American Inventors Protection Act of 1999

American Inventors Protection Act of 1999

Order Code RS20407
Updated February 28, 2000
CRS Report for Congress
Received through the CRS Web
American Inventors Protection Act of 1999
Michael V. Seitzinger
Legislative Attorney
American Law Division
Summary
After several years of consideration, on Friday, November 19, 1999, Congress gave
final approval to a bill which makes major changes to the patent laws. On this day the
Senate passed the American Inventors Protection Act of 1999 as part of the Intellectual
Property and Communications Omnibus Reform Act of 1999, attached by reference to
the Consolidated Appropriations Act for Fiscal Year 2000. Major provisions of the bill
include provisions to protect inventors from unscrupulous invention marketing services,
reducing certain patent fees, allow an infringement defense for one who first develops
and commercially uses the subject matter, extend patent terms in cases of administrative
delay by the Patent and Trademark Office, provide for publication of the patent after a
certain period of time, provide for optional inter partes reexamination procedures, and
transform the Patent and Trademark Office into an independent agency under the policy
direction of the Secretary of Commerce.
After several years of consideration, on Friday, November 19, 1999, Congress gave
final approval to a bill which makes major changes to the patent laws. On this day the
Senate passed the American Inventors Protection Act of 1999 as part of the Intellectual
Property and Communications Omnibus Reform Act of 1999, attached by reference to the
Consolidated Appropriations Act for Fiscal Year 2000.1 This report summarizes major
provisions of the patent reform bill.
1 Patent reform provisions in the 106th Congress passed the House on August 4, 1999 (H.R. 1907)
and the Senate Judiciary Committee on November 2, 1999 (S. 1798). The House-Senate
Conference Committee incorporated patent reform in Title IV of H.R. 1554 (See H.Rept. 106-464).
Congress approved the Intellectual Property and Communications Omnibus Reform Act of 1999
(S. 1948) on November 19, 1999. The Act is attached to the Consolidated Appropriations Act for
fiscal year 2000 (H.R. 3194; H.Rept. 106-479).
Congressional Research Service ˜ The Library of Congress

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Subtitle A: Inventors’ Rights Act of 1999
This subtitle requires an invention promoter to disclose certain information to a
customer in writing before entering into a contract for invention promotion services. This
information includes the total number of inventions evaluated by the invention promoter
for commercial potential in the past five years and how many of these received positive and
negative evaluations, the total number of customers who have contracted with the
invention promoter in the past five years, the total number of customers known by the
invention promoter to have received a net financial profit as a result of his services, the
total number of customers known by the invention promoter to have received license
agreements as a result of his services, and the names and addresses of all previous
invention promotion companies with which the invention promoter has been affiliated in
the past ten years.
A customer of an invention promoter injured by any material false or fraudulent
statement, omission, or disclosure of required information may recover in a civil action,
in addition to reasonable costs and attorneys’ fees, actual damages or damages not
exceeding $5000. In certain circumstances treble damages may be awarded.
Complaints made against invention promoters are to be made available to the public.
Subtitle B: Patent and Trademark Fee Fairness
This subtitle reduces certain specified patent fees. Additional authority allows
adjustments in trademark fees with respect to fluctuations in the Consumer Price Index.
A study on alternative fees is authorized. Trademark fees are required to be spent on
trademark-related operations.
Subtitle C: First Inventor Defense
This subtitle allows an infringement defense for one who actually reduced the subject
matter to practice at least one year before the effective filing date of the patent and
commercially used the subject matter before the effective filing date of the patent.
The sale of a useful end product produced by a patented method shall exhaust the
patent owner’s rights to the extent that the rights would have been exhausted if the sale
had been made by the patent owner.
The defense to infringement is subject to a number of limitations and qualifications.
For example, a person may not assert the defense unless the invention is for a business
method. A person asserting the defense has the burden of establishing the defense by clear
and convincing evidence.
The earlier inventor defense is apparently important to many small and large
businesses, especially in light of the 1998 opinion by the U.S. Court of Appeals for the

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Federal Circuit in State Street Bank and Trust Co. v. Signature Financial Group,2 which
held that methods of doing business are patentable.
Subtitle D: Patent Term Guarantee
This subtitle would extend patent terms in instances in which there have been
administrative delays by the Patent and Trademark Office (PTO). In most instances the
patent shall be extended one day for each day of delay after the end of a specified period.
If the issue of an original patent were delayed because of the failure of PTO to issue
a patent within three years of the actual filing date of the application in the United States,
the term of the patent shall be extended one day for each day after the end of that three-
year period until the patent had been issued.
The period of adjustment of the term of a patent would have to be reduced by a
period equal to the period of time during which the applicant failed to engage in reasonable
efforts to conclude prosecution of the application. An applicant would be deemed to have
failed to engage in reasonable efforts to conclude processing or examination of an
application if he had not responded within three months to PTO requests.
Patent term adjustment requests would be appealable to the United States District
Court for the District of Columbia.
Subtitle E: Domestic Publication of Patent Applications Published
Abroad
Applications for patents filed only in the United States shall be kept confidential by
PTO.
An application for a patent shall in most cases be published promptly after the
expiration of eighteen months from the earliest filing date for which a benefit is sought.
An application shall not be published if it is for a design patent.
A patent would include the right to obtain a reasonable royalty from any person who
during the publication period had used the invention.
Subtitle F: Optional Inter Partes Reexamination Procedure
A new chapter 31, entitled “Optional Inter Partes Reexamination Procedures,” is
added to title 35 of the United States Code. Under this new chapter any person at any
time could file a request for inter partes reexamination of a patent on the basis of cited
prior art.
Not later than three months after the filing of a request for inter partes reexamination,
the Director of PTO is required to determine whether a substantial new question of
2 149 F.3d 1368 (Fed. Cir. 1998).

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patentability affecting any claim of the patent is raised by the request. The Director may
at any time determine whether a substantial new question of patentability is raised. A
determination by the Director is final and nonappealable.
If the Director finds that a substantial new question of patentability has been raised,
the determination must include an order for inter partes reexamination of the patent for
resolution of the patentability. The order may be accompanied by the initial action of PTO
on the merits of the inter partes reexamination.
Reexamination must be conducted according to procedures established for initial
examination, subject to certain exceptions. The patent owner is permitted to propose any
amendment to the patent, except that no proposed amended or new claim enlarging the
scope of the claims of the patent is permitted.
The patent owner involved in an inter partes reexamination may appeal concerning
any decision adverse to the patentability of any original or proposed amended or new claim
of the patent and may be a party to an appeal taken by a third party requester. A third
party requester may appeal concerning any final decision favorable to the patentability of
any original or proposed amended or new claim of the patent or be a party to any appeal
taken by the patent owner.
When the time for appeal has expired or any appeal proceeding has terminated, the
Director shall publish a certificate canceling any claim of the patent finally determined to
be unpatentable, confirming any claim of the patent determined to be patentable, and
incorporating in the patent any proposed amended or new claim determined to be
patentable.
Once an order for inter partes reexamination has been issued, neither the patent
owner nor the third party requester may file a subsequent request for inter partes
reexamination until an inter partes reexamination certificate is issued and published, unless
authorized by the Director.
Once a final decision has been entered against a party in a civil action that the party
has not sustained its burden of proving the invalidity of any patent claim or if a final
decision in an inter partes reexamination proceeding instituted by a third party requester
is favorable, that party may not later request inter partes reexamination of any patent claim
on the basis of issues which that party raised or could have raised. This does not prevent
the assertion of invalidity based on newly discovered art unavailable to the third party
requester and PTO at the time of the inter partes reexamination proceedings.
Third parties can appeal a PTO determination that a reexamined patent is valid to the
PTO Board of Appeals and Interferences but not to the Court of Appeals for the Federal
Circuit.
Subtitle G: Patent and Trademark Office
This subtitle would establish the Patent and Trademark Office as an independent
agency within the Department of Commerce. It would be subject to the policy direction
of the Secretary of Commerce but would retain responsibility for decisions concerning the
management and administration of its operations.

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This subtitle would also establish a Patent Public Advisory Committee and a
Trademark Public Advisory Committee. Each committee would have nine voting members
appointed by the Secretary of Commerce for a term of three years. Members of each
committee would be required to be citizens of the United States, would include members
representing small and large entity applicants in proportion to the number of applications
filed by these members but in no cases would small entity members constitute less than 25
percent of the members, and would include persons with achievement in finance,
management, labor relations, science, technology, and office automation. Each committee
would include a nonvoting representative of each labor organization recognized by PTO.
The duties of each committee would include reviewing the policies, goals, performance,
budget, and user fees of PTO and advise the Director on these matters.
All fees authorized or established could be used by PTO in carrying out its duties.
Subtitle H: Miscellaneous Patent Provisions
Miscellaneous provisions include the treating of the abandonment of provisional
patent applications, international applications, electronic filing, a study and report on
biological deposits in support of biotechnology, and prior art exclusion for certain
commonly assigned patents.