Wireless Recognition Technologies LLC v. A9.com, Inc. et al

Filing 115

REPLY to Response to Motion re 104 Cross MOTION to Sever Pursuant to Rules 20 and 21 of the Federal Rules of Civil Procedure filed by A9.com, Inc., Amazon.com, Inc., Google, Inc.,, Nokia, Inc., Ricoh Innovations, Inc.. (Attachments: # 1 Exhibit C, # 2 Exhibit J)(Smith, Michael)

EXHIBIT C

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112TH CONGRESS}
{ REPT. 112-98
1st Session
HOUSE OF REPRESENTATIVES
Part 1

AMERICA INVENTS ACT

JUNE

I, 2011.-Committed to the Committee of the Whole House on the State of
the Union and ordered to be printed

Mr. SMITH of Texas, from the Committee on the Judiciary,
submitted the following

REPORT
together with
DISSENTING VIEWS AND ADDITIONAL VIEWS
[To accompany H.R. 1249)
[Including cost estimate of the Congressional Budget Office)

The Committee on the Judiciary, to whom was referred the bill
(H.R. 1249) to amend title 35, United States Code, to provide for

patent reform, having considered the same, reports favorably thereon with an amendment and recommends that the bill as amended
do pass.
CONTENTS
P.go

The Amendment ..................................................................................................... .
Purpose and Summary ........................................................................................... .
Background and Need for the Legislation ............................................................ .
Hearings .................................................................................................................. .
Committee Consideration ....................................................................................... .
Committee Votes ..................................................................................................... .
Committee Oversight Findings .............................................................................. .
New Budget Authority and Tax Expenditures ..................................................... .
Congressional Budget Office Cost Estimate ........................................................ ..
Performance Goals and Objectives ....................................................................... ..
Advisory on Earmarks ........................................................................................... ..
Section·by·Section Analysis .................................................................................. ..

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~~di~i:~~f ~ii:::
99-006

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1
38

40
57

58
58
63
63
63
73
73
73

85
89
162
163

33
"(2) may, under the circumstances specified in section 1367(c), remand any
claims within the supplemental jurisdiction of the district court under section
1367.".
(2) CONFORMING AMEND!.IENT.-The table of sections for chapter 89 of title
28, United States Code, is amended by adding at the end the following new
item:
·1.54. Palen!, plant variety protection. and copyright .........

(d) TRANSFER BY COURT OF ,ApPEALS FOR THE FEDEllAL CIRCUlT.(I) IN GENERAL.-Chapter 99 of title 28, United States Code, is amended
by adding at the end the following new section:
"§ 1632. Transrer by the Court of Appeals ror the Federal Circuit
"When a case is appealed to the Court of Appeals for the Federal Circuit under
section 1295(a)(1), and no claim for relief arising under any Act of Congress relating
to patents or plant variety protection is the subject of the appeal br any party, the
Court of Appeals for the Federal Circuit shall transfer the appea to the court of
appeals for the regional circuit embracing the district from which the appeal has
been taken ....
(2) CONFORMING Al\IENDMENT.-The table of sections for chapter 99 of title
28, United States Code, is amended by adding at the end the following new
item:
·1632. Tranafor by the CClurt of Appoals for the Federal Circuit·
(e) PROCEDURAL MA'M'ERS IN PATENT CASES.(1) JOINDER OF PARTIES AND STAY OF ACTIONS.-Chapter 29 of title 35,
United States Code, as amended by this Act, is further amended by adding at
the end the following new section:
"§ 299. Joinder or parties
"(a) JOINDER OF ACCUSED INFRINGERS.-In any civil action arising under any
Act of Congress relating to patents, other than on action or trial in which an act
of inCringement under section 271(eX2) has been pled, porties that are accused in·
Cringers may be joined in one oction as deCendonts or counterc\oim defendants only
iC-

"(1) any right to relief is asserted a~ainst the parties jointly, severally, or
in the alternative with respect to or arising out oC the same transaction, occur·
renee, or series oC transactions or occurrences relating to the making, using, im·
porting into the United States, olTering for sale, or selling of the same accused
product or process; and
"(2) questions of fact common to all defendonts or counterclaim defendonts
will arise in the action.
"(b) ALLEGATIONS INSUFFICIENT FOR JOINDER.-For purposes of this subsection,
accused infringers may not be joined in one action or trial as defendants or counter·
claim defendants based solely on allegations thot they each hove infringed the pat·
ent or potents in suit....
(2) CONFORMING A.\IEND!.IENT.-The table of sections for chapter 29 of title
35, United Stotes Code, as amended by this Act, is Curther amended by adding
at the end the following new item:

"299. Joinder of parU••. •.

(e) En'ECTIVE DATE.-The amendments made by this section shall apply to any
civil action commenced on or after the date of the enactment oC this Act.
SEC. 20. TECIINICAL AMENDMENTS.

(a) JOINT INVENTIONS.-Section 116 of title 35, United States Code, is amend·
ed(1) in the first undesignated paragraph, by striking "When" and insert·
ing "(a) JOINT INVENTIONS.-When";
(2) in the second un designated paragraph, br striking "If a joint inven·
tor" and inserting "(b) Oltfl'M'ED INVENTOR.-If a Joint inventor"; and
(3) in the third undesignated parogroph(A) by striking "Whenever" ond inserting "(c) CORRECTION OF ER·
RORS IN ApPLlCATION.-Whenever"; and
(B) by striking "and such error arose without any deceptive inten·
tion on his part,".
(b) FH.ING Ot' ApPLICATION IN FOREIGN COUNTRY.-Section 184 of title 35.
United States Code, is amended(1) in the first undesignated paragraph(A) by striking "Except when" lind inserting "(a) FILING IN FOIlEIGN
COUNTRY.-Except when"; and
(8) by striking "and without deceptive intent";

54

Transitional program for covered business method patents
A number of patent observers believe the issuance of poor business-method patents during the late 1990's through the early
2000's led to the patent ''troll'' lawsuits that compelled the Committee to launch the patent reform project 6 years ago. At the time,
the USPTO lacked a sufficient number of examiners with expertise
in the relevant art area. Compounding this problem, there was a
dearth of available prior art to assist examiners as they reviewed
business method applications. Critics also note that most countries
do not grant patents for business methods.
The Act responds to the problem by creating a transitional program 1 year after enactment of the bill to implement a provisional
post-grant proceeding for review of the validity of any business
method patent. In contrast to the era of the late 1990's-early
2000's, examiners will review the best prior art available. A petition to initiate a review will not be granted unless the petitioner
is first sued for infringement or is accused of infringement. The
program otherwise generally functions on the same terms as other
post-grant proceedings initiated pursuant to the bill. Any party
may request a stay of a civil action if a related post-grant proceeding is granted. The program sunsets after 10 years, which ensures that patent holders cannot delay filing a lawsuit over a shorter time period to avoid reevaluation under the transitional program.
Jurisdictional and procedural matters
a) State court jurisdiction and the US Court of Appeals for
the Federal Circuit
The US district courts area given original jurisdiction to hear
patent cases,57 while the US Court of Appeals for the Federal Circuit adjudicates all patent appeals. 58 The Supreme Court ruled in
2002,59 however, that patent counterclaims do not give the Federal
Circuit appellate jurisdiction over a case.
The Act clarifies the jurisdiction of the US district courts and
stipulates that the US Court of Appeals for the Federal Circuit has
jurisdiction over appeals involving compulsory patent counterclaims. The legislative history of this provision, which we reaffirm
and adopt as our own, appears in the Committee Report accompanying H.R. 2955 from the 109th Congress,SO which the Committee reported favorably to the House on April 5, 2006.
b) Joinder
The Act also addresses problems occasioned by the joinder of defendants (sometimes numbering in the dozens) who have tenuous
connections to the underlying disputes in patent infringement
suits.
The Act amends chapter 29 of the Patent Act by creating a new
§ 299 that addresses joinder under Rule 20 and consolidation of
trials under Rule 42. Pursuant to the provision, parties who are accused infringers in most patent suits may be joined as defendants
07

28

usc U33S.
usc § 1295.

58 28
t.9 Halmt!8
60 H. Rep.

Group, Inc.,
109--405.

II.

Varnado Air Circulation Systems. Inc. 535 U.S. 826 (2002).

55

or counterclaim defendants only if: (l) relief is asserted against the
parties, jointly, severally, or in the alternative, arising out of the
same transaction regarding the manufacture, use, or importation of
the accused product or process; and (2) questions of fact common
to all of the defendants will arise in the action. New § 299 also
clarifies that joinder will not be available if it based solely on allegations that a defendant has infringed the patent(s) in question. 61
Technical amendments
The Act contains technical amendments to improve the organization of the patent statute.
Travel expenses and payment of administrative judges
The USPTO Director is authorized to conduct programs or exchanges pertaining to intellectual property law and protection "domestically and throughout the world.' The House bill clarifies that
this authority includes expending funds to cover the subsistence
and travel expenses of non-Federal employees who attend these
programs.
The House bill also clarifies that the Director may fix the pay for
administrative ):latent judges and administrative trademark judges
under the new Patent Trial and Appeal Board set forth in Section
6 of the bill.
Patent and Trademark Office funding
The USPTO is a fee-funded agency. The revenue it collects from
fees imposed on inventors and trademark filers is deposited in a
special USPTO appropriations account in the Treasury. To obtain
funding for its operations, the agency must request the revenue
back from congressional appropriators. Since the early 1990's, however, more than $800 million has been diverted from the agency
and spent on non-USPTO initiatives.
The Committee believes the USPTO could operate more efficiently and productively if the agenc>, had full access to all of its
fee-generated revenue. The House bill therefore creates a USPTO
revolving fund within the Treasury that allows the agency to keep
all of the funds it raises until expended.
The provision also requires the Director to submit an annual
spending plan as well as an annual year-end report to the House
and Senate Appropriations and Judiciary Committees.
Satellite offices
The USPTO is conducting a pilot to create and operate a new
satellite office located in Detroit. The bill requires the Director to
establish three other satellite offices within a 3-year window, subject to available resources. The legislation includes criteria that
must be invoked when selecting the new sites.
61 Sec~on 299 .Iegislatively abrogates the construction of Rule 20\a) adopted i,?- Af~!tIai/. Ltd.
II. AnurlCO Onlme. Inc .• 223 F.R.D. 455 (E.D. Tex. 2004); Spnnt CommunicatIOns Co. II.
Theglobe.com. Inc. 233 F.R.D. 615 (D. Kan. 2006); Adrain II. Genetec Inc .• 2009 WL3063414
(E.D. Tex. September 22. 2009); Better Educ. Inc. v. Ein.lruclion Corp .• 2010 WL 918307 (E.D.
Tex. March 10. 2010); Mannatech. Inc. II. Counlry Life. LLC. 2010 WL 2944574 (N.D. Tex. July
26. 2010); Alford SafelY Serllices. Inc.• II. Hot·Hed. Inc .• 2010 WL 3418233 (E.D. La. August 24.
2010); and Eo/os Technologies. Inc. II. Adobe Systems. Inc .• 2010 WL 3835762 (E.D. Tex. Sep·

tember 28. 2010l-efTectively conforming these courts' jurisprudence to that fellowed by II major·
ity of jurisdictions. See generally Rudd II. Lux Product. Corp .• 2011 WL 148052 (N.D. III. JBnU·
IIry 12. 2011).