[House Report 104-784]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 104-784
_______________________________________________________________________
MOORHEAD-SCHROEDER PATENT REFORM ACT
_______
September 12, 1996.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Moorhead, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 3460]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 3460) to establish the Patent and Trademark Office
as a Government corporation, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 29
Background and Need for Legislation.............................. 30
Hearings......................................................... 38
Committee Consideration.......................................... 40
Committee Oversight Findings..................................... 40
Committee on Government Reform and Oversight Findings............ 41
New Budget Authority and Tax Expenditures........................ 41
Congressional Budget Office Estimate............................. 41
Inflationary Impact Statement.................................... 45
Section-by-Section Analysis and Discussion....................... 45
Changes in Existing Law.......................................... 84
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Moorhead Schroeder Patent Reform
Act''.
SEC. 2. TABLE OF CONTENTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--PATENT AND TRADEMARK OFFICE GOVERNMENT CORPORATION
Sec. 101. Short title.
Subtitle A--United States Patent and Trademark Office
Sec. 111. Establishment of Patent and Trademark Office as a Government
corporation.
Sec. 112. Powers and duties.
Sec. 113. Organization and management.
Sec. 114. Management Advisory Board.
Sec. 115. Conforming amendments.
Sec. 116. Trademark Trial and Appeal Board.
Sec. 117. Board of Patent Appeals and Interferences.
Sec. 118. Suits by and against the Office.
Sec. 119. Annual report of Commissioner.
Sec. 120. Suspension or exclusion from practice.
Sec. 121. Funding.
Sec. 122. Audits.
Sec. 123. Transfers.
Subtitle B--Effective Date; Technical Amendments
Sec. 131. Effective date.
Sec. 132. Technical and conforming amendments.
Subtitle C--Miscellaneous Provisions
Sec. 141. References.
Sec. 142. Exercise of authorities.
Sec. 143. Savings provisions.
Sec. 144. Transfer of assets.
Sec. 145. Delegation and assignment.
Sec. 146. Authority of Director of the Office of Management and Budget
with respect to functions transferred.
Sec. 147. Certain vesting of functions considered transfers.
Sec. 148. Availability of existing funds.
Sec. 149. Definitions.
TITLE II--EARLY PUBLICATION OF PATENT APPLICATIONS
Sec. 201. Short title.
Sec. 202. Early publication.
Sec. 203. Time for claiming benefit of earlier filing date.
Sec. 204. Provisional rights.
Sec. 205. Prior art effect of published applications.
Sec. 206. Cost recovery for publication.
Sec. 207. Conforming changes.
Sec. 208. Patent term extension authority.
Sec. 209. Examining procedure improvements; further limited
reexamination of patent applications.
Sec. 210. Last day of pendency of provisional application.
Sec. 211. Reporting requirement.
Sec. 212. Effective date.
TITLE III--PRIOR DOMESTIC COMMERCIAL USE
Sec. 301. Short title.
Sec. 302. Defense to patent infringement based on prior domestic
commercial use.
Sec. 303. Effective date and applicability.
TITLE IV--INVENTOR PROTECTION
Sec. 401. Short title.
Sec. 402. Invention development services.
Sec. 403. Technical and conforming amendment.
Sec. 404. Effective date.
TITLE V--PATENT REEXAMINATION REFORM
Sec. 501. Short title.
Sec. 502. Definitions.
Sec. 503. Reexamination procedures.
Sec. 504. Conforming amendments.
Sec. 505. Effective date.
TITLE VI--MISCELLANEOUS PATENT PROVISIONS
Sec. 601. Provisional applications.
Sec. 602. International applications.
Sec. 603. Plant patents.
Sec. 604. Just compensation for U.S. Government use of patents.
Sec. 605. Electronic filing.
TITLE I--PATENT AND TRADEMARK OFFICE GOVERNMENT CORPORATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Patent and Trademark Office
Government Corporation Act of 1996''.
Subtitle A--United States Patent and Trademark Office
SEC. 111. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE AS A GOVERNMENT
CORPORATION.
Section 1 of title 35, United States Code, is amended to read as
follows:
``Sec. 1. Establishment
``(a) Establishment.--The United States Patent and Trademark Office
is established as a wholly owned Government corporation subject to
chapter 91 of title 31, and shall be an agency of the United States
under the policy direction of the Secretary of Commerce, except as
otherwise provided in this title. For purposes of internal management,
the United States Patent and Trademark Office shall be a corporate body
not subject to supervision by any department, except as otherwise
provided in this title.
``(b) Offices.--The United States Patent and Trademark Office shall
maintain an office in the District of Columbia, or the metropolitan
area thereof, for the service of process and papers and shall be
deemed, for purposes of venue in civil actions, to be a resident of the
district in which its principal office is located. The United States
Patent and Trademark Office may establish offices in such other places
as it considers necessary or appropriate in the conduct of its
business.
``(c) Reference.--For purposes of this title, the United States
Patent and Trademark Office shall also be referred to as the `Office'
and the `Patent and Trademark Office'.''.
SEC. 112. POWERS AND DUTIES.
Section 2 of title 35, United States Code, is amended to read as
follows:
``Sec. 2. Powers and Duties
``(a) In General.--The United States Patent and Trademark Office
shall be responsible for--
``(1) the granting and issuing of patents and the
registration of trademarks;
``(2) conducting studies, programs, or exchanges of items or
services regarding domestic and international patent and
trademark law, the administration of the Office, or any other
function vested in the Office by law, including programs to
recognize, identify, assess, and forecast the technology of
patented inventions and their utility to industry;
``(3)(A) authorizing or conducting studies and programs
cooperatively with foreign patent and trademark offices and
international organizations, in connection with the granting
and issuing of patents and the registration of trademarks; and
``(B) with the concurrence of the Secretary of State,
authorizing the transfer of not to exceed $100,000 in any year
to the Department of State for the purpose of making special
payments to international intergovernmental organizations for
studies and programs for advancing international cooperation
concerning patents, trademarks, and related matters; and
``(4) disseminating to the public information with respect to
patents and trademarks.
The special payments under paragraph (3)(B) shall be in addition to any
other payments or contributions to international organizations
described in paragraph (3)(B) and shall not be subject to any
limitations imposed by law on the amounts of such other payments or
contributions by the United States Government.
``(b) Specific Powers.--The Office--
``(1) shall have perpetual succession;
``(2) shall adopt and use a corporate seal, which shall be
judicially noticed and with which letters patent, certificates
of trademark registrations, and papers issued by the Office
shall be authenticated;
``(3) may sue and be sued in its corporate name and be
represented by its own attorneys in all judicial and
administrative proceedings, subject to the provisions of
section 7;
``(4) may indemnify the Commissioner of Patents and
Trademarks, and other officers, attorneys, agents, and
employees (including members of the Management Advisory Board
established in section 5) of the Office for liabilities and
expenses incurred within the scope of their employment;
``(5) may adopt, amend, and repeal bylaws, rules,
regulations, and determinations, which--
``(A) shall govern the manner in which its business
will be conducted and the powers granted to it by law
will be exercised;
``(B) shall be made after notice and opportunity for
full participation by interested public and private
parties;
``(C) shall facilitate and expedite the processing of
patent applications, particularly those which can be
filed, stored, processed, searched, and retrieved
electronically, subject to the provisions of section
122 relating to the confidential status of
applications; and
``(D) may govern the recognition and conduct of
agents, attorneys, or other persons representing
applicants or other parties before the Office, and may
require them, before being recognized as
representatives of applicants or other persons, to show
that they are of good moral character and reputation
and are possessed of the necessary qualifications to
render to applicants or other persons valuable service,
advice, and assistance in the presentation or
prosecution of their applications or other business
before the Office;
``(6) may acquire, construct, purchase, lease, hold, manage,
operate, improve, alter, and renovate any real, personal, or
mixed property, or any interest therein, as it considers
necessary to carry out its functions;
``(7)(A) may make such purchases, contracts for the
construction, maintenance, or management and operation of
facilities, and contracts for supplies or services, without
regard to the provisions of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 471 and
following), the Public Buildings Act (40 U.S.C. 601 and
following), and the Stewart B. McKinney Homeless Assistance Act
(42 U.S.C. 11301 and following); and
``(B) may enter into and perform such purchases and contracts
for printing services, including the process of composition,
platemaking, presswork, silk screen processes, binding,
microform, and the products of such processes, as it considers
necessary to carry out the functions of the Office, without
regard to sections 501 through 517 and 1101 through 1123 of
title 44;
``(8) may use, with their consent, services, equipment,
personnel, and facilities of other departments, agencies, and
instrumentalities of the Federal Government, on a reimbursable
basis, and cooperate with such other departments, agencies, and
instrumentalities in the establishment and use of services,
equipment, and facilities of the Office;
``(9) may obtain from the Administrator of General Services
such services as the Administrator is authorized to provide to
other agencies of the United States, on the same basis as those
services are provided to other agencies of the United States;
``(10) may use, with the consent of the United States and the
agency, government, or international organization concerned,
the services, records, facilities, or personnel of any State or
local government agency or instrumentality or foreign
government or international organization to perform functions
on its behalf;
``(11) may determine the character of and the necessity for
its obligations and expenditures and the manner in which they
shall be incurred, allowed, and paid, subject to the provisions
of this title and the Act of July 5, 1946 (commonly referred to
as the `Trademark Act of 1946');
``(12) may retain and use all of its revenues and receipts,
including revenues from the sale, lease, or disposal of any
real, personal, or mixed property, or any interest therein, of
the Office, including for research and development and capital
investment, subject to the provisions of section 10101 of the
Omnibus Budget Reconciliation Act of 1990 (35 U.S.C. 41 note);
``(13) shall have the priority of the United States with
respect to the payment of debts from bankrupt, insolvent, and
decedents' estates;
``(14) may accept monetary gifts or donations of services, or
of real, personal, or mixed property, in order to carry out the
functions of the Office;
``(15) may execute, in accordance with its bylaws, rules, and
regulations, all instruments necessary and appropriate in the
exercise of any of its powers;
``(16) may provide for liability insurance and insurance
against any loss in connection with its property, other assets,
or operations either by contract or by self-insurance; and
``(17) shall pay any settlement or judgment entered against
it from the funds of the Office and not from amounts available
under section 1304 of title 31.''.
SEC. 113. ORGANIZATION AND MANAGEMENT.
Section 3 of title 35, United States Code, is amended to read as
follows:
``Sec. 3. Officers and employees
``(a) Commissioner.--
``(1) In general.--The management of the United States Patent
and Trademark Office shall be vested in a Commissioner of
Patents and Trademarks (hereafter in this title referred to as
the `Commissioner'), who shall be a citizen of the United
States and who shall be appointed by the President, by and with
the advice and consent of the Senate. The Commissioner shall be
a person who, by reason of professional background and
experience in patent or trademark law, is especially qualified
to manage the Office.
``(2) Duties.--
``(A) In general.--The Commissioner shall be
responsible for the management and direction of the
Office, including the issuance of patents and the
registration of trademarks, and shall perform these
duties in a fair, impartial, and equitable manner.
``(B) Advising the president.--The Commissioner shall
advise the President, through the Secretary of
Commerce, of all activities of the Office undertaken in
response to obligations of the United States under
treaties and executive agreements, or which relate to
cooperative programs with those authorities of foreign
governments that are responsible for granting patents
or registering trademarks. The Commissioner shall also
recommend to the President, through the Secretary of
Commerce, changes in law or policy which may improve
the ability of United States citizens to secure and
enforce patent rights or trademark rights in the United
States or in foreign countries.
``(C) Consulting with the management advisory
board.--The Commissioner shall consult with the
Management Advisory Board established in section 5 on a
regular basis on matters relating to the operation of
the Office, and shall consult with the Board before
submitting budgetary proposals to the Office of
Management and Budget or changing or proposing to
change patent or trademark user fees or patent or
trademark regulations.
``(D) Security clearances.--The Commissioner, in
consultation with the Director of the Office of
Personnel Management, shall maintain a program for
identifying national security positions and providing
for appropriate security clearances.
``(3) Term.--The Commissioner shall serve a term of 5 years,
and may continue to serve after the expiration of the
Commissioner's term until a successor is appointed and assumes
office. The Commissioner may be reappointed to subsequent
terms.
``(4) Oath.--The Commissioner shall, before taking office,
take an oath to discharge faithfully the duties of the Office.
``(5) Compensation.--The Commissioner shall receive
compensation at the rate of pay in effect for level II of the
Executive Schedule under section 5313 of title 5.
``(6) Removal.--The Commissioner may be removed from office
by the President only for cause.
``(7) Designee of commissioner.--The Commissioner shall
designate an officer of the Office who shall be vested with the
authority to act in the capacity of the Commissioner in the
event of the absence or incapacity of the Commissioner.
``(b) Officers and Employees of the Office.--
``(1) Deputy commissioners.--The Commissioner shall appoint a
Deputy Commissioner for Patents and a Deputy Commissioner for
Trademarks for terms that shall expire on the date on which the
Commissioner's term expires. The Deputy Commissioner for
Patents shall be a person with demonstrated experience in
patent law and the Deputy Commissioner for Trademarks shall be
a person with demonstrated experience in trademark law. The
Deputy Commissioner for Patents and the Deputy Commissioner for
Trademarks shall be the principal policy and management
advisors to the Commissioner on all aspects of the activities
of the Office that affect the administration of patent and
trademark operations, respectively.
``(2) Other officers and employees.--The Commissioner shall--
``(A) appoint an Inspector General and such other
officers, employees (including attorneys), and agents
of the Office as the Commissioner considers necessary
to carry out its functions;
``(B) fix the compensation of such officers and
employees, except as otherwise provided in this
section; and
``(C) define the authority and duties of such
officers and employees and delegate to them such of the
powers vested in the Office as the Commissioner may
determine.
The Office shall not be subject to any administratively or
statutorily imposed limitation on positions or personnel, and
no positions or personnel of the Office shall be taken into
account for purposes of applying any such limitation.
``(c) Limits on Compensation.--Except as otherwise provided by law,
the annual rate of basic pay of an officer or employee of the Office
may not be fixed at a rate that exceeds, and total compensation payable
to any such officer or employee for any year may not exceed, the annual
rate of basic pay in effect for the Commissioner for the year involved.
The Commissioner shall prescribe such regulations as may be necessary
to carry out this subsection.
``(d) Inapplicability of Title 5 Generally.--Except as otherwise
provided in this section, officers and employees of the Office shall
not be subject to the provisions of title 5 relating to Federal
employees.
``(e) Continued Applicability of Certain Provision of Title 5.--
``(1) In general.--The following provisions of title 5 shall
apply to the Office and its officers and employees:
``(A) Section 3110 (relating to employment of
relatives; restrictions).
``(B) Subchapter II of chapter 55 (relating to
withholding pay).
``(C) Subchapters II and III of chapter 73 (relating
to employment limitations and political activities,
respectively).
``(D) Chapter 71 (relating to labor-management
relations), subject to paragraph (2) and subsection
(g).
``(E) Section 3303 (relating to political
recommendations).
``(F) Subchapter II of chapter 61 (relating to
flexible and compressed work schedules).
``(2) Compensation subject to collective bargaining.--
``(A) In general.--Notwithstanding any other
provision of law, for purposes of applying chapter 71
of title 5 pursuant to paragraph (1)(D), basic pay and
other forms of compensation shall be considered to be
among the matters as to which the duty to bargain in
good faith extends under such chapter.
``(B) Exceptions.--The duty to bargain in good faith
shall not, by reason of subparagraph (A), be considered
to extend to any benefit under title 5 which is
afforded by paragraph (1), (2), (3), or (4) of
subsection (f).
``(C) Limitations apply.--Nothing in this subsection
shall be considered to allow any limitation under
subsection (c) to be exceeded.
``(f) Provisions of Title 5 that Continue to Apply, Subject to
Certain Requirements.--
``(1) Retirement.--(A) The provisions of subchapter III of
chapter 83 and chapter 84 of title 5 shall apply to the Office
and its officers and employees, subject to subparagraph (B).
``(B)(i) The amount required of the Office under the second
sentence of section 8334(a)(1) of title 5 with respect to any
particular individual shall, instead of the amount which would
otherwise apply, be equal to the normal-cost percentage
(determined with respect to officers and employees of the
Office using dynamic assumptions, as defined by section 8401(9)
of such title) of the individual's basic pay, minus the amount
required to be withheld from such pay under such section
8334(a)(1).
``(ii) The amount required of the Office under section
8334(k)(1)(B) of title 5 with respect to any particular
individual shall be equal to an amount computed in a manner
similar to that specified in clause (i), as determined in
accordance with clause (iii).
``(iii) Any regulations necessary to carry out this
subparagraph shall be prescribed by the Office of Personnel
Management.
``(C) The United States Patent and Trademark Office may
supplement the benefits provided under the preceding provisions
of this paragraph.
``(2) Health benefits.--(A) The provisions of chapter 89 of
title 5 shall apply to the Office and its officers and
employees, subject to subparagraph (B).
``(B)(i) With respect to any individual who becomes an
officer or employee of the Office pursuant to subsection (h),
the eligibility of such individual to participate in such
program as an annuitant (or of any other person to participate
in such program as an annuitant based on the death of such
individual) shall be determined disregarding the requirements
of section 8905(b) of title 5. The preceding sentence shall not
apply if the individual ceases to be an officer or employee of
the Office for any period of time after becoming an officer or
employee of the Office pursuant to subsection (h) and before
separation.
``(ii) The Government contributions authorized by section
8906 for health benefits for anyone participating in the health
benefits program pursuant to this subparagraph shall be made by
the Office in the same manner as provided under section
8906(g)(2) of title 5 with respect to the United States Postal
Service for individuals associated therewith.
``(iii) For purposes of this subparagraph, the term
`annuitant' has the meaning given such term by section 8901(3)
of title 5.
``(C) The Office may supplement the benefits provided under
the preceding provisions of this paragraph.
``(3) Life insurance.--(A) The provisions of chapter 87 of
title 5 shall apply to the Office and its officers and
employees, subject to subparagraph (B).
``(B)(i) Eligibility for life insurance coverage after
retirement or while in receipt of compensation under subchapter
I of chapter 81 of title 5 shall be determined, in the case of
any individual who becomes an officer or employee of the Office
pursuant to subsection (h), without regard to the requirements
of section 8706(b) (1) or (2), but subject to the condition
specified in the last sentence of paragraph (2)(B)(i) of this
subsection.
``(ii) Government contributions under section 8708(d) on
behalf of any such individual shall be made by the Office in
the same manner as provided under paragraph (3) thereof with
respect to the United States Postal Service for individuals
associated therewith.
``(C) The Office may supplement the benefits provided under
the preceding provisions of this paragraph.
``(4) Employees' compensation fund.--(A) Officers and
employees of the Office shall not become ineligible to
participate in the program under chapter 81 of title 5,
relating to compensation for work injuries, by reason of
subsection (d).
``(B) The Office shall remain responsible for reimbursing the
Employees' Compensation Fund, pursuant to section 8147 of title
5, for compensation paid or payable after the effective date of
the Patent and Trademark Office Government Corporation Act of
1996 in accordance with chapter 81 of title 5 with regard to
any injury, disability, or death due to events arising before
such date, whether or not a claim has been filed or is final on
such date.
``(g) Labor-Management Relations.--
``(1) Labor relations and employee relations programs.--The
Office shall develop labor relations and employee relations
programs with the objective of improving productivity and
efficiency, incorporating the following principles:
``(A) Such programs shall be consistent with the
merit principles in section 2301(b) of title 5.
``(B) Such programs shall provide veterans preference
protections equivalent to those established by sections
2108, 3308-3318, and 3320 of title 5.
``(C)(i) The right to work shall not be subject to
undue restraint or coercion. The right to work shall
not be infringed or restricted in any way based on
membership in, affiliation with, or financial support
of a labor organization.
``(ii) No person shall be required, as a condition of
employment or continuation of employment--
``(I) to resign or refrain from voluntary
membership in, voluntary affiliation with, or
voluntary financial support of a labor
organization;
``(II) to become or remain a member of a
labor organization;
``(III) to pay any dues, fees, assessments,
or other charges of any kind or amount to a
labor organization;
``(IV) to pay to any charity or other third
party, in lieu of such payments, any amount
equivalent to or a pro-rata portion of dues,
fees, assessments, or other charges regularly
required of members of a labor organization; or
``(V) to be recommended, approved, referred,
or cleared by or through a labor organization.
``(iii) This subparagraph shall not apply to a person
described in section 7103(a)(2)(v) of title 5 or a
`supervisor', `management official', or `confidential
employee' as those terms are defined in 7103(a)(10),
(11), and (13) of such title.
``(iv) Any labor organization recognized by the
Office as the exclusive representative of a unit of
employees of the Office shall represent the interests
of all employees in that unit without discrimination
and without regard to labor organization membership.
``(2) Adoption of existing labor agreements.--The Office
shall adopt all labor agreements which are in effect, as of the
day before the effective date of the Patent and Trademark
Office Government Corporation Act of 1996, with respect to such
Office (as then in effect).
``(h) Carryover of Personnel.--
``(1) From pto.--Effective as of the effective date of the
Patent and Trademark Office Government Corporation Act of 1996,
all officers and employees of the Patent and Trademark Office
on the day before such effective date shall become officers and
employees of the Office, without a break in service.
``(2) Other personnel.--Any individual who, on the day before
the effective date of the Patent and Trademark Office
Government Corporation Act of 1996, is an officer or employee
of the Department of Commerce (other than an officer or
employee under paragraph (1)) shall be transferred to the
Office if--
``(A) such individual serves in a position for which
a major function is the performance of work reimbursed
by the Patent and Trademark Office, as determined by
the Secretary of Commerce;
``(B) such individual serves in a position that
performed work in support of the Patent and Trademark
Office during at least half of the incumbent's work
time, as determined by the Secretary of Commerce; or
``(C) such transfer would be in the interest of the
Office, as determined by the Secretary of Commerce in
consultation with the Commissioner of Patents and
Trademarks.
Any transfer under this paragraph shall be effective as of the
same effective date as referred to in paragraph (1), and shall
be made without a break in service.
``(3) Accumulated leave.--The amount of sick and annual leave
and compensatory time accumulated under title 5 before the
effective date described in paragraph (1), by those becoming
officers or employees of the Office pursuant to this
subsection, are obligations of the Office.
``(4) Termination rights.--Any employee referred to in
paragraph (1) or (2) of this subsection whose employment with
the Office is terminated during the 2-year period beginning on
the effective date of the Patent and Trademark Office
Government Corporation Act of 1996 shall be entitled to rights
and benefits, to be afforded by the Office, similar to those
such employee would have had under Federal law if termination
had occurred immediately before such date. An employee who
would have been entitled to appeal any such termination to the
Merit Systems Protection Board, if such termination had
occurred immediately before such effective date, may appeal any
such termination occurring within this 2-year period to the
Board under such procedures as it may prescribe.
``(5) Continuation in office of certain officers.--(A) The
individual serving as the Commissioner of Patents and
Trademarks on the day before the effective date of the Patent
and Trademark Office Government Corporation Act of 1996 may
serve as the Commissioner until the date on which a
Commissioner is appointed under subsection (a).
``(B) The individual serving as the Assistant Commissioner
for Patents on the day before the effective date of the Patent
and Trademark Office Government Corporation Act of 1996 may
serve as the Deputy Commissioner for Patents until the date on
which a Deputy Commissioner for Patents is appointed under
subsection (b).
``(C) The individual serving as the Assistant Commissioner
for Trademarks on the day before the effective date of the
Patent and Trademark Office Government Corporation Act of 1996
may serve as the Deputy Commissioner for Trademarks until the
date on which a Deputy Commissioner for Trademarks is appointed
under subsection (b).
``(i) Competitive Status.--For purposes of appointment to a position
in the competitive service for which an officer or employee of the
Office is qualified, such officer or employee shall not forfeit any
competitive status, acquired by such officer or employee before the
effective date of the Patent and Trademark Office Government
Corporation Act of 1996, by reason of becoming an officer or employee
of the Office pursuant to subsection (h).
``(j) Savings Provisions.--
``(1) In general.--Compensation, benefits, and other terms
and conditions of employment in effect immediately before the
effective date of the Patent and Trademark Office Government
Corporation Act of 1996, whether provided by statute or by
rules and regulations of the former Patent and Trademark Office
or the executive branch of the Government of the United States,
shall continue to apply to officers and employees of the
Office, until changed in accordance with this section (whether
by action of the Commissioner or otherwise).
``(2) Provisions specific to basic pay.--With respect to any
individual who becomes an officer or employee of the Office
pursuant to subsection (h), the rate of basic pay for such
officer or employee may not, on or after the effective date of
the Patent and Trademark Office Government Corporation Act of
1996, be less than the rate in effect immediately before such
effective date, except--
``(A) pursuant to a collective-bargaining agreement
entered into under this section; or
``(B) for inefficiency, neglect of duty, or
misconduct, on the part of such individual.
For purposes of this subparagraph, the term `basic pay'
includes any amount considered to be part of basic pay for
purposes of subchapter III of chapter 83 or chapter 84 of title
5.
``(k) Removal of Quasi-Judicial Examiners.--The Office may remove a
patent examiner or examiner-in-chief, or a trademark examiner or member
of a Trademark Trial and Appeal Board, only for such cause as will
promote the efficiency of the Office.''.
SEC. 114. MANAGEMENT ADVISORY BOARD.
Chapter 1 of part I of title 35, United States Code, is amended by
inserting after section 4 the following:
``Sec. 5. Patent and Trademark Office Management Advisory Board
``(a) Establishment of Management Advisory Board.--
``(1) Appointment.--The United States Patent and Trademark
Office shall have a Management Advisory Board (hereafter in
this title referred to as the `Board') of 12 members, 4 of whom
shall be appointed by the President, 4 of whom shall be
appointed by the Speaker of the House of Representatives, and 4
of whom shall be appointed by the President pro tempore of the
Senate. Not more than 3 of the 4 members appointed by each
appointing authority shall be members of the same political
party.
``(2) Terms.--Members of the Board shall be appointed for a
term of 4 years each, except that of the members first
appointed by each appointing authority, 1 shall be for a term
of 1 year, 1 shall be for a term of 2 years, and 1 shall be for
a term of 3 years. No member may serve more than 1 term.
``(3) Chair.--The President shall designate the chair of the
Board, whose term as chair shall be for 3 years.
``(4) Timing of appointments.--Initial appointments to the
Board shall be made within 3 months after the effective date of
the Patent and Trademark Office Government Corporation Act of
1996, and vacancies shall be filled within 3 months after they
occur.
``(5) Vacancies.--Vacancies shall be filled in the manner in
which the original appointment was made under this subsection.
Members appointed to fill a vacancy occurring before the
expiration of the term for which the member's predecessor was
appointed shall be appointed only for the remainder of that
term. A member may serve after the expiration of that member's
term until a successor is appointed.
``(6) Committees.--The Chair shall designate members of the
Board to serve on a committee on patent operations and on a
committee on trademark operations to perform the duties set
forth in subsection (e) as they relate specifically to the
Office's patent operations, and the Office's trademark
operations, respectively.
``(b) Basis for Appointments.--Members of the Board shall be citizens
of the United States who shall be chosen so as to represent the
interests of diverse users of the United States Patent and Trademark
Office, and shall include individuals with substantial background and
achievement in corporate finance and management.
``(c) Applicability of Certain Ethics Laws.--Members of the Board
shall be special Government employees within the meaning of section 202
of title 18.
``(d) Meetings.--The Board shall meet at the call of the chair to
consider an agenda set by the chair.
``(e) Duties.--The Board shall--
``(1) review the policies, goals, performance, budget, and
user fees of the United States Patent and Trademark Office, and
advise the Commissioner on these matters; and
``(2) within 60 days after the end of each fiscal year,
prepare an annual report on the matters referred to in
paragraph (1), transmit the report to the President and the
Committees on the Judiciary of the Senate and the House of
Representatives, and publish the report in the Patent and
Trademark Office Official Gazette.
``(f) Compensation.--Members of the Board shall be compensated for
each day (including travel time) during which they are attending
meetings or conferences of the Board or otherwise engaged in the
business of the Board, at the rate which is the daily equivalent of the
annual rate of basic pay in effect for level III of the Executive
Schedule under section 5314 of title 5, and while away from their homes
or regular places of business they may be allowed travel expenses,
including per diem in lieu of subsistence, as authorized by section
5703 of title 5.
``(g) Access to Information.--Members of the Board shall be provided
access to records and information in the United States Patent and
Trademark Office, except for personnel or other privileged information
and information concerning patent applications required to be kept in
confidence by section 122.''.
SEC. 115. CONFORMING AMENDMENTS.
(a) Duties of Commissioner.--Chapter 1 of title 35, United States
Code, is amended by striking section 6.
(b) Regulations for Agents and Attorneys.--Section 31 of title 35,
United States Code, and the item relating to such section in the table
of sections for chapter 3 of title 35, United States Code, are
repealed.
SEC. 116. TRADEMARK TRIAL AND APPEAL BOARD.
Section 17 of the Act of July 5, 1946 (commonly referred to as the
``Trademark Act of 1946'') (15 U.S.C. 1067) is amended to read as
follows:
``Sec. 17. (a) In every case of interference, opposition to
registration, application to register as a lawful concurrent user, or
application to cancel the registration of a mark, the Commissioner
shall give notice to all parties and shall direct a Trademark Trial and
Appeal Board to determine and decide the respective rights of
registration.
``(b) The Trademark Trial and Appeal Board shall include the
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and members competent in trademark law who
are appointed by the Commissioner.''.
SEC. 117. BOARD OF PATENT APPEALS AND INTERFERENCES.
Chapter 1 of title 35, United States Code, is amended by striking
section 7 and inserting after section 5 the following:
``Sec. 6. Board of Patent Appeals and Interferences
``(a) Establishment and Composition.--There shall be in the United
States Patent and Trademark Office a Board of Patent Appeals and
Interferences. The Commissioner, the Deputy Commissioner for Patents,
the Deputy Commissioner for Trademarks, and the examiners-in-chief
shall constitute the Board. The examiners-in-chief shall be persons of
competent legal knowledge and scientific ability.
``(b) Duties.--The Board of Patent Appeals and Interferences shall,
on written appeal of an applicant, review adverse decisions of
examiners upon applications for patents and shall determine priority
and patentability of invention in interferences declared under section
135(a). Each appeal and interference shall be heard by at least 3
members of the Board, who shall be designated by the Commissioner. Only
the Board of Patent Appeals and Interferences may grant rehearings.''.
SEC. 118. SUITS BY AND AGAINST THE OFFICE.
Chapter 1 of part I of title 35, United States Code, is amended by
inserting after section 6 the following new section:
``Sec. 7. Suits by and against the Office
``(a) In General.--
``(1) Actions under united states law.--Any civil action or
proceeding to which the United States Patent and Trademark
Office is a party is deemed to arise under the laws of the
United States. The Federal courts shall have exclusive
jurisdiction over all civil actions by or against the Office.
``(2) Contract claims.--Any action or proceeding against the
Office in which any claim is cognizable under the Contract
Disputes Act of 1978 (41 U.S.C. 601 and following) shall be
subject to that Act. For purposes of that Act, the Commissioner
shall be deemed to be the agency head with respect to contract
claims arising with respect to the Office. Any other action or
proceeding against the Office founded upon contract may be
brought in an appropriate district court, notwithstanding any
provision of title 28.
``(3) Tort claims.--(A) Any action or proceeding against the
Office in which any claim is cognizable under the provisions of
section 1346(b) and chapter 171 of title 28, shall be governed
by those provisions.
``(B) Any other action or proceeding against the Office
founded upon tort may be brought in an appropriate district
court without regard to the provisions of section 1346(b) and
chapter 171 of title 28.
``(4) Prohibition on attachment, liens, etc.--No attachment,
garnishment, lien, or similar process, intermediate or final,
in law or equity, may be issued against property of the Office.
``(5) Substitution of office as party.--The Office shall be
substituted as defendant in any civil action or proceeding
against an officer or employee of the Office, if the Office
determines that the officer or employee was acting within the
scope of his or her employment with the Office. If the Office
refuses to certify scope of employment, the officer or employee
may at any time before trial petition the court to find and
certify that the officer or employee was acting within the
scope of his or her employment. Upon certification by the
court, the Office shall be substituted as the party defendant.
A copy of the petition shall be served upon the Office. In any
such civil action or proceeding to which paragraph (3)(A)
applies, the provisions of section 1346(b) and chapter 171 of
title 28 shall apply in lieu of this paragraph.
``(b) Relationship With Justice Department.--
``(1) Exercise by office of attorney general's authorities.--
Except as provided in this section, with respect to any action
or proceeding inwhich the Office is a party or an officer or
employee thereof is a party in his or her official capacity, the
Office, officer, or employee may exercise, without prior authorization
from the Attorney General, the authorities and duties that otherwise
would be exercised by the Attorney General on behalf of the Office,
officer, or employee under title 28 or other laws.
``(2) Appearances by attorney general.--Notwithstanding
paragraph (1), at any time the Attorney General may, in any
action or proceeding described in paragraph (1), file an
appearance on behalf of the Office or the officer or employee
involved, without the consent of the Office or the officer or
employee. Upon such filing, the Attorney General shall
represent the Office or such officer or employee with exclusive
authority in the conduct, settlement, or compromise of that
action or proceeding.
``(3) Consultations with and assistance by attorney
general.--The Office may consult with the Attorney General
concerning any legal matter, and the Attorney General shall
provide advice and assistance to the Office, including
representing the Office in litigation, if requested by the
Office.
``(4) Representation before supreme court.--The Attorney
General shall represent theOffice in all cases before the
United States Supreme Court.
``(5) Qualifications of attorneys.--An attorney admitted to
practice to the bar of the highest court of at least one State
in the United States or the District of Columbia and employed
by the Office may represent the Office in any legal proceeding
in which the Office or an officer or employee of the Office is
a party or interested, regardless of whether the attorney is a
resident of the jurisdiction in which the proceeding is held
and notwithstanding any other prerequisites of qualification or
appearance required by the court or administrative body before
which the proceeding is conducted.''.
SEC. 119. ANNUAL REPORT OF COMMISSIONER.
Section 14 of title 35, United States Code, is amended to read as
follows:
``Sec. 14. Annual report to Congress
``The Commissioner shall report to the Congress, not later than 180
days after the end of each fiscal year, the moneys received and
expended by the Office, the purposes for which the moneys were spent,
the quality and quantity of the work of the Office, and other
information relating to the Office. The report under this section shall
also meet the requirements of section 9106 of title 31, to the extent
that such requirements are not inconsistent with the preceding
sentence. The report required under this section shall be deemed to be
the report of the United States Patent and Trademark Office under
section 9106 of title 31, and the Commissioner shall not file a
separate report under such section.''.
SEC. 120. SUSPENSION OR EXCLUSION FROM PRACTICE.
Section 32 of title 35, United States Code, is amended by inserting
before the last sentence the following: ``The Commissioner shall have
the discretion to designate any attorney who is an officer or employee
of the United States Patent and Trademark Office to conduct the hearing
required by this section.''.
SEC. 121. FUNDING.
Section 42 of title 35, United States Code, is amended to read as
follows:
``Sec. 42. Patent and Trademark Office funding
``(a) Fees Payable to the Office.--All fees for services performed by
or materials furnished by the United States Patent and Trademark Office
shall be payable to the Office.
``(b) Use of Moneys.--Moneys from fees shall be available to the
United States Patent and Trademark Office to carry out, to the extent
provided in appropriations Acts, the functions of the Office. Moneys of
the Office not otherwise used to carry out the functions of the Office
shall be kept in cash on hand or on deposit, or invested in obligations
of the United States or guaranteed by the United States, or in
obligations or other instruments which are lawful investments for
fiduciary, trust, or public funds. Fees available to the Office under
this title shall be used for the processing of patent applications and
for other services and materials relating to patents. Fees available to
the Office under section 31 of the Act of July 5, 1946 (commonly
referred to as the `Trademark Act of 1946'; 15 U.S.C. 1113), shall be
used for the processing of trademark registrations and for other
services and materials relating to trademarks.
``(c) Borrowing Authority.--The United States Patent and Trademark
Office is authorized to issue from time to time for purchase by the
Secretary of the Treasury its debentures, bonds, notes, and other
evidences of indebtedness (hereafter in this subsection referred to as
`obligations') to assist in financing its activities. Borrowing under
this subsection shall be subject to prior approval in appropriations
Acts. Such borrowing shall not exceed amounts approved in
appropriations Acts. Any borrowing under this subsection shall be
repaid only from fees paid to the Office and surcharges appropriated by
the Congress. Such obligations shall be redeemable at the option of the
Office before maturity in the manner stipulated in such obligations and
shall have such maturity as is determined by the Office with the
approval of the Secretary of the Treasury. Each such obligation issued
to the Treasury shall bear interest at a rate not less than the current
yield on outstanding marketable obligations of the United States of
comparable maturity during the month preceding the issuance of the
obligation as determined by the Secretary of the Treasury. The
Secretary of the Treasury shall purchase any obligations of the Office
issued under this subsection and for such purpose the Secretary of the
Treasury is authorized to use as a public-debt transaction the proceeds
of any securities issued under chapter 31 of title 31, and the purposes
for which securities may be issued under that chapter are extended to
include such purpose. Payment under this subsection of the purchase
price of such obligations of the United States Patent and Trademark
Office shall be treated as public debt transactions of the United
States.''.
SEC. 122. AUDITS.
Chapter 4 of part I of title 35, United States Code, is amended by
adding at the end the following new section:
``Sec. 43. Audits
``(a) In General.--Financial statements of the United States Patent
and Trademark Office shall be prepared on an annual basis in accordance
with generally accepted accounting principles. Such statements shall be
audited by an independent certified public accountant chosen by the
Commissioner. The audit shall be conducted in accordance with standards
that are consistent with generally accepted Government auditing
standards and other standards established by the Comptroller General,
and with the generally accepted auditing standards of the private
sector, to the extent feasible. The Commissioner shall transmit to the
Committees on the Judiciary of the House of Representatives and the
Senate the results of each audit under this subsection.
``(b) Review by Comptroller General.--The Comptroller General may
review any audit of the financial statement of the Patent and Trademark
Office that is conducted under subsection (a). The Comptroller General
shall report to the Congress and the Office the results of any such
review and shall include in such report appropriate recommendations.
``(c) Audit by Comptroller General.--The Comptroller General may
audit the financial statements of the Office and such audit shall be in
lieu of the audit required by subsection (a). The Office shall
reimburse the Comptroller General for the cost of any audit conducted
under this subsection.
``(d) Access to Office Records.--All books, financial records, report
files, memoranda, and other property that the Comptroller General deems
necessary for theperformance of any audit shall be made available to
the Comptroller General.
``(e) Applicability in Lieu of Title 31 Provisions.--This section
applies to the Office in lieu of the provisions of section 9105 of
title 31.''.
SEC. 123. TRANSFERS.
(a) Transfer of Functions.--Except as otherwise provided in this
title, there are transferred to, and vested in, the United States
Patent and Trademark Office all functions, powers, and duties vested by
law in the Secretary of Commerce or the Department of Commerce or in
the officers or components in the Department of Commerce with respect
to the authority to grant patents and register trademarks, and in the
Patent and Trademark Office, as in effect on the day before the
effective date of this title, and in the officers and components of
such Office.
(b) Transfer of Funds and Property.--The Secretary of Commerce shall
transfer to the United States Patent and Trademark Office, on the
effective date of this title, so much of the assets, liabilities,
contracts, property, records, and unexpended and unobligated balances
of appropriations, authorizations, allocations, and other funds
employed, held, used, arising from, available to, or to be made
available to the Department of Commerce, including funds set aside for
accounts receivable which are related to functions, powers, and duties
which are vested in the Patent and Trademark Office by this title.
Subtitle B--Effective Date; Technical Amendments
SEC. 131. EFFECTIVE DATE.
This title and the amendments made by this title shall take effect 4
months after the date of the enactment of this Act.
SEC. 132. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Amendments to Title 35.--
(1) The item relating to part I in the table of parts for
chapter 35, United States Code, is amended to read as follows:
``I. United States Patent and Trademark Office......... 1''.
(2) The heading for part I of title 35, United States Code,
is amended to read as follows:
``PART I--UNITED STATES PATENT AND TRADEMARK OFFICE''.
(3) The table of chapters for part I of title 35, United
States Code, is amended by amending the item relating to
chapter 1 to read as follows:
``1. Establishment, Officers and Employees, Functions....... 1''.
(4) The table of sections for chapter 1 of title 35, United
States Code, is amended to read as follows:
``CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS
``Sec.
``1. Establishment.
``2. Powers and duties.
``3. Officers and employees.
``4. Restrictions on officers and employees as to interest in patents.
``5. Patent and Trademark Office Management Advisory Board.
``6. Board of Patent Appeals and Interferences.
``7. Suits by and against the Office.
``8. Library.
``9. Classification of patents.
``10. Certified copies of records.
``11. Publications.
``12. Exchange of copies of patents with foreign countries.
``13. Copies of patents for public libraries.
``14. Annual report to Congress.''.
(5) The table of sections for chapter 4 of part I of title
35, United States Code, is amended by adding at the end the
following new item:
``43. Audits.''.
(b) Other Provisions of Law.--
(1) Section 9101(3) of title 31, United States Code, is
amended by adding at the end the following:
``(R) the United States Patent and Trademark
Office.''.
(2) Section 500(e) of title 5, United States Code, is amended
by striking ``Patent Office'' and inserting ``United States
Patent and Trademark Office''.
(3) Section 5102(c)(23) of title 5, United States Code, is
amended by striking ``Patent and Trademark Office, Department
of Commerce'' and inserting ``United States Patent and
Trademark Office''.
(4) Section 5316 of title 5, United States Code (5 U.S.C.
5316) is amended by striking ``Commissioner of Patents,
Department of Commerce.'', ``Deputy Commissioner of Patents and
Trademarks.'', ``Assistant Commissioner for Patents.'', and
``Assistant Commissioner for Trademarks.''.
(5) Section 12 of the Act of February 14, 1903 (15 U.S.C.
1511) is amended by striking ``(d) Patent and Trademark
Office;'' and redesignating subsections (a) through (g) as
paragraphs (1) through (6), respectively.
(6) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C. 91) is
amended by striking ``Patent Office'' and inserting ``United
States Patent and Trademark Office''.
(7) Sections 505(m) and 512(o) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(m) and 360b(o)) are each amended by
striking ``Patent and Trademark Office of the Department of
Commerce'' and inserting ``United States Patent and Trademark
Office''.
(8) Section 105(e) of the Federal Alcohol Administration Act
(27 U.S.C. 205(e)) is amended by striking ``United States
Patent Office'' and inserting ``United States Patent and
Trademark Office''.
(9) Section 1744 of title 28, United States Code is amended--
(A) by striking ``Patent Office'' each place it
appears in the text and section heading and inserting
``United States Patent and Trademark Office''; and
(B) by striking ``Commissioner of Patents'' and
inserting ``Commissioner of Patents and Trademarks''.
(10) Section 1745 of title 28, United States Code, is amended
by striking ``United States Patent Office'' and inserting
``United States Patent and Trademark Office''.
(11) Section 1928 of title 28, United States Code, is amended
by striking ``Patent Office'' and inserting ``United States
Patent and Trademark Office''.
(12) Section 160 of the Atomic Energy Act of 1954 (42 U.S.C.
2190) is amended--
(A) by striking ``United States Patent Office'' and
inserting ``United States Patent and Trademark
Office''; and
(B) by striking ``Commissioner of Patents'' and
inserting ``Commissioner of Patents and Trademarks''.
(13) Section 305(c) of the National Aeronautics and Space Act
of 1958 (42 U.S.C. 2457(c)) is amended by striking
``Commissioner of Patents'' and inserting ``Commissioner of
Patents and Trademarks''.
(14) Section 12(a) of the Solar Heating and Cooling
Demonstration Act of 1974 (42 U.S.C. 5510(a)) is amended by
striking ``Commissioner of the Patent Office'' and inserting
``Commissioner of Patents and Trademarks''.
(15) Section 1111 of title 44, United States Code, is amended
by striking ``the Commissioner of Patents,''.
(16) Section 1114 of title 44, United States Code, is amended
by striking ``the Commissioner of Patents,''.
(17) Section 1123 of title 44, United States Code, is amended
by striking ``the Patent Office,''.
(18) Sections 1337 and 1338 of title 44, United States Code,
and the items relating to those sections in the table of
contents for chapter 13 of such title, are repealed.
(19) Section 10(i) of the Trading With the Enemy Act (50
U.S.C. App. 10(i)) is amended by striking ``Commissioner of
Patents'' and inserting ``Commissioner of Patents and
Trademarks''.
(20) Section 8G(a)(2) of the Inspector General Act of 1978 (5
U.S.C. App.) is amended by inserting ``the United States Patent
and Trademark Office,'' after ``the United States International
Trade Commission,''.
Subtitle C--Miscellaneous Provisions
SEC. 141. REFERENCES.
Any reference in any other Federal law, Executive order, rule,
regulation, or delegation of authority, or any document of or
pertaining to a department or office from which a function is
transferred by this title--
(1) to the head of such department or office is deemed to
refer to the head of the department or office to which such
function is transferred; or
(2) to such department or office is deemed to refer to the
department or office to which such function is transferred.
SEC. 142. EXERCISE OF AUTHORITIES.
Except as otherwise provided by law, a Federal official to whom a
function is transferred by this title may, for purposes of performing
the function, exercise all authorities under any other provision of law
that were available with respect to the performance of that function to
the official responsible for the performance of the function
immediately before the effective date of the transfer of the function
under this title.
SEC. 143. SAVINGS PROVISIONS.
(a) Legal Documents.--All orders, determinations, rules, regulations,
permits, grants, loans, contracts, agreements, certificates, licenses,
and privileges--
(1) that have been issued, made, granted, or allowed to
become effective by the President, the Secretary of Commerce,
any officer or employee of any office transferred by this
title, or any other Government official, or by a court of
competent jurisdiction, in the performance of any function that
is transferred by this title, and
(2) that are in effect on the effective date of such transfer
(or become effective after such date pursuant to their terms as
in effect on such effective date),
shall continue in effect according to their terms until modified,
terminated, superseded, set aside, or revoked in accordance with law by
the President, any other authorized official, a court of competent
jurisdiction, or operation of law.
(b) Proceedings.--This title shall not affect any proceedings or any
application for any benefits, service, license, permit, certificate, or
financial assistance pending on the effective date of this title before
an office transferred by this title, but such proceedings and
applications shall be continued. Orders shall be issued in such
proceedings, appeals shall be taken therefrom, and payments shall be
made pursuant to such orders, as if this title had not been enacted,
and orders issued in any such proceeding shall continue in effect until
modified, terminated, superseded, or revoked by a duly authorized
official, by a court of competent jurisdiction, or by operation of law.
Nothing in this subsection shall be considered to prohibit the
discontinuance or modification of any such proceeding under the same
terms and conditions and to the same extent that such proceeding could
have been discontinued or modified if this title had not been enacted.
(c) Suits.--This title shall not affect suits commenced before the
effective date of this title, and in all such suits, proceedings shall
be had, appeals taken, and judgments rendered in the same manner and
with the same effect as if this title had not been enacted.
(d) Nonabatement of Actions.--No suit, action, or other proceeding
commenced by or against the Department of Commerce or the Secretary of
Commerce, or by or against any individual in the official capacity of
such individual as an officer or employee of an office transferred by
this title, shall abate by reason of the enactment of this title.
(e) Continuance of Suits.--If any Government officer in the official
capacity of such officer is party to a suit with respect to a function
of the officer, and under this title such function is transferred to
any other officer or office, then such suit shall be continued with the
other officer or the head of such other office, as applicable,
substituted or added as a party.
(f) Administrative Procedure and Judicial Review.--Except as
otherwise provided by this title, any statutory requirements relating
to notice, hearings, action upon the record, or administrative or
judicial review that apply to any function transferred by this title
shall apply to the exercise of such function by the head of the
Federalagency, and other officers of the agency, to which such function
is transferred by this title.
SEC. 144. TRANSFER OF ASSETS.
Except as otherwise provided in this title, so much of the personnel,
property, records, and unexpended balances of appropriations,
allocations, and other funds employed, used, held, available, or to be
made available in connection with a function transferred to an official
or agency by this title shall be available to the official or the head
of that agency, respectively, at such time or times as the Director of
the Office of Management and Budget directs for use in connection with
the functions transferred.
SEC. 145. DELEGATION AND ASSIGNMENT.
Except as otherwise expressly prohibited by law or otherwise provided
in this title, an official to whom functions are transferred under this
title (including the head of any office to which functions are
transferred under this title) may delegate any of the functions so
transferred to such officers and employees of the office of the
official as the official may designate, and may authorize successive
redelegations of such functions as may be necessary or appropriate. No
delegation of functions under this section or under any other provision
of this title shall relieve the official to whom a function is
transferred under this title of responsibility for the administration
of the function.
SEC. 146. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
WITH RESPECT TO FUNCTIONS TRANSFERRED.
(a) Determinations.--If necessary, the Director of the Office of
Management and Budget shall make any determination of the functions
that are transferred under this title.
(b) Incidental Transfers.--The Director of the Office of Management
and Budget, at such time or times as the Director shall provide, may
make such determinations as may be necessary with regard to the
functions transferred by this title, and to make such additional
incidental dispositions of personnel, assets, liabilities, grants,
contracts, property, records, and unexpended balances of
appropriations, authorizations, allocations, and other funds held,
used, arising from, available to, or to be made available in connection
with such functions, as may be necessary to carry out the provisions of
this title. The Director shall provide for the termination of the
affairs of all entities terminated by this title and for such further
measures and dispositions as may be necessary to effectuate the
purposes of this title.
SEC. 147. CERTAIN VESTING OF FUNCTIONS CONSIDERED TRANSFERS.
For purposes of this title, the vesting of a function in a department
or office pursuant to reestablishment of an office shall be considered
to be the transfer of the function.
SEC. 148. AVAILABILITY OF EXISTING FUNDS.
Existing appropriations and funds available for the performance of
functions, programs, and activities terminated pursuant to this title
shall remain available, for the duration of their period of
availability, for necessary expenses in connection with the termination
and resolution of such functions, programs, and activities.
SEC. 149. DEFINITIONS.
For purposes of this title--
(1) the term ``function'' includes any duty, obligation,
power, authority, responsibility, right, privilege, activity,
or program; and
(2) the term ``office'' includes any office, administration,
agency, bureau, institute, council, unit, organizational
entity, or component thereof.
TITLE II--EARLY PUBLICATION OF PATENT APPLICATIONS
SEC. 201. SHORT TITLE.
This title may be cited as the ``Patent Application Publication Act
of 1996''.
SEC. 202. EARLY PUBLICATION.
Section 122 of title 35, United States Code, is amended to read as
follows:
``Sec. 122. Confidential status of applications; publication of patent
applications
``(a) Confidentiality.--Except as provided in subsection (b),
applications for patents shall be kept in confidence by the Patent and
Trademark Office and no information concerning the same given without
authority of the applicant or owner unless necessary to carry out the
provisions of an Act of Congress or in such special circumstances as
may be determined by the Commissioner.
``(b) Publication.--
``(1) In general.--(A) Subject to paragraph (2), each
application for patent, except applications for design patents
filed under chapter 16 of this title and provisional
applications filed under section 111(b) of this title, shall be
published, in accordance with procedures determined by the
Commissioner, as soon as possible after the expiration of a
period of 18 months from the earliest filing date for which a
benefit is sought under this title. At the request of the
applicant, an application may be published earlier than the end
of such 18-month period.
``(B) No information concerning published patent applications
shall be made available to the public except as the
Commissioner determines.
``(C) Notwithstanding any other provision of law, a
determination by the Commissioner to release or not to release
information concerning a published patent application shall be
final and nonreviewable.
``(2) Exceptions.--(A) An application that is no longer
pending shall not be published.
``(B) An application that is subject to a secrecy order
pursuant to section 181 of this title shall not be published.
``(C)(i) Upon the request of the applicant at the time of
filing, the application shall not be published in accordance
with paragraph (1) until 3 months after the Commissioner makes
a notification to the applicant under section 132 of this
title.
``(ii) Applications filed pursuant to section 363 of this
title, applications asserting priority under section 119 or
365(a) of this title, and applications asserting the benefit of
an earlier application under section 120, 121, or 365(c) of
this title shall not be eligible for a request pursuant to this
subparagraph.
``(iii) In a request under this subparagraph, the applicant
shall certify that the invention disclosed in the application
was not and will not be the subject of an application filed in
a foreign country.
``(iv) A request under this subparagraph shall only be
available to an applicant who has been accorded the status of
independent inventor under section 41(h) of this title.
``(v) The Commissioner may establish appropriate procedures
and fees for making a request under this subparagraph.
``(c) Pre-Issuance Opposition.--The provisions of this section shall
not operate to create any new opportunity for pre-issuance opposition.
The Commissioner may establish appropriate procedures to ensure that
this section does not create any new opportunity for pre-issuance
opposition.''.
SEC. 203. TIME FOR CLAIMING BENEFIT OF EARLIER FILING DATE.
(a) In a Foreign Country.--Section 119(b) of title 35, United States
Code, is amended to read as follows:
``(b)(1) No application for patent shall be entitled to this right of
priority unless a claim, identifying the foreign application by
specifying its application number, country, and the day, month, and
year of its filing, is filed in the Patent and Trademark Office at such
time during the pendency of the application as required by the
Commissioner.
``(2) The Commissioner may consider the failure of the applicant to
file a timely claim for priority as a waiver of any such claim, and may
require the payment of a surcharge as a condition of accepting an
untimely claim during the pendency of the application.
``(3) The Commissioner may require a certified copy of the original
foreign application, specification, and drawings upon which it is
based, a translation if not in the English language, and such other
information as the Commissioner considers necessary. Any such
certification shall be made by the patent office of the foreign country
in which the foreign application was filed and show the date of the
application and of the filing of the specification and other papers.''.
(b) In the United States.--Section 120 of title 35, United States
Code, is amended by adding at the end the following: ``The Commissioner
may determine the time period during the pendency of the application
within which an amendment containing the specific reference to the
earlier filed application is submitted. The Commissioner may consider
the failure to submit such an amendment within that time period as a
waiver of any benefit under this section. The Commissioner may
establish procedures, including the payment of a surcharge, to accept
unavoidably late submissions of amendments under this section.''.
SEC. 204. PROVISIONAL RIGHTS.
Section 154 of title 35, United States Code, is amended--
(1) in the section caption by inserting ``; provisional
rights'' after ``patent''; and
(2) by adding at the end the following new subsection:
``(d) Provisional Rights.--
``(1) In general.--In addition to other rights provided by
this section, a patent shall include the right to obtain a
reasonable royalty from any person who, during the period
beginning on the date of publication of the application for
such patent pursuant to section 122(b) of this title, or in the
case of an international application designating the United
States, the date of international publication of the
application, and ending on the date the patent is issued--
``(A)(i) makes, uses, offers for sale, or sells in
the United States the invention as claimed in the
published patent application or imports such an
invention into the United States; or
``(ii) if the invention as claimed in the published
patent application is a process, uses, offers for sale,
or sells in the United States or imports into the
United States products made by that process as claimed
in the published patent application; and
``(B) had actual notice of the published patent
application and where the right arising under this
paragraph is based upon an international application
designating the United States that is published in a
language other than English, a translation of the
international application into the English language.
``(2) Right based on substantially identical inventions.--The
right under paragraph (1) to obtain a reasonable royalty shall
not be available under this subsection unless the invention as
claimed in the patent is substantially identical to the
invention as claimed in the published patent application.
``(3) Time limitation on obtaining a reasonable royalty.--The
right under paragraph (1) to obtain a reasonable royalty shall
be available only in an action brought not later than 6 years
after the patent is issued. The right under paragraph (1) to
obtain a reasonable royalty shall not be affected by the
duration of the period described in paragraph (1).
``(4) Requirements for international applications.--The right
under paragraph (1) to obtain a reasonable royalty based upon
the publication under the treaty of an international
application designating the United States shall commence from
the date that the Patent and Trademark Office receives a copy
of the publication under the treaty of the international
application, or, if the publication under the treaty of the
international application is in a language other than English,
from the date that the Patent and Trademark Office receives a
translation of the international application in the English
language. The Commissioner may require the applicant to provide
a copy of the international publication of the international
application and a translation thereof.''.
SEC. 205. PRIOR ART EFFECT OF PUBLISHED APPLICATIONS.
Section 102(e) of title 35, United States Code, is amended to read as
follows:
``(e) the invention was described in--
``(1) an application for patent, published pursuant to
section 122(b) of this title, by another filed in the United
States before the invention by the applicant for patent, except
that an international application filed under the treaty
defined in section 351(a) of this title shall have the effect
under this subsection of a national application published under
section 122(b) of this title only if the international
application designating the United States was published under
Article 21(2)(a) of such treaty in the English language, or
``(2) a patent granted on an application for patent by
another filed in the United States before the invention by the
applicant for patent, except that a patent granted on an
international application filed under the treaty defined in
section 351(a) of this title shall have the effect under this
subsection of a patent granted on a national application only
if the international application was published under Article
21(2)(a) of such treaty in the English language, or''.
SEC. 206. COST RECOVERY FOR PUBLICATION.
The Commissioner shall recover the cost of early publication required
by the amendment made by section 202 by adjusting the filing, issue,
and maintenance fees under title 35, United States Code, by charging a
separate publication fee, or by any combination of these methods.
SEC. 207. CONFORMING CHANGES.
The following provisions of title 35, United States Code, are
amended:
(1) Section 11 is amended in paragraph 1 of subsection (a) by
inserting ``and published applications for patents'' after
``Patents''.
(2) Section 12 is amended--
(A) in the section caption by inserting ``and
applications'' after ``patents''; and
(B) by inserting ``and published applications for
patents'' after ``patents''.
(3) Section 13 is amended--
(A) in the section caption by inserting ``and
applications'' after ``patents''; and
(B) by inserting ``and published applications for
patents'' after ``patents''.
(4) The items relating to sections 12 and 13 in the table of
sections for chapter 1 are each amended by inserting ``and
applications'' after ``patents''.
(5) The item relating to section 122 in the table of sections
for chapter 11 is amended by inserting ``; publication of
patent applications'' after ``applications''.
(6) The item relating to section 154 in the table of sections
for chapter 14 is amended by inserting ``; provisional rights''
after ``patent''.
(7) Section 181 is amended--
(A) in the first paragraph--
(i) by inserting ``by the publication of an
application or'' after ``disclosure''; and
(ii) by inserting ``the publication of the
application or'' after ``withhold'';
(B) in the second paragraph by inserting ``by the
publication of an application or'' after ``disclosure
of an invention'';
(C) in the third paragraph--
(i) by inserting ``by the publication of the
application or'' after ``disclosure of the
invention''; and
(ii) by inserting ``the publication of the
application or'' after ``withhold''; and
(D) in the fourth paragraph by inserting ``the
publication of an application or'' after ``and'' in the
first sentence.
(8) Section 252 is amended in the first paragraph by
inserting ``substantially'' before ``identical'' each place it
appears.
(9) Section 284 is amended by adding at the end of the second
paragraph the following: ``Increased damages under this
paragraph shall not apply to provisional rights under section
154(d) of this title.''.
(10) Section 374 is amended to read as follows:
``Sec. 374. Publication of international application: Effect
``The publication under the treaty, defined in section 351(a) of this
title, of an international application designating the United States
shall confer the same rights and shall have the same effect under this
title as an application for patent published under section 122(b),
except as provided in sections 102(e) and 154(d) of this title.''.
SEC. 208. PATENT TERM EXTENSION AUTHORITY.
Section 154(b) of title 35, United States Code, is amended to read as
follows:
``(b) Term Extension.--
``(1) Basis for patent term extension.--
``(A) Delay.--Subject to the limitations set forth in
paragraph (2), if the issue of an original patent is
delayed due to--
``(i) a proceeding under section 135(a) of
this title,
``(ii) the imposition of an order pursuant to
section 181 of this title,
``(iii) appellate review by the Board of
Patent Appeals and Interferences or by a
Federal court where the patent was issued
pursuant to a decision in the review reversing
an adverse determination of patentability, or
``(iv) an unusual administrative delay by the
Patent and Trademark Office in issuing the
patent,
the term of the patent shall be extended for the period
of delay.
``(B) Administrative delay.--For purposes of
subparagraph (A)(iv), an unusual administrative delay
by the Patent and Trademark office is the failure to--
``(i) make a notification of the rejection of
any claim for a patent or any objection or
argument under section 132 of this title or
give or mail a written notice of allowance
under section 151 of this title not later than
14 months after the date on which the
application was filed;
``(ii) respond to a reply under section 132
of this title or to an appeal taken under
section 134 of this title not later than 4
months after the date on which the reply was
filed or the appeal was taken;
``(iii) act on an application not later than
4 months after the date of a decision by the
Board of Patent Appeals and Interferences under
section 134 or 135 of this title or a decision
by a Federal court under section 141, 145, or
146 of this title where allowable claims remain
in an application; or
``(iv) issue a patent not later than 4 months
after the date on which the issue fee was paid
under section 151 of this title and all
outstanding requirements were satisfied.
``(2) Limitations.--(A) The total duration of any extensions
granted pursuant to either clause (iii) or (iv) of paragraph
(1)(A) or both such clauses shall not exceed 10 years. To the
extent that periods of delay attributable to grounds specified
in paragraph (1) overlap, the period of any extension granted
under this subsection shall not exceed the actual number of
days the issuance of the patent was delayed.
``(B) The period of extension of the term of a patent under
this subsection 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. The Commissioner
shall prescribe regulations establishing the circumstances that
constitute a failure of an applicant to engage in reasonable
efforts to conclude processing or examination of an
application.
``(C) No patent the term of which has been disclaimed beyond
a specified date may be extended under this section beyond the
expiration date specified in the disclaimer.
``(3) Procedures.--The Commissioner shall prescribe
regulations establishing procedures for the notification of
patent term extensions under this subsection and procedures for
contesting patent term extensions under this subsection.''.
SEC. 209. EXAMINING PROCEDURE IMPROVEMENTS; FURTHER LIMITED
REEXAMINATION OF PATENT APPLICATIONS.
The Commissioner of Patents and Trademarks shall prescribe
regulations to provide for the further limited reexamination of
applications for patent. The Commissioner may establish appropriate
fees for such further limited reexamination and shall be authorized to
provide a 50 percent reduction on such fees for small entities that
qualify for reduced fees under section 41(h)(1) of title 35, United
States Code.
SEC. 210. LAST DAY OF PENDENCY OF PROVISIONAL APPLICATION.
Section 119(e) of title 35, United States Code, is amended by adding
at the end the following:
``(3) If the day that is 12 months after the filing date of a
provisional application falls on a Saturday, Sunday, or legal holiday
as defined in rule 6(a) of the Federal Rules of Civil Procedure, the
period of pendency of the provisional application shall be extended to
the next succeeding business day.''.
SEC. 211. REPORTING REQUIREMENT.
The Commissioner of Patents and Trademarks shall report to the
Congress not later than April 1, 2000, and not later than April 1 of
each year thereafter, regarding the impact of publication on the patent
applications filed by an applicant who has been accorded the status of
independent inventor under section 41(h) of title 35, United States
Code. The report shall include information concerning the frequency and
number of initial and continuing patent applications, pendency,
interferences, reexaminations, rejection, abandonment rates, fees,
other expenses, and other relevant information related to the
prosecution of patent applications.
SEC. 212. EFFECTIVE DATE.
(a) Sections 202 Through 207.--Sections 202 through 207, and the
amendments made by such sections, shall take effect on April 1, 1997,
and shall apply to all applications filed under section 111 of title
35, United States Code, on or after that date, and all international
applications designating the United States that are filed on or after
that date.
(b) Sections 208 Through 210.--The amendments made by sections 208
through 210 shall take effect on the date of the enactment of this Act
and, except for a design patent application filed under chapter 16 of
title 35, United States Code, shall apply to any application filed on
or after June 8, 1995.
TITLE III--PRIOR DOMESTIC COMMERCIAL USE
SEC. 301. SHORT TITLE.
This title may be cited as the ``Prior Domestic Commercial Use Act of
1996''.
SEC. 302. DEFENSE TO PATENT INFRINGEMENT BASED ON PRIOR DOMESTIC
COMMERCIAL USE.
(a) Defense.--Chapter 28 of title 35, United States Code, is amended
by adding at the end the following new section:
``Sec. 273. Prior domestic commercial use; defense to infringement
``(a) Definitions.--For purposes of this section--
``(1) the terms `commercially used', `commercially use', and
`commercial use' mean the use in the United States in commerce
or the use in the design, testing, or production in the United
States of a product or service which is used in commerce,
whether or not the subject matter at issue is accessible to or
otherwise known to the public;
``(2) the terms `used in commerce', and `use in commerce'
mean that there has been an actual sale or other commercial
transfer of the subject matter at issue or that there has been
an actual sale or other commercial transfer of a product or
service resulting from the use of the subject matter at issue;
and
``(3) the `effective filing date' of a patent is the earlier
of the actual filing date of the application for the patent or
the filing date of any earlier United States, foreign, or
international application to which the subject matter at issue
is entitled under section 119, 120, or 365 of this title.
``(b) Defense to Infringement.--(1) A person shall not be liable as
an infringer under section 271 of this title with respect to any
subject matter that would otherwise infringe one or more claims in the
patent being asserted against such person, if such person had, acting
in good faith, commercially used the subject matter before the
effective filing date of such patent.
``(2) The sale or other disposition of the subject matter of a patent
by a person entitled to assert a defense under this section with
respect to that subject matter shall exhaust the patent owner's rights
under the patent to the extent such rights would have been exhausted
had such sale or other disposition been made by the patent owner.
``(c) Limitations and Qualifications of Defense.--The defense to
infringement under this section is subject to the following:
``(1) Derivation.--A person may not assert the defense under
this section if the subject matter on which the defense is
based was derived from the patentee or persons in privity with
the patentee.
``(2) Not a general license.--The defense asserted by a
person under this section is not a general license under all
claims of the patent at issue, but extends only to the subject
matter claimed in the patent with respect to which the person
can assert a defense under this chapter, except that the
defense shall also extend to variations in the quantity or
volume of use of the claimed subject matter, and to
improvements in the claimed subject matter that do not infringe
additional specifically claimed subject matter of the patent.
``(3) Effective and serious preparation.--With respect to
subject matter that cannot be commercialized without a
significant investment of time, money, and effort, a person
shall be deemed to have commercially used the subject matter
if--
``(A) before the effective filing date of the patent,
the person reduced the subject matter to practice in
the United States, completed a significant portion of
the total investment necessary to commercially use the
subject matter, and made a commercial transaction in
the United States in connection with the preparation to
use the subject matter; and
``(B) thereafter the person diligently completed the
remainder of the activities and investments necessary
to commercially use the subject matter, and promptly
began commercial use of the subject matter, even if
such activities were conducted after the effective
filing date of the patent.
``(4) Burden of proof.--A person asserting the defense under
this section shall have the burden of establishing the defense.
``(5) Abandonment of use.--A person who has abandoned
commercial use of subject matter may not rely on activities
performed before the date of such abandonment in establishing a
defense under subsection (b) with respect to actions taken
after the date of such abandonment.
``(6) Personal defense.--The defense under this section may
only be asserted by the person who performed the acts necessary
to establish the defense and, except for any transfer to the
patent owner, the right to assert the defense shall not be
licensed or assigned or transferred to another person except in
connection with the good faith assignment or transfer of the
entire enterprise or line of business to which the defense
relates.
``(7) One-year limitation.--A person may not assert a defense
under this section unless the subject matter on which the
defense is based had been commercially used or reduced to
practice more than one year prior to the effective filing date
of the patent by the person asserting the defense or someone in
privity with that person.
``(d) Unsuccessful Assertion of Defense.--If the defense under this
section is pleaded by a person who is found to infringe the patent and
who subsequently fails to demonstrate a reasonable basis for asserting
the defense, the court shall find the case exceptional for the purpose
of awarding attorney's fees under section 285 of this title.
``(e) Invalidity.--A patent shall not be deemed to be invalid under
section 102 or 103 of this title solely because a defense is
established under this section.''.
(b) Conforming Amendment.--The table of sections at the beginning of
chapter 28 of title 35, United States Code, is amended by adding at the
end the following new item:
``273. Prior domestic commercial use; defense to infringement.''.
SEC. 303. EFFECTIVE DATE AND APPLICABILITY.
This title and the amendments made by this title shall take effect on
the date of the enactment of this Act, but shall not apply to any
action for infringement that is pending on such date of enactment or
with respect to any subject matter for which an adjudication of
infringement, including a consent judgment, has been made before such
date of enactment.
TITLE IV--INVENTOR PROTECTION
SEC. 401. SHORT TITLE.
This title may be cited as the ``Inventor Protection Act of 1996''.
SEC. 402. INVENTION DEVELOPMENT SERVICES.
Part I of title 35, United States Code, is amended by adding after
chapter 4 the following new chapter:
``CHAPTER 5--INVENTION DEVELOPMENT SERVICES
``Sec.
``51. Definitions.
``52. Contracting requirements.
``53. Standard provisions for cover notice.
``54. Reports to customer required.
``55. Mandatory contract terms.
``56. Remedies.
``57. Records of complaints.
``58. Fraudulent representation by an invention developer.
``59. Rule of construction.
``Sec. 51. Definitions
``For purposes of this chapter--
``(1) the term `contract for invention development services'
means a contract by which an invention developer undertakes
invention development services for a customer;
``(2) the term `customer' means any person, firm,
partnership, corporation, or other entity who is solicited by,
seeks the services of, or enters into a contract with an
invention promoter for invention promotion services;
``(3) the term `invention promoter' means any person, firm,
partnership, corporation, or other entity who offers to perform
or performs for, or on behalf of, a customer any act described
under paragraph (4), but does not include--
``(A) any department or agency of the Federal
Government or of a State or local government;
``(B) any nonprofit, charitable, scientific, or
educational organization, qualified under applicable
State law or described under section 170(b)(1)(A) of
the Internal Revenue Code of 1986; or
``(C) any person duly registered and in good standing
before the Patent and Trademark Office acting within
the scope of that person's registration to practice
before the Patent and Trademark Office; and
``(4) the term `invention development services' means, with
respect to an invention by a customer, any act involved in--
``(A) evaluating the invention to determine its
protectability as some form of intellectual property,
other than evaluation by a person licensed by a State
to practice law who is acting solely within the scope
of that person's professional license;
``(B) evaluating the invention to determine its
commercial potential by any person for purposes other
than providing venture capital; or
``(C) marketing, brokering, licensing, selling, or
promoting the invention or a product or service in
which the invention is incorporated or used, except
that the display only of an invention at a trade show
or exhibit shall not be considered to be invention
development services.
``Sec. 52. Contracting requirements
``(a) In General.--(1) Every contract for invention development
services shall be in writing and shall be subject to the provisions of
this chapter. A copy of the signed written contract shall be given to
the customer at the time the customer enters into the contract.
``(2) If a contract is entered into for the benefit of a third party,
such party shall be considered a customer for purposes of this chapter.
``(b) Requirements of Invention Developer.--The invention developer
shall--
``(1) state in a written document, at the time a customer
enters into a contract for invention development services,
whether the usual business practice of the invention developer
is to--
``(A) seek more than 1 contract in connection with an
invention; or
``(B) seek to perform services in connection with an
invention in 1 or more phases, with the performance of
each phase covered in 1 or more subsequent contracts;
and
``(2) supply to the customer a copy of the written document
together with a written summary of the usual business practices
of the invention developer, including--
``(A) the usual business terms of contracts; and
``(B) the approximate amount of the usual fees or
other consideration that may be required from the
customer for each of the services provided by the
developer.
``(c) Right of Customer To Cancel Contract.--(1) Notwithstanding any
contractual provision to the contrary, a customer shall have the right
to terminate a contract for invention development services by sending a
written letter to the invention developer stating the customer's intent
to cancel the contract. The letter of termination must be deposited
with the United States Postal Service on or before 5 business days
after the date upon which the customer or the invention developer
executes the contract, whichever is later.
``(2) Delivery of a promissory note, check, bill of exchange, or
negotiable instrument of any kind to the invention developer or to a
third party for the benefit of the invention developer, without regard
to the date or dates appearing in such instrument, shall be deemed
payment received by the invention developer on the date received for
purposes of this section.
``Sec. 53. Standard provisions for cover notice
``(a) Contents.--Every contract for invention development services
shall have a conspicuous and legible cover sheet attached with the
following notice imprinted in boldface type of not less than 12-point
size:
`` `YOU HAVE THE RIGHT TO TERMINATE THIS CONTRACT. TO
TERMINATE THIS CONTRACT, YOU MUST SEND A WRITTEN LETTER TO THE
COMPANY STATING YOUR INTENT TO CANCEL THIS CONTRACT. THE LETTER
OF TERMINATION MUST BE DEPOSITED WITH THE UNITED STATES POSTAL
SERVICE ON OR BEFORE FIVE (5) BUSINESS DAYS AFTER THE DATE ON
WHICH YOU OR THE COMPANY EXECUTE THE CONTRACT, WHICHEVER IS
LATER.
`` `THE TOTAL NUMBER OF INVENTIONS EVALUATED BY THE INVENTION
DEVELOPER FOR COMMERCIAL POTENTIAL IN THE PAST FIVE (5) YEARS
IS __________. OF THAT NUMBER, __________ RECEIVED POSITIVE
EVALUATIONS AND __________ RECEIVED NEGATIVE EVALUATIONS.
`` `IF YOU ASSIGN EVEN A PARTIAL INTEREST IN THE INVENTION TO
THE INVENTION DEVELOPER, THE INVENTION DEVELOPER MAY HAVE THE
RIGHT TO SELL OR DISPOSE OF THE INVENTION WITHOUT YOUR CONSENT
AND MAY NOT HAVE TO SHARE THE PROFITS WITH YOU.
`` `THE TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED WITH
THE INVENTION DEVELOPER IN THE PAST FIVE (5) YEARS IS
__________. THE TOTAL NUMBER OF CUSTOMERS KNOWN BY THIS
INVENTION DEVELOPER TO HAVE RECEIVED, BY VIRTUE OF THIS
INVENTION DEVELOPER'S PERFORMANCE, AN AMOUNT OF MONEY IN EXCESS
OF THE AMOUNT PAID BY THE CUSTOMER TO THIS INVENTION DEVELOPER
IS ______________.
`` `THE OFFICERS OF THIS INVENTION DEVELOPER HAVE
COLLECTIVELY OR INDIVIDUALLY BEEN AFFILIATED IN THE LAST TEN
(10) YEARS WITH THE FOLLOWING INVENTION DEVELOPMENT COMPANIES:
(LIST THE NAMES AND ADDRESSES OF ALL PREVIOUS INVENTION
DEVELOPMENT COMPANIES WITH WHICH THE PRINCIPAL OFFICERS HAVE
BEEN AFFILIATED AS OWNERS, AGENTS, OR EMPLOYEES). YOU ARE
ENCOURAGED TO CHECK WITH THE UNITED STATES PATENT AND TRADEMARK
OFFICE, THE FEDERAL TRADE COMMISSION, YOUR STATE ATTORNEY
GENERAL'S OFFICE, AND THE BETTER BUSINESS BUREAU FOR ANY
COMPLAINTS FILED AGAINST ANY OF THESE COMPANIES.
`` `YOU ARE ENCOURAGED TO CONSULT WITH AN ATTORNEY OF YOUR
OWN CHOOSING BEFORE SIGNING THIS CONTRACT. BY PROCEEDING
WITHOUT THE ADVICE OF AN ATTORNEY REGISTERED TO PRACTICE BEFORE
THE PATENT AND TRADEMARK OFFICE, YOU COULD LOSE ANY RIGHTS YOU
MIGHT HAVE IN YOUR IDEA OR INVENTION.'.
``(b) Other Requirements for Cover Notice.--The cover notice shall
contain the items required under subsection (a) and the name, primary
office address, and local office address of the invention developer,
and may contain no other matter.
``(c) Disclosure of Certain Customers Not Required.--The requirement
in the notice set forth in subsection (a) to include the `TOTAL NUMBER
OF CUSTOMERS WHO HAVE CONTRACTED WITH THE INVENTION DEVELOPER IN THE
PAST FIVE (5) YEARS' need not include information with respect to
customers who have purchased trade show services, research,
advertising, or other nonmarketing services from the invention
developer, nor with respect to customers who have defaulted in their
payments to the invention developer.
``Sec. 54. Reports to customer required
``With respect to every contract for invention development services,
the invention developer shall deliver to the customer at the address
specified in the contract, at least once every 3 months throughout the
term of the contract, a written report that identifies the contract and
includes--
``(1) a full, clear, and concise description of the services
performed to the date of the report and of the services yet to
be performed and names of all persons who it is known will
perform the services; and
``(2) the name and address of each person, firm, corporation,
or other entity to whom the subject matter of the contract has
been disclosed, the reason for each such disclosure, the nature
of the disclosure, and complete and accurate summaries of all
responses received as a result of those disclosures.
``Sec. 55. Mandatory contract terms
``(a) Mandatory Terms.--Each contract for invention development
services shall include in boldface type of not less than 12-point
size--
``(1) the terms and conditions of payment and contract
termination rights required under section 52;
``(2) a statement that the customer may avoid entering into
the contract by not making a payment to the invention
developer;
``(3) a full, clear, and concise description of the specific
acts or services that the invention developer undertakes to
perform for the customer;
``(4) a statement as to whether the invention developer
undertakes to construct, sell, or distribute one or more
prototypes, models, or devices embodying the invention of the
customer;
``(5) the full name and principal place of business of the
invention developer and the name and principal place of
business of any parent, subsidiary, agent, independent
contractor, and any affiliated company or person who it is
known will perform any of the services or acts that the
invention developer undertakes to perform for the customer;
``(6) if any oral or written representation of estimated or
projected customer earnings is given by the invention developer
(or any agent, employee, officer, director, partner, or
independent contractor of such invention developer), a
statement of that estimation or projection and a description of
the data upon which such representation is based;
``(7) the name and address of the custodian of all records
and correspondence relating to the contracted for invention
development services, and a statement that the invention
developer is required to maintain all records and
correspondence relating to performance of the invention
development services for such customer for a period of not less
than 2 years after expiration of the term of such contract; and
``(8) a statement setting forth a time schedule for
performance of the invention development services, including an
estimated date in which such performance is expected to be
completed.
``(b) Invention Developer as Fiduciary.--To the extent that the
description of the specific acts or services affords discretion to the
invention developer with respect to what specific acts or services
shall be performed, the invention developer shall be deemed a
fiduciary.
``(c) Availability of Information.--Records and correspondence
described under subsection (a)(7) shall be made available after 7 days
written notice to the customer or the representative of the customer to
review and copy at a reasonable cost on the invention developer's
premises during normal business hours.
``Sec. 56. Remedies
``(a) In General.--(1) Any contract for invention development
services that does not comply with the applicable provisions of this
chapter shall be voidable at the option of the customer.
``(2) Any contract for invention development services entered into in
reliance upon any material false, fraudulent, or misleading
information, representation, notice, or advertisement of the invention
developer (or any agent, employee, officer, director, partner, or
independent contractor of such invention developer) shall be voidable
at the option of the customer.
``(3) Any waiver by the customer of any provision of this chapter
shall be deemed contrary to public policy and shall be void and
unenforceable.
``(4) Any contract for invention development services which provides
for filing for and obtaining utility, design, or plant patent
protection shall be voidable at the option of the customer unless the
invention developer offers to perform or performs such act through a
registered patent attorney or agent.
``(b) Civil Action.--(1) Any customer who is injured by a violation
of this chapter by an invention developer or by any material false or
fraudulent statement or representation, or any omission of material
fact, by an invention developer (or any agent, employee, director,
officer, partner, or independent contractor of such invention
developer) or by failure of an invention developer to make all the
disclosures required under this chapter, may recover in a civil action
against the invention developer (or the officers, directors, or
partners of such invention developer) in addition to reasonable costs
and attorneys' fees, the greater of--
``(A) $5,000; or
``(B) the amount of actual damages sustained by the customer.
``(2) Notwithstanding paragraph (1), the court may increase damages
to not more than 3 times the amount awarded.
``(c) Rebuttable Presumption of Injury.--For purposes of this
section, substantial violation of any provision of this chapter by an
invention developer or execution by the customer of a contract for
invention development services in reliance on any material false or
fraudulent statements or representations or omissions of material fact
shall establish a rebuttable presumption of injury.
``Sec. 57. Records of complaints
``(a) Release of Complaints.--The Commissioner shall make all
complaints received by the Patent and Trademark Office involving
invention developers publicly available, together with any response of
the invention developers.
``(b) Request for Complaints.--The Commissioner may request
complaints relating to invention development services from any Federal
or State agency and include such complaints in the records maintained
under subsection (a), together with any response of the invention
developers.
``Sec. 58. Fraudulent representation by an invention developer
``Whoever, in providing invention development services, knowingly
provides any false or misleading statement, representation, or omission
of material fact to a customer or fails to make all the disclosures
required under this chapter, shall be guilty of a misdemeanor and fined
not more than $10,000 for each offense.
``Sec. 59. Rule of construction
``Except as expressly provided in this chapter, no provision of this
chapter shall be construed to affect any obligation, right, or remedy
provided under any other Federal or State law.''.
SEC. 403. TECHNICAL AND CONFORMING AMENDMENT.
The table of chapters for part I of title 35, United States Code, is
amended by adding after the item relating to chapter 4 the following:
``5. Invention Development Services......................... 51''.
SEC. 404. EFFECTIVE DATE.
This title and the amendments made by this title shall take effect 60
days after the date of the enactment of this Act.
TITLE V--PATENT REEXAMINATION REFORM
SEC. 501. SHORT TITLE.
This title may be cited as the ``Patent Reexamination Reform Act of
1996''.
SEC. 502. DEFINITIONS.
Section 100 of title 35, United States Code, is amended by adding at
the end the following new subsection:
``(e) The term `third-party requester' means a person requesting
reexamination under section 302 of this title who is not the patent
owner.''.
SEC. 503. REEXAMINATION PROCEDURES.
(a) Request for Reexamination.--Section 302 of title 35, United
States Code, is amended to read as follows:
``Sec. 302. Request for reexamination
``Any person at any time may file a request for reexamination by the
Office of a patent on the basis of any prior art cited under the
provisions of section 301 of this title or on the basis of the
requirements of section 112 of this title except for the requirement to
set forth the best mode of carrying out the invention. The request must
be in writing, must include the identity of the real party in interest,
and must be accompanied by payment of a reexamination fee established
by the Commissioner pursuant to the provisions of section 41 of this
title. The request must set forth the pertinency and manner of applying
cited prior art to every claim for which reexamination is requested or
the manner in which the patent specification or claims fail to comply
with the requirements of section 112 of this title. Unless the
requesting person is the owner of the patent, the Commissioner promptly
shall send a copy of the request to the owner of record of the
patent.''.
(b) Determination of Issue by Commissioner.--Section 303 of title 35,
United States Code, is amended to read as follows:
``Sec. 303. Determination of issue by Commissioner
``(a) Reexamination.--Not later than 3 months after the filing of a
request for reexamination under the provisions of section 302 of this
title, the Commissioner shall determine whether a substantial new
question of patentability affecting any claim of the patent concerned
is raised by the request, with or without consideration of other
patents or printed publications. On the Commissioner's initiative, at
any time, the Commissioner may determine whether a substantial new
question of patentability is raised by patents and publications or by
the failure of the patent specification or claims to comply with the
requirements of section 112 of this title except for the best mode
requirement described in section 302.
``(b) Record.--A record of the Commissioner's determination under
subsection (a) shall be placed in the official file of the patent, and
a copy shall be promptly given or mailed to the owner of record of the
patent and to the third-party requester, if any.
``(c) Final Decision.--A determination by the Commissioner pursuant
to subsection (a) shall be final and nonappealable. Upon a
determination that no substantial new question of patentability has
been raised, the Commissioner may refund a portion of the reexamination
fee required under section 302 of this title.''.
(c) Reexamination Order by Commissioner.--Section 304 of title 35,
United States Code, is amended to read as follows:
``Sec. 304. Reexamination order by Commissioner
``If, in a determination made under the provisions of section 303(a)
of this title, the Commissioner finds that a substantial new question
of patentability affecting a claim of a patent is raised, the
determination shall include an order for reexamination of the patent
for resolution of the question. The order may be accompanied by the
initial action of the Patent and Trademark Office on the merits of the
reexamination conducted in accordance with section 305 of this
title.''.
(d) Conduct of Reexamination Proceedings.--Section 305 of title 35,
United States Code, is amended to read as follows:
``Sec. 305. Conduct of reexamination proceedings
``(a) In General.--Subject to subsection (b), reexamination shall be
conducted according to the procedures established for initial
examination under the provisions of sections 132 and 133 of this title.
In any reexamination proceeding under this chapter, the patent owner
shall be permitted to propose any amendment to the patent and a new
claim or claims, except that no proposed amended or new claim enlarging
the scope of the claims of the patent shall be permitted.
``(b) Response.--(1) This subsection shall apply to any reexamination
proceeding in which the order for reexamination is based upon a request
by a third-party requester.
``(2) With the exception of the reexamination request, any document
filed by either the patent owner or the third-party requester shall be
served on the other party.
``(3) If the patent owner files a response to any Patent and
Trademark Office action on the merits, the third-party requester shall
have 1 opportunity to file written comments within a reasonable period
not less than 1 month after the date of service of the patent owner's
response. Written comments provided under this paragraph shall be
limited to issues covered by the Patent and Trademark Office action or
the patent owner's response.
``(c) Special Dispatch.--Unless otherwise provided by the
Commissioner for good cause, all reexamination proceedings under this
section, including any appeal to the Board of Patent Appeals and
Interferences, shall be conducted with special dispatch within the
Office.''.
(e) Appeal.--Section 306 of title 35, United States Code, is amended
to read as follows:
``Sec. 306. Appeal
``(a) Patent Owner.--The patent owner involved in a reexamination
proceeding under this chapter--
``(1) may appeal under the provisions of section 134 of this
title, and may appeal under the provisions of sections 141
through 144 of this title, with respect to any decision adverse
to the patentability of any original or proposed amended or new
claim of the patent; and
``(2) may be a party to any appeal taken by a third-party
requester pursuant to subsection (b) of this section.
``(b) Third-Party Requester.--A third-party requester--
``(1) may appeal under the provisions of section 134 of this
title, and may appeal under the provisions of sections 141
through 144 of this title, with respect to any final decision
favorable to the patentability of any original or proposed
amended or new claim of the patent; and
``(2) may be a party to any appeal taken by the patent owner,
subject to subsection (c) of this section.
``(c) Participation as Party.--(1) A third-party requester who, under
the provisions of sections 141 through 144 of this title, files a
notice of appeal or who participates as a party to an appeal by the
patent owner is estopped from asserting at a later time, in any forum,
the invalidity of any claim determined to be patentable on appeal on
any ground which the third-party requester raised or could have raised
during the reexamination proceedings.
``(2) A third-party requester is deemed not to have participated as a
party to an appeal by the patent owner unless, not later than 20 days
after the patent owner has filed notice of appeal, the third-party
requester files notice with the Commissioner electing to
participate.''.
(f) Reexamination Prohibited.--(1) Chapter 30 of title 35, United
States Code, is amended by adding at the end the following new section:
``Sec. 308. Reexamination prohibited
``(a) Order for Reexamination.--Notwithstanding any provision of this
chapter, once an order for reexamination of a patent has been issued
under section 304 of this title, neither the patent owner nor the
third-party requester, if any, nor privies of either, may file a
subsequent request for reexamination of the patent until a
reexamination certificate is issued and published under section 307 of
this title, unless authorized by the Commissioner.
``(b) Final Decision.--Once a final decision has been entered against
a party in a civil action arising in whole or in part under section
1338 of title 28 that the party has not sustained its burden of proving
the invalidity of any patent claim in suit, then neither that party nor
its privies may thereafter request reexamination of any such patent
claim on the basis of issues which that party or its privies raised or
could have raised in such civil action, and a reexamination requested
by that party or its privies on the basis of such issues may not
thereafter be maintained by the Office, notwithstanding any other
provision of this chapter.''.
(2) The table of sections for chapter 30 of title 35, United States
Code, is amended by adding at the end the following:
``308. Reexamination prohibited.''.
SEC. 504. CONFORMING AMENDMENTS.
(a) Board of Patent Appeals and Interferences.--The first sentence of
section 6(b) of title 35, United States Code, as amended by section 117
of this Act, is amended to read as follows: ``The Board of Patent
Appeals and Interferences shall, on written appeal of an applicant, or
a patent owner or a third-party requester in a reexamination
proceeding, review adverse decisions of examiners upon applications for
patents and decisions of examiners in reexamination proceedings, and
shall determine priority and patentability of invention in
interferences declared under section 135(a) of this title.''.
(b) Patent Fees; Patent and Trademark Search Systems.--Section
41(a)(7) of title 35, United States Code, is amended to read as
follows:
``(7) On filing each petition for the revival of an
unintentionally abandoned application for a patent, for the
unintentionally delayed payment of the fee for issuing each
patent, or for an unintentionally delayed response by the
patent owner in a reexamination proceeding, $1,250, unless the
petition is filed under sections 133 or 151 of this title, in
which case the fee shall be $110.''.
(c) Appeal to the Board of Patent Appeals and Interferences.--Section
134 of title 35, United States Code, is amended to read as follows:
``Sec. 134. Appeal to the Board of Patent Appeals and Interferences
``(a) Patent Applicant.--An applicant for a patent, any of whose
claims has been twice rejected, may appeal from the decision of the
primary examiner to the Board of Patent Appeals and Interferences,
having once paid the fee for such appeal.
``(b) Patent Owner.--A patent owner in a reexamination proceeding may
appeal from the final rejection of any claim by the primary examiner to
the Board of Patent Appeals and Interferences, having once paid the fee
for such appeal.
``(c) Third-Party.--A third-party requester may appeal to the Board
of Patent Appeals and Interferences from the final decision of the
primary examiner favorable to the patentability of any original or
proposed amended or new claim of a patent, having once paid the fee for
such appeal.''.
(d) Appeal to Court of Appeals for the Federal Circuit.--Section 141
of title 35, United States Code, is amended by amending the first
sentence to read as follows: ``An applicant, a patent owner, or a
third-party requester, dissatisfied with the final decision in an
appeal to the Board of Patent Appeals and Interferences under section
134 of this title, may appeal the decision to the United States Court
of Appeals for the Federal Circuit.''.
(e) Proceedings on Appeal.--Section 143 of title 35, United States
Code, is amended by amending the third sentence to read as follows:
``In ex parte and reexamination cases, the Commissioner shall submit to
the court in writing the grounds for the decision of the Patent and
Trademark Office, addressing all the issues involved in the appeal.''.
(f) Civil Action To Obtain Patent.--Section 145 of title 35, United
States Code, is amended in the first sentence by inserting ``(a)''
after ``section 134''.
SEC. 505. EFFECTIVE DATE.
This title and the amendments made by this title shall take effect on
the date that is 6 months after the date of the enactment of this Act
and shall apply to all reexamination requests filed on or after such
date.
TITLE VI--MISCELLANEOUS PATENT PROVISIONS
SEC. 601. PROVISIONAL APPLICATIONS.
(a) Abandonment.--Section 111(b)(5) of title 35, United States Code,
is amended to read as follows:
``(5) Abandonment.--Notwithstanding the absence of a claim,
upon timely request and as prescribed by the Commissioner, a
provisional application may be treated as an application filed
under subsection (a). If no such request is made, the
provisional application shall be regarded as abandoned 12
months after the filing date of such application and shall not
be subject to revival thereafter.''.
(b) Effective Date.--The amendment made by subsection (a) applies to
any provisional application filed on or after June 8, 1995.
SEC. 602. INTERNATIONAL APPLICATIONS.
Section 119 of title 35, United States Code, is amended--
(1) in subsection (a), by inserting ``or in a WTO member
country'' after ``or to citizens of the United States,'';
(2) in subsection (b), as amended by section 203 of this Act,
by striking ``patent office of the foreign country'' and
inserting ``foreign intellectual property authority''; and
(3) by adding at the end the following new subsections:
``(f) Applications For Plant Breeder's Rights.--Applications for
plant breeder's rights filed in a WTO member country (or in a UPOV
Contracting Party) shall have the same effect for the purpose of the
right of priority under subsections (a) through (c) of this section as
applications for patents, subject to the same conditions and
requirements of this section as apply to applications for patents.
``(g) Definitions.--As used in this section--
``(1) the term `WTO member country' has the same meaning as
the term is defined in section 104(b)(2) of this title; and
``(2) the term `UPOV Contracting Party' means a member of the
International Convention for the Protection of New Varieties of
Plants.''.
SEC. 603. PLANT PATENTS.
(a) Tuber Propagated Plants.--Section 161 of title 35, United States
Code, is amended by striking ``a tuber propagated plant or''.
(b) Rights in Plant Patents.--The text of section 163 of title 35,
United States Code, is amended to read as follows: ``In the case of a
plant patent, the grant shall include the right to exclude others from
asexually reproducing the plant, and from using, offering for sale, or
selling the plant so reproduced, or any of its parts, throughout the
United States, or from importing the plant so reproduced, or any parts
thereof, into the United States.''.
(c) Effective Date.--The amendment made by subsection (a) shall apply
on the date of the enactment of this Act. The amendment made by
subsection (b) shall apply to any plant patent issued on or after the
date of the enactment of this Act.
SEC. 604. JUST COMPENSATION FOR U.S. GOVERNMENT USE OF PATENTS.
(a) Compensation.--Section 1498(a) of title 28, United States Code,
is amended by adding at the end of the first paragraph the following:
``Reasonable and entire compensation shall include the owner's
reasonable costs, including reasonable fees for expert witnesses and
attorneys, in pursuing the action if the owner is an independent
inventor, a nonprofit organization, or an entity that had no more than
500 employees at any time during the 5-year period preceding the use or
manufacture of the patented invention by or for the United States.''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
to actions under section 1498(a) of title 28, United States Code, that
are pending on, or brought on or after, the date of the enactment of
this Act.
SEC. 605. ELECTRONIC FILING.
Section 22 of title 35, United States Code, is amended by striking
``printed or typewritten'' and inserting ``printed, typwritten, or on
an electronic medium''.
Purpose and Summary
The United States is by far the world's largest producer of
intellectual property, and this has greatly benefitted our
balance of trade. This success is dependent upon a rational and
sound policy of protecting intellectual property by encouraging
the development of new inventions and processes.
Despite this success, the U.S. patent system is not without
its problems. Some dilatory patent applicants and plaintiffs'
attorneys have developed ways to game the system and ultimately
extort hundreds of millions of dollars from industries--costs
that are ultimately passed on to American consumers. Another
key problem is that the Patent and Trademark Office is bogged
down in bureaucratic red tape. It cannot run at its peak
efficiency. Many other nations have learned from our success--
America no longer stands alone in its commitment to a strong
system of patent protection for its inventors, small
businesses, and industries. Consequently, it is more important
now than ever that Congress adopt certain reforms that will
ensure that America maintains its position as the world leader
in the production of intellectual property.
H.R. 3460 contains several titles addressing and solving
major problems threatening our patent system. With the
exception of the title containing miscellaneous provisions,
each title consists of an independent bill that was the subject
of comprehensive hearings in the Subcommittee on Courts and
Intellectual Property. Each of these titles also reflects
changes that were made in response to valuable comments
submitted by expert witnesses, Members, independent inventors,
small businesses, large corporations, industry organizations,
patent law associations, and the Patent and Trademark Office.
Background and Need for the Legislation
The following is a breakdown and explanation of the
background and need for each of the patent titles contained in
H.R. 3460:
Title I--Patent and Trademark Office Government Corporation
Under Title I, the United States Patent and Trademark
Office (``PTO''), currently a bureau of the Department of
Commerce, would be established as an independent government
corporation under the policy direction of the Secretary of
Commerce. These provisions, originally introduced by
Subcommittee Chairman Carlos Moorhead and Ranking Democratic
Member Pat Schroeder as H.R. 1659, separate the Office from any
established agency but maintain policy direction from the
Executive Branch to ensure uniform goals in the area of
intellectual property rights.
The PTO is one of a few government entities which lends
itself to the government corporation model. Unlike most
government agencies, it is funded completely by user fees. Its
workload is driven by the inflow of patent and trademark
applications that applicants submit. It requires the services
of patent examiners with expertise in a wide variety of areas.
The market values these kinds of expertise differently with
some commanding higher prices and some lower. The PTO can and
should operate to serve most efficiently the public interest,
including the interest of those who pay user fees to support
it--patent and trademark applicants. Further, the Office
performs a quasi-judicial function, which should be handled in
an independent manner.
Apart from policy, the work of the PTO has always been
independent, but the Department of Commerce has exercised
control over its finances and its procedures. An independently
managed government corporation with Congressionally approved
borrowing authority will possess the operational flexibility
and independence required to best serve the public and the
innovators who have become an increasingly important aspect of
our national economy. If the PTO is to operate in a business-
like manner to accomplish operational efficiency with
integrity, it must have management, operational, and financial
flexibility that it does not currently have.
Title I establishes the Patent and Trademark Office as an
independent wholly owned government corporation and transfers
to it the duties carried out by the existing Office while
maintaining the policy direction of the Secretary of Commerce.
It establishes that the Office shall be managed by a
Commissioner of Patents and Trademarks who is appointed by the
President, by and with the advice and consent of the Senate,
for a term of five years. The length of the term should provide
continuity and carry-over between presidential administrations.
Under this title, the President is required to nominate a
Commissioner who, ``by reason of professional background and
experience in patent or trademark law, is especially qualified
to manage the Office.''
Title I caps the salaries of the Commissioner, the Deputy
Commissioner for Patents, the Deputy Commissioner for
Trademarks (both of whom are appointed by the Commissioner),
and any other employees hired by the PTO. It further leaves to
Congress the duty of setting the filing fees which establish
and control the budget of the PTO. The title further requires
that an Inspector General be appointed.
Title I provides that the new PTO Corporation would be able
to purchase real and personal property based on an established
bidding process without proceeding through the General Services
Administration. It further frees the Office from any
administratively or statutorily imposed limitations on
positions or personnel and exempts it from the employment,
classification, retention, performance appraisal, and General
Schedule pay rates of Title 5 of the U.S. Code. Title I
replaces this system with full collective bargaining. This
would allow the PTO, subject to oversight by Congress and its
own collective bargaining agreements, to hire and place
employees without regard to the registers maintained by the
Office of Personnel Management, to downsize without regard to
current reduction in force requirements, to award bonuses and
demote for poor job performance, and to establish its own pay
scale outside of the General Schedule.
Under Title I, the cap on the top basic pay rate of PTO
employees will increase from about $95,000 to about $133,000
with a ceiling on total pay also having a cap of around
$133,000. The title continues to allow for a negotiated
grievance procedure and a right to appeal to the EEOC. The
title guarantees that employees will retain their federal
health, life, and retirement benefits, except that the PTO
would be able to supplement or improve current benefits.
The title further provides for a bipartisan Management
Advisory Board, comprised of members of the private sector who
represent users of the PTO. Under this title, the Board would
be made up of 12 members: four to be appointed by the
President, four to be appointed by the Speaker of the House,
and four to be appointed by the president pro tempore of the
Senate. The terms of the members of the Board would be four
years, and the terms would be staggered. The Chairman of the
Board would be appointed by the President and would serve for
three years. The Board shall review the policies, goals,
performance, budget, and user fees of the PTO and advise the
Commissioner. The Board shall also prepare an annual report to
the President and the Judiciary Committees of the House and the
Senate, which will be published in the PTO Official Gazette.
Title I maintains the Trademark Trial and Appeals Board
which determines the rights of registration in every case,
opposition to registration, or application to cancel the
registration of a mark. It further maintains a Board of Patent
Appeals and Interferences which shall, on written appeal of an
applicant, review adverse decisions of patent examiners.
Importantly, patent and trademark examiners, and Members of the
Appeal Boards may not be removed from office, except for cause.
This protection will insulate these quasi-judicial officers
from outside pressures and preserve integrity within the
application examination system.
Under the title, a relationship is established with the
Justice Department for assistance in the defense of lawsuits
brought against the PTO Corporation. The PTO will be required
to report to Congress annually on budget and patent quality
issues.
Importantly, the PTO is granted borrowing authority,
subject to annual appropriations acts, and is allowed to issue
bonds for purchase by the Secretary of the Treasury. Any monies
not otherwise used to carry on the duties of the PTO must be
kept in cash on hand, in deposit, or invested in U.S.
obligations or other lawful investments for public funds. The
PTO cannot borrow money without explicit advance approval in
appropriations acts and without guaranteeing its payment from
future user fee income. Audits shall be conducted by an
independent accountant chosen by the Commissioner and are
subject to review by the Comptroller General.
Title I was written to reflect the concerns of employees
from the PTO, expressed in hearing testimony. It attempts to
strike an appropriate balance between union and management and
grant the flexibility necessary to allow the PTO and its users
to benefit directly from the fees its users pay. That means
better service to America's creative community by a better work
force under the oversight of Congress and the President with
increased input by employees and their organizations.
Government corporation status is supported by the National
Academy of Public Administration. The establishment of the PTO
as a government corporation is necessary to achieve cost-
effective, quality examining operations which will best serve
its users, and consequently, the public interest.
title ii--patent publication
The Subcommittee on Courts and Intellectual Property held
extensive hearings on H.R. 1733, the ``Patent Application
Publication Act of 1995'' and H.R. 359, ``a bill to restore the
term of patents, and for other purposes.'' In those hearings,
held on June 8 and November 1, 1995, the Subcommittee
benefitted from the testimony of twenty-two witnesses. These
witnesses represented the full spectrum of views of individuals
and entities that utilize the Patent and Trademark Office:
independent inventors, small businesses, nonprofit
organizations, universities, large corporations, patent
attorneys and trade organizations. The vast majority of the
patent community wholly supported the provisions of H.R. 1733
as introduced, as did the Bush Administration, the Clinton
Administration and five of the past six former living
Commissioners of the Patent and Trademark Office. Below is a
summary of the provisions of Title II and a breakdown of the
changes adopted to ensure that every diligent patent applicant
gains under its provisions.
Term issues
One of the key patent provisions in the TRIPS Agreement was
the establishment of an international standard minimum term for
patent protection. In accordance with the treaty, the United
States is obliged to establish a minimum patent term of twenty
years from the time the patent application was filed. Formerly,
the U.S. provided only seventeen years of protection from the
time the patent was issued. Consequently, a change in the law
was required to ensure compliance.
In 1994, the Congress took a straightforward approach to
complying with this obligation and simply adopted the twenty
year from filing term, the minimum required by TRIPS. Since
June 8, 1995, that has been the standard to measure patent term
in the United States. Obviously, any patent that is granted
within three years will result in an increase in patent term
for patent applicants. Under this new system, even based on
historical data from a time when there was not the same
incentive to expedite processing, the vast majority of patent
applicants, nearly 90% will experience a significant increase
in patent term.
Nevertheless, because the system changed from one based
upon grant to one based upon filing, there was some concern
that delays in the Patent Office would eat away at some
applicants' patent term through no fault of the applicants.
This is handled to some extent by present law, where the twenty
year patent term may be extended for a total of up to five
years for delays in the issuance of a patent due to
interferences, secrecy orders, or successful appeals to the
Board of Patent Appeals and Interferences or the federal
courts.
As introduced, H.R. 1733 took the protection for inventors
two steps further. First, the bill provided an additional
category, unusual administrative delays, to the list of
circumstances justifying term compensation. Second, it raised
the limit on compensable delay to ten years. Even with these
protections, there were those who had concerns. Some patent
applicants were fearful that even a ten year cap on delays will
result in reductions in term for some fraction of a percentage
of diligent applicants. Others expressed concern about having a
subjective standard to determine unusual administrative delay.
Title II of H.R. 3460 solves both of these concerns. First,
it removes the ten-year cap in those circumstances where there
is even a slight risk that a diligent applicant could lose
patent term. Second, it introduces an objective time clock to
interpret the unusual administrative delay standard. Under the
objective time clock, the Patent Office is required to
compensate automatically and fully any delays beyond a stated
minimum. Under the provisions of Title II, every diligent
patent applicant is ensured at least seventeen years of patent
term form the date of grant, and in most cases, a term closer
to eighteen years.
Publication provisions
All of the major patent systems throughout the world, with
the exception of the United States, publish applications 18
months from the earliest effective filing date. In an age where
worldwide patent protection is becoming increasingly important,
the current system places U.S. inventors at a clear
disadvantage. For example, an invention that is the subject of
a patent application in Japan will be published in the Japanese
language after 18 months. Inventors reviewing the Japanese
patent application disclosures will have the benefit of the
early disclosure in Japan. This is especially beneficial to
domestic inventors in Japan as they are able to obtain an early
disclosure of the technology in the Japanese language.
Meanwhile, in the United States, domestic inventors do not have
the benefit of an English language publication of the
technology disclosed in an application for a patent until the
patent is actually issued. This situation provides foreign
inventors a clear advantage relative to U.S. domestic
inventors.
The early publication provisions of Title II would provide
American inventors with a prompt English-language publication
of relatively current technology. There would be no need to
await the grant of a patent to gain an understanding of the
technology it contains. This will speed disclosure of foreign
origin U.S. patent technology by at least 12 months. Further,
technology contained in patent applications that never mature
into patents would also be available. Our domestic inventors
would be able to take advantage of this earlier access to
English-language patent application technology and build upon
it more rapidly than they are able to do in our current system.
In this way, the Constitutional objective of ``promoting the
progress of * * * [the] useful arts'' would be advanced.
In addition, these provisions would promote more efficient
use of limited research and development resources by preventing
duplication of research, signaling promising areas of research,
and indicating which research topics are being pursued by
others. Further, with this law, inventors would be able to
avoid the commitment of substantial resources to develop an
invention based on an incomplete, erroneous assessment of its
patentability.
This legislation would also help to address the submarine
patent problem that has long plagued the U.S. patent system.
Submarine patents surface from applications that have been
pending in the PTO for many years. The belatedly granted
patents often cause disruptions in the market place because
competitors unknowingly regarded and adopted the later-patented
technology as commonplace publicly available information. Those
competitors are often required to negotiate a license with the
late-arriving patentee against a threat of a lawsuit to shut
down their operations if the terms are not right. Early
publication would provide the above competitors with the
necessary information to make the requisite business decisions
before entering a given field.
In return for the disclosure that would be made by virtue
of early publication, patentees would be given provisional
rights to obtain compensation for any use of an invention
disclosed in the application for patent for the time period
from publication to grant. In conjunction with a twenty-year
patent term, provisional rights would give eventual patentees
the opportunity to obtain at least 18\1/2\ years of patent
rights (provisional rights from publication at 18 months until
grant plus full rights upon grant) regardless of patent
pendency. If a provisional patent application is filed, or if
publication is requested earlier than eighteenth month, an
eventual patentee could obtain up to 19\1/2\ years or more of
patent rights.
Title II takes a significant additional step to protect
those who may not want their application published. It proposes
to amend title 35 to enable an independent inventor to defer
publication until three months after an initial patentability
determination by the PTO. To be eligible for this provision, an
inventor must certify that he or she has not also filed the
application in a foreign country (where it will inevitably be
published within 18 months). Situations are extremely rare
where an independent inventor who is actively seeking an early
PTO action will not obtain at least one patentability
determination (most will receive two) before three months prior
to the 18 months of pendency of his or her application.
However, this provision ensures that such an action will be
received by qualified independent inventors in a timely manner.
In this way, the independent inventor is given ample
opportunity to withdraw his application and pursue the trade
secret route when patentability is unlikely and the invention
can be kept secret.
The twenty-year term and the 18-month publication
provisions of Title II have the strong support of the current
and precious presidential administrations and five of the past
six living Commissioners of Patents and Trademarks. Title II
also has the backing of key industry groups like the National
Association of Manufacturers and the Biotechnology Industry
Organization as well as every major patent, copyright, and bar
association that has expressed an opinion on these topics.
Title III--Prior Domestic User Rights
Title III contains provisions originally contained in H.R.
2235, introduced by Subcommittee Chairman Carlos Moorhead and
Ranking Democratic Member Pat Schroeder, to provide a defense
of prior user rights against infringement of a patent. The
defense typically arises when an original inventor, who decided
not to patent a manufacturing process, uses the process as a
trade secret in a commercial endeavor. The original inventor is
later sued by a party, often a party outside the United States,
who subsequently patented the process. While U.S. law permits
the assertion of prior public use as a method of defeating a
patent under our first-to-invent system, it may not recognize
secret prior use as a defense to patent infringement.
An inventor may develop a process without ever considering
obtaining a patent, may not be able to afford obtaining a
patent, or may choose for strategic or personal reasons to
protect his process as a trade secret. One of the more famous
trade secrets is the formula for Coca-Cola which has never been
patented. While there is no federal trade secret law, there is
state common law protection for trade secrets and many states
have enacted statutes to protect trade secrets.
Under current law, choosing to practice an invention as a
trade secret has its risks because while prior public
disclosure of an invention defeats a patent, an undisclosed
invention which relies on trade secret protection may not.
Title III would eliminate this risk by granting a prior user,
in effect, a defense against infringement suits for practicing
the later patented invention. This personal defense does not
extend to later developed products and processes that infringe
the patent.
Title III would allow an inventor to choose whether to
patent an invention or use it as a trade secret by granting a
personal defense against an infringement suit to any inventor
who commercially used an invention at least one year before the
filing date of a patent for the very same invention issued to
another. This prior use defense leaves the patent intact for
assertion against all others. This balance is designed to
maintain incentives to patent new inventions without forcing
inventors to seek patents on every trivial advancement.
Under the current system, foreign patentees, who are
treated the same as U.S. inventors under our patent laws, may
obtain patents on processes or products protected by trade
secret laws in the U.S. and sue the original U.S. inventors for
infringement. However, U.S. inventors are not able to do the
same abroad because most of our foreign trading partners have
enacted prior uses rights as a means of protecting their
manufacturers.
Title IV--Inventor Protection
Title IV would create a new chapter 5 of Part I of title 35
of the United States Code designed to curb the deceptive
practices of invention marketing companies. It contains
provisions originally contained in H.R. 2419, introduced by
Subcommittee Chairman Carlos Moorhead and Ranking Democratic
Member Pat Schroeder.
These companies operate by advertising that inventors can
call a toll free number for an invention evaluation form, which
they claim is used to provide expert analysis of the
development possibilities of their inventions. The inventors
return the form with descriptions of the inventions, which
become the basis for contacts by salespeople at the marketing
companies. The next step is a costly product research report
which usually contains nothing more than boilerplate
information stating merely that the invention may qualify for a
design patent. Then the marketing companies attempt to convince
the inventor to buy marketing services--typically consisting of
a mere mention in a few press release and trade shows--at a
cost of up to $10,000.
The title aims to confront these problems by requiring
that: (1) contracts between marketing companies and inventors
contain standardized disclosures, including the number of
applicants rejected by the companies, statistics on the profits
actually earned by inventors, and contractual terms prescribing
payment conditions and termination rights and (2) marketing
companies submit quarterly reports to their subscribing
inventors.
Remedies against companies for failing to comply include
private civil actions for actual or $5,000 statutory damages,
the possibility of treble damages, and costs and attorneys'
fees. Criminal penalties of up to $10,000 are also provided.
Title V--Patent Reexamination Reform
In 1980, Congress enacted Public Law No. 96-517 to
authorize the reexamination of U.S. patents in the Patent and
Trademark Office. The reexamination provisions, set forth in 35
U.S.C. Sec. Sec. 301-307, and the rules governing reexamination
(37 CFR 1.501-1.570) became effective on July 1, 1981. Title V
contains provisions originally contained in H.R. 1732,
introduced by Chairman Moorhead and Ranking Democratic Member
Schroeder.
The reexamination statute permits the patent owner or any
other person to (1) cite to the Office patents or printed
publications as prior art pertaining to the validity of an
issued patent, and (2) request that the Office reexamine any
claim of that patent on the basis of the cited prior art.
Within three months of such a request or on his own initiative,
the Commissioner must determine whether a substantial new
question of patentability is raised by the prior art cited to
or discovered by him. If a substantial new question of
patentability is found, the Commissioner will issue an order
granting the reexamination. The patent owner is then given two
months to file a preliminary statement responding to the
reexamination order. If the order follows a request by a third
party to reexamine the patent, and the patent owner files a
preliminary statement responding to the order, the third-party
requester may, within two months, file a reply to the patent
owner's preliminary statement. The claim or claims in question
are then reexamined by the Office ``with special dispatch,''
but otherwise using essentially the same procedures applicable
to the examination of patent applications.
Reexamination proceedings, like the examination of patent
applications, are ex parte in nature (i.e., they exclude
participation by parties other than the Office and the patent
owner). In such proceedings, the patent owner may file
amendments to the specification, amend existing claims or
present new claims, conduct interviews and take appeals from
final adverse determinations of patentability by the Office.
Reexamination concludes with the issuance of a reexamination
certificate which cancels any claims found to be unpatentable,
and confirms the patentability of claims determined to be
patentable whether originally amended or newly submitted during
the reexamination.
Current reexamination procedures have been criticized as
being biased against ``third-party'' requesters (i.e., a party
other than the patent owner who requests reexamination). A
third-party requester cannot participate in the reexamination
proceeding beyond filing the initial request for reexamination.
Some have claimed that the ex parte nature of prosecution
following a reexamination order, while reducing the time and
cost involved, provides the patent owner with an unfair
advantage.
Conclusions of the Office in reexamination proceedings are
given considerable weight by a court in considering the
validity of reexamined claims of a patent. This has led some to
conclude that a third party's burden of proving invalidity in
litigation will be more difficult to sustain than in instances
where the patent was not involved in a reexamination. Many
third parties are accordingly reluctant to request
reexamination even when they posses relevant prior art. Thus,
reexamination has not realized its full potential as an
inexpensive and expeditious alternative to litigation.
The reexamination system established in 1980 needs to be
revised to make it a more effective and balanced procedure for
reviewing patent validity. This legislation would introduce
changes to the reexamination provisions to accomplish this
objective.
There are three main elements of the legislation. First,
the legislation provides third parties with a greater
opportunity to participate in reexamination proceedings while
maintaining most of the features which make reexamination a
desirable alternative to litigation in the federal courts
(e.g., low cost, expedited procedure). Second, the legislation
expands the basis and scope of reexamination to include review
of compliance with all aspects of 35 U.S.C., Sec. 112, except
the ``best mode'' requirement. Third, the proposed legislation
requires that the real party in interest be identified and
provides third-party requesters with certain appeal rights.
Exercising some of these rights (e.g., filing of an appeal to
the Federal Circuit), would be conditioned on the third-party
requester accepting a statutory estoppel against subsequent
review, either by the Office or by a federal court, of the
issues that were or could have been raised in the reexamination
proceeding. These limits, along with certain others introduced
in the legislation, would ensure that reexamination proceedings
could not be used to harass patent owners and would not be
available where court action makes reexamination unnecessary.
The proposed modifications would not unreasonably increase
the cost, complexity or duration of reexamination proceedings,
nor would they impose unreasonable burdens on the Office or
patentees. Reexamination proceedings would continue to be based
largely on the ex parte structure of regular examination. The
issues considered during reexamination would continue to be
those routinely considered by examiners in the course of
regular examination procedures. Most importantly, however,
these modifications would increase third party use of the
reexamination system as a meaningful, inexpensive and
expeditious alternative to patent validity litigation.
Title VI--Miscellaneous Patent Provisions
Title VI contains various technical, clarifying and
conforming changes to our patent law that are not related to
any of the five major titles of H.R. 3460.
Hearings
There have been six days of hearings and 44 witnesses who
have testified on the provisions of H.R. 3460.
The Committee's Subcommittee on Courts and Intellectual
Property held two days of hearings on Title I of H.R. 3460 on
September 14, 1995, and March 8, 1996. Testimony was received
from The Honorable Bruce A. Lehman, Assistant Secretary of
Commerce and Commissioner of Patents and Trademarks, Patent and
Trademark Office, U.S. Department of Commerce; Dr. Harold
Seidman, Senior Fellow, and Alan Dean, Fellow, from the
National Academy of Public Administration; Michael K. Kirk,
Executive Director of the American Intellectual Property Law
Association; Herbert C. Wamsley, Executive Director of the
Intellectual Property Owners; Donald R. Dunner, Chair of the
Section on Intellectual Property Law Section of the American
Bar Association; The Honorable Dana Rohrabacher,
Representative, California 45th District; The Honorable Duncan
Hunter, Representative, California, 52nd District; Mr. Timothy
Reardon, Congressional Liaison, Patent & Trademark Office
Society; Mr. Robert M. Tobias, National President, National
Treasury Employees Union; Mr. Ronald J. Stern, President,
Patent Office Professional Association; Mr. Howard Friedman,
President, The Trademark Society, National Treasury Employees
Union, Chapter 245; and Ms. Catherine Simmons-Gill, President,
International Trademark Association.
The Committee's Subcommittee on Courts and Intellectual
Property held two days of hearings on Title II and Title V of
H.R. 3460 on June 8, 1995 and November 1, 1995. Testimony was
received from The Honorable Martin Frost, Congressman from
Texas, 24th District; The Honorable Bruce A. Lehman, Assistant
Secretary of Commerce and Commissioner of Patents and
Trademarks, Patent and Trademark Office, U.S. Department of
Commerce; Mr. Gary L. Griswold, Intellectual Property Owners;
Mr. Michael Kirk, American Intellectual Property Law
Association; Mr. Thomas E. Smith, American Bar Association,
Section on Intellectual Property Law; Mr. Andrew Kimbrell,
Director, International Center for Technology Assessment; Mr.
Kenneth Addison, Oklahoma Inventors Congress; Dr. Raymond
Damadian, President and Chairman, Fonar Corporation; The
Honorable Dana Rohrabacher, Representative, California, 45th
District; Mr. James L. Fergason, Inventor, Founder and
President of Optical Shields, Incorporated, Menlo Park,
California; Mr. Mark A. Lemley, Assistant Professor, School of
Law, University of Texas at Austin; Mr. Thomas W. Buckman,
Inventor, Vice President, Patents and Technology, Illinois Tool
Works, Incorporated, Glenview, Illinois, representing the
National Association of Manufacturers; Mr. William D. Budinger,
Inventor, Chairman & Chief Executive Officer, Rodel,
Incorporated, and Chair of the Technology and Innovation
Section of the White House Conference on Small Business; Mr.
Edward Stead, Vice President, General Counsel & Secretary,
Apple Computer, Incorporated, testifying on behalf of the
Information Technology Industry Council; Mr. Roger May,
Assistant General Counsel, Ford Motor Company, Member of the
Michigan Patent Law Association; Mr. Stephen Barram, Inventor,
Chief Executive Officer, Integrated Services, Incorporated,
Lake Oswego, Oregon; Dr. Raymond Damadian, Inventor, President
and Chairman, Fonar, Incorporated, Inventor and Manufacturer of
Magnetic Resonance Imaging (MRI); Mr. James Chandler, President
of the National Intellectual Property Law Institute,
Washington, D.C.; Dr. Robert Rines, Inventor, Founder, and
former President of the Franklin Pierce Law Center; Ms. Diane
L. Gardner, Patent Agent, Molecular Biosystems, Incorporated,
and President of the Intellectual Property Law Society at
Thomas Jefferson School of Law; Dr. Paul Crilly, Inventor, and
Associate Professor of Electronic Engineering University of
Tennessee, Knoxville; and Dr. David L. Hill, President, Patent
Enforcement Fund, Incorporated, Southport, Connecticut.
The Committee's Subcommittee on Courts and Intellectual
Property held one day of hearings on Title III of H.R. 3460 on
October 26, 1995. Testimony was received from Mr. Dieter
Hoinkes, Senior Counsel, Office of Legislative and
International Affairs, Patent and Trademark Office, U.S.
Department of Commerce; Mr. Karl Jorda, Professor, Franklin
Pierce Law Center; Mr. Richard Schwaab, Adjunct Professor,
George Mason Law School and Partner, Foley & Lardner; Mr. Gary
L. Griswold, President of the Intellectual Property Owners; Mr.
Robert A. Armitage, President, American Intellectual Property
Law Association (AIPLA); and Mr. William D. Budinger, Chairman
and Chief Executive Officer, Rodel, Incorporated.
The Committee's Subcommittee on Courts and Intellectual
Property held one day of hearings on Title IV of H.R. 3460 on
October 19, 1996. Testimony was received from G. Lee
Skillington, Counsel, Office of Legislative and International
Affairs, Patent and Trademark Office, United States Department
of Commerce; Senator Joseph I. Lieberman, the sponsor of S.
909, the Senate companion bill to H.R. 2419; Dr. William D.
Noonan, Klarquist, Sparkman, Campbell, Leigh & Whinston; Mr.
Donald R. Dunner, Chair, Section of Intellectual Property Law
Section, American Bar Association; Mr. Michael Kirk, Executive
Director, American Intellectual Property Law Association; and
Mr. Robert Lougher, Inventors Awareness Group.
Committee Consideration
On May 15, 1996, the Subcommittee on Courts and
Intellectual Property considered a Committee Print
incorporating five bills pending before the Subcommittee (PTO
Government Corporation, Patent Application Publication, Prior
User Rights, Reexamination Reform and Inventor Protection). The
Committee Print was favorably reported to the Committee on the
Judiciary by voice vote, a quorum being present. A bill
containing the Committee Print favorably reported by the
Subcommittee was introduced as H.R. 3460. On June 11, the
Committee on the Judiciary considered H.R. 3460. Two amendments
were offered: (1) Congressman Moorhead offered an en bloc
amendment making various technical, clarifying and conforming
changes, and (2) Congressmen Hyde and Conyers offered an
amendment to the short title of H.R. 3460 to rename the bill
the ``Moorhead-Schroeder Patent Reform Act.'' Both of the
amendments passed by voice vote, a quorum being present and the
bill H.R. 3460, as amended, was ordered favorably reported by
voice vote, a quorum being present, to the House.
Committee Oversight Findings
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 2(l)(3)(C) of House rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 2(l)(C)(3) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to the bill, H.R. 3460, the following
estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 11, 1996.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3460, the
Moorhead-Schroeder Patent Reform Act.
Enactment of H.R. 3460 would affect direct spending.
Therefore, pay-as-you-go procedures would apply to the bill.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
James L. Blum
(For June E. O'Neill, Director).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
1. Bill number: H.R. 3460.
2. Bill title: Moorhead-Schroeder Patent Reform Act.
3. Bill status: As ordered reported by the House Committee
on the Judiciary on June 11, 1996.
4. Bill purpose: H.R. 3460 would establish the United
States Patent and Trademark Office (PTO) as a government
corporation and make a number of other changes in laws
governing the issuance of patents and related procedures.
Title I would establish a wholly owned government
corporation to replace the existing PTO, an agency within the
Department of Commerce. The new government corporation would
retain the same name and would be subject to the policy
guidance of the Department of Commerce but would not be subject
to supervision by any department. The bill would:
Authorize the PTO to collect and spend all of the
user fees authorized under current law to the extent
provided in appropriations acts;
Establish positions for a Deputy Commissioner of
Patents and a Deputy Commissioner of Trademarks to
serve as policy and management advisors to the
Commissioner of the PTO;
Require the Commissioner of the PTO to appoint an
inspector general;
Exempt the PTO from the statutory and administrative
ceilings on the number of employees the agency can
hire;
Exempt the PTO from most personnel laws governing
federal agencies;
Establish a 12-member Management Advisory Board to
review the performance and policies of the PTO and to
prepare an annual report to the Congress and the
President on such performance; and
Provide the new corporation with borrowing authority
subject to prior approval in appropriations acts.
Under current law the PTO grants a patent for a term of 20
years from the date of filing. The applicant, however, does not
have protection from patent infringement until the patent is
issued by the PTO. Title II would establish procedures to
ensure that administrative delays by the PTO in granting a
patent would not eat away at an applicant's patent term. Title
II also would require the PTO to publish patent applications
within 18 months of filing regardless of whether a patent has
been granted. The bill would authorize the PTO to adjust
certain fees to recover the cost of early publication.
If an inventor has used an invention at least one year
prior to being patented by another party, the inventor may
continue to use it without infringing on the patent. Title III
would recognize such private prior use as a defense against
patent infringement.
Invention marketing companies evaluate the market potential
of inventions and offer patent and marketing services to
individual inventors. Title IV would require these companies to
include standardized disclosures in contracts between the
companies and inventors. The title also would require these
companies to submit quarterly reports to their subscribing
inventors. Civil penalties would be established for violations.
Under current law an owner of a patent, the PTO
Commissioner, or a third party can request the PTO to reexamine
the validity of an existing patent. Title V would modify the
current reexamination procedures to allow the Commissioner to
review comments submitted by a third party on the merits of a
patent. The title also would grant third-party requestors
certain appeal rights but would limit the number of possible
reviews by the PTO or a federal court. In addition, the bill
would authorize the PTO to fine patent owners if they fail to
respond to a request for reexamination of their patent.
The remedy for unauthorized manufacture or use of patented
inventions by the United States government is a suit in the
U.S. Court of Federal Claims for reasonable and just
compensation. H.R. 3460 would expand the definition of
reasonable and just compensation to include fees of attorneys
and expert witnesses if the owner of the patent is an
individual, a nonprofit organization, or a company with less
than 500 employees.
5. Estimated cost to the Federal Government: CBO estimates
that enacting H.R. 3460 would result in net discretionary
spending by the PTO totaling about $1.3 billion over the 1997-
2002 period, assuming appropriations of the necessary amounts.
The bill would result in a net decrease in direct spending of
$159 million over the same period. The estimated budgetary
impact of the bill is summarized in the following table.
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending under current law:
Estimated authorization level 1................ 82 82 82 82 82 82 82
Estimated outlays.............................. 26 54 78 74 74 74 74
Proposed changes:
Estimated authorization level.................. ..... 17 22 25 29 534 340
Estimated outlays.............................. ..... 5 18 22 26 531 336
Estimated spending under H.R. 3460:
Estimated authorization level 1................ 82 99 104 107 111 616 422
Estimated outlays.............................. 26 59 96 96 100 605 410
CHANGES TO DIRECT SPENDING
Patent and Trademark Office:
Estimated budget authority..................... ..... -17 -22 -25 -29 -34 -40
Estimated outlays.............................. ..... -17 -22 -25 -29 -34 -40
Claims, judgments, and relief acts:
Estimated budget authority..................... ..... 3 1 1 1 1 1
Estimated outlays.............................. ..... 3 1 1 1 1 1
----------------------------------------------------------------------------------------------------------------
1 The 1996 level is the amount appropriated for that year. The estimated authorization levels for 1997-2002
reflect CBO baseline estimates for the PTO, assuming no adjustment for inflation.
The costs of this bill fall within budget function 370.
6. Basis of estimate: Under current law the PTO collects a
number of user fees that are spent by the agency to the extent
provided in advance in the appropriations acts. CBO assumes
that over time the PTO would be authorized to spend all of the
fees that the agency collects, except for the fees established
by the Omnibus Budget Reconciliation Act of 1990. Hence, our
current law projections show the estimated authorization levels
for fiscal years 1997-2002 net of the user fees estimated to be
collected and spent by the agency.
Spending subject to appropriation
H.R. 3460 would provide the PTO with the authority to issue
bonds or other forms of indebtedness for purchase by the
Treasury, subject to prior approval in appropriations acts.
Based on information from the PTO, CBO estimates that the
agency would issue bonds for purchase by the Treasury of about
$500 million in fiscal year 2001 and $300 million in fiscal
year 2002, assuming appropriation of the necessary amounts. The
proceeds would be spent in those years to buy an estimated 2
million square feet of office space.
As explained below, enacting H.R. 3460 would result in
collections of additional user fees, which would be reflected
as a net decrease in direct spending. The bill would authorize
the agency to collect an estimated $167 million in additional
fees over the 1997-2002 period, and CBO assumes that the agency
would be authorized in appropriations acts to spend these
additional fees. Because CBO expects a lag of several months
between the time the PTO collects and spends the fees, we
estimate that the agency would only spend $138 million of the
fees over the 1997-2002 period.
Direct spending
Publication Fees. H.R. 3460 would authorize the PTO to
raise existing fees or establish a new fee to offset the cost
of publishing the patent applications. Because the PTO would
not be allowed to spend the additional fees without approval in
appropriations acts, and collections would reduce direct
spending. Based on information from the PTO, CBO estimates that
the PTO would collect about $145 million in publication fees
over the 1997-2002 period.
Reexamination Fee. H.R. 3460 would ease restrictions on
reexamination proceedings initiated by third parties, thus
causing an increase in the number of proceedings. Based on
information from the PTO, CBO estimates enacting H.R. 3460
would nearly double the number of reexamination requests,
resulting in additional fee collections of about $22 million
over the 1997-2002 period.
The bill also would authorize the PTO to collect a new
penalty fee if a patent owner does not respond to a request for
a reexamination. CBO expects that any receipts from this new
fee would not be significant.
Claims, Judgments, and Relief Acts. According to the United
States Court of Federal Claims, about 30 cases of patent
infringement are pending against the federal government at any
one time. If H.R. 3640 were enacted, the Department of Justice
would expect the number of cases to increase slightly because
the plaintiffs' costs for attorneys and expert witnesses would
be paid by the federal government under certain circumstances.
Based on the value of past judgments, CBO estimates that
enacting this bill would increase direct spending by about $3
million in 1997 and about $1 million in subsequent years. The
estimate for 1997 is slightly larger because of a recent
judgment against the United States by a company that would meet
the qualifications stated in this bill.
7. Pay-as-you-go considerations: Section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985 sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts through 1998. CBO estimates that enacting
H.R. 3460 would decrease direct spending by about $14 million
in fiscal year 1997 and $21 million in fiscal year 1998 from
the increased collections of certain fees, which would be
partly offset by increased spending for claims and judgments.
The following table shows the estimated pay-as-you-go impact of
the bill.
[By fiscal year, in millions of dollars]
------------------------------------------------------------------------
1996 1997 1998
------------------------------------------------------------------------
Change in outlays............................ 0 -14 -21
Change in receipts........................... ....... (\1\) .......
------------------------------------------------------------------------
\1\ Not applicable.
8. Estimated impact on State, local, and tribal
governments: H.R. 3460 contains no intergovernmental mandates
as defined in Public Law 104-4 and would have no direct impact
on the budgets of state, local, or tribal governments.
9. Estimated impact on the private sector: H.R. 3460 would
impose new private-sector mandates, as defined in Public Law
104-4, by authorizing the PTO to raise or assess new fees for
certain services it provides, and by placing requirements on
providers of invention development services. First, the bill
would impose higher costs on private-sector entities that use
PTO services by enabling the Office to assess fees to offset
the cost of publishing patent applications. Second, the bill
would mandate that every contract for invention development
services between invention developers and inventors be in
writing and contain specific language. In addition, H.R. 3460
would require invention developers to produce and deliver
reports containing specific information about the status of
services provided to their customers at least once every three
months throughout the term of the contract.
CBO estimates that the costs associated with new private-
sector mandates in the bill would fall below the $100 million
threshold specified in Public Law 104-4. During the first five
years that the mandates were effective, payments of new fees
would total, on average, about $20 million a year, and the
costs imposed on providers of invention development services
would not be significant because the additional requirements
are modest and the industry is small.
10. Previous CBO estimate: None.
11. Estimate prepared by:
Federal cost estimate: Rachel Forward and Jonathan
Womer;
State and local government impact: Leo Lex;
Private-Sector Impact: Matthew Eyles.
12. Estimate approved by: Robert A. Sunshine, for Paul N.
Van de Water, Assistant Director for Budget Analysis.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that H.R.
3460 will have no significant inflationary impact on prices and
costs in the national economy.
Section-by-Section Analysis and Discussion
Section 1.--Short title
This section entitles the Act as the ``Moorhead-Schroeder
Patent Reform Act.''
Section 2.--Table of contents
This section sets forth the table of contents for the bill.
title i--patent and trademark office government corporation
Section 101.--Short title
This section entitles this title the ``Patent and Trademark
Office Government Corporation Act of 1996.''
subtitle a--united states patent and trademark office
Section 111.--Establishment of Patent and Trademark Office as a
government corporation
This section amends section 1 of title 35, United States
Code (35 U.S.C. Sec. 1) to establish the United States Patent
and Trademark Office (hereinafter the PTO or the Office) as a
wholly owned government corporation under chapter 91 of title
31, United States Code (31 U.S.C. Sec. 9101 et seq.). The
Office will continue to be under the policy direction of the
Secretary of Commerce. As a body corporate and government
agency, the Office will have the authority to direct its
personnel, procurement, budget, and similar administrative
functions in a manner consistent with the flexibilities
required for business-like operations, without supervision by
any department unless expressly provided for in the Act, but
subject to the specific oversight provisions contained in the
Act. Establishing the PTO as a separate entity under the policy
direction of the Secretary of Commerce permits the Office to
establish its own rules, regulations, and other processes. It
is anticipated that the Office will achieve savings and
efficiencies from its status as a wholly owned government
corporation separate from the rules and procedures of
departments and agencies of the United States Government, while
allowing the Administration to achieve an integrated approach
on patent and trademark policy an on general policies affecting
jobs, trade and technology.
Subsection (a) establishes the United States Patent and
Trademark Office as a wholly-owned government corporation under
the policy direction of the Secretary of Commerce on all
matters within his purview such as international treaties and
agreements concerning patents and trademarks, domestic patent
and trademark legislation, and issues involving interagency
coordination.
Subsection (b) requires that the Office maintain its
offices in the Washington, D.C. metropolitan area for purposes
of service of process and authorizes the Office to establish
satellite offices elsewhere as well. Venue in civil actions to
which the Office is subject is established in the district in
which the principal office is located.
Section 112.--Powers and duties
This section amends section 2 of title 35, United States
Code (35 U.S.C. Sec. 2) to provide the Office with the powers
and authorities necessary to carry out its functions as a
wholly owned government corporation.
Subsection (a)(1) provides that the PTO, as a sovereign
agency of the United States, will be responsible for the
granting and issuing of patents and the registering of
trademarks. These functions are transferred to the Office under
Section 123 of the Act. Article I, Section 8, paragraph 8 of
the Constitution of the United States gives to the Congress the
power to promote the progress of science and the useful arts,
by securing for limited times to authors and inventors the
exclusive right to their respective writings and discoveries.
The Constitution leaves to the discretion of the Congress the
manner in which those rights are provided. Congress has
authority under the Commerce Clause of the Constitution to
provide a uniform trademark law for the United States and to
designate a body responsible for maintaining a register for
protected marks. The PTO, as a wholly owned government
corporation, will be able to carry out the functions necessary
for the granting and issuing of patents and the registering of
trademarks more efficiently and cost effectively than would be
the case if the Office were subject to the limitations placed
on taxpayer funded Departments and Agencies.
Subsection (a)(2) authorizes the Office to carry out
studies, programs, exchanges of products and services regarding
domestic and international patent and trademark law. In
addition, the Office is responsible for its own administration
and for other functions that are assigned to the Office by law,
including any programs involving the recognition,
identification, assessment, or forecast in connection with
patented technology and its utility to industry.
Subsection (a)(3) makes the PTO responsible for cooperative
studies and programs with foreign patent and trademark offices
and international organizations related to the granting and
issuing of patents and the registration of trademarks. The
Office is authorized to transfer up to $100,000 to the State
Department, with the concurrence of the Secretary of State, for
making payments to international intergovernmental
organizations, such as the World Intellectual Property
Organization, for studies and programs promoting international
cooperation in connection with patents, trademarks, and related
matters. The payments referred to may be in addition to other
payments or contributions to these international
intergovernmental organizations.
Subsection (a)(4) makes the PTO responsible for
disseminating to the public information about patents and
trademarks. This is done currently though the Patent and
Trademark Depository Library program, the sale of electronic
data to information vendors, and the provision of public access
through the World Wide Web (the commercial multi-media
component of the Internet, or national and global information
infrastructure), as well as through other programs for the
public. It is expected that these programs would continue and
others would be developed. In fulfilling the responsibility set
out under Subsection (a)(4), the Office should pursue policies
that most effectively, efficiently, and broadly disseminate
patent and trademark information. In so doing, the Office
should continue to balance PTO direct services with its program
that provides bulk data in electronic form for a fee to any
member of the public wishing to buy it. The PTO program has
been one of the most successful in government in terms of
broad, far-reaching, efficient and effective dissemination of
information. With regard to direct services, the Office should
continue the policy which provides, for a fee, onsite direct
access to the Automated Patent System (APS) in the public
search room and in the Patent and Trademark Depository
Libraries; and the policy which provides, for no cost to the
user, access via the internet to bibliographic records of
patents issued over the most recent 20 year period. The Office
should continue the policy which provides bulk patent and
trademark text and image data in electronic form, for a fee
which is based on the cost of dissemination. A vigorous,
competitive private sector patent information dissemination
industry has emerged as a direct result of the Patent and
Trademark Office's excellent bulk dissemination program. The
PTO should proceed with caution before creating any direct-to-
end-user retail services because they could undercut the value
of the bulk dissemination program and the value of the patent
information products and services now sold.
Subsection (b) identifies the specific powers granted the
PTO to carry out its functions efficiently and in a cost
effective manner.
Subsection (b)(1) specifies that the Office shall have
perpetual succession.
Subsection (b)(2) authorizes the PTO to adopt and use a
corporate seal that is to be judicially noticed. All letters
patent, trademark registration certificates, and other official
papers issued by the Office are to be authenticated with the
seal.
Subsection (b)(3) provides that the Office may sue and be
sued in its own name. Wholly owned government corporations
generally have ``sue and be sued'' status which is specific to
the body corporate. The provision also specifies that the PTO
generally may be represented by its own attorneys. The
provisions regarding implementation of the Office's authority
to sue and be sued are in section 7 of this title, which allows
the Justice Department to represent the Office in lieu of the
Office's own attorneys at the discretion of the Attorney
General.
Subsection (b)(4) authorizes the PTO to indemnify all
officers, employees and agents of the Office, including the
members of the Management Advisory Board, against liabilities
and expenses incurred within the scope of their employment.
Subsection (b)(5) authorizes the PTO to adopt, amend, and
repeal any bylaws, rules, regulations, and determinations that
govern the conduct of its business and the exercise of the
powers granted to the Office by law. The adoption, amendment,
and repeal of bylaws, rules, regulations, and determinations
are to be made after notice and an opportunity for full
participation by interested public and private parties. The
purpose of any such adoption, amendment, or repeal should be to
facilitate and expedite the processing of patent and trademark
applications, particularly through the use of electronic media.
The provisions of section 122 regarding the confidential
treatment of patent applications are to be adhered to in any
expedited processing. With regard to any bylaws, rules,
regulations, and determinations regarding the recognition and
conduct of agents, attorneys, or other persons representing
applicants or other parties before the Office (the bar of the
PTO), the PTO is expressly authorized to require, before
granting recognition to anyone who wishes to represent others
before the Office, that party show that he or she is of good
moral character and reputation and is qualified to render
applicants and others valuable service, advice, and assistance
in procedures before the office. The power to recognize
includes the power to revoke recognition once granted in
accordance with the rules and regulations governing the conduct
of those authorized to practice before the Office.
Subsection (b)(6) gives the PTO broad authority to manage
its own real and personal property, or any interest in
property. The Office is authorized to acquire, construct,
purchase, lease, hold, manage, operate, improve, alter, and
renovate any real, personal, or mixed property or any interest
in such property, that it considers necessary to carry out the
responsibilities assigned to it.
Subsecton (b)(7) provides that the PTO may make purchases,
contract for the construction, maintenance, or management and
operations of facilities, and contract for supplies or services
without regard to (1) the Federal Property and Administrative
Services Act of 1949 (``FPAS'') (40 U.S.C. Sec. 471 and
following), (2) the Public Buildings Act of 1949 (40 U.S.C.
Sec. 601 and following), and (3) the Stewart B. McKinney
Homeless Assistance Act (the McKinney Act) (42 U.S.C.
Sec. Sec. 11301 and following). Subsections (b)(7) (A) and (B)
provide the PTO with authorities to oversee its own
acquisitions.
The FPAS contains many detailed requirements that are not
appropriate for businesslike operations of a fee-funded
government corporation and that often impose substantial
administrative costs. For example, the photocomposition
procurement for the Patent and Trademark Office took over two
and one-half years to complete resulting in wasted Office
resources, necessitating sole-source extensions, and revisions
of requirements to keep pace with technology advances. The
Office, as a nontaxpayer-funded, fee-funded government
corporation, has a responsibility to minimize operating costs
while assuring a fair and competitive process that reduces the
overall cost of acquisitions. The PTO is expected to follow
prudent business practice that achieve the objectives of FPAS,
such as obtaining effective competition, ensuring that prices
for supplies and services are fair and reasonable, and that
delivery times are reasonable. The Office remains subject to
the oversight provisions in the Act, as well as existing ethics
in government Acts.
The Public Buildings Act gives the Administrator of the
General Services Administration (``GSA'') exclusive authority
to acquire and manage office space for federal agencies. While
this system may be justified for taxpayer-funded agencies, it
is inappropriate and is not cost-effective when applied to
nontaxpayer-funded government corporations which are created to
operate intrinsically under business-like principles. GSA may
not always be able to respond to the PTO's needs in a timely
manner. To ensure timely and cost-effective space acquisition
and management, the Office must have authority to act on its
own behalf in appropriate circumstances. In addition, GSA
imposes surcharges upon agencies for the provision of its
services. Funds used to pay these surcharges could be better
used by the PTO in conducting its business. Mandatory, rather
than discretionary, GSA authority conflicts with the Office's
need to acquire its own space in a businesslike manner. This
proposal is consistent with the current trend for GSA to be an
asset management agency rather than a provider of services.
The McKinney Act requires that real property being disposed
of by a federal agency must be screened by the Department of
Housing and Urban Development to determine whether the property
may be used by agencies assisting the homeless. Because any
real property that the PTO might acquire would be paid for with
patent and trademark fees, rather than with taxpayer moneys, it
is inappropriate to apply the McKinney Act to disposal of PTO
property.
Subsection (b)(7)(B) exempts the PTO from the requirements
for printing and binding in sections 501-517 of title 44,
United States Code (44 U.S.C. Sec. Sec. 501-517) and from the
requirements of executive and judiciary printing and binding in
sections 1101-1123 of title 44, United States Code (44 U.S.C.
Sec. Sec. 1101-1123). There are instances when it may be more
efficient for the Office to have access to alternative printing
sources. For example, the Office is developing the capability
to print trademark registration certificates directly from its
automated computer systems, making it unnecessary to obtain
outside printing services. Without the exemption, the Office
would be unable to realize the cost savings associated with
this and future plans for technological improvement.
Subsection (b)(8) authorizes the PTO to use services,
equipment, personnel and facilities of other United States
departments, agencies, and instrumentalities with their consent
and with reimbursement. The Office is also authorized to
cooperate with other departments, agencies, and
instrumentalities by allowing them the use of services,
equipment, and facilities of the Office in a like manner.
Subsection (b)(9) authorizes the PTO, if it deems it
appropriate, to obtain services from the Administrator of
General Services under the same conditions that those services
are made available to other agencies of the United States.
Subsection (b)(10) authorizes the PTO to use the services,
records, facilities, or personnel of any State or local
government agency or instrumentality, any foreign government,
or any international organization, with their consent and that
of the United States, to perform functions on its behalf.
Subsection (b)(11) provides the PTO with the authority to
determine the character of, and necessity for, its financial
obligations and expenditures and the manner in which they are
incurred, allowed, and paid, subject to statutes expressly
applicable to wholly owned government corporations; title 35,
United States Code; and the Act of July 5, 1946 (commonly
referred to as the ``Trademark Act of 1946''). The PTO's use of
its funds, therefore, would be subject only to the restrictions
in its enabling law and in the relevant provisions of the
Government Corporation Control Act and other laws specifically
applicable to wholly owned government corporations. The
Comptroller General no longer would certify the Office's
obligations and expenditures. The Office would retain this
authority. This method of operation is appropriate since the
Office's funds derive from its own revenues and receipts, not
from taxpayer funds.
Subsection (b)(12) authorizes the PTO to retain and use of
all of the revenues, receipts, and other monies that arise from
activities of the Office for the operations of the Office,
subject to oversight provisions of the Act and the Government
Corporation Control Act. Subsection (b)(12) clarifies that the
Office's funding is derived principally from fees paid for the
Office's services, which are set by Congress. Accordingly,
Congress directly controls the budget of the PTO. Revenues are
not derived from appropriated, general taxpayer funds. This
statement recognizes current conditions of the Patent and
Trademark Office. Since fiscal year 1993, the Office has relied
upon user fees for all of its revenues. Except for restrictions
on required surcharge fees under the provisions of section
10101 of the Omnibus Budget Reconciliation Act of 1990 (35
U.S.C. Sec. 41 note), all funding is available to the Office
for the conduct of its affairs. The authority granted to the
PTO in this charter is consistent with that prevailing prior to
incorporation under this Act, excepting certain restrictions
associated with the appropriation and apportionment processes.
Exemption from the apportionment process affords flexibility to
the PTO in the management of its financial resources to enhance
operating efficiencies.
Subsection (b)(13) gives the PTO the priority of the United
States in connection with the payment of any debts from
bankrupt, insolvent, and decedents' estates.
Subsection (b)(14) authorizes the PTO to accept gifts or
donations of services and property. This provision mirrors
those of 12 other Executive agencies and currently applies to
the Patent and Trademark Office. The requirements of, and
regulations establishing standards for ethical conduct for
executive branch employees under Appendix 5 of title 5, United
States Code, including those regarding the acceptance of gifts,
will continue to apply to officers and employees of the PTO as
will the provisions of Chapter 11 of Title 18 of the United
States Code.
Subsection (b)(15) authorizes the PTO to execute any legal
instruments necessary and appropriate for the exercise of its
powers and authorities. Such execution shall conform to the
bylaws, rules and regulations established by the office for the
exercise of such powers and authorities.
Subsection (b)(16) authorizes the PTO, either by contract
or through self-insurance, to provide for liability insurance
and insurance against loss in connection with any of its
property, other assets, or operations.
Under subsection (b)(17), the PTO's funds will be the
source of payment of any settlement of or judgment on claims
against the Office.
Section 113.--Organization and management
This section amends section 3 of title 35, United States
Code, substituting new language. Subsection (a)(1) vests the
management of the PTO in a Commissioner of Patents and
Trademarks (the ``Commissioner'') who is appointed by the
President, by and with the advice and consent of the Senate.
The Commissioner must be a person who, by reason of knowledge
of patent or trademark law and management experience, is
specially qualified to manage the Office. While it is the
intent of the Act that the PTO and the Commissioner control the
policies, practices and operation of the Office in accordance
with Presidential and Congressional direction and expectations,
it is also the intent of the Act that whomever the President
appoints, that individual be uniquely qualified to manage a
government corporation that performs the important and
essential function of granting and issuing of patents and
registering trademarks.
Subsection (a)(2) establishes the duties of the
Commissioner to include the managing and directing of the PTO,
which includes the granting and issuing of patents and the
registration of trademarks. Those duties are to be performed in
a fair, impartial and equitable manner. This responsibility
includes the establishment of the organization of the Office,
the number and types of its offices and the filling thereof,
ensuring equitable term and other properties inherent in
patents issued by the Office, and the definition of the duties
assigned to employees and officers of the Office. The
Commissioner is charged with advising the President, through
the Secretary of Commerce, regarding all activities the Office
undertakes on treaties and executive agreements entered into by
the United States or that are related to cooperative programs
with authorities of foreign governments regarding the granting
of patents and the registration of trademarks. In addition, the
Commissioner is to recommend to the President, through the
Secretary of Commerce, any changes in the law or in policy that
might improve U.S. citizens abilities to secure and enforce
patent rights and trademark rights in the United States and
abroad.
On issues involving the operation of the Office, the
Commissioner is to consult with the Management Advisory Board
(the ``Advisory Board''), established in section 5 of title 35,
United States Code (35 U.S.C. Sec. 5). The Commissioner also
shall consult with the Advisory Board before submitting budget
proposals to the Office of Management and Budget, before
changing patent or trademark regulations, and before proposing
to Congress that it change patent and trademark user fees.
A program for identifying national security positions and
providing for appropriate security clearances must be
established by the Commissioner in consultation with the
Director of the Office of Personnel Management.
Subsection (a)(3) sets the Commissioner's term at 5 years
and whatever time thereafter is required for a successor to be
appointed and confirmed and actually assume the office. The
number of terms as individual may serve as Commissioner is not
limited. The 5-year term ensures the continuity of the
management of the Office, and is intended to foster the
selection of a non-political appointee who is qualified to
manage the detailed operations of the Office and to look after
the integrity of the examining process.
Subsection (a)(4) requires that before assuming office, the
Commissioner take an oath to discharge faithfully the duties of
the Commissioner as the head of an agency of the United States.
Subsection (a)(5) sets the Commissioner's compensation at
the rate of basic pay in effect for level II of the Executive
Schedule under section 5313 of title 5, United States Code (5
U.S.C. Sec. 5313).
Subsection (a)(6) prohibits removal of the Commissioner by
the President except for cause. This restriction buttresses the
non-political nature of the position to foster the selection of
a Commissioner by the President who will be best qualified to
oversee the fiscal elements of the office and who will be
independently concerned with the integrity of the examination
process. All national policy concerning patent and trademark
protection remains vested in the Secretary of Commerce, who
serves at the pleasure of the President. Therefore, the removal
restriction does not preclude the President from dismissing an
officer for failure to carry out his policies and accordingly
does not impede the President's ability to perform his
constitutional duty.
Subsection (a)(7) requires the Commissioner to designate an
officer of the PTO who will be vested with authority to act as
Commissioner in the event of absence or incapacity of the
Commissioner. This assures the continuity of management of the
Office.
Subsection (b) deals with the officers and employees of the
PTO other than the Commissioner. Subsection (b)(1) requires the
Commissioner to appoint a Deputy Commissioner for Patents and a
Deputy Commissioner for Trademarks, whose terms are co-
extensive with the Commissioner's term. Each person is to have
had demonstrated experience in the field of law for which he or
she will be responsible. The Deputy Commissioner for Patents
and the Deputy Commissioner for Trademarks are to advise the
Commissioner on all activities of the Office that affect the
administration of the section of the Office for which that
Deputy is responsible.
Subsection (b)(2) requires the Commissioner to appoint
officers, employees (including attorneys) and agents whom the
Commissioner deems necessary to carry out the functions of the
Office. The Commissioner is authorized to fix the rate of
compensation for the officers and employees, except as the
provisions of subsection (e) provide. Finally, the subsection
authorizes the Commissioner to define the authority and duties
of the Office's officers and employees and to delegate the
powers required to carry out those duties. Subsection (b)(2)
also makes it clear that its is Congress' intent that no
administrative or statutory limitations on the number of
positions or the number of personnel are to apply to the PTO
and the none of the positions or personnel of the Office are to
be taken into account in applying any such limitation to other
departments and agencies of the United States Government.
Subsection (c) prohibits, unless otherwise provided by law,
fixing the annual rate of basic pay for any officer or employee
of the PTO at a rate that exceeds the annual rate of basic pay
in effect for the Commissioner for the year concerned. The
total compensation (above and beyond the rate of basis pay,
e.g., including bonuses and merit rewards) payable to any
officer or employee also may not exceed the annual rate of
basic pay in effect for the Commissioner for the year
concerned. The Commissioner is required to promulgate
regulations necessary to ensure that these limits are
maintained.
Subsection (d) exempts the Office and its employees from
all of the provisions of title 5, United States Code, except
for those specifically listed in subsections 113(e) and 113(f).
The Office is still subject to section 3110, relating to
employment of relatives; Subchapter II of chapter 55, relating
to withholding pay; subchapters II and III of chapter 73,
relating to employment limitations and political activities
(the ``Hatch Act''), respectively; chapter 71, relating to
labor-management relations; section 3303, relating to political
recommendations (the ``Hatch Act''); subchapter II of the
chapter 61, relating to flexible and compressed work schedules;
chapter 81, relating to compensation for work injuries;
subchapter III of chapter 83 and chapter 84, relating to the
Federal Employees Retirement System; chapter 87, relating to
life insurance; and chapter 89, relating to health insurance.
To replace the rest of title 5, United States Code, the Office
will engage in collective bargaining over compensation, leave
and disciplinary procedures, and, consistent with Subsection
(g), create its own employee relations and labor relations
programs in line with title 5 merit principles.
Subsection (e)(2)(A) specifically requires the Office,
consistent with chapter 71, United States Code, to bargain in
good faith with its unions over basic pay and other forms of
compensation subject only to exceptions set forth in
Subsections (e)(2)(B). This subsection confers upon the
Office's unions the right to bargain with the Office over its
decisions regarding basic pay and compensation up to a maximum
which is defined as the annual rate of basic pay in effect for
the Commissioner.
Subsection (e)(2)(B) specifically prohibits the Office and
its unions from bargaining over benefits listed in paragraphs
(1), (2), (3) and (4) of subsection (f). This subsection
affords sole and exclusive rights to the Office to choose to
supplement basic retirement benefits, health benefits, life
insurance benefits or employee compensation benefits, beyond
those guaranteed to the Office's employees under applicable
sections of title 5, United States Code. No collective
bargaining is permitted regarding supplemental benefits.
Subsection (e)(2)(C) prohibits of Office through collective
bargaining from exceeding the limits on compensation set forth
in subsection 113(c). While the Office is obligated to bargain
regarding basic pay and compensation with its unions, the
maximum amount of compensation is established by this Act.
Subsection (f) maintains eligibility for officers and
employees of the Office to participate in the retirement and
benefits programs under subchapter III of chapters 83 (Civil
Service Retirement System), chapter 84 (Federal Employees
Retirement System), chapter 87 (life insurance), chapter 89
(health insurance) and chapter 81 (compensation for work
injuries) of title 5 except to the extent that the Office
augments them. Any regulations needed to carry out these
provisions shall be prescribed, as they are now, by the Office
of Personnel Management. Government contributions and
computations shall be made by the Office in the same manner as
provided under sections 8334(a)(1), 8401(9), 8334(k)(1)(B),
(8905(b), 8706(b) (1) or (2), 8708(d) and 8906(g)(2) of title
5. The Office remains responsible for reimbursing the
Employees' Compensation Fund for compensation paid or payable
after the effective date of incorporation.
Subsection (g)(1) requires the Office to establish an
employee relations and a labor relations system that is exempt
from all provisions of title 5, United States Code, except for
those specifically listed in subsections 223(e) and 113(f). The
Office has flexibility in establishing terms and conditions of
employment, including employee benefits, rates of pay,
performance-based compensation, and other terms and conditions
of employment consistent with the requirements of these
sections. Subsection (g) requires that such terms and
conditions of employment must be consistent with merit
principles now set forth in 2301(b) of title 5, provide
veterans preference protections equivalent to those established
by sections 2108, 3308-3318, and 3320 of title 5 and be
consistent with chapter 71 of title 5, United States Code,
particularly those provisions set forth in subsection (g).
The Office needs to establish its own regulations in order
to have the flexibility to hire a well qualified work force.
The current employment and compensation regulations limit that
flexibility. It is imperative that the Office be able to
attract and retain a high caliber of professionals learned in
emerging technologies. There is an increasing demand for patent
and trademark protection. Responding to that demand requires an
ever-changing mix of legal and technical expertise. The Office
needs the ability to establish different compensation and
employment packages based on a scarcity of patent and trademark
examination and processing skills to respond to the demand.
Subsection (g)(2) provides for the continuation of all
labor agreements that are in effect on the day before the
effective date of the Act. Should any of the unions not have a
labor agreement in effect on that date, terms and conditions of
employment shall continue unless and until changed by the
Office or as otherwise set forth in the Act.
Subsection (h) provides that all officers and employees of
the current Patent and Trademark Office will become officers
and employees of the United States Patent and Trademark Office
on the effective date of the Act, without a break in service.
In addition it sets forth the conditions under which
individuals employed by the Department of Commerce shall be
transferred to the Office on the effective date of the Act. Any
amount of sick or annual leave and compensatory time
accumulated under title 5, United States Code, before the
effective date of the Act by employees covered in this
subsection will become obligations of the Office. The
subsection also provides that, as a transition, officers and
employees of the Office who are terminated within 2-years of
incorporation shall maintain the same rights and benefits the
employee would have had if the termination had occurred
immediately before the date of incorporation.
Subsection (h)(5) provides for the transition to the Office
of the individuals serving as Commissioner of Patent and
Trademarks, Assistant Commissioner for Patents, and Assistant
Commissioner for Trademarks. Because the transformation of the
Patent and Trademark Office into a government corporation will
not alter the basic structure of the Office, and because the
Commissioner of the PTO will assume nearly identical
responsibilities to those of the current Commissioner, the
appointment of the current Commissioner as the initial
Commissioner for the government corporation would not violate
the Appointments Clause of Article II of the Constitution and
will provide for a smooth transition. For example, unlike the
restructuring that took place when the board-led Federal Home
Loan Bank Board was transformed into the Office of Thrift
Supervision where the board was replaced by one officer, the
PTO structure will remain virtually the same. New duties are
conferred on the office, rather than on a particular officer,
and the nature is not significantly transformed as far as the
essential functions of the agency.
Subsection (i) allows employees of the Office to maintain
for purpose of appointment to the competitive service elsewhere
in the federal government, any competitive status that employee
had acquired before the effective date of the Act. Employees of
the Office will not be in the competitive service;
consequently, they will not be able to acquire competitive
status. This subsection allows employees of the Office who had
already acquired competitive status before becoming employees
of the Office to maintain such status.
Subsection (j) provides for the continuity of compensation,
benefits and other terms of conditions of employment in effect
immediately before the effective date of the Act to remain in
effect until changed in accordance with this subsection.
Subsection (j)(2) requires that basic pay for employees or
officers may not be less than that in effect on the effective
date of the Act unless agreed to by their exclusive
representative as a term of a collective bargaining agreement
or for inefficiency, neglect of duty, or misconduct on the part
of the individual. Under the Act, the Office's unions are
permitted to bargain over basic pay. This subsection permits
these negotiations to include the reduction in basic pay. It
also permits the Office the flexibility to reduce basic pay as
a corrective action for poor performance and misconduct by an
individual employee or officer.
Subsection (k) requires the Office to establish a personnel
system that does not permit the removal from federal service of
patent examiners, examiners-in-chief, trademark examiners or
members of the Trademark Trial and Appeal Board for any reason
unless such removal promotes the efficiency of the Office. This
provision is intended to protect quasi-judicial government
officials who perform an essential government function from
being exposed to outside influence or pressure by granting to
them the title 5 protections against removal that they
currently receive.
Section 114.--Management Advisory Board
Section 114 adds a new section 5 to title 35, United States
Code to establish a Management Advisory Board for the PTO.
Section (a)(1) specifies that the Board shall be comprised of
twelve members. Four of the members are to be appointed by the
President, four by the Speaker of the House of Representatives,
and four by the President pro tempore of the Senate. No more
than three of the four members appointed by each appointing
authority may be members of the same political party.
Subsection (a)(2) sets the term of the Advisory Board's
members at four years and no member may serve more than a
single term. During the first appointment, each of the
appointing authorities shall appoint one member for a term of
one year, one for a term of two years, one for a term of three
years, and one for a full term of four years.
Subsection (a)(3) requires that the President designate a
member of the Advisory Board to serve as Chair for a term of
three years.
Subsection (a)(4) requires that the appointment of members
to the Advisory Board be made within three months of the
effective date of the Act. Vacancies must be filled within
three months of their occurrence.
Subsection (a)(5) specifies that vacancies on the Advisory
Board are to be filled in the same way the original
appointments were made. Those members appointed to fill a
vacancy of a member who did not complete his or her term of
appointment shall serve only for the remainder of that term.
Members may continue to serve after their term expires until a
successor is appointed.
Subsection (a)(6) requires that the Chair designate members
of the Advisory Board to serve on a committee concerned with
patent operations and a committee concerned with trademark
operations. The members of these committees are to be
responsible for the duties identified in subsection (e) in
connection with patent operations and trademark operations,
respectively.
Subsection (b) requires that those persons appointed to be
members of the Advisory Board be citizens of the United States.
The members are to be chosen so that they reflect the interests
of diverse users of the PTO. Among those chosen as members of
the Advisory Board are to be individuals who have substantial
experience and achievement in corporate finance and in
management.
Subsection (c) makes the members of the Advisory Board
special government employees within the meaning of section 202
of title 18, United States Code (18 U.S.C. Sec. 202). Advisory
Board members, therefore, will be subject to certain ethics
laws governing representation of others before the United
States during and following employment and participation in
matters in which the party has a financial interest, as
provided in sections 203, 205, 207, 208, and 209 of title 18.
Subsection (d) authorizes the Chair to call meetings of the
Advisory Board and to establish the agenda for the meeting.
Subsection (e) requires the Advisory Board to review the
policies, goals, performance, budget, and user fees of the PTO
and to provide advice to the Commissioner on these matters. In
addition, the Advisory Board is required to submit an annual
report on the matters which it reviews to the President and to
the Committees on the Judiciary of the Senate and the House of
Representatives within 60 days of the end of the fiscal year. A
copy of that report must be published in the PTO's Official
Gazette.
Subsection (f) authorizes compensation for the members of
the Advisory Board for each day (including travel time) during
which they are attending meetings or conferences of the
Advisory Board or are otherwise engaged in work on behalf of
the Advisory Board. The rate of pay at which the members may be
compensated is the daily equivalent of the annual rate of basic
pay in effect for level III of the Executive Schedule under
section 5314 of title 5. In addition, the subsection authorizes
travel expenses, including per diem in lieu of subsistence for
periods when the members must be away from their homes and
regular places of business, as provided in section 5703 of
title 5, United States Code.
Subsection (g) requires the PTO to provide members of the
Advisory Board with access to records and information in the
Office, except for personnel or other privileged information
and information concerning patent applications required to be
kept in confidence by section 122.
Section 115.--Conforming amendments
Subsection (a) repeals section 6 of title 35, United States
Code (35 U.S.C. Sec. 6), along with the heading for that
section in the table of contents for Chapter 1 of title 35. The
duties that were assigned the Commissioner under section 6 are
replaced by the provisions of Sections 112 and 113 of this Act.
Section 31 of title 35, United States Code (35 U.S.C.
Sec. 31) and the heading for that section in the table of
contents for chapter 3 are also repealed. The authority for
issuing regulations and rules governing the recognition and
conduct of agents, attorneys, or other persons representing
applicants and other parties before the Office are replaced by
the provisions of Section 112(b) of this Act.
Section 116.--Trademark Trial and Appeal Board
This section amends section 17 of the Act of July 5, 1946
(commonly referred to as the ``Trademark Act of 1946'') (15
U.S.C. Sec. 1067) to require, in subsection (a), that in every
case of interference, opposition to registration, application
to register as a lawful concurrent user, or application to
cancel the registration of a mark, the Commissioner shall give
notice to all parties and direct that the matter by decided by
a Trademark Trial and Appeal Board.
Subsection (b) specifies that the Board will include the
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and other members who are
competent in trademark law who have been appointed by the
Commissioner.
Section 117.--Board of Patent Appeals and Interferences
This section amends section 7 of title 35, United States
Code (35 U.S.C. Sec. 7) to provide for a Board of Patent
Appeals and Interferences in the PTO, composed of the
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and examiners-in-chief. The
examiners-in-chief are to have competent legal knowledge and
scientific ability.
Subsection (b) assigns to the Board of Patent Appeals and
Interferences responsibility for reviewing written appeals from
adverse decisions of examiners upon applications for patents
and for determining priority and patentability of invention in
interferences declared under section 135(a) of title 35, United
States Code (35 U.S.C. Sec. 135(a)). The decisions are to be
made by panels of the Board, composed of at least three
members, designated by the Commissioner. Subsection (b) also
limits the authority to grant rehearings to the Board itself.
Section 118.--Suits by and against the Office
This section inserts a new section 7 to title 35, and
provides for the renumbering of the existing sections.
Subsection (a)(1) of the new section 7 requires that any
action against the PTO must arise under Federal law.
Jurisdiction over civil actions by or against the Office is
vested with the Federal courts.
Subsection (a)(2) applies the Contracts Disputes Act of
1978 (41 U.S.C. Sec. 601 and following) to any action or
proceeding against the PTO in which any claim is cognizable
under such Act. The Commissioner is made the head of the agency
for purposes of any contract claims arising in connection with
the Office. Other actions or proceedings against the Office
based on contract may be brought in an appropriate Federal
district court, notwithstanding the provisions of title 28,
United States Code.
Subsection (a)(3) establishes that any action or proceeding
against the PTO in which any claim is cognizable under section
1346(b) and chapter 171 of title 28 are subject to the
limitations and exclusive remedy available under the Federal
Tort Claims Act. Other actions or proceedings against the
Office founded upon tort may be brought in an appropriate
Federal district court regardless of the provisions of section
1346(b) and chapter 171 of title 28, United States Code.
Subsection (a)(4) expressly prohibits certain legal
processes, such as attachments, garnishment, liens, or similar
processes from being issued against the PTO's property. This
protection is currently available to the property of the United
States under the Office's custody or control. This is necessary
to protect Office property and prevent interference with the
day-to-day operation of the patent and trademark examination
system. Although the Office has waived its sovereign immunity,
that waiver is limited and should not be construed as allowing
relief in any proceeding against the Office's property. This
protection against interference with important governmental
operations is customary for wholly owned government
corporations.
Subsection (a)(5) provides that the PTO will be substituted
as a defendant in any action or proceeding brought against an
employee of the Office, if the Office determines that the
employee was acting within the scope of the employee's
employment with the Office. This provision is intended to give
employees the same protection from other legal actions that
they currently have in tort cases. In the event that the Office
refuses to certify the scope of employment, the officer or
employee may petition the court at any time before trial for a
determination regarding the scope of employment. If the court
certifies that the employee was acting within the scope of his
or her employment, the Office would be substituted as the party
defendant. If subsection (3)(A) applies to the action or
proceeding, section 1346(b) and chapter 171 of title 28, United
States Code, will govern instead of this subsection.
Subsection (b) authorizes the PTO to be represented in
actions or proceedings in which the Office is a party or in
which an officer or employee of the Office is a party in his or
her official capacity, by attorneys employed or contracted by
the Office, without prior authorization from the Attorney
General. Other government corporations have the autonomy to
conduct their own business affairs, including litigation and
settlement of claims, and the PTO, likewise, will have such
authority.
Without regard for subsection (b)(1), under subsection
(b)(2), the Attorney General may represent the PTO in any suit
involving the Office where the Attorney General believes it is
necessary. Also, in any case where the Office, through the
Commissioner, so requests, the Attorney General may provide
advice or represent the Office.
Subsection (b)(4) specifies that the Attorney General is to
represent the PTO in any case before the Unites States Supreme
Court.
Subsection (b)(5) authorizes attorneys employed by the PTO,
who are admitted to practice to the bar of the highest court of
at least one State in the United States or of the District of
Columbia to represent the Office in any legal action or
proceeding in which the Office is a party even though the
attorney is not a resident of the jurisdiction in which the
action or proceeding is taking place and regardless of any
qualifications established by the court or administrative body
before which the action or proceeding is conducted.
Section 119.--Annual report of Commissioner
This section amends renumbered section 14 of title 35,
United States Code (35 U.S.C. Sec. 14) to require the
Commissioner to prepare and submit to the Congress an annual
financial and management report meeting the requirement of
section 9106 of title 31, United States Code (31 U.S.C.
Sec. 9106). The required report will be deemed to be the report
of the PTO under that section and a second report need not be
filed.
Section 120.--Suspension or exclusion from practice
This section amends section 32 of title 35, United States
Code (35 U.S.C. Sec. 32) to authorize the Commissioner to
designate any attorney who is an officer or employee of the PTO
to conduct any hearing in connection with any suspension or
exclusion from practice before the Office.
Section 121.--Funding
This section amends section 42 of title 35, United States
Code (35 U.S.C. Sec. 42(a)) and provides that the Office be
paid all fees collected for services performed or materials
furnished.
Section 42(b) provides that the PTO shall have the use of
its moneys for the functions of the Office, subject to approval
in appropriations acts, and that moneys not used to carry out
the functions of the Office may be kept as cash on hand or on
deposit, invested in obligations of the United States or
guaranteed by the United States, or in obligations or other
instruments which are lawful investments for fiduciary, trust,
or public funds. Specific language determines that fees
available to the Commissioner be used for processing patent
applications and other services and materials; and fees
available under the Trademark Act of 1946, 15 U.S.C. 1113, be
used for the processing of trademark registrations and other
services and materials.
Section 42(c) provides that the Office may borrow from the
Secretary of Treasury and that such borrowing will be treated
as a public-debt transaction of the United States. All
borrowing shall be subject to advance approval in
appropriations Acts of the Congress and cannot exceed amounts
approved in such Acts. Any borrowing under this subsection
shall be repaid only from fees paid to the Office and
surcharges appropriated by the Congress.
Section 122.--Audits
This section amends chapter 4 of part I of title 35, U.S.C.
by adding a new section 43, on audits, which specifies the
basis upon which the accounting records of the Office will be
maintained as well as the requirement for the preparation of
annual financial statements. These statements will be subject
to audit by an independent certified public accountant chosen
by the Commissioner and conducted in accordance with standards
that are consistent with generally accepted government auditing
standards. The Commissioner shall transmit to the House and
Senate the results of each audit.
The Comptroller General may review, audit, and have access
to Office records. The Comptroller General reports to the
Congress and the Office the results of any reviews. This
section applies to the Office in lieu of the provisions of
section 9105 of title 31.
Section 123.--Transfers
Subsection (a) transfers the functions, powers, and duties
of the Patent and Trademark Office and the Department of
Commerce with respect to the granting and issuing of patents
and the registration of trademarks to the United States Patent
and Trademark Office. The purpose of this section is to assure
that the Office has the legal authority to perform all of the
Office's functions and execute the laws that apply to the PTO.
Subsection (b) transfers to the PTO, on the effective date
of the Act, all assets, liabilities, contracts, property,
records, and unexpended and unobligated balances of
appropriations, authorizations, allocations, and other funds
and other items, employed, held, used, arising from, available
to, or to be made available to the Department of Commerce,
including any funds set aside for accounts receivable that are
related to functions, powers, and duties that are vested in the
PTO by this title
SUBTITLE B--EFFECTIVE DATE; TECHNICAL AMENDMENTS
Section 131.--Effective date
This section makes the title and amendments made by it
effective four months after the date of enactment of the Act.
Section 132.--Technical and conforming amendments
Subsection (a) makes conforming amendments to headings and
tables of contents in title 35, United States Code, reflecting
the amendments.
Subsection (b) makes conforming and technical changes to
statutes made applicable and inapplicable to the PTO, including
the Government Corporation Control Act and the Federal Property
and Administrative Services Act of 1949.
Subsection (b)(1) adds the PTO to the list of wholly owned
government corporations. Several subsections change references
to the ``Patent Office'' or the ``Patent and Trademark Office''
to the ``United States Patent and Trademark Office.''
References to the ``Commissioner of Patents'' in several
statutes are changed to the ``Commissioner of Patents and
Trademarks.'' Subsection (b)(20) amends section 8G(a)(2) of the
Inspector General Act of 1978 (5 U.S.C. App. 3 Sec. 8G(a)(2)),
to include the PTO as a ``designated Federal entity,'' thereby
authorizing the Commissioner to appoint the Inspector General
of the Office.
SUBTITLE C--MISCELLANEOUS PROVISIONS
Subtitle C contains provisions which allow for the transfer
of authority from the Patent and Trademark Office and the
Department of Commerce to the United States Patent and
Trademark Office established under this Act which are necessary
for its operation as a sovereign agency of the United States,
including references to the authority to operate, references in
legal documents, continuance of suits and proceedings,
administrative procedure and judicial review, transfer of
assets, delegation and assignment, and the Office of Management
and Budget's authority to oversee these transfers.
Title II--EARLY PUBLICATION OF PATENT APPLICATIONS
Section 201.--Short title
This section provides a short title: ``Patent Application
Publication Act of 1996.''
Section 202.--Early publication
This section amends section 122 of chapter 11 of title 35.
A new subsection (b), in subparagraph (1)(A), provides that
applications for patent, except applications for design patents
under Chapter 16 of title 35, provisional applications filed
under section 111(b) of title 35 and the exceptions noted
below, shall be published in accordance with procedures
determined by the Commissioner, as soon as possible after the
passage of 18 months from the earliest filing date for which a
benefit is sought by the applicant under title 35. This
includes any claim to the right of priority in accordance with
sections 119, 365(a) and 365(b) of title 35 and any benefit of
an earlier filing date in accordance with sections 120, 121 and
365 of title 35. An application that is filed more
than 18 months after the earliest filing date for which a
benefit is sought will be subject to immediate publication.
Applications, filed under the Patent Cooperation Treaty, that
enter the national stage in the United States will also be
subject to this publication requirement. The publication
requirements of this subsection are not intended to alter the
practice accorded to reissue applications. The exclusion of
provisional applications filed under section 111(b) of title 35
from the publication requirement precludes the early
publication of such applications prior to the abandonment, by
operation of law if not converted to a non-provisional
application (see Section 601), of such applications twelve
months after filing. At the request of an applicant, an
application may be published earlier than passage of 18 months.
Subparagraphs (1)(B) and (1)(C) of the new subsection (b)
also provide that the Commissioner shall determine what
information is published and what information will be available
after the publication at 18 months. Decisions on making
information available between the date of publication and the
date of issue are final and nonreviewable.
Subsection (b)(2) provides certain exceptions to the
publication requirement in subsection (b)(1). Subparagraph
(b)(2)(A) provides that applications that are no longer pending
will not be published. Subparagraph (b)(2)(B) provides that
applications subject to secrecy orders pursuant to section 181
of title 35 will not be published.
Subparagraph (b)(2)(C) provides an exception for
independent inventors who file only in the United States. Upon
the request of an applicant at the time of filing, publication
will not take place until 3 months after the Commissioner makes
a notification to the applicant under section 132 of title 35.
This exception does not include applications filed pursuant to
section 363 of title 35, applications asserting priority under
sections 119 or 365(a) of title 35 or applications asserting
the benefit of an earlier application under sections 120, 121,
or 365(c) of title 35. Further, in a request for treatment
under this subparagraph, an applicant must certify that the
application was not and will not be the subject of an
application filed in a foreign country and the applicant must
have been accorded the status of an independent inventor under
section 41(h) of title 35. The Commissioner may establish
appropriate procedures and fees for making a request in
accordance with this subparagraph.
Subsection (c) establishes that the provisions of this
section shall not operate to create any new opportunity for
pre-issuance opposition and that the Commissioner may establish
appropriate procedures to ensure that this section does not
create any new opportunity for pre-issuance opposition that did
not exist prior to the adoption of this section. The
publication of applications at 18 months should not operate to
allow third parties an opportunity to oppose an applicant's
application. As under current law, the process of issuing a
patent must be a process that involves only the applicant and
the PTO.
Section 203.--Time for claiming benefit of earlier filing date
This section allows the Commissioner to require the early
submission of a priority claim under section 119 of title 35 or
the early submission of an amendment containing a specific
reference to an earlier filed application under section 120 of
title 35.
Section 119 of title 35 is amended, in subsection (b), by
deleting time limits and adding a basis for establishing a
waiver of claims for priority. Thus, the Commissioner is
authorized to promulgate rules establishing time periods during
the pendency of an application within a right to priority may
be established. The failure of the applicant to file a timely
claim for priority may be considered a waiver of any such
claim, and the Commissioner may require the payment of a
surcharge as a condition of accepting an untimely claim for
priority during the pendency of an application.
Section 120 of title 35 is similarly amended by allowing
the Commissioner to determine the time period during the
pendency of an application within which an amendment containing
a specific reference to an earlier filed application must be
submitted. Additionally, the Commissioner may consider the
failure to timely submit such an amendment as a waiver of any
benefit under this section and to establish procedures,
including the payment of a surcharge, to accept late
submissions under this section.
Section 204.--Provisional rights
This section amends section 154 of title 35 by adding a new
subsection (d), entitled ``PROVISIONAL RIGHTS.''
Paragraph (d)(1) provides that a patent shall include the
right to obtain a reasonable royalty from any person who makes,
uses, offers for sale, sells, or imports in the United States
the invention as claimed in the published patent application
between the time it is published and the time the patent is
issued. Subsection (d)(1) further requires that the alleged
misappropriator must have had actual notice of the published
patent application from the application owner who is alleging
misappropriation and, where necessary, a translation of an
international application into the English language.
Subsection (d)(2) provides that the right to obtain a
reasonable royalty under this section shall be available only
if the invention claimed in the patent is substantially
identical to the invention as claimed in the published patent
application. That is, at least one infringed claim in the
published patent application must be substantially identical to
at least one claim in the patent in order to obtain a
reasonable royalty under this section. The requirement for
``substantial identity'' in this section is based, by analogy,
upon the decisional law for establishing intervening rights
under the reissue statute. In section 252 of title 35, the term
``identical'' has, heretofore, been used without qualification,
but the courts have interpreted that term to encompass claims
that are ``substantially identical.'' Slimfold Mfg. Co., Inc.
v. Kinkead Industries, Inc., 810 F.2d 1113, 1 USPQ2d 1563 (Fed.
Cir. 1987). That standard has been adopted here for provisional
rights and has now been explicitly codified in section 252 of
title 35 by a conforming amendment. No change in the law of
intervening rights is intended by that conforming amendment and
it is intended that same standard by applied in the context of
provisional rights.
The ``invention as claimed in the published application''
is defined by the claims present in the patent application on
the date of publication or as amended thereafter. The claims in
the Patent and Trademark office publication, as the nature,
format, and content of that document is determined in
accordance with requirement of section 122(b) of title 35, do
not necessarily limit the right to obtain a reasonable royalty
under this section as the claims in the application may have
been amended as of the date of publication or thereafter. In
any event, proper notice of those claims upon which a claim for
reasonable royalty is based must have been given during the
period in which provisional rights are available.
Subsection (d)(3) provides that the right to obtain a
reasonable royalty shall be available only in an action brought
within 6 years after a patent is issued and shall not be
affected by the duration of the period beginning on the date of
publication of an application and ending on the date a patent
is issued. This provision is included to make clear that the
time limitation on damages set forth in section 286 of title 35
shall not affect the ability to recover a reasonable royalty
for the entire period of time from publication until issue even
though that period may, itself, exceed 6 years. However, the
new subsection further provides that the right to obtain a
reasonable royalty for that period, however long, shall be
available only within 6 years of issue of the patent.
Subsection (d)(4) provides that the right to obtain a
reasonable royalty based upon the publication under the Patent
Cooperation Treaty of an international application designating
the United States shall commence from the date that the Patent
and Trademark office receives a copy of the international
publication of the international application, or, if the
publication under the treaty of the international application
is in a language other than English, from the date that the PTO
receives a translation of the international application in the
English language. These requirements are in accord with the
requirements in Article 29 of the Patent Cooperation Treaty
that may be imposed by national law.
Section 205.--Prior art effect of published applications
This section amends 102 of title 35 to provide a prior art
effect for applications published pursuant to new subsection
122(b) and international applications published under the
Patent Cooperation Treaty and expands the prior art effect of
patents based upon applications filed under the Patent
Cooperation Treaty.
To that end, subsection 102(e) of title 35 is amended to
include, as prior art, in paragraph (e)(1), inventions
described in an application for patent, published pursuant to
subsection 122(b) of title 35, by another filed in the United
States before the invention thereof by the applicant for
patent. The effective date as prior art for inventions
described in application for patent which is only published
pursuant to subsection 122(b) will be the date the application
is actually filed in the United States, and not any filing date
to which it might be entitled under the Paris Convention for
the Protection of Industrial Property or the Patent Cooperation
Treaty. Amended subsection 102(e) also provides that an
international application filed under the Patent Cooperation
Treaty shall have the effect of a national application
published under section 122(b) of title 35 only if the
international application designates the United States and is
published under Article 21(2)(a) of the Patent Cooperation
Treaty in the English language. Amended subsection 102(e) of
title 35 continues to include, as prior art, in paragraph
(e)(2), inventions described in a patent granted on an
application for patent by another filed in the United States
before the invention by the applicant for patent, but deletes
the language extending to a prior art effect to a patent
granted on an international application filed by another under
the Patent Cooperation Treaty. This is no longer necessary in
view of the extension of a prior art effect to the underlying
published application pursuant to paragraph (e)(1).
Section 206.--Cost recovery for publication
The Commissioner shall recover the cost of early
publication by the amendment made in section 202 by adjusting
the filing, issue, and maintenance fees under title 35, United
States Code, by charging a separate publication fee, or by any
combination of these methods.
Section 207.--Conforming changes
Section 11 of title 35, United States Code, is amended by
inserting ``and published applications for patent'' after
``Patents''.
Section 12 is amended in the section caption by inserting
``and applications'' after ``patents'' and by inserting ``and
published applications for patents'' after ``patents''.
Section 13 is amended in the section caption by inserting
``and applications'' after ``patents'' and by inserting ``and
published applications for patents'' after ``patents''.
The items relating to sections 12 and 13 in the table of
sections for chapter 1 are each amended by inserting ``and
applications'' after ``patents''.
The table of sections for chapter 11 of title 35, United
States Code, is amended in the item relating to section 122 by
inserting ``; publication of patent applications'' after
``applications''.
The table of sections for chapter 14 of title 35, United
States Code, is amended in the item relating to section 154 by
inserting ``; provisional rights'' after ``patent''.
Section 181 of title 35, United States Code, is amended in
the first paragraph by inserting ``by the publication of an
application or'' after ``disclosure'' and ``the publication of
an application or'' after ``withhold.'' The second paragraph is
amended by inserting ``by the publication of an application
or'' after ``disclosure of an invention.'' The third paragraph
is amended by inserting ``by the publication of the application
or'' after ``disclosure of the invention.'' Further, the third
paragraph is amended by inserting ``the publication of the
application or'' after ``withhold.'' Still further, the fourth
paragraph is amended by inserting ``the publication of an
application or'' after ``and'' in the first sentence.
Section 252 of title 35 is amended in the first
undesignated paragraph by inserting ``substantially'' before
``identical'' each place it appears. This change, referred to
above in the discussion relating to provisional rights in
Section 204, is not intended to change the law of intervening
rights but rather is intended only to codify existing
decisional law.
Section 284 of title 35 is amended by adding at the end of
the second paragraph the following: ``Increased damages under
this paragraph shall not apply to provisional rights under
section 154(d) of this title.'' This amendment has been made
because the willfulness necessary for the award of increased
damages cannot exist in the context of provisional rights
because the fact of infringement cannot be determined until a
patent has issued. That is, there can be no willful
infringement in the period for which provisional rights may be
available because ``infringement'' within that period can only
be defined by the terms of the patented claims that are, of
course, not available until a patent issues.
Section 374 of title 35 is amended such that the
publication under Patent Cooperation Treaty, of an
international application designating the United States shall
confer the same rights and shall have the same effect under
this title as an application for patent published under section
122(b) of this title, except as provided in section 102(e) and
154(d) of title 35.
Section 208.--Patent term extension authority
Section 208 amends Sec. 154(b) of title 35 to provide
patent term compensation for those diligent patent applicants
who experience delays beyond their control in the process of
getting their patents issued. Section 154(b)(1)(A)(i) provides
that a patent applicant will receive compensation for any time
lost due to an interference proceeding under Sec. 135(a) of
title 35. Section 154(b)(1)(A)(ii) provides that a patent
applicant will receive compensation for any time lost due to
the imposition of a secrecy order pursuant to Sec. 181 of title
35. Section 154(b)(1)(A)(iii) provides that a patent applicant
will receive compensation for any time lost due to appellate
review by the Board of Patent Appeals and Interferences or by a
federal court where the patent was issued pursuant to a
decision in the review reversing an adverse determination of
patentability. Section 154(b)(1)(A)(iv) provides that a patent
applicant will receive compensation for any time lost due to an
``unusual administrative delay'' by the PTO in issuing the
patent.
``Unusual administrative delay'' is strictly defined to
impose an objective time clock on the PTO in issuing a patent.
Any time the PTO takes in excess of the stated minimums is
automatically and fully compensated. An unusual administrative
delay is defined as the failure of the PTO to: (I) make a
notification of the rejection of any claim for a patent or any
objection or argument under section 132 of this or give or mail
a written notice of allowance under section 151 of title 35 not
later than fourteen months after the date on which the
application was filed; (ii) respond to a reply under section
132 of this title or to an appeal taken under section 134 of
this title not later than four months after the date on which
the reply was filed or the appeal was taken; (iii) act on an
application not later than four months after the date of a
decision by the Board of Patent Appeals and Interferences under
sections 134 or 135 of this title or a decision by a Federal
court under sections 141, 145, or 146 of this title where
allowable claims remain in an application; or (iv) issue a
patent not later than four months after the date on which the
issue fee was paid under section 151 of this title and all
outstanding requirements were satisfied.
The constraint upon the PTO in section 154(b)(1)(B)(i),
does not imply that a written notice of allowance under section
151 of title 35 must be given or mailed not later than 14
months after the date on which the application in issue was
filed. Rather, this constraint could be satisfied if a
notification of the rejection of any claim for a patent or any
objection or argument under section 132 of title 35 is made not
later than 14 months after the date on which the application in
issue was filed.
Section 154(b)(2)(A) provides that the total duration for
extensions granted under subsections (i) and (ii) of
Sec. 154(b)(1)(B) shall not be limited and that the total
duration for extensions granted under subsections (iii) or (iv)
or both shall not exceed ten years. Section 154(b)(2)(A) also
provides that overlapping delays should not be double counted.
Section 154(b)(2)(B) provides that extensions will not be
granted where the patent applicant fails to take reasonable
efforts to conclude prosecution of the application. The few
applicants who engage in intentional or unjustifiable delay
tactics will not be rewarded for such behavior. The PTO is
required to prescribe the regulations necessary to carry out
the mandate of this subsection. Section 154(b)(2)(C) provides
that no patent the term of which has been disclaimed beyond a
specified day may be extended under this section beyond the
expiration date specified in the disclaimer. The ``reasonable
efforts'' clause is an effort to avoid the submarine patent
problem. The intent of the Committee is that only the most
egregious and obvious delay tactics will go unrewarded by this
provision.
In prescribing regulations to carry out the provisions of
this section, the PTO should ensure that in those cases where
an appeal of an adverse determination of patentability is filed
or an interference is declared, the extension to be granted for
a successful appeal or for the interference proceeding should
be equal to the time from filing or declaration until an
applicant is notified of the conclusion of the proceeding. The
regulations should also provide that a patent applicant who
exercises reasonable efforts is eligible for one form or
another of term compensation throughout the prosecution of the
application. That is, there should be no time period where a
diligent patent applicant may lose term for reasons beyond his
or her control without an opportunity for compensation.
Section 209.--Examining procedure improvements; further limited
reexamination of patent applications
This section mandates that the Commissioner prescribe
regulations to provide for the further limited reexamination of
an application for patent and provides the Commissioner the
authority to establish appropriate fees for such further
limited reexamination and to provide a 50 percent reduction on
such fees for small entities that qualify for reduced fees
under section 41(h)(1) of title 35. This section is intended to
simplify the continued prosecution of patent applications after
a final rejection has been entered, extending to all
applications the transitional practice introduced in P.L. 103-
465, section 532(a)(2).
Section 210.--Last day of pendency of provisional application
This section amends section 119(e) of title 35 by providing
that if the day that is 12 months after the filing date of a
provisional application falls on a Saturday, Sunday, or legal
holiday as defined in rule 6(a) of the Federal Rules of Civil
Procedure, the period of pendency of the provisional
application shall be extended to the next succeeding business
day. This amendment is intended to address and resolve the so-
called ``last day trap'' for provisional applications. Because
the requirement for filing a non-provisional application that
claims priority of a provisional application under section
119(e) of title 35 relies upon both copendency and action
taking, the remedy of section 21(b) of title 35 is not
available for the filing of that non-provisional application
and an applicant may be confronted with this ``last day trap.''
This amendment resolves this problem.
Section 211.--Reporting requirement
Section 211 requires the PTO to report to Congress by April
1, 2000, and every year thereafter, on the impact of that
publication of applications has on independent inventors.
Section 212.--Effective date
Sections 202 through 207, and the amendments made by those
sections, shall take effect on April 1, 1997, and shall apply
to all applications filed under 35 U.S.C. Sec. 111 on or after
that date and all applications complying with 35 U.S.C.
Sec. 371 that resulted from international applications filed on
or after that date. Sections 204 and 205 shall also apply to
international applications designating the United States that
are filed on or after April 1, 1997.
Sections 208 through 210, and the amendments made by those
sections, shall take effect on the date of enactment of the Act
and, except for design patent applications filed under chapter
16 of title 35, shall apply to any application filed on or
after June 8, 1995.
title iii--prior domestic commercial use
This title provides a defense to patent infringement based
on prior use of a patented invention to certain circumstances.
The bill clarifies the rights of a party who had used an
invention (a ``prior user'') vis-a-vis a party that
subsequently patents the invention. Under this title, a person,
who prior to the effective filing date of a patent, has been
commercially using the claimed invention or has made effective
and serious preparation for commercial use of such an
invention, will have a defense if that party is charged with
patent infringement based on the prior use. The provisions of
this title will permit the prior user to continue the use of
the invention even though it is claimed in a subsequently
granted patent.
Section 301.--Short title
This section provides that the title may be cited as the
``Prior Domestic Commercial Use Act of 1996.''
Section 302.--Defense to patent infringement based on prior domestic
commercial use
This section adds a new section 273 to Chapter 28 of title
35, United States Code, which establishes a defense to a claim
of patent infringement where a person has commercially used or
made serious preparations to use commercially an invention that
later becomes the subject matter of a patent issued to another.
Such commercial use or preparation for commercial use must have
occurred at least one year prior to the earliest effective
filing date to which the subject matter at issue is entitled.
Subsection (a) of the newly added section 273 defines the
terms ``commercially used,'' ``commercially use,'' and
``commercial use'' to mean that the subject matter actually
claimed in the subsequently granted patent has, in fact, been
used in the United States in the design, preparation,
manufacture, or testing of a product or service that is used in
commerce in the United States. Commercial use does not require
that the invention itself be publicly disclosed or that it be
in any way publicly accessible.
The subsection defines ``used in commerce'' and ``use in
commerce'' as meaning that an actual sale or other commercial
transfer of the claimed invention has taken place or that an
actual sale or other commercial transfer of a product or
service resulting from the use of the invention has taken
place. Determining whether an activity would constitute
commercial use should be construed to include activities that
individuals in a particular industry would consider commercial
in nature. For example, sale of a software product that
consists of a license authorizing the copying and use of a
computer program and providing terms regarding proprietary
information embedded in the program, in conjunction with a copy
of the object code representing the complied computer program
on a computer readable medium, would be viewed as ``commercial
use'' under subsection 273(a)(2).
The ``effective filing date'' of a patent is defined in
subparagraph 273(a)(3) as the actual filing date of the
application in the United States or, if such an earlier filing
date is claimed, the earlier filing date claimed, and to which
the subject matter is entitled, under section 119, 120, or 365.
Subsection (b) of Section 273 provides that a prior user of
a patented invention will not be liable as an infringer under
section 271 of title 35 if certain requirements are met. The
prior user, acting in good faith, must have commercially used
the invention, as defined by one or more claims of the patent
being asserted against the prior user, in the United States or
made effective and serious preparation for its commercial use
prior to the effective filing date. It is important to
recognize that the prior user right is a defense that can be
asserted in response to a claim of infringement. The prior user
right is not a license under the patent and, therefore, does
not create an obligation to pay a royalty or other compensation
to the patent holder.
Subparagraph (b)(2) makes it clear that a party who
purchases the subject matter claimed in a patent, or a product
or service produced using the subject matter claimed in a
patent from a person entitled to assert prior user rights in
connection under this section, would not be liable to the
patent owner for patent infringement any more than the party
would be if he had purchased from the patent owner. One who has
the right to assert a prior user defense would be able to sell
the subject matter claimed in a patent or the product or
service produced using that subject matter without liability to
the patent owner for patent infringement. It follows that, if
the prior user's activities were not infringing, the purchaser
of the products or services resulting from those non-infringing
activities would not be liable for using that which was
purchased.
Subsection (c)(1) of new Section 273 makes it clear that
the prior user defense is not available to a person who derived
the subject matter on which the defense is claimed from the
patentee or from one in privity with the patentee. The prior
user does not have to be a prior inventor in order to assert a
defense based on prior use. Prior user rights may be claimed
whether the party asserting the right conceived the invention
or a third party conceived the invention, so long as the
technology that is the basis of the prior use defense was not
obtained directly or indirectly from the patentee.
Subparagraph (c)(2) provides that the prior user defense
does not have the effect of a general license under the patent.
The right extends only to what was actually in commercial use
by the prior user, or had been used by the prior user in the
design, testing, or production in the United States of a
product or service which is used in commerce. Variations in the
quantity or volume of the prior use are protected by the right
as are improvements in the claimed subject matter that do not
infringe additional claimed subject matter of the patent. In
other words, if the prior user must infringe additional claims
of the patent in order to implement an improvement in the
claimed subject matter, the prior user would not be able to
rely on the defense provided in this section. To determine
whether an alteration in the ``commercial use'' would infringe
additional claims of a patent, one should first determine which
claims of the patent would have been infringed by the original
prior use but for the operation of section 273(b). If the prior
user alters its activities after the filing date of the patent
application in a way that would infringe claims other than
those identified above, the prior user will be liable for
patent infringement with respect to those additional claims.
It is not the intent of the legislation to limit the prior
use defense only to instances in which actual commercial use
can be demonstrated. Under subsection (c)(3), the defense would
also be available to a prior user who can prove that he or she
has actually reduced the subsequently patented invention to
practice at least one year prior to the filing date of the
patent covering that invention, has made a significant
investment or a substantial portion of the total investment
necessary to use the subject matter, and has made a commercial
transaction in the United States in connection with the
preparation to sue the subject matter. In addition, the person
must have completed in diligent fashion the remainder of the
activities and investments needed to commercially use the
subject matter. These latter activities can have taken place
after the effective filing date of the patent application so
long as they are pursued diligently.
Subsection (c)(4) makes it clear that the burden of proof
is on the person asserting the defense. The prior user must
provide evidence to establish each of the conditions precedent
to the defense. To prove that the necessary investment has
taken place, the party asserting the defense must show that
substantial investment was made in equipment, testing,
advertising, or other preparation for commercializing the
invention. Documentation and commercialization plans must be
sufficiently developed and in sufficient detail to prove the
rights claimed. For example, in the pharmaceutical industry,
evidence that a prospective new drug had been cleared for
clinical trials prior to the effective filing date would be
sufficient to show effective and serious preparation. In the
chemical industry, effective and serious preparation would
require evidence proving that a substantial investment had been
made, for example, in reactors or process equipment designed to
employ or manufacture the invention. Evidence of actions that
amount merely to conceiving the invention, development of the
invention on a laboratory, experimental, or reduction of an
invention to practice, without evidence of subsequent efforts
to use the invention commercially and to make the necessary
investments to commercialize the invention, would not be
adequate to satisfy the test for effective and serious
preparation.
Subsection (c)(5) provides that the defense of prior use is
not available if a person has abandoned commercial use of the
subject matter. Regardless of the degree of commercial use or
serious and effective preparation which might have occurred at
an earlier point in time, a defense based on prior user rights
may not be invoked if such commercial use was in a state of
abandonment, or abandoned after the effective filing date. If
the prior use is abandoned after the effective filing date, it
is the intent of this section that the prior user right shall
be a defense to infringement for the time of commercial use
between the effective filing date and abandonment. As the term
is used in connection with this legislation, abandonment refers
to cessation of use with no intent to resume. Certain
activities, however, are naturally periodic or cyclical.
Intervals of non-use between such periodic activities such as
seasonal factors or reasonable intervals between contracts,
shall not be considered abandonment so long as there is no
positive corroborating evidence of abandonment.
Subsection (c)(6) makes clear that the ability to assert a
right of prior use is a personal right and cannot be licensed,
assigned, or transferred to any other person except to the
patentee, or as part of the assignment or transfer, in good
faith, of the entire enterprise or business to which the
defense relates. This subsection is intended to permit a
business to continue to use the subject matter related to the
defense in circumstances in which there has been a good faith
transfer of the entire enterprise or business but to prohibit
any attempt to sell or license the defense itself.
Subsection (c)(7) provides that, to assert a defense of
prior use, a person, or someone in privity with that person,
must have been using the subject matter commercially or have
reduced the subject matter to practice more than one year prior
to the effective filing date of the patent.
Subsection (d) is intended to ensure that the defense is
raised only in circumstances in which its assertion is
reasonable. The subsection requires that a court find the case
exceptional and award attorney's fees under section 285 of
title 35, United States Code, if the defense is pleaded by a
person who is found to infringe a patent and who fails to show
a reasonable basis for asserting the defense.
Subsection (e) provides that a patent cannot be deemed to
be invalid under section 102 or 103 of title 35 solely because
a defense is established under section 273(b). Any
determination under section 102 or 103 must be established
separately, although evidence used to establish a defense of
prior use could be used in connection with establishing
invalidity under those sections.
Subsection (b) of section 302 of the Act amends the table
of sections at the beginning of chapter 28 of title 35 to add
the heading for section 273, ``Prior domestic commercial use;
defense to infringement.''
Section 303.--Effective date and applicability
This section makes the amendments provided for in title III
effective on the date of enactment of the Act. The section
specifies, however, that the amendments shall not apply to any
action for infringement pending on the date of enactment or to
any subject matter for which an adjudication of infringement,
including any consent judgment, was made before the date of
enactment.
TITLE IV--INVENTOR PROTECTION
Section 401.--Short title
This section provides that the title may be cited as the
``Inventor Protection Act of 1996.''
Section 402.--Invention development services
This section adds a new chapter 5 to Part I of title 35,
United States Code, consisting of sections 51 through 59.
Invention development companies can be of great assistance to
independent inventors providing a single source to evaluate an
invention, assist in developing its technical potential, assist
in obtaining protection for it, and assist in promoting it in
order to license or sell it. 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 tool for independent inventors
to use if they are the target of the predatory practices of
unscrupulous invention development companies.
New section 51 of title 35 defines the terms used in the
chapter. The terms used in the chapter are defined broadly in
order to ensure that organizations that would prey upon
inventors cannot escape the reach of the chapter merely by
using titles and business descriptions artfully. Subsection
(3), however, excepts from the definition of ``invention
promoter'' departments and agencies of the Federal, state, and
local governments; charitable, scientific, or educational
organizations qualified under applicable State laws or
described under section 170(b)(1)(A) of the Internal Revenue
Code of 1986; or any person registered and in good standing
with the U.S. Patent and Trademark Office (PTO) who is acting
within the scope of his or her registration to practice before
the PTO.
The Committee is in agreement that the exclusion provide
for in Sec. 51(3)(c) does not totally exempt patent attorneys
from regulation under the act. The exception provides that any
person registered to practice before the Patent and Trademark
Office is exempt from regulation when acting within the scope
of that person's registration to practice before the Patent and
Trademark Office. However, the Committee recognizes that patent
attorneys may provide services which fall outside the scope of
their registration to practice before the Patent and Trademark
Office and within the definition of invention development
services. Whenever a patent attorney engages in conduct
described in Sec. 51(4)(B) and (C), he or she will be subject
to the provisions of this act.
New subsection 52(a) requires that contracts for invention
development services be in writing and that a copy of the
signed contract be provided to the customer at the time he or
she enters into the contract. Even in the event the contract is
entered into on behalf of a third party, that third party is to
be treated as a customer and the provisions of the chapter
apply.
Subsection 52(b) requires invention developers to provide
to customers at the time a contract is entered into a written
document stating whether the developer customarily seeks more
than one contract in connection with an invention and seeks to
perform services in connection with an invention in 1 or more
phases, using 1 or more contracts governing the performance at
each phase. In addition, invention developers must provide the
customer with a copy of the written contract together with a
summary, in writing, describing the developer's usual business
practices, including the customary terms in contracts and the
approximate amount of the usual fees or other consideration
that the customer will be charged for each service provided by
the invention developer.
Subsection 52(c) provides the customer with the right to
terminate a contract for invention development services by
sending a letter to the invention developer stating the
customer's intent to cancel. This right may not be waived in
the contract for invention development services. To execute the
right to terminate, the customer must send the letter within
five business days after both the customer and the inventions
developer execute the invention development contract. It is the
intention of the Congress to give the customer a ``cooling
off'' period in which the customer can effectively change his
or her mind. The delivery of a promissory note, check, bill of
exchange, or other negotiable instrument to the invention
developer or a third party for the benefit of the invention
developer is deemed payment received by the invention developer
on the date received, even though the date or dates in such
instruments differ from the date of receipt.
New section 53(a) of title 35 requires that every contract
for invention development services include a cover sheet with
the notice included in the legislation in legible, bold-face
type of not less than 12-point size, explaining the right of
termination; giving information regarding the number of
inventions evaluated by the invention developer and stating the
number of those evaluated positively and the number negatively;
advising the customer that assigning rights to the invention
developer can allow sale or other disposal of the invention by
the latter without sharing the profits; advising the customer
of the number of customers who have contracted for services
with the invention developer in the prior five years and how
many of them have earned more than the cost of the services due
to the performance of the invention developer; informing the
customer of the invention development companies with which the
invention developer's officer have been affiliated in the
previous ten years to enable the customer to check out the
reputations of these companies; and encouraging the customer to
consult an attorney before entering in the contract and
advising that rights can be lost by proceeding pro se before
the PTO.
Subsection 53(b) requires that the cover notice, in
addition to the obligatory text, include the name, primary
office address, and local office address of the invention
developer. The subsection prohibits inclusion of other matter.
Subsection 53(c) allows the invention developer to delete
from the total number of customers who have contracted with the
organization provided for in subsection 53(a) the customers who
have purchased trade show services, research, advertising, or
other non-marketing services from the invention developer. The
invention developer also need not include those who have
defaulted in their payments under invention development
contracts.
Subsection 54 of title 35 requires the invention developer
to provide each customer who has contracted for invention
development services a written report at least once every three
months during the term of the contract. The report must
describe fully, clearly, and concisely, the services performed
by the invention developer on behalf of the customer during the
report period and the services to be performed, giving the
names of the persons who will perform those services. The
report must include the name and address of each person, firm,
corporation, or other entity to whom the invention that is the
subject matter of the contract has been disclosed, the reason
for the disclosure, and the nature of the disclosure. Where
more than one person has been contacted in a particular
corporation or entity, it will suffice to include the name and
address of one of the people contacted and of the corporation
or entity. Copies of all responses received as a result of the
disclosure must be provided. The purpose of this section is to
ensure that the customer is kept fully informed of the services
being performed on his or her behalf and the results of those
services so that the customer may take appropriate action if
they are not receiving the service required under the contract.
New subsection 55(a) requires that all contracts for
invention development services include, in bold-face type of
not less than 12-point type: the terms and conditions of
payment and the contract termination rights required by section
52; a statement making it clear that the contract is not
executed until the customer makes a payment to the invention
developer and, therefore, the customer can avoid executing the
contract by not making such a payment; a complete, clear, and
concise description of the specific acts and services that the
invention developer is to perform for the customer; a clear
statement indicating whether the invention developer is going
to construct, sell, or distribute any prototypes, models, or
devices embodying the customer's invention and, if so, how
many; the full name and principal place of business developer
and, to the extent known at the time the contract is entered
into, the name and principal place of business of any parent,
subsidiary, agent, independent contractor, and any affiliated
company or person who will perform any service or act that the
invention developer has undertaken to perform for the customer;
a statement of any estimation or projection of customer
earnings resulting from the invention that has been given
orally or in writing by the invention developer or anyone on
behalf of the invention developer, and a full description of
the data on which that estimation or projection was based; the
name and address of the organization or person who is to be the
custodian of all the records and correspondence related to the
contracted for invention development services and an
unequivocal statement acknowledging that the invention
developer is required to maintain all such records and
correspondence for the customer for at least two years
following the expiration of the invention development services
contract; and a statement of the time schedule for performance
of the invention development services with an estimated date by
which the performance of services is expected to be completed.
It is the intent of this legislation that the invention
developer ensure that all material information be provided to
the customer so that the customer can make an informed decision
in entering into any contract for development services.
Subsection 55(b) makes it clear that, if the invention
developer has discretion regarding the nature of the specific
acts and services the invention developer is to perform for the
customer, as those acts and services are described in the
contract, the invention developer will be deemed to be
fiduciary with all corresponding obligations with respect to
the customer.
Subsection 55(c) requires that, within 7 days of written
notice to the invention developer or the custodian of records
and correspondence identified in the contract for invention
development services, such custodian must make available to the
customer or the customer's representative for review and
copying all records and correspondence related to the invention
development contract. The review and copying shall take place
on the invention developer's premises during normal business
hours and any fees for copying shall be reasonable.
Subsection 56(a) authorizes the customer to declare void
any contract for invention development services that does not
conform to the requirements of chapter 5 of Part I of title 35,
United States Code. In addition, the subsection authorizes the
customer to void any contract entered into in reliance on any
false, fraudulent, or misleading information, representation,
notice, or advertisement of the invention developer that is
material where the contract provides for filing an application
to obtain a utility, design, or plant patent. An exception
exists where the contract makes it clear that the filing of
such application will be done by an agent or attorney
registered to practice before the PTO and such filing is, in
fact, performed by such agent or attorney. Finally, subsection
56(a) makes void and unenforceable any waiver by a customer of
any provision required by chapter 4.
Subsection 56(b) establishes a civil cause of action
against any invention developer who injures a customer through
a violation of any of the obligations of chapter 5 or through
any false or fraudulent statement, representation, or omission
of material fact by the invention developer, or any person
acting on behalf of the invention developer, or through failure
of the invention developer to make all the disclosures required
under the chapter. In such a civil action, the customer may
recover from the invention developer, or any officers,
directors, or partners of such developer, reasonable costs,
attorneys' fees, and the greater of $5000 or the amount of
actual damages sustained by the customer. Subsection (b)
authorizes the court to increase damages in egregious cases to
an amount not to exceed 3 times the amount awarded as statutory
or actual damages.
Subsection 56(c) establishes a rebuttable presumption of
injury in the event of any substantial violation of chapter 5
by an invention developer or of execution of an invention
development services contract by a customer in reliance on any
false or fraudulent statements, representations, or material
omissions by the invention developer or any person acting on
behalf of the invention developer.
Subsection 57(a) requires the Commissioner of the PTO to
retain all complaints submitted to the PTO regarding invention
developers, together with any responses by invention developers
to those complaints, and to make such complaints and responses
available to the public.
Subsection 57(b) authorizes the Commissioner to request
from Federal and State agencies copies of any complaints
relating to invention development services they have received
and to include those complaints in the records maintained by
the PTO regarding invention development services.
Section 58 provides that making false or misleading
statements or representations to a customer, omitting any
material fact in a communication with a customer, or failing to
make all the disclosures required by chapter 5 is a misdemeanor
and authorizes a fine of not more than $10,000 for each such
offense.
Section 59 makes is clear that the provisions of chapter 5
are not to be construed to affect any other obligation, right,
or remedy that is provided under any other Federal or State
law.
Section 403.--Technical and conforming amendment
This section amends the table of chapters of Part I of
title 35, United States Code to add a heading for chapter 5.
Section 404.--Effective date
This section specifies that the title and the amendments
made by it will be effective 60 days after the date of
enactment of the Act.
Title V--Patent Reexamination Reform
Section 501.--Short title
This section provides a short title: ``Patent Reexamination
Reform Act of 1996.''
Section 502.--Definitions
This section amends 35 U.S.C. Sec. 100 to add a definition
for the term ``third-party requester''. A third-party requester
is defined as a person requesting reexamination under 35 U.S.C.
Sec. 302 who is not the patent owner.
Section 503.--Reexamination procedures
This section amends the reexamination procedures set forth
in chapter 30 of title 35, United States Code, to broaden the
basis for, and scope of, reexamination to increase third-party
requester participation in reexamination procedures and appeals
and to preclude reexamination in certain circumstances.
Subsection (a) amends 35 U.S.C. Sec. 302 to provide an
additional basis for a patent owner or a third party to request
reexamination. The additional basis is that a substantial new
question of patentability exists for any claim of a patent due
to a lack of compliance of that claim with the requirements of
35 U.S.C. Sec. 112 except for the requirement to set forth the
best mode of carrying out the invention. It also requires that
the request identify the real party in interest.
Subsection (b) amends each subsection of 35 U.S.C.
Sec. 303. Subsection (b) amends 35 U.S.C. Sec. 303(a) to
provide an additional basis for determining whether a
substantial new question of patentability exists in
Commissioner-initiated reexaminations, namely the failure of
one or more claims of a patent to comply with the requirements
of 35 U.S.C. Sec. 112 other than the best mode requirement.
Reexamination of a new question of patentability may involve
reconsideration of patents and publications considered during
the original examination, the examination of a reissue patent
or an earlier concluded prior reexamination. Such patents and
publications may be considered alone or in combination with
patents and publications not previously considered. Although a
new question of patentability can be raised by the same patents
and printed publications previously considered by the Office, a
new question cannot be based solely on an issue that has
already been decided by the Office.
Subsection (b) amends 35 U.S.C. Sec. 303(b) by substituting
the ``term third-party'' requester for the phrase ``person
requesting reexamination.'' Subsection (b) amends 35 U.S.C.
Sec. 303(c) by removing the phrase ``that no substantial new
question of patentability has been raised'' from the first
sentence of this subsection. This change clarifies that all
determinations of the Commissioner under subsection (a) (e.g.,
that a substantial new question of patentability has or has not
been raised) are nonappealable. This amendment codifies
existing case law which provides that a positive determination
by the Commissioner that a substantial new question of
patentability has been raised is nonappealable. The phrase
``that no new question of patentability has been raised'' is
added to the second sentence of this subsection to clarify that
refunds may be made for negative determinations. Review of
negative determinations should remain available for both patent
owner requesters and third-party requesters by petition to the
Commissioner under 37 C.F.R. Sec. 1.181, as currently provided
for in 37 C.F.R. Sec. 1.515(c).
Subsection (c) amends 35 U.S.C. Sec. 304 to provide that
the initial PTO action on the merits of a reexamination may
accompany the order granting the reexamination request. This
amendment also deletes provisions that allow the patent owner
to file a preliminary statement, which must be served on any
third-party requester, and may allow the third-party requester
to file a reply to the patent owner's statement. These changes
are made in view of the procedure in subsection (d) of this
Section.
Subsection (d) amends the first sentence of 35 U.S.C.
Sec. 305 by deleting the reference to the procedures of 35
U.S.C. Sec. 304 relating to the patent owner statement and
third-party requester reply, which are deleted by subsection
(c) of this Section. Subsection (d) also amends 35 U.S.C.
Sec. 305 to simplify the authority of a patent owner to amend
the patent or any of its claims or to present new claims. The
change permits a patent owner to amend an existing claim or to
add a new claim for any reason once a reexamination proceeding
has been established. The change does not alter the prohibition
imposed by the third sentence of Sec. 305 against amendments or
new claims that would enlarge the scope of the claims relative
to the claims in the patent as originally issued. Subsection
(d) then designates the existing provisions of 35 U.S.C.
Sec. 305, so modified, as subsection 305(a). Reexamination of a
new question of patentability may involve reconsideration of
patents and publications considered during the original
examination, the examination of a reissue patent, or an earlier
concluded prior reexamination. Such patents and publications
may be considered alone or in combination with patents and
publications not previously considered. Although a new question
of patentability can be raised by the same patents and printed
publications previously considered by the Office, a new
question cannot be based solely on an issue that has already
been decided by the Office.
Subsection (d) also amends 35 U.S.C. Sec. 305 to add a new
subsection, Sec. 305(b), to address reexamination proceedings
based on a request from a third-party requester. The new
Sec. 305(b)(2) requires that any document filed by either the
patent owner or a third-party requester be served on all other
parties to the reexamination proceeding, with the exception of
the request for reexamination. The new Sec. 305(b)(2) provides
that a third-party requester may submit one set of written
comments to the office in reply to a response by the patent
owner to any Office action. The written reply must be limited
to issues covered by the Office action or raised in the patent
owner's response thereto. This subsection provides that the
third party must submit the comments within a reasonable
period, such period to be not less than one month from the date
of service by the patent owner of its response to any Office
action.
Additionally, subsection (d) designates the last sentence
of existing 35 U.S.C. Sec. 305 as 35 U.S.C. Sec. 305(c), and
amends this sentence by providing an exception to the ``special
dispatch'' requirement where so provided by the Commissioner
for good cause.
While no statutory provision is added by this Act to
address interviews conducted before the examiner during
reexamination, it is intended that the Office, through
rulemaking, will provide third-party requesters the right to
participate in any examiner interview initiated by the patent
owner or by the examiner, and that such interviews will be
conducted under controlled conditions before the examiner and
an additional, more senior, Office representative. The third
party should not be permitted to initiate examiner interviews.
Subsection (e) amends 35 U.S.C. Sec. 306 by designating the
current provisions relating to appeal rights of the patent
owner as subsection 306(a) and by making amendments thereto,
and by adding two new subsections, 306(b) and 306(c), to
provide third-party requesters with appeal rights and to create
an estoppel effect, respectively.
Subsection 306(a) provides the patent owner with a right to
be a party to any appeal taken by a third-party requester
pursuant to subsection 306(b). In addition, subsection 306(a)
is amended to remove the availability of review under 35 U.S.C.
Sec. 145, while maintaining the availability of review under 35
U.S.C. Sec. 134 and 35 U.S.C. Sec. Sec. 141-144. By this
amendment, patent owners dissatisfied with a decision of the
Board of Patent Appeals and Interferences in a reexamination
proceeding would no longer be permitted to file a civil action
against the Commissioner in the U.S. District Court for the
District of Columbia, but could continue to appeal such
decision to the U.S. Court of Appeals for the Federal Circuit.
Subsection 306(b) provides third-party requesters with
appeal rights that parallel those provided to patent owners.
Under subsection 306(b), third-party requesters may appeal any
final decision favorable to the patentability of any original
or proposed amended or new claim of the patent under the
provisions of 35 U.S.C. Sec. 134. They may also seek court
review under 35 U.S.C. Sec. Sec. 141-144, and may be a party to
any appeal taken by the patent owner, subject to the provisions
of 35 U.S.C. Sec. 306(c).
Subsection 306(c)(1) provides that a third-party requester
who files an appeal or participates as a party to an appeal by
the patent owner under the provisions of 35 U.S.C.
Sec. Sec. 141-144, is estopped from later asserting, in any
forum, the invalidity of any claim determined to be patentable
on appeal on any ground which the third-party requester raised
or could have raised during the reexamination proceedings,
including the request for reexamination. Subsection 306(c)(2)
provides that a third-party requester is deemed not to have
participated as a party to an appeal by the patent owner
unless, within twenty days after the patent owner has filed
notice of appeal, the third-party requester files notice with
the Commissioner electing to participate.
Subsection (f)(1) adds a new section, 35 U.S.C. Sec. 308,
having two subsections, 308(a) and 308(b). This new section
prohibits reexamination in two circumstances, notwithstanding
any other reexamination provision. First, section 308(a)
provides that, once an order for reexamination of a patent has
been issued under section 35 U.S.C. Sec. 304, neither the
patent owner nor a third-party requester may file a subsequent
request for reexamination of the patent until a reexamination
certificate is issued and published under section 35 U.S.C.
Sec. 307, unless authorized by the Commissioner.
Second, Sec. 308(b) provides that once a judgment has been
entered against a party to a civil action arising in whole or
in part under 28 U.S.C. Sec. 1338 that the party has not
sustained its burden of proving the invalidity of any patent
claims in suit, then neither that party nor its privies may
thereafter request reexamination of any such patent claim on
the basis of issues which that party or its privies raised or
could have raised in that action. A reexamination requested by
such a party or by a party in privity with such a party on the
basis of such issues may not be maintained by the Office. This
provision avoids the potential for inconsistent treatment by
the Office of patent claims in a reexamination after a final
judicial determination of validity that the same patent claims
are not valid. Subsection 308(b) applies to any action that
could be brought under Sec. 1338 regardless of whether that
section is formally cited in the complaint.
Subsection (f)(2) amends the table of sections for chapter
30 of title 35, United States Code, to add the section heading,
``308. Reexamination Prohibited.'' for the new section added by
subsection 503(f)(1) of this Act.
Section 504.--Conforming amendments
Subsection (a) amends 35 U.S.C. Sec. 7(b) to authorize the
Board to review decisions of examiners upon written appeal of a
patent owner or a third-party requester in reexamination
proceedings.
Subsection (b) amends 35 U.S.C. Sec. 41(a)(7) to provide
the authority for the Commissioner to accept the filing of an
unintentionally delayed response by the patent owner in a
reexamination proceeding and for charging a fee for such
filing.
Subsection (c) amends 35 U.S.C. Sec. 134 to provide for
review of examiner decisions by the Board in reexamination
proceedings upon written appeal by a patent owner or by a
third-party requester. Specifically, subsection (b) amends 35
U.S.C. Sec. 134 by designating the existing provisions as
subsection 134(a) and by adding two new subsections, designated
as subsections 134(b) and 134(c). Subsection 134(b) permits a
patent owner in a reexamination proceeding to appeal to the
Board from the final rejection of any claim by the primary
examiner, having once paid the fee for such appeal. Subsection
134(c) permits third-party requesters to appeal to the Board
from the final decision of the primary examiner favorable to
the patentability of any original or proposed amended or new
claim of a patent, having once paid the fee for such appeal.
Subsection (d) amends 35 U.S.C. Sec. 141 to permit patent
owners and third-party requesters dissatisfied with the final
decision in an appeal under 35 U.S.C. Sec. 134 to appeal to the
Court of Appeals for the Federal Circuit.
Subsection (e) amends 35 U.S.C. Sec. 143 to require the
Commissioner to make submissions to the court in reexamination
cases, as well as in ex parte cases. Currently, this section
only requires such submissions in ex parte cases. This
amendment would require the Commissioner to make submissions to
the court in reexamination cases even when they are not ex
parte, but rather involve a third-party requester.
Subsection (f) amends 35 U.S.C. Sec. 145 to conform to the
amendments made to 35 U.S.C. Sec. 134. Specifically, this
section amends Sec. 145 to provide that appeals under Sec. 145
may only be initiated by patent applicants, and not by a patent
owner or a third-party requester who is a participant in a
reexamination proceeding.
Section 505.--Effective date
This section provides that this title and the amendments
made by this title shall take effect six months after the date
of enactment of this Act, and that they shall apply only to
those reexamination requests that are filed on or after that
date.
Title VI--Miscellaneous Patent Provisions
Section 601.--Provisional applications
This section amends section 111(b)(5) of title 35 to
enhance the attractiveness of filing provisional applications
by providing a basis for converting provisional applications to
non-provisional applications. A basis for converting non-
provisional applications to provisional applications is already
provided. This enhancement is provided in subsection 111(b)(5)
by providing that notwithstanding the absence of a claim, upon
timely request and as prescribed by the Commissioner, a
provisional application may be treated as an application filed
under subsection (a) of section 111. Further, the amendment
provides that if no such request is made, the provisional
application shall be regarded as abandoned 12 months after the
filing date of such application and shall not be subject to
revival thereafter. Accordingly, a provisional application
could be converted to a non-provisional application, be
subjected to examination and, depending upon the outcome of the
examination process, ultimately lead to the issue of a patent.
This amendment would be effective upon enactment and would
apply to provisional applications filed on or after June 8,
1995.
Section 602.--International applications
Section 119(a) has been amended to permit persons, who
filed an application for patent first in a WTO member country,
to claim the right of priority in a subsequent patent
application filed in the United States, even is 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. 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, however, some WTO member countries
are not yet members of the Paris Convention, and as developing
countries are permitted periods of up to 10 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.
In subsection (b), the term ``foreign intellectual property
authority'' has been substituted for ``patent office of the
foreign country'' to clarify that regional patent offices are
included, as well as international organizations acting as
receiving offices under the Patent Cooperation Treaty.
Subsection (f) has been added to section 119 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 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 protection for a plant variety in this
country.
Subsection (g) has been added to section 119 to define the
terms ``WTO member country'' and ``UPOV Contracting Party.''
Section 603.--Plant patents
Subsection (a) of Section 603 allows for the patenting of
tuber propagated plants.
Subsection (b) of Section 603 corrects a flaw in the
wording of 35 U.S.C. Sec. 163 to clarify that a plant patent
includes the right to exclude others from using, offering for
sale, selling, or importing both the entire plant and any of
its parts.
Section 604.--Just compensation for U.S. government use of patents
When the government takes a person's patent, he or she may
bring suit to recover damages against the United States in the
Court of Federal Claims under the Tucker Acts, 28 U.S.C.
Sec. Sec. 1346(a)(2) and 1491. Another section, 28 U.S.C.
Sec. 1498, provides the remedy for a patent owner plaintiff
stating that he shall be awarded ``reasonable and entire
compensation'' for the taking of his patent rights by the
government. Courts have ruled that this ``reasonable and entire
compensation'' is equal to the ``just compensation'' required
by the Fifth Amendment for government takings by eminent
domain. See Waite v. United States, 282 U.S. 508, 509 (1931).
The assessment of litigation fees and costs against the United
States in eminent domain cases is not required by the Fifth
Amendment, and thus is not part of the ``reasonable and entire
compensation'' required under 28 U.S.C. Sec. 1498. Accordingly,
such fees and costs can only be authorized by statute. United
States v. Bodcaw Co., 440 U.S. 202, 203 (1979).
Congress provided such authorization for legal fees and
costs in cases related to the taking of real property by the
United States when it passed the ``Uniform Relocation
Assistance and Real Property Acquisition Policies Act of
1970.'' 42 U.S.C. Sec. 4654. No such provision exists, however,
for the taking of intellectual property, specifically in the
case where the government is found liable for taking a patent.
See Calhoun v. United States, 453 F.2d 1385, 1395-96 (Ct. Cl.
1972). Section 604 provides this authorization so that
independent, non-profit, and small business patent owners whose
patents have been infringed can recover the expensive costs
required to obtain their damages.
Some have suggested that the Equal Access to Justice Act of
1980, 28 U.S.C. Sec. 2412 (``EAJA''), which makes the
government liable for attorney's fees and costs to the extent
that any such fees would be awarded against a private party, be
relied upon in lieu of enacting the specific provisions of
section 604. Private parties are liable for fees and costs in
``exceptional cases of patent infringement'' under 35 U.S.C.
285. The problem arises because of the differing nature of a
patent infringement suit against a private party compared with
one against the government. A suite against a private party in
based in tort whereas one against the government is based on
eminent domain. Leesona Corp. v. United States, 599 F.2d. 958,
966-969 (Ct. Cl. 1976). The government is never guilty of
direct infringement of a patent insofar as direct infringement
means tortious or wrongful conduct. Decca Ltd. v. United
States, 640 F.d2 1156, 1166 (Ct. Cl. 1980); ITT Corp. v. United
States, 17 Cl. Ct. 199, 202 (1989). Because the suits are not
directly analogous, it has been held that the EAJA does not
apply to patent owners who must sue the government for
infringement to recover just compensation. De Graffenried v.
United States, 29 Fed. Cl. 384, 386-87 (1993). No owner has yet
been able to recover any of its litigation costs under the
EAJA. Under the Act, costs must be assessed against the
government when a small business or non-profit claimant
prevails in a suit in which it otherwise could have claimed
fees and costs against a private party, but will not be awarded
when the government's position in the litigation is
``substantially justified.''
Currently, equity cannot be done in reimbursing patent
owners for fees and costs because the courts have generally
taken the position that if Congress had intended to include
such reimbursement, it should have said so specifically. That
is what this bill does--it says so specifically. It authorizes
the express recovery of reasonable costs and fees by small
businesses, non-profit entities, or independent patent owners
who are forced to litigate against the government to obtain
compensation for infringement by the government. Under the
bill, the fees and costs in each case will be scrutinized by
the Court of Federal Claims to assure that they are reasonable.
The effective date provision applies to action pending on,
or brought on or after, the date of enactment of this Act. By
reference to actions that are pending, the Committee intends to
cover any action under section 1498(a) that has been filed in
the United States Court of Federal Claims and that has not yet
been finally disposed of in all respects. Thus, it is intended
to apply to any action pending on the issues of liability,
damages, or compensation of costs pending in front of the
United States Court of Federal Claims or on appeal to the
United States Court for the Federal Circuit. The term
``actions'' has the same meaning as applied to the term
``cases'' in United States v. 1002.35 Acres of Land, 942 F.2d
733 (10th Cir. 1991) and as applied to the terms ``any case''
any ``any appeal'' in Jones v. Brown, 41 F.3d 634 (Fed. Cir.
1994).
Section 605.--Electronic filing
Section 605 amends Sec. 22 of title 35 to make it clear
that the PTO can receive in an electronic format.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
TITLE 35, UNITED STATES CODE
Part Sec.
Patent and Trademark Office.....................................1]
United States Patent and Trademark Office........................1
* * * * * * *
[PART I--PATENT AND TRADEMARK OFFICE]
PART I--UNITED STATES PATENT AND TRADEMARK OFFICE
Chap. Sec.
[1. Establishment, Officers, Functions............................ 1]
1. Establishment, Officers and Employees, Functions............... 1
* * * * * * *
5. Invention Development Services................................. 51
* * * * * * *
[CHAPTER 1--ESTABLISHMENT, OFFICERS, FUNCTIONS
[Sec.
[1. Establishment.
[2. Seal.
[3. Officers and employees.
[4. Restrictions on officers and employees as to interest in patents.
[6. Duties of Commissioner.
[7. Board of Patent Appeals and Interferences.
[8. Library.
[9. Classification of patents.
[10. Certified copies of records.
[11. Publications.
[12. Exchange of copies of patents with foreign countries.
[13. Copies of patents for public libraries.
[14. Annual report to Congress.]
CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS
Sec.
1. Establishment.
2. Powers and duties.
3. Officers and employees.
4. Restrictions on officers and employees as to interest in patents.
5. Patent and Trademark Office Management Advisory Board.
6. Board of Patent Appeals and Interferences.
7. Suits by and against the Office.
8. Library.
9. Classification of patents.
10. Certified copies of records.
11. Publications.
12. Exchange of copies of patents with foreign countries.
13. Copies of patents for public libraries.
14. Annual report to Congress.
[Sec. 1. Establishment
[The Patent and Trademark Office shall continue as an office
in the Department of Commerce, where records, books, drawings,
specifications, and other papers and things pertaining to
patents and to trademark registrations shall be kept and
preserved, except as otherwise provided by law.
[Sec. 2. Seal
[The Patent and Trademark Office shall have a seal with which
letters patent, certificates of trade-mark registrations, and
papers issued from the Office shall be authenticated.
[Sec. 3. Officers and employees
[(a) There shall be in the Patent and Trademark Office a
Commissioner of Patents and Trademarks, a Deputy Commissioner,
two Assistant Commissioners, and examiners-in-chief appointed
under section 7 of this title. The Deputy Commissioner, or, in
the event of a vacancy in that office, the Assistant
Commissioner senior in date of appointment shall fill the
office of Commissioner during a vacancy in that office until
the Commissioner is appointed and takes office. The
Commissioner of Patents and Trademarks, the Deputy
Commissioner, and the Assistant Commissioners shall be
appointed by the President, by and with the advice and consent
of the Senate. The Secretary of Commerce, upon the nomination
of the Commissioner, in accordance with law shall appoint all
other officers and employees.
[(b) The Secretary of Commerce may vest in himself the
functions of the Patent and Trademark Office and its officers
and employees specified in this title and may from time to time
authorize their performance by any other officer or employee.
[(c) The Secretary of Commerce is authorized to fix the per
annum rate of basic compensation of each examiner-in-chief in
the Patent and Trademark Office at not in excess of the maximum
scheduled rate provided for positions in grade 17 of the
General Schedule of the Classification Act of 1949, as amended.
[(d) The Commissioner of Patents and Trademarks shall be an
Assistant Secretary of Commerce and shall receive compensation
at the rate prescribed by law for Assistant Secretaries of
Commerce.
[(e) The members of the Trademark Trial and Appeal Board of
the Patent and Trademark Office shall each be paid at a rate
not to exceed the maximum rate of basic pay payable for GS-16
of the General Schedule under section 5332 of title 5.]
Sec. 1. Establishment
(a) Establishment.--The United States Patent and Trademark
Office is established as a wholly owned Government corporation
subject to chapter 91 of title 31, and shall be an agency of
the United States under the policy direction of the Secretary
of Commerce, except as otherwise provided in this title. For
purposes of internal management, the United States Patent and
Trademark Office shall be a corporate body not subject to
supervision by any department, except as otherwise provided in
this title.
(b) Offices.--The United States Patent and Trademark Office
shall maintain an office in the District of Columbia, or the
metropolitan area thereof, for the service of process and
papers and shall be deemed, for purposes of venue in civil
actions, to be a resident of the district in which its
principal office is located. The United States Patent and
Trademark Office may establish offices in such other places as
it considers necessary or appropriate in the conduct of its
business.
(c) Reference.--For purposes of this title, the United States
Patent and Trademark Office shall also be referred to as the
``Office'' and the ``Patent and Trademark Office''.
Sec. 2. Powers and Duties
(a) In General.--The United States Patent and Trademark
Office shall be responsible for--
(1) the granting and issuing of patents and the
registration of trademarks;
(2) conducting studies, programs, or exchanges of
items or services regarding domestic and international
patent and trademark law, the administration of the
Office, or any other function vested in the Office by
law, including programs to recognize, identify, assess,
and forecast the technology of patented inventions and
their utility to industry;
(3)(A) authorizing or conducting studies and programs
cooperatively with foreign patent and trademark offices
and international organizations, in connection with the
granting and issuing of patents and the registration of
trademarks; and
(B) with the concurrence of the Secretary of State,
authorizing the transfer of not to exceed $100,000 in
any year to the Department of State for the purpose of
making special payments to international
intergovernmental organizations for studies and
programs for advancing international cooperation
concerning patents, trademarks, and related matters;
and
(4) disseminating to the public information with
respect to patents and trademarks.
The special payments under paragraph (3)(B) shall be in
addition to any other payments or contributions to
international organizations described in paragraph (3)(B) and
shall not be subject to any limitations imposed by law on the
amounts of such other payments or contributions by the United
States Government.
(b) Specific Powers.--The Office--
(1) shall have perpetual succession;
(2) shall adopt and use a corporate seal, which shall
be judicially noticed and with which letters patent,
certificates of trademark registrations, and papers
issued by the Office shall be authenticated;
(3) may sue and be sued in its corporate name and be
represented by its own attorneys in all judicial and
administrative proceedings, subject to the provisions
of section 8;
(4) may indemnify the Commissioner of Patents and
Trademarks, and other officers, attorneys, agents, and
employees (including members of the Management Advisory
Board established in section 5) of the Office for
liabilities and expenses incurred within the scope of
their employment;
(5) may adopt, amend, and repeal bylaws, rules,
regulations, and determinations, which--
(A) shall govern the manner in which its
business will be conducted and the powers
granted to it by law will be exercised;
(B) shall be made after notice and
opportunity for full participation by
interested public and private parties;
(C) shall facilitate and expedite the
processing of patent applications, particularly
those which can be filed, stored, processed,
searched, and retrieved electronically, subject
to the provisions of section 122 relating to
the confidential status of applications; and
(D) may govern the recognition and conduct of
agents, attorneys, or other persons
representing applicants or other parties before
the Office, and may require them, before being
recognized as representatives of applicants or
other persons, to show that they are of good
moral character and reputation and are
possessed of the necessary qualifications to
render to applicants or other persons valuable
service, advice, and assistance in the
presentation or prosecution of their
applications or other business before the
Office;
(6) may acquire, construct, purchase, lease, hold,
manage, operate, improve, alter, and renovate any real,
personal, or mixed property, or any interest therein,
as it considers necessary to carry out its functions;
(7)(A) may make such purchases, contracts for the
construction, maintenance, or management and operation
of facilities, and contracts for supplies or services,
without regard to the provisions of the Federal
Property and Administrative Services Act of 1949 (40
U.S.C. 471 and following), the Public Buildings Act (40
U.S.C. 601 and following), and the Stewart B. McKinney
Homeless Assistance Act (42 U.S.C. 11301 and
following); and
(B) may enter into and perform such purchases and
contracts for printing services, including the process
of composition, platemaking, presswork, silk screen
processes, binding, microform, and the products of such
processes, as it considers necessary to carry out the
functions of the Office, without regard to sections 501
through 517 and 1101 through 1123 of title 44;
(8) may use, with their consent, services, equipment,
personnel, and facilities of other departments,
agencies, and instrumentalities of the Federal
Government, on a reimbursable basis, and cooperate with
such other departments, agencies, and instrumentalities
in the establishment and use of services, equipment,
and facilities of the Office;
(9) may obtain from the Administrator of General
Services such services as the Administrator is
authorized to provide to other agencies of the United
States, on the same basis as those services are
provided to other agencies of the United States;
(10) may use, with the consent of the United States
and the agency, government, or international
organization concerned, the services, records,
facilities, or personnel of any State or local
government agency or instrumentality or foreign
government or international organization to perform
functions on its behalf;
(11) may determine the character of and the necessity
for its obligations and expenditures and the manner in
which they shall be incurred, allowed, and paid,
subject to the provisions of this title and the Act of
July 5, 1946 (commonly referred to as the `Trademark
Act of 1946');
(12) may retain and use all of its revenues and
receipts, including revenues from the sale, lease, or
disposal of any real, personal, or mixed property, or
any interest therein, of the Office, including for
research and development and capital investment,
subject to the provisions of section 10101 of the
Omnibus Budget Reconciliation Act of 1990 (35 U.S.C. 41
note);
(13) shall have the priority of the United States
with respect to the payment of debts from bankrupt,
insolvent, and decedents' estates;
(14) may accept monetary gifts or donations of
services, or of real, personal, or mixed property, in
order to carry out the functions of the Office;
(15) may execute, in accordance with its bylaws,
rules, and regulations, all instruments necessary and
appropriate in the exercise of any of its powers;
(16) may provide for liability insurance and
insurance against any loss in connection with its
property, other assets, or operations either by
contract or by self-insurance; and
(17) shall pay any settlement or judgment entered
against it from the funds of the Office and not from
amounts available under section 1304 of title 31.
Sec. 3. Officers and employees
(a) Commissioner.--
(1) In general.--The management of the United States
Patent and Trademark Office shall be vested in a
Commissioner of Patents and Trademarks (hereafter in
this title referred to as the `Commissioner'), who
shall be a citizen of the United States and who shall
be appointed by the President, by and with the advice
and consent of the Senate. The Commissioner shall be a
person who, by reason of professional background and
experience in patent or trademark law, is especially
qualified to manage the Office.
(2) Duties.--
(A) In general.--The Commissioner shall be
responsible for the management and direction of
the Office, including the issuance of patents
and the registration of trademarks, and shall
perform these duties in a fair, impartial, and
equitable manner.
(B) Advising the president.--The Commissioner
shall advise the President, through the
Secretary of Commerce, of all activities of the
Office undertaken in response to obligations of
the United States under treaties and executive
agreements, or which relate to cooperative
programs with those authorities of foreign
governments that are responsible for granting
patents or registering trademarks. The
Commissioner shall also recommend to the
President, through the Secretary of Commerce,
changes in law or policy which may improve the
ability of United States citizens to secure and
enforce patent rights or trademark rights in
the United States or in foreign countries.
(C) Consulting with the management advisory
board.--The Commissioner shall consult with the
Management Advisory Board established in
section 5 on a regular basis on matters
relating to the operation of the Office, and
shall consult with the Board before submitting
budgetary proposals to the Office of Management
and Budget or changing or proposing to change
patent or trademark user fees or patent or
trademark regulations.
(D) Security clearances.--The Commissioner,
in consultation with the Director of the Office
of Personnel Management, shall maintain a
program for identifying national security
positions and providing for appropriate
security clearances.
(3) Term.--The Commissioner shall serve a term of 5
years, and may continue to serve after the expiration
of the Commissioner's term until a successor is
appointed and assumes office. The Commissioner may be
reappointed to subsequent terms.
(4) Oath.--The Commissioner shall, before taking
office, take an oath to discharge faithfully the duties
of the Office.
(5) Compensation.--The Commissioner shall receive
compensation at the rate of pay in effect for level II
of the Executive Schedule under section 5313 of title
5.
(6) Removal.--The Commissioner may be removed from
office by the President only for cause.
(7) Designee of commissioner.--The Commissioner shall
designate an officer of the Office who shall be vested
with the authority to act in the capacity of the
Commissioner in the event of the absence or incapacity
of the Commissioner.
(b) Officers and Employees of the Office.--
(1) Deputy commissioners.--The Commissioner shall
appoint a Deputy Commissioner for Patents and a Deputy
Commissioner for Trademarks for terms that shall expire
on the date on which the Commissioner's term expires.
The Deputy Commissioner for Patents shall be a person
with demonstrated experience in patent law and the
Deputy Commissioner for Trademarks shall be a person
with demonstrated experience in trademark law. The
Deputy Commissioner for Patents and the Deputy
Commissioner for Trademarks shall be the principal
policy and management advisors to the Commissioner on
all aspects of the activities of the Office that affect
the administration of patent and trademark operations,
respectively.
(2) Other officers and employees.--The Commissioner
shall--
(A) appoint an Inspector General and such
other officers, employees (including
attorneys), and agents of the Office as the
Commissioner considers necessary to carry out
its functions;
(B) fix the compensation of such officers and
employees, except as otherwise provided in this
section; and
(C) define the authority and duties of such
officers and employees and delegate to them
such of the powers vested in the Office as the
Commissioner may determine.
The Office shall not be subject to any administratively
or statutorily imposed limitation on positions or
personnel, and no positions or personnel of the Office
shall be taken into account for purposes of applying
any such limitation.
(c) Limits on Compensation.--Except as otherwise provided by
law, the annual rate of basic pay of an officer or employee of
the Office may not be fixed at a rate that exceeds, and total
compensation payable to any such officer or employee for any
year may not exceed, the annual rate of basic pay in effect for
the Commissioner for the year involved. The Commissioner shall
prescribe such regulations as may be necessary to carry out
this subsection.
(d) Inapplicability of Title 5 Generally.--Except as
otherwise provided in this section, officers and employees of
the Office shall not be subject to the provisions of title 5
relating to Federal employees.
(e) Continued Applicability of Certain Provisions of Title
5.--
(1) In general.--The following provisions of title 5
shall apply to the Office and its officers and
employees:
(A) Section 3110 (relating to employment of
relatives; restrictions).
(B) Subchapter II of chapter 55 (relating to
withholding pay).
(C) Subchapters II and III of chapter 73
(relating to employment limitations and
political activities, respectively).
(D) Chapter 71 (relating to labor-management
relations), subject to paragraph (2) and
subsection (g).
(E) Section 3303 (relating to political
recommendations).
(F) Subchapter II of chapter 61 (relating to
flexible and compressed work schedules).
(2) Compensation subject to collective bargaining.--
(A) In general.--Notwithstanding any other
provision of law, for purposes of applying
chapter 71 of title 5 pursuant to paragraph
(1)(D), basic pay and other forms of
compensation shall be considered to be among
the matters as to which the duty to bargain in
good faith extends under such chapter.
(B) Exceptions.--The duty to bargain in good
faith shall not, by reason of subparagraph (A),
be considered to extend to any benefit under
title 5 which is afforded by paragraph (1),
(2), (3), or (4) of subsection (f).
(C) Limitations apply.--Nothing in this
subsection shall be considered to allow any
limitation under subsection (c) to be exceeded.
(f) Provisions of Title 5 that Continue to Apply, Subject to
Certain Requirements.--
(1) Retirement.--(A) The provisions of subchapter III
of chapter 83 and chapter 84 of title 5 shall apply to
the Office and its officers and employees, subject to
subparagraph (B).
(B)(i) The amount required of the Office under the
second sentence of section 8334(a)(1) of title 5 with
respect to any particular individual shall, instead of
the amount which would otherwise apply, be equal to the
normal-cost percentage (determined with respect to
officers and employees of the Office using dynamic
assumptions, as defined by section 8401(9) of such
title) of the individual's basic pay, minus the amount
required to be withheld from such pay under such
section 8334(a)(1).
(ii) The amount required of the Office under section
8334(k)(1)(B) of title 5 with respect to any particular
individual shall be equal to an amount computed in a
manner similar to that specified in clause (i), as
determined in accordance with clause (iii).
(iii) Any regulations necessary to carry out this
subparagraph shall be prescribed by the Office of
Personnel Management.
(C) The United States Patent and Trademark Office may
supplement the benefits provided under the preceding
provisions of this paragraph.
(2) Health benefits.--(A) The provisions of chapter
89 of title 5 shall apply to the Office and its
officers and employees, subject to subparagraph (B).
(B)(i) With respect to any individual who becomes an
officer or employee of the Office pursuant to
subsection (h), the eligibility of such individual to
participate in such program as an annuitant (or of any
other person to participate in such program as an
annuitant based on the death of such individual) shall
be determined disregarding the requirements of section
8905(b) of title 5. The preceding sentence shall not
apply if the individual ceases to be an officer or
employee of the Office for any period of time after
becoming an officer or employee of the Office pursuant
to subsection (h) and before separation.
(ii) The Government contributions authorized by
section 8906 for health benefits for anyone
participating in the health benefits program pursuant
to this subparagraph shall be made by the Office in the
same manner as provided under section 8906(g)(2) of
title 5 with respect to the United States Postal
Service for individuals associated therewith.
(iii) For purposes of this subparagraph, the term
`annuitant' has the meaning given such term by section
8901(3) of title 5.
(C) The Office may supplement the benefits provided
under the preceding provisions of this paragraph.
(3) Life insurance.--(A) The provisions of chapter 87
of title 5 shall apply to the Office and its officers
and employees, subject to subparagraph (B).
(B)(i) Eligibility for life insurance coverage after
retirement or while in receipt of compensation under
subchapter I of chapter 81 of title 5 shall be
determined, in the case of any individual who becomes
an officer or employee of the Office pursuant to
subsection (h), without regard to the requirements of
section 8706(b) (1) or (2), but subject to the
condition specified in the last sentence of paragraph
(2)(B)(i) of this subsection.
(ii) Government contributions under section 8708(d)
on behalf of any such individual shall be made by the
Office in the same manner as provided under paragraph
(3) thereof with respect to the United States Postal
Service for individuals associated therewith.
(C) The Office may supplement the benefits provided
under the preceding provisions of this paragraph.
(4) Employees' compensation fund.--(A) Officers and
employees of the Office shall not become ineligible to
participate in the program under chapter 81 of title 5,
relating to compensation for work injuries, by reason
of subsection (d).
(B) The Office shall remain responsible for
reimbursing the Employees' Compensation Fund, pursuant
to section 8147 of title 5, for compensation paid or
payable after the effective date of the Patent and
Trademark Office Government Corporation Act of 1996 in
accordance with chapter 81 of title 5 with regard to
any injury, disability, or death due to events arising
before such date, whether or not a claim has been filed
or is final on such date.
(g) Labor-Management Relations.--
(1) Labor relations and employee relations
programs.--The Office shall develop labor relations and
employee relations programs with the objective of
improving productivity and efficiency, incorporating
the following principles:
(A) Such programs shall be consistent with
the merit principles in section 2301(b) of
title 5.
(B) Such programs shall provide veterans
preference protections equivalent to those
established by sections 2108, 3308-3318, and
3320 of title 5.
(C)(i) The right to work shall not be subject
to undue restraint or coercion. The right to
work shall not be infringed or restricted in
any way based on membership in, affiliation
with, or financial support of a labor
organization.
(ii) No person shall be required, as a
condition of employment or continuation of
employment--
(I) to resign or refrain from
voluntary membership in, voluntary
affiliation with, or voluntary
financial support of a labor
organization;
(II) to become or remain a member of
a labor organization;
(III) to pay any dues, fees,
assessments, or other charges of any
kind or amount to a labor organization;
(IV) to pay to any charity or other
third party, in lieu of such payments,
any amount equivalent to or a pro-rata
portion of dues, fees, assessments, or
other charges regularly required of
members of a labor organization; or
(V) to be recommended, approved,
referred, or cleared by or through a
labor organization.
(iii) This subparagraph shall not apply to a
person described in section 7103(a)(2)(v) of
title 5 or a ``supervisor'', ``management
official'', or ``confidential employee'' as
those terms are defined in 7103(a)(10), (11),
and (13) of such title.
(iv) Any labor organization recognized by the
Office as the exclusive representative of a
unit of employees of the Office shall represent
the interests of all employees in that unit
without discrimination and without regard to
labor organization membership.
(2) Adoption of existing labor agreements.--The
Office shall adopt all labor agreements which are in
effect, as of the day before the effective date of the
Patent and Trademark Office Government Corporation Act
of 1996, with respect to such Office (as then in
effect).
(h) Carryover of Personnel.--
(1) From pto.--Effective as of the effective date of
the Patent and Trademark Office Government Corporation
Act of 1996, all officers and employees of the Patent
and Trademark Office on the day before such effective
date shall become officers and employees of the Office,
without a break in service.
(2) Other personnel.--Any individual who, on the day
before the effective date of the Patent and Trademark
Office Government Corporation Act of 1996, is an
officer or employee of the Department of Commerce
(other than an officer or employee under paragraph (1))
shall be transferred to the Office if--
(A) such individual serves in a position for
which a major function is the performance of
work reimbursed by the Patent and Trademark
Office, as determined by the Secretary of
Commerce;
(B) such individual serves in a position that
performed work in support of the Patent and
Trademark Office during at least half of the
incumbent's work time, as determined by the
Secretary of Commerce; or
(C) such transfer would be in the interest of
the Office, as determined by the Secretary of
Commerce in consultation with the Commissioner
of Patents and Trademarks.
Any transfer under this paragraph shall be effective as
of the same effective date as referred to in paragraph
(1), and shall be made without a break in service.
(3) Accumulated leave.--The amount of sick and annual
leave and compensatory time accumulated under title 5
before the effective date described in paragraph (1),
by those becoming officers or employees of the Office
pursuant to this subsection, are obligations of the
Office.
(4) Termination rights.--Any employee referred to in
paragraph (1) or (2) of this subsection whose
employment with the Office is terminated during the 2-
year period beginning on the effective date of the
Patent and Trademark Office Government Corporation Act
of 1996 shall be entitled to rights and benefits, to be
afforded by the Office, similar to those such employee
would have had under Federal law if termination had
occurred immediately before such date. An employee who
would have been entitled to appeal any such termination
to the Merit Systems Protection Board, if such
termination had occurred immediately before such
effective date, may appeal any such termination
occurring within this 2-year period to the Board under
such procedures as it may prescribe.
(5) Continuation in office of certain officers.--(A)
The individual serving as the Commissioner of Patents
and Trademarks on the day before the effective date of
the Patent and Trademark Office Government Corporation
Act of 1996 may serve as the Commissioner until the
date on which a Commissioner is appointed under
subsection (a).
(B) The individual serving as the Assistant
Commissioner for Patents on the day before the
effective date of the Patent and Trademark Office
Government Corporation Act of 1996 may serve as the
Deputy Commissioner for Patents until the date on which
a Deputy Commissioner for Patents is appointed under
subsection (b).
(C) The individual serving as the Assistant
Commissioner for Trademarks on the day before the
effective date of the Patent and Trademark Office
Government Corporation Act of 1996 may serve as the
Deputy Commissioner for Trademarks until the date on
which a Deputy Commissioner for Trademarks is appointed
under subsection (b).
(i) Competitive Status.--For purposes of appointment to a
position in the competitive service for which an officer or
employee of the Office is qualified, such officer or employee
shall not forfeit any competitive status, acquired by such
officer or employee before the effective date of the Patent and
Trademark Office Government Corporation Act of 1996, by reason
of becoming an officer or employee of the Office pursuant to
subsection (h).
(j) Savings Provisions.--
(1) In general.--Compensation, benefits, and other
terms and conditions of employment in effect
immediately before the effective date of the Patent and
Trademark Office Government Corporation Act of 1996,
whether provided by statute or by rules and regulations
of the former Patent and Trademark Office or the
executive branch of the Government of the United
States, shall continue to apply to officers and
employees of the Office, until changed in accordance
with this section (whether by action of the
Commissioner or otherwise).
(2) Provisions specific to basic pay.--With respect
to any individual who becomes an officer or employee of
the Office pursuant to subsection (h), the rate of
basic pay for such officer or employee may not, on or
after the effective date of the Patent and Trademark
Office Government Corporation Act of 1996, be less than
the rate in effect immediately before such effective
date, except--
(A) pursuant to a collective-bargaining
agreement entered into under this section; or
(B) for inefficiency, neglect of duty, or
misconduct, on the part of such individual.
For purposes of this subparagraph, the term ``basic
pay'' includes any amount considered to be part of
basic pay for purposes of subchapter III of chapter 83
or chapter 84 of title 5.
(k) Removal of Quasi-Judicial Examiners.--The Office may
remove a patent examiner or examiner-in-chief, or a trademark
examiner or member of a Trademark Trial and Appeal Board, only
for such cause as will promote the efficiency of the Office.
* * * * * * *
Sec. 5. Patent and Trademark Office Management Advisory Board
(a) Establishment of Management Advisory Board.--
(1) Appointment.--The United States Patent and
Trademark Office shall have a Management Advisory Board
(hereafter in this title referred to as the ``Board'')
of 12 members, 4 of whom shall be appointed by the
President, 4 of whom shall be appointed by the Speaker
of the House of Representatives, and 4 of whom shall be
appointed by the President pro tempore of the Senate.
Not more than 3 of the 4 members appointed by each
appointing authority shall be members of the same
political party.
(2) Terms.--Members of the Board shall be appointed
for a term of 4 years each, except that of the members
first appointed by each appointing authority, 1 shall
be for a term of 1 year, 1 shall be for a term of 2
years, and 1 shall be for a term of 3 years. No member
may serve more than 1 term.
(3) Chair.--The President shall designate the chair
of the Board, whose term as chair shall be for 3 years.
(4) Timing of appointments.--Initial appointments to
the Board shall be made within 3 months after the
effective date of the Patent and Trademark Office
Government Corporation Act of 1996, and vacancies shall
be filled within 3 months after they occur.
(5) Vacancies.--Vacancies shall be filled in the
manner in which the original appointment was made under
this subsection. Members appointed to fill a vacancy
occurring before the expiration of the term for which
the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor is appointed.
(6) Committees.--The Chair shall designate members of
the Board to serve on a committee on patent operations
and on a committee on trademark operations to perform
the duties set forth in subsection (e) as they relate
specifically to the Office's patent operations, and the
Office's trademark operations, respectively.
(b) Basis for Appointments.--Members of the Board shall be
citizens of the United States who shall be chosen so as to
represent the interests of diverse users of the United States
Patent and Trademark Office, and shall include individuals with
substantial background and achievement in corporate finance and
management.
(c) Applicability of Certain Ethics Laws.--Members of the
Board shall be special Government employees within the meaning
of section 202 of title 18.
(d) Meetings.--The Board shall meet at the call of the chair
to consider an agenda set by the chair.
(e) Duties.--The Board shall--
(1) review the policies, goals, performance, budget,
and user fees of the United States Patent and Trademark
Office, and advise the Commissioner on these matters;
and
(2) within 60 days after the end of each fiscal year,
prepare an annual report on the matters referred to in
paragraph (1), transmit the report to the President and
the Committees on the Judiciary of the Senate and the
House of Representatives, and publish the report in the
Patent and Trademark Office Official Gazette.
(f) Compensation.--Members of the Board shall be compensated
for each day (including travel time) during which they are
attending meetings or conferences of the Board or otherwise
engaged in the business of the Board, at the rate which is the
daily equivalent of the annual rate of basic pay in effect for
level III of the Executive Schedule under section 5314 of title
5, and while away from their homes or regular places of
business they may be allowed travel expenses, including per
diem in lieu of subsistence, as authorized by section 5703 of
title 5.
(g) Access to Information.--Members of the Board shall be
provided access to records and information in the United States
Patent and Trademark Office, except for personnel or other
privileged information and information concerning patent
applications required to be kept in confidence by section 122.
[Sec. 6. Duties of Commissioner
[(a) The Commissioner, under the direction of the Secretary
of Commerce, shall superintend or perform all duties required
by law respecting the granting and issuing of patents and the
registration of trademarks; shall have the authority to carry
on studies, programs, or exchanges of items or services
regarding domestic and international patent and trademark law
or the administration of the Patent and Trademark Office,
including programs to recognize, identify, assess and forecast
the technology of patented inventions and their utility to
industry; and shall have charge of property belonging to the
Patent and Trademark Office. He may, subject to the approval of
the Secretary of Commerce, establish regulations, not
inconsistent with law, for the conduct of proceedings in the
Patent and Trademark Office.
[(b) The Commissioner, under the direction of the Secretary
of Commerce, may, in coordination with the Department of State,
carry on programs and studies cooperatively with foreign patent
offices and international intergovernmental organizations, or
may authorize such programs and studies to be carried on, in
connection with the performance of duties stated in subsection
(a) of this section.
[(c) The Commissioner, under the direction of the Secretary
of Commerce, may, with the concurrence of the Secretary of
State, transfer funds appropriated to the Patent and Trademark
Office, not to exceed $100,000 in any year, to the Department
of State for the purpose of making special payments to
international intergovernmental organizations for studies and
programs for advancing international cooperation concerning
patents, trademarks, and related matters. These special
payments may be in addition to any other payments or
contributions to the international organization and shall not
be subject to any limitations imposed by law on the amounts of
such other payments or contributions by the Government of the
United States.]
[Sec. 7. Board of Patent Appeals and Interferences
[(a) The examiners-in-chief shall be persons of competent
legal knowledge and scientific ability, who shall be appointed
to the competitive service. The Commissioner, the Deputy
Commissioner, the Assistant Commissioners, and the examiners-
in-chief shall constitute the Board of Patent Appeals and
Interferences.
[(b) The Board of Patent Appeals and Interferences shall, on
written appeal of an applicant, review adverse decisions of
examiners upon applications for patents and shall determine
priority and patentability of invention in interferences
declared under section 135(a) of this title. Each appeal and
interference shall be heard by at least three members of the
Board of Patent Appeals and Interferences, who shall be
designated by the Commissioner. Only the Board of Patent
Appeals and Interferences has the authority to grant
rehearings.
[(c) Whenever the Commissioner considers it necessary, in
order to keep current the work of the Board of Patent Appeals
and Interferences, the Commissioner may designate any patent
examiner of the primary examiner grade or higher, having the
requisite ability, to serve as examiner-in-chief for periods
not exceeding six months each. An examiner so designated shall
be qualified to act as a member of the Board of Patent Appeals
and Interferences. Not more than one of the members of the
Board of Patent Appeals and Interferences hearing an appeal or
determining an interference may be an examiner so designated.
The Secretary of Commerce is authorized to fix the pay of each
designated examiner-in-chief in the Patent and Trademark Office
at not to exceed the maximum rate of basic pay payable for
grade GS-16 of the General Schedule under section 5332 of title
5. The rate of basic pay of each individual designated
examiner-in-chief shall be adjusted, at the close of the period
for which that individual was designated to act as examiner-in-
chief, to the rate of basic pay which that individual would
have been receiving at the close of such period if such
designation had not been made.]
Sec. 6. Board of Patent Appeals and Interferences
(a) Establishment and Composition.--There shall be in the
United States Patent and Trademark Office a Board of Patent
Appeals and Interferences. The Commissioner, the Deputy
Commissioner for Patents, the Deputy Commissioner for
Trademarks, and the examiners-in-chief shall constitute the
Board. The examiners-in-chief shall be persons of competent
legal knowledge and scientific ability.
(b) Duties.--The Board of Patent Appeals and Interferences
shall, on written appeal of an applicant, or a patent owner or
a third-party requester in a reexamination proceeding, review
adverse decisions of examiners upon applications for patents
and decisions of examiners in reexamination proceedings, and
shall determine priority and patentability of invention in
interferences declared under section 135(a) of this title. Each
appeal and interference shall be heard by at least 3 members of
the Board, who shall be designated by the Commissioner. Only
the Board of Patent Appeals and Interferences may grant
rehearings.
Sec. 7. Suits by and against the Office
(a) In General.--
(1) Actions under united states law.--Any civil
action or proceeding to which the United States Patent
and Trademark Office is a party is deemed to arise
under the laws of the United States. The Federal courts
shall have exclusive jurisdiction over all civil
actions by or against the Office.
(2) Contract claims.--Any action or proceeding
against the Office in which any claim is cognizable
under the Contract Disputes Act of 1978 (41 U.S.C. 601
and following) shall be subject to that Act. For
purposes of that Act, the Commissioner shall be deemed
to be the agency head with respect to contract claims
arising with respect to the Office. Any other action or
proceeding against the Office founded upon contract may
be brought in an appropriate district court,
notwithstanding any provision of title 28.
(3) Tort claims.--(A) Any action or proceeding
against the Office in which any claim is cognizable
under the provisions of section 1346(b) and chapter 171
of title 28, shall be governed by those provisions.
(B) Any other action or proceeding against the Office
founded upon tort may be brought in an appropriate
district court without regard to the provisions of
section 1346(b) and chapter 171 of title 28.
(4) Prohibition on attachment, liens, etc.--No
attachment, garnishment, lien, or similar process,
intermediate or final, in law or equity, may be issued
against property of the Office.
(5) Substitution of office as party.--The Office
shall be substituted as defendant in any civil action
or proceeding against an officer or employee of the
Office, if the Office determines that the officer or
employee was acting within the scope of his or her
employment with the Office. If the Office refuses to
certify scope of employment, the officer or employee
may at any time before trial petition the court to find
and certify that the officer or employee was acting
within the scope of his or her employment. Upon
certification by the court, the Office shall be
substituted as the party defendant. A copy of the
petition shall be served upon the Office. In any such
civil action or proceeding to which paragraph (3)(A)
applies, the provisions of section 1346(b) and chapter
171 of title 28 shall apply in lieu of this paragraph.
(b) Relationship With Justice Department.--
(1) Exercise by office of attorney general's
authorities.--Except as provided in this section, with
respect to any action or proceeding in which the Office
is a party or an officer or employee thereof is a party
in his or her official capacity, the Office, officer,
or employee may exercise, without prior authorization
from the Attorney General, the authorities and duties
that otherwise would be exercised by the Attorney
General on behalf of the Office, officer, or employee
under title 28 or other laws.
(2) Appearances by attorney general.--Notwithstanding
paragraph (1), at any time the Attorney General may, in
any action or proceeding described in paragraph (1),
file an appearance on behalf of the Office or the
officer or employee involved, without the consent of
the Office or the officer or employee. Upon such
filing, the Attorney General shall represent the Office
or such officer or employee with exclusive authority in
the conduct, settlement, or compromise of that action
or proceeding.
(3) Consultations with and assistance by attorney
general.--The Office may consult with the Attorney
General concerning any legal matter, and the Attorney
General shall provide advice and assistance to the
Office, including representing the Office in
litigation, if requested by the Office.
(4) Representation before supreme court.--The
Attorney General shall represent the Office in all
cases before the United States Supreme Court.
(5) Qualifications of attorneys.--An attorney
admitted to practice to the bar of the highest court of
at least one State in the United States or the District
of Columbia and employed by the Office may represent
the Office in any legal proceeding in which the Office
or an officer or employee of the Office is a party or
interested, regardless of whether the attorney is a
resident of the jurisdiction in which the proceeding is
held and notwithstanding any other prerequisites of
qualification or appearance required by the court or
administrative body before which the proceeding is
conducted.
* * * * * * *
[Sec. 14. Annual report to Congress
[The Commissioner shall report to Congress annually the
moneys received and expended, statistics concerning the work of
the Office, and other information relating to the Office as may
be useful to the Congress or the public.]
Sec. 14. Annual report to Congress
The Commissioner shall report to the Congress, not later than
180 days after the end of each fiscal year, the moneys received
and expended by the Office, the purposes for which the moneys
were spent, the quality and quantity of the work of the Office,
and other information relating to the Office. The report under
this section shall also meet the requirements of section 9106
of title 31, to the extent that such requirements are not
inconsistent with the preceding sentence. The report required
under this section shall be deemed to be the report of the
United States Patent and Trademark Office under section 9106 of
title 31, and the Commissioner shall not file a separate report
under such section.
* * * * * * *
CHAPTER 2--PROCEEDINGS IN THE PATENT AND TRADEMARK OFFICE
* * * * * * *
Sec. 22. Printing of papers filed
The Commissioner may require papers filed in the Patent and
Trademark Office to be [printed or typewritten] printed,
typwritten, or on an electronic medium.
* * * * * * *
CHAPTER 3--PRACTICE BEFORE PATENT AND TRADEMARK OFFICE
Sec.
[31. Regulations for agents and attorneys.]
* * * * * * *
[Sec. 31. Regulations for agents and attorneys
[The Commissioner, subject to the approval of the Secretary
of Commerce, may prescribe regulations governing the
recognition and conduct of agents, attorneys, or other persons
representing applicants or other parties before the Patent and
Trademark Office, and may require them, before being recognized
as representatives of applicants or other persons, to show that
they are of good moral character and reputation and are
possessed of the necessary qualifications to render to
applicants or other persons valuable service, advice, and
assistance in the presentation or prosecution of their
applications or other business before the Office.]
Sec. 32. Suspension or exclusion from practice
The Commissioner may, after notice and opportunity for a
hearing, suspend or exclude, either generally or in any
particular case, from further practice before the Patent and
Trademark Office, any person, agent, or attorney shown to be
incompetent or disreputable, or guilty of gross misconduct, or
who does not comply with the regulations established under
section 31 of this title, or who shall, by word, circular,
letter, or advertising, with intent to defraud in any manner,
deceive, mislead, or threaten any applicant or prospective
applicant, or other person having immediate or prospective
business before the Office. The reasons for any such suspension
or exclusion shall be duly recorded. The Commissioner shall
have the discretion to designate any attorney who is an officer
or employee of the United States Patent and Trademark Office to
conduct the hearing required by this section. The United States
District Court for the District of Columbia, under such
conditions and upon such proceedings as it by its rules
determines, may review the action of the Commissioner upon the
petition of the person so refused recognition or so suspended
or excluded.
* * * * * * *
CHAPTER 4--PATENT FEES; FUNDING; SEARCH SYSTEMS
Sec.
41. Patent fees; patent and trademark search systems.
42. Patent and Trademark Office funding.
43. Audits.
* * * * * * *
Sec. 41. Patent fees; patent and trademark search systems
(a) The Commissioner shall charge the following fees:
(1) * * *
* * * * * * *
[(7) On filing each petition for the revival of an
unintentionally abandoned application for a patent or
for the unintentionally delayed payment of the fee for
issuing each patent, $820, unless the petition is filed
under section 133 or 151 of this title, in which case
the fee shall be $78.]
* * * * * * *
(7) On filing each petition for the revival of an
unintentionally abandoned application for a patent, for
the unintentionally delayed payment of the fee for
issuing each patent, or for an unintentionally delayed
response by the patent owner in a reexamination
proceeding, $1,250, unless the petition is filed under
sections 133 or 151 of this title, in which case the
fee shall be $110.
* * * * * * *
[Sec. 42. Patent and Trademark Office funding
[(a) All fees for services performed by or materials
furnished by the Patent and Trademark Office will be payable to
the Commissioner.
[(b) All fees paid to the Commissioner and all appropriations
for defraying the costs of the activities of the Patent and
Trademark Office will be credited to the Patent and Trademark
Office Appropriation Account in the Treasury of the United
States.
[(c) Revenues from fees shall be available to the
Commissioner to carry out, to the extent provided in
appropriation Acts, the activities of the Patent and Trademark
Office. Fees available to the Commissioner under section 31 of
the Trademark Act of 1946 may be used only for the processing
of trademark registrations and for other activities, services,
and materials relating to trademarks and to cover a
proportionate share of the administrative costs of the Patent
and Trademark Office.
[(d) The Commissioner may refund any fee paid by mistake or
any amount paid in excess of that required.
[(e) The Secretary of Commerce shall, on the day each year on
which the President submits the annual budget to the Congress,
provide to the Committees on the Judiciary of the Senate and
the House of Representatives--
[(1) a list of patent and trademark fee collections
by the Patent and Trademark Office during the preceding
fiscal year;
[(2) a list of activities of the Patent and Trademark
Office during the preceding fiscal year which were
supported by patent fee expenditures, trademark fee
expenditures, and appropriations;
[(3) budget plans for significant programs, projects,
and activities of the Office, including out-year
funding estimates;
[(4) any proposed disposition of surplus fees by the
Office; and
[(5) such other information as the committees
consider necessary.]
Sec. 42. Patent and Trademark Office funding
(a) Fees Payable to the Office.--All fees for services
performed by or materials furnished by the United States Patent
and Trademark Office shall be payable to the Office.
(b) Use of Moneys.--Moneys from fees shall be available to
the United States Patent and Trademark Office to carry out, to
the extent provided in appropriations Acts, the functions of
the Office. Moneys of the Office not otherwise used to carry
out the functions of the Office shall be kept in cash on hand
or on deposit, or invested in obligations of the United States
or guaranteed by the United States, or in obligations or other
instruments which are lawful investments for fiduciary, trust,
or public funds. Fees available to the Office under this title
shall be used for the processing of patent applications and for
other services and materials relating to patents. Fees
available to the Office under section 31 of the Act of July 5,
1946 (commonly referred to as the ``Trademark Act of 1946''; 15
U.S.C. 1113), shall be used for the processing of trademark
registrations and for other services and materials relating to
trademarks.
(c) Borrowing Authority.--The United States Patent and
Trademark Office is authorized to issue from time to time for
purchase by the Secretary of the Treasury its debentures,
bonds, notes, and other evidences of indebtedness (hereafter in
this subsection referred to as ``obligations'') to assist in
financing its activities. Borrowing under this subsection shall
be subject to prior approval in appropriations Acts. Such
borrowing shall not exceed amounts approved in appropriations
Acts. Any borrowing under this subsection shall be repaid only
from fees paid to the Office and surcharges appropriated by the
Congress. Such obligations shall be redeemable at the option of
the Office before maturity in the manner stipulated in such
obligations and shall have such maturity as is determined by
the Office with the approval of the Secretary of the Treasury.
Each such obligation issued to the Treasury shall bear interest
at a rate not less than the current yield on outstanding
marketable obligations of the United States of comparable
maturity during the month preceding the issuance of the
obligation as determined by the Secretary of the Treasury. The
Secretary of the Treasury shall purchase any obligations of the
Office issued under this subsection and for such purpose the
Secretary of the Treasury is authorized to use as a public-debt
transaction the proceeds of any securities issued under chapter
31 of title 31, and the purposes for which securities may be
issued under that chapter are extended to include such purpose.
Payment under this subsection of the purchase price of such
obligations of the United States Patent and Trademark Office
shall be treated as public debt transactions of the United
States.
Sec. 43. Audits
(a) In General.--Financial statements of the United States
Patent and Trademark Office shall be prepared on an annual
basis in accordance with generally accepted accounting
principles. Such statements shall be audited by an independent
certified public accountant chosen by the Commissioner. The
audit shall be conducted in accordance with standards that are
consistent with generally accepted Government auditing
standards and other standards established by the Comptroller
General, and with the generally accepted auditing standards of
the private sector, to the extent feasible. The Commissioner
shall transmit to the Committees on the Judiciary of the House
of Representatives and the Senate the results of each audit
under this subsection.
(b) Review by Comptroller General.--The Comptroller General
may review any audit of the financial statement of the Patent
and Trademark Office that is conducted under subsection (a).
The Comptroller General shall report to the Congress and the
Office the results of any such review and shall include in such
report appropriate recommendations.
(c) Audit by Comptroller General.--The Comptroller General
may audit the financial statements of the Office and such audit
shall be in lieu of the audit required by subsection (a). The
Office shall reimburse the Comptroller General for the cost of
any audit conducted under this subsection.
(d) Access to Office Records.--All books, financial records,
report files, memoranda, and other property that the
Comptroller General deems necessary for the performance of any
audit shall be made available to the Comptroller General.
(e) Applicability in Lieu of Title 31 Provisions.--This
section applies to the Office in lieu of the provisions of
section 9105 of title 31.
CHAPTER 5--INVENTION DEVELOPMENT SERVICES
Sec.
51. Definitions.
52. Contracting requirements.
53. Standard provisions for cover notice.
54. Reports to customer required.
55. Mandatory contract terms.
56. Remedies.
57. Records of complaints.
58. Fraudulent representation by an invention developer.
59. Rule of construction.
Sec. 51. Definitions
For purposes of this chapter--
(1) the term ``contract for invention development
services'' means a contract by which an invention
developer undertakes invention development services for
a customer;
(2) the term ``customer'' means any person, firm,
partnership, corporation, or other entity who is
solicited by, seeks the services of, or enters into a
contract with an invention promoter for invention
promotion services;
(3) the term ``invention promoter'' means any person,
firm, partnership, corporation, or other entity who
offers to perform or performs for, or on behalf of, a
customer any act described under paragraph (4), but
does not include--
(A) any department or agency of the Federal
Government or of a State or local government;
(B) any nonprofit, charitable, scientific, or
educational organization, qualified under
applicable State law or described under section
170(b)(1)(A) of the Internal Revenue Code of
1986; or
(C) any person duly registered and in good
standing before the Patent and Trademark Office
acting within the scope of that person's
registration to practice before the Patent and
Trademark Office; and
(4) the term ``invention development services''
means, with respect to an invention by a customer, any
act involved in--
(A) evaluating the invention to determine its
protectability as some form of intellectual
property, other than evaluation by a person
licensed by a State to practice law who is
acting solely within the scope of that person's
professional license;
(B) evaluating the invention to determine its
commercial potential by any person for purposes
other than providing venture capital; or
(C) marketing, brokering, licensing, selling,
or promoting the invention or a product or
service in which the invention is incorporated
or used, except that the display only of an
invention at a trade show or exhibit shall not
be considered to be invention development
services.
Sec. 52. Contracting requirements
(a) In General.--(1) Every contract for invention development
services shall be in writing and shall be subject to the
provisions of this chapter. A copy of the signed written
contract shall be given to the customer at the time the
customer enters into the contract.
(2) If a contract is entered into for the benefit of a third
party, such party shall be considered a customer for the
purposes of this chapter.
(b) Requirements of Invention Developer.--The invention
developer shall--
(1) state in a written document, at the time a
customer enters into a contract for invention
development services, whether the usual business
practice of the invention developer is to--
(A) seek more than 1 contract in connection
with an invention; or
(B) seek to perform services in connection
with an invention in 1 or more phases, with the
performance of each phase covered in 1 or more
subsequent contracts; and
(2) supply to the customer a copy of the written
document together with a written summary of the usual
business practices of the invention developer,
including--
(A) the usual business terms of contracts;
and
(B) the approximate amount of the usual fees
or other consideration that may be required
from the customer for each of the services
provided by the developer.
(c) Right of Customer To Cancel Contract.--(1)
Notwithstanding any contractual provision to the contrary, a
customer shall have the right to terminate a contract for
invention development services by sending a written letter to
the invention developer stating the customer's intent to cancel
the contract. The letter of termination must be deposited with
the United States Postal Service on or before 5 business days
after the date upon which the customer or the invention
developer executes the contract, whichever is later.
(2) Delivery of a promissory note, check, bill of exchange,
or negotiable instrument of any kind to the invention developer
or to a third party for the benefit of the invention developer,
without regard to the date or dates appearing in such
instrument, shall be deemed payment received by the invention
developer on the date received for purposes of this section.
Sec. 53. Standard provisions for cover notice
(a) Contents.--Every contract for invention development
services shall have a conspicuous and legible cover sheet
attached with the following notice imprinted in boldface type
of not less than 12-point size:
``YOU HAVE THE RIGHT TO TERMINATE THIS CONTRACT. TO
TERMINATE THIS CONTRACT, YOU MUST SEND A WRITTEN LETTER
TO THE COMPANY STATING YOUR INTENT TO CANCEL THIS
CONTRACT. THE LETTER OF TERMINATION MUST BE DEPOSITED
WITH THE UNITED STATES POSTAL SERVICE ON OR BEFORE FIVE
(5) BUSINESS DAYS AFTER THE DATE ON WHICH YOU OR THE
COMPANY EXECUTE THE CONTRACT, WHICHEVER IS LATER.
``THE TOTAL NUMBER OF INVENTIONS EVALUATED BY THE
INVENTION DEVELOPER FOR COMMERCIAL POTENTIAL IN THE
PAST FIVE (5) YEARS IS __________. OF THAT NUMBER,
__________ RECEIVED POSITIVE EVALUATIONS AND __________
RECEIVED NEGATIVE EVALUATIONS.
``IF YOU ASSIGN EVEN A PARTIAL INTEREST IN THE
INVENTION TO THE INVENTION DEVELOPER, THE INVENTION
DEVELOPER MAY HAVE THE RIGHT TO SELL OR DISPOSE OF THE
INVENTION WITHOUT YOUR CONSENT AND MAY NOT HAVE TO
SHARE THE PROFITS WITH YOU.
``THE TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED
WITH THE INVENTION DEVELOPER IN THE PAST FIVE (5) YEARS
IS __________. THE TOTAL NUMBER OF CUSTOMERS KNOWN BY
THIS INVENTION DEVELOPER TO HAVE RECEIVED, BY VIRTUE OF
THIS INVENTION DEVELOPER'S PERFORMANCE, AN AMOUNT OF
MONEY IN EXCESS OF THE AMOUNT PAID BY THE CUSTOMER TO
THIS INVENTION DEVELOPER IS ______________.
``THE OFFICERS OF THIS INVENTION DEVELOPER HAVE
COLLECTIVELY OR INDIVIDUALLY BEEN AFFILIATED IN THE
LAST TEN (10) YEARS WITH THE FOLLOWING INVENTION
DEVELOPMENT COMPANIES: (LIST THE NAMES AND ADDRESSES OF
ALL PREVIOUS INVENTION DEVELOPMENT COMPANIES WITH WHICH
THE PRINCIPAL OFFICERS HAVE BEEN AFFILIATED AS OWNERS,
AGENTS, OR EMPLOYEES). YOU ARE ENCOURAGED TO CHECK WITH
THE UNITED STATES PATENT AND TRADEMARK OFFICE, THE
FEDERAL TRADE COMMISSION, YOUR STATE ATTORNEY GENERAL'S
OFFICE, AND THE BETTER BUSINESS BUREAU FOR ANY
COMPLAINTS FILED AGAINST ANY OF THESE COMPANIES.
``YOU ARE ENCOURAGED TO CONSULT WITH AN ATTORNEY OF
YOUR OWN CHOOSING BEFORE SIGNING THIS CONTRACT. BY
PROCEEDING WITHOUT THE ADVICE OF AN ATTORNEY REGISTERED
TO PRACTICE BEFORE THE PATENT AND TRADEMARK OFFICE, YOU
COULD LOSE ANY RIGHTS YOU MIGHT HAVE IN YOUR IDEA OR
INVENTION.''.
(b) Other Requirements for Cover Notice.--The cover notice
shall contain the items required under subsection (a) and the
name, primary office address, and local office address of the
invention developer, and may contain no other matter.
(c) Disclosure of Certain Customers Not Required.--The
requirement in the notice set forth in subsection (a) to
include the ``TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED
WITH THE INVENTION DEVELOPER IN THE PAST FIVE (5) YEARS'' need
not include information with respect to customers who have
purchased trade show services, research, advertising, or other
nonmarketing services from the invention developer, nor with
respect to customers who have defaulted in their payments to
the invention developer.
Sec. 54. Reports to customer required
With respect to every contract for invention development
services, the invention developer shall deliver to the customer
at the address specified in the contract, at least once every 3
months throughout the term of the contract, a written report
that identifies the contract and includes--
(1) a full, clear, and concise description of the
services performed to the date of the report and of the
services yet to be performed and names of all persons
who it is known will perform the services; and
(2) the name and address of each person, firm,
corporation, or other entity to whom the subject matter
of the contract has been disclosed, the reason for each
such disclosure, the nature of the disclosure, and
complete and accurate summaries of all responses
received as a result of those disclosures.
Sec. 55. Mandatory contract terms
(a) Mandatory Terms.--Each contract for invention development
services shall include in boldface type of not less than 12-
point size--
(1) the terms and conditions of payment and contract
termination rights required under section 52;
(2) a statement that the customer may avoid entering
into the contract by not making a payment to the
invention developer;
(3) a full, clear, and concise description of the
specific acts or services that the invention developer
undertakes to perform for the customer;
(4) a statement as to whether the invention developer
undertakes to construct, sell, or distribute one or
more prototypes, models, or devices embodying the
invention of the customer;
(5) the full name and principal place of business of
the invention developer and the name and principal
place of business of any parent, subsidiary, agent,
independent contractor, and any affiliated company or
person who it is known will perform any of the services
or acts that the invention developer undertakes to
perform for the customer;
(6) if any oral or written representation of
estimated or projected customer earnings is given by
the invention developer (or any agent, employee,
officer, director, partner, or independent contractor
of such invention developer), a statement of that
estimation or projection and a description of the data
upon which such representation is based;
(7) the name and address of the custodian of all
records and correspondence relating to the contracted
for invention development services, and a statement
that the invention developer is required to maintain
all records and correspondence relating to performance
of the invention development services for such customer
for a period of not less than 2 years after expiration
of the term of such contract; and
(8) a statement setting forth a time schedule for
performance of the invention development services,
including an estimated date in which such performance
is expected to be completed.
(b) Invention Developer as Fiduciary.--To the extent that the
description of the specific acts or services affords discretion
to the invention developer with respect to what specific acts
or services shall be performed, the invention developer shall
be deemed a fiduciary.
(c) Availability of Information.--Records and correspondence
described under subsection (a)(7) shall be made available after
7 days written notice to the customer or the representative of
the customer to review and copy at a reasonable cost on the
invention developer's premises during normal business hours.
Sec. 56. Remedies
(a) In General.--(1) Any contract for invention development
services that does not comply with the applicable provisions of
this chapter shall be voidable at the option of the customer.
(2) Any contract for invention development services entered
into in reliance upon any material false, fraudulent, or
misleading information, representation, notice, or
advertisement of the invention developer (or any agent,
employee, officer, director, partner, or independent contractor
of such invention developer) shall be voidable at the option of
the customer.
(3) Any waiver by the customer of any provision of this
chapter shall be deemed contrary to public policy and shall be
void and unenforceable.
(4) Any contract for invention development services which
provides for filing for and obtaining utility, design, or plant
patent protection shall be voidable at the option of the
customer unless the invention developer offers to perform or
performs such act through a registered patent attorney or
agent.
(b) Civil Action.--(1) Any customer who is injured by a
violation of this chapter by an invention developer or by any
material false or fraudulent statement or representation, or
any omission of material fact, by an invention developer (or
any agent, employee, director, officer, partner, or independent
contractor of such invention developer) or by failure of an
invention developer to make all the disclosures required under
this chapter, may recover in a civil action against the
invention developer (or the officers, directors, or partners of
such invention developer) in addition to reasonable costs and
attorneys' fees, the greater of--
(A) $5,000; or
(B) the amount of actual damages sustained by the
customer.
(2) Notwithstanding paragraph (1), the court may increase
damages to not more than 3 times the amount awarded.
(c) Rebuttable Presumption of Injury.--For purposes of this
section, substantial violation of any provision of this chapter
by an invention developer or execution by the customer of a
contract for invention development services in reliance on any
material false or fraudulent statements or representations or
omissions of material fact shall establish a rebuttable
presumption of injury.
Sec. 57. Records of complaints
(a) Release of Complaints.--The Commissioner shall make all
complaints received by the Patent and Trademark Office
involving invention developers publicly available, together
with any response of the invention developers.
(b) Request for Complaints.--The Commissioner may request
complaints relating to invention development services from any
Federal or State agency and include such complaints in the
records maintained under subsection (a), together with any
response of the invention developers.
Sec. 58. Fraudulent representation by an invention developer
Whoever, in providing invention development services,
knowingly provides any false or misleading statement,
representation, or omission of material fact to a customer or
fails to make all the disclosures required under this chapter,
shall be guilty of a misdemeanor and fined not more than
$10,000 for each offense.
Sec. 59. Rule of construction
Except as expressly provided in this chapter, no provision of
this chapter shall be construed to affect any obligation,
right, or remedy provided under any other Federal or State law.
PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
* * * * * * *
CHAPTER 10--PATENTABILITY OF INVENTIONS
* * * * * * *
Sec. 100. Definitions
When used in this title unless the context otherwise
indicates--
(a) The term ``invention'' means invention or discovery.
* * * * * * *
(e) The term ``third-party requester'' means a person
requesting reexamination under section 302 of this title who is
not the patent owner.
* * * * * * *
CHAPTER 11--APPLICATION FOR PATENT
Sec.
111. Application.
* * * * * * *
122. Confidential status of applications; publication of patent
applications.
* * * * * * *
Sec. 111. Application
(a) * * *
(b) Provisional Application.--
(1) * * *
* * * * * * *
[(5) Abandonment.--The provisional application shall
be regarded as abandoned 12 months after the filing
date of such application and shall not be subject to
revival thereafter.]
(5) Abandonment.--Notwithstanding the absence of a
claim, upon timely request and as prescribed by the
Commissioner, a provisional application may be treated
as an application filed under subsection (a). If no
such request is made, the provisional application shall
be regarded as abandoned 12 months after the filing
date of such application and shall not be subject to
revival thereafter.
* * * * * * *
Sec. 119. Benefit of earlier filing date; right of priority
(a) An application for patent for an invention filed in this
country by any person who has, or whose legal representatives
or assigns have, previously regularly filed an application for
a patent for the same invention in a foreign country which
affords similar privileges in the case of applications filed in
the United States or to citizens of the United States, or in a
WTO member country, shall have the same effect as the same
application would have if filed in this country on the date on
which the application for patent for the same invention was
first filed in such foreign country, if the application in this
country is filed within twelve months from the earliest date on
which such foreign application was filed; but no patent shall
be granted on any application for patent for an invention which
had been patented or described in a printed publication in any
country more than one year before the date of the actual filing
of the application in this country, or which had been in public
use or on sale in this country more than one year prior to such
filing.
(b)(1) No application for patent shall be entitled to this
right of priority unless a claim, identifying the foreign
application by specifying its application number, country, and
the day, month, and year of its filing, is filed in the Patent
and Trademark Office at such time during the pendency of the
application as required by the Commissioner.
(2) The Commissioner may consider the failure of the
applicant to file a timely claim for priority as a waiver of
any such claim, and may require the payment of a surcharge as a
condition of accepting an untimely claim during the pendency of
the application.
(3) The Commissioner may require a certified copy of the
original foreign application, specification, and drawings upon
which it is based, a translation if not in the English
language, and such other information as the Commissioner
considers necessary. Any such certification shall be made by
the foreign intellectual property authority in which the
foreign application was filed and show the date of the
application and of the filing of the specification and other
papers.
* * * * * * *
(e)(1) * * *
* * * * * * *
(3) If the day that is 12 months after the filing date of a
provisional application falls on a Saturday, Sunday, or legal
holiday as defined in rule 6(a) of the Federal Rules of Civil
Procedure, the period of pendency of the provisional
application shall be extended to the next succeeding business
day.
(f) Applications For Plant Breeder's Rights.--Applications
for plant breeder's rights filed in a WTO member country (or in
a UPOV Contracting Party) shall have the same effect for the
purpose of the right of priority under subsections (a) through
(c) of this section as applications for patents, subject to the
same conditions and requirements of this section as apply to
applications for patents.
(g) Definitions.--As used in this section--
(1) the term ``WTO member country'' has the same
meaning as the term is defined in section 104(b)(2) of
this title; and
(2) the term ``UPOV Contracting Party'' means a
member of the International Convention for the
Protection of New Varieties of Plants.
Sec. 120. Benefit of earlier filing date in the United States
An application for patent for an invention disclosed in the
manner provided by the first paragraph of section 112 of this
title in an application previously filed in the United States,
or as provided by section 363 of this title, which is filed by
an inventor or inventors named in the previously filed
application shall have the same effect, as to such invention,
as though filed on the date of the prior application, if filed
before the patenting or abandonment of or termination of
proceedings on the first application or on an application
similarly entitled to the benefit of the filing date of the
first application and if it contains or is amended to contain a
specific reference to the earlier filed application. The
Commissioner may determine the time period during the pendency
of the application within which an amendment containing the
specific reference to the earlier filed application is
submitted. The Commissioner may consider the failure to submit
such an amendment within that time period as a waiver of any
benefit under this section. The Commissioner may establish
procedures, including the payment of a surcharge, to accept
unavoidably late submissions of amendments under this section.
* * * * * * *
[Sec. 122. Confidential status of applications for patents shall be
kept in confidence by the Patent and Trademark
Office and no information concerning the same given
without authority of the applicant or owner unless
necessary to carry out the provisions of any Act of
Congress or in such special circumstances as may be
determined by the Commissioner.]
Sec. 122. Confidential status of applications; publication of patent
applications
(a) Confidentiality.--Except as provided in subsection (b),
applications for patents shall be kept in confidence by the
Patent and Trademark Office and no information concerning the
same given without authority of the applicant or owner unless
necessary to carry out the provisions of an Act of Congress or
in such special circumstances as may be determined by the
Commissioner.
(b) Publication.--
(1) In general.--(A) Subject to paragraph (2), each
application for patent, except applications for design
patents filed under chapter 16 of this title and
provisional applications filed under section 111(b) of
this title, shall be published, in accordance with
procedures determined by the Commissioner, as soon as
possible after the expiration of a period of 18 months
from the earliest filing date for which a benefit is
sought under this title. At the request of the
applicant, an application may be published earlier than
the end of such 18-month period.
(B) No information concerning published patent
applications shall be made available to the public
except as the Commissioner determines.
(C) Notwithstanding any other provision of law, a
determination by the Commissioner to release or not to
release information concerning a published patent
application shall be final and nonreviewable.
(2) Exceptions.--(A) An application that is no longer
pending shall not be published.
(B) An application that is subject to a secrecy order
pursuant to section 181 of this title shall not be
published.
(C)(i) Upon the request of the applicant at the time
of filing, the application shall not be published in
accordance with paragraph (1) until 3 months after the
Commissioner makes a notification to the applicant
under section 132 of this title.
(ii) Applications filed pursuant to section 363 of
this title, applications asserting priority under
section 119 or 365(a) of this title, and applications
asserting the benefit of an earlier application under
section 120, 121, or 365(c) of this title shall not be
eligible for a request pursuant to this subparagraph.
(iii) In a request under this subparagraph, the
applicant shall certify that the invention disclosed in
the application was not and will not be the subject of
an application filed in a foreign country.
(iv) A request under this subparagraph shall only be
available to an applicant who has been accorded the
status of independent inventor under section 41(h) of
this title.
(v) The Commissioner may establish appropriate
procedures and fees for making a request under this
subparagraph.
(c) Pre-Issuance Opposition.--The provisions of this section
shall not operate to create any new opportunity for pre-
issuance opposition. The Commissioner may establish appropriate
procedures to ensure that this section does not create any new
opportunity for pre-issuance opposition.
CHAPTER 12--EXAMINATION OF APPLICATION
* * * * * * *
[Sec. 134. Appeal to the Board of Patent Appeals and Interferences
[An applicant for a patent, any of whose claims has been
twice rejected, may appeal from the decision of the primary
examiner to the Board of Patent Appeals and Interferences,
having once paid the fee for such appeal.]
Sec. 134. Appeal to the Board of Patent Appeals and Interferences
(a) Patent Applicant.--An applicant for a patent, any of
whose claims has been twice rejected, may appeal from the
decision of the primary examiner to the Board of Patent Appeals
and Interferences, having once paid the fee for such appeal.
(b) Patent Owner.--A patent owner in a reexamination
proceeding may appeal from the final rejection of any claim by
the primary examiner to the Board of Patent Appeals and
Interferences, having once paid the fee for such appeal.
(c) Third-Party.--A third-party requester may appeal to the
Board of Patent Appeals and Interferences from the final
decision of the primary examiner favorable to the patentability
of any original or proposed amended or new claim of a patent,
having once paid the fee for such appeal.
* * * * * * *
Sec. 141. Appeal to Court of Appeals for the Federal Circuit
[An applicant dissatisfied with the decision in an appeal to
the Board of Patent Appeals and Interferences under section 134
of this title may appeal the decision to the United States
Court of Appeals for the Federal Circuit.] An applicant, a
patent owner, or a third-party requester, dissatisfied with the
final decision in an appeal to the Board of Patent Appeals and
Interferences under section 134 of this title, may appeal the
decision to the United States Court of Appeals for the Federal
Circuit. By filing such an appeal the applicant waives his or
her right to proceed under section 145 of this title. A party
to an interference dissatisfied with the decision of the Board
of Patent Appeals and Interferences on the interference may
appeal the decision to the United States Court of Appeals for
the Federal Circuit, but such appeal shall be dismissed if any
adverse party to such interference, within twenty days after
the appellant has filed notice of appeal in accordance with
section 142 of this title, files notice with the Commissioner
that the party elects to have all further proceedings conducted
as provided in section 146 of this title. If the appellant does
not, within thirty days after the filing of such notice by the
adverse party, file a civil action under section 146, the
decision appealed from shall govern the further proceedings in
the case.
* * * * * * *
Sec. 143. Proceedings on appeal
With respect to an appeal described in section 142 of this
title, the Commissioner shall transmit to the United States
Court of Appeals for the Federal Circuit a certified list of
the documents comprising the record in the Patent and Trademark
Office. The court may request that the Commissioner forward the
original or certified copies of such documents during pendency
of the appeal. [In an ex parte case, the Commissioner shall
submit to the court in writing the grounds for the decision of
the Patent and Trademark Office, addressing all the issues
involved in the appeal.] In ex parte and reexamination cases,
the Commissioner shall submit to the court in writing the
grounds for the decision of the Patent and Trademark Office,
addressing all the issues involved in the appeal. The court
shall, before hearing an appeal, give notice of the time and
place of the hearing to the Commissioner and the parties in the
appeal.
* * * * * * *
Sec. 145. Civil action to obtain patent
An applicant dissatisfied with the decision of the Board of
Patent Appeals and Interferences in an appeal under section
134(a) of this title may, unless appeal has been taken to the
United States Court of Appeals for the Federal Circuit, have
remedy by civil action against the Commissioner in the United
States District Court for the District of Columbia if commenced
within such time after such decision, not less than sixty days,
as the Commissioner appoints. The court may adjudge that such
applicant is entitled to receive a patent for his invention, as
specified in any of his claims involved in the decision of the
Board of Patent Appeals and Interferences, as the facts in the
case may appear and such adjudication shall authorize the
Commissioner to issue such patent on compliance with the
requirements of law. All the expenses of the proceedings shall
be paid by the applicant.
* * * * * * *
CHAPTER 14--ISSUE OF PATENT
Sec.
151. Issue of patent.
* * * * * * *
154. Contents and term of patent; provisional rights.
* * * * * * *
Sec. 154. Contents and term of patent; provisional rights
(a) * * *
[(b) Term Extension.--
[(1) Interference delay or secrecy orders.--If the
issue of an original patent is delayed due to a
proceeding under section 135(a) of this title, or
because the application for patent is placed under an
order pursuant to section 181 of this title, the term
of the patent shall be extended for the period of
delay, but in no case more than 5 years.
[(2) Extension for appellate review.--If the issue of
a patent is delayed due to appellate review by the
Board of Patent Appeals and Interferences or by a
Federal court and the patent is issued pursuant to a
decision in the review reversing an adverse
determination of patentability, the term of the patent
shall be extended for a period of time but in no case
more than 5 years. A patent shall not be eligible for
extension under this paragraph if it is subject to a
terminal disclaimer due to the issue of another patent
claiming subject matter that is not patentably distinct
from that under appellate review.
[(3) Limitations.--The period of extension referred
to in paragraph (2)--
[(A) shall include any period beginning on
the date on which an appeal is filed under
section 134 or 141 of this title, or on which
an action is commenced under section 145 of
this title, and ending on the date of a final
decision in favor of the applicant;
[(B) shall be reduced by any time
attributable to appellate review before the
expiration of 3 years from the filing date of
the application for patent; and
[(C) shall be reduced for the period of time
during which the applicant for patent did not
act with due diligence, as determined by the
Commissioner.
[(4) Length of extension.--The total duration of all
extensions of a patent under this subsection shall not
exceed 5 years.]
(b) Term Extension.--
(1) Basis for patent term extension.--
(A) Delay.--Subject to the limitations set
forth in paragraph (2), if the issue of an
original patent is delayed due to--
(i) a proceeding under section 135(a)
of this title,
(ii) the imposition of an order
pursuant to section 181 of this title,
(iii) appellate review by the Board
of Patent Appeals and Interferences or
by a Federal court where the patent was
issued pursuant to a decision in the
review reversing an adverse
determination of patentability, or
(iv) an unusual administrative delay
by the Patent and Trademark Office in
issuing the patent,
the term of the patent shall be extended for
the period of delay.
(B) Administrative delay.--For purposes of
subparagraph (A)(iv), an unusual administrative
delay by the Patent and Trademark office is the
failure to--
(i) make a notification of the
rejection of any claim for a patent or
any objection or argument under section
132 of this title or give or mail a
written notice of allowance under
section 151 of this title not later
than 14 months after the date on which
the application was filed;
(ii) respond to a reply under section
132 of this title or to an appeal taken
under section 134 of this title not
later than 4 months after the date on
which the reply was filed or the appeal
was taken;
(iii) act on an application not later
than 4 months after the date of a
decision by the Board of Patent Appeals
and Interferences under section 134 or
135 of this title or a decision by a
Federal court under section 141, 145,
or 146 of this title where allowable
claims remain in an application; or
(iv) issue a patent not later than 4
months after the date on which the
issue fee was paid under section 151 of
this title and all outstanding
requirements were satisfied.
(2) Limitations.--(A) The total duration of any
extensions granted pursuant to either clause (iii) or
(iv) of paragraph (1)(A) or both such clauses shall not
exceed 10 years. To the extent that periods of delay
attributable to grounds specified in paragraph (1)
overlap, the period of any extension granted under this
subsection shall not exceed the actual number of days
the issuance of the patent was delayed.
(B) The period of extension of the term of a patent
under this subsection 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. The Commissioner shall prescribe
regulations establishing the circumstances that
constitute a failure of an applicant to engage in
reasonable efforts to conclude processing or
examination of an application.
(C) No patent the term of which has been disclaimed
beyond a specified date may be extended under this
section beyond the expiration date specified in the
disclaimer.
(3) Procedures.--The Commissioner shall prescribe
regulations establishing procedures for the
notification of patent term extensions under this
subsection and procedures for contesting patent term
extensions under this subsection.
* * * * * * *
(d) Provisional Rights.--
(1) In general.--In addition to other rights provided
by this section, a patent shall include the right to
obtain a reasonable royalty from any person who, during
the period beginning on the date of publication of the
application for such patent pursuant to section 122(b)
of this title, or in the case of an international
application designating the United States, the date of
international publication of the application, and
ending on the date the patent is issued--
(A)(i) makes, uses, offers for sale, or sells
in the United States the invention as claimed
in the published patent application or imports
such an invention into the United States; or
(ii) if the invention as claimed in the
published patent application is a process,
uses, offers for sale, or sells in the United
States or imports into the United States
products made by that process as claimed in the
published patent application; and
(B) had actual notice of the published patent
application and where the right arising under
this paragraph is based upon an international
application designating the United States that
is published in a language other than English,
a translation of the international application
into the English language.
(2) Right based on substantially identical
inventions.--The right under paragraph (1) to obtain a
reasonable royalty shall not be available under this
subsection unless the invention as claimed in the
patent is substantially identical to the invention as
claimed in the published patent application.
(3) Time limitation on obtaining a reasonable
royalty.--The right under paragraph (1) to obtain a
reasonable royalty shall be available only in an action
brought not later than 6 years after the patent is
issued. The right under paragraph (1) to obtain a
reasonable royalty shall not be affected by the
duration of the period described in paragraph (1).
(4) Requirements for international applications.--The
right under paragraph (1) to obtain a reasonable
royalty based upon the publication under the treaty of
an international application designating the United
States shall commence from the date that the Patent and
Trademark Office receives a copy of the publication
under the treaty of the international application, or,
if the publication under the treaty of the
international application is in a language other than
English, from the date that the Patent and Trademark
Office receives a translation of the international
application in the English language. The Commissioner
may require the applicant to provide a copy of the
international publication of the international
application and a translation thereof.
CHAPTER 15--PLANT PATENTS
* * * * * * *
Sec. 161. Patents for plants
Whoever invents or discovers and asexually reproduces any
distinct and new variety of plant, including cultivated sports,
mutants, hybrids, and newly found seedlings, other than [a
tuber propagated plant or] a plant found in an uncultivated
state, may obtain a patent therefor, subject to the conditions
and requirements of this title.
The provisions of this title relating to patents for
inventions shall apply to patents for plants, except as
otherwise provided.
* * * * * * *
Sec. 163. Grant
[In the case of a plant patent the grant shall be of the
right to exclude others from asexually reproducing the plant or
selling or using the plant so reproduced.] In the case of a
plant patent, the grant shall include the right to exclude
others from asexually reproducing the plant, and from using,
offering for sale, or selling the plant so reproduced, or any
of its parts, throughout the United States, or from importing
the plant so reproduced, or any parts thereof, into the United
States.
* * * * * * *
CHAPTER 17--SECRECY OF CERTAIN INVENTIONS AND FILING APPLICATIONS IN
FOREIGN COUNTRY
Sec. 181. Secrecy of certain inventions and withholding of patent
Whenever publication or disclosure by the publication of an
application or by the grant of a patent on an invention in
which the Government has a property interest might, in the
opinion of the head of the interested Government agency, be
detrimental to the national security, the Commissioner upon
being so notified shall order that the invention be kept secret
and shall withhold the publication of the application or the
grant of a patent therefor under the conditions set forth
hereinafter.
Whenever the publication or disclosure of an invention by the
publication of an application or by the granting of a patent,
in which the Government does not have a property interest,
might, in the opinion of the Commissioner, be detrimental to
the national security, he shall make the application for patent
in which such invention is disclosed available for inspection
to the Atomic Energy Commission, the Secretary of Defense, and
the chief officer of any other department or agency of the
Government designated by the President as a defense agency of
the United States.
Each individual to whom the application is disclosed shall
sign a dated acknowledgment thereof, which acknowledgment shall
be entered in the file of the application. If, in the opinion
of the Atomic Energy Commission, the Secretary of a Defense
Department, or the chief officer of another department or
agency so designated, the publication or disclosure of the
invention by the publication of the application or by the
granting of a patent therefor would be detrimental to the
national security, the Atomic Energy Commission, the Secretary
of a Defense Department, or such other chief officer shall
notify the Commissioner and the Commissioner shall order that
the invention be kept secret and shall withhold the publication
of the application or the grant of a patent for such period as
the national interest requires, and notify the applicant
thereof. Upon proper showing by the head of the department or
agency who caused the secrecy order to be issued that the
examination of the application might jeopardize the national
interest, the Commissioner shall thereupon maintain the
application in a sealed condition and notify the applicant
thereof. The owner of an application which has been placed
under a secrecy order shall have a right to appeal from the
order to the Secretary of Commerce under rules prescribed by
him.
An invention shall not be ordered kept secret and the
publication of an application or the grant of a patent withheld
for a period of more than one year. The Commissioner shall
renew the order at the end thereof, or at the end of any
renewal period, for additional periods of one year upon
notification by the head of the department or the chief officer
of the agency who caused the order to be issued that an
affirmative determination has been made that the national
interest continues so to require. An order in effect, or
issued, during a time when the United States is at war, shall
remain in effect for the duration of hostilities and one year
following cessation of hostilities. An order in effect, or
issued, during a national emergency declared by the President
shall remain in effect for the duration of the national
emergency and six months thereafter. The Commissioner may
rescind any order upon notification by the heads of the
departments and the chief officers of the agencies who caused
the order to be issued that the publication or disclosure of
the invention is no longer deemed detrimental to the national
security.
PART III--PATENTS AND PROTECTION OF PATENT RIGHTS
* * * * * * *
CHAPTER 25--AMENDMENT AND CORRECTION OF PATENTS
* * * * * * *
Sec. 252. Effect of reissue
The surrender of the original patent shall take effect upon
the issue of the reissued patent, and every reissued patent
shall have the same effect and operation in law, on the trial
of actions for causes thereafter arising, as if the same had
been originally granted in such amended form, but in so far as
the claims of the original and reissued patents are
substantially identical, such surrender shall not affect any
action then pending nor abate any cause of action then
existing, and the reissued patent, to the extent that its
claims are substantially identical with the original patent,
shall constitute a continuation thereof and have effect
continuously from the date of the original patent.
* * * * * * *
CHAPTER 28--INFRINGEMENT OF PATENTS
Sec.
271. Infringement of patent.
272. Temporary presence in the United States.
273. Prior domestic commercial use; defense to infringement.
* * * * * * *
Sec. 273. Prior domestic commercial use; defense to infringement
(a) Definitions.--For purposes of this section--
(1) the terms ``commercially used'', ``commercially
use'', and ``commercial use'' mean the use in the
United States in commerce or the use in the design,
testing, or production in the United States of a
product or service which is used in commerce, whether
or not the subject matter at issue is accessible to or
otherwise known to the public;
(2) the terms ``used in commerce'', and ``use in
commerce'' mean that there has been an actual sale or
other commercial transfer of the subject matter at
issue or that there has been an actual sale or other
commercial transfer of a product or service resulting
from the use of the subject matter at issue; and
(3) the ``effective filing date'' of a patent is the
earlier of the actual filing date of the application
for the patent or the filing date of any earlier United
States, foreign, or international application to which
the subject matter at issue is entitled under section
119, 120, or 365 of this title.
(b) Defense to Infringement.--(1) A person shall not be
liable as an infringer under section 271 of this title with
respect to any subject matter that would otherwise infringe one
or more claims in the patent being asserted against such
person, if such person had, acting in good faith, commercially
used the subject matter before the effective filing date of
such patent.
(2) The sale or other disposition of the subject matter of a
patent by a person entitled to assert a defense under this
section with respect to that subject matter shall exhaust the
patent owner's rights under the patent to the extent such
rights would have been exhausted had such sale or other
disposition been made by the patent owner.
(c) Limitations and Qualifications of Defense.--The defense
to infringement under this section is subject to the following:
(1) Derivation.--A person may not assert the defense
under this section if the subject matter on which the
defense is based was derived from the patentee or
persons in privity with the patentee.
(2) Not a general license.--The defense asserted by a
person under this section is not a general license
under all claims of the patent at issue, but extends
only to the subject matter claimed in the patent with
respect to which the person can assert a defense under
this chapter, except that the defense shall also extend
to variations in the quantity or volume of use of the
claimed subject matter, and to improvements in the
claimed subject matter that do not infringe additional
specifically claimed subject matter of the patent.
(3) Effective and serious preparation.--With respect
to subject matter that cannot be commercialized without
a significant investment of time, money, and effort, a
person shall be deemed to have commercially used the
subject matter if--
(A) before the effective filing date of the
patent, the person reduced the subject matter
to practice in the United States, completed a
significant portion of the total investment
necessary to commercially use the subject
matter, and made a commercial transaction in
the United States in connection with the
preparation to use the subject matter; and
(B) thereafter the person diligently
completed the remainder of the activities and
investments necessary to commercially use the
subject matter, and promptly began commercial
use of the subject matter, even if such
activities were conducted after the effective
filing date of the patent.
(4) Burden of proof.--A person asserting the defense
under this section shall have the burden of
establishing the defense.
(5) Abandonment of use.--A person who has abandoned
commercial use of subject matter may not rely on
activities performed before the date of such
abandonment in establishing a defense under subsection
(b) with respect to actions taken after the date of
such abandonment.
(6) Personal defense.--The defense under this section
may only be asserted by the person who performed the
acts necessary to establish the defense and, except for
any transfer to the patent owner, the right to assert
the defense shall not be licensed or assigned or
transferred to another person except in connection with
the good faith assignment or transfer of the entire
enterprise or line of business to which the defense
relates.
(7) One-year limitation.--A person may not assert a
defense under this section unless the subject matter on
which the defense is based had been commercially used
or reduced to practice more than one year prior to the
effective filing date of the patent by the person
asserting the defense or someone in privity with that
person.
(d) Unsuccessful Assertion of Defense.--If the defense under
this section is pleaded by a person who is found to infringe
the patent and who subsequently fails to demonstrate a
reasonable basis for asserting the defense, the court shall
find the case exceptional for the purpose of awarding
attorney's fees under section 285 of this title.
(e) Invalidity.--A patent shall not be deemed to be invalid
under section 102 or 103 of this title solely because a defense
is established under this section.
CHAPTER 29--REMEDIES FOR INFRINGEMENT OF PATENT, AND OTHER ACTIONS
* * * * * * *
Sec. 284. Damages
Upon finding for the claimant the court shall award the
claimant damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty for the use made
of the invention by the infringer, together with interest and
costs as fixed by the court.
When the damages are not found by a jury, the court shall
assess them. In either event the court may increase the damages
up to three times the amount found or assessed. Increased
damages under this paragraph shall not apply to provisional
rights under section 154(d) of this title.
The court may receive expert testimony as an aid to the
determination of damages or of what royalty would be reasonable
under the circumstances.
* * * * * * *
CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND REEXAMINATION OF PATENTS
Sec.
301. Citation of prior art.
* * * * * * *
308. Reexamination prohibited.
CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND REEXAMINATION OF PATENTS
* * * * * * *
[Sec. 302. Request for reexamination
[Any person at any time may file a request for reexamination
by the Office of any claim of a patent on the basis of any
prior art cited under the provisions of section 301 of this
title. The request must be in writing and must be accompanied
by payment of a reexamination fee established by the
Commissioner of Patents pursuant to the provisions of section
41 of this title. The request must set forth the pertinency and
manner of applying cited prior art to every claim for which
reexamination is requested. Unless the requesting person is the
owner of the patent, the Commissioner promptly will send a copy
of the request to the owner of record of the patent.
[Sec. 303. Determination of issue by Commissioner
[(a) Within three months following the filing of a request
for reexamination under the provisions of section 302 of this
title, the Commissioner will determine whether a substantial
new question of patentability affecting any claim of the patent
concerned is raised by the request, with or without
consideration of other patents or printed publications. On his
own initiative, and any time, the Commissioner may determine
whether a substantial new question of patentability is raised
by patents and publications discovered by him or cited under
the provisions of section 301 of this title.
[(b) A record of the Commissioner's determination under
subsection (a) of this section will be placed in the official
file of the patent, and a copy promptly will be given or mailed
to the owner of record of the patent and to the person
requesting reexamination, if any.
[(c) A determination by the Commissioner pursuant to
subsection (a) of this section that no substantial new question
of patentability has been raised will be final and
nonappealable. Upon such a determination, the Commissioner may
refund a portion of the reexamination fee required under
section 302 of this title.
[Sec. 304. Reexamination order by Commissioner
[If, in a determination made under the provisions of
subsection 303(a) of this title, the Commissioner finds that a
substantial new question of patentability affecting any claim
of a patent is raised, the determination will include an order
for reexamination of the patent for resolution of the question.
The patent owner will be given a reasonable period, not less
than two months from the date a copy of the determination is
given or mailed to him, within which he may file a statement on
such question, including any amendment to his patent and new
claim or claims he may wish to propose, for consideration in
the reexamination. If the patent owner files such a statement,
he promptly will serve a copy of it on the person who has
requested reexamination under the provisions of section 302 of
this title. Within a period of two months from the date of
service, that person may file and have considered in the
reexamination a reply to any statement filed by the patent
owner. That person promptly will serve on the patent owner a
copy of any reply filed.
[Sec. 305. Conduct of reexamination proceedings
[After the times for filing the statement and reply provided
for by section 304 of this title have expired, reexamination
will be conducted according to the procedures established for
initial examination under the provisions of sections 132 and
133 of this title. In any reexamination proceeding under this
chapter, the patent owner will be permitted to propose any
amendment to his patent and a new claim or claims thereto, in
order to distinguish the invention as claimed from the prior
art cited under the provisions of section 301 of this title, or
in response to a decision adverse to the patentability of a
claim of a patent. No proposed amended or new claim enlarging
the scope of a claim of the patent will be permitted in a
reexamination proceeding under this chapter. All reexamination
proceedings under this section, including any appeal to the
Board of Patent Appeals and Interferences, will be conducted
with special dispatch within the Office.
[Sec. 306. Appeal
[The patent owner involved in a reexamination proceeding
under this chapter may appeal under the provisions of section
134 of this title, and may seek court review under the
provisions of sections 141 to 145 of this title, with respect
to any decision adverse to the patentability of any original or
proposed amended or new claim of the patent.]
Sec. 302. Request for reexamination
Any person at any time may file a request for reexamination
by the Office of a patent on the basis of any prior art cited
under the provisions of section 301 of this title or on the
basis of the requirements of section 112 of this title except
for the requirement to set forth the best mode of carrying out
the invention. The request must be in writing, must include the
identity of the real party in interest, and must be accompanied
by payment of a reexamination fee established by the
Commissioner pursuant to the provisions of section 41 of this
title. The request must set forth the pertinency and manner of
applying cited prior art to every claim for which reexamination
is requested or the manner in which the patent specification or
claims fail to comply with the requirements of section 112 of
this title. Unless the requesting person is the owner of the
patent, the Commissioner promptly shall send a copy of the
request to the owner of record of the patent.
Sec. 303. Determination of issue by Commissioner
(a) Reexamination.--Not later than 3 months after the filing
of a request for reexamination under the provisions of section
302 of this title, the Commissioner shall determine whether a
substantial new question of patentability affecting any claim
of the patent concerned is raised by the request, with or
without consideration of other patents or printed publications.
On the Commissioner's initiative, at any time, the Commissioner
may determine whether a substantial new question of
patentability is raised by patents and publications or by the
failure of the patent specification or claims to comply with
the requirements of section 112 of this title except for the
best mode requirement described in section 302.
(b) Record.--A record of the Commissioner's determination
under subsection (a) shall be placed in the official file of
the patent, and a copy shall be promptly given or mailed to the
owner of record of the patent and to the third-party requester,
if any.
(c) Final Decision.--A determination by the Commissioner
pursuant to subsection (a) shall be final and nonappealable.
Upon a determination that no substantial new question of
patentability has been raised, the Commissioner may refund a
portion of the reexamination fee required under section 302 of
this title.
Sec. 304. Reexamination order by Commissioner
If, in a determination made under the provisions of section
303(a) of this title, the Commissioner finds that a substantial
new question of patentability affecting a claim of a patent is
raised, the determination shall include an order for
reexamination of the patent for resolution of the question. The
order may be accompanied by the initial action of the Patent
and Trademark Office on the merits of the reexamination
conducted in accordance with section 305 of this title.
Sec. 305. Conduct of reexamination proceedings
(a) In General.--Subject to subsection (b), reexamination
shall be conducted according to the procedures established for
initial examination under the provisions of sections 132 and
133 of this title. In any reexamination proceeding under this
chapter, the patent owner shall be permitted to propose any
amendment to the patent and a new claim or claims, except that
no proposed amended or new claim enlarging the scope of the
claims of the patent shall be permitted.
(b) Response.--(1) This subsection shall apply to any
reexamination proceeding in which the order for reexamination
is based upon a request by a third-party requester.
(2) With the exception of the reexamination request, any
document filed by either the patent owner or the third-party
requester shall be served on the other party.
(3) If the patent owner files a response to any Patent and
Trademark Office action on the merits, the third-party
requester shall have 1 opportunity to file written comments
within a reasonable period not less than 1 month after the date
of service of the patent owner's response. Written comments
provided under this paragraph shall be limited to issues
covered by the Patent and Trademark Office action or the patent
owner's response.
(c) Special Dispatch.--Unless otherwise provided by the
Commissioner for good cause, all reexamination proceedings
under this section, including any appeal to the Board of Patent
Appeals and Interferences, shall be conducted with special
dispatch within the Office.
Sec. 306. Appeal
(a) Patent Owner.--The patent owner involved in a
reexamination proceeding under this chapter--
(1) may appeal under the provisions of section 134 of
this title, and may appeal under the provisions of
sections 141 through 144 of this title, with respect to
any decision adverse to the patentability of any
original or proposed amended or new claim of the
patent; and
(2) may be a party to any appeal taken by a third-
party requester pursuant to subsection (b) of this
section.
(b) Third-Party Requester.--A third-party requester--
(1) may appeal under the provisions of section 134 of
this title, and may appeal under the provisions of
sections 141 through 144 of this title, with respect to
any final decision favorable to the patentability of
any original or proposed amended or new claim of the
patent; and
(2) may be a party to any appeal taken by the patent
owner, subject to subsection (c) of this section.
(c) Participation as Party.--(1) A third-party requester who,
under the provisions of sections 141 through 144 of this title,
files a notice of appeal or who participates as a party to an
appeal by the patent owner is estopped from asserting at a
later time, in any forum, the invalidity of any claim
determined to be patentable on appeal on any ground which the
third-party requester raised or could have raised during the
reexamination proceedings.
(2) A third-party requester is deemed not to have
participated as a party to an appeal by the patent owner
unless, not later than 20 days after the patent owner has filed
notice of appeal, the third-party requester files notice with
the Commissioner electing to participate.
* * * * * * *
Sec. 308. Reexamination prohibited
(a) Order for Reexamination.--Notwithstanding any provision
of this chapter, once an order for reexamination of a patent
has been issued under section 304 of this title, neither the
patent owner nor the third-party requester, if any, nor privies
of either, may file a subsequent request for reexamination of
the patent until a reexamination certificate is issued and
published under section 307 of this title, unless authorized by
the Commissioner.
(b) Final Decision.--Once a final decision has been entered
against a party in a civil action arising in whole or in part
under section 1338 of title 28 that the party has not sustained
its burden of proving the invalidity of any patent claim in
suit, then neither that party nor its privies may thereafter
request reexamination of any such patent claim on the basis of
issues which that party or its privies raised or could have
raised in such civil action, and a reexamination requested by
that party or its privies on the basis of such issues may not
thereafter be maintained by the Office, notwithstanding any
other provision of this chapter.
* * * * * * *
PART IV--PATENT COOPERATION TREATY
* * * * * * *
CHAPTER 37--NATIONAL STAGE
* * * * * * *
[Sec. 374. Publication of international application: Effect
[The publication under the treaty of an international
application shall confer no rights and shall have no effect
under this title other than that of a printed publication.]
Sec. 374. Publication of international application: Effect
The publication under the treaty, defined in section 351(a)
of this title, of an international application designating the
United States shall confer the same rights and shall have the
same effect under this title as an application for patent
published under section 122(b), except as provided in sections
102(e) and 154(d) of this title.
* * * * * * *
----------
SECTION 17 OF THE ACT OF JULY 5, 1946
(COMMONLY REFERRED TO AS THE ``TRADEMARK ACT OF 1946'')
[Sec. 17. In every case of interference, opposition to
registration, application to register as a lawful concurrent
user, or application to cancel the registration of a mark, the
Commissioner shall give notice to all parties and shall direct
a Trademark Trial and Appeal Boards, to determine and decide
the respective rights of registration.
[The Trademark Trail and Appeal Board shall include the
Commissioner, the Deputy Commissioner, the Assistant
Commissioners, and members appointed by the Commissioner.
Employees of the Patent and Trademark Office and other persons,
all of whom shall be competent in trademark law, shall be
eligible for appointment as members. Each case shall be heard
by at least three members of the Board, the members hearing
such case to be designated by the Commissioner.]
Sec. 17. (a) In every case of interference, opposition to
registration, application to register as a lawful concurrent
user, or application to cancel the registration of a mark, the
Commissioner shall give notice to all parties and shall direct
a Trademark Trial and Appeal Board to determine and decide the
respective rights of registration.
(b) The Trademark Trial and Appeal Board shall include the
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and members competent in trademark
law who are appointed by the Commissioner.
----------
SECTION 9101 OF TITLE 31, UNITED STATES CODE
Sec. 9101. Definitions
In this chapter--
(1) * * *
* * * * * * *
(3) ``wholly owned Government corporation'' means--
(A) * * *
* * * * * * *
(R) the United States Patent and Trademark
Office.
----------
TITLE 5, UNITED STATES CODE
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 5--ADMINISTRATIVE PROCEDURE
* * * * * * *
SUBCHAPTER I--GENERAL PROVISIONS
Sec. 500. Administrative practice; general provisions
(a) * * *
* * * * * * *
(e) Subsections (b)-(d) of this section do not apply to
practice before the [Patent Office] United States Patent and
Trademark Office with respect to patent matters that continue
to be covered by chapter 3 (sections 31-33) of title 35.
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart D--Pay and Allowances
* * * * * * *
CHAPTER 51--CLASSIFICATION
* * * * * * *
Sec. 5102. Definitions; application
(a) * * *
* * * * * * *
(c) This chapter does not apply to--
(2) * * *
* * * * * * *
(23) examiners-in-chief and designated examiners-in-
chief in the [Patent and Trademark Office, Department
of Commerce] United States Patent and Trademark Office;
* * * * * * *
CHAPTER 53--PAY RATES AND SYSTEMS
* * * * * * *
SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES
* * * * * * *
Sec. 5316. Positions at level V
Level V of the Executive Schedule applies to the following
positions, for which the annual rate of basic pay shall be the
rate determined with respect to such level under chapter 11 of
title 2, as adjusted by section 5318 of this title:
Administrator, Bonneville Power Administration,
Department of the Interior.
Administrator of the National Capital Transportation
Agency.
Associate Administrators of the Small Business
Administration (4).
* * * * * * *
[Commissioner of Patents, Department of Commerce.]
* * * * * * *
[Deputy Commissioner of Patents and Trademarks.
[Assistant Commissioner for Patents.
[Assistant Commissioner for Trademarks.]
Commissioner, Administration on Children, Youth, and
Families.
Director, Bureau of Transportation Statistics.
* * * * * * *
----------
ACT OF FEBRUARY 14, 1903
CHAP. 552.--An Act To establish the Department of Commerce and Labor.
* * * * * * *
bureaus in department
Sec. 12. The following named bureaus, administrations,
services, offices, and programs of the public service, and all
that pertains thereto, shall be under the jurisdiction and
subject to the control of the Secretary of Commerce:
[(a)] (1) National Oceanic and Atmospheric Administration;
[(b)] (2) United States Travel and Tourism Administration;
[(c)] (3) National Institute of Standards and Technology;
[(d) Patent and Trademark Office;]
[(e)] (4) Bureau of the Census;
[(f)] (5) United States Fire Administration; and
[(g)] (6) such other bureaus or other organizational units as
the Secretary of Commerce may from time to time establish in
accordance with law.
----------
ACT OF APRIL 12, 1892
[No. 8.] Joint resolution to encourage the establishment and endowment
of institutions of learning at the national capital by defining the
policy of the Government with reference to the use of its literary and
scientific collections by students.
Whereas, large collections illustrative of the various arts
and sciences and facilitating literary and scientific research
have been accumulated by the action of Congress through a
series of years at the national capital; and
Whereas it was the original purpose of the Government thereby
to promote research and the diffusion of knowledge, and is now
the settled policy and present practice of those charged with
the care of these collections specially to encourage students
who devote their time to the investigation and study of any
branch of knowledge by allowing to them all proper use thereof;
and
Whereas it is represented that the enumeration of these
facilities and the formal statement of this policy will
encourage the establishment and endowment of institutions of
learning at the seat of Government, and promote the work of
education by attracting students to avail themselves of the
advantages aforesaid under the direction of competent
instructors: Therefore,
Resolved by the Senate and House of Representatives of the
United States of America, in Congress assembled, That the
facilities for research and illustration in the following and
any other Governmental collections now existing or hereafter to
be established in the city of Washington for the promotion of
knowledge shall be accessible, under such rules and
restrictions as the officers in charge of each collection may
prescribe, subject to such authority as is now or may hereafter
be permitted by law, to the scientific investigators and to
students of any institution of higher education now
incorporated or hereafter to be incorporated under the laws of
Congress or of the District of Columbia, to wit:
One. Of the Library of Congress.
Two. Of the National Museum.
Three. Of the [Patent Office] United States Patent and
Trademark Office.
* * * * * * *
----------
FEDERAL FOOD, DRUG, AND COSMETIC ACT
CHAPTER V--DRUGS AND DEVICES
Subchapter A--Drugs and Devices
* * * * * * *
new drugs
Sec. 505. (a) * * *
* * * * * * *
(m) For purposes of this section, the term ``patent'' means a
patent issued by the [Patent and Trademark Office of the
Department of Commerce] United States Patent and Trademark
Office.
* * * * * * *
new animal drugs
Sec. 512. (a) * * *
* * * * * * *
(o) For purposes of this section, the term ``patent'' means a
patent issued by the [Patent and Trademark Office of the
Department of Commerce] United States Patent and Trademark
Office.
* * * * * * *
----------
SECTION 105 OF THE FEDERAL ALCOHOL ADMINISTRATION ACT
unfair competition and unlawful practices
Sec. 105. (a) * * *
* * * * * * *
(e) Labeling.--To sell or ship or deliver for sale or
shipment, or otherwise introduce in interstate or foreign
commerce, or to receive therein, or to remove from customs
custody for consumption, any distilled spirits, wine, or malt
beverages in bottles, unless such products are bottled,
packaged, and labeled in conformity with such regulations, to
be prescribed by the Administrator, with respect to packaging,
marking, branding, and labeling and size and fill of container
(1) as will prohibit deception of the consumer with respect to
such products or the quantity thereof and as will prohibit,
irrespective of falsity, such statements relating to age,
manufacturing processes, analyses, guarantees, and scientific
or irrelevant matters as the Administrator finds to be likely
to mislead the consumer; (2) as will provide the consumer with
adequate information as to the identity and quality of the
products, the alcoholic content thereof (except that statements
of, or statements likely to be considered as statements of,
alcoholic content of malt beverages are prohibited unless
required by State law and except that, in case of wines,
statements of alcoholic content shall be required only for
wines containing more than 14 per centum of alcohol by volume),
the net contents of the package, and the manufacturer or
bottler or importer of the product; (3) as will require an
accurate statement, in the case of distilled spirits (other
than cordials, liqueurs, and specialties) produced by blending
or rectification, if neutral spirits have been used in the
production thereof, informing the consumer of the percentage of
neutral spirits so used and of the name of the commodity from
which such neutral spirits have been distilled, or in case of
neutral spirits or of gin produced by a process of continuous
distillation, the name of the commodity from which distilled;
(4) as will prohibit statements on the label that are
disparaging of a competitor's products or are false,
misleading, obscene, or indecent; and (5) as will prevent
deception of the consumer by use of a trade or brand name that
is the name of any living individual of public prominence, or
existing private or public organization, or is a name that is
in simulation or is an abbreviation thereof, and as will
prevent the use of a graphic, pictorial, or emblematic
representation of any such individual or organization, if the
use of such name or representation is likely falsely to lead
the consumer to believe that the product has been indorsed,
made, or used by, or produced for, or under the supervision of,
or in accordance with the specifications of, such individual or
organization: Provided, That this clause shall not apply to the
use of the name of any person engaged in business as a
distiller, brewer, rectifier, blender, or other producer, or as
an importer, wholesaler, retailer, bottler, or warehouseman, of
distilled spirits, wine, or malt beverages, nor to the use by
any person of a trade or brand name used by him or his
predecessor in interest prior to the date of enactment of this
Act; including regulations requiring, at time of release from
customs custody, certificates issued by foreign governments
covering origin, age, and identity of imported products:
Provided further, That nothing herein nor any decision, ruling,
or regulation of any Department of the Government shall deny
the right of any person to use any trade name or brand of
foreign origin not presently effectively registered in the
[United States Patent Office] United States Patent and
Trademark Office which has been used by such person or
predecessors in the United States for a period of at least five
years last past, if the use of such name or brand is qualified
by the name of the locality in the United States in which the
product is produced, and, in the case of the use of such name
or brand on any label or in any advertisement, if such
qualification is as conspicuous as such name or brand.
* * * * * * *
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART V--PROCEDURE
* * * * * * *
CHAPTER 91--UNITED STATES COURT OF FEDERAL CLAIMS
* * * * * * *
Sec. 1498. Patent and copy-right cases
(a) Whenever an invention described in and covered by a
patent of the United States is used or manufactured by or for
the United States without license of the owner thereof or
lawful right to use or manufacture the same, the owner's remedy
shall be by action against the United States in the United
States Court of Federal Claims for the recovery of his
reasonable and entire compensation for such use and
manufacture. Reasonable and entire compensation shall include
the owner's reasonable costs, including reasonable fees for
expert witnesses and attorneys, in pursuing the action if the
owner is an independent inventor, a nonprofit organization, or
an entity that had no more than 500 employees at any time
during the 5-year period preceding the use or manufacture of
the patented invention by or for the United States.
For the purposes of this section, the use or manufacture of
an invention described in and covered by a patent of the United
States by a contractor, a subcontractor, or any person, firm,
or corporation for the Government and with the authorization or
consent of the Government, shall be construed as use or
manufacture for the United States.
The court shall not award compensation under this section if
the claim is based on the use or manufacture by or for the
United States of any article owned, leased, used by, or in the
possession of the United States prior to July 1, 1918.
A Government employee shall have the right to bring suit
against the Government under this section except where he was
in a position to order, influence, or induce use of the
invention by the Government. This section shall not confer a
right of action on any patentee or any assignee of such
patentee with respect to any invention discovered or invented
by a person while in the employment or service of the United
States, where the invention was related to the official
functions of the employee, in cases in which such functions
included research and development, or in the making of which
Government time, materials or facilities were used.
* * * * * * *
CHAPTER 115--EVIDENCE; DOCUMENTARY
* * * * * * *
Sec. 1744. Copies of [Patent Office] United States Patent and Trademark
Office documents, generally
Copies of letters patent or of any records, books, papers, or
drawings belonging to the [Patent Office] United States Patent
and Trademark Office and relating to patents, authenticated
under the seal of the [Patent Office] United States Patent and
Trademark Office and certified by the [Commissioner of Patents]
Commissioner of Patents and Trademarks, or by another officer
of the [Patent Office] United States Patent and Trademark
Office authorized to do so by the Commissioner, shall be
admissible in evidence with the same effect as the originals.
Any person making application and paying the required fee may
obtain such certified copies.
Sec. 1745. Copies of foreign patent documents
Copies of the specifications and drawings of foreign letters
patent, or applications for foreign letters patent, and copies
of excerpts of the official journals and other official
publications of foreign patent offices belonging to the [United
States Patent Office] United States Patent and Trademark
Office, certified in the manner provided by section 1744 of
this title are prima facie evidence of their contents and of
the dates indicated on their face.
* * * * * * *
CHAPTER 123--FEES AND COSTS
* * * * * * *
Sec. 1928. Patent infringement action; disclaimer not filed
Whenever a judgment is rendered for the plaintiff in any
patent infringement action involving a part of a patent and it
appears that the patentee, in his specifications, claimed to
be, but was not, the original and first inventor or discoverer
of any material or substantial part of the thing patented, no
costs shall be included in such judgment, unless the proper
disclaimer has been filed in the [Patent Office] United States
Patent and Trademark Office prior to the commencement of the
action.
* * * * * * *
----------
SECTION 160 OF THE ATOMIC ENERGY ACT OF 1954
Sec. 160. Saving Clause.--Any patent application on which a
patent was denied by the [United States Patent Office] United
States Patent and Trademark Office under sections 11(a)(1),
11(a)(2), or 11(b) of the Atomic Energy Act of 1946, and which
is not prohibited by section 151 or section 155 of this Act may
be reinstated upon application to the [Commissioner of Patents]
Commissioner of Patents and Trademarks within one year after
enactment of this Act and shall then be deemed to have been
continuously pending since its original filing date: Provided,
however, That no patent issued upon any patent application so
reinstated shall in any way furnish a basis of claim against
the Government of the United States.
----------
SECTION 305 OF THE NATIONAL AERONAUTICS AND SPACE ACT OF 1958
property rights in inventions
Sec. 305. (a) * * *
* * * * * * *
(c) No patent may be issued to any applicant other than the
Administrator for any invention which appears to the
[Commissioner of Patents] Commissioner of Patents and
Trademarks to have significant utility in the conduct of
aeronautical and space activities unless the applicant files
with the Commissioner, with the application or within thirty
days after request therefor by the Commissioner, a written
statement executed under oath setting forth the full facts
concerning the circumstances under which such invention was
made and stating the relationship (if any) of such invention to
the performance of any work under any contract of the
Administration. Copies of each such statement and the
application to which it relates shall be transmitted forthwith
by the Commissioner to the Administrator.
* * * * * * *
----------
SECTION 12 OF THE SOLAR HEATING AND COOLING DEMONSTRATION ACT OF 1974
dissemination of information and other actions to promote practical use
of solar heating and cooling technologies
Sec. 12. (a) The Secretary shall take all possible steps to
assure that full and complete information with respect to the
demonstrations and other activities conducted under this Act is
made available to Federal, State, and local authorities, the
building industry and related segments of the economy, the
scientific and technical community, and the public at large,
both during and after the close of the programs under this Act,
with the objective of promoting and facilitating to the maximum
extent feasible the early and widespread practical use of solar
energy for the heating and cooling of buildings throughout the
United States. In accordance with regulations prescribed under
section 16 such information shall be disseminated on a
coordinated basis by the Secretary, the Administrator, the
Director of the National Bureau of Standards, the Director, the
[Commissioner of the Patent Office] Commissioner of Patents and
Trademarks, and other appropriate Federal offices and agencies.
* * * * * * *
----------
TITLE 44, UNITED STATES CODE
* * * * * * *
CHAPTER 11--EXECUTIVE AND JUDICIARY PRINTING AND BINDING
* * * * * * *
Sec. 1111. Annual reports: time for furnishing manuscript and proofs to
Public Printer
The appropriations made for printing and binding may not be
used for an annual report or the accompanying documents unless
the manuscript and proof is furnished to the Public Printer in
the following manner:
manuscript of the documents accompanying annual
reports on or before February 1, each year;
manuscript of the annual report on or before February
15, each year;
complete revised proofs of the accompanying documents
on March 1, each year, and of the annual reports on
March 10, each year.
Annual reports and accompanying documents shall be printed,
made public, and available for distribution not later than
within the first five days after the assembling of each regular
session of Congress.
This section does not apply to the annual reports of the
Smithsonian Institution, [the Commissioner of Patents,] the
Comptroller of the Currency, or the Secretary of the Treasury.
* * * * * * *
Sec. 1114. Annual reports: number of copies for Congress
One thousand copies of the annual reports of the departments
to Congress shall be printed for the Senate, and two thousand
for the House of Representatives.
The usual number only of the reports of the Chief of
Engineers of the Army, [the Commissioner of Patents,] the
Commissioner of Internal Revenue, the report of the Chief
Signal Officer of the Department of the Army, and the Chief of
Ordnance shall be printed.
* * * * * * *
Sec. 1123. Binding materials; bookbinding for libraries
Binding for the departments of the Government shall be done
in plain sheep or cloth, except that record and account books
may be bound in Russia leather, sheep fleshers, and skivers,
when authorized by the head of a department. The libraries of
the several departments, the Library of Congress, the libraries
of the Surgeon General's Office, [the Patent Office,] and the
Naval Observatory may have books for the exclusive use of these
libraries bound in half Turkey, or material no more expensive.
* * * * * * *
CHAPTER 13--PARTICULAR REPORTS AND DOCUMENTS
Sec.
1301. Agriculture, Department of: report of Secretary.
* * * * * * *
[1337. Patent Office: publications authorized to be printed.
[1338. Patent Office: limitations and conditions concerning printing
and lithographing.]
[Sec. 1337. Patent Office: publications authorized to be printed
[The Commissioner of Patents, upon the requisition of the
Secretary of Commerce may cause to be printed:
[1. Patents issued.--The patents for inventions and designs
issued by the Patent Office, including grants, specifications,
and drawings, together with copies of them, and of patents
already issued, in the number needed for the business of the
office.
[2. Trade-marks and labels.--The certificates of trade-marks
and labels registered in the Patent Office, including
descriptions and drawings, together with copies of them, and of
trade-marks and labels previously registered, in the numbers
needed for the business of the office.
[3. Official Gazette.--The Official Gazette of the United
States Patent Office in numbers sufficient to supply all who
subscribe for it at $5 a year; also for exchange for other
scientific publications desirable for the use of the Patent
Office; also to supply one copy to each Senator and
Representative in Congress; with one hundred additional copies,
together with weekly, monthly, and annual indexes. The ``usual
number'' of the Official Gazette may not be printed.
[4. Report of Commissioner of Patents.--The annual report of
the Commissioner of Patents, not exceeding five hundred in
number, for distribution by him; the annual report of the
Commissioner of Patents to Congress, without the list of
patents, not exceeding one thousand five hundred in number, for
distribution by him; and the annual report of the Commissioner
of Patents to Congress, with the list of patents, five hundred
copies for sale by him, if needed, and in addition the ``usual
number'' only shall be printed.
[5. Rules of practice, laws, etc.--Pamphlet copies of the
rules of practice, and of the patent laws, and pamphlet copies
of the laws and rules relating to trade-marks and labels, and
circulars relating to the business of the office, all in
numbers as needed for the business of the office. The ``usual
number'' may not be printed.
[6. Decisions of Commissioner and courts.--Annual volumes of
the decisions of the Commissioner of Patents and of the United
States courts in patent cases, not exceeding one thousand five
hundred in number, of which the usual number shall be printed,
and for this purpose a copy of each shall be transmitted to
Congress promptly when prepared.
[7. Indexes.--Indexes to patents relating to electricity, and
indexes to foreign patents, in the numbers needed for the
business of the office. The ``usual number'' may not be
printed.
[Sec. 1338. Patent Office: limitations and conditions concerning
printing and lithographing
[Printing for the Patent Office making use of lithography or
photo-lithography, together with the plates, shall be
contracted for and performed under the direction of the
Commissioner of Patents, under limitations and conditions
prescribed by the Joint Committee on Printing, and other
printing for the Patent Office shall be done by the Public
Printer under limitations and conditions prescribed by the
Joint Committee on Printing. The entire work may be done at the
Government Printing Office when in the judgment of the Joint
Committee on Printing it is to the interest of the Government.]
* * * * * * *
----------
SECTION 10 OF THE TRADING WITH THE ENEMY ACT
Sec. 10. That nothing contained in this Act shall be held to
make unlawful any of the following Acts:
(a) * * *
* * * * * * *
(i) Whenever the publication of an invention by the granting
of a patent may in the opinion of the President, be detrimental
to the public safety or defense, or may assist the enemy or
endanger the successful prosecution of the war, he may order
that the invention be kept secret and withhold the grant of a
patent until the end of the war: Provided, That the invention
disclosed in the application for said patent may be held
abandoned upon it being established before or by the
[Commissioner of Patents] Commissioner of Patents and
Trademarks that, in violation of said order, said invention has
been published or that an application for a patent therefor has
been filed in any other country, by the inventor or his assigns
or. legal representatives, without the consent or approval of
the commissioner or under a license of the President.
When an applicant whose patent is withheld as herein provided
and who faithfully obeys the order of the President above
referred to shall tender his invention to the Government of the
United States for its use, he shall, if he ultimately receives
a patent, have the right to sue for compensation in the United
States Claims Court, such right to compensation to begin from
the date of the use of the invention by the Government.
----------
SECTION 8G OF THE INSPECTOR GENERAL ACT OF 1978
requirements for federal entities and designated federal entities
Sec. 8G. (a) Notwithstanding section 11 of this Act, as used
in this section--
(1) * * *
(2) the term ``designated Federal entity'' means
Amtrak, the Appalachian Regional Commission, the Board
of Governors of the Federal Reserve System, the Board
for International Broadcasting, the Commodity Futures
Trading Commission, the Consumer Product Safety
Commission, the Corporation for Public Broadcasting,
the Equal Employment Opportunity Commission, the Farm
Credit Administration, the Federal Communications
Commission, the Federal Deposit Insurance Corporation,
the Federal Election Commission, the Federal Housing
Finance Board, the Federal Labor Relations Authority,
the Federal Maritime Commission, the Federal Trade
Commission, the Legal Services Corporation, the
National Archives and Records Administration, the
National Credit Union Administration, the National
Endowment for the Arts, the National Endowment for the
Humanities, the National Labor Relations Board, the
National Science Foundation, the Panama Canal
Commission, the Peace Corps, the Pension Benefit
Guaranty Corporation, the Securities and Exchange
Commission, the Smithsonian Institution, the Tennessee
Valley Authority, the United States International Trade
Commission, the United States Patent and Trademark
Office, and the United States Postal Service;
* * * * * * *