[Senate Report 105-42]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 62
105th Congress                                                   Report
                                 SENATE

 1st Session                                                     105-42
_______________________________________________________________________


 
                     THE OMNIBUS PATENT ACT OF 1997

                                _______
                                

                  July 1, 1997.--Ordered to be printed

   Filed under authority of the order of the Senate of June 27, 1997

_______________________________________________________________________


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 507]

    The Committee on the Judiciary, to which was referred the 
bill (S. 507) to establish the United States Patent and 
Trademark Organization as a Government corporation, to amend 
the provisions of title 35, United States Code, relating to 
procedures for patent applications, commercial use of patents, 
reexamination reform, and for other purposes, having considered 
the same, reports favorably thereon, with an amendment in the 
nature of a substitute, and recommends that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
  I. Purpose.........................................................32
 II. Legislative history.............................................32
III. Discussion......................................................41
 IV. Vote of the committee...........................................60
  V. Section-by-section analysis.....................................60
 VI. Cost estimate..................................................114
VII. Regulatory impact statement....................................119
VIII.Additional views of Mr. Leahy..................................120

 IX. Changes in existing law........................................125

    The amendment is as follows:

    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Omnibus Patent Act of 1997'.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.

        TITLE I--UNITED STATES PATENT AND TRADEMARK ORGANIZATION

Sec. 101. Short title.
  Subtitle A--Establishment of the United States Patent and Trademark 
                              Organization

Sec. 111. Establishment of the United States Patent and Trademark 
Organization as a Government corporation.
Sec. 112. Powers and duties.
Sec. 113. Organization and management.
Sec. 114. United States Patent Office.
Sec. 115. United States Trademark Office.
Sec. 116. Suits by and against the Organization.
Sec. 117. Funding.
Sec. 118. Transfers.
Sec. 119. Use of Organization name
            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. Last day of pendency of provisional application.
Sec. 209. Effective date.

                   TITLE III--PATENT TERM RESTORATION

Sec. 301. Patent term restoration authority.
Sec. 302. Further examination of patent applications.
Sec. 303. Technical clarification.
Sec. 304. Effective date.

                TITLE IV--PRIOR DOMESTIC COMMERCIAL USE

Sec. 401. Short title.
Sec. 402. Defense to patent infringement based on prior domestic 
commercial use.
Sec. 403. Effective date and applicability.

                  TITLE V--PATENT REEXAMINATION REFORM

Sec. 501. Short title.
Sec. 502. Definitions.
Sec. 503. Reexamination procedures.
Sec. 504. Conforming amendments.
Sec. 505. Report to Congress
Sec. 506. Effective date.

               TITLE VI--MISCELLANEOUS PATENT PROVISIONS

Sec. 601. Provisional applications.
Sec. 602. International applications.
Sec. 603. Access to electronic patent information.
Sec. 604. Certain limitations on damages for patent infringement not 
applicable.
Sec. 605. Plant patents.
Sec. 606. Electronic filing.
Sec. 607. Study and report on biological deposits in support of 
biotechnology patents.

        TITLE I--UNITED STATES PATENT AND TRADEMARK ORGANIZATION

SEC. 101. SHORT TITLE.

    This title may be cited as the ``United States Patent and Trademark 
Organization Act of 1997'.

  Subtitle A--Establishment of the United States Patent and Trademark 
                              Organization

SEC. 111. ESTABLISHMENT OF THE UNITED STATES PATENT AND TRADEMARK 
                    ORGANIZATION AS A GOVERNMENT CORPORATION.

    (a) Establishment.--The United States Patent and Trademark 
Organization is established as a wholly owned Government corporation 
subject to chapter 91 of title 31, separate from any department, and 
shall be an agency of the United States under the policy direction of 
the Secretary of Commerce.
    (b) Offices.--The United States Patent and Trademark Organization 
shall maintain its principal office in the District of Columbia, or the 
metropolitan area thereof, for the service of process and papers and 
for the purpose of carrying out its powers, duties, and obligations 
under this title. The United States Patent and Trademark Organization 
shall be deemed, for purposes of venue in civil actions, to be a 
resident of the district in which its principal office is located 
except where jurisdiction is otherwise provided by law. The United 
States Patent and Trademark Organization may establish satellite 
offices in such places within the United States as it considers 
necessary and appropriate in the conduct of its business.
    (c) Reference.--For purposes of this title, a reference to the 
``Organization'' shall be a reference to the United States Patent and 
Trademark Organization, unless the context provides otherwise.

SEC. 112. POWERS AND DUTIES.

    (a) In General.--The United States Patent and Trademark 
Organization, under the policy direction of the Secretary of Commerce, 
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 Organization, or any 
        other function vested in the Organization 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.
    (b) Special Payments.--The special payments under subsection 
(a)(3)(B) may be in addition to any other payments or contributions to 
international organizations 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.
    (c) Specific Powers.--The Organization--
          (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 
        Organization 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 116;
          (4) may indemnify the Director of the United States Patent 
        and Trademark Organization, the Commissioner of Patents, the 
        Commissioner of Trademarks, and other officers, attorneys, 
        agents, and employees (including members of the Management 
        Advisory Boards of the Patent Office and the Trademark Office) 
        of the Organization 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; and
                  (B) shall be made after notice and opportunity for 
                full participation by interested public and private 
                parties;
          (6)(A) 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; and
          (B) sell, lease, grant, and dispose of such property as it 
        considers necessary to effectuate the purposes of this Act;
          (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 et seq.), 
        the Public Buildings Act (40 U.S.C. 601 et seq.), and the 
        Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11301 et 
        seq.); 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 Organization, 
        without regard to sections 501 through 517 and 1101 through 
        1123 of title 44, United States Code;
          (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 Organization;
          (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 title 35, United States Code 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 Organization, 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, intellectual, or mixed property, in order to 
        enhance libraries and museums operated by the Organization, 
        support the educational programs of the Organization, or 
        otherwise carry out the functions of the Organization;
          (15) may execute, in accordance with its bylaws, rules, and 
        regulations, all instruments necessary and appropriate in the 
        exercise of any of its powers; and
          (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.
    (d) Restrictions on Gifts.--Any acceptance of a gift or donation 
under subsection (c)(14) shall be subject to section 201 of title 18, 
United States Code. The Director shall establish regulations for the 
acceptance of such gifts and donations including regulations 
prohibiting gifts or donations to the Organization by foreign 
countries.
    (e) Rule of Construction.--Nothing in this section shall be 
construed to nullify, void, cancel, or interrupt any pending request-
for-proposal let or contract issued by the General Services 
Administration for the specific purpose of relocating or leasing space 
to the United States Patent and Trademark Organization.

SEC. 113. ORGANIZATION AND MANAGEMENT.

    (a) Offices.--The United States Patent and Trademark Organization 
shall consist of--
          (1) the Office of the Director;
          (2) the United States Patent Office; and
          (3) the United States Trademark Office.
    (b) Director.--
          (1) In general.--The management of the United States Patent 
        and Trademark Organization shall be vested in a Director of the 
        United States Patent and Trademark Organization (hereafter in 
        this title referred to as the ``Director`', unless the context 
        provides otherwise), 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 Director shall be a 
        person who, by reason of professional background and experience 
        in patent or trademark law, is especially qualified to manage 
        the Organization.
          (2) Duties.--(A) The Director shall--
                  (i) be responsible for the Management and direction 
                of the Organization and shall perform this duty in a 
                fair, impartial, and equitable manner; and
                  (ii) strive to meet the goals set forth in the 
                performance agreement described under paragraph (4).
          (B) The Director shall advise the President, through and 
        under the policy direction of the Secretary of Commerce, of all 
        activities of the Organization 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 Director shall 
        also recommend to the President, through and under the policy 
        direction of the Secretary of Commerce, changes in law or 
        policy which may improve the ability of United States citizens 
        to secure and enforce patent and trademark rights in the United 
        States or in foreign countries.
          (C)(i) At the direction of the President, the Director may 
        represent the United States in international negotiations on 
        matters of patents or trademarks, or may designate an officer 
        or officers of the Organization to participate in such 
        negotiations.
          (ii) Nothing in this subparagraph shall be construed to alter 
        any statutory responsibility of the Secretary of State or the 
        United States Trade Representative.
          (D) The Director, 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.
          (E) The Director may perform such personnel, procurement, and 
        other functions, with respect to the United States Patent 
        Office and the United States Trademark Office, where a 
        centralized administration of such functions would improve the 
        efficiency of the Offices, by continuous unanimous agreement of 
        the Director, the Commissioner of Patents, and the Commissioner 
        of Trademarks. The agreement shall be in writing and shall 
        indicate the allocation of costs among the Office of the 
        Director, the United States Patent Office, and the United 
        States Trademark Office.
          (F) Except as otherwise provided in this title, the Director 
        shall ensure that--
                  (i) the United States Patent Office and the United 
                States Trademark Office, respectively, shall--
                          (I) prepare all appropriation requests under 
                        section 1108 of title 31, United States Code, 
                        for each office for submission by the Director;
                          (II) adjust fees to provide sufficient 
                        revenues to cover the expenses of such office; 
                        and
                          (III) expend funds derived from such fees for 
                        only the functions of such office; and
                  (ii) each such office is not involved in the 
                management of any other office.
          (G) The Director shall submit to Congress annually such 
        information as is required under chapter 91 of title 31, United 
        States Code, including--
                  (i) the total monies received and expended by the 
                Organization;
                  (ii) the purpose for which the monies were spent;
                  (iii) the amount of any surplus revenues retained by 
                the Organization;
                  (iv) the quality and quantity of the work of the 
                Organization; and
                  (v) other information relating to the Organization.
          (3) Oath.--The Director shall, before taking office, take an 
        oath to discharge faithfully the duties of the Organization.
          (4) Compensation.--The Director shall receive compensation at 
        the rate of pay in effect for level III of the Executive 
        Schedule under section 5314 of title 5, United States Code and, 
        in addition, may receive as a bonus, an amount which would 
        raise total compensation to the equivalent of the level of the 
        rate of pay in effect for level II of the Executive Schedule 
        under section 5313 of title 5, based upon an evaluation by the 
        Secretary of Commerce of the Director's performance as defined 
        in an annual performance agreement between the Director and the 
        Secretary. The annual performance agreement shall incorporate 
        measurable goals as delineated in an annual performance plan 
        agreed to by the Director and the Secretary.
          (5) Removal.--The Director shall serve at the pleasure of the 
        President.
          (6) Designee of director.--The Director shall designate an 
        officer of the Organization who shall be vested with the 
        authority to act in the capacity of the Director in the event 
        of the absence or incapacity of the Director.
          (7) Relationship with existing authorities.--Nothing in this 
        section shall derogate from the duties or functions of the 
        Register of Copyrights.
    (c) Officers and Employees of the Organization.--
          (1) Commissioners of patents and trademarks.--The Director 
        shall appoint a Commissioner of Patents and a Commissioner of 
        Trademarks under section 3 of title 35, United States Code and 
        section 53 of the Act of July 5, 1946 (commonly referred to as 
        the Trademark Act of 1946), respectively, as amended by this 
        Act.
          (2) Other officers and employees.--The Director shall--
                  (A) appoint officers, employees (including 
                attorneys), and agents of the Organization, who shall 
                be citizens of the United States, as the Director 
                considers necessary to carry out its functions;
                  (B) fix the compensation of such officers and 
                employees, except as provided in subsection (e); and
                  (C) define the authority and duties of such officers 
                and employees and delegate to them such of the powers 
                vested in the Organization as the Director may 
                determine.
          (3) Personnel limitations.--The Organization shall not be 
        subject to any administratively or statutorily imposed 
        limitation on positions or personnel, and no positions or 
        personnel of the Organization shall be taken into account for 
        purposes of applying any such limitation.
    (d) Limits on Compensation.--Except as otherwise provided by law, 
the annual rate of basic pay of an officer or employee of the 
Organization 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 level II of the 
Executive Schedule under section 5313 of title 5, United States Code. 
The Director shall prescribe such regulations as may be necessary to 
carry out this subsection.
    (e) Inapplicability of Title 5, United States Code, Generally.--
Except as otherwise provided in this section, officers and employees of 
the Organization shall not be subject to the provisions of title 5, 
United States Code, relating to Federal employees.
    (f) Continued Applicability of Certain Provisions of Title 5, 
United States Code.--
        (1) In general.--The following provisions of title 5, United 
        States Code, shall apply to the Organization 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).
                  (G) Section 2302(b)(8) (relating to whistleblower 
                protection) and whistleblower related provisions of 
                chapter 12 (covering the role of the Office of Special 
                Counsel).
        (2) Compensation Subject to Collective Bargaining.--
                  (A) In general.--Notwithstanding any other provision 
                of law, for purposes of applying chapter 71 of title 5, 
                United States Code, 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, United States 
                Code, which is afforded by paragraph (1), (2), (3), or 
                (4) of subsection (g).
                  (C) Limitations apply.--Nothing in this subsection 
                shall be considered to allow any limitation under 
                subsection (d) to be exceeded.
    (g) Provisions of Title 5, United States Code, 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, United States Code, shall 
        apply to the Organization and its officers and employees, 
        subject to subparagraph (B).
          (B)(i) The amount required of the Organization under the 
        second sentence of section 8334(a)(1) of title 5, United States 
        Code, 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 Organization 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 Organization under section 
        8334(k)(1)(B) of title 5, United States Code, 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 Organization may 
        supplement the benefits provided under the preceding provisions 
        of this paragraph.
          (2) Health benefits.--(A) The provisions of chapter 89 of 
        title 5, United States Code, shall apply to the Organization 
        and its officers and employees, subject to subparagraph (B).
          (B)(i) With respect to any individual who becomes an officer 
        or employee of the Organization pursuant to subsection (i), 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, United States Code. The preceding sentence 
        shall not apply if the individual ceases to be an officer or 
        employee of the Organization for any period of time after 
        becoming an officer or employee of the Organization pursuant to 
        subsection (i) and before separation.
          (ii) The Government contributions authorized by section 8906 
        of title 5, United States Code, for health benefits for anyone 
        participating in the health benefits program pursuant to this 
        subparagraph shall be made by the Organization in the same 
        manner as provided under section 8906(g)(2) of such title 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, United States Code.
          (C) The Organization may supplement the benefits provided 
        under the preceding provisions of this paragraph.
          (3) Life insurance.--(A) The provisions of chapter 87 of 
        title 5, United States Code, shall apply to the Organization 
        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, United States Code, shall be 
        determined, in the case of any individual who becomes an 
        officer or employee of the Organization pursuant to subsection 
        (i), without regard to the requirements of section 8706(b) (1) 
        or (2) of such title, 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) of such 
        title on behalf of any such individual shall be made by the 
        Organization in the same manner as provided under paragraph (3) 
        thereof with respect to the United States Postal Service for 
        individuals associated therewith.
          (C) The Organization may supplement the benefits provided 
        under the preceding provisions of this paragraph.
          (4) Employees' compensation fund.--(A) Officers and employees 
        of the Organization shall not become ineligible to participate 
        in the program under chapter 81 of title 5, United States Code, 
        relating to compensation for work injuries, by reason of 
        subsection (e).
          (B) The Organization shall remain responsible for reimbursing 
        the Employees' Compensation Fund, pursuant to section 8147 of 
        title 5, United States Code, for compensation paid or payable 
        after the effective date of this title in accordance with 
        chapter 81 of title 5, United States Code, 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.
    (h) Labor-Management Relations.--
          (1) Labor relations and employee relations programs.--The 
        Organization shall develop hiring practices, 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, United States 
                Code.
                  (B) Such programs shall provide veterans preference 
                protections equivalent to those established by sections 
                2108, 3308 through 3318, 3320, 3502, and 3504 of title 
                5, United States Code.
                  (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, United 
                States Code, 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 
                Organization as the exclusive representative of a unit 
                of employees of the Organization 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 Organization 
        shall adopt all labor agreements which are in effect, as of the 
        day before the effective date of this title, with respect to 
        such Organization (as then in effect).
    (i) Carryover of personnel.--
          (1) From pto.--Effective as of the effective date of this 
        title, all officers and employees of the Patent and Trademark 
        Office on the day before such effective date shall become 
        officers and employees of the Organization, without a break in 
        service.
          (2) Other personnel.--(A) Any individual who, on the day 
        before the effective date of this title, is an officer or 
        employee of the Department of Commerce (other than an officer 
        or employee under paragraph (1)) shall be transferred to the 
        Organization if--
                  (i) 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;
                  (ii) 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
                  (iii) such transfer would be in the interest of the 
                Organization, as determined by the Secretary of 
                Commerce in consultation with the Director.
          (B) 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, United States 
        Code, before the effective date described in paragraph (1), by 
        any individual who becomes an officer or employee of the 
        Organization under this subsection, are obligations of the 
        Organization.
          (4) Termination rights.--Any employee referred to in 
        paragraph (1) or (2) of this subsection whose employment with 
        the Organization is terminated during the 1-year period 
        beginning on the effective date of this title shall be entitled 
        to rights and benefits, to be afforded by the Organization, 
        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 such 1-
        year period to the Board under such procedures as it may 
        prescribe.
          (5) Transition provisions.--(A)(i) On or after the effective 
        date of this title, the President shall appoint a Director of 
        the United States Patent and Trademark Organization who shall 
        serve until the earlier of--
                  (I) the date on which a Director qualifies under 
                subsection (b); or
                  (II) the date occurring 1 year after the effective 
                date of this title.
          (ii) The President shall not make more than 1 appointment 
        under this subparagraph.
          (B) The individual serving as the Assistant Commissioner of 
        Patents on the day before the effective date of this title 
        shall serve as the Commissioner of Patents until the date on 
        which a Commissioner of Patents is appointed under section 3 of 
        title 35, United States Code, as amended by this Act.
          (C) The individual serving as the Assistant Commissioner of 
        Trademarks on the day before the effective date of this title 
        shall serve as the Commissioner of Trademarks until the date on 
        which a Commissioner of Trademarks is appointed under section 
        53 of the Act of July 5, 1946 (commonly referred to as the 
        Trademark Act of 1946), as amended by this Act.
    (j) Competitive Status.--For purposes of appointment to a position 
in the competitive service for which an officer or employee of the 
Organization is qualified, such officer or employee shall not forfeit 
any competitive status, acquired by such officer or employee before the 
effective date of this title, by reason of becoming an officer or 
employee of the Organization under subsection (i).
    (k) Savings Provisions.--Compensation, benefits, and other terms 
and conditions of employment in effect immediately before the effective 
date of this title, 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 Organization, until changed in 
accordance with this section (whether by action of the Director or 
otherwise).
    (l) Removal of Quasi-judicial Examiners.--The Organization 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 Organization.

SEC. 114. UNITED STATES PATENT OFFICE.

    (a) Establishment of the Patent Office as a Separate Administrative 
Unit.--Section 1 of title 35, United States Code, is amended to read as 
follows:

``Sec. 1. Establishment

    ``(a) Establishment.--United States Patent Office is established as 
a separate administrative unit of the United States Patent and 
Trademark Organization, where records, books, drawings, specifications, 
and other papers and things pertaining to patents shall be kept and 
preserved, except as otherwise provided by law.
    ``(b) Reference.--For purposes of this title, the United States 
Patent Office shall also be referred to as the `Office' and the `Patent 
Office'.''.
    (b) Powers and Duties.--Section 2 of title 35, United States Code, 
is amended to read as follows:

``Sec. 2. Powers and duties

    ``The United States Patent Office, under the policy direction of 
the Secretary of Commerce through the Director of the United States 
Patent and Trademark Organization, shall be responsible for--
          ``(1) granting and issuing patents;
          ``(2) conducting studies, programs, or exchanges of items or 
        services regarding domestic and international patent law, the 
        administration of the Organization, or any other function 
        vested in the Organization by law, including programs to 
        recognize, identify, assess, and forecast the technology of 
        patented inventions and their utility to industry;
          ``(3) authorizing or conducting studies and programs 
        cooperatively with foreign patent offices and international 
        organizations, in connection with the granting and issuing of 
        patents; and
          ``(4) disseminating to the public information with respect to 
        patents.''.
    (c) 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 
        Office shall be vested in a Commissioner of Patents, who shall 
        be a citizen of the United States and who shall be appointed by 
        the Director of the United States Patent and Trademark 
        Organization and shall serve at the pleasure of the Director of 
        the United States Patent and Trademark Organization. The 
        Commissioner of Patents shall be a person who, by reason of 
        professional background and experience in patent law, is 
        especially qualified to manage the Office.
          ``(2)Duties.-- 
                  ``(A) In general.--The Commissioner shall be 
                responsible for all aspects of the management, 
                administration, and operation of the Office, including 
                the granting and issuing of patents, and shall perform 
                these duties in a fair, impartial, and equitable 
                manner.
                  ``(B) Advising the director of the united states 
                patent and trademark organization.--The Commissioner of 
                Patents shall advise the Director of the United States 
                Patent and Trademark Organization 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. The Commissioner of Patents shall 
                advise the Director of the United States Patent and 
                Trademark Organization on matters of patent law and 
                shall recommend to the Director of the United States 
                Patent and Trademark Organization changes in law or 
                policy which may improve the ability of United States 
                citizens to secure and enforce patent rights in the 
                United States or in foreign countries.
                  ``(C) Regulations.--The Commissioner may establish 
                regulations, not inconsistent with law, for the conduct 
                of proceedings in the Patent Office. The Director of 
                the United States Patent and Trademark Organization 
                shall determine whether such regulations are consistent 
                with the policy direction of the Secretary of Commerce.
                  ``(D) Consultation with the management advisory 
                board.--(i) The Commissioner shall consult with the 
                Management Advisory Board established in section 5--
                          ``(I) on a regular basis on matters relating 
                        to the operation of the Office; and
                          ``(II) before submitting budgetary proposals 
                        to the Director of the United States Patent and 
                        Trademark Organization for submission to the 
                        Office of Management and Budget or changing or 
                        proposing to change patent user fees or patent 
                        regulations.
                  ``(ii) The Director of the United States Patent and 
                Trademark Organization shall determine whether such 
                fees or regulations are consistent with the policy 
                direction of the Secretary of Commerce.
          ``(3) Oath.--The Commissioner shall, before taking office, 
        take an oath to discharge faithfully the duties of the Office.
          ``(4) Compensation.--
                  ``(A) In general.--The Commissioner shall receive 
                compensation at the rate of pay in effect for level IV 
                of the Executive Schedule under section 5315 of title 
                5.
                  ``(B) Bonus.--In addition to compensation under 
                subparagraph (A), the Commissioner may, at the 
                discretion of the Director of the United States Patent 
                and Trademark Organization, receive as a bonus, an 
                amount which would raise total compensation to the 
                equivalent of the rate of pay in effect for level III 
                of the Executive Schedule under section 5314 of title 
                5.
    ``(b) Officers and Employees.--
          ``(1) Deputy commissioner of patents.--The Commissioner shall 
        appoint a Deputy Commissioner of Patents 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. 
        In the event of a vacancy in the office of Commissioner, the 
        Deputy Commissioner shall fill the office of Commissioner until 
        a new Commissioner is appointed and takes office.
          ``(2) Ombudsman.--The Commissioner shall appoint an ombudsman 
        to advise the Commissioner on the concerns of independent 
        inventors, nonprofit organizations, and small business 
        concerns.
          ``(3) Other officers and employees.--Other officers, 
        attorneys, employees, and agents shall be selected and 
        appointed by the Commissioner, and shall be vested with such 
        powers and duties as the Commissioner may determine.''
    (d) 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 Office Management Advisory Board

    ``(a) Establishment of Management Advisory Board.--
          ``(1) Appointment.--The United States Patent Office shall 
        have a Management Advisory Board (hereafter in this title 
        referred to as the `Advisory Board') of 5 members, who shall be 
        appointed by the President and shall serve at the pleasure of 
        the President. Not more than 3 of the 5 members shall be 
        members of the same political party. At least 1 member shall be 
        an independent inventor, as defined in regulations issued by 
        the Commissioner.
          ``(2) Chair.--The President shall designate a Chair of the 
        Advisory Board, whose term as chair shall be for 3 years.
          ``(3) Timing of appointments.--Initial appointments to the 
        Advisory Board shall be made within 3 months after the 
        effective date of the United States Patent and Trademark 
        Organization Act of 1997. Vacancies shall be filled in the 
        manner in which the original appointment was made under this 
        subsection within 3 months after they occur.
    ``(b) Basis for Appointments.--Members of the Advisory 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 Office, and 
shall include individuals with substantial background and achievement 
in corporate finance and management.
    ``(c) Meetings.--The Advisory Board shall meet at the call of the 
Chair to consider an agenda set by the Chair.
    ``(d) Duties.--The Advisory Board shall--
          ``(1) review the policies, goals, performance, budget, and 
        user fees of the United States Patent Office, and advise the 
        Commissioner on these matters;
          ``(2) within 60 days after the end of each fiscal year--
                  ``(A) prepare an annual report on the matters 
                referred to in paragraph (1);
                  ``(B) transmit the report to the Director of the 
                United States Patent and Trademark Organization, the 
                President, and the Committees on the Judiciary of the 
                Senate and the House of Representatives; and
                  ``(C) publish the report in the Patent Office 
                Official Gazette.
    ``(f) Compensation.--Each member of the Advisory Board shall be 
compensated for each day (including travel time) during which such 
member is attending meetings or conferences of the Advisory Board or 
otherwise engaged in the business of the Advisory 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 such member's home or regular place of business 
such member 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 Advisory Board shall 
be provided access to records and information in the United States 
Patent Office, except for personnel or other privileged information and 
information concerning patent applications required to be kept in 
confidence by section 122.
    ``(h) Applicability of Certain Ethics Laws.--Members of the 
Advisory Board shall be special Government employees within the meaning 
of section 202 of title 18.''.
    (e) Conforming Amendments.--Section 6 of title 35, United States 
Code, and the item relating to such section in the table of contents 
for chapter 1 of title 35, United States Code, are repealed.
    (f) Board of Patent Appeals and Interferences.--Section 7 of title 
35, United States Code, is amended to read as follows:

``Sec. 7. Board of Patent Appeals and Interferences

    ``(a) Establishment and Composition.--There shall be in the United 
States Patent Office a Board of Patent Appeals and Interferences. The 
Commissioner, the Deputy Commissioner, and the administrative patent 
judges shall constitute the Board. The administrative patent judges 
shall be persons of competent legal knowledge and scientific ability.
    ``(b) Duties.--
          ``(1) In general.--The Board of Patent Appeals and 
        Interferences shall, on written appeal of an applicant, a 
        patent owner, or a third-party requester in a reexamination 
        proceeding--
                  ``(A) review adverse decisions of examiners--
                          ``(i) upon applications for patents; and
                          ``(ii) in reexamination proceedings; and
                  ``(B) determine priority and patentability of 
                invention in interferences declared under section 
                135(a).
          ``(2) Hearings.--Each appeal and interference shall be heard 
        by at least 3 members of the Board, who shall be designated by 
        the Deputy Commissioner. Only the Board of Patent Appeals and 
        Interferences may grant rehearings.''.
    (g) 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 Director of the United 
States Patent and Trademark Organization such information as the 
Director is required to submit to Congress annually under section 
157(d) of this title, and under chapter 91 of title 31, including--
          ``(1) the total of the moneys received and expended by the 
        Office;
          ``(2) the purposes for which the moneys were spent;
          ``(3) the quality and quantity of the work of the Office; and
          ``(4) other information relating to the Office.''.
    (h) Practice Before Patent Office.--
          (1) In general.--Section 31 of title 35, United States Code, 
        is amended to read as follows:

``Sec. 31. Regulations for agents and attorneys

    ``The Commissioner may prescribe regulations governing the 
recognition and conduct of agents, attorneys, or other persons 
representing applicants or other parties before the Office. The 
regulations may require such persons, 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.''.
          (2) Designation of attorney to conduct hearing.--Section 32 
        of title 35, United States Code, is amended in the first 
        sentence by striking ``Patent and Trademark Office'' and 
        inserting ``Patent Office'' and 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 Office to conduct the 
        hearing required by this section.''.
    (i) Funding.--
          (1) Adjustment of fees.--Section 41(f) of title 35, United 
        States Code, is amended to read as follows:
    ``(f) The Commissioner, after consulting with the Patent Office 
Management Advisory Board pursuant to section 3(a)(2)(C) of this title 
and after notice and opportunity for full participation by interested 
public and private parties, may, by regulation, adjust the fees 
established in this section. The Director of the United States Patent 
and Trademark Organization shall determine whether such fees are 
consistent with the policy direction of the Secretary of Commerce.''.
          (2) Patent office funding.--Section 42 of title 35, United 
        States Code, is amended to read as follows:

``Sec. 42. Patent Office funding

    ``(a) Fees Payable to the Office.--All fees for services performed 
by or materials furnished by the United States Patent Office shall be 
payable to the Office.
    ``(b) Use of Moneys.--Moneys from fees shall be available to the 
United States Patent 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 Commissioner under this title shall 
be used only for the processing of patent applications and for other 
services and materials relating to patents, including the agreed upon 
share of any centralized function, as set forth in section 113(b)(2)(E) 
of the United States Patent and Trademark Organization Act of 1997.
    ``(c) Contribution to the Office of the Director of the United 
States Patent and Trademark Organization.--The Patent Office shall 
contribute 50 percent of the annual budget of the Office of the 
Director of the United States Patent and Trademark Organization.''.

SEC. 115. UNITED STATES TRADEMARK OFFICE.

    (a) Establishment of the United States Trademark Office as a 
Separate Administrative Unit.--The Act of July 5, 1946 (commonly 
referred to as the Trademark Act of 1946) is amended--
          (1) by redesignating titles X and XI as titles XI and XII, 
        respectively;
          (2) by redesignating sections 45, 46, 47, 48, 49, 50, and 51 
        as sections 61, 71, 72, 73, 74, 75, and 76, respectively; and
          (3) by inserting after title IX the following new title:

               ``TITLE X--UNITED STATES TRADEMARK OFFICE

``SEC. 51. ESTABLISHMENT.

    ``(a) Establishment.--The United States Trademark Office is 
established as a separate administrative unit of the United States 
Patent and Trademark Organization.
    ``(b) Reference.--For purposes of this chapter, the United States 
Trademark Office shall also be referred to as the `Office' and the 
`Trademark Office'.

``SEC. 52. POWERS AND DUTIES.

    ``The United States Trademark Office, under the policy direction of 
the Secretary of Commerce through the Director of the United States 
Patent and Trademark Organization, shall be responsible for--
          ``(1) the registration of trademarks;
          ``(2) conducting studies, programs, or exchanges of items or 
        services regarding domestic and international trademark law or 
        the administration of the Office;
          ``(3) authorizing or conducting studies and programs 
        cooperatively with foreign trademark offices and international 
        organizations, in connection with the registration of 
        trademarks; and
          ``(4) disseminating to the public information with respect to 
        trademarks.

``SEC. 53. OFFICERS AND EMPLOYEES.

    ``(a) Commissioner.--
          ``(1) In general.--The management of the United States 
        Trademark Office shall be vested in a Commissioner of 
        Trademarks, who shall be a citizen of the United States and who 
        shall be appointed by the Director of the United States Patent 
        and Trademark Organization and shall serve at the pleasure of 
        the Director of the United States Patent and Trademark 
        Organization. The Commissioner of Trademarks shall be a person 
        who, by reason of professional background and experience in 
        trademark law, is especially qualified to manage the Office.
          ``(2) Duties.--
                  ``(A) In general.--The Commissioner shall be 
                responsible for all aspects of the management, 
                administration, and operation of the Office, including 
                the registration of trademarks, and shall perform these 
                duties in a fair, impartial, and equitable manner.
                  ``(B) Advising the director of the united states 
                patent and trademark organization.--The Commissioner of 
                Trademarks shall advise the Director of the United 
                States Patent and Trademark Organization 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 registering trademarks. The 
                Commissioner of Trademarks shall advise the Director of 
                the United States Patent and Trademark Organization on 
                matters of trademark law and shall recommend to the 
                Director of the United States Patent and Trademark 
                Organization changes in law or policy which may improve 
                the ability of United States citizens to secure and 
                enforce trademark rights in the United States or in 
                foreign countries.
                  ``(C) Regulations.--The Commissioner may establish 
                regulations, not inconsistent with law, for the conduct 
                of proceedings in the Trademark Office. The Director of 
                the United States Patent and Trademark Organization 
                shall determine whether such regulations are consistent 
                with the policy direction of the Secretary of Commerce.
                  ``(D) Consultation with the management advisory 
                board.--(i) The Commissioner shall consult with the 
                Trademark Office Management Advisory Board established 
                under section 54--
                          ``(I) on a regular basis on matters relating 
                        to the operation of the Office; and
                          ``(II) before submitting budgetary proposals 
                        to the Director of the United States Patent and 
                        Trademark Organization for submission to the 
                        Office of Management and Budget or changing or 
                        proposing to change trademark user fees or 
                        trademark regulations.
                  ``(ii) The Director of the United States Patent and 
                Trademark Organization shall determine whether such 
                fees or regulations are consistent with the policy 
                direction of the Secretary of Commerce.
                  ``(E) Publications.--(i) The Commissioner may print, 
                or cause to be printed, the following:
                          ``(I) Certificates of trademark 
                        registrations, including statements and 
                        drawings, together with copies of the same.
                          ``(II) The Official Gazette of the United 
                        States Trademark Office.
                          ``(III) Annual indexes of trademarks and 
                        registrants.
                          ``(IV) Annual volumes of decisions in 
                        trademark cases.
                          ``(V) Pamphlet copies of laws and rules 
                        relating to trademarks and circulars or other 
                        publications relating to the business of the 
                        Office.
                  ``(ii) The Commissioner may exchange any of the 
                publications specified under clause (i) for 
                publications desirable for the use of the Trademark 
                Office.
          ``(3) Oath.--The Commissioner shall, before taking office, 
        take an oath to discharge faithfully the duties of the Office.
          ``(4) Compensation.--
                  ``(A) In general.--The Commissioner shall receive 
                compensation at the rate of pay in effect for level IV 
                of the Executive Schedule under section 5315 of title 
                5, United States Code.
                  ``(B) Bonus.--In addition to compensation under 
                subparagraph (A), the Commissioner may, at the 
                discretion of the Director of the United States Patent 
                and Trademark Organization, receive as a bonus, an 
                amount which would raise total compensation to the 
                equivalent of the rate of pay in effect for level III 
                of the Executive Schedule under section 5314 of title 
                5.
    ``(b) Officers and Employees.--The Commissioner shall appoint a 
Deputy Commissioner of Trademarks 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. In the event of a 
vacancy in the office of Commissioner, the Deputy Commissioner shall 
fill the office of Commissioner until a new Commissioner is appointed 
and takes office. Other officers, attorneys, employees, and agents 
shall be selected and appointed by the Commissioner, and shall be 
vested with such powers and duties as the Commissioner may determine.

``SEC. 54. TRADEMARK OFFICE MANAGEMENT ADVISORY BOARD.

    ``(a) Establishment of Management Advisory Board.--
          ``(1) Appointment.--The United States Trademark Office shall 
        have a Management Advisory Board (hereafter in this title 
        referred to as the `Advisory Board') of 5 members, who shall be 
        appointed by the President and shall serve at the pleasure of 
        the President. Not more than 3 of the 5 members shall be 
        members of the same political party.
          ``(2) Chair.--The President shall designate a Chair of the 
        Advisory Board, whose term as chair shall be for 3 years.
          ``(3) Timing of appointments.--Initial appointments to the 
        Advisory Board shall be made within 3 months after the 
        effective date of the United States Patent and Trademark 
        Organization Act of 1997. Vacancies shall be filled in the 
        manner in which the original appointment was made under this 
        section within 3 months after they occur.
    ``(b) Basis for Appointments.--Members of the Advisory 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 Trademark Office, 
and shall include individuals with substantial background and 
achievement in corporate finance and management.
    ``(c) Meetings.--The Advisory Board shall meet at the call of the 
Chair to consider an agenda set by the Chair.
    ``(d) Duties.--The Advisory Board shall--
          ``(1) review the policies, goals, performance, budget, and 
        user fees of the United States Trademark Office, and advise the 
        Commissioner on these matters; and
          ``(2) within 60 days after the end of each fiscal year--
                  ``(A) prepare an annual report on the matters 
                referred to under paragraph (1);
                  ``(B) transmit the report to the Director of the 
                United States Patent and Trademark Organization, the 
                President, and the Committees on the Judiciary of the 
                Senate and the House of Representatives; and
                  ``(C) publish the report in the Trademark Office 
                Official Gazette.
    ``(f) Compensation.--Each member of the Advisory Board shall be 
compensated for each day (including travel time) during which such 
member is attending meetings or conferences of the Advisory Board or 
otherwise engaged in the business of the Advisory 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, 
United States Code, and while away from such member's home or regular 
place of business such member may be allowed travel expenses, including 
per diem in lieu of subsistence, as authorized by section 5703 of title 
5, United States Code.
    ``(g) Access to Information.--Members of the Advisory Board shall 
be provided access to records and information in the United States 
Trademark Office, except for personnel or other privileged information.
    ``(h) Applicability of Certain Ethic Laws.--Members of the Advisory 
Board shall be special Government employees within the meaning of 
section 202 of title 18.

``SEC. 55. ANNUAL REPORT TO CONGRESS.

    ``The Commissioner shall report to the Director of the United 
States Patent and Trademark Organization such information as the 
Director is required to report to Congress annually under chapter 91 of 
title 5, including--
          ``(1) the moneys received and expended by the Office;
          ``(2) the purposes for which the moneys were spent;
          ``(3) the quality and quantity of the work of the Office; and
          ``(4) other information relating to the Office.

``SEC. 56. TRADEMARK OFFICE FUNDING.

    ``(a) Fees Payable to the Office.--All fees for services performed 
by or materials furnished by the United States Trademark Office shall 
be payable to the Office.
    ``(b) Use of Moneys.--Moneys from fees shall be available to the 
United States 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 Commissioner under this chapter 
shall be used only for the registration of trademarks and for other 
services and materials relating to trademarks, including the agreed 
upon share of any centralized function, as set forth in section 
113(b)(2)(E) of the United States Patent and Trademark Organization Act 
of 1997.
    ``(c) Contribution to the Office of the Director of the United 
States Patent and Trademark Organization.--The Trademark Office shall 
contribute 50 percent of the annual budget of the Office of the 
Director of the United States Patent and Trademark Organization.''.
    (b) 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 of Trademarks, the Deputy Commissioner of Trademarks, and 
administrative trademark judges competent in trademark law who are 
appointed by the Commissioner.''.
    (c) Determination of Fees.--Section 31(a) of the Act of July 5, 
1946 (commonly referred to as the Trademark Act of 1946) (15 U.S.C. 
1067(a)) is amended by striking the second and third sentences and 
inserting the following: ``Fees established under this subsection may 
be adjusted by the Commissioner, after consulting with the Trademark 
Office Management Advisory Board in accordance with section 53(a)(2)(C) 
of this Act and after notice and opportunity for full participation by 
interested public and private parties. The Director of the United 
States Patent and Trademark Organization shall determine whether such 
fees are consistent with the policy direction of the Secretary of 
Commerce.''.

SEC. 116. SUITS BY AND AGAINST THE ORGANIZATION.

    (a) Actions Under United States Law.--Any civil action or 
proceeding to which the United States Patent and Trademark Organization 
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 Organization.
    (b) Representation by the Department of Justice.--The United States 
Patent and Trademark Organization shall be deemed an agency of the 
United States for purposes of section 516 of title 28, United States 
Code.
    (c) Prohibition on Attachment, Liens, or Similar Process.--No 
attachment, garnishment, lien, or similar process, intermediate or 
final, in law or equity, may be issued against property of the 
Organization.

SEC. 117. FUNDING.

    (a) In General.--The activities of the United States Patent and 
Trademark Organization and each office of the Organization shall be 
funded entirely through fees payable to the United States Patent Office 
(under section 42 of title 35, United States Code) and the United 
States Trademark Office (under section 56 of the Act of July 5, 1946 
(commonly known as the Trademark Act of 1946)), and surcharges 
appropriated by Congress, to the extent provided in appropriations Acts 
and subject to the provisions of subsection (b).
    (b) Borrowing Authority.--
          (1) In general.--The United States Patent and Trademark 
        Organization 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 the activities of the United States Patent Office and 
        the United States Trademark Office. Borrowing under this 
        section shall be subject to prior approval in appropriations 
        Acts. Such borrowing shall not exceed amounts approved in 
        appropriations Acts.
          (2) Borrowing authority.--Any borrowing under this subsection 
        shall be repaid only from fees paid to the Office for which 
        such obligations were issued and surcharges appropriated by 
        Congress. Such obligations shall be redeemable at the option of 
        the United States Patent and Trademark Organization before 
        maturity in the manner stipulated in such obligations and shall 
        have such maturity as is determined by the United States Patent 
        and Trademark Organization 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.
          (3) Purchase of obligations.--The Secretary of the Treasury 
        shall purchase any obligations of the United States Patent and 
        Trademark Organization 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, United States Code, and 
        the purposes for which securities may be issued under that 
        chapter are extended to include such purpose.
          (4) Treatment.--Payment under this subsection of the purchase 
        price of such obligations of the United States Patent and 
        Trademark Organization shall be treated as public debt 
        transactions of the United States.

SEC. 118. TRANSFERS.

    (a) Transfer of Functions.--Except as relates to the direction of 
patent and trademark policy, there are transferred to, and vested in, 
the United States Patent and Trademark Organization 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 Organization, 
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 United States Patent and Trademark 
Office by this title.

SEC. 119. USE OF ORGANIZATION NAME.

     The use of the terms ``United States Patent and Trademark 
Organization'', ``Patent and Trademark Office'', ``United States Patent 
Office'', ``Patent Office'', ``United States Trademark Office'', 
``Trademark Office'', or any combination of such terms, as the name or 
part thereof under which an individual or entity does business, is 
prohibited. A violation of this section may beenjoined by any Federal 
court at the suit of the Organization. In any such suit, the 
Organization shall be entitled to statutory damages of $1,000 for each 
day during which such violation continues or is repeated following 
notice by the Organization and, in addition, may recover actual damages 
flowing from such violations.

            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) Table of parts.--The item relating to part I in the table 
        of parts for title 35, United States Code, is amended to read 
        as follows:

   ``I. United States Patent Office.................................    
                                                                   1.''.

          (2) Heading.--The heading for part I of title 35, United 
        States Code, is amended to read as follows:

                ``PART I--UNITED STATES PATENT OFFICE''.

          (3) Table of chapters.--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) Table of sections.--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 Office Management Advisory Board.
``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.''.

          (5) Commissioner of patents and trademarks.--(A) Section 
        41(h)(1) of title 35, United States Code, is amended by 
        striking ``Commissioner of Patents and Trademarks'' and 
        inserting ``Commissioner''.
          (B) Section 155 of title 35, United States Code, is amended 
        by striking ``Commissioner of Patents and'' and inserting 
        ``Commissioner''.
          (C) Section 155A(c) of title 35, United States Code, is 
        amended by striking ``Commissioner of Patents'' and inserting 
        ``Commissioner''.
          (6) Patent and trademark office.--The provisions of title 35, 
        United States Code, are amended by striking ``Patent and 
        Trademark Office'' each place it appears and inserting ``Patent 
        Office''.
          (7) Secretary of commerce.--Section 157(d) of title 35, 
        United States Code, is amended by striking ``Secretary of 
        Commerce'' and inserting ``Director of the United States Patent 
        and Trademark Organization''.
    (b) Amendments to the Trademark Act of 1946.--
          (1) References.--All amendments in this subsection refer to 
        the Act of July 5, 1946 (commonly referred to as the Trademark 
        Act of 1946).
          (2) Amendments relating to commissioner.--Section 61 (as 
        redesignated by section 115(a)(2) of this Act) is amended by 
        striking the undesignated paragraph relating to the definition 
        of the term ``Commissioner'' and inserting the following:
    ``The term `Commissioner' means the Commissioner of Trademarks.''.
          (3) Amendments relating to patent and trademark office.--(A) 
        Section 1(a)(1) is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (B) Section 1(a)(2) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (C) Section 1(b)(1) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (D) Section 1(b)(2) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (E) Section 1(d)(1) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (F) Section 1(e) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (G) Section 2(d) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (H) Section 7(a) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (I) Section 7(d) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (J) Section 7(e) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (K) Section 7(f) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (L) Section 7(g) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (M) Section 8(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (N) Section 8(b) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (O) Section 10 is amended by striking ``Patent and Trademark 
        Office'' each place such term appears and inserting ``Trademark 
        Office''.
          (P) Section 12(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (Q) Section 13(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (R) Section 13(b)(1) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (S) Section 15(2) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (T) Section 17 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (U) Section 21(a)(2) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (V) Section 21(a)(3) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (W) Section 21(a)(4) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (X) Section 21(b)(3) is amended by striking ``Patent and 
        Trademark Office'' each place such term appears and inserting 
        ``Trademark Office''.
          (Y) Section 21(b)(4) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (Z) Section 24 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (AA) Section 29 is amended by striking ``Patent and Trademark 
        Office'' each place such term appears and inserting ``Trademark 
        Office''.
          (BB) Section 30 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (CC) Section 31(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (DD) Section 34(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (EE) Section 34(d)(1)(B)(i) is amended by striking ``Patent 
        and Trademark Office'' and inserting ``Trademark Office''.
          (FF) Section 35(a) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (GG) Section 36 is amended by striking ``Patent and 
        Trademark'' and inserting ``Trademark Office''.
          (HH) Section 37 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (II) Section 38 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (JJ) Section 39(b) is amended by striking ``Patent and 
        Trademark Office'' and inserting ``Trademark Office''.
          (KK) Section 41 is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (LL) Section 61 (as redesignated under section 115(a)(2) of 
        this Act) is amended in the undesignated paragraph relating to 
        the definition of ``registered mark''--
                  (i) by striking ``Patent and Trade Mark Office'' and 
                inserting ``Trademark Office''; and
                  (ii) by striking ``Patent and Trade Office'' and 
                inserting ``Trademark Office''.
          (MM) Section 72(a) (as redesignated under section 115(a)(2) 
        of this Act) is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
          (NN) Section 75 (as redesignated under section 115(a)(2) of 
        this Act) is amended by striking ``Patent and Trademark 
        Office'' and inserting ``Trademark Office''.
    (c) Amendments to Title 5.--Title 5, United States Code, is 
amended--
          (1) in section 5102(c)(23)--
                  (A) by striking ``examiners-in-chief'' in each place 
                it appears and inserting ``administrative patent 
                judges''; and
                  (B) by striking ``Office, Department of Commerce'' 
                and inserting ``Organization''; and
          (2) in section 5316--
                  (A) by striking ``Commissioner of Patents, Department 
                of Commerce.''; and
                  (B) by striking:
                ``Deputy Commissioner of Patents and Trademarks.
                ``Assistant Commissioner for Patents.
                ``Assistant Commissioner for Trademarks.''.
    (d) Amendment to Title 31.--Section 9101(3) of title 31, United 
States Code, is amended by adding at the end the following:
                  ``(O) the United States Patent and Trademark 
                Organization.''.
    (e) Amendments to Inspector General Act of 1978.--Section 11 of the 
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
          (1) in paragraph (1) by striking ``or the Commissioner of 
        Social Security, Social Security Administration;'' and 
        inserting ``the Commissioner of Social Security, Social 
        Security Administration; or the Director of the United States 
        Patent and Trademark Organization, United States Patent and 
        Trademark Organization;''; and
          (2) in paragraph (2) by striking ``or the Veterans' 
        Administration, or the Social Security Administration;'' and 
        inserting ``the Veterans' Administration, the Social Security 
        Administration, or the United States Patent and Trademark 
        Organization;''.

                  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, agency, or office from which a function is 
transferred by this title--
          (1) to the head of such department, agency, or office is 
        deemed to refer to the head of the department, agency, or 
        office to which such function is transferred; or
          (2) to such department, agency, or office is deemed to refer 
        to the department, agency, 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 that--
          (1) 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) 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 Federal 
agency, 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.

    (a) In general.--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--
          (1) delegate any of the functions so transferred to such 
        officers and employees of the office of the official as the 
        official may designate; and
          (2) authorize successive redelegations of such functions as 
        may be necessary or appropriate.
    (b) Responsibility for Administration.--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.
    (c) Termination of Affairs.--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, agency, 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 1997''.

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 
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) Where an applicant makes a request upon filing, 
        certifying that the invention disclosed in the application has 
        not and will not be the subject of an application filed in a 
        foreign country, the application shall not be published as 
        provided in paragraph (1).
          ``(ii) An applicant may rescind a request made under clause 
        (i) at any time. An applicant has a duty to notify the Director 
        within 1 month of filing an application in a foreign country.
          ``(iii) Where an applicant rescinds a request made under 
        clause (i) or notifies the Director that an application was 
        filed in a foreign country, the application shall be published 
        in accordance with the provisions of paragraph (1).
    ``(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 that did not exist prior to the adoption of this 
section.
    ``(d) Study.--
          ``(1) In general.--The General Accounting Office shall 
        conduct a 3-year study of the applicants who file only in the 
        United States after the effective date of this title.
          ``(2) Contents.--The study conducted under paragraph (1) 
        shall--
                  ``(A) consider the number of such applicants in 
                relation to the number of applicants who file in the 
                United States and outside the United States;
                  ``(B) examine how many domestic-only filers request 
                at the time of filing not to be published;
                  ``(C) examine how many such filers rescind that 
                request or later choose to file abroad; and
                  ``(D) examine the manner of entity seeking an 
                application and any correlation that may exist between 
                such manner and publication of patent applications.''.

 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 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. The 
Commissioner may establish procedures, including the payment of a 
surcharge, to accept an unintentionally delayed claim under this 
section.
    ``(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.''.
    (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 filed under the treaty 
        defined in section 351(a) of this title designating the United 
        States under Article 21(2)(a) of such treaty, the date of 
        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.--
                   ``(A) Effective date.--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 Office receives 
                a copy of the publication under the treaty defined in 
                section 351(a) of this title 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 Office 
                receives a translation of the international application 
                in the English language.
                  ``(B) Copies.--The Commissioner may require the 
                applicant to provide a copy of the international 
                application and a translation thereof.
          (5) Issuance of patents on individual claims.--Where the 
        Director in a notification to the applicant under section 132 
        of this title indicates that one or more claims of a published 
        application are allowable, the applicant may request the 
        issuance of a patent incorporating those claims. The applicant 
        may continue prosecution of the remaining claims as provided in 
        chapter 12 of this title. Any subsequently allowed claims may 
        be incorporated into the patent. The Director may establish 
        appropriate fees to cover the costs of incorporating any 
        additional claims into the patent.''.

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)(A) 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
          ``(B) a patent granted on an application for patent by 
        another filed in the United States before the invention by the 
        applicant for patent, 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 undesignated paragraph--
                          (i) by inserting ``by the publication of an 
                        application or'' after ``disclosure''; and
                          (ii) ``the publication of the application 
                        or'' after ``withhold'';
                  (B) in the second undesignated paragraph by inserting 
                ``by the publication of an application or'' after 
                ``disclosure of an invention'';
                  (C) in the third undesignated paragraph--
                          (i) by inserting ``by the publication of the 
                        application or'' after ``disclosure of the 
                        invention''; and
                          (ii) ``the publication of the application 
                        or'' after ``withhold''; and
                  (D) in the fourth undesignated paragraph by inserting 
                ``the publication of an application or'' after ``and'' 
                in the first sentence.
          (8) Section 252 is amended in the first undesignated 
        paragraph by inserting ``substantially'' before ``identical'' 
        each place it appears.
          (9) Section 284 is amended by adding at the end of the second 
        undesignated 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. 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. 209. EFFECTIVE DATE.

    (a) Sections 202 Through 207.--Sections 202 through 207, and the 
amendments made by such sections, shall take effect on the date that is 
1 year after the date of enactment of this Act and shall apply to all 
applications filed under section 111 of title 35, United States Code, 
on or after that date, and all applications complying with section 371 
of title 35, United States Code, that resulted from international 
applications filed on or after that date. The amendment made by section 
204 shall also apply to international applications designating the 
United States that are filed on or after the date that is 1 year after 
the date of enactment of this Act.
    (b) Section 208.--The amendments made by section 208 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--PATENT TERM RESTORATION

SEC. 301. PATENT TERM RESTORATION AUTHORITY.

    Section 154(b) of title 35, United States Code, is amended to read 
as follows:
    ``(b) Adjustment of Patent Term.--
          ``(1) Basis for patent term restoration.--
                  ``(A) Delay.--Subject to the limitations under 
                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 Office in issuing the patent,
                  the term of the patent shall be adjusted for the 
                period of delay.
                  ``(B) Administrative delay.--For purposes of 
                subparagraph (A)(iv), an unusual administrative delay 
                by the Patent 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;
                          ``(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; or
                          ``(v) issue a patent within 3 years after the 
                        actual filing date of the application in the 
                        United States, if the applicant--
                                  ``(I) has not obtained further 
                                limited examination of the application 
                                under section 132(b) of this title;
                                  ``(II) has not benefited from an 
                                adjustment of patent term under clause 
                                (i), (ii), or (iii) or paragraph 
                                (1)(A);
                                  ``(III) has not sought or obtained 
                                appellate review by the Board of Patent 
                                Appeals and Interferences or by a 
                                Federal court other than in a case in 
                                which the patent was issued pursuant to 
                                a decision in the review reversing an 
                                adverse determination of patentability; 
                                and
                                  ``(IV) has not requested any delay in 
                                the processing of the application by 
                                the Patent Office.
          ``(2) Limitations.--
                  ``(A) In general.--The total duration of any 
                adjustments granted pursuant to either subclause (iii) 
                or (iv) of paragraph (1)(A) or both such subclauses 
                shall not exceed 10 years. To the extent that periods 
                of delay attributable to grounds specified in paragraph 
                (1) overlap, the period of any adjustment granted under 
                this subsection shall not exceed the actual number of 
                days the issuance of the patent was delayed.
                  ``(B) Reduction of adjustment.--The period of 
                adjustment 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) Disclaimed term.--No patent the term of which 
                has been disclaimed beyond a specified date may be 
                adjusted under this section beyond the expiration date 
                specified in the disclaimer.
                  ``(D) Applicant delay.--The period of adjustment of 
                the term of a patent under clause (iv) of paragraph 
                (1)(A), which is based on the failure of the Patent 
                Office to meet the criteria set forth in clause (v) of 
                paragraph (1)(B), shall be reduced by the cumulative 
                total of any periods of time that an applicant takes to 
                respond in excess of 3 months after the date on which 
                the Patent Office makes any rejection, objection, 
                argument, or other request, except that the 
                Commissioner, upon petition from the applicant in the 
                case of a nonprofit research laboratory or nonprofit 
                entity such as a university, research center, or 
                hospital, shall reinstate all or part of such time upon 
                a showing of good cause by the applicant, but in no 
                case more than 3 additional months for each such 
                response beyond 3 months.
          ``(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.
          ``(4) Notice to commissioner.--In a case in which a patent 
        term is adjusted under this subsection, the Commissioner shall 
        determine the period of any patent term adjustment available 
        under this section and shall include a copy of that 
        determination with the final notice. The Commissioner shall 
        prescribe regulations establishing procedures for the 
        application for, and notification of, patent term adjustments 
        granted by the Commissioner under this subsection.
          ``(5) Judicial review.--Any applicant dissatisfied with a 
        determination of the Commissioner under paragraph (3) may have 
        remedy by civil action in the United States Court of Federal 
        Claims if commenced within 180 days after the mailing of the 
        notice of allowance as the Commissioner appoints. The 
        initiation of a civil action under this section shall not delay 
        the issuance of a patent.''.

SEC. 302. FURTHER EXAMINATION OF PATENT APPLICATIONS.

    Section 132 of title 35, United States Code, is amended--
          (1) in the first sentence by striking ``Whenever'' and 
        inserting ``(a) Whenever''; and
          (2) by adding at the end the following:
    ``(b) The Commissioner shall prescribe regulations to provide for 
the further limited reexamination of applications for patent at the 
request of the applicant. The Commissioner may establish appropriate 
fees for such further limited examination 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 this title.''.

SEC. 303. TECHNICAL CLARIFICATION.

    Section 156(a) of title 35, United States Code, is amended--
           (1) in the matter preceding paragraph (1) by inserting ``, 
        which shall include any patent term adjustment granted under 
        section 154(b),'' after ``the original expiration date of the 
        patent''.

SEC. 304. EFFECTIVE DATE.

    The amendments made by section 301 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 IV--PRIOR DOMESTIC COMMERCIAL USE

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Prior Domestic Commercial Use Act 
of 1997''.

SEC. 402. 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'--
                  ``(A) mean the use in the United States in commerce, 
                use by the United States, or the use in the design, 
                testing, or production in the United States of a 
                product or service which is used in commerce or used by 
                the United States, whether or not the subject matter at 
                issue is accessible to or otherwise known to the 
                public; and
                  ``(B) includes in the case of activities performed by 
                a nonprofit research laboratory, or nonprofit entity 
                such as a university, research center, or hospital, a 
                use for which the public is the intended beneficiary 
                shall be considered to be a use described in 
                subparagraph (A) except that the use--
                          ``(i) may be asserted as a defense under this 
                        section only for continued use by and in the 
                        laboratory or nonprofit entity; and
                          ``(ii) may not be asserted as a defense with 
                        respect to any subsequent commercialization or 
                        use outside such laboratory or nonprofit 
                        entity;
          ``(2) the terms `used in commerce', and `use in commerce' 
        mean that there has been an actual arms-length sale or other 
        commercial transfer, or use by the United States, of the 
        subject matter at issue or that there has been an actual arms-
        length sale or other commercial transfer, or use by the United 
        States, 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) In general.--A person shall not be liable as an 
        infringer under section 271 of this title, nor shall the United 
        States be held liable under section 1498(a) of title 28, 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) Exhaustion of right.--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 an arms-length 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 actually 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:

``Sec. 273. Prior domestic commercial use; defense to infringement.''.

SEC. 403. 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 V--PATENT REEXAMINATION REFORM

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Patent Reexamination Reform Act of 
1997''.

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

    ``(a) In General.--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.
    ``(b) Requirements.--The request shall--
          ``(1) be in writing, include the identity of the real party 
        in interest, and be accompanied by payment of a reexamination 
        fee established by the Commissioner of Patents pursuant to the 
        provisions of section 41 of this title; and
          ``(2) set forth the pertinency and manner of applying cited 
        prior art to every claim for which reexamination is requested.
    ``(c) Copy.--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, and 
any time, the Commissioner may determine whether a substantial new 
question of patentability is raised by patents and publications.
    ``(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 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 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 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 may--
          ``(1) 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; or
          ``(2) be a party to any appeal taken by the patent owner, 
        subject to subsection (c) of this section.
    ``(c) Participation as Party--
          ``(1) In general.--A third-party requester whose request for 
        a reexamination results in an order under section 304 of this 
        title is estopped from asserting at a later time, in any civil 
        action arising in whole or in part under section 1338 of title 
        28, 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. This 
        subsection does not prevent the assertion of invalidity based 
        on newly discovered prior art unavailable to the third-party 
        requester and the Patent Office at the time of the 
        reexamination proceedings.
          ``(2) Election to participate.--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) In general.--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 or if a final 
decision in a reexamination proceeding instituted by a third-party 
requester is favorable to a patentability of any original or proposed 
amended as new claim of the patent and such decision is not appealed by 
the third-party requester under section 306(b), 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 or reexamination proceeding, 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. This subsection 
does not prevent the assertion of invalidity based on newly discovered 
prior art unavailable to the third-party requester and the Patent 
Office at the time of the reexamination proceedings.''.
          (2) Technical and conforming amendment.--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) Patent Fees; Patent 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.''.
    (b) 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 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. REPORT TO CONGRESS.

    Not later than 5 years after the effective date of this title, the 
Director shall submit to the Congress a report evaluating whether the 
reexamination proceedings established under the amendments made by this 
title are inequitable to any of the parties in interest and, if so, the 
report shall contain recommendations for changes to the amendments made 
by this title to remove such inequity.

SEC. 506. EFFECTIVE DATE.

    This title and the amendments made by this title shall take effect 
on the date that is 1 year 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). Subject to section 1993(c)(3) of this 
        title, 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) Technical Amendment Relating to Weekends and Holidays.--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 Federal 
        holiday within the District of Columbia, the period of pendency 
        of the provisional application shall be extended to the next 
        succeeding secular or business day.''.
    (c) Effective Date.--The amendments made by subsection (a) apply to 
a provisional application filed on or after June 8, 1995.

SEC. 602. INTERNATIONAL APPLICATIONS.

    Section 119 of title 35, United States Code, is amended as follows:
          (1) In subsection (a), insert ``or in a WTO member country'' 
        after ``or to citizens of the United States,''.
          (2) At the end of section 119 add the following new 
        subsections:
    ``(f) Applications for plant breeder's rights filed in a WTO member 
country (or in a foreign 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) 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. ACCESS TO ELECTRONIC PATENT INFORMATION.

    (a) In General.--The United States Patent and Trademark 
Organization shall develop and implement statewide computer networks 
with remote library sites in requesting rural States such that citizens 
in those States will have enhanced access to information in their 
State's patent and trademark depository library.
    (b) Definition.--In this section, the term ``rural States'' means 
the States that qualified on January 1, 1997, as rural States under 
section 1501(b) of the Omnibus Crime Control and Safe Streets Act of 
1968 (42 U.S.C. 379bb(b)).

SEC. 604. CERTAIN LIMITATIONS ON DAMAGES FOR PATENT INFRINGEMENT NOT 
                    APPLICABLE.

    Section 287(c) of title 35, United States Code, is amended in 
paragraph (4) by striking ``before the date of enactment of this 
subsection'' and inserting ``based on an application the earliest 
effective filing date of which is prior to September 30, 1996''.

SEC. 605. 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 to the patentee, such patentee's heirs or 
assigns, shall have 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 amendments by subsection (a) shall apply 
on the date of enactment of this Act. The amendments made by subsection 
(b) shall apply to any plant patent issued on or after the date of 
enactment of this Act.

SEC. 606. ELECTRONIC FILING.

    Section 22 of title 35, United States Code, is amended by striking 
``printed or typewritten'' and inserting ``printed, typewritten, or on 
an electronic medium''.

SEC. 607. STUDY AND REPORT ON BIOLOGICAL DEPOSITS IN SUPPORT OF 
                    BIOTECHNOLOGY PATENTS.

    (a) In General.--No later than 6 months after the date of enactment 
of this Act, the General Accounting Office, in consultation with the 
United States Patent Office, shall conduct a study and submit a report 
to Congress on the potential risks to the United States biotechnology 
industry relating to biological deposits in support of biotechnology 
patents.
    (b) Contents.--The study conducted under this section shall 
include--
          (1) an examination of the risk of export and the risk of 
        third-party transfer of biological deposits, and the risks 
        posed by the change to 18-month publication requirements;
          (2) an analysis of comparative legal and regulatory regimes; 
        and
          (3) any related recommendations.
    (c) Consideration of Report.--In drafting regulations affecting 
biological deposits (including any modification of 37 Code of Federal 
Regulations 1.801 et seq.), the United States Patent Office shall 
consider the recommendations of the study conducted under this section.

                               I. PURPOSE

    The purposes of the bill are: (1) to make the Patent and 
Trademark Office (PTO) more efficient, (2) to increase the rate 
of invention, (3) to make sure that diligent applicants enjoy a 
full 17 years of patent term, (4) to provide protection for 
those who are ignorant of the patent system or who cannot 
afford to patent, (5) to reduce the cost ofpatent litigation, 
(6) to update plant patent protection, and (7) to make some 
miscellaneous and technical changes to the Patent Act.

                        II. LEGISLATIVE HISTORY

    In the 104th Congress, Senator Hatch introduced the Omnibus 
Patent Act of 1996 (S. 1961), which provided for, among other 
things, the creation of an independent U.S. Intellectual 
Property Organization to provide for the centralized 
administration of our nation's patent, trademark, and copyright 
laws, publication of patent applications, provisional rights 
during pendency, patent reexamination reform, restoration of 
lost patent term due to Patent and Trademark Office delay, 
establishment of a prior domestic user right as a defense to 
patent infringement, and other miscellaneous and technical 
amendments to the Patent Act. The Judiciary Committee held a 
hearing on S. 1961 on September 18, 1996. Subsequent to the 
Committee hearing, Chairman Hatch engaged in extensive 
negotiations with the Administration and members of Congress 
regarding the provisions of S. 1961, ultimately arriving at a 
draft upon which all agreed. Among the most significant changes 
in the revised draft of S. 1961 was the scaling back of title 
I--dealing with the U.S. Intellectual Property Organization--to 
leave the Copyright Office and its functions within the Library 
of Congress, and to create a strong policy link between the 
independent Patent and Trademark Organization and the Secretary 
of Commerce by making the Secretary responsible for directing 
patent and trademark policy. The 104th Congress ended, however, 
before there was an opportunity for the Committee to vote on 
the compromise version of S. 1961.
    In the 105th Congress, Senator Hatch reintroduced the 
compromise version of S. 1961 from the 104th Congress as the 
Omnibus Patent Act of 1997 (S. 507). A hearing was held by the 
Judiciary Committee on May 7, 1997. Bruce A. Lehman, Assistant 
Secretary of Commerce and Commissioner of Patents and 
Trademarks testified on behalf of the Administration. The 
Committee also heard testimony from Senator Frank R. 
Lautenberg, Representative Henry J. Hyde; Representative Howard 
Coble; Representative Dana Rohrabacher; Representative Marcy 
Kaptur; Michael K. Kirk, Executive Director of the American 
Intellectual Property Law Association; Eric J. Ruff, President 
and CEO of PowerQuest Corporation; Bill Parker, President of 
the Vermont Inventors Association; and Kimbley Muller, Vice 
President of the International Trademark Association.
    Between the time of the hearing and the Committee vote on 
S. 507, Chairman Hatch again engaged in extensive negotiations, 
this time to address the concerns of independent inventors, 
small businesses, universities, the Administration, and other 
senators. These negotiations were successful and resulted in a 
substitute amendment that was cosponsored by Chairman Hatch and 
the Ranking Member, Senator Leahy. On May 22, 1997, the 
Judiciary Committee met in executive session to consider the 
bill. The Hatch-Leahy substitute amendment was offered. An 
amendment offered thereto by Senator Grassley, relating to 
limitations on damages for infringement of medical methods 
patents, was adopted by voice vote. The Hatch-Leahy substitute 
amendment was then adopted and S. 507, as amended, approved by 
a voice vote, with only Senator Thompson noting his opposition.

Title I--The Patent and Trademark Organization Act of 1997

    The debate over where the authority to administer our 
nation's patent laws should be placed dates back to 1790, when 
the first patent law was enacted.1 That law 
authorized the Secretary of State, the Secretary of War, and 
the Attorney General, or a combination of any two of them, to 
issue patents upon filing of an application with the Secretary 
of State. Administration of the patent law was vested in the 
Department of State, largely because of then Secretary of State 
Thomas Jefferson's interest in the patent system and his 
position as an original member of the board charged with 
granting patents.2 That Act was repealed in 
1793,3 and Congress instituted a registration plan 
whereby patents were automatically issued upon the filing of a 
sworn application certifying that the invention merited patent 
protection. The registration system would continue until 1836, 
when Congress established the Patent Office as a bureau of the 
Department of State and reinstituted an examination-based 
system for the granting of patents.4 The Patent 
Office was later transferred to the Department of Interior upon 
its creation in 1849.5 In 1870, the first federal 
trademark statute was enacted,6 and subsequent 
federal trademark laws were enacted in 1881,7 
1905,8 and 1920 9 (although 
administration of these laws was not a significant function of 
the Patent Office). In 1925, the Patent Office was transferred 
by executive order to the Department of Commerce and 
Labor.10 In 1946, Congress enacted the Trademark Act 
of 1946 (the Lanham Act),11 creating significant 
incentives for federal trademark registration that would lead 
to an increasingly important trademark component of the Patent 
Office's responsibilities. In 1975, the name of the Patent 
Office was changed to the Patent and Trademark Office to 
reflect the importance of its trademark related 
functions.12
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    \1\ Act of April 10, 1790, ch. 7, 1 Stat. 109.
    \2\ See American Intellectual Property Law Association, 
Establishing the Patent and Trademark Office as a Government 
Corporation 1 (1992)[hereinafter AIPLA Report].
    \3\ Act of Feb. 21, 1793, ch. 11, 1 Stat. 318.
    \4\ Act of July 4, 1836, ch. 357, 5 Stat. 117.
    \5\ Act of Mar. 3, 1849, ch. 108, Sec. 2, 9 Stat. 395.
    \6\ Act of July 8, 1870, ch. 230, Sec. 77, 16 Stat. 198, 210.
    \7\ Act of Mar. 3, 1881, ch. 138, 21 Stat. 502.
    \8\ Act of Feb. 20, 1905, ch. 592, 33 Stat. 724.
    \9\ Act of Mar. 19, 1920, ch. 104, 41 Stat. 533.
    \10\ Exec. Order No. 4175, R.S. 475 (March 17, 1925).
    \11\ Act of July 5, 1946, Public Law 79-489, 60 Stat. 427 (codified 
as amended at 15 U.S.C. 1051-1127 (1994)).
    \12\ Act of Jan. 2, 1975, Public Law 93-596, 1974 U.S.C.C.A.N. (88 
Stat.) 1949.
---------------------------------------------------------------------------
    For more than 100 years, the lack of a substantive link 
between the functions of the Patent Office (or the Patent and 
Trademark Office as it has come to be called in more recent 
years) and the Department in which it has been housed and the 
fact that the parent Departments have consistently exercised 
control over the budget and procedures of the Patent Office 
despite the independent nature of the work of the Office have 
been criticized as sources of the operational deficiencies so 
pervasive at the Patent and Trademark Office.13 
Proposals to make the Patent and Trademark Office into an 
independent government agency date back to 1912, when a 
commission appointed by President Taft (Taft Commission), 
pursuant to a joint resolution of Congress requesting the 
President to ascertain what was necessary ``to enable the 
Patent Office to discharge its duties in a thoroughly efficient 
and economical manner,'' 14 recommended independent 
agency status for the Patent Office.15 That 
recommendation was not adopted and, as referred to above, the 
Patent Office was relocated some 14 years later to the 
Department of Commerce. The call for the independence of the 
Patent Office continued, however, as evidenced by a report of 
the Senate Judiciary Committee Subcommittee on Patents, 
Trademarks, and Copyrights issued on March 9, 
1959.16 That report concluded:
---------------------------------------------------------------------------
    \13\ See AIPLA Report, supra note 2, at 1.
    \14\ S. Res. 236, 85th Cong., 2d sess. (1958) (enacted).
    \15\ President's Commission on Economy and Efficiency, 
Investigation of the United States Patent Office, (1912) [hereinafter 
Taft Commission]. The report stated, in part, that ``[a]s early as 1852 
complaints were made by the commissioner that the Patent Office has no 
more logical connection with the department than it has with any other; 
that it suffers with all the inconveniences and embarrassments of such 
relation, but gains none of the advantages.'' Id. at 231-32. The report 
also stated: ``But when the Patent Office shall have been moved into a 
building especially adapted to its needs, it is believed that every 
consideration of good administration and of the building up and 
improvement of the Patent Office to the highest state of efficiency 
will demand that it be made in fact an independent bureau, subject to 
the supervision of the President where any supervision is needed.'' Id. 
at 25.
    \16\ S. Rept. 97, 86th Cong., 1st sess. (1959).

        that the present subordination of the Patent Office to 
        the Commerce Department is inconsistent with proper 
        performance of the quasi-judicial functions involved in 
        granting patents. When such a quasi-judicial agency is 
        made subordinate to an executive department it is 
        inevitably handicapped. The Patent Office will also be 
        handicapped in discharging its administrative 
        responsibilities so long as Congress must rely upon the 
        Secretary of Commerce, rather than on the Commissioner 
        of Patents, to present proposals needed to remedy 
        deficiencies in physical facilities and 
        personnel.17
---------------------------------------------------------------------------
    \17\ Id. at 4. The report went on to endorse the recommendation of 
the Taft Commission: The subcommittee staff concluded that the need for 
an independent patent office was established as long ago as 1912 when 
the President's Commission on Economy and Efficiency recommended that 
it should be moved into a building of its own and that it should be an 
independent bureau subject only to the supervision of the President 
where supervision is needed. This conclusion has been endorsed and 
reiterated whenever an official investigation of this matter has been 
made. . . . The subordination of the Patent Office to the executive 
branch of the Government was an historical accident which may have 
handicapped our technological progress in the past, and may continue to 
do so in the future unless the Patent Office is given the independent 
status that its importance deserves. Id. 

    During the late 1950's, the Senate Judiciary Committee 
Subcommittee on Patents, Trademarks, and Copyrights 
commissioned several studies of the patent system.18 
On April 12, 1957, during the 85th Congress, the Chairman of 
the Subcommittee, Senator O'Mahoney, introduced S. 1862, with 
Senator Wiley as a cosponsor, to create the Patent Office as an 
independent agency separate from the Department of Commerce. 
That legislation was referred to the Subcommittee on 
Reorganization of the Senate Committee on Government 
Operations, where it was approved as section 107(a) of the 
Science and Technology Act of 1958 (S. 3126). That bill was 
subsequently referred to the Special Committee on Space and 
Aeronautics, however, where it was not acted upon. Senator 
O'Mahoney obtained approval for a request that the original 
bill (S. 1862) be returned to the Judiciary Committee for 
consideration, but the 85th Congress adjourned before the bill 
could be returned.19
---------------------------------------------------------------------------
    \18\ Senate Committee on the Judiciary Subcommittee on Patents, 
Trademarks, and Copyrights, Research Studies Nos. 1-30 (Comm. Print 
1958-1963).
    \19\ See S. Rept. 97, 86th Cong., 1st sess. 4 (1959).
---------------------------------------------------------------------------
    In 1961, the Commissioner of Patents, David L. Ladd, 
commissioned his own management study of the Patent 
Office.20 The final report, released in 1962, made 
179 specific recommendations regarding the internal management, 
organization, and administration of the Patent 
Office.21 Operational difficulties continued, 
however, and in 1963, Commissioner Ladd resigned ``in part as a 
protest at the department's intrusion into internal affairs of 
the Patent Office.'' 22 In 1966, a report was 
released by President Johnson's Commission on the Patent System 
which, among other things, recommended the establishment of a 
private-sector advisory counsel to evaluate and advise the 
Secretary of Commerce on the vitality of the patent system and 
its administration by the Patent Office.23
---------------------------------------------------------------------------
    \20\ Senate Committee on the Judiciary Subcommittee on Patents, 
Trademarks, and Copyrights, 87th Cong., 2d sess., 1961-1962 Management 
Survey of the U.S. Patent Office (Comm. Print 1962).
    \21\ Id. at 1-11.
    \22\ Stacey v. Jones, The Patent Office 173 (1971).
    \23\ President's Comm'n on the Patent System, To Promote Progress 
of . . . Useful Arts in An Age of Exploding Technology 43 (1966) 
[hereinafter Johnson Commission Report].
---------------------------------------------------------------------------
    In 1973, during the 93rd Congress, legislation (S. 1321) 
was again introduced to establish the Patent Office as an 
independent agency. No further action was taken on that 
legislation, however. In 1979, during the 96th Congress, 
Senator Bayh introduced, with Senator Danforth and Senator 
Nelson as cosponsors, S. 2079, the Independent Patent and 
Trademark Office Act. Two days of joint hearings were held on 
January 24 and March 12, 1980, before the Senate Committees on 
the Judiciary and Governmental Affairs, where the Committees 
were informed that every Commissioner of Patents and Trademarks 
since 1933 supported creating an independent Patent and 
Trademark Office.24 Former Commissioner Donald W. 
Banner recommended that the Patent and Trademark Office be made 
a separate agency, independent of the Department of Commerce, 
in order to avoid a situation in which the PTO would ``soon be 
infected with an administrative dry rot condition, rendering it 
moribund.'' 25 He went on to say that:
---------------------------------------------------------------------------
    \24\ David L. Ladd, William E. Schuyler, Jr., Edward J. Brenner, 
Robert Gottschalk, Marshall Dann, and Donald W. Banner, who served as 
Commissioners of Patent and Trademarks under Presidents Kennedy, 
Johnson, Nixon, Ford, and Carter, respectively, testified before the 
Committee. Mr. Gottschalk testified that former Commissioners Conway P. 
Coe and Robert C. Watson were unable to appear and asked that he 
express their support for the legislation. Hearings on S. 2079 Before 
the Senate Committees on Governmental Affairs and the Judiciary, 96th 
Cong., 2d sess., 39 (1980) [hereinafter Hearings on S. 2079] (testimony 
of Robert Gottschalk). Mr. Banner testified that three other deceased 
commissioners (Commissioners Ooms, Marzall, and Kingsland), had all 
supported previous proposals to establish the Patent and Trademark 
Office as an independent agency. Id. at 26 (testimony of Donald W. 
Banner). Thus, the Committees were informed that the every Commissioner 
since 1933 agreed that the Patent and Trademark Office should be an 
independent agency.
    \25\ Id. at 24-25 (testimony of Donald W. Banner).


        There is no question . . . but that the Patent and 
        Trademark Office could respond more fully to the needs 
        of the public and more efficiently and meaningfully to 
        the requirements of the Congress by being a separate 
        agency. The PTO has nothing to hide and would welcome 
        close scrutiny by the Congress and by OMB. It would 
        thrive in the bright sunshine of such scrutiny, out of 
        the shadow of the Department of Commerce. The mission 
        of the Patent and Trademark Office is clearly set by 
        the statutes under which it performs. The Department of 
        Commerce cannot and does not assist the PTO in carrying 
        out its functions under those statutes in any way which 
        cannot be better done by the PTO itself.26
---------------------------------------------------------------------------
    \26\ Id. at 26.

    Although no further Action was taken on S. 2079 in the 96th 
Congress, the House Committee on the Judiciary reported 
legislation (H.R. 6933) favorably on September 9, 
1980,27 which would have established the Patent and 
Trademark Office as an independent agency. That legislation was 
sequentially referred to the House Committee on Government 
Operations, which held a hearing on the bill. The Committee 
reported the bill to the full Senate on September 23, 
1980,28 without the provision to make the Patent and 
Trademark Office independent of the Department of Commerce.
---------------------------------------------------------------------------
    \27\ H.R. Rept. 1307, 96th Cong., 2d sess., pt. I (1980).
    \28\ H.R. Rept. 1307, 96th Cong., 2d sess., pt. II (1980).
---------------------------------------------------------------------------
    In 1985, the National Academy of Public Administration 
(NAPA) 29 issued a report that recommended 
consideration be given to converting the Patent and Trademark 
Office to a government corporation.30 Four years 
later, in a 1989 report, NAPA formally recommended that the 
Patent and Trademark Office be established as a wholly-owned 
government corporation.31 In 1992, the American Bar 
Association's Patent, Trademark, and Copyright Section endorsed 
a similar report of the American Intellectual Property Law 
Association that called for the establishment of the Patent and 
Trademark Office as ``a government corporation, independent 
from the Department of Commerce.'' 32
---------------------------------------------------------------------------
    \29\ The National Academy of Public Administration is a 
congressionally chartered organization whose purpose is ``to advance 
the effectiveness of government at all levels through sound management 
and counsel on the practical implications of public policy.'' The 
Academy conducts studies for state and local governments, as well as 
the three branches of the Federal Government.
    \30\ Nat'l Acad. of Pub. Admin., Organization for Protection of 
Intellectual Property Rights (1985).
    \31\ Nat'l Acad. of Pub. Admin., Considerations in Establishing the 
Patent and Trademark Office as a Government Corporation (1989). The 
conclusions of the report were, in part, as follows:

      The Patent and Trademark Office meets the criteria for 
      conversion to a wholly-owned federal corporation. . . . It 
      has been the experience of the federal government that 
      enterprises which meet the criteria for incorporation have 
      benefitted from being placed under the Government 
      Corporation Control Act and from receiving the budgetary, 
      fiscal and administrative flexibility usually associated 
      with incorporation. We are aware of no instance in which 
      incorporating a potentially self-sustaining public 
      enterprise has resulted in adverse consequences. Id. at 22-
      23.
---------------------------------------------------------------------------
    \32\ AIPLA Report, supra note 2, at 2.
---------------------------------------------------------------------------
    In 1992, in the 102nd Congress, the Bush administration's 
Advisory Commission on Patent Law Reform considered the 
establishment of the Patent and Trademark Office as a 
government corporation, but withheld formal recommendation 
given the lack of a formal legislative proposal.33 
On May 12, 1992, the Judiciary Committee Subcommittee on 
Patents, Trademarks, and Copyrights held a Patent and Trademark 
Office oversight hearing, at which the Subcommittee heard 
testimony from Robert A. Armitage, 2nd Vice President of the 
American Intellectual Property Law Association, and Donald W. 
Banner, President of Intellectual Property Owners, Inc., urging 
the transformation of the Patent and Trademark Office into an 
independent government corporation.34
---------------------------------------------------------------------------
    \33\ Advisory Comm'n on Patent Law Reform, Report to the Secretary 
of Commerce 192 (1992).
    \34\ Oversight of the Patent and Trademark Office: Hearings Before 
the Subcommittee on Patents, Copyrights and Trademarks of the Senate 
Committee on the Judiciary, 102d Cong., 2d sess. 208, 243-44 (1992) 
(statements of Donald W. Banner, President, Intellectual Property 
Owners, and Robert A. Armitage, Second Vice President, American 
Intellectual Property Law Association).
---------------------------------------------------------------------------
    On February 23, 1995, in the 104th Congress, Secretary of 
Commerce Ron Brown informed the House Appropriations Committee 
Subcommittee on the Departments of Commerce, Justice, and 
State, the Judiciary, and Related Agencies that the Clinton 
administration was considering privatization of the Patent and 
Trademark Office as a part of its effort to ``reinvent'' 
government.35 Several proposals to create a Patent 
and Trademark Office corporation or otherwise separate the 
Office from the Department of Commerce were introduced in the 
House of Representatives by the Chairman of the House Judiciary 
Committee Subcommittee on Courts and Intellectual Property, 
Representative Carlos Moorhead (H.R. 1659; H.R. 2533; H.R. 
3460). Legislation to abolish the Department of Commerce and 
transfer the Patent and Trademark Office to the Department of 
Justice (H.R. 1756) was introduced by Representative Chrysler 
on June 7, 1995. Hearings were held on the various proposals by 
the Subcommittee on Courts and Intellectual Property of the 
House Judiciary Committee on September 14, 1995, March 8, 1996, 
and May 8, 1996. Provisions of H.R. 1659 were passed by the 
House of Representatives as a part of Departments of Commerce, 
State, Justice Appropriations Act for fiscal year 1996 (H.R. 
2076), although the provision was dropped prior to Senate 
passage of that legislation. H.R. 3460--an omnibus bill similar 
to S. 507--was considered and passed by the Subcommittee on 
Courts and Intellectual Property on May 15, 1996, and reported 
by the House Judiciary Committee on June 11, 1996. No further 
action was taken on H.R. 3460 in the 104th Congress.
---------------------------------------------------------------------------
    \35\ Departments of Commerce, Justice, and State, the Judiciary, 
and Related Agencies Appropriations for 1996: Hearings Before the 
Subcommittee on the Departments of Commerce, Justice, and State, the 
Judiciary, and Related Agencies of the House Comm. on Appropriations, 
104th Cong., 1st sess. 414 (1995) (Testimony of the Honorable Ronald H. 
Brown, Secretary of Commerce).
---------------------------------------------------------------------------
    In the Senate, three proposals were introduced in the 104th 
Congress to remove the Patent and Trademark Office from the 
Department of Commerce. Senator Abraham, with Senator Dole, 
Senator Faircloth, Senator Nickles, Senator Gramm, and Senator 
Brown as cosponsors, introduced the Commerce Department 
Dismantling Act of 1995 (S. 929) on June 15, 1995. That 
legislation proposed abolishing the Department of Commerce and 
removing the Patent and Trademark Office to the Department of 
Justice. The Senate Government Affairs Committee rejected 
transferring the Patent and Trademark Office to another 
Executive Department, ``keeping in mind recommendations 
spanning more than a century and up, until very recently with 
the Bayh-Danforth bill.'' 36 The Committee 
considered S. 929 on September 7, 1995, and reported the bill 
with an amendment in the nature of a substitute by Senator Roth 
that provided for the creation of an independent Office of 
Patents, Trademarks and Standards. No further action was taken 
on that legislation in the 104th Congress.
---------------------------------------------------------------------------
    \36\ S. Rept. 164, 104th Cong., 1st sess. 17 (1995).
---------------------------------------------------------------------------
    Senator Lautenberg introduced the Patent and Trademark 
Office Reform Act of 1995 (S. 1458) on December 7, 1995. That 
legislation was referred to the Judiciary Committee but not 
acted upon.
    Chairman Hatch introduced the United States Intellectual 
Property Organization Act of 1996 as Title I of S. 1961 on July 
16, 1996. That legislation would have created the U.S. 
Intellectual Property Organization as a wholly-owned government 
corporation charged with administering the Nation's patent, 
trademark, and copyright laws. A hearing was held in the 
Judiciary Committee on September 18, 1996. At that hearing, the 
Chairman stated that the proposal to remove the Copyright 
Office from the Legislative branch was apparently not ripe for 
consideration so late in the 104th Congress and announced his 
intention to work with interested parties to reach a consensus 
on legislation to reconfigure the Patent and Trademark Office 
as a government corporation.37 Subsequent 
negotiations between the Chairman, the Administration, and 
other senators yielded a revised text of S. 1961 that was 
endorsed by the Administration, but time ran out before this 
proposal could be considered by the Committee.
---------------------------------------------------------------------------
    \37\ The Omnibus Patent Act of 1996: Hearings on S. 1961 Before the 
Senate Committee on the Judiciary, 104th Cong., 2d sess. 32, 34 (1996).
---------------------------------------------------------------------------
    In the 105th Congress, Senator Hatch reintroduced the 
revised text of title I of S. 1961 as the U.S. Patent and 
Trademark Organization Act of 1997 (S. 507, Title I). Senator 
Lautenberg also reintroduced the Patent and Trademark Office 
Reform Act (S. 421). In the House of Representatives, 
Representative Howard Coble introduced the 21st Century Patent 
System Improvement Act (H.R. 400) based in part on the revised 
text of S. 1961. The House Judiciary Committee Subcommittee on 
Courts and Intellectual Property held a hearing on H.R. 400 on 
February 26, 1997, and reported the bill favorably, with an 
amendment by Mr. Coble, to the House Judiciary Committee on 
March 5, 1997. On March 12, 1997, the House Judiciary Committee 
ordered H.R. 400 favorably reported, with an amendment in the 
nature of a substitute, to the House of Representatives by a 
voice vote. The House then passed H.R. 400, with several 
amendments, on March 23, 1997, after extensive debate on the 
House floor. The Senate Committee on the Judiciary held a 
hearing on S. 507 on May 7, 1997, at which the Committee heard 
testimony from witnesses as outlined at the beginning of this 
section. After extensive negotiations, the Committee met in 
executive session on May 22, 1997, to consider a substitute 
amendment to S. 507, offered by Senator Hatch and cosponsored 
by Senator Leahy. An amendment was offered by Senator Grassley 
and adopted by voice vote. The Committee then adopted the 
Hatch-Leahy substitute amendment and approved S. 507, as 
amended, by a voice vote, with only Senator Thompson noting his 
opposition.

Title II--The Patent Application Publication Act of 1997

    One of the most discussed proposals of S. 507 is eighteen 
month publication. Far from being a new or radical, this 
proposal has been duly considered for over thirty years. In 
1966, President Johnson's Commission on the Patent System 
recommended early publication as a beneficial improvement to 
American patent protection. The report stated that ``[e]arly 
publication could prevent needless duplication of the disclosed 
work, promote additional technological advances based on 
information disclosed, and apprise entrepreneurs of their 
potential liability.'' 38 However, no action was 
taken at that time.
---------------------------------------------------------------------------
    \38\ President's Comm'n on the Patent System, To Promote Progress 
of . . . Useful Arts in An Age of Exploding Technology 17 (1966).
---------------------------------------------------------------------------
    The issue arose again in 1992, when an Advisory Commission 
on Patent Law Reform issued a report to the Bush Administration 
that also recommended adoption of the early publication. That 
report said that early publication would ``accelerate access to 
information contained in the patent disclosure, and would 
permit identification of potential patent conflicts sooner. 
These benefits would, in turn, speed technological progress by 
providing useful information to the public at an earlier stage 
after its discovery.'' 39
---------------------------------------------------------------------------
    \39\ Advisory Comm'n on Patent Law Reform, Report to the Secretary 
of Commerce 62 (1992).
---------------------------------------------------------------------------
    The first congressional action came in 1994 when Senator 
DeConcini introduced the Patent Application Publication Act, S. 
2488, which required the publication of patent applications 
eighteen months after filing. However, the bill did not move in 
the 103rd Congress.
    In the following Congress, Senator Hatch introduced S. 
1961. Title II of S. 1961 provided for the publication of 
patent applications eighteen months after filing. In this 
Congress, Senator Hatch introduced S. 507. As approved by the 
Committee, title II of S. 507 provides for the publication of 
patent applications that are filed both in the United States 
and abroad. Applications filed only in the United States need 
not be published before the granting of the patent.

Title III--Patent term restoration

    The need for this provision arises from the General 
Agreement on Tariffs and Trade. In 1994, the United States 
enacted the Uruguay Round Agreements Act which, among other 
things, changed the calculation of patent term in the United 
States. The old term was seventeen years from the date the 
patent was issued. The new term is 20 years from the date the 
patent application is filed. On average, this will result in 
longer patent terms since average patent pendency is well under 
2 years. However, there are inevitably individual cases where, 
due to delays in the processing of the application, the new 
method results in a shorter term through no fault of the 
applicant. Title III addresses this problem by restoring to the 
patent holder time lost due to undue delay.
    Recognizing this problem, Senator Hatch introduced S. 1540, 
The Full Patent Term Preservation Act of 1996 in the 104th 
Congress. It was later incorporated into S. 1961 as title III 
of that bill. In 1997, Senator Hatch introduced S. 507. Title 
III of S. 507 as approved by the Committee is very similar to 
title III of S. 1961. Some changes were made to accommodate the 
concerns of universities and independent inventors.

Title IV--The Prior Domestic Commercial Use Act of 1997

    In 1994, Senator DeConcini introduced S. 2272, The Patent 
Prior Users Rights Act of 1994. Senators Hatch and Biden 
cosponsored the bill. As Senator Domenici said at that time, 
``[t]his legislation will help minimize the adverse 
consequences of a reasonably made decision by a prior user not 
to seek patent protection for an invention.'' 40
---------------------------------------------------------------------------
    \40\ S. Rept. 405, 103d Cong., 2d sess. 3 (1994).
---------------------------------------------------------------------------
    The Subcommittee on Patents, Copyrights and Trademarks held 
a hearing on S. 2272 on August 9, 1994. On August 16, the 
subcommittee favorably polled out the bill without amendment. 
On September 22, 1994 the Judiciary Committee favorably 
reported S. 2272, as amended, by voice vote. The Senate 
approved S. 2272 by voice vote on October 8, 1994, but it did 
not pass the House of Representatives.
    In 1996, Senator Hatch introduced S. 1961. Title IV of that 
bill contained provisions very similar to those in S. 2272. In 
1997, Senator Hatch introduced S. 507. Title IV of that bill, 
as approved by the Committee is very similar to title IV of S. 
1961. Some changes were made to accommodate concerns of 
universities and the Department of Justice.

Title V--The Patent Reexamination Reform Act of 1997

    In 1966, President Johnson's Commission on the Patent 
System recommended the creation of an ex parte system for 
people to challenge whether a patent had been properly granted. 
In 1980, a refined version of this proposal was enacted as a 
part of Public Law 96-517. The goal was to provide a less-
costly alternative to litigation for the resolution of patent 
validity challenges. Under that law, any person may request a 
reexamination but it will only be granted to those who can show 
evidence of prior art in the form of patents or printed 
publications that raises a significant new question of 
patentability. The patent owner may file a statement to which 
the party requesting the reexamination may respond. The 
reexamination is conducted according to the procedures 
established for the initial examination. A decision adverse to 
the patent owner may be appealed to the Board of Patent Appeals 
and Interferences and may seek review in the Court of Appeals 
for the Federal Circuit.
    In 1994, Senator DeConcini, along with Senator Hatch, 
introduced S. 2341, The Patent Reexamination Reform Act of 1994 
with the goal of making modest changes to encourage greater use 
of the reexamination system. A hearing on S. 2341 was held in 
the Subcommittee on Patents, Copyrights, and Trademarks on 
August 9, 1994. On August 16, 1994 the bill was polled from the 
subcommittee. On September 22, 1994, S. 2341 was favorably 
reported by this Committee, by voice vote. On October 4, 1994, 
S. 2341 passed the Senate by voice vote, but it did not pass 
the House of Representatives.
    In 1995, Senator Hatch introduced S. 1070, The Patent 
Reexamination Reform Act of 1995. That bill was very similar to 
S. 2341.
    In 1996, Senator Hatch introduced S. 1961. Title V of that 
bill was virtually identical to S. 1070.
    In 1997, Senator Hatch introduced S. 507. Title V of S. 
507, as approved by the Committee, is similar to title V of S. 
1961. Significant changes were made to address the concerns of 
independent inventors.

Title VI--Miscellaneous patent provisions

    The provisions regarding provisional applications (section 
601), regarding international applications (section 602), 
updating the 1930 plant patent statute 41 (section 
605), and electronic filing (section 606) were all in S. 1961 
in virtually identical form in the 104th Congress.
---------------------------------------------------------------------------
    \41\ Act of May 23, 1930, ch. 312, Public Law 71-245, 46 Stat. 376.
---------------------------------------------------------------------------
    The provisions regarding increased access to electronic 
patent information (section 603), limiting the effect of the 
ban on medical methods patents (section 604), and providing for 
a study on biological deposit requirements (section 607) were 
not in S. 1961.

                            III. DISCUSSION

    The Omnibus Patent Act of 1997, S. 507, is the most 
comprehensive reform of the U.S. patent system in over 45 
years. As mentioned above, the purposes of the bill are: (1) to 
make the Patent and Trademark Office (PTO) more efficient, (2) 
to increase the rate of invention, (3) to make sure that 
diligent applicants enjoy a full 17 years of patent term, (4) 
to provide protection for those who are ignorant of the patent 
system or who cannot afford to patent, (5) to reduce the cost 
of patent litigation, (6) to update plant patent protection, 
and (7) to make some miscellaneous and technical changes to the 
Patent Act.
     Title I makes the PTO more efficient by transforming it 
into a government corporation, which frees it from the 
bureaucratic restraints of the Commerce Department and the 
myriad of regulations that currently hamper it from making the 
necessary management and personnel decisions to streamline and 
update the patent examination and trademark registration 
systems. Title VI makes the PTO more efficient by allowing it 
to accept electronic filings and by promoting expanded 
electronic access to its information database. A more efficient 
patent system will make it faster and cheaper to obtain a 
patent in order to encourage inventors to seek patent 
protection and to go public with their innovations.
    Title II increases the rate of invention by publishing most 
patent applications, so that needless duplication of research 
and development is avoided and so that an inventor may early on 
``stake a claim'' to his or her invention to warn off potential 
competition. At the same time, this title protects against 
invention theft while a patent application is pending by giving 
patentees whose applications are published the right to sue for 
infringements that occurred during pendency. Publication of 
applications filed in this country and abroad would be 
published after 18 months. For applications filed only in the 
U.S., publication would be consensual.
    The Uruguay Round Agreements Act of 1994 (Public Law 103-
465) changed the patent term from 17 years from issuance to 20 
years from filing, effective as of June 8, 1995, to bring U.S. 
law into compliance with the General Agreement on Tariffs and 
Trade (GATT). Title III makes sure that diligent applicants 
will not lose patent term due to the GATT-required change in 
patent term by providing that they will have a minimum of 17 
years of protection. At the same time, by rewarding only 
diligent applicants, title III preserves the 20-year term's 
disincentive to manipulate the patent examination system.
    Title IV protects those who are ignorant of the patent 
system or who cannot afford to patent by permitting continued 
use of an invention even if the invention is later patented by 
another, provided the invention was commercially used more than 
1 year prior to the filing of the patent application.
    The current reexamination procedure was added to the Patent 
Act in 1980 to allow a person who knows of prior art, 
consisting of a printed publication or patent, not considered 
by the Patent Office when a patent was originally examined to 
request reexamination in light of that prior art. This provided 
a lower-cost alternative to litigation to test a patent in 
federal court. Title V makes reexamination more attractive 
through some modest changes to the current procedure. Under 
title V, third parties will be able to participate more fully 
in the reexamination process, and they will be able to appeal 
an adverse decision. At the same time, in order to prevent 
abuse, parties are prohibited from filing the same claim more 
than once. Whether it be in a reexamination or a civil action 
if Federal court, they are limited to one bite at the apple.
    Title VI updates plant patent protection by removing the 
depression-era ban on patenting tuber-propagated plants (e.g., 
potatoes) and by protecting plant parts. Protecting plant parts 
closes a loophole in the Patent Act that foreign growers have 
used to import the fruit or flowers of patented plants without 
paying a royalty because the entire plant is not being sold.
    In addition, title VI makes some miscellaneous and 
technical changes that make it easier to convert provisional 
applications into nonprovisional ones and that provide an 
international right of priority for plant breeder's rights. 
Another provision prevents retroactive effect of the ban on 
effective enforcement of medical methods patents. Finally, 
title VI directs the General Accounting Office to conduct a 
study on the potential risks to the U.S. biotechnology industry 
relating to biological deposits in support of biotechnology 
patents.

            Title I--U.S. Patent And Trademark Organization

    Title I transforms the Patent and Trademark Office (PTO) 
into a government corporation called the U.S. Patent and 
Trademark Organization (USPTO). The USPTO is separate from the 
Commerce Department except for a policy link. As a stand-alone 
government corporation, the USPTO will not be subject to 
micromanagement by Commerce Department bureaucrats, and except 
for certain basic employee rights and benefits, the USPTO will 
have the flexibility to adopt management and personnel policies 
in order to provide its ``customers,'' the patent and trademark 
applicants, with the quality of service that they would expect 
from a corporation in the private sector.
    The concept of a government corporation is not a new one. 
Congress enacted the Government Corporation Control Act in 
1945, 31 U.S.C. 9101 et seq. (1994), which contains a list of 
government corporations, such as the Resolution Trust 
Corporation, the Commodity Credit Corporation, the Export-
Import Bank, the Federal Crop Insurance Corporation, the 
Government National Mortgage Association, the Overseas Private 
Investment Corporation, and the Tennessee Valley Authority, to 
name just a few. The criteria for a government corporation were 
set out by President Truman in his 1948 budget message:

        Experience indicates that the corporate form of 
        organization is peculiarly adapted to the 
        administration of government programs which are 
        predominantly of a commercial character--those which 
        are revenue producing, are at least potentially self-
        sustaining, and involve a large number of business-type 
        transactions with the public.

These criteria were reaffirmed by the first Hoover Commission 
in 1949,42 but the 1981 Report on Government 
Corporations by the National Academy of Public Administration 
noted that ``Congress in recent years has not been rigorous in 
applying these criteria when creating new corporations or 
including corporations under the Government Corporation Control 
Act.'' 43 A 1995 report prepared by the 
Congressional Research Service for the Senate Government 
Affairs Committee stated: ``The distinguishing characteristic 
of a government corporation, properly understood in the 
American context, is that it is an agency of government, 
established by Congress to perform a public purpose, which 
provides market-oriented service and produces revenue that 
meets or approximates its expenditures.'' 44
---------------------------------------------------------------------------
    \42\ U.S. Comm'n on Gov't Operation of the Executive Branch of 
Gov't, Federal Business Enterprises (1949).
    \43\ Nat'l Acad. of Pub. Admin., Report on Government Corporations, 
vol. 1 (1981). The Office of Management and Budget contracted with the 
NAPA to produce this report.
    \44\ Ronald C. Moe, Managing the Public's Business: Federal 
Government Corporations, S. Prt. 18, 104th Cong., 1st sess. (Comm. 
Print 1995) (prepared by the Congressional Research Service for the 
Senate Committee on Governmental Affairs)[hereinafter CRS Report].
---------------------------------------------------------------------------
    The PTO meets the criteria for government corporations 
identified by President Truman, as currently applied. The PTO 
is revenue producing, it is self-sustaining, and it involves a 
large number of business-type transactions with the public. 
This conclusion is supported by a report of the National 
Academy of Public Administration (NAPA), entitled, 
Considerations in Establishing the Patent and Trademark Office 
as a Government Corporation.45 The NAPA report notes 
that ``although technically the PTO is not engaged in 
`commercial' operations,'' it ``must respond to the needs of a 
market for its services which it does not control.'' 
46
---------------------------------------------------------------------------
    \45\ Nat'l Acad. of Pub. Admin., Considerations in Establishing the 
Patent and Trademark Office as a Government Corporation (1989).
    \46\ Id. at 8.
---------------------------------------------------------------------------
    Although the USPTO will gain in independence and 
flexibility, it will still remain accountable. First of all, it 
is a government corporation, expressly subject to the 
Government Corporation Control Act.47 In addition, 
(1) the USPTO will still be subject to Congressional oversight; 
(2) the head of the USPTO, the Director, is appointed by the 
President, serves at his or her pleasure, and must be confirmed 
by the Senate; (3) advisory boards, whose members are appointed 
by the President, are created to review, advise, and report to 
Congress and to the President; (4) the USPTO is subject to the 
policy direction of the Secretary of Commerce; (5) the Director 
and the Secretary of Commerce are to conclude an annual 
performance agreement, and (6) the USPTO is subject to 
oversight by an Inspector General appointed by the President.
---------------------------------------------------------------------------
    \47\ 31 U.S.C. 9101--9110 (1994). The USPTO should be distinguished 
from the Legal Services Corporation, for example, which is described in 
its enabling legislation as ``a private, nonmembership nonprofit 
corporation * * * and shall not be considered a department, agency, or 
instrumentality of the Federal Government.'' 42 U.S.C. 2996d(e)(1) 
(1994).
---------------------------------------------------------------------------
    The USPTO is composed of two subdivisions, the Patent 
Office and the Trademark Office, headed by the Commissioner of 
Patents and the Commissioner of Trademarks, respectively. 
Currently, the PTO is expected to formulate policy regarding 
patents and trademarks and to administer the granting of 
patents and the registering of trademarks. The structure of the 
USPTO reflects this dual responsibility by making the head of 
the USPTO, the Director, primarily responsible for policy, 
while the Commissioner of Patents is primarily responsible for 
the administration of the patent granting system and the 
Commissioner of Trademarks is primarily responsible for the 
administration of the trademark registration system.
    By devolving management responsibilities to the lowest 
practicable level, the structure of the USPTO reflects the 
entrepreneurial management paradigm adopted in the National 
Performance Review.48 The highest value in the 
entrepreneurial paradigm is accountability to the 
customer,49 in this case, applicants for patents and 
trademark registrations.
---------------------------------------------------------------------------
    \48\ Executive Office of the President, National Performance 
Review, From Red Tape to Results: Creating a Government That Works 
Better and Costs Less (1993).
    \49\ CRS Report, supra note 43, at 77.
---------------------------------------------------------------------------
    But policy and operations are not completely separated. The 
Commissioner of Patents and the Commissioner of Trademarks also 
have a policy role in that they advise the Director of the 
USPTO on patent and trademark policy respectively, and, 
although the Director is primarily responsible for policy, he 
or she also has responsibility for the efficient administration 
of the patent and trademark systems. For example, the Director: 
(1) makes an annual performance review contract with the 
Secretary of Commerce; (2) administers centralized offices, 
namely, those offices which by agreement are common to both the 
Patent Office and the Trademark Office; (3) appoints the 
Commissioner of Patents and the Commissioner of Trademarks, and 
they serve at his or her pleasure; (4) appoints all other 
officers and employees, except those appointed by the 
Commissioners; and (5) the Director determines whether fees and 
regulations established by the Commissioner of Patents and the 
Commissioner of Trademarks are consistent with the policy 
direction of the Secretary of Commerce.
    The establishment of separate, autonomous subdivisions for 
patents and trademarks largely eliminates the overshadowing of 
trademark policy direction and administrative decisions by the 
needs of the much larger Patent Office. Since 90 percent of the 
PTO's revenues come from patent fees, it is not surprising that 
the focus of the PTO has predominantly been on patent issues.
    The administration of Federal trademark law was not a very 
significant function of the Patent Office until the enactment 
of the Lanham Act in 1946,50 and it was not until 
1975 that the ``Patent Office'' became the ``Patent and 
Trademark Office.'' 51 The Lanham Act provided added 
incentives for securing Federal registrations, and since 1946, 
federal trademark law has become increasingly important. For 
example, the 1971 report of the Secretary of Commerce's Public 
Advisory Committee on Trademark Affairs stated, ``It has been 
said that the value of trademarks registered in the Patent 
Office exceeds that of existing patents.'' Moreover, this 
Committee understands that the number of new trademark 
applications filed with the PTO now exceeds the number of newly 
filed patent applications. Further, as noted by this Committee 
during consideration of legislation that changed the name of 
the ``Patent Office'' to the ``Patent and Trademark Office,'' 
the Office ``also has responsibility for the quite different 
matter of protecting consumer and business interests'' 
(emphasis added).52
---------------------------------------------------------------------------
    \50\ Act of July 5, 1946, Public Law 79-489, 60 Stat. 427 (codified 
as amended at 15 U.S.C. 1051-1127 (1994)).
    \51\ Act of Jan. 2, 1975, Public Law 93-596, 1974 U.S.C.C.A.N. (88 
Stat.) 1949.
    \52\ S. Rep. 1399, 93d Cong., 2d sess. (1974), reprinted in 1974 
U.S.C.C.A.N. 7113, 7114.
---------------------------------------------------------------------------
    Despite the increased importance and prominence of 
trademarks, for too long the head of the PTO has had little, if 
any, background in trademark law. Although there is currently 
an Assistant Commissioner for Trademarks, he or she has had 
``little more than a peripheral impact on issues other than 
trademark examination policy, due to the current management 
structure of the PTO,'' according to Jeffrey M. Samuels, a 
former head of trademarks at the PTO.53 Mr. Samuels 
identified several areas on which the patent preference of the 
PTO has had an adverse impact on trademarks: automation, 
budgeting, legislation, international affairs, and labor 
relations. In his testimony before the Committee, Kimbley 
Muller, Vice President of the International Trademark 
Association criticized the current PTO as ``an agency where 
serious trademark policy and operational problems languish with 
no cure or resolution in sight.'' 54
---------------------------------------------------------------------------
    \53\ Jeffrey M. and Linda B. Samuels, The Trademark Office as a 
Government Corporation, 7 Fordham Intell. Prop. Media & Ent. L.J. 101, 
104 (1996).
    \54\ The Omnibus Patent Act of 1996: Hearings on S. 1961 Before the 
Senate Committee on the Judiciary, 104th Cong., 2d Sess. 3 (1996) 
(testimony of Kimbley Muller, vice president of the International 
Trademark Association).
---------------------------------------------------------------------------
    Other than the fact that patents and trademarks are both 
broadly defined as ``intellectual property,'' the two forms of 
protection have little in common. Succinctly put:

        Patents protect inventions; trademark protects 
        indication of origin. Patents are designed to promote 
        innovation and technological progress. Trademarks are 
        designed to protect the public against confusion, and 
        to secure to the trademark owner the goodwill 
        associated with its mark: 55
---------------------------------------------------------------------------
    \55\ Samuels, supra note 53, at 103-04.

    The Trademark Office established by S. 507 will be able to 
be financially independent of the Patent Office. With a budget 
of around $80 million (covered entirely by user fees) and with 
more than 600 full-time employees, the current Trademark Office 
is already larger than many existing Federal agencies and 
government corporations. Although the Commissioner of 
Trademarks will be able to organize the Trademark Office 
independent of the Patent Office, S. 507 provides that the 
Director and the Commissioners of Patents and Trademarks may 
agree to centralize some administrative functions to effect 
cost savings.
    As the history of the PTO makes clear, there is nothing 
sacred about the connection of the PTO to the Commerce 
Department. After first being established in the Department of 
State, the Patent Office was transferred to the Department of 
the Interior when that department was created in 1849, and 
transferred to the Department of Commerce in 1925. Indeed, a 
report of the Senate Judiciary Committee Subcommittee on 
Patents, Trademarks, and Copyrights issued on March 9, 1959, 
concluded that the Commerce Department ``handicapped'' the 
Patent Office. 56
---------------------------------------------------------------------------
    \56\ S. Rept. No. 97, 86th Cong., 1st sess. (1959). That report 
concluded: that the present subordination of the Patent Office to the 
Commerce Department is inconsistent with proper performance of the 
quasi-judicial functions involved in granting patents. When such a 
quasi-judicial agency is made subordinate to an executive department it 
is inevitably handicapped. The Patent Office will also be handicapped 
in discharging its administrative responsibilities so long as Congress 
must rely upon the Secretary of Commerce, rather than on the 
Commissioner of Patents, to present proposals needed to remedy 
deficiencies in physical facilities and personnel. Id. at 4.
---------------------------------------------------------------------------
    As the legislative history section of this report 
indicates, as early as 1912, the Taft Commission recommended 
that the Patent Office be set up as an ``independent bureau,'' 
observing that ``[a]s early as 1852 complaints were made by the 
commissioner that the Patent Office has no more logical 
connection with the department than it has with any other; that 
it suffers with all the inconveniences and embarrassments of 
such relation, but gains none of the advantages.'' 
57 In 1979, during the 96th Congress, Senator Bayh 
introduced, with Senator Danforth and Senator Nelson as 
cosponsors, S. 2079, the Independent Patent and Trademark 
Office Act. Two days of joint hearings were held on January 24 
and March 12, 1980, before the Senate Committees on the 
Judiciary and Governmental Affairs, where the Committees were 
informed that every Commissioner of Patents and Trademarks 
since 1933 supported creating an independent Patent and 
Trademark Office.58 At the hearing, former 
Commissioner Donald W. Banner testified: ``The mission of the 
Patent and Trademark Office is clearly set by the statutes 
under which it performs. The Department of Commerce cannot and 
does not assist the PTO in carrying out its functions under 
those statutes in any way which cannot be better done by the 
PTO itself.'' 59
---------------------------------------------------------------------------
    \57\ Taft Commission, supra note 15, at 231-32.
    \58\ Hearings on S. 2079, supra note 24, at 26, 39 (testimony of 
Donald W. Banner and Robert Gottschalk).
    \59\ Id. at 26 (testimony of Donald W. Banner).
---------------------------------------------------------------------------
    Although separate from the Commerce Department, under S. 
507, the USPTO maintains a policy link with the Commerce 
Department. Title I provides that the Director advises the 
President on patent and trademark policy ``through and under 
the direction'' of the Secretary of Commerce, and the USPTO 
itself is ``an agency of the United States under the policy 
direction of the Secretary of Commerce.''
    The policy link between the USPTO and the Secretary of 
Commerce was originally more slender. Predecessor legislation 
to S. 507 in the 104th Congress, S. 1961, the Omnibus Patent 
Act of 1996, as introduced, simply provided that the Director 
would advise the President ``through'' the Secretary of 
Commerce. According to this concept, policy would originate in 
the USPTO, and it would be transmitted to the President by the 
Secretary of Commerce, who would, of course, be able to comment 
on its wisdom. At the request of the Clinton administration, 
the current language was adopted so that the Secretary has a 
more active role in policy development.
    The Administration's influence is also evident in the 
annual performance agreement between the Director and the 
Secretary of Commerce, which was absent from the original 
version of S. 1961. The annual performance agreement embodies 
the concept of performance-based review of government agency 
actions. According to this concept, heads of government 
agencies make an agreement with the President on an annual 
basis to attain measurable goals, for example, a certain 
improved level of efficiency. If these goals are in fact 
attained, the agency head receives a monetary reward.
    At the request of the Administration, an annual performance 
agreement between the Director and the Secretary of Commerce 
was included in the final version of S. 1961 in the 104th 
Congress and in S. 507. If the goals set out in the agreement 
are met, the Director may receive, upon evaluation by the 
Secretary, a bonus that would increase the Director's total 
annual compensation from the rate of pay provided for level III 
of the Executive Schedule to level II.

                           powers and duties

    S. 507 provides the USPTO with the powers and duties 
currently exercised by the PTO. In addition, the USPTO 
possesses powers normally associated with a corporation. For 
example, the USPTO may sue and be sued in its corporate name; 
it may adopt bylaws, rules and regulations; it may acquire and 
dispose of property; and it may accept gifts. The USPTO may 
also make purchases and contract for the construction, 
maintenance or management of facilities, and for supplies or 
services, but without the regulatory burdens imposed on other 
Federal agencies. However, pending requests for proposals or 
contracts issued by the General Services Administration (GSA) 
for the purposes of relocating the PTO are not disturbed.
    A surprising amount of concern was expressed over the 
boilerplate provision allowing the USPTO to accept gifts. The 
rather extravagant claim was made that this provision would 
make the granting of patents a prime target for Asian and 
corporate bribes for the issuing of patents, as if the anti-
bribery criminal statutes already in place would somehow be 
abrogated by the gift provision. Aside from the fact that 
almost every corporation in existence is empowered to accept 
gifts, most government agencies have such a provision. Notably, 
these include: the Department of State (22 U.S.C. 2697), the 
Department of the Treasury (31 U.S.C. 321), the Department of 
Commerce (15 U.S.C. 1522), the Department of Justice (21 U.S.C. 
871), and the Central Intelligence Agency (50 U.S.C. 403l)! 
Moreover, as an agency in the executive branch, the USPTO will 
continue to be subject to the gift rules applicable to that 
branch.
    The PTO currently accepts donations under the authority of 
the Commerce Department principally for its museum, its 
library, and under its guest lecturer program, which helps keep 
patent examiners up to date on the state of their art. In order 
that the cost of replacing these donations would not be borne 
by the inventor community, S. 507, unlike H.R. 400, retains the 
gift provision. However, to allay fears over this provision--
however unfounded--S. 507 makes it explicit that the Federal 
anti-bribery statute continues to apply, and it requires the 
Director to establish a gift policy, including regulations 
prohibiting gifts or donations to the Organization by foreign 
countries. Thus, the USPTO would have the toughest gift 
restrictions in the executive branch.
    It is not intended that the creation of the USPTO will 
alter the statutory responsibility of the Secretary of State or 
the U.S. Trade Representative or the ability of the Copyright 
Office to continue in its current activities; therefore, 
clarification language was inserted. Similarly, it is intended 
that the USPTO should be able to continue the current 
activities of the PTO.

                           personnel matters

    S. 507 promotes maximum flexibility in personnel matters, 
while at the same time retaining basic employee entitlements 
and protections. Moreover, it expands the current scope of 
collective bargaining in the Federal service by providing for 
good-faith bargaining over wages, leave, and disciplinary 
procedures. This package is the reason that S. 507 is endorsed 
by the National Treasury Employees Union (NTEU), the union 
representing the majority of the PTO's employees.
    In general, the USPTO is exempt from title 5 of the U.S. 
Code, except for, most notably, the provisions concerning 
employment of relatives, political activities, flexible and 
compressed work schedules, and whistleblower protection. 
Officers and employees of the USPTO will remain eligible to 
participate in the Civil Service Retirement System and the 
Federal Employees' Retirement System, and will be eligible for 
Federal life insurance, health insurance, and workmen's 
compensation benefits. The USPTO is required to establish 
hiring practices, labor relations, and employee relations 
programs that are consistent with merit principles and veterans 
preferences. To further protect personnel performing quasi-
judicial functions, such as examiners or appeal board members, 
S. 507 provides that they can be removed only for cause.
    All existing labor agreements in effect on the day before 
enactment will be adopted by the USPTO. All officers and 
employees of the PTO and certain employees of the Department of 
Commerce will become officers and employees of the USPTO 
without a break in service. Their sick and annual leave, 
compensatory time, and their competitive status will be 
preserved.
    Originally, S. 1961 provided that the current Commissioner 
of the PTO would become the Director of the USPTO in order to 
effect a smooth transition. Since the Director serves at the 
pleasure of the President, he or she could be removed at any 
time, and another confirmation process would be avoided. At the 
request of the Justice Department, however, this provision was 
changed to require the President to appoint an interim Director 
to serve for 1 year or until a permanent Director is appointed, 
whichever is shorter. The permanent Director must be confirmed 
by the Senate.
    S. 507 provides that the Assistant Commissioner of Patents 
will become the Commissioner of Patents under the USPTO and 
that the Assistant Commissioner of Trademarks will become the 
Commissioner of Trademarks under the USPTO until new 
Commissioners are appointed by the Director.
    The Director of the USPTO and all officers and employees of 
the USPTO must be citizens of the United States. S. 507 
provides that the Director ``shall be a person who, by reason 
of professional background and experience in patent or 
trademark law, is especially qualified to manage the 
Organization.'' Similarly, the Commissioners of Patents and 
Trademarks must be persons ``who, by reason of professional 
background and experience'' in patent or trademark law, 
respectively, are ``especially qualified to manage'' their respective 
offices. The Director and the Commissioners are expressly required to 
perform their duties in a ``fair, impartial, and equitable manner.''

                           funding and budget

    The USPTO is required to be self-sustaining. Since the 
Commissioner of Patents and the Commissioner of Trademarks are 
primarily responsible for the management of the Patent and 
Trademark Offices respectively, fees for patents are determined 
by the Commissioner of Patents and fees for trademarks are 
determined by the Commissioner of Trademarks. This fee-setting 
authority gives the Patent Office and the Trademark Office the 
flexibility to maintain and improve their services, while 
responding to evolving economic conditions.
    This fee-setting authority, however, is carefully 
circumscribed. Fees--and any regulations, for that matter--are 
subject to the policy direction of the Secretary of Commerce, 
and the Director is responsible for determining that fees and 
regulations established by the Commissioners of Patents and 
Trademarks are consistent with that policy. Before changing or 
proposing to change fees or patent regulations, the 
Commissioner of Patents and the Commissioner of Trademarks must 
consult with their Management Advisory Boards and must provide 
``notice and opportunity for full participation by interested 
public and private parties.'' And, of course, all fees and 
regulations are subject to modification by Congress.
    It is important to note that the Commissioner of Patents is 
still bound by 35 U.S.C. 41(h)(1), which requires that certain 
fees be reduced by 50 percent for small businesses, independent 
inventors, and nonprofit organizations.
    The Commissioners of Patents and Trademarks are likewise 
responsible for budgetary proposals for their respective 
offices. Such budgetary proposals are submitted to the 
Director, who must make sure that fees are sufficient to cover 
the expenses of each office, that each office is expending only 
its own money, and that an office is not involved in the 
management of any other office. Before submitting budgetary 
proposals, the Commissioner of Patents and the Commissioner of 
Trademarks must consult with their Management Advisory Boards. 
By removing the USPTO from the budget of an agency with other 
priorities, S. 507 will also help ensure that the user fees 
collected by the Patent Office and the Trademark Office are not 
appropriated to other, unrelated areas.
    The Patent Office and the Trademark Office each contribute 
50 percent of the budget of the Director. The Office of the 
Director is not expected to be large. Under the bill, the 
Director is primarily responsible for policy and not for the 
day to day operations of the Patent and Trademark Offices. Even 
in the case of policy, the staff need not be large, since the 
Commissioner of Patents and the Commissioner of Trademarks are 
charged with advising the Director on patent policy and 
trademark policy, respectively.

                       management advisory boards

    The USPTO does not have a board of directors. However, S. 
507 makes the Patent Office and the Trademark Office more 
accountable to the people whom they serve by giving them direct 
input into the policy and operations of the Offices. The bill 
creates a Patent Office Management Advisory Board and a 
Trademark Office Advisory Board. The Boards have charged with 
reviewing the ``policies, goals, performance, budget, and user 
fees'' of their respective Offices and with preparing an annual 
report for the Director, the President, and the Judiciary 
Committees of both the House and the Senate. In addition, the 
Commissioner of Patents and the Commissioner of Trademarks have 
a duty to consult with their respective Advisory Boards ``on a 
regular basis'' and ``before submitting budgetary proposals * * 
* or changing or proposing to change user fees or patent 
regulations'' (emphasis added).
    Each Advisory Board consists of 5 members appointed by the 
President. They all must be U.S. citizens, and no more than 3 
are to be from the same political party. The President 
designates the Chairs, who serve for 3 years.
    Private-sector advice for the Patent Office is not a 
shocking innovation. In 1966, a report was released by 
President Johnson's Commission on the Patent System which, 
among other things, recommended the establishment of a private-
sector advisory counsel to evaluate and advise the Secretary of 
Commerce on the vitality of the patent system and its 
administration by the Patent Office.60
---------------------------------------------------------------------------
    \60\ Johnson Commission Report, supra note 23, at 43.
---------------------------------------------------------------------------
    From the beginning, both S. 1961 and S. 507 contained a 
requirement that the members of the Advisory Boards be chosen 
``so as to represent the interests of the diverse users'' of 
the Patent Office and the Trademark Office. Under any 
reasonable reading of this provision, the President would have 
to appoint not only members with corporate backgrounds but also 
members who are independent inventors and small businessmen. 
But in order to address the concerns of some members of the 
independent inventor community, the Committee added a further 
requirement that at least one member of the Patent Office 
Management Advisory Board be an independent inventor. No other 
particular user of the Patent Office benefits from a reserved 
seat.
    In addition to representing the diverse users of the Patent 
and Trademark Offices, the President must appoint some persons 
with ``substantial background and achievement in corporate 
finance and management.'' Since the primary responsibility of 
the Commissioners of Patents and Trademarks is the efficient 
running of the day to day operations of their respective 
Offices, it was thought that they would especially benefit from 
advice from persons with relevant experience.

  independent inventors, nonprofit organizations, and small businesses

    S. 507 was not written with a view to the needs of any 
particular users of the PTO. It was believed that all users 
would benefit from a more efficient and responsive USPTO. But 
in order to reassure independent inventors, nonprofit 
organizations, and small businesses, the Committee added a 
provision requiring the Commissioner of Patents to appoint an 
ombudsman to advise him or her on their concerns. Thus, in 
addition to the mandatory independent inventor slot on the 
Patent Office Advisory Board, there will be an officer of the 
Patent Office exclusively devoted to not only independent 
inventors, but also to nonprofit organizations and small 
businesses.

  Title II--Publication of Patent Applications And Provisional Rights

    Title II provides for publication of patent applications 18 
months after filing, but applicants who file only domestically 
can postpone publication up to the time the patent is granted. 
However, there are two incentives to agree to publication. 
Those whose applications are published: (1) will receive 
provisional rights which will enable them to collect a 
reasonable royalty for infringement that occurs during the time 
the application is published, and (2) will receive a patent on 
each claim as it is approved rather than having to wait for all 
claims on the application to be allowed, as is the current, 
usual practice.
    The U.S. is the world's leader in technology innovation. In 
order to consolidate that position and even to increase the 
rate of innovation, there is a need to squeeze out the waste in 
research and development. Publication of patent applications 
helps to do this by letting inventors know as soon as possible 
what other inventors have done. Thereafter, an inventor may 
choose to re-orient his research to another project or devote 
himself to making a patentable improvement on an invention 
revealed in a published application. According to Mr. Eric J. 
Ruff, a small businessman who has several patent applications 
pending, ``U.S. companies of all sizes that invest in 
technology development and new product design would benefit 
from an early warning that their design or approach may be 
blocked by another patent.'' 61
---------------------------------------------------------------------------
    \61\ The Omnibus Patent Act of 1997: Hearings on S. 507 Before the 
Senate Committee on the Judiciary, 105th Cong., 1st sess. 6 (May 7, 
1997) (Statement of Eric J. Ruff, President and CEO, PowerQuest Corp.).
---------------------------------------------------------------------------
    It is important to understand that an inventor's options to 
move on to another project or to invent a patentable 
improvement are currently available once a patent has been 
published, which occurs at the time of the grant. Therefore, 
publication of patent applications does not create new grounds 
to challenge patents. It does not weaken patent protection in 
any way. Publication of patent applications does allow these 
options to be employed earlier in the patenting process, and 
this is precisely why title II will increase the rate of 
invention.
    Publication of patent applications also provides a further 
disincentive for ``submarine'' patents. Because patent 
applications are currently kept secret, some applicants have 
been able to manipulate the patent examination system to keep 
their inventions secret for longer than necessary. Submariners 
state their claims as broadly as possible in order to increase 
the chances that their claims will overlap other inventions. 
Then, they purposefully delay the consideration of their 
application through meaningless amendments and repeated 
continuance requests. Eventually, when someone else has 
invested heavily in a similar invention, the submarine 
applicant causes his application to ``surface'' as a patent. 
Having already invested a lot of money in the invention, the 
unsuspecting entrepreneur is all too willing to pay exorbitant 
fees to avoid patent litigation.
    Since submariners are not interested in actually 
manufacturing and selling their inventions, they undermine the 
entire patent system which is based on encouraging inventors to 
disclose and market their inventions as soon as possible. 
Furthermore, although relatively few in number, submarine 
patents do tremendous damage.62
---------------------------------------------------------------------------
    \62\ Bernard Wysocki, Jr., Royalty Rewards: How Patent Law Suits 
Make a Quiet Engineer Rich and Controversial, Wall St. J., Apr. 9, 
1997, at A1, A8.
---------------------------------------------------------------------------
    The move from a term of 17 years from issuance to 20 years 
from filing did, of course, lessen the attractiveness of 
submarine patenting, but because of the rapid pace of 
technological change, even a few years of patent use could be 
very valuable. Publication of patent applications will make it 
even harder to game the system.
    Title II mandates publication of applications after 18 
months for U.S. applications that are also filed abroad, 
because 18-month publication is the prevailing rule outside the 
United States. If an application is available for inspection in 
virtually every other country, it would be detrimental to U.S. 
businesses to keep it secret in the United States. Since 
approximately 65 percent of patent applications filed in the 
United States are also filed abroad, the bill has the effect of 
publishing most patent applications. In addition, since all 
applications are currently kept secret regardless of whether 
the applicant is a United States citizen or a foreigner, S. 507 
will give American inventors the benefit of an English version 
of foreign patents free of additional charge. Lastly, because 
about two-thirds of the applications filed both in the U.S. and 
abroad are filed by foreign inventors, this title would require 
publication of foreign patents by a 2-1 ratio over American 
patents.
    Applicants who file only domestically will be allowed to 
keep their applications secret. To provide an incentive to 
publish, however, those who consent to publication will receive 
patent protection for a claim when that claim is allowed. Most 
applications contain more than one patentable claim. The 
current practice of the PTO is not to issue patents until all 
claims in the application have been approved. Because of title 
II's ``fast track'' patent approval, the patentee will be able 
to enjoy the benefits of a patent sooner and longer.
    Provisional rights is another incentive to publish patent 
applications. The bill provides a cause of action for 
infringement that occurred during the examination process for 
inventions that have been disclosed in a published application, 
once the application has ripened into a patent. Relief is 
limited to a reasonable royalty, and the invention as claimed 
in the patent must be ``substantially identical'' to the 
invention as claimed in the application. Furthermore, the 
patentee must file a claim for provisional rights not more than 
6 years after the patent was issued.
    Provisional rights will be especially valuable for 
applicants in areas of fast-moving technology. For fast-moving 
technologies, an invention can become obsolete well before the 
patent term has run, maybe even before the patent is granted. 
This discourages potential applicants from filing for a patent, since 
the cost and effort is not worth the limited rewards. Provisional 
rights, however, gives the applicant reasonable royalties from day one, 
if publication is requested at the time of filing.
    Finally, title II provides that published applications will 
have the effect of prior art on subsequent applications, as of 
the date of filing of the published application. Under current 
law, an applicant cannot receive a patent if his or her 
invention was described in a patent granted to someone else 
based on an application that was filed before the applicant 
made his or her invention. In other words, you can't get a 
patent if your invention was already created by someone else 
before you invented it. Similarly, under the bill, you can't 
get a patent if your invention was already described in a 
published application that was filed before you invented it.
    This does not change the first-to-invent rule of the United 
States, since the published application by another must be 
filed before you made the invention in order to preclude your 
patent under the amended section 102(e).
    According to section 102(b) of the current Act, if an 
invention is ``described in a printed publication'' more than 
one year prior to the date of application, the applicant cannot 
obtain a patent. A published application is also a printed 
publication under 35 U.S.C. 102(b), and is prior art for any 
other application filed more than a year after its publication.
    It is important to note that S. 507 applies the secrecy 
provisions of current section 181 of the Patent Act to the 
publication of patent applications. Within 1 month of filing, 
every domestic origin patent application is reviewed by special 
PTO examiners to determine whether the application contains any 
military sensitive technology. If it does, the application is 
set aside for detailed review by security experts from the 
Army, Navy, Air Force, and Department of Energy. When an 
application is found to contain sensitive technology, the 
Commissioner imposes a secrecy order to prohibit publication of 
the application. The applicant is also forbidden to file a 
corresponding application in a foreign country and to disclose 
publicly information regarding the invention.
    Although the bill does not define ``publish,'' it is clear 
from the current practice of the PTO and from the purpose of 
this title that ``publication of an application'' means opening 
the application file for continual public inspection.

                   Title III--Patent Term Restoration

    In 1995, pursuant to the General Agreement on Tariffs and 
Trade Implementation Act, the U.S. patent term was changed from 
17 years from issuance to 20 years from filing. On average, the 
new term should not result in loss of patent term. According to 
a March 1997 General Accounting Office (GAO) report, using 1995 
figures, the most recent available, the average pendency period 
for patent applications is 19.8 months.63 Moreover, 
the highest average pendency (for computer systems) was 26.2 
months. (The lowest pendency was for solar, heat, power, and 
fluid engineering devices, where the average was 17.4 months.) 
All of these, of course, are not more than the 36 months, which 
would cause net loss of patent term in comparison to the pre-
GATT patent term.
---------------------------------------------------------------------------
    \63\ General Accounting Office, Comparison of Patent Examination 
Statistics for Fiscal Years 1994 and 1995 1 (1997).
---------------------------------------------------------------------------
    It is still possible, however, that an individual patentee 
would have less patent term under the new term than under the 
old. To remedy this situation, title III restores patent term 
lost to ``unusual administrative delay'' by the PTO and 
guarantees all diligent applicants a minimum 17-year term. 
Patent term will also be restored because of interferences and 
secrecy orders.
    Title III defines ``unusual administrative'' delay, and 
provides for restoration of patent term for the length of the 
delay with a cumulative total of 10 years. However, if the 
applicant ``fail[s] to engage in reasonable efforts to conclude 
prosecution of the application,'' the restoration will be 
reduced pro rata. Since failure of the PTO to issue a patent to 
a diligent applicant within three years after the actual filing 
date is considered to be ``unusual administrative delay,'' 
effectively, diligent applicants will receive at least 17 years 
of protection.
    Whenever a patent's term is adjusted because of title III, 
the Commissioner is required to determine the period of the 
adjustment and include a copy of the determination with the 
final notice.
    In addition, title III provides for further examination of 
a patent application after the final rejection of some or all 
claims in a patent application. Under current law, the only way 
to get further consideration of claims that have been finally 
rejected by an examiner is to have the examiner withdraw the 
final rejection, appeal the final rejection to the Board of 
Patent Appeals and Interferences, or file a continuing 
application and begin prosecution of that application. Title 
III provides for a fast-track version of the continuing 
application. This additional option for the applicant will 
allow for faster reconsideration of rejected claims without the 
expense of an appeal. The applicant would still have to pay a 
fee similar to the fee for a continuing application, but this 
provision provides independent inventors and small businesses 
with reduced fees. Thus, this provision will help all inventors 
speed the reconsideration of rejected claims and accommodate 
the financial constraints of small business.

                Title IV--Prior Domestic Commercial Use

    Title IV provides protection against an infringement suit 
for anyone who has commercially used an invention for more than 
a year before another person files for a patent on that 
invention. In raising this defense, the burden of proof is on 
the person claiming the defense, not on the patent holder. 
While far from patent protection, this title offers a shield to 
those who might otherwise be ruined through no fault of their 
own. This title is based on and quite similar to S. 2272, which 
passed this Committee and the Senate by voice vote in 1994.
    This provision will protect the unsophisticated 
entrepreneur from being ruined.
    Under current law, an independent entrepreneur who has 
invested perhaps his entire life savings to produce and market 
an invention can be shut down completely by someone else who 
comes along much, much later and gets a patent on the same 
invention. A prior user right will protect people from this 
financial disaster.
    This title is also based on the notion that the people who 
act in a way that will benefit society should be rewarded and 
encouraged. The inventor who immediately moves to put goods on 
the market, thus creating new jobs and raising the American 
standard of living, is rewarded with protection. The inventor 
who fails to act, who allows the invention to sit on a shelf is 
the one who is not rewarded by this title. Thus, this title 
protects the diligent and is only a concern to those who delay 
the introduction of new technology to the American public.
    While these protections are important, there is little 
doubt that prior user rights are a mere shadow of full patent 
protection. Prior user rights cannot be used to insulate others 
from infringement liability, they cannot be licensed, and in 
order for them to be transferred, the entire business concern 
must be sold along with the prior user right. Further, this 
provision is consistent with the rule that first inventors 
should receive the patent--they still would.
    Nor does this title significantly alter the balance between 
patents and trade secrets. Patents remain by far the strongest 
possible protection for inventions. Trade secrets are 
vulnerable to independent invention and reverse engineering. 
Title IV does not change the general rule that trade secret 
protection cannot trump patent protection of the same 
invention. This provision merely takes care of a special, 
hardship case.
    This provision also accommodates concerns raised by the 
Department of Justice and some universities. Specifically, the 
activities of the government and of nonprofit laboratories are 
included in the definition of commercial use, allowing them to 
qualify for prior use protection. Further, in order to qualify 
for the protection, there must be an ``arms-length'' sale and 
the reduction to practice must be ``actual'.

                  Title V--Patent Reexamination Reform

    As part of the 1980 patent reform legislation, Congress 
established an alternative to litigation when a patent may be 
invalid due to prior art not considered by the Patent Office 
during the original examination of the patent application. This 
reexamination of an issued patent could be requested by either 
the patent owner, to adjust or confirm his or her patent in 
light of prior art that he or she discovered after the issue of 
the patent, or by a third-party requester. Without 
reexamination, a person who is technically infringing a patent, 
but who has prior art that would invalidate the patent 
infringed, can't challenge the patent unless he or she is sued 
for infringement or unless the owner of the patent infringed 
puts him or her in true apprehension of an infringement suit, 
in which case he or she can file for a declaratory judgment. 
Until this happens, the infringer has the sword of Damocles 
hanging over his or her head.
    In the House report that accompanied the 1980 
legislation,64 it was noted that:
---------------------------------------------------------------------------
    \64\ H. Rept. 1307, 96th Cong., 2d sess. (1980).

          Reexamination will permit efficient resolution of 
        questions about the validity of issued patents without 
        recourse to expensive and lengthy infringement 
        litigation. This, in turn, will promote industrial 
        innovation by assuring the kind of certainty about 
        patent validity which is a necessary ingredient of 
        sound investment decisions.
          The cost incurred in defensive patent litigation 
        sometimes reaches $250,000 for each party, an 
        impossible burden for many smaller firms. The result is 
        a chilling effect on those businesses and independent 
        inventors who have repeatedly demonstrated their 
        ability to successfully innovate and develop new 
        products. A new patent reexamination procedure is 
        needed to permit the owner of a patent to have the 
        validity of his patent tested in the Patent office 
        where the most expert opinions exist and at a much 
        reduced cost. Patent office reexamination will greatly 
        reduce, if not end, the threat of legal costs being 
        used to ``blackmail'' such holders into allowing patent 
        infringements or being forced to license their patents 
        for nominal fees.
          The reexamination of issued patents could be 
        conducted with a fraction of the time and cost of 
        formal legal proceedings and would help restore 
        confidence in the effectiveness of our patent system.

    Yet, reexamination has had only limited success. Most 
patent attorneys advise their clients not to file for 
reexamination as a third party when they know of prior art that 
would invalidate the claims of an issued patent that they may 
be infringing. This is because the current law allows only very 
limited participation in the reexamination by a third party. 
They can submit prior art to the patent file and explain how it 
is pertinent to the issued patent. They must include a similar 
statement in their request for reexamination. And if the patent 
owner files a statement in response to the Commissioner's 
reexamination order, the third-party requester can file a reply 
to that statement. No other interaction with the Patent Office 
by the third-party requester is permitted, and reply statements are 
seldom allowed because patent owners know not to file a statement in 
response to the Commissioner's reexamination order, but instead wait 
for the examiner's first office action to make their response, when the 
third-party requester cannot reply.
    Since a third-party requester cannot comment on how the 
examiner is considering the prior art or the patent owner's 
responses, there is a strong concern that the prior art may be 
interpreted in the way most favorable to the patent owner. And 
because of the statutory presumption of validity for a patent, 
particularly against prior art considered by the examiner, any 
prior art presented by a third-party in a reexamination may be 
effectively excluded from any later litigation even if there is 
an interpretation based on that prior art that would invalidate 
the patent. Thus, it is not hard to see why third parties do 
not use reexamination as an alternative to litigation.
    S. 507 seeks to make reexamination a more viable 
alternative. This is achieved by giving a third-party requester 
a larger, but still limited, role in the reexamination 
proceedings. The third-party requester can now file written 
comments within a month of any response to an examiner's action 
by the patent owner. The comments are limited to the issues 
raised in the examiner's action and the patent owner's 
response. No new issues can be raised by the third-party 
requester in his or her comments. In addition, if third-party 
requesters are unsatisfied with the final determination of the 
examiner, they can appeal the decision, or become a party to 
any appeal taken by the patent owner. A very similar provision, 
S. 2341, passed both this Committee and the Senate by voice 
vote in 1994.
    In order to prevent abuse, once a reexamination is ordered, 
the party who requested it is legally prohibited from raising 
those claims or any claims that could have been raised at that 
time in a future civil action in Federal court or from raising 
those claims in a future reexamination. Symmetrically, if a 
claim of invalidity is asserted in litigation, reexamination is 
precluded on the issues raised in that claim of invalidity, or 
any issue that could have been raised. Nothing in the bill 
alters the qualifications necessary to seek reexamination, nor 
are any rights of the patent holder altered. Taken together, 
the provisions of title V maintain a fair balance in the 
reexamination process. Third-party requesters receive a 
slightly more substantive role and the ability to appeal, but 
they are limited then to one bite at the apple, thus preventing 
abuse.
    Patents are exceptions to the general rule of the free 
market that any product may be copied so that it might be made 
available to the public more cheaply. Congress has made a 
narrow exception to this general rule for inventions that meet 
the high standards of novelty and nonobviousness contained in 
the Patent Act. As the U.S. Supreme Court said in Bonito Boats 
v. Thunder Craft, ``The novelty and nonobviousness requirements 
of patentability embody a congressional understanding, implicit 
in the Patent Clause [of the Constitution] itself, that free 
exploitation of ideas will be the rule, to which the protection 
of a federal patent is the exception.'' 65 
Reexamination makes sure that an invention is not preserved 
from competition unless it really deserves it, by encouraging 
people to come forward with prior art affecting the 
patentability of an invention not previously considered by the 
Patent Office.
---------------------------------------------------------------------------
    \65\ 489 U.S. 141, 151 (1989).
---------------------------------------------------------------------------
    The work load for each examiner in the patent office is 
substantial. It cannot be helped that sometimes they miss prior 
art and grant a patent when it is not deserved. By providing 
third-parties with the opportunity to share their knowledge of 
potentially prior art, the examiner is aided in his work and 
can better evaluate the merits of the patent. This, in turn, 
keeps the faith in patents that have been granted high, and 
that aids business dealings.
    The reexamination process can also be used to help defend 
the patent. S. 507 allows the patent holder to adjust existing 
claims and even to add new claims to the existing patent during 
the reexamination process. This allows the patent owner to 
redraft the patent and avoid the prior art that have been 
raised. In Federal court, however, there is no middle ground. 
Should the court find a claim invalid, it must strike the claim 
from the patent, and if all claims arestruck from the patent, 
the patent owner has nothing. Thus, patent holders are not only 
protected from harassment by the terms of this provision, but it 
provides them an opportunity to foil potential attacks on their patent.
    Finally, the standard to have a reexamination granted is 
quite high. S. 507 preserves the current requirement that the 
requester must present a ``substantial new question of 
patentability''. Thus, meritless requests will be dismissed out 
of hand. Further, a requester may not request a reexamination 
while one is proceeding, so multiple requests by a harasser are 
prohibited.
    It is important to note that title V does not expand the 
grounds for reexamination. Any rejection of a claim in 
reexamination must be based, at least in part, on prior art 
that was not already considered by the Patent Office during the 
original examination of the patent, as in the current Act. 
While there is no presumption of validity of a patent during 
reexamination, the original decision of the examiner cannot be 
challenged. Instead, new prior art and a new reason based on 
that prior art is necessary for any rejection.
    Taken together, the provisions of title V provide an 
efficient and less expensive alternative to patent litigation 
while at the same time providing extensive barriers to misuse 
of the procedure.

               Title VI--Miscellaneous Patent Provisions

    The final title of S. 507 contains several lower-profile 
but nonetheless important and needed changes to American patent 
law.
    Section 601 allows the smooth transition from a provisional 
application to a full application. This will permit inventors 
with limited resources to get to the Patent Office quickly, 
while still giving them reasonable time to perfect their 
applications.
    Section 602 allows an applicant who filed first in another 
country, to claim the right of priority in a subsequent 
application in the United States. This will facilitate respect 
for patents between different countries and thus reduce 
conflicting claims of patent rights internationally.
    Section 603 provides for the creation of computer networks 
in rural States that will provide patent information to those 
who might not otherwise have had affordable access to such 
information. This provision will be particularly useful for 
independent inventors and small businesses that may not have 
the resources of larger organizations to obtain the information 
crucial to patent searches.
    Section 604 exempts from the ban on medical methods patents 
all patents for which an application was pending on the date of 
enactment of the ban. The underlying provision was adopted as 
part of the fiscal year 97 Omnibus Consolidated Appropriations 
Act (Public Law 104-208), passed on September 30, 1996.
    Section 605 fixes two problems with plant patent 
protection. First, it removes the depression-era ban on patents 
on ``tuber propagated'' plants. This was originally included 
for fear of limiting the food supply or causing some food to 
become too expensive. Clearly, these concerns are no longer 
applicable.
    Second, this section closes a loophole by providing patent 
protection not only for the plant as a whole, but for parts of 
the plant. Foreign infringers have been growing patented plants 
abroad and then selling only the fruit or flower in the United 
States. Because under the current wording of the statute the 
sale of fruit or flowers alone is not protected, the infringers 
were successful. By closing this loophole S. 507 will protect 
domestic plant patent holders from the foreign infringers.
    Section 606 will allow the Patent Office to accept filings 
by electronic means. Of course, printed or typewritten filings 
will continue to be acceptable as well. This will help increase 
the speed with which applications can be processed, reduce the 
costs of filings, and bring the government office that is by 
definition always at the cutting edge of technology into the 
computer age.
    Section 607 provides for a study of the biological deposit 
requirement in support of biotechnology patents. Concern has 
been raised that this requirement creates too easy an 
opportunity for foreign infringers to acquire the patented 
substance. The Committee shares this concern and seeks guidance 
as to the seriousness of the problem and the most efficacious 
solution.

                       IV. VOTE OF THE COMMITTEE

    The Senate Committee on the Judiciary, with a quorum 
present, met on Thursday, June 22, 1997, at 10 a.m., to mark up 
S. 507. The Chairman offered an amendment in the nature of a 
substitute, cosponsored by Senator Leahy. The Committee 
accepted, by a voice vote, an amendment thereto offered by 
Senator Grassley. The Committee then ordered S. 507 reported 
favorably, as amended by the modified Hatch-Leahy substitute 
amendment, by a voice vote with Senator Thompson noting his 
opposition.
    The amendment offered by Senator Grassley struck certain 
provisions relating to certain limitations on damages for 
patent infringements concerning health care entities.

                     V. SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This Act may be cited as the ``Omnibus Patent Act of 
1997.''

Section 2. Table of contents

  Title I--The United States Patent and Trademark Organization Act of 
                                  1997

Section 101. Short title

    The Act may be cited as the ``United States Patent and 
Trademark Organization Act of 1997.''

Subtitle A. Establishment of the U.S. Patent and Trademark Organization 
                                (USPTO)

Section 111. Establishment of the USPTO as a Government Corporation

    Subsection (a)--Establishment. Subsection (a) establishes 
the United States Patent and Trademark Organization 
(hereinafter the USPTO or the Organization) as a wholly owned 
government corporation under chapter 91 of title 31, United 
States Code (31 U.S.C. 9101 et seq.). Although structurally 
independent and separate from any department for purposes of 
management and administration, the USPTO remains subject to the 
policy direction of the Secretary of Commerce. This ``policy 
link'' to the Department of Commerce will enable the 
administration to maintain a uniform approach to patent and 
trademark policy, including international treaties and 
agreements concerning patents and trademarks, domestic patent 
and trademark legislation, and general policies affecting jobs, 
trade, and technology. This structure will also facilitate 
strong advocacy at the cabinet level for patent and trademark 
policy, which is an increasingly dominant force in our Nation's 
economic growth and in promoting a favorable balance of trade 
with foreign states. As a body corporate and independent 
government agency, the USPTO will have the authority to direct 
its personnel, procurement, budget, and similar administrative 
functions in a manner consistent with the flexibilities 
required for businesslike operations. The Organization will be 
free fromsupervision by any department, except as expressly 
provided for in this Act, but will be subject to the provisions of the 
Government Corporation Control Act and the specific oversight 
provisions contained in this Act. It is anticipated that significant 
cost savings and efficiencies will result from the USPTO's status as an 
administratively independent entity and its corresponding authority to 
establish its own rules, regulations, and other processes.
    Subsection (b)--Offices. Subsection (b) requires that the 
USPTO maintain its principal office in the Washington, DC, 
metropolitan area for purposes of service of process and 
carrying out its powers, duties, and obligations under this 
Act. The Organization may establish satellite offices in other 
places within the United States as it deems necessary and 
appropriate. For purposes of venue in civil actions, the USPTO 
is deemed to be a resident of the district in which its 
principal office is located.
    Subsection (c)--Reference. Subsection (c) provides that the 
word ``Organization'', as used in this Act, refers to the U.S. 
Patent and Trademark Organization.

Section 112. Powers and duties

    This section provides the USPTO with the powers and 
authorities necessary to carry out its functions as a wholly 
owned government corporation.
    Subsection (a)--In General. Subsection (a) sets forth the 
general responsibilities of the USPTO, which include those 
powers and duties currently exercised by the Commissioner of 
Patents and Trademarks under the direction of the Secretary of 
Commerce pursuant to section 6 of title 35, United States Code 
(35 U.S.C. 6). Administration of these functions within the 
USPTO shall be assigned pursuant to the provisions of this Act 
establishing the Patent Office and the Trademark Office as 
separate administrative units.
    Subsection (a)(1) provides that the USPTO, as a sovereign 
agency of the United States, will be responsible for the 
granting and issuing of patents and the registration of 
trademarks. 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 USPTO, as a wholly owned government 
corporation, will be able to carry out the functions necessary 
for the granting and issuing of patents and the registration of 
trademarks more efficiently and cost-effectively than would be 
the case if the Organization were subject to the limitations 
placed on taxpayer-funded departments and agencies.
    Subsection (a)(2) authorizes the USPTO to conduct studies, 
programs, and exchanges regarding domestic and international 
patent and trademark law, the administration of the 
Organization, and other functions vested in the Organization by 
law. This subsection simply extends authority to the USPTO to 
conduct such studies, programs, and exchanges, as the U.S. 
Patent and Trademark Office is currently authorized to conduct 
under section 6(a) of title 35, United States Code (35 U.S.C. 
6(a)).
    Subsection (a)(3)(A) authorizes the USPTO to conduct 
studies, programs, and exchanges with international 
organizations. This subsection affirms the authority of the 
USPTO to continue to conduct such studies, programs, and 
exchanges with international organizations as the U.S. Patent 
and Trademark Office is currently authorized to conduct under 
section 6(b) of title 35, United States Code (35 U.S.C. 6(b)).
    Subsection (a)(3)(B) authorizes the USPTO to transfer up to 
$100,000 to the State Department, with the concurrence of the 
Secretary of State, for the purpose of making payments to 
international intergovernmental organizations, such as the 
World Intellectual Property Organization, for studies and 
programs advancing international cooperation in connection with 
patents, trademarks, and related matters. This subsection 
affirms theauthority of the USPTO to continue to make such 
payments, as are currently authorized to be made by the Commissioner of 
Patents and Trademarks under section 6(c) of title 35, United States 
Code (35 U.S.C. 6(c)).
    Subsection (a)(4) makes the USPTO responsible for 
disseminating to the public information with respect to patents 
and trademarks. In fulfilling its duties under this subsection, 
the Organization should emphasize effective dissemination. The 
policies that have been pursued by the U.S. Patent and 
Trademark Office have resulted in broad dissemination of patent 
and trademark information. For example, through bulk sales to 
over 30 private sector organizations, many new patent 
information services have been created, including four free 
online patent search services operated by the private sector. 
As a result, there is a broad range of products and services 
now available to all categories of users. In the Committee's 
view, these policies have served the public and American 
businesses well. In fact, this PTO program has been one of the 
most successful in government in terms of broad, far-reaching, 
efficient, and effective dissemination of information. The 
Committee expects that the USPTO will continue the current 
policies of the Patent and Trademark Office with respect to 
information dissemination, including free Internet access to 
bibliographic records of patents issued over the most recent 
20-year period, fee-based direct access to the Automated Patent 
System (APS) in the public search room and in the Patent and 
Trademark Depository Libraries, and the provision of bulk 
patent and trademark text and image data in electronic form, 
for a fee which is based on the cost of dissemination. The 
USPTO should proceed with caution, however, before expending 
funds to extend any of its online services to include free 
patent full-text or imaging searching or other direct-to-end-
user retail online services beyond those now made available by 
the Patent and Trademark Office. Careful consideration should 
be given to the fact that such services are already provided by 
the private sector and the potential of such an expansion to 
undercut the value of private sector services that have been 
created by purchase of electronic data from the Patent and 
Trademark Office. The USPTO is encouraged, however, to make 
application status information available for both patent and 
trademark applications.
    Subsection (b)--Special Payments. Subsection (b) makes 
clear that payments made to the State Department for the 
purpose of making payments to international intergovernmental 
organizations, pursuant to subsection (a)(3)(B) of this 
section, may be in addition to other payments or contributions 
to these international intergovernmental organizations. This 
subsection reaffirms the status of such payments as currently 
expressed in section 6(c) of title 35, United States Code (35 
U.S.C. 6(c)).
    Subsection (c)--Specific Powers. Subsection (c) identifies 
the specific powers granted to the USPTO to carry out its 
functions efficiently and in a cost-effective manner.
    Subsection (c)(1) specifies that the Organization shall 
have perpetual succession.
    Subsection (c)(2) authorizes the USPTO 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 Organization are to be authenticated with 
the seal.
    Subsection (c)(3) provides that the Organization may sue 
and be sued in its own name. Wholly owned government 
corporations generally have ``sue and be sued'' status that is 
specific to the body corporate. The provisions regarding 
implementation of the Organization's authority to sue and be 
sued are contained in section 116 of this Act, which gives the 
Department of Justice sole litigation authority for suits in 
which the USPTO or officer thereof is a party, or is 
interested. Nothing in this legislation is intended to alter 
the present relationship between the Patent and Trademark 
Office's Office of the Solicitor and the Department of Justice.
    Subsection (c)(4) authorizes the USPTO to indemnify all 
officers, employees, and agents of the Organization, including 
the members of the Management Advisory Boards of the Patent 
Office and the Trademark Office, against liabilities and 
expenses incurred within the scope of their employment.
    Subsection (c)(5) authorizes the USPTO to adopt, amend, and 
repeal any bylaws, rules, regulations, and determinations, 
which shall govern the conduct of its business and the exercise 
of the powers granted to theOrganization 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.
    Subsection (c)(6) gives the USPTO broad authority to manage 
its own real and personal property, or any interest in such 
property.
    Subsection (c)(6)(A) authorizes the USPTO 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.
    Subsection (c)(6)(B) authorizes the USPTO to sell, lease, 
grant, and otherwise dispose of such real, personal, or mixed 
property as it considers necessary to carry out the purposes of 
this Act.
    Subsection (c)(7) grants the USPTO expanded authority, 
independent of the General Services Administration, to oversee 
its own acquisitions, including the authority to make purchases 
and enter contracts for the construction, maintenance, and 
management of facilities, the provision of supplies or 
services, and for printing services, as it considers necessary 
to carry out its functions.
    Subsection (c)(7)(A) provides that the USPTO may make 
purchases, contract for the construction, maintenance, or 
management and operations of facilities, without regard to (1) 
the Federal Property and Administrative Services Act of 1949 
(40 U.S.C. 471 et seq.), (2) the Public Buildings Act of 1949 
(40 U.S.C. 601 et seq.), and (3) the Stewart B. McKinney 
Homeless Assistance Act (the McKinney Act) (42 U.S.C. 11301 et 
seq.).
    The Federal Property and Administrative Services Act 
contains many detailed requirements that are not appropriate 
for the 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 more than 2\1/2\ years to 
complete, resulting in wasted Office resources and 
necessitating sole-source extensions and revisions of 
requirements to keep pace with technological advances. The 
USPTO, as a nontaxpayer-funded government corporation supported 
entirely through user fees, has a responsibility to minimize 
operating costs while assuring a fair and competitive process 
that reduces the overall cost of acquisitions. The Organization 
is expected to follow prudent business practices that achieve 
the objectives of the Federal Property and Administrative 
Services Act, such as obtaining effective competition, ensuring 
that prices for supplies and services are fair and reasonable, 
and that delivery times are reasonable. The Organization 
remains subject to the oversight provisions in this 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 that are created to 
operate intrinsically under business-like principles. GSA may 
not always be able to respond to the Organization's needs in a 
timely manner. To ensure timely and cost-effective space 
acquisition and management, the Organization must have 
authority to act on its own behalf in appropriate 
circumstances, subject to the provision contained in subsection 
(e) of this Act regarding certain pending request-for-proposal 
lets or contracts issued by GSA prior to enactment of this Act. 
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 USPTO in conducting its business. 
Mandatory, rather than discretionary, GSA authority conflicts 
with the Organization's need to acquire its own space in a 
businesslike manner. Subsection (c)(9) of this Act provides the 
USPTO with discretionary authority to obtain such services from 
GSA as are appropriate and cost-effective. 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 USPTO might acquire would be paid for 
with patent andtrademark fees, rather than with taxpayer 
moneys, it is inappropriate to apply the McKinney Act to disposal of 
USPTO property.
    Subsection (c)(7)(B) exempts the USPTO from the 
requirements for printing and binding in sections 501-517 of 
title 44, United States Code (44 U.S.C. 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. 
1101-1123). There are instances when it may be more efficient 
for the Organization to have access to alternative printing 
sources. For example, the U.S. Patent and Trademark 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 Organization would be unable to 
realize the costs savings associated with this and future plans 
for technological improvement.
    Subsection (c)(8) authorizes the USPTO to use services, 
equipment, personnel, and facilities of other United States 
departments, agencies, and instrumentalities with their consent 
and with reimbursement. The Organization is also authorized to 
cooperate with other departments, agencies, and 
instrumentalities by allowing them the use of services, 
equipment, and facilities of the Organization in a like manner.
    Subsection (c)(9) authorizes the USPTO, 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 (c)(10) authorizes the USPTO 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 (c)(11) provides the USPTO 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 Organization'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 (31 U.S.C. 9101 et 
seq.) and other laws specifically applicable to wholly owned 
government corporations. The Comptroller General no longer 
would certify the Organization's obligations and expenditures. 
The Organization would retain this authority. This method of 
operation is appropriate since the Organization's funds derive 
from its own revenues and receipts, not from taxpayer funds.
    Subsection (c)(12) authorizes the USPTO to retain and use 
all the revenues, receipts, and other monies that arise from 
activities of the Organization for the operations of the 
Organization, subject to the oversight provisions of this Act 
and the Government Corporation Control Act (35 U.S.C. 9101 et 
seq.). The Organization's funding is derived principally from 
fees paid to the U.S. Patent Office and the U.S. Trademark 
Office, which are separate administrative units of the USPTO, 
for services provided by those offices. Since fiscal year 1993, 
the U.S. Patent and Trademark Office has relied upon such 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 (OBRA90) (35 
U.S.C. 41 note), all funding is available to the Organization 
for the conduct of its affairs. The authority granted to the 
USPTO in this charter is consistent with that prevailing prior 
to incorporation under this Act.
    Subsection (c)(13) gives the USPTO priority of the United 
States in connection with the payment of any debts from 
bankrupt, insolvent, and decedents estates.
    Subsection (c)(14) authorizes the USPTO to accept gifts or 
donations of services and property. This provision mirrors 
those of 12 other Cabinet-level Executive agencies and numerous 
other government agencies and corporations. The U.S. Patent and 
Trademark Office is currently authorized to accept such gifts 
by virtue of the Secretary of Commerce's authority to do so 
under section 1522 of title 15, United States Code (15 U.S.C. 
1522).This authority makes it possible for the Commissioner of 
Patents and Trademarks to accept donations to the Patent and Trademark 
Museum and the Office's library, as well as to accept donations of 
service by experts from the private sector who serve as volunteer 
instructors at the Patent Academy--a voluntary after-hours program in 
which patent professionals improve their legal education in an ongoing 
effort to improve the overall examination process. This subsection 
provides authority for the USPTO, as an independent agency of the 
United States, to continue the existing practices of the U.S. Patent 
and Trademark Office with respect to the acceptance of gifts and 
donations. The requirements of the Ethics in Government Act (5 U.S.C. 
App.) and regulations establishing standards for ethical conduct for 
executive branch employees under, including those specifically 
regarding the acceptance of gifts, will continue to apply to the 
officers and employees of the Organization, as will the criminal 
bribery provisions of chapter 11 of title 18, United States Code (18 
U.S.C. 201). Additional restrictions on the authority of the USPTO to 
accept gifts, beyond those applicable to all other executive branch 
employees, are set forth in subsection 112(d) of this Act.
    Subsection (c)(15) authorizes the USPTO 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 Organization 
for the exercise of such powers and authorities.
    Subsection (c)(16) authorizes the USPTO, 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.
    Subsection (d)--Restriction on Gifts. Subsection (d) sets 
forth specific restrictions on the acceptance of gifts by the 
Organization. Such gifts may be accepted only for the limited 
purposes of enhancing the libraries and museums of the USPTO, 
supporting the Organization's educational programs, or 
otherwise carrying out the functions of the Organization. 
Officers and employees of the Organization remain subject to 
criminal bribery statutes (18 U.S.C. 201 et seq.), as well as 
regulations establishing standards for ethical conduct for 
executive branch employees under Appendix 4 of title 5, United 
States Code (5 U.S.C. App.) (the Ethics in Government Act), 
including those regarding the acceptance of gifts. This 
subsection requires the Director of the USPTO to establish 
regulations governing the acceptance of gifts and donations by 
the Organization, consistent with such statutes and 
regulations, and requires that those regulations further 
prohibit all gifts or donations from foreign entities.
    Subsection (e)--Rule of Construction. Subsection (e) 
provides that this legislation will not render null and void 
any pending request-for-proposal let or contract already 
approved by the General Services Administration for the purpose 
of relocating or leasing space to the U.S. Patent and Trademark 
Office.

Section 113. Organization and management

    Subsection (a)--Offices. Subsection (a) provides for the 
organizational structure of the USPTO. The Organization 
consists of three separate administrative units: (1) the Office 
of the Director, (2) the United States Patent Office, and (3) 
the United States Trademark Office. Under this organizational 
structure, the Patent Office and the Trademark Office will be 
operated as separate, autonomous administrative units. Each 
office will be responsible for adopting and implementing 
policies that serve the best interests of that office, as 
determined by its respective Commissioner under the policy 
direction of the Secretary of Commerce through the Director.
    This structure reflects the fundamental differences between 
patents and trademarks--two diverse fields of law whose focus 
and purpose are very different. The patent statute is designed 
to advance technological progress through the public disclosure 
of new and useful inventions. The trademark laws are intended 
to protect a company's product names and exclusive features, 
promote the national economy by encouraging the production of 
quality products, and protect consumers from confusion and 
deception.
    Linking these two distinct areas administratively has 
created serious operational difficulties to the detriment of 
the trademark functions--as patent functions have overshadowed 
trademark policy direction and administrative decisionmaking. 
By providing autonomy for trademark operations and insulating 
it from the patent function, theCommittee believes these 
operational difficulties will subside, providing more efficient and 
effective administration of the Nation's trademark laws.
    Subsection (b)--Director. Subsection (b) provides for the 
appointment of a Director of the USPTO.
    Subsection (b)(1) vests the management of the USPTO in a 
Director of the United States Patent and Trademark Organization 
(Director). The Director shall be appointed by the President, 
by and with the advice and consent of the Senate. The Director 
must be a United States citizen and shall be a person who, by 
reason of professional background and experience in patent or 
trademark law, is especially qualified to manage the 
Organization.
    Subsection (b)(2) establishes the duties of the Director.
    Subsection (b)(2)(A)(i) provides that the Director is 
responsible for the management and direction of the USPTO. The 
Director shall perform this duty in a fair, impartial, and 
equitable manner. This responsibility includes the 
establishment of the organization of the USPTO, the number and 
types of its offices and the filling thereof, and the 
definition of the duties assigned to employees and officers of 
the Organization. The power of the Director to manage the 
Organization and to appoint officers and employees of the USPTO 
is limited, however, to the Office of the Director and such 
other offices as the Director may, in his or her discretion, 
establish. Responsibility for the management of the U.S. Patent 
Office and the U.S. Trademark Office, as separate 
administrative units of the USPTO, and the power to appoint the 
officers and employees of those offices, is reserved for the 
Commissioner of Patents and the Commissioner of Trademarks, 
respectively, under sections 114(c) and 115(a) of this Act.
    Subsection (b)(2)(A)(ii) requires the Director to strive to 
meet the goals set forth in an annual performance agreement 
between the Director and the Secretary of Commerce, as outlined 
in subsection (b)(4).
    Subsection (b)(2)(B) charges the Director with advising the 
President, through the Secretary of Commerce, on policy matters 
regarding patents and trademarks. Specifically, this subsection 
provides that the Director will advise the President, through 
the Secretary of Commerce, regarding all activities the 
Organization 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 Director is to recommend to the 
President, through the Secretary of Commerce, any changes in 
law or policy that may improve the ability of U.S. citizens to 
secure and enforce patent and trademark rights in the United 
States and abroad.
    Subsection (b)(2)(C)(i) authorizes the Director, at the 
direction of the President, to represent the United States in 
international negotiations related to patents and trademarks, 
or to designate an officer or officers of the USPTO to 
participate in such negotiations. Recently, the U.S. Patent and 
Trademark Office has been selected by the Administration to 
represent the United States as a party to international treaty 
negotiations on intellectual property rights, including 
negotiations on the law of patents, trademarks, copyrights, and 
related matters. The authorization contained in this subsection 
grants the Director, or his or her designee(s) from among the 
officers of the USPTO, the ability to continue to serve in this 
capacity, if chosen by the President to do so.
    Subsection (b)(2)(C)(ii) makes clear that nothing in 
subsection (b)(2)(C)(i)--authorizing the Director to represent 
the United States at the direction of the President in 
international treaty negotiations--serves to alter the 
statutory responsibilities of the Secretary of State or the 
United States Trade Representative with respect to such 
international treaty negotiations or related matters.
    Subsection (b)(2)(D) requires the Director, in consultation 
with the Director of the Office of Personnel Management, to 
maintain a program for identifying national security positions 
and providing for appropriate security clearances.
    Subsection (b)(2)(E) authorizes the Director to perform 
such personnel, procurement, and other functions of the Patent 
Office and the Trademark Office as can be administered more 
efficiently through a centralized office. This subsection 
provides a mechanism whereby the overall efficiency of the 
Organization will be increased by avoiding unnecessary 
duplication of efforts by the Patent Office and the Trademark 
Office, which operate as separate administrative units within 
the USPTO. Under this subsection, the Patent Office and the 
Trademark Office need not establish separate offices to handle 
those functions, such as procurement and certain hiring 
functions, which can be handled just as effectively but at a 
lower cost through a single, centralized office. The Director's 
authority is limited to the performance of those functions that 
the Director, the Commissioner of Patents, and the Commissioner 
of Trademarks unanimously and continuously agree can be more 
efficiently handled by a single, centralized office. The 
Committee intends that any agreement to perform a centralized 
function and allocate costs is an ongoing process requiring the 
unanimous agreement of all three parties to remain in effect. 
Under this subsection, any agreement between the Director, the 
Commissioner of Patents, and the Commissioner of Trademarks 
must be in writing and must indicate the allocation of costs of 
administering the agreed upon function(s) between the Office of 
the Director, the Patent Office, and the Trademark Office. In 
determining the allocation of costs for a particular function, 
it is expected that the Director and Commissioners will assess 
the commensurate value of the function to trademark operations 
versus patent operations. In some cases, this may result in 
each office bearing an equal portion of the costs. In most 
instances, however, it is expected that the costs will be 
allocated based on each office's proportionate share of full-
time equivalent (FTE) levels, as is currently required by law.
    Subsection (b)(2)(F) sets forth the Director's 
responsibilities with respect to the United States Patent 
Office and the United States Trademark Office, which operate as 
separate administrative units within the USPTO.
    Subsection (b)(2)(F)(i) requires the Director to ensure 
that the Patent Office and the Trademark Office prepare 
appropriation requests for their respective offices. The 
appropriations requests are to be included in the appropriation 
request for the USPTO and submitted to the President by the 
Director pursuant to section 1108 of title 31, United States 
Code (31 U.S.C. 1108). This subsection recognizes that the 
Commissioner of Patents and the Commissioner of Trademarks are 
responsible for all aspects of the management, administration, 
and operation of their respective offices, including management 
of their respective budgets and preparation of appropriation 
requests. This subsection provides a limited role for the 
Director in this process by requiring that the Director ensure 
that the fees of the Patent Office and the Trademark Office are 
sufficient to cover the expenses of each office. Thus, the 
Director is charged with ensuring that the Organization 
operates as a self-funded agency, as the U.S. Patent and 
Trademark Office has done since fiscal year 1993. In carrying 
out this function, section 114(i)(1) and section 115(c) of this 
Act, respectively, require the Director to determine whether 
any adjustments to fees are consistent with the policy 
direction of the Secretary of Commerce. This subsection also 
requires the Director to ensure that any expenditures from the 
funds derived from the fees of the Patent Office and the 
Trademark Office are used only for the functions of the 
respective offices. This responsibility corresponds with the 
requirements in section 114(i)(1) and section 115(a) of this 
Act that revenues derived from the fees of the Patent Office 
and the Trademark Office be used only for carrying out the 
functions of the office from which the fees are derived. Such a 
requirement currently exists with respect to trademark fees 
under section 42(c) of title 35, United States Code (35 U.S.C. 
42(c)).
    Subsection (b)(2)(F)(ii) requires that the Director 
maintain the structural integrity of the Organization, 
including the administrative independence of the separate units 
within the USPTO, by ensuring that the Patent Office and the 
Trademark Office are not involved in the management of any 
other office.
    Subsection (b)(2)(G) requires the Director to submit an 
annual report to Congress that includes such information as is 
required under the Government Corporation Control Act (31 
U.S.C. 9101 et seq.), including the total monies received and 
expended by the Organization and the purpose for which the 
monies were spent, the amount of any surplus revenues retained 
by the Organization, the quality and quantity of the work of 
the Organization, and other information relating to the 
Organization.
    Subsection (b)(3) requires that before assuming office, the 
Director shall take an oath to discharge faithfully the duties 
of the Director as the head of an agency of the United States.
    Subsection (b)(4) sets the Director's compensation at the 
rate of basic pay in effect for level III of the Executive 
Schedule under section 5314 of title 5, United States Code (5 
U.S.C. 5314). This subsection further provides that the 
Director may receive a bonus in an amount that would raise 
total compensation to the equivalent of the rate of pay in 
effect for level II of the Executive Schedule under section 
5313 of title 5, United States Code (5 U.S.C. 5313). Such a 
bonus shall be based on an evaluation by the Secretary of 
Commerce of the Director's performance, as defined in an annual 
performance agreement between the Director and the Secretary 
that incorporates measurable goals agreed to by the Director 
and the Secretary in an annual performance plan.
    Subsection (b)(5) provides that the Director will serve at 
the pleasure of the President. Under subsection (b)(2)(B), the 
Director is charged with advising the President, through and 
under the policy direction of the Secretary of Commerce, on 
matters of patent and trademark policy. In order to serve 
effectively in this capacity, the Director must enjoy the full 
confidence of the President. Thus, this subsection anticipates 
that the Director's term will be contingent upon the 
President's approval, and each President will have the 
opportunity to appoint the Director of his or her choice to 
furnish advise, through the Secretary of Commerce, on policy 
matters relating to patents and trademarks.
    Subsection (b)(6) requires the Director to designate an 
officer of the USPTO who will be vested with authority to act 
as Director in the event of absence or incapacity of the 
Director. This assures the continuity of management of the 
Organization.
    Subsection (b)(7) clarifies that nothing in this section 
with respect to duties of the Director of the USPTO derogates 
in any way from the existing duties or functions of the 
Register of Copyrights. This subsection clarifies the intent of 
the Committee that the USPTO be authorized to continue the 
performance of those functions currently performed by the U.S. 
Patent and Trademark Office, but that the authority of the 
Copyright Office and the Register of Copyrights is in no way 
affected by this Act.
    Subsection (c)--Officers and Employees. This subsection 
provides for the appointment of other officers and employees of 
the USPTO.
    Subsection (c)(1) requires the Director to appoint a 
Commissioner of Patents and a Commissioner of Trademarks to 
manage the U.S. Patent Office and the U.S. Trademark Office, 
respectively, pursuant to section 3 of title 35, United States 
Code (35 U.S.C. 3), as amended by this Act, and section 53 of 
the Act of July 5, 1946 (commonly referred to as the Trademark 
Act of 1946), as created by this Act.
    Subsection (c)(2) requires the Director to appoint other 
officers, employees (including attorneys), and agents of the 
USPTO as the Director considers necessary to carry out the 
functions of the Organization. This subsection requires that 
such officers, employees, and agents be citizens of the United 
States. Similar limitations are placed upon all Federal 
agencies with respect to appointments to the competitive 
service under section 7.4 of title 5, Code of Federal 
Regulations (5 C.F.R. 7.4). The Director is also charged with 
setting the compensation of such officers and employees 
(subject to the provisions of subsection (e)), with defining 
the authority and duties of those officers and employees, and 
with delegating powers vested in the Organization to them as 
the Director deems necessary and appropriate to carry the 
functions of the USPTO.
    Subsection (c)(3) makes clear that no administrative or 
statutory limitations on the number of positions or the number 
of personnel are to apply to the USPTO and that none of 
positions or personnel of the USPTO are to be taken into 
account in applying any such limitation to other departments 
and agencies of the United States Government.
    Subsection (d)--Limits on Compensation. This subsection 
provides that, except as otherwise provided by law, neither the 
annual rate of basic pay of an officer or employee of the USPTO 
nor the total annual compensation of such officer or employee 
may exceed the annual rate of basic pay in effect for level II 
of the Executive service under section 5313 of title 5, United 
States Code (5 U.S.C. 5313). In effect, this subsection 
prevents any officer oremployee of the USPTO from receiving 
annual compensation in excess of the total annual compensation of the 
Director (including bonus) under subsection (b)(4). This subsection 
requires the Director to promulgate regulations as necessary to carry 
out the provisions of this subsection.
    Subsection (e)--Inapplicability of Title 5. Subsection (e) 
exempts the USPTO and its employees from all of the provisions 
of title 5, United States Code, with enumerated exceptions set 
forth in subsections (f) and (g). This subsection, taken 
together with the provisions of subsections (f) and (g), 
promotes maximum flexibility in personnel matters, while at the 
same time retaining basic employee entitlements and 
protections.
    Subsection (f)--Continued Applicability of Certain Title 5 
Provisions. Subsection (f)(1) outlines those provisions of 
title 5, United States Code, that continue to apply to officers 
and employees of the USPTO. These provisions constitute the 
basic employee protections upon which title 5 is based. Under 
this subsection, the USPTO remains 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 
chapter 61, relating to flexible and compressed work schedules; 
section 21302(b)(8), relating to whistleblower protection; and 
the whistleblower-related provisions of chapter 12, covering 
the role of the Office of Special Counsel. To replace the rest 
of title 5, United States Code, the USPTO will engage in 
collective bargaining over compensation, leave, and 
disciplinary procedures, and, consistent with subsection (h), 
create its own employee relations and labor relations programs 
in line with title 5 merit principles.
    Subsection (f)(2)(A) specifically requires the USPTO, 
consistent with chapter 71 of title 5, United States Code (5 
U.S.C. 7101 et seq.), to bargain in good faith with its unions 
over basic pay and other forms of compensation subject only to 
the exceptions set forth in subsection (f)(2)(B). This 
subsection confers upon the Organization's unions the right to 
bargain with the USPTO 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 Director.
    Subsection (f)(2)(B) specifically prohibits the 
Organization and its unions from bargaining over benefits 
listed in paragraphs (1), (2), (3), and (4) of subsection (g). 
This subsection affords sole and exclusive rights to the 
Organization to choose to supplement basic retirement, health 
and life insurance, and workers compensation benefits, beyond 
those guaranteed to the Organization's employees under 
applicable sections of title 5, United States Code, and no 
collective bargaining is permitted regarding such supplemental 
benefits.
    Subsection (f)(2)(C) prohibits the Organization, through 
collective bargaining, from exceeding the limits on 
compensation set forth in subsection (d). While the 
Organization is obligated to bargain regarding basic pay and 
compensation with its unions, the maximum amount of 
compensation is established by this Act.
    Subsection (g)--Continued Applicability of Health, 
Retirement, Life Insurance, and Workman's Compensation 
Benefits. Subsection (g) maintains eligibility for officers and 
employees of the USPTO to participate in the basic Federal 
retirement, health insurance, life insurance, and workman's 
compensation benefits programs under title 5, United States 
Code. Specifically, this subsection maintains eligibility for 
officers and employees of the USPTO to participate in the 
retirement and benefits programs under subchapter III of 
chapter 83 of title 5, United States Code (5 U.S.C. 8331 et 
seq.) (Civil Service Retirement System), chapter 84 of title 5, 
United States Code (5 U.S.C. 8401 et seq.) (Federal Employees 
Retirement System), chapter 87 of title 5, United States Code 
(5 U.S.C. 8701 et seq.) (life insurance), chapter 89 of title 
5, United States Code (5 U.S.C. 8901 et seq.) (health 
insurance), and chapter 81 of title 5, United States Code (5 
U.S.C. 8101 et seq.), except to the extent that the 
Organization elects to augment these benefits under this 
subsection. The USPTO may provide for supplemental retirement 
benefits or may make changes to the life and health insurance 
benefits, provided such changes do not result in benefits that 
are, on the whole, less favorable than those provided Federal 
employees under chapters 87 and 89 of title 5, United States 
Code (5 U.S.C. 8701 et seq., 8901 et seq.). 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 USPTO in 
the same manner as provided under section 8334(a)(1), 8401(9), 
8334(k)(1)(b), 8706(b)(1) or (2),8708(d) and 9806(g)(2) of 
title 5, United States Code (5 U.S.C. 8334(a)(1), 8401(9), 8334 
(k)(1)(b), 8706(b)(1), 8706(b)(2), 8708(d), 9806(g)(2)). The USPTO 
remains responsible for reimbursing the Employees' Compensation Fund 
for compensation paid or payable after the effective date of 
incorporation under this Act.
    Subsection (h)--Labor-Management Relations. Subsection (h) 
requires the USPTO to establish hiring practices, labor 
relations, and employee relations programs with the objective 
of improving the productivity and efficiency of the 
Organization. The provisions of this subsection will provide 
the requisite flexibility for the USPTO to hire and maintain a 
well qualified workforce while retaining the substantive 
protections anticipated by title 5, United States Code.
    Subsection (h)(1) requires the USPTO 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 (f) and (g) of this 
section. The USPTO has flexibility in establishing terms and 
conditions of employment, including supplemental employee 
benefits, rates of pay, performance-based compensation, and 
other terms and conditions of employment consistent with the 
requirements of those subsections. Subsection (h) requires that 
such terms and conditions of employment must be consistent with 
merit principles now set forth in section 2301(b) of title 5, 
United States Code (5 U.S.C. 2301(b)), provide veterans 
preference protections equivalent to those required by sections 
2108, 3308-3318, 3320, 3502, and 3504 of title 5, United States 
Code (5 U.S.C. 2108, 3308-3318, 3320, 3502, 3504), and be 
consistent with chapter 71 of title 5, United States Code (5 
U.S.C. 7101 et seq.) (National Labor Relations Act), 
particularly those provisions set forth in this subsection.
    The USPTO 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 Organization 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 USPTO 
needs the ability to establish different compensation and 
employment packages based on scarcity of patent and trademark 
examination and processing skills to respond to the demand.
    Subsection (h)(2) provides for the continuation of all 
labor agreements that are in effect on the day before the 
effective date of this 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 
Organization or as otherwise set forth in this Act.
    Subsection (i)--Carryover of Personnel; Continuation in 
Office of Certain Officers. Subsection (i) provides for the 
carryover of officers and employees from the Patent and 
Trademark Office and certain additional employees to the USPTO, 
the carryover of rights and benefits, and the transitional 
appointment of a Director.
    Subsection (i)(1) provides that all officers and employees 
of the current U.S. Patent and Trademark Office will become 
officers and employees of the USPTO on the effective date of 
this Act, without a break in service.
    Subsection (i)(2) sets forth conditions under which 
individuals employed by the Department of Commerce may be 
transferred to the USPTO on the effective date of this Act, 
without a break in service. Qualified individuals are those 
that, as a part of their job perform work that is reimbursed by 
the Patent and Trademark Office and the Secretary of Commerce 
determines that such work is a major function of their 
position, those who serve in positions that the Secretary of 
Commerce determines require the dedication of at least half 
their time to work in support of the Patent and Trademark 
Office, and those whose transfer the Secretary of Commerce, in 
consultation with the Director, determines would be in the 
interest of the USPTO.
    Subsection (i)(3) provides that all sick and annual leave 
and compensatory time accumulated by officers and employees of 
the U.S. Patent and Trademark Office under title 5, United 
States Code, before the effective date of this Act, shall be 
preserved as obligations of the USPTO.
    Subsection (i)(4) provides transitional protections for 
employees transferred to the USPTO under this Act. Under this 
subsection, any officer or employee transferred under 
subsections (i)(1) or (2) of this section whose employment is 
terminated within 1 year of such transfer will be entitled to 
the same rights and benefits the employee would have had as a 
Federal employee had such termination occurred before the 
transfer, including, where applicable, the right to appeal 
their termination to the Merit Systems Protection Board within 
the 1-year period.
    Subsection (i)(5)(A) provides for the appointment of a 
transitional Director of the USPTO. Under this subsection, the 
President, on or after enactment of this Act, shall appoint a 
Director to serve for 1 year or until a Director qualifies 
under subsection (b), whichever is shorter. The President may 
only make one such interim appointment pursuant to the 
subsection.
    Subsection (i)(5)(B) provides that the individual serving 
as the Assistant Commissioner of Patents on the day before the 
effective date of incorporation shall serve as the Commissioner 
of Patents until a Commissioner is appointed by the Director 
under section 3 of title 35, United States Code (35 U.S.C. 3), 
as amended by section 114(c) of this Act.
    Subsection (i)(5)(C) provides that the person serving as 
the Assistant Commissioner of Trademarks on the day before the 
effective date of incorporation shall serve as the Commissioner 
of Trademarks until one is appointed by the Director under 
section 53 of the Act of July 5, 1946 (commonly referred to as 
the Trademark Act of 1946), as created by section 115(a) of 
this Act.
    Subsection (j)--Competitive Status. Subsection (j) makes 
clear that, for the purposes of appointment to a position in 
the competitive service, no officer or employee of the USPTO 
will, as a result of becoming an employee of the USPTO, forfeit 
any competitive status they may have acquired prior to the 
effective date of this Act.
    Subsection (k)--Savings Provisions. Subsection (k) makes 
clear that compensation, benefits, and other terms and 
conditions of employment in effect before the effective date of 
the Act shall continue in effect until changed as provided for 
in this section, whether by action of the Director or 
otherwise.
    Subsection (l)--Removal of Quasi-Judicial Examiners. 
Subsection (k) requires the USPTO to establish a personnel 
system that does not permit the removal from federal service of 
patent examiners, administrative patent judges, trademark 
examiners, or administrative trademark judges for any reason, 
unless such removal promotes the efficiency of the 
Organization. This provision is intended to protect quasi-
judicial government officials who perform an essential 
government function from exposure to outside influence or 
pressure by granting to them the title 5 protections against 
removal that they currently enjoy.

Section 114. United States Patent Office

    This section creates the U.S. Patent Office as an 
autonomous subdivision of the USPTO, charged with the 
administration of the patent-related functions of the current 
U.S. Patent and Trademark Office.
    Subsection (a)--Establishment of the U.S. Patent Office. 
Subsection (a) amends section 1 of title 35, United States Code 
(35 U.S.C. 1), to establish the United States Patent Office as 
a separate administrative unit of the USPTO, charged with the 
administration of the U.S. patent system. As a separate 
administrative unit, the Patent Office will be funded entirely 
through fees payable to the Office by its users, which will be 
unavailable for use in carrying out the functions of any other 
office. It will also be free from outside management of its 
day-to-day functions by other offices.
    Subsection (b)--Powers and Duties. Subsection (b) amends 
section 2 of title 35, United States Code (35 U.S.C. 2) to set 
forth the powers and duties of the U.S. Patent Office. These 
powers and duties are substantially the same as the patent-
related duties of the current Commissioner of Patents and 
Trademarks under section 6 of title 35, United States Code (35 
U.S.C. 6). These include: (1) granting and issuing patents; (2) 
conducting studies,programs, and exchanges regarding domestic 
and international patent law, the administration of the Office, and 
other functions vested in the Office by law; (3) conducting studies, 
programs, and exchanges with foreign patent offices and international 
organizations in connection with the granting and issuing of patents; 
and, (4) disseminating information to the public with respect to 
patents. Similar powers and duties are enumerated with respect to the 
USPTO in section 112(a) of this Act. The Director of the USPTO is 
primarily responsible for the policy functions, whereas the 
Commissioner of Patents, as the head to the U.S. Patent Office, is 
primarily responsible for the administration of the patent system, 
although the Commissioner does retain a limited policy role as an 
advisor to the Director on matters relating to patent law. This 
subsection makes clear that it is the power and duty of the Patent 
Office to perform those functions vested in the USPTO and assigned to 
the Patent Office in this subsection that relate to the administration 
of the patent system, as well as certain policy-related functions 
carried out in fulfilment of the Commissioner's advisory role. To the 
degree that these functions share common elements with functions of the 
Trademark Office and the USPTO in general, such as the dissemination of 
information to the public, those functions may be performed through a 
centralized office provided the Director, the Commissioner of Patents, 
and the Commissioner of Trademarks agree that such a centralized 
administration will promote the efficiency of the Organization.
    Subsection (c)--Organization and Management. Subsection (c) 
amends section 3 of title 35, United States Code (35 U.S.C. 3), 
to set forth the organizational structure of the independent 
Patent Office within the USPTO.
    Section 3(a) of title 35, United States Code (35 U.S.C. 
3(a)), as amended by this subsection, provides for the 
appointment of a Commissioner of Patents to manage the U.S. 
Patent Office. Subsection (a)(1) vests the management of the 
Patent Office in the Commissioner of Patents (Commissioner), 
who shall be appointed by the Director under section 113(c)(1) 
of this Act, and who shall serve at the pleasure of the 
Director. The Director must ultimately answer to Congress and 
the President, through the Secretary of Commerce, for the 
performance of the USPTO, including the Patent Office. In fact, 
the Director's salary is directly tied to the performance of 
the various offices within the USPTO, inasmuch as the 
Director's bonus is based in part upon the achievement of 
measurable goals enumerated in an annual performance agreement 
between the Director and the Secretary of Commerce, which is 
expected to include performance goals for the Patent Office. In 
addition, the Commissioner is charged with advising the 
Director on policy matters with respect to patents. In order to 
serve effectively in his or her capacity, the Commissioner must 
enjoy the full confidence of the Director, just as the Director 
must enjoy the full confidence of the President in his role as 
an advisor to the President, through the Secretary of Commerce, 
on patent and trademark policy. Thus, this subsection 
anticipates that the Commissioner's term will be contingent 
upon the Director's approval, and each Director will have the 
opportunity to appoint the Commissioner of his or her choice to 
manage the Patent Office and to furnish advice on policy 
matters relating to patents. This subsection also provides that 
the Commissioner must be a United States citizen and must be a 
person who, by reason of professional background and experience 
in patent law, is especially qualified to manage the Patent 
Office.
    Subsection (a)(2), as amended by this subsection, sets 
forth the duties of the Commissioner of Patents. Subsection 
(a)(2)(A) provides that the Commissioner is responsible for all 
aspects of the management, administration, and operation of the 
Patent Office, including the granting and issuing of patents. 
The Commissioner must perform these duties in a fair, 
impartial, and equitable manner.
    Subsection (a)(2)(B) outlines the Commissioner's policy-
related duties. Specifically, this subsection provides that the 
Commissioner of Patents will advise the Director regarding all 
activities the Patent Office undertakes under treaties and 
executive agreements to which the United States is a party or 
that are related to cooperative programs with foreign 
governments regarding the granting of patents. In addition, the 
Commissioner is to advise the Director on matters of patent law 
and recommend to the Director changes in law or policy that may 
improve the ability of U.S. citizens to secure and enforce 
patent rights in the United States and abroad. The Director is 
charged with advising the President, through the Secretary of 
Commerce, on these matters under section 113(b)(2)(B) of this 
Act.
    Subsection (a)(2)(C) authorizes the Commissioner to 
establish regulations governing the proceedings in the Patent 
Office. The Commissioner of Patents and Trademarks currently 
exercises such authority, subject to theapproval of the 
Secretary of Commerce, with respect to regulations in the U.S. Patent 
and Trademark Office pursuant to section 6(a) of title 35, United 
States Code (35 U.S.C. 6(a)). This subsection requires the Director to 
certify that regulations promulgated by the Commissioner are consistent 
with the policy direction of the Secretary of Commerce.
    Subsection (a)(2)(D) requires the Commissioner to consult 
with the Patent Office Management Advisory Board--established 
in section 114(d) of this Act--on a regular basis on matters 
relating to the operation of the Patent Office and before 
submitting budgetary proposals to the Director for submission 
to the Office of Management and Budget or proposing changes in 
Patent Office regulations or user fees. This subsection also 
reiterates that the Director must certify that any change in 
fees or regulations is consistent with the policy direction of 
the Secretary of Commerce.
    Subsection (a)(3), as amended by this subsection, requires 
the Commissioner to take an oath to discharge faithfully the 
duties of the Patent Office.
    Subsection (a)(4), as amended by this subsection, provides 
that the Commissioner of Patents will be paid at the rate in 
effect for level IV of the Executive Schedule under section 
5315 of title 5, United States Code (5 U.S.C. 5315). The 
Commissioner may receive a bonus at the discretion of the 
Director that would increase total compensation to the 
equivalent of the rate of pay in effect for level III of the 
Executive Schedule under section 5314 of title 5, United States 
Code (5 U.S.C. 5314). As with bonuses in the private sector, 
the bonus available to the Commissioner as the head of the 
Patent Office is discretionary and performance-based. It is 
appropriate in determining whether to award such a bonus that 
the Director take into account the Commissioner's contribution 
to meeting those elements of the performance agreement between 
the Director and the Secretary of Commerce--including specific 
measurable goals contained in the annual performance plan--that 
directly involve the functions of the U.S. Patent Office.
    Section 3(b) of title 35, United States Code (35 U.S.C. 
3(b)), as amended by this subsection, provides for the 
appointment of other officers and employees of the Patent 
Office. Subsection (b)(1) requires the Commissioner of Patents 
to appoint a Deputy Commissioner of Patents, who shall have 
authority to act as Commissioner in the absence or incapacity 
of the Commissioner.
    Subsection (b)(2) requires the Commissioner of Patents to 
appoint an Ombudsman to advise the Commissioner on the concerns 
of independent inventors, nonprofit organizations, and small 
business concerns. Congress has afforded small businesses and 
independent inventors preferential treatment in the Patent and 
Trademark Office's fee structure in order to promote ingenuity 
in all sectors and to facilitate the bringing of innovative 
technologies to market by making patent protection more 
accessible. This subsection further guards the interests of the 
smaller, yet equally important, users of the patent system by 
providing a direct channel through which these constituents of 
the Patent Office can have their interests raised at the 
highest level. Additional safeguards for these constituents are 
provided in section 114(d) of this Act, which reserves one of 
the five positions on the Patent Office Management Advisory 
Board for an independent inventor.
    Subsection (b)(3) authorizes the Commissioner to appoint 
other officers, attorneys, employees, and agents of the Patent 
Office, and to vest them with such authority as he or she may 
determine necessary, consistent with the provisions of this Act 
and other provisions of law.
    Subsection (d)--Patent Office Management Advisory Board. 
Subsection (d) creates a new section 5 of title 35, United 
States Code (35 U.S.C. 5), to establish a Patent Office 
Management Advisory Board (Advisory Board) to consult with and 
advise the Commissioner of Patents on the efficient 
administration of the Patent Office.
    Section 5(a) of title 35, United States Code (5 U.S.C. 
5(a)), as created by this subsection, provides for the 
establishment of the Patent Office Management Advisory Board. 
Subsection (a)(1) provides that the Advisory Board shall be 
made up of five members. Each shall be appointed by and serve 
at the pleasure of the President. Nomore than three may be from 
the same political party. At least one member of the Advisory Board 
must be an independent inventor. Subsection (a)(2) requires the 
President to designate a Chair of the Advisory Board from among its 
members. The Chair shall serve for a term of 3 years. Subsection (a)(3) 
provides for the timing of appointments to the Advisory Board. Initial 
appointments must be made within 3 months after the effective date of 
this Act. Vacancies shall be filled by Presidential appointment in the 
same manner in which the original appointment was made under this 
subsection. Vacancies must be filled within 3 months of the date on 
which they occur.
    Section 5(b) of title 35, United States Code (35 U.S.C. 
5(b)), as created by this subsection, establishes the 
qualifications for appointment to the Advisory Board. Members 
of the Advisory Board must be citizens of the United States. 
Furthermore, they must be selected so as to represent the 
diverse users of the Patent Office. The Patent Office caters to 
a broad constituency, ranging from small inventors working out 
of their garage, to small startup companies with varying 
numbers of employees, to educational and other nonprofit 
research facilities, to large corporations employing hundreds, 
even thousands, of research scientists. This subsection is 
intended to ensure that the views of all the users of the 
Patent Office, who collectively support the Office through 
their user fees, are heard and accounted for in the management 
of the Patent Office. Because the view has been expressed that 
smaller users of the Patent Office are somehow at a 
disadvantage in comparison to the larger users in having their 
interests effectively heard, this Act guarantees at least one 
seat on the Advisory Board for an independent inventor. 
Independent inventors are the only class of users of the Patent 
Office that are guaranteed a seat on the Advisory Board. It is 
expected that the individual appointed as an independent 
inventor will represent the minority constituents of the Patent 
Office, specifically independent inventors, nonprofit entities, 
and small businesses. This subsection also requires that the 
Advisory Board include individuals with substantial background 
and achievement in corporate finance and management. Such a 
requirement is important to the effective performance of the 
Advisory Board's duties, which include advising the 
Commissioner of Patents with respect to the Patent Office 
budget and user fees, as well as the overall performance of the 
Patent Office.
    Section 5(c) of title 35, United States Code (35 U.S.C. 
5(c)), as created by this subsection, provides that the 
Advisory Board will meet at the call of the Chair to consider 
an agenda set by the Chair.
    Section 5(d) of title 35, United States Code (5 U.S.C. 
5(c)), as created by this subsection, sets forth the duties of 
the Advisory Board. Under this subsection, the Advisory Board 
is charged with reviewing and advising the Commissioner of 
Patents on the policies, goals, performance, budget, and user 
fees of the Patent Office. The Advisory Board is also required 
to prepare an annual report on these matters for submission to 
the Director, the President, and the House and Senate Judiciary 
Committees, and to print the annual report in the Patent Office 
Official Gazette. The Advisory Board's role is advisory only. 
The primary purpose of the Advisory Board is to facilitate 
input from those parties that use and support the Patent Office 
to the Commissioner in order to enhance the effective and 
efficient administration of the Office, to provide information 
to the Director, the President, and Congress to facilitate the 
effective performance of their oversight duties, and to ensure 
public access to information regarding the administration of 
the Patent Office.
    Section 5(f) of title 35, United States Code (35 U.S.C. 
5(f)), as created by this subsection, provides that each member 
of the Advisory Board will be paid on a pro-rated basis, based 
on the annual rate of pay in effect for level III of the 
Executive Schedule under section 5314 of title 5, United States 
Code (5 U.S.C. 5314), for each day (including travel time) that 
he or she is engaged in the business of the Advisory Board. 
Members of the Advisory Board shall be allowed travel expenses 
while away from home or regular place of business, including 
per diem in lieu of subsistence, as authorized by section 5703 
of title 5, United States Code (5 U.S.C. 5703).
    Section 5(g) of title 35, United States Code (35 U.S.C. 
5(g)), as created by this subsection, ensures that members of 
the Advisory Board will have access to Patent Office records 
and information in the conduct of their duties. This subsection 
provides further, however, that members of the Advisory Board 
will not have access to personnel and other privileged 
information or information concerning patent applications that 
is required to be kept confidential under section 122 of title 
35, United States Code (35 U.S.C. 122).
    Section 5(h) of title 35, United States Code (35 U.S.C. 
5(h)), as created by this subsection, provides that members of 
the Advisory Board are special Government employees within the 
meaning of section 202 of title 18, United States Code (18 
U.S.C. 202). As special Government employees, members of the 
Advisory Board are expressly subject to standards of ethical 
conduct outlined in the criminal bribery, graft and conflict of 
interest statutes under chapter 11 of title 18, United States 
Code (18 U.S.C. 201 et seq.).
    Subsection (e)--Conforming Amendments. Subsection (e) 
repeals section 6 of title 35, United States Code (35 U.S.C. 
6), dealing with the duties of the Commissioner of Patents and 
Trademarks, along with the heading for that section in the 
table of contents for chapter 1 of title 35. These duties were 
assigned to the Commissioner of Patents by the amendments to 
section 2 of title 35, United States Code (35 U.S.C. 2) under 
section (b), thus making the section 6 delineation of duties 
duplicative.
    Subsection (f)--Board of Patent Appeals and Interferences. 
Subsection (f) amends section 7 of title 35, United States Code 
(35 U.S.C. 7) (dealing with the Board of Patent Appeals and 
Interferences) to reflect the organizational structure of the 
USPTO, specifically the separate Patent Office and Trademark 
Office.
    Section 7(a) of title 35, United States Code (35 U.S.C. 
7(a)), as amended by this subsection, provides for a Board of 
Patent Appeals and Interferences in the USPTO, composed of the 
Commissioner of Patents, the Deputy Commissioner of Patents, 
and the administrative patent judges. Thus, in addition to 
recognizing the changes in organizational structure, this 
subsection also recognizes the change in nomenclature from 
``examiners-in-chief'' to ``administrative patent judges,'' 
which has been used by the Patent and Trademark Office pursuant 
to regulation since 1993, but for which a corresponding change 
has never been made in the United States Code. This subsection 
provides that the administrative patent judges shall be persons 
of competent legal knowledge and scientific ability.
    Section 7(b) of title 35, United States Code (35 U.S.C. 
7(b)), as amended by this subsection, sets forth the duties of 
the Board of Patent Appeals and Interferences. These duties 
remain unchanged from those currently outlined in section 7(b) 
of title 35, United States Code (35 U.S.C. 7(b)), but are 
modified to reflect changes proposed by title V of the Omnibus 
Patent Act of 1997 (the Patent Reexamination Reform Act of 
1997). Under this subsection, the Board of Patent Appeals and 
Interferences is responsible for reviewing written appeals of 
applicants, patent owners, or third-party requesters in 
reexamination proceedings from adverse decisions of examiners 
upon applications for patents and in reexamination proceedings 
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. 135(a)). The decisions are to be made by 
panels of the Board, comprised of at least three members, 
designated by the Commissioner of Patents. This subsection also 
limits the authority to grant rehearings to the Board itself.
    Subsection (g)--Annual Report to the Director and Congress. 
Subsection (g) amends the current reporting requirement of the 
Commissioner of Patents and Trademarks contained in section 14 
of title 35, United States Code (35 U.S.C. 14) to require the 
Commissioner of Patents to provide the Director with such 
information as the Director is required to submit to Congress 
annually under section 157(d) of title 35, United States Code 
(35 U.S.C. 157(d)) (regarding statutory invention 
registrations), and the Government Corporation Control Act (31 
U.S.C. 9101 et seq.). This subsection makes clear that such 
information will include information regarding the total monies 
received and expended by the Patent Office and the purposes for 
which such monies were spent, the quality and quantity of the 
work of the Patent Office, and other information regarding the 
Office. The Director is required to submit this information to 
Congress in the context of a larger report on the USPTO under 
section 113(b)(2)(G) of this Act.
    Subsection(h)--Practice Before the Patent Office. 
Subsection (h)(1) amends section 31 of title 35, United States 
Code (35 U.S.C. 31) to authorize the Commissioner of Patents to 
prescribe regulations, independent of the Secretary of 
Commerce, governing the recognition and conduct of agents, 
attorneys, and others who appear before the Patent Office. Such 
authority is currently exercised by the Commissioner of Patents 
and Trademarks, subject to the approval of the Secretary of 
Commerce. Given the Commissioner's responsibility ``for all 
aspects of the management, administration, and operation of the 
Office,'' it is appropriate that the Commissioner be given 
thelatitude to promulgate regulations independently governing the 
recognition and conduct of agents, attorneys, and others before the 
Patent Office.
    Subsection (h)(2) amends section 32 of title 35, United 
States Code (35 U.S.C. 32), to allow the Commissioner to 
designate an attorney who is an officer or employee of the 
Patent Office to conduct any hearing in connection with any 
suspension or exclusion from practice before the Patent Office.
    Subsection (i)--Patent Office Funding. Subsection (i) 
amends sections 41 and 42 of title 35, United States Code (35 
U.S.C. 41, 42) with regard to Patent Office funding. Subsection 
(i)(1) amends section 41(f) of title 35, United States Code (35 
U.S.C. 41(f)) to authorize the Commissioner of Patents to 
adjust patent user fees by regulation. The Patent Office is 
funded entirely through user fees, and the Commissioner of 
Patents is responsible for ensuring that such fees are 
sufficient to cover the costs of the Office. Authorizing the 
Commissioner to set Patent Office user fees gives the Office 
the flexibility to maintain and improve its services while 
responding to changing economic conditions. The Commissioner's 
fee authority is carefully circumscribed, however. Under this 
subsection, the Commissioner must consult with the Patent 
Office Management Advisory Board and provide notice and 
opportunity for full participation by interested parties before 
adjusting user fees. Furthermore, the Director must certify 
that such fees are consistent with the policy direction of the 
Secretary of Commerce. It is the Committee's intent that the 
Commissioner, in proposing any adjustment in Patent Office user 
fees, and the Patent Office Management Advisory Board, in 
consulting with the Commissioner regarding any such adjustment 
of fees, recognize the public interest in continuing to 
safeguard broad access to the U.S. patent system through the 
reduced fee structure for small entities under section 41(h)(1) 
of title 35, United States Code (35 U.S.C. 41(h)).
    Subsection (i)(2) amends section 42 of title 35, United 
States Code (35 U.S.C. 42), with regard to the use of Patent 
Office fees. Section 42(a), as amended by this subsection, 
provides that all fees for services performed by or materials 
furnished by the Patent Office shall be payable to the Office.
    Section 42(b) of title 35, United States Code (35 U.S.C. 
42(b)), as amended by this subsection, provides that fee 
revenues shall be available to the Patent Office, subject to 
approval in appropriations acts, to carry out the functions of 
the Patent Office. Monies not otherwise used for these purposes 
may be kept in cash on hand or on deposit, invested in 
obligations of the United States or guaranteed by the United 
States, or invested in obligations or other instruments that 
are lawful investments for fiduciary, trust, or public funds. 
The Director must account to Congress for such funds in an 
annual report under 113(b)(2)(G) of this Act. Fees available to 
the Commissioner shall be used only for the processing of 
patent applications and other patent-related functions of the 
Office, including the agreed upon contribution to the Office of 
the Director for the purpose of performing centralized hiring, 
procurement, and other functions, pursuant to section 
113(b)(2)(E) of this Act.
    Subsection 42(c) of title 35, United States Code (35 U.S.C. 
42(c)), as amended by this subsection, provides that the Patent 
Office is to contribute from its revenues an amount equal to 
one-half of the annual budget of the Office of the Director. 
Such budget shall not include the cost of performance of those 
centralized functions performed by the Director pursuant to 
section 113(b)(2)(E) of this Act. Instead, section 113 
(b)(2)(E) provides that the costs of such centralized functions 
shall be allocated between the Patent Office and the Trademark 
Office, as agreed to in writing by the Director, the 
Commissioner of Patents, and the Commissioner of Trademarks. 
This provision ensures that patent fees will be used only for 
services and material related to trademarks, as required by 
subsection (b).

Section 115. United States Trademark Office

    This section creates the U.S. Trademark Office as an 
autonomous subdivision of the USPTO and moves the trademark 
functions of the current Patent and Trademark Office to the 
newly created U.S. Trademark Office.
    Subsection (a)--Establishment and Organization. Subsection 
(a) redesignates titles X and XI of the Act of July 5, 1946 
(commonly referred to as the Trademark Act of 1946), as titles 
XI and XII, respectively, and redesignatesthe corresponding 
sections within those titles. This subsection creates a new title X 
dealing with the establishment and administration of the United States 
Trademark Office.

      Section 51. Establishment

    As amended by this subsection, section 51 of the Act of 
July 5, 1946 (commonly referred to as the Trademark Act of 
1946), establishes the U.S. Trademark Office as a separate 
administrative unit of the USPTO.

      Section 52. Powers and duties

    As created by this subsection, section 52 of the Act of 
July 5, 1946 (commonly referred to as the Trademark Act of 
1946), sets forth the powers and duties of the U.S. Trademark 
Office. These powers and duties are substantially the same as 
the trademark-related duties of the current Commissioner of 
Patents and Trademarks under section 6 of title 35, United 
States Code (35 U.S.C. 6). These include: (1) the registration 
of trademarks; (2) conducting studies, programs, and exchanges 
regarding domestic and international trademark law and the 
administration of the Office; (3) conducting studies, programs, 
and exchanges with foreign trademark offices and international 
organizations in connection with the registration of 
trademarks; and, (4) disseminating information to the public 
with respect to trademarks. Similar powers and duties are 
enumerated with respect to the USPTO in section 112(a) of this 
Act. The Director of the USPTO is primarily responsible for the 
policy functions, whereas the Commissioner of Trademarks, as 
the head of the U.S. Trademark Office, is primarily responsible 
for the administration of the Federal trademark registration 
system, although the Commissioner does retain a limited policy 
role as an advisor to the Director on matters relating to 
trademark law. This subsection makes clear that it is the power 
and duty of the Trademark Office to perform those functions 
vested in the USPTO and assigned to the Trademark Office in 
this subsection that relate to the administration of the 
Trademark Office and the Federal trademark registration system, 
as well as certain policy-related functions carried out in 
fulfilment of the Commissioner's advisory role. To the degree 
that these functions share common elements with functions of 
the Patent Office and the USPTO in general, such as the 
dissemination of information to the public, those functions may 
be performed through a centralized office provided the 
Director, the Commissioner of Patents, and the Commissioner of 
Trademarks agree that such a centralized administration will 
promote the efficiency of the Organization.

      Section 53. Officers and employees

    Section 53 of the Act of July 5, 1946 (commonly referred to 
as the Trademark Act of 1946), as created by this subsection, 
sets forth the organizational structure of the independent 
Trademark Office within the USPTO.
    Subsection (a) provides for the appointment of a 
Commissioner of Trademarks to manage the U.S. Trademark Office. 
Subsection (a)(1) vests the management of the Trademark Office 
in the Commissioner of Trademarks (Commissioner), who shall be 
appointed by the Director under section 113(c)(1) of this Act, 
and who shall serve at the pleasure of the Director. The 
Director must ultimately answer to Congress and the President, 
through the Secretary of Commerce, for the performance of the 
USPTO, including the Trademark Office. In fact, the Director's 
salary is directly tied to the performance of the various 
offices within the USPTO, inasmuch as the Director's bonus is 
based in part upon the achievement of measurable goals 
enumerated in an annual performance agreement between the 
Director and the Secretary of Commerce, which is expected to 
include performance goals for the Trademark Office. In 
addition, the Commissioner is charged with advising the 
Director on policy matters with respect to trademarks. In order 
to serve effectively in his or her capacity, the Commissioner 
must enjoy the full confidence of the Director, just as the 
Director must enjoy the full confidence of the President in his 
or her role as an advisor to the President, through the 
Secretary of Commerce, on patent and trademark policy. Thus, 
this subsection anticipates that the Commissioner's term will 
be contingent upon the Director's approval, and each Director 
will have the opportunity to appoint the Commissioner of his or 
her choice to manage the Trademark Office and to furnish advice 
on policy matters relating to trademarks. This subsection also 
provides that the Commissioner must be a U.S. citizen and must 
be a person who, by reason of professional background and 
experience in trademark law, is especially qualified to manage 
the Trademark Office.
    Subsection (a)(2) sets forth the duties of the Commissioner 
of Trademarks. Subsection (a)(2)(A) provides that the 
Commissioner is responsible for all aspects of the management, 
administration, and operation of the TrademarkOffice, including 
the registration of trademarks. The Commissioner must perform these 
duties in a fair, impartial, and equitable manner.
    Subsection (a)(2)(B) outlines the Commissioner's policy-
related duties. Specifically, this subsection provides that the 
Commissioner of Trademarks will advise the Director regarding 
all activities the Trademark Office undertakes under treaties 
and executive agreements to which the United States is a party 
or that are related to cooperative programs with foreign 
governments that are responsible for registering trademarks. In 
addition, the Commissioner is to advise the Director on matters 
of trademark law and recommend to the Director changes in law 
or policy that may improve the ability of U.S. citizens to 
secure and enforce trademark rights in the United States and 
abroad. The Director is charged with advising the President, 
through the Secretary of Commerce, on these matters under 
section 113(b)(2)(B) of this Act.
    Subsection (a)(2)(C) authorizes the Commissioner to 
establish regulations governing the proceedings in the 
Trademark Office. The Commissioner of Patents and Trademarks 
currently exercises such authority, subject to the approval of 
the Secretary of Commerce, with respect to regulations in the 
U.S. Patent and Trademark Office pursuant to section 6(a) of 
title 35, United States Code (35 U.S.C. 6(a)). This subsection 
requires the Director to certify that regulations promulgated 
by the Commissioner are consistent with the policy direction of 
the Secretary of Commerce.
    Subsection (a)(2)(D) requires the Commissioner to consult 
with the Trademark Office Management Advisory Board--
established in section 54 of the Act of July 5, 1946 (commonly 
referred to as the Trademark Act of 1946), as created by this 
Act--on a regular basis on matters relating to the operation of 
the Trademark Office and before submitting budgetary proposals 
to the Director for submission to the Office of Management and 
Budget or proposing changes in Trademark Office regulations or 
user fees. This subsection also reiterates that the Director 
must certify that any change in fees or regulations is 
consistent with the policy direction of the Secretary of 
Commerce.
    Subsection (a)(2)(E) authorizes the Commissioner to print: 
(1) trademark registration certificates; (2) the Official 
Gazette of the U.S. Trademark Office; (3) annual indexes of 
trademarks and registrants; (4) annual volumes of decisions in 
trademark cases; and, (5) pamphlet copies of trademark laws and 
rules, as well as circulars or other publications relating to 
the business of the Office. The Commissioner of Trademarks is 
authorized to exchange any of these publications for other 
publications that are desirable for use in the Trademark 
Office. This section thus clarifies that the Commissioner may 
order the printing of trademark-related documents which 
correspond to those currently printed by the Commissioner of 
Patents and Trademarks under section 11 of title 35, United 
States Code (35 U.S.C. 11). Under this subsection and 
conforming amendments to title 35, United States Code, the 
Commissioner of Trademarks and the Commissioner of Patents are 
authorized to print such publications separately for their 
respective offices.
    Subsection (a)(3) requires the Commissioner to take an oath 
to discharge faithfully the duties of the Trademark Office.
    Subsection (a)(4) provides that the Commissioner of 
Trademarks will be paid at the rate in effect for level IV of 
the Executive Schedule under section 5315 of title 5, United 
States Code (5 U.S.C. 5315). The Commissioner may receive a 
bonus at the discretion of the Director that would increase 
total compensation to the equivalent of the rate of pay in 
effect for level III of the Executive Schedule under section 
5314 of title 5, United States Code (5 U.S.C. 5314). As with 
bonuses in the private sector, the bonus available to the 
Commissioner as the head of the Trademark Office is 
discretionary and performance-based. It is appropriate in 
determining whether to award such a bonus, that the Director 
take into account the Commissioner's contribution to meeting 
those elements of the performance agreement between the 
Director and the Secretary of Commerce--including specific 
measurable goals contained in the annual performance plan--that 
directly involve the functions of the U.S. Trademark Office.
    Subsection (b) provides for the appointment of other 
officers and employees of the Trademark Office. This subsection 
requires the Commissioner of Trademarks to appoint a Deputy 
Commissioner of Trademarks, who shall have authority to act as 
Commissioner in the absence or incapacity of the Commissioner. 
In the event of a vacancy in the Office of Commissioner, the 
Deputy Commissioner will serve as Commissioner until a new 
Commissioner is appointed and takes Office. The Commissioner 
shall further appoint other officers, attorneys, employees, and 
agents of the Trademark Office and vest them with such 
authority as he or she may determine necessary, consistent with 
the provisions of this Act and other provisions of law.

      Section 54. Trademark Office Management Advisory Board

    Section 54 of the Act of July 5, 1946 (commonly referred to 
as the Trademark Act of 1946), as created by this subsection, 
establishes a Trademark Office Management Advisory Board 
(Advisory Board) to consult with and advise the Commissioner of 
Trademarks on the efficient administration of the Trademark 
Office.
    Subsection (a) provides for the establishment of the 
Trademark Office Management Advisory Board. Subsection (a)(1) 
provides that the Advisory Board shall be made up of five 
members. Each shall be appointed by and serve at the pleasure 
of the President. No more than three may be from the same 
political party. Subsection (a)(2) requires the President to 
designate a Chair of the Advisory Board from among its members. 
The Chair shall serve for a term of 3 years. Subsection (a)(3) 
provides for the timing of appointments to the Advisory Board. 
Initial appointments must be made within 3 months after the 
effective date of this Act. Vacancies shall be filled by 
presidential appointment in the same manner in which the 
original appointment was made under this subsection. Vacancies 
must be filled within 3 months of the date on which they occur.
    Subsection (b) establishes the qualifications for 
appointment to the Advisory Board. Members of the Advisory 
Board must be citizens of the United States. Furthermore, they 
must be selected so as to represent the diverse users of the 
Trademark Office. This subsection is intended to ensure that 
the Board will serve as a valuable resource in providing 
regular private sector input to the Trademark Office, helping 
to ensure that the Trademark Office does not become insulated 
from the community it serves. To further this goal, it is 
expected that at least several members of the Advisory Board 
will have substantial experience in the practice of trademark 
law. It is also appropriate for the Advisory Board to seek the 
views of private sector organizations and individuals in 
formulating its advice and recommendations to the Commissioner 
of Trademarks. This subsection also requires that the Advisory 
Board include individuals with substantial background and 
achievement in corporate finance and management. Such a 
requirement is important to the effective performance of the 
Advisory Board's duties, which include advising the 
Commissioner of Trademarks with respect to the Trademark Office 
budget and user fees, as well as the overall performance of the 
Trademark Office.
    Subsection (c) provides that the Advisory Board will meet 
at the call of the Chair to consider an agenda set by the 
Chair.
    Subsection (d) sets forth the duties of the Advisory Board. 
Under this subsection, the Advisory Board is charged with 
reviewing and advising the Commissioner of Trademarks on the 
policies, goals, performance, budget, and user fees of the 
Trademark Office. The Advisory Board is also required to 
prepare an annual report on these matters for submission to the 
Director, the President, and the House and Senate Judiciary 
Committees, and to print the annual report in the Trademark 
Office Official Gazette. The Advisory Board's role is advisory 
only. The primary purpose of the Advisory Board is to 
facilitate input from those parties that use and support the 
Trademark Office to the Commissioner in order to enhance the 
effective and efficient administration of the Office, to 
provide information to the Director, the President, and 
Congress in order to facilitate the effective performance of 
their oversight duties, and to ensure public access to 
information regarding the administration of the Trademark 
Office.
    Subsection (f) provides that each member of the Advisory 
Board will be paid on a pro-rated basis, based on the annual 
rate of pay in effect for level III of the Executive Schedule 
under section 5314 of title 5, United States Code (5 U.S.C. 
5314), for each day (including travel time) that he or she is 
engaged in the business of the Advisory Board. Members of the 
Advisory Board shall be allowed travel expenses while away from 
home or regular place ofbusiness, including per diem in lieu of 
subsistence, as authorized by section 5703 of title 5, United States 
Code (5 U.S.C. 5703).
    Subsection (g) ensures that members of the Advisory Board 
will have access to Trademark Office records and information in 
the conduct of their duties. This subsection provides further, 
however, that members of the Advisory Board will not have 
access to personnel and other privileged information.
    Subsection (h) provides that members of the Advisory Board 
are special Government employees within the meaning of section 
202 of title 18, United States Code (18 U.S.C. 202). As special 
Government employees, members of the Advisory Board are 
expressly subject to standards of ethical conduct outlined in 
the criminal bribery, graft and conflict of interest statutes 
under chapter 11 of title 18, United States Code (18 U.S.C. 201 
et seq.).

      Section 55. Annual report to the Director and Congress

    Section 55 of the Act of July 5, 1946 (commonly referred to 
as the Trademark Act of 1946), as created by this subsection, 
requires the Commissioner of Trademarks to provide the Director 
with such information as the Director is required to submit to 
Congress annually under the Government Control Act (31 U.S.C. 
9101 et seq.). This subsection makes clear that such 
information will include information regarding the total monies 
received and expended by the Trademark Office and the purposes 
for which such monies were spent, the quality and quantity of 
the work of the Trademark Office, and other information 
regarding the Office. The Director is required to submit this 
information to Congress in the context of a larger report on 
the USPTO under section 113(b)(2)(G) of this Act.

      Section 56. Trademark Office funding

    Section 56 of the Act of July 5, 1946 (commonly referred to 
as the Trademark Act of 1946), as created by this subsection, 
governs the payment of fees to the Trademark Office and their 
use.
    Subsection (a) provides that all fees for services 
performed by or materials furnished by the Trademark Office 
shall be payable to the Office.
    Subsection (b) provides that fee revenues shall be 
available to the Trademark Office, subject to approval in 
appropriations acts, to carry out the functions of the 
Trademark Office. Monies not otherwise used for these purposes 
may be kept in cash on hand or on deposit, invested in 
obligations of the United States or guaranteed by the United 
States, or invested in obligations or other instruments that 
are lawful investments for fiduciary, trust, or public funds. 
The Director must account to Congress for such funds in an 
annual report under 113(b)(2)(G) of this Act. Fees available to 
the Commissioner shall be used only for the registration of 
trademarks and other trademark- related functions of the 
Office, including the agreed-upon contribution to the Office of 
the Director for the purpose of performing centralized hiring, 
procurement, and other functions, pursuant to section 
113(b)(2)(E) of this Act. The use of trademark fees by the U.S. 
Patent and Trademark Office is currently limited in this manner 
under section 42(c) of title 35, United States Code (35 U.S.C. 
42(c)).
    Subsection (c) provides that the Trademark Office is to 
contribute from its revenues an amount equal to one- half of 
the annual budget of the Office of the Director. Such budget 
shall not include the cost of performance of those centralized 
functions performed by the Director pursuant to section 
113(b)(2)(E) of this Act. Instead, section 113 (b)(2)(E) 
provides that the costs of such centralized functions shall be 
allocated between the Patent Office and the Trademark Office, 
as agreed to in writing by the Director, the Commissioner of 
Patents, and the Commissioner of Trademarks. This provision 
ensures that trademark fees will continue to be used only for 
services and material related to trademarks, as currently 
required under section 42(c) of title 35, United States Code 
(35 U.S.C. 42(c)).
    Subsection (b)--Trademark Trial and Appeal Board. 
Subsection (b) amends section 17 of the Act of July 5, 1946 
(commonly referred to as the Trademark Act of 1946) (15 U.S.C. 
1067), dealing with the appointment and duties of a Trademark 
Trial and Appeal Board (Board), to reflect the organizational 
structure of the USPTO, specifically the separate Patent Office 
and Trademark Office.
    Section 17(a) of the Act of July 5, 1946 (commonly referred 
to as the Trademark Act of 1946) (15 U.S.C. 1067), as amended 
by this subsection, provides for the appointment and duties of 
the Board, which remain unchanged from current law. In each 
case of interference, opposition to registration, application 
to register as a lawful concurrent user, or application to 
cancel a registration, the Commissioner is required to give 
notice to all parties and direct a Trademark Trial and Appeal 
Board to determine the respective rights of registration.
    Section 17(b) of the Act of July 5, 1946 (commonly referred 
to as the Trademark Act of 1946) (15 U.S.C. 1067), as amended 
by this subsection, provides that the Board shall include the 
Commissioner of Trademarks, the Deputy Commissioner of 
Trademarks, and administrative trademark judges. Thus, in 
addition to recognizing the changes in organizational 
structure, this subsection also recognizes the change in 
nomenclature from ``members'' to ``administrative trademark 
judges,'' which is the title used by the U.S. Patent and 
Trademark Office, but for which a corresponding change has 
never been made in the United States Code. This subsection 
provides that the administrative trademark judges shall be 
persons competent in trademark law who are appointed by the 
Commissioner.
    Subsection (c)--Determination of Fees. Subsection (c) 
amends section 31(a) of the Act of July 5, 1946 (commonly 
referred to as the Trademark Act of 1946) (15 U.S.C. 1113) to 
authorize the Commissioner of Trademarks to adjust Trademark 
Office fees by regulation. The Trademark Office is funded 
entirely through user fees, and the Commissioner of Trademarks 
is responsible for ensuring that such fees are sufficient to 
cover the costs of the Office. Authorizing the Commissioner to 
set Trademark Office user fees gives the Office the flexibility 
to maintain and improve its services while responding to 
changing economic conditions. The Commissioner's fees authority 
is carefully circumscribed, however. Under this subsection, the 
Commissioner must consult with the Trademark Office Management 
Advisory Board and provide notice and opportunity for full 
participation by interested parties before adjusting user fees. 
Furthermore, the Director must certify that such fees are 
consistent with the policy direction of the Secretary of 
Commerce.

Section 116. Suits by and against the Organization

    Subsection (a)--Actions Under United States Law. Subsection 
(a) provides that suits against the USPTO must arise under 
Federal law. Federal courts are deemed to have exclusive 
jurisdiction in all civil actions by or against the USPTO.
    Subsection (b)--Representation by the Department of 
Justice. Subsection (b) makes clear that the USPTO is an agency 
of the United States for purposes of section 516 of title 28, 
United States Code (28 U.S.C. 516). Thus, except as otherwise 
authorized by other law, the Department of Justice, under the 
direction of the Attorney General, maintains sole litigation 
authority in cases in which the USPTO or an officer thereof is 
a party or is otherwise interested. Nothing in this subsection 
is intended to alter the present relationship between the 
Patent and Trademark Office's Office of the Solicitor and the 
Department of Justice.
    Subsection (c)--Prohibition on Attachment, Liens, or 
Similar Process. Subsection (c) expressly prohibits certain 
legal processes, such as attachments, garnishment, liens, or 
similar processes from being issued against he USPTO's 
property. This protection is currently available to the 
property of the United States under the U.S. Patent and 
Trademark Office's custody or control. This is necessary to 
protect the Organization's property and to prevent interference 
with the day-to-day operation of the patent and trademark 
examination systems. Although the U.S. Patent and Trademark 
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.

Section 117. Funding

    This section sets forth the requirements regarding the 
funding of the USPTO.
    Subsection (a)--In General. Subsection (a) provides that 
the USPTO is to be entirely self-funded through fees payable to 
the Patent Office and the Trademark Office, and surcharges 
appropriated by Congress, to the extent provided in 
appropriations acts and subject to the provisions regarding 
borrowing outlined in subsection (b).
    Subsection (b)--Borrowing Authority. Subsection (b)(1) 
authorizes the USPTO to issue bonds or other debt instruments 
to assist in financing the activities of the Patent Office and 
the Trademark Office. Purchases of obligations of the USPTO by 
the Secretary of the Treasury are to be treated as public-debt 
transactions. All borrowing shall be subject to advance 
approval in appropriations acts and cannot exceed the amounts 
provided for in such acts.
    Subsection (b)(2) requires that any obligations are to be 
repaid only from fees paid to the office for which the 
obligation is incurred and through surcharges appropriated by 
Congress. Such obligations are redeemable at the option of the 
USPTO before maturity in the manner stipulated in the 
obligations themselves, and the maturity of the such 
obligations shall be determined by the USPTO with the approval 
of the Secretary of the Treasury. Each obligation will be 
subject to an interest rate that is not less than the current 
yield on outstanding marketable obligations of the United 
States with comparable maturity during the month preceding the 
issuance of the obligation, as determined by the Secretary of 
the Treasury.
    This section is not intended to authorize borrowing as a 
routine matter. However, the Committee recognizes that, as with 
any business organization, circumstances may arise in which 
sound management practice makes borrowing advisable as an 
alternative to increasing the fees paid by users of the U.S. 
Patent Office and the U.S. Trademark Office. For example, debt 
financing may be justifiable for large capital improvements 
such as further automating the patent and trademark search 
files. Large one-time expenditures for such purposes may 
improve service and reduce costs for users in the long-run, but 
require an up-front outlay of funds that cannot reasonably be 
obtained through user fees without imposing an unacceptable 
burden on the users. Borrowing may also be justified to hire 
and train additional staff when the workload of the Patent 
Office or the Trademark Office increases at an unusual rate, as 
has been the case with the skyrocketing number of patent 
filings in the field of biotechnology in the 1980's and 1990's. 
In such situations, a time lag occurs before user fee income 
begins to grow commensurate with the growth in workload. 
Borrowed funds might support the staff needed to process the 
workload in a timely manner until fee income catches up with 
the workload. Judgments on whether to request authority to 
borrow should be made on a case-by-case basis in consultation 
with the Management Advisory Boards.

Section 118. Transfers

    Subsection (a)--Transfer of Functions. Subsection (a) 
transfers all functions, powers, and duties of the U.S. Patent 
and Trademark Office, the Secretary of Commerce, and the 
Department of Commerce with respect to the granting of patents 
and registration of trademarks, except those relating to the 
direction of patent and trademark policy, to the USPTO. The 
purpose of this section is to assure that the USPTO has the 
legal authority to perform all of the Organization's functions 
and execute the laws that currently apply to the U.S. Patent 
and Trademark Office.
    Subsection (b)--Transfer of Funds and Property. Subsection 
(b) further directs the Secretary of Commerce to transfer to 
the USPTO all assets, liabilities, contracts, property, 
records, unexpended and unobligated balances of appropriations, 
authorizations, allocations, and other funds or 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 the functions, 
powers, and duties that are vested by this Act in the USPTO.

Section 119. Use of Organization name

    This section protects the USPTO from the unauthorized use 
of the corporate name. Specifically, it prohibits the use of 
the name of the Organization, or part thereof, as the name or 
part of the name under which an individual or entity does 
business. This section provides for specific remedies, 
including injunctive relief, statutory damages of$1,000 for 
each day during which the violation continues or is repeated following 
notice by the USPTO, and, in addition, recovery of actual damages 
stemming from such violations.

            Subtitle B. Effective Date; Technical Amendments

Sec. 131. Effective date

    This section provides that the U.S. Patent and Trademark 
Organization Act of 1997 and the amendments made by it shall be 
effective four months after the date of enactment.

Sec. 132. Technical and conforming amendments

    Subsection (a)--Amendments to Title 35. Subsection (a) 
makes technical and conforming amendments title 35, United 
States Code, to reflect the amendments made thereto by this 
Act. Subsections (a)(1)-(a)(4) amend headings and tables of 
contents to reflect the change in name from the ``U.S. Patent 
and Trademark Office'' to the ``U.S. Patent Office'' and the 
other changes in headings effectuated by this Act. Subsection 
(a)(5) amends the relevant sections of title 35, United States 
Code, to reflect the change in name from ``Commissioner of 
Patents and Trademarks'' to ``Commissioner of Patents.'' 
Subsection (a)(6) amends the relevant sections of title 35, 
United States Code, to reflect the change in title from 
``Patent and Trademark Office'' to ``Patent Office.'' 
Subsection (a)(7) amends the relevant sections of title 35, 
United States Code, to reflect the current duties of the 
Secretary of Commerce which are assumed by the Director of the 
USPTO under this Act.
    Subsection (b)--Amendments to the Trademark Act of 1946. 
Subsection (b) makes technical and conforming amendments to the 
Act of July 5, 1946 (commonly referred to as the Trademark Act 
of 1946). Subsection (b)(1) clarifies that all references in 
this subsection refer to the Act of July 5, 1946 (commonly 
referred to as the Trademark Act of 1946). Subsection (b)(2) 
amends section 61 of that Act, as redesignated by section 
115(a)(2) of this Act, to clarify that the term 
``Commissioner'' refers to the Commissioner of Trademarks, 
rather than the Commissioner of Patents and Trademarks. 
Subsection (b)(3) amends the relevant sections of that Act to 
reflect the change in name from the ``U.S. Patent and Trademark 
Office'' to the ``U.S. Trademark Office.''
    Subsection (c)--Amendments to Title 5. Subsection (c) makes 
technical and conforming amendments to title 5, United States 
Code. Subsection (c)(1) amends the relevant section to reflect 
the change in title from ``examiners-in-chief'' to 
``administrative patents judges'' recognized in section 114(f) 
of this Act, and to recognize the structural independence of 
the USPTO from the Department of Commerce. Subsection (c)(2) 
amends the relevant section relating to compensation to 
eliminate references to positions that no longer exist or are 
no longer covered by that section.
    Subsection (d)--Amendment to Title 31. Subsection (d) 
amends title 31, United States Code, to add the USPTO to the 
list of wholly owned government corporations under the 
Government Corporation Control Act of 1945 (31 U.S.C. 9101 et 
seq.).
    Subsection (e)--Amendments to Inspector General Act of 
1978. Subsection (e) amends section 11 of the Inspector General 
Act of 1978 (5 U.S.C. App.), to include the USPTO in the list 
of those government agencies subject to the Inspector General 
Act (thus providing for an Inspector General to be appointed by 
the President).

                  Subtitle C. Miscellaneous Provisions

Sec. 141. References

    This section provides that any reference in a law, 
regulation, document, etc., to the Patent and Trademark Office 
or any other department, agency, or office from which a 
function is transferred by this Act, or to the head of such 
offices, is deemed to refer to the office or officer to which 
that function is transferred.

Sec. 142. Exercise of authorities

    This section provides that any official to whom a function 
is transferred by this Act may exercise all legal authorities 
in performance of that function which were available to the 
person responsible for such performance prior to the transfer, 
except where otherwise provided for by law.

Sec. 143. Savings provisions

    This section provides for the continuance of all orders, 
determinations, rules, regulations, permits, grants, loans, 
contracts, agreements, certificates, licenses and privileges 
that are in effect on the effective date of this Act, as well 
as proceedings or pending applications for any benefits, 
service, license, permit, certificate, or financial assistance. 
This section further provides for the continuance of all suits 
and other legal proceedings commenced by or against the 
Department of Commerce, the Secretary of Commerce, or an 
officer or employee of an office transferred by this Act. All 
statutory requirements relating to administrative procedures 
and judicial review shall remain in effect, except as otherwise 
provided in this Act.

Sec. 144. Transfer of assets

    This section provides for the transfer of assets to the 
USPTO.

Sec. 145. Delegation and assignment

    This section provides for assignment and delegation of 
duties and authorities by officials to whom functions are 
transferred by this Act.

Sec. 146. Authority of Director of the Office of Management and Budget 
        with respect to functions transferred

    This section provides the Director of the Office of 
Management and Budget with authority to oversee the transfer of 
functions brought about by this Act and to make additional 
incidental dispositions of personnel, assets, liabilities, 
contracts, property, records, and various funds as may be 
necessary to carry out the provisions of this Act.

Sec. 147. Certain vesting of functions considered transfers

    This section makes clear that the vesting of a function in 
a department, agency, or office pursuant to reestablishment of 
an office is considered a transfer of that function.

Sec. 148. Availability of existing funds

    This section provides that all existing appropriations and 
funds available for performance of the functions of the U.S. 
Patent and Trademark Office will remain available for the 
performance of those functions as transferred to the USPTO and 
its offices.

Sec. 149. Definitions

    This section provides definitions of the terms ``function'' 
and ``office,'' as used by this Act. As used in this Act, the 
term ``function'' includes any duty, obligation, power, 
authority, responsibility, right, privilege, activity, or 
program. The term ``office'' includes any office, 
administration, agency, bureau, institute, council, unit, 
organizational entity, or component thereof.

          Title II--Patent Application Publication Act of 1997

Section 201. Short title

    This title may be cited as the ``Patent Application 
Publication Act of 1997.''

Section 202. Early publication

    This section amends section 122 of title 35, United States 
Code (35 U.S.C. 122) as follows:
    Section 122(a), as amended, states that the general rule is 
that patent applications are to be kept secret. Currently, a 
pending patent application is kept in confidence until a patent 
issues from that application. Patent applications can also be 
made available to the public ``in such special circumstances as 
may be determined by the Commissioner.'' 35 U.S.C. 122. Such 
special circumstances, described in 37 C.F.R. 1.14, include 
pending applications that have been identified by serial number 
in a published patent document; abandoned applications referred 
to in an issued patent; applications regarding atomic energy, 
which are reported to the Department of Energy; and decisions 
of the Board of Patent Appeals and Interferences, possibly with 
trade secrets redacted.
    Under this Act, patent applications will be published after 
they have been pending for 18 months (measured from the 
earliest filing date benefitting the application), or earlier 
if requested by the applicant. The applicant can opt out of 18-
month publication at the time of filing if the application has 
not also been filed in a foreign country. This election to opt 
out ends if the application is later filed in a foreign 
country. This will assure that foreign applicants who wish to 
benefit from the United States patent system will have to 
disclose, in English, the material they are disclosing in other 
countries.
    While S. 507 provides for the ``publication'' of pending 
applications when certain conditions have been met, what is 
contemplated by the provision is not the distribution of a 
printed copy of the patent application at one point during its 
prosecution, but instead a notice that an application is 
currently pending and public access to the application file is 
available from that point on. This mirrors the public 
accessability of files during a reissue application and during 
the reexamination of an issued patent. Having the application 
file open to the public following publication is necessary if 
the public is to be aware of the nature of a possible patent as 
claims are amended during the prosecution of the application.
    Section 122(b) of title 35, United States Code (35 U.S.C. 
122(b)), as amended by this section, provides the framework for 
18-month publication. Subsection (b)(1)(A) states that 
notwithstanding subsection (a), patent applications will be 
published as soon as possible after the expiration of 18 months 
after the filing of the application, except for design patent 
applications and provisional applications. This includes any 
claim to the right of priority in accordance with sections 119, 
365(a) and 365(b) of title 35, United States Code (35 U.S.C. 
119, 365(a)-(b)), and any benefit of an earlier filing date in 
accordance with sections 120, 121 and 365(c) of title 35, 
United States Code (35 U.S.C. 120-21, 365(c)). 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, United States Code (35 U.S.C. 111(b)), 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 S. 507)) of such applications 12 months after filing. At 
the request of an applicant, an application may be published 
earlier than passage of 18 months. The Committee included the 
language ``as soon as possible'' so that Patent Office would 
not be required to publish on Federal holidays, weekends, or 
where circumstances made publication exactly 18 months from the 
date of application impractical. However, the Committee expects 
the Patent Office to act diligently in complying with this 
provision.
    Subsection (b)(1)(B) states that no information about 
published applications shall be made public except as the 
Commissioner of Patents determines.
    Subsection (b)(1)(C) states that notwithstanding any other 
provision of law, the determination by the Commissioner to 
release or not to release such information is final and 
nonreviewable.
    Subsection (b)(2) provides exceptions to the general rule 
of 18 month publication.
    Subsection (b)(2)(A) states the common-sense rule that 
applications no longer pending shall not be published. This 
provides applicants who become skeptical of their chances of 
receiving a patent to withdraw the application, avoid 
publication, and continue with trade secret protection.
    Subsection (b)(2)(B) provides that applications subject to 
secrecy orders under section 181 of title 35, United States 
Code (35 U.S.C. 181) will not be published. The Committee 
envisions no changes in the procedures and standards currently 
used to determine whether an application is subject to secrecy 
under section 181.
    Subsection (b)(2)(C)(i) creates an exception to the 18 
month publication provision for applications that are filed 
only in the United States. Such applications will be published 
18 months after filing, unless the applicant requests that the 
application not be published and certifies that the application 
has not--and will not--be filed abroad.
    Subsection (b)(2)(C)(ii) allows an applicant to rescind 
that request at any time. Moreover, the applicant has a legal 
duty to notify the Commissioner within 1 month of filing such 
an application in a foreign country.
    Subsection (b)(2)(C)(iii) states that if a prior request is 
rescinded or if an application for a patent on the invention is 
filed abroad, the application will be published in the United 
States after 18 months. Regardless of where the application is 
filed, all applications currently published at the time of 
grant shall be published at grant if not previously published.
    Section 122(c) of title 35, United States Code (35 U.S.C. 
122(c)), as amended by this section, makes clear that this 
section does not create any new opportunities for preissuance 
opposition. 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 Patent Office.
    Subsection 122(d) of title 35, United States Code (35 
U.S.C. 122(d)), as amended by this section, provides for a 3-
year study of early publication in the United States, with a 
particular emphasis on the number and types of applicants who 
elect to file only in the United States and waive publication 
under this section.

Section 203. Time for claiming benefit of earlier filing date

    Subsection (a)--In a Foreign Country. Subsection (a) amends 
section 119(b) of title 35, United States Code (35 U.S.C. 
119(b)), as follows:
    Section 119(b)(1), as amended, states that no application 
for patent is entitled to this right of priority unless it is 
properly identified. The application number, country, and the 
exact date of filing must be filed in the Patent Office.
    Section 119(b)(2), as amended, authorizes the Commissioner 
of Patents to set time limits for the claiming of earlier 
filing dates and priority for applications previously filed 
either in the United States or abroad. The Commissioner is 
further authorized to consider a failure to meet the prescribed 
time limits as a waiver of any such rights.
    Section 119(b)(3), as amended, permits the Commissioner of 
Patents to require a certified copy of the original foreign 
application, specification, and drawings on which it is based, 
a translation if not already in English, and other information 
the Commissioner deems necessary.
    Subsection (b)--In the United States. Subsection (b) amends 
section 120 of title 35, United States Code (35 U.S.C. 120), to 
authorize the Commissioner of Patents to determine a time 
within which an amendment containing a specific reference to 
the earlier application must be submitted. The Commissioner may 
also consider failure to meet that deadline as a waiver of any 
benefit under this section. Lastly, the Commissioner may 
establish procedures--including the payment of a surcharge--to 
govern the acceptance of an unavoidably late claim.

Section 204. Provisional rights

    This section amends section 154 of title 35, United States 
Code (35 U.S.C. 154), by adding at the end a new subsection 
(d):
    Subsection (d)(1), created by this section, provides legal 
protection called ``provisional rights'' to applicants once 
their application has been published and ending on the date of 
issuance. Under this provision the applicant has a right to 
collect a ``reasonable royalty'' from infringers. To perfect 
this right, the applicant needs to allow the early publication 
of the patent application.
    Subsection (d)(1)(A)(i) states that the applicant can 
collect this royalty from anyone who makes, uses, offers to 
sell, or sells the invention.
    Subsection (d)(1)(A)(ii) states that the applicant can 
collect this royalty from anyone who makes, uses, offers to 
sell, or sells a product made through the invented process.
    Subsection (d)(1)(B) qualifies the right to a reasonable 
royalty to require that the accused infringer had actual notice 
of the published patent application in English.
    Subsection (d)(2), created by this section, states that in 
order to obtain the royalty, the invention as claimed in the 
patent must be ``substantially identical'' to the invention as 
claimed in the published application. Because of the fact-
intensive nature of this inquiry, the Committee believes that 
the precise application of this standard is best left to the 
courts. However, the Committee recognizes that there may be a 
variance between the claims as published and the claims 
actually granted. As a matter of guidance, the Committee views 
the ``substantially identical'' standard as bound by two 
principles. The first is that no party should be found to have 
infringed the provisional rights if the published claims did 
not reasonably foretell the relevant issued claim. Left alone, 
this principle would encourage the filing of grossly 
exaggerated claims, which the Committee believes would be 
detrimental to the patent system and thus seeks to avoid. 
Therefore, the second principle that the Committee views as 
framing the ``substantially identical'' standard is that an 
accused infringer should only be held to have infringed the 
provisional rights to the extent that the published claims are 
reasonably based on the underlying art. The Committee believes 
that claims a person reasonably skilled in the field would not 
expect to be based on the relevant art are not claims on which 
provision rights should be deemed to have been infringed.
    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 Office publication, as the nature, format, and 
content of that document is determined in accordance with the 
requirement of section 122(b) of title 35, United States Code 
(35 U.S.C. 122(b)), as amended by this Act, 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), created by this section, requires that 
the applicant must file any claim under this section no later 
than 6 years after the patent is issued, regardless of the 
length of time for which royalties are sought. 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, this 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), created by this section, addresses the 
requirements for international applications. Subsection 
(d)(4)(A) states that the right to a royalty arising from an 
international application designating the United States 
commences from the date that the Patent Office receives a copy 
of the publication in English.
    Subsection (d)(4)(B) permits the Commissioner to require 
the applicant to provide a copy of the international 
application. The requirements under both subparagraphs (A) and 
(B) are in accord with the requirements in article 29 of the 
Patent Cooperation Treaty that may be imposed by national law.
    Subsection (d)(5), created by this section, provides for 
``fast-track'' issuance of patents on individual claims in 
published applications as they are approved, rather than 
waiting for the disposition of all claims contained in such an 
application, as occurs now. This allows applicants to gain full 
patent protection for some of their component inventions 
earlier than they otherwise would, thus allowing them to both 
exploit and protect their inventions after publication. This 
provision also authorizes the Commissioner to establish fees to 
cover the cost of incorporating claims back into the patent.
    At the time of issuance of the allowed claims, the 
application file will become available for public review, as 
with any other issued patent. Furthermore, papers in the 
further prosecution of the application on the remaining claims 
will also be available for public review as they are added to 
the application file, as is now the case with a reissue 
application. This is necessary because the further prosecution 
is invariably to get broader claims, and it would work a 
hardship on the public if they were misled to believe that the 
early-issue patent's claims represented the full scope of the 
invention and based their decision on whether their acts 
infringe the patent based on those acts. Notification by the 
Commissioner on the early-issue patent that further claims 
remain pending and the ability to review the application file, 
the public will be on notice that the claims of the final 
patent may be broader than the claims in the patent as 
originally issued.
    The Committee included this provision so as to provide an 
incentive for applicants to publish prior to issuance. This 
provision is not intended to cause a general alteration in the 
traditional method of considering patents as a whole, and not 
claim by claim. Nonetheless, the Committee recognizes that by 
necessity, this provision will, in certain circumstances, cause 
the Patent Office to process applications differently. However, 
the Committee also expects that the Patent Office will 
incorporate this new provision into its traditional practice 
with as little disruption and alteration as possible.

Section 205. Prior art effect of published applications

    This section amends section 102(e) of title 35, United 
States Code (35 U.S.C. 102(e)), as follows:
    Subsection (e)(1)(A), as amended, stipulates that published 
applications have the effect of prior art on subsequent 
applications. This applies to all applications for patents on 
inventions that were invented after the publication of the 
prior application. In the case of foreign applications, the 
prior art effect is only triggered at the time when the prior 
application is published in English.
    Subsection (e)(1)(B), as amended, provides a prior art 
effect of a patent granted on an application by another filed 
in the United States before the invention by this applicant.
    The effective date as prior art for inventions described in 
an application for patent which is only published pursuant to 
subsection 122(b) of title 35, United States Code (35 U.S.C. 
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. Section 
102(e), as amended, 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, United States Code (35 U.S.C. 
122(b)), 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) 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

    This section authorizes the Commissioner to adjust fees in 
order to pay for the cost of publications.

Section 207. Conforming changes

    This section consists of a series of conforming changes to 
accommodate the new publication requirements as follows.
    (1) Section 11 of title 35, United States Code (35 U.S.C. 
11), is amended by inserting ``and published applications for 
patents'' after ``Patents.''
    (2) Section 12 of title 35, United States Code (35 U.S.C. 
12) is amended in the section caption by inserting ``and 
applications'' after ``patents'' and by inserting ``and 
published applications for patents'' after ``patents.''
    (3) Section 13 of title 35, United States Code (35 U.S.C. 
13) is amended in the section caption by inserting ``and 
applications'' after ``patents'' and 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 of title 35, United States Code (35 
U.S.C. 1 et seq.), are each amended by inserting ``and 
applications'' after ``patents.''
    (5) The table of sections for chapter 11 of title 35, 
United States Code (35 U.S.C. 111 et seq.), is amended in the 
item relating to section 122 by inserting ``; publication of 
patent applications'' after ``applications.''
    (6) The table of sections for chapter 14 of title 35, 
United States Code (35 U.S.C. 151 et seq.), is amended in the 
item relating to section 154 by inserting ``; provisional 
rights'' after ``patent.''
    (7) Section 181 of title 35, United States Code (35 U.S.C. 
181), 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.
    (8) Section 252 of title 35, United States Code (35 U.S.C. 
252), is amended in the first undesignated paragraph by 
inserting ``substantially'' before ``identical'' each place it 
appears. This change, referred to above in the 
discussionrelating to provisional rights in section 204 of this Act, is 
not intended to change the law of intervening rights but rather is 
intended only to codify existing decisional law.
    (9) Section 284 of title 35, United States Code (35 U.S.C. 
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.'' 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.
    (10) Section 374 of title 35, United States Code (35 U.S.C. 
374), is amended such that the publication under the 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 title 35, United States Code 
(35 U.S.C. 122(b)), as amended by this Act, except as provided 
in section 102(e) and 154(d) of title 35, United States Code 
(35 U.S.C. 102(e), 154(d)).

Section 208. Last day of pendency of provisional application

    This section amends section 119(e) of title 35, United 
States Code (35 U.S.C. 119(e)), by adding a paragraph (3) which 
provides for the extension of the time limit on provisional 
applications by 1 business day if that time limit would 
otherwise fall on a weekend or legal holiday. This amendment is 
intended to address and resolve the so-called ``last day trap'' 
for provisional applications. Because the requirement for 
filing a nonprovisional application that claims priority of a 
provisional application under section 119(e) relies upon both 
copendency and action taking, the remedy of section 21(b) of 
title 35, United States Code (35 U.S.C. 21(b)), is not 
available for the filing of that nonprovisional application 
such that an applicant may be confronted with this ``last day 
trap.'' This amendment resolves this problem.

Section 209. Effective date

    This section sets the effective dates for this Act.
    Subsection 209(a) states that sections 202 through 207 of 
this Act will take effect 1 year from the date of enactment and 
will apply to all patent applications filed on or after that 
date.
    Subsection 209(b) states that section 208 of this Act will 
apply to patent applications filed on or after June 8, 1995, 
except for design patent applications.

                   Title III--Patent Term Restoration

Section 301. Patent term restoration authority

    This section amends section 154(b) of title 35, United 
States Code (35 U.S.C. 154(b)), as follows:
    Subsection (b)(1), as amended by this section, provides the 
basis for patent term restoration.
    Subsection (b)(1)(A), lists the causes of delay for which 
term restoration is provided.
    Paragraph (1)(A)(i) provides for the restoration of patent 
terms that are diminished due to an interference.
    Paragraph (1)(A)(ii) provides for the restoration of patent 
terms that are diminished due to the imposition of a secrecy 
order.
    Paragraph (1)(A)(iii) provides for the restoration of 
patent terms that are diminished due to an appeal to the Board 
of Patent Appeals.
    Paragraph (1)(A)(iv) provides for the restoration of patent 
terms that are diminished due to unusual administrative delay 
in the processing of the application.
    Subsection (b)(1)(B) defines ``unusual administrative 
delay,'' as used in paragraph (a)(A)(iv).
    Paragraph (1)(B)(i) defines ``unusual administrative 
delay'' as the failure of the Patent Office to respond with a 
first office action within 14 months of filing. The constraint 
upon the Patent Office does not imply that a written notice of 
allowance under section 151 of title 35, United States Code (35 
U.S.C. 151), 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, United States Code (35 
U.S.C. 132) is made not later than 14 months after the date on 
which the application in issue was filed.
    Paragraph (1)(B)(ii) defines ``unusual administrative 
delay'' as the failure of the Patent Office to act on an 
application within 4 months of the filing of a reply under 
section 132 of title 35, United States Cod (35 U.S.C. 132), or 
to an appeal taken under section 134 of title 35, United States 
Code (35 U.S.C. 134).
    Paragraph (1)(B)(iii) defines ``unusual administrative 
delay'' as the failure of the Patent Office to respond to an 
appeal within 4 months.
    Paragraph (1)(B)(iv) defines ``unusual administrative 
delay'' as the failure of the Patent Office to issue a patent 
within 4 months of the payment of the issue fee.
    Paragraph (1)(B)(v) defines ``unusual administrative 
delay'' as the failure of the Patent Office to issue a patent 
within 3 years after filing if the applicant meets the 
following conditions.
    Paragraph (1)(B)(v)(I) states that in order to qualify for 
the 3-year issuance, the applicant must not have obtained 
further limited examination of the application. Subparagraph 
(B)(v)(II) states that in order to qualify for the 3-year 
issuance, the applicant must not have benefitted from a patent 
term adjustment under clause i, ii, iii, or paragraph 1(A) of 
this subsection.
    Paragraph (1)(B)(v)(III) says that in order to qualify for 
the 3-year issuance, the applicant must not have sought or 
obtained appellate review other than in a case in which the 
patent was issued pursuant to a decision in the review 
reversing an adverse determination of patentability.
    Paragraph (1)(B)(v)(IV) says that in order to qualify for 
the 3-year issuance, the applicant must not have requested any 
delay in the processing of the application by the Patent 
Office.
    Taken together, the provisions that comprise the 3-year 
issuance provision operate to provide at least 17 years of 
patent term to diligent applicants. This provides the benefit 
of the pre-GATT 17-year term but does not invite the 
unscrupulous and terribly wasteful practice of submarine 
patenting.
    Subsection (b)(2), as amended by this section, provides for 
limitation on restoration of patent term under this section. 
Paragraph (2)(A) states that restoration of time lost due to 
subclause (iii) or (iv) of paragraph (b)(1)(A) combined, shall 
not exceed 10 years. It also provides that overlapping delays 
should not be double-counted.
    Paragraph (2)(B) states that the restoration period will be 
reduced by the amount of time that the applicant fails to 
engage in reasonable efforts to conclude the prosecution of the 
application, as defined by regulations promulgated by the 
Commissioner.
    Paragraph (2)(C) provides that no patent, the term of which 
has been disclaimed, may be adjusted under this section beyond 
the expiration date specified in the disclaimer.
    Paragraph (2)(D) provides for the reduction of term 
restoration arising from the failure of the Patent Office to 
meet the deadline specified in paragraph (1)(B)(v). 
Specifically, anytime the applicant takes more than 3 months to 
respond to the Patent Office, that time will be subtracted. 
However, nonprofit research laboratories, universities, 
research centers, or hospitals may petition the Commissioner 
for an extension of nondeductible time not to exceed an 
additional 3 months.
    Subsection (b)(3), as amended by this section, instructs 
the Commissioner to establish regulations governing the 
procedures for notification of term restorations under this 
section and procedures for contesting those restorations.
    In prescribing regulations to carry out the provisions of 
this section, the Patent Office should ensure that in those 
cases where an appeal of an adverse determination of 
patentability is filed or an interference is declared, the 
restoration 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, 
beyond the statutory time limits for the Patent Office to act, 
for reasons beyond his or her control without an opportunity 
for compensation.
    The language should not be viewed in a mechanistic way. 
Even though an application wins on some relevant issue, the 
Board of Patent Appeals and Interferences or the Court of 
Appeals for the Federal Circuit can ``affirm'' a rejection. In 
certain such cases, the applicant may be entitled to term 
restoration. Only where an applicant does not prevail on any 
determination should no extension be provided for lost patent 
term.
    To ensure an equitable application of the provisions 
providing for term restoration for delays due to appellate 
review, the Patent Office should look carefully at the 
substance of each particular case and not arbitrarily deny any 
restoration of term simply because an application was not 
immediately ready for patent grant following an action by the 
Board or the Court. For example, where the Court reversed the 
Patent Office decision to not consider an affidavit to overcome 
a rejection and remanded the case to the Patent Office to 
consider the merits of the affidavit, the subsequent issuance 
of a patent based on the review of the affidavit would 
constitute a situation where patent term restoration for the 
period of the review would be appropriate. (See, In re Alton, 
37 U.S.P.Q 2d. 1577). Similarly, in a case where the Board 
reverses an examiner's rejection, but issues a new rejection 
which the applicant is able to overcome in subsequent 
prosecution by, for example, submission of a rule 131 
affidavit, the applicant should receive an extension equal to 
the period of appellate review.
    Another situation could arise where the Board or the Court 
affirms a rejection on very narrow grounds that are 
subsequently overcome by a minor amendment which the applicant 
clearly would have known to submit had it not faced a broader 
and improper rejection by the examiner. In such a situation, 
the issuance of the patent can be said to have been a result of 
the reversal of the examiner's broad rejection. Finally, where 
the Office withdraws an appeal after it had been pending for a 
long time before the Board or the court on the basis that a 
minor amendment would obviate the original rejection and place 
the case in condition for allowance, a restoration would be 
equally appropriate.
    In establishing rules to implement the provisions allowing 
for patent term restoration for successful appeals, 
interferences, secrecy orders, and unusual administrative 
delays, the Patent Office should make every effort to ensure 
that the applicants whose patents are unfairly delayed receive 
appropriate restorations. The Patent Office should coordinate 
the restoration provisions to ensure that an applicant is, at 
all points, given the opportunity to meet the standards for 
compensation under one of those provisions. Applicants should 
not lose patent term when they are in transition between 
prosecution and an interference, appeal, or secrecy order. At 
the same time, theOffice should be ever watchful to ensure that 
its procedures do not admit of the manipulation which Congress intended 
to stop with the adoption of a term measured from filing.
    Subsection (b)(4), as amended by this section, clarifies 
that the Commissioner of Patents must state the length of the 
patent's term at the time of issuance.
    Subsection (b)(5), as amended by this section, requires 
that any appeal of the Commissioner's decision on the patent 
term be filed with the Federal court within 180 days of the 
date of issuance of the patent. This provides a reasonable time 
for patent-holders to challenge the Commissioner's decision but 
limits the window so as to prevent gaming the restoration 
system with other provisions of law.

Section 302. Further examination of patent applications

    This section amends section 132 of title 35, United States 
Code (35 U.S.C. 132), to direct the Commissioner of Patents to 
establish regulations to provide for further limited 
reexamination of an application at the request of the 
applicant, and to provide for reduced fees for small businesses 
and independent inventors. This section is designed to provide 
the applicant with further opportunity to advance their 
applications within the Patent Office without having to resort 
to Federal court. 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 Public Law 103-465, section 
532(a)(2) (Uraguay Round Agreements Act).

Section 303. Technical clarification

    This section amends section 156(a) of title 35, United 
States Code (35 U.S.C. 156(a)), to clarify that the expiration 
date of a patent, for purposes of the Hatch-Waxman Act, shall 
take into account any adjustment of patent term under this Act.

Section 304. Effective date

    This section states that the amendments made by section 301 
of this Act will apply to any application filed on or after 
June 8, 1995, except for design patent applications.

          Title IV--Prior Domestic Commercial Use Act of 1997

Section 401. Short title

    This title may be cited as the ``Prior Domestic Commercial 
Use Act of 1997.''

Section 402. Defense to patent infringement based on prior domestic 
        commercial use

    Subsection (a)--Defense. Subsection (a) amends chapter 28 
of title 35, United States Code (35 U.S.C. 271 et seq.) to add 
at the end a new section 273. This subsection provides a 
defense to patent infringement based on prior use of a patented 
invention in certain circumstances. The subsection 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 subsection, 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 subsection will 
permit the prior user to continue the use of the invention even 
though it is claimed in a subsequently granted patent.
    Subsection (a)(1), as created by this subsection, defines 
the terms ``commercially used'', ``commercially use'', and 
``commercial use'' as follows:
    Subsection (a)(1)(A) includes in the definition of the 
above terms, use in the United States in commerce, use by the 
United States, or use in the design, testing, or production in 
the United States, regardless of whether the subject matter is 
public.
    Subsection (a)(1)(B) includes in the definition of the 
above terms, use for which the public is the intended 
beneficiary where the activity is performed by a nonprofit 
research laboratory, university, research center, or hospital.
    Paragraph (1)(B)(i) limits the application of this 
definition to continued use by the laboratory or nonprofit 
entity.
    Paragraph (1)(B)(ii) further limits the application of this 
definition by prohibiting the assertion of the defense created 
by this section with respect to any subsequent 
commercialization or use outside the relevant laboratory or 
nonprofit entity.
    Subsection (a)(2), created by this subsection, defines the 
terms ``used in commerce'' and ``use in commerce'' to mean that 
there has been an actual arms-length sale or other commercial 
transfer, or use by the United States, of the relevant subject 
matter, or of a product or service resulting from the use of 
the relevant subject matter. The Committee interprets the arms-
length requirement as prohibiting sham compliance with the sale 
requirement such as self-dealing or sale between two arms of 
the same entity. However, the Committee does not interpret the 
arms-length requirement to mandate anything more than an 
exchange between two or more independent parties.
    Subsection (a)(3), created by this subsection, defines the 
term ``effective filing date'' as the earlier of the actual 
filing date of the application or the filing date of any 
earlier application in the United States or abroad to which the 
subject matter is entitled under sections 119, 120, or 365 of 
title 35, United States Code (35 U.S.C. 119-20, 365).
    Subsection (b), created by this subsection, outlines the 
substance of the prior-use defense. Subsection (b)(1) provides 
a defense to an infringement suit for anyone who in good faith, 
commercially used the subject matter before the effective 
filing date of the patent sought to be enforced.
    Subsection (b)(2) deems the sale or other disposition of 
the subject matter by the prior user to be an exhaustion of the 
patent holders rights to the extent that they would be 
exhausted had the patent owner made the sale or other 
disposition. This provision 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 use 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 noninfringing 
activities would not be liable for using that which was 
purchased.
    Subsection (c), created by this subsection, provides for 
certain limitations and qualifications of the defense. 
Subsection (c)(1) prevents the assertion of the prior use 
defense if the person who used the relevant subject matter was 
derived from the patentee or persons in privity with the 
patentee.
    Subsection (c)(2) clarifies that the prior user is not a 
general licensee, but only has a defense against infringement 
with respect to the claims in the patent for which the prior 
user has a defense under this chapter. However, the prior use 
defense does extend to variations in the quantity or volume of 
use and to improvements in the subject matter that do not 
infringe other claimed subject matter.
    Subsection (c)(3) states that if the invention could not be 
commercially sold without a significant investment, it is 
deemed commercially used if the following conditions are met.
    Subsection (c)(3)(A) provides that a person will be deemed 
to have commercially used the subject matter if before the 
effective filing date of the patent sought to be enforced, the 
person claiming the defense reduced the subject matter to 
practice, completed a significant portion of the total 
investment, and made an arms-length commercial transaction in 
connection with the preparation to use the subject matter. It 
was also the intent of the Committee to require that the 
subject matter be ``actually'' reduced to practice. Due to a 
typographical error the word ``actually'' was not included. 
However, the Committee anticipates no difficulty in adding that 
requirement later in the legislative process.
    Subsection (c)(3)(B) adds to the previous paragraph the 
requirement that after meeting those requirements, the person 
diligently completed the remainder of the necessary activities, 
even if such completion was conducted after the effective 
filing date of the patent.
    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 this subsection, 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, 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 use 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.
    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. Only 
investment in the United States should be considered. 
Documentation and commercialization plans must be sufficiently 
developed and in sufficient detail to prove the rights claimed. 
For example, in the biotechnology or 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. In the software industry, 
beta testing and debugging of the computer program prior to 
licensing should be sufficient to constitute serious 
preparation for commercial use. Evidence of actions that amount 
merely to conceiving the invention, developing the invention in 
a laboratory, experimenting, or reducing 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)(4) states that the burden of proof is on the 
person claiming the prior use defense. The prior user must 
provide evidence to establish each of the conditions precedent 
to the defense.
    Subsection (c)(5) states that if commercial use of the 
invention is abandoned, that person may not rely on activities 
performed prior to the abandonment in establishing a defense 
for activities performed subsequent to the abandonment. 
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) limits the application of the prior-user 
defense to the person who performed the acts necessary to 
establish the defense. The right to assert the defense cannot 
be licensed or transferred except in connection with a transfer 
of the entire enterprise or line of business to which the 
defense relates.
    Subsection (c)(7) prohibits this assertion of the prior-use 
defense unless the relevant subject matter had been 
commercially used or actually reduced to practice more than 1 
year before the effective filing date of the patent sought to 
be enforced.
    Subsection (d), created by this subsection, instructs the 
court to award attorney fees to the patent holder in the event 
of an unreasonable assertion of this defense.
    Subsection (e), created by this subsection, states that a 
patent shall not be deemed invalid under sections 102 or 103 of 
title 35, United States Code (35 U.S.C. 102-03), solely because 
of a successful assertion of the prior-use defense. Any 
determination under those sections 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)--Conforming Amendments. Subsection (b) 
conforms the table of contents in the U.S. Code to accommodate 
the new provisions of section 273 of title 35, United States 
Code.

Section 403. Effective date and applicability

    This section provides that this Act will take effect upon 
enactment and will apply to any action for or adjudication of 
infringement begun on or after that date.

                  Title V--Patent Reexamination Reform

Section 501. Short title

    This title may be cited as the ``Patent Reexamination 
Reform Act of 1997''.

Section 502. Definitions

    This section amends section 100 of title 35, United States 
Code (35 U.S.C. 100) to add a new subsection 100(e). The newly 
created subsection (e) defines a ``third-party requester'' as 
the party seeking reexamination who is not the patent owner.

Section 503. Reexamination procedures

    This section amends sections 302 to 306 of title 35, United 
States Code (35 U.S.C. 302-306), and adds a new section 308.
    Subsection (a)--Request for Reexamination. Subsection (a) 
amends section 302 of title 35, United States Code (35 U.S.C. 
302), as follows:
    Section 302(a), as amended, permits any person to file a 
request for reexamination on the basis of any prior art.
    Section 302(b), as amended, sets out the requirements for 
such a filing.
    Subsection (b)(1) requires that the request be in writing, 
include the identity of the real party in interest, and be 
accompanied by payment of the appropriate fee.
    Subsection (b)(2) requires that the request also state the 
pertinency and manner of applying the cited prior art for every 
claim sought to be reexamined.
    Section 302(c), as amended, requires that the Commissioner 
send a copy of the request to the patent owner, unless the 
owner is the requester.
    Subsection (b)--Determination of Issue by Commissioner. 
Subsection (b) amends section 303 of title 35, United States 
Code (35 U.S.C. 303) as follows:
    Section 303(a), as amended, requires that within 3 months 
of the filing of a reexamination request, the Commissioner of 
Patents must determine whether the request raises a substantial 
new question of patentability. The Commissioner is authorized 
but not required to consider other patents or printed 
publications in reaching this determination. Further, at any 
time and on the Commissioner's own initiative, the Commissioner 
may determine whether a substantial new question of 
patentability is raised by other patents and publications.
    Section 303(b), as amended, requires that a copy of the 
Commissioner's determination under the previous subsection be 
placed in the file of the patent and copies sent to the patent 
owner and the third-party requester, if any.
    Section 303(c), as amended, states that the Commissioner's 
determination under subsection (a) of this section shall be 
final and nonreviewable. In the event that no substantial new 
question of patentability is found, the Commissioner is 
authorized to refund part of the reexamination fee. 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 Director 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. 1.181, as 
currently provided for in 37 C.F.R. 1.515(c).
    Subsection (c)--Reexamination Order by Commissioner. 
Subsection (c) amends section 304 of title 35, United States 
Code (35 U.S.C. 304), to provide that if the Commissioner 
determines that a substantive new question of patentability is 
raised by the reexamination request, that determination shall 
include an order for reexamination. That order may be 
accompanied by the initial action of the Patent Office 
conducted in accordance with section 305 of title 35, United 
States Code (35 U.S.C. 305). This subsection 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)--Conduct of Reexamination Proceedings. 
Subsection (d) amends section 305 of title 35, United States 
Code (35 U.S.C. 305), as follows:
    Section 305 (a), as amended, instructs that reexaminations 
are to be conducted according to the procedures used for 
initial examination. In addition, the patent owner is given the 
right to propose an amendment to the patent and new claims, so 
long as the amendment does not seek to enlarge the scope of the 
claims of the patent.
    Section 305(b)(1), as amended, states that this subsection 
applies to all reexaminations based on a request by a third-
party.
    Section 305(b)(2), as amended, requires that all documents 
filed by either the patent owner or the third-party requester 
be served on the other party, except for the initial request.
    Section 305(b)(3), as amended, states that if the patent 
owner files a response to any reexamination action on the 
merits of the patent, the third-party requester will have one 
opportunity to file written comments as well. The third-party 
must file these comments in a reasonable period of time, not 
less than 1 month after receiving the patent owner's response. 
The third-party's comments must be limited to issues covered by 
the Patent Office action or the patent owner's response.
    Section 305(c), as amended, states that unless the 
Commissioner has good cause to the contrary, all reexaminations 
will be conducted by the Patent Office with special dispatch.
    Subsection (e)--Appeal. Subsection (e) amends section 306 
of title 35, United States Code (35 U.S.C. 306), as follows:
    Section 306(a)(1), as amended, gives the patent owner the 
right to appeal any decision that is adverse to any original, 
proposed amended, or new claim of the patent.
    Section 306(a)(2), as amended, provides the patent owner 
with the opportunity to be party to any appeal taken by the 
third-party requester.
    Section 306(b)(1), as amended, states that a third-party 
requester may appeal any decision favorable to any original, 
proposed amended, or new claim of the patent.
    Section 306(b)(2), as amended, provides the third-party 
requester with the opportunity to be party to any appeal taken 
by the patent owner.
    Section 306(c)(1), as amended, states that once the 
reexamination is ordered, the third-party requester is estopped 
from asserting in any future infringement suit the invalidity 
of any claim found to be patentable on appeal. This estoppel 
extends to any claim that was raised or could have been raised 
by the third-party requester during the reexamination 
proceedings. However, this subsection does not prevent the 
assertion of invalidity based on prior art that was unavailable 
to the requester and the Patent Office at the time of the 
reexamination.
    Section 306(c)(2), as amended, states that a third party is 
deemed to not have participated as a party to an appeal by the 
patent owner unless the third party files a notice of appeal 
electing to participate with the Commissioner not more than 20 
days after the patent owner has filed a notice of appeal.
    Subsection (f)--Reexamination Prohibited. Subsection (f)(1) 
amends section 308 of title 35, United States Code (35 U.S.C. 
308), as follows:
    Section 308(a), as amended, states that during the course 
of a reexamination, neither the patent owner nor the third-
party requester may file a new request for reexamination of the 
patent.
    Section 308(b), as amended, states that once a final 
decision has been entered in a suit in Federal court and that 
decision is favorable to patent validity, neither the party nor 
any of its privies claiming invalidity may later request 
reexamination of the patent on the basis of issues that that 
party raised or could have raised in the civil action. 
Similarly, in a reexamination instituted by a third party where 
the final decision is favorable to the patentability or any 
original, proposed amended, or new claim, neither the third 
party nor any of its privies may request a reexamination on the 
issues that were raised or could have been raised. However, 
this does not prohibit the assertion of invalidity based on 
prior art that was unavailable to the requester and the Patent 
Office at the time of the reexamination.
    The net effect of this subsection is to create a situation 
wherein a party wishing to challenge the validity of a patent 
will have their day in court, but will be limited to one bite 
at the apple. Such a party would have the choice of either 
pursuing a reexamination or going directly to Federal court. In 
either event, the estoppel provisions of thissection prevent 
that party or its privies from raising the same issues or any issues 
that could have been raised at that time again in the future. Thus, the 
Committee is confident that this Act provides for an invigorated 
reexamination procedure that will provide a viable alternative to the 
tremendous expense of Federal litigation but that also guards closely 
against abuse of this title as a tool of harassment.
    Subsection (f)(2) amends chapter 30 of title 35, United 
States Code (35 U.S.C. 301 et seq.), to change the table of 
contents to accommodate the new section 308.

Section 504. Conforming amendments

    This section makes various conforming amendments to 
accommodate the new reexamination procedures.
    Subsection (a)--Patent Fees; Patent Search Systems. 
Subsection (a) amends section 41(a)(7) of title 35, United 
States Code (35 U.S.C. 41(a)(7)), to set the fee for an 
unintentionally delayed response in a reexamination proceeding 
at $1,250.
    Subsection (b)--Appeal to the Board of Patent Appeals and 
Interferences. Subsection (b) amends section 134, United States 
Code (35 U.S.C. 134), as follows:
    Section 134(a), as amended, is the text of the current 
section 134, providing the right of an applicant to appeal the 
decision of the primary examiner to the Board of Patent Appeals 
and Interferences.
    Section 134(b), as amended, provides the patent owner in a 
reexamination proceeding the right to appeal the final 
rejection of any claim by the primary examiner to the Board of 
Patent Appeals and Interferences.
    Section 134(c), as amended, provides the right of a third-
party requester in a reexamination proceeding the right to 
appeal the final decision by the primary examiner that is 
favorable to the patentability of any original, proposed 
amended, or new claim of the patent.
    Subsection (d)--Appeal to the Court of Appeals for the 
Federal Circuit. Subsection (d) amends section 141 of title 35, 
United States Code (35 U.S.C. 141) to specify that in 
reexamination, appeals of decisions of the Board of Patent 
Appeals and Interferences should go to the U.S. Court of 
Appeals for the Federal Circuit.
    Subsection (e)--Proceedings on Appeal. Subsection (e) 
amends section 143 of title 35, United States Code (35 U.S.C. 
143), to require the Commissioner to submit to the court the 
grounds for the decision of the Patent Office in reexamination 
proceedings.
    Subsection (f)--Civil Action to Obtain Patent. Subsection 
(f) amends section 145 of title 35, United States Code (35 
U.S.C. 145) to make a technical correction referencing the 
proper subsection of section 134 of title 35, United States 
Code (35 U.S.C. 134) as amended by this Act.

Section 505. Report to Congress

    This section requires the Director of the USPTO to report 
to Congress within 5 years on the effect of reexamination 
proceedings under this title on the various parties, and to 
recommend changes, if necessary, to cure any inequities.

Section 506. Effective date

    This title shall take effect 1 year after enactment and 
shall apply to all reexamination requests filed on or after 
that date.

               Title VI--Miscellaneous Patent Provisions

Section 601. Provisional applications

    Subsection (a)--Abandonment. Subsection (a) amends section 
111(e)(5) of title 35, United States Code (35 U.S.C. 
111(e)(5)), to permit a provisional application to be treated 
as a nonprovisional application. In order for this to occur, 
the applicant must request the provisional application to be 
considered as a nonprovisional application within 12 months of 
the filing of the provisional application. Failure to act 
within 12 months results in abandonment of the provisional 
application.
    Subsection (b)--Technical Amendment Relating to Weekends 
and Holidays. Subsection (b) amends section 119(e) of title 35, 
United States Code (35 U.S.C. 119(e)), to make a technical 
amendment to clarify the treatment of provisional applications 
whose last day of pendency falls on a weekend or Federal 
holiday.
    Subsection (c)--Effective Date. Subsection (c) applies the 
amendments made by this section to all provisional applications 
filed on or after June 8, 1995.

Section 602. International applications

    This section amends section 119 of title 35, United States 
Code (35 U.S.C. 119), 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 if such country does not yet afford 
similar privileges on the basis of applications filed in the 
United States. This amendment was made in conformity with the 
requirements of articles 1 and 2 of the TRIPS Agreement. 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.
    This subsection adds a new subsection (f) 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.
    A new subsection (g) is added to define the terms ``WTO 
member country'' and ``UPOV Contracting Party.''

Section 603. Access to electronic patent information

    Subsection (a)--In General. Subsection (a) would assist 
independent inventors and small businesses in rural States by 
requiring the USPTO to develop and implement statewide computer 
networks so that the citizens of rural States will have 
enhanced access to the information in their State's patent and 
trademark depository libraries. Such a requirement is 
consistent with the USPTO's attempts to modernize the Office 
and with independent inventor and small business desires for 
expanded availability of USPTO information.
    Subsection (b)--Definition. Subsection (b) defines ``rural 
States'' as States that qualified on January 1, 1997, as rural 
States under section 10501(b) of the Omnibus Crime Control and 
Safe Streets Act of 1968 (42 U.S.C. 379bb(b)).
    The purpose of this section is to provide remote access to 
the patent and trademark depository libraries (``PTDL'') and 
PTO APS text search services that currently exist or will be 
opened in the future in eligible States.

Section 604. Certain limitations on damages for patent infringement not 
        applicable

    This section amends section 287(c) of title 35, United 
States Code (35 U.S.C. 287(c)), to narrow the scope of the ban 
on enforcement of medical methods patents so as to exempt those 
patents for which an application was pending on the date of 
enactment of the ban.

Section 605. Plant patents

    Subsection (a)--Tuber Propagated Plants. Subsection (a) 
amends section 163 of title 35, United States Code (35 U.S.C. 
163) to remove the prohibition against patenting tuber 
propagated plants.
    Subsection (b)--Rights in Plant Patents. Subsection (b) 
amends section 165 of title 35, United States Code (35 U.S.C. 
165) to provide patent protection to the sale of asexually 
produced parts of plants (i.e., flowers, fruit) as well as the 
entire plant. This provision closes the loophole in current 
plant patent protection that has allowed infringers to 
circumvent plant patents by importing only the fruit or flower 
of a plant. In many circumstances, the fruit or flower is, in 
fact, the commercially profitable part of the plant. Thus, this 
provision restores meaningful and full patent protection in 
this area.
    Subsection (c)--Effective Date. Subsection (c) states that 
the amendments made by subsection (a) apply on the date of 
enactment. The amendments made by subsection (b) apply to any 
plant patent issued on or after the date of enactment.

Section 606. Electronic filing

    This section amends section 22 of title 35, United States 
Code (35 U.S.C. 22) to allow the Commissioner to require papers 
filed in the Patent Office to be on an electronic medium, as 
well as printed or typewritten.

Section 607. Study and report on biological deposits in support of 
        biotechnology patents

    Subsection (a)--In General. Subsection (a) directs the 
General Accounting Office (GAO) to conduct a study, in 
consultation with the U.S. Patent Office, and to report to 
Congress on the potential risks to the U.S. biotechnology 
industry relating to biological deposits in support of 
biotechnology patents.
    Subsection (b)--Contents. Subsection (b) provides that the 
study shall include a review of the risk of export and third-
party transfer of biological deposits, and the risks posed by 
the early publication provisions of S. 507, an analysis of 
comparative legal and regulatory regimes, and any related 
recommendations.
    Subsection (c)--Consideration of Report. Subsection 607(c) 
states that the U.S. Patent Office is to consider the 
recommendations of this study when drafting regulations 
affecting biological deposits.
    The Committee is concerned that since biological material 
deposited for purposes of enabling a patent application is 
available to the public once the patent is issued, the sample 
could be withdrawn from a U.S. depository and exported to a 
different entity anywhere in the world. It could then be 
utilized and/or reproduced in places where no patent protection 
for the invention exists, resulting in an economic disadvantage 
for U.S. patent holders. The Committee is also aware the U.S. 
Patent and Trademark Office has previously recognized the 
unique nature of an invention which requires the deposit of a 
sample of a biological material as part of the patent 
application disclosure and the attendant risks the sample may 
be used in a way or location that would avoid infringement of 
the patent. Thus, this provision directs the General Accounting 
Office, in consultation with the United States Patent Office, 
to conduct a study and make recommendations on the risks to the 
U.S. biotechnology industry relating to biological deposits in 
support of biotechnology.

                           VI. COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 30, 1997.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary, U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 507, the Omnibus 
Patent Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Rachel 
Forward (for federal costs) and Matt Eyles (for private-sector 
impact).
            Sincerely,
                                           June E. O'Neill,
                                                          Director.

               Congressional Budget Office Cost Estimate

                                Summary

    S. 507 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.
    CBO estimates that enacting S. 507 would result in 
additional discretionary spending by the PTO totaling $144 
million over the 1998-2002 period, along with additional costs 
of $1.5 million for the General Accounting Office (GAO) for 
studies required by the bill, assuming appropriation of the 
necessary amounts. Enacting S. 507 also would result in a 
decrease in direct spending of $31 million in fiscal year 1998 
and $211 million over the 1998-2002 period. Because the bill 
would affect direct spending in fiscal year 1998, pay-as-you-go 
procedures would apply.
    S. 507 would impose new private-sector mandates as defined 
by the Unfunded Mandates Reform Act of 1995 (UMRA) by 
authorizing the PTO to raise existing fees and to assess new 
fees for the services it provides. CBO estimates that the 
direct costs of the new private-sector mandates in the bill 
would fall below the $100 million statutory threshold in UMRA. 
The bill contains no intergovernmental mandates as defined by 
UMRA and would not impose costs on state, local, or tribal 
governments.

               Description of the Bill's Major Provisions

    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, named 
the United States Patent and Trademark organization, would be 
composed of the United States Patent office and the United 
States Trademark office. The PTO would be subject to the policy 
guidance of the Secretary of Commerce but would not be subject 
to supervisionby any department. The bill would authorize the 
PTO to adjust patent and trademark fees, after consultation with a 
Management Advisory Board established by the bill, to provide 
sufficient revenues to cover the expenses of the organization.
    Title II would require the PTO to publish most patent 
applications within 18 months of filing, regardless of whether 
a patent has been granted, and would authorize the PTO to 
charge a fee to cover the cost of early publication. Under 
current law, the Patent Office issues one patent for each 
application regardless of the number of innovations covered by 
the application. If a patent application is published, S. 507 
would permit an applicant to request that the PTO grant a 
patent as each innovation in an application is approved, and 
would authorize the PTO to charge a fee to cover the cost of 
issuing multiple patents for a single application.
    Title V would modify current reexamination procedures to 
ease the restrictions on third parties requesting the PTO to 
reexamine the validity of an existing patent. The bill would 
require a fee to be paid with each third-party request for the 
reexamination of a patent. Title VI would require the PTO to 
establish a system that would allow the public to access patent 
information electronically. S. 507 also would require the PTO 
and the GAO to complete a number of studies for the Congress.
    Other titles and provisions in S. 507 would not 
significantly affect the federal budget. For example, title III 
would direct the PTO to restore to the patent holder any part 
of a patent term that is lost because of certain administrative 
delays by the PTO. The bill also would allow an inventor who 
has used an invention at least one year before it was patented 
by another party to continue using the invention without 
infringing on the new patent.

                estimated cost to the federal government

    Under current law, the PTO collects a number of user fees 
that are spent by the agency to the extent provided in advance 
in 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 surcharge fees required to be 
collected through 1998 pursuant to the Omnibus Budget 
Reconciliation Act of 1990. Hence, our current-law projections 
show the estimated authorization levels for fiscal years 1998 
through 2002 net of the user fees estimated to be collected and 
spent by the agency. CBO estimates that the net change in 
discretionary spending--relative to those current-law 
projections--would be an increase of about $144 million over 
the 1998-2002 period.
    For the purposes of this estimate, CBO assumes that S. 507 
will be enacted by the end of fiscal year 1997, and that the 
estimated amounts necessary to implement the bill will 
beappropriated by the start of each fiscal year. Outlays have been 
estimated on the basis of historical spending patterns for the PTO and 
information provided by the agency. The estimated budgetary impact of 
S. 507 is shown in table 1.

                                  TABLE 1. ESTIMATED BUDGETARY IMPACT OF S. 507                                 
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under current law:                                                                                     
    Estimated authorization level \1\.....................       61       61       61       61       61       61
    Estimated outlays.....................................       -2       24       18       14       10        5
Proposed changes:                                                                                               
    Authorization level...................................        0       26       31       35       40       45
    Estimated outlays.....................................        0        7       28       32       36       41
Spending under S. 507:                                                                                          
    Authorization level \1\...............................       61       87       92       96      101      106
    Estimated outlays.....................................       -2       31       46       46       46       46
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
    Estimated budget authority............................        0      -31      -38      -42      -47      -53
    Estimated outlays.....................................        0      -31      -38      -42      -47     -53 
----------------------------------------------------------------------------------------------------------------
\1\ The 1997 level is the amount appropriated for that year. The estimated authorization levels for 1998-2002   
  reflect CBO's baseline estimates for the PTO, assuming no adjustment for inflation.                           

    The budget impact of this legislation falls within budget 
functions 370 (commerce and housing credit), 550 (health), 600 
(income security), and 950 (undistributed offsetting receipts).

                           basis of estimate

Spending subject to appropriation

    Under current law, the PTO cannot spend any user fees 
without prior approval in an appropriations act. Although S. 
507 would establish the PTO as a government corporation, the 
agency would still need to receive approval in appropriations 
acts to spend any of the user fees collected. The bill would 
authorize the PTO to both adjust existing user fees and 
establish new user fees to cover expenditures of the new 
corporation. The current user fees, and any adjustments to 
those fees, are classified in the budget as offsetting 
collections. The agency is authorized in annual appropriations 
acts to both collect and spend the fees. CBO expects, however, 
that the new fees that this bill would create would be recorded 
in the budget as offsetting receipts. (Those new fees are 
discussed below under ``direct spending.'')
    CBO expects that enacting S. 507 would increase 
expenditures by the PTO for personnel and for the other 
requirements of the bill. CBO estimates that some of these 
costs would be offset by a number of efficiencies and savings, 
primarily for procurement and administration, but that the 
agency would need to increase existing user fees (offsetting 
collections) by $10 million to $15 million a year to offset new 
expenditures by the corporation. CBO expects that the PTO would 
receive prior approval in appropriations acts to both collect 
and spend the fees and that the net budgetary impact of these 
changes would be close to zero over time.
    Enacting S. 507 also would result in the collection of new 
user fees (classified as offsetting receipts) that would be 
reflected as a net decrease in direct spending. As discussed 
below, CBO estimates that enacting the bill would allow the PTO 
to collect an estimated $177 million in publication, 
reexamination, and patent issuance fees over the 1998-2002 
period. CBO assumes that the agency would be authorized in 
appropriations acts to spend these additional fees. Because CBO 
expects a lag between the time the PTO collects and spends the 
fees, we estimate that the agency would only spend $144 million 
of the new fees over the 1998-2002 period. This amount is 
included in table 1 as spending subject to appropriation.
    S. 507 also 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. The 
General Services Administration (GSA) is currently soliciting 
proposals to lease an estimated 2 million square feet of office 
space to house the PTO for 20 years beginning in 2002 or 2003. 
Based on information from GSA and PTO, the lease agreement will 
likely contain a clause that would allow the Federal Government 
to buy the buildings at several points during the course of the 
lease. CBO estimates that the PTO could issue $800 million 
worth of bonds for purchase by the Treasury and use the 
proceeds for the purchase of thebuildings after their 
completion (probably no earlier than 2003), assuming appropriation of 
the necessary amounts.
    CBO estimates that GAO would need to spend $1.5 million 
over the 1998-2000 period to conduct two studies required by 
the bill, assuming the appropriation of the necessary amount.

Direct spending

    Enacting the bill would affect direct spending by 
increasing receipts from several types of fees and by 
increasing payments from the PTO to the retirement, health 
insurance, and life insurance funds for government employees. 
The estimated effects on direct spending are shown in table 2.

                             TABLE 2. ESTIMATED IMPACT OF S. 507 ON DIRECT SPENDING                             
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                       1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
Publication fees:                                                                                               
    Estimated budget authority.....................................      -13      -16      -19      -23      -27
    Estimated outlays..............................................      -13      -16      -19      -23      -27
Reexamination fees:                                                                                             
    Estimated budget authority.....................................       -2       -3       -3       -3       -3
    Estimated outlays..............................................       -2       -3       -3       -3       -3
Patent issuance fees:                                                                                           
    Estimated budget authority.....................................      -11      -12      -13      -14      -15
    Estimated outlays..............................................      -11      -12      -13      -14      -15
Retirement and insurance costs:                                                                                 
    Estimated budget authority.....................................       -5       -7       -7       -7       -8
    Estimated outlays..............................................       -5       -7       -7       -7       -8
Total changes:                                                                                                  
    Estimated budget authority.....................................      -31      -38      -42      -47      -53
    Estimated outlays..............................................      -31      -38      -42      -47      -53
----------------------------------------------------------------------------------------------------------------

    Publication Fees.--S. 507 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, any such collections would reduce direct 
spending. Based on information from PTO, CBO estimates that the 
PTO would collect about $98 million in publication fees over 
the 1998-2002 period.
    Reexamination Fee.--S. 507 would ease restrictions on 
reexamination proceedings initiated by third parties, thus 
causing an increase in the number of proceedings. Based on 
information from PTO, CBO estimates that enacting S. 507 would 
nearly double the number of reexamination requests, resulting 
in additional fee collections of about $14 million over the 
1998-2002 period.
    Patent Issuance Fee.--Currently the PTO issues one patent 
for each application although each patent may incorporate 
several innovations. S. 507 would authorize the PTO to issue a 
patent for each innovation covered by a patent application as 
long as the application is published. Based on information from 
the PTO, CBO estimates that the agency would collect an 
additional $65 million over the 1998-2002 period to cover the 
costs of issuing the additional patents.
    Personnel Expenses.--S. 507 would raise the amounts paid by 
the PTO for health and life insurance benefits for its 
employees and for retirement payments for its current employees 
covered by the Civil Service Retirement System. CBO estimates 
that the increase in such payments by the PTO would add $34 
million in receipts over the 1998-2002 period. The PTO would 
need to increase fees by an identical amount to cover these 
additional personnel costs. Thus, instead of having such costs 
borne by taxpayers generally, they would be borne by the users 
of PTO's services.

                      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 S. 507 would decrease direct 
spending by about $31 million in fiscal year 1998 from the 
increased collections of various patent fees and from 
additional payments by the PTO into the Government's insurance 
and retirement funds.

        estimated impact on state, local, and tribal governments

    S. 507 contains no intergovernmental mandates as defined in 
the UMRA and would impose no costs on State, local, or tribal 
governments.

                 estimated impact on the private sector

    S. 507 would impose new private-sector mandates as defined 
in UMRA by authorizing the PTO to raise existing fees and to 
assess new fees for the services it provides. Patent law and 
patent fees are the exclusive domain of the Federal Government. 
Therefore, increases in existing patent fees or the creation of 
new fees constitute new enforceable duties and represent 
private-sector mandates under UMRA.
    The bill would impose private-sector mandates in several 
areas. It would authorize the PTO to establish new patent-
issuance fees and to increase fees to cover the cost of early 
patent publications. S. 507 would also allow the Commissioner 
of Patents to levy new fees upon persons who request the PTO to 
reexamine existing patents. Finally, the PTO would be 
authorized to raise other fees, for example, to defray the 
costs of developing electronic patent filing and information 
systems.
    CBO estimates that the directs costs of new private-sector 
mandates in the bill would fall below the $100 million 
statutory threshold in UMRA. On average, new mandates would 
impose about $46 million in direct costs per year during the 
first 5 years that the mandates were effective. That estimate 
is based on an average annual increase in early publication 
fees of about $20 million; new patent issuance fees of $13 
million; and increases to other fees of about $13 million.

                         previous cbo estimate

    On March 18, 1997, CBO prepared a cost estimate for H.R. 
400, the 21st Century Patent System Improvement Act, as ordered 
reported by the House Committee on the Judiciary on March 12, 
1997. The two bills are similar; however, S. 507 would not 
extend the patent surcharge fee that expires in fiscal year 
1998. Both bills would require the PTO to publish most patent 
applications within 18 months filing but S. 507 also would 
authorize the PTO to issue patents on individual claims within 
an application and to collect a fee to cover the costs of 
issuing such patents. CBO estimates that this fee would produce 
additional receipts of $65 million over the 1998-2002 period.
    Establishing the PTO as a wholly owned government 
corporation would result in a number of efficiencies and 
savings that would be roughly offset by new expenditures under 
H.R. 400. Additional expenditures under S. 507 would be 
greater, necessitating an increase of fees of $10 million to 
$15 million in each fiscal year. This increase in fees would 
result from the bill's requirement that the PTO establish a 
system for accessing patent information electronically and pay 
additional retirement and insurance costs for its employees. We 
assume that the PTO would be authorized in appropriations acts 
to collect and spend these fees. Thus, the net effect on the 
deficit of such collections and spending would be roughly zero 
in each year.
    Estimated prepared by: Federal costs: Rachel Forward; 
impact on the private sector: Matt Eyles.
    Estimated approved by Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                    VII. REGULATORY IMPACT STATEMENT

    In compliance with paragraph 11(b)(1), rule XXVI of the 
Standing Rules of the Senate, the Committee, after due 
consideration, concludes that S. 507 will have significant 
regulatory impact.
                  VIII. ADDITIONAL VIEWS OF MR. LEAHY

    I am delighted that the minority and majority were able to 
work together on S. 507, legislation to help American 
innovators. The new Hatch-Leahy substitute amendment contains 
many significant improvements to S. 507--changes that should 
benefit independent inventors, small businesses, and 
universities.
Publication
    I am especially glad that we were able to work together on 
the issue of publication. The Hatch-Leahy substitute responds 
to the concerns of independent inventors and small businesses 
about publication. These concerns were articulated at the 
hearing by the president of the Vermont Inventors Association, 
Bill Parker. Mr. Parker suggested giving applicants who only 
file in the United States a choice about whether or not to 
publish. He also recommended that we enhance the protections 
granted to those who choose 18-month publication if we wish to 
encourage them to take that course.
    The substitute does both of those things. Particularly, it 
allows any applicant to avoid publication before the granting 
of the patent simply by making such a request upon filing the 
application and by certifying that their application has not--
and will not--be published abroad. The substitute also provides 
for the issuance of patents on individual claims in published 
applications as they are approved, rather than waiting for the 
disposition of all claims contained in such an application, as 
now occurs. This allows applicants to gain full patent 
protection--including reasonable royalties, damages, and 
attorneys fees when appropriate--for some of their component 
inventions earlier than they would have under the original 
draft of the bill.
    Many other important changes were made to the bill to 
benefit independent inventors, small businesses and 
universities, for instance:
Ensuring at least 17 years of patent term to applicants that diligently 
        prosecute patent applications
    I was concerned that, as introduced, S. 507 did not 
preclude the possibility that an applicant who is diligently 
prosecuting a patent will receive less than 17 years of patent 
protection. The ability to have a full 17 years of patent 
protection is important to small and large patent applicants 
alike. Hence, the Hatch-Leahy substitute makes clear that an 
applicant that diligently prosecutes a patent application 
before the PTO will receive a full 17 years of patent 
protection.

Clarifying that nonprofits, universities and the Government can benefit 
        from the prior user defense in a patent infringement action

    Title IV is designed to close a loophole in the present law 
that arguably permits one who obtains a patent to sue someone 
who has independently developed and used the same invention 
prior to the date of the patent application. Specifically, S. 
507 accords a defense to one who has ``commercially used'' 
subject matter later covered by a patent. I was concerned, 
however, that the term ``commercially used'' could be 
interpreted as not applying to activities, no matter how 
important or widespread, undertaken by nonprofits, 
universities, or the U.S. Government. The Hatch-Leahy 
substitute clarifies that nonprofits, universities, and the 
U.S. Government can assert the ``prior use'' defense when 
appropriate, thus avoiding the anomalous situation where 
individuals or companies who are prior users of patented 
subject matter are accorded a defense to an infringement claim, 
while nonprofits, universities and the U.S. Government are not.

Enhancing access to electronic patent information for independent 
        inventors and small businesses in rural areas

    A matter of special interest to me is the section I 
suggested be added in the Hatch-Leahy substitute to enhance 
access to patent information. I have long thought that 
electronic access should be more widespread and want to work 
with the Patent and Trademark Organization to ensure the 
effective implementation of statewide electronic accessibility 
of patent information in rural states and eventually in all 
areas to make it easier for inventors to study prior art and 
make further advances. This should be of particular benefit to 
Vermont, which is only now getting a patent and trademark 
depository library.

Tightening the prior user defense to ensure that it is asserted only by 
        those who have a justification to use it

    Under S. 507 as introduced, the ``used in commerce'' 
threshold is met if there has been an actual sale or other 
commercial transfer of a product or service. The university 
community expressed concern that this threshold could be met 
simply by one division of a company making a ``sale'' to 
another division of the company. Such interdivisional sales are 
common and can be easily accomplished through bookkeeping. The 
Hatch-Leahy substitute requires that a sale or other commercial 
transfer be at arms-length in order to ensure that a prior user 
has truly used the process or sold the product ``in commerce'' 
rather than an intracompany transfer that is logged on the 
books as a ``commercial sale.''
    In order to achieve ``effective and serious preparation'' 
under S. 507 as introduced, it is sufficient if the ``person'' 
has reduced the subject matter to practice in the United 
States. The university community expressed concern that this is 
a low threshold given the ambiguity of the terms (e.g., a 
person may ``reduce to practice'' through computer simulation, 
through tangential experimentation, through ``like'' 
application). The Hatch-Leahy substitute therefore intends to 
raise the threshold by requiring an ``actual reduction to 
practice'' of the infringing subject matter.

Enhancing the estoppel provisions for re-examination

    Although the goal of the original re-examination provisions 
was laudable, i.e., reducing legal bills for patent applicants, 
I was concerned that the legislation protect against harassment 
by third parties. The Hatch-Leahy substitute enhances 
protection against harassment by strengthening the estoppel 
provisions to prevent a party from raising an issue that was 
raised or could have been raised in one forum from raising it 
in any other forum in the future. Hence, the re-examination 
provision in the Hatch-Leahy substitute will provide an 
alternative to the current costly and time-consuming process of 
Federal litigation and at the same time, protect patent 
applicants against undue harassment.

Protection of the Copyright Office

    I am also glad that the substitute amendment clarifies that 
it is not the Senate Judiciary Committee's intent to undercut 
the Copyright Office in any way. The Copyright Office has 
served this country and this Committee well for over a hundred 
years, and it should continue in that role.
    At the September 1996 hearing on The Omnibus Patent Act of 
1996, S. 1961, several groups testified that it was important 
to allow the Copyright Office to continue its longstanding role 
with regards to the policy issues concerning international and 
domestic copyright law and related matters. See testimony of 
the American Society of Journalists and Authors; the 
Association of American Publishers, the American Association of 
Law Libraries, the National Humanities Alliance, the American 
Library Association, the Association of Research Libraries, the 
Medical Library Association, and the Special Libraries 
Association; the Authors Guild, Inc.; Jane Ginsburg, Morton J. 
Janklow Professor of Literary and Artistic Property Law; James 
H. Billington, the Librarian of Congress; the National Writers 
Union; the United States National Commission of Libraries and 
Information Science; Marybeth Peters, Register of Copyrights 
and Librarian for Copyright Services; the American Society of 
Composers, Authors and Publishers (ASCAP) and Broadcast Music, 
Inc. (BMI); and William Patry, professor at Cardozo School of 
Law, YeshivaUniversity; The Omnibus Patent Act of 1996: Hearing 
before the Committee on the Judiciary, 104th Cong., 2d sess. (1996).
    This year's Hatch-Leahy substitute specifies that nothing 
in the bill shall derogate from the duties or functions of the 
Register of Copyrights. This language is intended to clarify 
that the Copyright Office shall continue in its longstanding 
role as advisor to Congress on matters within its competence, 
including but not limited to copyright, semiconductor chip 
protection, and related matters such as database protection and 
protection for designs of useful articles.
    The Copyright Office should also continue its longstanding 
role as advisor to various Federal agencies on matters within 
its competence. For example, the Copyright Office advises the 
U.S. Trade Representative and the State Department on an 
ongoing basis on the adequacy of foreign copyright laws, and 
serves as a technical consultant to those agencies in 
bilateral, regional and multilateral consultations or 
negotiations with other countries on copyright-related issues. 
Similarly, the Copyright Office has served as an important 
source of expertise on U.S. delegations negotiating and 
implementing multilateral treaties in the areas of copyright, 
related rights, and trade-related intellectual property 
rights--most recently with regard to the two World Intellectual 
Property Organization (WIPO) treaties concluded in Geneva in 
December 1996 and the July 1996 review of developed countries 
copyright laws in the TRIP's Council of the World Trade 
Organization. On the domestic front, the Register recently 
participated in the Working Group on Intellectual Property 
Rights of the Administration's Information Infrastructure Task 
Force, and provided language to the administration for the 
technical portions of implementing legislation for the two new 
WIPO treaties at the 1996 Diplomatic Conference in Geneva. The 
language in the Hatch-Leahy substitute contemplates that the 
Copyright Office should continue in this role.
    The Copyright Office should continue to carry out studies 
and programs regarding international and domestic copyright law 
and related matters. Examples of appropriate studies that the 
Copyright Office has conducted in the past include a 1984 
study, ``To Secure Intellectual Property Rights in World 
Commerce,'' reprinted in S. Hrg. 98-1183, 98th Cong., 2d sess., 
Serial No. J-98-142 (Sept. 25, 1984), and studies on the issues 
of public performance rights in sound recordings, the copyright 
liability of States, the waiver of moral rights, library 
photocopying, and the nonprofit library lending exemption to 
the ``rental right'' under the Computer Software Rental 
Amendments Act of 1990. Currently underway are studies of the 
cable and satellite compulsory licenses, legal protection for 
databases, and the economic and policy implications of term 
extension. Among the most important of these studies 
historically was a series of comprehensive reports on various 
issues produced in the 1960's as the foundation of the last 
general revision of U.S. copyright law, enacted as the 1976 
Copyright Act. As for carrying out appropriate programs, the 
Copyright Office should continue to run such programs such as 
the conferences the Copyright Office has cosponsored in 1996-
1997 on the subject of technology-based intellectual property 
management, and the International Copyright Institutes that the 
Copyright Office has conducted for foreign government officials 
at least annually over the past decade, often in cooperation 
with WIPO.

Conclusion

    I noted at the Senate Judiciary Committee hearing on S. 507 
that Vermont has a great tradition of ``Yankee ingenuity.'' In 
fact, the very first U.S. patent was granted to Samuel Hopkins, 
a native of Pittsford, VT, who discovered a process for making 
potash. Those early patents were awarded by Secretary of State 
Thomas Jefferson, who made his own contributions to our 
national tradition of inventiveness.
    Today's inventors can be individuals in a shop, garage or 
home lab. They can be teams of scientists working in our 
largest corporations or at our colleges and universities. Our 
Nation's patent laws should be fair to American innovators of 
all kinds--independent inventors, small businesses, venture 
capitalists and larger corporations. For this reason, I urge 
all members of Congress to support the Hatch-Leahy substitute.

                                                  Patrick J. Leahy.
                      IX. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 507, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           UNITED STATES CODE

          * * * * * * *

             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

          * * * * * * *

                          PART III--EMPLOYEES

                     Subpart D--Pay and Allowances

                       CHAPTER 51--CLASSIFICATION

          * * * * * * *

Sec. 5102. Definitions; application

    (a) For the purpose of this chapter--
          * * * * * * *
    (c) This chapter does not apply to--
          [(1) Repealed. Pub.L. 91-375, Sec. 6(c)(9), Aug. 12, 
        1970, 84 Stat. 776]
          [(2) members of the Foreign Service whose pay is 
        fixed under the Foreign Service Act of 1980; and 
        positions in or under the Department of State which 
        are--
          * * * * * * *
          (23) [examiners-in-chief] administrative patent 
        judges and designated [examiners-in-chief] 
        administrative patent judges in the Patent and 
        Trademark [Office, Department of Commerce] 
        Organization;
          * * * * * * *

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.
          * * * * * * *
          Commissioners, Indian Claims Commission (5).
          [Commissioner of Patents, Department of Commerce.]
          Commissioner, Public Buildings Service, General 
        Services Administration.
          * * * * * * *
          Commissioners, United States Parole Commission (8).
          [Deputy Commissioner of Patents and Trademarks.]
          [Assistant Commissioner for Patents.]
          [Assistant Commissioner for Trademarks.]
          Commissioner, Administration on Children, Youth, and 
        Families.
          * * * * * * *

           Government Organization and Employees--Appendixes

          * * * * * * *

                               APPENDIX 3

                     INSPECTOR GENERAL ACT OF 1978

          * * * * * * *

Sec. 11. Definitions

    As used in this Act--
          (1) the term ``head of the establishment'' means the 
        Secretary of Agriculture, Commerce, Defense, Education, 
        Energy, Health and Human Services, Housing and Urban 
        Development, the Interior, Labor, State, 
        Transportation, or the Treasury; the Attorney General; 
        the Administrator of the Agency for International 
        Development, Environmental Protection, General 
        Services, National Aeronautics and Space, Small 
        Business, or Veterans' Affairs; the Director of the 
        Federal Emergency Management Agency, the Office of 
        Personnel Management or the United States Information 
        Agency; the Chairman of the Nuclear Regulatory 
        Commission or the Railroad Retirement Board; the 
        Chairperson of the Thrift Depositor Protection 
        Oversight Board; the Chief Executive Officer of the 
        Corporation for National and Community Service; the 
        Administrator of the Community Development Financial 
        Institutions Fund; and the chief executive officer of 
        the Resolution Trust Corporation; and the Chairperson 
        of the Federal Deposit Insurance Corporation; [or the 
        Commissioner of Social Security, Social Security 
        Administration;] the Commissioner of Social Security, 
        Social Security Administration; or the Director of the 
        United States Patent and Trademark Organization, United 
        States Patent and Trademark Organization; as the case 
        may be;
          (2) the term ``establishment'' means the Department 
        of Agriculture, Commerce, Defense, Education, Energy, 
        Health and Human Services, Housing and Urban 
        Development, the Interior, Justice, Labor, State, 
        Transportation, or the Treasury; the Agency for 
        International Development, the Community Development 
        Financial Institutions Fund, the Environmental 
        Protection Agency, the Federal Emergency Management 
        Agency, the General Services Administration, the 
        National Aeronautics and Space Administration, the 
        Nuclear Regulatory Commission, the Office of Personnel 
        Management, the Railroad Retirement Board, the 
        Resolution Trust Corporation, the Federal Deposit 
        Insurance Corporation, the Small Business 
        Administration, the United States Information Agency, 
        the Corporation for National and Community Service, [or 
        \3\ the Veterans' Administration, or the Social 
        Security Administration;] the Veterans' Administration, 
        the Social Security Administration, or the United 
        States Patent and Trademark Organization; as the case 
        may be;
          * * * * * * *

                      TITLE 15--COMMERCE AND TRADE

          * * * * * * *

                         CHAPTER 22--TRADEMARKS

          * * * * * * *

                  Subchapter I--The Principal Register

          * * * * * * *

[Sec. 1067. Interference, opposition, and proceedings for concurrent 
                    use registration or for cancellation; notice; 
                    Trademark Trial and Appeal Board

    [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.
    [The Trademark Trial 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 of Trademarks, the Deputy Commissioner of 
Trademarks, and administrative trademark judges competent in 
trademark law who are appointed by the Commissioner.
          * * * * * * *

Sec. 1113. Fees

    (a) Applications; Services; Materials.--
    The Commissioner shall establish fees for the filing and 
processing of an application for the registration of a 
trademark or other mark and for all other services performed by 
and materials furnished by the Patent and Trademark Office 
related to trademarks and other marks. [Fees established under 
this subsection may be adjusted by the Commissioner once each 
year to reflect, in the aggregate, any fluctuations during the 
preceding 12 months in the Consumer Price Index, as determined 
by the Secretary of Labor. Changes of less than 1 percent may 
be ignored. No fee established under this section shall take 
effect until at least 30 days after notice of the fee has been 
published in the Federal Register and in the Official Gazette 
of the Patent and Trademark Office.] Fees established under 
this subsection may be adjusted by the Commissioner, after 
consulting with the Trademark Office Management Advisory Board 
in accordance with section 53(a)(2)(C) of this Act and after 
notice and opportunity for full participation by interested 
public and private parties. The Director of the United States 
Patent and Trademark Organization shall determine whether such 
fees are consistent with the policy direction of the Secretary 
of Commerce.
          * * * * * * *

                      TITLE 31--MONEY AND FINANCE

          * * * * * * *

                       Subtitle VI--Miscellaneous

          * * * * * * *

                  CHAPTER 91--GOVERNMENT CORPORATIONS

          * * * * * * *

Sec. 9101. Definitions

    In this chapter--
          (1) ``Government corporation'' means a mixed-
        ownership Government corporation and a wholly owned 
        Government corporation.
          * * * * * * *
          (3) ``wholly owned Government corporation'' means--
                  (A) the Commodity Credit Corporation.
          * * * * * * *
                  (Q) the Alternative Agricultural Research and 
                Commercialization Corporation * * *.
                  (R) the United States Patent and Trademark 
                Organization.
          * * * * * * *

                           TITLE 35--PATENTS

Part                                                                Sec.

    [I. Patent and Trademark Office...........................        1]
    I. United States Patent Office............................         1
     * * * * * * *


                  [PART I--PATENT AND TRADEMARK OFFICE]


                   PART I_UNITED STATES PATENT OFFICE


Chap.                                                               Sec.

    [1. Establishment, Officers, Functions....................        1]
    1. Establishment, Officers and Employees, Functions.......         1
          * * * * * * *

             CHAPTER 1--ESTABLISHMENT, OFFICERS, FUNCTIONS

[Sec.
[1. Establishment.
[2. Seal.
[3. Officers and employees.
[4. Restrictions on officers and employees as to interest inpatents.
[[5. Repealed.]
[6. Duties of Commissioner.
[7. Board of Appeals.
[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 Office Management Advisory Board.
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 and applications with foreign 
          countries.
13. Copies of patents and applications 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. 1. Establishment

    (a) Establishment.--The United States Patent Office is 
established as a separate administrative unit of the United 
States Patent and Trademark Organization, where records, books, 
drawings, specifications, and other papers and things 
pertaining to patents shall be kept and preserved, except as 
otherwise provided by law.
    (b) Reference.--For purposes of this title, the United 
States Patent Office shall also be referred to as the 
``Office'' and the ``Patent Office''.

[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. 2. Powers and duties

    The United States Patent Office, under the policy direction 
of the Secretary of Commerce through the Director of the United 
States Patent and Trademark Organization, shall be responsible 
for--
          (1) granting and issuing patents;
          (2) conducting studies, programs, or exchanges of 
        items or services regarding domestic and international 
        patent law, the administration of the Organization, or 
        any other function vested in the Organization by law, 
        including programs to recognize, identify, assess, and 
        forecast the technology of patented inventions and 
        their utility to industry;
          (3) authorizing or conducting studies and programs 
        cooperatively with foreign patent offices and 
        international organizations, in connection with the 
        granting and issuing of patents; and
          (4) disseminating to the public information with 
        respect to patents.

[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 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. 3. Officers and employees

    (a) Commissioner.--
          (1) In general.--The management of the United States 
        Patent Office shall be vested in a Commissioner of 
        Patents, who shall be a citizen of the United States 
        and who shall be appointed by the Director of the 
        United States Patent and Trademark Organization and 
        shall serve at the pleasure of the Director of the 
        United States Patent and Trademark Organization. The 
        Commissioner of Patents shall be a person who, by 
        reason of professional background and experience in 
        patent law, is especially qualified to manage the 
        Office.
          (2) Duties.--
                  (A) In general.--The Commissioner shall be 
                responsible for all aspects of the management, 
                administration, and operation of the Office, 
                including the granting and issuing of patents, 
                and shall perform these duties in a fair, 
                impartial, and equitable manner.
                  (B) Advising the director of the united 
                states patent and trademark organization.--The 
                Commissioner of Patents shall advise the 
                Director of the United States Patent and 
                Trademark Organization 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. The Commissioner of Patents shall 
                advise the Director of the United States Patent 
                and Trademark Organization on matters of patent 
                law and shall recommend to the Director of the 
                United States Patent and Trademark Organization 
                changes in law or policy which may improve the 
                ability of United States citizens to secure and 
                enforce patent rights in the United States or 
                in foreign countries.
                  (C) Regulations.--The Commissioner may 
                establish regulations, not inconsistent with 
                law, for the conduct of proceedings in the 
                Patent Office. The Director of the United 
                States Patent and Trademark Organization shall 
                determine whether such regulations are 
                consistent with the policy direction of the 
                Secretary of Commerce.
                  (D) Consultation with the management advisory 
                board.--(i) The Commissioner shall consult with 
                the Management Advisory Board established in 
                section 5--
                          (I) on a regular basis on matters 
                        relating to the operation of the 
                        Office; and
                          (II) before submitting budgetary 
                        proposals to the Director of the United 
                        States Patent and Trademark 
                        Organization for submission to the 
                        Office of Management and Budget or 
                        changing or proposing to change patent 
                        user fees or patent regulations.
                  (ii) The Director of the United States Patent 
                and Trademark Organization shall determine 
                whether such fees or regulations are consistent 
                with the policy direction of the Secretary of 
                Commerce.
          (3) Oath.--The Commissioner shall, before taking 
        office, take an oath to discharge faithfully the duties 
        of the Office.
          (4) Compensation.--
                  (A) In general.--The Commissioner shall 
                receive compensation at the rate of pay in 
                effect for level IV of the Executive Schedule 
                under section 5315 of title 5.
                  (B) Bonus.--In addition to compensation under 
                subparagraph (A), the Commissioner may, at the 
                discretion of the Director of the United States 
                Patent and Trademark Organization, receive as a 
                bonus, an amount which would raise total 
                compensation to the equivalent of the rate of 
                pay in effect for level III of the Executive 
                Schedule under section 5314 of title 5.
    (b) Officers and Employees.--
          (1) Deputy commissioner of patents.--The Commissioner 
        shall appoint a Deputy Commissioner of Patents who 
        shall be vested with the authority to act in the 
        capacity of the Commissioner inthe event of the absence 
or incapacity of the Commissioner. In the event of a vacancy in the 
office of Commissioner, the Deputy Commissioner shall fill the office 
of Commissioner until a new Commissioner is appointed and takes office.
          (2) Ombudsman.--The Commissioner shall appoint an 
        ombudsman to advise the Commissioner on the concerns of 
        independent inventors, nonprofit organizations, and 
        small business concerns.
          (3) Other officers and employees.--Other officers, 
        attorneys, employees, and agents shall be selected and 
        appointed by the Commissioner, and shall be vested with 
        such powers and duties as the Commissioner may 
        determine.

Sec. 4. Restrictions on officers and employees as to interest in 
                    patents

    Officers and employees of the [Patent and Trademark Office] 
Patent Office shall be incapable, during the period of their 
appointments and for one year thereafter, of applying for a 
patent and of acquiring, directly or indirectly, except by 
inheritance or bequest, any patent or any right or interest in 
any patent, issued or to be issued by the Office. In patents 
applied for thereafter they shall not be entitled to any 
priority date earlier than one year after the termination of 
their appointment.

Sec. 5. Patent Office Management Advisory Board

    (a) Establishment of Management Advisory Board.--
          (1) Appointment.--The United States Patent Office 
        shall have a Management Advisory Board (hereafter in 
        this title referred to as the ``Advisory Board'') of 5 
        members, who shall be appointed by the President and 
        shall serve at the pleasure of the President. Not more 
        than 3 of the 5 members shall be members of the same 
        political party. At least 1 member shall be an 
        independent inventor, as defined in regulations issued 
        by the Commissioner.
          (2) Chair.--The President shall designate a Chair of 
        the Advisory Board, whose term as chair shall be for 3 
        years.
          (3) Timing of appointments.--Initial appointments to 
        the Advisory Board shall be made within 3 months after 
        the effective date of the United States Patent and 
        Trademark Organization Act of 1997. Vacancies shall be 
        filled in the manner in which the original appointment 
        was made under this subsection within 3 months after 
        they occur.
    (b) Basis for Appointments.--Members of the Advisory 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 Office, and shall include individuals with 
substantial background and achievement in corporate finance and 
management.
    (c) Meetings.--The Advisory Board shall meet at the call of 
the Chair to consider an agenda set by the Chair.
    (d) Duties.--The Advisory Board shall--
          (1) review the policies, goals, performance, budget, 
        and user fees of the United States Patent Office, and 
        advise the Commissioner on these matters;
          (2) within 60 days after the end of each fiscal 
        year--
                  (A) prepare an annual report on the matters 
                referred to in paragraph (1);
                  (B) transmit the report to the Director of 
                the United States Patent and Trademark 
                Organization, the President, and the Committees 
                on the Judiciary of the Senate and the House of 
                Representatives; and
                  (C) publish the report in the Patent Office 
                Official Gazette.
    (f) Compensation.--Each member of the Advisory Board shall 
be compensated for each day (including travel time) during 
which such member is attending meetings or conferences of the 
Advisory Board or otherwise engaged in the business of the 
Advisory 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 such member's home or regular place of business such 
member 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 Advisory Board 
shall be provided access to records and information in the 
United States Patent Office, except for personnel or other 
privileged information and information concerning patent 
applications required to be kept in confidence by section 122.
    (h) Applicability of Certain Ethics Laws.--Members of the 
Advisory Board shall be special Government employees within the 
meaning of section 202 of title 18.

[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. 7. Board of Patent Appeals and Interferences

    (a) Establishment and Composition.--There shall be in the 
United States Patent Office a Board of Patent Appeals and 
Interferences. The Commissioner, the Deputy Commissioner, and 
the administrative patent judges shall constitute the Board. 
The administrative patent judges shall be persons of competent 
legal knowledge and scientific ability.
    (b) Duties.--
          (1) In general.--The Board of Patent Appeals and 
        Interferences shall, on written appeal of an applicant, 
        a patent owner, or a third-party requester in a 
        reexamination proceeding--
                  (A) review adverse decisions of examiners--
                          (i) upon applications for patents; 
                        and
                          (ii) in reexamination proceedings; 
                        and
                  (B) determine priority and patentability of 
                invention in interferences declared under 
                section 135(a).
          (2) Hearings.--Each appeal and interference shall be 
        heard by at least 3 members of the Board, who shall be 
        designated by the Deputy Commissioner. Only the Board 
        of Patent Appeals and Interferences may grant 
        rehearings.

Sec. 8. Library

    The Commissioner shall maintain a library of scientific and 
other works and periodicals, both foreign and domestic, in the 
[Patent and Trademark Office] Patent Office to aid the officers 
in the discharge of their duties.
          * * * * * * *

Sec. 10. Certified copies of records

    The Commissioner may furnish certified copies of 
specifications and drawings of patents issued by the [Patent 
and Trademark Office] Patent Office, and of other records 
available either to the public or to the person applying 
therefor.

Sec. 11. Publications

    (a) The Commissioner may print, or cause to be printed, the 
following:
          1. Patents and published applications for patents, 
        including specifications and drawings, together with 
        copies of the same. the [Patent and Trademark Office] 
        Patent Office may print the headings of the drawings 
        for patents for the purpose of photolithography.
          * * * * * * *
          3. The Official Gazette of the United States [Patent 
        and Trademark Office] Patent Office.
          * * * * * * *
    (b) The Commissioner may exchange any of the publications 
specified in items 3, 4, 5, and 6 of subsection (a) of this 
section for publications desirable for the use of the [Patent 
and Trademark Office] Patent Office.

Sec. 12. Exchange of copies of patents and applications with foreign 
                    countries

    The Commissioner may exchange copies of specifications and 
drawings of United States patents and published applications 
for patents for those of foreign countries.

Sec. 13. Copies of patents and applications for public libraries

    The Commissioner may supply printed copies of 
specifications and drawings of patents and published 
applications for patents to public libraries in the United 
States which shall maintain such copies for the use of the 
public, at the rate for each year's issue established for this 
purpose in section 41(d) of this title.

[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 Director of the United 
States Patent and Trademark Organization such information as 
the Director is required to submit to Congress annually under 
section 157(d) of this title, and under chapter 91 of title 31, 
including--
          (1) the total of the moneys received and expended by 
        the Office;
          (2) the purposes for which the moneys were spent;
          (3) the quality and quantity of the work of the 
        Office; and
          (4) other information relating to the Office.
          * * * * * * *

  CHAPTER 2--PROCEEDINGS IN THE [PATENT AND TRADEMARK OFFICE] PATENT 
                                 OFFICE

Sec.

21. Day for taking action falling on Saturday, Sunday, or holiday.
22. Printing of papers filed.
23. Testimony in [Patent and Trademark Office] Patemt Office cases.
24. Subpoenas, witnesses.
25. Declaration in lieu of oath.
26. Effect of defective execution.

Sec. 21. Filing date and day for taking action

    (a) The Commissioner may by rule prescribe that any paper 
or fee required to be filed in the [Patent and Trademark 
Office] Patent Office will be considered filed in the Office on 
the date on which it was deposited with the United States 
Postal Service but for postal service interruptions or 
emergencies designated by the Commissioner.
    (b) When the day, or the last day, for taking any action or 
paying any fee in the United States [Patent and Trademark 
Office] Patent Office falls on Saturday, Sunday, or a federal 
holiday within the District of Columbia, the action may be 
taken, or the fee paid, on the next succeeding secular or 
business day.

Sec. 22. Printing of papers filed

    The Commissioner may require papers filed in the [Patent 
and Trademark Office] Patemt Office to be [printed or 
typewriter] printed, typewritten, or on an electric medium

Sec. 23. Testimony in [Patent and Trademark Office] Patent Office cases

    The Commissioner may establish rules for taking affidavits 
and depositions required in cases in the [Patent and Trademark 
Office] Patent Office. Any officer authorized by law to take 
depositions to be used in the courts of the United States, or 
of the State where he resides, may take such affidavits and 
depositions.

Sec. 24. Subpoenas, witnesses

    The clerk of any United States court for the district 
wherein testimony is to be taken for use in any contested case 
in the [Patent and Trademark Office] Patent Office, shall, upon 
the application of any party thereto, issue a subpoena for any 
witness residing or being within such district, commanding him 
to appear and testify before an officer in such district 
authorized to take depositions and affidavits, at the time and 
place stated in the subpoena. The provisions of the Federal 
Rules of Civil Procedure relating to the attendance of 
witnesses and to the production of documents and things shall 
apply to contested cases in the [Patent and Trademark Office] 
Patent Office.
          * * * * * * *

Sec. 25. Declaration in lieu of oath

    (a) The Commissioner may be rule prescribe that any 
document to be filed in the [Patent and Trademark Office] 
Patent Office and which is required by any law, rule, or other 
regulation to be under oath may be subscribed to by a written 
declaration in such form as the Commissioner may prescribe, 
such declaration to be in lieu of the oath otherwise required.
          * * * * * * *

Sec. 26. Effect of defective execution

    Any document to be filed in the [Patent and Trademark 
Office] Patent Office and which is required by any law, rule, 
or other regulation to be executed in a specified manner may be 
provisionally accepted by the Commissioner despite a defective 
execution, provided a property executed document is submitted 
within such time as may be prescribed.

 CHAPTER 3--PRACTICE BEFORE [PATENT AND TRADEMARK OFFICE] PATENT OFFICE

Sec.

31. Regulations for agents and attorneys.
32. Suspension or exclusion from practice.
33. Unauthorized representation as practitioner.

[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. 31. Regulations for agents and attorneys

    The Commissioner may prescribe regulations governing the 
recognition and conduct of agents, attorneys, or other persons 
representing applicants or other parties before the Office. The 
regulations may require such persons, 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] Patent 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 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.

Sec. 33. Unauthorized representation as practitioner

    Whoever, not being recognized to practice before the 
[Patent and Trademark Office] Patent Office, holds himself out 
or permits himself to be held out as so recognized, or as being 
qualified to prepare or prosecute applications for patent, 
shall be fined not more than $1,000 for each offense.

            CHAPTER 4--PATENT FEES; FUNDING; SEARCH SYSTEMS

          * * * * * * *

Sec. 41. Patent fees; patent and trademark search systems

    (a) The Commissioner shall charge the following fees;
          (1)(A) On filing each application for an original 
        patent, except in design or plant cases, $500.
          * * * * * * *
          [(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 
        section 133 of 151 of this title, in which case the fee 
        shall be $100.
          * * * * * * *
          (9) Basic national fee for an international 
        application where the [Patent and Trademark Office] 
        Patent Office was the International Preliminary 
        Examining Authority and the International Searching 
        Authority, $450.
          (10) Basic national fee for an international 
        application where the [Patent and Trademark Office] 
        Patent Office was the International Searching Authority 
        but not the International Preliminary Examining 
        Authority, $500.
          (11) Basic national fee for an international 
        application where the [Patent and Trademark Office] 
        Patent Office was the International Searching Authority 
        nor the International Preliminary Examining Authority, 
        $670.
          (12) Basic national fee for an international 
        application where the [Patent and Trademark Office] 
        Patent Office was the international preliminary 
        examination report states that the provisions of 
        Article 33(2), (3), and (4) of the Patent Cooperation 
        Treaty have been satisfied for all claims in the 
        application entering the national state, $66.
          * * * * * * *
    (b) The Commissioner shall charge the following fees for 
maintaining in force all patents based on applications filed on 
or after December 12, 1980:
          (1) 3 years and 6 months after grant, $650.
          * * * * * * *
Unless payment of the applicable maintenance fee is received in 
the [Patent and Trademark Office] Patent Office on or before 
the date the fee is due or within a grade period of six months 
thereafter, the patent will expire as of the end of such grace 
period. The Commissioner may require the payment of a surcharge 
as a condition of accepting within such six-month grade period 
the late payment of an applicable maintenance fee. No fee will 
be established for maintaining a design or plant patent in 
force.
          * * * * * * *
    [(f) The fees established in subsection (a) and (b) of this 
section may be adjusted by the Commissioner on October 1, 1992, 
and every year thereafter, to reflect any fluctuations 
occurring during the previous 12 months in the Consumer Price 
Index, as determined by the Secretary of Labor. Changes of less 
than 1 per centum may be ignored.]
    (f) The Commissioner, after consulting with the Patent 
Office Management Advisory Board pursuant to section 3(a)(2)(C) 
of this title and after notice and opportunity for full 
participation by interested public and private parties, may, by 
regulation, adjust the fees established in this section. The 
Director of the United States Patent and Trademark Organization 
shall determine whether such fees are consistent with the 
policy direction of the Secretary of Commerce.
    (g) No fee established by the Commissioner under this 
section shall take effect until at least 30 days after notice 
of the fee has been published in the Federal Register and in 
the Official Gazette of the [Patent and Trademark Office] 
Patent Office.
    (h)(1) Fees charged under subsection (a) or (b) shall be 
reduced by 50 percent with respect to their application to any 
small business concern as defined under section 3 of the Small 
Business Act, and to any independent inventor or nonprofit 
organization as defined in regulations issued by the 
[Commissioner of Patents and Trademarks] Commissioner.
          * * * * * * *
    (i)(1) * * *
    (2) The Commissioner shall provide for the full deployment 
of the automated search systems of the [Patent and Trademark 
Office] Patent Office so that such systems are available for 
use by the public, and shall assure full access by the public 
to, and dissemination of, patent and trademark information, 
using a variety of automated methods, including electronic 
bulletin boards and remote access by users to mass storage and 
retrieval systems.
    (3) The Commissioner may establish reasonable fees for 
access by the public to the automated search systems of the 
[Patent and Trademark Office] Patent Office. If such fees are 
established, a limited amount of free access shall be made 
available to users of the systems for purposes of education and 
training. The Commissioner may waive the payment by an 
individual of fees authorized by this subsection upon a showing 
of need or hardship, and if such a waiver is in the public 
interest.
    (4) The Commissioner shall submit to the Congress an annual 
report on the automated search systems of the [Patent and 
Trademark Office] Patent Office and the access by the public to 
such systems. The Commissioner shall also publish such report 
in the Federal Register. The Commissioner shall provide an 
opportunity for the submission of comments by interested 
persons on each such report.

[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 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 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 Office funding

    (a) Fees Payable to the Office.--All fees for services 
performed by or materials furnished by the United States Patent 
Office shall be payable to the Office.
    (b) Use of Moneys.--Moneys from fees shall be available to 
the United States Patent 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 Commissioner under this 
title shall be used only for the processing of patent 
applications and for other services and materials relating to 
patents, including the agreed upon share of any centralized 
function, as set forth in section 113(b)(2)(E) of the United 
States Patent and Trademark Organization Act of 1997.
    (c) Contribution to the Office of the Director of the 
United States Patent and Trademark Organization.--The Patent 
Office shall contribute 50 percent of the annual budget of the 
Office of the Director of the United States Patent and 
Trademark Organization.
          * * * * * * *

       PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS

Chap.                                                               Sec.

10. Patentability of Inventions...................................   100
     * * * * * * *
13. Review of [Patent and Trademark Office] Patent Office 
              Decisions...........................................   141
          * * * * * * *

                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.
          * * * * * * *
    (d) The word ``patentee'' includes not only the patentee to 
whom the patent was issued but also the successors in title to 
the patentee.
    (e) The term ``third-party requester'' means a person 
requesting reexamination under section 302 of this title who is 
not the patent owner.
          * * * * * * *

Sec. 102. Conditions for patentability; novelty and loss of right to 
                    patent

    A person shall be entitled to a patent unless--
    (a) the invention was known or used by others in this 
country, or patented or described in a printed publication in 
this or a foreign country, before the invention thereof by the 
applicant for patent, or
          * * * * * * *
    [(e) the invention was described in a patent granted on an 
application for patent by another filed in the United States 
before the invention thereof by the applicant for patent, or on 
an international application by another who has fulfilled the 
requirements of paragraphs (1), (2), and (4) of section 371(c) 
of this title before the invention thereof by the applicant for 
patent, or]
    (e) the invention was described in--
          (1)(A) 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
          (B) a patent granted on an application for patent by 
        another filed in the United States before the invention 
        by the applicant for patent, or
          * * * * * * *

Sec. 104. Invention made abroad

    (a) In General.--
          (1) Proceedings.--In proceedings in the [Patent and 
        Trademark Office] Patent Office, in the courts, and 
        before any other competent authority, an applicant for 
        a patent, or a patentee, may not establish a date of 
        invention by reference to knowledge or use thereof, or 
        other activity with respect thereto, in a foreign 
        country other than a NAFTA country or a WTO member 
        country, except as provided in sections 119 and 365 of 
        this title.
          * * * * * * *
          (3) Use of Information.--To the extent that any 
        information in a NAFTA country or a WTO member country 
        concerning knowledge, use, or other activity relevant 
        to proving or disproving a date of invention has not 
        been made available for use in a proceeding in the 
        [Patent and Trademark Office] Patent Office, a court, 
        or any other competent authority to the same extent as 
        such information could be made available in the United 
        States, the Commissioner, court, or such other 
        authority shall draw appropriate inferences, or take 
        other action permitted by statute, rule, or regulation, 
        in favor of the party that requested the information in 
        the proceeding.
          * * * * * * *
Sec.
111.  Application for patent.
     * * * * * * *
122.  Confidential status of application; publication of patent 
          applications.

Sec. 111. Application.

    (a) In General.--
          (1) Written application.--An application for patent 
        shall be made, or authorized to be made, by the 
        inventor, except as otherwise provided in this title, 
        in writing to the Commissioner.
          * * * * * * *
          (4) Failure to submit.--Upon failure to submit the 
        fee and oath within such prescribed period, the 
        application shall be regarded as abandoned, unless it 
        is shown to the satisfaction of the Commissioner that 
        the delay in submitting the fee and oath was 
        unavoidable or unintentional. The filing date of an 
        application shall be the date on which the 
        specification and any required drawing are received in 
        the [Patent and Trademark Office] Patent Office.
    (b) Provisional Application.--
          (1) Authorization. A provisional application for 
        patent shall be made or authorized to be made by the 
        inventor, except as otherwise provided in this title, 
        in writing to the Commissioner. Such application shall 
        include--
          * * * * * * *
          (4) Filing date.--The filing date of a provisional 
        application shall be the date on which the 
        specification and any required drawing are received in 
        the [Patent and Trademark Office] Patent Office.
          [(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). Subject 
        to section 1993(c)(3) of this title, 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) No application for patent shall be entitled to this 
right of priority unless a claim therefor and a certified copy 
of the original foreign application, specification and drawings 
upon which it is based are filed in the [Patent and Trademark 
Office] Patent Office before the patent is granted, or at such 
time during the pendency of the application as required by the 
Commissioner not earlier than six months after the filing of 
the application in this country. Such certification shall be 
made by the patent office of the foreign country in which filed 
and show the date of the application and of the filing of the 
specification and other papers. The Commissioner may require a 
translation of the papers filed if not in the English language 
and such other information as he deems necessary.]
    (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 
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. The Commissioner may establish procedures, 
including the payment of a surcharge, to accept an 
unintentionally delayed claim under this section.
    (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) * * *
    (2) A provisional application filed under section 111(b) of 
this title may not be relied upon in any proceeding in the 
[Patent and Trademark Office] Patent Office unless the fee set 
forth in subparagraph (A) or (C) of section 41(a)(1) of this 
title has been paid and the provisional application was pending 
on the filing date of the application for patent under section 
111(a) or section 363 of this title.
    (3) If the day that is 12 months after the filing date of a 
provisional application falls on a Saturday, Sunday, or Federal 
holiday within the District of Columbia, the period of pendency 
of the provisional application shall be extended to the next 
succeeding secular or business day.
    (f) Applications for plant breeder's rights filed in a WTO 
member country (or in a foreign 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) 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. 121. Divisional applications

    If two or more independent and distinct inventions are 
claimed in one application, the Commissioner may require the 
application to be restricted to one of the inventions. If the 
other invention is made the subject of a divisional application 
which complies with the requirements of section 120 of this 
title it shall be entitled to the benefit of the filing date of 
the original application. A patent issuing on an application 
with respect to which a requirement for restriction under this 
section has been made, or on an application filed as a result 
of such a requirement, shall not be used as a reference either 
in the [Patent and Trademark Office] Patent Office or in the 
courts against a divisional application or against the original 
application or any patent issued on either of them, if the 
divisional application is filed before the issuance of the 
patent on the other application. If a divisional application is 
directed solely to subject matter described and claimed in the 
original application as filed, the Commissioner may dispense 
with signing and execution by the inventor. The validity of a 
patent shall not be questioned for failure of the Commissioner 
to require the application to be restricted to one invention.

[Sec. 122. Confidential status of applications

    [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 keep in confidence by the 
Patent 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, and 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) Where an applicant makes a request upon 
        filing, certifying that the invention disclosed in the 
        application has not and will not be the subject of an 
        application filed in a foreign country, the application 
        shall not be published as provided in paragraph (1).
          (ii) An applicant may rescind a request made under 
        clause (i) at any time. an applicant has a duty to 
        notify the Director within 1 month of filing an 
        application in a foreign country.
          (iii) Where an applicant rescinds a request made 
        under clause (i) or notifies the Director that an 
        application was filed in a foreign country, the 
        application shall be published in accordance with the 
        provisions of paragraph (1).
    (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 that did 
not exist prior to the adoption of this section.
    (d) Study.--
          (1) In general.--The General Accounting Office shall 
        conduct a 3-year study of the applicants who file only 
        in the United States after the effective date of this 
        title.
          (2) Contents.--The study conducted under paragraph 
        (1) shall--
                  (A) consider the number of such applicants in 
                relation to the number of applicants who file 
                in the United States and outside the United 
                States;
                  (B) examine how many domestic-only filers 
                request at the time of filing not to be 
                published;
                  (C) examine how many such filers rescind that 
                request or later choose to file abroad; and
                  (D) examine the manner of entity seeking an 
                application and any correlation that may exist 
                between such manner and publication of patent 
                applications.
          * * * * * * *

                 CHAPTER 12--EXAMINATION OF APPLICATION

          * * * * * * *

Sec. 132. Notice of rejection; reexamination

    [Whenever] (a) Whenever, on examination, any claim for a 
patent is rejected, or any objection or requirement made, the 
Commissioner shall notify the applicant thereof, stating the 
reasons for such rejection, or objection or requirement, 
together with such information and references as may be used in 
judging of the propriety of continuing the prosecution of his 
application; and if after receiving such notice, the applicant 
persists in his claim for a patent, with or without amendment, 
the application shall be reexamined. No amendment shall 
introduce new matter into the disclosure of the invention.
    (b) The Commissioner shall prescribe regulations to provide 
for the further limited reexamination of applications for 
patent at the request of the applicant. The Commissioner may 
establish appropriate fees for such further limited examination 
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 this title.
          * * * * * * *

[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. 135. Interferences

    (a) Whenever an application is made for a patent which, in 
the opinion of the Commissioner, would interfere with any 
pending application, or with any unexpired patent, an 
interference may be declared and the Commissioner shall give 
notice of such declaration to the applicants, or applicant and 
patentee, as the case may be. The Board of Patent Appeals and 
Interferences shall determine questions of priority of the 
inventions and may determine questions of patentability. Any 
final decision, if adverse to the claim of an applicant, shall 
constitute the final refusal by the [Patent and Trademark 
Office] Patent Office of the claims involved, and the 
Commissioner may issue a patent to the applicant who is 
adjudged the prior inventor. A final judgment adverse to a 
patentee from which no appeal or other review has been or can 
be taken or had shall constitute cancellation of the claims 
involved in the patent, and notice of such cancellation shall 
be endorsed on copies of the patent distributed after such 
cancellation by the [Patent and Trademark Office] Patent 
Office.
          * * * * * * *
    (c) Any agreement or understanding between parties to an 
interference, including any collateral agreements referred to 
therein, made in connection with or in contemplation of the 
termination of the interference, shall be in writing and a true 
copy thereof filed in the [Patent and Trademark Office] Patent 
Office before the termination of the interference as between 
the said parties to the agreement or understanding. If any 
party filing the same so requests, the copy shall be kept 
separate from the file of the interference, and made available 
only to Government agencies on written request, or to any 
person on a showing of good cause. Failure to file the copy of 
such agreement or understanding shall render permanently 
unenforceable such agreement or understanding and any patent of 
such parties involved in the interference or any patent 
subsequently issued on any application of such parties so 
involved. The Commissioner may, however, on a showing of good 
cause for failure to file within the time prescribed, permit 
the filing of the agreement or understanding during the six-
month period subsequent to the termination of the interference 
as between the parties to the agreement or understanding.
          * * * * * * *

   CHAPTER 13--REVIEW OF [PATENT AND TRADEMARK OFFICE] PATENT OFFICE 
                               DECISIONS

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. 142. Notice of appeal

    When an appeal is taken to the United States Court of 
Appeals for the Federal Circuit, the appellant shall file in 
the [Patent and Trademark Office] Patent Office a written 
notice of appeal directed to the Commissioner, within such time 
after the date of the decision from which the appeal is taken 
as the Commissioner prescribes, but in no case less than 60 
days after that date.

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] Patent 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 
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. 144. Decision on appeal

    The United States Court of Appeals for the Federal Circuit 
shall review the decision from which an appeal is taken on the 
record before the [Patent and Trademark Office] Patent Office. 
Upon its determination the court shall issue to the 
Commissioner its mandate and opinion, which shall be entered of 
record in the [Patent and Trademark Office] Patent Office and 
shall govern the further proceedings in the case.

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.

Sec. 146. Civil action in case of interference

    Any party to an interference dissatisfied with the decision 
of the Board of Patent Appeals and Interferences on the 
interference, may have remedy by civil action, if commenced 
with such time after such decision, not less than sixty days, 
as the Commissioner appoints or as provided in section 141 of 
this title, unless he has appealed to the United States Court 
of Appeals for the Federal Circuit, and such appeal is pending 
or has been decided. In such suits the record in the [Patent 
and Trademark Office] Patent Office shall be admitted on motion 
of either party upon the terms and conditions as to costs, 
expenses, and the further cross-examination of the witnesses as 
the court imposes, without prejudice to the right of the 
parties to take further testimony. The testimony and exhibits 
of the record in the [Patent and Trademark Office] Patent 
Office when admitted shall have the same effect as if 
originally taken and produced in the suit.
    Such suit may be instituted against the party in interest 
as shown by the records of the [Patent and Trademark Office] 
Patent Office at the time of the decision complained of, but 
any party in interest may become a party to the action. If 
there be adverse parties residing in a plurality of districts 
not embraced within the same state, or an adverse party 
residing in a foreign country, the United States District Court 
for the District of Columbia shall have jurisdiction and may 
issue summons against the adverse parties directed to the 
marshal of any district in which any adverse party resides. 
Summons against adverse parties residing in foreign countries 
may be served by publication or otherwise as the court directs. 
The Commissioner shall not be a necessary party but he shall be 
notified of the filing of the suit by the clerk of the court in 
which it is filed and shall have the right to intervene. 
Judgment of the court in favor of the right of an applicant to 
a patent shall authorize the Commissioner to issue such patent 
on the filing in the [Patent and Trademark Office] Patent 
Office of certified copy of the judgment and on compliance with 
the requirements of law.

                      CHAPTER 14--ISSUE OF PATENT

Sec.

151. Issue of patent.
     * * * * * * *
154. Contents and term of patent; provisional rights.
          * * * * * * *

Sec. 152. Issue of patent to assignee

    Patents may be granted to the assignee of the inventor of 
record in the [Patent and Trademark Office] Patent Office, upon 
the application made and the specification sworn to by the 
inventor, except as otherwise provided in this title.

Sec. 153. How issued

    Patents shall be issued in the name of the United States of 
America, under the seal of the [Patent and Trademark Office] 
Patent Office, and shall be signed by the Commissioner or have 
his signature placed thereon and attested by an officer of the 
[Patent and Trademark Office] Patent Office designated by the 
Comissioner, and shall be recorded in the [Patent and Trademark 
Office] Patent Office.

Sec. 154. Contents and term of patent; provisional rights

    (a) In General.--
          (1) Contents.--
          * * * * * * *
    [(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) Adjustment of Patent Term.--
          (1) Basis for patent term restoration.--
                  (A) Delay.--Subject to the limitations under 
                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 Office in issuing the 
                        patent,
                the term of the patent shall be adjusted for 
                the period of delay.
                  (B) Administrative delay.--For purposes of 
                subparagraph (A)(iv), an unusual administrative 
                delay by the Patent 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;
                          (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; or
                          (v) issue a patent within 3 years 
                        after the actual filing date of the 
                        application in the United States, if 
                        the applicant--
                                  (I) has not obtained further 
                                limited examination of the 
                                application under section 
                                132(b) of this title;
                                  (II) has not benefited from 
                                an adjustment of patent term 
                                under clause (i), (ii), or 
                                (iii) or paragraph (1)(A);
                                  (III) has not sought or 
                                obtained appellate review by 
                                the Board of Patent Appeals and 
                                Interferences or by a Federal 
                                court other than in a case in 
                                which the patent was issued 
                                pursuant to a decision in the 
                                review reversing an adverse 
                                determination of patentability; 
                                and
                                  (IV) has not requested any 
                                delay in the processing of the 
                                application by the Patent 
                                Office.
          (2) Limitations.--
                  (A) In general.--The total duration of any 
                adjustments granted pursuant to either 
                subclause (iii) or (iv) of paragraph (1)(A) or 
                both such subclauses shall not exceed 10 years. 
                To the extent that periods of delay 
                attributable to grounds specified in paragraph 
                (1) overlap, the period of any adjustment 
                granted under this subsection shall not exceed 
                the actual number of days the issuance of the 
                patent was delayed.
                  (B) Reduction of adjustment.--The period of 
                adjustment of the term of a patent under this 
                subsection shall be reduced by a periodequal 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) Disclaimed term.--No patent the term of 
                which has been disclaimed beyond a specified 
                date may be adjusted under this section beyond 
                the expiration date specified in the 
                disclaimer.
                  (D) Applicant delay.--The period of 
                adjustment of the term of a patent under clause 
                (iv) of paragraph (1)(A), which is based on the 
                failure of the Patent Office to meet the 
                criteria set forth in clause (v) of paragraph 
                (1)(B), shall be reduced by the cumulative 
                total of any periods of time that an applicant 
                takes to respond in excess of 3 months after 
                the date on which the Patent Office makes any 
                rejection, objection, argument, or other 
                request, except that the Commissioner, upon 
                petition from the applicant in the case of a 
                nonprofit research laboratory or nonprofit 
                entity such as a university, research center, 
                or hospital, shall reinstate all or part of 
                such time upon a showing of good cause by the 
                applicant, but in no case more than 3 
                additional months for each such response beyond 
                3 months.
          (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.
          (4) Notice to commissioner.--In a case in which a 
        patent term is adjusted under this subsection, the 
        Commissioner shall determine the period of any patent 
        term adjustment available under this section and shall 
        include a copy of that determination with the final 
        notice. The Commissioner shall prescribe regulations 
        establishing procedures for the application for, and 
        notification of, patent term adjustments granted by the 
        Commissioner under this subsection.
          (5) Judicial review.--Any applicant dissatisfied with 
        a determination of the Commissioner under paragraph (3) 
        may have remedy by civil action in the United States 
        Court of Federal Claims if commenced within 180 days 
        after the mailing of the notice of allowance as the 
        Commissioner appoints. The initiation of a civil action 
        under this section shall not delay the issuance of a 
        patent.
    (c) Continuation.--
          (1) Determination.--The term of a patent that is in 
        force on or that results from an application filed 
        before the date that is 6 months after the date of the 
        enactment of the Uruguay Round Agreements Act shall be 
        the greater of the 20-year term provided in subsection 
        (a), or 17 years from grant, subject to any terminal 
        disclaimers.
          * * * * * * *
    (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 personwho, 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 filed under the treaty defined in section 
351(a) of this title designating the United States under Article 
21(2)(a) of such treaty, the date of 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 application.--
                  (A) Effective date.--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 Office receives a copy of the 
                publication under the treaty defined in section 
                351(a) of this title 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 Office receives a translation of the 
                international application in the English 
                language.
                  (B) Copies.--The Commissioner may require the 
                applicant to provide a copy of the 
                international application and a translation 
                thereof.
          (5) Issuance of patents on individual claims.--Where 
        the Director in a notification to the applicant under 
        section 132 of this title indicates that one or more 
        claims of a published application are allowable, the 
        applicant may request the issuance of a patent 
        incorporating those claims. The applicant may continue 
        prosecution of the remaining claims as provided in 
        chapter 12 of this title. Any subsequently allowed 
        claims may be incorporated into the patent. The 
        Director may establish appropriate fees to cover the 
        costs of incorporating any additional claims into the 
        patent.

Sec. 155. Patent term extension

    Notwithstanding the provisions of section 154, the term of 
a patent which encompasses within its scope a composition of 
matter or a process for using such composition shall be 
extended if such composition or process has been subjected to a 
regulatory review by the Federal Food and Drug Administration 
pursuant to the Federal Food, Drug, and Cosmetic Act leading to 
the publication of regulation permitting the interstate 
distribution and sale of such composition or process and for 
which there has thereafter been a stay of regulation of 
approval imposed pursuant to section 409 of the Federal Food, 
Drug, and Cosmetic Act which stay was in effect on January 1, 
1981, by a length of time to be measured from the date such 
stay of regulation of approval was imposed until such 
proceedings are finally resolved and commercial marketing 
permitted. The patentee, his heirs, successors or assigns shall 
notify the [Commissioner of Patents and Trademarks] 
Commissioner within ninety days of the date of enactment of 
this section or the date the stay of regulation of approval has 
been removed, whichever is later, of the number of the patent 
to be extended and the date the stay was imposed and the date 
commercial marketing was permitted. On receipt of such notice, 
the Commissioner shall promptly issue to the owner of record of 
the patent a certificate of extension, under seal, stating the 
fact and length of the extension and identifying the 
composition of matter or process for using such composition to 
which such extension is applicable. Such certificate shall be 
recorded in the official file of each patent extended and such 
certificate shall be considered as part of the original patent, 
and an appropriate notice shall be published in the Official 
Gazette of the [Patent and Trademark Office] Patent Office.

Sec. 155A. Patent term restoration

    (a) Notwithstanding section 154 of this title, the term of 
each of the following patents shall be extended in accordance 
with this section:
          * * * * * * *
    (c) The patentee of any patent described in subsection (a) 
of this section shall, within ninety days after the date of 
enactment of this section, notify the [Commissioner of Patents 
and Trademarks] Commissioner of the number of any patent so 
extended. On receipt of such notice, the Commissioner shall 
confirm such extension by placing a notice thereof in the 
official file of such patent and publishing an appropriate 
notice of such extension in the Official Gazette of the Patent 
and Trademark Office.

Sec. 156. Extension of patent term

    (a) The term of a patent which claims a product, a method 
of using a product, or a method of manufacturing a product 
shall be extended in accordance with this section from the 
original expiration date of the patent, which shall include any 
patent term adjustment granted under section 154(b), if--
          * * * * * * *
    (f) For purposes of this section:
          (1) The term ``product'' means:
          * * * * * * *
          (6) The term ``patent'' means a patent issued by the 
        United States [Patent and Trademark Office] Patent 
        Office.
          * * * * * * *

Sec. 157. Statutory invention registration

    (a) Notwithstanding any other provision of this title, the 
Commissioner is authorized to publish a statutory invention 
registration containing the specification and drawings of a 
regularly filed application for a patent without examination if 
the applicant--
          * * * * * * *
    (d) The [Secretary of Commerce] Director of the United 
States Patent and Trademark Organization shall report to the 
Congress annually on the use of statutory invention 
registrations. Such report shall include an assessment of the 
degree to which agencies of the Federal Government are making 
use of the statutory invention registration system, the degree 
to which it aids the management of federally developed 
technology, and an assessment of the cost savings to the 
Federal government of the use of such procedures.

                       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 sport, 
mutants, hybrids, and newly found seedlings, other than [a 
tuberpropagated 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 to the patentee, 
such patentee's heirs or assigns, shall have 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 or 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 
officers 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.
          * * * * * * *

  CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE

          * * * * * * *

Sec. 205. Confidentiality

    Federal agencies are authorized to withhold from disclosure 
to the public information disclosing any invention in which the 
Federal Government owns or may own a right, title, or interest 
(including a nonexclusive license) for a reasonable time in 
order for a patent application to be filed. Furthermore, 
Federal agencies shall not be required to release copies of any 
document which is part of an application for patent filed with 
the United States [Patent and Trademark Office] Patent Office 
or with any foreign patent office.
          * * * * * * *

           PART III--PATENTS AND PROTECTION OF PATENT RIGHTS

          * * * * * * *

            CHAPTER 25--AMENDMENT AND CORRECTION OF PATENTS

Sec.
251.  Reissue of defective patents.
     * * * * * * *
254.  Certificate of correction of [Patent and Trademark Office] Patent 
          Office mistake.
     * * * * * * *

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.
          * * * * * * *

Sec. 253. Disclaimer

    Whenever, without any deceptive intention, a claim of a 
patent is invalid the remaining claims shall not thereby be 
rendered invalid. A patentee, whether of the whole or any 
sectional interest therein, may, on payment of the fee required 
by law, make disclaimer of any complete claim, stating therein 
the extent of his interest in such patent. Such disclaimer 
shall be in writing, and recorded in the [Patent and Trademark 
Office] Patent Office; and it shall thereafter be considered as 
part of the original patent to the extent of the interest 
possessed by the disclaimant and by those claiming under him.
          * * * * * * *

Sec. 254. Certificate of corrections of [Patent and Trademark Office] 
                    Patent Office mistake

    Whenever a mistake in a patent, incurred through the fault 
of the [Patent and Trademark Office] Patent Office is clearly 
disclosed by the records of the Office, the Commissioner may 
issue a certificate of correction stating the fact and nature 
of such mistake, under seal, without charge, to be recorded in 
the records of patents. A printed copy thereof shall be 
attached to each printed copy of the patent, and such 
certificate shall be considered as part of the original patent. 
Every such patent, together with such certificate, 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 issued in such corrected form. The Commissioner may 
issue a corrected patent without charge in lieu of and with 
like effect as a certificate of correction.

Sec. 255. Certificate of correction of applicant's mistake

    Whenever a mistake of a clerical or typographical nature, 
or of minor character, which was not the fault of the [Patent 
and Trademark Office] Patent Office, appears in a patent and a 
showing has been made that such mistake occurred in good faith, 
the Commissioner may, upon payment of the required fee, issue a 
certificate of correction, if the correction does not involve 
such changes in the patent as would constitute new matter or 
would require re-examination. Such patent, together with the 
certificate, 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 issued in such corrected form.
          * * * * * * *

                  CHAPTER 26--OWNERSHIP AND ASSIGNMENT

          * * * * * * *

Sec. 261. Ownership; assignment

    Subject to the provisions of this title, patents shall have 
the attributes of personal property.
          * * * * * * *
    An assignment, grant or conveyance shall be void as against 
any subsequent purchaser or mortgagee for a valuable 
consideration, without notice, unless it is recorded in the 
[Patent and Trademark Office] Patent Office within three months 
from its date or prior to the date of such subsequent purchase 
or mortgage.
          * * * * * * *

                  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,'' ``commercial 
        use,'' and ``commercial use''--
                  (A) mean the use in the United States in 
                commerce, use by the United States, or the use 
                in the design, testing, or production in the 
                United States of a product or service which is 
                used in commerce or used by the United States, 
                whether or not the subject matter at issue is 
                accessible to or otherwise known to the public; 
                and
                  (B) includes in the case of activities 
                performed by a nonprofit research laboratory, 
                or nonprofit entity such as a university, 
                research center, or hospital, a use for which 
                the public is the intended beneficiary shall be 
                considered to be a use described in 
                subparagraph (A) except that the use:
                          (i) may be asserted as a defense 
                        under this section only for continued 
                        use by and in the laboratory or 
                        nonprofit entity; and
                          (ii) may not be asserted as a defense 
                        with respect to any subsequent 
                        commercialization or use outside such 
                        laboratory or nonprofit entity;
          (2) the terms ``used in commerce,'' and ``use in 
        commerce'' mean that there has been an actual arms-
        length sale or other commercial transfer, or use by the 
        United States, of the subject matter at issue or that 
        there has been an actual arms-length sale or other 
        commercial transfer, or use by the United States, 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) In general.--A person shall not be liable as an 
        infringer under section 271 of this title, nor shall 
        the United States be held liable under section 1498(a) 
        of title 28, 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) Exhaustion of right.--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 tothe extent 
such rights would have been exhausted had such sale or other 
disposition been made by the patent owner.
    (c) Limitation 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 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 an arms-length 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 actually 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 ease 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.
          * * * * * * *

Sec. 287. Limitation on damages and other remedies; marking and notice

    (a) * * *
          * * * * * * *
    (c)(1) With respect to a medical practitioner's performance 
of a medical activity that constitutes an infringement under 
section 271(a) or (b) of this title, the provisions of sections 
281, 283, 284, and 285 of this title shall not apply against 
the medical practitioner or against a related health care 
entity with respect to such medical activity.
          * * * * * * *
    (4) This subsection shall not apply to any patent issued 
[before the date of enactment of this subsection] based on an 
application the earliest effective filing date of which is 
prior to September 30, 1996.
          * * * * * * *

Sec. 288. Action for infringement of a patent containing an invalid 
                    claim

    Whenever, without deceptive intention, a claim of a patent 
is invalid, an action may be maintained for the infringement of 
a claim of the patent which may be valid. The patentee shall 
recover no cost unless a disclaimer of the invalid claim has 
been entered at the [Patent and Trademark Office] Patent Office 
before the commencement of the suit. .
          * * * * * * *

Sec. 293. Nonresident patentee; service and notice

    Every patentee not residing in the United States may file 
in the [Patent and Trademark Office] Patent Office a written 
designation stating the name and address of a person residing 
within the United States on whom may be served process or 
notice of proceedings affecting the patent or rights 
thereunder. If the person designated cannot be found at the 
address given in the last designation, or if no person has been 
designated, the United States District Court for the District 
of Columbia shall have jurisdiction and summons shall be served 
by publication or otherwise as the court directs. The court 
shall have the same jurisdiction to take any action respecting 
the patent or rights thereunder that it would have if the 
patentee were personally within the jurisdiction of the court.
          * * * * * * *

 CHAPTER 30--PRIOR ART CITATIONS TO OFFICE AND REEXAMINATION OF PATENTS

Sec.

301. Citation of prior art.
     * * * * * * *
308. Reexamination prohibited.
     * * * * * * *

[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 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. 302. Request for reexamination

    (a) In General.--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.
    (b) Requirements.--The request shall--
          (1) be in writing, include the identity of the real 
        party in interest, and be accompanied by payment of a 
        reexamination fee established by the Commissioner of 
        Patents pursuant to the provisions of section 41 of 
        this title; and
          (2) set forth the pertinency and manner of applying 
        cited prior art to every claim for which reexamination 
        is requested.
    (c) Copy.--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) Within three months following the filing of a request 
for reexamination under the provisions of section 302 of this 
title, the Commission 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 records 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. 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, and any time, 
the Commissioner may determine whether a substantial new 
question of patentability is raised by patents and 
publications.
    (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 or 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 
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. 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 
Officer on the merits of the reexamination conducted in 
accordance with section 305 of this title.

[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. 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 
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 
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

    [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. 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 may--
          (1) 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; or
          (2) be a party to any appeal taken by the patent 
        owner, subject to subsection (c) of this section.
    (c) Participation as Party.--
          (1) In general.--A third-party requester whose 
        request for a reexamination results in an order under 
        section 304 of this title is stopped from asserting at 
        a later time, in any civil action arising in whole or 
        in part under section 1338 of title 28, 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. 
        This subsection does not prevent the assertion of 
        invalidity based on newly discovered prior art 
        unavailable to the third-party requester and the Patent 
        Office at the time of the reexamination proceedings.
          (2) Election to participate.--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. 307. Certificate of patentability, unpatentability, and claim 
                    cancellation

    (a) In a reexamination proceeding under this chapter, when 
the time for appeal has expired or any appeal proceeding has 
terminated, the Commissioner will issue and publish a 
certificate canceling any claim of the patent finally 
determined to be unpatentable, confirming any claim of the 
patent determined to be patentable, and incorporating in the 
patent any proposed amended or new claim determined to be 
patentable.
    (b) Any proposed amended or new claim determined to be 
patentable and incorporated into a patent following a 
reexamination proceeding will have the same effect as that 
specified in section 252 of this title for reissued patents on 
the right of any person who made, purchased, or used within the 
United States, or imported into the United States, anything 
patented by such proposed amended or new claim, or who made 
substantial preparation for the same, prior to issuance of a 
certificate under the provisions of subsection (a) of this 
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 1388 of title 28 that the party has not sustained 
its burden of proving the invalidity of any patent claim in 
suit or if a final decision in a reexamination proceeding 
instituted by a third-party requester is favorable to a 
patentability of any original or proposed amended as new claim 
of the patent and such decision is not appealed by the third-
party requester under section 306(b), 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 or 
reexamination proceeding, 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. This subsection does not 
prevent the assertion of invalidity based on newly discovered 
prior art unavailable to the third-party requester and the 
Patent Office at the time of the reexamination proceedings.
          * * * * * * *

                   PART IV--PATENT COOPERATION TREATY

          * * * * * * *

                        CHAPTER 35--DEFINITIONS

          * * * * * * *

Sec. 351. Definitions

    When used in this part unless the context otherwise 
indicates--
    (a) The term ``treaty'' means the Patent Cooperation Treaty 
done at Washington, on June 19, 1970, excluding chapter II 
thereof.
          * * * * * * *
    (d) The term ``international application originating in the 
United States'' means an international application filed in the 
[Patent and Trademark Office] Patent Office when it is acting 
as a Receiving Office under the treaty, irrespective of whether 
or not the United States has been designated in that 
international application.
          * * * * * * *

                    CHAPTER 36--INTERNATIONAL STAGE

          * * * * * * *

Sec. 361. Receiving Office

    (a) The [Patent and Trademark Office] Patent Office shall 
act as a Receiving Office for international applications filed 
by nationals or residents of the United States. In accordance 
with any agreement made between the United States and another 
country, the [Patent and Trademark Office] Patent Office may 
also act as a Receiving Office for international applications 
filed by residents or nationals of such country who are 
entitled to file international applications.
    (b) The [Patent and Trademark Office] Patent Office shall 
perform all acts connected with the discharge of duties 
required of a Receiving Office, including the collection of 
international fees and their transmittal to the International 
Bureau.
    (c) International applications filed in the [Patent and 
Trademark Office] Patent Office shall be in the English 
language.
          * * * * * * *

Sec. 362. International Searching Authority and International 
                    Preliminary Examining Authority

    (a) The [Patent and Trademark Office] Patent Office may act 
as an International Searching Authority and International 
Preliminary Examining Authority with respect to international 
applications in accordance with the terms and conditions of an 
agreement which may be concluded with the International Bureau, 
and may discharge all duties required of such Authorities, 
including the collection of handling fees and their transmittal 
to the International Bureau.
          * * * * * * *

Sec. 363. International application designating the United States: 
                    Effect

    An international application designating the United States 
shall have the effect, from its international filing date under 
article 11 of the treaty, of a national application for patent 
regularly filed in the [Patent and Trademark Office] Patent 
Office except as otherwise provided in section 102(e) of this 
title.

Sec. 364. International stage: Procedure

    (a) International applications shall be processed by the 
[Patent and Trademark Office] Patent Office when acting as a 
Receiving Office, International Searching Authority, or 
International Preliminary Examining Authority, in accordance 
with the applicable provisions of the treaty, the Regulations, 
and this title.
          * * * * * * *

Sec. 365. Right of priority; benefit of the filing date of a prior 
                    application

    (a) * * *
          * * * * * * *
    (c) In accordance with the conditions and requirements of 
section 120 of this title, and international application 
designating the United States shall be entitled to the benefit 
of the filing date of a prior national application or a prior 
international application designating the United States, and a 
national application shall be entitled to the benefit of the 
filing date of a prior international application designating 
the United States. If any claim for the benefit of an earlier 
filing date is based on a prior international application which 
designated but did not originate in the United States, the 
Commissioner may require the filing in the [Patent and 
Trademark Office] Patent Office of a certified copy of such 
application together with a translation thereof into the 
English language, if it was filed in another language.
          * * * * * * *

Sec. 367. Actions of other authorities: Review

    (a) Where a Receiving Office other than the [Patent and 
Trademark Office] Patent Office has refused to accord an 
international filing date to an international application 
designating the United States or where it has held such 
application to be withdrawn either generally or as to the 
United States, the applicant may request review of the matter 
by the Commissioner, on compliance with the requirements of and 
within the time limits specified by the treaty and the 
Regulations. Such review may result in a determination that 
such application be considered as pending in the national 
stage.
          * * * * * * *

Sec. 368. Secrecy of certain inventions; filing international 
                    applications in foreign countries

    (a) International application filed in the [Patent and 
Trademark Office] Patent Office shall be subject to the 
provisions of chapter 17 of this title.
          * * * * * * *
    (c) If a license to file in a foreign country is refused or 
if an international application is ordered to be kept secret 
and a permit refused, the [Patent and Trademark Office] Patent 
Office when acting as a Receiving Office, International 
Searching Authority, or International Preliminary Examining 
Authority, may not disclose the contents of such application to 
anyone not authorized to receive such disclosure.

                       CHAPTER 37--NATIONAL STAGE

          * * * * * * *

Sec. 371. National stage: Commencement

    (a) * * *
          * * * * * * *
    (c) The applicant shall file in the [Patent and Trademark 
Office] Patent Office--
          (1) the national fee provided in section 41(a) of 
        this title;
          * * * * * * *
          (3) amendments, if any, to the claims in the 
        international application, made under article 19 of the 
        treaty, unless such amendments have been communicated 
        to the [Patent and Trademark Office] Patent Office by 
        the International Bureau, and a translation into the 
        English language if such amendments were made in 
        another language;
          * * * * * * *

Sec. 372. National stage: Requirements and procedure

    (a) All questions of substance and, within the scope of the 
requirements of the treaty and Regulations, procedure in an 
international application designating the United States shall 
be determined as in the case of national applications regularly 
filed in the [Patent and Trademark Office] Patent Office.
          * * * * * * *

Sec. 373. Improper applicant

    An international application designating the United States, 
shall not be accepted by the [Patent and Trademark Office] 
Patent Office for the national stage if it was filed by anyone 
not qualified under chapter 11 of this title to be an applicant 
for the purpose of filing a national application in the United 
States. Such international application shall not serve as the 
basis for the benefit of an earlier filing date under section 
120 of this title in a subsequently filed application, but may 
serve as the basis for a claim of the right of priority under 
subsection (a) through (d) of section 119 of this title, if the 
United States was not the sole country designated in such 
international application.

[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.
          * * * * * * *

Sec. 376. Fees

    (a) The required payment of the international fee and the 
handling fee, which amounts are specified in the Regulations, 
shall be paid in United States currency. The [Patent and 
Trademark Office] Patent Office shall charge a national fee as 
provided in section 41(a), and may also charge the following 
fees:
          * * * * * * *

                        The Act of July 5, 1946

          (Commonly referred to as the Trademark Act of 1946)

                              (15 U.S.C.)

          * * * * * * *

                TITLE X--UNITED STATES TRADEMARK OFFICE

SEC. 51. ESTABLISHMENT.

    (a) Establishment.--The United States Trademark Office is 
established as a separate administrative unit of the United 
States Patent and Trademark Organization.
    (b) Reference.--For purposes of this chapter, the United 
States Trademark Office shall also be referred to as the 
``Office'' and the ``Trademark Office''.

SEC. 52. POWERS AND DUTIES.

    The United States Trademark Office, under the policy 
direction of the Secretary of Commerce through the Director of 
the United States Patent and Trademark Organization, shall be 
responsible for--
          (1) the registration of trademarks;
          (2) conducting studies, programs, or exchanges of 
        items or services regarding domestic and international 
        trademark law or the administration of the Office;
          (3) authorizing or conducting studies and programs 
        cooperatively with foreign trademark offices and 
        international organizations, in connection with the 
        registration of trademarks; and
          (4) disseminating to the public information with 
        respect to trademarks.

SEC. 53. OFFICERS AND EMPLOYEES.

    (a) Commissioner.--
          (1) In general.--The management of the United States 
        Trademark Office shall be vested in a Commissioner of 
        Trademarks, who shall be a citizen of the United States 
        and who shall be appointed by the Director of the 
        United States Patent and Trademark Organization and 
        shall serve at the pleasure of the Director of the 
        United States Patent and Trademark Organization. The 
        Commissioner of Trademarks shall be a person who, by 
        reason of professional background and experience in 
        trademark law, is especially qualified to manage the 
        Office.
          (2) Duties.--
                  (A) In general.--The Commissioner shall be 
                responsible for all aspects of the management, 
                administration, and operation of the Office, 
                including the registration of trademarks, and 
                shall perform these duties in a fair, 
                impartial, and equitable manner.
                  (B) Advising the director of the united 
                states patent and trademark organization.--The 
                Commissioner of Trademarks shall advise the 
                Director of the United States Patent and 
                Trademark Organization 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 
                registering trademarks. The Commissioner of 
                Trademarks shall advise the Director of the 
                United States Patent and Trademark Organization 
                on matters of trademark law and shall recommend 
                to the Director of the United States Patent and 
                Trademark Organization changes in law or policy 
                which may improve the ability of United States 
                citizens to secure and enforce trademark rights 
                in the United States or in foreign countries.
                  (C) Regulations.--The Commissioner may 
                establish regulations, not inconsistent with 
                law, for the conduct of proceedings in the 
                Trademark Office. The Director of the United 
                States Patent and Trademark Organization shall 
                determine whether such regulations are 
                consistent with the policy direction of the 
                Secretary of Commerce.
                  (D) Consultation with the management advisory 
                board.--(i) The Commissioner shall consult with 
                the Trademark Office Management Advisory Board 
                established under section 54--
                          (I) on a regular basis on matters 
                        relating to the operation of the 
                        Office; and
                          (II) before submitting budgetary 
                        proposals to the Director of the United 
                        States Patent and Trademark 
                        Organization for submission to the 
                        Office of Management and Budget or 
                        changing or proposingto change 
trademark user fees or trademark regulations.
                  (ii) The Director of the United States Patent 
                and Trademark Organization shall determine 
                whether such fees or regulations are consistent 
                with the policy direction of the Secretary of 
                Commerce.
                  (E) Publications.--(i) The Commissioner may 
                print, or cause to be printed, the following:
                          (I) Certificates of trademark 
                        registrations, including statements and 
                        drawings, together with copies of the 
                        same.
                          (II) The Official Gazette of the 
                        United States Trademark Office.
                          (III) Annual indexes of trademarks 
                        and registrants.
                          (IV) Annual volumes of decisions in 
                        trademark cases.
                          (V) Pamphlet copies of laws and rules 
                        relating to trademarks and circulars or 
                        other publications relating to the 
                        business of the Office.
                  (ii) The Commissioner may exchange any of the 
                publications specified under clause (i) for 
                publications desirable for the use of the 
                Trademark Office.
          (3) Oath.--The Commissioner shall, before taking 
        office, take an oath to discharge faithfully the duties 
        of the Office.
          (4) Compensation.--
                  (A) In general.--The Commissioner shall 
                receive compensation at the rate of pay in 
                effect for level IV of the Executive Schedule 
                under section 5315 of title 5, United States 
                Code.
                  (B) Bonus.--In addition to compensation under 
                subparagraph (A), the Commissioner may, at the 
                discretion of the Director of the United States 
                Patent and Trademark Organization, receive as a 
                bonus, an amount which would raise total 
                compensation to the equivalent of the rate of 
                pay in effect for level III of the Executive 
                Schedule under section 5314 of title 5.
    (b) Officers and Employees.--The Commissioner shall appoint 
a Deputy Commissioner of Trademarks 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. In the 
event of a vacancy in the office of Commissioner, the Deputy 
Commissioner shall fill the office of Commissioner until a new 
Commissioner is appointed and takes office. Other officers, 
attorneys, employees, and agents shall be selected and 
appointed by the Commissioner, and shall be vested with such 
powers and duties as the Commissioner may determine.

SEC. 54. TRADEMARK OFFICE MANAGEMENT ADVISORY BOARD.

    (a) Establishment of Management Advisory Board.--
          (1) Appointment.--The United States Trademark Office 
        shall have a Management Advisory Board (hereafter in 
        this title referred to as the ``Advisory Board'') of 5 
        members, who shall be appointed by the President and 
        shall serve at the pleasure of the President. Not more 
        than 3 of the 5 members shall be members of the same 
        political party.
          (2) Chair.--The President shall designate a Chair of 
        the Advisory Board, whose term as chair shall be for 3 
        years.
          (3) Timing of appointments.--Initial appointments to 
        the Advisory Board shall be made within 3 months after 
        the effective date of the UnitedStates Patent and 
Trademark Organization Act of 1997. Vacancies shall be filled in the 
manner in which the original appointment was made under this section 
within 3 months after they occur.
    (b) Basis for Appointments.--Members of the Advisory 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 Trademark Office, and shall include individuals with 
substantial background and achievement in corporate finance and 
management.
    (c) Meetings.--The Advisory Board shall meet at the call of 
the Chair to consider an agenda set by the Chair.
    (d) Duties.--The Advisory Board shall--
          (1) review the policies, goals, performance, budget, 
        and user fees of the United States Trademark Office, 
        and advise the Commissioner on these matters; and
          (2) within 60 days after the end of each fiscal 
        year--
                  (A) prepare an annual report on the matters 
                referred to under paragraph (1);
                  (B) transmit the report to the Director of 
                the United States Patent and Trademark 
                Organization, the President, and the Committees 
                on the Judiciary of the Senate and the House of 
                Representatives; and
                  (C) publish the report in the Trademark 
                Office Official Gazette.
    (f) Compensation.--Each member of the Advisory Board shall 
be compensated for each day (including travel time) during 
which such member is attending meetings or conferences of the 
Advisory Board or otherwise engaged in the business of the 
Advisory 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, United States 
Code, and while away from such member's home or regular place 
of business such member may be allowed travel expenses, 
including per diem in lieu of subsistence, as authorized by 
section 5703 of title 5, United States Code.
    (g) Access to Information.--Members of the Advisory Board 
shall be provided access to records and information in the 
United States Trademark Office, except for personnel or other 
privileged information.
    (h) Applicability of Certain Ethic Laws.--Members of the 
Advisory Board shall be special Government employees within the 
meaning of section 202 of title 18.

SEC. 55. ANNUAL REPORT TO CONGRESS.

    The Commissioner shall report to the Director of the United 
States Patent and Trademark Organization such information as 
the Director is required to report to Congress annually under 
chapter 91 of title 5, including--
          (1) the moneys received and expended by the Office;
          (2) the purposes for which the moneys were spent;
          (3) the quality and quantity of the work of the 
        Office; and
          (4) other information relating to the Office.

SEC. 56. TRADEMARK OFFICE FUNDING.

    (a) Fees Payable to the Office.--All fees for services 
performed by or materials furnished by the United States 
Trademark Office shall be payable to the Office.
    (b) Use of Moneys.--Moneys from fees shall be available to 
the United States 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 Commissioner under this 
chapter shall be used only for the registration of trademarks 
and for other services and materials relating to trademarks, 
including the agreed upon share of any centralized function, as 
set forth in section 113(b)(2)(E) of the United States Patent 
and Trademark Organization Act of 1997.
    (c) Contribution to the Office of the Director of the 
United States Patent and Trademark Organization.--The Trademark 
Office shall contribute 50 percent of the annual budget of the 
Office of the Director of the United States Patent and 
Trademark Organization.

               TITLE [X] XI--CONSTRUCTION AND DEFINITIONS

    Sec. [45] 61. In the construction of this Act, unless the 
contrary is plainly apparent from the context--
          * * * * * * *

                TITLE [XI] XII--REPEAL OF PREVIOUS ACTS

    Sec. [46] 71. (a) This Act shall be in force * * *
          * * * * * * *
    Sec. [47] 72. (a) All applications for registration pending 
in the Patent Office at the effective date of this Act may be 
amended, if practicable, to bring them under the provisions of 
this Act. The prosecution of such applications so amended and 
the grant of registrations thereon shall be proceeded with in 
accordance with the provisions of this Act. If such amendments 
are not made, the prosecution of said applications shall be 
proceeded with and registrations thereon granted in accordance 
with the Acts under which said applications were filed, and 
said Acts are hereby continued in force to this extent and for 
this purpose only, notwithstanding the foregoing general repeal 
thereof.
          * * * * * * *
    Sec. [48] 73. Section 4 of the Act of January 5, 1905 
(U.S.C., title 36, sec. 4), as amended, entitled ``An Act to 
incorporate the National Red Cross'', and section 7 of the Act 
of June 15, 1916 (U.S.C., title 36, sec. 27), entitled ``An Act 
to incorporate the Boy Scouts of America, and for other 
purposes'', and the Act of June 20, 1936 (U.S.C., title 22, 
sec. 248), entitled ``An Act to prohibit the commercial use of 
the coat of arms of the Swiss Confederation'', are not repealed 
or affected by this Act.
    Sec. [49] 74. Nothing herein shall adversely affect the 
rights or the enforcement of rights in marks acquired in good 
faith prior to the effective date of this Act.
    Sec. [50] 75. If any provision of this Act or the 
application of such provision to any person or circumstance is 
held invalid, the remainder of the Act shall not be affected 
thereby.
    Sec. [51] 76. All certificates of registration based upon 
applications for registration pending in the Patent and 
Trademark Office on the effective date of the Trademark Law 
Revision Act of 1988 shall remain in force for a period of 10 
years.
          * * * * * * *

Sec. 1051. Registration of trade-marks

    (a) Trade-Marks Used in Commerce.--
    The owner of a trademark used in commerce may apply to 
register his or her trademark under this chapter on the 
principal register established:
          (1) By filing in the [Patent and Trademark Office] 
        Trademark Office--
          * * * * * * *
          (2) By paying into the [Patent and Trademark Office] 
        Trademark Office the prescribed fee.
          * * * * * * *
    (b) Trade-Marks Intended for Use in Commerce.--
    A person who has a bona fide intention, under circumstances 
showing the good faith of such person, to use a trademark in 
commerce may apply to register the trademark under this chapter 
on the principal register hereby established:
          (1) By filing in the [Patent and Trademark Office] 
        Trademark Office--
          * * * * * * *
          (2) By paying in the [Patent and Trademark Office] 
        Trademark Office the prescribed fee.
          * * * * * * *
    (d) Verified Statement That Trade-Mark Is Used in 
Commerce.--
          (1) Within six months after the date on which the 
        notice of allowance with respect to a mark is issued 
        under section 1063(b)(2) of this title to an applicant 
        under subsection (b) of this section, the applicant 
        shall file in the [Patent and Trademark Office] 
        Trademark Office, together with such number of 
        specimens or facsimiles of the mark as used in commerce 
        as may be required by the Commissioner and payment of 
        the prescribed fee, a verified statement that the mark 
        is in use in commerce and specifying the date of the 
        applicant's first use of the mark in commerce, those 
        goods or services specified in the notice of allowance 
        on or in connection with which the mark is used in 
        commerce, and the mode or manner in which the mark is 
        used on or in connection with such goods or services. 
        Subject to examination and acceptance of the statement 
        of use, the mark shall be registered in the [Patent and 
        Trademark Office] Trademark Office, a certificate of 
        registration shall be issued for those goods or 
        services recited in the statement for use for which the 
        mark is entitled to registration, and notice of 
        registration shall be published in the Official Gazette 
        of the [Patent and Trademark Office] Trademark Office. 
        Such examination may include an examination of the 
        factors set forth in subsections (a) through (e) of 
        section 1052 of this title. The notice of registration 
        shall specify the goods or services for which the mark 
        is registered.
          * * * * * * *
    (e) Designation of Resident for Service of Process and 
Notices.--
    If the applicant is not domiciled in the United States he 
shall designate by a written document filed in the [Patent and 
Trademark Office] Trademark Office the name and address of some 
person resident in the United States on whom may be served 
notices of process in proceedings affecting the mark. Such 
notices or process may be served upon the person so designated 
by leaving with him or mailing to him a copy thereof at the 
address specified in the last designations so filed. If the 
person so designated cannot be found at the address given in 
the last designation, such notice or process may be served upon 
the Commissioner.

Sec. 1052. Trademarks registrable on principal register; concurrent 
                    registration

    No trademark by which the goods of the applicant may be 
distinguished from the goods of others shall be refused 
registration on the principal register on account of its nature 
unless it--
    (a) * * *
          * * * * * * *
    (d) Consists of or comprises a mark which so resembles a 
mark registered in the [Patent and Trademark Office] Trademark 
Office, or a mark or trade name previously used in the United 
States by another and not abandoned, as to be likely, when used 
on or in connection with the goods of the applicant, to cause 
confusion, or to cause mistake, or to deceive: Provided, That 
if the Commissioner determines that confusion, mistake, or 
deception is not likely to result from the continued use by 
more than one person of the same or similar marks under 
conditions and limitations as to the mode or place of use of 
the marks or the goods on or in connection with which such 
marks are used, concurrent registrations may be issued to such 
persons when they have become entitled to use such marks as a 
result of their concurrent lawful use in commerce prior to (1) 
the earliest of the filing dates of the applications pending or 
of any registration issued under this chapter; (2) July 5, 
1947, in the case of registrations previously issued under the 
Act of March 3, 1881, or February 20, 1905, and continuing in 
full force and effect on that date; or (3) July 5, 1947, in the 
case of applications filed under the Act of February 20, 1905, 
and registered after July 5, 1947. Use prior to the filing date 
of any pending application or a registration shall not be 
required when the owner of such application or registration 
consents to the grant of a concurrent registration to the 
applicant. Concurrent registrations may also be issued by the 
Commissioner when a court of competent jurisdiction has finally 
determined that more than one person is entitled to use the 
same or similar marks in commerce. In issuing concurrent 
registrations, the Commissioner shall prescribe conditions and 
limitations as to the mode or place of use of the mark or the 
goods on or in connection with which such mark is registered to 
the respective persons.
          * * * * * * *

Sec. 1057. Certificates of registration

    (a) Issuance and Form.--
    Certificates of registration of marks registered upon the 
principal register shall be issued in the name of the United 
States of America, under the seal of the [Patent and Trademark 
Office] Trademark Office, and shall be signed by the 
Commissioner or have his signature placed thereon, and a record 
thereof shall be kept in the [Patent and Trademark Office] 
Trademark Office. The registration shall reproduce the mark, 
and state that the mark is registered on the principal register 
under this chapter, the date of the first use of the mark, the 
date of the first use of the mark in commerce, the particular 
goods or services for which it is registered, the number and 
date of the registration, the term thereof, the date on which 
the application for registration was received in the [Patent 
and Trademark Office] Trademark Office, and any conditions and 
limitations that may be imposed in the registration.
          * * * * * * *
    (d) Issuance to Assignee.--
    A certificate of registration of a mark may be issued to 
the assignee of the applicant, but the assignment must first be 
recorded in the [Patent and Trademark Office] Trademark Office. 
In case of change of ownership the Commissioner shall, at the 
request of the owner and upon a proper showing and the payment 
of the prescribed fee, issue to such assignee a new certificate 
of registration of the said mark in the name of such assignee, 
and for the unexpired part of the original period.
    (e) Surrender, Cancellation, or Amendment by Registrant.--
    Upon application of the registrant the Commissioner may 
permit any registration to be surrendered for cancellation, and 
upon cancellation appropriate entry shall be made in the 
records of the [Patent and Trademark Office] Trademark Office. 
Upon application of the registrant and payment of the 
prescribed fee, the Commissioner for good cause may permit any 
registration to be amended or to be disclaimed in part: 
Provided, That the amendment or disclaimer does not alter 
materially the character of the mark. Appropriate entry shall 
be made in the records of the [Patent and Trademark Office] 
Trademark Office and upon the certificate of registration or, 
if said certificate is lost or destroyed, upon a certified copy 
thereof.
    (f) Copies of [Patent and Trademark Office] Trademark 
Office Records as Evidence.--
    Copies of any records, books, papers, or drawings belonging 
to the [Patent and Trademark Office] Trademark Office relating 
to marks, and copies of registrations, when authenticated by 
the seal of the [Patent and Trademark Office] Trademark Office 
and certified by the Commissioner, or in his name by an 
employee of the Office duly designated by the Commissioner, 
shall be evidence in all cases wherein the originals would be 
evidence; and any person making application therefore and 
paying the prescribed fee shall have such copies.
    (g) Correction of [Patent and Trademark Office] Trademark 
Office Mistake.--
    Whenever a material mistake in a registration, incurred 
through the fault of the [Patent and Trademark Office] 
Trademark Office, is clearly disclosed by the records of the 
Office a certificate stating the fact and nature of such 
mistake, shall be issued without charge and recorded and a 
printed copy thereof shall be attached to each printed copy of 
the registration certificate and such corrected registration 
shall thereafter have the same effect as if the same had been 
originally issued in such corrected form, or in the discretion 
of the Commissioner a new certificate of registration may be 
issued without charge. All certificates of correction 
heretofore issued in accordance with the rules of the [Patent 
and Trademark Office] Trademark Office and the registrations to 
which they are attached shall have the same force and effect as 
if such certificates and their issue had been specifically 
authorized by statute.
          * * * * * * *

Sec. 1058. Duration of registration

    (a) Affidavit of Continuing Use.--
    Each certificate of registration shall remain in force for 
ten years: Provided, That the registration of any mark under 
the provisions of this chapter shall be canceled by the 
Commissioner at the end of six years following its date, unless 
within one year next preceding the expiration of such six years 
the registrant shall file in the [Patent and Trademark Office] 
Trademark Office an affidavit setting forth those goods or 
services recited in the registration on or in connection with 
which the mark is in use in commerce and attaching to the 
affidavit a specimen or facsimile showing current use of the 
mark, or showing that any nonuse is due to special 
circumstances which excuse such nonuse and is not due to any 
intention to abandon the mark. Special notice of the 
requirement for such affidavit shall be attached to each 
certificate of registration.
    (b) Registration Published Under Other Provisions of Law.--
    Any registration published under the provisions of 
subsection (c) of section 1062 of this title shall be canceled 
by the Commissioner at the end of six years after the date of 
such publication unless within one year next preceding the 
expiration of such six years the registrant shall file in the 
[Patent and Trademark Office] Trademark Office an affidavit 
showing that said mark is in use in commerce or showing that 
its nonuse is due to special circumstances which excuse such 
nonuse and is not due to any intention to abandon the mark.
          * * * * * * *

Sec. 1060. Assignment of mark; execution; recording; purchaser without 
                    notice

    A registered mark or a mark for which application to 
register has been filed shall be assignable with the goodwill 
of the business in which the mark is used, or with that part of 
the goodwill of the business connected with the use of and 
symbolized by the mark. However, no application to register a 
mark under section 1051(b) of this title shall be assignable 
prior to the filing of the verified statement of use under 
section 1051(d) of this title, except to a successor to the 
business of the applicant, or portion thereof, to which the 
mark pertains, if that business is ongoing and existing. In any 
assignment authorized by this section it shall not be necessary 
to include the goodwill of the business connected with the use 
of and symbolized by any other mark used in the business or by 
the name or style under which the business is conducted. 
Assignments shall be by instruments in writing duly executed. 
Acknowledgement shall be prima facie evidence of the execution 
of an assignment and when recorded in the [Patent and Trademark 
Office] Trademark Office the record shall be prima facie 
evidence of execution. An assignment shall be void as against 
any subsequent purchaser for a valuable consideration without 
notice, unless it is recorded in the [Patent and Trademark 
Office] Trademark Office within three months after the date 
thereof or prior to such subsequent purchase. A separate record 
of assignments submitted for recording hereunder shall be 
maintained in the [Patent and Trademark Office] Trademark 
Office.
          * * * * * * *

Sec. 1062. Publication

    (a) Examination and Publication.--
    Upon the filing of an application for registration and 
payment of the prescribed fee, the Commissioner shall refer the 
application to the examiner in charge of the registration of 
marks, who shall cause an examination to be made and, if on 
such examination it shall appear that the applicant is entitled 
to registration, or would be entitled to registration upon the 
acceptance of the statement of use required by section 1051(d) 
of this title, the Commissioner shall cause the mark to be 
published in the Official Gazette of the [Patent and Trademark 
Office] Trademark Office: Provided, That in the case of an 
applicant claiming concurrent use, or in the case of an 
application to be placed in an interference as provided for in 
section 1066 of this title, the mark, if otherwise registrable, 
may be published subject to the determination of the rights of 
the parties to such proceedings.
          * * * * * * *

Sec. 1063. Opposition to registration

    (a) Any person who believes that he would be damaged by the 
registration of a mark upon the principal register may, upon 
payment of the prescribed fee, file an opposition in the 
[Patent and Trademark Office] Trademark Office, stating the 
grounds therefor, within thirty days after the publication 
under subsection (a) of section 1062 of this title of the mark 
sought to be registered. Upon written request prior to the 
expiration of the thirty-day period, the time for filing 
opposition shall be extended for an additional thirty days, and 
further extensions of time for filing opposition may be granted 
by the Commissioner for good cause when requested prior to the 
expiration of an extension. The Commissioner shall notify the 
applicant of each extension of the time for filing opposition. 
An opposition may be amended under such conditions as may be 
prescribed by the Commissioner.
    (b) Unless registration is successfully opposed--
          (1) a mark entitled to registration on the principal 
        register based on an application filed under section 
        1051(a) or pursuant to section 1126 of this title shall 
        be registered in the [Patent and Trademark Office] 
        Trademark Office, a certificate of registration shall 
        be issued, and notice of the registration shall be 
        published in the Official Gazette of the [Patent and 
        Trademark Office] Trademark Office; or
          * * * * * * *

Sec. 1065. Incontestability of right to use mark under certain 
                    conditions

    Except on a ground for which application to cancel may be 
filed at any time under paragraphs (3) and (5) of section 1064 
of this title, and except to the extent, if any, to which the 
use of a mark registered on the principal register infringes a 
valid right acquired under the law of any State or Territory by 
use of a mark or trade name continuing from a date prior to the 
date of registration under this chapter of such registered 
mark, the right of the registrant to use such registered mark 
in commerce for the goods or services on or in connection with 
which such registered mark has been in continuous use for five 
consecutive years subsequent to the date of such registration 
and is still in use in commerce, shall be incontestable: 
Provided, That--
          (1) * * *
          (2) there is no proceeding involving said rights 
        pending in the [Patent and Trademark Office] Trademark 
        Office or in a court and not finally disposed of; and
          * * * * * * *

Sec. 1067. Interference, opposition, and proceedings for concurrent use 
                    registration or for cancellation; notice; Trademark 
                    Trial and Appeal Board

    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.
    The Trademark Trial 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] 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. 1071. Appeal to courts

    (a) Persons Entitled to Appeal; United States Court of 
Appeals for the Federal Circuit; Waiver of Civil Action; 
Election of Civil Action by Adverse Party; Procedure.--
          (1) * * *
          (2) When an appeal is taken to the United States 
        Court of Appeals for the Federal Circuit, the appellant 
        shall file in the [Patent and Trademark Office] 
        Trademark Office a written notice of appeal directed to 
        the Commissioner, within such time after the date of 
        the decision from which the appeal is taken as the 
        Commissioner prescribes, but in no case less than 60 
        days after that date.
          (3) 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] 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 that court a brief 
        explaining the grounds for the decision of the [Patent 
        and Trademark Office] 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.
          (4) The United States Court of Appeals for the 
        Federal Circuit shall review the decision from which 
        the appeal is taken on the record before the [Patent 
        and Trademark Office] Trademark Office. Upon its 
        determination the court shall issue its mandate and 
        opinion to the Commissioner, which shall be entered of 
        record in the [Patent and Trademark Office] Trademark 
        Office and shall govern the further proceedings in the 
        case. However, no final judgment shall be entered in 
        favor of an applicant under section 1051(b) of this 
        title before the mark is registered, if such applicant 
        cannot prevail without establishing constructive use 
        pursuant to section 1057(c) of this title.
     (b) Civil Action; Persons Entitled to; Jurisdiction of 
Court; Status of Commissioner; Procedure.--
          (1) * * *
          * * * * * * *
          (3) In any case where there is no adverse party, a 
        copy of the complaint shall be served on the 
        Commissioner, and, unless the court finds the expenses 
        to be unreasonable, all the expenses of the proceeding 
        shall be paid by the party bringing the case, whether 
        the final decision is in favor of such party or not. In 
        suits brought hereunder, the record in the [Patent and 
        Trademark Office] Trademark Office shall be admitted on 
        motion of any party, upon such terms and conditions as 
        to costs, expenses, and the further cross-examination 
        of the witnesses as the court imposes, without 
        prejudice to the right of any party to take further 
        testimony. The testimony and exhibits of the record in 
        the [Patent and Trademark Office] Trademark Office, 
        when admitted, shall have the same effect as if 
        originally taken and produced in the suit.
          (4) Where there is an adverse party, such suit may be 
        instituted against the party in interest as shown by 
        the records of the [Patent and Trademark Office] 
        Trademark Office at the time of the decision complained 
        of, but any party in interest may become a party to the 
        action. If there be adverse parties residing in a 
        plurality of districts not embraced within the same 
        State, or an adverse party residing in a foreign 
        country, the United States District Court for the 
        District of Columbia shall have jurisdiction and may 
        issue summons against the adverse parties directed to 
        the marshal of any district in which any adverse party 
        resides. Summons against adverse parties residing in 
        foreign countries may be served by publication or 
        otherwise as the court directs.
          * * * * * * *

Sec. 1092. Publication; not subject to opposition; cancellation

    Marks for the supplemental register shall not be published 
for or be subject to opposition, but shall be published on 
registration in the Official Gazette of the [Patent and 
Trademark Office] Trademark Office. Whenever any person 
believes that he is or will be damaged by the registration of a 
mark on this register he may at any time, upon payment of the 
prescribed fee and the filing of a petition stating the ground 
therefor, apply to the Commissioner to cancel such 
registration. The Commissioner shall refer such application to 
the Trademark Trial and Appeal Board which shall give notice 
thereof to the registrant. If it is found after a hearing 
before the Board that the registrant is not entitled to 
registration thereof, or that the mark has been abandoned, the 
registration shall be canceled by the Commissioner. However, no 
final judgment shall be entered in favor of an applicant under 
section 1051(b) of this title before the mark is registered, if 
such applicant cannot prevail without establishing constructive 
use pursuant to section 1057(c) of this title.
          * * * * * * *

                   Subchapter III--General Provisions

Sec. 1111. Notice of registration; display with mark; recovery of 
                    profits and damages in infringement suit

    Notwithstanding the provisions of section 1072 of this 
title, a registrant of a mark registered in the [Patent and 
Trademark Office] Trademark Office, may give notice that his 
mark is registered by displaying with the mark the words 
``Registered in U.S. [Patent and Trademark Office] Trademark 
Office'' or ``Reg. U.S. Pat. & Tm. Off.'' or the letter R 
enclosed within a circle, thus ; and in any suit for 
infringement under this chapter by such a registrant failing to 
give such notice of registration, no profits and no damages 
shall be recovered under the provisions of this chapter unless 
the defendant had actual notice of the registration.

Sec. 1112. Classification of goods and services; registration in 
                    plurality of classes

    The Commissioner may establish a classification of goods 
and services, for convenience of [Patent and Trademark Office] 
Trademark Office administration, but not to limit or extend the 
applicant's or registrant's rights. The applicant may apply to 
register a mark for any or all of the goods or services on or 
in connection with which he or she is using or has a bona fide 
intention to use the mark in commerce: Provided, That if the 
Commissioner by regulation permits the filing of an application 
for the registration of a mark for goods or services which fall 
within a plurality of classes, a fee equaling the sum of the 
fees for filing an application in each class shall be paid, and 
the Commissioner may issue a single certificate of registration 
for such mark.

Sec. 1113. Fee.

    (a) Applications; Services; Materials.--
          The Commissioner shall establish fees for the filing 
        and processing of an application for the registration 
        of a trademark or other mark and for all other services 
        performed by and materials furnished by the [Patent and 
        Trademark Office] Trademark Office related to 
        trademarks and other marks. Fees established under this 
        subsection may be adjusted by the Commissioner once 
        each year to reflect, in the aggregate, any 
        fluctuations during the preceding 12 months in the 
        Consumer Price Index, as determined by the Secretary of 
        Labor. Changes of less than 1 percent may be ignored. 
        No fee established under this section shall take effect 
        until at least 30 days after notice of the fee has been 
        published in the Federal Register and in the Official 
        Gazette of the [Patent and Trademark Office] Trademark 
        Office.
          * * * * * * *

Sec. 1116. Injunctive relief

    (a) Jurisdiction; Service.--
          The several courts vested with jurisdiction of civil 
        actions arising under this chapter shall have power to 
        grant injunctions, according to the principles of 
        equity and upon such terms as the court may deem 
        reasonable, to prevent the violation of any right of 
        the registrant of a mark registered in the [Patent and 
        Trademark Office] Trademark Office or to prevent a 
        violation under section 1125(a) of this title. Any such 
        injunction may include a provision directing the 
        defendant to file with the court and serve on the 
        plaintiff within thirty days after the service on the 
        defendant of such injunction, or such extended period 
        as the court may direct, a report in writing under oath 
        setting forth in detail the manner and form in which 
        the defendant has complied with the injunction. Any 
        such injunction granted upon hearing, after notice to 
        the defendant, by any district court of the United 
        States, may be served on the parties against whom such 
        injunction is granted anywhere in the United States 
        where they may be found, and shall be operative and may 
        be enforced by proceedings to punish for contempt, or 
        otherwise, by the court by which such injunction was 
        granted, or by any other United States district court 
        in whose jurisdiction the defendant may be found.
          * * * * * * *
    (d) Civil Actions Arising Out of Use of Counterfeit 
Marks.--
          (1)(A) In the case of a civil action arising under 
        section 1114(1)(a) of this title or section 380 of 
        Title 36 with respect to a violation that consists of 
        using a counterfeit mark in connection with the sale, 
        offering for sale, or distribution of goods or 
        services, the court may, upon ex parte application, 
        grant an order under subsection (a) of this section 
        pursuant to this subsection providing for the seizure 
        of goods and counterfeit marks involved in such 
        violation and the means of making such marks, and 
        records documenting the manufacture, sale, or receipt 
        of things involved in such violation.
          (B) As used in this subsection the term ``counterfeit 
        mark'' means--
                  (i) a counterfeit of a mark that is 
                registered on the principal register in the 
                United States [Patent and Trademark Office] 
                Trademark Office for such goods or services 
                sold, offered for sale, or distributed and that 
                is in use, whether or not the person against 
                whom relief is sought knew such mark was so 
                registered; or
          * * * * * * *

Sec. 1117. Recovery for violation of rights

    (a) Profits; Damages and Costs; Attorney Fees.--
          When a violation of any right of the registrant of a 
        mark registered in the [Patent and Trademark Office] 
        Trademark Office, or a violation under section 1125(a) 
        of this title, shall have been established in any civil 
        action arising under this chapter, the plaintiff shall 
        be entitled, subject to the provisions of sections 1111 
        and 1114 of this title, and subject to the principles 
        of equity, to recover (1) defendant's profits, (2) any 
        damages sustained by the plaintiff, and (3) the costs 
        of the action. The court shall assess such profits and 
        damages or cause the same to be assessed under its 
        direction. In assessing profits the plaintiff shall be 
        required to prove defendant's sales only; defendant 
        must prove all elements of cost or deduction claimed. 
        In assessing damages the court may enter judgment, 
        according to the circumstances of the case, for any sum 
        above the amount found as actual damages, not exceeding 
        three times such amount. If the court shall find that 
        the amount of the recovery based on profits is either 
        inadequate or excessive the court may in its discretion 
        enter judgment for such sum as the court shall find to 
        be just, according to the circumstances of the case. 
        Such sum in either of the above circumstances shall 
        constitute compensation and not a penalty. The court in 
        exceptional cases may award reasonable attorney fees to 
        the prevailing party.
          * * * * * * *

Sec. 1118. Destruction of infringing articles

    In any action arising under this chapter, in which a 
violation of any right of the registrant of a mark registered 
in the [Patent and Trademark Office] Trademark Office, or a 
violation under section 1125(a) of this title, shall have been 
established, the court may order that all labels, signs, 
prints, packages, wrappers, receptacles, and advertisements in 
the possession of the defendant, bearing the registered mark 
or, in the case of a violation of section 1125(a) of this 
title, the word, term, name, symbol, device, combination 
thereof, designation, description, or representation that is 
the subject of the violation, or any reproduction, counterfeit, 
copy, or colorable imitation thereof, and all plates, molds, 
matrices, and other means of making the same, shall be 
delivered up and destroyed. The party seeking an order under 
this section for destruction of articles seized under section 
1116(d) of this title shall give ten days' notice to the United 
States attorney for the judicial district in which such order 
is sought (unless good cause is shown for lesser notice) and 
such United States attorney may, if such destruction may affect 
evidence of an offense against the United States, seek a 
hearing on such destruction or participate in any hearing 
otherwise to be held with respect to such destruction.

Sec. 1119. Power of court over registration

    In any action involving a registered mark the court may 
determine the right to registration, order the cancellation of 
registrations, in whole or in part, restore canceled 
registrations, and otherwise rectify the register with respect 
to the registrations of any party to the action. Decrees and 
orders shall be certified by the court to the Commissioner, who 
shall make appropriate entry upon the records of the [Patent 
and Trademark Office] Trademark Office, and shall be controlled 
thereby.

Sec. 1120. Civil liability for false or fraudulent registration

    Any person who shall procure registration in the [Patent 
and Trademark Office] Trademark Office of a mark by a false or 
fraudulent declaration or representation, oral or in writing, 
or by any false means, shall be liable in a civil action by any 
person injured thereby for any damages sustained in consequence 
thereof.

Sec. 1121. Jurisdiction of Federal courts; State and local requirements 
                    that registered trademarks be altered or displayed 
                    differently; prohibition

    (a) * * *
    (b) No State or other jurisdiction of the United States or 
any political subdivision or any agency thereof may require 
alteration of a registered mark, or require that additional 
trademarks, service marks, trade names, or corporate names that 
may be associated with or incorporated into the registered mark 
be displayed in the mark in a manner differing from the display 
of such additional trademarks, service marks, trade names, or 
corporate names contemplated by the registered mark as 
exhibited in the certificate of registration issued by the 
United States [Patent and Trademark Office] Trademark Office.
          * * * * * * *

Sec. 1123. Rules and regulations for conduct of proceedings in [Patent 
                    and Trademark Office] Trademark Office

    The Commissioner shall make rules and regulations, not 
inconsistent with law, for the conduct of proceedings in the 
[Patent and Trademark Office] Trademark Office under this 
chapter.
          * * * * * * *

Sec. 1127. Construction and definitions; intent of chapter

    In the construction of this chapter, unless the contrary is 
plainly apparent from the context--
          * * * * * * *
    The terms ``applicant'' and ``registrant'' embrace the 
legal representatives, predecessors, successors and assigns of 
such applicant or registrant.
    [The term ``Commissioner'' means the Commissioner of 
Patents and Trademarks.]
    The term ``Commissioner'' means the Commissioner of 
Trademarks.
          * * * * * * *
    The term ``registered mark'' means a mark registered in the 
United States [Patent and Trademark Office] Trademark Office 
under this chapter or under the Act of March 3, 1881, or the 
Act of February 20, 1905, or the Act of March 19, 1920. The 
phrase ``marks registered in the [Patent and Trademark Office] 
Trademark Office means registered marks.
    The term ``Act of March 3, 1881'', ``Act of February 20, 
1905'', or ``Act of March 19, 1920,'' means the respective Act 
as amended.
    A ``counterfeit'' is a spurious mark which is identical 
with, or substantially indistinguishable from, a registered 
mark.
    Words used in the singular include the plural and vice 
versa.
    The intent of this chapter is to regulate commerce within 
the control of Congress by making actionable the deceptive and 
misleading use of marks in such commerce;
          * * * * * * *

                    Uncodified Lanham Act Provisions

          * * * * * * *

Sec. 47(a). Applications pending on effective date of Act

    All applications for registration pending in the [Patent 
and Trademark Office] Trademark Office at the effective date of 
this Act may be amended, if practicable, to bring them under 
the provisions of this Act. This prosecution of such 
applications so amended and the grant of registrations thereon 
shall be proceeded with in accordance with the provisions of 
this Act. If such amendments are not made, the prosecution of 
said applications shall be proceeded with and registrations 
thereof granted in accordance with the Acts under which said 
applications were filed, and said Acts are hereby continued in 
force to this extent for this purpose only, notwithstanding the 
foregoing general repeal thereof.
          * * * * * * *

Sec. 51. Pending Applications

    All certificates of registration based upon applications 
for registration pending in the [Patent and Trademark Office] 
Trademark Office on the effective date of the Trademark Law 
Revision Act of 1988 shall remain in force for a period * * *.