[Congressional Record Volume 147, Number 149 (Thursday, November 1, 2001)]
[Senate]
[Pages S11364-S11368]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY:
  S. 1611. A bill to restore Federal remedies for infringements of 
intellectual property by States, and for other purposes; to the 
Committee on the Judiciary.
  Mr. LEAHY. Mr. President, in June 1999, the U.S. Supreme Court issued 
a pair of decisions that altered the legal landscape with respect to 
intellectual property. I am referring to the Florida Prepaid and 
College Savings Bank cases. The Court ruled in these cases that States 
and their institutions cannot be held liable for patent infringement 
and other violations of the Federal intellectual property laws, even 
though they can and do enjoy the full protection of those laws for 
themselves.
  About 4 months after the Court ruled in these cases, I introduced a 
bill that responded to the Court's decisions. The Intellectual Property 
Restoration Act of 1999 was designed to restore Federal remedies for 
violations of intellectual property rights by States.
  I regret that the Senate Judiciary Committee did not consider my 
legislation during the last Congress, and that the Senate has yet to 
give any attention to the nearly 2-year-old Supreme Court decisions 
that opened such a troubling loophole in our Federal intellectual 
property laws. We should delay no further.
  Today, I am introducing the Intellectual Property Protection 
Restoration Act of 2001, IPPRA. This legislation builds on my earlier 
proposal and on the helpful comments I received on that proposal from 
legal experts across the country. In particular, I would like to thank 
Justin Hughes, David Carson, Steve Tepp, Michael Kirk, Michael Klipper, 
and John Kent for their assistance in improving and refining this 
legislation. I also want to thank the House sponsors of the counterpart 
bill, Howard Coble and Howard Berman, who are the chairman and ranking 
member of the Subcommittee on Courts, the Internet, and Intellectual 
Property.
  The IPPRA has two essential components. First, it places States on an 
equal footing with private parties by eliminating any damages remedy 
for infringement of State-owned intellectual property unless the State 
has waived its immunity in Federal suits for infringement of privately 
owned intellectual property. Second, it improves the limited remedies 
that are available to enforce a nonwaiving State's obligations under 
Federal law and the United States Constitution. I will discuss both 
provisions in more detail later in these remarks.
  Innovation and creativity have been the fuel of our national economic 
boom over the past decade. The United States now leads the world in 
computing, communications and biotechnologies, and American authors and 
brand names are recognized across the globe.
  Our national prosperity is, first and foremost, a tribute to American 
ingenuity. But it is also a tribute to the wisdom of our Founding 
Fathers, who made the promotion of what they called ``Science and the 
Useful Arts'' a national project, which they constitutionally assigned 
to Congress. And it is no less of a tribute to the successive 
Congresses and administrations of both parties who have striven to 
provide real incentives and rewards for innovation and creativity by 
providing strong and even-handed protection to intellectual property 
rights. Congress passed the first Federal patent law in 1790, and the 
U.S. Government issued its first patent the same year, to Samuel 
Hopkins of my home State of Vermont. The first Federal copyright law 
was also enacted in 1790, and the first Federal trademark laws date 
back to the 1870s.
  The Supreme Court has long recognized that intellectual property 
rights bear the hallmark of true constitutional property rights, the 
right of exclusion against the world, and are therefore protection 
against appropriation both by individuals and by government. Consistent 
with this understanding of intellectual property, Congress has long 
ensured that the rights secured by the Federal intellectual property 
laws were enforceable against the Federal Government by waiving the 
government's immunity in suits alleging infringements of those rights.
  No doubt Congress would have legislated similarly with respect to 
infringements by State entities and bureaucrats had there been any 
doubt that they were already fully subject to Federal intellectual 
property laws. But there was no doubt. States had long enjoyed the 
benefits of the intellectual property laws on an equal footing with 
private parties.
  By the same token, and in accordance with the fundamental principles 
of equity on which our intellectual property laws are founded, the 
States bore the burdens of the intellectual property laws, being liable 
for infringements just like private parties. States were free to join 
intellectual property markets as participants, or to hold back from 
commerce and limit themselves to a narrower governmental role. The 
intellectual property right of exclusion meant what it said and was 
enforced even-handedly for public and private entities alike.
  This harmonious state of affairs ended in 1985, with the Supreme 
Court's announcement of the so-called ``clear statement'' rule in 
Atascadero State Hospital versus Scanlon. The Court in Atascadero held 
that Congress must express its intention to abrogate the States' 11th 
Amendment immunity ``in unmistakable language in the statute itself.'' 
A few years later in Pennsylvania versus Union Gas Co., the Supreme 
Court assured us that if the intent to abrogate were expressed clearly 
enough, it would be honored.
  Following Atascadero, some courts held that States and State entities 
and

[[Page S11365]]

officials could escape liability for patent, copyright and trademark 
infringement because the patent, copyright and trademark laws lacked 
the clear statement of congressional intent that was now necessary to 
abrogate State sovereign immunity.

  To close this new loophole in the law, Congress promptly did 
precisely what the Supreme Court had told us was necessary. In 1990 and 
1992, Congress passed three laws--the Patent and Plant Variety 
Protection Remedy Clarification Act, the Copyright Remedy Clarification 
Act, and the Trademark Remedy Clarification Acts. The sole purpose of 
the Clarification Acts was to make it absolutely, unambiguously, 100 
percent clear that Congress intended the patent, copyright and 
trademark laws to apply to everyone, including the States, and that 
Congress did not intend the States to be immune from liability for 
money damages. Each of the three Clarification Acts passed unanimously.
  In 1996, however, by a five-to-four-vote, the Supreme Court in 
Seminole Tribe of Florida versus Florida reversed its earlier decision 
in Union Gas and held that Congress lacked authority under article I of 
the Constitution to abrogate the States' 11th amendment immunity from 
suit in Federal court.
  Then, on June 23, 1999, by the same bare majority, the Supreme Court 
in Florida Prepaid Postsecondary Education Expense Board versus College 
Savings Bank told us that it did not really mean what it said in 
Atascadero and invalidated the Patent and Plant Variety Protection 
Remedy Clarification Act. In the companion case decided on the same 
day, College Savings Bank versus Florida Prepaid Postsecondary 
Education Expense Board, the same five Justices held that the Trademark 
Remedy Clarification Act also failed to abrogate State sovereign 
immunity.
  The Florida Prepaid decisions have been the subject of bipartisan 
criticism. In a floor statement on July 1, 1999, I highlighted the 
anti-democratic implications of the approach of the activist majority 
of the Supreme Court, who have left constitutional text behind, ripped 
up precedent, and treated Congress with less respect than that due to 
an administrative agency in their haste to impose their natural law 
notions of sovereignty as a barrier to democratic regulation. I also 
noted that ``the Court's decisions will have far-reaching consequences 
about how * * * intellectual property rights may be protected against 
even egregious infringements and violations by the states.''
  One of my Republican colleagues on the Judiciary Committee, Senator 
Specter, expressed similar concerns in a floor statement on August 5, 
1999. He noted that the Court decisions ``leave us with an absurd and 
untenable state of affairs,'' where ``states will enjoy an enormous 
advantage over their private sector competitors.''
  Charles Fried, a professor at Harvard Law School and former Solicitor 
General during the Reagan administration, has called the Florida 
Prepaid decisions ``truly bizarre.'' He observed in an op-ed piece in 
the New York Times:

       [The Court's decisions] did not question that states are 
     subject to the patent and trademark laws of the United 
     States. It's just that when a state violates those laws--as 
     when it uses a patented invention without permission and 
     without paying for it--the patent holder cannot sue the state 
     for infringement. So a state hospital can manufacture 
     medicines patented by others and sell or use them, and state 
     schools and universities can pirate textbooks and software, 
     and the victims cannot sue for infringement.
       It is hard to see what sense this makes, and the claim that 
     ``the Constitution made me do it'' is particularly 
     unconvincing. The 11th Amendment does protect states from 
     suits in Federal courts by residents of other states--a 
     provision almost certainly not intended to protect states 
     from suits based on Federal law.

  Not surprisingly, alarm has also been expressed in the business 
community about the potential of the Court's recent decisions to harm 
intellectual property owners in a wide variety of ways. A commentary in 
Business Week offered these cautions:

       Watch out if you publish software that someone at a state 
     university wants to copy for free . . . Watch out if you own 
     a patent on a medical procedure that some doctor in a state 
     medical school wants to use. Watch out if you've invested 
     heavily in a great trademark, like Nike's Swoosh, and a 
     bureaucrat decides his state program would be wildly promoted 
     if it used the same mark.

  I believe that these concerns are real. As Congress acknowledged when 
it waived Federal sovereign immunity in this area, it would be naive to 
imagine that reliance on the commercial decency of the government and 
its myriad agencies and officials would provide the security needed to 
promote investment in research and development and to facilitate 
negotiation in the exclusive licensing arrangements that are often 
necessary to bring valuable products and creations to market. Indeed, 
the good intentions of government may be beside the point, if 
businesses are unwilling to enter into agreements because one side 
cannot be bound by the law.
  Since the Court issued its decisions in June 1999, intellectual 
property scholars and practitioners across the country have come 
together to explore ways for Congress to restore protection for federal 
intellectual property rights as against the States. The Patent and 
Trademark Office hosted a particularly enlightening conference in March 
2000, in cooperation with the American Intellectual Property Law 
Association and the Intellectual Property Section of the American Bar 
Association. I commend the PTO for taking the initiative on this 
important issue.
  More recently, in September 2001, the General Accounting Office 
released a report requested by Senator Orrin Hatch on State Immunity in 
Infringement Actions. The GAO's research confirmed that, after Florida 
Prepaid, owners of intellectual property have few alternatives or 
remedies available against State infringements. A State cannot be sued 
in Federal court for damages except in the unlikely event that it 
waives its sovereign immunity. As for the State courts, there is little 
chance of success with infringement-type a actions for patents and 
copyrights because of Federal judicial preemption and an absence of 
State-recognized causes of action. Furthermore, even if infringement 
suits can be brought in State court, it may not be possible to bring 
them against States that have governmental immunity shielding them from 
suit in their own courts.

  What I have just described is a series of dead ends for intellectual 
property owners. That is why the two Federal agencies with expertise in 
intellectual property matters, the U.S. Copyright Office and the U.S. 
Patent and Trademark Office, have expressed their support for 
corrective legislation by Congress. As the Copyrights Office told the 
GAO, ``Only in this way can the proper balance, and basic fairness, be 
restored.''
  I hope we can all agree on the need for congressional action on this 
issue. We need to assure American inventors and investors, and our 
foreign trading partners, that as State involvement in intellectual 
property becomes ever greater in the new information economy, U.S. 
intellectual property rights are backed by legal remedies.
  This is important as a matter of economics: Our national economy 
depends on real and effective intellectual property rights. It is also 
important as a matter of justice: In conceding that the States are 
constitutionally bound to respect Federal intellectual property rights 
but invalidating the remedies Congress has created to enforce those 
rights, the Court has jeopardized one of the basic principles that 
distinguishes our Constitution from the constitution of the old Soviet 
Union, the principle that where there is a right, there must also be a 
remedy.
  It is also important as a matter of foreign relations: American 
trading interests have been well served by our strong and consistent 
advocacy of effective intellectual property protections in treaty 
negotiations and other international fora, and those efforts could be 
jeopardized by the loophole in U.S. intellectual property enforcement 
that the Supreme Court has created.
  Like most of the constitutional experts who have examined the issue, 
I have no doubt that several constitutional mechanisms remain open to 
Congress to restore substantial protection for patents, copyrights and 
trademarks. The Supreme Court's hypertechnical constitutional 
interpretations require us to jump through some technical hoops of our 
own, but that the exercise is now not merely worthwhile, but essential 
to safeguard both U.S. prosperity and the continued authority of 
Congress.

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  My bill is based on a simple premise: That there is no inherent, 
``natural law'' entitlement to Federal intellectual property rights and 
remedies. In discussing the policies underlying the intellectual 
property laws, the Supreme Court has emphasized that intellectual 
property is not a right but a privilege, and that it is conditioned by 
a public purpose. For example, the Court wrote in Mercoid Corp. versus 
Mid-Continent Invest Co., a 1944 case, that ``The grant of a patent is 
the grant of a special privilege `to promote the Progress of Science 
and useful Arts,' '' and that ``It is the public interest which is 
dominant in the patent system.'' Similarly, in discussing the copyright 
laws in Fogerty versus Fantasy, Inc, the Court underscored that ``the 
monopoly privileges that Congress has authorized, while intended to 
motivate the creative activity of authors and inventors by the 
provision of a special reward, are limited in nature and must 
ultimately serve the public good.''

  The Constitution empowers but does not require Congress to make 
intellectual property rights and remedies available, and Congress 
should do so in a manner that encourages and protects innovation in the 
public and private sector alike.
  States and their institutions, especially State Universities, benefit 
hugely from the Federal intellectual property laws. All 50 States own 
or have obtained patents, some hold many hundreds of patents. States 
also hold other intellectual property rights secured by Federal law, 
and the trend is toward increased participation by the States in 
commerce involving intellectual property.
  Principles of State sovereignty tell us that States and their 
instrumentalities are entitled to a free and informed choice of whether 
or not to participate in the Federal intellectual property system, 
subject only to their constitutional obligations.
  Equity and common sense tell us that one who chooses to enjoy the 
benefits of a law, whether it be a Federal research grant or the 
multimillion-dollar benefits of Federal intellectual property 
protections, should also bear its burdens.
  Sound economics and traditional notions of federalism tell us that it 
is appropriate for the Federal Government to assist and encourage the 
sovereign States in their sponsorship of whatever innovation and 
creation they freely choose to sponsor by giving them intellectual 
property protection and, on occasion, funding, so long as the States 
hold up their end of the bargain by honoring the exclusive rights of 
other intellectual property owners.
  The IPPRA builds on these principles. In order to promote cooperative 
federalism in the intellectual property arena, it provides reasonable 
incentives for states to waive their immunity in intellectual property 
cases and participate in our national intellectual property project on 
equal terms with private parties. States that choose not to waive their 
immunity within 2 years after enactment of the IPPRA would continue to 
enjoy many of the benefits of the Federal intellectual property system; 
however, like private parties that sue non-waiving states for 
infringement, nonwaiving States that sue private parties for 
infringement could not recover any money damages that would otherwise 
be available under Federal law. That is because Federal intellectual 
property that has been owned by a nonwaiving State would be short one 
``stick'' from the usual bundle of rights accorded by Federal law: The 
ability to sue for damages under Federal law when the intellectual 
property has been infringed.
  This scheme is plainly authorized by the letter of the Constitution. 
Article I empowers Congress to ``promote the Progress of Science and 
useful Arts, by securing for limited Times to Authors and Inventors the 
exclusive right to their respective Writings and Discoveries.'' 
Incident to this power, Congress may attach conditions on the receipt 
of exclusive intellectual property rights. Indeed, we have always 
attached certain conditions, such as the requirement of public 
disclosure of an invention at the Patent and Trademark Office in order 
to obtain a patent.
  My proposal is also consistent with the spirit of federalism, as 
interpreted by the Supreme Court, because it gives State entities a 
free, informed and meaningful choice to waive or not to waive immunity 
at any time. The condition imposed on receipt of federal benefits by 
the IPPRA, submitting to suit under laws that are already binding on 
the States, is not onerous, nor does it co-opt any state resources to 
the service of Federal policy. It simply levels the intellectual 
property playing field.
  Congress may attach conditions on a State's receipt of Federal 
intellectual property protection under its Article I intellectual 
property power just as Congress may attach conditions on a State's 
receipt of Federal funds under its Article I spending power. Either 
way, the power to attach conditions to the Federal benefit is an 
integral part of the greater power to deny the benefit altogether. 
Either way, the State has a choice, to forgo the Federal benefit and 
exercise its sovereign power however it wishes subject to the 
Constitution, or to take the benefit and exercise its sovereign power 
in the manner requested by Congress.
  Three Federal appeals courts have applied similar reasoning in 
connection with the 1996 Telecommunications Act. The Courts of Appeals 
for the Fifth, Seventh, Tenth Circuits have reasoned that, because 
Congress was under no obligation to allow States to participate in the 
regulatory scheme established by the 1996 Act, Congress could validly 
condition a state commission's decision to exercise regulatory 
authority under the Act on its waiving sovereign immunity.
  This seems like plain common sense to me. It would be a truly bizarre 
reading of the Constitution to say that it is up to Congress whether or 
not to let States participate in telecom regulation or in the 
intellectual property regime, but that if we choose to let them 
participate, we cannot hold them accountable for their actions.
  Given the choice between opting in to the intellectual property laws 
and forging some intellectual property protection under the Federal 
laws, States and their institutions will, I hope, choose to opt in. The 
benefit--being able to recover damages for an infringement--is 
significant, while the burden--consenting to be sued for future State 
infringements--is slight. Most States already respect intellectual 
property rights and will seldom find themselves in infringement suits.
  However, some State entities and officials have violated intellectual 
property rights in the past, and the massive growth of both 
intellectual property and state participation in the 
intellectual property marketplace that we are seeing in the new economy 
give ample cause for concern that such violations will continue. Now 
that the Supreme Court has seemingly given the States carte blanche to 
violate intellectual property rights free from any adverse financial 
consequences so long as they stand on their newly augmented sovereign 
immunity, the prospect of States violating Federal law and then 
asserting immunity is too serious to ignore.

  The IPPRA therefore also provides for the limited set of remedies 
that the Supreme Court's new jurisprudence leaves available to Congress 
to enforce a nonwaiving State's obligations under Federal law and the 
United States Constitution. The key point here is that, while the Court 
struck down our prior effort to enforce the intellectual property laws 
themselves by authorizing actions for damages against the states, it 
nonetheless acknowledged Congress' power to authorize actions for 
injunctions and actions to enforce constitutional rights related to 
intellectual property.
  First, for the avoidance of doubt, the IPPRA ensures the full 
availability of prospective equitable relief to prevent States from 
violating or exceeding their rights under Federal intellectual property 
laws. As the Supreme Court expressly acknowledged in its Seminole Tribe 
decision in 1996, such relief is available, notwithstanding any 
assertion of State sovereign immunity, under what is generally known as 
the doctrine of Ex parte Young.
  Second, to address the harm done to the rights of intellectual 
property owners before they can secure an injunction, the IPPRA also 
provides a damages remedy to the full extent of Congress' power to 
enforce the constitutional rights of intellectual property owners. 
Under the Supreme Court's recent decisions, this remedy is necessarily 
limited to the redress of constitutional violations, not violations of

[[Page S11367]]

the Federal intellectual property laws themselves. However, the Supreme 
Court has reaffirmed on may occasions that the intellectual property 
owner's right of exclusion is a property right fully protected from 
governmental violation under the Fifth amendment's takings clause and 
under the 14th amendment's due process clause.
  The constitutional remedy provided by the IPPRA closely resembles the 
remedy that Congress provided decades ago for deprivations of Federal 
rights by persons acting under color of State law. The bill does not 
expand the property rights secured by the Federal intellectual property 
laws--these laws are already binding on the States' nor does the bill 
interfere with any governmental authority to regulate businesses that 
own such rights. It simply restores the ability of private persons to 
enforce such rights against the States.
  I view this bill as an exercise in cooperative federalism. Clear, 
certain, and uniform national rules protecting Federal intellectual 
property rights benefit everyone: Consumers, businesses, the Federal 
Government and the States. The IPPRA preserves States' rights, and 
gives States a free choice. At the same time, it ensures effective 
protection for individual constitutional rights closing the loophole 
created by the Supreme Court of Federal rights unsupported by effective 
remedies. We unanimously passed more sweeping legislation in the early 
1990s, but were thwarted by Supreme Court's shifting jurisprudence. The 
IPPRA is designed to restore the benefits we sought to provide 
intellectual property owners while meeting the Court's new 
jurisprudential requirements.

  There are to be sure, other approaches that Congress could take to 
address the problems created by the Court's decisions. In consultation 
with experts in intellectual property law and constitutional law, I 
reviewed several alternatives before settling on the IPPRA's approach. 
In the end, I concluded that the approach I have outlined is the best 
way to achieve a solution that meets any constitutional concerns, 
fosters State-Federal cooperation, and encourages American innovation 
and creativity to providing certain and effective intellectual property 
protection.
  when I first introduced the IPPRA in 1999, it prompted a flurry of 
constructive comments and suggestions on how the legislation could be 
improved. I look forward to considering further refinements to the bill 
as the legislative process moves forward.
  I ask unanimous consent that the text of the bill and a section-by-
section summary of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1611

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; REFERENCES.

       (a) Short Title.--This Act may be cited as the 
     ``Intellectual Property Protection Restoration Act of 2001''.
       (b) References.--Any reference in this Act to the Trademark 
     Act of 1946 shall be a reference to the Act entitled ``An Act 
     to provide for the registration and protection of trade-marks 
     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.).

     SEC. 2. PURPOSES.

       The purposes of this Act are to--
       (1) help eliminate the unfair commercial advantage that 
     States and their instrumentalities now hold in the Federal 
     intellectual property system because of their ability to 
     obtain protection under the United States patent, copyright, 
     and trademark laws while remaining exempt from liability for 
     infringing the rights of others;
       (2) promote technological innovation and artistic creation 
     in furtherance of the policies underlying Federal laws and 
     international treaties relating to intellectual property;
       (3) reaffirm the availability of prospective relief against 
     State officials who are violating or who threaten to violate 
     Federal intellectual property laws; and
       (4) abrogate State sovereign immunity in cases where States 
     or their instrumentalities, officers, or employees violate 
     the United States Constitution by infringing Federal 
     intellectual property.

     SEC. 3. INTELLECTUAL PROPERTY REMEDIES EQUALIZATION.

       (a) Amendment to Patent Law.--Section 287 of title 35, 
     United States Code, is amended by adding at the end the 
     following:
       ``(d)(1) No remedies under section 284 or 289 shall be 
     awarded in any civil action brought under this title for 
     infringement of a patent issued on or after January 1, 2002, 
     if a State or State instrumentality is or was at any time the 
     legal or beneficial owner of such patent, except upon proof 
     that--
       ``(A) on or before the date the infringement commenced or 
     January 1, 2004, whichever is later, the State has waived its 
     immunity, under the eleventh amendment of the United States 
     Constitution and under any other doctrine of sovereign 
     immunity, from suit in Federal court brought against the 
     State or any of its instrumentalities, for any infringement 
     of intellectual property protected under Federal law; and
       ``(B) such waiver was made in accordance with the 
     constitution and laws of the State, and remains effective.
       ``(2) The limitation on remedies under paragraph (1) shall 
     not apply with respect to a patent if--
       ``(A) the limitation would materially and adversely affect 
     a legitimate contract-based expectation in existence before 
     January 1, 2002; or
       ``(B) the party seeking remedies was a bona fide purchaser 
     for value of the patent, and, at the time of the purchase, 
     did not know and was reasonably without cause to believe that 
     a State or State instrumentality was once the legal or 
     beneficial owner of the patent.
       ``(3) The limitation on remedies under paragraph (1) may be 
     raised at any point in a proceeding, through the conclusion 
     of the action. If raised before January 1, 2004, the court 
     may stay the proceeding for a reasonable time, but not later 
     than January 1, 2004, to afford the State an opportunity to 
     waive its immunity as provided in paragraph (1).''.
       (b) Amendment to Copyright Law.--Section 504 of title 17, 
     United States Code, is amended by adding at the end the 
     following:
       ``(e) Limitation on Remedies in Certain Cases.--
       ``(1) No remedies under this section shall be awarded in 
     any civil action brought under this title for infringement of 
     an exclusive right in a work created on or after January 1, 
     2002, if a State or State instrumentality is or was at any 
     time the legal or beneficial owner of such right, except upon 
     proof that--
       ``(A) on or before the date the infringement commenced or 
     January 1, 2004, whichever is later, the State has waived its 
     immunity, under the eleventh amendment of the United States 
     Constitution and under any other doctrine of sovereign 
     immunity, from suit in Federal court brought against the 
     State or any of its instrumentalities, for any infringement 
     of intellectual property protected under Federal law; and
       ``(B) such waiver was made in accordance with the 
     constitution and laws of the State, and remains effective.
       ``(2) The limitation on remedies under paragraph (1) shall 
     not apply with respect to an exclusive right if--
       ``(A) the limitation would materially and adversely affect 
     a legitimate contract-based expectation in existence before 
     January 1, 2002; or
       ``(B) the party seeking remedies was a bona fide purchaser 
     for value of the exclusive right, and, at the time of the 
     purchase, did not know and was reasonably without cause to 
     believe that a State or State instrumentality was once the 
     legal or beneficial owner of the right.
       ``(3) The limitation on remedies under paragraph (1) may be 
     raised at any point in a proceeding, through the conclusion 
     of the action. If raised before January 1, 2004, the court 
     may stay the proceeding for a reasonable time, but not later 
     than January 1, 2004, to afford the State an opportunity to 
     waive its immunity as provided in paragraph (1).''.
       (c) Amendment to Trademark Law.--Section 35 of the 
     Trademark Act of 1946 (15 U.S.C. 1117) is amended by adding 
     at the end the following:
       ``(e) Limitation on Remedies in Certain Cases.--
       ``(1) No remedies under this section shall be awarded in 
     any civil action arising under this Act for a violation of 
     any right of the registrant of a mark registered in the 
     Patent and Trademark Office on or after January 1, 2002, or 
     any right of the owner of a mark first used in commerce on or 
     after January 1, 2002, if a State or State instrumentality is 
     or was at any time the legal or beneficial owner of such 
     right, except upon proof that--
       ``(A) on or before the date the violation commenced or 
     January 1, 2004, whichever is later, the State has waived its 
     immunity, under the eleventh amendment of the United States 
     Constitution and under any other doctrine of sovereign 
     immunity, from suit in Federal court brought against the 
     State or any of its instrumentalities, for any infringement 
     of intellectual property protected under Federal law; and
       ``(B) such waiver was made in accordance with the 
     constitution and laws of the State, and remains effective.
       ``(2) The limitation on remedies under paragraph (1) shall 
     not apply with respect to a right of the registrant or owner 
     of a mark if--
       ``(A) the limitation would materially and adversely affect 
     a legitimate contract-based expectation in existence before 
     January 1, 2002; or
       ``(B) the party seeking remedies was a bona fide purchaser 
     for value of the right, and, at the time of the purchase, did 
     not know and was reasonably without cause to believe that a 
     State or State instrumentality was once the legal or 
     beneficial owner of the right.
       ``(3) The limitation on remedies under paragraph (1) may be 
     raised at any point in a proceeding, through the conclusion 
     of the

[[Page S11368]]

     action. If raised before January 1, 2004, the court may stay 
     the proceeding for a reasonable time, but not later than 
     January 1, 2004, to afford the State an opportunity to waive 
     its immunity as provided in paragraph (1).''.
       (d) Technical and Conforming Amendments.--
       (1) Amendments to patent law.--
       (A) In general.--Section 296 of title 35, United States 
     Code, is repealed.
       (B) Table of sections.--The table of sections for chapter 
     29 of title 35, United States Code, is amended by striking 
     the item relating to section 296.
       (2) Amendments to copyright law.--
       (A) In general.--Section 511 of title 17, United States 
     Code, is repealed.
       (B) Table of sections.--The table of sections for chapter 5 
     of title 17, United States Code, is amended by striking the 
     item relating to section 511.
       (3) Amendments to trademark law.--Section 40 of the 
     Trademark Act of 1946 (15 U.S.C. 1122) is amended--
       (A) by striking subsection (b);
       (B) in subsection (c), by striking ``or (b)'' after 
     ``subsection (a)''; and
       (C) by redesignating subsection (c) as subsection (b).

     SEC. 4. CLARIFICATION OF REMEDIES AVAILABLE FOR STATUTORY 
                   VIOLATIONS BY STATE OFFICERS AND EMPLOYEES.

       In any action against an officer or employee of a State or 
     State instrumentality for any violation of any of the 
     provisions of title 17 or 35, United States Code, the 
     Trademark Act of 1946, or the Plant Variety Protection Act (7 
     U.S.C. 2321 et seq.), remedies shall be available against the 
     officer or employee in the same manner and to the same extent 
     as such remedies are available in an action against a private 
     individual under like circumstances. Such remedies may 
     include monetary damages assessed against the officer or 
     employee, declaratory and injunctive relief, costs, attorney 
     fees, and destruction of infringing articles, as provided 
     under the applicable Federal statute.

     SEC. 5. LIABILITY OF STATES FOR CONSTITUTIONAL VIOLATIONS 
                   INVOLVING INTELLECTUAL PROPERTY.

       (a) Due Process Violations.--Any State or State 
     instrumentality that violates any of the exclusive rights of 
     a patent owner under title 35, United States Code, of a 
     copyright owner, author, or owner of a mask work or original 
     design under title 17, United States Code, of an owner or 
     registrant of a mark used in commerce or registered in the 
     Patent and Trademark Office under the Trademark Act of 1946, 
     or of an owner of a protected plant variety under the Plant 
     Variety Protection Act (7 U.S.C. 2321 et seq.), in a manner 
     that deprives any person of property in violation of the 
     fourteenth amendment of the United States Constitution, shall 
     be liable to the party injured in a civil action in Federal 
     court for compensation for the harm caused by such violation.
       (b) Takings Violations.--
       (1) In general.--Any State or State instrumentality that 
     violates any of the exclusive rights of a patent owner under 
     title 35, United States Code, of a copyright owner, author, 
     or owner of a mask work or original design under title 17, 
     United States Code, of an owner or registrant of a mark used 
     in commerce or registered in the Patent and Trademark Office 
     under the Trademark Act of 1946, or of an owner of a 
     protected plant variety under the Plant Variety Protection 
     Act (7 U.S.C. 2321 et seq.), in a manner that takes property 
     in violation of the fifth and fourteenth amendments of the 
     United States Constitution, shall be liable to the party 
     injured in a civil action in Federal court for compensation 
     for the harm caused by such violation.
       (2) Effect on other relief.--Nothing in this subsection 
     shall prevent or affect the ability of a party to obtain 
     declaratory or injunctive relief under section 4 of this Act 
     or otherwise.
       (c) Compensation.--Compensation under subsection (a) or 
     (b)--
       (1) may include actual damages, profits, statutory damages, 
     interest, costs, expert witness fees, and attorney fees, as 
     set forth in the appropriate provisions of title 17 or 35, 
     United States Code, the Trademark Act of 1946, and the Plant 
     Variety Protection Act; and
       (2) may not include an award of treble or enhanced damages 
     under section 284 of title 35, United States Code, section 
     504(d) of title 17, United States Code, section 35(b) of the 
     Trademark Act of 1946 (15 U.S.C. 1117 (b)), and section 
     124(b) of the Plant Variety Protection Act (7 U.S.C. 
     2564(b)).
       (d) Burden of Proof.--In any action under subsection (a) or 
     (b)--
       (1) with respect to any matter that would have to be proved 
     if the action were an action for infringement brought under 
     the applicable Federal statute, the burden of proof shall be 
     the same as if the action were brought under such statute; 
     and
       (2) with respect to all other matters, including whether 
     the State provides an adequate remedy for any deprivation of 
     property proved by the injured party under subsection (a), 
     the burden of proof shall be upon the State or State 
     instrumentality.
       (e) Effective Date.--This section shall apply to violations 
     that occur on or after the date of enactment of this Act.

     SEC. 6. RULES OF CONSTRUCTION.

       (a) Jurisdiction.--The district courts shall have original 
     jurisdiction of any action arising under this Act under 
     section 1338 of title 28, United States Code.
       (b) Broad Construction.--This Act shall be construed in 
     favor of a broad protection of intellectual property, to the 
     maximum extent permitted by the United States Constitution.
       (c) Severability.--If any provision of this Act or any 
     application of such provision to any person or circumstance 
     is held to be unconstitutional, the remainder of this Act and 
     the application of the provision to any other person or 
     circumstance shall not be affected.
                                  ____


 Intellectual Property Protection Restoration Act of 2001--Section-by-
                            Section Summary

       Recent Supreme Court decisions invalidated prior efforts by 
     Congress to abrogate state sovereign immunity in actions 
     arising under the federal intellectual property laws. The 
     Court's decisions give states an unfair advantage in the 
     intellectual property marketplace by shielding them from 
     money damages when they infringe the rights of private 
     parties, while leaving them free to obtain money damages when 
     their own rights are infringed. These decisions also have the 
     potential to impair the rights of private intellectual 
     property owners, discourage technological innovation and 
     artistic creation, and compromise the ability of the United 
     States to fulfill its obligations under a variety of 
     international treaties. The Intellectual Property Protection 
     Restoration Act of 2001 creates reasonable incentives for 
     states to waive their immunity in intellectual property cases 
     and participate in the intellectual property marketplace on 
     equal terms with private parties. The bill also provides new 
     remedies for state infringements that rise to the level of 
     constitutional violations.
       Sec. 1. Short title; references.--This Act may be cited as 
     the ``Intellectual Property Protection Restoration Act of 
     2001.
       Sec. 2. Purposes.--Legislative purposes in support of this 
     Act.
       Sec. 3. Intellectual property remedies equalization.--
     Places states on an equal footing with private parties by 
     eliminating any damages remedy for infringement of state-
     owned intellectual property unless the state has waived its 
     immunity from any damages remedy for infringement of 
     privately-owned intellectual property. Intellectual property 
     that the state owned before the enactment of this Act is not 
     affected.
       Sec. 4. Clarification of remedies available for statutory 
     violations by state officers and employees.--Affirms the 
     availability of injunctive relief against state officials who 
     violate the federal intellectual property laws. Such relief 
     is authorized under the doctrine of Ex parte Young, 209 U.S. 
     123 (1908), which held that an individual may sue a state 
     official for prospective relief requiring the state official 
     to cease violating federal law, even if the state itself is 
     immune from suit under the eleventh amendment. This section 
     also affirms that state officials may be personally liable 
     for violations of the intellectual property laws.
       Sec. 5. Liability of states for constitutional violations 
     involving intellectual property.--Establishes a right to 
     compensation for state infringements of intellectual property 
     that rise to the level of constitutional violations. 
     Compensation shall be measured by the statutory remedies 
     available under the federal intellectual property laws, but 
     may not include treble damages.
       Sec. 6. Rules of construction.--Establishes rules for 
     interpreting this Act.
                                 ______