112TH CONGRESS 1
`l st Session
`HOUSE OF REPRESENTATIVES
`
`(
`
`REPT. 112-98
`Part 1
`
`AMERICA INVENTS ACT
`
`J UNl!: l , 20 11.-Committed tG the Committee orthe Whole HOU5C on the S18te of
`t he Union and ordcred to be printcd
`
`Mf. SMITH of Texas, from the Comm ittee on the Judiciary,
`submitted the following
`
`REPORT
`
`together with
`
`DISSENTING VIEWS AND ADDITIONAL VIEWS
`
`(To accompany H.R. 1249J
`
`[lncluding cost estimate of t he CongreSllional Budget Office]
`
`The Committee on the Judiciary, to whom was refer red the bill
`(H.R. 1249) to amend title 35, United States Code, to provide for
`patent reform, having considered the sa me, reports favorably there(cid:173)
`on with an amendment and recommends that the bill as amended
`do pass.
`
`CONTE NTS
`
`.........•.............................
`The Amendment
`~~d~:nndd a~ud~~ fo~ï:h~··~gi~i~t;~~· .................................. .
`HClirings
`...................................... .
`Committee ConsideratÎo n ................................... .
`Committee Votes .........•..
`. .................................... .
`~~:B~~:e~A~'tl!~~~:~~~~x E~····~d;~·res·· ::::::::::::::: ...
`CongressÎonal Budget Office Cost ~imate .. .
`Performance Goals and Objectivcs .................................................. .
`Advisory on Ennnarks .................................................................................. .
`Section·by·Scction Analysis
`.......................................................... .
`~ra~lC8Vt~wÊxÎ!~ti~iLa·~··~iadëï;yï,};ëï3iïî,I~8Rëportëd·:::::::::::::::::::::::::::::
`Dissenting Views
`Additionlll Views
`
`,.~
`1
`38
`40
`57
`58
`58
`63
`63
`63
`73
`73
`73
`85
`89
`162
`163
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`Page 1 of 20
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`Biogen Exhibit 2018
`Coalition v. Biogen
`IPR2015-01136
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`pl'actices in the paient realm. The need to update OUI' patent laws
`has been meticulously documented in 15 hearings before the Com(cid:173)
`mittee or ils Subcommittee on Courts, the Internet, a nd Intellec(cid:173)
`tuai Property, as weil as eighi hearings before the United States
`Senate Committee on the Judicia ry. In addition, these legislative
`findings are augmented by the Federal Trade Commission and the
`National Academy of Sciences,5 both of which published authori(cid:173)
`tative reports on patent reform , and a plethora of academic com(cid:173)
`mentary.6
`While Congress has considered patent reform legislation over the
`last four Congresses, the need to morlernize our patent laws has
`round expression in the courts, as weB. The Supreme Court has re(cid:173)
`versed the Federa l Circuit in six of the patent·related cases th at
`it has heard since the beginning of the l09th Congress. 7 The
`Court's decisions have moved in the direction of improving patent
`quality and making the determination of patent validity more effi·
`cient. The decisions reflect a growing sense that question able pat·
`ents are too easily obtained and are 000 diffieult to challenge.s Re·
`eent decisions by the Federal Circuit refleet a similar trend in re·
`sponse to these concerns.9 But the courts are constrained in their
`decisions by the text of the statutes at issue. It is time for Congress
`to aet.
`The voices heard during the debate over changes to the patent
`law h ave been dive rse and their proposais have been far from uni·
`form. They have focused the Committee's attention on the value of
`harmonizing our system for granting patents with the best parts of
`other major patent systems throughout the industrialized world for
`the benefit of U.S. patent holders; improving patent quality and
`providing a more efficient system for challenging patents that
`
`6The National Academy of Sciences (NAS), and the Federal Trade Commission (FTC ) con(cid:173)
`ducted multi-year studies On the patent system ond its need for refonn. See Na/i,mal Reseorch
`Cou/rcil of Ihe Na/i01WI Aœdemies. A Palml Syslem for Ihe 2181 CelrluT)" (2004) (hereinaft.er
`"NAB Reporl ~); and Federal Trode Comm·n. Ta Promo/e Innova/ion: The Proper Balance of Cam·
`pe/iliall and Pa/~nl ww and Po/iey (2003) (hereinaft.er "PI'C Repor(').
`6&e. e.1(., Mark A. Lemle)' and Carl Shapiro. Paient Ho/duE and Royal/y Stacking, 85 Tex.
`L. Rev. 1991 (2007); Donald!;. Chisum, Reforming Palenll.<!w Hefarm. 4 J . Marshall Rev. Intell
`Prop. L. 336 (2005); Gerald J. Mossinghoff .. The First·ta·lnuen/ Rule in the U.S. Pate/rt System
`ha s Pmu,ded no Admnlage 10 SmaU Iinl,I,es, 87 JPTOS 514 (2005); Joseph Farrell & Robert
`P. Mergea. Incenth'es la Chalknge ami Defend Pale.n/s: Why Li/igalion Won 1 Rebably Fil: Paient
`Office l'rrors "/Id Why Mlll/ms/ra/lUe Pa/~nl Ret',ew Mlghl He/p. 19 Berkeley Te.;h. L.J. 943,
`958 (2004); see alsa Adam 8 . J affe & J osh Lemer, l mrovation and I/s Disconte1<ts: How O"r 8ro·
`k~n Palen/ Syslem is Endangering ltlnowlion .and Progress. alld IVha/ /0 Do Abolil lt (2004);
`Kevin G . Rivette & David Kline, Rembrondts ln the AUie, UnlockÎ1'fI the H,dden Value of Pat·
`ents ( 2000 )
`V.S.
`'See Bilski v. Kappos, _
`_ . 130 S.Ct. 3218 (2010) (reversing the Federal Circuit
`and holdin~ that the madiine-or·transfonnation test i8 not the sole test far deœ nnining the pat(cid:173)
`ent ehgibihty of a process); Ouanta Computer. l "c. v. LG Elecs. lne. , 553 V .S. 617 (2008) (revers(cid:173)
`ing the Federal CircUIt and holding that paœn t exhaustion a)lplies to method patent1l when the
`essentlal or inventive festure of the invention is embodied !II the product); Microsoft CorP . . v.
`AT& T Corp., 550 V .S. 437 (2007) (reversing the Fede ral Circuit and limiti ng the extraterntonal
`reach of section 271(1), which imposes liability on a party which s upplies from the V.S. compo(cid:173)
`nent1l of a patented invention for combination outside the V.S.); KSR Int"l Co. u. Te/e{1ex Ine.,
`550 V.S. 398 (2007) (reversing the Federal Circuit and strengthening the standard for deter(cid:173)
`mining when an invention la obvious under section 103); Medlmm""e, I llC. v. G;men/<;"h, l nc.,
`549 V.S. 118 (2007) (revel"8ing the ~'ederal Circuit and holding that the threat of a pnvaœ en·
`forcemen t action is eufficient to confinn SUmdmg under the Constitution ); eBay Inc. v.
`MercExchal!ge. LLC., 547 V.S. 388 (2006) (reversing the Federal Circuit and holding that the
`generally applicable four-factor test for injunctive relief applies to disputes in patent cases):
`8See gellemUy Palenl Reform ln the l1J/h COIIgress: Leg,slatwn and Recent Cauri J)ec,sions,
`Senate Judiciary Committe<e, 11 lth Congo (2009) (statement of ProfeSll(lr Mark A. Lemley, Stan.
`ford Law Schao\).
`9See, e.g., III re Seagale Tech., LLC, 497 F.3d 1360 (Fe<!. Ciro 2007) (holding that wiHfu! in_
`fringeITlent .-equires at least a demonstration of obJectively reckless behavior and removing any
`affirm a tive obligation ta obtain an opinion of counsel !etter to combat an aHegation of wiHful
`infringementJ.
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`should Ilot have issued; a nd reducing unwarranted litigation costs
`and inconsistent damage awards.
`The purpose of the "America Invents Act," as reported by the
`Committee on the Judiciary, is ta ensure that the patent system in
`the 218t century reflects the constitutional imperative. Congress
`must promote innovation by granting inventors temporally limited
`monopolies on their inventions in a manner tbat ultimately bene(cid:173)
`fi ts the public through the disclosure of the in vention to the public.
`The legislation is designed to establish a more efficient a nd stream(cid:173)
`lined patent system that will improve patent quality and limit UIl(cid:173)
`necessary a nd counterprorluctive litigation costs.
`If the United States is to main tain its competitive edge in the
`global economy, it needs a system that will support and reward ail
`innovators with hi gh quality patents. The Committee has taken
`testimony from and its members have held meetings with inter(cid:173)
`ested parties that have different and oft.en conflicting perspectives
`on the patent system. The Committee has taken ail of those views
`into consideration, and drafted and then amended the "America In(cid:173)
`vents Act" to bala nce the competing interests. The legislation or(cid:173)
`dered reported by the Committee on a vote of 32-3 is a consensus
`approach that will modernize the United States patent system in
`significa nt respects.
`
`Background and Need for the Legislation
`Firsl Inuenlor to File
`The "America In vents Act" creates a new "first-inventor-to-file"
`system. Every industrialized nation other than the United States
`uses a patent priority system commonly referred to as "fir st-to-file."
`In a first-to-file system, when more than one a pplication claiming
`the same invention is filed, the priority of a right to a patent is
`based on the earlier-filed application. The United States, by con(cid:173)
`trast, cur rently uses a "first-to-invent" system, in which priority is
`established through a proceeding to determine which applicant ac(cid:173)
`tually invented the claimed invention first. Differences between the
`two systems arise in large part from the date that is most relevant
`to each respective system. In a first-to-file system, the filing date
`of the application is most relevant;10 the filing date of a n applica(cid:173)
`tion is an objective date, simple to detennine , for it is listed on the
`fa ce of the patent. In contrast, in a first-to-invent system, the date
`the invention claimed in the application was actually invented is
`the determinative date. Unlike the objective date of filing, the date
`someone invents so mething is often uncertain , a nd , when disputed,
`typically requires corroborating evidence as part of a n adjudication.
`There are significant, practical differences between the two sys(cid:173)
`tems. Among them is the ease of determining the right to a claimed
`invention in the in stance in which two different people file patent
`applications for the same invention. In a first-to-file system, the ap(cid:173)
`plication with the earlier filing date prevail s and will be awarded
`the patent, if one issues. In the first-to-invent system, a lengthy,
`complex and costly administrative proceeding (called a n "inter(cid:173)
`ference proceeding" ) must he conducted at the United States Patent
`a nd Trademark Office (''USPTO'') to determine who actually in-
`
`lOWhen the term "filing date" is used herein. it is aIs<> meant to include. when appropriate,
`the effective filing date. i.e .• the earhest date the daim in an application-daims priority.
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`ven ted fir st. 11 Interference proceedings can l.ake yeaes la complete
`(even if there is no appeaI to the United States Court of Appeals
`for the Federal Circuit), cost hundreds of thousands of dollars, and
`require extensive discovery. 12 In addition, because it is a lways pos(cid:173)
`sible that an applicant cou\d he involved in a n interference pro(cid:173)
`ceeding, companies must main tain extensive recording a nd docu(cid:173)
`ment retention systems in case they are later required to praye t he
`date they invented the claimed invention .
`Another important difference between the two system s is that in
`sorne fi rst-to-file systems , prioT a rt cao include the inventor's own
`disclosure of his invention prior to the filing date of his application.
`Such systems do flot provide the inventor any grace period during
`which time he is allowed to publish his in vention without fear of
`its later being used against him as prior art. The Committee hea rd
`from universities and small inventors, in particular, about t he im(cid:173)
`portance of maintaining that grace period in our system .13 They ar(cid:173)
`gued that the grace period affords the n ecessary time to prepare
`a nd file applications, and in sorne instances, to obtain the nec(cid:173)
`essary funding that enables the inventor to prepa re adequately the
`a ppli cation. In addition, the grace period benefits the public by en(cid:173)
`couraging early disclosure of new inventions, regardless of whether
`an application may later be filed for a patent on it.
`Numerous organizations, institutions, and companies have advo(cid:173)
`cated t hat the V.S. adopt a first-to-file system similar to those used
`in t he rest of the world. 14 The National Academy of Sc iences made
`a similar recommendation after an extensive study of t he patent
`system. 15 When t he United States patent system wa s fi rst adopted,
`inventors did not typically file in other countries. It is now common
`for inventors a nd companies to file for protection in several coun(cid:173)
`tries at the same time. 16 Thus , United States applicants, who also
`
`"&e 35 U,S.C. §l35.
`' 2&e, e,g., Robert W. Pritchard. The FutuT"fl is Now-The Case (or Patent Harmo"izatiO/,. 20
`N.C. J. Infl L, & Corn. Reg. 291,3 13 (1995).
`'"&e, e.g" Perspectiues on Pate/lts: HarmO/,izatio/l and Other Mal/ers: Heari/lg Before the
`Subcomm. O/! b!tellectual Prop. of the &/late Comm. Ol! the Judiciary, l09th Cong. (2005) (SUIte·
`ment of Charles E. Phelps, Provost. University nf Rochester. on behalf of th e Associatiom nf
`American Universities); Patent lAw Reform: llIjunetion" and Damages: Hcaring Be(are the
`Suboomm. 0/1 botelleetual Prop. of the &/late Comm. 011 .the Judieiary, l09th Cong. (2005) (state·
`ment of Carl Gulbrandsen. Managing Director, W,soonsin Alumni Research Foundation
`(WARF» ; Perspective an Patents: Hearing Before tN: Subcomm. on Intellcctual Prop. of the &'1'
`ote Comm . an the '/udiciary, 1000h Congo (2005 ) (sta,tement of William Pa rkeo:.. Diffraction, Ltd.)
`" &e, e,g,. Perspectiues on Patents: Harmomzatwn and Other Mal/ers: Neari"g Before the
`Subcomm. on !J'telleetual Prop. of Ihe &nate Comm. on the Judiciary, l09th Cong. (2005) (sUIte·
`ment of Gerald J. Mossinghoff. Former Assistant Se.:retary of Commerœ and Commissioner of
`Patents and Trademarks); Perspectives on Patents: Harmonizalion and Other Mallers: Hearing
`Befare the Subcomm. an Inlellec/ual Prop, of the &nate Comm. on Ihe Judiciary, l09th Cong
`(2005) (sUltement of Q. Todd Oickinson. Former Under SecreUlry of Commerce for Jntellectual
`PropeTt>, and Direetor of th e United States Patent and Trademark Offi~); Patent La w Ref"rm:
`Injunctwns and Da mages: Hearing Bef ON< the Suboomm. on Illtellectual Prop. of the Senate
`Comm. on Ihe Judiciary. 109th Congo (2005) (sUltement of Jeffrey P. Kushan. Partner. Sidley
`Austin Brown & Wood, LLP ); Patellt Law Reform: Inj/me/ions and Da mages: Heari"g BefoT"fl the
`Subcomm. On l n/ellectual Prop. o( the Senate Comm. On the Judiciary, l09th Congo (2005) (sUIte·
`ment of Mark A. Lemley, Professor, Stanford LIlw School); PerspectiUf!s 0" Pat.ents: Hearing Be·
`fore the Subcomm. on Intel/ec/ual Pra/I. of IN: &nate Comm. on IN: JudlclOry. 1000h Cong,
`(200M (~I."'emen l. nf Rnho) rt, A. Annil."e:e, Seninr v,,,,,, Pre~i clent "ncl C'.ener"l Pntent. C,""noel, Foh
`L,lly and Company); Perspec/iUf!s 011 Pate"ts: Hearing Be{oT"fl/he Subcomm: 0" In/elled/401 Prop.
`of Ihe Benate Comm. an the JudrclOry. l09th Cong. (2005) (statement of l\hchael K. K'rk. Execu·
`tIVe Directer, American Intellectual Property LIlw ABsoe,ation).
`I ~ &e NAS RepOrt at 124; Bee alro Perspecli~es on Palents: Hearing Before the Subcomm. on
`IIItellectual Prop. of the & /la/e Com,... on tN: J"diclOry, l09th Congo (2005) (st.atement of Rich(cid:173)
`ard C. Levin. Yale Universi ty).
`'6 • ...". ppr~".,..li",,~ "n Pnl,,"I~: Hnrmm,i,znli"" ""'/ nthpr Mntt",.,., H""ri,,/! Rpf" .... Ih"
`Suboomm. 0" botelleetual Prop. of the Senate Comm. on the Judiciary, l09th Cong. (2005) (st.ate·
`Continued
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`42
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`want tü file abroad, are forced to follow and comply wit.h t,wo dif(cid:173)
`ferent filing systems. Maintaining a filing system 80 different from
`the rest of the world disadvantages United States applicants who,
`in most instances, a iso file in other countries.'7 A change is long
`overdue. 18
`Drawing on the best aspects of the two existing systems, the
`America Invents Act creates a new "first-inventor-to-fiIe" system.
`This new system provides patent applicants in the United States
`the efficiency benefits of the first-to-file systems used in the rest
`of the world by moving the V.S. system much closer to a first-to(cid:173)
`file system a nd ma king the filing date tbat which is most relevant
`in determining whether an application is patentable. The new sys(cid:173)
`tem continues, however, to rrovide inventors the benefit of the 1-
`year grace period. As part 0
`the transition to a simpler, more effi(cid:173)
`cient first-inventor-to-file system, this provision eliminates costly,
`oomplex interference proceedings, because priority will be based on
`the first aRplication. A new administrative proceeding----called a
`is created to ensure that the first person
`"derivation proceeding-
`to file the application is actually a true in ventor. This new pro(cid:173)
`ceeding will ensure that a person will not be able to obtain a pat(cid:173)
`ent for the invention that he did not actually invent. If a dispute
`arises as to which of two applicants is a true in ventor (as opposed
`to who invented it first), it will be resolved through an administra(cid:173)
`tive proceeding by the Patent Board. The Act a lso simplifies how
`prior art is determined, provides more certainty, and reduces the
`oost associated with filing and litigating patents.
`The Act main tains a l-year grace period for U.S. a pplica nts. Ap(cid:173)
`plicants' own publication or disclosure that occurs within 1 year
`prior to filing will not aet as prior art against their a pplications.
`Similarly, disclosure by others during that time based on informa(cid:173)
`tion obtained (directly or indirectly) from the in ventor will not con(cid:173)
`stitute prior art. This l-year graee period should continue to give
`U.S. applicants the time they need to prepare and file their appli(cid:173)
`cations.
`Thjs provision also, and neeessarily, modifies the prior-art sec(cid:173)
`tions of the patent law. Prior art will be measured from the filin g
`date of the application and will typically include ail art that pub(cid:173)
`licly exists prior to the filing date, other than disclosures by the in(cid:173)
`ventor within 1 year of filing. Prior art also will no longer have any
`geographic limitations. Thus, in section 102 the "in this country"
`
`ment of Gerald J. Mossi nghoff. Former Assistant Se<:retary of Commerœ and c.:.mm;ss;oner !}f
`Patents and 1'Tademarks).
`"See Perspectives Qll Patents: Heoring &(ore the Subromm. On IlItellectuo/ Prop. o(the Sellote
`Comm. 011 the Judiciary, l09th Cong. (2005) (statement of Richard C. L<evin. President. Yale
`UmveNllty, and Mark B. Meyen. Visltinl Executive Professor. Management Department at the
`Wharton Business School. Unlvenity 0 Pennsylva nia ), estlmating that It C<:Ists as much as
`$750.000 to $ 1 milli!}n W obtain worldwide patent protection on an import.ant invention. and
`the lack ofharmoni~ation .-.:garding filing syste ms adds un necessary rost and delay.
`18The NAS recammended changing the U.S. W a fint·to-file system, while maint.aining a
`grace period. See NAS Report at 124_27. See a/sa Patent Reform ù, the Illth CongN!SS: /...('gislo·
`tion a"d Recent Court Deci3ion3: Heoring Be(ON! the SerlOte Comm. on the Jud,ciary, II1th
`Cong. (2009) (statement of Steven Appleton, Chainnan and Chief Executive Officer. Micron
`Technologies, Ine.); Patent Re(orm in the 1111h CongN!ss: Legislation and &cellt Court Deci·
`sions: Heorillg Be(ON! the Sellate Comm. 011 the Judiciory. 111th O:mg. (2009) (statement of Phil·
`ip S. Johnson. Chief Patent c.:.unsel. J!}hn'lOn & Johnson ); Pate"t Re(orm in the Illth Congress:
`LegislatlOn and Re""nt Court Decisions: Hearing Be(ON! the Sellate Comm. 011 the Judiciary,
`II !th Congo (2009) (st.atement !}f Herbert C. Wamsley. Executive Oiredor. Intellectual Propert)'
`Owners Alssocistion ); Paient Rc{orm in the Illth ConllN!u: Legislation and Recent Court Dec,·
`sions: Heoring Be(oN! the Senate Comm. on the Judiciory. l11th c.:.ng. (2009) (stateme nt !}f
`Mark A. Lemley, Professor, Stanford Lnw School).
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`limitation as applied ta "public use" and "on sale" is removed, and
`the phrase "available to the public" is added to clarify t he broad
`scope of relevant prior art, as weIl as to emphasize the faet that
`it must be publicly accessible. Prior art based on earlier-filed
`United States applications is maintained ,19 as is current law's
`grace period, which will apply to ail actions by the patent owner
`during the year prior to filing that would otherwise create § 102(a)
`prior art,20 Sections (and suhsections) orthe existing statute are re(cid:173)
`numbered, modified, or deleted consistent with converting to a
`first-inventor-to-file system.21 Finally, the intent behind t he CRE(cid:173)
`ATE Act to promote joint research activities is preserved by includ(cid:173)
`ing a prior art exception for subject matter invented by parties to
`a joint research agreement. The Act also provides that its enact(cid:173)
`ment of new section 102(c) of title 35 is done with the same intent
`to promote joint research activities that was expressed in the Coop(cid:173)
`erative Research and Technology Enhancement Act of 2004 (Public
`Law 108-453), a nd that section 102(c) shaH be administered in a
`manner consistent with such intent.
`Inventor's oath or declaration
`The V .S. patent system, when first adopted in 1790, con(cid:173)
`templated that individual inventors would file their own patent ap(cid:173)
`plications, or would have a patent practitioner do 50 on their he(cid:173)
`half. It has hecome increasingly common for patent a pplications to
`he assigned to corporate entities, most commonly the employer of
`the inventor.22 In fact, many employment contracts require employ(cid:173)
`ees to Rssign their inventions to their employer.23
`CUITent law still reflects the antiquated notion t hat it is the in(cid:173)
`ventor who files the application, not the company-assignee. For ex(cid:173)
`ample, every inventor must sign an oath as part of the patent ap(cid:173)
`plication stating that the inventor believes he or she is the true in(cid:173)
`ventor of the invention claimed in the a ppli cation.24 By t he time an
`application is eventually filed, however, the a pplicant filing as an
`assignee may have difficulty locating and obtaining every inven(cid:173)
`tor's signature for the statutorily required oath. Although the
`VSPTO has adopted certain regulations to aHow filing of an appli(cid:173)
`cation when the inventor's signature is unobtainable,25 ma ny have
`advocated that the statute be modernized to facilitate t he filing of
`applications by assignees. 26
`The Act updates the patent system by facilitati ng the process hy
`which an assignee may file and prosecute patent applications. It
`
`'9Compare current § 1000e) with new § 102(a )(2).
`2<.>&e generally 157 Cong. Ree. 8. 1496-97 (daily ed. Mareh 9, 2011), 8. 1370-71 (daily ed
`Mareh 8. W11 ).
`2' The Committee dœs not intend a substantive change by replacing the ward "negatived" in
`section 103 of title 35 with "negated."
`22&e John R. Allison & Mark A. Lemley, The Growing Complexity of the United States Patent
`System, 82 B.U. L. Rev. 77. 97 (2002) (study showmg that approximately 85% of the patenta
`issued between 1996-98 were assigned by inventars ta corporati,ms; an increase from 79% dur(cid:173)
`in{,the per-iO<! betw~n 1!)76-78).
`&e Jerry C. Liu, O""rview of Patellt OWllership CO/lSideratiolls ill Joillt Techllology DeL"fllop·
`mellt, 2005 Syracuse Sei. & Te<:h. L. Rep. 1 (2005).
`2< 35 U.S.C. § 115.
`25&e 37 C.F.R. § 1.47, which permita an applican t \.0 petition the Oirector of the USPTO \.0
`have the application accepte<! without every inventar's signature in limited CÎrcumBtances. e.g.,
`when the inventa~ cannot lx- found or refuses ta participate in the application.
`2«.see Per8peçl'''''3 011 Pale"t3: Hormo"izatw" o"d Olher Molters: Hearing &fore the
`Subromm. on Intelleetual Prop. of the Senate Comm. on the Judiciary. J09th Cong. (2005) (state·
`ment of David Beier, Senior Vice President of Global Governmcnt Affairs, Amgen ).
`
`Page 6 of 20
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`44
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`pl'Ovides similar flexibility for a person tü whom the inventor is ob(cid:173)
`ligated to assign, but has flot assigned, rights to the invention (the
`"obligated assignee").
`Section 115 of titIe 35 is amended to allow a substitute statement
`tü be submitted in lieu of a n inventor's oath when either the inven(cid:173)
`tor (i) is unable tü submit an oath, or (ii) is both unwilling to do
`80 and under an obligation tü assign the invention. If a n error is
`discovered, the statement may later be corrected. A savings clause
`is included to prevent an invalidity or unenforceability challenge tü
`the patent based on failure tü comply with these requirements, pro(cid:173)
`vided that any error has been remedied. Willful false statements
`remain punishable, however, under Federal criminall aws. 27
`Section 118 of title 35 is also amended to make it easier for an
`assignee to file a patent application. The amendment now allows
`obligated assignees-entities to which the inventor is obligated to
`assign the application-to file applications, as weIl. It also allows
`a person who has a sufficient proprietary interest in the invention
`to file an application to preserve that person's rights and those of
`the inventor.
`Defense to infringement based on earlier inventor
`Under current law, "prior user rights" may oller a defense to pat(cid:173)
`ent infringement when the patent in question is a "business meth(cid:173)
`od patent"28 and its inventor uses the invention, but never files a
`patent application for it.29 If the same invention is later patented
`by another party, the prior user may not be liable for infringement
`to the new patent holder, although aIl others may be.
`Many cOlUlties include a more expansive prior-user rights regime
`within their first-to-file system. In the United States, t his is par(cid:173)
`ticularly important to high-tech businesses that prefer not to pat(cid:173)
`ent every process or method that is part of their commercial oper(cid:173)
`ations. The Act responds to this point by revising US law as fol(cid:173)
`lows: First, the prior-use defense may be asserted against any pat(cid:173)
`ent (not just method patents), provided the person asserting t he de(cid:173)
`fen se reduced the subject matter of the patent to practice and com(cid:173)
`mercially used the subj ect matter at least 1 year befor e t he effec(cid:173)
`tive filing date of the patent. Second, the defense cannot be as(cid:173)
`serted if the subject matter was derived from the patent holder or
`persons in privity with the patent holder. And third, the defense
`cannat be asserted unless the prior user both reduced the subject
`matter of the patent to practice and commercially used it at least
`1 year before the effective filing date of the patent or the date t hat
`the patentee publicly disclosed the invention and invoked the
`§ l02(b) grace period, whichever is earlier .
`This narrow expansion of prior-user rights balances t he interests
`of patent holders, including universities, against the legitimate con(cid:173)
`cerns of businesses thot wont to ovoid infringement suits reloting
`to processes that they developed and used prior to another party
`acquiring related patents.
`
`2'&e 18 U ,S.C. § 1001.
`""35 U.S.C. §273(a)(3) $tau s: -rhe U nn 'method' meanS a. method of doing oc eonduet ing
`bU8i ness.~
`29&c 35 U ,S.C. §273.
`
`Page 7 of 20
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`

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`45
`
`Posl-granl review proœedings
`The Act amends ex parte and inter partes reexamination and es(cid:173)
`tablishes a new post-grant review procedure. Under CUITent law,
`there are two ways to challenge the validity and enforceability of
`a pat ent that has issued. The patent may be challenged in district
`court litigation or in a reexamination at the usno.
`Nearly 30 years aga, Congress created the administrative "reex(cid:173)
`amination" process, through which the USPTO could review the va(cid:173)
`lidity of already-issued Eatents on the request of either the patent
`holder or a third party, 0 in the expectation that it would serve as
`an effecti ve and efficient alternative to often costly and protracted
`district court litigation. 3 1 Reexamination requires the usno to re(cid:173)
`view the patent in light of a substantial new question of patent(cid:173)
`ability not presented during the original examination.32 The ini tial
`reexamination statute had several limita tions that later proved to
`make it a less viable alternative to litigation for evaluating patent
`validity than Congress intended. First, a reexamination request
`could only be based on prior art, and could not be based on prior
`public use or prior sales. Moreover, the requestor could not raise
`any challenge based on § 101 (utility, eligibility) or § 112 (indefinite(cid:173)
`ness, enablement, written description, best mode). A third party al(cid:173)
`leging a patent is invalid, therefore, had fewer challenges it could
`raise in the proceeding and, therefore, may instead opt to risk in(cid:173)
`fringement and litigate the validity of the patent in court. Second,
`in the original reexamination system, the third-party challenger
`had no role once the proceeding was initiated, while the patent
`holder had significant input throughout the entire process. Third,
`a challenger that lost at the USFTO under reexamination had no
`right to appeal an examiner's, or the Patent Board's, decision either
`administratively or in court. Restrictions such as these made reex(cid:173)
`amination a much less favored avenue to challenge questionable
`patents than litigation. Reexamination proceedings are also often
`costly, taking several years to complete,33 and are first conducted
`by examiners and, if the patent is rejected, then by Patent Board
`judges. Thus, many patents must go through two rounds of admin(cid:173)
`istrative review (one by the examiner, and a second by the Patent
`Board) adding to the length of the proceeding.34
`
`3O&e 35 U.S.C. §§301-307. A patent holder will typically request reexami nation to bolster
`the patent in view of new prior art. A third party may request reexamination 10 challenge. an d
`ultimately invalidate, the patent.
`3'"Reexamination will pennit efficient resolution of questions about the validity of issued pat(cid:173)
`ents without recourse 10 expensive and I.engthy infringement litigntion. .. The ref'xamination
`of issued patents oould he oonducted wlth a fraction of the time and oost of fonnal legnl pro(cid:173)
`ceedings and would help restore confidence in the effectiveness of our patent system . . . . It
`is antieipated t ha t these measures provide a useful and neœSl!ary alternative for challe,:gers
`and for patent Owners 10 test the validity of united states patents in li n efficient and relatlVely
`inexpensive manne •. - See H.R. Rep. No. 96-1307(1) at 3 (980). reprinted in 1980 U.S.C.C.A.N.
`6460, 6 462-63.
`32&e 35 U.S.C. §303.
`a'&e PerspectilX':~ on Patents: Heoring [kfore the Subcomm. on Intellecl"al Prop. of the Senate
`Cmmll. 0/1 the Jud.eiary, l 09th Congo (2005) (statement of Jon W. Dudas, Undersecretary of
`Commerce for Intel1ec:tual Property, Director of the U.S. Patent and Trademark Office), explain.
`ing that ua large nu mber of reexam ination proœedings h ave been pend ing berore the US PTO
`for mOre t han 4 years: and questioning whether this amount oftime is consistent wi th the stat.(cid:173)
`utory r e<juirement that "(a]1l reexaminlltion proœedmgs.
`. will he conducted wi t h special dis(cid:173)
`patch wlthin the Office: Su a/so 35 U.S.C. § 305.
`3< FOI" several years. the standard practice at the US PTO was to assign the ref'xam ination to
`the patent examine r who had original1y examined that patent. In addition. the same t hird-party
`re<tne~ter oonlil file mnlt.i ple, "",.;,,1 reex" m in"ti(ln~ h"AAti nn the ""me ""n h~lAnti,,1 new 'l ne"t.inn
`of patentability," so long as the initial ref'xamination was not complete. More recently, t he
`Continue<!
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`Page 8 of 20
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`46
`
`COllgress has responded several times l.o crit.icisms of the reex(cid:173)
`amination system by ma king amendments to t he process.35 In
`1999, Congress created a second reexamination procedure-called
`inter partes reexamination-that gave
`third-party challengers
`greater input throughout the proceeding by permitting them to re(cid:173)
`spond to every plea ding suhmitted by the patent holder.36 Congress
`also eventually gave third-party challengers the r ight to appeal ad(cid:173)
`verse decisions.37
`As part of the 1999 improvements to reexamination, Congress di(cid:173)
`rected t he USPTO to submit a report to Congress evaluating the