[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.
          * * * * * * *
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                      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;
          * * * * * * *