112TH CONGRESS
`1st Session
`
`"
`
`HOUSE OF REPRESENTATIVES
`
`!
`
`REPT. 112–98
`Part 1
`
`AMERICA INVENTS ACT
`
`JUNE 1, 2011.—Committed to the Committee of the Whole House on the State of
`the Union and ordered to be printed
`
`Mr. SMITH of Texas, from the Committee on the Judiciary,
`submitted the following
`
`R E P O R T
`
`together with
`
`DISSENTING VIEWS AND ADDITIONAL VIEWS
`
`[To accompany H.R. 1249]
`
`[Including cost estimate of the Congressional Budget Office]
`The Committee on the Judiciary, to whom was referred the bill
`(H.R. 1249) to amend title 35, United States Code, to provide for
`patent reform, having considered the same, reports favorably there-
`on with an amendment and recommends that the bill as amended
`do pass.
`
`CONTENTS
`
`Page
`1
`......................................................................................................
`The Amendment
`38
`Purpose and Summary ............................................................................................
`40
`Background and Need for the Legislation .............................................................
`57
`Hearings ...................................................................................................................
`58
`Committee Consideration ........................................................................................
`58
`Committee Votes ......................................................................................................
`63
`Committee Oversight Findings ...............................................................................
`63
`New Budget Authority and Tax Expenditures ......................................................
`63
`Congressional Budget Office Cost Estimate ..........................................................
`73
`Performance Goals and Objectives .........................................................................
`73
`Advisory on Earmarks .............................................................................................
`73
`Section-by-Section Analysis
`....................................................................................
`85
`Agency Views ...........................................................................................................
`89
`Changes in Existing Law Made by the Bill, as Reported .....................................
`Dissenting Views
`..................................................................................................... 162
`Additional Views ...................................................................................................... 163
`
`99–006
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`MYLAN - EXHIBIT 1171
`Mylan Pharmaceuticals Inc. et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131, -01132
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`45
`
`Post-grant review proceedings
`The Act amends ex parte and inter partes reexamination and es-
`tablishes a new post-grant review procedure. Under current law,
`there are two ways to challenge the validity and enforceability of
`a patent that has issued. The patent may be challenged in district
`court litigation or in a reexamination at the USPTO.
`Nearly 30 years ago, Congress created the administrative ‘‘reex-
`amination’’ process, through which the USPTO could review the va-
`lidity of already-issued patents on the request of either the patent
`holder or a third party,30 in the expectation that it would serve as
`an effective and efficient alternative to often costly and protracted
`district court litigation.31 Reexamination requires the USPTO to re-
`view the patent in light of a substantial new question of patent-
`ability not presented during the original examination.32 The initial
`reexamination statute had several limitations 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-
`ness, enablement, written description, best mode). A third party al-
`leging a patent is invalid, therefore, had fewer challenges it could
`raise in the proceeding and, therefore, may instead opt to risk in-
`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 USPTO 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-
`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-
`istrative review (one by the examiner, and a second by the Patent
`Board) adding to the length of the proceeding.34
`
`30 See 35 U.S.C. §§ 301–307. A patent holder will typically request reexamination to bolster
`the patent in view of new prior art. A third party may request reexamination to challenge, and
`ultimately invalidate, the patent.
`31 ‘‘Reexamination will permit efficient resolution of questions about the validity of issued pat-
`ents without recourse to expensive and lengthy infringement litigation. . . . The reexamination
`of issued patents could be conducted with a fraction of the time and cost of formal legal pro-
`ceedings and would help restore confidence in the effectiveness of our patent system. . . . It
`is anticipated that these measures provide a useful and necessary alternative for challengers
`and for patent owners to test the validity of united states patents in an efficient and relatively
`inexpensive manner.’’ See H.R. Rep. No. 96–1307(I) at 3 (1980), reprinted in 1980 U.S.C.C.A.N.
`6460, 6462–63.
`32 See 35 U.S.C. § 303.
`33 See Perspectives on Patents: Hearing Before the Subcomm. on Intellectual Prop. of the Senate
`Comm. on the Judiciary, 109th Cong. (2005) (statement of Jon W. Dudas, Undersecretary of
`Commerce for Intellectual Property, Director of the U.S. Patent and Trademark Office), explain-
`ing that ‘‘a large number of reexamination proceedings have been pending before the USPTO
`for more than 4 years,’’ and questioning whether this amount of time is consistent with the stat-
`utory requirement that ‘‘[a]ll reexamination proceedings . . . will be conducted with special dis-
`patch within the Office.’’ See also 35 U.S.C. § 305.
`34 For several years, the standard practice at the USPTO was to assign the reexamination to
`the patent examiner who had originally examined that patent. In addition, the same third-party
`requester could file multiple, serial reexaminations based on the same ‘‘substantial new question
`of patentability,’’ so long as the initial reexamination was not complete. More recently, the
`Continued
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`46
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`Congress has responded several times to criticisms of the reex-
`amination system by making amendments to the 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-
`spond to every pleading submitted by the patent holder.36 Congress
`also eventually gave third-party challengers the right to appeal ad-
`verse decisions.37
`As part of the 1999 improvements to reexamination, Congress di-
`rected the USPTO to submit a report to Congress evaluating the
`inter partes reexamination process and making any recommenda-
`tions for changes.38 Initially, the USPTO projected that in the first
`year after the creation of inter partes reexamination, it would re-
`ceive 400 such requests and it projected that by 2004 it would re-
`ceive nearly 600.39 No inter partes reexamination requests were ac-
`tually filed in 2000 and only 27 such requests had been filed by
`2004.40 Over the 5-year period studied by the USPTO, it issued
`900,000 patents and received only 53 requests for inter partes reex-
`amination.41
`The Act expands the category of documents that may be cited in
`a reexamination proceeding to include written statements of the
`patent owner that have been filed in a proceeding before a Federal
`court or the USPTO regarding the scope of claims. This addition
`will counteract the ability of patent owners to offer differing inter-
`pretations of prior art in different proceedings. These written state-
`ments, which include documents, pleadings or evidence from pro-
`ceedings that address the patent owner’s statements, shall not be
`considered for any purpose other than to determine the proper
`meaning of the claims that are the subject of the request in a pro-
`ceeding. Specifically, the Committee does not intend these state-
`ments to be a basis for the institution of a reexamination pro-
`ceeding. Reexaminations will continue to be available only on the
`basis of ‘‘patents or printed publications.’’ 42
`The Act also amends the ex parte reexamination procedure to
`allow the Director to institute a reexamination on the Director’s
`own initiative if a substantial new question of patentability is
`raised by patents or publications.
`from an
`reexamination
`The Act
`converts
`inter partes
`examinational to an adjudicative proceeding, and renames the pro-
`
`USPTO ended some of these procedures, and now reexaminations are handled by a Central Re-
`examination Unit (CRU), and subsequent serial reexamination, based on the same ‘‘substantial
`new question of patentability,’’ is no longer permitted. See, e.g., Manual of Patent Examining
`Procedure (MPEP) §§ 2236 and 2240 (August 2006).
`35 See e.g., 21st Century Dep’t of Justice Appropriations Authorization Act, Pub. L. No. 107–
`273, §§ 13105–06, 13202, 116 Stat. 1758, 1761 (2002) (effective Nov. 2, 2002); American Inven-
`tors Protection Act, Pub.L. 106–113, 113 Stat. 1536, § 1501A et seq. (1999) (creating inter partes
`reexamination) (hereafter referred to as the ‘‘AIPA’’).
`36 See 35 U.S.C. §§ 311–318.
`37 See 35 U.S.C. § 315(b).
`38 AIPA, Pub. L. 106–113, § 4606.
`39 See United States Patent and Trademark Office, Report to Congress on Inter Partes Reexam-
`ination (2004) (hereinafter referred to as ‘‘Report on Inter Partes Reexamination’’), at 4.
`40 Id. at 5.
`41 Id.
`42 The scope of ‘‘patent and printed publication’’ prior art in the amended section 301 is in-
`tended to be coextensive with these terms in current section 102 of the title 35. Further, amend-
`ments made by Section 2 of the Act, which expand and contract the definition of certain other
`forms of prior art, are not intended to change the particular ‘‘patent or printed publication’’ prior
`art, which will continue to be the sole basis for initiating reexamination proceedings.
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`47
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`ceeding ‘‘inter partes review.’’ The Act also makes the following im-
`provements to this proceeding:
`• ‘‘Reasonable likelihood of success’’ for instituting inter
`partes review. The threshold for initiating an inter partes
`review is elevated from ‘‘significant new question of patent-
`ability’’—a standard that currently allows 95% of all re-
`quests to be granted—to a standard requiring petitioners to
`present information showing that their challenge has a rea-
`sonable likelihood of success. Satisfaction of the new thresh-
`old will be assessed based on the information presented both
`in the petition for the proceeding and in the patent owner’s
`response to the petition.
`• ‘‘Reasonably could have raised’’ estoppel applied to
`subsequent administrative proceedings. A party that
`uses inter partes review is estopped from raising in a subse-
`quent PTO proceeding (such as an ex parte reexam or inter
`partes review) any issue that it raised or reasonably could
`have raised in the inter partes review.
`• Repeal of the 1999 limit. The limit on challenging patents
`issued before 1999 in inter partes reexamination is elimi-
`nated; all patents can be challenged in inter partes review.
`• Preponderance burden. Petitioners bear the burden of
`proving that a patent is invalid by a preponderance of the
`evidence in inter partes review.
`• Time limits during litigation. Parties who want to use
`inter partes review during litigation are required to seek a
`proceeding within 12 months of being served with a com-
`plaint alleging infringement of the patent, and are barred
`from seeking or maintaining an inter partes review if they
`file an action for a declaratory judgment that the patent is
`invalid.
`• Discovery. Parties may depose witnesses submitting affida-
`vits or declarations and seek such discovery as the Patent
`Office determines is otherwise necessary in the interest of
`justice.
`• 12- to 18-month deadline. Inter partes review must be
`completed within 1 year of when the proceeding is instituted,
`except that the Office can extend this deadline by 6 months
`for good cause.
`• Oral hearing. Each party has the right to request an oral
`hearing as part of an inter partes review.
`• Three-judge panels. Inter partes reviews will be conducted
`before a panel of three APJs. Decisions will be appealed di-
`rectly to the Federal Circuit.
`The Act also creates a new post-grant opposition procedure that
`can be utilized during the first 12 months after the grant of a pat-
`ent or issue of a reissue patent. Unlike reexamination proceedings,
`which provide only a limited basis on which to consider whether a
`patent should have issued, the post-grant review proceeding per-
`mits a challenge on any ground related to invalidity under section
`282. The intent of the post-grant review process is to enable early
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`48
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`challenges to patents, while still protecting the rights of inventors
`and patent owners against new patent challenges unbounded in
`time and scope. The Committee believes that this new, early-stage
`process for challenging patent validity and its clear procedures for
`submission of art will make the patent system more efficient and
`improve the quality of patents and the patent system. This new,
`but time-limited, post-grant review procedure will provide a mean-
`ingful opportunity to improve patent quality and restore confidence
`in the presumption of validity that comes with issued patents in
`court.
`In utilizing the post-grant review process, petitioners, real par-
`ties in interest, and their privies are precluded from improperly
`mounting multiple challenges to a patent or initiating challenges
`after filing a civil action challenging the validity a claim in the pat-
`ent. Further, a final decision in a post-grant review process will
`prevent the petitioner, a real party in interest, or its privy from
`challenging any patent claim on a ground that was raised in the
`post-grant review process. The post-grant review procedure is not
`intended, however, to inhibit patent owners from pursuing the var-
`ious avenues of enforcement of their rights under a patent, and the
`amendment makes clear that the filing or institution of a post-
`grant review proceeding does not limit a patent owner from com-
`mencing such actions.
`The Committee recognizes the importance of quiet title to patent
`owners to ensure continued investment resources. While this
`amendment is intended to remove current disincentives to current
`administrative processes, the changes made by it are not to be used
`as tools for harassment or a means to prevent market entry
`through repeated litigation and administrative attacks on the va-
`lidity of a patent. Doing so would frustrate the purpose of the sec-
`tion as providing quick and cost effective alternatives to litigation.
`Further, such activity would divert resources from the research and
`development of inventions. As such, the Committee intends for the
`USPTO to address potential abuses and current inefficiencies
`under its expanded procedural authority.
`Patent Trial and Appeal Board.
`The Act renames the Patent Board the ‘‘Patent Trial and Appeal
`Board’’ and sets forth its duties, which are expanded to include ju-
`risdiction over the new post-grant review and derivation pro-
`ceedings. This section strikes references to proceedings eliminated
`by the Act, including interference proceedings, and updates the
`various appeals statutes.
`Preissuance submissions by third parties
`After an application is published, members of the public—most
`likely, a competitor or someone else familiar with the patented in-
`vention’s field—may realize they have information relevant to a
`pending application. The relevant information may include prior
`art that would prohibit the pending application from issuing as a
`patent. Current USPTO rules permit the submission of such prior
`art by third parties only if it is in the form of a patent or publica-
`tion,43 but the submitter is precluded from explaining why the
`
`43 See 35 C.F.R. § 1.99.
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