[Congressional Record Volume 141, Number 130 (Saturday, August 5, 1995)]
[Extensions of Remarks]
[Page E1680]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


             THE PRIOR DOMESTIC COMMERCIAL USE ACT OF 1995

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                        HON. CARLOS J. MOORHEAD

                             of california

                    in the house of representatives

                         Friday, August 4, 1995
  Mr. MOORHEAD. Mr. Speaker, I introduce the Prior Domestic Commercial 
Use Act of 1995. It is the product of many months of hard work and 
represents a compromise that I believe will be acceptable to all 
interested parties.
  This bill is about patents. It is about inventions that have already 
been in commercial use and benefiting the public before another 
inventor comes later and applies for a patent.
  Normally inventions already in use are what is called prior art and 
in most circumstances issuing from subsequent applications on such 
prior art will be found invalid. A problem arises, however, where the 
invention is not publicly known and where the process of 
commercialization did not reveal the invention itself to the public. 
These situations can occur, for example, when the invention is part of 
a manufacturing process used to make a commercial product or software 
used to control such a process. For such cases, there is no statutory 
or case law that makes clear what should happen if the holder of such a 
patent sues the earlier practioner for infringement. Is the patent 
enforceable against the earlier practitioner? Some attorneys predict 
the patentee will prevail because the invention was not publicly 
disclosed. Other predict the patent will be found unenforceable against 
the earlier practitioner.
  At present the court's only option is a finding of either 
infringement or invalidation. One party must lose everything. Yet in 
these circumstances, each party has created some public benefit; the 
first by bringing the fruits of the invention to the public, the second 
by disclosing the invention to the public. Fairness suggests that 
neither party deserves to lose everything. Thus present law confronts 
us with a quandary. It provides only for a ``winner take all'' outcome 
and it does not make clear who the winner should be.
  Earlier attempts to resolve this issue have met with opposition from 
those who believe that inventors have an obligation to disclose or 
patent every innovation. For inventors who fail to do so, these 
opponents presumably believe that their inventions should be taken away 
from them by others who come along later and file patents on the same 
material.
  Mr. Speaker, anyone who has worked in industry or built a 
manufacturing business knows that there are any number of reasons why 
one might not secure a patent one very invention. Once issued, an 
American patent tells the whole world how to copy the invention. 
Manufacturers fear that inventions relating to internal processes
 are almost impossible to police and protect in many other countries. 
Then too, small investors may be unable to afford the costs of 
obtaining even a U.S. patent on every invention, much less world wide 
protection. It is also true that in many cases, the inventor does not 
realize that what seemed like just an innovation was indeed a 
patentable invention. In any case, a serious problem arises when a 
later inventor, and that later inventor need not be an American, comes 
along and independently inverts the same process, tool, or software 
that the earlier innovator has been using. This later inventor can 
apply for a U.S. patent. If the earlier innovator did not publish the 
innovation, the Patent Office may not know of it and the later inventor 
might actually receive a patent on the innovation. This situation gives 
rise to the question of whether or not that patent is or ought to be 
valid and whether or not it may be enforced against the earlier 
innovator.

  We also should not assume that all of these later inventors have been 
operating in good faith. In these days of growing industrial espionage, 
it is possible that the later inventor simply patented the product or 
process by means of reverse engineering or by looking through a factory 
window. I have seen U.S. patents issued to foreign companies who appear 
to have reverse engineered American products and patented the method of 
manufacture. The law in those companies' home countries prevents them 
from enforcing such patents in their own land. The bill I am 
introducing today will ensure that American industry has the same 
protection.
  Opponents of earlier legislation have feared that any law recognizing 
unpublished earlier use would be misused and weaken legitimate patents 
issued to persons who are undisputed first inventors. The university 
community was particularly concerned that such a law might impair their 
opportunity to license their inventions. This bill introduced today has 
been carefully crafted to prevent such an outcome. As a result of its 
limitations, this bill will not affect the vast majority of patents. 
The only patents that will be affected are those patents written on 
internal software, processes, or tools which were already being used by 
others for public benefit. For those questionable patents, this bill 
promotes sound public policy by recognizing the public contribution 
made by both parties.
  By providing a specific defense for this limited class of inventions, 
this bill will make long and expensive infringement or invalidation 
litigation unnecessary. Moreover, some very strict limitations must be 
met before the defense can be used. First, the earlier use of the 
invention must have been commercial and the public must have benefited 
from that commercial use. Simply making an invention and even reducing 
it to practice are insufficient grounds for the defense. Second, the 
commercial use and public benefit must have occurred more than one year 
prior to the priority date of the patent. Third, the defense will not 
be available where the commercial use has been terminated and 
abandoned. Forth, the patentee or the patentee's work must not have 
been the source of the user's technology. Fifth, the commercial use 
must have occurred on American soil. Sixth, the defense is not a 
license under the patent nor is it a defense against the entire patent. 
It is a defense only for the subject matter that can be proved to have 
been used commercially before the filing date. Seventh, the burden of 
proof falls entirely on the prior commercial user. Eighth, the defense 
is personal, it cannot be transferred to another. Finally, sanctions 
are provided to discourage a frivolous defense.
  This bill will create for American manufacturers the same protection 
that their overseas competitors already have. It is a domestic bill 
that removes some of the incentives now enjoyed by offshore 
manufacturing. In addition, considerations of fairness, public policy, 
and the need to make America more competitive in the international 
economy all strongly support this legislation.
  Mr. Speaker, I am hopeful that all concerns about this legislation 
have been resolved and that this bill can become enacted this year.


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