[Congressional Record Volume 143, Number 30 (Tuesday, March 11, 1997)]
[Senate]
[Pages S2132-S2140]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LAUTENBERG:
  S. 421. A bill to amend title 35, United States Code, to establish 
the Patent and Trademark Office as a Government corporation, and for 
other purposes; to the Committee on the Judiciary.


               THE PATENT AND TRADEMARK OFFICE REFORM ACT

 Mr. LAUTENBERG. Mr. President, today I reintroduce the Patent 
and Trademark Office Reform Act, a bill to establish the Patent and 
Trademark Office as a Government corporation and to provide needed 
reforms to its operations. The handful of changes I have made from the 
legislation I sponsored in the last Congress are designed to provide 
assurance to the Office's users that their fees will only be applied 
toward Patent and Trademark Office purposes and additional protections 
to the Office's employees.
  Our country's Patent and Trademark Office is one of the finest in the 
world. It has been and continues to be integral to America's 
competitiveness and economic growth. It is no exaggeration to state 
that tens of millions of jobs have been created as a result of the 
PTO's actions. I have seen first-hand the benefits of this Office in my 
home State of New Jersey, which although it is the ninth most populated 
State in the Union, receives the third largest number of patents per 
capita. Despite the comparative quality of work of the current PTO, 
laws and regulations outside of the control of the PTO's management 
have prevented it from being as efficient as it should be, and as its 
users deserve. And unless remedied by legislation, certain 
circumstances that I will detail below will cause PTO's performance to 
decrease dramatically.
  The Patent and Trademark Office is currently subject to the same 
procurement and personnel requirements, including personnel ceilings, 
as other Federal agencies. While these requirements make sense and, 
indeed, are essential for other Government entities, they hinder the 
effectiveness of the PTO and are not appropriate for a completely user 
fee-funded agency. By converting the PTO into a Government corporation, 
we would free the Office from most of these laws and regulations, but 
would keep its inherently governmental function within the Federal 
Government and its work would be continued by federal employees.
  Mr. President, the new PTO will be a wholly owned Government 
corporation run by a commissioner and two assistants. They will report 
to the Secretary of Commerce on patent and trademark policy matters 
only. Like my bill from the last Congress, I have inserted a firewall 
to prevent the Commerce Department from interfering with internal 
management decisions of the Office, as opposed to policy decisions. My 
legislation establishes an Office of the Under Secretary for 
Intellectual Property within the Commerce Department. The Under 
Secretary will ensure both attention to intellectual property issues 
at the Cabinet level and a coordinated Government approach to these 
matters.

  The new PTO will be able to procure equipment, supplies, even office 
space without the constraints of the Brooks Act, the Public Buildings 
Act, and the Federal Property and Administrative Services Act. These 
changes are in response to criticism of undue procurement delays that 
have resulted in lower quality products at higher costs to the Office. 
My legislation would also permit PTO to lease, buy, or build office 
space that is more practical for PTO's needs. Currently, PTO is spread 
throughout over a dozen buildings, which is not only inconvenient for 
its employees, it's inefficient.

[[Page S2133]]

  Much of the work performed at the PTO requires specialized skills. 
Those skills are the main reason that the PTO's employees are so highly 
sought by the private sector. Limited by the general schedule and an 
overly structured employee classification system, the Office has been 
hindered in its ability to retain a large number of its workers. My 
legislation will enable the new PTO to provide its employees with 
competitive pay so that it might keep and hire top talent. The Office 
will no longer be subject to personnel ceilings, including those 
established in the Federal WorkForce Restructuring Act of 1994. There 
will also be a one-year carry-over of all PTO employees during the 
transition from the current PTO to the PTO as a Government corporation.
  One of the more significant differences between the bill I am 
introducing today and the one I sponsored last Congress involves 
personnel issues. Although both bills give the new PTO the flexibility 
to competitively compensate its employees, S. 421 permits collective 
bargaining over pay and other important terms and conditions of 
employment. This increased employee participation will provide an 
essential balance to needed managerial flexibility. I have also 
established a floor on basic pay for current PTO employees so that they 
will be assured of receiving no less then they do now after PTO becomes 
a Government corporation.
  Mr. President, this bill would give the users, who have fully funded 
the Office's operations since 1991, an advisory role over such matters 
as PTO's performance, fees, and budget. This advisory board will review 
and recommend changes to promote the Office's patent and trademark 
operations. This board will be comprised of 12 persons selected by the 
President and Congress who will serve for 4-year terms and who will 
meet at least quarterly. The Commissioner is required to consult with 
the board prior to changing or proposing to change fees or regulations. 
The board will submit an annual report containing its review of the 
Office to the President, the Commissioner, and Congress.
  In addition to the oversight of the Office's operations provided by 
the advisory board, I have included safeguards to ensure the new PTO 
remains accountable to Congress and its users. The new Office will have 
its own inspector general, who will be appointed by the President, to 
investigate waste, fraud, and abuse. The Office's annual financial 
statements will be audited by either an independent CPA or the 
Comptroller General, and the results of such audits shall be provided 
to Congress. Furthermore, the new PTO is required to submit annual 
management reports to Congress and business-like budgets to the 
President. These reports and budgets must include statements on cash 
flows, operations, financial position, and internal accounting and 
administrative control systems.
  Congress will continue to set the user fees for the new Office, and 
thus, control, to a large extent, the PTO's revenue stream. This should 
provide comfort to my colleagues and the PTO's users concerned that, 
with its new-found freedom, the Office will move into plush offices or 
pay its employees unwarranted sums. I realize the decision to keep the 
fee-setting authority with Congress is counter to most government 
corporations. Hopefully we can revisit this issue in a few years after 
we see how well the new PTO is performing.
  Mr. President, there is one last difference between S. 421 and the 
bill I introduced 2 years ago that I would like to discuss today and 
that involves the patent surcharge fee. When Congress created the 
patent surcharge fee in the Omnibus Budget Reconciliation Act of 1990, 
it was done to make the Office completely user fee funded, and 
therefore, to reduce the budget deficit. Although the surcharge, which 
amounted to an almost 70 percent increase in fees, was intended to be 
applied only to Patent and Trademark Office uses, Congress has diverted 
approximately $140 million over the past 6 fiscal years for unrelated 
purposes. Until this year, the administration has not advocated, nor 
even supported, such action. In the President's proposed budget for 
fiscal year 1998, however, over $90 million of the patent surcharge 
account will be applied for deficit reduction. In following fiscal 
years, the administration has proposed diverting all of the patent 
surcharge fees through 2002.
  As the ranking Democrat on the Budget Committee, I understand the 
strain on the administration and on this body to balance the budget. 
This is a goal supported by colleagues on both sides of the aisle. 
While I share the administration's budget priorities and commend the 
President for putting forth a budget that balances in 2002, I 
regretfully disagree with this component of his budget. Should this 
proposed diversion be enacted, the PTO would be prevented from hiring 
over 500 patent examiners this year, and patent pendency rates would 
double from the current 21 months to an estimated 42 months by 2003. 
The PTO projects that this delay will reduce PTO's revenues by 
over $400 million in lost issue and maintenance fees on top of the lost 
$570 million in surcharge fees. Not only will PTO suffer from this 
diversion, our economy will as well. Doubling the pendency times will 
slow the development of new technologies, hurt our productivity, and 
put us at a competitive disadvantage in the world marketplace.

  Mr. President, the legislation I introduced in the last Congress 
would have ended the patent surcharge fee in October 1, 1998. However, 
I am now convinced that the PTO needs the fees it should receive from 
the surcharge to make necessary hires and improvements to the Office's 
operations. Therefore, S. 421 continues the surcharge but reclassifies 
it as an ``offsetting collection'' like all other PTO user fees rather 
than an ``offsetting receipt.'' This modification to the 1990 OBRA 
would ensure that these fees are only applied toward PTO uses.
  Mr. President, although I might disagree with the administration on 
the surcharge diversion issue, the President and the Vice-President, in 
particular, deserve commendation for their support of reinventing the 
Patent and Trademark Office. The Vice President has been a tireless 
advocate on reforming Government and making it more responsive to the 
public. It is my understanding that the administration will soon send 
its own PTO reform legislation to Capitol Hill. The legislation I am 
introducing today is merely the starting point for discussion and I 
look forward to working with the administration to advance the concepts 
I have described above.
  I would also like to acknowledge the efforts of my colleagues and 
former colleagues in both Houses for their contributions on this issue. 
Unbeknownst to many Members, we came very close to enacting PTO 
government corporation legislation in the last Congress, largely due to 
the work of Senator Hatch and former Representatives Moorhead and 
Schroeder. I am pleased to note that Representative Moorhead's 
successor, Representative Coble, has continued the momentum and his 
Judiciary subcommittee favorably reported out a patent bill last week 
that contained a PTO government corporation section as well as 
protection against patent surcharge fee diversion.
  Mr. President, I hope my colleagues will support this bill, which 
will provide the means to improve the Patent and Trademark Office's 
operations and which will make the Office more accountable to its 
users. I ask unanimous consent that a copy of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 421

       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 ``Patent and Trademark Office 
     Reform Act''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

           TITLE I--UNITED STATES PATENT AND TRADEMARK OFFICE

Sec. 101. Establishment of Patent and Trademark Office as a Government 
              corporation.
Sec. 102. Powers and duties.
Sec. 103. Organization and management.
Sec. 104. Management Advisory Board.
Sec. 105. Conforming amendments.
Sec. 106. Trademark Trial and Appeal Board.
Sec. 107. Board of Patent Appeals and Interferences.
Sec. 108. Suits by and against the Office.

[[Page S2134]]

Sec. 109. Annual report of Commissioner.
Sec. 110. Suspension or exclusion from practice.
Sec. 111. Funding.
Sec. 112. Audits.
Sec. 113. Transfers.
Sec. 114. Nonapplicability of Federal workforce reductions.

             TITLE II--EFFECTIVE DATE; TECHNICAL AMENDMENTS

Sec. 201. Effective date.
Sec. 202. Technical and conforming amendments.

                  TITLE III--MISCELLANEOUS PROVISIONS

Sec. 301. References.
Sec. 302. Exercise of authorities.
Sec. 303. Savings provisions.
Sec. 304. Transfer of assets.
Sec. 305. Delegation and assignment.
Sec. 306. Authority of Director of the Office of Management and Budget 
              with respect to functions transferred.
Sec. 307. Certain vesting of functions considered transfers.
Sec. 308. Availability of existing funds.
Sec. 309. Definitions.

          TITLE IV--UNDER SECRETARY FOR INTELLECTUAL PROPERTY

Sec. 401. Under Secretary for Intellectual Property.
           TITLE I--UNITED STATES PATENT AND TRADEMARK OFFICE

     SEC. 101. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE AS A 
                   GOVERNMENT CORPORATION.

       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 a wholly owned Government 
     corporation subject to chapter 91 of title 31, separate from 
     any department of the United States, and shall be an agency 
     of the United States under the policy direction of the 
     Secretary of Commerce. For purposes of internal management, 
     the United States Patent and Trademark Office shall be a 
     corporate body not subject to direction or supervision by any 
     department of the United States, except as otherwise provided 
     in this title.
       ``(b) Offices.--The United States Patent and Trademark 
     Office shall maintain its principal office in the 
     metropolitan Washington, D.C. 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 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. 102. 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 shall be responsible for--
       ``(1) the granting and issuing of patents and the 
     registration of trademarks;
       ``(2) conducting studies, programs, or exchanges of items 
     or services regarding domestic and international law of 
     patents, trademarks, and related matters, the administration 
     of the Office, or any other function vested in the Office by 
     law, including programs to recognize, identify, assess, and 
     forecast the technology of patented inventions and their 
     utility to industry;
       ``(3) authorizing or conducting studies and programs 
     cooperatively with foreign patent and trademark offices and 
     international organizations, in connection with the granting 
     and issuing of patents and the registration of trademarks; 
     and
       ``(4) disseminating to the public information with respect 
     to patents and trademarks.
       ``(b) Specific Powers.--The Office--
       ``(1) shall have perpetual succession;
       ``(2) shall adopt and use a corporate seal, which shall be 
     judicially noticed and with which letters patent, 
     certificates of trademark registrations, and papers issued by 
     the Office shall be authenticated;
       ``(3) may sue and be sued in its corporate name and be 
     represented by its own attorneys in all judicial and 
     administrative proceedings, subject to the provisions of 
     section 7;
       ``(4) may indemnify the Commissioner, and other officers, 
     attorneys, agents, and employees (including members of the 
     Management Advisory Board established in section 5) of the 
     Office for liabilities and expenses incurred within the scope 
     of their employment;
       ``(5) may adopt, amend, and repeal bylaws, rules, 
     regulations, and determinations, which--
       ``(A) shall govern the manner in which its business will be 
     conducted and the powers granted to it by law will be 
     exercised;
       ``(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; and
       ``(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;
       ``(6) 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;
       ``(7)(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;
       ``(8) 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;
       ``(9) may obtain from the Administrator of General Services 
     such services as the Administrator is authorized to provide 
     to other agencies of the United States, on the same basis as 
     those services are provided to other agencies of the United 
     States;
       ``(10) when the Commissioner determines that it is 
     practicable, efficient, and cost-effective to do so, may 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;
       ``(11) may determine the character of and the necessity for 
     its obligations and expenditures and the manner in which they 
     shall be incurred, allowed, and paid, subject to the 
     provisions of this title and the Act of July 5, 1946 
     (commonly referred to as the `Trademark Act of 1946');
       ``(12) 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, including for research and development and 
     capital investment;
       ``(13) shall have the priority of the United States with 
     respect to the payment of debts from bankrupt, insolvent, and 
     decedents' estates;
       ``(14) may accept monetary gifts or donations of services, 
     or of real, personal, or mixed property, in order to carry 
     out the functions of the Office;
       ``(15) may execute, in accordance with its bylaws, rules, 
     and regulations, all instruments necessary and appropriate in 
     the exercise of any of its powers; and
       ``(16) may provide for liability insurance and insurance 
     against any loss in connection with its property, other 
     assets, or operations either by contract or by self-
     insurance.
       ``(c) 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. 103. ORGANIZATION AND MANAGEMENT.

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

     ``Sec. 3. Officers and employees

       ``(a) Commissioner.--
       ``(1) In general.--The management of the United States 
     Patent and Trademark Office shall be vested in a Commissioner 
     of the United States Patent and Trademark Office (in this 
     title referred to as the `Commissioner'), 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 Commissioner 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 Commissioner 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) Advising the president.--The Commissioner shall 
     advise the President, through the Secretary of Commerce, on 
     the operation of the Office.

[[Page S2135]]

       ``(C) Consulting with the management advisory board.--The 
     Commissioner shall consult with the Management Advisory Board 
     established in section 5 on a regular basis on matters 
     relating to the operation of the Office, and shall consult 
     with the Board 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.
       ``(D) Security clearances.--The Commissioner, 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) Term.--The Commissioner shall serve a term of 5 
     years, and may continue to serve after the expiration of the 
     Commissioner's term until a successor is appointed and 
     assumes office. The Commissioner may be reappointed to 
     subsequent terms.
       ``(4) Oath.--The Commissioner shall, before taking office, 
     take an oath to discharge faithfully the duties of the 
     Office.
       ``(5) Compensation.--The Commissioner shall receive 
     compensation at the rate of pay in effect for level II of the 
     Executive Schedule under section 5313 of title 5 and, in 
     addition, may receive as a bonus awarded by the Secretary, an 
     amount up to the equivalent of the annual rate of basic pay 
     for such level II, based upon an evaluation by the Secretary 
     of Commerce of the Commissioner's performance as defined in 
     an annual performance agreement between the Commissioner and 
     the Secretary. The annual performance agreement shall 
     incorporate measurable goals as delineated in an annual 
     performance plan agreed to by the Commissioner and the 
     Secretary.
       ``(6) Removal.--The Commissioner may be removed from office 
     by the President. The President shall provide notification of 
     any such removal to both Houses of Congress.
       ``(7) Designee of commissioner.--The Commissioner shall 
     designate an officer of the Office who shall be vested with 
     the authority to act in the capacity of the Commissioner in 
     the event of the absence or incapacity of the Commissioner.
       ``(b) Officers and Employees of the Office.--
       ``(1) Assistant commissioners.--The Commissioner shall 
     appoint an Assistant Commissioner for Patents and an 
     Assistant Commissioner for Trademarks for terms that shall 
     expire on the date on which the Commissioner's term expires. 
     The Assistant Commissioner for Patents shall be a person with 
     demonstrated experience in patent law and the Assistant 
     Commissioner for Trademarks shall be a person with 
     demonstrated experience in trademark law. The Assistant 
     Commissioner for Patents and the Assistant Commissioner for 
     Trademarks shall be the principal policy and management 
     advisers to the Commissioner on all aspects of the activities 
     of the Office that affect the administration of patent and 
     trademark operations, respectively.
       ``(2) Other officers and employees.--
       ``(A) In general.--The Commissioner shall--
       ``(i) appoint such officers, employees (including 
     attorneys), and agents of the Office as the Commissioner 
     considers necessary to carry out the functions of the Office;
       ``(ii) fix the compensation of such officers and employees, 
     except as otherwise provided in this section; and
       ``(iii) define the authority and duties of such officers 
     and employees and delegate to them such of the powers vested 
     in the Office as the Commissioner may determine.
       ``(B) Limitations.--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.
       ``(c) Limits on Compensation.--Except as otherwise provided 
     by law, the annual rate of basic pay of an officer or 
     employee of the Office may not be fixed at a rate that 
     exceeds, and total compensation payable to any such officer 
     or employee for any year may not exceed, the annual rate of 
     basic pay in effect for the Commissioner for that year 
     involved. The Commissioner shall prescribe such regulations 
     as may be necessary to carry out this subsection.
       ``(d) Inapplicability of Title 5 Generally.--Except as 
     otherwise provided in this section, officers and employees of 
     the Office shall not be subject to the provisions of title 5 
     relating to Federal employees.
       ``(e) Continued Applicability of Certain Provision of Title 
     5.--
       ``(1) In general.--The following provisions of title 5 
     shall apply to the Office and its officers and employees:
       ``(A) Section 2302 (relating to prohibited personnel 
     practices).
       ``(B) Section 3110 (relating to employment of relatives; 
     restrictions).
       ``(C) Subchapter II of chapter 55 (relating to withholding 
     pay).
       ``(D) Subchapters II and III of chapter 73 (relating to 
     employment limitations and political activities, 
     respectively).
       ``(E) Chapter 71 (relating to labor-management relations), 
     subject to paragraph (2) and subsection (g).
       ``(F) Section 3303 (relating to political recommendations).
       ``(G) Subchapter II of chapter 61 (relating to flexible and 
     compressed work schedules).
       ``(2) Compensation subject to collective bargaining.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, for purposes of applying chapter 71 of title 5 pursuant 
     to paragraph (1)(D), basic pay and other forms of 
     compensation shall be considered to be among the matters as 
     to which the duty to bargain in good faith extends under such 
     chapter.
       ``(B) Exceptions.--The duty to bargain in good faith shall 
     not, by reason of subparagraph (A), be considered to extend 
     to any benefit under title 5 which is afforded by paragraph 
     (1), (2), (3), or (4) of subsection (f).
       ``(C) Limitations apply.--Nothing in this subsection shall 
     be considered to allow any limitation under subsection (c) to 
     be exceeded.
       ``(f) Provisions of Title 5 That Continue to Apply, Subject 
     to Certain Requirements.--
       ``(1) Retirement.--(A) The provisions of subchapter III of 
     chapter 83 and chapter 84 of title 5 shall apply to the 
     Office and its officers and employees, subject to 
     subparagraph (B).
       ``(B)(i) The amount required of the Office under the second 
     sentence of section 8334(a)(1) of title 5 with respect to any 
     particular individual shall, instead of the amount which 
     would otherwise apply, be equal to the normal-cost percentage 
     (determined with respect to officers and employees of the 
     Office using dynamic assumptions, as defined by section 
     8401(9) of such title) of the individual's basic pay, minus 
     the amount required to be withheld from such pay under such 
     section 8334(a)(1).
       ``(ii) The amount required of the Office under section 
     8334(k)(1)(B) of title 5 with respect to any particular 
     individual shall be equal to an amount computed in a manner 
     similar to that specified in clause (i), as determined in 
     accordance with clause (iii).
       ``(iii) Any regulations necessary to carry out this 
     subparagraph shall be prescribed by the Office of Personnel 
     Management.
       ``(C) The United States Patent and Trademark Office may 
     supplement the benefits provided under the preceding 
     provisions of this paragraph.
       ``(2) Health benefits.--(A) The provisions of chapter 89 of 
     title 5 shall apply to the Office and its officers and 
     employees, subject to subparagraph (B).
       ``(B)(i) With respect to any individual who becomes an 
     officer or employee of the Office pursuant to subsection (h), 
     the eligibility of such individual to participate in such 
     program as an annuitant (or of any other person to 
     participate in such program as an annuitant based on the 
     death of such individual) shall be determined disregarding 
     the requirements of section 8905(b) of title 5. The preceding 
     sentence shall not apply if the individual ceases to be an 
     officer or employee of the Office for any period of time 
     after becoming an officer or employee of the Office pursuant 
     to subsection (h) and before separation.
       ``(ii) The Government contributions authorized by section 
     8906 of title 5 for health benefits for anyone participating 
     in the health benefits program pursuant to this subparagraph 
     shall be made by the Office in the same manner as provided 
     under section 8906(g)(2) of title 5 with respect to the 
     United States Postal Service for individuals associated 
     therewith.
       ``(iii) For purposes of this subparagraph, the term 
     `annuitant' has the meaning given such term by section 
     8901(3) of title 5.
       ``(C) The Office may supplement the benefits provided under 
     the preceding provisions of this paragraph.
       ``(3) Life insurance.--(A) The provisions of chapter 87 of 
     title 5 shall apply to the Office and its officers and 
     employees, subject to subparagraph (B).
       ``(B)(i) Eligibility for life insurance coverage after 
     retirement or while in receipt of compensation under 
     subchapter I of chapter 81 of title 5 shall be determined, in 
     the case of any individual who becomes an officer or employee 
     of the Office pursuant to subsection (h), without regard to 
     the requirements of section 8706(b) (1) or (2) of such title, 
     but subject to the condition specified in the last sentence 
     of paragraph (2)(B)(i) of this subsection.
       ``(ii) Government contributions under section 8708(d) of 
     such title on behalf of any such individual shall be made by 
     the Office in the same manner as provided under paragraph (3) 
     thereof with respect to the United States Postal Service for 
     individuals associated therewith.
       ``(C) The Office may supplement the benefits provided under 
     the preceding provisions of this paragraph.
       ``(4) Employees' compensation fund.--(A) Officers and 
     employees of the Office shall not become ineligible to 
     participate in the program under chapter 81 of title 5, 
     relating to compensation for work injuries, by reason of 
     subsection (d).
       ``(B) The Office shall remain responsible for reimbursing 
     the Employees' Compensation Fund, pursuant to section 8147 of 
     title 5, for compensation paid or payable after the effective 
     date of the Patent and Trademark Office Reform Act in 
     accordance with chapter 81 of title 5 with regard to any 
     injury, disability, or death due to events arising before 
     such date, whether or not a claim has been filed or is final 
     on such date.
       ``(g) Labor-Management Relations.--
       ``(1) Labor relations and employee relations programs.--The 
     Office shall develop labor relations and employee relations 
     programs with the objective of improving productivity, 
     efficiency, and the quality of working life of Office 
     employees, incorporating the following principles:

[[Page S2136]]

       ``(A) Such programs shall be consistent with the merit 
     principles in section 2301(b) of title 5.
       ``(B) Such programs shall provide veterans preference 
     protections equivalent to those established by sections 2108, 
     3308 through 3318, and 3320 of title 5.
       ``(C)(i) The right to work shall not be subject to undue 
     restraint or coercion. The right to work shall not be 
     infringed or restricted in any way based on membership in, 
     affiliation with, or financial support of a labor 
     organization.
       ``(ii) No person shall be required, as a condition of 
     employment or continuation of employment--
       ``(I) to resign or refrain from voluntary membership in, 
     voluntary affiliation with, or voluntary financial support of 
     a labor organization;
       ``(II) to become or remain a member of a labor 
     organization;
       ``(III) to pay any dues, fees, assessments, or other 
     charges of any kind or amount to a labor organization;
       ``(IV) to pay to any charity or other third party, in lieu 
     of such payments, any amount equivalent to or a pro rata 
     portion of dues, fees, assessments, or other charges 
     regularly required of members of a labor organization; or
       ``(V) to be recommended, approved, referred, or cleared by 
     or through a labor organization.
       ``(iii) This subparagraph shall not apply to a person 
     described in section 7103(a)(2)(v) of title 5 or a 
     `supervisor', `management official', or `confidential 
     employee' as those terms are defined in section 7103(a) (10), 
     (11), and (13) of such title.
       ``(iv) Any labor organization recognized by the Office as 
     the exclusive representative of a unit of employees of the 
     Office shall represent the interests of all employees in that 
     unit without discrimination and without regard to labor 
     organization membership.
       ``(2) 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 Reform Act, with respect to such Office (as then in 
     effect).
       ``(h) Carryover of Personnel.--
       ``(1) From pto.--Effective as of the effective date of the 
     Patent and Trademark Office Reform 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 established under this Act or may be 
     reassigned to the Office of the Under Secretary for 
     Intellectual Property, without a break in service.
       ``(2) Other personnel.--Any individual who, on the day 
     before the effective date of the Patent and Trademark Office 
     Reform 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 Commissioner.

     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) Nonseparation.--No person who becomes an officer or 
     employee of the Office under this subsection shall, for a 
     period of 1 year after the effective date of the Patent and 
     Trademark Office Reform Act, be subject to separation as a 
     consequence of the establishment of the Office.
       ``(4) 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.
       ``(5) Termination rights.--Any employee referred to in 
     paragraph (1) or (2) of this subsection whose employment with 
     the Office is terminated during the 2-year period beginning 
     on the effective date of the Patent and Trademark Office 
     Reform Act shall be entitled to rights and benefits, to be 
     afforded by the Office, similar to those such employee would 
     have had under Federal law if termination had occurred 
     immediately before such date. An employee who would have been 
     entitled to appeal any such termination to the Merit Systems 
     Protection Board, if such termination had occurred 
     immediately before such effective date, may appeal any such 
     termination occurring within this 2-year period to the board 
     under such procedures as it may prescribe.
       ``(6) 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 Reform Act may serve as the Assistant 
     Commissioner for Patents until the date on which an Assistant 
     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 Reform Act may serve as the 
     Assistant Commissioner for Trademarks until the date on which 
     an Assistant Commissioner for Trademarks is appointed under 
     subsection (b).
       ``(i) Competitive Status.--For purposes of appointment to a 
     position in the competitive service for which an officer or 
     employee of the Office is qualified, such officer or employee 
     shall not forfeit any competitive status, acquired by such 
     officer or employee before the effective date of the Patent 
     and Trademark Office Reform Act, by reason of becoming an 
     officer or employee of the Office pursuant to subsection (h).
       ``(j) Savings Provisions.--
       ``(1) In general.--Compensation, benefits, and other terms 
     and conditions of employment in effect immediately before the 
     effective date of the Patent and Trademark Office Reform Act, 
     whether provided by statute or by rules and regulations of 
     the former Patent and Trademark Office or the executive 
     branch of the Government of the United States, shall continue 
     to apply to officers and employees of the Office, until 
     changed in accordance with this section (whether by action of 
     the Director or otherwise).
       ``(2) Provisions specific to basic pay.--(A) With respect 
     to any individual who becomes an officer or employee of the 
     Office pursuant to subsection (h), the rate of basic pay for 
     such officer or employee may not, on or after the effective 
     date of the Patent and Trademark Office Reform Act, be less 
     than the rate in effect immediately before such effective 
     date, except--
       ``(i) pursuant to a collective-bargaining agreement entered 
     into under this section; or
       ``(ii) for inefficiency, neglect of duty, or misconduct, on 
     the part of such individual.
       ``(B) For purposes of this paragraph, the term `basic pay' 
     includes any amount considered to be part of basic pay for 
     purposes of subchapter III of chapter 83 or chapter 84 of 
     title 5.
       ``(k) Removal of Quasi-Judicial Examiners.--The Office may 
     remove a patent examiner or examiner-in-chief, or a trademark 
     examiner or member of a Trademark Trial and Appeal Board, 
     only for such cause as will promote the efficiency of the 
     Office.''.

      SEC. 104. MANAGEMENT ADVISORY BOARD.

       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 Management Advisory 
       Board

       ``(a) Establishment of Management Advisory Board.--
       ``(1) Appointment.--The United States Patent and Trademark 
     Office shall have a Management Advisory Board (hereafter in 
     this title referred to as the `Board') of 12 members, 4 of 
     whom shall be appointed by the President, 4 of whom shall be 
     appointed by the Speaker of the House of Representatives in 
     consultation with the minority leader of the House of 
     Representatives, and 4 of whom shall be appointed by the 
     majority leader of the Senate in consultation with the 
     minority leader of the Senate.
       ``(2) Terms.--Members of the Board shall be appointed for a 
     term of 4 years each, except that of the members first 
     appointed by each appointing authority, 1 shall be for a term 
     of 1 year, 1 shall be for a term of 2 years, and 1 shall be 
     for a term of 3 years. No member may serve more than 1 term.
       ``(3) Chair.--The President shall designate the chair of 
     the Board, whose term as chair shall be for 4 years.
       ``(4) Timing of appointments.--Initial appointments to the 
     Board shall be made within 3 months after the effective date 
     of the Patent and Trademark Office Reform Act, and vacancies 
     shall be filled within 3 months after they occur.
       ``(5) Vacancies.--Vacancies shall be filled in the manner 
     in which the original appointment was made under this 
     subsection. Members appointed to fill a vacancy occurring 
     before the expiration of the term for which the member's 
     predecessor was appointed shall be appointed only for the 
     remainder of that term. A member may serve after the 
     expiration of that member's term until a successor is 
     appointed.
       ``(6) Committees.--The Chair shall designate members of the 
     Board to serve on a committee on patent operations and on a 
     committee on trademark operations to perform the duties set 
     forth in subsection (e) as they relate specifically to the 
     Office's patent operations, and the Office's trademark 
     operations, respectively.
       ``(b) Basis for Appointments.--Members of the Board shall 
     be citizens of the United States who shall be chosen so as to 
     represent the interests of diverse users of the United States 
     Patent and Trademark Office, and shall include individuals 
     with substantial background and achievement in corporate 
     finance and management.
       ``(c) Applicability of Certain Ethics Laws.--Members of the 
     Board shall be special Government employees within the 
     meaning of section 202 of title 18.
       ``(d) Meetings.--The Board shall meet at least quarterly 
     and at any time at the call of the chair to consider an 
     agenda set by the chair.
       ``(e) Duties.--The Board shall--
       ``(1) review the policies, goals, performance, budget, and 
     user fees of the United States Patent and Trademark Office, 
     and advise the Commissioner on these matters; and
       ``(2) within 60 days after the end of each fiscal year, 
     prepare an annual report on the

[[Page S2137]]

     matters referred to in paragraph (1), transmit the report to 
     the President, the Commissioner, and the Committees on the 
     Judiciary of the Senate and the House of Representatives, and 
     publish the report in the Patent and Trademark Office 
     Official Gazette.
       ``(f) Compensation.--Members of the Board shall be 
     compensated for each day (including travel time) during which 
     they are attending meetings or conferences of the Board or 
     otherwise engaged in the business of the Board, 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, and while away from their homes or 
     regular places of business they may be allowed travel 
     expenses, including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5.
       ``(g) Access to Assistance and Information.--
       ``(1) Assistance.--The Office shall provide at the request 
     of the Board such assistance as is necessary for the Board to 
     perform its functions.
       ``(2) Information.--Members of the Board shall be provided 
     access to records and information in the United States 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.''.

     SEC. 105. 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. 106. 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 Commissioner 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 Commissioner, the Assistant Commissioner for Patents, the 
     Assistant Commissioner for Trademarks, and members competent 
     in trademark law who are appointed by the Commissioner.''.

     SEC. 107. BOARD OF PATENT APPEALS AND INTERFERENCES.

       Chapter 1 of title 35, United States Code, is amended by 
     striking section 7 and 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 Commissioner, the Assistant 
     Commissioner for Patents, the Assistant Commissioner for 
     Trademarks, and the examiners-in-chief shall constitute the 
     Board. The examiners-in-chief shall be persons of competent 
     legal knowledge and scientific ability.
       ``(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 
     Commissioner. Only the Board of Patent Appeals and 
     Interferences may grant rehearings.''.

     SEC. 108. SUITS BY AND AGAINST THE OFFICE.

       Chapter 1 of part I of title 35, United States Code, is 
     amended by inserting after section 6 the following new 
     section:

     ``Sec. 7. Suits by and against the Office

       ``(a) Actions Under United States Law.--Any civil action or 
     proceeding to which the United States Patent and Trademark 
     Office is a party is deemed to arise under the laws of the 
     United States. The Federal courts shall have exclusive 
     jurisdiction over all civil actions by or against the Office.
       ``(b) Representation by the Department of Justice.--The 
     United States Patent and Trademark Office shall be deemed an 
     agency of the United States for purposes of section 516 of 
     title 28.
       ``(c) Prohibition on Attachment, Liens, Etc.--No 
     attachment, garnishment, lien, or similar process, 
     intermediate or final, in law or equity, may be issued 
     against property of the Office.''.

     SEC. 109. ANNUAL REPORT OF COMMISSIONER.

       Section 14 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 14. Annual report to Congress

       ``Not later than 180 days after the end of each fiscal 
     year, the Commissioner shall report to Congress 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, and other information relating to the Office. 
     The report under this section shall also meet the 
     requirements of section 9106 of title 31, to the extent that 
     such requirements are not inconsistent with the preceding 
     sentence. The report required under this section shall be 
     deemed to be the report of the United States Patent and 
     Trademark Office under section 9106 of title 31, and the 
     Commissioner shall not file a separate report under such 
     section.''.

     SEC. 110. SUSPENSION OR EXCLUSION FROM PRACTICE.

       Section 32 of title 35, United States Code, is amended by 
     inserting before the last sentence the following: ``The 
     Commissioner 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. 111. FUNDING.

       (a) In General.--Chapter 4 of title 35, United States Code, 
     is amended by striking section 42 and inserting the 
     following:

     ``Sec. 42. Patent and Trademark Office funding

       ``(a) Fees Payable to the Office.--All fees for services 
     performed by or materials furnished by the United States 
     Patent and Trademark Office shall be payable to the Office.
       ``(b) Use of Moneys.--Moneys from fees shall be available 
     to the United States Patent and Trademark Office to carry out 
     the functions of the Office. Moneys of the Office not 
     otherwise used to carry out the functions of the Office shall 
     be kept in cash on hand or on deposit, or invested in 
     obligations of the United States or guaranteed by the United 
     States, or in obligations or other instruments which are 
     lawful investments for fiduciary, trust, or public funds. 
     Fees available to the Office under this title shall be used 
     for the processing of patent applications and for other 
     services and materials relating to patents. Fees available to 
     the Office under section 31 of the Act of July 5, 1946 
     (commonly referred to as the `Trademark Act of 1946'; 15 
     U.S.C. 1113), shall be used only for the processing of 
     trademark registrations and for other services and materials 
     relating to trademarks.
       ``(c) Borrowing Authority.--The United States Patent and 
     Trademark Office is authorized to issue from time to time for 
     purchase by the Secretary of the Treasury its debentures, 
     bonds, notes, and other evidences of indebtedness (hereafter 
     in this subsection referred to as `obligations') to assist in 
     financing its activities. Borrowing under this subsection 
     shall be subject to prior approval in appropriations Acts. 
     Such borrowing shall not exceed amounts approved in 
     appropriation Acts. Any borrowing under this subsection shall 
     be repaid only from fees paid to the Office. Such obligations 
     shall be redeemable at the option of the Office before 
     maturity in the manner stipulated in such obligations and 
     shall have such maturity as is determined by the Office with 
     the approval of the Secretary of the Treasury. Each such 
     obligation issued to the Treasury shall bear interest at a 
     rate not less than the current yield on outstanding 
     marketable obligations of the United States of comparable 
     maturity during the month preceding the issuance of the 
     obligation as determined by the Secretary of the Treasury. 
     The Secretary of the Treasury shall purchase any obligations 
     of the Office issued under this subsection and for such 
     purpose the Secretary of the Treasury is authorized to use as 
     a public-debt transaction the proceeds of any securities 
     issued under chapter 31 of title 31, and the purposes for 
     which securities may be issued under that chapter are 
     extended to include such purpose. Payment under this 
     subsection of the purchase price of such obligations of the 
     United States Patent and Trademark Office shall be treated as 
     public debt transactions of the United States.
       ``(d) Refund.--The Commissioner may refund any fee paid by 
     mistake or any amount paid in excess of that required.''.
       (b) Extension of Surcharges on Patent Fees.--
       (1) In general.--Section 10101 of the Omnibus Budget 
     Reconciliation Act of 1990 (35 U.S.C. 41 note) is amended by 
     striking subsections (a) through (c) and inserting the 
     following:
       ``(a) Surcharges.--There shall be a surcharge on all fees 
     authorized by subsections (a) and (b) of section 41 of title 
     35, United States Code, in order to ensure that the amounts 
     specified in subsection (c) are collected.
       ``(b) Use of Surcharges.--Notwithstanding section 3302 of 
     title 31, United States Code, all surcharges collected by the 
     United States Patent and Trademark Office--
       ``(1) shall be credited to a separate account established 
     in the Treasury and ascribed to the United States Patent and 
     Trademark Office activities in the Department of Commerce as 
     offsetting collections;
       ``(2) shall be collected by and made available to the 
     United States Patent and Trademark Office for all authorized 
     activities and operations of the Office, including all direct 
     and indirect costs of services provided by the Office; and
       ``(3) shall remain available until expended.
       ``(c) Establishment of Surcharges.--The Commissioner of the 
     United States Patent and Trademark Office shall establish 
     surcharges under subsection (a), subject to the provisions of 
     section 553 of title 5, United States Code, in order to 
     ensure that $119,000,000, but not more than $119,000,000, are 
     collected in fiscal year 1999 and each fiscal year 
     thereafter.
       ``(d) Appropriations Act Required.--Notwithstanding 
     subsections (a) through (c), no fee established by subsection 
     (a) shall be collected nor shall be available for spending 
     without prior authorization in appropriations Acts.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on October 1, 1998.

[[Page S2138]]

     SEC. 112. AUDITS.

       Chapter 4 of title 35, United States Code, is amended by 
     adding at the end the following new section:

     ``Sec. 43. Audits

       ``(a) In General.--Financial statements of the United 
     States Patent and Trademark Office shall be prepared on an 
     annual basis in accordance with generally accepted accounting 
     principles. Such statements shall be audited by an 
     independent certified public accountant chosen by the 
     Commissioner. The audit shall be conducted in accordance with 
     standards that are consistent with generally accepted 
     Government auditing standards and other standards established 
     by the Comptroller General, and with the generally accepted 
     auditing standards of the private sector, to the extent 
     feasible. The Commissioner shall transmit to the Committees 
     on the Judiciary of the House of Representatives and the 
     Senate the results of each audit under this subsection.
       ``(b) Review by Comptroller General.--The Comptroller 
     General may review any audit of the financial statement of 
     the United States Patent and Trademark Office that is 
     conducted under subsection (a). The Comptroller General shall 
     report to Congress and the Office the results of any such 
     review and shall include in such report appropriate 
     recommendations.
       ``(c) Audit by Comptroller General.--The Comptroller 
     General may audit the financial statements of the Office and 
     such audit shall be in lieu of the audit required by 
     subsection (a). The Office shall reimburse the Comptroller 
     General for the cost of any audit conducted under this 
     subsection.
       ``(d) Access to Office Records.--All books, financial 
     records, report files, memoranda, and other property that the 
     Comptroller General deems necessary for the performance of 
     any audit shall be made available to the Comptroller General.
       ``(e) Applicability in Lieu of Title 31 Provisions.--This 
     section applies to the Office in lieu of the provisions of 
     section 9105 of title 31.''.

     SEC. 113. TRANSFERS.

       (a) Transfer of Functions.--Except to the extent that such 
     functions, powers, and duties relate to the direction of 
     patent or trademark policy, there are transferred to, and 
     vested in, the United States Patent and Trademark Office all 
     functions, powers, and duties vested by law in the Secretary 
     of Commerce or the Department of Commerce or in the officers 
     or components in the Department of Commerce with respect to 
     the authority to grant patents and register trademarks, and 
     in the Patent and Trademark Office, as in effect on the day 
     before the effective date of this Act, and in the officers 
     and components of such Office.
       (b) Transfer of Funds and Property.--The Secretary of 
     Commerce shall transfer to the United States Patent and 
     Trademark Office, on the effective date of this Act, so much 
     of the assets, liabilities, contracts, property, records, and 
     unexpended and unobligated balances of appropriations, 
     authorizations, allocations, and other funds employed, held, 
     used, arising from, available to, or to be made available to 
     the Department of Commerce, including funds set aside for 
     accounts receivable, which are related to functions, powers, 
     and duties which are vested in the United States Patent and 
     Trademark Office by this Act.

     SEC. 114. NONAPPLICABILITY OF FEDERAL WORKFORCE REDUCTIONS.

       No full-time equivalent position in the United States 
     Patent and Trademark Office shall be eliminated to meet the 
     requirements of section 5 of the Federal Workforce 
     Restructuring Act of 1994 (5 U.S.C. 3101 note).
             TITLE II--EFFECTIVE DATE; TECHNICAL AMENDMENTS

     SEC. 201. EFFECTIVE DATE.

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

     SEC. 202. 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:

  ``I. United States Patent and Trademark Office...................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. Establishment, Officers and Employees, Functions..........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 Management Advisory Board.
``6.  Board of Patent Appeals and Interferences.
``7.  Suits by and against the Office.
``8.  Library.
``9.  Classification of patents.
``10. Certified copies of records.
``11. Publications.
``12. Exchange of copies of patents with foreign countries.
``13. Copies of patents for public libraries.
``14. Annual report to Congress.''.

       (5) The table of sections for chapter 4 of title 35, United 
     States Code, is amended by adding after the item relating to 
     section 42 the following:

``43. Audits.''.

       (6) Section 41(a)(8)(A) of title 35, United States Code, is 
     amended by striking ``On'' and inserting ``on''.
       (b) Other Provisions of Law.--
       (1) Section 9101(3) of title 31, United States Code, is 
     amended by adding at the end the following:
       ``(R) the United States Patent and Trademark Office.''.
       (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 by striking ``Patent and Trademark Office, Department 
     of Commerce'' and inserting ``United States Patent and 
     Trademark Office''.
       (4) Section 5314 of title 5, United States Code, is amended 
     by adding at the end the following:
       ``Under Secretary for Intellectual Property, Department of 
     Commerce.''.
       (5) Section 5315 of title 5, United States Code, is amended 
     by adding at the end the following:
       ``Inspector General, United States Patent and Trademark 
     Office.''.
       (6) 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.''.
       (7) 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 Commissioner of the United States Patent and 
     Trademark Office; and''.
       (8) 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.
       (9) Section 1127 of title 15, United States Code, is 
     amended by striking ``Commissioner of Patents and 
     Trademarks'' and inserting ``Commissioner of the United 
     States Patent and Trademark Office''.
       (10) Section 19 of the Tennessee Valley Authority Act of 
     1933 (16 U.S.C. 831r) is amended--
       (A) by striking ``Patent and Trademark Office of the United 
     States'' and inserting ``United States Patent and Trademark 
     Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (11) 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 ``Under Secretary 
     for Intellectual Property''.
       (12) 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 ``Under Secretary 
     for Intellectual Property''.
       (13) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C. 91) 
     is amended by striking ``Patent Office'' and inserting 
     ``United States Patent and Trademark Office''.
       (14) Sections 505(m) and 512(o) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(m) and 360b(o)) are each 
     amended by striking ``Patent and Trademark Office of the 
     Department of Commerce'' and inserting ``United States Patent 
     and Trademark Office''.
       (15) Section 702(d) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 372(d)) is amended by striking ``Commissioner 
     of Patents'' and inserting ``Commissioner of the United 
     States Patent and Trademark Office''.
       (16) Section 2151t-1(b)(1) of title 22, United States Code, 
     is amended by striking ``Patent and Trademark Office'' and 
     inserting ``Under Secretary for Intellectual Property''.
       (17) Section 105(e) of the Federal Alcohol Administration 
     Act (27 U.S.C. 205(e)) is amended by striking ``United States 
     Patent Office'' and inserting ``United States Patent and 
     Trademark Office''.
       (18) Section 1744 of title 28, United States Code is 
     amended--
       (A) by striking ``Patent Office'' each place it appears in 
     the text and section heading and inserting ``United States 
     Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (19) Section 1295(a)(4) of title 28, United States Code, is 
     amended--
       (A) in subparagraph (A) by inserting ``United States'' 
     before ``Patent and Trademark''; and
       (B) in subparagraph (B) by striking ``Commissioner of 
     Patents and Trademarks'' and inserting ``Commissioner of the 
     United States Patent and Trademark Office''.
       (20) Section 1745 of title 28, United States Code, is 
     amended by striking ``United States Patent Office'' and 
     inserting ``United States Patent and Trademark Office''.

[[Page S2139]]

       (21) Section 1928 of title 28, United States Code, is 
     amended by striking ``Patent Office'' and inserting ``United 
     States Patent and Trademark Office''.
       (22) Section 151 of the Atomic Energy Act of 1954 (42 
     U.S.C. 2181) is amended in subsections c. and d. by striking 
     ``Commissioner of Patents and Trademarks'' and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (23) Section 152 of the Atomic Energy Act of 1954 (42 
     U.S.C. 2182) is amended by striking ``Commissioner of Patents 
     and Trademarks'' each place it appears and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (24) Section 160 of the Atomic Energy Act of 1954 (42 
     U.S.C. 2190) is amended--
       (A) by striking ``United States Patent Office'' and 
     inserting ``United States Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (25) Section 305(c) of the National Aeronautics and Space 
     Act of 1958 (42 U.S.C. 2457(c)) is amended by striking 
     ``Commissioner of Patents'' and inserting ``Commissioner of 
     the United States Patent and Trademark Office''.
       (26) Section 12(a) of the Solar Heating and Cooling 
     Demonstration Act of 1974 (42 U.S.C. 5510(a)) is amended by 
     striking ``Commissioner of the Patent Office'' and inserting 
     ``Commissioner of the United States Patent and Trademark 
     Office''.
       (27) Section 1111 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (28) Section 1114 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (29) Section 1123 of title 44, United States Code, is 
     amended by striking ``the Patent Office,''.
       (30) Sections 1337 and 1338 of title 44, United States 
     Code, and the items relating to those sections in the table 
     of contents for chapter 13 of such title, are repealed.
       (31) Section 10(i) of the Trading With the Enemy Act (50 
     U.S.C. App. 10(i)) is amended by striking ``Commissioner of 
     Patents'' and inserting ``Commissioner of the United States 
     Patent and Trademark Office''.
       (32) Section 11 of the Inspector General Act of 1978 (5 
     U.S.C. App.) is amended--
       (A) in paragraph (1)--
       (i) by striking ``and'' before ``the chief executive 
     officer of the Resolution Trust Corporation;'';
       (ii) by striking ``and'' before ``the Chairperson of the 
     Federal Deposit Insurance Corporation;'';
       (iii) by striking ``or'' before ``the Commissioner of 
     Social Security,''; and
       (iv) by inserting ``or the Commissioner of the United 
     States Patent and Trademark Office;'' after ``Social Security 
     Administration;''; and
       (B) in paragraph (2)--
       (i) by striking ``or'' before ``the Veterans' 
     Administration,''; and
       (ii) by striking ``or the Social Security Administration'' 
     and inserting ``the Social Security Administration, or the 
     United States Patent and Trademark Office''.
                  TITLE III--MISCELLANEOUS PROVISIONS

     SEC. 301. REFERENCES.

       Any reference in any other Federal law, Executive order, 
     rule, regulation, or delegation of authority, or any document 
     of or pertaining to a department or office from which a 
     function is transferred by this Act--
       (1) to the head of such department or office is deemed to 
     refer to the head of the department or office to which such 
     function is transferred; or
       (2) to such department or office is deemed to refer to the 
     department or office to which such function is transferred.

     SEC. 302. EXERCISE OF AUTHORITIES.

       Except as otherwise provided by law, a Federal official to 
     whom a function is transferred by this Act may, for purposes 
     of performing the function, exercise all authorities under 
     any other provision of law that were available with respect 
     to the performance of that function to the official 
     responsible for the performance of the function immediately 
     before the effective date of the transfer of the function 
     under this Act.

     SEC. 303. SAVINGS PROVISIONS.

       (a) Legal Documents.--All orders, determinations, rules, 
     regulations, permits, grants, loans, contracts, agreements, 
     certificates, licenses, and privileges--
       (1) that have been issued, made, granted, or allowed to 
     become effective by the President, the Secretary of Commerce, 
     any officer or employee of any office transferred by this 
     Act, or any other Government official, or by a court of 
     competent jurisdiction, in the performance of any function 
     that is transferred by this Act, and
       (2) that are in effect on the effective date of such 
     transfer (or become effective after such date pursuant to 
     their terms as in effect on such effective date),

     shall continue in effect according to their terms until 
     modified, terminated, superseded, set aside, or revoked in 
     accordance with law by the President, any other authorized 
     official, a court of competent jurisdiction, or operation of 
     law.
       (b) Proceedings.--This Act shall not affect any proceedings 
     or any application for any benefits, service, license, 
     permit, certificate, or financial assistance pending on the 
     effective date of this Act before an office transferred by 
     this Act, but such proceedings and applications shall be 
     continued. Orders shall be issued in such proceedings, 
     appeals shall be taken therefrom, and payments shall be made 
     pursuant to such orders, as if this Act had not been enacted, 
     and orders issued in any such proceeding shall continue in 
     effect until modified, terminated, superseded, or revoked by 
     a duly authorized official, by a court of competent 
     jurisdiction, or by operation of law. Nothing in this 
     subsection shall be considered to prohibit the discontinuance 
     or modification of any such proceeding under the same terms 
     and conditions and to the same extent that such proceeding 
     could have been discontinued or modified if this Act had not 
     been enacted.
       (c) Suits.--This Act shall not affect suits commenced 
     before the effective date of this Act, and in all such suits, 
     proceedings shall be had, appeals taken, and judgments 
     rendered in the same manner and with the same effect as if 
     this Act had not been enacted.
       (d) Nonabatement of Actions.--No suit, action, or other 
     proceeding commenced by or against the Department of Commerce 
     or the Secretary of Commerce, or by or against any individual 
     in the official capacity of such individual as an officer or 
     employee of an office transferred by this Act, shall abate by 
     reason of the enactment of this Act.
       (e) Continuance of Suits.--If any Government officer in the 
     official capacity of such officer is party to a suit with 
     respect to a function of the officer, and under this Act such 
     function is transferred to any other officer or office, then 
     such suit shall be continued with the other officer or the 
     head of such other office, as applicable, substituted or 
     added as a party.
       (f) Administrative Procedure and Judicial Review.--Except 
     as otherwise provided by this Act, any statutory requirements 
     relating to notice, hearings, action upon the record, or 
     administrative or judicial review that apply to any function 
     transferred by this Act shall apply to the exercise of such 
     function by the head of the Federal agency, and other 
     officers of the agency, to which such function is transferred 
     by this Act.

     SEC. 304. TRANSFER OF ASSETS.

       Except as otherwise provided in this Act, so much of the 
     personnel, property, records, and unexpended balances of 
     appropriations, allocations, and other funds employed, used, 
     held, available, or to be made available in connection with a 
     function transferred to an official or agency by this Act 
     shall be available to the official or the head of that 
     agency, respectively, at such time or times as the Director 
     of the Office of Management and Budget directs for use in 
     connection with the functions transferred.

     SEC. 305. DELEGATION AND ASSIGNMENT.

       Except as otherwise expressly prohibited by law or 
     otherwise provided in this Act, an official to whom functions 
     are transferred under this Act (including the head of any 
     office to which functions are transferred under this Act) may 
     delegate any of the functions so transferred to such officers 
     and employees of the office of the official as the official 
     may designate, and may authorize successive redelegations of 
     such functions as may be necessary or appropriate. No 
     delegation of functions under this section or under any other 
     provision of this Act shall relieve the official to whom a 
     function is transferred under this Act of responsibility for 
     the administration of the function.

     SEC. 306. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT 
                   AND BUDGET WITH RESPECT TO FUNCTIONS 
                   TRANSFERRED.

       (a) Determinations.--If necessary, the Director of the 
     Office of Management and Budget shall make any determination 
     of the functions that are transferred under this Act.
       (b) Incidental Transfers.--The Director of the Office of 
     Management and Budget, at such time or times as the Director 
     shall provide, may make such determinations as may be 
     necessary with regard to the functions transferred by this 
     Act, and to make such additional incidental dispositions of 
     personnel, assets, liabilities, grants, contracts, property, 
     records, and unexpended balances of appropriations, 
     authorizations, allocations, and other funds held, used, 
     arising from, available to, or to be made available in 
     connection with such functions, as may be necessary to carry 
     out the provisions of this Act. The Director shall provide 
     for the termination of the affairs of all entities terminated 
     by this Act and for such further measures and dispositions as 
     may be necessary to effectuate the purposes of this Act.

     SEC. 307. CERTAIN VESTING OF FUNCTIONS CONSIDERED TRANSFERS.

       For purposes of this Act, the vesting of a function in a 
     department or office pursuant to reestablishment of an office 
     shall be considered to be the transfer of the function.

     SEC. 308. AVAILABILITY OF EXISTING FUNDS.

       Existing appropriations and funds available for the 
     performance of functions, programs, and activities terminated 
     pursuant to this Act shall remain available, for the duration 
     of their period of availability, for necessary expenses in 
     connection with the termination and resolution of such 
     functions, programs, and activities.

     SEC. 309. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``function'' includes any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program; and
       (2) the term ``office'' includes any office, 
     administration, agency, bureau, institute, council, unit, 
     organizational entity, or component thereof.

[[Page S2140]]

          TITLE IV--UNDER SECRETARY FOR INTELLECTUAL PROPERTY

     SEC. 401. UNDER SECRETARY FOR INTELLECTUAL PROPERTY.

       (a) Appointment.--There is established in the Department of 
     Commerce, an Under Secretary for Intellectual Property, who 
     shall be appointed by the President by and with the advice 
     and consent of the Senate. Pending appointment of the Under 
     Secretary by and with the advice and consent of the Senate, 
     the individual serving as Commissioner of Patents and 
     Trademarks prior to the enactment of the Act shall perform 
     the functions of the Under Secretary.
       (b) Functions.--The Under Secretary for Intellectual 
     Property, under the direction of the Secretary of Commerce, 
     shall--
       (1) advise the President, through the Secretary of 
     Commerce, on national and international intellectual property 
     policy issues;
       (2) advise the Secretary of Commerce on international trade 
     issues concerning intellectual property;
       (3) promote in international trade the United States 
     industries that rely on intellectual property;
       (4) advise Federal agencies on ways to improve intellectual 
     property protection in other countries through economic 
     assistance and international trade;
       (5) review and coordinate all proposals by agencies to 
     assist foreign governments and international 
     intergovernmental agencies in improving intellectual property 
     protection;
       (6) carry on studies related to the effectiveness of 
     intellectual property protection throughout the world; and
       (7) in coordination with the Department of State, carry on 
     studies cooperatively with foreign intellectual property 
     offices and international organizations.
       (c) Consultation.--In connection with the performance of 
     this section, the Under Secretary for Intellectual Property 
     shall, in advance of major policy initiatives, consult with 
     the Commissioner of the United States Patent and Trademark 
     Office and the Register of Copyrights.
                                 ______