 of the bill has been modified by wants to ensure that it is only required tected against subsequent inequitable- reinserting language that eliminates to collect third-party submissions for conduct challenges of unenforceability, various deceptive-intent requirements an application if that application is ac- only to allow the same patents to be that relate to correcting the naming of tually filed in the United States. challenged on the same basis and de- the inventor or a joint inventor, ob- Section 8 of the present bill omits clared invalid on the basis of inequi- taining a retroactive foreign filing li- provisions appearing in prior bills that table conduct. cense, seeking section 251 reissue, or would have created an expanded right While some critics of this proposal enforcing remaining valid claims if a to an interlocutory appeal from claim- have suggested that it would immunize claim is invalidated. See generally construction rulings. Even as revised misconduct by inventors and practi- Kearney & Trecker Corp. v. Giddings & in the 2009 Judiciary Committee mark tioners, I would note that the Patent Lewis, Inc., 452 F.2d 579, 596, 7th Cir. up, previous section 8(b) gave the Fed- Office has ample authority to sanction 1971. These changes were first proposed eral Circuit insufficient discretion to such misconduct. Under section 32 of in section 5 of the original Patent Re- turn away such appeals and posed a se- title 35, the Office can bar an attorney form Act of 2005, H.R. 2795, 109th Con- rious risk of overwhelming the court. from appearing before the Office if he gress, and have been advocated by uni- The 2009 mark-up revisions allowed the has engaged in misconduct in any pro- versities and their technology-transfer Federal Circuit to reject an interlocu- ceeding before the Office. In section 2(l) offices. For reasons that are not en- tory appeal if it found clear error in of this bill, we have extended the stat- tirely clear, subsequent bills main- the district court’s certification that ute of limitations for initiating such a tained this section and its addition of there is a sufficient evidentiary record proceeding. Under current regulations, substructure and titles to the affected for an interlocutory appeal and that the Office also sanctions misconduct by code sections, but struck the sub- such an appeal may advance the termi- striking offending filings or reducing stantive part of the section—i.e., its nation of the litigation or will likely the weight that they are given. And the elimination of the deceptive-intent re- control the outcome of the case. It Federal Circuit has recognized that the quirements. would be difficult in any case, however, Office also ‘‘has inherent authority to Eliminating the various deceptive-in- to reject a finding that an interlocu- govern procedure before the [Office],’’ tent requirements moves the U.S. pat- tory appeal of claim-construction rul- as noted in In re Bogese II, 303 F.3d ent system away from the 19th century ings may lead to the termination of the 1362, 1368, Fed. Cir. 2002, and that inher- model that focused on the patent own- litigation. Moreover, if a district judge ent authority to sanction attorneys for er’s subjective intent, and towards a has certified a case for interlocutory misconduct is not restricted to Article more objective-evidence-based system appeal, it is very unlikely that the III courts, a point noted in In re Bai- that will be much cheaper to litigate record that he has created would sup- ley, 182 F.3d 860, 864 n.4, Fed. Cir. 1999. and more efficient to administer. port a finding that his decision is clear- Given the Office’s existing tools for Section 16(i) of the present bill cor- ly erroneous. And finally, given the sanctioning misconduct, there is no rects several errors and typos through- disdain for patent cases felt by a sub- need to make the courts into super- out title 35 that are noted in the revis- stantial number of district judges, visors of attorney conduct in Office er’s notes to the U.S. Code. there is a serious likelihood that a proceedings. It is doubtful that a prac- Section 16(j) strikes unnecessary ref- large number of judges would take ad- titioner who is discovered to have en- erences to ‘‘of this title’’ that are vantage of a new authorization from gaged in substantial misconduct in pro- sprinkled throughout title 35. The 1952 Congress to send away such cases to ceedings before the Office would escape Act included such unnecessary ref- the Federal Circuit, with the hope that adequate and effective sanction by the erences, but more recent additions to they do not return. Current law’s grant Office itself. the code have not, and the current of discretion to the Federal Circuit to Section 11 of the bill repeals the so- bill’s changes omit such references. Be- entertain interlocutory appeals of called Baldwin rule, which requires cause the unnecessary references great- claim-construction rulings strikes the judges on the Federal Circuit to live ly outnumber the necessary references, appropriate balance. within 50 miles of Washington, D.C. the provision is written to strike all Section 10 of the present bill author- Subsection (b) provides that the repeal references but then except out the nec- izes supplemental examination of a of the Baldwin rule shall not be con- essary references. patent to correct errors or omissions in strued to imply that the Administra- The present bill’s new section 17 en- proceedings before the Office. Under tive Office of the Courts must provide acts the so-called Holmes Group fix, this new procedure, information that court facilities or administrative sup- H.R. 2955, 109th Congress, which was re- was not considered or was inadequately port services to judges who choose to ported out of the House Judiciary Com- considered or was incorrect can be pre- reside outside of the District of Colum- mittee in 2006. The committee report sented to the Office. If the Office deter- bia. This proviso does not affect the accompanying that bill, House Report mines that the information does not AOC’s existing authority to provide 109–407, explains the bill’s reasons for present a substantial new question of services to judges outside of the Dis- abrogating Holmes Group, Inc. v. patentability or that the patent is still trict of Columbia. Its reference to Vornado Air Circulation Systems, Inc., valid, that information cannot be used ‘‘court facilities’’ means space within a 535 U.S. 826 (2002), and more fully pre- as a basis for an inequitable-conduct courthouse or federal building, and the cluding state court jurisdiction over attack on the surviving patent in civil reference to ‘‘administrative support patent legal claims. litigation. New section 257(c)(1) follows services’’ means those services that Section 17 makes two modifications the usual practice of referring to in- would be provided to judges within a to the reported version of H.R. 2955. equitable-conduct attacks in terms of courthouse or federal building. The first modification, at subsection unenforceability, rather than inva- In section 15 of the bill, a conforming (c), limits the bill’s expansion of Fed- lidity, though courts have in the past subsection (b) has been added to ensure eral Circuit jurisdiction to only com- used the terms interchangeably when that the best-mode requirement cannot pulsory counterclaims asserting patent describing the effect of fraud or inequi- be used to challenge a patent’s entitle- rights, rather than the original bill’s table conduct on a patent. J.P. Stevens ment to a right of priority or to the expansion of jurisdiction to include & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d benefit of an earlier filing date. In the any counterclaim asserting patent 1553, 1560, Fed. Cir. 1984, notes that new effective-date subsection, the sec- rights. Compulsory counterclaims are ‘‘[w]hether the holding should be one of tion is made applicable to all ‘‘pro- defined at Rule 13(a) and basically con- invalidity or unenforceability has had ceedings’’ commenced after enactment sist of counterclaims that arise out of no practical significance in cases thus of the Act, in order to make clear that the same transaction or occurrence and far presented to this court.’’ The term the section’s changes to the law will be that do not require the joinder of par- should be considered to be used inter- immediately applicable not just in liti- ties over whom the court would lack

VerDate Mar 15 2010 02:01 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00044 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.043 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1379 jurisdiction. A compulsory counter- This section grew out of concerns present bill modifies section 301 of title claim must be raised as a counterclaim originally raised in the 110th Congress 35 to allow any person to submit to the in the case in question, and cannot be about financial institutions’ inability Office the patent owner’s statements in asserted in a later case. Without this to take advantage of the authority to federal court or in any Office pro- modification, it is possible that a de- clear checks electronically pursuant ceeding about the scope of the patent’s fendant could raise unrelated and un- the Check Clearing for the 21st Century claims. With this and other informa- necessary patent counterclaims simply Act, at chapter 50 of title 12 of the U.S. tion, the Office should be able to deter- in order to manipulate appellate juris- Code, without infringing the so-called mine whether the patent reads on prod- diction. With the modification, a de- Ballard patents, patents number ucts or services that are particular to fendant with a permissive patent coun- 5,910,988 and 6,032,137. See generally or characteristic of financial institu- terclaim who wanted to preserve Fed- Senate Report 110–259 at pages 33 tions. eral Circuit appellate review of that through 34. Once the committee began As the proviso at the end of the defi- counterclaim could simply wait to as- to examine this issue in greater depth, nition makes clear, business methods sert it in a separate action. however, the question quickly turned do not include ‘‘technological inven- The second modification, in sub- from whether the Ballard patents tions.’’ In other words, the definition section (d), corrects an error in H.R. should be allowed to disrupt compli- applies only to abstract business con- 2955 that would have required remand ance with the Check 21 Act, to how it cepts and their implementation, of patent and other intellectual-prop- is that the Ballard patents were issued whether in computers or otherwise, but erty counterclaims after their removal. in the first place. These patents consist does not apply to inventions relating H.R. 2955’s proposed removal statute, of long recitations of technology cre- to computer operations for other uses at section 1454(c)(1) of title 28, required ated by others to implement the sup- or the application of the natural a remand to the state court of all posed ‘‘invention’’ of transmitting and sciences or engineering. claims that are not within the original processing checks and other business One feature of section 18 that has or supplemental jurisdiction of the dis- records electronically. The first of been the subject of prolonged discus- trict court. Since the bill no longer these patents was assigned to the class sion and negotiation between various amends section 1338 to give district of cryptography inventions, but its groups during the last few weeks is its courts original jurisdiction over patent specification itself concedes that the subsection (c), which concerns stays of counterclaims, however—and since, invention’s ‘‘controller’’ will litigation. The current subsection (c) pursuant to Holmes Group itself, pat- ‘‘execute[] an encryption algorithm reflects a compromise that requires a ent counterclaims are not within the which is well known to an artisan of district courts’ original jurisdiction— district judge to consider fixed criteria ordinary skill in the field.’’ The second then under paragraph (1), district when deciding whether to grant a stay, patent is assigned to Class 705, home to courts would be required to remand the and provides either side with a right to many of the most notorious business- patent counterclaims. Courts would an interlocutory appeal of the district probably strain to avoid reading the method patents. Both of these patents judge’s decision. The appeal right has paragraph this way, since doing so de- are obviously business-method patents, been modified to provide that such re- feats the only apparent purpose of the and it is difficult to see how they were view ‘‘may be de novo,’’ and in every section, and the amendments to sec- even novel and nonobvious and other- case requires the Federal Circuit to en- tion 1338 strip the state courts of juris- wise valid under the more liberal State sure consistent application of estab- diction over patent counterclaims. But Street standard, much less how they lished precedent. Thus whether or not that is exactly what H.R. 2955’s pro- could survive the strictures of Bilski. every case is reviewed de novo, the posed 1454(c)(1) ordered the court to do. Section 18’s definition of business- court of appeals cannot simply leave In the modified text of section 17(d) of method patent, and its authorization the stay decision to the discretion of this bill, the court is instructed to not to raise prior-art challenges in the pe- the district court and allow different remand those claims that were a basis tition for review, are designed to allow outcomes based on the predilections of for removal in the first place—that is, the Office to recognize a business- different trial judges. the intellectual-property counter- method patent as such despite its reci- It is expected that district judges claims. tation of technological elements that will liberally grant stays of litigation Section 18 of the bill creates an ad- are not colorably novel and non- once a proceeding is instituted. Peti- ministrative mechanism for reviewing obvious. This definition does not re- tioners are required to make a high the validity of business-method pat- quire the Office to conduct a merits in- threshold showing in order to institute ents. In 1998, the U.S. Court of Appeals quiry into the nonobviousness of a a proceeding, and proceedings are re- for the Federal Circuit, in its decision technological invention, and should quired to be completed within one year in State Street Bank & Trust Co. v. Sig- not be construed in a way that makes to 18 months after they are instituted. nature Financial Group, Inc., 149 F.3d it difficult for the Office to administer. The case for a stay is particularly pro- 1368 (Fed. Cir. 1998), substantially ex- But if a technological element in a pat- nounced in a section 18 proceeding, panded the patentability of business- ent is not even assertedly or plausibly given the expectation that most if not method inventions in the United outside of the prior art, the Office all true business-method patents are States, holding that any invention can should not rely on that element to abstract and therefore invalid in light be patented so long as it produces a classify the patent as not being a busi- of the Bilski decision. ‘‘useful, concrete, and tangible result’’ ness-method patent. Thus when pat- In pursuit of this congressional pol- and meets other requirements of title ents such as the Ballard patents recite icy strongly favoring stays when pro- 35. In recent years, federal judicial de- elements incorporating off-the-shelf ceedings are instituted under this sec- cisions, culminating in the U.S. Su- technology or other technology ‘‘know tion, subsection (c) incorporates the preme Court’s decision in Bilski v. to those skilled in the art,’’ that four-factor test for stays of litigation Kappos, 561 U.S. ll, 130 S.Ct. 3218 should not preclude those patents’ eli- that was first announced in Broadcast (2010), have overruled State Street and gibility for review under this program. Innovation, L.L.C. v. Charter Commu- retracted the patentability of business At the request of other industry nications, 2006 WL 1897165, D. Colo. 2006. methods and other abstract inventions. groups, section 18’s definition of ‘‘cov- Broadcast Innovation includes, and This judicial expansion and subsequent ered business-method patent’’ has been gives separate weight to, a fourth fac- judicial retraction of U.S. patent- limited to those patents that relate to tor that has often been ignored by ability standards resulted in the a financial product or service. Given other courts: ‘‘whether a stay will re- issuance, in the interim, of a large the protean nature of many business- duce the burden of litigation on the number of business-method patents method patents, it often will be un- parties and on the court.’’ that are no longer valid. Section 18 cre- clear on the face of the patent whether In order to ensure consistency in de- ates a relatively inexpensive adminis- it relates to a financial product or cisions whether to stay, regardless of trative alternative to litigation for ad- service. To make such a determination, the court in which a section 281 action dressing disputes concerning the valid- the Office may look to how the patent is pending, paragraph (2) of subsection ity of these patents. has been asserted. Section 5(g) of the (c) requires consistent application of

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00045 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.044 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1380 CONGRESSIONAL RECORD — SENATE March 8, 2011 ‘‘established precedent.’’ This par- reform, and has done a lot of work over especially thank Kolan Davis and Rita ticular requirement is based on section the past several Congresses. We have Lari Jochum of my staff for their good 2245(d)(1) of title 28, which has been had a good process on the floor. We work on this bill. construed to require lower courts to adopted several amendments to im- In conclusion, I urge my colleagues look only to a fixed body of caselaw prove the bill. We had votes on amend- to vote for the America Invents Act. when making decisions under section ments and a pretty good open process, This is a bill that will spur inventions, 2254. Currently, district judge’s deci- which we have not seen much of in the create innovative new products and sions whether to stay litigation when a last few years. We have a good bipar- services, and stimulate job creation. reexamination has been ordered are not tisan bill—the chairman of the Judici- This bill will help upgrade and appealable and therefore have never ary Committee has successfully strengthen our patent system so Amer- been reconciled by the Federal Circuit. brought Senators and industry to- ica can stay competitive in an increas- Unsurprisingly, the resulting district- gether to craft this compromise legis- ingly global environment. I urge my court caselaw is a dog’s breakfast of lation. Now I urge my colleagues to colleagues to support this carefully different combinations of factors and support final passage on this important crafted bill. different meanings ascribed to those bill so we can conclude our work in the Mr. LEAHY. Mr. President, the man- factors. Although the cases applying Senate. agers’ amendment to the America In- Broadcast Innovation cite other opin- The America Invents Act will protect vents Act, adopted 97–2 on March 1, ions applying other tests as sources for inventors’ rights and encourage inno- contained a rule of construction that some of its factors, by requiring appli- vation and investment in our economy. cation of ‘‘established precedent,’’ sub- It will improve transparency and third nothing in section 14 of the act should section (c) limits the relevant prece- party participation in the patent re- be construed to imply that other busi- dent to that applying the four factors view process, which will strengthen ness methods are patentable or that of Broadcast Innovation in combina- patent quality and reduce costs. The other business-method patents are tion. By requiring courts to apply this bill will institute beneficial changes to valid. This provision was included limited and relatively consistent body the patent approval and review process, merely as a clarification. No inference of caselaw when determining whether and will curb litigation abuses and im- should be drawn in any way from any to grant a stay, subsection (c) should prove certainty for investors and part of section 14 of the act about the ensure predictability and stability in innovators. It will help companies do patentability of methods of doing busi- stay decisions across different district business more efficiently on an inter- ness. courts, and limit the incentive to national basis. Mr. President, I have discussed this forum shop. The existence of forum The America Invents Act will also with the Republican leadership, and we shopping is an embarrassment to the help small entities in their patent ap- are prepared to yield back all time on legal system. Federal courts should plications and provide for reduced fees both the Democratic and Republican apply equal justice, and give federal for microentities and small businesses. sides. law the same meaning, regardless of The bill will prevent patents from The PRESIDING OFFICER. All time where they are located. being issued on claims for tax strate- is yielded back. Mr. President, I will conclude by not- gies, which can add unwarranted fees Mr. LEAHY. Mr. President, I ask for ing that the present bill is the product on taxpayers simply for attempting to the yeas and nays on the bill. of almost a decade of hard work. The comply with the Tax Code. The PRESIDING OFFICER. Is there a Finally, the America Invents Act will path to this bill included three Senate sufficient second? Judiciary Committee mark ups, as well enhance operations of the Patent and as the untold hours devoted by Chair- Trademark Office with administrative There appears to be a sufficient sec- ond. man SMITH and other members of the reforms and will give the Office fee set- House of Representatives to the devel- ting authority to reduce backlogs. It The yeas and nays were ordered. opment of the Patent Reform Act of will end fee diversion, which will im- The bill was ordered to be engrossed 2005, the foundation of today’s bill. The prove the ability of the Patent and for a third reading and was read the present bill will protect our heritage of Trademark Office to manage its affairs third time. innovation while updating the patent and allocate resources where they are The PRESIDING OFFICER. The system for the current century. It will most needed. clerk will read the pay-go statement. create clear and efficient rules for de- I thank Chairman LEAHY and Senator The bill clerk read as follows: fining prior art and establishing patent HATCH for their hard work on this bill. Without their leadership, we would not Mr. Conrad: This is the Statement of Budg- priority. It will fix problems with cur- etary Effects of PAYGO Legislation for S. 23, rent administrative proceedings, and be where we are today. I thank Sen- as amended. create new means for improving patent ators KYL, SESSIONS, and COBURN. They were instrumental in making improve- Total Budgetary Effects of S. 23 for the 5- quality. And it will move us toward a year statutory PAYGO Scorecard: net reduc- patent system that is objective, trans- ments to the bill. I also wish to ac- tion in the deficit of $590 million. parent, clear, and fair to all parties. I knowledge the Senate Judiciary Com- Total Budgetary Effects of S. 23 for the 10- look forward to the Senate’s passage of mittee staff for their efforts on this year statutory PAYGO Scorecard: net reduc- this bill and its enactment into law. bill: in particular, Bruce Cohen, Aaron tion in the deficit of $750 million. Mr. GRASSLEY. Mr. President, I Cooper, and Curtis LeGeyt of Chairman Also submitted for the RECORD as part of urge my colleagues to support final LEAHY’s staff, Matt Sandgren of Sen- this statement is a table prepared by the passage on the America Invents Act. ator HATCH’s staff, Joe Matal of Sen- Congressional Budget Office, which provides The Judiciary Committee has held nu- ator KYL’s staff, and Sarah Beth additional information on the budgetary ef- merous hearings on the need for patent Groshart of Senator COBURN’s staff. I fects of this Act, as follows: CBO ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS FOR S. 23, THE AMERICA INVENTS ACT, WITH AMENDMENTS APPROVED BY THE SENATE THROUGH MARCH 8, 2010

By fiscal year, in millions of dollars— 2011– 2011– 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2016 2021

NET DECREASE (¥) IN THE DEFICIT Statutory Pay-As-You-Go Impact ...... 0 ¥420 ¥90 ¥30 ¥20 ¥30 ¥30 ¥30 ¥30 ¥40 ¥30 ¥590 ¥750 Memorandum: Changes in Outlays ...... 0 2,060 2,600 2,800 2,940 3,070 3,200 3,320 3,450 3,570 3,700 13,470 30,710 Changes in Revenues ...... 0 2,480 2,690 2,830 2,960 3,100 3,230 3,350 3,480 3,610 3,730 14,060 31,460 Notes: Components may not sum to totals because of rounding. The legislation would give the Patent and Trademark Office permanent authority to collect and spend fees. Sources: Congressional Budget Office.

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00046 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.045 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1381 The PRESIDING OFFICER. The bill Sec. 24. Designation of Detroit satellite of- ‘‘(A) the subject matter disclosed was ob- having been read the third time, the fice. tained directly or indirectly from the inven- question is, Shall the bill, as amended, Sec. 25. Effective date. tor or a joint inventor; Sec. 26. Budgetary effects. pass? ‘‘(B) the subject matter disclosed had, be- SEC. 2. FIRST INVENTOR TO FILE. fore such subject matter was effectively filed The yeas and nays have been ordered. under subsection (a)(2), been publicly dis- The clerk will call the roll. (a) DEFINITIONS.—Section 100 of title 35, United States Code, is amended by adding at closed by the inventor or a joint inventor or The bill clerk called the roll. the end the following: another who obtained the subject matter dis- The result was announced—yeas 95, ‘‘(f) The term ‘inventor’ means the indi- closed directly or indirectly from the inven- nays 5, as follows: vidual or, if a joint invention, the individ- tor or a joint inventor; or [Rollcall Vote No. 35 Leg.] uals collectively who invented or discovered ‘‘(C) the subject matter disclosed and the YEAS—95 the subject matter of the invention. claimed invention, not later than the effec- ‘‘(g) The terms ‘joint inventor’ and ‘co- tive filing date of the claimed invention, Akaka Graham Moran were owned by the same person or subject to Alexander Grassley Murkowski inventor’ mean any 1 of the individuals who Ayotte Hagan Murray invented or discovered the subject matter of an obligation of assignment to the same per- Barrasso Harkin Nelson (NE) a joint invention. son. Baucus Hatch Nelson (FL) ‘‘(h) The term ‘joint research agreement’ ‘‘(c) COMMON OWNERSHIP UNDER JOINT RE- Begich Hoeven Paul means a written contract, grant, or coopera- SEARCH AGREEMENTS.—Subject matter dis- Bennet Hutchison Portman tive agreement entered into by 2 or more closed and a claimed invention shall be Bingaman Inhofe Pryor persons or entities for the performance of ex- deemed to have been owned by the same per- Blumenthal Inouye Reed perimental, developmental, or research work son or subject to an obligation of assignment Blunt Isakson Reid Boozman Johanns in the field of the claimed invention. to the same person in applying the provi- Roberts Brown (MA) Johnson (SD) ‘‘(i)(1) The term ‘effective filing date’ of a sions of subsection (b)(2)(C) if— Rockefeller Brown (OH) Johnson (WI) claimed invention in a patent or application Rubio ‘‘(1) the subject matter disclosed was de- Burr Kerry Sanders for patent means— veloped and the claimed invention was made Cardin Kirk Schumer ‘‘(A) if subparagraph (B) does not apply, by, or on behalf of, 1 or more parties to a Carper Klobuchar Sessions the actual filing date of the patent or the ap- joint research agreement that was in effect Casey Kohl plication for the patent containing a claim Chambliss Kyl Shaheen on or before the effective filing date of the Coats Landrieu Shelby to the invention; or claimed invention; Coburn Lautenberg Snowe ‘‘(B) the filing date of the earliest applica- ‘‘(2) the claimed invention was made as a Cochran Leahy Stabenow tion for which the patent or application is result of activities undertaken within the Collins Lee Tester entitled, as to such invention, to a right of scope of the joint research agreement; and Thune Conrad Levin priority under section 119, 365(a), or 365(b) or ‘‘(3) the application for patent for the Coons Lieberman Toomey Udall (CO) to the benefit of an earlier filing date under claimed invention discloses or is amended to Corker Lugar section 120, 121, or 365(c). Cornyn Manchin Udall (NM) disclose the names of the parties to the joint DeMint McCain Vitter ‘‘(2) The effective filing date for a claimed research agreement. Durbin McCaskill Warner invention in an application for reissue or re- ‘‘(d) PATENTS AND PUBLISHED APPLICATIONS Enzi McConnell Webb issued patent shall be determined by deem- EFFECTIVE AS PRIOR ART.—For purposes of Feinstein Menendez Whitehouse ing the claim to the invention to have been determining whether a patent or application Franken Merkley Wicker contained in the patent for which reissue for patent is prior art to a claimed invention Gillibrand Mikulski Wyden was sought. under subsection (a)(2), such patent or appli- NAYS—5 ‘‘(j) The term ‘claimed invention’ means cation shall be considered to have been effec- the subject matter defined by a claim in a Boxer Crapo Risch tively filed, with respect to any subject mat- Cantwell Ensign patent or an application for a patent.’’. ter described in the patent or application— (b) CONDITIONS FOR PATENTABILITY.— The bill (S. 23), as amended, was ‘‘(1) if paragraph (2) does not apply, as of (1) IN GENERAL.—Section 102 of title 35, the actual filing date of the patent or the ap- passed, as follows: United States Code, is amended to read as plication for patent; or S. 23 follows: ‘‘(2) if the patent or application for patent Be it enacted by the Senate and House of Rep- ‘‘§ 102. Conditions for patentability; novelty is entitled to claim a right of priority under resentatives of the United States of America in ‘‘(a) NOVELTY; PRIOR ART.—A person shall section 119, 365(a), or 365(b), or to claim the Congress assembled, be entitled to a patent unless— benefit of an earlier filing date under section SECTION 1. SHORT TITLE; TABLE OF CONTENTS. ‘‘(1) the claimed invention was patented, 120, 121, or 365(c), based upon 1 or more prior (a) SHORT TITLE.—This Act may be cited as described in a printed publication, or in pub- filed applications for patent, as of the filing the ‘‘America Invents Act’’. lic use, on sale, or otherwise available to the date of the earliest such application that de- (b) TABLE OF CONTENTS.—The table of con- public before the effective filing date of the scribes the subject matter.’’. tents for this Act is as follows: claimed invention; or (2) CONTINUITY OF INTENT UNDER THE CRE- Sec. 1. Short title; table of contents. ‘‘(2) the claimed invention was described in ATE ACT.—The enactment of section 102(c) of Sec. 2. First inventor to file. a patent issued under section 151, or in an ap- title 35, United States Code, under the pre- Sec. 3. Inventor’s oath or declaration. plication for patent published or deemed ceding paragraph is done with the same in- Sec. 4. Virtual marking and advice of coun- published under section 122(b), in which the tent to promote joint research activities sel. patent or application, as the case may be, that was expressed, including in the legisla- Sec. 5. Post-grant review proceedings. names another inventor and was effectively tive history, through the enactment of the Sec. 6. Patent Trial and Appeal Board. filed before the effective filing date of the Cooperative Research and Technology En- Sec. 7. Preissuance submissions by third claimed invention. hancement Act of 2004 (Public Law 108–453; parties. ‘‘(b) EXCEPTIONS.— the ‘‘CREATE Act’’), the amendments of Sec. 8. Venue. ‘‘(1) DISCLOSURES MADE 1 YEAR OR LESS BE- which are stricken by subsection (c). The Sec. 9. Fee setting authority. FORE THE EFFECTIVE FILING DATE OF THE United States Patent and Trademark Office Sec. 10. Supplemental examination. CLAIMED INVENTION.—A disclosure made 1 shall administer section 102(c) of title 35, Sec. 11. Residency of Federal Circuit judges. year or less before the effective filing date of United States Code, in a manner consistent Sec. 12. Micro entity defined. a claimed invention shall not be prior art to with the legislative history of the CREATE Sec. 13. Funding agreements. the claimed invention under subsection (a)(1) Act that was relevant to its administration Sec. 14. Tax strategies deemed within the if— by the United States Patent and Trademark prior art. Office. Sec. 15. Best mode requirement. ‘‘(A) the disclosure was made by the inven- (3) CONFORMING AMENDMENT.—The item re- Sec. 16. Technical amendments. tor or joint inventor or by another who ob- lating to section 102 in the table of sections Sec. 17. Clarification of jurisdiction. tained the subject matter disclosed directly Sec. 18. Transitional program for covered or indirectly from the inventor or a joint in- for chapter 10 of title 35, United States Code, business-method patents. ventor; or is amended to read as follows: Sec. 19. Travel expenses and payment of ad- ‘‘(B) the subject matter disclosed had, be- ‘‘102. Conditions for patentability; novelty.’’. fore such disclosure, been publicly disclosed ministrative judges. (c) CONDITIONS FOR PATENTABILITY; NON- by the inventor or a joint inventor or an- Sec. 20. Patent and Trademark Office fund- OBVIOUS SUBJECT MATTER.—Section 103 of ing. other who obtained the subject matter dis- title 35, United States Code, is amended to Sec. 21. Satellite offices. closed directly or indirectly from the inven- read as follows: Sec. 22. Patent Ombudsman Program for tor or a joint inventor. small business concerns. ‘‘(2) DISCLOSURES APPEARING IN APPLICA- ‘‘§ 103. Conditions for patentability; non- Sec. 23. Priority examination for tech- TIONS AND PATENTS.—A disclosure shall not obvious subject matter nologies important to Amer- be prior art to a claimed invention under ‘‘A patent for a claimed invention may not ican competitiveness. subsection (a)(2) if— be obtained, notwithstanding that the

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claimed invention is not identically dis- (h) DERIVED PATENTS.—Section 291 of title ment reflecting the agreement of the parties closed as set forth in section 102, if the dif- 35, United States Code, is amended to read as as to the correct inventors of the claimed in- ferences between the claimed invention and follows: vention in dispute. Unless the Patent Trial the prior art are such that the claimed in- ‘‘§ 291. Derived patents and Appeal Board finds the agreement to be vention as a whole would have been obvious inconsistent with the evidence of record, if ‘‘(a) IN GENERAL.—The owner of a patent before the effective filing date of the claimed may have relief by civil action against the any, it shall take action consistent with the invention to a person having ordinary skill owner of another patent that claims the agreement. Any written settlement or under- in the art to which the claimed invention same invention and has an earlier effective standing of the parties shall be filed with the pertains. Patentability shall not be negated Director. At the request of a party to the filing date if the invention claimed in such by the manner in which the invention was proceeding, the agreement or understanding other patent was derived from the inventor made.’’. shall be treated as business confidential in- of the invention claimed in the patent owned (d) REPEAL OF REQUIREMENTS FOR INVEN- formation, shall be kept separate from the by the person seeking relief under this sec- TIONS MADE ABROAD.—Section 104 of title 35, file of the involved patents or applications, tion. United States Code, and the item relating to and shall be made available only to Govern- ‘‘(b) FILING LIMITATION.—An action under that section in the table of sections for chap- ment agencies on written request, or to any this section may only be filed within 1 year ter 10 of title 35, United States Code, are re- person on a showing of good cause. after the issuance of the first patent con- pealed. ‘‘(f) ARBITRATION.—Parties to a proceeding (e) REPEAL OF STATUTORY INVENTION REG- taining a claim to the allegedly derived in- instituted under subsection (a) may, within ISTRATION.— vention and naming an individual alleged to such time as may be specified by the Direc- (1) IN GENERAL.—Section 157 of title 35, have derived such invention as the inventor tor by regulation, determine such contest or United States Code, and the item relating to or joint inventor.’’. any aspect thereof by arbitration. Such arbi- (i) DERIVATION PROCEEDINGS.—Section 135 that section in the table of sections for chap- tration shall be governed by the provisions of title 35, United States Code, is amended to ter 14 of title 35, United States Code, are re- of title 9, to the extent such title is not in- pealed. read as follows: consistent with this section. The parties (2) REMOVAL OF CROSS REFERENCES.—Sec- ‘‘§ 135. Derivation proceedings shall give notice of any arbitration award to tion 111(b)(8) of title 35, United States Code, ‘‘(a) INSTITUTION OF PROCEEDING.—An appli- the Director, and such award shall, as be- is amended by striking ‘‘sections 115, 131, 135, cant for patent may file a petition to insti- tween the parties to the arbitration, be dis- and 157’’ and inserting ‘‘sections 131 and 135’’. tute a derivation proceeding in the Office. positive of the issues to which it relates. The (3) EFFECTIVE DATE.—The amendments The petition shall set forth with particu- arbitration award shall be unenforceable made by this subsection shall take effect 18 larity the basis for finding that an inventor until such notice is given. Nothing in this months after the date of the enactment of named in an earlier application derived the subsection shall preclude the Director from this Act, and shall apply to any request for claimed invention from an inventor named determining the patentability of the claimed a statutory invention registration filed on or in the petitioner’s application and, without inventions involved in the proceeding.’’. after that date. authorization, the earlier application claim- (j) ELIMINATION OF REFERENCES TO INTER- (f) EARLIER FILING DATE FOR INVENTOR AND ing such invention was filed. Any such peti- FERENCES.—(1) Sections 41, 134, 145, 146, 154, JOINT INVENTOR.—Section 120 of title 35, tion may only be filed within 1 year after the 305, and 314 of title 35, United States Code, United States Code, is amended by striking first publication of a claim to an invention are each amended by striking ‘‘Board of Pat- ‘‘which is filed by an inventor or inventors that is the same or substantially the same as ent Appeals and Interferences’’ each place it named’’ and inserting ‘‘which names an in- the earlier application’s claim to the inven- appears and inserting ‘‘Patent Trial and Ap- ventor or joint inventor’’. tion, shall be made under oath, and shall be peal Board’’. (g) CONFORMING AMENDMENTS.— supported by substantial evidence. Whenever (2)(A) Sections 146 and 154 of title 35, (1) RIGHT OF PRIORITY.—Section 172 of title the Director determines that a petition filed United States Code, are each amended— 35, United States Code, is amended by strik- under this subsection demonstrates that the (i) by striking ‘‘an interference’’ each place ing ‘‘and the time specified in section standards for instituting a derivation pro- it appears and inserting ‘‘a derivation pro- 102(d)’’. ceeding are met, the Director may institute ceeding’’; and (2) LIMITATION ON REMEDIES.—Section a derivation proceeding. The determination (ii) by striking ‘‘interference’’ each addi- 287(c)(4) of title 35, United States Code, is by the Director whether to institute a deri- tional place it appears and inserting ‘‘deriva- amended by striking ‘‘the earliest effective vation proceeding shall be final and non- tion proceeding’’. filing date of which is prior to’’ and inserting appealable. (B) The subparagraph heading for section ‘‘which has an effective filing date before’’. ‘‘(b) DETERMINATION BY PATENT TRIAL AND 154(b)(1)(C) of title 35, United States Code, as (3) INTERNATIONAL APPLICATION DESIG- APPEAL BOARD.—In a derivation proceeding amended by this paragraph, is further NATING THE UNITED STATES: EFFECT.—Section instituted under subsection (a), the Patent amended by— 363 of title 35, United States Code, is amend- Trial and Appeal Board shall determine (i) striking ‘‘OR’’ and inserting ‘‘OF’’; and ed by striking ‘‘except as otherwise provided whether an inventor named in the earlier ap- (ii) striking ‘‘SECRECY ORDER’’ and insert- in section 102(e) of this title’’. plication derived the claimed invention from ing ‘‘SECRECY ORDERS’’. (4) PUBLICATION OF INTERNATIONAL APPLICA- an inventor named in the petitioner’s appli- (3) The section heading for section 134 of TION: EFFECT.—Section 374 of title 35, United cation and, without authorization, the ear- title 35, United States Code, is amended to States Code, is amended by striking ‘‘sec- lier application claiming such invention was read as follows: tions 102(e) and 154(d)’’ and inserting ‘‘sec- filed. The Director shall prescribe regula- ‘‘§ 134. Appeal to the Patent Trial and Appeal tion 154(d)’’. tions setting forth standards for the conduct Board’’. (5) PATENT ISSUED ON INTERNATIONAL APPLI- of derivation proceedings. (4) The section heading for section 146 of CATION: EFFECT.—The second sentence of sec- ‘‘(c) DEFERRAL OF DECISION.—The Patent title 35, United States Code, is amended to tion 375(a) of title 35, United States Code, is Trial and Appeal Board may defer action on read as follows: amended by striking ‘‘Subject to section a petition for a derivation proceeding until 3 ‘‘§ 146. Civil action in case of derivation pro- 102(e) of this title, such’’ and inserting months after the date on which the Director ceeding’’. ‘‘Such’’. issues a patent that includes the claimed in- (5) Section 154(b)(1)(C) of title 35, United (6) LIMIT ON RIGHT OF PRIORITY.—Section vention that is the subject of the petition. States Code, is amended by striking ‘‘INTER- 119(a) of title 35, United States Code, is The Patent Trial and Appeal Board also may FERENCES’’ and inserting ‘‘DERIVATION PRO- amended by striking ‘‘; but no patent shall defer action on a petition for a derivation CEEDINGS’’. be granted’’ and all that follows through proceeding, or stay the proceeding after it (6) The item relating to section 6 in the ‘‘one year prior to such filing’’. has been instituted, until the termination of table of sections for chapter 1 of title 35, (7) INVENTIONS MADE WITH FEDERAL ASSIST- a proceeding under chapter 30, 31, or 32 in- United States Code, is amended to read as ANCE.—Section 202(c) of title 35, United volving the patent of the earlier applicant. follows: States Code, is amended— ‘‘(d) EFFECT OF FINAL DECISION.—The final ‘‘6. Patent Trial and Appeal Board.’’. (A) in paragraph (2)— decision of the Patent Trial and Appeal (i) by striking ‘‘publication, on sale, or Board, if adverse to claims in an application (7) The items relating to sections 134 and public use,’’ and all that follows through for patent, shall constitute the final refusal 135 in the table of sections for chapter 12 of ‘‘obtained in the United States’’ and insert- by the Office on those claims. The final deci- title 35, United States Code, are amended to ing ‘‘the 1-year period referred to in section sion of the Patent Trial and Appeal Board, if read as follows: 102(b) would end before the end of that 2-year adverse to claims in a patent, shall, if no ap- ‘‘134. Appeal to the Patent Trial and Appeal period’’; and peal or other review of the decision has been Board. (ii) by striking ‘‘the statutory’’ and insert- or can be taken or had, constitute cancella- ‘‘135. Derivation proceedings.’’. ing ‘‘that 1-year’’; and tion of those claims, and notice of such can- (8) The item relating to section 146 in the (B) in paragraph (3), by striking ‘‘any stat- cellation shall be endorsed on copies of the table of sections for chapter 13 of title 35, utory bar date that may occur under this patent distributed after such cancellation. United States Code, is amended to read as title due to publication, on sale, or public ‘‘(e) SETTLEMENT.—Parties to a proceeding follows: use’’ and inserting ‘‘the expiration of the 1- instituted under subsection (a) may termi- ‘‘146. Civil action in case of derivation pro- year period referred to in section 102(b)’’. nate the proceeding by filing a written state- ceeding.’’.

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(k) FALSE MARKING.— cants for patents that are not small business (B) a specific reference under section 120, (1) IN GENERAL.—Section 292 of title 35, concerns; 121, or 365(c) of title 35, United States Code, United States Code, is amended— (iii) the cost savings and other potential to any patent or application that contains or (A) in subsection (a), by adding at the end benefits to small business concerns of the contained at any time such a claim. the following: change; and SEC. 3. INVENTOR’S OATH OR DECLARATION. ‘‘Only the United States may sue for the (iv) the feasibility and costs and benefits (a) INVENTOR’S OATH OR DECLARATION.— penalty authorized by this subsection.’’; and to small business concerns of alternative (1) IN GENERAL.—Section 115 of title 35, (B) by striking subsection (b) and inserting means of determining whether an applicant United States Code, is amended to read as the following: is entitled to a patent under title 35, United follows: ‘‘(b) Any person who has suffered a com- States Code. ‘‘§ 115. Inventor’s oath or declaration (3) REPORT.—Not later than 1 year after petitive injury as a result of a violation of ‘‘(a) NAMING THE INVENTOR; INVENTOR’S the date of enactment of this Act, the Chief this section may file a civil action in a dis- OATH OR DECLARATION.—An application for Counsel shall submit to the Committee on trict court of the United States for recovery patent that is filed under section 111(a) or of damages adequate to compensate for the Small Business and Entrepreneurship and commences the national stage under section injury.’’. the Committee on the Judiciary of the Sen- 371 shall include, or be amended to include, (2) EFFECTIVE DATE.—The amendments ate and the Committee on Small Business the name of the inventor for any invention made by this subsection shall apply to all and the Committee on the Judiciary of the claimed in the application. Except as other- cases, without exception, pending on or after House of Representatives a report regarding wise provided in this section, each individual the date of the enactment of this Act. the results of the study under paragraph (2). who is the inventor or a joint inventor of a (n) REPORT ON PRIOR USER RIGHTS.— (l) STATUTE OF LIMITATIONS.— claimed invention in an application for pat- (1) IN GENERAL.—Not later than 1 year after (1) IN GENERAL.—Section 32 of title 35, ent shall execute an oath or declaration in the date of the enactment of this Act, the United States Code, is amended by inserting connection with the application. Director shall report, to the Committee on between the third and fourth sentences the ‘‘(b) REQUIRED STATEMENTS.—An oath or the Judiciary of the Senate and the Com- declaration under subsection (a) shall con- following: ‘‘A proceeding under this section mittee on the Judiciary of the House of Rep- shall be commenced not later than the ear- tain statements that— resentatives, the findings and recommenda- ‘‘(1) the application was made or was au- lier of either 10 years after the date on which tions of the Director on the operation of the misconduct forming the basis for the thorized to be made by the affiant or declar- prior user rights in selected countries in the ant; and proceeding occurred, or 1 year after the date industrialized world. The report shall include ‘‘(2) such individual believes himself or on which the misconduct forming the basis the following: herself to be the original inventor or an for the proceeding is made known to an offi- (A) A comparison between patent laws of original joint inventor of a claimed inven- cer or employee of the Office as prescribed in the United States and the laws of other in- tion in the application. the regulations established under section dustrialized countries, including members of 2(b)(2)(D).’’. ‘‘(c) ADDITIONAL REQUIREMENTS.—The Di- the European Union and Japan, Canada, and rector may specify additional information (2) REPORT TO CONGRESS.—The Director Australia. shall provide on a biennial basis to the Judi- relating to the inventor and the invention (B) An analysis of the effect of prior user that is required to be included in an oath or ciary Committees of the Senate and House of rights on innovation rates in the selected Representatives a report providing a short declaration under subsection (a). countries. UBSTITUTE STATEMENT.— description of incidents made known to an ‘‘(d) S (C) An analysis of the correlation, if any, ‘‘(1) IN GENERAL.—In lieu of executing an officer or employee of the Office as pre- between prior user rights and start-up enter- oath or declaration under subsection (a), the scribed in the regulations established under prises and the ability to attract venture cap- applicant for patent may provide a sub- section 2(b)(2)(D) of title 35, United States ital to start new companies. stitute statement under the circumstances Code, that reflect substantial evidence of (D) An analysis of the effect of prior user described in paragraph (2) and such addi- misconduct before the Office but for which rights, if any, on small businesses, univer- tional circumstances that the Director may the Office was barred from commencing a sities, and individual inventors. specify by regulation. proceeding under section 32 of title 35, (E) An analysis of legal and constitutional ‘‘(2) PERMITTED CIRCUMSTANCES.—A sub- United States Code, by the time limitation issues, if any, that arise from placing trade stitute statement under paragraph (1) is per- established by the fourth sentence of that secret law in patent law. mitted with respect to any individual who— section. (F) An analysis of whether the change to a ‘‘(A) is unable to file the oath or declara- (3) EFFECTIVE DATE.—The amendment first-to-file patent system creates a par- made by paragraph (1) shall apply in all tion under subsection (a) because the indi- ticular need for prior user rights. vidual— cases in which the time period for insti- (2) CONSULTATION WITH OTHER AGENCIES.—In tuting a proceeding under section 32 of title ‘‘(i) is deceased; preparing the report required under para- ‘‘(ii) is under legal incapacity; or 35, United State Code, had not lapsed prior graph (1), the Director shall consult with the to the date of the enactment of this Act. ‘‘(iii) cannot be found or reached after dili- United States Trade Representative, the Sec- gent effort; or (m) SMALL BUSINESS STUDY.— retary of State, and the Attorney General. ‘‘(B) is under an obligation to assign the (1) DEFINITIONS.—In this subsection— (o) EFFECTIVE DATE.— invention but has refused to make the oath (A) the term ‘‘Chief Counsel’’ means the (1) IN GENERAL.—Except as otherwise pro- or declaration required under subsection (a). Chief Counsel for Advocacy of the Small vided by this section, the amendments made ‘‘(3) CONTENTS.—A substitute statement Business Administration; by this section shall take effect on the date under this subsection shall— (B) the term ‘‘General Counsel’’ means the that is 18 months after the date of the enact- ‘‘(A) identify the individual with respect to General Counsel of the United States Patent ment of this Act, and shall apply to any ap- whom the statement applies; and Trademark Office; and plication for patent, and to any patent ‘‘(B) set forth the circumstances rep- (C) the term ‘‘small business concern’’ has issuing thereon, that contains or contained resenting the permitted basis for the filing of the meaning given that term under section 3 at any time— the substitute statement in lieu of the oath of the Small Business Act (15 U.S.C. 632). (A) a claim to a claimed invention that has or declaration under subsection (a); and (2) STUDY.— an effective filing date as defined in section ‘‘(C) contain any additional information, (A) IN GENERAL.—The Chief Counsel, in 100(i) of title 35, United States Code, that is including any showing, required by the Di- consultation with the General Counsel, shall 18 months or more after the date of the en- rector. conduct a study of the effects of eliminating actment of this Act; or ‘‘(e) MAKING REQUIRED STATEMENTS IN AS- the use of dates of invention in determining (B) a specific reference under section 120, SIGNMENT OF RECORD.—An individual who is whether an applicant is entitled to a patent 121, or 365(c) of title 35, United States Code, under an obligation of assignment of an ap- under title 35, United States Code. to any patent or application that contains or plication for patent may include the re- (B) AREAS OF STUDY.—The study conducted contained at any time such a claim. quired statements under subsections (b) and under subparagraph (A) shall include exam- (2) INTERFERING PATENTS.—The provisions (c) in the assignment executed by the indi- ination of the effects of eliminating the use of sections 102(g), 135, and 291 of title 35, vidual, in lieu of filing such statements sepa- of invention dates, including examining— United States Code, in effect on the day rately. (i) how the change would affect the ability prior to the date of the enactment of this ‘‘(f) TIME FOR FILING.—A notice of allow- of small business concerns to obtain patents Act, shall apply to each claim of an applica- ance under section 151 may be provided to an and their costs of obtaining patents; tion for patent, and any patent issued there- applicant for patent only if the applicant for (ii) whether the change would create, miti- on, for which the amendments made by this patent has filed each required oath or dec- gate, or exacerbate any disadvantage for ap- section also apply, if such application or pat- laration under subsection (a) or has filed a plicants for patents that are small business ent contains or contained at any time— substitute statement under subsection (d) or concerns relative to applicants for patents (A) a claim to an invention having an ef- recorded an assignment meeting the require- that are not small business concerns, and fective filing date as defined in section 100(i) ments of subsection (e). whether the change would create any advan- of title 35, United States Code, earlier than ‘‘(g) EARLIER-FILED APPLICATION CON- tages for applicants for patents that are 18 months after the date of the enactment of TAINING REQUIRED STATEMENTS OR SUB- small business concerns relative to appli- this Act; or STITUTE STATEMENT.—

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‘‘(1) EXCEPTION.—The requirements under ‘‘§ 118. Filing by other than inventor (b) VIRTUAL MARKING.—Section 287(a) of this section shall not apply to an individual ‘‘A person to whom the inventor has as- title 35, United States Code, is amended by with respect to an application for patent in signed or is under an obligation to assign the inserting ‘‘, or by fixing thereon the word which the individual is named as the inven- invention may make an application for pat- ‘patent’ or the abbreviation ‘pat.’ together tor or a joint inventor and who claims the ent. A person who otherwise shows sufficient with an address of a posting on the Internet, benefit under section 120, 121, or 365(c) of the proprietary interest in the matter may make accessible to the public without charge for filing of an earlier-filed application, if— an application for patent on behalf of and as accessing the address, that associates the ‘‘(A) an oath or declaration meeting the re- agent for the inventor on proof of the perti- patented article with the number of the pat- quirements of subsection (a) was executed by nent facts and a showing that such action is ent’’ before ‘‘, or when’’. the individual and was filed in connection appropriate to preserve the rights of the par- (c) ADVICE OF COUNSEL.—Chapter 29 of title with the earlier-filed application; ties. If the Director grants a patent on an ap- 35, United States Code, is amended by adding ‘‘(B) a substitute statement meeting the plication filed under this section by a person at the end the following: requirements of subsection (d) was filed in other than the inventor, the patent shall be ‘‘§ 298. Advice of Counsel the earlier filed application with respect to granted to the real party in interest and ‘‘The failure of an infringer to obtain the the individual; or upon such notice to the inventor as the Di- advice of counsel with respect to any alleg- ‘‘(C) an assignment meeting the require- rector considers to be sufficient.’’. edly infringed patent or the failure of the in- (2) CONFORMING AMENDMENT.—Section 251 ments of subsection (e) was executed with re- fringer to present such advice to the court or spect to the earlier-filed application by the of title 35, United States Code, is amended in jury may not be used to prove that the ac- individual and was recorded in connection the third undesignated paragraph by insert- cused infringer willfully infringed the patent with the earlier-filed application. ing ‘‘or the application for the original pat- or that the infringer intended to induce in- ‘‘(2) COPIES OF OATHS, DECLARATIONS, ent was filed by the assignee of the entire in- fringement of the patent.’’. STATEMENTS, OR ASSIGNMENTS.—Notwith- terest’’ after ‘‘claims of the original patent’’. (d) EFFECTIVE DATE.—The amendments (c) SPECIFICATION.—Section 112 of title 35, standing paragraph (1), the Director may re- made by this section shall apply to any civil quire that a copy of the executed oath or United States Code, is amended— action commenced on or after the date of the declaration, the substitute statement, or the (1) in the first paragraph— enactment of this Act. assignment filed in the earlier-filed applica- (A) by striking ‘‘The specification’’ and in- SEC. 5. POST-GRANT REVIEW PROCEEDINGS. tion be included in the later-filed applica- serting ‘‘(a) IN GENERAL.—The specifica- (a) INTER PARTES REVIEW.—Chapter 31 of tion. tion’’; and title 35, United States Code, is amended to ‘‘(h) SUPPLEMENTAL AND CORRECTED STATE- (B) by striking ‘‘of carrying out his inven- read as follows: MENTS; FILING ADDITIONAL STATEMENTS.— tion’’ and inserting ‘‘or joint inventor of car- ‘‘(1) IN GENERAL.—Any person making a rying out the invention’’; ‘‘CHAPTER 31—INTER PARTES REVIEW statement required under this section may (2) in the second paragraph— ‘‘Sec. withdraw, replace, or otherwise correct the (A) by striking ‘‘The specification’’ and in- ‘‘311. Inter partes review. statement at any time. If a change is made serting ‘‘(b) CONCLUSION.—The specifica- ‘‘312. Petitions. in the naming of the inventor requiring the tion’’; and ‘‘313. Preliminary response to petition. ‘‘314. Institution of inter partes review. filing of 1 or more additional statements (B) by striking ‘‘applicant regards as his ‘‘315. Relation to other proceedings or ac- under this section, the Director shall estab- invention’’ and inserting ‘‘inventor or a joint tions. lish regulations under which such additional inventor regards as the invention’’; statements may be filed. ‘‘316. Conduct of inter partes review. (3) in the third paragraph, by striking ‘‘A ‘‘317. Settlement. ‘‘(2) SUPPLEMENTAL STATEMENTS NOT RE- claim’’ and inserting ‘‘(c) FORM.—A claim’’; ‘‘318. Decision of the board. QUIRED.—If an individual has executed an (4) in the fourth paragraph, by striking ‘‘319. Appeal. oath or declaration meeting the require- ‘‘Subject to the following paragraph,’’ and ‘‘§ 311. Inter partes review ments of subsection (a) or an assignment inserting ‘‘(d) REFERENCE IN DEPENDENT ‘‘(a) IN GENERAL.—Subject to the provi- meeting the requirements of subsection (e) FORMS.—Subject to subsection (e),’’; with respect to an application for patent, the sions of this chapter, a person who is not the (5) in the fifth paragraph, by striking ‘‘A patent owner may file with the Office a peti- Director may not thereafter require that in- claim’’ and inserting ‘‘(e) REFERENCE IN MUL- dividual to make any additional oath, dec- tion to institute an inter partes review for a TIPLE DEPENDENT FORM.—A claim’’; and patent. The Director shall establish, by regu- laration, or other statement equivalent to (6) in the last paragraph, by striking ‘‘An those required by this section in connection lation, fees to be paid by the person request- element’’ and inserting ‘‘(f) ELEMENT IN with the application for patent or any patent ing the review, in such amounts as the Direc- CLAIM FOR A COMBINATION.—An element’’. tor determines to be reasonable, considering issuing thereon. (d) CONFORMING AMENDMENTS.— the aggregate costs of the review. ‘‘(3) SAVINGS CLAUSE.—No patent shall be (1) Sections 111(b)(1)(A) is amended by invalid or unenforceable based upon the fail- ‘‘(b) SCOPE.—A petitioner in an inter partes striking ‘‘the first paragraph of section 112 of review may request to cancel as ure to comply with a requirement under this this title’’ and inserting ‘‘section 112(a)’’. section if the failure is remedied as provided unpatentable 1 or more claims of a patent (2) Section 111(b)(2) is amended by striking only on a ground that could be raised under under paragraph (1). ‘‘the second through fifth paragraphs of sec- ‘‘(i) ACKNOWLEDGMENT OF PENALTIES.—Any section 102 or 103 and only on the basis of tion 112,’’ and inserting ‘‘subsections (b) declaration or statement filed pursuant to prior art consisting of patents or printed through (e) of section 112,’’. this section shall contain an acknowledg- publications. (e) EFFECTIVE DATE.—The amendments ‘‘(c) FILING DEADLINE.—A petition for inter ment that any willful false statement made made by this section shall take effect 1 year partes review shall be filed after the later of in such declaration or statement is punish- after the date of the enactment of this Act either— able under section 1001 of title 18 by fine or and shall apply to patent applications that ‘‘(1) 9 months after the grant of a patent or imprisonment of not more than 5 years, or are filed on or after that effective date. both.’’. issuance of a reissue of a patent; or SEC. 4. VIRTUAL MARKING AND ADVICE OF ‘‘(2) if a post-grant review is instituted (2) RELATIONSHIP TO DIVISIONAL APPLICA- COUNSEL. under chapter 32, the date of the termination TIONS.—Section 121 of title 35, United States (a) DEFENSE TO INFRINGEMENT BASED ON Code, is amended by striking ‘‘If a divisional EARLIER INVENTOR.—Section 273(b)(6) of title of such post-grant review. application’’ and all that follows through 35, United States Code, is amended to read as ‘‘§ 312. Petitions ‘‘inventor.’’. follows: ‘‘(a) REQUIREMENTS OF PETITION.—A peti- (3) REQUIREMENTS FOR NONPROVISIONAL AP- ‘‘(6) PERSONAL DEFENSE.—The defense tion filed under section 311 may be consid- PLICATIONS.—Section 111(a) of title 35, United under this section may be asserted only by ered only if— States Code, is amended— the person who performed or caused the per- ‘‘(1) the petition is accompanied by pay- (A) in paragraph (2)(C), by striking ‘‘by the formance of the acts necessary to establish ment of the fee established by the Director applicant’’ and inserting ‘‘or declaration’’; the defense as well as any other entity that under section 311; (B) in the heading for paragraph (3), by in- controls, is controlled by, or is under com- ‘‘(2) the petition identifies all real parties serting ‘‘OR DECLARATION’’ after ‘‘AND OATH’’; mon control with such person and, except for in interest; and any transfer to the patent owner, the right ‘‘(3) the petition identifies, in writing and (C) by inserting ‘‘or declaration’’ after to assert the defense shall not be licensed or with particularity, each claim challenged, ‘‘and oath’’ each place it appears. assigned or transferred to another person ex- the grounds on which the challenge to each (4) CONFORMING AMENDMENT.—The item re- cept as an ancillary and subordinate part of claim is based, and the evidence that sup- lating to section 115 in the table of sections a good faith assignment or transfer for other ports the grounds for the challenge to each for chapter 11 of title 35, United States Code, reasons of the entire enterprise or line of claim, including— is amended to read as follows: business to which the defense relates. Not- ‘‘(A) copies of patents and printed publica- ‘‘115. Inventor’s oath or declaration.’’. withstanding the preceding sentence, any tions that the petitioner relies upon in sup- (b) FILING BY OTHER THAN INVENTOR.— person may, on its own behalf, assert a de- port of the petition; and (1) IN GENERAL.—Section 118 of title 35, fense based on the exhaustion of rights pro- ‘‘(B) affidavits or declarations of sup- United States Code, is amended to read as vided under paragraph (3), including any nec- porting evidence and opinions, if the peti- follows: essary elements thereof.’’. tioner relies on expert opinions;

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00050 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.021 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1385 ‘‘(4) the petition provides such other infor- ceeding or matter may proceed, including ‘‘(12) requiring that the final determina- mation as the Director may require by regu- providing for stay, transfer, consolidation, or tion in an inter partes review be issued not lation; and termination of any such matter or pro- later than 1 year after the date on which the ‘‘(5) the petitioner provides copies of any of ceeding. Director notices the institution of a review the documents required under paragraphs (2), ‘‘(e) ESTOPPEL.— under this chapter, except that the Director (3), and (4) to the patent owner or, if applica- ‘‘(1) PROCEEDINGS BEFORE THE OFFICE.—The may, for good cause shown, extend the 1-year ble, the designated representative of the pat- petitioner in an inter partes review under period by not more than 6 months, and may ent owner. this chapter, or his real party in interest or adjust the time periods in this paragraph in ‘‘(b) PUBLIC AVAILABILITY.—As soon as privy, may not request or maintain a pro- the case of joinder under section 315(c). practicable after the receipt of a petition ceeding before the Office with respect to a ‘‘(b) CONSIDERATIONS.—In prescribing regu- under section 311, the Director shall make claim on any ground that the petitioner lations under this section, the Director shall the petition available to the public. raised or reasonably could have raised during consider the effect of any such regulation on an inter partes review of the claim that re- ‘‘§ 313. Preliminary response to petition the economy, the integrity of the patent sys- sulted in a final written decision under sec- tem, the efficient administration of the Of- ‘‘(a) PRELIMINARY RESPONSE.—If an inter tion 318(a). fice, and the ability of the Office to timely partes review petition is filed under section ‘‘(2) CIVIL ACTIONS AND OTHER PRO- complete proceedings instituted under this 311, the patent owner shall have the right to CEEDINGS.—The petitioner in an inter partes chapter. file a preliminary response within a time pe- review under this chapter, or his real party ‘‘(c) PATENT TRIAL AND APPEAL BOARD.— riod set by the Director. in interest or privy, may not assert either in The Patent Trial and Appeal Board shall, in ‘‘(b) CONTENT OF RESPONSE.—A preliminary a civil action arising in whole or in part accordance with section 6, conduct each pro- response to a petition for inter partes review under section 1338 of title 28 or in a pro- ceeding authorized by the Director. shall set forth reasons why no inter partes ceeding before the International Trade Com- ‘‘(d) AMENDMENT OF THE PATENT.— review should be instituted based upon the mission that a claim in a patent is invalid on ‘‘(1) IN GENERAL.—During an inter partes failure of the petition to meet any require- any ground that the petitioner raised or rea- review instituted under this chapter, the ment of this chapter. sonably could have raised during an inter patent owner may file 1 motion to amend the ‘‘§ 314. Institution of inter partes review partes review of the claim that resulted in a patent in 1 or more of the following ways: ‘‘(a) THRESHOLD.—The Director may not final written decision under section 318(a). ‘‘(A) Cancel any challenged patent claim. authorize an inter partes review to com- ‘‘§ 316. Conduct of inter partes review ‘‘(B) For each challenged claim, propose a mence unless the Director determines that ‘‘(a) REGULATIONS.—The Director shall pre- reasonable number of substitute claims. the information presented in the petition scribe regulations— ‘‘(2) ADDITIONAL MOTIONS.—Additional mo- filed under section 311 and any response filed ‘‘(1) providing that the file of any pro- tions to amend may be permitted upon the under section 313 shows that there is a rea- ceeding under this chapter shall be made joint request of the petitioner and the patent sonable likelihood that the petitioner would available to the public, except that any peti- owner to materially advance the settlement prevail with respect to at least 1 of the tion or document filed with the intent that of a proceeding under section 317, or as per- claims challenged in the petition. it be sealed shall be accompanied by a mo- mitted by regulations prescribed by the Di- ‘‘(b) TIMING.—The Director shall determine tion to seal, and such petition or document rector. whether to institute an inter partes review shall be treated as sealed pending the out- ‘‘(3) SCOPE OF CLAIMS.—An amendment under this chapter within 3 months after re- come of the ruling on the motion; under this subsection may not enlarge the ceiving a preliminary response under section ‘‘(2) setting forth the standards for the scope of the claims of the patent or intro- 313 or, if none is filed, within three months showing of sufficient grounds to institute a duce new matter. after the expiration of the time for filing review under section 314(a); ‘‘(e) EVIDENTIARY STANDARDS.—In an inter such a response. ‘‘(3) establishing procedures for the sub- partes review instituted under this chapter, ‘‘(c) NOTICE.—The Director shall notify the mission of supplemental information after the petitioner shall have the burden of prov- petitioner and patent owner, in writing, of the petition is filed; ing a proposition of unpatentability by a pre- the Director’s determination under sub- ‘‘(4) in accordance with section 2(b)(2), es- ponderance of the evidence. section (a), and shall make such notice avail- tablishing and governing inter partes review ‘‘§ 317. Settlement able to the public as soon as is practicable. under this chapter and the relationship of ‘‘(a) IN GENERAL.—An inter partes review Such notice shall list the date on which the such review to other proceedings under this instituted under this chapter shall be termi- review shall commence. title; nated with respect to any petitioner upon ‘‘(d) NO APPEAL.—The determination by ‘‘(5) setting a time period for requesting the joint request of the petitioner and the the Director whether to institute an inter joinder under section 315(c); patent owner, unless the Office has decided partes review under this section shall be ‘‘(6) setting forth standards and procedures the merits of the proceeding before the re- final and nonappealable. for discovery of relevant evidence, including quest for termination is filed. If the inter that such discovery shall be limited to— partes review is terminated with respect to a ‘‘§ 315. Relation to other proceedings or ac- ‘‘(A) the deposition of witnesses submit- petitioner under this section, no estoppel tions ting affidavits or declarations; and under section 315(e) shall apply to that peti- ‘‘(a) INFRINGER’S ACTION.—An inter partes ‘‘(B) what is otherwise necessary in the in- tioner. If no petitioner remains in the inter review may not be instituted or maintained terest of justice; partes review, the Office may terminate the if the petitioner or real party in interest has ‘‘(7) prescribing sanctions for abuse of dis- review or proceed to a final written decision filed a civil action challenging the validity covery, abuse of process, or any other im- under section 318(a). of a claim of the patent. proper use of the proceeding, such as to har- ‘‘(b) AGREEMENTS IN WRITING.—Any agree- ‘‘(b) PATENT OWNER’S ACTION.—An inter ass or to cause unnecessary delay or an un- ment or understanding between the patent partes review may not be instituted if the necessary increase in the cost of the pro- owner and a petitioner, including any collat- petition requesting the proceeding is filed ceeding; eral agreements referred to in such agree- more than 6 months after the date on which ‘‘(8) providing for protective orders gov- ment or understanding, made in connection the petitioner, real party in interest, or his erning the exchange and submission of con- with, or in contemplation of, the termi- privy is served with a complaint alleging in- fidential information; nation of an inter partes review under this fringement of the patent. The time limita- ‘‘(9) allowing the patent owner to file a re- section shall be in writing and a true copy of tion set forth in the preceding sentence shall sponse to the petition after an inter partes not apply to a request for joinder under sub- review has been instituted, and requiring such agreement or understanding shall be section (c). that the patent owner file with such re- filed in the Office before the termination of the inter partes review as between the par- ‘‘(c) JOINDER.—If the Director institutes an sponse, through affidavits or declarations, inter partes review, the Director, in his dis- any additional factual evidence and expert ties. If any party filing such agreement or cretion, may join as a party to that inter opinions on which the patent owner relies in understanding so requests, the copy shall be partes review any person who properly files a support of the response; kept separate from the file of the inter petition under section 311 that the Director, ‘‘(10) setting forth standards and proce- partes review, and shall be made available after receiving a preliminary response under dures for allowing the patent owner to move only to Federal Government agencies upon section 313 or the expiration of the time for to amend the patent under subsection (d) to written request, or to any other person on a filing such a response, determines warrants cancel a challenged claim or propose a rea- showing of good cause. the institution of an inter partes review sonable number of substitute claims, and en- ‘‘§ 318. Decision of the board under section 314. suring that any information submitted by ‘‘(a) FINAL WRITTEN DECISION.—If an inter ‘‘(d) MULTIPLE PROCEEDINGS.—Notwith- the patent owner in support of any amend- partes review is instituted and not dismissed standing sections 135(a), 251, and 252, and ment entered under subsection (d) is made under this chapter, the Patent Trial and Ap- chapter 30, during the pendency of an inter available to the public as part of the pros- peal Board shall issue a final written deci- partes review, if another proceeding or mat- ecution history of the patent; sion with respect to the patentability of any ter involving the patent is before the Office, ‘‘(11) providing either party with the right patent claim challenged by the petitioner the Director may determine the manner in to an oral hearing as part of the proceeding; and any new claim added under section which the inter partes review or other pro- and 316(d).

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‘‘(b) CERTIFICATE.—If the Patent Trial and (ii) in section 313, by striking ‘‘a substan- file a preliminary response within 2 months Appeal Board issues a final written decision tial new question of patentability affecting a of the filing of the petition. under subsection (a) and the time for appeal claim of the patent is raised’’ and inserting ‘‘(b) CONTENT OF RESPONSE.—A preliminary has expired or any appeal has terminated, ‘‘it has been shown that there is a reasonable response to a petition for post-grant review the Director shall issue and publish a certifi- likelihood that the requester would prevail shall set forth reasons why no post-grant re- cate canceling any claim of the patent fi- with respect to at least 1 of the claims chal- view should be instituted based upon the nally determined to be unpatentable, con- lenged in the request’’. failure of the petition to meet any require- firming any claim of the patent determined (B) APPLICATION.—The amendments made ment of this chapter. to be patentable, and incorporating in the by this paragraph shall apply to requests for ‘‘§ 324. Institution of post-grant review patent by operation of the certificate any inter partes reexamination that are filed on ‘‘(a) THRESHOLD.—The Director may not new or amended claim determined to be pat- or after the date of the enactment of this authorize a post-grant review to commence entable. Act, but prior to the effective date of sub- ‘‘(c) DATA ON LENGTH OF REVIEW.—The Pat- unless the Director determines that the in- section (a). formation presented in the petition, if such ent and Trademark Office shall make avail- (d) POST-GRANT REVIEW.—Part III of title able to the public data describing the length information is not rebutted, would dem- 35, United States Code, is amended by adding onstrate that it is more likely than not that of time between the commencement of each at the end the following: inter partes review and the conclusion of at least 1 of the claims challenged in the pe- that review. ‘‘CHAPTER 32—POST-GRANT REVIEW tition is unpatentable. ‘‘(b) ADDITIONAL GROUNDS.—The deter- ‘‘§ 319. Appeal ‘‘Sec. ‘‘321. Post-grant review. mination required under subsection (a) may ‘‘A party dissatisfied with the final written ‘‘322. Petitions. also be satisfied by a showing that the peti- decision of the Patent Trial and Appeal ‘‘323. Preliminary response to petition. tion raises a novel or unsettled legal ques- Board under section 318(a) may appeal the ‘‘324. Institution of post-grant review. tion that is important to other patents or decision pursuant to sections 141 through 144. ‘‘325. Relation to other proceedings or ac- patent applications. Any party to the inter partes review shall tions. ‘‘(c) TIMING.—The Director shall determine have the right to be a party to the appeal.’’. ‘‘326. Conduct of post-grant review. whether to institute a post-grant review (b) TECHNICAL AND CONFORMING AMEND- ‘‘327. Settlement. MENT.—The table of chapters for part III of under this chapter within 3 months after re- title 35, United States Code, is amended by ‘‘328. Decision of the board. ceiving a preliminary response under section ‘‘329. Appeal. striking the item relating to chapter 31 and 323 or, if none is filed, the expiration of the inserting the following: ‘‘§ 321. Post-grant review time for filing such a response. ‘‘(d) NOTICE.—The Director shall notify the ‘‘31. Inter Partes Review ...... 311.’’. ‘‘(a) IN GENERAL.—Subject to the provi- sions of this chapter, a person who is not the petitioner and patent owner, in writing, of (c) REGULATIONS AND EFFECTIVE DATE.— the Director’s determination under sub- (1) REGULATIONS.—The Director shall, not patent owner may file with the Office a peti- tion to institute a post-grant review for a section (a) or (b), and shall make such notice later than the date that is 1 year after the available to the public as soon as is prac- date of the enactment of this Act, issue regu- patent. The Director shall establish, by regu- lation, fees to be paid by the person request- ticable. The Director shall make each notice lations to carry out chapter 31 of title 35, of the institution of a post-grant review United States Code, as amended by sub- ing the review, in such amounts as the Direc- tor determines to be reasonable, considering available to the public. Such notice shall list section (a) of this section. the date on which the review shall com- (2) APPLICABILITY.— the aggregate costs of the post-grant review. mence. (A) IN GENERAL.—The amendments made ‘‘(b) SCOPE.—A petitioner in a post-grant review may request to cancel as ‘‘(e) NO APPEAL.—The determination by by subsection (a) shall take effect on the the Director whether to institute a post- date that is 1 year after the date of the en- unpatentable 1 or more claims of a patent on any ground that could be raised under para- grant review under this section shall be final actment of this Act and shall apply to all and nonappealable. patents issued before, on, or after the effec- graph (2) or (3) of section 282(b) (relating to tive date of subsection (a). invalidity of the patent or any claim). ‘‘§ 325. Relation to other proceedings or ac- (B) EXCEPTION.—The provisions of chapter ‘‘(c) FILING DEADLINE.—A petition for a tions 31 of title 35, United States Code, as amended post-grant review shall be filed not later ‘‘(a) INFRINGER’S ACTION.—A post-grant re- by paragraph (3), shall continue to apply to than 9 months after the grant of the patent view may not be instituted or maintained if requests for inter partes reexamination that or issuance of a reissue patent. the petitioner or real party in interest has are filed prior to the effective date of sub- ‘‘§ 322. Petitions filed a civil action challenging the validity of a claim of the patent. section (a) as if subsection (a) had not been ‘‘(a) REQUIREMENTS OF PETITION.—A peti- enacted. tion filed under section 321 may be consid- ‘‘(b) PRELIMINARY INJUNCTIONS.—If a civil (C) GRADUATED IMPLEMENTATION.—The Di- ered only if— action alleging infringement of a patent is rector may impose a limit on the number of ‘‘(1) the petition is accompanied by pay- filed within 3 months of the grant of the pat- inter partes reviews that may be instituted ment of the fee established by the Director ent, the court may not stay its consideration during each of the first 4 years following the under section 321; of the patent owner’s motion for a prelimi- effective date of subsection (a), provided that ‘‘(2) the petition identifies all real parties nary injunction against infringement of the such number shall in each year be equivalent in interest; patent on the basis that a petition for post- to or greater than the number of inter partes ‘‘(3) the petition identifies, in writing and grant review has been filed or that such a reexaminations that are ordered in the last with particularity, each claim challenged, proceeding has been instituted. ‘‘(c) JOINDER.—If more than 1 petition for a full fiscal year prior to the effective date of the grounds on which the challenge to each post-grant review is properly filed against subsection (a). claim is based, and the evidence that sup- (3) TRANSITION.— the same patent and the Director determines ports the grounds for the challenge to each (A) IN GENERAL.—Chapter 31 of title 35, that more than 1 of these petitions warrants claim, including— United States Code, is amended— the institution of a post-grant review under ‘‘(A) copies of patents and printed publica- (i) in section 312— section 324, the Director may consolidate tions that the petitioner relies upon in sup- (I) in subsection (a)— such reviews into a single post-grant review. port of the petition; and (aa) in the first sentence, by striking ‘‘a ‘‘(d) MULTIPLE PROCEEDINGS.—Notwith- ‘‘(B) affidavits or declarations of sup- substantial new question of patentability af- standing sections 135(a), 251, and 252, and porting evidence and opinions, if the peti- fecting any claim of the patent concerned is chapter 30, during the pendency of any post- tioner relies on other factual evidence or on raised by the request,’’ and inserting ‘‘the in- grant review, if another proceeding or mat- expert opinions; formation presented in the request shows ter involving the patent is before the Office, ‘‘(4) the petition provides such other infor- that there is a reasonable likelihood that the the Director may determine the manner in mation as the Director may require by regu- requester would prevail with respect to at which the post-grant review or other pro- lation; and least 1 of the claims challenged in the re- ceeding or matter may proceed, including ‘‘(5) the petitioner provides copies of any of quest,’’; and providing for stay, transfer, consolidation, or the documents required under paragraphs (2), (bb) in the second sentence, by striking termination of any such matter or pro- (3), and (4) to the patent owner or, if applica- ‘‘The existence of a substantial new question ceeding. In determining whether to institute ble, the designated representative of the pat- of patentability’’ and inserting ‘‘A showing or order a proceeding under this chapter, ent owner. that there is a reasonable likelihood that the chapter 30, or chapter 31, the Director may ‘‘(b) PUBLIC AVAILABILITY.—As soon as requester would prevail with respect to at take into account whether, and reject the pe- practicable after the receipt of a petition least 1 of the claims challenged in the re- tition or request because, the same or sub- under section 321, the Director shall make quest’’; and stantially the same prior art or arguments the petition available to the public. (II) in subsection (c), in the second sen- previously were presented to the Office. tence, by striking ‘‘no substantial new ques- ‘‘§ 323. Preliminary response to petition ‘‘(e) ESTOPPEL.— tion of patentability has been raised,’’ and ‘‘(a) PRELIMINARY RESPONSE.—If a post- ‘‘(1) PROCEEDINGS BEFORE THE OFFICE.—The inserting ‘‘the showing required by sub- grant review petition is filed under section petitioner in a post-grant review under this section (a) has not been made,’’; and 321, the patent owner shall have the right to chapter, or his real party in interest or

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00052 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.021 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1387 privy, may not request or maintain a pro- later than 1 year after the date on which the under subsection (a) and the time for appeal ceeding before the Office with respect to a Director notices the institution of a pro- has expired or any appeal has terminated, claim on any ground that the petitioner ceeding under this chapter, except that the the Director shall issue and publish a certifi- raised or reasonably could have raised during Director may, for good cause shown, extend cate canceling any claim of the patent fi- a post-grant review of the claim that re- the 1-year period by not more than 6 months, nally determined to be unpatentable, con- sulted in a final written decision under sec- and may adjust the time periods in this para- firming any claim of the patent determined tion 328(a). graph in the case of joinder under section to be patentable, and incorporating in the ‘‘(2) CIVIL ACTIONS AND OTHER PRO- 325(c). patent by operation of the certificate any CEEDINGS.—The petitioner in a post-grant re- ‘‘(b) CONSIDERATIONS.—In prescribing regu- new or amended claim determined to be pat- view under this chapter, or his real party in lations under this section, the Director shall entable. interest or privy, may not assert either in a consider the effect of any such regulation on ‘‘(c) DATA ON LENGTH OF REVIEW.—The Pat- civil action arising in whole or in part under the economy, the integrity of the patent sys- ent and Trademark Office shall make avail- section 1338 of title 28 or in a proceeding be- tem, the efficient administration of the Of- able to the public data describing the length fore the International Trade Commission fice, and the ability of the Office to timely of time between the commencement of each that a claim in a patent is invalid on any complete proceedings instituted under this post-grant review and the conclusion of that ground that the petitioner raised during a chapter. review. post-grant review of the claim that resulted ‘‘(c) PATENT TRIAL AND APPEAL BOARD.— ‘‘§ 329. Appeal in a final written decision under section The Patent Trial and Appeal Board shall, in ‘‘A party dissatisfied with the final written 328(a). accordance with section 6, conduct each pro- decision of the Patent Trial and Appeal ‘‘(f) REISSUE PATENTS.—A post-grant re- ceeding authorized by the Director. Board under section 328(a) may appeal the ‘‘(d) AMENDMENT OF THE PATENT.— view may not be instituted if the petition re- decision pursuant to sections 141 through 144. ‘‘(1) IN GENERAL.—During a post-grant re- quests cancellation of a claim in a reissue Any party to the post-grant review shall view instituted under this chapter, the pat- patent that is identical to or narrower than have the right to be a party to the appeal.’’. a claim in the original patent from which ent owner may file 1 motion to amend the (e) TECHNICAL AND CONFORMING AMEND- the reissue patent was issued, and the time patent in 1 or more of the following ways: MENT.—The table of chapters for part III of limitations in section 321(c) would bar filing ‘‘(A) Cancel any challenged patent claim. title 35, United States Code, is amended by a petition for a post-grant review for such ‘‘(B) For each challenged claim, propose a adding at the end the following: original patent. reasonable number of substitute claims. ‘‘32. Post-Grant Review ...... 321.’’. ‘‘§ 326. Conduct of post-grant review ‘‘(2) ADDITIONAL MOTIONS.—Additional mo- (f) REGULATIONS AND EFFECTIVE DATE.— ‘‘(a) REGULATIONS.—The Director shall pre- tions to amend may be permitted upon the joint request of the petitioner and the patent (1) REGULATIONS.—The Director shall, not scribe regulations— later than the date that is 1 year after the ‘‘(1) providing that the file of any pro- owner to materially advance the settlement of a proceeding under section 327, or upon date of the enactment of this Act, issue regu- ceeding under this chapter shall be made lations to carry out chapter 32 of title 35, available to the public, except that any peti- the request of the patent owner for good cause shown. United States Code, as added by subsection tion or document filed with the intent that (d) of this section. it be sealed shall be accompanied by a mo- ‘‘(3) SCOPE OF CLAIMS.—An amendment (2) APPLICABILITY.—The amendments made tion to seal, and such petition or document under this subsection may not enlarge the scope of the claims of the patent or intro- by subsection (d) shall take effect on the shall be treated as sealed pending the out- date that is 1 year after the date of the en- come of the ruling on the motion; duce new matter. ‘‘(e) EVIDENTIARY STANDARDS.—In a post- actment of this Act and, except as provided ‘‘(2) setting forth the standards for the in section 18 and in paragraph (3), shall apply showing of sufficient grounds to institute a grant review instituted under this chapter, only to patents that are described in section review under subsections (a) and (b) of sec- the petitioner shall have the burden of prov- 2(o)(1). The Director may impose a limit on tion 324; ing a proposition of unpatentability by a pre- the number of post-grant reviews that may ‘‘(3) establishing procedures for the sub- ponderance of the evidence. be instituted during each of the 4 years fol- mission of supplemental information after ‘‘§ 327. Settlement lowing the effective date of subsection (d). the petition is filed; ‘‘(a) IN GENERAL.—A post-grant review in- (3) PENDING INTERFERENCES.—The Director ‘‘(4) in accordance with section 2(b)(2), es- stituted under this chapter shall be termi- shall determine the procedures under which tablishing and governing a post-grant review nated with respect to any petitioner upon interferences commenced before the effective under this chapter and the relationship of the joint request of the petitioner and the date of subsection (d) are to proceed, includ- such review to other proceedings under this patent owner, unless the Office has decided ing whether any such interference is to be title; the merits of the proceeding before the re- dismissed without prejudice to the filing of a ‘‘(5) setting forth standards and procedures quest for termination is filed. If the post- petition for a post-grant review under chap- for discovery of relevant evidence, including grant review is terminated with respect to a ter 32 of title 35, United States Code, or is to that such discovery shall be limited to evi- petitioner under this section, no estoppel dence directly related to factual assertions under section 325(e) shall apply to that peti- proceed as if this Act had not been enacted. advanced by either party in the proceeding; tioner. If no petitioner remains in the post- The Director shall include such procedures ‘‘(6) prescribing sanctions for abuse of dis- grant review, the Office may terminate the in regulations issued under paragraph (1). covery, abuse of process, or any other im- post-grant review or proceed to a final writ- For purposes of an interference that is com- proper use of the proceeding, such as to har- ten decision under section 328(a). menced before the effective date of sub- ass or to cause unnecessary delay or an un- ‘‘(b) AGREEMENTS IN WRITING.—Any agree- section (d), the Director may deem the Pat- necessary increase in the cost of the pro- ment or understanding between the patent ent Trial and Appeal Board to be the Board ceeding; owner and a petitioner, including any collat- of Patent Appeals and Interferences, and ‘‘(7) providing for protective orders gov- eral agreements referred to in such agree- may allow the Patent Trial and Appeal erning the exchange and submission of con- ment or understanding, made in connection Board to conduct any further proceedings in fidential information; with, or in contemplation of, the termi- that interference. The authorization to ap- ‘‘(8) allowing the patent owner to file a re- nation of a post-grant review under this sec- peal or have remedy from derivation pro- sponse to the petition after a post-grant re- tion shall be in writing, and a true copy of ceedings in sections 141(d) and 146 of title 35, view has been instituted, and requiring that such agreement or understanding shall be United States Code, and the jurisdiction to the patent owner file with such response, filed in the Office before the termination of entertain appeals from derivation pro- through affidavits or declarations, any addi- the post-grant review as between the parties. ceedings in section 1295(a)(4)(A) of title 28, tional factual evidence and expert opinions If any party filing such agreement or under- United States Code, shall be deemed to ex- on which the patent owner relies in support standing so requests, the copy shall be kept tend to final decisions in interferences that of the response; separate from the file of the post-grant re- are commenced before the effective date of ‘‘(9) setting forth standards and procedures view, and shall be made available only to subsection (d) and that are not dismissed for allowing the patent owner to move to Federal Government agencies upon written pursuant to this paragraph. amend the patent under subsection (d) to request, or to any other person on a showing (g) CITATION OF PRIOR ART AND WRITTEN cancel a challenged claim or propose a rea- of good cause. STATEMENTS.— sonable number of substitute claims, and en- ‘‘§ 328. Decision of the board (1) IN GENERAL.—Section 301 of title 35, United States Code, is amended to read as suring that any information submitted by ‘‘(a) FINAL WRITTEN DECISION.—If a post- follows: the patent owner in support of any amend- grant review is instituted and not dismissed ment entered under subsection (d) is made under this chapter, the Patent Trial and Ap- ‘‘§ 301. Citation of prior art and written state- available to the public as part of the pros- peal Board shall issue a final written deci- ments ecution history of the patent; sion with respect to the patentability of any ‘‘(a) IN GENERAL.—Any person at any time ‘‘(10) providing either party with the right patent claim challenged by the petitioner may cite to the Office in writing— to an oral hearing as part of the proceeding; and any new claim added under section ‘‘(1) prior art consisting of patents or and 326(d). printed publications which that person be- ‘‘(11) requiring that the final determina- ‘‘(b) CERTIFICATE.—If the Patent Trial and lieves to have a bearing on the patentability tion in any post-grant review be issued not Appeal Board issues a final written decision of any claim of a particular patent; or

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00053 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.022 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1388 CONGRESSIONAL RECORD — SENATE March 8, 2011 ‘‘(2) statements of the patent owner filed in ‘‘(1) on written appeal of an applicant, re- ‘‘(A) the Patent Trial and Appeal Board of a proceeding before a Federal court or the view adverse decisions of examiners upon ap- the United States Patent and Trademark Of- Office in which the patent owner took a posi- plications for patents pursuant to section fice with respect to patent applications, deri- tion on the scope of any claim of a particular 134(a); vation proceedings, reexaminations, post- patent. ‘‘(2) review appeals of reexaminations pur- grant reviews, and inter partes reviews at ‘‘(b) OFFICIAL FILE.—If the person citing suant to section 134(b); the instance of a party who exercised his prior art or written statements pursuant to ‘‘(3) conduct derivation proceedings pursu- right to participate in a proceeding before or subsection (a) explains in writing the perti- ant to section 135; and appeal to the Board, except that an applicant nence and manner of applying the prior art ‘‘(4) conduct inter partes reviews and post- or a party to a derivation proceeding may or written statements to at least 1 claim of grant reviews pursuant to chapters 31 and 32. also have remedy by civil action pursuant to the patent, the citation of the prior art or ‘‘(c) Each appeal, derivation proceeding, section 145 or 146 of title 35. An appeal under written statements and the explanation post-grant review, and inter partes review this subparagraph of a decision of the Board thereof shall become a part of the official shall be heard by at least 3 members of the with respect to an application or derivation file of the patent. Patent Trial and Appeal Board, who shall be proceeding shall waive the right of such ap- ‘‘(c) ADDITIONAL INFORMATION.—A party designated by the Director. Only the Patent plicant or party to proceed under section 145 that submits a written statement pursuant Trial and Appeal Board may grant re- or 146 of title 35;’’. to subsection (a)(2) shall include any other hearings. (3) PROCEEDINGS ON APPEAL.—Section 143 of documents, pleadings, or evidence from the ‘‘(d) The Secretary of Commerce may, in title 35, United States Code, is amended— proceeding in which the statement was filed his discretion, deem the appointment of an (A) by striking the third sentence and in- that addresses the written statement. administrative patent judge who, before the serting the following: ‘‘In an ex parte case, ‘‘(d) LIMITATIONS.—A written statement date of the enactment of this subsection, the Director shall submit to the court in submitted pursuant to subsection (a)(2), and held office pursuant to an appointment by writing the grounds for the decision of the additional information submitted pursuant the Director to take effect on the date on Patent and Trademark Office, addressing all to subsection (c), shall not be considered by which the Director initially appointed the of the issues raised in the appeal. The Direc- the Office for any purpose other than to de- administrative patent judge. It shall be a de- tor shall have the right to intervene in an termine the proper meaning of a patent fense to a challenge to the appointment of an appeal from a decision entered by the Patent claim in a proceeding that is ordered or in- administrative patent judge on the basis of Trial and Appeal Board in a derivation pro- stituted pursuant to section 304, 314, or 324. If the judge’s having been originally appointed ceeding under section 135 or in an inter any such written statement or additional in- by the Director that the administrative pat- partes or post-grant review under chapter 31 formation is subject to an applicable protec- ent judge so appointed was acting as a de or 32.’’; and tive order, it shall be redacted to exclude in- facto officer.’’. (B) by repealing the second of the two iden- formation that is subject to that order. (b) ADMINISTRATIVE APPEALS.—Section 134 tical fourth sentences. ‘‘(e) CONFIDENTIALITY.—Upon the written of title 35, United States Code, is amended— (d) EFFECTIVE DATE.—The amendments request of the person citing prior art or writ- made by this section shall take effect 1 year ten statements pursuant to subsection (a), (1) in subsection (b), by striking ‘‘any reex- amination proceeding’’ and inserting ‘‘a re- after the date of the enactment of this Act that person’s identity shall be excluded from and shall apply to proceedings commenced the patent file and kept confidential.’’. examination’’; and (2) by striking subsection (c). on or after that effective date, except that— (2) EFFECTIVE DATE.—The amendment (1) the extension of jurisdiction to the (c) CIRCUIT APPEALS.— made by this subsection shall take effect 1 United States Court of Appeals for the Fed- (1) IN GENERAL.—Section 141 of title 35, year after the date of the enactment of this eral Circuit to entertain appeals of decisions Act and shall apply to patents issued before, United States Code, is amended to read as follows: of the Patent Trial and Appeal Board in re- on, or after that effective date. examinations under the amendment made by (h) REEXAMINATION.— ‘‘§ 141. Appeal to the Court of Appeals for the subsection (c)(2) shall be deemed to take ef- (1) DETERMINATION BY DIRECTOR.— Federal Circuit fect on the date of enactment of this Act and (A) IN GENERAL.—Section 303(a) of title 35, ‘‘(a) EXAMINATIONS.—An applicant who is shall extend to any decision of the Board of United States Code, is amended by striking dissatisfied with the final decision in an ap- Patent Appeals and Interferences with re- ‘‘section 301 of this title’’ and inserting ‘‘sec- peal to the Patent Trial and Appeal Board spect to a reexamination that is entered be- tion 301 or 302’’. under section 134(a) may appeal the Board’s fore, on, or after the date of the enactment (B) EFFECTIVE DATE.—The amendment decision to the United States Court of Ap- of this Act; made by this paragraph shall take effect 1 peals for the Federal Circuit. By filing such (2) the provisions of sections 6, 134, and 141 year after the date of the enactment of this an appeal, the applicant waives his right to of title 35, United States Code, in effect on Act and shall apply to patents issued before, proceed under section 145. the day prior to the date of the enactment of on, or after that effective date. ‘‘(b) REEXAMINATIONS.—A patent owner this Act shall continue to apply to inter (2) APPEAL.— who is dissatisfied with the final decision in partes reexaminations that are requested (A) IN GENERAL.—Section 306 of title 35, an appeal of a reexamination to the Patent under section 311 prior to the date that is 1 United States Code, is amended by striking Trial and Appeal Board under section 134(b) year after the date of the enactment of this ‘‘145’’ and inserting ‘‘144’’. may appeal the Board’s decision only to the Act; (B) EFFECTIVE DATE.—The amendment United States Court of Appeals for the Fed- (3) the Patent Trial and Appeal Board may made by this paragraph shall take effect on eral Circuit. be deemed to be the Board of Patent Appeals the date of enactment of this Act and shall ‘‘(c) POST-GRANT AND INTER PARTES RE- and Interferences for purposes of appeals of apply to appeals of reexaminations that are VIEWS.—A party to a post-grant or inter inter partes reexaminations that are re- pending before the Board of Patent Appeals partes review who is dissatisfied with the quested under section 311 prior to the date and Interferences or the Patent Trial and final written decision of the Patent Trial and that is 1 year after the date of the enactment Appeal Board on or after the date of the en- Appeal Board under section 318(a) or 328(a) of this Act; and actment of this Act. may appeal the Board’s decision only to the (4) the Director’s right under the last sen- SEC. 6. PATENT TRIAL AND APPEAL BOARD. United States Court of Appeals for the Fed- tence of section 143 of title 35, United States (a) COMPOSITION AND DUTIES.—Section 6 of eral Circuit. Code, as amended by subsection (c)(3), to in- title 35, United States Code, is amended to ‘‘(d) DERIVATION PROCEEDINGS.—A party to tervene in an appeal from a decision entered read as follows: a derivation proceeding who is dissatisfied by the Patent Trial and Appeal Board shall ‘‘§ 6. Patent Trial and Appeal Board with the final decision of the Patent Trial be deemed to extend to inter partes reexam- ‘‘(a) There shall be in the Office a Patent and Appeal Board on the proceeding may ap- inations that are requested under section 311 Trial and Appeal Board. The Director, the peal the decision to the United States Court prior to the date that is 1 year after the date Deputy Director, the Commissioner for Pat- of Appeals for the Federal Circuit, but such of the enactment of this Act. ents, the Commissioner for Trademarks, and appeal shall be dismissed if any adverse SEC. 7. PREISSUANCE SUBMISSIONS BY THIRD the administrative patent judges shall con- party to such derivation proceeding, within PARTIES. stitute the Patent Trial and Appeal Board. 20 days after the appellant has filed notice of (a) IN GENERAL.—Section 122 of title 35, The administrative patent judges shall be appeal in accordance with section 142, files United States Code, is amended by adding at persons of competent legal knowledge and notice with the Director that the party the end the following: scientific ability who are appointed by the elects to have all further proceedings con- ‘‘(e) PREISSUANCE SUBMISSIONS BY THIRD Secretary, in consultation with the Director. ducted as provided in section 146. If the ap- PARTIES.— Any reference in any Federal law, Executive pellant does not, within 30 days after the fil- ‘‘(1) IN GENERAL.—Any third party may order, rule, regulation, or delegation of au- ing of such notice by the adverse party, file submit for consideration and inclusion in the thority, or any document of or pertaining to a civil action under section 146, the Board’s record of a patent application, any patent, the Board of Patent Appeals and Inter- decision shall govern the further proceedings published patent application, or other print- ferences is deemed to refer to the Patent in the case.’’. ed publication of potential relevance to the Trial and Appeal Board. (2) JURISDICTION.—Section 1295(a)(4)(A) of examination of the application, if such sub- ‘‘(b) The Patent Trial and Appeal Board title 28, United States Code, is amended to mission is made in writing before the earlier shall— read as follows: of—

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00054 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.022 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1389 ‘‘(A) the date a notice of allowance under (A) submit to the Patent Public Advisory (B) striking ‘‘shall be administered as section 151 is given or mailed in the applica- Committee or the Trademark Public Advi- though that subsection’’. tion for patent; or sory Committee, or both, as appropriate, any (c) ADJUSTMENT OF TRADEMARK FEES.—Di- ‘‘(B) the later of— proposed fee under paragraph (1) not less vision B of Public Law 108–447 is amended in ‘‘(i) 6 months after the date on which the than 45 days before publishing any proposed title VIII of the Departments of Commerce, application for patent is first published fee in the Federal Register; Justice and State, the Judiciary and Related under section 122 by the Office, or (B) provide the relevant advisory com- Agencies Appropriations Act, 2005, in section ‘‘(ii) the date of the first rejection under mittee described in subparagraph (A) a 30- 802(a) by striking ‘‘During fiscal years 2005, section 132 of any claim by the examiner dur- day period following the submission of any 2006 and 2007’’, and inserting ‘‘Until such ing the examination of the application for proposed fee, on which to deliberate, con- time as the Director sets or adjusts the fees patent. sider, and comment on such proposal, and re- otherwise,’’. ‘‘(2) OTHER REQUIREMENTS.—Any submis- quire that— (d) EFFECTIVE DATE, APPLICABILITY, AND sion under paragraph (1) shall— (i) during such 30-day period, the relevant TRANSITION PROVISIONS.—Division B of Pub- ‘‘(A) set forth a concise description of the advisory committee hold a public hearing re- lic Law 108–447 is amended in title VIII of the asserted relevance of each submitted docu- lated to such proposal; and Departments of Commerce, Justice and ment; (ii) the Director shall assist the relevant State, the Judiciary and Related Agencies ‘‘(B) be accompanied by such fee as the Di- advisory committee in carrying out such Appropriations Act, 2005, in section 803(a) by rector may prescribe; and public hearing, including by offering the use striking ‘‘and shall apply only with respect ‘‘(C) include a statement by the person of Office resources to notify and promote the to the remaining portion of fiscal year 2005, making such submission affirming that the hearing to the public and interested stake- 2006 and 2007’’. (e) STATUTORY AUTHORITY.—Section submission was made in compliance with holders; 41(d)(1)(A) of title 35, United States Code, is this section.’’. (C) require the relevant advisory com- amended by striking ‘‘, and the Director may (b) EFFECTIVE DATE.—The amendments mittee to make available to the public a not increase any such fee thereafter’’. made by this section shall take effect 1 year written report detailing the comments, ad- after the date of the enactment of this Act (f) RULE OF CONSTRUCTION.—Nothing in this vice, and recommendations of the committee section shall be construed to affect any other and shall apply to patent applications filed regarding any proposed fee; before, on, or after that effective date. provision of Division B of Public Law 108–447, (D) consider and analyze any comments, including section 801(c) of title VIII of the SEC. 8. VENUE. advice, or recommendations received from Departments of Commerce, Justice and (a) TECHNICAL AMENDMENTS RELATING TO the relevant advisory committee before set- State, the Judiciary and Related Agencies VENUE.—Sections 32, 145, 146, 154(b)(4)(A), and ting or adjusting any fee; and 293 of title 35, United States Code, and sec- Appropriations Act, 2005. (E) notify, through the Chair and Ranking (g) DEFINITIONS.—In this section, the fol- tion 21(b)(4) of the Act entitled ‘‘An Act to Member of the Senate and House Judiciary lowing definitions shall apply: provide for the registration and protection of Committees, the Congress of any final rule (1) DIRECTOR.—The term ‘‘Director’’ means trademarks used in commerce, to carry out setting or adjusting fees under paragraph (1). the provisions of certain international con- the Director of the United States Patent and (5) PUBLICATION IN THE FEDERAL REG- ventions, and for other purposes’’, approved Trademark Office. ISTER.— July 5, 1946 (commonly referred to as the (2) OFFICE.—The term ‘‘Office’’ means the (A) IN GENERAL.—Any rules prescribed ‘‘Trademark Act of 1946’’ or the ‘‘Lanham United States Patent and Trademark Office. under this subsection shall be published in Act’’; 15 U.S.C. 1071(b)(4)), are each amended (3) TRADEMARK ACT OF 1946.—The term the Federal Register. by striking ‘‘United States District Court for ‘‘Trademark Act of 1946’’ means an Act enti- (B) RATIONALE.—Any proposal for a change the District of Columbia’’ each place that tled ‘‘Act to provide for the registration and in fees under this section shall— term appears and inserting ‘‘United States protection of trademarks used in commerce, District Court for the Eastern District of (i) be published in the Federal Register; to carry out the provisions of certain inter- Virginia’’. and national conventions, and for other pur- (b) EFFECTIVE DATE.—The amendments (ii) include, in such publication, the spe- poses’’, approved July 5, 1946 (15 U.S.C. 1051 made by this section shall take effect upon cific rationale and purpose for the proposal, et seq.) (commonly referred to as the Trade- the date of the enactment of this Act and including the possible expectations or bene- mark Act of 1946 or the Lanham Act). shall apply to civil actions commenced on or fits resulting from the proposed change. (h) ELECTRONIC FILING INCENTIVE.— after that date. (C) PUBLIC COMMENT PERIOD.—Following (1) IN GENERAL.—Notwithstanding any SEC. 9. FEE SETTING AUTHORITY. the publication of any proposed fee in the other provision of this section, a fee of $400 (a) FEE SETTING.— Federal Register pursuant to subparagraph shall be established for each application for (1) IN GENERAL.—The Director shall have (A), the Director shall seek public comment an original patent, except for a design, plant, authority to set or adjust by rule any fee es- for a period of not less than 45 days. or provisional application, that is not filed tablished, authorized, or charged under title (6) CONGRESSIONAL COMMENT PERIOD.—Fol- by electronic means as prescribed by the Di- 35, United States Code, and the Trademark lowing the notification described in para- rector. The fee established by this subsection Act of 1946 (15 U.S.C. 1051 et seq.), notwith- graph (3)(E), Congress shall have not more shall be reduced 50 percent for small entities standing the fee amounts established, au- than 45 days to consider and comment on that qualify for reduced fees under section thorized, or charged thereunder, for all serv- any final rule setting or adjusting fees under 41(h)(1) of title 35, United States Code. All ices performed by or materials furnished by, paragraph (1). No fee set or adjusted under fees paid under this subsection shall be de- the Office, provided that patent and trade- paragraph (1) shall be effective prior to the posited in the Treasury as an offsetting re- mark fee amounts are in the aggregate set to end of such 45-day comment period. ceipt that shall not be available for obliga- recover the estimated cost to the Office for (7) RULE OF CONSTRUCTION.—No rules pre- tion or expenditure. processing, activities, services, and mate- scribed under this subsection may diminish— (2) EFFECTIVE DATE.—This subsection shall rials relating to patents and trademarks, re- (A) an applicant’s rights under title 35, become effective 60 days after the date of the spectively, including proportionate shares of United States Code, or the Trademark Act of enactment of this Act. the administrative costs of the Office. 1946; or (i) REDUCTION IN FEES FOR SMALL ENTITY (2) SMALL AND MICRO ENTITIES.—The fees (B) any rights under a ratified treaty. PATENTS.—The Director shall reduce fees for established under paragraph (1) for filing, (b) FEES FOR PATENT SERVICES.—Division B providing prioritized examination of utility searching, examining, issuing, appealing, and of Public Law 108–447 is amended in title VIII and plant patent applications by 50 percent maintaining patent applications and patents of the Departments of Commerce, Justice, for small entities that qualify for reduced shall be reduced by 50 percent with respect and State, the Judiciary, and Related Agen- fees under section 41(h)(1) of title 35, United to their application to any small entity that cies Appropriations Act, 2005— States Code, so long as the fees of the qualifies for reduced fees under section (1) in subsections (a), (b), and (c) of section prioritized examination program are set to 41(h)(1) of title 35, United States Code, and 801, by— recover the estimated cost of the program. shall be reduced by 75 percent with respect (A) striking ‘‘During’’ and all that follows (j) EFFECTIVE DATE.—Except as provided in to their application to any micro entity as through ‘‘ 2006, subsection’’ and inserting subsection (h), the provisions of this section defined in section 123 of that title. ‘‘Subsection’’; and shall take effect upon the date of the enact- (3) REDUCTION OF FEES IN CERTAIN FISCAL (B) striking ‘‘shall be administered as ment of this Act. YEARS.—In any fiscal year, the Director— though that subsection reads’’ and inserting SEC. 10. SUPPLEMENTAL EXAMINATION. (A) shall consult with the Patent Public ‘‘is amended to read’’; (a) IN GENERAL.—Chapter 25 of title 35, Advisory Committee and the Trademark (2) in subsection (d) of section 801, by strik- United States Code, is amended by adding at Public Advisory Committee on the advis- ing ‘‘During’’ and all that follows through the end the following: ability of reducing any fees described in ‘‘2006, subsection’’ and inserting ‘‘Sub- ‘‘§ 257. Supplemental examinations to con- paragraph (1); and section’’; and sider, reconsider, or correct information (B) after the consultation required under (3) in subsection (e) of section 801, by— ‘‘(a) IN GENERAL.—A patent owner may re- subparagraph (A), may reduce such fees. (A) striking ‘‘During’’ and all that follows quest supplemental examination of a patent (4) ROLE OF THE PUBLIC ADVISORY COM- through ‘‘2006, subsection’’ and inserting in the Office to consider, reconsider, or cor- MITTEE.—The Director shall— ‘‘Subsection’’; and rect information believed to be relevant to

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the patent. Within 3 months of the date a re- and impose sanctions for misconduct in con- ‘‘(1) IN GENERAL.—For purposes of this sec- quest for supplemental examination meeting nection with matters or proceedings before tion, a micro entity shall include an appli- the requirements of this section is received, the Office; or cant who certifies that— the Director shall conduct the supplemental ‘‘(3) to limit the authority of the Director ‘‘(A) the applicant’s employer, from which examination and shall conclude such exam- to promulgate regulations under chapter 3 the applicant obtains the majority of the ap- ination by issuing a certificate indicating relating to sanctions for misconduct by rep- plicant’s income, is a State public institu- whether the information presented in the re- resentatives practicing before the Office.’’. tion of higher education, as defined in sec- quest raises a substantial new question of (b) EFFECTIVE DATE.—This section shall tion 102 of the Higher Education Act of 1965 patentability. take effect 1 year after the date of the enact- (20 U.S.C. 1002); or ‘‘(b) REEXAMINATION ORDERED.—If a sub- ment of this Act and shall apply to patents ‘‘(B) the applicant has assigned, granted, stantial new question of patentability is issued before, on, or after that date. conveyed, or is under an obligation by con- raised by 1 or more items of information in SEC. 11. RESIDENCY OF FEDERAL CIRCUIT tract or law to assign, grant, or convey, a li- the request, the Director shall order reexam- JUDGES. cense or other ownership interest in the par- ination of the patent. The reexamination (a) IN GENERAL.—Section 44(c) of title 28, ticular application to such State public in- shall be conducted according to procedures United States Code, is amended— stitution. established by chapter 30, except that the (1) by repealing the second sentence; and ‘‘(2) DIRECTOR’S AUTHORITY.—The Director patent owner shall not have the right to file (2) in the third sentence, by striking may, in the Director’s discretion, impose in- a statement pursuant to section 304. During ‘‘state’’ and inserting ‘‘State’’. come limits, annual filing limits, or other the reexamination, the Director shall ad- (b) NO PROVISION OF FACILITIES AUTHOR- limits on who may qualify as a micro entity dress each substantial new question of pat- IZED.—The repeal made by the amendment in pursuant to this subsection if the Director entability identified during the supple- subsection (a)(1) shall not be construed to determines that such additional limits are mental examination, notwithstanding the authorize the provision of any court facili- reasonably necessary to avoid an undue im- limitations therein relating to patents and ties or administrative support services out- pact on other patent applicants or owners or printed publication or any other provision of side of the District of Columbia. are otherwise reasonably necessary and ap- chapter 30. (c) EFFECTIVE DATE.—This section shall propriate. At least 3 months before any lim- ‘‘(c) EFFECT.— take effect on the date of enactment of this its proposed to be imposed pursuant to this ‘‘(1) IN GENERAL.—A patent shall not be Act. paragraph shall take effect, the Director held unenforceable on the basis of conduct SEC. 12. MICRO ENTITY DEFINED. shall inform the Committee on the Judiciary relating to information that had not been Chapter 11 of title 35, United States Code, of the House of Representatives and the considered, was inadequately considered, or is amended by adding at the end the fol- Committee on the Judiciary of the Senate of was incorrect in a prior examination of the lowing new section: any such proposed limits.’’. patent if the information was considered, re- considered, or corrected during a supple- ‘‘§ 123. Micro entity defined SEC. 13. FUNDING AGREEMENTS. mental examination of the patent. The mak- ‘‘(a) IN GENERAL.—For purposes of this (a) IN GENERAL.—Section 202(c)(7)(E)(i) of ing of a request under subsection (a), or the title, the term ‘micro entity’ means an appli- title 35, United States Code, is amended— absence thereof, shall not be relevant to en- cant who makes a certification that the ap- (1) by striking ‘‘75 percent’’ and inserting forceability of the patent under section 282. plicant— ‘‘15 percent’’; and ‘‘(2) EXCEPTIONS.— ‘‘(1) qualifies as a small entity, as defined (2) by striking ‘‘25 percent’’ and inserting ‘‘(A) PRIOR ALLEGATIONS.—This subsection in regulations issued by the Director; ‘‘85 percent’’. shall not apply to an allegation pled with ‘‘(2) has not been named on 5 or more pre- (b) EFFECTIVE DATE.—The amendments particularity, or set forth with particularity viously filed patent applications, not includ- made by this section shall take effect on the in a notice received by the patent owner ing applications filed in another country, date of enactment of this Act and shall apply under section 505(j)(2)(B)(iv)(II) of the Fed- provisional applications under section 111(b), to patents issued before, on, or after that eral Food, Drug, and Cosmetic Act (21 U.S.C. or international applications filed under the date. 355(j)(2)(B)(iv)(II)), before the date of a sup- treaty defined in section 351(a) for which the SEC. 14. TAX STRATEGIES DEEMED WITHIN THE plemental-examination request under sub- basic national fee under section 41(a) was not PRIOR ART. section (a) to consider, reconsider, or correct paid; (a) IN GENERAL.—For purposes of evalu- information forming the basis for the allega- ‘‘(3) did not in the prior calendar year have ating an invention under section 102 or 103 of tion. a gross income, as defined in section 61(a) of title 35, United States Code, any strategy for ‘‘(B) PATENT ENFORCEMENT ACTIONS.—In an the Internal Revenue Code (26 U.S.C. 61(a)), reducing, avoiding, or deferring tax liability, action brought under section 337(a) of the exceeding 3 times the most recently reported whether known or unknown at the time of Tariff Act of 1930 (19 U.S.C. 1337(a)), or sec- median household income, as reported by the the invention or application for patent, shall tion 281 of this title, this subsection shall Bureau of Census; and be deemed insufficient to differentiate a not apply to any defense raised in the action ‘‘(4) has not assigned, granted, conveyed, claimed invention from the prior art. that is based upon information that was con- and is not under an obligation by contract or (b) DEFINITION.—For purposes of this sec- sidered, reconsidered, or corrected pursuant law to assign, grant, or convey, a license or tion, the term ‘‘tax liability’’ refers to any to a supplemental-examination request other ownership interest in the particular liability for a tax under any Federal, State, under subsection (a) unless the supplemental application to an entity that had a gross in- or local law, or the law of any foreign juris- examination, and any reexamination ordered come, as defined in section 61(a) of the Inter- diction, including any statute, rule, regula- pursuant to the request, are concluded before nal Revenue Code (26 U.S.C. 61(a)), exceeding tion, or ordinance that levies, imposes, or as- the date on which the action is brought. 3 times the most recently reported median sesses such tax liability. ‘‘(d) FEES AND REGULATIONS.—The Director household income, as reported by the Bureau (c) RULE OF CONSTRUCTION.—Nothing in shall, by regulation, establish fees for the of the Census, in the calendar year preceding this section shall be construed to imply that submission of a request for supplemental ex- the calendar year in which the fee is being other business methods are patentable or amination of a patent, and to consider each paid, other than an entity of higher edu- that other business-method patents are item of information submitted in the re- cation where the applicant is not an em- valid. quest. If reexamination is ordered pursuant ployee, a relative of an employee, or have (d) EFFECTIVE DATE; APPLICABILITY.—This to subsection (a), fees established and appli- any affiliation with the entity of higher edu- section shall take effect on the date of enact- cable to ex parte reexamination proceedings cation. ment of this Act and shall apply to any pat- under chapter 30 shall be paid in addition to ‘‘(b) APPLICATIONS RESULTING FROM PRIOR ent application pending and any patent fees applicable to supplemental examination. EMPLOYMENT.—An applicant is not consid- issued on or after that date. The Director shall promulgate regulations ered to be named on a previously filed appli- (e) EXCLUSION.—This section does not governing the form, content, and other re- cation for purposes of subsection (a)(2) if the apply to that part of an invention that is a quirements of requests for supplemental ex- applicant has assigned, or is under an obliga- method, apparatus, computer program prod- amination, and establishing procedures for tion by contract or law to assign, all owner- uct, or system, that is used solely for pre- conducting review of information submitted ship rights in the application as the result of paring a tax or information return or other in such requests. the applicant’s previous employment. tax filing, including one that records, trans- ‘‘(e) RULE OF CONSTRUCTION.—Nothing in ‘‘(c) FOREIGN CURRENCY EXCHANGE RATE.— mits, transfers, or organizes data related to this section shall be construed— If an applicant’s or entity’s gross income in such filing. ‘‘(1) to preclude the imposition of sanctions the preceding year is not in United States SEC. 15. BEST MODE REQUIREMENT. based upon criminal or antitrust laws (in- dollars, the average currency exchange rate, (a) IN GENERAL.—Section 282 of title 35, cluding section 1001(a) of title 18, the first as reported by the Internal Revenue Service, United State Code, is amended in its second section of the Clayton Act, and section 5 of during the preceding year shall be used to undesignated paragraph by striking para- the Federal Trade Commission Act to the ex- determine whether the applicant’s or enti- graph (3) and inserting the following: tent that section relates to unfair methods ty’s gross income exceeds the threshold spec- ‘‘(3) Invalidity of the patent or any claim of competition); ified in paragraphs (3) or (4) of subsection (a). in suit for failure to comply with— ‘‘(2) to limit the authority of the Director ‘‘(d) STATE INSTITUTIONS OF HIGHER EDU- ‘‘(A) any requirement of section 112, except to investigate issues of possible misconduct CATION.— that the failure to disclose the best mode

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shall not be a basis on which any claim of a (g) PRESUMPTION OF VALIDITY.—Section 282 (c) COURT OF APPEALS FOR THE FEDERAL patent may be canceled or held invalid or of title 35, United States Code, is amended— CIRCUIT.—Section 1295(a)(1) of title 28, United otherwise unenforceable; or (1) in the first undesignated paragraph— States Code, is amended to read as follows: ‘‘(B) any requirement of section 251.’’. (A) by striking ‘‘A patent’’ and inserting ‘‘(1) of an appeal from a final decision of a (b) CONFORMING AMENDMENT.—Sections ‘‘(a) IN GENERAL.—A patent’’; and district court of the United States, the Dis- 119(e)(1) and 120 of title 35, United States (B) by striking the third sentence; trict Court of Guam, the District Court of Code, are each amended by striking ‘‘the (2) in the second undesignated paragraph, the Virgin Islands, or the District Court of first paragraph of section 112 of this title’’ by striking ‘‘The following’’ and inserting the Northern Mariana Islands, in any civil and inserting ‘‘section 112(a) (other than the ‘‘(b) DEFENSES.—The following’’; and action arising under, or in any civil action in requirement to disclose the best mode)’’. (3) in the third undesignated paragraph, by which a party has asserted a compulsory (c) EFFECTIVE DATE.—The amendments striking ‘‘In actions’’ and inserting ‘‘(c) NO- counterclaim arising under, any Act of Con- made by this section shall take effect upon TICE OF ACTIONS; ACTIONS DURING EXTENSION gress relating to patents or plant variety the date of the enactment of this Act and OF PATENT TERM.—In actions’’. protection;’’. shall apply to proceedings commenced on or (h) ACTION FOR INFRINGEMENT.—Section 288 (d) REMOVAL.— after that date. of title 35, United States Code, is amended by (1) IN GENERAL.—Chapter 89 of title 28, SEC. 16. TECHNICAL AMENDMENTS. striking ‘‘, without deceptive intention,’’. United States Code, is amended by adding at (a) JOINT INVENTIONS.—Section 116 of title (i) REVISER’S NOTES.— the end the following new section: (1) Section 3(e)(2) of title 35, United States 35, United States Code, is amended— ‘‘§ 1454. Patent, plant variety protection, and Code, is amended by striking ‘‘this Act,’’ and (1) in the first paragraph, by striking copyright cases ‘‘When’’ and inserting ‘‘(a) JOINT INVEN- inserting ‘‘that Act,’’. ‘‘(a) IN GENERAL.—A civil action in which TIONS.—When’’; (2) Section 202 of title 35, United States (2) in the second paragraph, by striking ‘‘If Code, is amended— any party asserts a claim for relief arising under any Act of Congress relating to pat- a joint inventor’’ and inserting ‘‘(b) OMITTED (A) in subsection (b)(3), by striking ‘‘the ents, plant variety protection, or copyrights INVENTOR.—If a joint inventor’’; and section 203(b)’’ and inserting ‘‘section may be removed to the district court of the (3) in the third paragraph— 203(b)’’; and United States for the district and division (A) by striking ‘‘Whenever’’ and inserting (B) in subsection (c)(7)— embracing the place where such action is ‘‘(c) CORRECTION OF ERRORS IN APPLICA- (i) in subparagraph (D), by striking ‘‘except pending. TION.—Whenever’’; and where it proves’’ and all that follows through ‘‘(b) SPECIAL RULES.—The removal of an (B) by striking ‘‘and such error arose with- ‘‘; and’’ and inserting: ‘‘except where it is de- action under this section shall be made in out any deceptive intent on his part,’’. termined to be infeasible following a reason- accordance with section 1446 of this chapter, (b) FILING OF APPLICATION IN FOREIGN able inquiry, a preference in the licensing of except that if the removal is based solely on COUNTRY.—Section 184 of title 35, United subject inventions shall be given to small this section— States Code, is amended— business firms; and’’; and ‘‘(1) the action may be removed by any (1) in the first paragraph— (ii) in subparagraph (E)(i), by striking ‘‘as party; and (A) by striking ‘‘Except when’’ and insert- described above in this clause (D);’’ and in- ‘‘(2) the time limitations contained in sec- ing ‘‘(a) FILING IN FOREIGN COUNTRY.—Except serting ‘‘described above in this clause;’’. tion 1446(b) may be extended at any time for when’’; and (3) Section 209(d)(1) of title 35, United cause shown. (B) by striking ‘‘and without deceptive in- States Code, is amended by striking ‘‘(c) DERIVATIVE JURISDICTION NOT RE- tent’’; ‘‘nontransferrable’’ and inserting ‘‘non- QUIRED.—The court to which a civil action is (2) in the second paragraph, by striking transferable’’. removed under this section is not precluded ‘‘The term’’ and inserting ‘‘(b) APPLICA- (4) Section 287(c)(2)(G) of title 35, United from hearing and determining any claim in TION.—The term’’; and States Code, is amended by striking ‘‘any such civil action because the State court (3) in the third paragraph, by striking state’’ and inserting ‘‘any State’’. from which such civil action is removed did ‘‘The scope’’ and inserting ‘‘(c) SUBSEQUENT (5) Section 371(b) of title 35, United States not have jurisdiction over that claim. MODIFICATIONS, AMENDMENTS, AND SUPPLE- Code, is amended by striking ‘‘of the treaty’’ ‘‘(d) REMAND.—If a civil action is removed MENTS.—The scope’’. and inserting ‘‘of the treaty.’’. solely under this section, the district court— (c) FILING WITHOUT A LICENSE.—Section 185 (j) UNNECESSARY REFERENCES.— ‘‘(1) shall remand all claims that are nei- of title 35, United States Code, is amended by (1) IN GENERAL.—Title 35, United States ther a basis for removal under subsection (a) striking ‘‘and without deceptive intent’’. Code, is amended by striking ‘‘of this title’’ nor within the original or supplemental ju- (d) REISSUE OF DEFECTIVE PATENTS.—Sec- each place that term appears. risdiction of the district court under any Act tion 251 of title 35, United States Code, is (2) EXCEPTION.—The amendment made by of Congress; and amended— paragraph (1) shall not apply to the use of ‘‘(2) may, under the circumstances speci- (1) in the first paragraph— such term in the following sections of title fied in section 1367(c), remand any claims (A) by striking ‘‘Whenever’’ and inserting 35, United States Code: within the supplemental jurisdiction of the ‘‘(a) IN GENERAL.—Whenever’’; and (A) Section 1(c). district court under section 1367.’’. (B) by striking ‘‘without any deceptive in- (B) Section 101. (2) CONFORMING AMENDMENT.—The table of tention’’; (C) Subsections (a) and (b) of section 105. sections for chapter 89 of title 28, United (2) in the second paragraph, by striking (D) The first instance of the use of such States Code, is amended by adding at the end ‘‘The Director’’ and inserting ‘‘(b) MULTIPLE term in section 111(b)(8). the following new item: REISSUED PATENTS.—The Director’’; (E) Section 157(a). (3) in the third paragraph, by striking (F) Section 161. ‘‘1454. Patent, plant variety protection, and ‘‘The provisions’’ and inserting ‘‘(c) APPLICA- (G) Section 164. copyright cases.’’. BILITY OF THIS TITLE.—The provisions’’; and (H) Section 171. (e) TRANSFER BY COURT OF APPEALS FOR (4) in the last paragraph, by striking ‘‘No (I) Section 251(c), as so designated by this THE FEDERAL CIRCUIT.— reissued patent’’ and inserting ‘‘(d) REISSUE section. (1) IN GENERAL.—Chapter 99 of title 28, PATENT ENLARGING SCOPE OF CLAIMS.—No re- (J) Section 261. United States Code, is amended by adding at issued patent’’. (K) Subsections (g) and (h) of section 271. the end the following new section: (e) EFFECT OF REISSUE.—Section 253 of title (L) Section 287(b)(1). ‘‘§ 1632. Transfer by the Court of Appeals for 35, United States Code, is amended— (M) Section 289. the Federal Circuit (1) in the first paragraph, by striking (N) The first instance of the use of such ‘‘When a case is appealed to the Court of ‘‘Whenever, without any deceptive inten- term in section 375(a). Appeals for the Federal Circuit under section tion’’ and inserting ‘‘(a) IN GENERAL.—When- (k) EFFECTIVE DATE.—The amendments 1295(a)(1), and no claim for relief arising ever’’; and made by this section shall take effect 1 year under any Act of Congress relating to pat- (2) in the second paragraph, by striking ‘‘in after the date of the enactment of this Act ents or plant variety protection is the sub- like manner’’ and inserting ‘‘(b) ADDITIONAL and shall apply to proceedings commenced ject of the appeal by any party, the Court of DISCLAIMER OR DEDICATION.—In the manner on or after that effective date. Appeals for the Federal Circuit shall transfer set forth in subsection (a),’’. SEC. 17. CLARIFICATION OF JURISDICTION. the appeal to the court of appeals for the re- (f) CORRECTION OF NAMED INVENTOR.—Sec- (a) SHORT TITLE.—This section may be tion 256 of title 35, United States Code, is gional circuit embracing the district from cited as the ‘‘Intellectual Property Jurisdic- which the appeal has been taken.’’. amended— tion Clarification Act of 2011’’. (2) CONFORMING AMENDMENT.—The table of (1) in the first paragraph— (b) STATE COURT JURISDICTION.—Section sections for chapter 99 of title 28, United (A) by striking ‘‘Whenever’’ and inserting 1338(a) of title 28, United States Code, is States Code, is amended by adding at the end ‘‘(a) CORRECTION.—Whenever’’; and amended by striking the second sentence and (B) by striking ‘‘and such error arose with- inserting the following: ‘‘No State court the following new item: out any deceptive intention on his part’’; and shall have jurisdiction over any claim for re- ‘‘1632. Transfer by the Court of Appeals for (2) in the second paragraph, by striking lief arising under any Act of Congress relat- the Federal Circuit.’’. ‘‘The error’’ and inserting ‘‘(b) PATENT VALID ing to patents, plant variety protection, or (f) EFFECTIVE DATE.—The amendments IF ERROR CORRECTED.—The error’’. copyrights.’’. made by this section shall apply to any civil

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action commenced on or after the date of the tion for a transitional proceeding that is (4) TRADEMARK ACT OF 1946.—The term enactment of this Act. filed prior to the date that this subsection is ‘‘Trademark Act of 1946’’ means an Act enti- SEC. 18. TRANSITIONAL PROGRAM FOR COVERED repealed pursuant to subparagraph (A). tled ‘‘Act to provide for the registration and BUSINESS-METHOD PATENTS. (c) REQUEST FOR STAY.— protection of trademarks used in commerce, (a) REFERENCES.—Except as otherwise ex- (1) IN GENERAL.—If a party seeks a stay of to carry out the provisions of certain inter- pressly provided, wherever in this section a civil action alleging infringement of a pat- national conventions, and for other pur- language is expressed in terms of a section or ent under section 281 in relation to a transi- poses’’, approved July 5, 1946 (15 U.S.C. 1051 chapter, the reference shall be considered to tional proceeding for that patent, the court et seq.) (commonly referred to as the ‘‘Trade- be made to that section or chapter in title shall decide whether to enter a stay based mark Act of 1946’’ or the ‘‘Lanham Act’’). 35, United States Code. on— (5) UNDER SECRETARY.—The term ‘‘Under (b) TRANSITIONAL PROGRAM.— (A) whether a stay, or the denial thereof, Secretary’’ means the Under Secretary of (1) ESTABLISHMENT.—Not later than 1 year will simplify the issues in question and Commerce for Intellectual Property. after the date of enactment of this Act, the streamline the trial; (b) FUNDING.— Director shall issue regulations establishing (B) whether discovery is complete and (1) IN GENERAL.—Section 42 of title 35, and implementing a transitional post-grant whether a trial date has been set; United States Code, is amended— review proceeding for review of the validity (C) whether a stay, or the denial thereof, (A) in subsection (b), by striking ‘‘Patent of covered business-method patents. The would unduly prejudice the nonmoving party and Trademark Office Appropriation Ac- transitional proceeding implemented pursu- or present a clear tactical advantage for the count’’ and inserting ‘‘United States Patent ant to this subsection shall be regarded as, moving party; and and Trademark Office Public Enterprise and shall employ the standards and proce- (D) whether a stay, or the denial thereof, Fund’’; and dures of, a post-grant review under chapter will reduce the burden of litigation on the (B) in subsection (c), in the first sentence— 32, subject to the following exceptions and parties and on the court. qualifications: (i) by striking ‘‘To the extent’’ and all that (2) REVIEW.—A party may take an imme- (A) Section 321(c) and subsections (e)(2), (f), follows through ‘‘fees’’ and inserting ‘‘Fees’’; diate interlocutory appeal from a district and and (g) of section 325 shall not apply to a court’s decision under paragraph (1). The transitional proceeding. (ii) by striking ‘‘shall be collected by and United States Court of Appeals for the Fed- shall be available to the Director’’ and in- (B) A person may not file a petition for a eral Circuit shall review the district court’s transitional proceeding with respect to a serting ‘‘shall be collected by the Director decision to ensure consistent application of covered business-method patent unless the and shall be available until expended’’. established precedent, and such review may person or his real party in interest has been (2) EFFECTIVE DATE.—The amendments be de novo. sued for infringement of the patent or has made by paragraph (1) shall take effect on (d) DEFINITION.—For purposes of this sec- the later of— been charged with infringement under that tion, the term ‘‘covered business method pat- patent. (A) October 1, 2011; or ent’’ means a patent that claims a method or (B) the first day of the first fiscal year that (C) A petitioner in a transitional pro- corresponding apparatus for performing data ceeding who challenges the validity of 1 or begins after the date of the enactment of processing operations utilized in the prac- this Act. more claims in a covered business-method tice, administration, or management of a fi- (c) USPTO REVOLVING FUND.— patent on a ground raised under section 102 nancial product or service, except that the (1) ESTABLISHMENT.—There is established or 103 as in effect on the day prior to the term shall not include patents for techno- in the Treasury of the United States a re- date of enactment of this Act may support logical inventions. Solely for the purpose of volving fund to be known as the ‘‘United such ground only on the basis of— implementing the transitional proceeding States Patent and Trademark Office Public (i) prior art that is described by section authorized by this subsection, the Director Enterprise Fund’’. Any amounts in the Fund 102(a) (as in effect on the day prior to the shall prescribe regulations for determining shall be available for use by the Director date of enactment of this Act); or whether a patent is for a technological in- without fiscal year limitation. (ii) prior art that— vention. ERIVATION OF RESOURCES (I) discloses the invention more than 1 year (e) RULE OF CONSTRUCTION.—Nothing in (2) D .—There shall prior to the date of the application for pat- this section shall be construed as amending be deposited into the Fund on or after the ef- ent in the United States; and or interpreting categories of patent-eligible fective date of subsection (b)(1)— (II) would be described by section 102(a) (as subject matter set forth under section 101. (A) any fees collected under sections 41, 42, in effect on the day prior to the date of en- SEC. 19. TRAVEL EXPENSES AND PAYMENT OF and 376 of title 35, United States Code, pro- actment of this Act) if the disclosure had ADMINISTRATIVE JUDGES. vided that notwithstanding any other provi- been made by another before the invention (a) AUTHORITY TO COVER CERTAIN TRAVEL sion of law, if such fees are collected by, and thereof by the applicant for patent. RELATED EXPENSES.—Section 2(b)(11) of title payable to, the Director, the Director shall (D) The petitioner in a transitional pro- 35, United States Code, is amended by insert- transfer such amounts to the Fund, provided, ceeding, or his real party in interest, may ing ‘‘, and the Office is authorized to expend however, that no funds collected pursuant to not assert either in a civil action arising in funds to cover the subsistence expenses and section 9(h) of this Act or section 1(a)(2) of whole or in part under section 1338 of title 28, travel-related expenses, including per diem, Public Law 111–45 shall be deposited in the United States Code, or in a proceeding before lodging costs, and transportation costs, of Fund; and the International Trade Commission that a non-federal employees attending such pro- (B) any fees collected under section 31 of claim in a patent is invalid on any ground grams’’ after ‘‘world’’. the Trademark Act of 1946 (15 U.S.C. 1113). that the petitioner raised during a transi- (b) PAYMENT OF ADMINISTRATIVE JUDGES.— (3) EXPENSES.—Amounts deposited into the tional proceeding that resulted in a final Section 3(b) of title 35, United States Code, is Fund under paragraph (2) shall be available, written decision. amended by adding at the end the following: without fiscal year limitation, to cover— (E) The Director may institute a transi- ‘‘(6) ADMINISTRATIVE PATENT JUDGES AND (A) all expenses to the extent consistent tional proceeding only for a patent that is a ADMINISTRATIVE TRADEMARK JUDGES.—The with the limitation on the use of fees set covered business-method patent. Director has the authority to fix the rate of forth in section 42(c) of title 35, United (2) EFFECTIVE DATE.—The regulations basic pay for the administrative patent States Code, including all administrative issued pursuant to paragraph (1) shall take judges appointed pursuant to section 6 of and operating expenses, determined in the effect on the date that is 1 year after the this title and the administrative trademark discretion of the Under Secretary to be ordi- date of enactment of this Act and shall apply judges appointed pursuant to section 17 of nary and reasonable, incurred by the Under to all covered business-method patents the Trademark Act of 1946 (15 U.S.C. 1067) at Secretary and the Director for the continued issued before, on, or after such date of enact- not greater than the rate of basic pay pay- operation of all services, programs, activi- ment, except that the regulations shall not able for Level III of the Executive Schedule. ties, and duties of the Office relating to pat- apply to a patent described in the first sen- The payment of a rate of basic pay under ents and trademarks, as such services, pro- tence of section 5(f)(2) of this Act during the this paragraph shall not be subject to the grams, activities, and duties are described period that a petition for post-grant review pay limitation of section 5306(e) or 5373 of under— of that patent would satisfy the require- title 5.’’. (i) title 35, United States Code; and ments of section 321(c). SEC. 20. PATENT AND TRADEMARK OFFICE FUND- (ii) the Trademark Act of 1946; and (3) SUNSET.— ING. (B) all expenses incurred pursuant to any (A) IN GENERAL.—This subsection, and the (a) DEFINITIONS.—In this section, the fol- obligation, representation, or other commit- regulations issued pursuant to this sub- lowing definitions shall apply: ment of the Office. section, are repealed effective on the date (1) DIRECTOR.—The term ‘‘Director’’ means (d) ANNUAL REPORT.—Not later than 60 that is 4 years after the date that the regula- the Director of the United States Patent and days after the end of each fiscal year, the tions issued pursuant to paragraph (1) take Trademark Office. Under Secretary and the Director shall sub- effect. (2) FUND.—The term ‘‘Fund’’ means the mit a report to Congress which shall— (B) APPLICABILITY.—Notwithstanding sub- public enterprise revolving fund established (1) summarize the operations of the Office paragraph (A), this subsection and the regu- under subsection (c). for the preceding fiscal year, including finan- lations implemented pursuant to this sub- (3) OFFICE.—The term ‘‘Office’’ means the cial details and staff levels broken down by section shall continue to apply to any peti- United States Patent and Trademark Office. each major activity of the Office;

VerDate Mar 15 2010 02:45 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00058 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.022 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE March 8, 2011 CONGRESSIONAL RECORD — SENATE S1393 (2) detail the operating plan of the Office, after the date of the enactment of this Act, The motion to lay on the table was including specific expense and staff needs for and each fiscal year thereafter, the Director agreed to. the upcoming fiscal year; shall submit a report to Congress on— Mr. LEAHY. Mr. President, it has (3) describe the long term modernization (1) the rationale of the Director in select- been many years getting to this point. plans of the Office; ing the locale of any satellite office required I cannot tell you the amount of pride I (4) set forth details of any progress towards under subsection (a); such modernization plans made in the pre- (2) the progress of the Director in estab- have in my fellow Senators, both Re- vious fiscal year; and lishing all such satellite offices; and publicans and Democrats. I thank the (5) include the results of the most recent (3) whether the operation of existing sat- Senator from Iowa who has been here audit carried out under subsection (f). ellite offices is achieving the purposes re- with me and so many others I men- (e) ANNUAL SPENDING PLAN.— quired under subsection (b). tioned earlier. It is nice to finally have (1) IN GENERAL.—Not later than 30 days (f) DEFINITIONS.—In this section, the fol- this bill through the Senate. after the beginning of each fiscal year, the lowing definitions shall apply: Mr. KYL. Mr. President, I rise today Director shall notify the Committees on Ap- (1) DIRECTOR.—The term ‘‘Director’’ means to recognize and thank the patent law- propriations of both Houses of Congress of the Director of the United States Patent and yers and Senate staff who have played the plan for the obligation and expenditure Trademark Office. a critical role in the drafting and en- of the total amount of the funds for that fis- (2) PATENT AND TRADEMARK OFFICE.—The term ‘‘Patent and Trademark Office’’ means actment of the present bill. cal year in accordance with section 605 of the Among the Senate staff who have Science, State, Justice, Commerce, and Re- the United States Patent and Trademark Of- lated Agencies Appropriations Act, 2006 fice. played a role with regard to this bill (Public Law 109–108; 119 Stat. 2334). SEC. 22. PATENT OMBUDSMAN PROGRAM FOR are Chip Roy, Holt Lackey, and Zina (2) CONTENTS.—Each plan under paragraph SMALL BUSINESS CONCERNS. Bash of Senator CORNYN’s staff, David (1) shall— Subject to available resources, the Direc- Barlow and Rob Porter of Senator (A) summarize the operations of the Office tor may establish in the United States Pat- LEE’s staff, Walt Kuhn of Senator for the current fiscal year, including finan- ent and Trademark Office a Patent Ombuds- GRAHAM’s staff, and Danielle Cutrona cial details and staff levels with respect to man Program. The duties of the Program’s and Bradley Hayes of Senator SES- staff shall include providing support and major activities; and SIONS’s staff. Special mention is mer- services relating to patent filings to small (B) detail the operating plan of the Office, ited for Matt Sandgren of Senator including specific expense and staff needs, business concerns. HATCH’s staff, who fought tenaciously for the current fiscal year. SEC. 23. PRIORITY EXAMINATION FOR TECH- for the bill’s supplemental examination (f) AUDIT.—The Under Secretary shall, on NOLOGIES IMPORTANT TO AMER- an annual basis, provide for an independent ICAN COMPETITIVENESS. provision, and who worked hard to de- audit of the financial statements of the Of- Section 2(b)(2) of title 35, United States feat the amendment to strip the bill of fice. Such audit shall be conducted in ac- Code, is amended— its adoption of the first-to-file system, cordance with generally acceptable account- (1) in subparagraph (E), by striking ‘‘; and’’ and Sarah Beth Groshart of Senator and inserting a semicolon; ing procedures. COBURN’s staff, who helped draft the (2) in subparagraph (F), by striking the (g) BUDGET.—The Fund shall prepare and Coburn amendment, which will create semicolon and inserting ‘‘; and’’; and submit each year to the President a busi- a revolving fund for the PTO and put ness-type budget in a manner, and before a (3) by adding at the end the following: ‘‘(G) may, subject to any conditions pre- an end to fee diversion. Past staff who date, as the President prescribes by regula- played an important role include Jen- tion for the budget program. scribed by the Director and at the request of the patent applicant, provide for nifer Duck of Senator FEINSTEIN’s SEC. 21. SATELLITE OFFICES. prioritization of examination of applications staff, and Ryan Triplette, who man- (a) ESTABLISHMENT.—Subject to available for products, processes, or technologies that resources, the Director may establish 3 or aged the bill for Senator HATCH while are important to the national economy or he was chairman and for Senator Spec- more satellite offices in the United States to national competitiveness without recovering carry out the responsibilities of the Patent ter while he was the lead Republican the aggregate extra cost of providing such on the committee. Miss Duck and Miss and Trademark Office. prioritization, notwithstanding section 41 or (b) PURPOSE.—The purpose of the satellite any other provision of law;’’. Triplette negotiated the managers’ offices established under subsection (a) are SEC. 24. DESIGNATION OF DETROIT SATELLITE amendment that was adopted during to— OFFICE. the bill’s 2009 committee mark up, and (1) increase outreach activities to better (a) DESIGNATION.—The satellite office of which represented a major break- connect patent filers and innovators with the United States Patent and Trademark Of- through on this bill, resolving the con- the Patent and Trademark Office; fice to be located in Detroit, Michigan shall tentious issues of damages and venue. (2) enhance patent examiner retention; be known and designated as the ‘‘Elijah J. (3) improve recruitment of patent exam- In the House of Representatives, key McCoy United States Patent and Trademark staff include Blaine Merritt and Vishal iners; and Office’’. (4) decrease the number of patent applica- (b) REFERENCES.—Any reference in a law, Amin of Chairman LAMAR SMITH’s tions waiting for examination and improve map, regulation, document, paper, or other staff, and Christal Sheppard of Mr. the quality of patent examination. record of the United States to the satellite CONYERS’s staff. Bob Schiff of Senator (c) REQUIRED CONSIDERATIONS.—In select- office of the United States Patent and Trade- Feingold’s staff worked with my staff ing the locale of each satellite office to be mark Office to be located in Detroit, Michi- to develop minority views for the bill’s established under subsection (a), the Direc- gan referred to in subsection (a) shall be 2009 committee report—I believe that tor— deemed to be a reference to the ‘‘Elijah J. (1) shall ensure geographic diversity among this is the only time that Senator McCoy United States Patent and Trademark Feingold and I ever submitted a minor- the offices, including by ensuring that such Office’’. ity report together. I should also ac- offices are established in different States and SEC. 25. EFFECTIVE DATE. regions throughout the Nation; Except as otherwise provided in this Act, knowledge Tim Molino of Senator (2) may rely upon any previous evaluations the provisions of this Act shall take effect 1 KLOBUCHAR’s staff, Rebecca Kelly of by the Patent and Trademark Office of po- year after the date of the enactment of this Senator SCHUMER’s staff, Caroline Hol- tential locales for satellite offices, including Act and shall apply to any patent issued on land of Senator KOHL’s staff, and Galen any evaluations prepared as part of the Pat- or after that effective date. Roehl, who worked in past Congresses ent and Trademark Office’s Nationwide SEC. 26. BUDGETARY EFFECTS. for Senator Brownback, and who cur- Workforce Program that resulted in the 2010 The budgetary effects of this Act, for the rently staffs Senator TOOMEY. Much of selection of Detroit, Michigan as the first purpose of complying with the Statutory ever satellite office of the Patent and Trade- S. 3600 was drafted in Senator Pay-As-You-Go-Act of 2010, shall be deter- Brownback’s conference room. Let me mark Office; and mined by reference to the latest statement (3) nothing in the preceding paragraph titled ‘‘Budgetary Effects of PAYGO Legisla- also recognize the work of Rob Grant shall constrain the Patent and Trademark tion’’ for this Act, submitted for printing in of Senate Legislative Counsel, who has Office to only consider its prior work from the Congressional Record by the Chairman of drafted literally hundreds of versions 2010. The process for site selection shall be the Senate Budget Committee, provided that of and amendments to this bill. And fi- open. such statement has been submitted prior to nally, I must acknowledge Rita Lari, (d) PHASE-IN.—The Director shall satisfy the vote on passage. the requirements of subsection (a) over the 3- who managed this bill for Senator year period beginning on the date of enact- Mr. LEAHY. I move to reconsider the GRASSLEY on the Senate floor this past ment of this Act. vote. week, and the indispensable Aaron Coo- (e) REPORT TO CONGRESS.—Not later than Mr. GRASSLEY. I move to lay that per, who has managed the bill for the the end of the first fiscal year that occurs motion on the table. chairman since the beginning of 2009.

VerDate Mar 15 2010 03:54 Mar 09, 2011 Jkt 099060 PO 00000 Frm 00059 Fmt 0624 Sfmt 0634 E:\CR\FM\A08MR6.022 S08MRPT1 sroberts on DSKG8SOYB1PROD with SENATE S1394 CONGRESSIONAL RECORD — SENATE March 8, 2011 Among those outside the Senate, I Mr. MENENDEZ. Mr. President, I un- that allowed for the free-for-all that recognize and thank Hayden Gregory of derstand we are in a period of morning brought us on the brink of a new de- the American Bar Association, Laurie business. pression, and that is what we are meet- Self and Rod McKelvie of Covington & The PRESIDING OFFICER. The Sen- ing the challenges of today. Burling, and Hans Sauer, Mike ator is correct. Those choices then and the choices Schiffer, Bruce Burton, Matt Rainey, Mr. MENENDEZ. Mr. President, I ask we make, what we choose to cut and David Korn, Carl Horton, Steve Miller, unanimous consent to speak for 20 min- what we determine is in our interest, Doug Norman, and Stan Fendley. The utes. will speak volumes about our values, Wisconsin Alumni Research Founda- The PRESIDING OFFICER. Without our priorities as a people and as a Na- tion has played an important role, par- objection, it is so ordered. tion. ticularly with regard to the bill’s en- f Mr. President, I favor smart cuts, not hanced grace period. I thank Carl dangerous ones. In an independent THE FEDERAL DEFICIT Gulbrandsen, Howard Bremmer, Andy analysis of H.R. 1, which we are going Cohn, and Mike Remington. I thank Mr. MENENDEZ. Mr. President, as to be voting on tomorrow—the Repub- Todd Dickinson and Vince Garlock of someone who voted to freeze salaries, lican vision of where we should take AIPLA, and Jim Crowne, who was will- to end earmarks in this budget process, the country—shows we are losing about ing to come to the Senate to double as someone who has already voted to 700,000 jobs. But we are trying to grow check the draft enrolled bill. I should cut $45 billion from the budget, I rise jobs in America. We have finally got- also mention Herb Wamsley of Intellec- today in recognition that business as ten into positive gross domestic prod- tual Property Owners, as well as Dana usual cannot continue. I recognize the uct of our Nation’s economy. We are Colarulli, who has worn two hats dur- critical importance of addressing our seeing job growth. I would like to see it ing the course of his work on this bill, Federal deficit—a deficit, I would add, be even more robust, but H.R. 1 takes first with IPO, and subsequently as the inherited by this administration, a def- us back the opposite way and threatens head of legislative affairs at the PTO. icit driven by two wars, both unpaid the very essence of this economic re- Key participants at the PTO have also for, and the unprecedented need for covery—700,000 jobs. included Mike Fleming, John Love, governmental action to mitigate the Don’t believe what I say because I Jim Toupin, and Rob Clarke. And of wild excesses of Wall Street and Amer- say it is so, but because those in the course I must mention the current Di- ican financial markets, excesses that know say it—Ben Bernanke: ‘‘The rector, David Kappos, without whose were effectively condoned by the last GOP’s plan will cut jobs.’’ Economist effort and dedication the passage of the administration, whose policies took Mark Zandi: ‘‘The GOP plan would cost present bill would not have been pos- this Nation to the brink of a second 700,000 jobs.’’ Here is another analysis: sible. Great Depression and cost millions of House spending cuts will hurt eco- Finally, allow me to acknowledge the American jobs. nomic growth. So what we have is key members of the 21st Century Coali- I never forget that time in late 2008 economist after economist telling us tion for Patent Reform, who have de- when Chairman Bernanke, the Chair- that H.R. 1 is a recipe for disaster when voted countless hours to this bill, and man of the Federal Reserve, came be- it comes to the question of jobs in stuck with it through thick and thin. fore members of the Banking Com- America. They have also formed an important mittee and members of the leadership That analysis which says we would ‘‘kitchen cabinet’’ that has been indis- and described the circumstances that slash 700,000 jobs directly impacts the pensable to the committee’s drafting of were unfolding in the country in which lives of middle-class and working fami- this bill and to the resolution of dif- a series of financial institutions, ac- lies struggling to get back on their ficult technical questions. I thus ac- cording to Chairman Bernanke and feet. They are severe cuts that run knowledge and thank Phil Johnson, then-Secretary Paulson, the Secretary roughshod over the green shoots of eco- Gary Griswold, Bob Armitage, and of the Treasury—they said: We are nomic recovery just to satisfy a polit- Mike Kirk for their key role in the cre- going to have a series of financial insti- ical agenda. I favor smart common- ation of the America Invents Act. tutions collapse, and if they collapse, sense cuts—cuts made with a surgeon’s I yield the floor. I suggest the ab- they will create systemic risk to the knife not a meat ax; cuts that are sence of a quorum. entire country’s economy, and every thoughtful, surgically precise cuts that The PRESIDING OFFICER (Mr. BEN- American will feel the consequences of actually reduce the deficit, not cuts NET). The clerk will call the roll. that collapse. I remember how hushed that eliminate jobs and disinvest in The legislative clerk proceeded to that room was. educational opportunities for millions call the roll. I remember also the question being of promising young Americans, not Mr. LEAHY. Mr. President, I ask put to Chairman Bernanke: Surely you cuts that hurt middle-class families unanimous consent that the order for must have enough tools at the Federal struggling to make ends meet, make the quorum call be rescinded. Reserve to get us through this period our workforce less competitive, our The PRESIDING OFFICER. Without of time. I remember the response to communities less safe, and strip away objection, it is so ordered. that question, which was basically: basic protections Americans have come f Senator, if you and your colleagues do to take for granted. MORNING BUSINESS not act in a matter of days, maybe a In my view, we can preserve our val- week, we will have a global financial ues and invest in the future, invest in Mr. LEAHY. Mr. President, I ask meltdown, which really meant a new out-educating, out-innovating, out- unanimous consent that the Senate depression. greening, and out-growing the world proceed to a period for the transaction Chairman Bernanke is an academi- and still cut the deficit. To begin with, of morning business, with Senators cian. His expertise is in depression-era Secretary Gates of the Department of permitted to speak therein for up to 10 economics, how this Nation got into Defense has identified $78 billion in de- minutes each. The PRESIDING OFFICER. Without the last depression, how Roosevelt got fense spending cuts alone. He has iden- objection, it is so ordered. us out of it. So when he made that tified $178 billion in program reduc- Mr. LEAHY. Mr. President, I suggest statement, it was all the more chilling. tions over 5 years, including delaying the absence of a quorum. It is from that moment in 2008, before or terminating high-profile weapon The PRESIDING OFFICER. The this President took office and Demo- systems. clerk will call the roll. crats were in full control here, that, in I agree with Secretary Gates that we The legislative clerk proceeded to fact, we were facing the challenges we can live without the Marine Corps vari- call the roll. are today. ant of the F–35 Joint Strike Fighter as Mr. MENENDEZ. Mr. President, I ask Those of us who believe in a free mar- well as the Marine Corps Expeditionary unanimous consent that the order for ket also know you cannot have a free- Fighting Vehicle. The Secretary has the quorum call be rescinded. for-all market. We had economic poli- identified $54 billion in cuts in over- The PRESIDING OFFICER. Without cies for the Bush 8 years, two wars rag- head costs and improved efficiency objection, it is so ordered. ing abroad, an unregulated market across defense agencies and the civilian

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