AMERICA INVENTS ACT
`
`HEARING
`BEFORE THE
`SUBCOMMITTEE ON
`INTELLECTUAL PROPERTY,
`COMPETITION, AND THE INTERNET
`OF THE
`COMMITTEE ON THE JUDICIARY
`HOUSE OF REPRESENTATIVES
`ONE HUNDRED TWELFTH CONGRESS
`
`FIRST SESSION
`
`ON
`H.R. 1249
`
`MARCH 30, 2011
`
`Serial No. 112–35
`
`Printed for the use of the Committee on the Judiciary
`
`(
`
`Available via the World Wide Web: http://judiciary.house.gov
`
`65–487 PDF
`
`U.S. GOVERNMENT PRINTING OFFICE
`WASHINGTON :
`2011
`
`For sale by the Superintendent of Documents, U.S. Government Printing Office
`Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800
`Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001
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`COMMITTEE ON THE JUDICIARY
`
`LAMAR SMITH, Texas, Chairman
`JOHN CONYERS, JR., Michigan
`F. JAMES SENSENBRENNER, JR.,
`HOWARD L. BERMAN, California
`Wisconsin
`JERROLD NADLER, New York
`HOWARD COBLE, North Carolina
`ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia
`ELTON GALLEGLY, California
`MELVIN L. WATT, North Carolina
`BOB GOODLATTE, Virginia
`ZOE LOFGREN, California
`DANIEL E. LUNGREN, California
`SHEILA JACKSON LEE, Texas
`STEVE CHABOT, Ohio
`MAXINE WATERS, California
`DARRELL E. ISSA, California
`STEVE COHEN, Tennessee
`MIKE PENCE, Indiana
`HENRY C. ‘‘HANK’’ JOHNSON, JR.,
`J. RANDY FORBES, Virginia
`Georgia
`STEVE KING, Iowa
`PEDRO R. PIERLUISI, Puerto Rico
`TRENT FRANKS, Arizona
`MIKE QUIGLEY, Illinois
`LOUIE GOHMERT, Texas
`JUDY CHU, California
`JIM JORDAN, Ohio
`TED DEUTCH, Florida
`TED POE, Texas
`LINDA T. SA´ NCHEZ, California
`JASON CHAFFETZ, Utah
`DEBBIE WASSERMAN SCHULTZ, Florida
`TOM REED, New York
`TIM GRIFFIN, Arkansas
`TOM MARINO, Pennsylvania
`TREY GOWDY, South Carolina
`DENNIS ROSS, Florida
`SANDY ADAMS, Florida
`BEN QUAYLE, Arizona
`
`SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel
`PERRY APELBAUM, Minority Staff Director and Chief Counsel
`
`SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET
`
`BOB GOODLATTE, Virginia, Chairman
`BEN QUAYLE, Arizona, Vice-Chairman
`F. JAMES SENSENBRENNER, JR.,
`MELVIN L. WATT, North Carolina
`JOHN CONYERS, JR., Michigan
`Wisconsin
`HOWARD L. BERMAN, California
`HOWARD COBLE, North Carolina
`JUDY CHU, California
`STEVE CHABOT, Ohio
`TED DEUTCH, Florida
`DARRELL E. ISSA, California
`LINDA T. SA´ NCHEZ, California
`MIKE PENCE, Indiana
`DEBBIE WASSERMAN SCHULTZ, Florida
`JIM JORDAN, Ohio
`JERROLD NADLER, New York
`TED POE, Texas
`ZOE LOFGREN, California
`JASON CHAFFETZ, Utah
`SHEILA JACKSON LEE, Texas
`TOM REED, New York
`MAXINE WATERS, California
`TIM GRIFFIN, Arkansas
`TOM MARINO, Pennsylvania
`SANDY ADAMS, Florida
`
`BLAINE MERRITT, Chief Counsel
`STEPHANIE MOORE, Minority Counsel
`
`(II)
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`C O N T E N T S
`
`MARCH 30, 2011
`
`TEXT OF THE BILL
`H.R. 1249, the ‘‘America Invents Act’’
`...................................................................
`
`OPENING STATEMENTS
`The Honorable Bob Goodlatte, a Representative in Congress from the State
`of Virginia, and Chairman, Subcommittee on Intellectual Property, Com-
`petition, and the Internet ....................................................................................
`The Honorable Melvin L. Watt, a Representative in Congress from the State
`of North Carolina, and Ranking Member, Subcommittee on Intellectual
`Property, Competition, and the Internet ............................................................
`The Honorable Lamar Smith, a Representative in Congress from the State
`of Texas, and Chairman, Committee on the Judiciary .....................................
`
`WITNESSES
`The Honorable David J. Kappos, Under Secretary of Commerce for Intellec-
`tual Property and Director, the United States Patent and Trademark Office
`Oral Testimony .....................................................................................................
`Prepared Statement .............................................................................................
`The Honorable Steve Bartlett, President and Chief Executive Officer, The
`Financial Services Roundtable
`Oral Testimony .....................................................................................................
`Prepared Statement .............................................................................................
`Steven W. Miller, Vice President and General Counsel for Intellectual Prop-
`erty, Procter & Gamble Company
`Oral Testimony .....................................................................................................
`Prepared Statement .............................................................................................
`Mark Chandler, Senior Vice President, General Counsel, and Secretary, Cisco
`Systems, Inc.
`Oral Testimony .....................................................................................................
`Prepared Statement .............................................................................................
`John C. Vaughn, Executive Vice President, Association of American Univer-
`sities
`Oral Testimony .....................................................................................................
`Prepared Statement .............................................................................................
`
`Page
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`3
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`1
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`39
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`42
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`44
`46
`
`56
`59
`
`65
`67
`
`79
`82
`
`92
`94
`
`LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
`Material submitted by the Honorable Melvin L. Watt, a Representative in
`Congress from the State of North Carolina, and Ranking Member, Sub-
`committee on Intellectual Property, Competition, and the Internet
`............... 107
`
`APPENDIX
`
`MATERIAL SUBMITTED FOR THE HEARING RECORD
`Prepared Statement of the Honorable John Conyers, Jr., a Representative
`in Congress from the State of Michigan, Ranking Member, Committee
`on the Judiciary, and Member, Subcommittee on Intellectual Property,
`Competition, and the Internet
`............................................................................ 125
`
`(III)
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`Response to Post-Hearing Questions from the Honorable David J. Kappos,
`Under Secretary of Commerce for Intellectual Property, Director of the
`United States Patent and Trademark Office ..................................................... 127
`Prepared Statement of the Generic Pharmaceutical Association (GPhA) ........... 132
`
`Page
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`AMERICA INVENTS ACT
`
`WEDNESDAY, MARCH 30, 2011
`
`HOUSE OF REPRESENTATIVES,
`SUBCOMMITTEE ON INTELLECTUAL PROPERTY,
`COMPETITION, AND THE INTERNET,
`COMMITTEE ON THE JUDICIARY,
`Washington, DC.
`
`The Subcommittee met, pursuant to call, at 1:32 p.m., in room
`2141, Rayburn House Office Building, the Honorable Bob Goodlatte
`(Chairman of the Subcommittee) presiding.
`Present: Representatives Goodlatte, Smith, Coble, Sensen-
`brenner, Chabot, Chaffetz, Reed, Griffin, Marino, Adams, Quayle,
`Watt, Conyers, Berman, Chu, Deutch, Sa´nchez, Lofgren, and Wa-
`ters.
`Staff Present: (Majority) Blaine Merritt, Subcommittee Chief
`Counsel; Vishal Amin, Counsel; Olivia Lee, Clerk; and Stephanie
`Moore, Minority Subcommittee Chief Counsel.
`Mr. GOODLATTE. Folks, we are going to just make an announce-
`ment. We will begin the hearing after this series of votes. We want
`to spend a little bit of time on our opening statements. So it is
`probably not enough time to get it in before the votes.
`Also, at 2:30 p.m., there is a briefing by some of our country’s
`leaders regarding the situation in Libya, and so that all Members
`can participate, we are going to recess the hearing at 2:30 p.m. And
`then we will come back later on.
`So this is going to be a herky-jerky afternoon, it sounds like. But
`we will get this hearing done, and we will welcome the testimony
`of all our witnesses.
`So the Committee will stand in recess.
`[Recess.]
`Mr. GOODLATTE. Take two. The Subcommittee will come to order,
`and I recognize myself for an opening statement.
`For the better part of the past decade, this Committee has been
`working to update our patent laws to ensure that the incentives
`our Framers envisioned when they wrote article 1, section 8 of our
`Constitution remain meaningful and effective. The U.S. patent sys-
`tem must work efficiently if America is to remain the world leader
`in innovation.
`It is only right that as more and more inventions with increasing
`complexity emerge, we examine our Nation’s patent laws to ensure
`that they still work efficiently and that they still encourage and not
`discourage innovation.
`
`(1)
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`The core principles that have guided our efforts have been to en-
`sure that quality patents are issued by the PTO in the first place
`and to ensure that our patent enforcement laws and procedures do
`not create incentives for opportunists with invalid claims to exploit,
`while maintaining strong laws that allow legitimate patent owners
`to enforce their patents effectively. H.R. 1249 addresses these prin-
`ciples.
`With regard to ensuring the issuance of quality patents, this leg-
`islation allows third parties to submit evidence of prior art prior to
`the examination process, which will help ensure examiners have
`the full record before them when making decisions. In addition,
`after the PTO issues a patent, this legislation creates a new post
`grant opposition system in which third parties can raise objections
`to a patent immediately after its issuance, which will both help
`screen out bad patents while bolstering valid ones.
`The bill also increases patent quality by eliminating fee diver-
`sion, which will allow the PTO to keep all the fees it collects from
`inventors. This fee diversion provision is crucial to allowing PTO
`to accomplish the mission we are asking it to do with this bill and
`will allow the PTO to allocate resources with certainty.
`H.R. 1249 also includes provisions to ensure that patent litiga-
`tion benefits those with valid claims, but not those opportunists
`who seek to abuse the litigation process. Many innovative compa-
`nies, including those in the technology and other sectors, have been
`forced to defend against patent infringement lawsuits of question-
`able legitimacy.
`When such a defendant company truly believes that the patent
`being asserted is invalid, it is important for it to have an avenue
`to request the PTO to take another look at the patent in order to
`better inform the district court of the patent’s validity. This legisla-
`tion retains an inter partes re-exam process, which allows
`innovators to challenge the validity of a patent when they are sued
`for patent infringement.
`The Senate bill placed many restrictions on the use of the re-
`exam procedure, and the House bill relaxes some of those restric-
`tions in order to maintain the usefulness of the inter partes re-
`exam process.
`H.R. 1249 is the culmination of years of work in both the House
`and the Senate from Democrats and Republicans, and it is impor-
`tant to note that the House and the Senate, over four Congresses,
`we have held dozens of hearings, met with numerous stakeholders
`from every industry sector, as well as small and large businesses
`and individual inventors, watched judicial decisions in the courts,
`and produced several pieces of legislation.
`By giving the necessary tools to the Patent Office to issue strong
`patents and procedures that will help ensure certainty for patent-
`able inventions, we are paving the way for independent inventors
`as well as small, medium, and large-sized enterprises to raise cap-
`ital and grow. I believe this legislation will spur innovation, eco-
`nomic growth, and jobs.
`However, I also believe some work still needs to be done on this
`bill. Specifically, I agree that the PTO needs to have more certainty
`with respect to its fee-setting authority. I want to ensure, however,
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`that Congress maintains strong oversight over the PTO as it uses
`that authority.
`I also have concerns about the supplemental exam provisions in
`the bill and believe further work may need to be done on the inter
`partes re-exam procedure to make sure we are striking the right
`balance there.
`I look forward to hearing from our experts today, many of whom
`have been working on this effort for a long, long time.
`It is now my pleasure to recognize the Ranking Member of the
`Committee, the gentleman from North Carolina, Mr. Watt.
`[The text of the bill, H.R. 1249, follows:]
`
`112TH CONGRESS
`1ST SESSION
`
`H. R. 1249
`
`To amend title 35, United States Code, to provide for patent reform.
`
`I
`
`IN THE HOUSE OF REPRESENTATIVES
`
`MARCH 30, 2011
`Mr. SMITH of Texas (for himself, Mr. GOODLATTE, and Mr. ISSA) introduced the fol-
`lowing bill; which was referred to the Committee on the Judiciary, and in addition
`to the Committee on the Budget, for a period to be subsequently determined by
`the Speaker, in each case for consideration of such provisions as fall within the
`jurisdiction of the committee concerned
`
`A BILL
`
`To amend title 35, United States Code, to provide for patent reform.
`Be it enacted by the Senate and House of Representatives of the United States
`of America in Congress assembled,
`SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
`(a) SHORT TITLE.—This Act may be cited as the ‘‘America Invents Act’’.
`(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:
`
`Sec. 1. Short title; table of contents.
`Sec. 2. First inventor to file.
`Sec. 3. Inventor’s oath or declaration.
`Sec. 4. Defense to infringement based on earlier inventor.
`Sec. 5. Post-grant review proceedings.
`Sec. 6. Patent Trial and Appeal Board.
`Sec. 7. Preissuance submissions by third parties.
`Sec. 8. Venue.
`Sec. 9. Fee setting authority.
`Sec. 10. Fees for patent services.
`Sec. 11. Supplemental examination.
`Sec. 12. Funding agreements.
`Sec. 13. Tax strategies deemed within the prior art.
`Sec. 14. Best mode requirement.
`Sec. 15. Marking.
`Sec. 16. Advice of counsel.
`Sec. 17. Ownership; assignment.
`Sec. 18. Transitional program for covered business method patents.
`Sec. 19. Clarification of jurisdiction.
`Sec. 20. Technical amendments.
`Sec. 21. Travel expenses and payment of administrative judges.
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`Sec. 22. Patent and Trademark Office funding.
`Sec. 23. Satellite offices.
`Sec. 24. Patent Ombudsman Program for small business concerns.
`Sec. 25. Priority examination for technologies important to American competitive-
`ness.
`Sec. 26. Designation of Detroit satellite office.
`Sec. 27. Effective date.
`Sec. 28. Budgetary effects.
`SEC. 2. FIRST INVENTOR TO FILE.
`(a) DEFINITIONS.—Section 100 of title 35, United States Code, is amended by
`adding at the end the following:
`‘‘(f) The term ‘inventor’ means the individual or, if a joint invention, the individ-
`uals collectively who invented or discovered the subject matter of the invention.
`‘‘(g) The terms ‘joint inventor’ and ‘coinventor’ mean any 1 of the individuals
`who invented or discovered the subject matter of a joint invention.
`‘‘(h) The term ‘joint research agreement’ means a written contract, grant, or co-
`operative agreement entered into by 2 or more persons or entities for the perform-
`ance of experimental, developmental, or research work in the field of the claimed
`invention.
`‘‘(i)(1) The term ‘effective filing date’ for a claimed invention in a patent or ap-
`plication for patent means—
`‘‘(A) if subparagraph (B) does not apply, the actual filing date of the patent
`or the application for the patent containing a claim to the invention; or
`‘‘(B) the filing date of the earliest application for which the patent or appli-
`cation is entitled, as to such invention, to a right of priority under section 119,
`365(a), or 365(b) or to the benefit of an earlier filing date under section 120,
`121, or 365(c).
`‘‘(2) The effective filing date for a claimed invention in an application for reissue
`or reissued patent shall be determined by deeming the claim to the invention to
`have been contained in the patent for which reissue was sought.
`‘‘(j) The term ‘claimed invention’ means the subject matter defined by a claim
`in a patent or an application for a patent.’’.
`(b) CONDITIONS FOR PATENTABILITY.—
`(1) IN GENERAL.—Section 102 of title 35, United States Code, is amended
`to read as follows:
`‘‘§ 102. Conditions for patentability; novelty
`‘‘(a) NOVELTY; PRIOR ART.—A person shall be entitled to a patent unless—
`‘‘(1) the claimed invention was patented, described in a printed publication,
`or in public use, on sale, or otherwise available to the public before the effective
`filing date of the claimed invention; or
`‘‘(2) the claimed invention was described in a patent issued under section
`151, or in an application for patent published or deemed published under sec-
`tion 122(b), in which the patent or application, as the case may be, names an-
`other inventor and was effectively filed before the effective filing date of the
`claimed invention.
`‘‘(b) EXCEPTIONS.—
`‘‘(1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE
`OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effec-
`tive filing date of a claimed invention shall not be prior art to the claimed in-
`vention under subsection (a)(1) if—
`‘‘(A) the disclosure was made by the inventor or joint inventor or by an-
`other who obtained the subject matter disclosed directly or indirectly from
`the inventor or a joint inventor; or
`‘‘(B) the subject matter disclosed had, before such disclosure, been pub-
`licly disclosed by the inventor or a joint inventor or another who obtained
`the subject matter disclosed directly or indirectly from the inventor or a
`joint inventor.
`‘‘(2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.—A disclosure
`shall not be prior art to a claimed invention under subsection (a)(2) if—
`‘‘(A) the subject matter disclosed was obtained directly or indirectly
`from the inventor or a joint inventor;
`‘‘(B) the subject matter disclosed had, before such subject matter was
`effectively filed under subsection (a)(2), been publicly disclosed by the in-
`ventor or a joint inventor or another who obtained the subject matter dis-
`closed directly or indirectly from the inventor or a joint inventor; or
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`‘‘(C) the subject matter disclosed and the claimed invention, not later
`than the effective filing date of the claimed invention, were owned by the
`same person or subject to an obligation of assignment to the same person.
`‘‘(c) COMMON OWNERSHIP UNDER JOINT RESEARCH AGREEMENTS.—Subject mat-
`ter disclosed and a claimed invention shall be deemed to have been owned by the
`same person or subject to an obligation of assignment to the same person in apply-
`ing the provisions of subsection (b)(2)(C) if—
`‘‘(1) the subject matter disclosed was developed and the claimed invention
`was made by, or on behalf of, 1 or more parties to a joint research agreement
`that was in effect on or before the effective filing date of the claimed invention;
`‘‘(2) the claimed invention was made as a result of activities undertaken
`within the scope of the joint research agreement; and
`‘‘(3) the application for patent for the claimed invention discloses or is
`amended to disclose the names of the parties to the joint research agreement.
`‘‘(d) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVE AS PRIOR ART.—For pur-
`poses of determining whether a patent or application for patent is prior art to a
`claimed invention under subsection (a)(2), such patent or application shall be consid-
`ered to have been effectively filed, with respect to any subject matter described in
`the patent or application—
`‘‘(1) if paragraph (2) does not apply, as of the actual filing date of the patent
`or the application for patent; or
`‘‘(2) if the patent or application for patent is entitled to claim a right of pri-
`ority under section 119, 365(a), or 365(b), or to claim the benefit of an earlier
`filing date under section 120, 121, or 365(c), based upon 1 or more prior filed
`applications for patent, as of the filing date of the earliest such application that
`describes the subject matter.’’.
`(2) CONTINUITY OF INTENT UNDER THE CREATE ACT.—The enactment of sec-
`tion 102(c) of title 35, United States Code, under paragraph (1) of this sub-
`section is done with the same intent to promote joint research activities that
`was expressed, including in the legislative history, through the enactment of the
`Cooperative Research and Technology Enhancement Act of 2004 (Public Law
`108–453; the ‘‘CREATE Act’’), the amendments of which are stricken by sub-
`section (c) of this section. The United States Patent and Trademark Office shall
`administer section 102(c) of title 35, United States Code, in a manner consistent
`with the legislative history of the CREATE Act that was relevant to its adminis-
`tration by the United States Patent and Trademark Office.
`(3) CONFORMING AMENDMENT.—The item relating to section 102 in the table
`of sections for chapter 10 of title 35, United States Code, is amended to read
`as follows:
`
`‘‘102. Conditions for patentability; novelty.’’.
`(c) CONDITIONS FOR PATENTABILITY; NONOBVIOUS SUBJECT MATTER.—Section
`103 of title 35, United States Code, is amended to read as follows:
`‘‘§ 103. Conditions for patentability; nonobvious subject matter
`‘‘A patent for a claimed invention may not be obtained, notwithstanding that
`the claimed invention is not identically disclosed as set forth in section 102, if the
`differences between the claimed invention and the prior art are such that the
`claimed invention as a whole would have been obvious before the effective filing
`date of the claimed invention to a person having ordinary skill in the art to which
`the claimed invention pertains. Patentability shall not be negated by the manner
`in which the invention was made.’’.
`(d) REPEAL OF REQUIREMENTS FOR INVENTIONS MADE ABROAD.—Section 104 of
`title 35, United States Code, and the item relating to that section in the table of
`sections for chapter 10 of title 35, United States Code, are repealed.
`(e) REPEAL OF STATUTORY INVENTION REGISTRATION.—
`(1) IN GENERAL.—Section 157 of title 35, United States Code, and the item
`relating to that section in the table of sections for chapter 14 of title 35, United
`States Code, are repealed.
`(2) REMOVAL OF CROSS REFERENCES.—Section 111(b)(8) of title 35, United
`States Code, is amended by striking ‘‘sections 115, 131, 135, and 157’’ and in-
`serting ‘‘sections 131 and 135’’.
`(3) EFFECTIVE DATE.—The amendments made by this subsection shall take
`effect upon the expiration of the 18-month period beginning on the date of the
`enactment of this Act, and shall apply to any request for a statutory invention
`registration filed on or after that effective date.
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`(f) EARLIER FILING DATE FOR INVENTOR AND JOINT INVENTOR.—Section 120 of
`title 35, United States Code, is amended by striking ‘‘which is filed by an inventor
`or inventors named’’ and inserting ‘‘which names an inventor or joint inventor’’.
`(g) CONFORMING AMENDMENTS.—
`(1) RIGHT OF PRIORITY.—Section 172 of title 35, United States Code, is
`amended by striking ‘‘and the time specified in section 102(d)’’.
`(2) LIMITATION ON REMEDIES.—Section 287(c)(4) of title 35, United States
`Code, is amended by striking ‘‘the earliest effective filing date of which is prior
`to’’ and inserting ‘‘which has an effective filing date before’’.
`(3) INTERNATIONAL APPLICATION DESIGNATING THE UNITED STATES: EF-
`FECT.—Section 363 of title 35, United States Code, is amended by striking ‘‘ex-
`cept as otherwise provided in section 102(e) of this title’’.
`(4) PUBLICATION OF INTERNATIONAL APPLICATION: EFFECT.—Section 374 of
`title 35, United States Code, is amended by striking ‘‘sections 102(e) and 154(d)’’
`and inserting ‘‘section 154(d)’’.
`(5) PATENT ISSUED ON INTERNATIONAL APPLICATION: EFFECT.—The second
`sentence of section 375(a) of title 35, United States Code, is amended by strik-
`ing ‘‘Subject to section 102(e) of this title, such’’ and inserting ‘‘Such’’.
`(6) LIMIT ON RIGHT OF PRIORITY.—Section 119(a) of title 35, United States
`Code, is amended by striking ‘‘; but no patent shall be granted’’ and all that
`follows through ‘‘one year prior to such filing’’.
`(7) INVENTIONS MADE WITH FEDERAL ASSISTANCE.—Section 202(c) of title 35,
`United States Code, is amended—
`(A) in paragraph (2)—
`(i) by striking ‘‘publication, on sale, or public use,’’ and all that fol-
`lows through ‘‘obtained in the United States’’ and inserting ‘‘the 1-year
`period referred to in section 102(b) would end before the end of that
`2-year period’’; and
`(ii) by striking ‘‘prior to the end of the statutory’’ and inserting ‘‘be-
`fore the end of that 1-year’’; and
`(B) in paragraph (3), by striking ‘‘any statutory bar date that may occur
`under this title due to publication, on sale, or public use’’ and inserting ‘‘the
`expiration of the 1-year period referred to in section 102(b)’’.
`(h) DERIVED PATENTS.—
`(1) IN GENERAL.—Section 291 of title 35, United States Code, is amended
`to read as follows:
`‘‘§ 291. Derived Patents
`‘‘(a) IN GENERAL.—The owner of a patent may have relief by civil action against
`the owner of another patent that claims the same invention and has an earlier effec-
`tive filing date if the invention claimed in such other patent was derived from the
`inventor of the invention claimed in the patent owned by the person seeking relief
`under this section.
`‘‘(b) FILING LIMITATION.—An action under this section may be filed only before
`the end of the 1-year period beginning on the date of the issuance of the first patent
`containing a claim to the allegedly derived invention and naming an individual al-
`leged to have derived such invention as the inventor or joint inventor.’’.
`(2) CONFORMING AMENDMENT.—The item relating to section 291 in the table
`of sections for chapter 29 of title 35, United States Code, is amended to read
`as follows:
`
`‘‘291. Derived patents.’’.
`(i) DERIVATION PROCEEDINGS.—Section 135 of title 35, United States Code, is
`amended to read as follows:
`‘‘§ 135. Derivation proceedings
`‘‘(a) INSTITUTION OF PROCEEDING.—An applicant for patent may file a petition
`to institute a derivation proceeding in the Office. The petition shall set forth with
`particularity the basis for finding that an inventor named in an earlier application
`derived the claimed invention from an inventor named in the petitioner’s application
`and, without authorization, the earlier application claiming such invention was
`filed. Any such petition may be filed only within the 1-year period beginning the
`date of the first publication of a claim to an invention that is the same or substan-
`tially the same as the earlier application’s claim to the invention, shall be made
`under oath, and shall be supported by substantial evidence. Whenever the Director
`determines that a petition filed under this subsection demonstrates that the stand-
`ards for instituting a derivation proceeding are met, the Director may institute a
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`derivation proceeding. The determination by the Director whether to institute a der-
`ivation proceeding shall be final and nonappealable.
`‘‘(b) DETERMINATION BY PATENT TRIAL AND APPEAL BOARD.—In a derivation pro-
`ceeding instituted under subsection (a), the Patent Trial and Appeal Board shall de-
`termine whether an inventor named in the earlier application derived the claimed
`invention from an inventor named in the petitioner’s application and, without au-
`thorization, the earlier application claiming such invention was filed. The Director
`shall prescribe regulations setting forth standards for the conduct of derivation pro-
`ceedings.
`‘‘(c) DEFERRAL OF DECISION.—The Patent Trial and Appeal Board may defer ac-
`tion on a petition for a derivation proceeding until the expiration of the 3-month
`period beginning on the date on which the Director issues a patent that includes
`the claimed invention that is the subject of the petition. The Patent Trial and Ap-
`peal Board also may defer action on a petition for a derivation proceeding, or stay
`the proceeding after it has been instituted, until the termination of a proceeding
`under chapter 30, 31, or 32 involving the patent of the earlier applicant.
`‘‘(d) EFFECT OF FINAL DECISION.—The final decision of the Patent Trial and Ap-
`peal Board, if adverse to claims in an application for patent, shall constitute the
`final refusal by the Office on those claims. The final decision of the Patent Trial
`and Appeal Board, if adverse to claims in a patent, shall, if no appeal or other re-
`view of the decision has been or can be taken or had, constitute cancellation of those
`claims, and notice of such cancellation shall be endorsed on copies of the patent dis-
`tributed after such cancellation.
`‘‘(e) SETTLEMENT.—Parties to a proceeding instituted under subsection (a) may
`terminate the proceeding by filing a written statement reflecting the agreement of
`the parties as to the correct inventors of the claimed invention in dispute. Unless
`the Patent Trial and Appeal Board finds the agreement to be inconsistent with the
`evidence of record, if any, it shall take action consistent with the agreement. Any
`written settlement or understanding of the parties shall be filed with the Director.
`At the request of a party to the proceeding, the agreement or understanding shall
`be treated as business confidential information, shall be kept separate from the file
`of the involved patents or applications, and shall be made available only to Govern-
`ment agencies on written request, or to any person on a showing of good cause.
`‘‘(f) ARBITRATION.—Parties to a proceeding instituted under subsection (a) may,
`within such time as may be specified by the Director by regulation, determine such
`contest or any aspect thereof by arbitration. Such arbitration shall be governed by
`the provisions of title 9, to the extent such title is not inconsistent with this section.
`The parties shall give notice of any arbitration award to the Director, and such
`award shall, as between the parties to the arbitration, be dispositive of the issues
`to which it relates. The arbitration award shall be unenforceable until such notice
`is given. Nothing in this subsection shall preclude the Director from determining the
`patentability of the claimed inventions involved in the proceeding.’’.
`(j) ELIMINATION OF REFERENCES TO INTERFERENCES.—(1) Sections 134, 145, 146,
`154, 305, and 314 of title 35, United States Code, are each amended by striking
`‘‘Board of Patent Appeals and Interferences’’ each place it appears and inserting
`‘‘Patent Trial and Appeal Board’’.
`(2)(A) Sections 146 and 157(a) of title 35, United States Code, are each amend-
`ed—
`
`(i) by striking ‘‘an interference’’ each place it appears and inserting ‘‘a
`derivation proceeding’’; and
`(ii) by striking ‘‘interference’’ each additional place it appears and in-
`serting ‘‘derivation proceeding’’.
`(B) The subparagraph heading for section 154(b)(1)(C) of title 35, United
`States Code, is amended to read as follows:
`‘‘(C) GUARANTEE OF ADJUSTMENTS FOR DELAYS DUE TO DERIVATION
`PROCEEDINGS, SECRECY ORDERS, AND APPEALS.—’’.
`(3) The section heading for section 134 of title 35, United States Code, is
`amended to read as follows: