Order Code RL33996
Patent Reform in the 110th Congress:
Innovation Issues
May 7, 2007
John R. Thomas
Visiting Scholar
Resources, Science, and Industry Division
Wendy H. Schacht
Specialist in Science and Technology
Resources, Science, and Industry Division

---

Patent Reform in the 110th Congress:
Innovation Issues
Summary
Congressional interest in patent policy and possible patent reform has expanded
as the importance of intellectual property to innovation has increased. Patent
ownership is perceived as an incentive to the technological advancement that leads
to economic growth. However, growing interest in patents has been accompanied by
persistent concerns about the fairness and effectiveness of the current system. Several
recent studies, including those by the National Academy of Sciences and the Federal
Trade Commission, have recommended patent reform to address perceived
deficiencies in the operation of the patent regime. Other experts maintain that major
alterations in existing law are unnecessary and that the patent process can adapt, and
is adapting, to technological progress.
Pending patent reform proposals would work significant legal changes to the
patent system. Among the more notable of these proposed changes is a shift to a first-
inventor-to-file priority system; substantive and procedural modifications to the
patent law doctrine of willful infringement; and adoption of post-grant review
proceedings, prior user rights, and pre-issuance publication of all pending
applications. Several of these proposals have been the subject of discussion within
the patent community for many years, but others are more novel propositions.
Current legislative reform efforts (H.R. 1908, S. 1145) also would address
several issues of concern, including the quality of issued patents, the expense and
complexity of patent litigation, harmonization of U.S. patent law with the laws of our
leading trading partners, potential abuses committed by patent speculators, and the
special needs of individual inventors, universities, and small firms with respect to the
patent system. In addition, although the existing patent statute in large measure
applies the same basic rules to different sorts of inventions, regardless of the
technological field of that invention, the patent system is widely believed to impact
different industries in varying ways.
The provisions of the proposed legislation would arguably work the most
sweeping reforms to the U.S. patent system since the nineteenth century. However,
many of these proposals, such as pre-issuance publication and prior user rights, have
already been implemented in U.S. law to a more limited extent. These and other
reforms, such as the first-inventor-to-file priority system and post-grant review
proceedings, also reflect the decades-old patent practices of Europe, Japan, and our
other leading trading partners.
Other knowledgeable observers are nonetheless concerned that certain of these
proposals would weaken the patent right, thereby diminishing needed incentives for
innovation. Some also believe that changes of this magnitude, occurring at the same
time, do not present the most prudent course for the patent system. Patent reform
therefore confronts Congress with difficult legal, practical, and policy issues, but also
with apparent possibilities for altering and possibly improving the legal regime that
has long been recognized as an engine of innovation within the U.S. economy.

---

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Patents and Innovation Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Mechanics of the Patent System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Innovation Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current Issues and Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Patent Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Litigation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
International Harmonization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Potential Abuses of Patent Speculators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Role of Individuals, Universities and Small Entities . . . . . . . . . . . . . . 10
Different Roles for Patents in Distinct Industries . . . . . . . . . . . . . . . . . . . . 12
Proposed Legislative Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
First Inventor to File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Policy Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Grace Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Elimination of Sections 102(c), (d) and (f) . . . . . . . . . . . . . . . . . . . . . . . . . 18
Inventor’s Oath . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Assignee Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Apportionment of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Willful Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Prior User Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Post-Issuance Review Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Publication of Pending Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Pre-Issuance Submissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Interlocutory Claim Construction Appeals . . . . . . . . . . . . . . . . . . . . . . . . . 33
Enhanced USPTO Rulemaking Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Additional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Elimination of the Best Mode Requirement . . . . . . . . . . . . . . . . . . . . . . . . 35
Unenforceability (Inequitable Conduct) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Concluding Observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
This report was funded in part by a grant from the John D. and Catherine T.
MacArthur Foundation

---

Patent Reform in the 110th Congress:
Innovation Issues
Introduction
Congressional interest in patent reform has increased as the patent system
becomes more significant to U.S. industry.1 There is broad agreement that more
patents are sought and enforced then ever before; that the attention paid to patents in
business transactions and corporate boardrooms has dramatically increased; and that
the commercial and social significance of patent grants, licenses, judgments, and
settlements is at an all-time high.2 As the United States becomes even more of a
high-technology, knowledge-based economy, the importance of patents may grow
even further in the future.
Increasing interest in patents has been accompanied by persistent concerns about
the fairness and effectiveness of the current system. Several recent studies, including
those by the National Academy of Sciences and the Federal Trade Commission, have
recommended legal reform to address perceived deficiencies in the operation of the
patent regime.3 Other experts maintain that major alterations in existing law are
unnecessary and that the patent process can adapt, and is adapting, to technological
progress.
Bills have been introduced before both houses of the 110th Congress that attempt
to respond to current concerns about the functioning of the patent process. With
respect to the House of Representatives, H.R. 1908, titled The Patent Reform Act of
2007, was introduced on April 17, 2007. On the same date, S. 1145, also titled the
Patent Reform Act of 2007, was introduced in the Senate. The two bills are
identically worded.
1 This report is based substantially on CRS Report RL32996, Patent Reform: Innovation
Issues, by John R. Thomas and Wendy H. Schacht. That report addressed patent reform
issues in the 109th Congress.
2 Statistics from the United States Patent and Trademark Office (USPTO) support this
account. In 1980, the USPTO received 104,329 utility patent applications; by 2005, this
number had grown to 390,733 applications. The number of U.S. patents granted in 1980
was 61,819; in 2006 this number had increased to 173,771. U.S. Patent and Trademark
Office, U.S. Patent Statistics, Calendar Years 1963-2006. Available at [http://www.uspto
.gov].
3 National Research Council, National Academy of Sciences, A Patent System for the 21st
Century, [Washington, National Academies Press, 2004] and Federal Trade Commission,
To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy,
October 2003, available at [http://www.ftc.gov].

---

CRS-2
Both the House and the Senate bills propose significant legal reforms to the
patent system. Among these reforms are a shift to a first-inventor-to-file priority
system; substantive and procedural modifications to the doctrine of willful
infringement; and adoption of assignee filing, post-grant review proceedings, prior
user rights, and pre-issuance publication of all pending applications. Several of these
proposals have been the subject of discussion within the patent community for many
years, but others present more novel propositions.
This study provides an overview of current patent reform issues. It begins by
offering a summary of the structure of the current patent system and the role of
patents in innovation policy. The report then reviews some of the broader issues and
concerns, including patent quality, the high costs of patent litigation, international
harmonization, and speculation in patents, that have motivated these diverse
legislative reform proposals. The specific components of this legislation are then
identified and reviewed in greater detail.
Patents and Innovation Policy
The Mechanics of the Patent System
The patent system is grounded in Article I, Section 8, Clause 8 of the U.S.
Constitution, which states that “The Congress Shall Have Power ... To promote the
Progress of Science and useful Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective Writings and Discoveries ....” As
mandated by the Patent Act of 1952,4 U.S. patent rights do not arise automatically.
Inventors must prepare and submit applications to the U.S. Patent and Trademark
Office (USPTO) if they wish to obtain patent protection.5 USPTO officials known
as examiners then assess whether the application merits the award of a patent.6 The
patent acquisition process is commonly known as “prosecution.”7
In deciding whether to approve a patent application, a USPTO examiner will
consider whether the submitted application fully discloses and distinctly claims the
invention.8 In addition, the application must disclose the “best mode,” or preferred
way, that the applicant knows to practice the invention.9 The examiner will also
determine whether the invention itself fulfills certain substantive standards set by the
patent statute. To be patentable, an invention must be useful, novel and nonobvious.
The requirement of usefulness, or utility, is satisfied if the invention is operable and
4 P.L. 82-593, 66 Stat. 792 (codified at Title 35 United States Code).
5 35 U.S.C. § 111.
6 35 U.S.C. § 131.
7 John R. Thomas, “On Preparatory Texts and Proprietary Technologies: The Place of
Prosecution Histories in Patent Claim Interpretation,” 47 UCLA Law Review (1999), 183.
8 35 U.S.C. § 112.
9 Ibid.

---

CRS-3
provides a tangible benefit.10 To be judged novel, the invention must not be fully
anticipated by a prior patent, publication or other state-of-the-art knowledge that is
collectively termed the “prior art.”11 A nonobvious invention must not have been
readily within the ordinary skills of a competent artisan at the time the invention was
made.12
If the USPTO allows the patent to issue, the patent proprietor obtains the right
to exclude others from making, using, selling, offering to sell or importing into the
United States the patented invention.13 Those who engage in these acts without the
permission of the patentee during the term of the patent can be held liable for
infringement. Adjudicated infringers may be enjoined from further infringing acts.14
The patent statute also provides for the award of damages “adequate to compensate
for the infringement, but in no event less than a reasonable royalty for the use made
of the invention by the infringer.”15
The maximum term of patent protection is ordinarily set at 20 years from the
date the application is filed.16 At the end of that period, others may employ that
invention without regard to the expired patent.
Patent rights are not self-enforcing. Patentees who wish to compel others to
observe their rights must commence enforcement proceedings, which most
commonly consist of litigation in the federal courts. Although issued patents enjoy
a presumption of validity, accused infringers may assert that a patent is invalid or
unenforceable on a number of grounds.17 The U.S. Court of Appeals for the Federal
Circuit (Federal Circuit) possesses national jurisdiction over most patent appeals
from the district courts.18 The U.S. Supreme Court enjoys discretionary authority to
review cases decided by the Federal Circuit.19
10 35 U.S.C. § 101.
11 35 U.S.C. § 102.
12 35 U.S.C. § 103.
13 35 U.S.C. § 271(a).
14 35 U.S.C. § 283.
15 35 U.S.C. § 284.
16 35 U.S.C. § 154(a)(2). Although patent term is based upon the filing date, the patentee
gains no enforceable legal rights until the USPTO allows the application to issue as a
granted patent. A number of Patent Act provisions may modify the basic 20-year term,
including examination delays at the USPTO and delays in obtaining marketing approval for
the patented invention from other federal agencies.
17 35 U.S.C. § 282.
18 28 U.S.C. § 1295(a)(1).
19 28 U.S.C. § 1254(1).

---

CRS-4
Innovation Policy
Patent ownership is perceived to be an incentive to innovation, the basis for the
technological advancement that contributes to economic growth. It is through the
commercialization and use of new products and processes that productivity gains are
made and the scope and quality of goods and services are expanded. Award of a
patent is intended to stimulate the investment necessary to develop an idea and bring
it to the marketplace embodied in a product or process. Patent title provides the
recipient with a limited-time monopoly over the use of his discovery in exchange for
the public dissemination of information contained in the patent application. This is
intended to permit the inventor to receive a return on the expenditure of resources
leading to the discovery but does not guarantee that the patent will generate
commercial benefits. The requirement for publication of the patent is expected to
stimulate additional innovation and other creative means to meet similar and
expanded demands in the marketplace.
Innovation produces new knowledge. One characteristic of this knowledge is
that it is a “public good,” a good that is not consumed when it is used. This “public
good” concept underlies the U.S. patent system. Absent a patent system, “free riders”
could easily duplicate and exploit the inventions of others. Further, because they
incurred no cost to develop and perfect the technology involved, copyists could
undersell the original inventor. The resulting inability of inventors to capitalize on
their inventions would lead to an environment where too few inventions are made.20
The patent system corrects this market failure problem by providing innovators with
an exclusive interest in their inventions, thereby allowing them to capture the
innovation’s marketplace value.
The regime of patents purportedly serves other goals as well. The patent system
encourages the disclosure of products and processes, for each issued patent must
include a description sufficient to enable skilled artisans to practice the patented
invention.21 At the close of the patent’s 20-year term,22 others may practice the
claimed invention without regard to the expired patent. In this manner the patent
system ultimately contributes to the growth of the public domain.
Even during their term, issued patents may also encourage others to “invent
around” the patentee’s proprietary interest. A patentee may point the way to new
products, markets, economies of production and even entire industries. Others can
build upon the disclosure of a patent instrument to produce their own technologies
that fall outside the exclusive rights associated with the patent.23
The patent system has also been identified as a facilitator of markets. Absent
patent rights, an inventor may have scant tangible assets to sell or license. In
20 See Rebecca S. Eisenberg, “Patents and the Progress of Science: Exclusive Rights and
Experimental Use,” 56 University of Chicago Law Review 1017 (1989).
21 35 U.S.C. § 112.
22 35 U.S.C. § 154.
23 Eisenberg, supra, at 1017.

---

CRS-5
addition, an inventor might otherwise be unable to police the conduct of a contracting
party. Any technology or know-how that has been disclosed to a prospective licensee
might be appropriated without compensation to the inventor. The availability of
patent protection decreases the ability of contracting parties to engage in
opportunistic behavior. By lowering such transaction costs, the patent system may
make technology-based transactions more feasible.24
Through these mechanisms, the patent system can act in more socially desirable
ways than its chief legal alternative, trade secret protection. Trade secrecy guards
against the improper appropriation of valuable, commercially useful and secret
information. In contrast to patenting, trade secret protection does not result in the
disclosure of publicly valuable information. That is because an enterprise must take
reasonable measures to keep secret the information for which trade secret protection
is sought. Taking the steps necessary to maintain secrecy, such as implementing
physical security measures, also imposes costs that may ultimately be unproductive
for society.25
The patent system has long been subject to criticism, however. Some observers
have asserted that the patent system is unnecessary due to market forces that already
suffice to create an optimal level of innovation. The desire to obtain a lead time
advantage over competitors, as well as the recognition that technologically backward
firms lose out to their rivals, may well provide sufficient inducement to invent
without the need for further incentives.26 Other commentators believe that the patent
system encourages industry concentration and presents a barrier to entry in some
markets.27 Still other observers believe that the patent system too frequently attracts
speculators who prefer to acquire and enforce patents rather than engage in socially
productive activity.28
When analyzing the validity of these competing views, it is important to note
the lack of rigorous analytical methods available for studying the effect of the patent
law upon the U.S. economy as a whole. The relationship between innovation and
patent rights remains poorly understood. As a result, current economic and policy
tools do not allow us to calibrate the patent system precisely in order to produce an
optimal level of investment in innovation. Thus, each of the arguments for and
against the patent system remains open to challenge by those who are unpersuaded
by their internal logic.
24 Robert P. Merges, “Intellectual Property and the Costs of Commercial Exchange: A
Review Essay,” 93 Michigan Law Review (1995), 1570.
25 David D. Friedman et al., “Some Economics of Trade Secret Law,” 5 Journal of
Economic Perspectives (1991), 61.
26 See Frederic M. Sherer, Industrial Market Structure and Economic Performance (1970),
384-87.
27 See John R. Thomas, “Collusion and Collective Action in the Patent System: A Proposal
for Patent Bounties,” University of Illinois Law Review (2001), 305.
28 Ibid.

---

CRS-6
Current Issues and Concerns
Pending legislation proposes a number of changes to diverse aspects of the
patent system. Although these reforms were undoubtedly motivated by a range of
concerns, a discrete number of issues have been the subject of persistent discussion
in the patent community over a period of many years. Among these issues are
concern for the quality of issued patents, the expense and complexity of patent
litigation, harmonization of U.S. patent law with the laws of our leading trading
partners, potential abuses committed by patent speculators, and the special needs of
individual inventors, universities, and small firms with respect to the patent system.
In addition, although the patent statute in large measure applies the same basic rules
to different sorts of inventions, regardless of the technological field of that invention,
the patent system is widely believed to impact different industries in varying ways.29
As a result, different industries can be expected to espouse dissimilar views of certain
patent reform proposals. Before turning to a more specific analysis of individual
legislative proposals, this report reviews the proposed legislation’s broader themes
with regard to these issues and concerns.
Patent Quality
Government, industry, academia and the patent bar alike have long insisted that
the USPTO approve only those patent applications that describe and claim a
patentable advance.30 Because they meet all the requirements imposed by the patent
laws, quality patents may be dependably enforced in court and employed as a
technology transfer tool. Such patents are said to confirm private rights by making
their proprietary uses, and therefore their value, more predictable. Quality patents
also may clarify the extent that others may approach the protected invention without
infringing. These traits in turn should strengthen the incentives of private actors to
engage in value-maximizing activities such as innovation or commercial
transactions.31
In contrast, poor patent quality is said to hold deleterious consequences. Large
numbers of inappropriately granted patents may negatively impact entrepreneurs. For
example, innovative firms may be approached by an individual with a low quality
patent that appears to cover the product they are marketing. The innovative firm may
recognize that the cost of challenging a patent even of dubious validity may be
considerable. Therefore, the firm may choose to make payments under licensing
29 See Dan L. Burk & Mark A. Lemley, “Is Patent Law Technology-Specific?,” 17 Berkeley
Technology Law Journal (2002), 1155.
30 CRS Report RL31281, Patent Quality and Public Policy: Issues for Innovative Firms in
Domestic Markets, by John R. Thomas.
31 See Joseph Farrell & Robert P. Merges, “Incentives to Challenge and Defend Patents:
Why Litigation Won’t Reliably Fix Patent Office Errors and Why Administrative Patent
Review Might Help,” 19 Berkeley Technology Law Journal (2004), 943.

---

CRS-7
arrangements, or perhaps decide not to market its product at all, rather than contest
the patent proprietor’s claims.32
Poor patent quality may also encourage opportunistic behavior. Perhaps
attracted by large damages awards and a potentially porous USPTO, rent-seeking
entrepreneurs may be attracted to form speculative patent acquisition and
enforcement ventures. Industry participants may also be forced to expend
considerable sums on patent acquisition and enforcement.33 The net results would
be reduced rates of innovation, decreased patent-based transactions, and higher prices
for goods and services.
Although low patent quality appears to affect both investors and competitors of
a patentee, patent proprietors themselves may also be negatively impacted. Patent
owners may make managerial decisions, such as whether to build production
facilities or sell a product, based upon their expectation of exclusive rights in a
particular invention. If their patent is declared invalid by the USPTO or a court,
patentees will be stripped of exclusive rights without compensation. The issuance
of large numbers of invalid patents would increase the possibility that the investment-
backed expectations of patentees would be disappointed.34
The notion that high patent quality is socially desirable has been challenged,
however. Some commentators believe that market forces will efficiently assign
patent rights no matter what their quality. Others observe that few issued patents are
the subject of litigation and further estimate that only a minority of patents are
licensed or sold. Because many patented inventions are not used in a way that calls
their validity into question, some observers maintain, society may be better off
making a detailed review into the patentability of an invention only in those few
cases where that invention is of commercial significance.35
Pending legislation bears upon the patent quality issue. Both the House and
Senate bills (H.R. 1908 and S. 1145) would allow for increased public participation
in USPTO decisionmaking through a pre-issuance submission procedure. These bills
also allow for post-issuance review proceedings, which would potentially allow
interested parties to “weed out” invalid patents before they are the subject of
licensing or infringement litigation.
32 See Bronwyn H. Hall & Dietmar Harhoff, “Post-Grant Reviews in the U.S. Patent System
— Design Choices and Expected Impact,” 19 Berkeley Technology Law Journal (2004),
989.
33 See Robert P. Merges, “As Many As Six Impossible Patents Before Breakfast: Property
Rights for Business Concepts and Patent System Reform,” 14 Berkeley Technology Law
Journal (1999), 577.
34 See Craig Allen Nard, “Certainty, Fence Building and the Useful Arts,” 74 Indiana Law
Journal (1999), 759.
35 Mark A. Lemley, “Rational Ignorance at the Patent Office,” 95 Northwestern University
Law Review (2001), 1495.

---

CRS-8
Litigation Costs
Patent enforcement is often expensive. The complex legal and technological
issues, extensive discovery proceedings, expert witnesses, and specially qualified
attorneys associated with patent trials can lead to high costs.36 One study published
in 2000 concluded that the average cost of patent enforcement was $1.2 million.37
These expenses appear to be increasing, with one more recent commentator
describing an “industry rule of thumb” whereby “any patent infringement lawsuit will
easily cost $1.5 million in legal fees alone to defend.”38 Higher stakes litigation is
even more costly: for patent suits involving damages claims of more than $25
million, expenses reportedly increase to $4 million per side.39
For innovative firms that are not infrequently charged with patent infringement,
or that bring claims of patent infringement themselves, the annual expenses
associated with patent litigation can be very dear. The Microsoft Corporation
reportedly defends an average of 35 to 40 patent lawsuits annually at a cost of almost
$100 million.40 The Intel Corporation has recently been estimated to spend $20
million a year on patent litigation.41
The high costs of litigation may discourage patent proprietors from bringing
meritorious claims against infringers. They may also encourage firms to license
patents of dubious merit rather than contest them in court. Pending legislation would
endeavor to make patent litigation less costly and complex through modification of
the doctrine of willful infringement. H.R. 1908 and S. 1145 would also allow for an
interlocutory appeal of claim construction rulings by the district courts. In addition,
these bills call for an administrative post-grant review proceeding that could serve
as a less expensive alternative to litigation.
International Harmonization
In our increasingly globalized, high-technology economy, patent protection in
a single jurisdiction is often ineffective to protect the interests of inventors. As a
result, U.S. inventors commonly seek patent protection abroad. Doing so can be a
costly, time-consuming, and difficult process. There is no global patent system.
36 Steven J. Elleman, “Problems in Patent Litigation: Mandatory Mediation May Provide
Settlement and Solutions,” 12 Ohio State Journal on Dispute Resolution (1997), 759.
37 Dee Gill, “Defending Your Rights: Protecting Intellectual Property is Expensive,” Wall
Street Journal (September 25, 2000), 6.
38 Mark H. Webbink, “A New Paradigm for Intellectual Property Rights in Software,” 2005
Duke Law and Technology Review (May 1, 2005), 15.
39 See Sarah Lai Stirland, “Will Congress Stop High-Tech Trolls?,” National Journal
(February 26, 2005), 612.
40 “Microsoft Advocates for Patent Reform,” eWEEK (March 10, 2005).
41 Stirland, supra, at 613.

---

CRS-9
Inventors who desire intellectual property protection in a particular country must
therefore take specific steps to procure a patent within that jurisdiction.42
Differences in national laws are among the difficulties faced by U.S. inventors
seeking patent rights overseas. Although the world’s patent laws have undergone
considerable harmonization in recent years, several notable distinctions between U.S.
patent law and those of our leading trading partners persist. H.R. 1908 and S. 1145
would address some of these differences by modifying U.S. patent law in order to
comply with international standards. Among these proposed reforms are adoption
of a first-inventor-to-file priority system, a post-grant review system, assignee filing,
and prior user rights.
Potential Abuses of Patent Speculators
Some commentators believe that the patent system too frequently attracts
speculators who prefer to acquire and enforce patents rather than engage in research,
development, manufacturing, or other socially productive activity.43 Patent
speculators are sometimes termed “trolls,” after creatures from folklore that would
emerge from under a bridge in order to waylay travelers.44 The late Jerome C.
Lemelson, a prolific inventor who owned hundreds of patents and launched
numerous charges of patent infringement, has sometimes been mentioned in this
context. The total revenue of the Lemelson estate’s patent licensing program has
been reported as in excess of $1.5 billion.45 But as explained by journalist Michael
Ravnitsky, “critics charge that many Lemelson patents are so-called submarine
patents, overly broad applications that took so long to issue or were so general in
nature that their owners could unfairly claim broad infringement across entire
industry sectors.”46 Of such patent ventures, patent attorney James Pooley observes:
Of course there is nothing inherently wrong with charging someone rent to use
your property, including intellectual property like patents. But it’s useful to keep
in mind — especially when listening to prattle about losing American jobs to
foreign competition — that these patent mills produce no products. Their only
output is paper, of a highly threatening sort.47
Patent enforcement suits brought by patent speculators appear to present special
concerns for manufacturers and service providers. If one manufacturer or service
42 CRS Report RL31132, Multinational Patent Acquisition and Enforcement: Public Policy
Challenges and Opportunities for Innovative Firms, by John R. Thomas.
43 See Elizabeth D. Ferrill, “Patent Investment Trusts: Let’s Build a Pit to Catch the Patent
Trolls,” 6 North Carolina Journal of Law and Technology (2005), 367.
44 See Lorraine Woellert, “A Patent War Is Breaking Out on the Hill,” BusinessWeek 45
(July 4, 2005).
45 Nicholas Varchaver, “The Patent King,” Fortune (May 14, 2001), 202.
46 Michael Ravnitsky, “More Lemelson Suits,” The National Law Journal (December 17,
2001), B9.
47 James Pooley, “Opinion: U.S. Patent Reform — A Good Invention,” Electronic
Business (January 1, 2000), 72.

---

CRS-10
provider commences litigation against another, the defendant can often counter with
its own claims of patent infringement against the plaintiff. Because patent
speculators do not otherwise participate in the marketplace, however, they are
immune to such counterclaims. This asymmetry in litigation positions reportedly
reduces the bargaining power of manufacturers and service providers, potentially
exposing them to harassment.48

Observers hasten to note, however, that not every patent proprietor who does not
commercialize the patented invention should properly be considered an opportunistic
“troll.” A nonmanufacturing patentee may lack the expertise or resources to produce
a patented product, prefer to commit itself to further innovation, or otherwise have
legitimate reasons for its behavior.49 Universities and small biotechnology
companies often fit into this category. Further, whether classified as a “troll” or not,
each patent owner has presumptively fulfilled all of the relevant statutory
requirements. Among these obligations is a thorough disclosure of a novel,
nonobvious invention to the public.50
The legislation introduced in the 110th Congress would impact concerns over
“trolling” by the introduction of post-grant review procedures as well as reform of
patent damages law.
The Role of Individuals, Universities and Small Entities
Entrepreneurs and small, innovative firms play a role in the technological
advancement and economic growth of the United States.51 Several studies
commissioned by U.S. federal agencies have concluded that individuals and small
entities constitute a significant source of innovative products and services.52 Studies
48 See Ronald J. Mann, “Do Patents Facilitate Financing in the Software Industry?,” 83
Texas Law Review (2005), 961.
49 See David G. Barker, “Troll or No Troll? Policing Patent Usage with An Open Post-Grant
Review,” 2005 Duke Law and Technology Review (April 15, 2005), 11.
50 35 U.S.C. § 112.
51 National Science Board, Science and Engineering Indicators, 1993 (December 8, 1993),
185. See also CRS Report RL30216, Small, High Tech Companies and Their Role in the
Economy: Issues in the Reauthorization of the Small Business Innovation (SBIR) Program,
by Wendy H. Schacht.
52 For example, the National Academy of Engineering concluded that “small high-tech
companies play a critical and diverse role in creating new products and services, in
developing new industries, and in driving technological change and growth in the U.S.
economy.” National Academy of Engineering, Risk & Innovation: The Role and Importance
of Small High-Tech Companies in the U.S. Economy (Washington: National Academy Press,
1995), 37. This assessment was founded on the ability of small firms to develop markets
rapidly, generate new goods and services, and offer diverse products. The study also
concluded that small businesses were less risk adverse than larger, established corporations
and were often better positioned to exploit market opportunities quickly. A National
Science Foundation report found that entrepreneurs and small firms are six times as
effective as larger firms in utilizing research and development expenditures to generate new
(continued...)

---

CRS-11
have also indicated that entrepreneurs and small, innovative firms rely more heavily
upon the patent system than larger enterprises. Larger companies are said to possess
alternative means for achieving a proprietary or property-like interest in a particular
technology. For example, trade secrecy, ready access to markets, trademark rights,
speed of development, and consumer goodwill may to some degree act as substitutes
to the patent system.53 However, individual inventors and small firms often do not
have these mechanisms at their disposal. As a result, the patent system may enjoy
heightened importance with respect to these enterprises.54
In recent years, universities have also become more full-fledged participants in
the patent system. This trend has been attributed to the Bayh-Dole Act,55 a federal
statute that allowed universities and other government contractors to retain patent
title to inventions developed with the benefit of federal funding.56 In recent years
there has reportedly “been a dramatic increase in academic institutions’ investments
in technology licensing activities.”57 This increase has been reflected in the growth
in the number of patents held by universities, the number of universities with
technology transfer offices, and the amount of patent-based licensing revenues that
these offices have raised.58
The U.S. patent system has long acknowledged the role, and particular needs,
of independent inventors, small firms, and universities. For example, the patent
statute calls for each of these entities to receive a 50% discount on many USPTO
fees.59 As the USPTO is currently entirely funded by the fees it charges its users,60
this provision effectively calls for larger institutions to subsidize the patent
expenditures of their smaller competitors.
Beyond potentially diminished financial resources vis-a-vis larger concerns,
however, observers have disagreed over whether independent inventors, small firms,
52 (...continued)
products. National Science Board, Science and Engineering Indicators, 1993, (December
8, 1993), 185. Anne Anderson, “Small Businesses Make it Big in the SBIR Program,” New
Technology Week (June 6, 1998), 2.
53 Sally Wyatt & Gilles Y. Bertin, Multinationals and Industrial Property 139 (Harvester
1988).
54 J. Douglas Hawkins, “Importance and Access of International Patent Protection for the
Independent Inventor,” 3 University of Baltimore Intellectual Property Journal (1995), 145.
55 P.L. 96-517, 94 Stat. 2311 (codified at 35 U.S.C. §§ 200-212).
56 CRS Report RL32076, The Bayh-Dole Act: Selected Issues in Patent Policy and the
Commercialization of Technology, by Wendy H. Schacht.
57 Josh Lerner, “Patent Policy Innovations: A Clinical Examination,” 53 Vanderbilt Law
Review (2000), 1841.
58 See Arti K. Rai & Rebecca S. Eisenberg, “Bayh-Dole Reform and the Progress of
Biomedicine,” 66 Law and Contemporary Problems (Winter/Spring 2003), 289.
59 35 U.S.C. § 41(g).
60 CRS Report RS20906, U.S. Patent and Trademark Office Appropriations Process: A Brief
Explanation, by Wendy H. Schacht.

---

CRS-12
and universities have particular needs with respect to the patent system, and if so
whether those needs should be reflected in patent law doctrines. With respect to the
proposed system of “prior user rights,”61 for example, some observers state that such
rights would particularly benefit small entities, which may often lack a sophisticated
knowledge of the patent system.62 Others disagree, stating that smaller concerns rely
heavily on the exclusivity of the patent right, and that the adoption of prior user rights
would advantage large enterprises.63 Similar debates have occurred with respect to
other patent reform proposals, perhaps reflecting the fact that the community of
independent inventors, small firms, and universities is itself a diverse one.
Pending legislation includes a number of provisions that appear to be of
particular interest to independent inventors, universities, and small businesses,
including a shift to a first-inventor-to-file priority system, prior user rights, and post-
grant review procedures.
Different Roles for Patents in Distinct Industries
To a large extent, the patent statute subjects all inventions to the same standards,
regardless of the field in which those inventions arose. Whether the invention is an
automobile engine, semiconductor, or a pharmaceutical, it is for the most part subject
to the same patentability requirements, scope of rights, and term of protection. Both
experience and economic research suggest that distinct industries encounter the
patent system in different ways, however.64 As a result, it can be expected that
61 Under a rule of “prior user rights,” when a conflict exists between an issued patent and
an earlier user of the patented technology, the validity of the patent is upheld but the prior
user is exempted from infringement. See Pierre Jean Hubert, “The Prior User Right of H.R.
400: A Careful Balancing of Competing Interests,” 14 Santa Clara Computer and High
Technology Law Journal (1998), 189. Prior user rights are discussed further in this report
below.
62 See Gary L. Griswold & F. Andrew Ubel, “Prior User Rights — A Necessary Part of a
First-to-File System,” 26 John Marshall Law Review (1993), 567.
63 See David H. Hollander, Jr., “The First Inventor Defense: A Limited Prior User Right
Finds Its Way Into U.S. Patent Law,” 30 American Intellectual Property Law Association
Quarterly Journal (2002), 37 (noting the perception that prior user rights favor large, well-
financed corporations).
64 In particular, economic research suggests that different industries attach widely varying
values to patents. For example, one study of the aircraft and semiconductor industries
suggested that lead time and the strength of the learning curve were superior to patents in
capturing the value of investments. In contrast, members of the drug and chemical
industries attached a higher value to patents. Differences in the perception of the patent
system have been attributed to the extent to which patents introduced significant duplication
costs and times for competitors of the patentee. Richard C. Levin, Alvin K. Klevorick,
Richard R. Nelson, and Sidney G. Winter, “Appropriating the Returns for Industrial
Research and Development,” Brookings Papers on Economic Activity, 1987, in The
Economics of Technical Change, eds. Edwin Mansfield and Elizabeth Mansfield (Vermont,
Edward Elgar Publishing Co., 1993), 254.

---

CRS-13
particular industries will react differently to the various patent reform proposals
currently before Congress.65
Although broad generalizations should be drawn with care, two industries
widely perceived as viewing the patent system in different ways are the
pharmaceutical and software sectors. Within the pharmaceutical industry, individual
patents are perceived as critical to a business model that provides life-saving and life-
enhancing medical innovations, but eventually allows members of the public access
to medicines at low cost. In particular, often only a handful, and sometimes only one
or two patents cover a particular drug product. Patents are also judged to be crucial
to the pharmaceutical sector because of the relative ease of replicating the finished
product. For example, while it is expensive, complicated, and time consuming to
duplicate an airplane, it is relatively simple to perform a chemical analysis of a pill
and reproduce it.66
In contrast to the pharmaceutical field, the nature of software development is
such that innovations are typically cumulative and new products often embody
numerous patentable inventions. This environment has led to what has been
described as a
poor match between patents and products in the [software] industry: it is difficult
to patent an entire product in the software industry because any particular
product is likely to include dozens if not hundreds of separate technological
ideas.67
This situation may be augmented by the multiplicity of patents often associated with
a finished computer product that utilizes the software. It is not uncommon for
thousands of different patents (relating to hardware and software) to be embodied in
one single computer. In addition, ownership of these patents may well be fractured
among hundreds or thousands of different individuals and firms.
In summary, then, the patent laws provide a “one size fits all” system, where all
inventions are subject to the same requirements of patentability and scope of
protection, regardless of the technical field in which they arose. Innovators in
different fields nonetheless have varying experiences with the patent system. These
discrepancies, among others, lead to the expectation that distinct industries may react
differently to the various patent reform proposals presently considered by Congress.
65 For additional discussion on this issue see CRS Report RL33367, Patent Reform: Issues
in the Biomedical and Software Industries, by Wendy H. Schacht.
66 Federic M. Scherer, “The Economics of Human Gene Patents,” 77 Academic Medicine
(December 2002), 1350.
67 Mann, supra, at 979.

---

CRS-14
Proposed Legislative Initiatives
First Inventor to File
Basic Concepts. Pending legislation would alter the U.S. patent priority rule
from the current “first-to-invent” principle to the “first-inventor-to-file” principle.68
Within the patent law, the priority rule addresses the circumstance where two or more
persons independently develop the identical or similar invention at approximately the
same time. In such cases the patent law must establish a rule as to which of these
inventors obtains entitlement to a patent.69
Under current U.S. law, when more than one patent application is filed claiming
the same invention, the patent will be awarded to the applicant who was the first
inventor in fact. This conclusion holds even if the first inventor was not the first
person to file a patent application directed towards that invention.70 Within this
“first-to-invent” system,71 the timing of real-world events, such as the date a chemist
conceived of a new compound or a machinist constructed a new engine, is of
significance.
In every patent-issuing nation except the United States, priority of invention is
established by the earliest effective filing date of a patent application disclosing the
claiming invention.72 Stated differently, the inventor who first filed an application
at the patent office is presumptively entitled to the patent. Whether or not the first
applicant was actually the first individual to complete the invention in the field is
irrelevant. This priority system follows the “first-inventor-to file” principle.
A simple example illustrates the distinction between these priority rules.
Suppose that inventor A synthesizes a new chemical compound on August 1, 2007,
and files a patent application on November 1, 2007, claiming that compound.
Suppose further that inventor B independently invents the same compound on
September 1, 2007, and files a patent application on October 1, 2007. Inventor A
would be awarded the patent under the first-to-invent rule, while Inventor B would
obtain the patent under the first-inventor-to-file principle.
68 This provision appears in § 3 of both bills.
69 See Roger E. Schechter & John R. Thomas, Principles of Patent Law § 1.2.5 (2d ed.
2004).
70 In addition, the party that was the first to invent must not have abandoned, suppressed or
concealed the invention. 35 U.S.C. § 102(g)(2).
71 See Charles E. Gholz, “First-to-File or First-to-Invent?,” 82 Journal of the Patent and
Trademark Office Society (2000), 891.
72 See Peter A. Jackman, “Adoption of a First-to-File System: A Proposal,” 26 University
of Baltimore Law Review (1997), 67.

---

CRS-15
Under the current U.S. first-to-invent rule, priority disputes may be resolved via
“interference” proceedings conducted at the USPTO.73 An interference is a complex
administrative proceeding that may result in the award of priority to one of its
participants. These proceedings are not especially common. One estimate concludes
that less than one-quarter of one percent of patents are subject to an interference.74
This statistic may mislead, however, because the expense of interference cases may
result in their use only for the most commercially significant inventions.
By shifting to a first-inventor-to-file priority rule, the House and Senate bills
would eliminate the need for interference proceedings. Instead, the applicant with
the earliest filing date, rather than the first individual to have created the invention,
would have been eligible for the patent. Notably, the proposed bills would not render
a patent applicant’s actual date of invention completely irrelevant. As this report
discusses immediately below, the invention date would have remained pertinent with
respect to the so-called grace period. In this respect, these legislative proposals
depart from first-inventor-to-file practices in other patent-issuing countries.
Policy Considerations. The relative merits of the first-to-invent and first-
inventor-to-file priority principles have been the subject of a lengthy debate within
the patent community. Supporters of the current first-to-invent principle in part
assert that the first-inventor-to-file system would create inequities by sponsoring a
“race to the Patent Office.” They are also concerned that the first-to-file system
would encourage premature and sketchy technological disclosures in hastily-filed
patent applications.75
Supporters of the first-inventor-to-file principle in part assert that it provides a
definite, readily determined and fixed date of priority of invention, which would lead
to greater legal certainty within innovative industries. They also contend that the
first-inventor-to-file principle would decrease the complexity, length and expense
associated with current USPTO interference proceedings. Rather than being caught
up in lengthy interference proceedings in an attempt to prove dates of inventive
activity that occurred many years previously, they assert, inventors could continue to
go about the process of innovation. Supporters also observe that informed U.S. firms
already organize their affairs on a first-inventor-to-file basis in order to avoid
forfeiture of patent rights abroad.76
The effect of a shift to the first-inventor-to-file rule upon individual inventors,
small firms, and universities has been debated. Some observers state that such
entities often possess fewer resources and wherewithal than their larger competitors,
73 35 U.S.C. § 135.
74 See Clifford A. Ulrich, “The Patent Systems Harmonization Act of 1992: Conformity at
What Price?,” 16 New York Law School Journal of International and Comparative Law
(1996), 405.
75 See Coe A. Bloomberg, “In Defense of the First-to-Invent Rule,” 21 American Intellectual
Property Law Quarterly Journal (1993), 255.
76 See Bernarr A. Pravel, “Why the United States Should Adopt the First-to-File System for
Patents,” 22 St. Mary’s Law Journal (1991), 797.

---

CRS-16
and thus are less able to prepare and file patent applications quickly. Others disagree,
stating that smaller concerns are more nimble than larger ones and thus better able
to submit applications promptly. They also point to the availability of provisional
applications,77 asserting that such applications allow small entities to secure priority
rights readily without a significant expenditure of resources. A quantitative study of
interference proceedings by Gerald Mossinghoff, a former Commissioner of the
USPTO, also suggested that the first-to-invent rule neither advantaged nor
disadvantaged small entities vis-a-vis larger enterprises.78
The role of the U.S. Constitution is sometimes debated within the context of the
patent priority principle. Article I, Section 8, clause 8 of the Constitution provides
Congress with the authority to award “inventors” with exclusive rights. Some
observers suggest this language suggests, or possibly even mandates, the current first-
to-invent system. Others conclude that because the first-inventor-to-file only awards
patents to individuals who actually developed the invention themselves, rather than
derived it from another, this priority system is permissible under the Constitution.79
In weighing the validity of this position, it should be noted that under well-
established U.S. law, the first-inventor-in-fact does not always obtain entitlement to
a patent. If, for example, a first-inventor-in-fact maintained his invention as a trade
secret for many years before seeking patent protection, he may be judged to have
“abandoned, suppressed or concealed” the invention.80 In such a case a second-
inventor-in-fact may be awarded a patent on that invention. Courts have reasoned
that this statutory rule encourages individuals to disclose their inventions to the
public promptly, or give way to an inventor who in fact does so.81 As the first-
inventor-to-file rule acts in a similar fashion to this longstanding patent law principle,
conflict between this rule and the Constitution appears unlikely.
Notably, a first-inventor-to-file priority rule does not permit one individual to
copy another’s invention and then, by virtue of being the first to file a patent
application, be entitled to a patent. All patent applicants must have originated the
invention themselves, rather than derived it from another.82 In order to police this
requirement, both bills would provide for “inventor’s rights contests” that would
allow the USPTO to determine which applicant is entitled to a patent on a particular
invention.83
77 35 U.S.C. § 111(b).
78 Gerald J. Mossinghoff, “The U.S. First-to-Invent System Has Provided No Advantage to
Small Entities,” 84 Journal of the Patent and Trademark Office Society (2002), 425.
79 See generally Charles R.B. Marcedo, “First-to-File: Is American Adoption of the
International Standard in Patent Law Worth the Price?,” 18 American Intellectual Property
Law Association Quarterly Journal (1990), 193.
80 35 U.S.C. § 102(g)(2).
81 See Del Mar Engineering Labs. v. United States, 524 F.2d 1178 (Ct. Cl. 1975).
82 35 U.S.C. § 101.
83 H.R. 1908, § 3(i); S. 1145, § 3(i).

---

CRS-17
Grace Period
Pending legislative proposals would retain the existing one-year “grace period”
enjoyed by U.S. inventors. Current U.S. patent law essentially provides inventors
with a one-year period to decide whether patent protection is desirable, and, if so, to
prepare an application. Specified activities that occur before the “critical date” —
patent parlance for the day one year before the application was filed — will prevent
a patent from issuing.84 If, for example, an entrepreneur first discloses an invention
by publishing an article in a scientific journal, she knows that she has one year from
the publication date in which to file a patent application. Importantly, uses, sales,
and other technical disclosures by third parties will also start the one-year clock
running. As a result, inventors have a broader range of concerns than merely their
own activities.85
Suppose, for example, that an electrical engineer files a patent application
claiming a new capacitor on February 1, 2007. While reviewing the application, a
USPTO examiner discovers a October 1, 2005, journal article disclosing the identical
capacitor. Because the article was published prior to the critical date of February 1,
2006, that publication will prevent or “bar” the issuance of a patent on that capacitor.
If a relevant reference is first publicly disclosed during the one-year grace period
— that is to say, after the critical date but prior to the filing date — the legal situation
is more complex. Under current law, patent applicants may “antedate” such a
reference by demonstrating that they had actually invented the subject matter of their
application prior to the date of the reference. If the applicant can make such a
showing, then the reference cannot ordinarily be used to defeat the patentability of
the invention.
As an illustration of this procedure, suppose that an inventor files a patent
application directed to a polymer on February 1, 2007. Suppose further that the
USPTO examiner discovers that a textbook published on January 1, 2007, describes
the same polymer that is claimed in the application.86 Because the textbook was
published subsequent to the critical date of February 1, 2006, it does not absolutely
bar the application. In order to obtain a patent, however, the applicant must
nonetheless demonstrate that he invented the polymer prior to January 1, 2007, the
date the textbook was published. The applicant might submit copies of his laboratory
notebook, for example, or submit a sworn declaration in order to make this
showing.87
Both H.R. 1908 and S. 1145 would retain current patent law rules with respect
to the grace period. As a result, an inventor would still have been allowed to
“antedate” prior art by showing that she invented the subject matter of the application
84 35 U.S.C. § 102(b).
85 Schechter & Thomas, supra, at § 4.3.1.
86 In addition, the textbook must be attributable to someone other than the patent applicant.
See 35 U.S.C. § 102(a).
87 37 C.F.R. § 1.131.

---

CRS-18
prior to the date of the reference.88 This approach would enjoy the advantage of
maintaining longstanding U.S. rules regarding the patent-defeating effect of
references that first become publicly available during the grace period. It might also
benefit university professors, small firms, and other entities that may lack the
wherewithal to file patent applications promptly.
On the other hand, these proposals would mean that the U.S. shift from a “first-
to-invent” system to a “first-inventor-to-file” system would be incomplete. Because
an applicant’s date of invention would remain relevant, patentability decisions would
be more complex and less certain than in the first-inventor-to-file systems employed
by all other patent-issuing states. Such an approach also would not fully harmonize
U.S. law with those of other nations.
Elimination of Sections 102(c), (d) and (f)
Pending legislation would eliminate three provisions of the Patent Act,
paragraphs (c), (d), and (f) of Section 102. Section 102(c) does not allow an
applicant to obtain a patent when he “has abandoned the invention.” This statute
does not refer to disposal of the invention itself, however, but instead to the
intentional surrender of an invention to the public. Older Supreme Court opinions
instruct that abandonment may occur where an inventor expressly dedicates it to the
public, through a deliberate relinquishment or conduct evidencing an intent not to
pursue patent protection.89 The circumstances must be such that others could
reasonably rely upon the inventor’s renunciation.90 Perhaps because few individuals
expressly cede their patentable inventions to the public without seeking
compensation, there are few modern judicial opinions that consider 35 U.S.C. §
102(c) in any meaningful way. In addition, the generally applicable principle of
equitable estoppel may apparently be used to obtain the same result.91
Like Section 102(c), Section 102(d) of the Patent Act is reportedly little-used.92
35 U.S.C. 102(d) bars a U.S. patent when (1) an inventor files a foreign patent
application more than twelve months before filing the U.S. application, and (2) a
foreign patent results from that application prior to the U.S. filing date. Suppose that
an inventor files an application at a foreign patent office on May 25, 2006. The
foreign application matures into a granted foreign patent on August 1, 2007. If the
inventor has not filed his patent application at the USPTO as of August 1, 2007, the
date of the foreign patent grant, any patent application that the inventor subsequently
filed in the United States would be defeated.
88 35 U.S.C. § 102(a).
89 See Beedle v. Bennett, 122 U.S. 71 (1887).
90 See Mendenhall v. Astec Indus., Inc., 13 USPQ2d 1913, 1937 (E.D. Tenn. 1988), aff’d,
887 F.2d 1094 (Fed. Cir. 1989).
91 See generally A.C. Auckerman & Co. v. R.L. Chaides Construction Co., 960 F.2d 1020
(Fed. Cir. 1992).
92 Schechter & Thomas, supra, at § 4.3.8.

---

CRS-19
35 U.S.C. § 102(d) is intended to encourage the prompt filing of patent
applications in the United States. As the Patent Office Commissioner explained in
1870:
The intention of [C]ongress obviously was to obtain for this country the free use
of the inventions of foreigners as soon as they became free abroad. This is
indicated by the use of the phrase, ‘first patented, or caused to be patented, in a
foreign country,’ for it was presumable that American citizens would obtain their
first patent here, while a foreigner would first patent his invention in his own
country. The statute was designed to prevent a foreigner from spending his time
and capital in the development of an invention in his own country, and then
coming to this country to enjoy a further monopoly, when the invention had
become free at home. The result of such a course would be that while the foreign
country was developing the invention and enjoying its benefits, its use could be
interdicted here; while, if the term of the monopoly could be further extended
here, the market could be controlled long after the foreign nation was prepared
to flood this country with the unpatented products of the patented process.93
Section 102(d) has been subject to critical commentary. Because inventors may
choose to file a patent application only in the United States, the policy goal of
assuring that the U.S. market will become patent-free contemporaneously with
foreign markets may not be well-served by this provision. In addition, 35 U.S.C. §
102(d) effectively acts against foreign, rather than U.S.-based inventors, as domestic
inventors ordinarily file at the USPTO first before seeking rights overseas. Some
commentators have suggested that 35 U.S.C. § 102(d) violates the spirit, if not the
letter, of U.S. international treaty obligations, which generally impose an obligation
of national treatment with respect to intellectual property matters.94
Finally, the House and Senate bills (H.R. 1908 and S. 1145) would also
eliminate current 35 U.S.C. § 102(f), which states that a person may obtain a patent
unless “he did not himself invent the subject matter sought to be patented.” This
proposed amendment would not alter the requirement that only an actual inventor
may obtain a patent, which is also stated by 35 U.S.C. § 101.95
93 Bate Refrigerating Co. v. Sulzberger, 157 U.S. 1, 27 (1895) (quoting Ex parte Mushet,
1870 Comm’r December 106, 108 (1870)).
94 See Donald S. Chisum, “Foreign Activity: Its Effect on Patentability under United States
Law,” 11 International Review of Industrial Property & Copyright Law (1980), 26.
95 See Schechter & Thomas, supra, at § 4.4.4. This amendment may potentially alter the
holding in Oddzon Products Inc. v. Just Toys Inc., 122 F.3d 1396 (Fed. Cir. 1997), that
subject matter that qualifies as prior art only under 35 U.S.C. § 102(f) may be used for a
nonobviousness analysis under 35 U.S.C. § 103(a). Further discussion of this issue may be
found at CRS Report RL33063, Intellectual Property and Collaborative Research, by John
R. Thomas.

---

CRS-20
Inventor’s Oath
Under current U.S. law, a patent application must be filed by the inventor —
that is to say, the natural person or persons who developed the invention.96 Under
Section 115 of the Patent Act, each applicant must also submit an oath or declaration
stating that he believes himself to be the “original and first inventor” of the subject
matter for which he seeks a patent. Section 118 of the Patent Act allows a few
exceptions to this general rule. If an inventor cannot be located, or refuses to perform
his contractual obligation to assign an invention to his employer, then the employer
may file the patent application in place of the inventor.
The House and Senate bills (H.R. 1908 and S. 1145) would incorporate the
exceptions found in current Section 118 into Section 115 of the Patent Act.97 This
proposal appears to be primarily technical in nature, although a few changes between
the proposed statute and present law exist. First, the pending legislation would
require inventors to declare only that they are the “original inventor” — rather than
the “original and first inventor” — in keeping with the proposed shift to a first-
inventor-to-filed priority system. Second, the pending legislation would allow an
“individual who is under an obligation of assignment for patent [to] include the
required statements ... in the assignment executed by the individual, in lieu of filing
such statements separately.” This provision comports with the allowance of the filing
of patent applications by employers and other assignees of patent rights, a topic this
paper addresses next.
Assignee Filing
As noted previously, current U.S. law for the most part requires patent
applications to be filed by inventors themselves. In other words, the natural person
or persons who developed the invention must submit the application.98 This rule
applies even where the invention was developed by individuals in their capacity as
employees. Even though rights to the invention have usually been contractually
assigned to an employer, for example, the actual inventor, rather than the employer,
must be the one that applies for the patent.
Pending legislation would instead stipulate that a “person to whom the inventor
has assigned or is under an obligation to assign the invention may make an
application for patent.”99 Individuals who otherwise make a showing of a “sufficient
proprietary interest in the matter” may also apply for a patent on behalf of the
inventor upon a sufficient show of proof of the pertinent facts. Under the proposed
legislation, if the USPTO “Director grants a patent on an application filed under this
section by a person other than the inventor, the patent shall be granted to the real
party in interest and upon such notice to the inventor as the Director considers to be
sufficient.”
96 35 U.S.C. § 111.
97 These provisions are found in § 4(a) of both bills.
98 35 U.S.C. § 111.
99 This provision appears in § 4(b) of both bills.

---

CRS-21
Legal reforms allowing assignee filing of patent applications have been
discussed for many years. A 1966 Report of the President’s Commission on the
Patent System recommended this change as a way to simplify formalities of
application filing and to avoid delays caused by the need to identify and obtain
signatures from each inventor.100 The 1992 Advisory Commission on Patent Law
Reform was also in favor of this change. The 1992 Commission observed that the
United States was “the only country which does not permit the assignee of an
invention to file a patent application in its own name.”101 In the opinion of the 1992
Commission, assignee filing would appropriately accompany a U.S. shift to a first-
inventor-to-file priority system, as the reduction of formalities would allow
innovative enterprises to file patent applications more promptly.
The 1992 Commission also reviewed potential undesirable aspects of assignee
filing. The Commission noted that patent applications filed by assignees may lack
the actual inventor’s personal guarantee that the application was properly prepared.
In addition, assignee filing might derogate the right of natural persons to their
inventions. In the opinion of the Commission, however, the advantages of assignee
filing outweighed the disadvantages.102
Apportionment of Damages
H.R. 1908 and S. 1145 also address monetary remedies in patent cases.
Marketplace realities often render the determination of an appropriate damages award
a difficult affair in patent litigation. In some cases, the product or process that is
found to infringe may incorporate numerous additional elements beyond the patented
invention. For example, the asserted patent may relate to a single component of an
audio speaker, while the accused product consists of the entire stereo system. In such
circumstances, a court may apply “the entire market value rule,” which “permits
recovery of damages based upon the entire apparatus containing several features,
where the patent-related feature is the basis for consumer demand.”103 On the other
hand, if the court determines that the infringing sales were due to many factors
beyond the use of the patented invention, the court may apply principles of
“apportionment” to reach a just measure of damages for infringement.104
Some observers believe that courts have sometimes been overly generous in
assessing damages in patent cases. As one commentator asserted:
[B]road application of the entire market value rule appears to broaden the
practical scope of a remedy for patent infringement beyond the legal scope of the
patent and despite careful attention to a precise and proper construction of claim
100 President’s Commission on the Patent System, “To Promote the Progress of ... Useful
Arts” in an Age of Exploding Technology (1966).
101 Advisory Commission on Patent Reform, A Report to the Secretary of Commerce (August
1992), 179.
102 Ibid.
103 State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1580 (Fed. Cir. 1989).
104 Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641 (1915).

---

CRS-22
terms. Further, although the entire market value rule was conceived to ensure a
proper level of damages for the infringement by recognizing a patent’s value that
went beyond sales of a single product, the courts’ abandonment of a meaningful
“basis of consumer” demand test requires an infringer to pay damages for an
entire system, despite that the patent has been issued on only a narrow piece that
has little market impact on sales of unpatented components. Similarly, failing to
provide subsequent inventors with clear notice of their potential liability by
uneven application of the entire market value rule may chill innovation and
interfere with the public notice requirements on which the patent laws depend.
Overcompensating initial inventors and over-deterring subsequent inventors
interferes with the balance sought to be struck by proper claim interpretation.105
Other commentators disagree, believing that current case law appropriately
incorporates apportionment principles. These commentators also believe that the
proposed reforms would diminish the value of the patent right to the detriment of the
innovation environment of the United States. One observer states:
Courts have had little difficulty applying the current law on apportionment and
the entire market value rule to reach just and reasonable findings on assessment
of damages ....
Patent infringement damages ... are the culmination of the courts’ long and
careful efforts to adhere to the statutory requirement to provide damages
adequate to compensate for the infringement of an inventor’s patent.
Apportionment recognizes the reality that consumer demand for an infringing
product or process may in part spring from contributions from the infringer, and
to reward the inventor for those contributions is inappropriate. On the other hand,
the entire market value rule recognizes the reality that even complex assemblies
may owe their marketability to a patented feature — a feature that drives
consumer demand for the overall assembly. In those cases, it is entirely
appropriate to reward the inventor according to the worth of her invention. To
do otherwise would only encourage those who trespass and discourage inventors
from making their intellectual efforts available to the public. The courts can be
and are flexible in assessing each case on its merits, and they can reliably
determine the correct royalty base and rate that will award “damages adequate
to compensate for the infringement.”106
Views differ on the appropriateness of this reform. Some believe that current
damages standards have resulted in the systemic overcompensation of patent owners.
Such overcompensation may place unreasonable royalty burdens upon producers of
high technology products, ultimately impeding the process of technological
innovation and dissemination that the patent system is meant to foster. Others
believe that current case law appropriately accounts for apportionment concerns.
These observers are concerned that this reform might overly restrict damages in
patent cases, thereby discouraging voluntary licensing and promoting infringement
of patent rights. Limited damage awards for patent infringement might prevent
105 Amy L. Landers, “Let the Games Begin: Incentives to Innovation in the New Economy
of Intellectual Property Law,” 46 Santa Clara Law Review (2006), 364-65.
106 William C. Rooklidge, “Reform of the Patent Laws: Forging Legislation Addressing
Disparate Interests,” 88 Journal of the Patent and Trademark Office Society (2006), 17-18,
20 (quoting 35 U.S.C. § 284).

---

CRS-23
innovators from realizing the value of their inventive contributions, a principal goal
of the patent system.
Willful Infringement
H.R. 1908 and S. 1145 would also reform the law of willful infringement. The
patent statute currently provides that the court “may increase the damages up to three
times the amount found or assessed.”107 An award of enhanced damages, as well as
the amount by which the damages will be increased, is committed to the discretion
of the trial court.108 Although the statute does not specify the circumstances in which
enhanced damages are appropriate, the courts most commonly award them when the
infringer acted in blatant disregard of the patentee’s rights. This circumstance is
termed “willful infringement.”109
Courts will not ordinarily enhance damages due to willful infringement if the
adjudicated infringer did not know of the patent until charged with infringement in
court, or if the infringer acted with the reasonable belief that the patent was not
infringed or that it was invalid. Federal Circuit decisions emphasize the duty of
someone with actual notice of a competitor’s patent to exercise due care in
determining if his acts will infringe that patent. A common way to fulfill this
obligation is to obtain competent legal advice before commencing, or continuing,
activity that may infringe another’s patent.110
Prior to 2004, the Federal Circuit held that when an accused infringer invoked
the attorney-client or work-product privilege, courts should be free to reach an
adverse inference that either (1) no opinion had been obtained or (2) an opinion had
been obtained and was contrary to the infringers’s desire to continue practicing the
patented invention.111 However, in its decision in Knorr-Bremse Systeme fuer
Nutzfahrzeuge GmbH v. Dana Corp.,112 the Federal Circuit expressly overturned this
principle. The Court of Appeals further stressed that the failure to obtain legal advice
did not occasion an adverse inference with respect to willful infringement either.
Following the Knorr-Bremse opinion, willful infringement determinations are based
upon “the totality of circumstances, but without the evidentiary contribution or
presumptive weight of an adverse inference that any opinion of counsel was or would
have been unfavorable.”113
107 35 U.S.C. § 284.
108 See Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992).
109 See Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576,
1578 (Fed. Cir. 1991).
110 See, e.g., Jon E. Wright, “Willful Patent Infringement and Enhanced Damages —
Evolution and Analysis,” 10 George Mason Law Review (2001), 97.
111 See, e.g., Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1572 (Fed. Cir.
1988).
112 383 F.3d 1337 (Fed. Cir. 2004).
113 Ibid. at 1341.

---

CRS-24
Patent law’s willful infringement doctrine has proven controversial. Some
observers believe that this doctrine ensures that patent rights will be respected in the
marketplace. Critics of the policy believe that the possibility of trebled damages
discourages individuals from reviewing issued patents. Out of fear that their
inquisitiveness will result in multiple damages, innovators may simply avoid looking
at patents until they are sued for infringement. To the extent this observation is
correct, the law of willful infringement discourages the dissemination of technical
knowledge, thereby thwarting one of the principal goals of the patent system. Fear
of increased liability for willful infringement may also discourage firms from
challenging patents of dubious validity. Consequently some have argued that the
patent system should shift to a “no-fault” regime of strictly compensatory damages,
without regard to the state of mind of the adjudicated infringer.114
The House and Senate bills would add several clarifications and changes to the
law of willful infringement. First, a finding of willful infringement would be
appropriate only where (1) the infringer received specific written notice from the
patentee and continued to infringe after a reasonable opportunity to investigate; (2)
the infringer intentionally copied from the patentee with knowledge of the patent; or
(3) the infringer continued to infringe after an adverse court ruling. Second, willful
infringement cannot be found where the infringer possessed an informed, good faith
belief that its conduct was not infringing. Finally, a court may not determine willful
infringement before the date on which the court determines that the patent is not
invalid, enforceable, and infringed.115
Prior User Rights
H.R. 1908 and S. 1145 would expand the applicability of a “first inventor
defense” established by the American Inventors Protection Act of 1999.116 As
currently found at 35 U.S.C. § 273, an earlier inventor of a “method of doing or
conducting business” that was later patented by another may claim a defense to patent
infringement in certain circumstances. Both the House and Senate bills would
broaden this defense by allowing it to apply with respect to any patented subject
matter.
The impetus for this provision lies in the rather complex relationship between
the law of trade secrets and the patent system. Trade secrecy protects individuals
from misappropriation of valuable information that is useful in commerce. One
reason an inventor might maintain the invention as a trade secret rather than seek
patent protection is that the subject matter of the invention may not be regarded as
patentable. Such inventions as customer lists or data compilations have traditionally
been regarded as amenable to trade secret protection but not to patenting.117
Inventors might also maintain trade secret protection due to ignorance of the patent
114 See generally Schechter & Thomas, supra, at § 9.2.5.
115 This provision appears in § 5(b) of both bills.
116 This provision also appears in § 5(b) of both bills, although the more appropriate heading
would appear to be § 5(c).
117 Restatement of Unfair Competition § 39.

---

CRS-25
system or because they believe they can keep their invention as a secret longer than
the period of exclusivity granted through the patent system.118
The patent law does not favor trade secret holders, however. Well-established
patent law provides that an inventor who makes a secret, commercial use of an
invention for more than one year prior to filing a patent application at the USPTO
forfeits his own right to a patent.119 This policy is based principally upon the desire
to maintain the integrity of the statutorily prescribed patent term. The patent law
grants patents a term of twenty years, commencing from the date a patent application
is filed.120 If the trade secret holder could make commercial use of an invention for
many years before choosing to file a patent application, he could disrupt this regime
by delaying the expiration date of his patent.
On the other hand, settled patent law principles established that prior secret uses
would not defeat the patents of later inventors.121 If an earlier inventor made secret
commercial use of an invention, and another person independently invented the same
technology later and obtained patent protection, then the trade secret holder could
face liability for patent infringement. This policy is based upon the reasoning that
once issued, published patent instruments fully inform the public about the invention,
while trade secrets do not. As between a subsequent inventor who patented the
invention, and thus had disclosed the invention to the public, and an earlier trade
secret holder who had not, the law favored the patent holder.
An example may clarify this rather complex legal situation. Suppose that
Inventor A develops and makes commercial use of a new manufacturing process.
Inventor A chooses not to obtain patent protection, but rather maintains that process
as a trade secret. Many years later, Inventor B independently develops the same
manufacturing process and promptly files a patent application claiming that
invention. In such circumstances, Inventor A’s earlier, trade secret use does not
prevent Inventor B from procuring a patent. Furthermore, if the USPTO approves
the patent application, then Inventor A faces infringement liability should Inventor
B file suit against him.
The American Inventors Protection Act of 1999 somewhat modified this
principle. That statute in part provided an infringement defense for an earlier
inventor of a “method of doing or conducting business” that was later patented by
another. By limiting this defense to patented methods of doing business, Congress
responded to the 1998 Federal Circuit opinion in State Street Bank and Trust Co. v.
Signature Financial Group.122 That judicial opinion recognized that business
118 David D. Friedman, “Some Economics of Trade Secret Law,” 5 Journal of Economic
Perspectives (1991), 61, 64.
119 35 U.S.C. § 102(b). See Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts,
153 F.2d 516 (2d Cir. 1946).
120 35 U.S.C. § 154.
121 W.L. Gore & Associates v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983).
122 149 F.3d 1368 (Fed. Cir. 1998).

---

CRS-26
methods could be subject to patenting, potentially exposing individuals who had
maintained business methods as trade secrets to liability for patent infringement.
Again, an example may aid understanding of the first inventor defense. Suppose
that Inventor X develops and exploits commercially a new method of doing business.
Inventor X maintains his business method as a trade secret. Many years later,
Inventor Y independently develops the same business method and promptly files a
patent application claiming that invention. Even following the enactment of the
American Inventors Protection Act, Inventor X’s earlier, trade secret use would not
prevent Inventor Y from procuring a patent. However, should the USPTO approve
Inventor Y’s patent application, and should Inventor Y sue Inventor X for patent
infringement, then Inventor X may potentially claim the benefit of the first inventor
defense. If successful,123 Inventor X would enjoy a complete defense to infringement
of Inventor Y’s patent.
As originally enacted, the first inventor defense applied only to patents claiming
a “method of doing or conducting business.” Although the American Inventors
Protection Act did not define this term, the first inventor defense was arguably a
focused provision directed towards a specific group of potential patent infringers.
H.R. 1908 and S. 1145 would expand upon the first inventor defense by allowing it
to apply to all patented subject matter.124 By removing current restrictions referring
to methods of doing business, both the House and Senate bills would effectively
introduce “prior user rights” into U.S. law.
A feature of many foreign patent regimes, prior user rights are often seen as
assisting small entities, which may lack the sophistication or resources to pursue
patent protection. The provision of prior user rights would allow such entities to
commercialize their inventions when they used the subject matter of the invention
prior to the patent’s filing date, even when they themselves did not pursue patent
rights. For this reason, a more expansive prior user rights regime has also been tied
to adoption of the first-inventor-to-file priority system.125
Proponents of prior user rights also assert that the proposed legislation would
support investment in technological innovation. Under this view, firms would not
longer be required to engage in extensive defensive patenting, but rather would be
123 As presently codified at 35 U.S.C. § 273, the first inventor defense is subject to a number
of additional qualifications. First, the defendant must have reduced the infringing subject
matter to practice at least one year before the effective filing date of the application.
Second, the defendant must have commercially used the infringing subject matter prior to
the effective filing date of the patent. Finally, any reduction to practice or use must have
been made in good faith, without derivation from the patentee or persons in privity with the
patentee.
124 Both bills would also remove the requirement that the prior use be reduced to practice
at least one year before the effective filing date of such patent. Under the proposed
legislation, the defense would apply where reduction to practice occurred prior to the
patent’s filing date.
125 See Gary L. Griswold & F. Andrew Ubel, “Prior User Rights — A Necessary Part of a
First-to-File System,” 26 John Marshall Law Review (1993), 567.

---

CRS-27
able to devote these resources to further innovation. In addition, some commentators
observe that many U.S. trading partners, including Germany and Japan, currently
allow prior user rights. As a result, U.S. firms that obtain patent rights in certain
foreign nations may face the possibility that a foreign firm may enjoy prior user rights
in that invention. Foreign firms with U.S. patents do not currently face this
possibility with respect to U.S. firms, however. Under this view, adoption of prior
user rights in the United States would “level the playing field” for U.S. industry.126
Proposals to adopt prior user rights have attracted critics, however. Some
observers believe that this regime would benefit large corporations at the expense of
smaller ones. Others believe that individuals who are aware that they can rely upon
prior user rights will be less likely to disclose their inventions through the patent
system. Still others have stated that prior user rights reduce the value of patents and
therefore make innovation less desirable. The role of the U.S. Constitution is
sometimes debated within this context as well. Article I, Section 8, clause 8 of the
Constitution provides Congress with the authority to award “inventors the exclusive
right to their ... discoveries.” Some commentators suggest this language suggests, or
possibly requires, a system of exclusive patent rights, rather than an interest that may
be mitigated by prior user rights.127
Post-Issuance Review Proceedings
Pending legislation in the 110th Congress would introduce post-grant review
proceedings into U.S. patent law. Post-issuance review proceedings, which are
common in foreign patent regimes, are patent revocation proceedings that are usually
administered by authorities from the national patent office. Typically known as
“oppositions,” these proceedings often involve a wide range of potential invalidity
arguments and are conducted through adversarial hearings that resemble courtroom
litigation.
Although the U.S. patent system does not currently include full-fledged post-
grant review proceedings in the manner of an opposition, the U.S. patent system has
incorporated a so-called reexamination proceeding since 1981. Under the
reexamination statute, any individual, including the patentee, a competitor, and even
the USPTO Director, may cite a prior art patent or printed publication to the USPTO.
If the USPTO determines that this reference raises a “substantial new question of
patentability” with respect to an issued patent, then it will essentially reopen
prosecution of the issued patent.
Traditional reexamination proceedings are conducted in an accelerated fashion
on an ex parte basis. Following the American Inventors Protection Act of 1999, an
inter partes reexamination allows the requester to participate more fully in the
proceedings through the submission of arguments and the filing of appeals. Either
126 Paul R. Morico, “Are Prior User Rights Consistent with Federal Patent Policy?: The U.S.
Considers Legislation to Adopt Prior User Rights,” 78 Journal of the Patent and Trademark
Office Society (1996), 572.
127 See Robert L. Rohrback, “Prior User Rights: Roses or Thorns?,” 2 University of
Baltimore Intellectual Property Review (1993), 1.

---

CRS-28
sort of reexamination may result in a certificate confirming the patentability of the
original claims, an amended patent with narrower claims or a declaration of patent
invalidity.
Congress intended reexamination proceedings to serve as an inexpensive
alternative to judicial determinations of patent validity.128 Reexamination also allows
further access to the legal and technical expertise of the USPTO after a patent has
issued.129 However, some commentators believe that reexamination proceedings
have been employed only sparingly and question their effectiveness.130 The proposed
bills each call for the USPTO to submit to Congress “a study of the effectiveness and
efficiency of the different forms of proceedings available under title 35, United States
Code, for the reexamination of patents” three years after the date the legislation is
enacted.131
Some analysts have expressed concern that potential requesters are discouraged
from commencing inter partes reexamination proceedings due to a statutory
provision that limits their future options. In order to discourage abuse of these
proceedings, the inter partes reexamination statute provides that third-party
participants may not later assert that a patent is invalid “on any ground that [they]
raised or could have raised during the inter partes reexamination proceedings.”132
Some observers believe that this potential estoppel effect disinclines potential
requesters from use of this post-issuance proceeding. In apparent response to this
concern, both pending bills would delete the phrase “or could have raised” from the
statute.133 As a result, inter partes reexamination requesters would be limited only
with respect to arguments that they actually made before the USPTO.
Pending legislation would create an additional post-issuance proceeding termed
a “post-grant review proceeding.” The two bills provide that any person other than
the patent proprietor may commence this proceeding. The proceeding may begun
either within 12 months of the date the patent was issued, at any time the challenger
has either “received notice from the patent holder alleging infringement” or is able
to establish a “substantial reason” that the “continued existence of the challenged
claim causes or is likely to cause the petitioner significant economic harm,” or at any
time if the patent proprietor so consents.
H.R. 1908 and S. 1145 afford the patent proprietor a single opportunity to
amend its patent during the post-grant review proceeding, with further opportunities
available with good cause shown. The USPTO would be required to reach a final
128 Mark D. Janis, “Inter Partes Reexamination,” 10 Fordham Intellectual Property, Media
& Entertainment Law Journal (2000), 481.
129 Craig Allen Nard, “Certainty, Fence Building and the Useful Arts,” 74 Indiana Law
Journal (1999), 759.
130 See Schechter & Thomas, supra, at § 7.5.4.
131 This provision appears in § 8 of both bills.
132 35 U.S.C. § 315(c).
133 This provision appears in § 6(b) of both bills.

---

CRS-29
decision within one year of commencement of the proceeding, with an extension
possible of up to six months for good cause shown. Should the patent survive the
post-grant review proceeding, the individual who commenced the proceeding, along
with his privies, are barred from raising issues that were aired before the USPTO at
a later date. The two bills also provide the USPTO Director with authority to
establish regulations to govern post-grant review proceedings.
Many observers have called for the United States to adopt a more effective post-
grant administrative revocation system in order to provide more timely, lower cost,
and more efficient review of issued patents.134 Such a system could potentially
improve the quality of issued patents by weeding out invalid claims. It might also
encourage innovative firms to review issued patents soon after they are granted,
thereby increasing the opportunity for technology spillovers.135 However, concerns
have arisen over oppositions because they too may be costly, complex, and prone to
abuse as a means for harassing patent owners.136 A successful post-grant review
proceeding will require a balancing of these issues.
Publication of Pending Applications
Until recent years, the U.S. patent system maintained pending patent
applications in secrecy. The first moment that the public would become aware of the
existence of a U.S. patent application was the day the USPTO formally allowed it to
issue as a granted patent. This regime advantaged patent applicants because it
allowed them to understand exactly what the scope of any allowed claims might be
prior to disclosing an invention. Thus, if the applicant was able to maintain the
invention that was subject to a patent application as a trade secret, then he could
choose between obtaining the allowed patent claims and trade secret status. In
addition, because the invention was not disclosed prior to the award of formal patent
rights, unscrupulous competitors were discouraged from copying the invention.
However, this secrecy regime has been perceived as imposing costs as well.
Others might well engage in duplicative research efforts during the pendency of
patent applications, unaware that an earlier inventor had already staked a claim to that
technology. This arrangement also allowed inventors to commence infringement
litigation on the very day a patent issued, without any degree of notice to other
members of the technological community.137
Industry in the United States possessed one mechanism for identifying pending
U.S. patent applications. Most foreign patent regimes publish all pending patent
134 See National Research Council of the National Academies, A Patent System for the 21st
Century (2004), 96.
135 Ibid. at 103.
136 See Mark D. Janis, “Rethinking Reexamination: Toward a Viable Administrative
Revocation System for U.S. Patent Law,” 11 Harvard Journal of Law and Technology
(1997), 1.
137 Schechter & Thomas, supra, at § 7.2.6.

---

CRS-30
applications approximately 18 months after they have been filed.138 As a result,
savvy firms in the United States could review pending applications filed before
foreign patent offices, and make an educated guess as to the existence of a
corresponding U.S. application. This effort was necessarily inexact, however,
particularly as some inventors either lacked the resources, or made the strategic
decision, not to obtain patent rights outside the United States.
In enacting the American Inventors Protection Act of 1999, Congress for the
first time introduced the concept of pre-grant publication into U.S. law. Since
November 29, 2000, U.S. patent applications have been published 18 months from
the date of filing, with some exceptions. The most significant of these exceptions
applies where the inventor represents that he will not seek patent protection abroad.
In particular, if an applicant certifies that the invention disclosed in the U.S.
application will not be the subject of a patent application in another country that
requires publication of applications 18 months after filing, then the USPTO will not
publish the application.139 As a result, inventors who do not wish to seek foreign
patent rights retain the possibility of avoiding pre-grant publication.
H.R. 1908 and S. 1145 would further modify the U.S. pre-grant publication
system by effectively calling for all pending applications to be published
approximately 18 months after they are filed. In particular, both bills would
eliminate the possibility of opting out of pre-grant publication by certifying that a
patent will be sought only in the United States.140
Pre-Issuance Submissions
Both H.R. 1908 and S. 1145 would expand the ability of members of the public
to submit information to the USPTO that is pertinent to pending applications. Under
current law, interested individuals may enter a protest against a patent application.
The protest must specifically identify the application and be served upon the
applicant. The protest must also include a copy and, if necessary, an English
translation, of any patent, publication or other information relied upon. The protester
also must explain the relevance of each item.141
Protest proceedings have traditionally played a small role in U.S. patent practice.
Until Congress enacted the American Inventors Protection Act of 1999, the USPTO
maintained applications in secrecy. Therefore, the circumstances in which members
of the public would learn of the precise contents of a pending patent application were
relatively limited. With the USPTO commencing publication of some pending patent
applications, protests would seem far more likely. Seemingly aware of this
possibility, the 1999 Act provided that the USPTO shall “ensure that no protest or
other form of pre-issuance opposition ... may be initiated after publication of the
138 John C. Todaro, “Potential Upcoming Changes in U.S. Patent Laws: the Publication of
Patent Applications,” 36 IDEA: Journal of Law and Technology (1996), 309.
139 35 U.S.C. § 122(b).
140 This provision appears in § 9(a) of both bills.
141 37 C.F.R. § 1.291.

---

CRS-31
application without the express written consent of the applicant.”142 Of course, the
effect of this provision is to eliminate the possibility of protest in exactly that class
of cases where the public is most likely to learn of the contents of a pending
application.
Through rulemaking, the USPTO has nonetheless established a limited
mechanism for members of the public to submit information they believe is pertinent
to a pending, published application. The submitted information must consist of
either a patent or printed publication, and it must be submitted within two months of
the date the USPTO published the pending application. Nondocumentary
information that may be relevant to the patentability determination, such as sales or
public use of the invention, will not be considered.143 In addition, because Congress
stipulated that no protest or pre-grant opposition may occur absent the consent of the
patent holder, the USPTO has explained that it will not accept comments or
explanations concerning the submitted patents or printed publications. If such
comments are attached, USPTO staff will redact them before the submitted
documents are forwarded to the examiner.144
The proposed legislation would augment the possibility for pre-issuance
submissions. Under both the House and Senate bills, any person may submit patent
documents and other printed publications to the USPTO for review. Such prior art
must be submitted within the later date of either (1) the date the USPTO issues a
notice of allowance to the patent applicant; or (2) either six months after the date of
pre-grant publication of the application, or the date of the rejection of any claim by
the USPTO examiner. Such a submission must include “a concise description of the
asserted relevance of each submitted document.”145
Most observers agree that ideally, the USPTO would have access to all pertinent
information when making patentability determinations. A more expansive pre-
issuance submission policy may allow members of the public to disclose relevant
patents and other documents that the USPTO’s own searchers may not have revealed,
thereby leading to more accurate USPTO decision making. On the other hand,
lengthy pre-issuance submissions may merely be repetitive of the USPTO’s own
search results, but still require extensive periods of examiner review that might
ultimately delay examination. The pending proposals attempt to balance these
concerns by expanding existing opportunities for post-publication submissions, but
limiting the timing and nature of those submissions so as to prevent undue burdens
upon the USPTO and patent applicants.
142 35 U.S.C. § 122(c).
143 37 C.F.R. § 1.99.
144 U.S. Dept. of Commerce, U.S. Patent & Trademark Off., Manual of Patent Examining
Procedure § 1134.01 (8th ed. May 2004).
145 This provision appears as § 9(b) in both bills.

---

CRS-32
Venue
Pending legislation would reform the venue provision that applies to patent
infringement cases in federal court. The requirement of venue complements the more
fundamental requirement of jurisdiction in federal litigation. In particular, venue
addresses the question of which court, out of those that possess personal and subject
matter jurisdiction, may most conveniently hear the specific lawsuit in question.146
Congress has enacted a specialized venue statute that applies only to patent
cases. 28 U.S.C. § 1400(b) provides that in patent litigation, venue is proper either:
(1) in the judicial district where the defendant resides, or (2) where the defendant has
committed acts of infringement and has a regular and established place of business.
An important question under this provision is where a corporation is deemed to
“reside.” Prior to 1988, a corporation was viewed as residing in its state of
incorporation.147 Commentators have explained that during this period, the patent
venue statute was fairly restrictive, tending to move infringement litigation into the
defendant’s seat of operations.148
Congressional amendments subsequently liberalized venue concepts in patent
litigation. In 1988, Congress adopted a new definition of “reside” as it applies to
venue for corporate defendants.149 Under the new definition, a corporation is
presumed to reside in any judicial district to which it could be subject to personal
jurisdiction at the time the litigation commences. Congress codified this change
in a separate provision found at 28 U.S.C. § 1391. Although there is no evidence
that Congress contemplated that these reforms would hold consequences for the
specialized patent venue statute, the Federal Circuit nonetheless held that this
amendment should also be read into § 1400(b).150
The result of the 1988 amendments has been significant for corporate
defendants, which constitute the majority of defendants in patent litigation. Although
§ 1400(b) still governs venue in patent cases, few, if any plaintiffs rely upon the
restrictive second prong of that section. Instead they base venue upon the
“residence” requirement of the first prong — which now is entirely conterminous
with personal jurisdiction, and which for larger corporations is likely to include every
federal district in the country. For corporate defendants, then, the venue statute has
essentially become superfluous, for the same standards governing personal
jurisdiction also dictate whether a court may provide an appropriate venue or not.
Some observers allege that the liberal venue statute promotes forum shopping,
allowing patent proprietors to bring suit in courts that they believe favor patent
146 See Wachovia Bank v. Schmidt, 126 S. Ct. 941 (2006).
147 See Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957).
148 See Schechter & Thomas, supra, at § 10.1.3.
149 Judicial Improvements and Access to Justice Act, P.L. 100-702, tit. X, § 1013(a), 102
Stat. 4642, 4669 (1988).
150 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).

---

CRS-33
owners over accused infringers. One such “magnet jurisdiction” is said to be the
rural Eastern District of Texas, and in particular the Marshall, Texas federal court.
According to one account, many observers “wonder how an East Texas town of
25,000 — even if it was named after Supreme Court Justice John Marshall — came
to harbor an oversized share of intellectual property disputes.”151 In addition,
reportedly “many of the local lawyers who once specialized in personal injury cases
are turning their attention to intellectual property law.”152 Others believe that the
existence of a single appellate court for patent cases, the Federal Circuit, minimizes
forum shopping concerns, and that certain district courts attract patent cases due to
their expertise and timeliness, rather than an inherent favoritism for patent holders.
In any event, both the House and Senate bills would amend § 1400(b) by
providing for venue (1) in the judicial district where either party resides, or (2) where
the defendant has committed acts of infringement and has a regular and established
place of business. H.R. 1908 and S. 1145 further stipulate that, notwithstanding §
1391, for purposes of venue in patent cases “a corporation shall be deemed to reside
in the judicial district in which the corporation has its principal place of business or
in the State in which the corporation is incorporated.”153
Interlocutory Claim Construction Appeals
Both H.R. 1908 and S. 1145 would allow a litigant to pursue an interlocutory
appeal of a patent claim construction order to the Court of Appeals for the Federal
Circuit. This provision appears to be motivated by the recognition that the
interpretation of a patent claims — a process that in large measure determines the
scope of the patent owner’s proprietary rights — is the most fundamental inquiry that
occurs during patent litigation.154 In addition, numerous observers have perceived the
Federal Circuit to have a high reversal rate of claim interpretations by the district
courts.155 Because claim construction is commonly the central focus of a patent trial,
the Federal Circuit’s reversal of that construction often requires the district court to
retry the entire case. As patent litigation is a notoriously lengthy and costly exercise,
some observers believe that the current system is overly expensive and inefficient.156
Some commentators have opined that allowing an immediate appeal of patent
claim construction orders would allow Federal Circuit review before the litigants are
151 Allen Pusey, “Marshall Law: Patent Lawyers Flood to East Texas Court for Its Expertise
and ‘Rocket Docket’,” Dallas Morning News (March 26, 2006), 1D.
152 Ibid.
153 This provision appears as § 10(a) in both bills.
154 See Joseph Scott Miller, “Enhancing Patent Disclosure for Faithful Claim Construction,”
9 Lewis & Clark Law Review (2005), 177.
155 See Kimberly A. Moore, “Are District Court Judges Equipped to Resolve Patent Cases?,”
12 Federal Circuit Bar Journal (2002), 1.
156 See Gwendolyn Dawson, “Matchmaking in the Realm of Patents: A Call for the Marriage
of Patent Theory and Claim Construction Procedure,” 79 Texas Law Review (2001), 1257.

---

CRS-34
put to the full expense of a trial in federal district court.157 Ordinarily, litigants may
appeal only “final decisions” from the district courts.158 Although federal law
currently allows for a review of an intermediate matter at trial159 — a so-called
interlocutory appeal — the Federal Circuit has declined to accept such appeals for
routine claim interpretation cases.160 Both H.R. 1908 and S. 1145 would expressly
authorize such interlocutory appeals.161
Enhanced USPTO Rulemaking Authority
Under current law, the ability of the USPTO to issue regulations governing
substantive patent law matters is extremely limited. The most significant grant of
rulemaking authority appears to be found in 35 U.S.C. § 2(b)(2)(A), which allows the
USPTO to establish regulations that “shall govern the conduct of proceedings in the
Office ....” As explained by the Federal Circuit, “Congress has not vested the
[USPTO Director] with any general substantive rulemaking power ....”162
Both H.R. 1908 and S. 1145 would expand USPTO rulemaking authority.163
The USPTO Director would be permitted to “promulgate such rules, regulations, and
orders as the Director determines appropriate to carry out the provisions of this title
or any other law applicable to the [USPTO] or that the Director determines necessary
to govern the operation and organization of the Office.”
Additional Issues
Reforms pertaining to a number of additional patent law doctrines were
discussed before the 109th Congress, but were not incorporated within H.R. 1908 or
S. 1145 introduced in the 110th Congress. This report reviews two of these topics —
the “best mode” requirement and the defense of unenforceability — in the event that
consideration of these reforms is renewed in the current Congress.
157 See Kyle J. Fiet, “Restoring the Promise of Markman: Interlocutory Patent Appeals
Reevaluated Post-Phillips v. AWH Corp.,” 84 North Carolina Law Review 1291 (2006).
158 28 U.S.C. § 1291 (2006).
159 28 U.S.C. § 1292 (2006).
160 See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1479 (Fed. Cir .1998) (en banc)
(Newman, J., additional views).
161 This provision appears as § 10(b) in both bills.
162 Merck & Co. v. Kessler, 80 F.3d 1543, 1550 (Fed. Cir. 1996).
163 This provision appears as § 11 in both bills.

---

CRS-35
Elimination of the Best Mode Requirement
Introduced in the 109th Congress, H.R. 2795 would have eliminated U.S. patent
law’s best mode requirement.164 Currently, inventors are required to “set forth the
best mode contemplated by the inventor of carrying out his invention.” 165 Failure to
disclose the best mode known to the inventor is a ground for invalidating an issued
patent. The courts have established a two-part standard for analyzing whether an
inventor disclosed her best mode in a particular patent. The first inquiry was whether
the inventor knew of a way of practicing the claimed invention that she considered
superior to any other. If so, then the patent instrument must identify, and disclose
sufficient information to enable persons of skill in the art to practice that best
mode.166
Proponents of the best mode requirement have asserted that it allows the public
to receive the most advantageous implementation of the technology known to the
inventor. This disclosure becomes part of the patent literature and may be freely
reviewed by those who wish to design around the patented invention. Absent a best
mode requirement, some observers say, patent proprietors may be able to maintain
the preferred way of practicing their inventions as a trade secret. Members of the
public are also said to be better able to compete with the patentee on equal footing
after the patent expires.167
The best mode requirement has encountered severe criticism in recent years,
however.168 For example, a 1992 Presidential Commission recommended that
Congress eliminate the best mode requirement. The Commission reasoned that
patents also are statutorily required to disclose “the manner and process of making
and using [the invention], in such full, clear, concise, and exact terms as to enable
any person skilled in the art ... to make and use the same.”169 This “enablement”
requirement was believed to provide sufficient information to achieve the patent
law’s policy goals.170

The Commission further stated that the best mode requirement leads to increases
in the costs and complexity of patent litigation. As the Commission explained:
164 That provision appeared as § 4(d) in H.R. 2795 (Chairman’s Draft Substitute of July 26,
2005). The omnibus patent reform bill introduced before the Senate, S. 3818, did not
address the best mode requirement, and therefore would have retained existing law.
165 35 U.S.C. § 112.
166 See, e.g., Chemcast Corp. v. Arco Industries Corp. 913 F.2d 923 (Fed. Cir. 1990).
167 See Jerry R. Selinger, “In Defense of the ‘Best Mode’: Preserving the Benefit of the
Bargain for the Public, 43 Catholic University Law Review (1994), 1071.
168 See, e.g., Steven B. Walmsley, “Best Mode: A Plea to Repair or Sacrifice This Broken
Requirement of United States Patent Law,” 9 Michigan Telecommunications and
Technology Law Review (2002), 125.
169 35 U.S.C. § 101.
170 1992 Advisory Commission Report, supra, at 102-03.

---

CRS-36
The disturbing rise in the number of best mode challenges over the past 20 years
may serve as an indicator that the best mode defense is being used primarily as
a procedural tactic. A party currently can assert failure to satisfy the best mode
requirement without any significant burden. This assertion also entitles the party
to seek discovery on the “subjective beliefs” of the inventors prior to the filing
date of the patent application. This broad authority provides ample opportunity
for discovery abuse. Given the fluidity by which the requirement is evaluated
(e.g., even accidental failure to disclose any superior element, setting, or step can
negate the validity of the patent), and the wide ranging opportunities for
discovery, it is almost certain that a best mode challenge will survive at least
initial judicial scrutiny.171
The Commission further reasoned that the best mode at the time of filing is unlikely
to remain the best mode when the patent expires many years later.172 Because many
foreign patent laws include no analog to the best mode requirement, inventors based
overseas have also questioned the desirability of the best mode requirement in U.S.
law.
Unenforceability (Inequitable Conduct)
The administrative process of obtaining a patent from the USPTO has
traditionally been conducted as an ex parte procedure. Stated differently, patent
prosecution involves only the applicant and the USPTO. Members of the public, and
in particular the patent applicant’s marketplace competitors, do not participate in
patent acquisition procedures.173 As a result, the patent system relies to a great
extent upon applicant observance of a duty of candor and truthfulness towards the
USPTO.
An applicant’s obligation to proceed in good faith may be undermined, however,
by the great incentive applicants might possess not to disclose, or to misrepresent,
information that might deleteriously impact her prospective patent rights. The patent
law therefore penalizes those who stray from honest and forthright dealings with the
USPTO. Under the doctrine of “inequitable conduct,” if an applicant intentionally
misrepresents a material fact or fails to disclose material information, then the
resulting patent will be declared unenforceable.174 Two elements must exist before
a court will decide that the applicant has engaged in inequitable conduct. First, the
patentee must have misrepresented or failed to disclose material information to the
171 Ibid. at 101.
172 Ibid. at 102-03.
173 35 U.S.C. § 122(a) (stating the general rule that “applications for patents shall be kept in
confidence by the Patent and Trademark Office and no information concerning the same
given without authority of the applicant ....”).
174 Glaverbel Societe Anonyme v. Northlake Mktg. & Supply Inc., 45 F.3d 1550 (Fed. Cir.
1995).

---

CRS-37
USPTO in the prosecution of the patent.175 Second, such nondisclosure or
misrepresentation must have been intentional.176
During patent infringement litigation, an accused infringer has the option of
asserting that the plaintiff’s patent is unenforceable because it was procured through
inequitable conduct. Concerns have arisen that charges of inequitable conduct have
become routine in patent cases. As one commentator explains:
The strategic and technical advantages that the inequitable conduct defense
offers the accused infringer make it almost too attractive to ignore. In addition
to the potential effect on the outcome of the litigation, injecting the inequitable
conduct issue into patent litigation wreaks havoc in the patentee’s camp. The
inequitable conduct defense places the patentee on the defensive, subjects the
motives and conduct of the patentee’s personnel to intense scrutiny, and provides
an avenue for discovery of attorney-client and work product documents ....177
As the Federal Circuit put it, “the habit of charging inequitable conduct in almost
every major patent case has become an absolute plague.”178 Other observers believe
that because inequitable conduct requires an analysis of the knowledge and intentions
of the patent applicants, the doctrine may also be contributing disproportionately to
the time and expense of patent litigation.179
Due to these perceived burdens upon patent litigation, some commentators have
proposed that the inequitable conduct defense be eliminated.180 Others believe that
inequitable conduct is necessary to ensure the proper functioning of the patent
system. As the Advisory Commission on Patent Law Reform explained in its 1992
report:
Some mechanism to ensure fair dealing between the patentee, public, and the
Federal Government has been part of the patent system for over 200 years. In its
modern form, the unenforceability defense provides a necessary incentive for
patent applicants to engage in fair and open dealing with the [USPTO] during the
ex parte prosecution of patent applications, by imposing the penalty of forfeiture
of patent rights for failure to so deal. The defense is also considered to be an
essential safeguard against truly fraudulent conduct before the [USPTO].
Finally, the defense provides a means for encouraging complete disclosure of
information relevant to a particular patent application .... Thus, from a policy
175 Heidelberger Druckmaschinen AG v. Hantscho Comm’l Prods., Inc., 21 F.3d 1068 (Fed.
Cir. 1993).
176 Jazz Photo Corp. v. U.S. Int’l Trade Comm’n, 264 F.3d 1094 (Fed. Cir. 2001).
177 John F. Lynch, “An Argument for Eliminating the Defense of Patent Unenforceability
Based on Inequitable Conduct,” 16 American Intellectual Property Law Association
Quarterly Journal (1988), 7.
178 Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418 (Fed. Cir. 1988).
179 See, e.g., Scott D. Anderson, “Inequitable Conduct: Persistent Problems and
Recommended Resolutions,” 82 Marquette Law Review (1999), 845.
180 Lynch, supra, at 7.

---

CRS-38
perspective, the defense of unenforceability based upon inequitable conduct is
desirable and should be retained.181
Proposed legislation in the 109th Congress would have retained the concept of
an inequitable conduct defense, but introduced a number of substantive and
procedural changes to the doctrine. The Senate bill (S. 3818) would have limited the
availability of inequitable conduct as an affirmative defense to patent infringement.182
In particular, inequitable conduct may only have been found if the patentee, his agent,
or his privy failed to disclose material information, or submitted false information,
with an intent to deceive the USPTO. A finding of good faith on behalf of the
applicant, agent or privy would have negated a conclusion of inequitable conduct.
Finally, in a notable departure from current law, a court may not have reached a
finding of inequitable conduct if none of the claims of the patent have been held
invalid.
The House bill also proposed reforms to the inequitable conduct doctrine,183 but
its approach differed. The House bill would have provided statutory authorization
for the USPTO Director to issue regulations governing applicants’ duty of candor.
It would have also imbued the USPTO with authority to prosecute violations of the
inequitable conduct doctrine. In addition, the House bill would have limited the
circumstances under which the defense of inequitable conduct could be raised before
the courts. In broad outline, under the House bill, if a court determined that an issue
of possible misconduct existed, then the court was directed to refer the matter to the
USPTO. Within judicial infringement proceedings, issues of inequitable conduct
could only have arisen after the court granted a motion to amend the pleadings. Such
a motion would have had to describe the relevant facts in detail and could not have
been granted until the court has previously entered a judgment that at least one of the
asserted patent claims is invalid. Finally, a charge of inequitable conduct could not
have been sustained unless the USPTO “would not have issued the invalidated claim,
acting reasonably, in the absence of the misconduct,” or “based upon the prosecution
history as a whole objectively considered, would have done so based upon in whole
or in part on account of the misconduct.”
Concluding Observations
Pending legislation introduced in the 110th Congress arguably would work the
most sweeping reforms to the U.S. patent system since the nineteenth century.
However, many of these proposals, such as pre-issuance publication, prior user
rights, and oppositions, have already been implemented in U.S. law to a more limited
extent. These and other proposed modifications, such as the first-inventor-to-file
priority system and elimination of the best mode requirement, also reflect the
decades-old patent practices of Europe, Japan, and our other leading trading partners.
181 1992 Advisory Commission, supra, at 114.
182 These provisions appeared in § 5(c) of S. 3818.
183 These provisions appeared in § 5 of H.R. 2795 (Chairman’s Draft Substitute of July 26,
2005).

---

CRS-39
As well, many of these suggested changes enjoy the support of diverse institutions,
including the Federal Trade Commission, National Academies, economists, industry
representatives, attorneys, and legal academics.
Other knowledgeable observers are nonetheless concerned that certain of these
proposals would weaken the patent right, thereby diminishing needed incentives for
innovation. Some also believe that changes of this magnitude, occurring at the same
time, do not present the most prudent course for the patent system. Patent reform
therefore confronts Congress with difficult legal, practical, and policy issues, but also
with the apparent possibility for altering and potentially improving the legal regime
that has long been recognized as an engine of innovation within the U.S. economy.
Legislation
H.R. 1908 (Berman)
Patent Reform Act of 2007. Makes changes to patent law. Introduced April 18,
2007; referred to the House Committee on the Judiciary. Hearings held by the
Subcommittee on Courts, the Internet, and Intellectual Property on April 26, 2007.
S. 1145 (Leahy)
Patent Reform Act of 2007. Makes changes to patent law. Introduced April18,
2007; referred to the Senate Committee on the Judiciary.
crsphpgw

---