A Guide to the Legislative History
`of the America Invents Act: Part II of II
`
`Joe Matal*
`
`Introduction
`This is the second Article in a two-part series about the legislative history
`of the recently enacted Leahy-Smith America Invents Act (“AIA”).1 The first
`Article addressed those sections of the AIA that apply to an application be-
`fore a patent has issued—principally, the bill’s amendments to §§ 102, 103,
`115, 122, and 135 of title 35, and several of the AIA’s uncodified provisions.2
`This second Article addresses those changes made by the AIA that apply only
`after a patent has been granted. It examines the legislative history of the AIA’s
`provisions concerning post-grant review of patents; inter partes proceedings;
`supplemental examination; the section 18 business-method-patent-review
`program; the new defense of prior commercial use; the partial repeal of the
`best-mode requirement; and other changes regarding virtual and false mark-
`ing, advice of counsel, court jurisdiction, USPTO funding, and the deadline
`for seeking a patent term extension. This second Article consists of two parts:
`Part I addresses sections of the U.S. Code that were amended by the AIA,
`and Part II addresses sections of the AIA that are uncodified.
`
`I. Sections of the U.S. Code That Are Amended by the AIA
`A. 28 U.S.C. §§ 1295(a)(1), 1338(a), and 1454: The Holmes
`Group v. Vornado Fix
`Section 19 of the AIA, at subsections (a) through (c), enacts the so-called
`Holmes Group3 fix.4 These provisions: (1) amend title 28 to clarify that state
`
`* Joe Matal has served as a Judiciary Committee Counsel to Senator Jon Kyl since 2002,
`except for when he served as the Minority General Counsel of the Judiciary Committee
`from May 2009 to January 2011 while Senator Jeff Sessions was the ranking member of the
`committee. The author thanks his wife, Maren, for her assistance and support during the
`drafting of these Articles.
`1 Pub. L. No. 112-29, 125 Stat. 284 (2011). The first Article appeared in volume 21,
`page 435, of the Federal Circuit Bar Journal. Joe Matal, A Guide to the Legislative History of
`the America Invents Act: Part I of II, 21 Fed. Cir B.J. 435 (2012).
`2 Matal, supra note 1, at 436.
`3 Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826 (2002).
`4 H.R. Rep. No. 112-98, at 81 (2011).
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`courts lack jurisdiction over legal claims arising under patent, copyright, and
`plant-variety-protection statutes, and deem the various overseas territories to
`be States for this purpose; (2) extend the Federal Circuit’s appellate jurisdiction
`to compulsory patent and plant-variety-protection counterclaims, thereby
`abrogating Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.;5 and
`(3) allow removal of civil actions in which “any party” asserts legal claims
`under patent, copyright, or plant-variety-protection statutes.6
`A provision appearing in earlier versions of the AIA as § 19(d), which would
`have required the Federal Circuit to transfer cases that had been appealed as
`patent or plant-variety-protection cases but in which no such legal claim “is
`the subject of the appeal by any party,” was eliminated from the AIA during
`House floor consideration.7
`The 2011 Committee Report briefly described these provisions, noted that
`similar legislation was reported by the House Judiciary Committee in 2006,
`and “reaffirm[ed]” the Committee Report for that earlier bill.8
`The Committee Report for the 2006 Holmes Group bill stated that:
`The [House Judiciary] Committee believes Holmes Group contravened the will of
`Congress when it created the Federal Circuit. That is, the decision will induce litigants
`to engage in forum-shopping among the regional circuits and State courts. Extending
`the argument, the Committee is concerned that the decision will lead to an erosion
`in the uniformity or coherence in patent law that has been steadily building since the
`Circuit’s creation in 1982.9
`The Holmes Group provisions were added to the AIA during the Senate
`Judiciary Committee’s markup of the bill on February 3, 2011.10 During the
`Senate debates in March 2011, Senator Kyl noted that the AIA modified the
`2006 bill by limiting its expansion of Federal Circuit jurisdiction to “only
`compulsory counterclaims.”11 Senator Kyl stated: “Compulsory counterclaims
`are defined at Rule 13(a) and basically consist of counterclaims that arise out
`of the same transaction or occurrence and that do not require the joinder
`of parties over whom the court would lack jurisdiction.”12 He explained
`that “[w]ithout this modification, it is possible that a defendant could raise
`unrelated and unnecessary patent counterclaims simply in order to manipulate
`appellate jurisdiction.”13 Senator Kyl also noted that § 1454, the new removal
`
`5 Holmes, 535 U.S. 826.
`6 Leahy-Smith America Invents Act, sec. 19, 125 Stat. at 332.
`7 157 Cong. Rec. H4446 (daily ed. June 22, 2011).
`8 H.R. Rep. No. 112-98, at 81; see also id. pt. 1, at 54.
`9 H.R. Rep. No. 109-407, at 5 (2006).
`10 S. 23, 112th Cong., sec. § 17 (2011).
`11 157 Cong. Rec. S1378 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`12 Id. at S1378–79.
`13 Id. at S1379.
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`statute, had been modified to clarify that intellectual-property counterclaims
`would not be remanded.14
`
`B. 28 U.S.C. § 1295(a)(4)(A): Jurisdiction of the Federal Circuit
`This subparagraph was revised to identify all of the various Patent Trial
`and Appeal Board proceedings from which the Federal Circuit shall entertain
`appeals.15
`Senator Kyl addressed these revisions during the March 2011 debates,
`commenting that “[t]he language of subparagraph (A) is also generalized and
`clarified, recognizing that the details of what is appealable will be in sections
`134 and 141.”16 He also noted that it “appears that Congress never gave the
`Federal Circuit jurisdiction over appeals from reexaminations when it created
`those proceedings,” and that the AIA’s recognition of such jurisdiction was
`therefore made retroactive.17 Finally, he noted that “[i]n the effective-date
`provision . . . , various existing authorities are extended so that they may
`continue to apply to inter partes reexaminations commenced under the old
`system.”18
`
`C. 35 U.S.C. §§ 6, 141: Patent Trial and Appeal Board and
`Appeals to the Federal Circuit
`Section 6 of title 35 is revised by section 7(a) of the AIA to (i) redesignate
`the Board of Patent Appeals and Interferences (“BPAI”) as the Patent Trial
`and Appeal Board (“PTAB” or “Board”), (ii) to authorize the new Board to
`hear appeals of examinations and reexaminations, and (iii) to enable the Board
`to conduct derivation proceedings and inter partes and post-grant reviews.19
`Consistent with this change, in section 7(c) of the AIA, “section 141 of title
`35 [was] modified to allow appeals of PTAB decisions in inter partes and
`post-grant reviews, and the section is edited and reorganized.”20
`The Committee Report briefly commented on these revisions,21 as did Senator
`Kyl, who noted that the recodification of section 6 departs from previous
`
`14 Id.
`15 See Leahy-Smith America Invents Act, Pub. L. No. 112–29, sec. 6(f)(3)(C), § 1295(a)
`(4)(A), 125 Stat. 284, 313 (2011); see also 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011)
`(statement of Sen. Kyl).
`16 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`17 Id.
`18 Id.
`19 Leahy-Smith America Invents Act, sec. 7(a), 125 Stat. at 313.
`20 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`21 H.R. Rep. No. 112-98, at 48, 77 (2011).
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`versions of the bill by allowing all members of the PTAB to participate in
`all proceedings.22
`Section 6(f)(2)(B) of the AIA provides that, for purposes of pending
`interferences, “the Director may deem the Patent Trial and Appeal Board to
`be the Board of Patent Appeals and Interferences” and conduct “any further
`proceedings in that interference.”23 Paragraphs (2) and (3) of section 7(e) of the
`bill create similar authority for pending inter partes reexaminations.24 And in
`conformity with this change, “language [was] added to section [6(f)(3)(C)] of
`the bill that deems references to derivation proceedings in the current appeals
`statutes to extend to interferences commenced before the effective date of the
`bill’s repeal of interferences.”25
`
`D. 35 U.S.C. § 32: Suspension or Exclusion from Practice
`Section 3(k) of the AIA modifies the statute of limitations for initiating a
`proceeding under 35 U.S.C. § 32 to exclude an attorney from practice before
`the USPTO.26 It requires that such a proceeding be initiated within the earlier
`of either the ten-year period after the misconduct occurred, or one year after the
`misconduct was reported to the USPTO “as prescribed in * * * regulations.”27
`Section 3(k) also requires the USPTO to report every two years to Congress
`on substantial incidents of misconduct that evade investigation because of
`the ten-year time limit.28
`Senator Kyl commented on these provisions during the March 2011 Senate
`debates, describing the ambiguity that existed as to which deadline applied to
`§ 32 proceedings under pre-AIA law.29 He also noted that “[a] 10-year limit
`would appear to allow a proceeding for the vast bulk of misconduct that is
`discovered,”30 while staying within the time period “during which individuals
`can reasonably be expected to maintain an accurate recollection of events and
`motivations.”31
`
`22 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`23 Leahy-Smith America Invents Act, sec. 6(f)(2)(B), 125 Stat. at 311.
`24 Id. at secs. 7(e)(2), 7(e)(3), 125 Stat. at 315.
`25 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl) (“In the
`effective-date provision at the end of section [7], various existing [appeal] authorities are
`extended so that they may continue to apply to inter partes reexaminations commenced
`under the old system.”).
`26 Leahy-Smith America Invents Act, § 3(k), 125 Stat. at 291.
`27 Id. § 3(k)(1).
`28 Id. § 3(k)(2).
`29 See 157 Cong. Rec. S1372 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`30 Id.
`31 Id. at S1372–73.
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`E. 35 U.S.C. § 143: Proceedings on Appeal
`Section 7(c)(3) of the AIA amends § 143 of title 35 to allow the Director
`to intervene in a Federal Circuit appeal of the PTAB’s decision in a derivation
`proceeding or in an inter partes or post-grant review.32 Senator Kyl noted this
`provision in passing during the March 2011 debates on the bill.33
`
`F. 35 U.S.C. § 202(b): Bayh-Dole Funding Agreements and
`Technical Corrections
`Prior to the enactment of the AIA, § 202(c)(7)(E)(i) of title 35 provided
`that, if a government-owned, contractor-operated facility received net royalty
`income from patented inventions developed through federally funded research
`in an amount that exceeded 5% of the facility’s annual budget, then 75% of
`any such royalty income received in excess of that 5% must be paid by the
`facility to the federal government.34 Section 13 of the AIA reduced this 75%
`toll to just 15%.35
`The 2011 Committee Report commented briefly on this provision in its
`background section, noting that:
`The Senate Judiciary Committee considered testimony that the requirement to repay
`the government 75 percent of the excess on royalty payments may be causing a
`disincentive for universities and small business operating under the GOCO provisions
`to commercialize products.[36] Based on these concerns, the Act maintains the essence
`of the agreement GOCOs made with the taxpayers when they received funding[:] that
`they would reimburse the taxpayer if they are sufficiently successful in commercializing
`a product invented with taxpayer dollars, but which reduces the burden on universities
`and small businesses, thereby encouraging commercialization.37
`
`32 Leahy-Smith America Invents Act § 7(c)(3), 125 Stat. at 314–15.
`33 See 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`34 35 U.S.C. § 202(c)(7)(E)(i) (2006), amended by Leahy-Smith America Invents Act
`§ 13(a)(1), 125 Stat. at 327.
`35 Leahy-Smith America Invents Act § 13(a)(1), 125 Stat. at 327.
`36 H.R. Rep. No. 112-98, at 51 n.52 (2011). A footnote that appears in the Report at
`this point cites to the following hearing testimony: The Role of Federally-Funded University
`Research in the Patent System: Hearing Before the S. Comm. on the Judiciary, 110th Cong.
`(2007) (statement of Dr. Elizabeth Hoffman, Executive Vice President and Provost, Professor
`of Economics, Iowa State University).
`37 H.R. Rep. No. 112-98, at 51; see also id. at 79 (section-by-section analysis); S. Rep.
`No. 111-18, at 46 (2009) (additional views of Sen. Grassley); 157 Cong. Rec. S1366 (daily
`ed. Mar. 8, 2011) (Republican Policy Committee Legislative Notice) (summarizing section
`13’s amendments to the America Invents Act).
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`The AIA also corrected several minor errors in § 202,38 conformed it to the
`adoption of the first-to-file system,39 and softened language that had previously
`provided that, except where infeasible after a reasonable inquiry, federally
`funded patented inventions must be licensed to small firms.40 The AIA replaced
`the previous requirement to license to small firms with a requirement that
`such firms simply be given a “preference” in licensing.41
`
`G. 35 U.S.C. § 251: Allowing Assignees to Seek Broadening
`Reissue
`Section 4(b)(2) of the AIA amends the third paragraph of section 251 (which
`will be designated as subsection (c) by the AIA)42 to allow an assignee of a
`patent to seek a broadening reissue of the patent if the entire interest in the
`invention was assigned before the application for patent was filed.43 Prior to the
`enactment of this provision, an assignee was barred from seeking broadening
`reissue.44 And even after its enactment, an assignee who acquired the patent or
`application from the inventor (that is, in cases where the inventor himself filed
`the application) will continue to be barred from seeking broadening reissue.45
`Senator Kyl commented on this change, and the USPTO’s construction
`the pre-AIA law, during the March 2011 debates on the bill:
`[T]he present bill . . . modifies section 251 to allow an assignee who applied for a
`patent to also seek broadening reissue of the patent within two years of its issue.
`Notwithstanding the language of the fourth paragraph of current section 251, the
`Office currently does allow assignees to seek broadening reissue, so long as the inventor
`does not oppose the reissue. The Office views such unopposed applications for reissue
`as effectively being made “in the name” of the inventor.[46] Expanding an assignee’s
`right to seek broadening reissue is consistent with the bill’s changes to sections 115
`and 118, which expand assignees’ rights by allowing assignees to apply for a patent
`against the inventor’s wishes. If an assignee exercises his right to apply for a patent
`
`38 See Leahy-Smith America Invents Act, secs.13(a)(3), 20(i)(2)(A), 125 Stat. at 327.
`39 See id. sec. 3(g)(7), 125 Stat. at 288.
`40 See id. sec. 20(i)(2)(B), 125 Stat. at 335.
`41 Id.
`42 Id. sec. 20(d)(3), 125 Stat. at 334.
`43 Id. sec. 4(b)(2),§ 251, 125 Stat. at 296.
`44 35 U.S.C. § 251 (2006), amended by Leahy-Smith America Invents Act § 4(b)(2),
`125 Stat. at 296.
`45 See Leahy-Smith America Invents Act, sec. 4(b)(2), 125 Stat. at 296; 35 U.S.C. § 251.
`46 The regulations governing this matter are somewhat contradictory. Although 37 C.F.R.
`§ 1.172 (2011) emphasizes that “[a] reissue oath must be signed and sworn to or declaration
`made by the inventor,” it then adds “except as otherwise provided,” and cites to 37 C.F.R.
`§ 1.47. Section 1.47 in turn provides that an assignee may file an application for patent
`“[w]henever all of the inventors refuse” to do so. 37 C.F.R. § 1.47(b) (2011).
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`against the inventor’s wishes, there is no reason not to allow the same assignee to also
`seek a broadening reissue within the section 251 time limits.47
`
`H. 35 U.S.C. § 257: Supplemental Examination
`Section 12 of the AIA authorizes a new post-grant proceeding called
`“supplemental examination.”48 This new proceeding allows the patent owner
`to submit to the USPTO any information that is believed to be “relevant to
`the patent.”49 Once the information is submitted, the Director must decide
`whether the information creates a substantial new question of patentability.50
`If he finds that it does, the USPTO must reexamine the patent.51
`The most important feature of this new proceeding is its effect on the
`inequitable-conduct doctrine. As the final Committee Report stated:
`If the Office determines that the information [that was submitted to the Office by the
`patent owner] does not present a substantial new question of patentability or that the
`patent is still valid, that information cannot later be used to hold the patent unenforceable
`or invalid on the basis [of] an inequitable-conduct attack in civil litigation.52
`The final Committee Report’s section-by-section analysis further elaborated
`on this point, noting that “[c]hallengers may still argue in court that the
`Office’s conclusion in supplemental examination was erroneous and that the
`information renders the patent invalid, but the information cannot be used
`to render the patent invalid or unenforceable on the basis of inequitable
`conduct.”53
`Supplemental examination was championed by Senator Hatch.54 The concept
`grew out of Senator Hatch’s advocacy over several Congresses of proposals
`to restrict the inequitable-conduct doctrine.55 The first Senate version of the
`AIA—the Hatch-Leahy bill of 200656—included a provision that would have
`sharply limited courts’ authority to hold a patent unenforceable on the basis
`
`47 157 Cong. Rec. S1373 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`48 Leahy-Smith America Invents Act, sec. 12, 125 Stat. at 325; see H.R. Rep. No. 112-
`98, at 28 (2011).
`49 H.R. Rep. No. 112-98, at 28.
`50 Id.
`51 For conventional summaries of the features of this new proceeding, see id. at 50, 78;
`157 Cong. Rec. S1366 (daily ed. Mar. 8, 2011) (Republican Policy Committee Legisla-
`tive Notice); id. at S1097 (statement of Sen. Hatch); id. at S1378 (statement of Sen. Kyl).
`52 H.R. Rep. No. 112-98, at 50.
`53 Id. pt. 1, at 78.
`54 See 157 Cong. Rec. S1097 (daily ed. Mar. 2, 2011) (statement of Sen. Hatch).
`55 See S. 3818, 109th Cong., sec. 4 (2006); see also 153 Cong. Rec. S4691 (daily ed.
`Apr. 18, 2007) (statement of Sen. Hatch).
`56 S. 3818.
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`of inequitable conduct.57 This provision was dropped from the Leahy-Hatch
`bill that was introduced in 2007, but Senator Hatch continued to pursue
`inequitable-conduct reform, arguing that the defense “has been overpleaded
`and has become a drag on the litigation process.”58
`In 2009, Senator Hatch secured a commitment from the House and
`Senate bill’s lead sponsors—Senator Leahy and Representative Conyers—to
`include inequitable-conduct reforms in the bill.59 Supplemental Examination
`was added to the bill by the Leahy-Sessions managers’ amendment that was
`announced in March 2010.60
`
`57 The Hatch-Leahy bill would have barred courts from holding a patent unenforceable
`because of inequitable conduct if: (1) the patent owner or his agent had an informed good-
`faith belief that the information in question was not material; (2) the patent owner had no
`actual or constructive knowledge of the misconduct in question; or (3) the court had not
`determined that one or more claims in the patent is invalid. See id. sec. 5(c).
`58 153 Cong. Rec. S4691 (daily ed. Apr. 18, 2007) (statement of Sen. Hatch); see
`also Patent Reform: The Future of American Innovation: Hearing Before the S. Comm. on the
`Judiciary, 110th Cong. 10–11 (2007) [hereinafter 2007 Senate hearing] (statement of Jon
`Dudas, Director, USPTO) (describing impact of inequitable-conduct litigation on applicant
`behavior); Patent Reform Act of 2007: Hearing on H.R. 1908 Before the Subcomm. on Courts,
`the Internet, and Intellectual Prop., 110th Cong. 56 (2007) [hereinafter 2007 House hearing]
`(statement of Gary L. Griswold, President and Chief Counsel of Intellectual Property, 3M
`Innovative Properties) (“Defendants now shamelessly second-guess everything that is said to
`the PTO in obtaining a patent . . . There is always fodder for the contention that . . . informa-
`tion . . . was somehow wrongfully withheld.”); H.R. Rep. No. 112-98, at 50 (2011); S. Rep.
`No. 110-259, at 59–62 (2008) (additional views of Sens. Specter and Hatch) (criticizing
`the inequitable-conduct doctrine’s low standard for showing materiality); 155 Cong. Rec.
`S2715 (daily ed. Mar. 3, 2009) (statement of Sen. Hatch) (“The inequitable conduct defense
`is frequently pled, rarely proven, and always drives up the cost of litigation tremendously.”).
`59 See 155 Cong. Rec. S2715–16 (daily ed. Apr. 18, 2007) (statement of Sen. Hatch)
`(“For years I have been arguing . . . [that] we must take steps to ensure that the inequitable
`conduct doctrine is [reformed] . . . . Chairman Leahy and Chairman Conyers both know of
`my strong interest in this area and have agreed to incorporate changes to the law.”); see also
`id. at S2707 (statement of Sen. Leahy) (“I understand that the issue of inequitable conduct
`is very important to Senator Hatch, and I will work with him to address any statutory
`changes.”); 155 Cong. Rec. E537 (daily ed. Mar. 3, 2009) (statement of Rep. Conyers) (“It
`is my intention to work closely with [Sen. Hatch] to craft language on inequitable conduct
`that can be incorporated into the bill at a later time.”).
`60 See S. 515, 111th Cong. (2009) (amendment in the nature of a substitute). As noted in
`Part I of this Article, see Matal, supra note 1, at 443 n.54, 444 n.58 and accompanying text,
`there is no official public version of the 2010 managers’ amendment, but that amendment
`is substantially identical to S. 23, 112th Cong. (2011) (introduced bill).
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`During the 2011 Senate debates, Senators Hatch and Kyl spoke about
`the policy goals that are intended to be served by allowing supplemental
`examination of patents.61 Senator Hatch stated that:
`the supplemental examination provision satisfies a long-felt need in the patent community
`to be able to identify whether a patent would be deemed flawed if it ever went to
`litigation and enables patentees to take corrective action. This process enhances the
`quality of patents, thereby promoting greater certainty for patentees and the public.62
`Senator Kyl noted that under the law at that time, “even minor and
`inadvertent errors in the patent application process can lead to expensive and
`very unpredictable . . . inequitable conduct litigation.”63 He then went on to
`describe scenarios in which supplemental examination would be particularly
`beneficial to small and start-up businesses:
`It is often the case that startup companies or university researchers cannot afford to
`hire the very best patent lawyers. Their patents are prosecuted by an in-house attorney
`who does a good enough job but who is unfamiliar with all of the sharp corners and
`pitfalls of the inequitable conduct doctrine, such as the need to present cumulative
`studies and prior art. Later, when more legally sophisticated investors evaluate the
`patent for potential investment or purchase, these minor flaws in prosecution can
`deter the investor from purchasing or funding the development of the invention. An
`investor would not risk spending hundreds of millions of dollars to develop a product
`if a potential inequitable conduct attack may wipe out the whole investment.
`Parties on both sides of these exchanges report that investors routinely walk away
`from inventions because of their inability under current law to resolve uncertainties
`whether a flaw in prosecution was, in fact, inequitable conduct. These decisions not
`to invest in a new invention represent important new cures never tested and brought
`to market and other important inventions that are never developed.
`. . . .
`The authorization of supplemental examination will result in path-breaking inventions
`being developed and brought to market that otherwise would have lingered on the
`shelf because of legal uncertainty over the patent. It will ensure that small and startup
`companies with important and valid patents will not be denied investment capital
`because of legal technicalities.64
`The final Committee Report also described the AIA’s exceptions to § 257’s
`guarantee that a patent that survives supplemental examination will be immune
`from an inequitable-conduct attack based on the information presented in the
`supplemental examination.65 The Report noted that no immunity will attach
`if there have been “prior allegations involving certain new drug applications
`
`61 See 157 Cong. Rec. S1097 (daily ed. Mar. 2, 2011) (statement of Sen. Hatch); id. at
`S5319 (daily ed. Sept. 6, 2011) (statement of Sen. Kyl).
`62 Id. at S1097 (daily ed. Mar. 2, 2011) (statement of Sen. Hatch).
`63 Id. at S5319 (daily ed. Sept. 6, 2011) (statement of Sen. Kyl).
`64 Id.
`65 H.R. Rep. No. 112-98, at 78 (2011).
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`(21 USC§. 355(j)),” or if the patent owner has brought “patent enforcement
`actions before the International Trade Commission or a [U.S.] district court,
`unless the supplemental examination was concluded before the date on which
`the action is brought.”66
`Senator Hatch further elaborated on this second exception, noting that:
`[t]he request [for supplemental examination] must be made before litigation [by the
`patent owner] commences. Therefore, supplemental examination cannot be used to
`remedy flaws first brought to light in the course of litigation, nor does it interfere with
`the court’s ability to address inequitable conduct.67
`Both Representative Lamar Smith and Senator Kyl also commented during
`the 2011 debates on subsection (e) of § 257.68 Subsection (e) requires that, if
`the Director discovers during the course of the supplemental examination that
`a “material fraud on the Office may have been committed in connection with
`the patent,” the Director “shall . . . refer the matter to the Attorney General
`for such further action as the Attorney General may deem appropriate.”69
`In an extension of remarks submitted on the day of the House passage
`of the AIA, Representative Smith indicated that: (1) subsection (e) is not
`intended to expand USPTO’s investigatory duties; (2) even if the USPTO
`makes a referral to the Attorney General, it must conclude the supplemental
`examination; and (3) the Director cannot delegate to his subordinate employees
`his duty to refer cases to the Attorney General pursuant to subsection (e).70
`Representative Smith stated:
`this provision is not intended to impose any obligation on the PTO beyond those it
`already undertakes, or require it to investigate or prosecute any such potential fraud.
`Subparagraph (C)[71] is neither an investigative nor an adjudicative provision, and, as
`
`66 Id. The Report also stated that no immunity will attach in “instances in which fraud on
`the USPTO was practiced or attempted.” Id. However, this particular exception, which was
`added to supplemental examination by an amendment offered by Representative Goodlatte
`in the House Judiciary Committee markup, see id. at 60–61, was later stripped from the
`bill on the House floor by the managers’ amendment. See 157 Cong. Rec. H4450 (daily
`ed. June 22, 2011) (text of managers’ amendment). Compare H.R. 1249, 112th Cong., sec.
`12, § 257(c)(2)(C) (as reported in House, June. 1, 2011), with H.R. 1249, 112th Cong.,
`sec. 12, § 257(c)(2) (as passed by House).
`67 157 Cong. Rec. S1097 (daily ed. Mar. 2, 2011) (statement of Sen. Hatch).
`68 See id. at E1182 (daily ed. June 23, 2011) (statement of Rep. Smith); id. at S5429
`(daily ed. Sept. 8, 2011) (statement of Sen. Kyl).
`69 Leahy-Smith America Invents Act, sec. 12 § 257(e), 125 Stat. at 326–27.
`70 See 157 Cong. Rec. E1182 (daily ed. June 23, 2011) (statement of Rep. Smith).
`71 Representative Smith mistakenly referred to subparagraph (C) of subsection (c)(2),
`where an earlier provision relating to fraud on the Office had been located. See H.R. 1249,
`112th Cong., sec. 12, § 257(c)(2)(C) (as reported in House, June. 1, 2011). His remarks
`are obviously intended to be directed at subsection (e).
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`such, is not intended to expand the authority or obligation of the PTO to investigate
`or adjudicate allegations of fraud lodged by private parties.
`Further, any referral under this subjection is not meant to relieve the Director from
`his obligation to conclude the supplemental examination or reexamination proceeding
`ordered under this section. It is important for the process to proceed through conclusion
`of reexamination, so that any claims that are invalid can be properly cancelled.
`[Finally,] [t]he decision to make referrals under subsection (c)[72] is not meant to be
`delegated to examiners or other agents of the PTO, but rather is a determination that
`should only be made by the Director himself or herself.73
`When the House-passed AIA was brought to the Senate floor in September
`of 2011, Senator Kyl noted that Representative Smith’s extension of remarks
`had “clarifie[d] the purpose and effect of [new subsection (e)],” and stated
`that “[i]n light of [Representative Smith’s] remarks, I find the addition
`unobjectionable.”74 Senator Kyl also added that, “in evaluating whether a fraud
`is ‘material’ for purpose of referral, the Director should look to the Federal
`Circuit’s decision in Therasense, Inc. v. Becton, Dickinson & Co.”75
`During the March 2011 Senate debates on the AIA, Senator Kyl also
`commented on the fact that the AIA provides only that a patent may not
`later be held unenforceable in civil litigation on the basis of information that
`was evaluated in a supplemental examination.76 He noted that:
`[n]ew section 257(c)(1) follows the usual practice of referring to inequitable-conduct
`attacks in terms of unenforceability, rather than invalidity, though courts have in the
`past used the terms interchangeably when describing the effect of fraud or inequitable
`conduct on a patent.77
`
`72 Representative Smith presumably intended to refer to subsection (e). See id.
`73 157 Cong. Rec. E1182 (daily ed. June 23, 2011) (statement of Rep. Smith). It should
`be noted that nothing on the face of § 257(e) precludes the Director from delegating the
`decision to make such referrals, and elsewhere in the same section, responsibilities assigned
`to the Director obviously are intended to be delegated. See, e.g., Leahy-Smith America In-
`vents Act, sec. 12(a), § 257(a), 125 Stat. at 325 (stating that “the Director shall conduct the
`supplemental examination”).
`74 157 Cong. Rec. S5429 (daily ed. Sept. 8, 2011) (statement of Sen. Kyl).
`75 Id. (citing 649 F.3d 1276, 1291 (Fed. Cir. 2011) (“[T]he materiality required to es-
`tablish inequitable conduct is but-for materiality.”)).
`76 See id. at S1378 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
`77 Id. In support of this proposition, Senator Kyl quoted J.P. Stevens & Co. v. Lex Tex Ltd.,
`Inc., 747 F.2d 1553 (Fed. Cir. 1984). That case held that “[w]hether the holding should
`be one of invalidity or unenforceability has had no practical significance in cases thus far
`presented to this court.” Id. at 1560; cf. H.R. Rep. No. 112-98, at 50 (2011) (“Patents are
`unenforceable and invalid if they are obtained through fraud.”).
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`Senator Kyl went on to state that:
`The term [unenforceability] should be considered to be used interchangeably with
`“invalidity” in this bill as well. Obviously, Congress would not create a procedure for
`reexamining patents that allowed them to be protected against subsequent inequitable-
`conduct challenges of unenforceability, only to allow the same patents to be challenged
`on the same basis and declared invalid on the basis of inequitable conduct.78
`During his March 8, 2011, remarks, Senato