This report amends bill H.R. 400; includes patent & trademark office modernization, such as its powers & duties, organization & management, Trademark Trial & Appeal Board, Board of Patent Appeals & Interferences, suits by & against the Office, suspension or exclusion from practice, funding, & extension of surcharges on patent fees; examining procedure improvements; publication with provisional royalties; term extensions; further examination of patents; protection for prior domestic users of patented technologies; enhanced protection of inventors' rights; improved reexamination procedures; provisional, international & divisional applications, plant patents, & electronic filing.

The U.S. patent system is in an accelerating race with human ingenuity and investments in innovation. In many respects the system has responded with admirable flexibility, but the strain of continual technological change and the greater importance ascribed to patents in a knowledge economy are exposing weaknesses including questionable patent quality, rising transaction costs, impediments to the dissemination of information through patents, and international inconsistencies. A panel including a mix of legal expertise, economists, technologists, and university and corporate officials recommends significant changes in the way the patent system operates. A Patent System for the 21st Century urges creation of a mechanism for post-grant challenges to newly issued patents, reinvigoration of the non-obviousness standard to quality for a patent, strengthening of the U.S. Patent and Trademark Office, simplified and less costly litigation, harmonization of the U.S., European, and Japanese examination process, and protection of some research from patent infringement liability.