[Congressional Record Volume 149, Number 82 (Thursday, June 5, 2003)]
[Senate]
[Pages S7479-S7482]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                             By Mr. LEAHY:

  S. 1191. 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 United States Supreme 
Court issued a pair of decisions that altered the legal landscape with 
respect to intellectual property. I am referring to Florida Prepaid v. 
College Savings Bank and its companion case, College Savings Bank v. 
Florida Prepaid. The Court ruled in these cases that States and their 
institutions cannot be held liable for damages 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.
  Both Florida Prepaid and College Savings Bank were decided by the 
same five-to-four majority of the justices. This slim majority of the 
Court threw out three Federal statutes that Congress passed, 
unanimously, in the early 1990s, to reaffirm that the Federal patent, 
copyright, and trademark laws apply to everyone, including the States.
  I believe that there is an urgent need for Congress to respond to the 
Florida Prepaid decisions, for two reasons.
  First, the decisions opened up a huge loophole in our Federal 
intellectual property laws. If we truly believe in fairness, we cannot 
tolerate a situation in which some participants in the intellectual 
property system get legal

[[Page S7480]]

protection but need not adhere to the law themselves. If we truly 
believe in the free market, we cannot tolerate a situation where one 
class of market participants have to play by the rules and others do 
not. As Senator Specter said in August 1999, in a floor statement that 
was highly critical of the Florida Prepaid decisions, they ``leave us 
with an absurd and untenable state of affairs,'' where ``States will 
enjoy an enormous advantage over their private sector competitors.''
  The second reason why Congress should respond to the Florida Prepaid 
decisions is that they raise broader concerns about the roles of 
Congress and the Court. Over the past decade, in a series of five-to-
four decisions that might be called examples of ``judicial activism,'' 
the current Supreme Court majority has overturned Federal legislation 
with a frequency unprecedented in American constitutional history. In 
doing so, the Court has more often than not relied on notions of State 
sovereign immunity that have little if anything to do with the text of 
the Constitution.
  Some of us have liked some of the results; others have liked others; 
but that is not the point. This activist Court has been whittling away 
at the legitimate constitutional authority of the federal government. 
At the risk of sounding alarmist, this is the fact of the matter: We 
are faced with a choice. We can respond--in a careful and measured 
way--by reinstating our democratic policy choices in legislation that 
is crafted to meet the Court's stated objections. Or we can run away, 
abdicate our democratic policy-making duties to the unelected Court, 
and go down in history as the incredible shrinking Congress.
  About four months after the Florida Prepaid decisions issued, I 
introduced a bill that responded to those decisions. The Intellectual 
Property Protection Restoration Act of 1999 was designed to restore 
Federal remedies for violations of intellectual property rights by 
states. I have continued to refine this legislation over the years, and 
in February 2002, as Chairman of the Judiciary Committee, I held the 
Committee's first hearing on the issue of sovereign immunity and the 
protection of intellectual property.

  Today, I am pleased to be introducing the Intellectual Property 
Protection Restoration Act of 2003, which builds on my earlier 
proposals and on the helpful comments I have received on those 
proposals from legal experts across the country. I am proud to have the 
House leaders on intellectual property issues, Representatives Smith 
and Berman, as the principal sponsors of the House companion bill.
  This bill has the same common-sense goal as the three statutes that 
the Supreme Court's decisions invalidated: To protect intellectual 
property rights fully and fairly. But the legislation has been re-
engineered, after extensive consultation with constitutional and 
intellectual property experts, to ensure full compliance with the 
Court's new jurisprudential requirements. As a result, the bill has 
earned the strong support of the U.S. Copyright Office and the 
endorsements of a broad range of organizations including the American 
Bar Association, the American Intellectual Property Law Association, 
the Business Software Alliance, the Intellectual Property Owners 
Association, the International Trademark Association, the Motion 
Picture Association of America, the Professional Photographers of 
America Association, and the Chamber of Commerce.
  In essence, our bill presents States with a choice. It creates 
reasonable incentives for States to waive their immunity in 
intellectual property cases, but it does not oblige them to do so. 
States that choose not to waive their immunity within two years after 
enactment of the bill would continue to enjoy many of the benefits of 
the Federal intellectual property system; however, like private parties 
that sue States for infringement, States that sue private parties for 
infringement could not recover any money damages unless they had waived 
their immunity from liability in intellectual property cases.
  This arrangement is clearly constitutional. Congress may attach 
conditions to 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 part of the greater power to deny 
the benefit altogether. And no condition could be more reasonable or 
proportionate than the condition that in order to obtain full 
protection for your federal intellectual property rights, you must 
respect those of others.
  I am encouraged by the Supreme Court's recent decision in Nevada 
Department of Human Resources v. Hibbs, which, although very narrow, 
suggests that certain Justices may be starting to realize that the 
Court has gone too far in sacrificing ordinary people's rights at the 
altar of sovereign immunity. By upholding the Family and Medical Leave 
Act as applied to the States, the Hibbs case also suggests that a very 
carefully crafted law, which simply does what is necessary to protect 
important rights, will be upheld.
  I hope we can all agree on the need to protect the rights of 
intellectual property owners. A recent GAO study confirmed that, as the 
law now stands, owners of intellectual property have few or no 
alternatives or remedies available against State infringers--just a 
series of dead ends.
  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. I want to emphasize the 
international ramifications here. 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. Those efforts could be jeopardized by the loophole 
in U.S. intellectual property enforcement that the Supreme Court has 
created.
  Senator Brownback made this point at a Judiciary Committee hearing on 
February 27, 2002. He said, ``When states assert sovereign immunity for 
the purpose of infringing upon intellectual property rights, it damages 
the credibility of the United States internationally, and could 
possibly even lead to violations of our treaty obligations. Any 
decrease in the level of enforcement of intellectual property rights 
around the world is likely to harm American businesses, because of our 
position as international leaders in industries like pharmaceuticals, 
information technology, and biotechnology.''
  The Intellectual Property Protection Restoration Act restores 
protection for violations of intellectual property rights that may, 
under current law, go unremedied. We unanimously passed more sweeping 
legislation in the early 1990s, but were thwarted by the Supreme 
Court's shifting jurisprudence. We should enact this legislation 
without further delay.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows.

                                S. 1191

       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 2003''.
       (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

[[Page S7481]]

     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, 2004, 
     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, 2006, 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, 2004; 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, 2006, the court 
     may stay the proceeding for a reasonable time, but not later 
     than January 1, 2006, 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, 
     2004, 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, 2006, 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, 2004; 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, 2006, the court 
     may stay the proceeding for a reasonable time, but not later 
     than January 1, 2006, 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, 2004, or 
     any right of the owner of a mark first used in commerce on or 
     after January 1, 2004, 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, 2006, 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, 2004; 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 action. If raised before January 1, 2006, the court 
     may stay the proceeding for a reasonable time, but not later 
     than January 1, 2006, 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.--Section 296 of title 35, 
     United States Code, and the item relating to section 296 in 
     the table of sections for chapter 29 of such title, are 
     repealed.
       (2) Amendments to copyright law.--Section 511 of title 17, 
     United States Code, and the item relating to section 511 in 
     the table of sections for chapter 5 of such title, are 
     repealed.
       (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)), or 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.

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     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.
                                 ______