`
`
`
`
`
`
`
`Exhibit 2
`
`Exhibit 2
`
`

`

`I yield the floor and suggest the ab—
`sence of a quorum.
`The
`PRESIDING OFFICER (Mr.
`BROWN of Ohio). The clerk will call the
`roll.
`legislative clerk pro—
`The assistant
`ceeded to call the roll.
`Mr. SESSIONS. Mr. President, I ask
`unanimous consent that the order for
`the quorum call be rescinded.
`The PRESIDING OFFICER. Without
`objection, it is so ordered.
`
`CONCLUSION OF MORNING
`BUSINESS
`
`The PRESIDING OFFICER. Morning
`business is closed.
`
`
`legislative clerk read
`
`
`CONGRESSIONAL RECORD — SENATE
`S5402
`America, This transformation is not
`without enormous dangers and chal—
`lenges, but consider how much worse it
`would have been if a pro-bin Laden
`movement were
`fueling this
`trans
`formation.
`It is plain we need more of what we
`had post—Q/Il now. I am not naive.
`I
`know it cannot be conjured up or
`wished into existence. But if we are op—
`timistic,
`if we are inspired by the
`Americans who died here,
`if we truly
`understand our shared history and the
`sacred place compromise and rations
`ality hold at the very center of the for~
`mation of our Nation and the structure
`of our Constitution, then we can again
`take up the mantle of shared sacrifice
`and common purpose that we wore
`after 9/11 and apply some of those he-
`haviors to the problems we now con—
`front.
`The reality of our current political
`climate is that both sides are off in
`their corners;
`the common enemy is
`faded. Some see Wall Street as the
`enemy many others see Washington,
`DC, as the enemy and to still others
`any and all government is the enemy.
`I believe the greatest problem we
`face is the belief that we can no longer
`confront and solve the problems and
`challenges that confront us;
`the fear
`that our best days may be behind us;
`that, for the first time in history. we
`fear things will not be as good for our
`kids as they are for us. It is a creeping
`pessimism that cuts against the can—do
`and will—do American spirit. And, along
`with the divisiveness in our politics, it
`is harming our ability to create the
`great works our forbears accomplished:
`building the Empire State building in
`the teeth of the Great Depression, con—
`structing the Interstate Highway Sys—
`tem and the Hoover Dam,
`the Erie
`Canal, and so much more.
`While governmental action is not the
`whole answer to all that faces us, it is
`equally true that we cannot confront
`the multiple and complex challenges
`we now face with no government or a
`defanged government or
`a dysfunce
`tional government.
`As we approach the 10th anniversary
`of 9/11, the focus on what happened that»
`day intensifieswwhat we lost, who we
`lost, and how we reactedwit becomes
`acutely clear that we need to confront
`our current challenges imbued with the
`spirit of 9/11 and determine to make
`our government and our politics wor—
`thy of the sacrifice and loss we suffered
`that day.
`To return to de Tocqueville, he also
`remarked that:
`The greatness of America lies not in being
`more enlightened than any other nation, but
`rather in her ability to repair her faults.
`So,
`like the ironworkers and oper—
`ating engineers and trade workers who
`miraculously appeared at
`the pile
`hours after the towers came down with
`blowtorches and hard hats in hand,
`let’s put on our gloves, pick up our
`hammers and get to work fixing what
`ails the body politic. It is the least we
`can do to honor those we lost.
`
`LEAHY— SMITH AMERICA INVENTS
`ACT
`The PRESIDING OFFICER. Under
`the previous order, the Senate will re—
`sume consideration of HR. 1249, which
`the clerk will report by title.
`The assistant legislative clerk read
`as follows:
`An Act (HR. 1249) to amend title 35, United
`States Code, to provide for patent reform.
`AMENDMENT NO. 600
`Mr. SESSIONS. Mr. President, I ask
`unanimous consent
`to call up my
`amendment No. 600, which is at
`the
`desk.
`PRESIDING OFFICER. The
`The
`clerk will report.
`The assistant
`as follows:
`The Senator from Alabama [Mr. SESSIONS].
`for himself. Mr. MANCHIN, Mr. COBURN, and
`Mr. LEE, proposes an amendment numbered
`600.
`Mr. SESSIONS. Mr. President, I ask
`unanimous consent that the reading of
`the amendment be dispensed with.
`The PRESIDING OFFICER. Without
`objection, it is so ordered.
`The amendment is as follows:
`AMENDMENT NO. 600
`(Purpose: To strike the provision relating to
`the calculation of the 60-day period for ap-
`plication of patent term extension)
`On page 149, line 20, strike all through page
`150, line 16.
`the
`Mr. SESSIONS. Mr. President,
`amendment that I have offered is a
`very important amendment. It is one
`that I believe is important to the in—
`tegrity of the U;S. legal system and to
`the integrity of the Senate. It is a mat—
`ter that I have been wrestling with and
`objecting to for over
`a decade.
`I
`thought the matter had been settled,
`frankly, but it has not because it has
`been driven by one of the most fero—
`cious
`lobbying efforts
`the Congress
`maybe has seen.
`The House patent bill as originally
`passed out of committee and taken to
`the floor of the House did not include a
`bailout for Medco, the WilmerHale law
`firm, or the insurance carrier for that
`firm, all of whom were in financial
`jeopardy as a result of a failure to file
`a patent appeal timely.
`I have practiced law hard in my life.
`I have been in court'many times.
`I
`
`September 8, 2011
`spent 12 years as a US. Attorney and
`tried cases. I am well aware of how the
`system works. The way the system
`works in America, you file lawsuits
`and you are entitled to your day in
`court. But if you do not file your law—
`suit in time. within the statute of limi-
`tations, you are out.
`When a defendant raises a legal point
`of order—a motion to dismiss~based
`on the failure of the complaining party
`to file their lawsuit timely,
`they are
`out. That happens every day to poor
`people, widow ladies. And it does not
`make any difference what your excuse
`is, why you think you have a good law—
`suit, why you had this idea or that
`idea. Everyone is required to meet the
`same deadlines.
`In Alabama they had a situation in
`which a lady asked a probate judge
`when she had to file her appeal by, and
`the judge said: You can file it on Mon—
`day. As it turned out, Monday was too
`late. They went
`to the Alabama Su~
`preme Court, and who ruled: The pro—
`bate judge—who does not have to be a
`lawyer—does not have the power
`to
`amend the
`statute
`of
`limitations.
`Sorry, lady. You are out.
`Nobody filed a bill in the Congress to
`give her relief, or the thousands of oth—
`ers like her every day. So Medco and
`WilmerHale seeking this kind of relief
`is a big deal. To whom much has been
`given, much is required. This is a big—
`time law firm, one of the biggest law
`firms in America. Medco is one of the
`biggest pharmaceutical companies in
`the country. And presumably the law
`firm has insurance that they pay to in
`sure them if they make an error. So it
`appears that they are not willing to ac-
`cept the court’s ruling.
`One time an individual was asking
`me: Oh, JEFF, you let this go. Give in
`and let this go. I sort of as a joke said
`to the individual: Well, if WilmerHale
`will agree not to raise the statute of
`limitations against anybody who sues
`their clients if they file a lawsuit late,
`maybe I will reconsider. He thought I
`was serious. Of course WilmerHale is
`not going to do that. If some poor per—
`son files a lawsuit against someone
`they are representing, and they file it
`one hour late, WilmerHale will file a
`motion to dismiss it. And they will not
`ask why they filed it late. This is law.
`It has to be objective. It has to be fair.
`You are not entitled to waltz into the
`
`US. Congress well
`connected—and
`start lobbying for special relief.
`There is nothing more complicated
`about that than this. So a couple of
`things have been raised. Well, they sug—
`gest, we should not amend the House
`patent bill, and that if we do, it some—
`how will kill the legislation. That is
`not so. Chairman LEAHY has said he
`supports
`the
`amendment,
`but
`he
`doesn’t want to vote for it because it
`would keep the bill from being passed
`somehow.
`It would not keep it
`passed.
`Indeed,
`the bill
`
`from being
`that was
`
`

`

`CONGRESSIONAL RECORD — SENATE
`
`S5427
`
`September 8, 2011
`to assure
`the patent office in order
`their long term freedom to operate. I
`do not need to belabor my colleagues
`with the attendant benefit the publica—
`tion of patents provides to global com—
`petitors who are not respectful of intel-
`lectual property rights.
`The reason for this detrimental reli—
`ance on patents for internal technology
`is that the utility and reliability of
`section 5 is dependent on the prior use
`being an “internal commercial use”~a
`term for which there is no readily
`available judicial precedent. Should
`section 5 of HR. 1249 become law, an
`innovator and his legal counsel need
`some reasonable assurance that an in—
`ternal use will, in fact, be deemed to be
`a commercial use protectable under
`the law. These assurances are all the
`more important for US. companies in
`the biotechnology field with extraor—
`dinarily long lead times for commer-
`cialization of its products. Does my
`colleague from Vermont understand
`the concern I am raising?
`Mr. LEAHY. Madam President, I will
`say to my good friend that he is not
`the first to raise this issue with me and
`the other Members of the House and
`Senate Judiciary Committees who have
`worked on this bill. I have discussed
`section 5 at
`length with the distin—
`guished House
`Judiciary Committee
`Chairman LAMAR SMITH. Perhaps I can
`help provide some of the needed clarity
`for my colleague concerning what we
`intend to be within the confines of the
`definition of
`“internal
`commercial
`use” as it is used in section 5 of the
`bill.
`Mr. BLUNT. I thank my colleague for
`his willingness to discuss this matter
`here on the floor of the Senate. It is
`my reading of the bill’s language under
`section 5 that prior use rights shall
`vest when innovative technology is
`first put into continuous internal use
`in the business of the enterprise with
`the
`objective
`of
`developing
`commercializable products. Does
`the
`chairman of the Judiciary Committee
`share this understanding?
`Mr. LEAHY. Yes. My colleague and I
`are in agreement that it is our inten—
`tion,
`as
`the sponsors of
`this com—
`prehensive measure, that the prior use
`right set forth in section 5 of HR. 1249
`shall vest when innovative technology
`is first put
`into continuous internal
`use in the business of an innovator’s
`enterprise with the objective of mak—
`ing a commercializable product.
`Mr. BLUNT.
`I thank my colleague
`from Vermont. If he would permit me
`to clarify this matter further. Am I
`correct in understanding that, so long
`as that use begins more than 1 year
`prior to the effective filing date of a
`subsequent patent or publication by a
`later inventor, the initiation of contin—
`uous internal use by an original inno—
`vator in a manufacturing of a product
`should guarantee the defense of prior
`use regardless of whether the product
`is a prototype with a need for quality
`improvements?
`I thank my colleague
`Mr. LEAHY.
`for the question. His understanding is
`
`correct. So long as the prior use begins
`more than 1 year prior to the effective
`filing date of a subsequent patent or
`publication by a later inventor, the ini—
`tiation of continuous internal use in
`the manufacture of products should
`guarantee the defense of prior use.
`Mr. BLUNT.
`I thank my colleague.
`Let me illustrate by showing the im—
`pact of the ambivalence of the statu—
`tory language on agricultural research
`which is a major industry not only in
`Midwestern States like Missouri, Iowa,
`Kansas, Nebraska,
`Illinois, but
`in
`States ranging from California to Con—
`necticut from Texas to Minnesota from
`North Carolina to Idaho. Virtually
`every State in this Union has an in—
`vestment in agricultural research. The
`productivity of US. farmers provides a
`significant positive input to the US.
`balance of trade due in large part to
`the high technology adopted by US.
`farmers. That high technology is pro~
`vided from multiple sources ranging
`from research at
`land grant univer—
`sities, the USDA and private for—profit
`companies all of whom have internal
`technology that provides a competitive
`edge for maintaining agricultural com—
`petitive advantage for the US. econ—
`omy.
`To specifically illustrate let us con—
`sider that US. researchers are leading
`the world in discovering genetic mark—
`ers that are associated with important
`agronomic traits which serves as breed—
`ing production tools. Instead of teach—
`ing foreign competitors these produc—
`tion tools, a preferred alternative may
`be to rely on prior user rights for such
`innovative crop breeding technology
`which is used in the manufacture of
`new plant varieties although the use
`may only occur once a year after each
`growing season and for many years to
`selectively manufacture a perfected
`crop product that is sold.
`As another example let us consider
`an innovation in making potential new
`genetically modified products all of
`which need years of testing to verify
`their viability, repeatabilty and com—
`mercial value. Of the thousands of new
`potential prototype products made,
`only a few may survive initial screen—
`ing to begin years of field trials. We
`should agree that a continuously used
`process qualifies as internal commer—
`cial use despite the fact that many pro—
`totypes will fail
`to have commercial
`merit.
`As my examples illustrate, for sec—
`tion 5 to have its intended benefit, in—
`ternal commercial use must vest when
`an innovator
`reduces
`technology to
`practice and takes diligent steps to
`maintain continuous, regular commer»
`cial use of the technology in manufac—
`turing operations of the enterprise.
`Mr. LEAHY. My colleague is correct
`in his reasoning and his understanding
`of what is intended by section 5. The
`methods used by Edison in producing
`multiple
`failures
`for electric light
`bulbs were no less commercial uses be—
`fore the ultimate production of a com—
`mercially successful light bulb. Let us
`
`agree that internally used methods and
`materials do qualify for the defense of
`prior user rights when there is evidence
`of a commitment to put the innovation
`into use followed by a series of diligent
`events demonstrating that the innova—
`tion has been put
`into continuous-
`into a business activity with a purpose
`of developing new products for the ben-
`efit of mankind.
`Mr. BLUNT. I thank my colleague.
`SECTION 5
`Mr. KOHL. Madam President, I have
`long supported reforming our patent
`system and was pleased with the bill
`the Senate passed in March. It was not
`what everyone wanted, but it was an
`effective compromise that would spur
`innovation and economic growth. I am
`disappointed with changes the House
`made to the bill, specifically the ex~
`pansion of the “prior user rights” de—
`fense a provision which raises serious
`concerns for the University of Wiscon~
`sin’s patent
`licensing organization
`which fosters innovative discoveries,
`spawning dozens of small businesses
`and spurring economic growth in Wis—
`consin.
`Let me explain why. A patent grants
`an innovator the right to exclude oth~
`ers from using an invention in eX—
`change for making that invention pub—
`lic. The publication of patents and the
`research behind them advance further
`innovation and discovery. Anyone who
`uses the invention without permission
`is liable for infringement, and someone
`who was using the invention prior to
`the patent has only a limited defense
`for infringement. The purpose of lim—
`iting this defense to infringement is to
`encourage publication and disclosure of
`inventions to foster innovation. So by
`expanding the prior user defense we
`run the real risk of discouraging disclo—
`sure through the patent system. This is
`concerning to the University of Wis—
`consin because they depend on publica—
`tion and disclosure to further research
`and innovation.
`I appreciate the inclusion of a carve-
`out to the prior user rights defense pro—
`vision so that it does not apply to pat-
`ents owned by a university “or a tech—
`nology transfer organization whose pri«
`mary purpose is to facilitate the com—
`mercialization of
`technologies devel—
`oped by one or more such institutions
`of higher education.” However, I have
`some concerns about how the carve out
`will work in practice and I would like
`to clarify its application.
`It is my understanding that the term
`“primary purpose” in this exception is
`intended to be consistent with and
`have a similar scope as the “primary
`functions” language in the Bayh—Dole
`Act. In particular, if a nonprofit entity
`is entitled to receive assignment of in—
`ventions pursuant to section 207(c)(7) of
`title 35 because one of its primary func—
`tions is the management of inventions,
`presumably it falls under the primary
`purpose prong of the prior user rights
`exception. Is that the Senator‘s under—
`standing of the provision?
`Mr LEAHY. The senior Senator from
`Wisconsin is correct. That is also my
`
`

`

`S5428
`
`view of the exception. I understand the
`Senator has consistently opposed the
`expansion of prior user rights, but I
`agree with his analysis of the scope of
`the exception in section 5 of HR. 1249.
`SECTION is
`Mr. PRYOR. I would like to ask my
`colleague from Vermont, the Chairman
`of the Judiciary Committee and lead
`sponsor of the America Invents Act be—
`fore us today,
`to further clarify an
`issue relating to Section 18 of that leg—
`islation. Ideally, I would have liked to
`modify the Section 18 process in ac—
`cordance with the Cantwell
`amend—
`ment. It is of crucial importance to me
`that we clarify the intent of the proc—
`ess and implement it as narrowly as
`possible.
`As I understand it, Section 18 is in—
`tended to enable the PTO to weed out
`improperly issued patents for abstract
`methods of doing business. Conversely,
`I understand that Section 18 is not in—
`tended to allow owners of valid patents
`to be harassed or subjected to the sub—
`stantial cost and uncertainty of the
`untested review process established
`therein. Yet I have heard concerns that
`Section 18 would allow just such har—
`assment because it enables review of
`patents whose claims have been found
`valid both through previous reexamina—
`tions by the PTO and jury trials. In my
`mind, patent claims that have with—
`stood multiple administrative and judi—
`ciary reviews should be considered pre—
`sumptively valid. It would not only be
`unfair to the patent holder but would
`be a waste of both PTO’s time and re—
`sources to subject such presumptively
`valid patent claims to yet another ad—
`ministrative review. It would be par—
`ticularly wasteful and injurious to le—
`gitimate patent holders if the “transi—
`tional
`review” only considered prior
`art that was already considered in the
`previous administrative or judicial pro—
`ceedings. Can the Chairman enlighten
`me as to how the PTO will ensure that
`the “transitional process” does not be—
`come a tool to harass owners of valid
`patents that have survived multiple ad—
`ministrative and judicial reviews”?
`Mr. LEAHY. The proceeding created
`by Section 18 is modeled on the pro~
`posed post~grant
`review proceeding
`under Section 6 of the Act. As in other
`post—grant
`proceedings,
`the
`claims
`should typically be evaluated to deter—
`mine whether
`they,
`among other
`things, meet the enablement and writ~
`ten description requirements of
`the
`act, and contain patentable subject
`matter under the standards defined in
`the statutes, case law, and as explained
`in relevant USPTO guidance. While the
`program will generally otherwise func—
`tion on the same terms as other post—
`grant proceedings, the USPTO should
`implement Section 18 in a manner that
`avoids attempts to use the transitional
`program against patent owners in a
`harassing way. Specifically, to initiate
`a post issuance review under the new
`post grant or transitional proceedings,
`it is not enough that the request show
`a substantial new question of patent—
`
`
`
`CONGRESSIONAL RECORD — SENATE
`September 8, 2011
`tronic trading industry to implement
`trading and asset allocation strategies.
`Additionally. there are companies that
`possess class 705 patents which have
`used the patents to manufacture and
`commercialize
`novel machinery
`to
`count, sort, and authenticate currency
`and paper instruments. Are these the
`types of patents that are the target of
`Section 18?
`Mr. SCHUMER. No. Patent holders
`who have generated productive inven—
`tions and have provided large numbers
`of American workers with good jobs
`through the development and commerw
`cialization of those patents are not the
`ones that have created the business
`method patent problem. While merely
`having employees and conducting busi—
`ness would not disqualify a patent—
`holder from Section 18
`review,
`gen—
`erally speaking, it is not
`the under—
`standing of Congress that such patents
`would be
`reviewed and invalidated
`under Section 18.
`Mr. COBURN. Madam President,
`today,
`I rise to discuss section 18 of
`HR.
`1249,
`the Leahy—Smith America
`Invents Act. Consistent with the state—
`ment
`in the RECORD by Chairman
`LAMAR SMITH on June 23, 2011, I under—
`stand that section 18 will not make all
`business method patents subject to re.
`view by the US. Patent and Trade-
`mark Office. Rather, section 18 is de—
`signed to address the problem of low—
`quality business method patents that
`are commonly associated with the Fed—
`eral Circuit’s 1998 State Street deci—
`sion. I further understand that section
`18 of the bill specifically exempts “pat—
`ents for technological inventions” from
`this new review at USPTO.
`Patents for technological inventions
`are those patents whose novelty turns
`on a technological innovation over the
`prior art and are concerned with a
`technical problem which is solved with
`a technical solution. The technological
`innovation exception does not exclude
`a patent from section 18 simply be—
`cause it recites technology. Inventions
`related to manufacturing and machines
`that do not simply use known tech—
`nology to accomplish a novel business
`process would be excluded from review
`under section 18.
`For example, section 18 would not
`cover patents related to the manufac—
`ture and distribution of machinery to
`count, sort, and authenticate currency.
`It is the intention of section 18 to not
`review mechanical
`inventions related
`to the manufacture and distribution of
`machinery to count, sort, and authen—
`ticate currency like change sorters and
`machines that scan paper instruments.
`including
`currency, whose
`novelty
`turns on a technological
`innovation
`over the prior art. These types of pat—
`ents would not be eligible for review
`under this program.
`American innovation is an important
`engine for job growth and our economic
`revitalization. To this end, the timely
`consideration of patent applications
`and the issuance of quality patents are
`critical components and should remain
`
`ability but must establish that “it is
`more likely than not that at least 1 of
`the claims challenged in the petition is
`unpatentable.” The heightened require—
`ment established by this bill means
`that these proceedings are even better
`shielded from abuse than the reexam—
`ination proceedings have been. In fact,
`the new higher
`standard for post
`issuance review was created to make it
`even more difficult
`for
`these proce—
`dures to be used as tools for harass—
`ment. Therefore, the rule that bars the
`PTO from reconsidering issues
`pre—
`viously considered during examination
`or in an earlier reexamination still ap~
`plies. While a prior district court deci—
`sion upholding the validity of a patent
`may not preclude the PTO from consid—
`ering the same issues resolved in that
`proceeding, PTO officials must still
`consider the court’s decision and devi—
`ate from its findings only to the extent
`reasonable. As a result, I expect
`the
`USPTO would not initiate proceedings
`where the petition does not raise a sub—
`stantial new question of patentability
`than those that had already been con—
`sidered by the USPTO in earlier pro—
`ceedings. Does that answer my col—
`league’s question?”
`Mr. PRYOR. I thank my colleague
`for that explanation.
`SECTION 18
`Mr. DURBIN. I would like to clarify
`an issue with my colleague from New
`York, who is the author of Section 18.
`Legislative history created during ear—
`lier consideration of
`this legislation
`makes clear that the business method
`patent problem that Section 18 is in—
`tended to address is fundamentally an
`issue of patent quality. Does the Sen—
`ator agree that poor quality business
`method patents generally do not arise
`from the operation of American compa—
`nies who use business method patents
`to develop and sell products and em-
`ploy American workers in doing so?
`Mr. SCHUMER. My friend from Illi—
`nois is correct. I have previously in—
`serted into the RECORD a March 3 letter
`from the
`Independent Community
`Bankers of America which stated that
`“Under
`the current system, business
`method patents of questionable quality
`are used to force community banks to
`pay meritless settlements to entities
`that may have patents assigned to
`them, but who have invented nothing,
`offer no product or service and employ
`no one.
`.
`.
`. The Schumer—Kyl amend—
`ment is critical to stopping this eco—
`nomic harm.”
`Mr. DURBIN. I thank the Senator. I
`want
`to point out
`that
`there are a
`number of examples of companies that
`employ hundreds
`or
`thousands
`of
`American workers in developing and
`commercializing financial sector prod—
`ucts that are based on business method
`patents, For example, some companies
`that possess patents categorized by the
`PTO as class 705 business method pat~
`ents have used the patents to develop
`novel software tools and graphical user
`interfaces that have been widely com—
`mercialized and used within the elec—
`
`
`
`

`

`CONGRESSIONAL RECORD —- SENATE
`
`S5429
`
`September 8, 2011
`the primary goal of the US. Patent
`and Trademark Office.
`I rise
`Mr. KYL. Madam President,
`today to say a few words about aspects
`of the present bill that differ from the
`bill that passed the Senate in March. I
`commented at
`length on the Senate
`bill when that bill was before this
`body. Since the present bill and the
`Senate bill are largely identical, I will
`not repeat what I said previously, but
`will simply refer to my previous re—
`marks, at 157 Cong. Rec. 1368-80, daily
`ed. March 8,
`2011, which obviously
`apply to the present bill as well.
`As I mentioned earlier, Mr. SMITH ne—
`
`gotiated his bill with Senators LEAHY,
`GRASSLEY, and me as he moved the bill
`through the House of Representatives.
`The final House bill thus represents a
`compromise, one which the Senate sup—
`porters of patent reform have agreed to
`support in theSenate. The provisions
`that Mr. SMITH has added to the bill
`are ones that we have all had an oppor—
`tunity to consider and discuss, and
`which I fully support.
`Section 19(d) of the present bill adds
`a new section 299 to title 35. This new
`section bars joinder of accused infring-
`ers as codefendants, or consolidation of
`their cases for trial,
`if the only com—
`mon fact and transaction among the
`defendants is that they are alleged to
`have infringed the same patent, This
`provision effectively codifies current
`law as it has been applied everywhere
`outside of
`the Eastern District of
`Texas. See Rudd v. Lur Products Corp,
`2011 WL 148052.
`(N.D. Ill. January 12,
`2011), and the committee report for this
`bill at pages 54 through 55.
`HR. 1249 as introduced applied only
`to joinder of defendants in one action.
`As amended in the mark up and in the
`floor managers’ amendment,
`the bill
`extends the limit on joinder to also bar
`consolidation of trials of separate ac—
`tions. When this change was first pro—
`posed, I was skeptical that it was nec—
`essary. A review of legal authority,
`however,
`reveals that under current
`law. even if parties cannot be joined as
`defendants under rule 20,
`their cases
`can still be consolidated for trial under
`rule 42. For example, as the district
`court held in Ohio v. Louis Trautn
`Dam, Inc,
`163 F.R.D. 500, 503 (SD.
`Ohio 1995), “[e]ven when actions are
`improperly joined,
`it
`is
`sometimes
`proper to consolidate them for trial.”
`The same conclusion was reached by
`the court in Kenvin v. Newburger, Loeb
`& 00., 37 F.R.D.
`473 (S.D.N.Y. 1965),
`which ordered severance because of
`misjoinder of parties, concluding that
`the claims against the defendants did
`not arise out of single transaction or
`occurrence, but then suggested the de—
`sirability of a joint trial, and expressly
`made its severance order without prej—
`udice to a subsequent motion for con—
`solidation under rule 42(a). Similarly,
`in Stanford v. TVA, 18 F.R.D. 152 (MD.
`Tenn. 1955), a court found that the de—
`fendants had been misjoined, since the
`claims arose out of independent trans—
`actions, and ordered them severed. The
`
`subsequently found, however,
`court
`that a common question existed and
`ordered the defendants” cases consoli—
`dated for trial.
`That these cases are not just outliers
`is confirmed by Federal Practice and
`Procedure, which comments as follows
`at §23822
`Although as a general proposition it is true
`that Rule 42(a) should be construed in har-
`mony with the other civil rules, it would be
`a mistake to assume that the standard for
`consolidation is the same as that governing
`the original joinder of parties or claims. .
`.
`.
`[M]ore than one party can be joined on a side
`under Rule 20(a) only if there is asserted on
`behalf of or against all of them one or more
`claims for relief arising out of the same
`transaction or occurrence or series of trans—
`actions or occurrences. This is in addition to
`the requirement that there be some question
`of law or fact common to all the parties. But
`the existence of a common question by itself
`is enough to permit consolidation under Rule
`42(a), even if the claims arise out of inde—
`pendent transactions.
`If a court that was barred from join—
`ing defendants in one action could in—
`stead simply consolidate their cases for
`trial under rule 42, section 299’s pur—
`pose of allowing unrelated patent de—
`fendants to insist on being tried sepa~
`rately would be undermined. Section
`299 thus adopts a common standard for
`both joinder of defendants and consoli—
`dation of their cases for trial.
`Another set of changes made by the
`House bill concerns the coordination of
`inter partes and postgrant review with
`civil litigation. The Senate bill, at pro—
`posed sections 315(a) and 325(a), would
`have barred a party or his real party in
`interest from seeking or maintaining
`an inter partes or postgrant
`review
`after he has filed a declaratory—judg—
`ment action challenging the validity of
`the patent. The final bill will still bar
`seeking IPR or PGR after a declara—
`tory—judgment action has been filed,
`but will allow a declaratory—judgment
`action to be filed on the same day or
`after the petition for IPR or PGR was
`filed. Such a declaratory—judgment ac—
`tion, however, will be automatically
`stayed by the court unless the patent
`owner countersues for
`infringement.
`The purpose of allowing the declara—
`tory—judgment action to be filed is to
`allow the accused infringer to file the
`first action and thus be presumptively
`entitled to his choice of venue.
`The House bill also extends the dead“
`line for allowing an accused infringer
`to seek inter partes review after he has
`been sued for infringement. The Senate
`bill
`imposed a 6—month deadline on
`seeking IPR after the patent owner has
`filed an action for infringement. The
`final bill extends this deadline, at pro—
`posed section 315(b),
`to 1 year. High—
`technology companies,
`in particular,
`have noted that they are often sued by
`defendants asserting multiple patents
`with large numbers of vague claims,
`making it difficult to determine in the
`first few months of the litigation which
`claims will be relevant and how those
`claims are alleged to read on the de-
`fendant’s products. Current
`law im—
`poses no deadline on seeking inter
`
`partes reexamination. And in light of
`the present bill’s enhanced estoppels, it
`is important
`that
`the section 315(b)
`deadline afford defendants a reasonable
`opportunity to identify and understand
`the patent claims that are relevant to
`the litigation. It is thus appropriate to
`extend the section 315(b) deadline to
`one year.
`The final bill also extends inter—
`vening rights to inter partes and post—
`grant review. The bill does not allow
`new matter to be introduced to support
`claims in IPR and PGR and does not
`allow broadening of claims in those
`proceedings. The aspect of intervening
`rights that is relevant to IPR and PGR
`is section 252, first paragraph, which
`provides
`that damages accrue only
`from the date of the conclusion of re—
`view if claim scope has been sub—
`stantively altered in the proceeding.
`This restriction applies even if
`the
`amendment only narrowed the scope of
`the claims. See Engineered Data Prod—
`ucts,
`Inc. v. GBS Corp, 506 F.Supp.2d
`461, 467 (D. Colo. 2007), which notes that
`“the Federal Circuit has routinely ap—
`plied the intervening rights defense to
`narrowing amendments.” When patent—
`defeating prior art is discovered, it is
`often impossible to predict whether
`that prior art will be found to render
`the entire invention obvious, o