EXHIBIT 2003
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`to
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`PATENT OWNER DISPOSITION SERVICES, LLC’S
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`PRELIMINARY RESPONSE
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`in
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`Case CBM2013-00040
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`Patent 5,424,944
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`
`112TH CONGRESS
`1st Session
`
`"
`
`HOUSE OF REPRESENTATIVES
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`!
`
`REPT. 112–98
`Part 1
`
`AMERICA INVENTS ACT
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`JUNE 1, 2011.—Committed to the Committee of the Whole House on the State of
`the Union and ordered to be printed
`
`Mr. SMITH of Texas, from the Committee on the Judiciary,
`submitted the following
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`R E P O R T
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`together with
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`DISSENTING VIEWS AND ADDITIONAL VIEWS
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`[To accompany H.R. 1249]
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`[Including cost estimate of the Congressional Budget Office]
`
`The Committee on the Judiciary, to whom was referred the bill
`(H.R. 1249) to amend title 35, United States Code, to provide for
`patent reform, having considered the same, reports favorably there-
`on with an amendment and recommends that the bill as amended
`do pass.
`
`CONTENTS
`
`Page
`1
`......................................................................................................
`The Amendment
`38
`Purpose and Summary ............................................................................................
`40
`Background and Need for the Legislation .............................................................
`57
`Hearings ...................................................................................................................
`58
`Committee Consideration ........................................................................................
`58
`Committee Votes ......................................................................................................
`63
`Committee Oversight Findings ...............................................................................
`63
`New Budget Authority and Tax Expenditures ......................................................
`63
`Congressional Budget Office Cost Estimate ..........................................................
`73
`Performance Goals and Objectives .........................................................................
`73
`Advisory on Earmarks .............................................................................................
`73
`Section-by-Section Analysis
`....................................................................................
`85
`Agency Views ...........................................................................................................
`89
`Changes in Existing Law Made by the Bill, as Reported .....................................
`Dissenting Views
`..................................................................................................... 162
`Additional Views ...................................................................................................... 163
`
`99–006
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`54
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`Transitional program for covered business method patents
`A number of patent observers believe the issuance of poor busi-
`ness-method patents during the late 1990’s through the early
`2000’s led to the patent ‘‘troll’’ lawsuits that compelled the Com-
`mittee to launch the patent reform project 6 years ago. At the time,
`the USPTO lacked a sufficient number of examiners with expertise
`in the relevant art area. Compounding this problem, there was a
`dearth of available prior art to assist examiners as they reviewed
`business method applications. Critics also note that most countries
`do not grant patents for business methods.
`The Act responds to the problem by creating a transitional pro-
`gram 1 year after enactment of the bill to implement a provisional
`post-grant proceeding for review of the validity of any business
`method patent. In contrast to the era of the late 1990’s-early
`2000’s, examiners will review the best prior art available. A peti-
`tion to initiate a review will not be granted unless the petitioner
`is first sued for infringement or is accused of infringement. The
`program otherwise generally functions on the same terms as other
`post-grant proceedings initiated pursuant to the bill. Any party
`may request a stay of a civil action if a related post-grant pro-
`ceeding is granted. The program sunsets after 10 years, which en-
`sures that patent holders cannot delay filing a lawsuit over a short-
`er time period to avoid reevaluation under the transitional pro-
`gram.
`
`Jurisdictional and procedural matters
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`a) State court jurisdiction and the US Court of Appeals for
`the Federal Circuit
`The US district courts area given original jurisdiction to hear
`patent cases,57 while the US Court of Appeals for the Federal Cir-
`cuit adjudicates all patent appeals.58 The Supreme Court ruled in
`2002,59 however, that patent counterclaims do not give the Federal
`Circuit appellate jurisdiction over a case.
`The Act clarifies the jurisdiction of the US district courts and
`stipulates that the US Court of Appeals for the Federal Circuit has
`jurisdiction over appeals involving compulsory patent counter-
`claims. The legislative history of this provision, which we reaffirm
`and adopt as our own, appears in the Committee Report accom-
`panying H.R. 2955 from the 109th Congress,60 which the Com-
`mittee reported favorably to the House on April 5, 2006.
`
`b) Joinder
`The Act also addresses problems occasioned by the joinder of de-
`fendants (sometimes numbering in the dozens) who have tenuous
`connections to the underlying disputes in patent infringement
`suits.
`The Act amends chapter 29 of the Patent Act by creating a new
`§ 299 that addresses joinder under Rule 20 and consolidation of
`trials under Rule 42. Pursuant to the provision, parties who are ac-
`cused infringers in most patent suits may be joined as defendants
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`57 28 USC § 1338.
`58 28 USC § 1295.
`59 Holmes Group, Inc., v. Vornado Air Circulation Systems, Inc. 535 U.S. 826 (2002).
`60 H. Rep. 109–405.
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