[Congressional Record Volume 142, Number 142 (Friday, October 4, 1996)]
[Extensions of Remarks]
[Page E1925]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       PATENT HOLDER COMPENSATION

                                 ______
                                 

                           HON. MARTIN FROST

                                of texas

                    in the house of representatives

                        Friday, October 4, 1996

  Mr. FROST. Mr. Speaker, I am pleased that the provision of the bill 
that I had introduced and that the House passed last year--H.R. 632--
has finally also been passed and returned to the House by the other 
body. At long last, small investors will be guaranteed fair, 
reasonable, and entire compensation when they are required to defend 
their patents rights when appropriated by the Government.
  When the bill was pending in the other body, we received some 
questions whether the legislation was intended actually to provide full 
coverage of costs as it states, or whether some cap on costs might 
appropriately be added by the Congress as has been done in some other 
contexts.
  The short answer is that the legislation means just what it says. It 
intends that all costs are to be reimbursed, with the only limitation 
being reasonableness, and the determination of reasonableness by a 
court is to be realistic, not miserly. If the patent holder's actual 
costs are within the realm of reason under the circumstance, they are 
to be fully compensated.
  A patent holder whose invention is taken by the Government can obtain 
compensation only by bringing a case in the Court of Federal Claims 
under Section 1498 (a) of Title 28, United States Code. A case brought 
under that Section differs substantially not only from the usual cases 
brought in Federal courts, but also from other eminent domain cases. 
There is no procedure for an offer by the Government to be submitted to 
a patent holder for its taking of his patent rights. There is no 
administrative or other simple procedure for resolution of differences 
and settlement. There is no prominent single-issue such as valuation as 
in real estate condemnation cases, but instead a series of issues of 
unusual complexity. The patent holder must initiate a lawsuit, and must 
marshall professional assistance capable of establishing the validity 
of the patent, the infringement of the patent, and the proper valuation 
of the damages stemming from the infringement. Such lawsuits are 
exceedingly difficult and time-consuming to prepare and present to the 
court. They require extensive review, research, analysis, and 
presentation by capable professionals in the fields of law, 
engineering, science, accounting, and licensing. The time of such 
professionals is not inexpensive. Yet a patent holder has no choice but 
to engage such competent assistance, and to incur such costs, if he is 
to defend his patent right against the Government's taking.
  It is our intent and our expectation that the court bear in mind 
these unique characteristics of Section 1498(a) lawsuits in the course 
of judging the reasonableness of the patent owner's costs during the 
investigation, preparation, liability, and accounting phases of such a 
case. It is also our intent and expectation that the court base its 
determination on a realistic view not only of the kinds of costs that 
it is reasonable to incur in such cases, but also of the reasonableness 
of the amounts of those costs. With respect to the kinds of costs that 
it would be reasonable to incur, apart from the costs of professional 
assistance, we have in mind such court costs as may be taxed under 
Section 1920 of 28 United States Code, as well as reasonable out-of-
pocket expenses charged to the patent owner by expert witnesses and 
attorneys for such items as computerized research, communications, 
travel, hotels, and meals. With regard to the reasonableness of the 
amounts to be reimbursed, we note that suits under section 1498(a) are 
not elective ones such as prompted the Congress in the past to impose 
arbitrary limits on attorney's fees as in 28 United States Code, 
Section 2412(d)(2)(A), and on expert witnesses fees as in 28 United 
States Code, Section 1821(b). Thus, the touchstone for the court is 
simply a realistic appraisal of what is reasonable under the 
circumstances. Certainly, when a small patent holder's economic 
survival may be threatened by the cost of responding to an unwelcome 
governmental taking, the concerned patent holder cannot be limited to 
bargain-basement professional assistance if he is to receive ``just'' 
compensation as required by the Constitution. In such a situation, as 
well as in less dire circumstances, the intended test of reasonableness 
of professional fees actually incurred by the patent holder is whether 
they are within the range commonly charged by competent professionals 
in the same locality, in cases of similar complexity and similar 
importance to the patent holder.
  In short, we intend that the Court of Federal Claims at last be 
empowered to do complete justice in such cases, and we believe that 
complete justice requires realism and practicality in the assessment of 
the reasonableness of the patent holder's costs.

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