HR 1907 IH

To amend title 35, United States Code, to provide enhanced protection for inventors and innovators, protect patent terms, reduce patent litigation, and for other purposes.

May 24, 1999

Mr. COBLE (for himself, Mr. BERMAN, Mr. HYDE, Mr. CONYERS, Mr. ROHRABACHER, Mr. CAMPBELL, Mr. GOODLATTE, Mr. LOFGREN, Mr. DELAHUNT, Mr. PEASE, Mr. WEXLER, and Mr. GALLEGLY) introduced the following bill; which was referred to the Committee on the Judiciary

To amend title 35, United States Code, to provide enhanced protection for inventors and innovators, protect patent terms, reduce patent litigation, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `American Inventors Protection Act of 1999'.

SEC. 2. TABLE OF CONTENTS.

The table of contents is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I--INVENTORS' RIGHTS

Sec. 101. Short title.

Sec. 102. Invention promotion services.

Sec. 103. Effective date.

TITLE II--FIRST INVENTOR DEFENSE

Sec. 201. Short title.

Sec. 202. Defense to patent infringement based on earlier inventor.

Sec. 203. Effective date and applicability.

TITLE III--PATENT TERM GUARANTEE

Sec. 301. Short title.

Sec. 302. Patent term guarantee authority.

Sec. 303. Continued examination of patent applications.

Sec. 304. Technical clarification.

Sec. 305. Effective date.

TITLE IV--UNITED STATES PUBLICATION OF PATENT APPLICATIONS PUBLISHED ABROAD

Sec. 401. Short title.

Sec. 402. Publication.

Sec. 403. Time for claiming benefit of earlier filing date.

Sec. 404. Provisional rights.

Sec. 405. Prior art effect of published applications.

Sec. 406. Cost recovery for publication.

Sec. 407. Conforming amendments.

Sec. 408. Effective date.

TITLE V--PATENT LITIGATION REDUCTION ACT

Sec. 501. Short title.

Sec. 502. Definitions.

Sec. 503. Reexamination procedures.

Sec. 504. Conforming amendments.

Sec. 505. Report to Congress.

Sec. 506. Effective date.

TITLE VI--PATENT AND TRADEMARK OFFICE

Sec. 601. Short title.

Subtitle A--United States Patent and Trademark Office

Sec. 611. Establishment of Patent and Trademark Office.

Sec. 612. Powers and duties.

Sec. 613. Organization and management.

Sec. 614. Personnel flexibility.

Sec. 615. Public Advisory Committees.

Sec. 616. Patent and Trademark Office funding.

Sec. 617. Conforming amendments.

Sec. 618. Trademark Trial and Appeal Board.

Sec. 619. Board of Patent Appeals and Interferences.

Sec. 620. Annual report of Director.

Sec. 621. Suspension or exclusion from practice.

Sec. 622. Pay of Director.

Subtitle B--Effective Date; Technical Amendments

Sec. 631. Effective date.

Sec. 632. Technical and conforming amendments.

Subtitle C--Miscellaneous Provisions

Sec. 641. References.

Sec. 642. Exercise of authorities.

Sec. 643. Savings provisions.

Sec. 644. Transfer of assets.

Sec. 645. Delegation and assignment.

Sec. 646. Authority of Director of the Office of Management and Budget with respect to functions transferred.

Sec. 647. Certain vesting of functions considered transfers.

Sec. 648. Availability of existing funds.

Sec. 649. Definitions.

TITLE VII--MISCELLANEOUS PATENT PROVISIONS

Sec. 701. Provisional applications.

Sec. 702. International applications.

Sec. 703. Certain limitations on damages for patent infringement not applicable.

Sec. 704. Electronic filing.

Sec. 705. Study and report on biological deposits in support of biotechnology patents.

Sec. 706. Prior invention.

Sec. 707. Prior art exclusion for certain commonly assigned patents.

TITLE I--INVENTORS' RIGHTS

SEC. 101. SHORT TITLE.

This title may be cited as the `Inventors' Rights Act'.

SEC. 102. INVENTION PROMOTION SERVICES.

Part I of title 35, United States Code, is amended by adding after chapter 4 the following chapter:

`CHAPTER 5--INVENTION PROMOTION SERVICES

`Sec.

`51. Definitions.

`52. Contracting requirements.

`53. Standard provisions for cover notice.

`54. Reports to customer required.

`55. Mandatory contract terms.

`56. Remedies.

`57. Records of complaints.

`58. Fraudulent representation by an invention promoter.

`59. Rule of construction.

`Sec. 51. Definitions

`For purposes of this chapter--

`(1) the term `contract for invention promotion services' means a contract by which an invention promoter undertakes invention promotion services for a customer;

`(2) the term `customer' means any person, firm, partnership, corporation, or other entity who enters into a financial relationship or a contract with an invention promoter for invention promotion services;

`(3) the term `invention promoter' means any person, firm, partnership, corporation, or other entity who offers to perform or performs for, or on behalf of, a customer any act described under paragraph (4), but does not include--

`(A) any department or agency of the Federal Government or of a State or local government;

`(B) any nonprofit, charitable, scientific, or educational organization, qualified under applicable State law or described under section 170(b)(1)(A) of the Internal Revenue Code of 1986; or

`(C) any person duly registered with, and in good standing before, the United States Patent and Trademark Office acting within the scope of that person's registration to practice before the Patent and Trademark Office, except when that person performs any act described in subparagraph (B) or (C) of paragraph (4); and

`(4) the term `invention promotion services' means, with respect to an invention by a customer, any act involved in--

`(A) evaluating the invention to determine its protectability as some form of intellectual property, other than evaluation by a person licensed by a State to practice law who is acting solely within the scope of that person's professional license;

`(B) evaluating the invention to determine its commercial potential by any person for purposes other than providing venture capital; or

`(C) marketing, brokering, offering to license or sell, or promoting the invention or a product or service in which the invention is incorporated or used, except that the display only of an invention at a trade show or exhibit shall not be considered to be invention promotion services.

`Sec. 52. Contracting requirements

`(a) IN GENERAL- (1) Every contract for invention promotion services shall be in writing and shall be subject to the provisions of this chapter. A copy of the signed written contract shall be given to the customer at the time the customer enters into the contract.

`(2) If a contract is entered into for the benefit of a third party, the identity and address of such party shall be disclosed by such party's agent and such party shall be considered a customer for purposes of this chapter.

`(b) REQUIREMENTS OF INVENTION PROMOTER- The invention promoter shall--

`(1) state in a written document, at the time a customer enters into a contract for invention promotion services, whether the usual business practice of the invention promoter is to--

`(A) seek more than 1 contract in connection with an invention; or

`(B) seek to perform services in connection with an invention in 1 or more phases, with the performance of each phase covered in 1 or more subsequent contracts; and

`(2) supply to the customer a copy of the written document together with a written summary of the usual business practices of the invention promoter, including--

`(A) the usual business terms of contracts; and

`(B) the approximate amount of the usual fees or other consideration that may be required from the customer for each of the services provided by the invention promoter.

`(c) RIGHT OF CUSTOMER TO CANCEL CONTRACT- (1) Notwithstanding any contractual provision to the contrary, a customer shall have the right to terminate a contract for invention promotion services by sending a written letter to the invention promoter stating the customer's intent to cancel the contract. The letter of termination must be deposited with the United States Postal Service on or before 5 business days after the date upon which the customer or the invention promoter executes the contract, whichever is later.

`(2) Delivery of a promissory note, check, bill of exchange, or negotiable instrument of any kind to the invention promoter or to a third party for the benefit of the invention promoter, without regard to the date or dates appearing in such instrument, shall be deemed payment received by the invention promoter on the date received for purposes of this section.

`Sec. 53. Standard provisions for cover notice

`(a) CONTENTS- Every contract for invention promotion services shall have a conspicuous and legible cover sheet attached with the following notice imprinted in boldface type of not less than 12-point size:

`YOU HAVE THE RIGHT TO TERMINATE THIS CONTRACT. TO TERMINATE THIS CONTRACT, YOU MUST SEND A WRITTEN LETTER TO THE COMPANY STATING YOUR INTENT TO CANCEL THIS CONTRACT.

`THE LETTER OF TERMINATION MUST BE DEPOSITED WITH THE UNITED STATES POSTAL SERVICE ON OR BEFORE FIVE (5) BUSINESS DAYS AFTER THE DATE ON WHICH YOU OR THE COMPANY EXECUTE THE CONTRACT, WHICHEVER IS LATER.

`THE TOTAL NUMBER OF INVENTIONS EVALUATED BY THE INVENTION PROMOTER

FOR COMMERCIAL POTENTIAL IN THE PAST FIVE (5) YEARS IS XXXXX. OF THAT NUMBER, XXXXX RECEIVED POSITIVE EVALUATIONS AND XXXXX RECEIVED NEGATIVE EVALUATIONS.

`IF YOU ASSIGN EVEN A PARTIAL INTEREST IN THE INVENTION TO THE INVENTION PROMOTER, THE INVENTION PROMOTER MAY HAVE THE RIGHT TO SELL OR DISPOSE OF THE INVENTION WITHOUT YOUR CONSENT AND MAY NOT HAVE TO SHARE THE PROFITS WITH YOU.

`THE TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED WITH THE INVENTION PROMOTER IN THE PAST FIVE (5) YEARS IS XXXXX. THE TOTAL NUMBER OF CUSTOMERS KNOWN BY THIS INVENTION PROMOTER TO HAVE RECEIVED, BY VIRTUE OF THIS INVENTION PROMOTER'S PERFORMANCE, AN AMOUNT OF MONEY IN EXCESS OF THE AMOUNT PAID BY THE CUSTOMER TO THIS INVENTION PROMOTER IS XXXXXXX. AS A RESULT OF THE EFFORTS OF THIS INVENTION PROMOTER, XXXXX NUMBER OF CUSTOMERS HAVE RECEIVED LICENSE AGREEMENTS FOR THEIR INVENTIONS.

`THE OFFICERS OF THIS INVENTION PROMOTER HAVE COLLECTIVELY OR INDIVIDUALLY BEEN AFFILIATED IN THE LAST TEN (10) YEARS WITH THE FOLLOWING INVENTION PROMOTION COMPANIES: (LIST THE NAMES AND ADDRESSES OF ALL PREVIOUS INVENTION PROMOTION COMPANIES WITH WHICH THE PRINCIPAL OFFICERS HAVE BEEN AFFILIATED AS OWNERS, AGENTS, OR EMPLOYEES). YOU ARE ENCOURAGED TO CHECK WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE, THE FEDERAL TRADE COMMISSION, YOUR STATE ATTORNEY GENERAL'S OFFICE, AND THE BETTER BUSINESS BUREAU FOR ANY COMPLAINTS FILED AGAINST ANY OF THESE COMPANIES WHICH RESULTED IN REGULATORY SANCTIONS OR OTHER CORRECTIVE ACTIONS.

`YOU ARE ENCOURAGED TO CONSULT WITH AN ATTORNEY OF YOUR OWN CHOOSING BEFORE SIGNING THIS CONTRACT. BY PROCEEDING WITHOUT THE ADVICE OF AN ATTORNEY REGISTERED TO PRACTICE BEFORE THE UNITED STATES PATENT AND TRADEMARK OFFICE, YOU COULD LOSE ANY RIGHTS YOU MIGHT HAVE IN YOUR IDEA OR INVENTION.'.

`(b) OTHER REQUIREMENTS FOR COVER NOTICE- The cover notice shall contain the items required under subsection (a) and the name, primary office address, and local office address of the invention promoter, and may contain no other matter.

`(c) DISCLOSURE OF CERTAIN CUSTOMERS NOT REQUIRED- The requirement in the notice set forth in subsection (a) to include the `TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED WITH THE INVENTION PROMOTER IN THE PAST FIVE (5) YEARS' need not include information with respect to customers who have purchased trade show services, research, advertising, or other nonmarketing services from the invention promoter, nor with respect to customers who have defaulted in their payment to the invention promoter.

`Sec. 54. Reports to customer required

`With respect to every contract for invention promotion services, the invention promoter shall deliver to the customer at the address specified in the contract, at least once every 3 months throughout the term of the contract, a written report that identifies the contract and includes--

`(1) a full, clear, and concise description of the services performed to the date of the report and of the services yet to be performed and names of all persons who it is known will perform the services; and

`(2) the name and address of each person, firm, corporation, or other entity to whom the subject matter of the contract has been disclosed, the reason for each such disclosure, the nature of the disclosure, and complete and accurate summaries of all responses received as a result of those disclosures.

`Sec. 55. Mandatory contract terms

`(a) MANDATORY TERMS- Each contract for invention promotion services shall include in boldface type of not less than 12-point size--

`(1) the terms and conditions of payment and contract termination rights required under section 52;

`(2) a statement that the customer may avoid entering into the contract by not making the initial payment to the invention promoter;

`(3) a full, clear, and concise description of the specific acts or services that the invention promoter undertakes to perform for the customer;

`(4) a statement as to whether the invention promoter undertakes to construct, sell, or distribute one or more prototypes, models, or devices embodying the invention of the customer;

`(5) the full name and principal place of business of the invention promoter and the name and principal place of business of any parent, subsidiary, agent, independent contractor, and any affiliated company or person who it is known will perform any of the services or acts that the invention promoter undertakes to perform for the customer;

`(6) if any oral or written representation of estimated or projected customer earnings is given by the invention promoter (or any agent, employee, officer, director, partner, or independent contractor of such invention promoter), a statement of that estimation or projection and a description of the data upon which such representation is based;

`(7) the name and address of the custodian of all records and correspondence relating to the contracted for invention promotion services, and a statement that the invention promoter is required to maintain all records and correspondence relating to performance of the invention promotion services for such customer for a period of not less than 2 years after expiration of the term of such contract; and

`(8) a statement setting forth a time schedule for performance of the invention promotion services,

including an estimated date in which such performance is expected to be completed.

`(b) INVENTION PROMOTER AS FIDUCIARY- To the extent that the description of the specific acts or services affords discretion to the invention promoter with respect to what specific acts or services shall be performed, the invention promoter shall be deemed a fiduciary.

`(c) AVAILABILITY OF INFORMATION- Records and correspondence described under subsection (a)(7) shall be made available after 7 days written notice to the customer or the representative of the customer to review and copy at a reasonable cost on the invention promoter's premises during normal business hours.

`Sec. 56. Remedies

`(a) IN GENERAL- (1) Any contract for invention promotion services that does not comply with the applicable provisions of this chapter shall be voidable at the option of the customer.

`(2) Any contract for invention promotion services entered into in reliance upon any material false, fraudulent, or misleading information, representation, notice, or advertisement of the invention promoter (or any agent, employee, officer, director, partner, or independent contractor of such invention promoter) shall be voidable at the option of the customer.

`(3) Any waiver by the customer of any provision of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.

`(4) Any contract for invention promotion services which provides for filing for and obtaining utility, design, or plant patent protection shall be voidable at the option of the customer unless the invention promoter offers to perform or performs such act through a person duly registered to practice before, and in good standing with, the Patent and Trademark Office.

`(b) CIVIL ACTION- (1) Any customer who is injured by a violation of this chapter by an invention promoter or by any material false or fraudulent statement or representation, or any omission of material fact, by an invention promoter (or any agent, employee, director, officer, partner, or independent contractor of such invention promoter) or by failure of an invention promoter to make all the disclosures required under this chapter, may recover in a civil action against the invention promoter (or the officers, directors, or partners of such invention promoter) in addition to reasonable costs and attorneys' fees, the greater of--

`(A) $5,000; or

`(B) the amount of actual damages sustained by the customer.

`(2) Notwithstanding paragraph (1), the court may increase damages to not more than 3 times the amount awarded, taking into account past complaints made against the invention promoter that resulted in regulatory sanctions or other corrective actions based on those record compiled by the Director under section 57.

`(c) REBUTTABLE PRESUMPTION OF INJURY- For purposes of this section, substantial violation of any provision of this chapter by an invention promoter or execution by the customer of a contract for invention promotion services in reliance on any material false or fraudulent statements or representations or omissions of material fact shall establish a rebuttable presumption of injury.

`Sec. 57. Records of complaints

`(a) RELEASE OF COMPLAINTS- The Director shall make all complaints received by the United States Patent and Trademark Office involving invention promoters publicly available, together with any response of the invention promoters.

`(b) REQUEST FOR COMPLAINTS- The Director may request complaints relating to invention promotion services from any Federal or State agency and include such complaints in the records maintained under subsection (a), together with any response of the invention promoters.

`Sec. 58. Fraudulent representation by an invention promoter

`Whoever, in providing invention promotion services, knowingly provides any false or misleading statement, representation, or omission of material fact to a customer or fails to make all the disclosures required under this chapter, shall be guilty of a misdemeanor and fined not more than $10,000 for each offense.

`Sec. 59. Rule of construction

`Except as expressly provided in this chapter, no provision of this chapter shall be construed to affect any obligation, right, or remedy provided under any other Federal or State law.'.

SEC. 103. EFFECTIVE DATE.

This title and the amendments made by this title shall take effect 60 days after the date of the enactment of this Act.

TITLE II--FIRST INVENTOR DEFENSE

SEC. 201. SHORT TITLE.

This title may be cited as the `First Inventor Defense Act'.

SEC. 202. DEFENSE TO PATENT INFRINGEMENT BASED ON EARLIER INVENTOR.

(a) DEFENSE- Chapter 28 of title 35, United States Code, is amended by adding at the end the following new section:

`Sec. 273. Defense to infringement based on earlier inventor

`(a) DEFINITIONS- For purposes of this section--

`(1) the terms `commercially used' and `commercial use' mean use of a process or method in the United States or the use of a process or method in the design, testing, or production in the United States of a product or service, so long as such use is in connection with an actual arm's-length sale or other arm's-length commercial transfer of a product or service, whether or not the subject matter at issue is accessible to or otherwise known to the public, except that the subject matter for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period specified in section 156(g), shall be deemed `commercially used' and in `commercial use' during such regulatory review period;

`(2) in the case of activities performed by a nonprofit research laboratory, or nonprofit entity

such as a university, research center, or hospital, a use for which the public is the intended beneficiary shall be considered to be a use described in paragraph (1), except that the use--

`(A) may be asserted as a defense under this section only for continued use by and in the laboratory or nonprofit entity; and

`(B) may not be asserted as a defense with respect to any subsequent commercialization or use outside such laboratory or nonprofit entity;

`(3) the term `process or method' means `process' as defined in section 100(b), and includes any invention that produces a useful end product or service which has been or could have been claimed in a patent in the form of a process; and

`(4) the `effective filing date' of a patent is the earlier of the actual filing date of the application for the patent or the filing date of any earlier United States, foreign, or international application to which the subject matter at issue is entitled under section 119, 120, or 365 of this title.

`(b) DEFENSE TO INFRINGEMENT-

`(1) IN GENERAL- It shall be a defense to an action for infringement under section 271 of this title with respect to any subject matter that would otherwise infringe one or more claims asserting a process or method in the patent being asserted against a person, if such person had, acting in good faith, actually reduced the subject matter to practice at least one year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.

`(2) EXHAUSTION OF RIGHT- The sale or other disposition, of a product or service produced by a patented process or method, by a person entitled to assert a defense under this section with respect to that product or service shall exhaust the patent owner's rights under the patent to the extent such rights would have been exhausted had such sale or other disposition been made by the patent owner.

`(3) LIMITATIONS AND QUALIFICATIONS OF DEFENSE- The defense to infringement under this section is subject to the following:

`(A) PATENT- A person may not assert the defense under this section unless the invention for which the defense is asserted is for a process or method, the exclusive purpose of which is to produce a useful end product or service.

`(B) DERIVATION- A person may not assert the defense under this section if the subject matter on which the defense is based was derived from the patentee or persons in privity with the patentee.

`(C) NOT A GENERAL LICENSE- The defense asserted by a person under this section is not a general license under all claims of the patent at issue, but extends only to the specific subject matter claimed in the patent with respect to which the person can assert a defense under this chapter, except that the defense shall also extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent.

`(4) BURDEN OF PROOF- A person asserting the defense under this section shall have the burden of establishing the defense by clear and convincing evidence.

`(5) ABANDONMENT OF USE- A person who has abandoned commercial use of subject matter may not rely on activities performed before the date of such abandonment in establishing a defense under this section with respect to actions taken after the date of such abandonment.

`(6) PERSONAL DEFENSE- The defense under this section may be asserted only by the person who performed the acts necessary to establish the defense and, except for any transfer to the patent owner, the right to assert the defense shall not be licensed or assigned or transferred to another person except as an ancillary and subordinate part of a good faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates.

`(7) LIMITATION ON SITES- A defense under this section, when acquired as part of a good faith assignment or transfer of an entire enterprise or line of business to which the defense relates, may only be asserted for uses at sites where the subject matter that would otherwise infringe one or more of the claims is in use before the later of the effective filing date of the patent or the date of the assignment or transfer of such enterprise or line of business.

`(8) UNSUCCESSFUL ASSERTION OF DEFENSE- If the defense under this section is pleaded by a person who is found to infringe the patent and who subsequently fails to demonstrate a reasonable basis for asserting the defense, the court shall find the case exceptional for the purpose of awarding attorney's fees under section 285 of this title.

`(9) INVALIDITY- A patent shall not be deemed to be invalid under section 102 or 103 of this title solely because a defense is raised or established under this section.'.

(b) CONFORMING AMENDMENT- The table of sections at the beginning of chapter 28 of title 35, United States Code, is amended by adding at the end the following new item:

`273. Defense to infringement based on earlier inventor.'.

SEC. 203. EFFECTIVE DATE AND APPLICABILITY.

This title and the amendments made by this title shall take effect on the date of the enactment of this Act, but shall not apply to any action for infringement that is pending on such date of enactment or with respect to any subject matter for which an adjudication of infringement, including a consent judgment, has been made before such date of enactment.

TITLE III--PATENT TERM GUARANTEE

SEC. 301. SHORT TITLE.

This title may be cited as the `Patent Term Guarantee Act'.

SEC. 302. PATENT TERM GUARANTEE AUTHORITY.

(a) ADJUSTMENT OF PATENT TERM- Section 154(b) of title 35, United States Code, is amended to read as follows:

`(b) ADJUSTMENT OF PATENT TERM-

`(1) PATENT TERM GUARANTEES-

`(A) GUARANTEE OF PROMPT PATENT AND TRADEMARK OFFICE RESPONSES- Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to--

`(i) make a notification of the rejection of any claim for a patent or any objection or argument under section 132, or give or mail a written notice of allowance under section 151, within 14 months after the date on which the application was filed;

`(ii) respond to a reply under section 132, or to an appeal taken under section 134, within 4 months after the date on which the reply was filed or the appeal was taken;

`(iii) act on an application within 4 months after the date of a decision by the Board of Patent Appeals and Interferences under section 134 or 135 or a decision by a Federal court under section 141, 145, or 146 in a case in which allowable claims remain in the application; or

`(iv) issue a patent within 4 months after the date on which the issue fee was paid under section 151 and all outstanding requirements were satisfied;

the term of the patent shall be extended one day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

`(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY- Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including--

`(i) any time consumed by continued examination of the application requested by the applicant under section 132(b);

`(ii) any time consumed by a proceeding under section 135(a), any time consumed by the imposition of an order pursuant to section 181, or any time consumed by appellate review by the Board of Patent Appeals and Interferences or by a Federal court; or

`(iii) any delay in the processing of the application by the Patent and Trademark Office requested by the applicant except as permitted by paragraph (2)(C),

the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

`(C) GUARANTEE OR ADJUSTMENTS FOR DELAYS DUE TO INTERFERENCES, SECRECY ORDERS, AND APPEALS- Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to--

`(i) a proceeding under section 135(a);

`(ii) the imposition of an order pursuant to section 181; or

`(iii) appellate review by the Board of Patent Appeals and Interferences or by a Federal court in a case in which the patent was issued pursuant to a decision in the review reversing an adverse determination of patentability,

the term of the patent shall be extended one day for each day of the pendency of the proceeding, order, or review, as the case may be.

`(2) LIMITATIONS-

`(A) IN GENERAL- To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

`(B) DISCLAIMED TERM- No patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.

`(C) REDUCTION OF PERIOD OF ADJUSTMENT-

`(i) The period of adjustment of the term of a patent under paragraph (1) shall 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.

`(ii) With respect to adjustments to patent term made under the authority of paragraph (1)(B), an applicant shall be deemed to have failed to engage in reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time in excess of 3 months that are taken to respond to a notice from the Office making any rejection, objection, argument, or other request, measuring such 3-month period from the date the notice was given or mailed to the applicant.

`(iii) The Director shall prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.

`(3) PROCEDURES FOR PATENT TERM ADJUSTMENT DETERMINATION-

`(A) The Director shall prescribe regulations establishing procedures for the application

for and determination of patent term adjustments under this subsection.

`(B) Under the procedures established under subparagraph (A), the Director shall--

`(i) make a determination of the period of any patent term adjustment under this subsection, and shall transmit a notice of that determination with the written notice of allowance of the application under section 151; and

`(ii) provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director.

`(C) The Director shall reinstate all or part of the cumulative period of time of an adjustment under paragraph (2)(C) if the applicant, prior to the issuance of the patent, makes a showing that, in spite of all due care, the applicant was unable to respond within the 3-month period, but in no case shall more than 3 additional months for each such response beyond the original 3-month period be reinstated.

`(D) The Director shall proceed to grant the patent after completion of the Director's determination of a patent term adjustment under the procedures established under this subsection, notwithstanding any appeal taken by the applicant of such determination.

`(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION-

`(A) An applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent. Chapter 7 of title 5 shall apply to such action. Any final judgment resulting in a change to the period of adjustment of the patent term shall be served on the Director, and the Director shall thereafter alter the term of the patent to reflect such change.

`(B) The determination of a patent term adjustment under this subsection shall not be subject to appeal or challenge by a third party prior to the grant of the patent.'.

(b) CONFORMING AMENDMENTS-

(1) Section 282 of title 35, United States Code, is amended in the fourth paragraph by striking `156 of this title' and inserting `154(b) or 156 of this title'.

(2) Section 1295(a)(4)(C) of title 28, United States Code, is amended by striking `145 or 146' and inserting `145, 146, or 154(b)'.

SEC. 303. CONTINUED EXAMINATION OF PATENT APPLICATIONS.

Section 132 of title 35, United States Code, is amended--

(1) in the first sentence by striking `Whenever' and inserting `(a) Whenever'; and

(2) by adding at the end the following:

`(b) The Commissioner shall prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant. The Commissioner may establish appropriate fees for such continued examination and shall provide a 50 percent reduction on such fees for small entities that qualify for reduced fees under section 41(h)(1) of this title.'.

SEC. 304. TECHNICAL CLARIFICATION.

Section 156(a) of title 35, United States Code, is amended in the matter preceding paragraph (1) by inserting `, which shall include any patent term adjustment granted under section 154(b),' after `the original expiration date of the patent'.

SEC. 305. EFFECTIVE DATE.

(a) SECTIONS 302 AND 304- The amendments made by sections 302 and 304 shall take effect on the date of the enactment of this Act and, except for a design patent application filed under chapter 16 of title 35, United States Code, shall apply to any application filed on or after the date of the enactment of this Act.

(b) SECTION 303- The amendments made by section 303 shall take effect 6 months after the date of the enactment of this Act.

TITLE IV--UNITED STATES PUBLICATION OF PATENT APPLICATIONS PUBLISHED ABROAD

SEC. 401. SHORT TITLE.

This title may be referred to as the `Publication of Foreign Filed Applications Act'.

SEC. 402. PUBLICATION.

(a) PUBLICATION- Section 122 of title 35, United States Code, is amended to read as follows:

`Sec. 122. Confidential status of applications; publication of patent applications

`(a) CONFIDENTIALITY- Except as provided in subsection (b), applications for patents shall be kept in confidence by the Patent and Trademark Office and no information concerning any such application shall be given without authority of the applicant or owner unless necessary to carry out the provisions of an Act of Congress or in such special circumstances as may be determined by the Director.

`(b) UNITED STATES PUBLICATION OF APPLICATIONS PUBLISHED ABROAD-

`(1) IN GENERAL- (A) Subject to paragraph (2), each application for patent, except applications for design patents filed under chapter 16 and provisional applications filed under section 111(b), shall be published, in accordance with procedures determined by the Director, promptly upon the expiration of a period of 18 months after the earliest filing date for which a benefit is sought under this title. At the request of the applicant, an application may be published earlier than the end of such 18-month period.

`(B) No information concerning published patent applications shall be made available to the public except as the Director determines.

`(C) Pursuant to this title and notwithstanding any other provision of law, a determination by the Director to release or not to release information concerning a published patent application shall be final and nonreviewable.

`(2) EXCEPTIONS- (A) An application that is no longer pending shall not be published.

`(B) An application that is subject to a secrecy order under section 181 shall not be published.

`(C)(i) If an applicant, upon filing, makes a request that an application not be published pursuant to paragraph (1), and states in such request that the invention disclosed in the application has not been the subject of an application filed in another country, or under a multilateral international agreement, that requires publication of applications 18 months after filing, the application shall not be published as provided in paragraph (1).

`(ii) An applicant may rescind a request made under clause (i) at any time.

`(iii) An applicant who has made a request under clause (i) but who subsequently files, in a foreign country or under a multilateral international agreement specified in clause (i), an application directed to the invention disclosed in the application filed in the Patent and Trademark Office, shall notify the Director of such filing not later than 45 days after the date of the filing of such foreign or international application. A failure of the applicant to provide such notice within the prescribed period shall result in the application being regarded as abandoned, unless it is shown to the satisfaction of the Director that the delay in submitting the notice was unintentional.

`(iv) If a notice is made pursuant to clause (iii), or the applicant rescinds a request pursuant to clause (ii), the Director shall publish the application on or as soon as is practical after the date that is specified in clause (i).

`(v) If an applicant has filed applications in one or more foreign countries, directly or through a multilateral international agreement, and such foreign filed applications corresponding to an application filed in the Patent and Trademark Office or the description of the invention in such foreign filed applications is less extensive than the application or description of the invention in the application filed in the Patent and Trademark Office, the applicant may submit a redacted copy of the application filed in the Patent and Trademark Office eliminating any part or description of the invention in such application that is not also contained in any of the corresponding applications filed in a foreign country. The Director may only publish the redacted copy of the application unless the redacted copy of the application is not received within 16 months after the earliest effective filing date for which a benefit is sought under this title. The provisions of section 154(d) shall not apply to a claim if the description of the invention published in the redacted application filed under this clause with respect to the claim does not enable a person skilled in the art to make and use the subject matter of the claim.

`(c) PROTEST AND PRE-ISSUANCE OPPOSITION- The Director shall establish appropriate procedures to ensure that no protest or other form of pre-issuance opposition to the grant of a patent on an application may be initiated after publication of the application without the express written consent of the applicant.'.

(b) STUDY BY GAO-

(1) IN GENERAL- The Comptroller General of the United States shall conduct a study of applicants for patents who file only in the United States during the 3-year period beginning on the effective date of this title.

(2) CONTENTS- The study conducted under paragraph (1) shall--

(A) consider the number of such applicants for patent in relation to the number of applicants who file in the United States and outside the United States;

(B) examine how many domestic-only filers request at the time of filing not to be published;

(C) examine how many such filers rescind that request or later choose to file abroad; and

(D) examine the manner of entity seeking an application and any correlation that may exist between such manner and publication of patent applications.

(3) REPORT TO JUDICIARY COMMITTEES- The Comptroller General shall submit to the Committees on the Judiciary of the House of Representatives and the Senate the results of the study conducted under this subsection.

SEC. 403. TIME FOR CLAIMING BENEFIT OF EARLIER FILING DATE.

(a) IN A FOREIGN COUNTRY- Section 119(b) of title 35, United States Code, is amended to read as follows:

`(b)(1) No application for patent shall be entitled to this right of priority unless a claim, identifying the foreign application by specifying its application number, country, and the day, month, and year of its filing, is filed in the Patent and Trademark Office at such time during the pendency of the application as required by the Director.

`(2) The Director may consider the failure of the applicant to file a timely claim for priority as a waiver of any such claim. The Director may establish procedures, including the payment of a surcharge, to accept an unintentionally delayed claim under this section.

`(3) The Director may require a certified copy of the original foreign application, specification, and drawings upon which it is based, a translation if not in the English language, and such other information as the Director considers necessary. Any such certification shall be made by the foreign intellectual property authority in which the foreign application was filed and show the date of the application and of the filing of the specification and other papers.'.

(b) IN THE UNITED STATES- Section 120 of title 35, United States Code, is amended by adding at the end the following: `The Director may determine the time period during the pendency of the application within which an amendment containing the specific reference to the earlier filed application is submitted. The Director may consider the failure to submit such an amendment within that time period as a waiver of any benefit under this section. The Director may establish procedures, including the payment of a surcharge, to accept unintentionally late submissions of amendments under this section.'.

SEC. 404. PROVISIONAL RIGHTS.

Section 154 of title 35, United States Code, is amended--

(1) in the section caption by inserting `; provisional rights' after `patent'; and

(2) by adding at the end the following new subsection:

`(d) PROVISIONAL RIGHTS- -

`(1) IN GENERAL- In addition to other rights provided by this section, a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application for such patent pursuant to section 122(b), or in the case of an international application filed under the treaty defined in section 351(a) designating the United States under Article 21(2)(a) of such treaty, the date of publication of the application, and ending on the date the patent is issued--

`(A)(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States; or

`(ii) if the invention as claimed in the published patent application is a process, uses, offers for sale, or sells in the United States or imports into the United States products made by that process as claimed in the published patent application; and

`(B) had actual notice of the published patent application, and in a case in which the right arising under this paragraph is based upon an international application designating the United States that is published in a language other than English, a translation of the international application into the English language.

`(2) RIGHT BASED ON SUBSTANTIALLY IDENTICAL INVENTIONS- The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.

`(3) TIME LIMITATION ON OBTAINING A REASONABLE ROYALTY- The right under paragraph (1) to obtain a reasonable royalty shall be available only in an action brought not later than 6 years after the patent is issued. The right under paragraph (1) to obtain a reasonable royalty shall not be affected by the duration of the period described in paragraph (1).

`(4) REQUIREMENTS FOR INTERNATIONAL APPLICATIONS-

`(A) EFFECTIVE DATE- The right under paragraph (1) to obtain a reasonable royalty based upon the publication under the treaty defined in section 351(a) of an international application designating the United States shall commence on the date on which the Patent and Trademark Office receives a copy of the publication under the treaty of the international application, or, if the publication under the treaty of the international application is in a language other than English, on the date on which the Patent and Trademark Office receives a translation of the international application in the English language.

`(B) COPIES- The Director may require the applicant to provide a copy of the international application and a translation thereof.

`(5) ISSUANCE OF PATENTS ON INDIVIDUAL CLAIMS- If the Director in a notification to the applicant under section 132 indicates that one or more claims of a published application are allowable, the applicant may request the issuance of a patent incorporating those claims. The applicant may continue prosecution of the remaining claims as provided in chapter 12 of this title. Any subsequently allowed claims may be incorporated into the patent or issued in a separate patent, in accordance with regulations adopted by the Director. The Director may establish appropriate fees to cover the costs of incorporating any additional claims into the patent or issuing a separate patent.'.

SEC. 405. PRIOR ART EFFECT OF PUBLISHED APPLICATIONS.

Section 102(e) of title 35, United States Code, is amended to read as follows:

`(e) the invention was described in--

`(1)(A) an application for patent, published pursuant to section 122(b), by another filed in the United States before the invention by the applicant for patent, except that an international application filed under the treaty defined in section 351(a) shall have the effect under this subsection of a national application published under section 122(b) only if the international application designating the United States was published under Article 21(2)(a) of such treaty in the English language, or

`(B) a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent, except that a patent shall not be deemed filed in the United States for the purposes of this subsection based on the filing of an international application filed under the treaty defined in section 351(a), or'.

SEC. 406. COST RECOVERY FOR PUBLICATION.

The Director of the United States Patent and Trademark Office shall recover the cost of early publication required by the amendment made by section 402 by charging a separate publication fee after notice of allowance is given pursuant to section 151 of title 35, United States Code.

SEC. 407. CONFORMING AMENDMENTS.

The following provisions of title 35, United States Code, are amended:

(1) Section 11 is amended in paragraph 1 of subsection (a) by inserting `and published applications for patents' after `Patents'.

(2) Section 12 is amended--

(A) in the section caption by inserting `and applications' after `patents'; and

(B) by inserting `and published applications for patents' after `patents'.

(3) Section 13 is amended--

(4) The items relating to sections 12 and 13 in the table of sections for chapter 1 are each amended by inserting `and applications' after `patents'.

(5) The item relating to section 122 in the table of sections for chapter 11 is amended by inserting `; publication of patent applications' after `applications'.

(6) The item relating to section 154 in the table of sections for chapter 14 is amended by inserting `; provisional rights' after `patent'.

(7) Section 181 is amended--

(A) in the first undesignated paragraph--

(i) by inserting `by the publication of an application or' after `disclosure'; and

(ii) by inserting `the publication of the application or' after `withhold';

(B) in the second undesignated paragraph by inserting `by the publication of an application or' after `disclosure of an invention';

(C) in the third undesignated paragraph--

(i) by inserting `by the publication of the application or' after `disclosure of the invention'; and

(ii) `the publication of the application or' after `withhold'; and

(D) in the fourth undesignated paragraph by inserting `the publication of an application or' after `and' in the first sentence.

(8) Section 252 is amended in the first undesignated paragraph by inserting `substantially' before `identical' each place it appears.

(9) Section 284 is amended by adding at the end of the second undesignated paragraph the following: `Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.'.

(10) Section 374 is amended to read as follows:

`Sec. 374. Publication of international application: effect

`The publication under the treaty defined in section 351(a) of this title of an international application designating the United States shall confer the same rights and shall have the same effect under this title as an application for patent published under section 122(b), except as provided in sections 102(e) and 154(d).'.

SEC. 408. EFFECTIVE DATE.

This title and the amendments made by this title, shall take effect on the date that is 1 year after the date of the enactment of this Act and shall apply to all applications filed under section 111 of title 35, United States Code, on or after that date, and all applications complying with section 371 of title 35, United States Code, that resulted from international applications filed on or after that date. The amendment made by section 404 shall also apply to international applications designating the United States that are filed on or after the date that is 1 year after the date of the enactment of this Act.

TITLE V--PATENT LITIGATION REDUCTION ACT

SEC. 501. SHORT TITLE.

This title may be cited as the `Patent Litigation Reduction Act'.

SEC. 502. DEFINITIONS.

Section 100 of title 35, United States Code, is amended by adding at the end the following new subsection:

`(e) The term `third-party requester' means a person requesting reexamination under section 302 of this title who is not the patent owner.'.

SEC. 503. REEXAMINATION PROCEDURES.

(a) CITATION OF PRIOR ART- Section 301 of title 35, United States Code, is amended to read as follows:

`Sec. 301. Citation of prior art

`Any person at any time may cite to the Office in writing prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent. If the person explains in writing the pertinency and manner of applying such prior art to at least one claim of the patent, the citation of such prior art and the explanation thereof will become a part of the official file of the patent.'.

(b) REQUEST FOR REEXAMINATION- Section 302 of title 35, United States Code, is amended to read as follows:

`Sec. 302. Request for reexamination

`(a) IN GENERAL- Any person at any time may file a request for reexamination by the Office of a patent on the basis of any prior art cited under the provisions of section 301.

`(b) REQUIREMENTS- The request shall--

`(1) be in writing, include the identity of the real party in interest, and be accompanied by payment of a reexamination fee established by the Director under section 41; and

`(2) set forth the pertinency and manner of applying cited prior art to every claim for which reexamination is requested.

`(c) COPY- Unless the requesting person is the owner of the patent, the Director promptly shall send a copy of the request to the owner of record of the patent.'.

(c) DETERMINATION OF ISSUE BY DIRECTOR- Section 303 of title 35, United States Code, is amended to read as follows:

`Sec. 303. Determination of issue by Director

`(a) REEXAMINATION- Not later than 3 months after the filing of a request for reexamination under section 302, the Director shall determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications. On the Director's initiative, and any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications.

`(b) RECORD- A record of the Director's determination under subsection (a) shall be placed in the official file of the patent, and a copy shall be promptly given or mailed to the owner of record of the patent and to the third-party requester, if any.

`(c) FINAL DECISION- A determination by the Director pursuant to subsection (a) shall be final and nonappealable. Upon a determination that no substantial new question of patentability has been raised, the Director may refund a portion of the reexamination fee required under section 302.'.

(d) REEXAMINATION ORDER BY DIRECTOR- Section 304 of title 35, United States Code, is amended to read as follows:

`Sec. 304. Reexamination order by Director

`If, in a determination made under section 303(a), the Director finds that a substantial new question of patentability affecting a claim of a patent is raised, the determination shall include an order for reexamination of the patent for resolution of the question. The order may be accompanied by the initial action of the Patent and Trademark Office on the merits of the reexamination conducted in accordance with section 305.'.

(e) CONDUCT OF REEXAMINATION PROCEEDINGS- Section 305 of title 35, United States Code, is amended to read as follows:

`Sec. 305. Conduct of reexamination proceedings

`(a) IN GENERAL- Subject to subsection (b), reexamination shall be conducted according to the procedures established for initial examination under the provisions of sections 132 and 133, except as provided for under this section. In any reexamination proceeding under this chapter, the patent owner shall be permitted to propose any amendment to the patent and a new claim or claims, except that no proposed amended or new claim enlarging the scope of the claims of the patent shall be permitted.

`(b) RESPONSE- (1) This subsection shall apply to any reexamination proceeding in which the order for reexamination is based upon a request by a third-party requester.

`(2) With the exception of the reexamination request, any document filed by either the patent owner or the third-party requester shall be served on the other party. In addition, the third-party requester shall receive a copy of any communication sent by the Office to the patent owner concerning the patent subject to the reexamination proceeding.

`(3) Each time that the patent owner files a response to an action on the merits from the Patent and Trademark Office, the third-party requester shall have one opportunity to file written comments addressing issues raised by the action of the Office or the patent owner's response thereto, if those written comments are received by the Office within 30 days after the date of service of the patent owner's response.

`(c) SPECIAL DISPATCH- Unless otherwise provided by the Director for good cause, all reexamination proceedings under this section, including any appeal to the Board of Patent Appeals and Interferences, shall be conducted with special dispatch within the Office.'.

(f) APPEAL- Section 306 of title 35, United States Code, is amended to read as follows:

`Sec. 306. Appeal

`(a) PATENT OWNER- The patent owner involved in a reexamination proceeding under this chapter--

`(1) may appeal under the provisions of section 134, and may appeal under the provisions of sections 141 through 144, with respect to any decision adverse to the patentability of any original or proposed amended or new claim of the patent; and

`(2) may be a party to any appeal taken by a third-party requester under subsection (b).

`(b) THIRD-PARTY REQUESTER- A third-party requester may--

`(1) appeal under the provisions of section 134, and may appeal under the provisions of sections 141 through 144, with respect to any final decision favorable to the patentability of any original or proposed amended or new claim of the patent; or

`(2) be a party to any appeal taken by the patent owner, subject to subsection (c).

`(c) CIVIL ACTION- A third-party requester whose request for a reexamination results in an order under section 304 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the reexamination proceedings. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the reexamination proceedings.'.

(g) REEXAMINATION PROHIBITED; STAY OF LITIGATION-

(1) IN GENERAL- Chapter 30 of title 35, United States Code, is amended by adding at the end the following new section:

`Sec. 308. Reexamination prohibited

`(a) ORDER FOR REEXAMINATION- Notwithstanding any provision of this chapter, once an order for reexamination of a patent has been issued under section 304, neither the patent owner nor the third-party requester, if any, nor privies of either, may file a subsequent request

for reexamination of the patent until a reexamination certificate is issued and published under section 307, unless authorized by the Director.

`(b) FINAL DECISION- Once a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28 that the party has not sustained its burden of proving the invalidity of any patent claim in suit or if a final decision in a reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent then neither that party nor its privies may thereafter request reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or reexamination proceeding, and a reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the reexamination proceedings.

`Sec. 309. Stay of litigation

`Once an order for reexamination of a patent has been issued under section 304, the patent owner may obtain a stay of any pending litigation which involves an issue of patentability of any claims of the patent which are the subject of the reexamination order, unless the court before which such litigation is pending determines that a stay would not serve the interests of justice.'.

(2) TECHNICAL AND CONFORMING AMENDMENT- The table of sections for chapter 30 of title 35, United States Code, is amended to read as follows:

`CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND REEXAMINATION OF PATENTS

`Sec.

`301. Citation of prior art.

`302. Request for reexamination.

`303. Determination of issue by Director.

`304. Reexamination order by Director.

`305. Conduct of reexamination proceedings.

`306. Appeal.

`307. Certificate of patentability, unpatentability, and claim cancellation.

`308. Reexamination prohibited.

`309. Stay of litigation.'.

SEC. 504. CONFORMING AMENDMENTS.

(a) PATENT FEES; PATENT SEARCH SYSTEMS- Section 41(a)(7) of title 35, United States Code, is amended to read as follows:

`(7) On filing each petition for the revival of an unintentionally abandoned application for a patent, for the unintentionally delayed payment of the fee for issuing each patent, or for an unintentionally delayed response by the patent owner in a reexamination proceeding, $1,210, unless the petition is filed under section 133 or 151 of this title, in which case the fee shall be $110.'.

(b) APPEAL TO THE BOARD OF PATENT APPEALS AND INTERFERENCES- Section 134 of title 35, United States Code, is amended to read as follows:

`Sec. 134. Appeal to the Board of Patent Appeals and Interferences

`(a) PATENT APPLICANT- An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the primary examiner to the Board of Patent Appeals and Interferences, having once paid the fee for such appeal.

`(b) PATENT OWNER- A patent owner in a reexamination proceeding may appeal from the final rejection of any claim by the primary examiner to the Board of Patent Appeals and Interferences, having once paid the fee for such appeal.

`(c) THIRD-PARTY- A third-party requester may appeal to the Board of Patent Appeals and Interferences from the final decision of the primary examiner favorable to the patentability of any original or proposed amended or new claim of a patent, having once paid the fee for such appeal.'.

(c) APPEAL TO COURT OF APPEALS FOR THE FEDERAL CIRCUIT- Section 141 of title 35, United States Code, is amended by adding the following after the second sentence: `A patent owner or third-party requester in a reexamination proceeding dissatisfied with the final decision in an appeal to the Board of Patent Appeals and Interferences under section 134 may appeal the decision only to the United States Court of Appeals for the Federal Circuit.'.

(d) PROCEEDINGS ON APPEAL- Section 143 of title 35, United States Code, is amended by amending the third sentence to read as follows: `In ex parte and reexamination cases, the Director shall submit to the court in writing the grounds for the decision of the Patent and Trademark Office, addressing all the issues involved in the appeal.'.

(e) CIVIL ACTION TO OBTAIN PATENT- Section 145 of title 35, United States Code, is amended in the first sentence by inserting `(a)' after `section 134'.

SEC. 505. REPORT TO CONGRESS.

Not later than 5 years after the effective date of this title, the Director of the United States Patent and Trademark Office shall submit to the Congress a report evaluating whether the reexamination proceedings established under the amendments made by this title are inequitable to any of the parties in interest and, if so, the report shall

contain recommendations for changes to the amendments made by this title to remove such inequity.

SEC. 506. EFFECTIVE DATE.

This title and the amendments made by this title shall take effect on the date that is 1 year after the date of the enactment of this Act and shall apply to all reexamination requests filed on or after such date.

TITLE VI--PATENT AND TRADEMARK OFFICE

SEC. 601. SHORT TITLE.

This title may be cited as the `Patent and Trademark Office Efficiency Act'.

Subtitle A--United States Patent and Trademark Office

SEC. 611. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE.

Section 1 of title 35, United States Code, is amended to read as follows:

`Sec. 1. Establishment

`(a) ESTABLISHMENT- The United States Patent and Trademark Office is established as an agency of the United States, within the Department of Commerce. In carrying out its functions, the United States Patent and Trademark Office shall be subject to the policy direction of the Secretary of Commerce, but shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law.

`(b) OFFICES- The United States Patent and Trademark Office shall maintain its principal office in the metropolitan Washington, DC, area, for the service of process and papers and for the purpose of carrying out its functions. The United States Patent and Trademark Office shall be deemed, for purposes of venue in civil actions, to be a resident of the district in which its principal office is located, except where jurisdiction is otherwise provided by law. The United States Patent and Trademark Office may establish satellite offices in such other places in the United States as it considers necessary and appropriate in the conduct of its business.

`(c) REFERENCE- For purposes of this title, the United States Patent and Trademark Office shall also be referred to as the `Office' and the `Patent and Trademark Office'.

SEC. 612. POWERS AND DUTIES.

Section 2 of title 35, United States Code, is amended to read as follows:

`Sec. 2. Powers and duties

`(a) IN GENERAL- The United States Patent and Trademark Office, subject to the policy direction of the Secretary of Commerce--

`(1) shall be responsible for the granting and issuing of patents and the registration of trademarks; and

`(2) shall be responsible for disseminating to the public information with respect to patents and trademarks.

`(b) SPECIFIC POWERS- The Office--

`(1) shall adopt and use a seal of the Office, which shall be judicially noticed and with which letters patent, certificates of trademark registrations, and papers issued by the Office shall be authenticated;

`(2) may establish regulations, not inconsistent with law, which--

`(A) shall govern the conduct of proceedings in the Office;

`(B) shall be made after notice and opportunity for full participation by interested public and private parties;

`(C) shall facilitate and expedite the processing of patent applications, particularly those which can be filed, stored, processed, searched, and retrieved electronically, subject to the provisions of section 122 relating to the confidential status of applications;

`(D) may govern the recognition and conduct of agents, attorneys, or other persons representing applicants or other parties before the Office, and may require them, before being recognized as representatives of applicants or other persons, to show that they are of good moral character and reputation and are possessed of the necessary qualifications to render to applicants or other persons valuable service, advice, and assistance in the presentation or prosecution of their applications or other business before the Office;

`(E) shall recognize the public interest in continuing to safeguard broad access to the United States patent system through the reduced fee structure for small entities under section 41(b)(1) of this title; and

`(F) provide for the development of a performance-based process that includes quantitative and qualitative measures and standards for evaluating cost-effectiveness and is consistent with the principles of impartiality and competitiveness;

`(3) may acquire, construct, purchase, lease, hold, manage, operate, improve, alter, and renovate any real, personal, or mixed property, or any interest therein, as it considers necessary to carry out its functions;

`(4)(A) may make such purchases, contracts for the construction, maintenance, or management and operation of facilities, and contracts for supplies or services, without regard to the provisions of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 471 and following), the Public Buildings Act (40 U.S.C. 601 and following), and the Stewart B. McKinney Homeless Assistance Act (42 U.S.C.11301 and following); and

`(B) may enter into and perform such purchases and contracts for printing services, including the process of composition, platemaking, presswork, silk screen processes, binding, microform, and the products of such processes, as it considers necessary to carry out the functions of the Office, without regard to sections 501 through 517 and 1101 through 1123 of title 44;

`(5) may use, with their consent, services, equipment, personnel, and facilities of other departments, agencies, and instrumentalities of the Federal Government, on a reimbursable basis, and cooperate with such other departments, agencies, and instrumentalities in the establishment and use of services, equipment, and facilities of the Office;

`(6) may, when the Director determines that it is practicable, efficient, and cost-effective to do so, use, with the consent of the United States and the agency, government, or international organization concerned, the services, records, facilities, or personnel of any State or local government agency or instrumentality or foreign government or international organization to perform functions on its behalf;

`(7) may retain and use all of its revenues and receipts, including revenues from the sale, lease, or disposal of any real, personal, or mixed property, or any interest therein, of the Office;

`(8) in coordination with the Under Secretary of Commerce for International Trade, shall promote exports of goods and services of the United States industries that rely on intellectual property;

`(9) shall advise the President, through the Secretary of Commerce, on national and certain international intellectual property policy issues;

`(10) shall advise Federal departments and agencies on matters of intellectual property policy in the United States and intellectual property protection in other countries;

`(11) shall provide guidance, as appropriate, with respect to proposals by agencies to assist foreign governments and international intergovernmental organizations on matters of intellectual property protection;

`(12) may conduct programs, studies, or exchanges of items or services regarding domestic and international intellectual property law and the effectiveness of intellectual property protection domestically and throughout the world;

`(13)(A) shall advise the Secretary of Commerce on programs and studies relating to intellectual property policy that are conducted, or authorized to be conducted, cooperatively with foreign intellectual property offices and international intergovernmental organizations; and

`(B) may conduct programs and studies described in subparagraph (A); and

`(14)(A) in coordination with the Department of State, may conduct programs and studies cooperatively with foreign intellectual property offices and international intergovernmental organizations; and

`(B) with the concurrence of the Secretary of State, may authorize the transfer of not to exceed $100,000 in any year to the Department of State for the purpose of making special payments to international intergovernmental organizations for studies and programs for advancing international cooperation concerning patents, trademarks, and other matters.

`(c) CLARIFICATION OF SPECIFIC POWERS- (1) The special payments under paragraph (14)(B) shall be in addition to any other payments or contributions to international organizations described in paragraph (14)(B) and shall not be subject to any limitations imposed by law on the amounts of such other payments or contributions by the United States Government.

`(2) Nothing in subsection (b) shall derogate from the duties of the Secretary of State or from the duties of the United States Trade Representative as set forth in section 141 of the Trade Act of 1974 (19 U.S.C. 2171).

`(3) Nothing in subsection (b) shall derogate from the duties and functions of the Register of Copyrights or otherwise alter current authorities relating to copyright matters.

`(4) In exercising the Director's powers under paragraphs (3) and (4)(A) of subsection (b), the Director shall consult with the Administrator of General Services.

`(d) CONSTRUCTION- Nothing in this section shall be construed to nullify, void, cancel, or interrupt any pending request-for-proposal let or contract issued by the General Services Administration for the specific purpose of relocating or leasing space to the United States Patent and Trademark Office.'.

SEC. 613. ORGANIZATION AND MANAGEMENT.

Section 3 of title 35, United States Code, is amended to read as follows:

`Sec. 3. Officers and employees

`(a) UNDER SECRETARY AND DIRECTOR-

`(1) IN GENERAL- The powers and duties of the United States Patent and Trademark Office shall be vested in an Under Secretary of Commerce and Director of the United States Patent and Trademark Office (in this title referred to as the `Director'), who shall be a citizen of the United States and who shall be appointed by the President, by and with the advice and consent of the Senate. The Director shall be a person who, by reason of professional background and experience in patent or trademark law, is especially qualified to manage the Office.

`(2) DUTIES-

`(A) IN GENERAL- The Director shall be responsible for the management and direction of the Office, including the issuance of patents and the registration of trademarks, and shall perform these duties in a fair, impartial, and equitable manner.

`(B) CONSULTING WITH THE PUBLIC ADVISORY COMMITTEES- The Director shall consult with the Patent Public Advisory Committee established in section 5 on a regular basis on matters relating to the patent operations of the Office, shall consult with the Trademark Public Advisory Committee established in section 5 on a regular basis on matters relating to the trademark operations of the Office, and shall consult with the respective Public Advisory Committee before submitting budgetary proposals to the Office of Management and Budget or changing or proposing to change patent or trademark user fees or patent or trademark regulations, as the case may be.

`(C) SECURITY CLEARANCES- The Director, in consultation with the Director of the Office of Personnel Management, shall maintain a program for identifying national security positions and providing for appropriate security clearances.

`(3) OATH- The Director shall, before taking office, take an oath to discharge faithfully the duties of the Office.

`(4) COMPENSATION- In addition to the Director's pay as prescribed in section 5314 of title 5, the Director may receive a bonus in an amount up to, but not in excess of, 50 percent of the Director's annual rate of pay, based upon an evaluation by the Secretary of Commerce of the Director's performance as defined in an annual performance agreement between the Director and the Secretary. The annual performance agreement shall incorporate measurable organization and individual goals in key operational areas as delineated in an annual performance plan agreed to by the Director and the Secretary and made public in the annual report of the Director. Payment of a bonus under this paragraph may be made to the Director only to the extent that such payment does not cause the Director's total aggregate compensation in a calendar year to equal or exceed the amount of the salary of the President under section 102 of title 3.

`(5) REMOVAL- The Director may be removed from office by the President. The President shall provide notification of any such removal to both Houses of Congress.

`(b) OFFICERS AND EMPLOYEES OF THE OFFICE-

`(1) DEPUTY UNDER SECRETARY AND DEPUTY DIRECTOR- The Director shall appoint a Deputy Under Secretary of Commerce and Deputy Director of the United States Patent and Trademark Office who shall be vested with the authority to act in the capacity of the Director in the event of the absence or incapacity of the Director.

`(2) COMMISSIONERS- The Director shall appoint a Commissioner for Patents and a Commissioner for Trademarks. The Commissioner for Patents shall be a citizen of the United States with demonstrated experience in patent law and the Commissioner for Trademarks shall be a citizen of the United States with demonstrated experience in trademark law. The Commissioner for Patents and the Commissioner for Trademarks shall be the principal management advisers to the Director on all aspects of the activities of the Office that affect the administration of patent and trademark operations, respectively.

`(3) OTHER OFFICERS AND EMPLOYEES- The Director shall--

`(A) appoint such officers, employees (including attorneys), and agents of the Office as the Director considers necessary to carry out the functions of the Office; and

`(B) define the title, authority, and duties of such officers and employees and delegate to them such of the powers vested in the Office as the Director may determine.

The Office shall not be subject to any administratively or statutorily imposed limitation on positions or personnel, and no positions or personnel of the Office shall be taken into account for purposes of applying any such limitation.

`(4) TRAINING OF EXAMINERS- The Patent and Trademark Office shall develop an incentive program to retain as employees patent and trademark examiners of the primary examiner grade or higher who are eligible for retirement, for the sole purpose of training patent and trademark examiners.

`(c) ADOPTION OF EXISTING LABOR AGREEMENTS- The Office shall adopt all labor agreements which are in effect, as of the day before the effective date of the Patent and Trademark Office Efficiency Act, with respect to such Office (as then in effect).

`(d) CARRYOVER OF PERSONNEL-

`(1) FROM PTO- Effective as of the effective date of the Patent and Trademark Office Efficiency Act, all officers and employees of the Patent and Trademark Office on the day before such effective date shall become officers and employees of the Office, without a break in service.

`(2) OTHER PERSONNEL- Any individual who, on the day before the effective date of the Patent and Trademark Office Efficiency Act, is an officer or employee of the Department of Commerce (other than an officer or employee under paragraph (1)) shall be transferred to the Office if--

`(A) such individual serves in a position for which a major function is the performance of work reimbursed by the Patent and Trademark Office, as determined by the Secretary of Commerce;

`(B) such individual serves in a position that performed work in support of the Patent and Trademark Office during at least half of the incumbent's work time, as determined by the Secretary of Commerce; or

`(C) such transfer would be in the interest of the Office, as determined by the Secretary of Commerce in consultation with the Director.

Any transfer under this paragraph shall be effective as of the same effective date as referred to in paragraph (1), and shall be made without a break in service.

`(3) ACCUMULATED LEAVE- The amount of sick and annual leave and compensatory time accumulated under title 5 before the effective date described in paragraph (1), by those becoming officers or employees of the Office pursuant to this subsection, are obligations of the Office.

`(e) TRANSITION PROVISIONS-

`(1) INTERIM APPOINTMENT OF DIRECTOR- On or after the effective date of the Patent and Trademark Office Efficiency Act, the President shall appoint an individual to serve as the Director until the date on which a Director qualifies under subsection (a). The President shall not make more than one such appointment under this subsection.

`(2) CONTINUATION IN OFFICE OF CERTAIN OFFICERS- (A) The individual serving as the Assistant Commissioner for Patents on the day before the effective date of the Patent and Trademark Office Efficiency Act may serve as the Commissioner for Patents until the date on which a Commissioner for Patents is appointed under subsection (b).

`(B) The individual serving as the Assistant Commissioner for Trademarks on the day before the effective date of the Patent and Trademark Office Efficiency Act may serve as the Commissioner for Trademarks until the date on which a Commissioner for Trademarks is appointed under subsection (b).'.

SEC. 614. PERSONNEL FLEXIBILITY.

(a) IN GENERAL- Chapter 1 of part I of title 35, United States Code, is amended by inserting after section 3 the following:

`Sec. 3a. Personnel flexibility

`(a) ADMINISTRATIVE FLEXIBILITY-

`(1) RELATIONSHIP TO TITLE 5- Any authorities provided by this section shall be exercised--

`(A) in a manner consistent with--

`(i) chapter 23 of title 5 (relating to merit system principles and prohibited personnel practices);

`(ii) provisions of title 5 relating to preference eligibles;

`(iii) except as otherwise specifically provided, section 5307 of title 5 (relating to the aggregate limitation on pay); and

`(iv) except as otherwise specifically provided, chapter 71 of title 5 (relating to labor-management relations); and

`(E) subject to subsections (b) and (c) of section 1104 of title 5 as though such authorities were delegated to the Office under section 1104(a)(2) of such title.

`(2) INFORMING OPM- The Director shall provide the Office of Personnel Management with any information the Office of Personnel Management requires in carrying out its responsibilities under this section.

`(b) WRITTEN AGREEMENTS WITH LABOR ORGANIZATIONS REQUIRED- Employees within a unit to which a labor organization is accorded exclusive recognition under chapter 71 of title 5 shall not be subject to the authorities provided in this section unless the exclusive representative and the Office have entered into a written agreement which specifically provides for the exercise of those authorities. Such written agreement may not be imposed by the Federal Services Impasses Panel under section 7119 of title 5.

`(c) SENIOR MANAGEMENT OF THE OFFICE-

`(1) APPOINTMENT- (A) The Director may appoint such senior managers as the Director determines are necessary without regard to the provisions of title 5 governing appointments in the competitive service.

`(B) The senior managers described in subparagraph (A) may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5 relating to classification and General Schedule pay rates.

`(2) PERFORMANCE AGREEMENT- Each year the Director and each senior manager appointed under this subsection shall enter into an annual performance agreement that sets forth measurable organization and individual goals. The agreement shall be subject to review and renegotiation at the end of each term.

`(3) COMPENSATION-

`(A) IN GENERAL- A senior manager appointed under this subsection may be paid at an annual rate of basic pay of not more than the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(C) of title 5. The compensation of a senior manager shall be considered, for purposes of section 207(c)(2)(A) of title 18, to be the equivalent of that described under clause (ii) of section 207(c)(2)(A) of title 18.

`(B) BONUS- In addition to the compensation paid under subparagraph (A), a senior manager may receive a bonus in an amount such that the manager's total compensation does not exceed 125 percent of the maximum rate of basic pay for the Senior Executive Service, including any applicable locality-based comparability payment, based upon the Director's evaluation of the manager's performance in relation to the goals set forth in the performance agreement described in paragraph (2).

`(4) REMOVAL- A senior manager shall be removable by the Director, or by the Secretary if the position of Director is vacant.

`(d) GENERAL WORKFORCE PERFORMANCE MANAGEMENT SYSTEM-

`(1) ESTABLISHMENT- In lieu of a performance appraisal system established under section 5302 of title 5, the Director shall, within 1 year after the date of the enactment of the Patent and Trademark Office Efficiency Act, establish for the Office a performance management system that--

`(A) maintains individual accountability by--

`(i) establishing 1 or more retention standards for each employee related to the work of the employee and expressed in terms of individual performance, and communicating such retention standards to employees;

`(ii) making periodic determinations of whether each employee meets or does not meet the employee's established retention standards; and

`(iii) taking actions, in accordance with applicable laws and regulations, with respect to any employee whose performance does not meet established retention standards, including denying any increases in basic pay, promotions, and credit for performance under section 3502 of title 5, and--

`(I) reassignment;

`(II) an action under chapter 43 or chapter 75 of title 5;

`(III) any other appropriate action to resolve the performance problem; or

`(IV) any combination of actions under subclauses (I) through (III); and

`(B) strengthens the system's effectiveness by--

`(i) establishing goals or objectives for individual, group, or organizational performance (or any combination thereof), consistent with the Office's performance planning procedures, including those established under the Government Performance and Results Act of 1993, and communicating such goals or objectives to employees;

`(ii) using such goals and objectives to make performance distinctions among employees or groups of employees; and

`(iii) using performance assessments as a basis for granting employee awards, adjusting an employee's rate of basic pay, and other appropriate personnel actions, in accordance with applicable laws and regulations.

`(2) DEFINITIONS- For purposes of this subsection--

`(A) the term `performance assessment' means a determination of whether or not retention standards established under paragraph (1)(A)(i) are met, and any additional performance determination made on the basis of performance goals and objectives established under paragraph (1)(B)(i); and

`(B) the term `unacceptable performance', with respect to an employee of the Office covered by a performance management system established under this subsection, means performance of the employee which fails to meet a retention standard established under this section.

`(3) AWARDS PROGRAM- (A) The Office may establish an awards program designed to provide incentives for and recognition of organizational, group, and individual achievements by providing for granting awards to employees who, as individuals or members of a group, contribute to meeting the performance goals and objectives established under this section by such means as a superior individual or group accomplishment, a documented productivity gain, or sustained superior performance.

`(B) A cash award under subchapter I of chapter 45 of title 5 may be granted to an employee of the Office without the need for any approval under section 4502(b) of title 5. The Office may approve cash awards in excess of $10,000, but not in excess of $25,000, to an employee for exceptional and unusually outstanding contributions or accomplishments.

`(4) APPLICATION OF PROCEDURES- (A) In applying sections 4303(b)(1)(A) and 7513(b) of title 5 to employees of the Office, `30 days' may be deemed to be `15 days'.

`(B) Notwithstanding the second sentence of section 5335(c) of title 5, an employee of the Office shall not have a right to appeal the denial of a periodic step increase under section 5335 to the Merit Systems Protection Board.

`(e) CLASSIFICATION AND PAY FLEXIBILITIES-

`(1) DEFINITION- For purposes of this subsection, the term `broad-banded system' means a system for grouping positions for pay, job evaluation, and other purposes that is different from the system established under chapter 51 and subchapter III of chapter 53 of title 5 as a result of combining grades and related ranges of rates of pay in 1 or more occupational series.

`(2) ESTABLISHMENT OF BROAD-BANDED SYSTEMS- (A)(i) The Director may, subject to criteria to be prescribed by the Office of Personnel Management, establish 1 or more broad-banded systems covering all or any portion of the Office workforce.

`(ii) With the approval of the Office of Personnel Management, a broad-banded system established under this subsection may either include or consist of positions that otherwise would be subject to subchapter IV of chapter 53 or section 5376 of title 5.

`(B) The Office of Personnel Management may require the Director to submit to the Office of Personnel Management information relating to broad-banded systems at the Office.

`(C) Except as otherwise provided under this section, employees under a broad-banded system shall continue to be subject to the laws and regulations covering employees under the pay system that otherwise would apply to such employees.

`(D) The criteria to be prescribed by the Office of Personnel Management shall, at a minimum--

`(i) ensure that the structure of any broad-banded system maintains the principle of equal pay for substantially equal work;

`(ii) establish the minimum and maximum number of grades that may be combined into pay bands;

`(iii) establish requirements for setting minimum and maximum rates of pay in a pay band;

`(iv) establish requirements for adjusting the pay of an employee within a pay band;

`(v) establish requirements for setting the pay of a supervisory employee whose position is in a pay band or who supervises employees whose positions are in pay bands; and

`(vi) establish requirements and methodologies for setting the pay of an employee upon conversion to a broad-banded system, initial appointment, change of position or type of appointment (including promotion, demotion, transfer, reassignment, reinstatement, or placement in another pay band, or movement to a different geographic location), and movement between a broad-banded system and another pay system.

`(E) With the approval of the Office of Personnel Management and in accordance with a plan for implementation submitted by the Director, the Director may, with respect to the Office employees who are covered by a broad-banded system established under this section, provide for variations from the provisions of subchapter VI of chapter 53 of title 5.

`(f) GENERAL WORKFORCE STAFFING-

`(1) EVALUATING APPLICANTS- (A) Notwithstanding subchapter I of chapter 33 of title 5, the Office may establish category rating systems for evaluating applicants for Office positions in the competitive service under which qualified candidates are divided into 2 or more quality categories on the basis of relative degrees of merit, rather than assigned individual numerical ratings.

`(B) Each applicant who meets the minimum qualification requirements for the position to be filled shall be assigned to an appropriate category based on an evaluation of the applicant's knowledge, skills, and abilities relative to those needed for successful performance in the position to be filled.

`(C) Within each quality category established under subparagraph (A), preference eligibles shall be listed ahead of individuals who are not preference eligibles. For other than scientific and professional positions at or higher than GS-9 (or equivalent), preference eligibles who have a compensable service-connected disability of 10 percent or more, and who meet the minimum qualification standards, shall be listed in the highest quality category.

`(D) An appointing authority may select any applicant from the highest quality category or, if fewer than 3 candidates have been assigned to the highest quality category, from a merged category consisting of the highest and second highest categories.

`(E) Notwithstanding subparagraph (D), the appointing authority may not pass over a preference eligible in the same or higher category from which selection is made unless the requirements of section 3317(b) or 3318(b) of title 5, United States Code, as applicable, are satisfied.

`(2) DETAILING OF EMPLOYEES- The Director may detail employees among the offices of the Office without regard to the 120-day limitation in section 3341(b) of title 5.

`(3) PROBATIONARY PERIODS- Notwithstanding any other provision of law, the Office may establish a probationary period under section 3321 of title 5 of up to 3 years for Office positions if the Director determines that the nature of the work is such that a shorter period is insufficient to demonstrate complete proficiency in the position.

`(4) PRECEDENCE OF PRESIDENTIAL AND COURT ORDERS- Nothing in this section exempts the Office from--

`(A) any employment priority established under direction of the President for the placement of surplus or displaced employees; or

`(B) any obligation under a court order or decree relating to the employment practices of the Office or the Department of Commerce.

`(g) STREAMLINED DEMONSTRATION PROJECT AUTHORITY-

`(1) DEMONSTRATION PROJECT AUTHORITY- The exercise of any of the authorities under this section shall not affect the authority of the Office to implement a demonstration project subject to chapter 47 of title 5, as provided in paragraph (2).

`(2) APPLICABILITY OF TITLE 5- In applying section 4703 of title 5 to a demonstration project described in section 4701(a)(4) of title 5 which involves the Office--

`(A) section 4703(b)(1) shall be deemed to read

`(1) develop a plan for such project which describes its purpose, the employees to be covered, the project itself, its anticipated outcomes, and the method of evaluating the project;';

`(B) section 4703(b)(3) shall not apply;

`(C) the 180-day notification period in section 4703(b)(4) shall be deemed to be a notification period of 30 days;

`(D) section 4703(b)(6) shall be deemed to read

`(6) provide each House of Congress with the final version of the plan.';

`(E) section 4703(c)(1) shall be deemed to read

`(1) subchapter V of chapter 63 or subpart G of part III of this title;';

`(F) the requirements of paragraphs (1)(A) and (2) of section 4703(d) shall not apply; and

`(G) notwithstanding section 4703(d)(1)(B), based on an evaluation as provided in section 4703(h), the Office of Personnel Management and the Director, except as otherwise provided by this subsection, may waive the termination date of a demonstration project under section 4703(d).

`(3) NOTICE OF INTENT TO WAIVE TERMINATION DATE- At least 90 days before waiving the termination date under paragraph (2)(G), the Office of Personnel Management shall publish in the Federal Register a notice of its intention to waive the termination date and shall inform in writing both Houses of Congress of its intention.'.

SEC. 615. PUBLIC ADVISORY COMMITTEES.

Chapter 1 of part I of title 35, United States Code, is amended by inserting after section 4 the following:

`Sec. 5. Patent and Trademark Office Public Advisory Committees

`(a) ESTABLISHMENT OF PUBLIC ADVISORY COMMITTEES-

`(1) APPOINTMENT- The United States Patent and Trademark Office shall have a Patent Public Advisory Committee and a Trademark Public Advisory Committee, each of which shall have 9 voting members who shall be appointed by the Secretary of Commerce and serve at the pleasure of the Secretary of Commerce. Members of each Public Advisory Committee shall be appointed for a term of 3 years, except that of the members first appointed, 3 shall be appointed for a term of 1 year, and 3 shall be appointed for a term of 2 years. In making appointments to each Committee, the Secretary of Commerce shall consider the risk of loss of competitive advantage in international commerce or other harm to United States companies as a result of such appointments.

`(2) CHAIR- The Secretary shall designate a chair of each Advisory Committee, whose term as chair shall be for 3 years.

`(3) TIMING OF APPOINTMENTS- Initial appointments to each Advisory Committee shall be made within 3 months after the effective date of the Patent and Trademark Office Efficiency Act. Vacancies shall be filled within 3 months after they occur.

`(b) BASIS FOR APPOINTMENTS- Members of each Advisory Committee--

`(1) shall be citizens of the United States who shall be chosen so as to represent the interests of diverse users of the Patent and Trademark Office with respect to patents, in the case of the Patent Public Advisory Committee, and with respect to trademarks, in the case of the Trademark Public Advisory Committee;

`(2) shall include members who represent small and large entity applicants located in the United States in proportion to the number of applications filed by such members, but in no case shall members who represent small entity patent applicants, including small business concerns, independent inventors, and nonprofit organizations, constitute less than 25 percent of the members of the Patent Public Advisory Committee; and

`(3) shall include individuals with substantial background and achievement in finance, management, labor relations, science, technology, and office automation.

In addition to the voting members, each Advisory Committee shall include a representative of each labor organization recognized by the Patent and Trademark Office. Such

representatives shall be nonvoting members of the Advisory Committee to which they are appointed.

`(c) MEETINGS- Each Advisory Committee shall meet at the call of the chair to consider an agenda set by the Chair.

`(d) DUTIES- Each Advisory Committee shall--

`(1) review the policies, goals, performance, budget, and user fees of the Patent and Trademark Office with respect to patents, in the case of the Patent Public Advisory Committee, and with respect to Trademarks, in the case of the Trademark Public Advisory Committee, and advise the Director on these matters;

`(2) within 60 days after the end of each fiscal year--

`(A) prepare an annual report on the matters referred to in paragraph (1);

`(B) transmit the report to the Secretary of Commerce, the President, and the Committees on the Judiciary of the Senate and the House of Representatives; and

`(C) publish the report in the Official Gazette of the Patent and Trademark Office.

`(e) COMPENSATION- Each member of each Advisory Committee shall be compensated for each day (including travel time) during which such member is attending meetings or conferences of that Advisory Committee or otherwise engaged in the business of that Advisory Committee, at the rate which is the daily equivalent of the annual rate of basic pay in effect for level III of the Executive Schedule under section 5314 of title 5. While away from such member's home or regular place of business such member shall be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5.

`(f) ACCESS TO INFORMATION- Members of each Advisory Committee shall be provided access to records and information in the Patent and Trademark Office, except for personnel or other privileged information and information concerning patent applications required to be kept in confidence by section 122.

`(g) APPLICABILITY OF CERTAIN ETHICS LAWS- Members of each Advisory Committee shall be special Government employees within the meaning of section 202 of title 18.

`(h) INAPPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to each Advisory Committee.

`(i) OPEN MEETINGS- The meetings of each Advisory Committee shall be open to the public, except that each Advisory Committee may by majority vote meet in executive session when considering personnel or other confidential information.'.

SEC. 616. PATENT AND TRADEMARK OFFICE FUNDING.

Section 42(c) of title 35, United States Code, is amended in the second sentence--

(1) by striking `Fees available' and inserting `All fees available'; and

(2) by striking `may' and inserting `shall'.

SEC. 617. CONFORMING AMENDMENTS.

(a) DUTIES- Chapter 1 of title 35, United States Code, is amended by striking section 6.

(b) REGULATIONS FOR AGENTS AND ATTORNEYS- Section 31 of title 35, United States Code, and the item relating to such section in the table of sections for chapter 3 of title 35, United States Code, are repealed.

SEC. 618. TRADEMARK TRIAL AND APPEAL BOARD.

Section 17 of the Act of July 5, 1946 (commonly referred to as the `Trademark Act of 1946') (15 U.S.C. 1067) is amended to read as follows:

`SEC. 17. (a) In every case of interference, opposition to registration, application to register as a lawful concurrent user, or application to cancel the registration of a mark, the Director shall give notice to all parties and shall direct a Trademark Trial and Appeal Board to determine and decide the respective rights of registration.

`(b) The Trademark Trial and Appeal Board shall include the Director, the Commissioner for Patents, the Commissioner for Trademarks, and administrative trademark judges who are appointed by the Director.'.

SEC. 619. BOARD OF PATENT APPEALS AND INTERFERENCES.

Chapter 1 of title 35, United States Code, is amended--

(1) by striking section 7 and redesignating sections 8 through 14 as sections 7 through 13, respectively; and

(2) by inserting after section 5 the following:

`Sec. 6. Board of Patent Appeals and Interferences

`(a) ESTABLISHMENT AND COMPOSITION- There shall be in the United States Patent and Trademark Office a Board of Patent Appeals and Interferences. The Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Board. The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Director.

`(b) DUTIES- The Board of Patent Appeals and Interferences shall, on written appeal of an applicant, review adverse decisions of examiners upon applications for patents and shall determine priority and patentability of invention in interferences declared under section 135(a). Each appeal and interference shall be heard by at least 3 members of the Board, who shall be designated by the Director. Only the Board of Patent Appeals and Interferences may grant rehearings.'.

SEC. 620. ANNUAL REPORT OF DIRECTOR.

Section 13 of title 35, United States Code, as redesignated by section 617 of this Act, is amended to read as follows:

`Sec. 13. Annual report to Congress

`The Director shall report to the Congress, not later than 180 days after the end of each fiscal year, the moneys received and expended by the Office, the purposes for which the moneys were spent, the quality and quantity of the work of the Office, the nature of training provided to examiners, the evaluation of the Director by the Secretary of Commerce, the Director's compensation, and other information relating to the Office.'.

SEC. 621. SUSPENSION OR EXCLUSION FROM PRACTICE.

Section 32 of title 35, United States Code, is amended by inserting before the last sentence the following: `The Director shall have the discretion to designate any attorney who is an officer or employee of the United States

Patent and Trademark Office to conduct the hearing required by this section.'.

SEC. 622. PAY OF DIRECTOR.

Section 5314 of title 5, United States Code, is amended by striking

`Assistant Secretary of Commerce and Commissioner of Patents and Trademarks.'

and inserting

`Under Secretary of Commerce and Director of the United States Patent and Trademark Office.'.

Subtitle B--Effective Date; Technical Amendments

SEC. 631. EFFECTIVE DATE.

This title and the amendments made by this title shall take effect 4 months after the date of the enactment of this Act.

SEC. 632. TECHNICAL AND CONFORMING AMENDMENTS.

(a) AMENDMENTS TO TITLE 35-

(1) The item relating to part I in the table of parts for chapter 35, United States Code, is amended to read as follows:

1'.

(2) The heading for part I of title 35, United States Code, is amended to read as follows:

`PART I--UNITED STATES PATENT AND TRADEMARK OFFICE'.

(3) The table of chapters for part I of title 35, United States Code, is amended by amending the item relating to chapter 1 to read as follows:

1'.

(4) The table of sections for chapter 1 of title 35, United States Code, is amended to read as follows:

`CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS

`Sec.

`1. Establishment.

`2. Powers and duties.

`3. Officers and employees.

`4. Restrictions on officers and employees as to interest in patents.

`5. Patent and Trademark Office Public Advisory Committee.

`6. Board of Patent Appeals and Interferences.

`7. Library.

`8. Classification of patents.

`9. Certified copies of records.

`10. Publications.

`11. Exchange of copies of patents with foreign countries.

`12. Copies of patents for public libraries.

`13. Annual report to Congress.'.

(5) Section 41(h) of title 35, United States Code, is amended by striking `Commissioner of Patents and Trademarks' and inserting `Director'.

(6) Section 155 of title 35, United States Code, is amended by striking `Commissioner of Patents and Trademarks' and inserting `Director'.

(7) Section 155A(c) of title 35, United States Code, is amended by striking `Commissioner of Patents and Trademarks' and inserting `Director'.

(8) Section 302 of title 35, United States Code, is amended by striking `Commissioner of Patents' and inserting `Director'.

(9) Section 303(b) of title 35, United States Code, is amended by striking `Commissioner's' and inserting `Director's'.

(10)(A) Except as provided in subparagraph (B), title 35, United States Code, is amended by striking `Commissioner' each place it appears and inserting `Director'.

(B) Chapter 17 of title 35, United States Code, is amended by striking `Commissioner' each place it appears and inserting `Commissioner of Patents'.

(11) Section 41(a)(8)(A) of title 35, United States Code, is amended by striking `On' and inserting `on'.

(12) Section 157(d) of title 35, United States Code, is amended by striking `Secretary of Commerce' and inserting `Director'.

(13) Section 181 of title 35, United States Code, is amended in the third paragraph by striking `Secretary of Commerce under rules prescribed by him' and inserting `Director under rules prescribed by the Patent and Trademark Office'.

(14) Section 188 of title 35, United States Code, is amended by striking `Secretary of Commerce' and inserting `Patent and Trademark Office'.

(15) Section 202(a) of title 35, United States Code, is amended--

(A) by striking `iv)' and inserting `(iv)'; and

(B) by striking the second period after `Department of Energy' at the end of the first sentence.

(b) OTHER PROVISIONS OF LAW-

(1)(A) Section 45 of the Act of July 5, 1946 (commonly referred to as the `Trademark Act of 1946'; 15 U.S.C. 1127), is amended by striking `The term `Commissioner' means the Commissioner of Patents and Trademarks.' and inserting `The term `Director' means the Director of the United States Patent and Trademark Office.'.

(B) The Act of July 5, 1946 (commonly referred to as the `Trademark Act of 1946'; 15 U.S.C. 1051 and following), except for section 17, as amended by section 116 of this Act, is amended by striking `Commissioner' each place it appears and inserting `Director'.

(2) Section 500(e) of title 5, United States Code, is amended by striking `Patent Office' and inserting `United States Patent and Trademark Office'.

(3) Section 5102(c)(23) of title 5, United States Code, is amended to read as follows:

`(23) administrative patent judges and designated administrative patent judges in the United States Patent and Trademark Office;'.

(4) Section 5316 of title 5, United States Code (5 U.S.C. 5316) is amended by striking `Commissioner of Patents, Department of Commerce.', `Deputy Commissioner of Patents and Trademarks.', `Assistant Commissioner for Patents.', and `Assistant Commissioner for Trademarks.'.

(5) Section 9(p)(1)(B) of the Small Business Act (15 U.S.C. 638(p)(1)(B)) is amended to read as follows:

`(B) the Director of the United States Patent and Trademark Office; and'.

(6) Section 12 of the Act of February 14, 1903 (15 U.S.C. 1511) is amended by striking `(d) PATENT AND TRADEMARK OFFICE;' and redesignating

subsections (a) through (g) as paragraphs (1) through (6), respectively.

(7) Section 19 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831r) is amended--

(A) by striking `Patent Office of the United States' and inserting `United States Patent and Trademark Office'; and

(B) by striking `Commissioner of Patents' and inserting `Director of the United States Patent and Trademark Office'.

(8) Section 182(b)(2)(A) of the Trade Act of 1974 (19 U.S.C. 2242(b)(2)(A)) is amended by striking `Commissioner of Patents and Trademarks' and inserting `Director of the United States Patent and Trademark Office'.

(9) Section 302(b)(2)(D) of the Trade Act of 1974 (19 U.S.C. 2412(b)(2)(D)) is amended by striking `Commissioner of Patents and Trademarks' and inserting `Director of the United States Patent and Trademark Office'.

(10) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C.