[Congressional Record Volume 145, Number 163 (Wednesday, November 17, 1999)]
[Senate]
[Pages S14708-S14726]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LOTT:
  S. 1948. A bill to amend the provisions of title 17, United States 
Code, and the Communications Act of 1934, relating to copyright 
licensing and carriage of broadcast signals by satellite; to the 
Committee on the Judiciary.


  intellectual property and communications omnibus reform act of 1999

  Mr. LOTT: Mr. President, I ask unanimous consent that the following 
section-by-section analysis be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  S. 1948--Section-by-Section Analysis

       Section 1. Short Title. This Act may be cited as the 
     ``Intellectual Property and Communications Omnibus Reform Act 
     of 1999.''

         TITLE I--SATELLITE HOME VIEWER IMPROVEMENT ACT OF 1999

       When Congress passed the Satellite Home Viewer Act in 1988, 
     few Americans were familiar with satellite television. They 
     typically resided in rural areas of the country where the 
     only means of receiving television programming was through 
     use of a large, backyard C-band satellite dish. Congress 
     recognized the importance of providing these people with 
     access to broadcast programming, and created a compulsory 
     copyright license in the Satellite Home Viewer Act that 
     enabled satellite carriers to easily license the copyrights 
     to the broadcast programming that they retransmitted to their 
     subscribers.
       The 1988 Act fostered a boom in the satellite television 
     industry. Coupled with the development of high-powered 
     satellite service, or DSS, which delivers programming to a 
     satellite dish as small as 18 inches in diameter, the 
     satellite industry now serves homes nationwide with a wide 
     range of high quality programming. Satellite is no longer 
     primarily a rural service, for it offers an attractive 
     alternative to other providers of multichannel video 
     programming; in particular, cable television. Because 
     satellite can provide direct competition with the cable 
     industry, it is in the public interest to ensure that 
     satellite operates under a copyright framework that permits 
     it to be an effective competitor.
       The compulsory copyright license created by the 1988 Act 
     was limited to a five year period to enable Congress to 
     consider its effectiveness and renew it where necessary. The 
     license was renewed in 1994 for an additional five years, and 
     amendments made that were intended to increase the 
     enforcement of the network territorial restrictions of the 
     compulsory license. Two-year transitional provisions were 
     created to enable local network broadcasters to challenge 
     satellite subscribers' receipt of satellite network service 
     where the local network broadcaster had reason to believe 
     that these subscribers received an adequate off-the-air 
     signal from the broadcaster. The transitional provisions were 
     minimally effective and caused much consumer confusion and 
     anger regarding receipt of television network stations.
       The satellite license is slated to expire at the end of 
     this year, requiring Congress to again consider the copyright 
     licensing regime for satellite retransmissions of over-the-
     air television broadcast stations. In passing this 
     legislation, the Conference Committee was guided by several 
     principles. First, the Conference Committee believes that 
     promotion of competition in the marketplace for delivery of 
     multichannel video programming is an effective policy to 
     reduce costs to consumers. To that end, it is important that 
     the satellite industry be afforded a statutory scheme for 
     licensing television broadcast programming similar to that of 
     the cable industry. At the same time, the practical 
     differences between the two industries must be recognized and 
     accounted for.
       Second, the Conference Committee reasserts the importance 
     of protecting and fostering the system of television networks 
     as they relate to the concept of localism. It is well 
     recognized that television broadcast stations provide 
     valuable programming tailored to local needs, such as news, 
     weather, special announcements and information related to 
     local activities. To that end, the Committee has structured 
     the copyright licensing regime for satellite to encourage and 
     promote retransmissions by satellite of local television 
     broadcast stations to subscribers who reside in the local 
     markets of those stations.
       Third, perhaps most importantly, the Conference Committee 
     is aware that in creating compulsory licenses, it is acting 
     in derogation of the exclusive property rights granted by the 
     Copyright Act to copyright holders, and that it therefore 
     needs to act as narrowly as possible to minimize the effects 
     of the government's intrusion on the broader market in which 
     the affected property rights and industries operate. In this 
     context, the broadcast television market has developed in 
     such a way that copyright licensing practices in this area 
     take into account the national network structure, which 
     grants exclusive territorial rights to programming in a local 
     market to local stations either directly or through 
     affiliation agreements. The licenses granted in this 
     legislation attempt to hew as closely to those arrangements 
     as possible. For example, these arrangements are mirrored in 
     the section 122 ``local-to-local'' license, which grants 
     satellite carriers the right to retransmit local stations 
     within the station's local market, and does not require a 
     separate copyright payment because the works have already 
     been licensed and paid for with respect to viewers in those 
     local markets. By contrast, allowing the importation of 
     distant or out-of-market network stations in derogation of 
     the local stations' exclusive right--bought and paid for in 
     market-negotiated arrangements--to show the works in question 
     undermines those market arrangements. Therefore, the specific 
     goal of the 119 license, which is to allow for a life-line 
     network television service to those homes beyond the reach of 
     their local television stations, must be met by only allowing 
     distant network service to those homes which cannot receive 
     the local network television stations. Hence, the ``unserved 
     household'' limitation that has been in the license since its 
     inception. The Committee is mindful and respectful of the

[[Page S14709]]

     interrelationship between the communications policy of 
     ``localism'' outlined above and property rights 
     considerations in copyright law, and seeks a proper balance 
     between the two.
       Finally, although the legislation promotes satellite 
     retransmissions of local stations, the Conference Committee 
     recognizes the continued need to monitor the effects of 
     distant signal importation by satellite. To that end, the 
     compulsory license for retransmission of distant signals is 
     extended for a period of five years, to afford Congress the 
     opportunity to evaluate the effectiveness and continuing need 
     for that license at the end of the five-year period.
     Section 1001. Short Title
       This title may be cited as the ``Satellite Home Viewer 
     Improvement Act.''
     Section 1002. Limitations on Exclusive Rights; Secondary 
         Transmissions by Satellite Carriers Within Local Markets
       The House and the Senate provisions were in most respects 
     highly similar. The conference substitute generally follows 
     the House approach, with the differences described here.
       Section 1002 of this Act creates a new statutory license, 
     with no sunset provision, as a new section 122 of the 
     Copyright Act of 1976. The new license authorizes the 
     retransmission of television broadcast stations by satellite 
     carriers to subscribers located within the local markets of 
     those stations.
       Creation of a new statutory license for retransmission of 
     local signals is necessary because the current section 119 
     license is limited to the retransmission of distance signals 
     by satellite. The section 122 license allows satellite 
     carriers for the first time to provide their subscribers with 
     the television signals they want most: their local stations. 
     A carrier may retransmit the signal of a network station (or 
     superstation) to all subscribers who reside within the local 
     market of that station, without regard to whether the 
     subscriber resides in an ``unserved household.'' The term 
     ``local market'' is defined in Section 119(j)(2), and 
     generally refers to a station's Designated Market Area as 
     defined by Nielsen.
       Because the section 122 license is permanent, subscribers 
     may obtain their local television stations without fear that 
     their local broadcast service may be turned off at a future 
     date. In addition, satellite carriers may deliver local 
     stations to commercial establishments as well as homes, as 
     the cable industry does under its license. These amendments 
     create parity and enhanced competition between the satellite 
     and cable industries in the provision of local television 
     broadcast stations.
       For a satellite carrier to be eligible for this license, 
     this Act, following the House approach, provides both in new 
     section 122(a) and in new section 122(d) that a carrier may 
     use the new local-to-local license only if it is in full 
     compliance with all applicable rules and regulations of the 
     Federal Communications Commission, including any requirements 
     that the Commission may adopt by regulation concerning 
     carriage of stations or programming exclusivity. These 
     provisions are modeled on similar provisions in section 111, 
     the terrestrial compulsory license. Failure to fully comply 
     with Commission rules with respect to retransmission of one 
     or more stations in the local market precludes the carrier 
     from making use of the section 122 license. Put another way, 
     the statutory license overrides the normal copyright scheme 
     only to the extent that carriers strictly comply with the 
     limits Congress has put on that license.
       Because terrestrial systems, such as cable, as a general 
     rule do not pay any copyright royalty for local 
     retransmissions of broadcast stations, the section 122 
     license does not require payment of any copyright royalty by 
     satellite carriers for transmissions made in compliance with 
     the requirements of section 122. By contrast, the section 119 
     statutory license for distant signals does require payment of 
     royalties. In addition, the section 122 statutory license 
     contains no ``unserved household'' limitation, while the 
     section 119 license does contain that limitation.
       Satellite carriers are liable for copyright infringement, 
     and subject to the full remedies of the Copyright Act, if 
     they violate one or more of the following requirements of the 
     section 122 license. First, satellite carriers may not in any 
     way willfully alter the programming contained on a local 
     broadcast station.
       Second, satellite carriers may not use the section 122 
     license to retransmit a television broadcast station to a 
     subscriber located outside the local market of the station. 
     Retransmission of a station to a subscriber located outside 
     the station's local market is covered by section 119, and is 
     permitted only when all conditions of that license are 
     satisfied. Accordingly, satellite carriers are required to 
     provide local broadcasters with accurate lists of the street 
     addresses of their local-to-local subscribers so that 
     broadcasters may verify that satellite carriers are making 
     proper use of the license. The subscriber information 
     supplied to broadcasters is for verification purposes only, 
     and may not be used by broadcasters for any other reason. Any 
     knowing provision of false information by a satellite carrier 
     would, under section 122(d), bar use of the Section 122 
     license by the carrier engaging in such practices. The 
     section 122 license contains remedial provisions parallel to 
     those of Section 119, including a ``pattern or practice'' 
     provision that requires termination of the Section 122 
     statutory license as to a particular satellite carrier if it 
     engages in certain abuses of the license.
       Under this provision, just as in the statutory licenses 
     codified in sections 111 and 119, a violation may be proven 
     by showing willful activity, or simple delivery of the 
     secondary transmission over a certain period of time. In 
     addition to termination of service on a nationwide or local 
     or regional basis, statutory damages are available up to 
     $250,000 for each 6-month period during which the pattern or 
     practice of violations was carried out. Satellite carriers 
     have the burden of proving that they are not improperly 
     making use of the section 122 license to serve subscribers 
     outside the local markets of the television broadcast 
     stations they are providing. The penalties created under this 
     section parallel those under Section 119, and are to deter 
     satellite carriers from providing signals to subscribers in 
     violation of the licenses.
       The section 122 license is limited in geographic scope to 
     service to locations in the United States, including any 
     commonwealth, territory or possession of the United States. 
     In addition, section 122(j) makes clear that local 
     retransmission of television broadcast stations to 
     subscribers is governed solely by the section 122 license, 
     and that no provision of the section 111 cable compulsory 
     license should be interpreted to allow satellite carriers to 
     make local retransmissions of television broadcast stations 
     under that license. Likewise, no provision of the section 119 
     license (or any other law) should be interpreted as 
     authorizing local-to-local retransmissions. As with all 
     statutory licenses, these explicit limitations are consistent 
     with the general rule that, because statutory licenses are in 
     derogation of the exclusive rights granted under the 
     Copyright Act, they should be interpreted narrowly.
       Section 1002(a) of this Act contains new standing 
     provisions. Adopting the approach of the House bill, section 
     122(f)(1) of the Copyright Act is parallel to section 119(e), 
     and ensures that local stations, in addition to any other 
     parties that qualify under other standing provisions of the 
     Act, will have the ability to sue for violations of section 
     122. New section 122(f)(2) of the Copyright Act enables a 
     local television station that is not being carried by a 
     satellite carrier in violation of the license to file a 
     copyright infringement lawsuit in federal court to enforce 
     its rights.
     Section 1003. Extension of Effect of Amendments to Section 
         119 of Title 17, United States Code
       As in both the House bill and the Senate amendment, this 
     Act extends the section 119 satellite statutory license for a 
     period of five years by changing the expiration date of the 
     legislation from December 31, 1999, to December 31, 2004. The 
     procedural and remedial provisions of section 119, which have 
     already been interpreted by the courts, are being extended 
     without change. Should the section 119 license be allowed to 
     expire in 2004, it shall do so at midnight on December 31, 
     2004, so that the license will cover the entire second 
     accounting period of 2004.
       The advent of digital terrestrial broadcasting will 
     necessitate additional review and reform of the distant 
     signal statutory license. And responsibility to oversee the 
     development of the nascent local station satellite service 
     may also require for review of the distant signal statutory 
     license in the future. For each of these reasons, this Act 
     establishes a period for review in 5 years.
       Although the section 119 regime is largely being extended 
     in its current form, certain sections of the Act may have a 
     near-term effect on pending copyright infringement lawsuits 
     brought by broadcasters against satellite carriers. These 
     changes are prospective only; Congress does not intend to 
     change the legality of any conduct that occurred prior to the 
     date of enactment. Congress does intend, however, to benefit 
     consumers where possible and consistent with existing 
     copyright law and principles.
       This Act attempts to strike a balance among a variety of 
     public policy goals. While increasing the number of potential 
     subscribers to distant network signals, this Act clarifies 
     that satellite carriers may carry up to, but no more than, 
     two stations affiliated with the same network. The original 
     purpose of the Satellite Home Viewer Act was to ensure that 
     all Americans could receive network programming and other 
     television services provided they could not receive those 
     services over-the-air or in any other way. This bill reflects 
     the desire of the Conference to meet this requirement and 
     consumers' expectations to receive the traditional level of 
     satellite service that has built up over the years, while 
     avoiding an erosion of the programming market affected by the 
     statutory licenses.
     Section 1004. Computation of Royalty Fees for Satellite 
         Carriers
       Like both the House bill and the Senate amendment, this Act 
     reduces the royalty fees currently paid by satellite carriers 
     for the retransmission of network and superstations by 45 
     percent and 30 percent, respectively. These are reductions of 
     the 27-cent royalty fees made effective by the Librarian of 
     Congress on January 1, 1998. The reductions take effect on 
     July 1, 1999, which is the beginning of the second accounting 
     period for 1999, and apply to all accounting periods for the 
     five-year extension of the section 119 license. The Committee 
     has drafted this provision such that, if the section 119 
     license is renewed after 2004, the 45 percent and 30 percent 
     reductions of the 27-cent fee will remain in effect, unless 
     altered by legislative amendment.

[[Page S14710]]

       In addition, section 119(c) of title 17, United States 
     Code, is amended to clarify that in royalty distribution 
     proceedings conducted under section 802 of the Copyright Act, 
     the Public Broadcasting Service may act as agent for all 
     public television copyright claimants and all Public 
     Broadcasting Service member stations.
     Section 1005. Distant Signal Eligibility for Consumers
       The Senate bill contained provisions retaining the existing 
     Grade B intensity standard in the definition of ``unserved 
     household.'' The House agreed to the Senate provisions with 
     amendments, which extend the ``unserved household'' 
     definition of section 119 of title 17 intact in certain 
     respects and amend it in other respects. Consistent with the 
     approach of the Senate amendment, the central feature of the 
     existing definition of ``unserved household''--inability to 
     receive, through use of a conventional outdoor rooftop 
     receiving antenna, a signal of Grade B intensity from a 
     primary network station--remains intact. The legislation 
     directs the FCC, however, to examine the definition of 
     ``Grade B intensity,'' reflecting the dBu levels long set by 
     the Federal Communications Commission in 47 C.F.R. 
     Sec. 73.683(a), and issue a rulemaking within 6 months after 
     enactment to evaluate the standard and, if appropriate, make 
     recommendations to Congress about how to modify the analog 
     standard, and make a further recommendation about what an 
     appropriate standard would be for digital signals. In this 
     fashion, the Congress will have the best input and 
     recommendations from the Commission, allowing the Commission 
     wide latitude in its inquiry and recommendations, but reserve 
     for itself the final decision-making authority over the scope 
     of the copyright licenses in question, in light of all 
     relevant factors.
       The amended definition of ``unserved household'' makes 
     other consumer-friendly changes. It will eliminate the 
     requirement that a cable subscriber wait 90 days to be 
     eligible for satellite delivery of distant network signals. 
     After enactment, cable subscribers will be eligible to 
     receive distant network signals by satellite, upon choosing 
     to do so, if they satisfy the other requirements of section 
     119.
       In addition, this Act adds three new categories to the 
     definition of ``unserved household'' in section 119(d)(10): 
     (a) certain subscribers to network programming who are not 
     predicted to receive a signal of Grade A intensity from any 
     station of the relevant network, (b) operators of 
     recreational vehicles and commercial trucks who have complied 
     with certain documentation requirements, and (c) certain C-
     band subscribers to network programming. This Act also 
     confirms in new section 119(d)(10)(B) what has long been 
     understood by the parties and accepted by the courts, namely 
     that a subscriber may receive distant network service if all 
     network stations affiliated with the relevant network that 
     are predicted to serve that subscriber give their written 
     consent.
       Section 1005(a)(2) of the bill creates a new section 
     119(a)(2)(B)(i) of the Copyright Act to prohibit a satellite 
     carrier from delivering more than two distant TV stations 
     affiliated with a single network in a single day to a 
     particular customer. This clarifies that a satellite carrier 
     provides a signal of a television station throughout the 
     broadcast day, rather than switching between stations 
     throughout a day to pick the best programming among different 
     signals.
       Section 1005(a)(2) of this Act creates a new section 
     119(a)(2)(B)(ii)(I) of the Copyright Act to confirm that 
     courts should rely on the FCC's ILLR model to presumptively 
     determine whether a household is capable of receiving a 
     signal of Grade B intensity. The conferees understand that 
     the parties to copyright infringement litigation under the 
     Satellite Home Viewer Act have agreed on detailed procedures 
     for implementing the current version of ILLR, and nothing in 
     this Act requires any change in those procedures. In the 
     future, when the FCC amends the ILLR model to make it more 
     accurate pursuant to section 339(c)(3) of the Communications 
     Act of 1934, the amended model should be used in place of the 
     current version of ILLR. The new language also confirms in 
     new section 119(a)(2)(B)(ii)(II) that the ultimate 
     determination of eligibility to receive network signals shall 
     be a signal intensity test pursuant to 47 C.F.R. 
     Sec. 73.686(d), as reflected in new section 339(c)(5) of the 
     Communications Act of 1934. Again, the conferees understand 
     that existing Satellite Home Viewer Act court orders already 
     incorporate this FCC-approved measurement method, and nothing 
     in this Act requires any change in such orders. Such a signal 
     intensity test may be conducted by any party to resolve a 
     customer's eligibility in litigation under section 119.
       Section 1005(a)(2) of this Act creates a new section 
     119(a)(2)(B)(iii) of the Copyright Act to permit continued 
     delivery by means of C-band transmissions of network stations 
     to C-band dish owners who received signals of the pertinent 
     network on October 31, 1999, or were recently required to 
     have such service terminated pursuant to court orders or 
     settlements under section 119. This provision does not 
     authorize satellite delivery of network stations to such 
     persons by any technology other than C-band.
       Section 1005(b) also adds a new provision (E) to section 
     119(a)(5). The purpose of this provision is to allow certain 
     longstanding superstations to continue to be delivered to 
     satellite customers without regard to the ``unserved 
     household'' limitation, even if the station now technically 
     qualifies as a ``network station'' under the 15-hour-per-week 
     definition of the Act. This exception will cease to apply if 
     such a station in the future becomes affiliated with one of 
     the four networks (ABC, CBS, Fox, and NBC) that qualified as 
     networks as of January 1, 1995.
       Section 1005(c) of this Act adds a new section 119(e) of 
     the Copyright Act. This provision contains a moratorium on 
     terminations of network stations to certain otherwise 
     ineligible recent subscribers to network programming whose 
     service has been (or soon would have been) terminated and 
     allows them to continue to be eligible for distant signal 
     services. The subscribers affected are those predicted by the 
     current version of the ILLR model to receive a signal of less 
     than Grade A intensity from any network station of the 
     relevant network defined in section 73.683(a) of Commission 
     regulations (47 C.F.R. 73.683(a)) as in effect January 1, 
     1999. As the statutory language reflects, recent court orders 
     and settlements between the satellite and broadcasting 
     industries have required (or will in the near future require) 
     significant numbers of terminations of network stations to 
     ineligible subscribers in this category. Although the 
     conferees strongly condemn lawbreaking by satellite carriers, 
     and intend for satellite carriers to be subject to all other 
     available legal remedies for any infringements in which the 
     carriers have engaged, the conferees have concluded that the 
     public interest will be served by the grandfathering of this 
     limited category of subscribers whose service would otherwise 
     be terminated.
       The decision by the conferees to direct this limited 
     grandfathering should not be understood as condoning unlawful 
     conduct by satellite carriers, but rather reflects the 
     concern of the conference for those subscribers who would 
     otherwise be punished for the actions of the satellite 
     carriers. Note that in the previous 18 months, court 
     decisions have required the termination of some distant 
     network signals to some subscribers. However, the Conferees 
     are aware that in some cases satellite carriers terminated 
     distant network service that was not subject to the original 
     lawsuit. The Conferees intend that affected subscribers 
     remain eligible for such service.
       The words ``shall remain eligible'' in section 119(e) refer 
     to eligibility to receive stations affiliated with the same 
     network from the same satellite carrier through use of the 
     same transmission technology at the same location; in other 
     words, grandfathered status is not transferable to a 
     different carrier or a different type of dish or at a new 
     address. The provisions of new section 119(e) are 
     incorporated by reference in the definition of ``unserved 
     household'' as new section 119(d)(10)(C).
       Section 1005(d) of this Act creates a new section 
     119(a)(11), which contains provisions governing delivery of 
     network stations to recreational vehicles and commercial 
     trucks. This provision is, in turn, incorporated in the 
     definition of ``unserved household'' in new section 
     119(d)(10)(D). The purpose of these amendments is to allow 
     the operators of recreational vehicles and commercial trucks 
     to use satellite dishes permanently attached to those 
     vehicles to receive, on television sets located inside those 
     vehicles, distant network signals pursuant to section 119. To 
     prevent abuse of this provision, the exception for 
     recreational vehicles and commercial trucks is limited to 
     persons who have strictly complied with the documentation 
     requirements set forth in section 119(a)(11). Among other 
     things, the exception will only become available as to a 
     particular recreational vehicle or commercial truck after the 
     satellite carrier has provided all affected networks with all 
     documentation set forth in section 119(a). The exception will 
     apply only for reception in that particular recreational 
     vehicle or truck, and does not authorize any delivery of 
     network stations to any fixed dwelling.
     Section 1006. Public Broadcasting Service Satellite Feed
       The conference agreement follows the Senate bill with an 
     amendment that applies the network copyright royalty rate to 
     the Public Broadcasting Service the satellite feed. The 
     conference agreement grants satellite carriers a section 119 
     compulsory license to retransmit a national satellite feed 
     distributed and designated by PBS. The license would apply to 
     educational and informational programming to which PBS 
     currently holds broadcast rights. The license, which would 
     extend to all households in the United States, would sunset 
     on January 1, 2002, the date when local-to-local must-carry 
     obligations become effective. Under the conference agreement, 
     PBS will designate the national satellite feed for purposes 
     of this section.
     Section 1007. Application of Federal Communications 
         Commission Regulations
       The section 119 license is amended to clarify that 
     satellite carriers must comply with all rules, regulations, 
     and authorizations of the Federal Communications Commission 
     in order to obtain the benefits of the section 119 license. 
     As provided in the House bill, this would include any 
     programming exclusivity provisions or carriage requirements 
     that the Commission may adopt. Violations of such rules, 
     regulations or authorizations would render a carrier 
     ineligible for the copyright statutory license with respect 
     to that retransmission.

[[Page S14711]]

     Section 1008. Rules for Satellite Carriers Retransmitting 
         Television Broadcast Signals
       The Senate agrees to the House bill provisions regarding 
     carriage of television broadcast signals, with certain 
     amendments, as discussed below. Section 108 creates new 
     sections 338 and 339 of the Communications Act of 1934. 
     Section 338 addresses carriage of local television signals, 
     while section 339 addresses distant television signals.
       New section 338 requires satellite carriers, by January 1, 
     2002, to carry upon request all local broadcast stations' 
     signals in local markets in which the satellite carriers 
     carry at least one signal pursuant to section 122 of title 
     17, United States Code. The conference report added the 
     cross-reference to section 122 to the House provision to 
     indicate the relationship between the benefits of the 
     statutory license and the carriage requirements imposed by 
     this Act. Thus, the conference report provides that, as of 
     January 1, 2002, royalty-free copyright licenses for 
     satellite carriers to retransmit broadcast signals to viewers 
     in the broadcasters' service areas will be available only on 
     a market-by-market basis.
       The procedural provisions applicable to section 338 
     (concerning costs, avoidance of duplication, channel 
     positioning, compensation for carriage, and complaints by 
     broadcast stations) are generally parallel to those 
     applicable to cable systems. Within one year after enactment, 
     the Federal Communications Commission is to issue 
     implementing regulations which are to impose obligations 
     comparable to those imposed on cable systems under paragraphs 
     (3) and (4) of section 614(b) and paragraphs (1) and (2) of 
     section 615(g), such as the requirement to carry a station's 
     entire signal without additions or deletions. The obligation 
     to carry local stations on contiguous channels is 
     illustrative of the general requirement to ensure that 
     satellite carriers position local stations in a way that is 
     convenient and practically accessible for consumers. By 
     directing the FCC to promulgate these must-carry rules, the 
     conferees do not take any position regarding the application 
     of must-carry rules to carriage of digital television signals 
     by either cable or satellite systems.
       To make use of the local license, satellite carriers must 
     provide the local broadcast station signal as part of their 
     satellite service, in a manner consistent with paragraphs 
     (b), (c), (d), and (e), FCC regulations, and retransmission 
     consent requirements. Until January 1, 2002, satellite 
     carriers are granted a royalty-free copyright license to 
     retransmit broadcast signals on a station-by-station basis, 
     consistent with retransmission consent requirements. The 
     transition period is intended to provide the satellite 
     industry with a transitional period to begin providing local-
     into-local satellite service to communities throughout the 
     country.
       The conferees believe that the must-carry provisions of 
     this Act neither implicate nor violate the First Amendment. 
     Rather than requiring carriage of stations in the manner of 
     cable's mandated duty, this Act allows a satellite carrier to 
     choose whether to incur the must-carry obligation in a 
     particular market in exchange for the benefits of the local 
     statutory license. It does not deprive any programmers of 
     potential access to carriage by satellite carriers. Satellite 
     carriers remain free to carry any programming for which they 
     are able to acquire the property rights. The provisions of 
     this Act allow carriers an easier and more inexpensive way to 
     obtain the right to use the property of copyright holders 
     when they retransmit signals from all of a market's broadcast 
     stations to subscribers in that market. The choice whether to 
     retransmit those signals is made by carriers, not by the 
     Congress. The proposed licenses are a matter of legislative 
     grace, in the nature of subsidies to satellite carriers, and 
     reviewable under the rational basis standard.\1\
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     See footnotes at end of Analysis.
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       In addition, the conferees are confident that the proposed 
     license provisions would pass constitutional muster even if 
     subjected to the O'Brien standard applied to the cable must-
     carry requirement.\2\ The proposed provisions are intended to 
     preserve free television for those not served by satellite or 
     cable systems and to promote widespread dissemination of 
     information from a multiplicity of sources. The Supreme Court 
     has found both to be substantial interests, unrelated to the 
     suppression of free expression.\3\ Providing the proposed 
     license on a market-by-market basis furthers both goals by 
     preventing satellite carriers from choosing to carry only 
     certain stations and effectively preventing many other local 
     broadcasters from reaching potential viewers in their service 
     areas. The Conference Committee is concerned that, absent 
     must-carry obligations, satellite carriers would carry the 
     major network affiliates and few other signals. Non-carried 
     stations would face the same loss of viewership Congress 
     previously found with respect to cable noncarriage.\4\
       The proposed licenses place satellite carrier in a 
     comparable position to cable systems, competing for the same 
     customers. Applying a must-carry rule in markets which 
     satellite carriers choose to serve benefits consumers and 
     enhances competition with cable by allowing consumers the 
     same range of choice in local programming they receive 
     through cable service. The conferees expect that, by January 
     1, 2002, satellite carriers' market share will have increased 
     and that the Congress' interest in maintaining free over-the-
     air television will be undermined if local broadcasters are 
     prevented from reaching viewers by either cable or satellite 
     distribution systems. The Congress' preference for must-carry 
     obligations has already been proven effective, as attested by 
     the appearance of several emerging networks, which often 
     serve underserved market segments. There are no narrower 
     alternatives that would achieve the Congress' goals. Although 
     the conferees expect that subscribers who receive no 
     broadcast signals at all from their satellite service may 
     install antennas or subscribe to cable service in addition to 
     satellite service, the Conference Committee is less sanguine 
     that subscribers who receive network signals and hundreds of 
     other programming choices from their satellite carrier will 
     undertake such trouble and expense to obtain over-the-air 
     signals from independent broadcast stations. National feeds 
     would also be counterproductive because they siphon potential 
     viewers from local over-the-air affiliates. In sum, the 
     Conference Committee finds that trading the benefits of the 
     copyright license for the must carry requirement is a fair 
     and reasonable way of helping viewers have access to all 
     local programming while benefitting satellite carriers and 
     their customers.
       Section 338(c) contains a limited exception to the general 
     must-carry requirements, stating that a satellite carrier 
     need not carry two local affiliates of the same network that 
     substantially duplicate each others' programming, unless the 
     duplicating stations are licensed to communities in different 
     states. The latter provisions address unique and limited 
     cases, including WMUR (Manchester, New Hampshire) / WCVB 
     (Boston, Massachusetts) and WPTZ (Plattsburg, New York)/ WNNE 
     (White River Junction, Vermont), in which mandatory carriage 
     of both duplicating local stations upon request assures that 
     satellite subscribers will not be precluded from receiving 
     the network affiliate that is licensed to the state in which 
     they reside.
       Because of unique technical challenges on satellite 
     technology and constraints on the use of satellite spectrum, 
     satellite carriers may initially be limited in their ability 
     to deliver must carry signals into multiple markets. New 
     compression technologies, such as video streaming, may help 
     overcome these barriers however, and, if deployed, could 
     enable satellite carriers to deliver must-carry signals into 
     many more markets than they could otherwise. Accordingly, the 
     conferees urge the FCC, pursuant to its obligations under 
     section 338, or in any other related proceedings, to not 
     prohibit satellite carriers from using reasonable 
     compression, reformatting, or similar technologies to meet 
     their carriage obligations, consistent with existing 
     authority.

                           *   *   *   *   *

       New section 339 of the Communications Act contains 
     provisions concerning carriage of distant television stations 
     by satellite carriers. Section 339(a)(1) limits satellite 
     carriers to providing a subscriber with no more than two 
     stations affiliated with a given television network from 
     outside the local market. In addition, a satellite carrier 
     that provides two distant signals to eligible households may 
     also provide the local television signals pursuant to section 
     122 of title 17 if the subscriber offers local-to-local 
     service in the subscriber's market. This provision furthers 
     the congressional policy of localism and diversity of 
     broadcast programming, which provides locally-relevant news, 
     weather, and information, but also allows consumers in 
     unserved households to enjoy network programming obtained via 
     distant signals. Under new section 339(a)(2), which is based 
     on the Senate amendment, the knowing and willful provision of 
     distant television signals in violation of these restrictions 
     is subject to a forfeiture penalty under section 503 of the 
     Communications Act of $50,000 per violation or for each day 
     of a continuing violation.
       New section 339(b)(1)(A) requires the Commission to 
     commence within 45 days of enactment, and complete within one 
     year after the date of enactment, a rulemaking to develop 
     regulations to apply network nonduplication, syndicated 
     exclusivity and sports blackout rules to the transmission of 
     nationally distributed superstations by satellite carriers. 
     New section 339(b)(1)(B) requires the Commission to 
     promulgate regulations on the same schedule with regard to 
     the application of sports blackout rules to network stations. 
     These regulations under subparagraph (B) are to be imposed 
     ``to the extent technically feasible and not economically 
     prohibitive'' with respect to the affected parties. The 
     burden of showing that conforming to rules similar to cable 
     would be ``economically prohibitive'' is a heavy one. It 
     would entail a very serious economic threat to the health of 
     the carrier. Without that showing, the rules should be as 
     similar as possible to that applicable to cable services.
       Section 339(c) of the Communications Act of 1934 addresses 
     the three distinct areas discussed by the Commission in its 
     Report & Order in Docket No. 98-201: (i) the definition of 
     ``Grade B intensity,'' which is the substantive standard for 
     determining eligibility to receive distant network stations 
     by satellite, (ii) prediction of whether a signal of Grade B 
     intensity from a particular station is present at a 
     particular household, and (iii) measurement of whether a 
     signal of Grade B intensity from a particular station is 
     present

[[Page S14712]]

     at a particular household. Section 339(c) addresses each of 
     these topics.
       New section 339(c) addresses evaluation and possible 
     recommendations for modification by the Commission of the 
     definition of Grade B intensity, which is incorporated into 
     the definition of ``unserved household'' in section 119 of 
     the Copyright Act. Under section 339(c), the Commission is to 
     complete a rulemaking within 1 year after enactment to 
     evaluate, and if appropriate to recommend modifications to 
     the Grade B intensity standard for analog signals set forth 
     in 47 C.F.R. Sec. 73.683(a), for purposes of determining 
     eligibility for distant signal satellite service. In 
     addition, the Commission is to recommend a signal standard 
     for digital signals to prepare Congress to update the 
     statutory license for digital television broadcasting. The 
     Committee intends that this report would reflect the FCC's 
     best recommendations in light of all relevant considerations, 
     and be based on whatever factors and information the 
     Commission deems relevant to determining whether the signal 
     intensity standard should be modified and in what way. As 
     discussed above, the two-part process allows the Commission 
     to recommend modifications leaving to Congress the decision-
     making power on modifications of the copyright licenses at 
     issue.
       Section 339(c)(3) addresses requests to local television 
     stations by consumers for waivers of the eligibility 
     requirements under section 119 of title 17, United States 
     Code. If a satellite carrier is barred from delivering 
     distant network signals to a particular customer because the 
     ILLR model predicts the customer to be served by one or more 
     television stations affiliated with the relevant network, the 
     consumer may submit to those stations, through his or her 
     satellite carrier, a written request for a waiver. The 
     statutory phrase ``station asserting that the retransmission 
     is prohibited'' refers to a station that is predicted by the 
     ILLR model to serve the household. Each such station must 
     accept or reject the waiver request within 30 days after 
     receiving the request from the satellite carrier. If a 
     relevant network station grants the requested waiver, or 
     fails to act on the waiver within 30 days, the viewer shall 
     be deemed unserved with respect to the local network station 
     in question.
       Section 339(c)(4) addresses the ILLR predictive model 
     developed by the Commission in Docket No. 98-201. The 
     provision requires the Commission to attempt to increase its 
     accuracy further by taking into account not only terrain, as 
     the ILLR model does now, but also land cover variations such 
     as buildings and vegetation. If the Commission discovers 
     other practical ways to improve the accuracy of the ILLR 
     model still further, it shall implement those methods as 
     well. The linchpin of whether particular proposed refinements 
     to the ILLR model result in greater accuracy is whether the 
     revised model's predictions are closer to the results of 
     actual field testing in terms of predicting whether 
     households are served by a local affiliate of the relevant 
     network.
       The ILLR model of predicting subscribers' eligibility will 
     be of particular use in rural areas. To make the ILLR more 
     accurate and more useful to this group of Americans, the 
     Conference Committee believes the Commission should be 
     particularly careful to ensure that the ILLR is accurate in 
     areas that use star routes, postal routes, or other 
     addressing systems that may not indicate clearly the location 
     of the actual dwelling of a potential subscriber. The 
     Commission should to ensure the model accurately predicts the 
     signal strength at the viewers' actual location.
       New section 339(c)(5) addresses the third area discussed in 
     the Commission's Report & Order in Docket No. 98-201, namely 
     signal intensity testing. This provision permits satellite 
     carriers and broadcasters to carry out signal intensity 
     measurements, using the procedures set forth by the 
     Commission in 47 C.F.R. Sec. 73.686(d), to determine whether 
     particular households are unserved. Unless the parties 
     otherwise agree, any such tests shall be conducted on a 
     ``loser pays'' basis, with the network station bearing the 
     costs of tests showing the household to be unserved, and the 
     satellite carrier bearing the costs of tests showing the 
     household to be served. If the satellite carrier and station 
     is unable to agree on a qualified individual to perform the 
     test, the Commission is to designate an independent and 
     neutral entity by rule. The Commission is to promulgate rules 
     that avoid any undue burdens being imposed on any party.
     Section 1009. Retransmission Consent
       Section 1009 amends the provisions of section 325 of the 
     Communications Act governing retransmission consent. As 
     revised, section 325(b)(1) bars multichannel video 
     programming distributors from retransmitting the signals of 
     television broadcast stations, or any part thereof, without 
     the express authority of the originating station. Section 
     325(b)(2) contains several exceptions to this general 
     prohibition, including noncommercial stations, certain 
     superstations, and, until the end of 2004, retransmission of 
     not more than two distant signals by satellite carriers to 
     unserved households outside of the local market of the 
     retransmitted stations, and (E) for six months to the 
     retransmission of local stations pursuant to the statutory 
     license in section 122 of the title 17.
       Section 1009 also amends section 325(b) of the 
     Communications Act to require the Commission to issue 
     regulations concerning the exercise by television broadcast 
     stations of the right to grant retransmission consent. The 
     regulations would, until January 1, 2006, prohibit a 
     television broadcast station from entering into an exclusive 
     retransmission consent agreement with a multichannel video 
     programming distributor or refusing to negotiate in good 
     faith regarding retransmission consent agreements. A 
     television station may generally offer different 
     retransmission consent terms or conditions, including price 
     terms, to different distributors. The FCC may determine that 
     such different terms represent a failure to negotiate in good 
     faith only if they are not based on competitive marketplace 
     considerations.
       Section 1009 of the bill adds a new subsection (e) to 
     section 325 of the Communications Act. New subsection 325(e) 
     creates a set of expedited enforcement procedures for the 
     alleged retransmission of a television broadcast station in 
     its own local market without the station's consent. The 
     purpose of these expedited procedure is to ensure that delays 
     in obtaining relief from violations do not make the right to 
     retransmission consent an empty one. The new provision 
     requires 45-day processing of local-to-local retransmission 
     consent complaints at the Commission, followed by expedited 
     enforcement of any Commission orders in the United States 
     District Court for the Eastern District of Virginia. In 
     addition, a television broadcast station that has been 
     retransmitted in its local market without its consent will be 
     entitled to statutory damages of $25,000 per violation in an 
     action in federal district court. Such damages will be 
     awarded only if the television broadcast station agrees to 
     contribute any statutory damage award above $1,000 to the 
     United States Treasury for public purposes. The expedited 
     enforcement provision contains a sunset which prevents the 
     filing of any complaint with the Commission or any action in 
     federal district court to enforce any Commission order under 
     this section after December 31, 2001. The conferees believe 
     that these procedural provisions, which provide ample due 
     process protections while ensuring speedy enforcement, will 
     ensure that retransmission consent will be respected by all 
     parties and promote a smoothly functioning marketplace.
     Section 1010. Severability
       Section 1010 of the Act provides that if any provision of 
     section 325(b) of the Communications Act as amended by this 
     Act is declared unconstitutional, the remaining provisions of 
     that section will stand.
     Section 1011. Technical Amendments
       Section 1011 of this Act makes technical and conforming 
     amendments to sections 101, 111, 119, 501, and 510 of the 
     Copyright Act. Apart from these technical amendments, this 
     legislation makes no changes to section 111 of the Copyright 
     Act. In particular, nothing in this legislation makes any 
     changes concerning entitlement or eligibility for the 
     statutory licenses under sections 111 and 119, nor 
     specifically to the definitions of ``cable system'' under 
     section 111(f), and ``satellite carrier'' under section 
     119(d)(6). Certain technical amendments to these definitions 
     that were included in the Conference Report to the 
     Intellectual Property and Communications Omnibus Reform Act 
     (IPCORA) of 1999 are not included in this legislation. 
     Congress intends that neither the courts nor the Copyright 
     Office give any legal significance either to the inclusion of 
     the amendments in the IPCORA conference report or their 
     omission in this legislation. These statutory definitions are 
     to be interpreted in the same way after enactment of this 
     legislation as they were interpreted prior to enactment of 
     this legislation.
       Section 1011(b) makes a technical and clarifying change to 
     the definition of a ``work made for hire'' in section 101 of 
     the Copyright Act. Sound recordings have been registered in 
     the Copyright Office as works made for hire since being 
     protected in their own right. This clarifying amendment shall 
     not be deemed to imply that any sound recording or any other 
     work would not otherwise qualify as a work made for hire in 
     the absence of the amendment made by this subsection.
     Section 1012. Effective dates.
       Under section 1012 of this Act, sections 1001, 1003, 1005, 
     and 1007 through 1011 shall be effective on the date of 
     enactment. The amendments made by sections 1002, 1004, and 
     1006 shall be effective as of July 1, 1999.

                TITLE II--RURAL LOCAL TELEVISION SIGNALS

     Section 2001. Short Title
       This title may be referred to as the ``Rural Local 
     Broadcast Signal Act.''
     Section 2002. Local Television Service in Unserved and 
         Underserved Markets
       To encourage the FCC to approve needed licenses (or other 
     authorizations to use spectrum) to provide local TV service 
     in rural areas, the Commission is required to make 
     determinations regarding needed licenses within one year of 
     enactment.
       However, the FCC shall ensure that no license or 
     authorization provided under this section will cause 
     ``harmful interference'' to the primary users of the spectrum 
     or to public safety use. Subparagraph (2), states that the 
     Commission shall not license under subsection (a) any 
     facility that causes harmful interference to existing primary 
     users of spectrum or to public safety use. The Commission 
     typically categorizes a licensed service as primary or 
     secondary. Under Commission rules, a secondary service cannot 
     be authorized to operate in the same band as a

[[Page S14713]]

     primary user of that band unless the proposed secondary user 
     conclusively demonstrates that the proposed secondary use 
     will not cause harmful interference to the primary service. 
     The Commission is to define ``harmful interference'' pursuant 
     to the definition at 47 C.F.R. section 2.1 and in accordance 
     with Commission rules and policies.
       For purposes of section 2005(b)(3) the FCC may consider a 
     compression, reformatting or other technology to be 
     unreasonable if the technology is incompatible with other 
     applicable FCC regulation or policy under the Communications 
     Act of 1934, as amended.
       The Commission also may not restrict any entity granted a 
     license or other authorization under this section, except as 
     otherwise specified, from using any reasonable compression, 
     reformatting, or other technology.

              TITLE III--TRADEMARK CYBERPIRACY PREVENTION

     Section 3001. Short Title; References
       This section provides that the Act may be cited as the 
     ``Anticybersquatting Consumer Protection Act'' and that any 
     references within the bill to the Trademark Act of 1946 shall 
     be a reference to the Act entitled ``An Act to provide for 
     the registration and protection of trademarks used in 
     commerce, to carry out the provisions of certain 
     international conventions, and for other purposes,'' approved 
     July 5, 1946 (15 U.S.C. 1051 et seq.), also commonly referred 
     to as the Lanham Act.
     Sec. 3002. Cyberpiracy Prevention
       Subsection (a). In General. This subsection amends the 
     Trademark Act to provide an explicit trademark remedy for 
     cybersquatting under a new section 43(d). Under paragraph 
     (1)(A) of the new section 43(d), actionable conduct would 
     include the registration, trafficking in, or use of a domain 
     name that is identical or confusingly similar to, or dilutive 
     of, the mark of another, including a personal name that is 
     protected as a mark under section 43 of the Lanham Act, 
     provided that the mark was distinctive (i.e., enjoyed 
     trademark status) at the time the domain name was registered, 
     or in the case of trademark dilution, was famous at the time 
     the domain name was registered. The bill is carefully and 
     narrowly tailored, however, to extend only to cases where the 
     plaintiff can demonstrate that the defendant registered, 
     trafficked in, or used the offending domain name with bad-
     faith intent to profit from the goodwill of a mark belonging 
     to someone else. Thus, the bill does not extend to innocent 
     domain name registrations by those who are unaware of 
     another's use of the name, or even to someone who is aware of 
     the trademark status of the name but registers a domain name 
     containing the mark for any reason other than with bad faith 
     intent to profit from the goodwill associated with that mark.
       The phrase ``including a personal name which is protected 
     as a mark under this section'' addresses situations in which 
     a person's name is protected under section 43 of the Lanham 
     Act and is used as a domain name. The Lanham Act prohibits 
     the use of false designations of origin and false or 
     misleading representations. Protection under 43 of the Lanham 
     Act has been applied by the courts to personal names which 
     function as marks, such as service marks, when such marks are 
     infringed. Infringement may occur when the endorsement of 
     products or services in interstate commerce is falsely 
     implied through the use of a personal name, or otherwise, 
     without regard to the goods or services of the parties. This 
     protection also applies to domain names on the Internet, 
     where falsely implied endorsements and other types of 
     infringement can cause greater harm to the owner and 
     confusion to a consumer in a shorter amount of time than is 
     the case with traditional media. The protection offered by 
     section 43 to a personal name which functions as a mark, as 
     applied to domain names, is subject to the same fair use and 
     first amendment protections as have been applied 
     traditionally under trademark law, and is not intended to 
     expand or limit any rights to publicity recognized by States 
     under State law.
       Paragraph (1)(B)(i) of the new section 43(d) sets forth a 
     number of nonexclusive, nonexhaustive factors to assist a 
     court in determining whether the required bad-faith element 
     exists in any given case. These factors are designed to 
     balance the property interests of trademark owners with the 
     legitimate interests of Internet users and others who seek to 
     make lawful uses of others' marks, including for purposes 
     such as comparative advertising, comment, criticism, parody, 
     news reporting, fair use, etc. The bill suggests a total of 
     nine factors a court may wish to consider. The first four 
     suggest circumstances that may tend to indicate an absence of 
     bad-faith intent to profit from the goodwill of a mark, and 
     the next four suggest circumstances that may tend to indicate 
     that such bad-faith intent exits. The last factor may suggest 
     either bad-faith or an absence thereof depending on the 
     circumstances.
       First, under paragraph (1)(B)(i)(I), a court may consider 
     whether the domain name registrant has trademark or any other 
     intellectual property rights in the name. This factor 
     recognizes, as does trademark law in general, that there may 
     be concurring uses of the same name that are noninfringing, 
     such as the use of the ``Delta'' mark for both air travel and 
     sink faucets. Similarly, the registration of the domain name 
     ``deltaforce.com'' by a movie studio would not tend to 
     indicate a bad faith intent on the part of the registrant to 
     trade on Delta Airlines or Delta Faucets' trademarks.
       Second, under paragraph (1)(B)(i)(II), a court may consider 
     the extent to which the domain name is the same as the 
     registrant's own legal name or a nickname by which that 
     person is commonly identified. This factor recognizes, again 
     as does the concept of fair use in trademark law, that a 
     person should be able to be identified by their own name, 
     whether in their business or on a web site. Similarly, a 
     person may bear a legitimate nickname that is identical or 
     similar to a well-known trademark, such as in the well-
     publicized case of the parents who registered the domain name 
     ``pokey.org'' for their young son who goes by that name, and 
     these individuals should not be deterred by this bill from 
     using their name online. This factor is not intended to 
     suggest that domain name registrants may evade the 
     application of this act by merely adopting Exxon, Ford, or 
     other well-known marks as their nicknames. It merely provides 
     a court with the appropriate discretion to determine whether 
     or not the fact that a person bears a nickname similar to a 
     mark at issue is an indication of an absence of bad-faith on 
     the part of the registrant.
       Third, under paragraph (1)(B)(i)(III), a court may consider 
     the domain name registrant's prior use, if any, of the domain 
     name in connection with the bona fide offering of goods or 
     services. Again, this factor recognizes that the legitimate 
     use of the domain name in online commerce may be a good 
     indicator of the intent of the person registering that name. 
     Where the person has used the domain name in commerce without 
     creating a likelihood of confusion as to the source or origin 
     of the goods or services and has not otherwise attempted to 
     use the name in order to profit from the goodwill of the 
     trademark owner's name, a court may look to this as an 
     indication of the absence of bad faith on the part of the 
     registrant.
       Fourth, under paragraph (1)(B)(i)(IV), a court may consider 
     the person's bona fide noncommercial or fair use of the mark 
     in a web site that is accessible under the domain name at 
     issue. This factor is intended to balance the interests of 
     trademark owners with the interests of those who would make 
     lawful noncommercial or fair uses of others' marks online, 
     such as in comparative advertising, comment, criticism, 
     parody, news reporting, etc. Under the bill, the mere fact 
     that the domain name is used for purposes of comparative 
     advertising, comment, criticism, parody, news reporting, 
     etc., would not alone establish a lack of bad-faith intent. 
     The fact that a person uses a mark in a site in such a lawful 
     manner may be an appropriate indication that the person's 
     registration or use of the domain name lacked the required 
     element of bad-faith. This factor is not intended to create a 
     loophole that otherwise might swallow the bill, however, by 
     allowing a domain name registrant to evade application of the 
     Act by merely putting up a noninfringing site under an 
     infringing domain name. For example, in the well know case of 
     Panavision Int'l v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), a 
     well known cybersquatter had registered a host of domain 
     names mirroring famous trademarks, including names for 
     Panavision, Delta Airlines, Neiman Marcus, Eddie Bauer, 
     Lufthansa, and more than 100 other marks, and had attempted 
     to sell them to the mark owners for amounts in the range of 
     $10,000 to $15,000 each. His use of the ``panavision.com'' 
     and ``panaflex.com'' domain names was seemingly more 
     innocuous, however, as they served as addresses for sites 
     that merely displayed pictures of Pana Illinois and the word 
     ``Hello'' respectively. This bill would not allow a person to 
     evade the holding of that case--which found that Mr. Toeppen 
     had made a commercial use of the Panavision marks and that 
     such uses were, in fact, diluting under the Federal Trademark 
     Dilution Act--merely by posting noninfringing uses of the 
     trademark on a site accessible under the offending domain 
     name, as Mr. Toeppen did. Similarly, the bill does not affect 
     existing trademark law to the extent it has addressed the 
     interplay between First Amendment protections and the rights 
     of trademark owners. Rather, the bill gives courts the 
     flexibility to weigh appropriate factors in determining 
     whether the name was registered or used in bad faith, and it 
     recognizes that one such factor may be the use the domain 
     name registrant makes of the mark.
       Fifth, under paragraph (1)(B)(i)(V), a court may consider 
     whether, in registering or using the domain name, the 
     registrant intended to divert consumers away from the 
     trademark owner's website to a website that could harm the 
     goodwill of the mark, either for purposes of commercial gain 
     or with the intent to tarnish or disparage the mark, by 
     creating a likelihood of confusion as to the source, 
     sponsorship, affiliation, or endorsement of the site. This 
     factor recognizes that one of the main reasons cybersquatters 
     use other people's trademarks is to divert Internet users to 
     their own sites by creating confusion as to the source, 
     sponsorship, affiliation, or endorsement of the site. This is 
     done for a number of reasons, including to pass off inferior 
     goods under the name of a well-known mark holder, to defraud 
     consumers into providing personally identifiable information, 
     such as credit card numbers, to attract ``eyeballs'' to sites 
     that price online advertising according to the number of 
     ``hits'' the site receives, or even just to harm the value of 
     the mark. Under this provision,

[[Page S14714]]

     a court may give appropriate weight to evidence that a domain 
     name registrant intended to confuse or deceive the public in 
     this manner when making a determination of bad-faith intent.
       Sixth, under paragraph (1)(B)(i)(VI), a court may consider 
     a domain name registrant's offer to transfer, sell, or 
     otherwise assign the domain name to the mark owner or any 
     third party for financial gain, where the registrant has not 
     used, and did not have any intent to use, the domain name in 
     the bona fide offering of any goods or services. A court may 
     also consider a person's prior conduct indicating a pattern 
     of such conduct. This factor is consistent with the court 
     cases, like the Panavision case mentioned above, where courts 
     have found a defendant's offer to sell the domain name to the 
     legitimate mark owner as being indicative of the defendant's 
     intent to trade on the value of a trademark owner's marks by 
     engaging in the business of registering those marks and 
     selling them to the rightful trademark owners. It does not 
     suggest that a court should consider the mere offer to sell a 
     domain name to a mark owner or the failure to use a name in 
     the bona fide offering of goods or services as sufficient to 
     indicate bad faith. Indeed, there are cases in which a person 
     registers a name in anticipation of a business venture that 
     simply never pans out. And someone who has a legitimate 
     registration of a domain name that mirrors someone else's 
     domain name, such as a trademark owner that is a lawful 
     concurrent user of that name with another trademark owner, 
     may, in fact, wish to sell that name to the other trademark 
     owner. This bill does not imply that these facts are an 
     indication of bad-faith. It merely provides a court with the 
     necessary discretion to recognize the evidence of bad-faith 
     when it is present. In practice, the offer to sell domain 
     names for exorbitant amounts to the rightful mark owner has 
     been one of the most common threads in abusive domain name 
     registrations. Finally, by using the financial gain standard, 
     this paragraph allows a court to examine the motives of the 
     seller.
       Seventh, under paragraph (1)(B)(i)(VII), a court may 
     consider the registrant's intentional provision of material 
     and misleading false contact information in an application 
     for the domain name registration, the person's intentional 
     failure to maintain accurate contact information, and the 
     person's prior conduct indicating a pattern of such conduct. 
     Falsification of contact information with the intent to evade 
     identification and service of process by trademark owners is 
     also a common thread in cases of cybersquatting. This factor 
     recognizes that fact, while still recognizing that there may 
     be circumstances in which the provision of false information 
     may be due to other factors, such as mistake or, as some have 
     suggested in the case of political dissidents, for purposes 
     of anonymity. This bill balances those factors by limiting 
     consideration to the person's contact information, and even 
     then requiring that the provision of false information be 
     material and misleading. As with the other factors, this 
     factor is nonexclusive and a court is called upon to make a 
     determination based on the facts presented whether or not the 
     provision of false information does, in fact, indicate bad-
     faith.
       Eight, under paragraph (1)(B)(i)(VIII), a court may 
     consider the domain name registrant's acquisition of multiple 
     domain names which the person knows are identical or 
     confusingly similar to, or dilutive of, others' marks. This 
     factor recognizes the increasingly common cybersquatting 
     practice known as ``warehousing'', in which a cybersquatter 
     registers multiple domain names--sometimes hundreds, even 
     thousands--that mirror the trademarks of others. By sitting 
     on these marks and not making the first move to offer to sell 
     them to the mark owner, these cybersquatters have been 
     largely successful in evading the case law developed under 
     the Federal Trademark Dilution Act. This bill does not 
     suggest that the mere registration of multiple domain names 
     is an indication of bad faith, but it allows a court to weigh 
     the fact that a person has registered multiple domain names 
     that infringe or dilute the trademarks of others as part of 
     its consideration of whether the requisite bad-faith intent 
     exists.
       Lastly, under paragraph (1)(B)(i)(IX), a court may consider 
     the extent to which the mark incorporated in the person's 
     domain name registration is or is not distinctive and famous 
     within the meaning of subsection (c)(1) of section 43 of the 
     Trademark Act of 1946. The more distinctive or famous a mark 
     has become, the more likely the owner of that mark is 
     deserving of the relief available under this act. At the same 
     time, the fact that a mark is not well-known may also suggest 
     a lack of bad-faith.
       Paragraph (1)(B)(ii) underscores the bad-faith requirement 
     by making clear that bad-faith shall not be found in any case 
     in which the court determines that the person believed and 
     had reasonable grounds to believe that the use of the domain 
     name was a fair use or otherwise lawful.
       Paragraph (1)(C) makes clear that in any civil action 
     brought under the new section 43(d), a court may order the 
     forfeiture, cancellation, or transfer of a domain name to the 
     owner of the mark.
       Paragraph (1)(D) clarifies that a prohibited ``use'' of a 
     domain name under the bill applies only to a use by the 
     domain name registrant or that registrant's authorized 
     licensee.
       Paragraph (1)(E) defines what means to ``traffic in'' a 
     domain name. Under this Act, ``traffics in'' refers to 
     transactions that include, but are not limited to, sales, 
     purchases, loans, pledges, licenses, exchanges of currency, 
     and any other transfer for consideration or receipt in 
     exchange for consideration.
       Paragraph (2)(A) provides for in rem jurisdiction, which 
     allows a mark owner to seek the forfeiture, cancellation, or 
     transfer of an infringing domain name by filing an in rem 
     action against the name itself, where the mark owner has 
     satisfied the court that it has exercised due diligence in 
     trying to locate the owner of the domain name but is unable 
     to do so, or where the mark owner is otherwise unable to 
     obtain in personam jurisdiction over such person. As 
     indicated above, a significant problem faced by trademark 
     owners in the fight against cybersquatting is the fact that 
     many cybersquatters register domain names under aliases or 
     otherwise provide false information in their registration 
     applications in order to avoid identification and service of 
     process by the mark owner. This bill will alleviate this 
     difficulty, while protecting the notions of fair play and 
     substantial justice, by enabling a mark owner to seek an 
     injunction against the infringing property in those cases 
     where, after due diligence, a mark owner is unable to proceed 
     against the domain name registrant because the registrant has 
     provided false contact information and is otherwise not to be 
     found, or where a court is unable to assert personal 
     jurisdiction over such person, provided the mark owner can 
     show that the domain name itself violates substantive federal 
     trademark law (i.e., that the domain name violates the rights 
     of the registrant of a mark registered in the Patent and 
     Trademark Office, or section 43(a) or (c) of the Trademark 
     Act). Under the bill, a mark owner will be deemed to have 
     exercised due diligence in trying to find a defendant if the 
     mark owner sends notice of the alleged violation and intent 
     to proceed to the domain name registrant at the postal and e-
     mail address provided by the registrant to the registrar and 
     publishes notice of the action as the court may direct 
     promptly after filing the action. Such acts are deemed to 
     constitute service of process by paragraph (2)(B).
       The concept of in rem jurisdiction has been with us since 
     well before the Supreme Court's landmark decision in Pennoyer 
     v. Neff, 95 U.S. 714 (1877). Although more recent decisions 
     have called into question the viability of quasi in rem 
     ``attachment'' jurisdiction, see Shaffer v. Heitner, 433 U.S. 
     186 (1977), the Court has expressly acknowledged the 
     propriety of true in rem proceedings (or even type I quasi in 
     rem proceedings \5\) where ``claims to the property itself 
     are the source of the underlying controversy between the 
     plaintiff and the defendant.'' Id. at 207-08. The Act 
     clarifies the availability of in rem jurisdiction in 
     appropriate cases involving claims by trademark holders 
     against cyberpirates. In so doing, the Act reinforces the 
     view that in rem jurisdiction has continuing constitutional 
     vitality, see R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 
     957-58 (4th Cir. 1999) (``In rem actions only require that a 
     party seeking an interest in a res bring the res into the 
     custody of the court and provide reasonable, public notice of 
     its intention to enable others to appear in the action to 
     claim an interest in the res.''); Chapman v. Vande Bunte, 604 
     F. Supp. 714, 716-17 (E.D. N.C. 1985) (``In a true in rem 
     proceeding, in order to subject property to a judgment in 
     rem, due process requires only that the property itself have 
     certain minimum contacts with the territory of the forum.'').
       By authorizing in rem jurisdiction, the Act also attempts 
     to respond to the problems faced by trademark holders in 
     attempting to effect personal service of process on 
     cyberpirates. In an effort to avoid being held accountable 
     for their infringement or dilution of famous trademarks, 
     cyberpirates often have registered domain names under 
     fictitious names and addresses or have used offshore 
     addresses or companies to register domain names. Even when 
     they actually do receive notice of a trademark holder's 
     claim, cyberpirates often either refuse to acknowledge 
     demands from a trademark holder altogether, or simply respond 
     to an initial demand and then ignore all further efforts by 
     the trademark holder to secure the cyberpirate's compliance. 
     The in rem provisions of the Act accordingly contemplate that 
     a trademark holder may initiate in rem proceedings in cases 
     where domain name registrants are not subject to personal 
     jurisdiction or cannot reasonably be found by the trademark 
     holder.
       Paragraph (2)(C) provides that in an in rem proceeding, a 
     domain name shall be deemed to have its situs in the judicial 
     district in which (1) the domain name registrar, registry, or 
     other domain name authority that registered or assigned the 
     domain name is located, or (2) documents sufficient to 
     establish control and authority regarding the disposition of 
     the registration and use of the domain name are deposited 
     with the court.
       Paragraph (2)(D) limits the relief available in such an in 
     rem action to an injunction ordering the forfeiture, 
     cancellation, or transfer of the domain name. Upon receipt of 
     a written notification of the complaint, the domain name 
     registrar, registry, or other authority is required to 
     deposit with the court documents sufficient to establish the 
     court's control and authority regarding the disposition of 
     the registration and use of the domain name to the court, and 
     may not transfer, suspend, or otherwise modify the domain 
     name during the pendency of the action, except upon order of 
     the court. Such domain

[[Page S14715]]

     name registrar, registry, or other authority is immune from 
     injunctive or monetary relief in such an action, except in 
     the case of bad faith or reckless disregard, which would 
     include a willful failure to comply with any such court 
     order.
       Paragraph (3) makes clear that the new civil action created 
     by this Act and the in rem action established therein, and 
     any remedies available under such actions, shall be in 
     addition to any other civil action or remedy otherwise 
     applicable. This paragraph thus makes clear that the creation 
     of a new section 43(d) in the Trademark Act does not in any 
     way limit the application of current provisions of trademark, 
     unfair competition and false advertising, or dilution law, or 
     other remedies under counterfeiting or other statutes, to 
     cybersquatting cases.
       Paragraph (4) makes clear that the in rem jurisdiction 
     established by the bill is in addition to any other 
     jurisdiction that otherwise exists, whether in rem or in 
     personam.
     Subsection (b). Cyberpiracy Protection for Individuals
       Subsection (b) prohibits the registration of a domain name 
     that is the name of another living person, or a name that is 
     substantially and confusingly similar thereto, without such 
     person's permission, if the registrant's specific intent is 
     to profit from the domain name by selling it for financial 
     gain to such person or a third party. While the provision is 
     broad enough to apply to the registration of full names 
     (e.g., johndoe.com), appellations (e.g., doe.com), and 
     variations thereon (e.g. john-doe.com or jondoe.com), the 
     provision is still very narrow in that it requires a showing 
     that the registrant of the domain name registered that name 
     with a specific intent to profit from the name by selling it 
     to that person or to a third party for financial gain. This 
     section authorizes the court to grant injunctive relief, 
     including ordering the forfeiture or cancellation of the 
     domain name or the transfer of the domain name to the 
     plaintiff. Although the subsection does not authorize a court 
     to grant monetary damages, the court may award costs and 
     attorneys' fees to the prevailing party in appropriate cases.
       This subsection does not prohibit the registration of a 
     domain name in good faith by an owner or licensee of a 
     copyrighted work, such as an audiovisual work, a sound 
     recording, a book, or other work of authorship, where the 
     personal name is used in, affiliated with, or related to that 
     work, where the person's intent in registering the domain is 
     not to sell the domain name other than in conjunction with 
     the lawful exploitation of the work, and where such 
     registration is not prohibited by a contract between the 
     domain name registered and the named person. This limited 
     exemption recognizes the First Amendment issues that may 
     arise in such cases and defers to existing bodies of law that 
     have developed under State and Federal law to address such 
     uses of personal names in conjunction with works of 
     expression. Such an exemption is not intended to provide a 
     loophole for those whose specific intent is to profit from 
     another's name by selling the domain name to that person or a 
     third party other than in conjunction with the bona fide 
     exploitation of a legitimate work of authorship. For example, 
     the registration of a domain name containing a personal name 
     by the author of a screenplay that bears the same name, with 
     the intent to sell the domain name in conjunction with the 
     sale or license of the screenplay to a production studio 
     would not be barred by this subsection, although other 
     provisions of State or Federal law may apply. On the other 
     hand, the exemption for good faith registrations of domain 
     names tied to legitimate works of authorship would not exempt 
     a person who registers a personal name as a domain name with 
     the intent to sell the domain name by itself, or in 
     conjunction with a work of authorship (e.g., a copyrighted 
     web page) where the real object of the sale is the domain 
     name, rather than the copyrighted work.
       In sum, this subsection is a narrow provision intended to 
     curtail one form of ``cybersquatting''--the act of 
     registering someone else's name as a domain name for the 
     purpose of demanding remuneration from the person in exchange 
     for the domain name. Neither this section nor any other 
     section in this bill is intended to create a right of 
     publicity of any kind with respect to domain names. Nor is it 
     intended to create any new property rights, intellectual or 
     otherwise, in a domain name that is the name of a person. 
     This subsection applies prospectively only, affecting only 
     those domain names registered on or after the date of 
     enactment of this Act.
     Sec. 3003. Damages and Remedies
       This section applies traditional trademark remedies, 
     including injunctive relief, recovery of defendant's profits, 
     actual damages, and costs, to cybersquatting cases under the 
     new section 43(d) of the Trademark Act. The bill also amends 
     section 35 of the Trademark Act to provide for statutory 
     damages in cybersquatting cases, in an amount of not less 
     than $1,000 and not more than $100,000 per domain name, as 
     the court considers just.
     Sec. 3004. Limitation on Liability
       This section amends section 32(2) of the Trademark Act to 
     extend the Trademark Act's existing limitations on liability 
     to the cybersquatting context. This section also creates a 
     new subparagraph (D) in section 32(2) to encourage domain 
     name registrars and registries to work with trademark owners 
     to prevent cybersquatting through a limited exemption from 
     liability for domain name registrars and registries that 
     suspend, cancel, or transfer domain names pursuant to a court 
     order or in the implementation of a reasonable policy 
     prohibiting cybersquatting. Under this exemption, a 
     registrar, registry, or other domain name registration 
     authority that suspends, cancels, or transfers a domain name 
     pursuant to a court order or a reasonable policy prohibiting 
     cybersquatting will not be held liable for monetary damages, 
     and will be not be subject to injunctive relief provided that 
     the registrar, registry, or other registration authority has 
     deposited control of the domain name with a court in which an 
     action has been filed regarding the disposition of the domain 
     name, it has not transferred, suspended, or otherwise 
     modified the domain name during the pendency of the action, 
     other than in response to a court order, and it has not 
     willfully failed to comply with any such court order. Thus, 
     the exemption will allow a domain name registrar, registry, 
     or other registration authority to avoid being joined in a 
     civil action regarding the disposition of a domain name that 
     has been taken down pursuant to a dispute resolution policy, 
     provided the court has obtained control over the name from 
     the registrar, registry, or other registration authority, but 
     such registrar, registry, or other registration authority 
     would not be immune from suit for injunctive relief where no 
     such action has been filed or where the registrar, registry, 
     or other registration authority has transferred, suspended, 
     or otherwise modified the domain name during the pendency of 
     the action or wilfully failed to comply with a court order.
       This section also protects the rights of domain name 
     registrants against overreaching trademark owners. Under a 
     new subparagraph (D)(iv) in section 32(2), a trademark owner 
     who knowingly and materially misrepresents to the domain name 
     registrar or registry that a domain name is infringing shall 
     be liable to the domain name registrant for damages resulting 
     from the suspension, cancellation, or transfer of the domain 
     name. In addition, the court may grant injunctive relief to 
     the domain name registrant by ordering the reactivation of 
     the domain name or the transfer of the domain name back to 
     the domain name registrant. In creating a new subparagraph 
     (D)(iii) of section 32(2), this section codifies current case 
     law limiting the secondary liability of domain name 
     registrars and registries for the act of registration of a 
     domain name, absent bad-faith on the part of the registrar 
     and registry.
       Finally, subparagraph (D)(v) provides additional 
     protections for domain name holders by allowing a domain name 
     registrant whose name has been suspended, disabled, or 
     transferred to file a civil action to establish that the 
     registration or use of the domain name by such registrant is 
     not a violation of the Lanham Act. In such cases, a court may 
     grant injunctive relief to the domain name registrant, 
     including the reactivation of the domain name or transfer of 
     the domain name to the domain name registrant.
     Sec. 3005. Definitions
       This section amends the Trademark Act's definitions section 
     (section 45) to add definitions for key terms used in this 
     Act. First, the term ``Internet'' is defined consistent with 
     the meaning given that term in the Communications Act (47 
     U.S.C. 230(f)(1)). Second, this section creates a narrow 
     definition of ``domain name'' to target the specific bad 
     faith conduct sought to be addressed while excluding such 
     things as screen names, file names, and other identifiers not 
     assigned by a domain name registrar or registry.
     Sec. 3006. Study on Abusive Domain Name Registrations 
         Involving Personal Names
       This section directs the Secretary of Commerce, in 
     consultation with the Patent and Trademark Office and the 
     Federal Election Commission, to conduct a study and report to 
     Congress with recommendations on guidelines and procedures 
     for resolving disputes involving the registration or use of 
     domain names that include personal names of others or names 
     that are confusingly similar thereto. This section further 
     directs the Secretary of Commerce to collaborate with the 
     Internet Corporation for Assigned Names and Numbers (ICANN) 
     to develop guidelines and procedures for resolving disputes 
     involving the registration or use of domain names that 
     include personal names of others or names that are 
     confusingly similar thereto.
     Sec. 3007. Historic Preservation
       This section provides a limited immunity from suit under 
     trademark law for historic buildings that are on or eligible 
     for inclusion on the National Register of Historic Places, or 
     that are designated as an individual landmark or as a 
     contributing building in a historic district.
     Sec. 3008. Savings Clause
       This section provides an explicit savings clause making 
     clear that the bill does not affect traditional trademark 
     defenses, such as fair use, or a person's first amendment 
     rights.
     Sec. 3009. Effective Date
       This section provides that damages provided for under this 
     bill shall not apply to the registration, trafficking, or use 
     of a domain name that took place prior to the enactment of 
     this Act.

                     TITLE VI--INVENTOR PROTECTION

     Sec. 4001. Short Title
       This title may be cited as the ``American Inventors 
     Protection Act of 1999.''

[[Page S14716]]

     Sec. 4002. Table of Contents
       Section 4002 enumerates the table of contents of this 
     title.

                     Subtitle A--Inventors' Rights

       Subtitle A creates a new section 297 in chapter 29 of title 
     35 of the United States Code, designed to curb the deceptive 
     practices of certain invention promotion companies. Many of 
     these companies advertise on television and in magazines that 
     inventors may call a toll-free number for assistance in 
     marketing their inventions. They are sent an invention 
     evaluation form, which they are asked to complete to allow 
     the promoter to provide expert analysis of the market 
     potential of their inventions. The inventors return the form 
     with descriptions of the inventions, which become the basis 
     for contacts by salespeople at the promotion companies. The 
     next step is usually a ``professional''-appearing product 
     research report which contains nothing more than boilerplate 
     information stating that the invention has outstanding market 
     potential and fills an important need in the field. The 
     promotion companies attempt to convince the inventor to buy 
     their marketing services, normally on a sliding scale in 
     which the promoter will ask for a front-end payment of up to 
     $10,000 and a percentage of resulting profits, or a reduced 
     front-end payment of $6,000 or $8,000 with commensurately 
     larger royalties on profits. Once paid under such a scenario, 
     a promoter will typically and only forward information to a 
     list of companies that never respond.
       This subtitle addresses these problems by (1) requiring an 
     invention promoter to disclose certain materially relevant 
     information to a customer in writing prior to entering into a 
     contract for invention promotion services; (2) establishing a 
     federal cause of action for inventors who are injured by 
     material false of fraudulent statements or representations, 
     or any omission of material fact, by an invention promoter, 
     or by the invention promoter's failure to make the required 
     written disclosures; and (3) requiring the Director of the 
     United States Patent and Trademark Office to make publicly 
     available complaints received involving invention promoters, 
     along with the response to such complaints, if any, from the 
     invention promoters.
     Sec. 4101. Short title
       This subtitle may be cited as the ``Inventors'' Rights Act 
     of 1999.''
     Sec. 4102. Integrity in invention promotion services
       This section adds a new section 297 to in chapter 29 of 
     title 35, United States Code, intended to promote integrity 
     in invention promotion services. Legitimate invention 
     assistance and development organizations can be of great 
     assistance to novice inventors by providing information on 
     how to protect an invention, how to develop it, how to obtain 
     financing to manufacture it, or how to license or sell the 
     invention. While many invention developers are legitimate, 
     the unscrupulous ones take advantage of untutored inventors, 
     asking for large sums of money up front for which they 
     provide no real service in return. This new section provides 
     a much needed safeguard to assist independent inventors in 
     avoiding becoming victims of the predatory practices of 
     unscrupulous invention promoters.
       New section 297(a) of title 35 requires an invention 
     promoter to disclose certain materially relevant information 
     to a customer in writing prior to entering into a contract 
     for invention promotion services. Such information includes: 
     (1) The number of inventions evaluated by the invention 
     promoter and stating the number of those evaluated positively 
     and the number negatively; (2) The number of customers who 
     have contracted for services with the invention promoter in 
     the prior five years; (3) The number of customers known by 
     the invention promoter to have received a net financial 
     profit as a direct result of the invention promoter's 
     services; (4) The number of customers known by the invention 
     promoter to have received license agreements for their 
     inventions as a direct result of the invention promoter's 
     services; and (5) the names and addresses of all previous 
     invention promotion companies with which the invention 
     promoter or its officers have collectively or individually 
     been affiliated in the previous 10 years to enable the 
     customer to evaluate the reputations of these companies.
       New section 297(b) of title 35 establishes a civil cause of 
     action against any invention promoter who injures a customer 
     through any material false or fraudulent statement, 
     representation, or omission of material fact by the invention 
     promoter, or any person acting on behalf of the invention 
     promoter, or through failure of the invention promoter to 
     make all the disclosures required under subsection (a). In 
     such a civil action, the customer may recover, in addition to 
     reasonable costs and attorneys' fees, the amount of actual 
     damages incurred by the customer or, at the customer's 
     election, statutory damages up to $5,000, as the court 
     considers just. Subsection (b)(2) authorizes the court to 
     increase damages to an amount not to exceed three times the 
     amount awarded as statutory or actual damages in a case where 
     the customer demonstrates, and the court finds, that the 
     invention promoter intentionally misrepresented or omitted a 
     material fact to such customer, or failed to make the 
     required disclosures under subsection (a), for the purpose of 
     deceiving the customer. In determining the amount of 
     increased damages, courts may take into account whether 
     regulatory sanctions or other corrective action has been 
     taken as a result of previous complaints against the 
     invention promoter.
       New section 297(c) defines the terms used in the section. 
     These definitions are carefully crafted to cover true 
     invention promoters without casting the net too broadly. 
     Paragraph (3) excepts from the definition of ``invention 
     promoter'' departments and agencies of the Federal, state, 
     and local governments; any nonprofit, charitable, scientific, 
     or educational organizations qualified under applicable State 
     laws or described under Sec. 170(b)(1)(A) of the Internal 
     Revenue Code of 1986; persons or entities involved in 
     evaluating the commercial potential of, or offering to 
     license or sell, a utility patent or a previously filed 
     nonprovisional utility patent application; any party 
     participating in a transaction involving the sale of the 
     stock or assets of a business; or any party who directly 
     engages in the business of retail sales or distribution of 
     products. Paragraph (4) defines the term ``invention 
     promotion services'' to mean the procurement or attempted 
     procurement for a customer of a firm, corporation, or other 
     entity to develop and market products or services that 
     include the customer's invention.
       New section 297(d) requires the Director of the USPTO to 
     make publicly available all complaints submitted to the USPTO 
     regarding invention promoters, together with any responses by 
     invention promoters to those complaints. The Director is 
     required to notify the invention promoter of a complaint and 
     provide a reasonable opportunity to reply prior to making 
     such complaint public. Section 297(d)(2) authorizes the 
     Director to request from Federal and State agencies copies of 
     any complaints relating to invention promotion services they 
     have received and to include those complaints in the records 
     maintained by the USPTO regarding invention promotion 
     services. It is anticipated that the Director will use 
     appropriate discretion in making such complaints available to 
     the public for a reasonably sufficient, yet limited, length 
     of time, such as a period of three years from the date of 
     receipt, and that the Director will consult with the Federal 
     Trade Commission to determine whether the disclosure 
     requirements of the FTC and section 297(a) can be 
     coordinated.
     Sec. 4103. Effective date
       This section provides that the effective date of section 
     297 will be 60 days after the date of enactment of this Act.

             Subtitle B--Patent and Trademark Fee Fairness

       Subtitle B provides patent and trademark fee reform, by 
     lowering patent fees, by directing the Director of the USPTO 
     to study alternative fee structures to encourage full 
     participation in our patent system by all inventors, large 
     and small, and by strengthening the prohibition against the 
     use of trademark fees for non-trademark uses.
     Sec. 4201. Short title
       This subtitle may be cited as the ``Patent and Trademark 
     Fee Fairness Act of 1999.''
     Sec. 4202. Adjustment of patent fees.
       This section reduces patent filing an reissue fees by $50, 
     and reduces patent maintenance fees by $110. This would mark 
     only the second time in history that patent fees have been 
     reduced. Because trademark fees have not been increased since 
     1993 and because of the application of accounting based cost 
     principles and systems, patent fee income has been partially 
     offsetting the cost of trademark operations. This section 
     will restore fairness to patent and trademark fees by 
     reducing patent fees to better reflect the cost of services.
     Sec. 4203. Adjustment of trademark fees.
       This section will allow the Director of the USPTO to adjust 
     trademark fees in fiscal year 2000 without regard to 
     fluctuations in the Consumer Price Index in order to better 
     align those fees with the costs of services.
     Sec. 4204. Study on alternative fee structures
       This section directs the Director of the USPTO to conduct a 
     study and report to the Judiciary Committees of the House and 
     Senate within one year on alternative fee structures that 
     could be adopted by the USPTO to encourage maximum 
     participation in the patent system by the American inventor 
     community.
     Sec. 4205. Patent and Trademark Office funding
       Pursuant to section 42(c) of the Patent Act, fees available 
     to the Commissioner under section 31 of the Trademark Act of 
     1946 \6\ may be used only for the processing of trademark 
     registrations and for other trademark-related activities, and 
     to cover a proportionate share of the administrative costs of 
     the USPTO. In an effort to more tightly ``fence'' trademark 
     funds for trademark purposes, section 4205 amends this 
     language such that all (trademark) fees available to the 
     Commissioner shall be used for trademark registration and 
     other trademark-related purposes. In other words, the 
     Commissioner may exercise no discretion when spending funds; 
     they must be earmarked for trademark purposes.

                   Subtitle C--First Inventor Defense

       Subtitle C strikes an equitable balance between the 
     interests of U.S. inventors who have invented and 
     commercialized business methods and processes, many of which 
     until recently were thought not to be patentable, and U.S. or 
     foreign inventors who later patent the methods and processes. 
     The subtitle creates a defense for inventors who have reduced 
     an invention to practice in the U.S. at

[[Page S14717]]

     least one year before the patent filing date of another, 
     typically later, inventor and commercially used the invention 
     in the U.S. before the filing date. A party entitled to the 
     defense must not have derived the invention from the patent 
     owner. The bill protects the patent owner by providing that 
     the establishment of the defense by such an inventor or 
     entrepreneur does not invalidate the patent.
       The subtitle clarifies the interface between two key 
     branches of intellectual property law--patents and trade 
     secrets. Patent law serves the public interest by encouraging 
     innovation and investment in new technology, and may be 
     thought of as providing a right to exclude other parties from 
     an invention in return for the inventor making a public 
     disclosure of the invention. Trade secret law, however, also 
     serves the public interest by protecting investments in new 
     technology. Trade secrets have taken on a new importance with 
     an increase in the ability to patent all business methods and 
     processes. It would be administratively and economically 
     impossible to expect any inventor to apply for a patent on 
     all methods and processes now deemed patentable. In order to 
     protect inventors and to encourage proper disclosure, this 
     subtitle focuses on methods for doing and conducting 
     business, including methods used in connection with internal 
     commercial operations as well as those used in connection 
     with the sale or transfer of useful end results--whether in 
     the form of physical products, or in the form of services, or 
     in the form of some other useful results; for example, 
     results produced through the manipulation of data or other 
     inputs to produce a useful result.
       The earlier-inventor defense is important to many small and 
     large businesses, including financial services, software 
     companies, and manufacturing firms--any business that relies 
     on innovative business processes and methods. The 1998 
     opinion by the U.S. Court of Appeals for the Federal Circuit 
     in State Street Bank and Trust Co. v. Signature Financial 
     Group,\7\ which held that methods of doing business are 
     patentable, has added to the urgency of the issue. As the 
     Court noted, the reference to the business method exception 
     had been improperly applied to a wide variety of processes, 
     blurring the essential question of whether the invention 
     produced a ``useful, concrete, and tangible result.'' In the 
     wake of State Street, thousands of methods and processes used 
     internally are now being patented. In the past, many 
     businesses that developed and used such methods and processes 
     thought secrecy was the only protection available. Under 
     established law, any of these inventions which have been in 
     commercial use--public or secret--for more than one year 
     cannot now be the subject of a valid U.S. patent.
     Sec. 4301. Short title
       This subtitle may be cited as the ``First Inventor Defense 
     Act of 1999.''
     Sec. 4302. Defense to patent infringement based on earlier 
         inventor
       In establishing the defense, subsection (a) of section 4302 
     creates a new section 273 of the Patent Act, which in 
     subsection (a) sets forth the following definitions:
       (1) ``Commercially used and commercial use'' mean use of 
     any method in the United States so long as the use is in 
     connection with an internal commercial use or an actual sale 
     or transfer of a useful end result;
       (2) ``Commercial use as applied to a nonprofit research 
     laboratory and nonprofit entities such as a university, 
     research center, or hospital intended to benefit the public'' 
     means that such entities may assert the defense only based on 
     continued use by and in the entities themselves, but that the 
     defense is inapplicable to subsequent commercialization or 
     use outside the entities;
       (3) ``Method'' means any method for doing or conducting an 
     entity's business; and (4) ``Effective filing date'' means 
     the earlier of the actual filing date of the application for 
     the patent or the filing date of any earlier US, foreign, or 
     international application to which the subject matter at 
     issue is entitled under the Patent Act.
       To be ``commercially used'' or in ``commercial use'' for 
     purposes of subsection (a), the use must be in connection 
     with either an internal commercial use or an actual arm's-
     length sale or other arm's-length commercial transfer of a 
     useful end result. The method that is the subject matter of 
     the defense may be an internal method for doing business, 
     such as an internal human resources management process, or a 
     method for conducting business such as a preliminary or 
     intermediate manufacturing procedure, which contributes to 
     the effectiveness of the business by producing a useful end 
     result for the internal operation of the business or for 
     external sale. Commercial use does not require the subject 
     matter at issue to be accessible to or otherwise known to the 
     public.
       Subject matter that must undergo a premarketing regulatory 
     review period during which safety or efficacy is established 
     before commercial marketing or use is considered to be 
     commercially used and in commercial use during the regulatory 
     review period.
       The issue of whether an invention is a method is to be 
     determined based on its underlying nature and not on the 
     technicality of the form of the claims in the patent. For 
     example, a method for doing or conducting business that has 
     been claimed in a patent as a programmed machine, as in the 
     State Street case, is a method for purposes of section 273 if 
     the invention could have as easily been claimed as a method. 
     Form should not rule substance.
       Subsection (b)(1) of section 273 establishes a general 
     defense against infringement under section 271 of the Patent 
     Act. Specifically, a person will not be held liable with 
     respect to any subject matter that would otherwise infringe 
     one or more claims to a method in another party's patent if 
     the person:
       (1) Acting in good faith, actually reduced the subject 
     matter to practice at least one year before the effective 
     filing date of the patent; and
       (2) Commercially used the subject matter before the 
     effective filing date of the patent.
       The first inventor defense is not limited to methods in any 
     particular industry such as the financial services industry, 
     but applies to any industry which relies on trade secrecy for 
     protecting methods for doing or conducting the operations of 
     their business.
       Subsection (b)(2) states that the sale or other lawful 
     disposition of a useful end result produced by a patented 
     method, by a person entitled to assert a section 273 defense, 
     exhausts the patent owner's rights with respect to that end 
     result to the same extent such rights would have been 
     exhausted had the sale or other disposition been made by the 
     patent owner. For example, if a purchaser would have had the 
     right to resell a product or other end result if bought from 
     the patent owner, the purchaser will have the same right if 
     the product is purchased from a person entitled to a section 
     273 defense.
       Subsection (b)(3) creates limitations and qualifications on 
     the use of the defense. First, a person may not assert the 
     defense unless the invention for which the defense is 
     asserted is for a commercial use of a method as defined in 
     section 273(a)(1) and (3). Second, a person may not assert 
     the defense if the subject matter was derived from the patent 
     owner or persons in privity with the patent owner. Third, 
     subsection (b)(3) makes clear that the application of the 
     defense does not create a general license under all claims of 
     the patent in question--it extends only to the specific 
     subject matter claimed in the patent with respect to which 
     the person can assert the defense. At the same time, however, 
     the defense does extend to variations in the quantity or 
     volume of use of the claimed subject matter, and to 
     improvements that do not infringe additional, specifically-
     claimed subject matter.
       Subsection (b)(4) requires that the person asserting the 
     defense has the burden of proof in establishing it by clear 
     and convincing evidence. Subsection (b)(5) establishes that 
     the person who abandons the commercial use of subject matter 
     may not rely on activities performed before the date of such 
     abandonment in establishing the defense with respect to 
     actions taken after the date of abandonment. Such a person 
     can rely only on the date when commercial use of the subject 
     matter was resumed.
       Subsection (b)(6) notes that the defense may only be 
     asserted by the person who performed the acts necessary to 
     establish the defense, and, except for transfer to the patent 
     owner, the right to assert the defense cannot be licensed, 
     assigned, or transferred to a third party except as an 
     ancillary and subordinate part of a good-faith assignment or 
     transfer for other reasons of the entire enterprise or line 
     of business to which the defense relates.
       When the defense has been transferred along with the 
     enterprise or line of business to which it relates as 
     permitted by subsection (b)(6), subsection (b)(7) limits the 
     sites for which the defense may be asserted. Specifically, 
     when the enterprise or line of business to which the defense 
     relates has been transferred, the defense may be asserted 
     only for uses at those sites where the subject matter was 
     used before the later of the patent filing date or the date 
     of transfer of the enterprise or line of business.
       Subsection (b)(8) states that a person who fails to 
     demonstrate a reasonable basis for asserting the defense may 
     be held liable for attorneys' fees under section 285 of the 
     Patent Act.
       Subsection (b)(9) specifies that the successful assertion 
     of the defense does not mean that the affected patent is 
     invalid. Paragraph (9) eliminates a point of uncertainty 
     under current law, and strikes a balance between the rights 
     of an inventor who obtains a patent after another inventor 
     has taken the steps to qualify for a prior use defense. The 
     bill provides that the commercial use of a method in 
     operating a business before the patentee's filing date, by an 
     individual or entity that can establish a section 273 
     defense, does not invalidate the patent. For example, under 
     current law, although the matter has seldom been litigated, a 
     party who commercially used an invention in secrecy before 
     the patent filing date and who also invented the subject 
     matter before the patent owner's invention may argue that the 
     patent is invalid under section 102 (g) of the Patent Act. 
     Arguably, commercial use of an invention in secrecy is not 
     suppression or concealment of the invention within the 
     meaning of section 102(g), and therefore the party's earlier 
     invention could invalidate the patent.\8\
     Sec. 4303. Effective date and applicability
       The effective date for subtitle C is the date of enactment, 
     except that the title does not apply to any infringement 
     action pending on the date of enactment or to any subject 
     matter for which an adjudication of infringement, including a 
     consent judgment, has been made before the date of enactment.

[[Page S14718]]

                   Subtitle D--Patent Term Guarantee

       Subtitle D amends the provisions in the Patent Act that 
     compensate patent applicants for certain reductions in patent 
     term that are not the fault of the applicant. The provisions 
     that were initially included in the term adjustment 
     provisions of patent bills in the 105th Congress only 
     provided adjustments for up to 10 years for secrecy orders, 
     interferences, and successful appeals. Not only are these 
     adjustments too short in some cases, but no adjustments were 
     provided for administrative delays caused by the USPTO that 
     were beyond the control of the applicant. Accordingly, 
     subtitle D removes the 10-year caps from the existing 
     provisions, adds a new provision to compensate applicants 
     fully for USPTO-caused administrative delays, and, for good 
     measure, includes a new provision guaranteeing diligent 
     applicants at least a 17-year term by extending the term of 
     any patent not granted within three years of filing. Thus, no 
     patent applicant diligently seeking to obtain a patent will 
     receive a term of less than the 17 years as provided under 
     the pre-GATT \9\ standard; in fact, most will receive 
     considerably more. Only those who purposely manipulate the 
     system to delay the issuance of their patents will be 
     penalized under subtitle D, a result that the Conferees 
     believe entirely appropriate.
     Sec. 4401. Short title
       This subtitle may be cited as the ``Patent Term Guarantee 
     Act of 1999.''
     Sec.4402. Patent term guarantee authority
       Section 4402 amends section 154(b) of the Patent Act 
     covering term. First, new subsection (b)(1)(A)(i)-(iv) 
     guarantees day-for-day restoration of term lost as a result 
     of delay created by the USPTO when the agency fails to:
       (1) Make a notification of the rejection of any claim for a 
     patent or any objection or argument under Sec. 132, or give 
     or mail a written notice of allowance under Sec. 151, within 
     14 months after the date on which a non-provisional 
     application was actually filed in the USPTO;
       (2) Respond to a reply under Sec. 132, or to an appeal 
     taken under Sec. 134, within four months after the date on 
     which the reply was filed or the appeal was taken;
       (3) Act on an application within four months after the date 
     of a decision by the Board of Patent Appeals and 
     Interferences under Sec. 134 or Sec. 135 or a decision by a 
     Federal court under Sec. Sec. 141, 145, or 146 in a case in 
     which allowable claims remain in the application; or (4) 
     Issue a patent within four months after the date on which the 
     issue fee was paid under Sec. 151 and all outstanding 
     requirements were satisfied.
       Further, subject to certain limitations, infra, section 
     154(b)(1)(B) guarantees a total application pendency of no 
     more than three years. Specifically, day-for-day restoration 
     of term is granted if the USPTO has not issued a patent 
     within three years after ``the actual date of the application 
     in the United States.'' This language was intentionally 
     selected to exclude the filing date of an application under 
     the Patent Cooperation Treaty (PCT).\10\ Otherwise, an 
     applicant could obtain up to a 30-month extension of a U.S. 
     patent merely by filing under PCT, rather than directly in 
     the USPTO, gaining an unfair advantage in contrast to 
     strictly domestic applicants. Any periods of time
       (1) consumed in the continued examination of the 
     application under Sec. 132(b) of the Patent Act as added by 
     section 4403 of this Act;
       (2) lost due to an interference under section135(a), a 
     secrecy order under section 181, or appellate review by the 
     Board of Patent Appeals and Interferences or by a Federal 
     court (irrespective of the outcome); and
       (3) incurred at the request of an applicant in excess of 
     the three months to respond to a notice from the Office 
     permitted by section 154(b)(2)(C)(ii) unless excused by a 
     showing by the applicant under section 154(b)(3)(C) that in 
     spite of all due care the applicant could not respond within 
     three months

     shall not be considered a delay by the USPTO and shall not be 
     counted for purposes of determining whether the patent issued 
     within three years from the actual filing date.
       Day-for-day restoration is also granted under new section 
     154(b)(1)(C) for delays resulting from interferences,\11\ 
     secrecy orders,\12\ and appeals by the Board of Patent 
     Appeals and Interferences or a Federal court in which a 
     patent was issued as a result of a decision reversing an 
     adverse determination of patentability.
       Section 4402 imposes limitations on restoration of term. In 
     general, pursuant to new Sec. 154(b)(2)(A)-(C) of the bill, 
     total adjustments granted for restorations under (b)(1) are 
     reduced as follows:
       (1) To the extent that there are multiple grounds for 
     extending the term of a patent that may exist simultaneously 
     (e.g., delay due to a secrecy order under section 181 and 
     administrative delay under section 154(b)(1)(A)), the term 
     should not be extended for each ground of delay but only for 
     the actual number of days that the issuance of a patent was 
     delayed;
       (2) The term of any patent which has been disclaimed beyond 
     a date certain may not receive an adjustment beyond the 
     expiration date specified in the disclaimer; and
       (3) Adjustments shall be reduced by a period equal to the 
     time in which the applicant failed to engage in reasonable 
     efforts to conclude prosecution of the application, based on 
     regulations developed by the Director, and an applicant shall 
     be deemed to have failed to engage in such reasonable efforts 
     for any periods of time in excess of three months that are 
     taken to respond to a notice from the Office making any 
     rejection or other request;
       New section 154(b)(3) sets forth the procedures for the 
     adjustment of patent terms. Paragraph (3)(A) empowers the 
     Director to establish regulations by which term extensions 
     are determined and contested. Paragraph (3)(B) requires the 
     Director to send a notice of any determination with the 
     notice of allowance and to give the applicant one opportunity 
     to request reconsideration of the determination. Paragraph 
     (3)(C) requires the Director to reinstate any time the 
     applicant takes to respond to a notice from the Office in 
     excess of three months that was deducted from any patent term 
     extension that would otherwise have been granted if the 
     applicant can show that he or she was, in spite of all due 
     care, unable to respond within three months. In no case shall 
     more than an additional three months be reinstated for each 
     response. Paragraph (3)(D) requires the Director to grant the 
     patent after completion of determining any patent term 
     extension irrespective of whether the applicant appeals.
       New section 154(b)(4) regulates appeals of term adjustment 
     determinations made by the Director. Paragraph (4)(A) 
     requires a dissatisfied applicant to seek remedy in the 
     District Court for the District of Columbia under the 
     Administrative Procedures Act \13\ within 180 days after the 
     grant of the patent. The Director shall alter the term of the 
     patent to reflect any final judgment. Paragraph (4)(B) 
     precludes a third party from challenging the determination of 
     a patent term prior to patent grant.
       Section 4402(b) makes certain conforming amendments to 
     section 282 of the Patent Act and the appellate jurisdiction 
     of the U.S. Court of Appeals for the Federal Circuit.\14\
     Sec. 4403. Continued examination of patent applications
       Section 4403 amends section 132 of the Patent Act to permit 
     an applicant to request that an examiner continue the 
     examination of an application following a notice of ``final'' 
     rejection by the examiner. New section 132(b) authorizes the 
     Director to prescribe regulations for the continued 
     examination of an application notwithstanding a final 
     rejection, at the request of the applicant. The Director may 
     also establish appropriate fees for continued examination 
     proceedings, and shall provide a 50% fee reduction for small 
     entities which qualify for such treatment under section 
     41(h)(1) of the Patent Act.
     Section 4404. Technical clarification
       Section 4404 of the bill coordinates technical term 
     adjustment provisions set forth in section 154(b) with those 
     in section 156(a) of the Patent Act.
     Section 4405. Effective date
       The effective date for the amendments in section 4402 and 
     4404 is six months after the date of enactment and, with the 
     exception of design applications (the terms of which are not 
     measured from filing), applies to any application filed on or 
     after such date. The amendments made by section 4403 take 
     effect six months after date of enactment to allow the USPTO 
     to prepare implementing regulations an apply to all national 
     and international (PCT) applications filed on or after June 
     8, 1995.

   Subtitle E--Domestic Publication of Patent Applications Published 
                                 Abroad

       Subtitle E provides for the publication of pending patent 
     applications which have a corresponding foreign counterpart. 
     Any pending U.S. application filed only in the United States 
     (e.g., one that does not have a foreign counterpart) will not 
     be published if the applicant so requests. Thus, an applicant 
     wishing to maintain her application in confidence may do so 
     merely by filing only in the United States and requesting 
     that the USPTO not publish the application. For those 
     applicants who do file abroad or who voluntarily publish 
     their applications, provisional rights will be available for 
     assertion against any third party who uses the claimed 
     invention between publication and grant provided that 
     substantially similar claims are contained in both the 
     published application and granted patent. This change will 
     ensure that American inventors will be able to see the 
     technology that our foreign competition is seeking to patent 
     much earlier than is possible today.
     Sec. 4501. Short title
       This subtitle may be cited as the ``Domestic Publication of 
     Foreign Filed Patent Applications Act of 1999.''
     Sec. 4502. Publication
       As provided in subsection (a) of section 4502, amended 
     section 122(a) of the Patent Act continues the general rule 
     that patent applications will be maintained in confidence. 
     Paragraph (1)(A) of new subsection (b) of section 122 creates 
     a new exception to this general rule by requiring publication 
     of certain applications promptly after the expiration of an 
     18-month period following the earliest claimed U.S. or 
     foreign filing date. The Director is authorized by 
     subparagraph (B) to determine what information concerning 
     published applications shall be made available to the public, 
     and, under subparagraph (C) any decision made in this regard 
     is final and not subject to review.
       Subsection (b)(2) enumerates exceptions to the general rule 
     requiring publication. Subparagraph (A) precludes publication 
     of any

[[Page S14719]]

     application that is: (1) no longer pending at the 18th month 
     from filing; (2) the subject of a secrecy order until the 
     secrecy order is rescinded; (3) a provisional 
     application;\15\ or (4) a design patent application.\16\
       Pursuant to subparagraph (B)(i), any applicant who is not 
     filing overseas and does not wish her application to be 
     published can simply make a request and state that her 
     invention has not and will not be the subject of an 
     application filed in a foreign country that requires 
     publication after 18 months. Subparagraph (B)(ii) clarifies 
     that an applicant may rescind this request at any time. 
     Moreover, if an applicant has requested that her application 
     not be published in a foreign country with a publication 
     requirement, subparagraph (B)(iii) imposes a duty on the 
     applicant to notify the Director of this fact. An unexcused 
     failure to notify the Director will result in the abandonment 
     of the application. If an applicant either rescinds a request 
     that her application not be published or notifies the 
     Director that an application has been filed in an early 
     publication country or through the PCT, the U.S. application 
     will be published at 18 months pursuant to subsection (b)(1).
       Finally, under subparagraph (B)(v), where an applicant has 
     filed an application in a foreign country, either directly or 
     through the PCT, so that the application will be published 18 
     months from its earliest effective filing date, the applicant 
     may limit the scope of the publication by the USPTO to the 
     total of the cumulative scope of the applications filed in 
     all foreign countries. Where the foreign application is 
     identical to the application filed in the United States or 
     where an application filed under the PCT is identical to the 
     application filed in the United States, the applicant may not 
     limit the extent to which the application filed in the United 
     States is published. However, where an applicant has limited 
     the description of an application filed in a foreign country, 
     either directly or through the PCT in comparison with the 
     application filed in the USPTO, the applicant may restrict 
     the publication by the USPTO to no more than the cumulative 
     details of what will be published in all of the foreign 
     applications and through the PCT. The applicant may restrict 
     the extent of publication of her U.S. application by 
     submitting a redacted copy of the application to the USPTO 
     eliminating only those details that will not be published in 
     any of the foreign applications. Any description contained in 
     at least one of the foreign national or PCT filings may not 
     be excluded from publication in the corresponding U.S. patent 
     application. To ensure that any redacted copy of the U.S. 
     application is published in place of the original U.S. 
     application, the redacted copy must be received within 16 
     months from the earliest effective filing date. Finally, if 
     the published U.S. application as redacted by the applicant 
     does not enable a person skilled in the art to make and use 
     the claimed invention, provisional rights under section 
     154(d) shall not be available.
       Subsection (c) requires the Director to establish 
     procedures to ensure that no protest or other form of pre-
     issuance opposition to the grant of a patent on an 
     application may be initiated after publication without the 
     express written consent of the applicant.
       Subsection (d) protects our national security by providing 
     that no application may be published under subsection (b)(1) 
     where the publication or disclosure of such invention would 
     be detrimental to the national security. In addition, the 
     Director of the USPTO is required to establish appropriate 
     procedures to ensure that such applications are promptly 
     identified and the secrecy of such inventions is maintained 
     in accordance with chapter 17 of the Patent Act, which 
     governs secrecy of inventions in the interest of national 
     security.
       Subsection (b) of section 4502 of subtitle E requires the 
     Government Accounting Office (GAO) to conduct a study of 
     applicants who file only in the United States during a three-
     year period beginning on the effective date of subtitle E. 
     The study will focus on the percentage of U.S. applicants who 
     file only in the United States versus those who file outside 
     the United States; how many domestic-only filers request not 
     to be published; how many who request not to be published 
     later rescind that request; and whether there is any 
     correlation between the type of applicant (e.g., small vs. 
     large entity) and publication. The Comptroller General must 
     submit the findings of the study, once completed, to the 
     Committees on the Judiciary of the House and Senate.
     Sec. 4503. Time for claiming benefit of earlier filing date
       Section 119 of the Patent Act prescribes procedures to 
     implement the right to claim priority under Article 4 of the 
     Paris Convention for the Protection of Industrial 
     Property.\17\ Under that Article, an applicant seeking 
     protection in the United States may claim the filing date of 
     an application for the same invention filed in another 
     Convention country--provided the subsequent application is 
     filed in the United States within 12 months of the earlier 
     filing in the foreign country.
       Section 4503 of subtitle V amends section 119(b) of the 
     Patent Act to authorize the Director to establish a cut-off 
     date by which the applicant must claim priority. This is to 
     ensure that the claim will be made early enough--generally 
     not later than the 16th month from the earliest effective 
     filing date--so as to permit an orderly publication schedule 
     for pending applications. As the USPTO moves to electronic 
     filing, it is envisioned that this date could be moved closer 
     to the 18th month.
       The amendment to Sec. 119(b) also gives the Director the 
     discretion to consider the failure of the applicant to file a 
     timely claim for priority to be a waiver of any such priority 
     claim. The Director is also authorized to establish 
     procedures (including the payment of a surcharge) to accept 
     an unintentionally delayed priority claim.
       Section 4503(b) of subtitle E amends section 120 of the 
     Patent Act in a similar way. This provision empowers the 
     Director to: (1) establish a time by which the priority of an 
     earlier filed United States application must be claimed; (2) 
     consider the failure to meet that time limit to be a waiver 
     of the right to claim such priority; and (3) accept an 
     unintentionally late claim of priority subject to the payment 
     of a surcharge.
     Sec. 4504. Provisional rights
       Section 4504 amends section 154 of the Patent Act by adding 
     a new subsection (d) to accord provisional rights to obtain a 
     reasonable royalty for applicants whose applications are 
     published under amended section 122(b) of the Patent Act, 
     supra, or applications designating the United States filed 
     under the PCT. Generally, this provision establishes the 
     right of an applicant to obtain a reasonable royalty from any 
     person who, during the period beginning on the date that his 
     or her application is published and ending on the date a 
     patent is issued--
       (1) makes, uses, offers for sale, or sells the invention in 
     the United States, or imports such an invention into the 
     United States; or
       (2) if the invention claimed is a process, makes, uses, 
     offers for sale, sells, or imports a product made by that 
     process in the United States; and
       (3) had actual notice of the published application and, in 
     the case of an application filed under the PCT designating 
     the United States that is published in a language other than 
     English, a translation of the application into English.
       The requirement of actual notice is critical. The mere fact 
     that the published application is included in a commercial 
     database where it might be found is insufficient. The 
     published applicant must give actual notice of the published 
     application to the accused infringer and explain what acts 
     are regarded as giving rise to provisional rights.
       Another important limitation on the availability of 
     provisional royalties is that the claims in the published 
     application that are alleged to give rise to provisional 
     rights must also appear in the patent in substantially 
     identical form. To allow anything less than substantial 
     identity would impose an unacceptable burden on the public. 
     If provisional rights were available in the situation where 
     the only valid claim infringed first appeared in 
     substantially that form in the granted patent, the public 
     would have no guidance as to the specific behavior to avoid 
     between publication and grant. Every person or company that 
     might be operating within the scope of the disclosure of the 
     published application would have to conduct her own private 
     examination to determine whether a published application 
     contained patentable subject matter that she should avoid. 
     The burden should be on the applicant to initially draft a 
     schedule of claims that gives adequate notice to the public 
     of what she is seeking to patent.
       Amended section 154(d)(3) imposes a six-year statute of 
     limitations from grant in which an action for reasonable 
     royalties must be brought.
       Amended section 154(d)(4) sets forth some additional rules 
     qualifying when an international application under the PCT 
     will give rise to provisional rights. The date that will give 
     rise to provisional rights for international applications 
     will be the date on which the USPTO receives a copy of the 
     application published under the PCT in the English language; 
     if the application is published under the PCT in a language 
     other than English, then the date on which provisional rights 
     will arise will be the date on which the USPTO receives a 
     translation of the international application in the English 
     language. The Director is empowered to require an applicant 
     to provide a copy of the international application and a 
     translation of it.
     Sec. 4505. Prior art effect of published applications
       Section 4505 amends section 102(e) of the Patent Act to 
     treat an application published by the USPTO in the same 
     fashion as a patent published by the USPTO. Accordingly, a 
     published application is given prior art effect as of its 
     earliest effective U.S. filing date against any subsequently 
     filed U.S. applications. As with patents, any foreign filing 
     date to which the published application is entitled will not 
     be the effective filing date of the U.S. published 
     application for prior art purposes. An exception to this 
     general rule is made for international applications 
     designating the United States that are published under 
     Article 21(2)(a) of the PCT in the English language. Such 
     applications are given a prior art effect as of their 
     international filing date. The prior art effect accorded to 
     patents under section 4505 remains unchanged from present 
     section 102(e) of the Patent Act.
     Sec. 4506. Cost recovery for publications
       Section 4506 authorizes the Director to recover the costs 
     of early publication required by the amendment made by 
     section 4502 of this Act by charging a separate publication 
     fee after a notice of allowance is given pursuant to section 
     151 of the Patent Act.

[[Page S14720]]

     Sec. 4507. Conforming amendments
       Section 4507 consists of various technical and conforming 
     amendments to the Patent Act. These include amending section 
     181 of the Patent Act to clarify that publication of pending 
     applications does not apply to applications under secrecy 
     orders, and amending section 284 of the Patent Act to ensure 
     that increased damages authorized under section 284 shall not 
     apply to the reasonable royalties possible under amended 
     section 154(d). In addition, section 374 of the Patent Act is 
     amended to provide that the effect of the publication of an 
     international application designating the United States shall 
     be the same as the publication of an application published 
     under amended section 122(b), except as its effect as prior 
     art is modified by amended section 102(e) and its giving rise 
     to provisional rights is qualified by new section 154(d).
     Sec. 4508. Effective date
       Subtitle E shall take effect on the date that is one year 
     after the date of enactment and shall apply to all 
     applications filed under section 111 of the Patent Act on or 
     after that date; and to all applications complying with 
     section 371 of the Patent Act that resulted from 
     international applications filed on or after that date. The 
     provisional rights provided in amended section 154(d) and the 
     prior art effect provided in amended section 102(e) shall 
     apply to all applications pending on the date that is one 
     year after the date of enactment that are voluntarily 
     published by their applicants. Finally, section 404 
     (provisional rights) shall apply to international 
     applications designating the United States that are filed on 
     or after the date that is one year after the date of 
     enactment.

       Subtitle F--Optional Inter Partes Reexamination procedure

       Subtitle F is intended to reduce expensive patent 
     litigation in U.S. district courts by giving third-party 
     requesters, in addition to the existing ex parte 
     reexamination in Chapter 30 of title 35, the option of inter 
     partes reexamination proceedings in the USPTO. Congress 
     enacted legislation to authorize ex parte reexamination of 
     patents in the USPTO in 1980, but such reexamination has been 
     used infrequently since a third party who requests 
     reexamination cannot participate at all after initiating the 
     proceedings. Numerous witnesses have suggested that the 
     volume of lawsuits in district courts will be reduced if 
     third parties can be encouraged to use reexamination by 
     giving them an opportunity to argue their case for patent 
     invalidity in the USPTO. Subtitle F provides that opportunity 
     as an option to the existing ex parte reexamination 
     proceedings.
       Subtitle F leaves existing ex parte reexamination 
     procedures in Chapter 30 of title 35 intact, but establishes 
     an inter partes reexamination procedure which third-party 
     requesters can use at their option. Subtitle VI allows third 
     parties who request inter partes reexamination to submit one 
     written comment each time the patent owner files a response 
     to the USPTO. In addition, such third-party requesters can 
     appeal to the USPTO Board of Patent Appeals and Interferences 
     from an examiner's determination that the reexamined patent 
     is valid, but may not appeal to the Court of Appeals for the 
     Federal Circuit. To prevent harassment, anyone who requests 
     inter partes reexamination must identify the real party in 
     interest and third-party requesters who participate in an 
     inter partes reexamination proceeding are estopped from 
     raising in a subsequent court action or inter partes 
     reexamination any issue of patent validity that they raised 
     or could have raised during such inter partes reexamination.
       Subtitle F contains the important threshold safeguard (also 
     applied in ex parte reexamination) that an inter partes 
     reexamination cannot be commenced unless the USPTO makes a 
     determination that a ``substantial new question'' of 
     patentability is raised. Also, as under Chapter 30, this 
     determination cannot be appealed, and grounds for inter 
     partes reexamination are limited to earlier patents and 
     printed publications--grounds that USPTO examiners are well-
     suited to consider.
     Sec. 4601. Short title
       This subtitle may be cited as the ``Optional Inter Partes 
     Reexamination Procedure Act.''
     Sec. 4602. Clarification of Chapter 30
       This section distinguishes Chapter 31 from existing Chapter 
     30 by changing the title of Chapter 30 to ``Ex Parte 
     Reexamination of Patents.''
     Sec. 4603. Definitions
       This section amends section 100 of the Patent Act by 
     defining ``third-party requester'' as a person who is not the 
     patent owner requesting ex parte reexamination under section 
     302 or inter partes reexamination under section 311.
     Sec. 4604. Optional Inter Partes Reexamination Procedure
       Section 4604 amends Part III of title 35 by inserting a new 
     Chapter 31 setting forth optional inter partes reexamination 
     procedures.
       New section 311, as amended by this section, differs from 
     section 302 of existing law in Chapter 30 of the Patent Act 
     by requiring any person filing a written request for inter 
     partes reexamination to identify the real party in interest.
       Similar to section 303 of existing law, new section 312 of 
     the Patent Act confers upon the Director the authority and 
     responsibility to determine, within three months after the 
     filing of a request for inter partes reexamination, whether a 
     substantial new question affecting patentability of any claim 
     of the patent is raised by the request. Also, the decision in 
     this regard is final and not subject to judicial review.
       Proposed sections 313-14 under this subtitle are similarly 
     modeled after sections 304-305 of Chapter 30. Under proposed 
     section 313, if the Director determines that a substantial 
     new question of patentability affecting a claim is raised, 
     the determination shall include an order for inter partes 
     reexamination for resolution of the question. The order may 
     be accompanied by the initial USPTO action on the merits of 
     the inter partes reexamination conducted in accordance with 
     section 314. Generally, under proposed section 314, inter 
     partes reexamination shall be conducted according to the 
     procedures set forth in sections 132-133 of the Patent Act. 
     The patent owner will be permitted to propose any amendment 
     to the patent and a new claim or claims, with the same 
     exception contained in section 305: no proposed amended or 
     new claim enlarging the scope of the claims will be allowed.
       Proposed section 314 elaborates on procedure with regard to 
     third-party requesters who, for the first time, are given the 
     option to participate in inter partes reexamination 
     proceedings. With the exception of the inter partes 
     reexamination request, any document filed by either the 
     patent owner or the third-party requester shall be served on 
     the other party. In addition, the third party-requester in an 
     inter partes reexamination shall receive a copy of any 
     communication sent by the USPTO to the patent owner. After 
     each response by the patent owner to an action on the merits 
     by the USPTO, the third-party requester shall have one 
     opportunity to file written comments addressing issues raised 
     by the USPTO or raised in the patent owner's response. Unless 
     ordered by the Director for good cause, the agency must act 
     in an inter partes reexamination matter with special 
     dispatch.
       Proposed section 315 prescribes the procedures for appeal 
     of an adverse USPTO decision by the patent owner and the 
     third-party requester in an inter partes reexamination. Both 
     the patent owner and the third-party requester are entitled 
     to appeal to the Board of Patent Appeals and Interferences 
     (section 134 of the Patent Act), but only the patentee can 
     appeal to the U.S. Court of Appeals for the Federal Circuit 
     (Sec. Sec. 141-144); either may also be a party to any appeal 
     by the other to the Board of Patent Appeals and 
     Interferences. The patentee is not entitled to the 
     alternative of an appeal of an inter partes reexamination to 
     the U.S. District Court for the District of Columbia. Such 
     appeals are rarely taken from ex parte reexamination 
     proceedings under existing law and its removal should speed 
     up the process.
       To deter unnecessary litigation, proposed section 315 
     imposes constraints on the third-party requester. In general, 
     a third-party requester who is granted an inter partes 
     reexamination by the USPTO may not assert at a later time in 
     any civil action in U.S. district court \18\ the invalidity 
     of any claim finally determined to be patentable on any 
     ground that the third-party requester raised or could have 
     raised during the inter partes reexamination. However, the 
     third-party requester may assert invalidity based on newly 
     discovered prior art unavailable at the time of the 
     reexamination. Prior art was unavailable at the time of the 
     inter partes reexamination if it was not known to the 
     individuals who were involved in the reexamination proceeding 
     on behalf of the third-party requester and the USPTO.
       Section 316 provides for the Director to issue and publish 
     certificates canceling unpatentable claims, confirming 
     patentable claims, and incorporating any amended or new claim 
     determined to be patentable in an inter partes procedure.
       Subtitle F creates a new section 317 which sets forth 
     certain conditions by which inter partes reexamination is 
     prohibited to guard against harassment of a patent holder. In 
     general, once an order for inter partes reexamination has 
     been issued, neither a third-party requester nor the patent 
     owner may file a subsequent request for inter partes 
     reexamination until an inter partes reexamination certificate 
     is issued and published, unless authorized by the Director. 
     Further, if a third-party requester asserts patent invalidity 
     in a civil action and a final decision is entered that the 
     party failed to prove the assertion of invalidity, or if a 
     final decision in an inter partes reexamination instituted by 
     the requester is favorable to patentability, after any 
     appeals, that third-party requester cannot thereafter request 
     inter partes reexamination on the basis of issues which were 
     or which could have been raised. However, the third-party 
     requester may assert invalidity based on newly discovered 
     prior art unavailable at the time of the civil action or 
     inter partes reexamination. Prior art was unavailable at the 
     time if it was not known to the individuals who were involved 
     in the civil action or inter partes reexamination proceeding 
     on behalf of the third-party requester and the USPTO.
       Proposed section 318 gives a patent owner the right, once 
     an inter partes reexamination has been ordered, to obtain a 
     stay of any pending litigation involving an issue of 
     patentability of any claims of the patent that are the 
     subject of the inter partes reexamination, unless the court 
     determines that the stay would not serve the interests of 
     justice.

[[Page S14721]]

     Sec. 4605. Conforming amendments
       Section 4605 makes the following conforming amendments to 
     the Patent Act:
       A patent owner must pay a fee of $1,210 for each petition 
     in connection with an unintentionally abandoned application, 
     delayed payment, or delayed response by the patent owner 
     during any reexamination.
       A patent applicant, any of whose claims has been twice 
     rejected; a patent owner in a reexamination proceeding; and a 
     third-party requester in an inter partes reexamination 
     proceeding may all appeal final adverse decisions from a 
     primary examiner to the Board of Patent Appeals and 
     Interferences.
       Proposed section 141 states that a patent owner in a 
     reexamination proceeding may appeal an adverse decision by 
     the Board of Patent Appeals and Interferences only to the 
     U.S. Court of Appeals for the Federal Circuit as earlier 
     noted. A third-party requester in an inter partes 
     reexamination proceeding may not appeal beyond the Board of 
     Patent Appeals and Interferences.
       The Director is required pursuant to section 143 
     (proceedings on appeal to the Federal Circuit) to submit to 
     the court the grounds for the USPTO decision in any 
     reexamination addressing all the issues involved in the 
     appeal.
     Sec. 4606. Report to Congress
       Not later than five years after the effective date of 
     subtitle F, the Director must submit to Congress a report 
     evaluating whether the inter partes reexamination proceedings 
     set forth in the title are inequitable to any of the parties 
     in interest and, if so, the report shall contain 
     recommendations for change to eliminate the inequity.
     Sec. 4607. Estoppel Effect of Reexamination
       Section 4607 estops any party who requests inter partes 
     reexamination from challenging at a later time, in any civil 
     action, any fact determined during the process of the inter 
     partes reexamination, except with respect to a fact 
     determination later proved to be erroneous based on 
     information unavailable at the time of the inter partes 
     reexamination. The estoppel arises after a final decision in 
     the inter partes reexamination or a final decision in any 
     appeal of such reexamination. If section 4607 is held to be 
     unenforceable, the enforceability of the rest of subtitle F 
     or the Act is not affected.
     Sec. 4608. Effective date
       Subtitle F shall take effect on the date of the enactment 
     and shall apply to any patent that issues from an original 
     application filed in the United States on or after that date, 
     except that the amendments made by section 4605(a) shall take 
     effect one year from the date of enactment.

         Subtitle G--United States Patent and Trademark Office

       Subtitle G establishes the United States Patent and 
     Trademark Office (USPTO) as an agency of the United States 
     within the Department of Commerce. The Secretary of Commerce 
     gives policy direction to the agency, but the agency is 
     autonomous and responsible for the management and 
     administration of its operations and has independent control 
     of budget allocations and expenditures, personnel decisions 
     and processes, and procurement. The Committee intends that 
     the Office will conduct its patent and trademark operations 
     without micro-management by Department of Commerce officials, 
     with the exception of policy guidance of the Secretary. The 
     agency is headed by an Under Secretary of Commerce for 
     Intellectual Property and Director of the United States 
     Patent and Trademark Office, a Deputy, and a Commissioner of 
     Patents and a Commissioner of Trademarks. The agency is 
     exempt from government-wide personnel ceilings. A patent 
     public advisory committee and a trademark public advisory 
     committee are established to advise the Director on agency 
     policies, goals, performance, budget and user fees.
     Sec. 4701. Short title
       This subtitle may be cited as the ``Patent and Trademark 
     Office Efficiency Act.''

        Subchapter A--United States Patent and Trademark Office

     Sec. 4711. Establishment of Patent and Trademark Office
       Section 4711 establishes the USPTO as an agency of the 
     United States within the Department of Commerce and under the 
     policy direction of the Secretary of Commerce. The USPTO, as 
     an autonomous agency, is explicitly responsible for decisions 
     regarding the management and administration of its operations 
     and has independent control of budget allocations and 
     expenditures, personnel decisions and processes, 
     procurements, and other administrative and management 
     functions. Patent operations and trademark operations are to 
     be treated as separate operating units within the Office, 
     each under the direction of its respective Commissioner, as 
     supervised by the Director.
       The USPTO shall maintain its principal office in the 
     metropolitan Washington, D.C., area, for the service of 
     process and papers and for the purpose of discharging its 
     functions. For purposes of venue in civil actions, the agency 
     is deemed to be a resident of the district in which its 
     principal office is located, except where otherwise provided 
     by law. The USPTO is also permitted to establish satellite 
     offices in such other places in the United States as it 
     considers necessary and appropriate to conduct business. This 
     is intended to allow the USPTO, if appropriate, to serve 
     American applicants better.
     Sec. 4712. Powers and duties
       Subject to the policy direction of the Secretary of the 
     Commerce, in general the USPTO will be responsible for the 
     granting and issuing of patents, the registration of 
     trademarks, and the dissemination of patent and trademark 
     information to the public.
       The USPTO will also possess specific powers, which include:
       (1) a requirement to adopt and use an Office seal for 
     judicial notice purposes and for authenticating patents, 
     trademark certificates and papers issued by the Office;
       (2) the authority to establish regulations, not 
     inconsistent with law, that
       (A) govern the conduct of USPTO proceedings within the 
     Office,
       (B) are in accordance with Sec. 553 of title 5,
       (C) facilitate and expedite the processing of patent 
     applications, particularly those which can be processed 
     electronically,
       (D) govern the recognition, conduct, and qualifications of 
     agents, attorneys, or other persons representing applicants 
     or others before the USPTO,
       (E) recognize the public interest in ensuring that the 
     patent system retain a reduced fee structure for small 
     entities, and
       (F) provide for the development of a performance-based 
     process for managing that includes quantitative and 
     qualitative measures, standards for evaluating cost-
     effectiveness, and consistency with principles of 
     impartiality and competitiveness;
       (3) the authority to acquire, construct, purchase, lease, 
     hold, manage, operate, improve, alter and renovate any real, 
     personal, or mixed property as it considers necessary to 
     discharge its functions;
       (4) the authority to make purchases of property, contracts 
     for construction, maintenance, or management and operation of 
     facilities, as well as to contract for and purchase printing 
     services without regard to those federal laws which govern 
     such proceedings;
       (5) the authority to use services, equipment, personnel, 
     facilities and equipment of other federal entities, with 
     their consent and on a reimbursable basis;
       (6) the authority to 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 foreign 
     patent or trademark office or international organization to 
     perform functions on its behalf;
       (7) the authority to retain and use all of its revenues and 
     receipts;
       (8) a requirement to advise the President, through the 
     Secretary of Commerce, on national and certain international 
     intellectual property policy issues;
       (9) a requirement to advise Federal departments and 
     agencies of intellectual property policy in the United States 
     and intellectual property protection abroad;
       (10) a requirement to provide guidance regarding proposals 
     offered by agencies to assist foreign governments and 
     international intergovernmental organizations on matters of 
     intellectual property protection;
       (11) the authority to conduct programs, studies or 
     exchanges regarding domestic or international intellectual 
     property law and the effectiveness of intellectual property 
     protection domestically and abroad;
       (12) a requirement to advise the Secretary of Commerce on 
     any programs and studies relating to intellectual property 
     policy that the USPTO may conduct or is authorized to 
     conduct, cooperatively with foreign intellectual property 
     offices and international intergovernmental organizations; 
     and
       (13) the authority to (A) coordinate with the Department of 
     State in conducting programs and studies cooperatively with 
     foreign intellectual property offices and international 
     intergovernmental organizations, and (B) transfer, with the 
     concurrence of the Secretary of State, up to $100,000 in any 
     year to the Department of State to pay an international 
     intergovernmental organization for studies and programs 
     advancing international cooperation concerning patents, 
     trademarks, and other matters.
       The specific powers set forth in new subsection (b) are 
     clarified in new subsection (c). The special payments of 
     paragraph (14)(B) are additional to other payments or 
     contributions and are not subject to any limitation imposed 
     by law. Nothing in subsection (b) derogates from the duties 
     of the Secretary of State or the United States Trade 
     Representative as set forth in section 141 of the Trade Act 
     of 1974 \19\, nor derogates from the duties and functions of 
     the Register of Copyrights. The Director is required to 
     consult with the Administrator of General Services when 
     exercising authority under paragraphs (3) and (4)(A). Nothing 
     in section 4712 may 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 USPTO. 
     Finally, in exercising the powers and duties under this 
     section, the Director shall consult with the Register of 
     Copyright on all Copyright and related matters.
     Sec. 4713. Organization and management
       Section 4713 details the organization and management of the 
     agency. The powers and duties of the USPTO shall be vested in 
     the Under Secretary and Director, who shall be appointed by 
     the President, by and with the consent of the Senate. The 
     Under Secretary and Director performs two main functions. As 
     Under Secretary of Commerce for Intellectual Property, she 
     serves as the policy advisor to the Secretary of Commerce and 
     the

[[Page S14722]]

     President on intellectual property issues. As Director, she 
     is responsible for supervising the management and direction 
     of the USPTO. She shall consult with the Public Advisory 
     Committees, infra, on a regular basis regarding operations of 
     the agency and before submitting budgetary proposals and fee 
     or regulation changes. The Director shall take an oath of 
     office. The President may remove the Director from office, 
     but must provide notification to both houses of Congress.
       The Secretary of Commerce, upon nomination of the Director, 
     shall appoint a Deputy Director to act in the capacity of the 
     Director if the Director is absent or incapacitated. The 
     Secretary of Commerce shall also appoint two Commissioners, 
     one for Patents, the other for Trademarks, without regard to 
     chapters 33, 51, or 53 of title 5 of the U.S. Code. The 
     Commissioners will have five-year terms and may be 
     reappointed to new terms by the Secretary. Each Commissioner 
     shall possess a demonstrated experience in patent and 
     trademark law, respectively; and they shall be responsible 
     for the management and direction of the patent and trademark 
     operations, respectively. In addition to receiving a basic 
     rate of compensation under the Senior Executive Service \20\ 
     and a locality payment,\21\ the Commissioners may receive 
     bonuses of up to 50 percent of their annual basic rate of 
     compensation, not to exceed the salary of the Vice President, 
     based on a performance evaluation by the Secretary, acting 
     through the Director. The Secretary may remove Commissioners 
     for misconduct or unsatisfactory performance. It is intended 
     that the Commissioners will be non-political expert 
     appointees, independently responsible for operations, subject 
     to supervision by the Director.
       The Director may appoint all other officers, agents, and 
     employees as she sees fit, and define their responsibilities 
     with equal discretion. The USPTO is specifically not subject 
     to any administratively or statutorily imposed limits (full-
     time equivalents, or ``FTEs'') on positions or personnel.
       The USPTO is charged with developing and submitting to 
     Congress a proposal for an incentive program to retain senior 
     (of the primary examiner grade or higher) patent and 
     trademark examiners eligible for retirement for the sole 
     purpose of training patent and trademark examiners.
       The Director of the USPTO, in consultation with the 
     Director of the Office of Personnel Management, is required 
     to maintain a program for identifying national security 
     positions at the USPTO and for providing for appropriate 
     security clearances for USPTO employees in order to maintain 
     the secrecy of inventions as described in section 181 of the 
     Patent Act and to prevent disclosure of sensitive and 
     strategic information in the interest of national security.
       The USPTO will be subject to all provisions of title 5 of 
     the U.S. Code governing federal employees. All relevant labor 
     agreements which are in effect the day before enactment of 
     subtitle G shall be adopted by the agency. All USPTO 
     employees as of the day before the effective date of subtitle 
     G shall remain officers and employees of the agency without a 
     break in service. Other personnel of the Department of 
     Commerce shall be transferred to the USPTO only if necessary 
     to carry out purposes of subtitle G of the bill and if a 
     major function of their work is reimbursed by the USPTO, they 
     spend at least half of their work time in support of the 
     USPTO, or a transfer to the USPTO would be in the interest of 
     the agency, as determined by the Secretary of Commerce in 
     consultation with the Director.
       On or after the effective date of the Act, the President 
     shall appoint an individual to serve as Director until a 
     Director qualifies under subsection (a). The persons serving 
     as the Assistant Commissioner for Patents and the Assistant 
     Commissioner for Trademarks on the day before the effective 
     date of the Act may serve as the Commissioner for Patents and 
     the Commissioner for Trademarks, respectively, until a 
     respective Commissioner is appointed under subsection (b)(2).
     Sec. 4714. Public Advisory Committees
       Section 4714 provides a new section 5 of the Patent Act 
     which establishes a Patent Public Advisory Committee and a 
     Trademark Public Advisory Committee. Each Committee has nine 
     voting members with three-year terms appointed by and serving 
     at the pleasure of the Secretary of Commerce. Initial 
     appointments will be made within three months of the 
     effective date of the Act; and three of the initial 
     appointees will receive one-year terms, three will receive 
     two-year terms, and three will receive full terms. Vacancies 
     will be filled within three months. The Secretary will also 
     designate chairpersons for three-year terms.
       The members of the Committees will be U.S. citizens and 
     will be chosen to represent the interests of USPTO users. The 
     Patent Public Advisory Committee shall have members who 
     represent small and large entity applicants in the United 
     States in proportion to the number of applications filed by 
     the small and large entity applicants. In no case shall the 
     small entity applicants be represented by less than 25 
     percent of the members of the Patent Public Advisory 
     Committee, at least one of whom shall be an independent 
     inventor. The members of both Committees shall include 
     individuals with substantial background and achievement in 
     finance, management, labor relations, science, technology, 
     and office automation. The patent and trademark examiners' 
     unions are entitled to have one representative on their 
     respective Advisory Committee in a non-voting capacity.
       The Committees meet at the call of the chair to consider an 
     agenda established by the chair. Each Committee reviews the 
     policies, goals, performance, budget, and user fees that bear 
     on its area of concern and advises the Director on these 
     matters. Within 60 days of the end of a fiscal year, the 
     Committees prepare annual reports, transmit the reports to 
     the Secretary of Commerce, the President, and the Committees 
     on the Judiciary of the Congress, and publish the reports in 
     the Official Gazette of the USPTO.
       Members of the Committees are compensated at a defined 
     daily rate for meeting and travel days. Members are provided 
     access to USPTO records and information other than personnel 
     or other privileged information including that concerning 
     patent applications. Members are special Government employees 
     within the meaning of section 202 of title 18. The Federal 
     Advisory Committee Act shall not apply to the Committees. 
     Finally, section 4714 provides that Committee meetings shall 
     be open to the public unless by a majority vote the Committee 
     meets in executive session to consider personnel or other 
     confidential information.
     Sec. 4715. Conforming amendments
       Technical conforming amendments to the Patent Act are set 
     forth in section 4715.
     Sec. 4716. Trademark Trial and Appeal Board
       Section 4716 amends section 17 of the Trademark Act of 1946 
     by specifying that the Director shall give notice to all 
     affected parties and shall direct a Trademark Trial and 
     Appeal Board to determine the respective rights of those 
     parties before it in a relevant proceeding. The section also 
     invests the Director with the power of appointing 
     administrative trademark judges to the Board. The Director, 
     the Commissioner for Trademarks, the Commissioner for 
     Patents, and the administrative trademark judges shall serve 
     on the Board.
     Sec. 4717. Board of Patent Appeals and Interferences
       Under existing section 7 of the Patent Act, the 
     Commissioner, Deputy Commissioner, Assistant Commissioners, 
     and the examiners-in-chief constitute the Board of Patent 
     Appeals and Interferences. Pursuant to section 4717 of 
     subtitle G, the Board shall be comprised of the Director, the 
     Commissioner for Patents, the Commissioner for Trademarks, 
     and the administrative patent judges. In addition, the 
     existing statute allows each appellant a hearing before three 
     members of the Board who are designated by the Director. 
     Section 4717 empowers the Director with this authority.
     Sec. 4718. Annual report of Director
       No later than 180 days after the end of each fiscal year, 
     the Director must provide a report to Congress detailing 
     funds received and expended by the USPTO, the purposes for 
     which the funds were spent, the quality and quantity of USPTO 
     work, the nature of training provided to examiners, the 
     evaluations of the Commissioners by the Secretary of 
     Commerce, the Commissioners' compensation, and other 
     information relating to the agency.
     Sec. 4719. Suspension or exclusion from practice
       Under existing section 32 of the Patent Act, the 
     Commissioner (the Director pursuant to this Act) has the 
     authority, after notice and a hearing, to suspend or exclude 
     from further practice before the USPTO any person who is 
     incompetent, disreputable, indulges in gross misconduct or 
     fraud, or is noncompliant with USPTO regulations. Section 
     4719 permits the Director to designate an attorney who is an 
     officer or employee of the USPTO to conduct a hearing under 
     section 32.
     Sec. 4720. Pay of Director and Deputy Director
       Section 4720 replaces the Assistant Secretary of Commerce 
     and Commissioner of Patents and Trademarks with the Under 
     Secretary of Commerce for Intellectual Property and Director 
     of the United States Patent and Trademark Office to receive 
     pay at Level III of the Executive Schedule.\22\ Section 4720 
     also establishes the pay of the Deputy Director at Level IV 
     of the Executive Schedule.\23\

           Subchapter B--Effective Date; Technical Amendments

     Sec. 4731. Effective date
       The effective date of subtitle G is four months after the 
     date of enactment.
     Sec. 4732. Technical and conforming amendments
       Section 4732 sets forth numerous technical and conforming 
     amendments related to subtitle G.

                 Subchapter C--Miscellaneous Provisions

     Sec. 4741. References
       Section 4741 clarifies that any reference to the transfer 
     of a function from a department or office to the head of such 
     department or office means the head of such department or 
     office to which the function is transferred. In addition, 
     references in other federal materials to the current 
     Commissioner of Patents and Trademarks refer, upon enactment, 
     to the Under Secretary of Commerce for Intellectual Property 
     and Director of the United States Patent and Trademark 
     Office. Similarly, references to the Assistant Commissioner 
     for Patents are deemed to refer to the Commissioner for 
     Patents and references to the Assistant Commissioner for 
     Trademarks are deemed to refer to the Commissioner for 
     Trademarks.

[[Page S14723]]

     Sec. 4742. Exercise of authorities
       Under section 4742, except as otherwise provided by law, a 
     federal official to whom a function is transferred pursuant 
     to subtitle G may exercise all authorities under any other 
     provision of law that were available regarding the 
     performance of that function to the official empowered to 
     perform that function immediately before the date of the 
     transfer of the function.
     Sec. 4743. Savings provisions
       Relevant legal documents that relate to a function which is 
     transferred by subtitle G, and which are in effect on the 
     date of such transfer, shall continue in effect according to 
     their terms unless later modified or repealed in an 
     appropriate manner. Applications or proceedings concerning 
     any benefit, service, or license pending on the effective 
     date of subtitle G before an office transferred shall not be 
     affected, and shall continue thereafter, but may later be 
     modified or repealed in the appropriate manner.
       Subtitle G will not affect suits commenced before the 
     effective date of passage. Suits or actions by or against the 
     Department of Commerce, its employees, or the Secretary shall 
     not abate by reason of enactment of subtitle G. Suits against 
     a relevant government officer in her official capacity shall 
     continue post enactment, and if a function has transferred to 
     another officer by virtue of enactment, that other officer 
     shall substitute as the defendant. Finally, administrative 
     and judicial review procedures that apply to a function 
     transferred shall apply to the head of the relevant federal 
     agency and other officers to which the function is 
     transferred.
     Sec. 4744. Transfer of assets
       Section 4744 states that all available personnel, property, 
     records, and funds related to a function transferred pursuant 
     to subtitle G shall be made available to the relevant 
     official or head of the agency to which the function 
     transfers at such time or times as the Director of the Office 
     of Management and Budget (OMB) directs.
     Sec. 4745. Delegation and assignment
       Section 4745 allows an official to whom a function is 
     transferred under subtitle G to delegate that function to 
     another officer or employee. The official to whom the 
     function was originally transferred nonetheless remains 
     responsible for the administration of the function.
     Sec. 4746. Authority of Director of the Office of Management 
         and Budget with respect to functions transferred
       Pursuant to section 4746, if necessary the Director of OMB 
     shall make any determination of the functions transferred 
     pursuant to subtitle G.
     Sec. 4747. Certain vesting of functions considered transfers
       Section 4747 states that the vesting of a function in a 
     department or office pursuant to reestablishment of an office 
     shall be considered to be the transfer of that function.
     Sec. 4748. Availability of existing funds
       Under section 4748, existing appropriations and funds 
     available for the performance of functions and other 
     activities terminated pursuant to subtitle G shall remain 
     available (for the duration of their period of availability) 
     for necessary expenses in connection with the termination and 
     resolution of such functions and activities, subject to the 
     submission of a plan to House and Senate appropriators in 
     accordance with Public Law 105-277 (Departments of Commerce, 
     Justice, and State, the Judiciary and Related Agencies 
     Appropriations Act, Fiscal Year 1999).
     Sec. 4749. Definitions
       ``Function'' includes any duty, obligation, power, 
     authority, responsibility, right, privilege, activity, or 
     program.
       ``Office'' includes any office, administration, agency, 
     bureau, institute, council, unit, organizational entity, or 
     component thereof.

              Subtitle H--Miscellaneous Patent Provisions

       Subtitle H consists of seven largely-unrelated provisions 
     that make needed clarifying and technical changes to the 
     Patent Act . Subtitle H also authorizes a study. The 
     provisions in Subtitle H take effect on the date of enactment 
     except where stated otherwise in certain sections.
     Sec. 4801. Provisional applications
       Section 4801 amends section 111(b)(5) of the Patent Act by 
     permitting a provisional application to be converted into a 
     non-provisional application. The applicant must make a 
     request within 12 months after the filing date of the 
     provisional application for it to be converted into a non-
     provisional application.
       Section 4801 also amends section 119(e) of the Patent Act 
     by clarifying the treatment of a provisional application when 
     its last day of pendency falls on a weekend or a Federal 
     holiday, and by eliminating the requirement that a 
     provisional application must be co-pending with a non-
     provisional application if the provisional application is to 
     be relied on in any USPTO proceeding.
     Sec. 4802. International applications
       Section 4802 amends section 119(a) of the Patent Act to 
     permit persons who filed an application for patent first in a 
     WTO \24\ member country to claim the right of priority in a 
     subsequent patent application filed in the United States, 
     even if such country does not yet afford similar privileges 
     on the basis of applications filed in the United States. This 
     amendment was made in conformity with the requirements of 
     Articles 1 and 2 of the TRIPS Agreement.\25\ These Articles 
     require that WTO member countries apply the substantive 
     provisions of the Paris Convention for the Protection of 
     Industrial Property to other WTO member countries. As some 
     WTO member countries are not yet members of the Paris 
     Convention, and as developing countries are generally 
     permitted periods of up to 5 years before complying with all 
     provisions of the TRIPS Agreement, they are not required to 
     extend the right of priority to other WTO member countries 
     until such time.
       Section 4802 also adds subsection (f) to section 119 of the 
     Patent Act to provide for the right of priority in the United 
     States on the basis of an application for a plant breeder's 
     right first filed in a WTO member country or in a UPOV\26\ 
     Contracting Party. Many foreign countries provide only a sui 
     generis system of protection for plant varieties. Because 
     section 119 presently addresses only patents and inventors' 
     certificates, applicants from those countries are technically 
     unable to base a priority claim on a foreign application for 
     a plant breeder's right when seeking plant patent or utility 
     patent protection for a plant variety in this country.
       Subsection (g) is added to section 119 to define the terms 
     ``WTO member country'' and ``UPOV Contracting Party.''
     Sec. 4803. Certain limitations on remedies for patent 
         infringement not applicable
       Section 4803 amends section 287(c)(4) of the Patent Act, 
     which pertains to certain limitations on remedies for patent 
     infringement, to make it applicable only to applications 
     filed on or after September 30, 1996.
     Sec. 4804. Electronic filing and publications
       Section 4804 amends section 22 of the Patent Act to clarify 
     that the USPTO may receive, disseminate, and maintain 
     information in electronic form. Subsection (d)(2), however, 
     prohibits the Director from ceasing to maintain paper or 
     microform collections of U.S. patents, foreign patent 
     documents, and U.S. trademark registrations, except pursuant 
     to notice and opportunity for public comment and except the 
     Director shall first submit a report to Congress detailing 
     any such plan, including a description of the mechanisms in 
     place to ensure the integrity of such collections and the 
     data contained therein, as well as to ensure prompt public 
     access to the most current available information, and 
     certifying that the implementation of such plan will not 
     negatively impact the public.
       In addition, in the operation of its information 
     dissemination programs and as the sole source of patent data, 
     the USPTO should implement procedures that assure that bulk 
     patent data are provided in such a manner that subscribers 
     have the data in a manner that grants a sufficient amount of 
     time for such subscribers to make the data available through 
     their own systems at the same time the USPTO makes the data 
     publicly available through its own Internet system.
     Sec. 4805. Study and report on biologic deposits in support 
         of biotechnology patents
       Section 4805 charges the Comptroller General, in 
     consultation with the Director of the USPTO, with conducting 
     a study and submitting a report to Congress no later than six 
     months after the date of enactment on the potential risks to 
     the U.S. biotechnological industry regarding biological 
     deposits in support of biotechnology patents. The study shall 
     include: an examination of the risk of export and of 
     transfers to third parties of biological deposits, and the 
     risks posed by the 18-month publication requirement of 
     subtitle E; an analysis of comparative legal and regulatory 
     regimes; and any related recommendations. The USPTO is then 
     charged with considering these recommendations when drafting 
     regulations affecting biological deposits.
     Sec. 4806. Prior invention
       Section 4806 amends section 102(g) of the Patent Act to 
     make clear that an inventor who is involved in a USPTO 
     interference proceeding and establishes a date of invention 
     under section 104 is subject to the requirements of section 
     102(g), including the requirement that the invention was not 
     abandoned, suppressed, or concealed.
     Sec. 4807. Prior art exclusion for certain commonly assigned 
         patents
       Section 4807 amends section 103 of the Patent Act, which 
     sets forth patentability conditions related to the 
     nonobviousness of subject matter. Section 103(c) of the 
     current statute states that subject matter developed by 
     another person which qualifies as prior art only under 
     section 102(f) or (g) shall not preclude granting a patent on 
     an invention with only obvious differences where the subject 
     matter and claimed invention were, at the time the invention 
     was made, owned by the same person or subject to an 
     obligation of assignment to the same person. The bill amends 
     section 103(c) by adding a reference to section 102(e), which 
     currently bars the granting of a patent if the invention was 
     described in another patent granted on an application filed 
     before the applicant's date of invention. The effect of the 
     amendment is to allow an applicant to receive a patent when 
     an invention with only obvious differences from the 
     applicant's invention was described in a patent granted on an 
     application filed before the applicant's invention, provided 
     the inventions are commonly owned or subject to an obligation 
     of assignment to the same person.

[[Page S14724]]

     Sec. 4808. Exchange of copies of patents with foreign 
         countries
       Sec. 4808 amends section 12 of the Patent Act to prohibit 
     the Director of the USPTO from entering into an agreement to 
     exchange patent data with a foreign country that is not one 
     of our NAFTA \27\ or WTO trading partners, unless the 
     Secretary of Commerce explicitly authorizes such an exchange.

                   TITLE V--MISCELLANEOUS PROVISIONS

     Section 5001. Commission on Online Child Protection.
       Section 5001(a) provides that references contained in the 
     amendments made by this title are to section 1405 of the 
     Child Online Protection Act (47 U.S.C. 231 note).
       Section 5001(b) amends the membership of the Commission on 
     Online Child Protection to remove a requirement that a 
     specific number of representatives come from designated 
     sectors of private industry, as outlined in the Act. Section 
     5001(b) also provides that the members appointed to the 
     Commission as of October 31, 1999, shall remain as members. 
     Section 5001(b) also prevents the members of the Commission 
     from being paid for their work on the Commission. This 
     provision, however, does not preclude members from being 
     reimbursed for legitimate costs associated with participating 
     in the Commission (such as travel expenses).
       Section 5001(c) extends the due date for the report of the 
     Commission by one year.
       Section 5001(d) establishes that the Commission's statutory 
     authority will expire either (1) 30 days after the submission 
     of the report required by the Act, or (2) November 30, 2000, 
     whichever is earlier.
       Section 5001(e) requires the Commission to commence its 
     first meeting no later than March 31, 2000. Section 5001(e) 
     also requires that the Commission elect, by a majority vote, 
     a chairperson of the Commission not later than 30 days after 
     holding its first meeting.
       Section 5001(f) establishes minimum rules for the 
     operations of the Commission, and also allows the Commission 
     to adopt other rules as it deems necessary.
     Section 5002. Privacy Protection for Donors to Public 
         Broadcasting Entities.
       This provision, which was added in Conference, protects the 
     privacy of donors to public broadcasting entities.
     Section 5003. Completion of Biennial Regulatory Review.
       Section 5003 provides that, within 180 days after the date 
     of enactment, the FCC will complete the biennial review 
     required by section 202(h) of the Telecommunications Act of 
     1996. The Conferees expect that if the Commission concludes 
     that it should retain any of the rules under the review 
     unchanged, the Commission shall issue a report that includes 
     a full justification of the basis for so finding.
     Section 5004. Broadcasting Entities.
       This provision, added in Conference, allows for a 
     remittance of copyright damages for public broadcasting 
     entities where they are not aware and have no reason to 
     believe that their activities constituted violations of 
     copyright law. This is currently the standard for nonprofit 
     libraries, archives and educational institutions.
     Section 5005. Technical Amendments Relating to Vessel Hull 
         Design Protection.
       This section makes several amendments to chapter 13 of the 
     Copyright Act regarding design protection for vessel hulls. 
     The sunset provision for chapter 13, enacted as part of the 
     Digital Millennium Copyright Act, is removed so that chapter 
     13 is now a permanent provision of the Copyright Act. The 
     timing and number of joint studies to be done by the 
     Copyright Office and the Patent and Trademark Offices of the 
     effectiveness of chapter 13 are also amended by reducing the 
     number of studies from two to one, and requiring that the one 
     study not be submitted until November 1, 2003. Current law 
     requires delivery of two studies within the first two years 
     of chapter 13, which is unnecessary and an insufficient 
     amount of time for the Copyright Office and the Patent and 
     Trademark Office to accurately measure and assess the 
     effectiveness of design protection within the marine 
     industry.
       The definition of a ``vessel'' in chapter 13 is amended to 
     provide that in addition to being able to navigate on or 
     through water, a vessel must be self-propelled and able to 
     steer, and must be designed to carry at least one passenger. 
     This clarifies Congress's intent not to allow design 
     protection for such craft as barges, toy and remote 
     controlled boas, inner tubes and surf boards.
     Section 5006. Informal Rulemaking of Copyright Determination.
       The Copyright Office has requested that Congress make a 
     technical correction to section 1201(a)(1)(C) of title 17 by 
     deleting the phrase ``on the record.'' The Copyright Office 
     believes that this correction is necessary to avoid any 
     misunderstanding regarding the intent of Congress that the 
     rulemaking proceeding which is the be conducted by the 
     Copyright Office under this provision shall be an informal, 
     rather than a formal, rulemaking proceeding. Accordingly, the 
     phrase ``on the record'' is deleted as a technical correction 
     to clarify the intent of Congress that the Copyright Office 
     shall conduct the rulemaking under section 1201(a)(1)(C) as 
     an informal rulemaking proceeding pursuant to section 553 of 
     Title 5. The intent is to permit interested persons an 
     opportunity to participate through the submission of written 
     statements, oral presentations at one or more of the public 
     hearings, and the submission of written responses to the 
     submissions or presentations of others.
     Section 5007. Service of Process for Surety Corporations
       This section allows surety corporations, like other 
     corporations, to utilize approved state officials to receive 
     service of process in any legal proceeding as an alternative 
     to having a separate agent for service of process in each of 
     the 94 federal judicial districts.
     Section 5008. Low-Power Television.
       Section 5008, which can be cited as the Community 
     Broadcasters Protection Act of 1999, will ensure that many 
     communities across the nation will continue to have access to 
     free, over-the-air low-power television (LPTV) stations, even 
     as full-service television stations proceed with their 
     conversion to digital format. In particular, Section 5008 
     requires the Federal Communications Commission (FCC) to 
     provide certain qualifying LPTV stations with ``primary'' 
     regulatory status, which in turn will enable these LPTV 
     stations to attract the financing that is necessary to 
     provide consumers with critical information and programming. 
     At the same time, recognizing the importance of, and the 
     engineering complexity in, the FCC's plan to convert full-
     service television stations to digital format, Section 5009 
     protects the ability of these stations to provide both 
     digital and analog service throughout their existing service 
     areas.
       The FCC began awarding licenses for low-power television 
     service in 1982. Low-power television service is a relatively 
     inexpensive and flexible means of delivering programming 
     tailored to the interests of viewers in small localized 
     areas. It also ensures that spectrum allocated for broadcast 
     television service is more efficiently used and promotes 
     opportunities for entering the television broadcast business.
       The FCC estimates that there are more than 2,000 licensed 
     and operational LPTV stations, about 1,500 of which are 
     operated in the continental United States by 700 different 
     licensees in nearly 750 towns and cities.\28\ LPTV stations 
     serve rural and urban communities alike, although about two-
     thirds of all LPTV stations serve rural communities. LPTV 
     stations in urban markets typically provide niche programming 
     (e.g., bilingual or non-English programming) to under-served 
     communities in large cities. In many rural markets, LPTV 
     stations are consumers' only source of local, over-the-air 
     programming. Owners of LPTV stations are diverse, including 
     high school and college student populations, churches and 
     religious groups, local governments, large and small 
     businesses, and even individual citizens.
       From an engineering standpoint, the term ``low-power 
     television service'' means precisely what it implies, i.e., 
     broadcast television service that operates at a lower level 
     of power than full-service stations. Specifically, LPTV 
     stations radiate 3 kilowatts of power for stations operating 
     on the VHF band (i.e., channels 2 through 13), and 150 
     kilowatts of power for stations operating on the UHF band 
     (i.e., channels 14 through 69). By comparison, full-service 
     stations on VHF channels radiate up to 316 kilowatts of 
     power, and stations on UHF channels radiate up to 5,000 
     kilowatts of power. The reduced power levels that govern LPTV 
     stations mean these stations serve a much smaller geographic 
     region than do full-service stations. LPTV signals typically 
     extend to a range of approximately 12 to 15 miles, whereas 
     the originating signal of full-service stations often reach 
     households 60 or 80 miles away.
       Compared to its rules for full-service television station 
     licensees, the FCC's rules for obtaining and operating an 
     LPTV license are minimal. But in return for ease of 
     licensing, LPTV stations must operate not only at reduced 
     power levels but also as ``secondary'' licensees. This means 
     LPTV stations are strictly prohibited from interfering with, 
     and must accept signal interference from, ``primary'' 
     licensees, such as full-service television stations. 
     Moreover, LPTV stations must yield at any point in time to 
     full-service stations that increase their power levels, as 
     well as to new full-service stations.
       The video programming marketplace is intensely competitive. 
     The three largest broadcast networks that once dominated the 
     market now face competition from several emerging broadcast 
     and cable networks, cable systems, satellite television 
     operators, wireless cable, and even the Internet. Low-power 
     television plays a valuable, albeit modest, role in this 
     market because it is capable of providing locally-originated 
     programming to rural and urban communities that have either 
     no access to local programming, or an over-abundance of 
     national programming.
       Low-power television's future, however, is uncertain. To 
     begin with, LPTV's secondary regulatory status means a 
     licensee can be summarily displaced by a full-service station 
     that seeks to expand its own service area, or by a new full-
     service station seeking to enter the same market. This cloud 
     of regulatory uncertainty necessarily affects the ability of 
     LPTV stations to raise capital over the long-term, 
     irrespective of an LPTV station's popularity among consumers.
       The FCC's plan to convert full-service stations to digital 
     substantially complicates LPTV stations' already uncertain 
     future. In its digital television (DTV) proceeding, the FCC 
     adopted a table of allotments for DTV service that provided a 
     second channel for

[[Page S14725]]

     each existing full-service station to use for DTV service in 
     making the transition from the existing analog technology to 
     the new DTV technology. These second channels were provided 
     to broadcasters on a temporary basis. At the end of the DTV 
     transition, which is currently scheduled for December 31, 
     2006, they must relinquish one of their two channels.
       In assigning DTV channels, the FCC maintained the secondary 
     status of LPTV stations (as well as translators). In order to 
     provide all full-service television stations with a second 
     channel, the FCC was compelled to establish DTV allotments 
     that will displace a number of LPTV stations, particularly in 
     the larger urban market areas where the available spectrum is 
     most congested.
       The FCC's plan also provides for the recovery of a portion 
     of the existing broadcast television spectrum so that it can 
     be reallocated to new uses. Specifically, the FCC provided 
     for immediate recovery of broadcast channels 60 through 69, 
     and for recovery of broadcast channels 52 through 59 at the 
     end of the DTV transition. As further required by Congress 
     under the Balanced Budget Act of 1997,\29\ the FCC has 
     completed the reallocation of broadcast channels 60 through 
     69. Existing analog stations, including LPTV stations and a 
     few DTV stations, are permitted to operate on these channels 
     during the DTV transition. But at the end of the transition, 
     all analog broadcast TV stations will have to cease 
     operation, and the DTV stations on broadcast channels 52 
     through 69 will be relocated to new channels in the DTV core 
     spectrum. As a result, the FCC estimates that the DTV 
     transition will require about 35 to 45 percent of all LPTV 
     stations to either change their operation or cease operation. 
     Indeed, some full-service stations have already ``bumped'' 
     several LPTV stations a number of times, at substantial cost 
     to the LPTV station, with no guarantee that the LPTV station 
     will be permitted to remain on its new channel in the long 
     term.
       The conferees, therefore, seek to provide some regulatory 
     certainty for low-power television service. The conferees 
     recognize that, because of emerging DTV service, not all LPTV 
     stations can be guaranteed a certain future. Moreover, it is 
     not clear that all LPTV stations should be given such a 
     guarantee in light of the fact that many existing LPTV 
     stations provide little or no original programming service.
       Instead, the conferees seek to buttress the commercial 
     viability of those LPTV stations which can demonstrate that 
     they provide valuable programming to their communities. The 
     House Committee on Commerce's record in considering this 
     legislation reflects that there are a significant number of 
     LPTV stations which broadcast programming--including locally 
     originated programming--for a substantial portion of each 
     day. From the consumers' perspective, these stations provide 
     video programming that is functionally equivalent to the 
     programming they view on full-service stations, as well as 
     national and local cable networks. Consequently, these 
     stations should be afforded roughly similar regulatory 
     status. Section 5008, the Community Broadcasters Protection 
     Act of 1999, will achieve that objective, and at the same 
     time, protect the transition to digital.
       Section 5008(a) provides that the short title of this 
     section is the ``Community Broadcasters Protection Act of 
     1999.''
       Section 5008(b) describes the Congress' findings on the 
     importance of low-power television service. The Congress 
     finds that LPTV stations have operated in a manner beneficial 
     to the public, and in many instances, provide worthwhile and 
     diverse services to communities that lack access to over-the-
     air programming. The Congress also finds, however, that LPTV 
     stations' secondary regulatory status effectively blocks 
     access to capital.
       Section 5008(c) amends section 336 of the Communications 
     Act of 1934 \30\ to require the FCC to create a new ``Class 
     A'' license for certain qualifying LPTV stations. New 
     paragraph (1)(A) in particular directs the FCC to prescribe 
     rules within 120 days of enactment for the establishment of a 
     new Class A television license that will be available to 
     qualifying LPTV stations. The FCC's rules must ensure that a 
     Class A licensee receives the same license terms and renewal 
     standards as any full-service licensee, and that each Class A 
     licensee is accorded primary regulatory status. Subparagraph 
     (B) further requires the FCC, within 30 days of enactment, to 
     send to each existing LPTV licensee a notice that describes 
     the requirements for Class A designation. Within 60 days of 
     enactment (or within 30 days of the FCC's notice), LPTV 
     stations intending to seek Class A designation must submit a 
     certification of eligibility to the FCC. Absent a material 
     deficiency in an LPTV station's certification materials, the 
     FCC is required under subparagraph (B) to grant a 
     certification of eligibility.
       Subparagraph (C) permits an LPTV station, within 30 days of 
     the issuance of the rules required under subparagraph (A), to 
     submit an application for Class A designation. The FCC must 
     award a Class A license to a qualifying LPTV station within 
     30 days of receiving such application. Subparagraph (D) 
     mandates that the FCC must act to preserve the signal 
     contours of an LPTV station pending the final resolution of 
     its application for a Class A license. In the event technical 
     problems arise that require an engineering solution to a 
     full-service station's allotted parameters or channel 
     assignment in the DTV table of allotments, subparagraph (D) 
     requires the FCC to make the necessary modifications to 
     ensure that such full-service station can replicate or 
     maximize its service area, as provided for in the FCC's 
     rules.
       With regard to maximization, a full-service digital 
     television station must file an application for maximization 
     or a notice of intent to seek such maximization by December 
     31, 1999, file a bona fide application for maximization by 
     May 1, 2000, and also comply with all applicable FCC rules 
     regarding the construction of digital television facilities. 
     The term ``maximization'' is defined in paragraph 31 of the 
     FCC's Sixth Report and Order as the process by which stations 
     increase their service areas by operating with additional 
     power or higher antennae than specified in the FCC's digital 
     television table of allotments. Subparagraph(E) requires that 
     a station must reduce the protected contour of its digital 
     television service area in accordance with any modifications 
     requested in future change applications. This provision is 
     intended to ensure that stations indeed utilize the full 
     amount of maximized spectrum for which they originally apply 
     by the aforementioned deadlines.
       Paragraph (2) lists the criteria an LPTV station must meet 
     to qualify for a Class A license. Specifically, the LPTV 
     station must: during the 90 days preceding the date of 
     enactment, broadcast a minimum of 18 hours per day--including 
     at least 3 hours per week of locally-originated programming--
     and also be in compliance with the FCC's rules on low-power 
     television service; and from and after the date of its 
     application for a Class A license, be in compliance with the 
     FCC's rules for full-service television stations. In the 
     alternative, the FCC may qualify an LPTV station as a Class A 
     licensee if it determines that such qualification would serve 
     the public interest, convenience, and necessity or for other 
     reasons determined by the FCC.
       Paragraph (3) provides that no LPTV station authorized as 
     of the date of enactment may be disqualified for a Class A 
     license based on common ownership with any other medium of 
     mass communication.
       Paragraph (4) makes clear that the FCC is not required to 
     issue Class A LPTV stations (or translators) an additional 
     license for advanced television services. The FCC, however, 
     must accept applications for such services, provided the 
     station will not cause interference to any other broadcast 
     facility applied for, protected, permitted or authorized on 
     the date of the filing of the application for advanced 
     television services. Either the new license for advanced 
     services or the original license must be forfeited at the end 
     of the DTV transition. The licensee may elect to convert to 
     advanced television services on its analog channel, but is 
     not required to convert to digital format until the end of 
     the DTV transition.
       Paragraph (5) clarifies that nothing in new subsection 
     336(f) preempts, or otherwise affects, section 337 of the 
     Communications Act of 1934.\31\
       Paragraph (6) precludes the FCC from granting Class A 
     licenses to LPTV stations operating between 698 megahertz 
     (MHz) and 806 MHz (i.e., television broadcast channels 52 
     through 69). However, the FCC shall provide to LPTV stations 
     assigned to, and temporarily operating on, those channels the 
     opportunity to qualify for a Class A license. If a qualifying 
     LPTV station is ultimately assigned a channel within the band 
     of frequencies that will eventually comprise the ``core 
     spectrum'' (i.e., television broadcast channels 2 through 
     51), then the FCC is required to issue a Class A license 
     simultaneously. However, the FCC may not grant a Class A 
     license to an LPTV station operating on a channel within the 
     core spectrum that the FCC will identify within 180 days of 
     enactment.
       Finally, paragraph (7) provides that the FCC may not grant 
     a Class A license (or a modification thereto) unless the 
     requesting LPTV station demonstrates that it will not 
     interfere with one of three types of radio-based services. 
     First, under subparagraph (A), the LPTV station must show 
     that it will not interfere with: (i) the predicted Grade B 
     contour of any station transmitting in analog format; or (ii) 
     the digital television service areas provided in the DTV 
     table of allotments; or the digital television areas 
     explicitly protected (as opposed to those areas that may be 
     permitted) in the Commission's digital television 
     regulations; or the digital television service areas of 
     stations subsequently granted by the FCC prior to the filing 
     of a Class A application; or lastly, stations seeking to 
     maximize power under the FCC's rules (provided such stations 
     are in compliance with the notification requirements under 
     paragraph (1)).
       Second, under subparagraph (B), the LPTV station must show 
     that it will not interfere with any licensed, authorized or 
     pending LPTV station or translator. And third, under 
     subparagraph (C), the LPTV station must show that it will not 
     interfere with other services (e.g., land mobile services) 
     that also operate on television broadcast channels 14 through 
     20.
       Finally, paragraph (8) establishes priority for those LPTVs 
     that are displaced by an application filed under this 
     section, in that these LPTVs have priority over other LPTVs 
     in the assignment of available channels.


                               FOOTNOTES

     \1\ See Rust v. Sullivan, 500 U.S. 173 (1991) (grants); 
     Indopco, Inc. v. Commissioner, 503 U.S. 79, 84 (1992) (tax 
     benefits). The First Amendment requires only

[[Page S14726]]

     that Congress not aim at ``the suppression of dangerous 
     ideas.'' NEA v. Finley, 118 S. Ct. 2168, 2178-79 (1998).
     \2\ See United States v. O'Brien, 391 U.S. 367 (1968).
     \3\ See Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622, 
     663 (1994).
     \4\ See, e.g., H.R. Rep. No. 102-628, p. 51 (1992); S. Rep. 
     No. 102-92, p. 62 (1991); see also Feb. 24 Hearing (Al 
     DeVaney).
     \5\ The Supreme Court has described the ``two types'' of 
     quasi in rem proceedings: a type I proceeding, in which ``the 
     plaintiff is seeking to secure a pre-existing claim in the 
     subject property and to extinguish or establish the 
     nonexistence of similar interests of particular persons,'' 
     and a type II action, in which ``the plaintiff seeks to apply 
     what he concedes to be the property of the defendant to the 
     satisfaction of a claim against him.'' Hanson v. Denckla, 357 
     U.S. 235, 246 n.12 (1958).
     \6\ 15 U.S.C. Sec. 1051, et seq.
     \7\ 149 F.3d 1368 (Fed. Cir. 1998) [hereinafter State 
     Street].
     \8\ See Dunlop Holdings v. Ram Golf Corp., 524 F.2d 33 (7th 
     Cir. 1975), cert. denied, 424 US 985 (1976).
     \9\ General Agreement on Tariffs and Trade, Pub. L. No. 103-
     465. The framework for international trade since its 
     inception in 1948, GATT is now administered under the 
     auspices of the World Trade Organization (WTO) (see note 19, 
     infra).
     \10\ See Herbert F. Schwartz, Patent Law & Practice (2d ed., 
     Federal Judicial Center, 1995), note 72 at 22. The PCT is a 
     multilateral treaty among more than 50 nations that is 
     designed to simplify the patenting process when an applicant 
     seeks a patent on the same invention in more than one nation. 
     See also 35 U.S.C.A. chs. 35-37 and PCT Applicant's Guide 
     (1992, rev. 1994).
     \11\ 35 U.S.C. Sec. 135(a).
     \12\ 35 U.S.C. Sec. 181.
     \13\ 5 U.S.C. Sec. Sec. 551-559, 701-706, 1305, 3105, 3344, 
     5372, 7521.
     \14\ 28 U.S.C. Sec. 1295.
     \15\ 35 U.S.C. Sec. 111(b). Pursuant to 35 U.S.C. 
     Sec. 111(b)(5), all provisional applications are abandoned 12 
     months after the date of their filing; accordingly, they are 
     not subject to the 18-month publication requirement.
     \16\ 35 U.S.C. Sec. 171. Since design applications do not 
     disclose technology, inventors do not have a particular 
     interest in having them published. The bill as written 
     therefore simplifies the proposed system of publication to 
     confine the requirement to those applications for which there 
     is a need for publication.
     \17\ Mar. 20, 1883, as revised at Brussels, Dec. 14, 1900, 25 
     Stat. 1645, T.S. No. 579, and subsequently through 1967. The 
     Convention has 156 member nations, including the United 
     States.
     \18\ See 28 U.S.C. Sec. 1338.
     \19\ 19 U.S.C. Sec. 2171.
     \20\ 28 U.S.C. Sec. 5382.
     \21\ 5 U.S.C. Sec. 5304(h)(2)(C).
     \22\ 5 U.S.C. Sec. 5314.
     \23\ 5 U.S.C. Sec. 5315.
     \24\ World Trade Organization. The agreement establishing the 
     WTO is a multilateral instrument which creates a permanent 
     organization to oversee the implementation of the Uruguay 
     Round Agreements, including the GATT 1994, to provide a forum 
     for multilateral trade negotiations and to administer dispute 
     settlements (see note 3, supra). Staff of the House Comm. on 
     Ways and Means, 104th Cong., 1st Sess., Overview and 
     Compilation of U.S. Trade Statutes 1040 (Comm. Print 1995) 
     [hereinafter, Overview and Compilation of U.S. Trade 
     Statutes].
     \25\ Trade-Related Aspects of Intellectual Property Rights 
     Agreement; i.e., that component of GATT which addresses 
     intellectual property rights among the signatory members.
     \26\ International Convention for the Protection of New 
     Varieties of Plants. UPOV is administered by the World 
     Intellectual Property Organization (WIPO), which is charged 
     with the administration of, and activities concerning 
     revisions to, the international intellectual property 
     treaties. UPOV has 40 members, and guarantees plant breeders 
     national treatment and right of priority in other countries 
     that are members of the treaty, along with certain other 
     benefits. See M.A. Leaffer, International Treaties on 
     Intellectual Property at 47 (BNA, 2d ed. 1997).
     \27\ North American Free Trade Agreement, Pub. L. No. 103-
     182. The cornerstone of NAFTA is the phased-out elimination 
     of all tariffs on trade between the U.S., Canada, and Mexico. 
     Overview and Compilation of U.S. Trade Statutes 1999.
     \28\ LPTV stations are distinct from so called 
     ``translators.'' Whereas LPTV stations typically offer 
     original programming, translators merely amplify or ``boost'' 
     a full-service television station's signal into rural and 
     mountainous regions adjacent to the station's market.
     \29\  See 47 U.S.C. Sec. 337.
     \30\  47 U.S.C. Sec. 336.
     \31\  47 U.S.C. Sec. 337.
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