I

103D CONGRESS

1ST SESSION H. R. 1450

To promote the competitiveness of American businesses by reducing the

national debt to lower the cost of capital, providing tax incentives to

further enhance private capital formation, modernizing antitrust law to

remove barriers to cooperative enterprise, instituting civil justice reform

to reduce litigious burdens, and reviewing new Federal regulations to

prevent unintended effects, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1993

Mr. WALKER (for himself, Mr. GINGRICH, Mr. ARMEY, Mr. MCCOLLUM, Mr.

DELAY, Mr. HYDE, Mr. HUNTER, Mr. PAXON, Mr. BURTON of Indiana,

Mr. LEWIS of Florida, Mr. SENSENBRENNER, Mr. HENRY, Mr. FAWELL,

Mr. ROHRABACHER, Mr. BARTON of Texas, Mr. ZIMMER, Mr. SAM JOHNSON of Texas, Mr. CALVERT, Mr. HOKE, Mr. SMITH of Michigan, Mr.

ROYCE, Mr. GRAMS, Mr. LINDER, Mr. BLUTE, Ms. DUNN, Mr. BAKER

of California, and Mr. BARTLETT of Maryland) introduced the following

bill; which was referred jointly to the Committees on Ways and Means,

the Judiciary, Energy and Commerce, Science, Space, and Technology,

Education and Labor, and Government Operations

A BILL

To promote the competitiveness of American businesses by

reducing the national debt to lower the cost of capital,

providing tax incentives to further enhance private capital formation, modernizing antitrust law to remove barriers to cooperative enterprise, instituting civil justice

reform to reduce litigious burdens, and reviewing new

Federal regulations to prevent unintended effects, and

for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Fundamental Competitiveness Act of 1993’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title.

Sec. 2. Findings.

TITLE I—PUBLIC DEBT REDUCTION

Sec. 101. Designation of amounts for reduction of public debt.

Sec. 102. Public debt reduction trust fund.

Sec. 103. Taxpayer-generated sequestration of Federal spending to reduce the

public debt.

TITLE II—CAPITAL FORMATION

Sec. 201. Findings.

Sec. 202. Research credit improvement.

Sec. 203. Variable capital gains.

Sec. 204. Capital gains exclusion for startup business stock.

Sec. 205. Indexing of certain capital assets.

Sec. 206. Corporate debt-equity equalization.

Sec. 207. Charitable deduction for corporate contributions of employee services

to educational organizations.

Sec. 208. Investment credit for new manufacturing and other production equipment.

Sec. 209. Increase in limitation based on amount of tax.

Sec. 210. Special treatment for losses on investment in manufacturing facilities.

Sec. 211. Exemption of certain interest and dividend income from tax.

Sec. 212. Ordinary-loss treatment for losses on investments in startup companies.

TITLE III—COOPERATIVE ENTERPRISE

Sec. 301. Findings.

Sec. 302. Merger analysis.

Sec. 303. Joint production.

TITLE IV—BUSINESS LIABILITY REFORM

Subtitle A—Findings

Sec. 401. Findings.

Subtitle B—Professionals’ Liability Reform

Sec. 411. Short title.

Sec. 412. Purpose.

Sec. 413. Scope and preemption.
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Sec. 414. Description of professional liability standards.

Sec. 415. Formation of risk management programs.

Sec. 416. Definitions.

Subtitle C—Product Liability Fairness

PART I—GENERAL PROVISIONS

Sec. 421. Short title.

Sec. 422. Definitions.

Sec. 423. Preemption.

Sec. 424. Jurisdiction of Federal courts.

Sec. 425. Effective date.

PART II—OUT OF COURT PROCEDURES

Sec. 431. Expedited product liability settlements.

Sec. 432. Alternative dispute resolution procedures.

PART III—COURT PROCEDURES

Sec. 441. Civil actions.

Sec. 442. Uniform standards of product seller liability.

Sec. 443. Uniform standards for award of punitive damages.

Sec. 444. Uniform time limitations on liability.

Sec. 445. Uniform standards for offset of workers’ compensation benefits.

Sec. 446. Several liability for noneconomic damages.

Sec. 447. Defenses involving intoxicating alcohol or drugs.

TITLE V—REGULATORY REVIEW

Sec. 501. Findings.

Sec. 502. Competitiveness risk assessment.

TITLE VI—TOTAL QUALITY MANAGEMENT

Sec. 601. Formation and use of quality circles and joint production teams.

TITLE VII—LONG-TERM INVESTMENT

Sec. 701. Short title.

Sec. 702. Findings.

Sec. 703. Elimination of quarterly reports.

TITLE VIII—AMENDMENTS TO THE STEVENSON-WYDLER

TECHNOLOGY INNOVATION ACT OF 1980

Sec. 801. Amendment to Stevenson-Wydler Technology Innovation Act of 1980.

Sec. 802. Copyright for software.

Sec. 803. Royalty payments to authors.

Sec. 804. Technical and conforming amendments.

1 SEC. 2. FINDINGS.

2 The Congress finds that—
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1 (1) the ability of United States companies to

2 develop, produce, and market new products and

3 services is second to none when on an equal footing

4 with the competition;

5 (2) however, United States companies are not

6 on such a footing due in large part to competitive

7 disadvantages imposed by government;

8 (3) therefore, the Federal Government should

9 fuel the engine of the United States private sector

10 by freeing it from the tax, regulatory, and other

11 legal burdens imposed on it;

12 (4) the Federal Government should focus on

13 long-term competitiveness and job creation by reex14 amining those provisions of law and regulation which

15 are anticompetitive in nature;

16 (5) the Federal Government can best promote

17 United States competitiveness by fostering a healthy

18 business climate and by reducing the Federal budget

19 deficit which will free up capital for private use and

20 reduce its cost;

21 (6) targeting large sums of taxpayer money to

22 aid specific United States industries will further

23 erode our competitiveness by increasing our national

24 debt and removing the inherent efficiency of the

25 marketplace; and
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1 (7) our main economic competitors spend few

2 government resources to aid specific sectors of their

3 economies, but instead remove barriers and disincen4 tives to savings, investment, production, and eco5 nomic activity.

6 TITLE I—PUBLIC DEBT

7 REDUCTION

8 SEC. 101. DESIGNATION OF AMOUNTS FOR REDUCTION OF

9 PUBLIC DEBT.

10 (a) IN GENERAL.—Subchapter A of chapter 61 of the

11 Internal Revenue Code of 1986 (relating to returns and

12 records) is amended by adding at the end the following

13 new part:

14 ‘‘PART IX—DESIGNATION FOR REDUCTION OF

15 PUBLIC DEBT.

‘‘Sec. 6097. Designation.

16 ‘‘SEC. 6097. DESIGNATION.

17 ‘‘(a) IN GENERAL.—Every individual with adjusted

18 income tax liability for any taxable year may designate

19 that a portion of such liability (not to exceed 10 percent

20 thereof) shall be used to reduce the public debt.

21 ‘‘(b) MANNER AND TIME OF DESIGNATION.—A des22 ignation under subsection (a) may be made with respect

23 to any taxable year only at the time of filing the return

24 of tax imposed by chapter 1 for the taxable year. The des-
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1 ignation shall be made on the first page of the return or

2 on the page bearing the taxpayer’s signature.

3 ‘‘(c) ADJUSTED INCOME TAX LIABILITY.—For pur4 poses of this section, the term ‘adjusted income tax liabil5 ity’ means income tax liability (as defined in section

6 6096(b)) reduced by any amount designated under section

7 6096 (relating to designation of income tax payments to

8 Presidential Election Campaign Fund).’’

9 (b) CLERICAL AMENDMENT.—The table of parts for

10 such subchapter A is amended by adding at the end the

11 following new item:

‘‘Part IX. Designation for reduction of public debt.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years ending after the

14 date of the enactment of this Act.

15 SEC. 102. PUBLIC DEBT REDUCTION TRUST FUND.

16 (a) IN GENERAL.—Subchapter A of chapter 98 of the

17 Internal Revenue Code of 1986 (relating to trust fund

18 code) is amended by adding at the end the following

19 section:

20 ‘‘SEC. 9512. PUBLIC DEBT REDUCTION TRUST FUND.

21 ‘‘(a) CREATION OF TRUST FUND.—There is estab22 lished in the Treasury of the United States a trust fund

23 to be known as the ‘Public Debt Reduction Trust Fund’,

24 consisting of any amount appropriated or credited to the

25 Trust Fund as provided in this section or section 9602(b).
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1 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here2 by appropriated to the Public Debt Reduction Trust Fund

3 amounts equivalent to the amounts designated under sec4 tion 6097 (relating to designation for public debt reduc5 tion).

6 ‘‘(c) EXPENDITURES.—Amounts in the Public Debt

7 Reduction Trust Fund shall be available only for purposes

8 of paying at maturity, or to redeem or buy before matu9 rity, any obligation of the Federal Government included

10 in the public debt. Any obligation which is paid, redeemed,

11 or bought with amounts from such Trust Fund shall be

12 canceled and retired and may not be reissued.’’

13 (b) CLERICAL AMENDMENT.—The table of sections

14 for such subchapter is amended by adding at the end the

15 following new item:

‘‘Sec. 9512. Public Debt Reduction Trust Fund.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to amounts received after the date

18 of the enactment of this Act.

19 SEC. 103. TAXPAYER-GENERATED SEQUESTRATION OF FED20 ERAL SPENDING TO REDUCE THE PUBLIC

21 DEBT.

22 (a) SEQUESTRATION TO REDUCE THE PUBLIC

23 DEBT.—Part C of the Balanced Budget and Emergency

24 Deficit Control Act of 1985 is amended by adding after

25 section 253 the following new section:
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1 ‘‘SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC

2 DEBT.

3 ‘‘(a) SEQUESTRATION.—Notwithstanding sections

4 255 and 256, within 15 days after Congress adjourns to

5 end a session, and on the same day as sequestration (if

6 any) under sections 251, 252, and 253, but after any se7 questration required by those sections, there shall be a se8 questration equivalent to the estimated aggregate amount

9 designated under section 6097 of the Internal Revenue

10 Code of 1986 for the last taxable year ending before the

11 beginning of that session of Congress, as estimated by the

12 Department of the Treasury on May 1 and as modified

13 by the total of (1) any amounts by which net discretionary

14 spending is reduced by legislation below the discretionary

15 spending limits (or, in the absence of such limits, any net

16 deficit change from the baseline amount calculated under

17 section 257, except that such baseline for fiscal year 1996

18 and thereafter shall be based upon fiscal year 1995 en19 acted appropriations less any 1995 sequesters) and (2) the

20 net deficit change that has resulted from direct spending

21 legislation.

22 ‘‘(b) APPLICABILITY.—

23 ‘‘(1) IN GENERAL.—Except as provided by

24 paragraph (2), each account of the United States

25 shall be reduced by a dollar amount calculated by

26 multiplying the level of budgetary resources in that
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1 account at that time by the uniform percentage nec2 essary to carry out subsection (a). All obligational

3 authority reduced under this section shall be done in

4 a manner that makes such reductions permanent.

5 ‘‘(2) EXEMPT ACCOUNTS.—No order issued

6 under this part may—

7 ‘‘(A) reduce benefits payable the old-age,

8 survivors, and disability insurance program es9 tablished under title II of the Social Security

10 Act;

11 ‘‘(B) reduce payments for net interest (all

12 of major functional category 900); or

13 ‘‘(C) make any reduction in the following

14 accounts:

15 ‘‘Federal Deposit Insurance Corpora16 tion, Bank Insurance Fund;

17 ‘‘Federal Deposit Insurance Corpora18 tion, FSLIC Resolution Fund;

19 ‘‘Federal Deposit Insurance Corpora20 tion, Savings Association Insurance Fund;

21 ‘‘National Credit Union Administra22 tion, credit union share insurance fund; or

23 ‘‘Resolution Trust Corporation.’’.

24 (b) REPORTS.—Section 254 of the Balanced Budget

25 and Emergency Deficit Control Act of 1985 is amended—
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1 (1) in subsection (a), by inserting before the

2 item relating to August 10 the following:

3 ‘‘May 1. . . Department of Treasury report to Con4 gress estimating amount of income tax designated pursu5 ant to section 6097 of the Internal Revenue Code of

6 1986.’’;

7 (2) in subsection (d)(1), by inserting ‘‘, and se8 questration to reduce the public debt,’’;

9 (3) in subsection (d), by redesignating para10 graph (5) as paragraph (6) and by inserting after

11 paragraph (4) the following new paragraph:

12 ‘‘(5) SEQUESTRATION TO REDUCE THE PUBLIC

13 DEBT REPORTS.—The preview reports shall set forth

14 for the budget year estimates for each of the follow15 ing:

16 ‘‘(A) The aggregate amount designated

17 under section 6097 of the Internal Revenue

18 Code of 1986 for the last taxable year ending

19 before the budget year.

20 ‘‘(B) The amount of reductions required

21 under section 253A and the deficit remaining

22 after those reductions have been made.

23 ‘‘(C) The sequestration percentage nec24 essary to achieve the required reduction in ac25 counts under section 253A(b).’’; and
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1 (4) in subsection (g), by redesignating para2 graphs (4) and (5) as paragraphs (5) and (6), re3 spectively, and by inserting after paragraph (3) the

4 following new paragraph:

5 ‘‘(4) SEQUESTRATION TO REDUCE THE PUBLIC

6 DEBT REPORTS.—The final reports shall contain all

7 of the information contained in the public debt tax8 ation designation report required on May 1.’’.

9 (c) EFFECTIVE DATE.—Notwithstanding section

10 275(b) of the Balanced Budget and Emergency Deficit

11 Control Act of 1985, the expiration date set forth in that

12 section shall not apply to the amendments made by this

13 section. The amendments made by this section shall cease

14 to have any effect after the first fiscal year during which

15 there is no public debt.

16 TITLE II—CAPITAL FORMATION

17 SEC. 201. FINDINGS.

18 The Congress finds that—

19 (1) competitiveness studies consistently show

20 that the United States business sector needs to have

21 access to greater amounts of capital at low cost;

22 (2) capital formation is a goal that should be

23 fostered by the United States Government;
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1 (3) our main economic competitors encourage

2 capital formation by low rates of taxation on capital

3 gains and savings and investment; and

4 (4) lowering tax rates in the United States on

5 capital gains and savings and investment will make

6 our country more competitive internationally.

7 SEC. 202. RESEARCH CREDIT IMPROVEMENT.

8 (a) ALTERNATIVE CREDIT CALCULATION BASED ON

9 AGGREGATE RESEARCH EXPENSES.—

10 (1) IN GENERAL.—Subsection (a) of section 41

11 of the Internal Revenue Code of 1986 (relating to

12 general rule) is amended to read as follows:

13 ‘‘(a) GENERAL RULE.—For purposes of section 38,

14 the research credit determined under this section for the

15 taxable year shall be an amount equal to 1 of the following

16 amounts (as elected by the taxpayer for the taxable year):

17 ‘‘(1) 25 PERCENT OF INCREASED RESEARCH

18 EXPENSES.—The sum of—

19 ‘‘(A) 25 percent of the excess (if any) of—

20 ‘‘(i) the qualified research expenses,

21 over

22 ‘‘(ii) the base amount, and

23 ‘‘(B) 25 percent of the basic research pay24 ments, determined under subsection (e)(1)(A).
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1 ‘‘(2) 5 PERCENT OF AGGREGATE RESEARCH EX2 PENSES.—The sum of—

3 ‘‘(A) 5 percent of the qualified research ex4 penses, determined by substituting ‘100 per5 cent’ for ‘65 percent’ in subsection (b)(3)(A),

6 and

7 ‘‘(B) 5 percent of the basic research pay8 ments, determined under subsection (e)(2).’’

9 (2) CONFORMING AMENDMENTS.—

10 (A) Paragraph (1) of section 41(e) of such

11 Code (relating to basic research credit) is

12 amended—

13 (i) by striking ‘‘subsection (a)(2)’’ and

14 inserting ‘‘subsection (a)(1)(B)’’, and

15 (ii) by striking ‘‘subsection (a)(1)’’

16 and inserting ‘‘subsection (a)(1)(A)’’.

17 (B) Subparagraph (C) of section 41(e)(7)

18 of such Code (relating to definitions and special

19 rules) is amended—

20 (i) by striking ‘‘INCREMENTAL’’ in the

21 subparagraph caption and inserting

22 ‘‘OTHER’’,

23 (ii) by striking ‘‘subsection (a)(1)’’

24 and inserting ‘‘paragraph (1)(A) or (2)(A)

25 of subsection (a)’’,
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1 (iii) by striking ‘‘subsection (a)(2)’’

2 and inserting ‘‘paragraph (1)(B) or (2)(B)

3 of such subsection’’,

4 (iv) by striking ‘‘subsection (a)(1)(A)’’

5 and inserting ‘‘paragraph (1)(A)(i) or

6 (2)(A) of such subsection’’, and

7 (v) by striking ‘‘subsection (a)(1)(B)’’

8 and inserting ‘‘paragraph (1)(A)(ii) of

9 such subsection’’.

10 (C) Subparagraph (A) of section

11 280C(c)(2) of such Code (relating to disallow12 ance of deduction for expenses for which re13 search credit taken) is amended by striking

14 ‘‘section 41(a)(1)’’ and inserting ‘‘paragraph

15 (1)(A) or (2)(A) of section 41(a)’’.

16 (3) EFFECTIVE DATE.—The amendments made

17 by this subsection shall apply to taxable years begin18 ning after the date of the enactment of this Act.

19 (b) PERMANENT EXTENSION OF CREDIT.—

20 (1) IN GENERAL.—Section 41 of such Code is

21 amended by striking subsection (h) (relating to ter22 mination).

23 (2) CONFORMING AMENDMENT.—Paragraph (1)

24 of section 28(b) of such Code (relating to qualified
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1 clinical testing expenses) is amended by striking sub2 paragraph (D).

3 SEC. 203. VARIABLE CAPITAL GAINS.

4 (a) IN GENERAL.—Part I of subchapter P of chapter

5 1 of the Internal Revenue Code of 1986 (relating to treat6 ment of capital gains) is amended by adding at the end

7 thereof the following new section:

8 ‘‘SEC. 1202. VARIABLE CAPITAL GAINS DEDUCTION.

9 ‘‘(a) DEDUCTION ALLOWED.—If for any taxable year

10 a taxpayer other than a corporation has a net capital gain,

11 there shall be allowed as a deduction from gross income

12 an amount equal to the sum of—

13 ‘‘(1) 100 percent of the qualified 10-year net

14 capital gain,

15 ‘‘(2) 90 percent of the qualified 9-year net cap16 ital gain,

17 ‘‘(3) 80 percent of the qualified 8-year net cap18 ital gain,

19 ‘‘(4) 70 percent of the qualified 7-year net cap20 ital gain,

21 ‘‘(5) 60 percent of the qualified 6-year net cap22 ital gain,

23 ‘‘(6) 50 percent of the qualified 5-year net cap24 ital gain,
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1 ‘‘(7) 40 percent of the qualified 4-year net cap2 ital gain,

3 ‘‘(8) 30 percent of the qualified 3-year net cap4 ital gain,

5 ‘‘(9) 20 percent of the qualified 2-year net cap6 ital gain, plus

7 ‘‘(10) 10 percent of the qualified 1-year net

8 capital gain.

9 ‘‘(b) QUALIFIED NET CAPITAL GAIN.—For purposes

10 of subsection (a)—

11 ‘‘(1) QUALIFIED 10-YEAR NET CAPITAL GAIN.—

12 The term ‘qualified 10-year net capital gain’ means

13 the amount of net long-term capital gain which

14 would be computed for the taxable year if only cap15 ital assets held by the taxpayer for at least 10 years

16 at the time of the sale or exchange were taken into

17 account. Such term shall not exceed the amount of

18 the net capital gain for such taxable year.

19 ‘‘(2) QUALIFIED 9-YEAR NET CAPITAL GAIN.—

20 The term ‘qualified 9-year net capital gain’ means

21 the amount of net long-term capital gain which

22 would be computed for the taxable year if only cap23 ital assets held by the taxpayer for at least 9 years

24 but less than 10 years at the time of the sale or ex25 change were taken into account. Such term shall not
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1 exceed the amount of the net capital gain for such

2 taxable year reduced by the amount of the qualified

3 10-year net capital gain.

4 ‘‘(3) OTHER DEFINITIONS.—The amount of the

5 qualified 8-year net capital gain, 7-year net capital

6 gain, 6-year net capital gain, 5-year net capital gain,

7 4-year net capital gain, 3-year net capital gain,

8 qualified 2-year net capital gain, and qualified 1-

9 year net capital gain shall be determined under the

10 principles of paragraphs (1) and (2).

11 ‘‘(c) ESTATE AND TRUSTS.—In the case of an estate

12 or trust, the deduction shall be computed by excluding the

13 portion (if any) of the gains for the taxable year from sales

14 or exchanges of capital assets which, under sections 652

15 and 662 (relating to inclusions of amounts in gross income

16 of beneficiaries of trusts), is includible by the income bene17 ficiaries as gain derived from the sale or exchange of cap18 ital assets.’’

19 (b) TREATMENT OF COLLECTIBLES.—

20 (1) IN GENERAL.—Section 1222 of such Code

21 is amended by inserting after paragraph (11) the

22 following new paragraph:

23 ‘‘(12) SPECIAL RULE FOR COLLECTIBLES.—

24 ‘‘(A) IN GENERAL.—Any gain or loss from

25 the sale or exchange of a collectible shall be
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1 treated as a short-term capital gain or loss (as

2 the case may be), without regard to the period

3 such asset was held. The preceding sentence

4 shall apply only to the extent the gain or loss

5 is taken into account in computing taxable in6 come.

7 ‘‘(B) TREATMENT OF CERTAIN SALES OF

8 INTEREST IN PARTNERSHIP, ETC.—For pur9 poses of subparagraph (A), any gain from the

10 sale or exchange of an interest in a partnership,

11 S corporation, or trust which is attributable to

12 unrealized appreciation in the value of collect13 ibles held by such entity shall be treated as gain

14 from the sale or exchange of a collectible. Rules

15 similar to the rules of section 751(f) shall apply

16 for purposes of the preceding sentence.

17 ‘‘(C) COLLECTIBLE.—For purposes of this

18 paragraph, the term ‘collectible’ means any cap19 ital asset which is a collectible (as defined in

20 section 408(m) without regard to paragraph (3)

21 thereof).’’

22 (2) CHARITABLE DEDUCTION NOT AF23 FECTED.—

24 (A) Paragraph (1) of section 170(e) of

25 such Code is amended by adding at the end
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1 thereof the following new sentence: ‘‘For pur2 poses of this paragraph, section 1222 shall be

3 applied without regard to paragraph (12) there4 of (relating to special rule for collectibles).’’

5 (B) Clause (iv) of section 170(b)(1)(C) of

6 such Code is amended by inserting before the

7 period at the end thereof the following: ‘‘and

8 section 1222 shall be applied without regard to

9 paragraph (12) thereof (relating to special rule

10 for collectibles)’’.

11 (c) CONFORMING AMENDMENTS.—

12 (1) Section 1 of such Code is amended by strik13 ing subsection (h).

14 (2) Subsection (a) of section 62 of such Code

15 is amended by inserting after paragraph (13) the

16 following new paragraph:

17 ‘‘(14) LONG-TERM CAPITAL GAINS.—In the case

18 of a taxpayer other than a corporation, the deduc19 tion allowed by section 1202.’’

20 (d) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 the date of the enactment of this Act.
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1 SEC. 204. CAPITAL GAINS EXCLUSION FOR STARTUP BUSI2 NESS STOCK.

3 (a) TAXPAYERS OTHER THAN CORPORATIONS.—

4 Part I of subchapter P of chapter 1 of the Internal Reve5 nue Code of 1986 (relating to treatment of capital gains)

6 is amended by adding at the end the following new section:

7 ‘‘SEC. 1203. DEDUCTION FOR CAPITAL GAINS ON CERTAIN

8 BUSINESS STOCK HELD FOR MORE THAN 2

9 YEARS.

10 ‘‘(a) GENERAL RULE.—If for any taxable year a tax11 payer other than a corporation has a qualified business

12 net capital gain, there shall be allowed as a deduction from

13 gross income an amount equal to 50 percent of the quali14 fied business net capital gain.

15 ‘‘(b) QUALIFIED BUSINESS NET CAPITAL GAIN.—

16 For purposes of this section—

17 ‘‘(1) IN GENERAL.—The term ‘qualified busi18 ness net capital gain’ means the lesser of—

19 ‘‘(A) the net capital gain for the taxable

20 year, or

21 ‘‘(B) the net capital gain for the taxable

22 year determined by taking into account only

23 gain or loss from qualified business stock with

24 a holding period of at least 2 years at the time

25 of the disposition.

26 ‘‘(2) QUALIFIED BUSINESS STOCK.—
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1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 business stock’ means stock which—

3 ‘‘(i) is first acquired (whether directly

4 or through an underwriter) from the issuer

5 by the taxpayer, and

6 ‘‘(ii) is not issued in redemption of (or

7 otherwise exchanged for) stock.

8 ‘‘(B) EXCEPTION FOR PERSONAL SERVICE

9 CORPORATIONS.—The term ‘qualified business

10 stock’ does not include stock issued by a per11 sonal service corporation (within the meaning of

12 section 269A(b)(1)).

13 ‘‘(c) ESTATES AND TRUSTS.—In the case of an estate

14 or trust, the deduction under subsection (a) shall be com15 puted by excluding the portion (if any) of the gains for

16 the taxable year from sales or exchanges of capital assets

17 which, under sections 652 and 662 (relating to inclusions

18 of amounts in gross income of beneficiaries of trusts), is

19 includible by the income beneficiaries as gain derived from

20 the sale or exchange of capital assets.’’

21 (b) CORPORATIONS.—Section 1201 of such Code (re22 lating to alternative tax for corporations) is amended by

23 redesignating subsection (b) as subsection (c) and by in24 serting after subsection (a) the following new subsection:
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1 ‘‘(b) DEDUCTION FOR GAIN ON QUALIFIED BUSI2 NESS STOCK.—

3 ‘‘(1) IN GENERAL.—If for any taxable year a

4 corporation has a qualified business net capital gain,

5 there shall be allowed as a deduction from gross in6 come an amount equal to 50 percent of the qualified

7 business net capital gain.

8 ‘‘(2) QUALIFIED BUSINESS NET CAPITAL

9 GAIN.—For purposes of this subsection, the term

10 ‘qualified business net capital gain’ has the meaning

11 given such term in section 1203(b).’’

12 (c) CONFORMING AMENDMENTS.—

13 (1) Subsection (a) of section 1201 of such Code

14 is amended by inserting after ‘‘net capital gain’’

15 each place it appears the following: ‘‘(other than

16 qualified business net capital gain (within the mean17 ing of section 1203(b))’’.

18 (2) Subsection (a) of section 62 of such Code

19 is amended by adding at the end the following new

20 paragraph:

21 ‘‘(15) QUALIFIED BUSINESS STOCK CAPITAL

22 GAINS.—The deduction allowed by section 1203.’’

23 (3)(A) The heading for section 1201 of such

24 Code is amended to read as follows:
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1 ‘‘SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS; DE2 DUCTION FOR GAIN ON QUALIFIED BUSINESS

3 STOCK.’’

4 (B) The item relating to section 1201 in the

5 table of sections for part I of subchapter P of chap6 ter 1 of such Code is amended to read as follows:

‘‘Sec. 1201. Alternative tax for corporations; deduction for gain

on qualified business stock.’’

7 (4) The table of sections for part I of sub8 chapter P of chapter 1 of such Code is amended by

9 adding at the end the following new item:

‘‘Sec. 1203. Deduction for capital gains on certain business stock

held for more than 2 years.’’

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to stock issued after the date of

12 the enactment of this Act.

13 SEC. 205. INDEXING OF CERTAIN CAPITAL ASSETS.

14 (a) IN GENERAL.—Part II of subchapter O of chap15 ter 1 of the Internal Revenue Code of 1986 (relating to

16 basis rules of general application) is amended by inserting

17 after section 1021 the following new section:

18 ‘‘SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES

19 OF DETERMINING GAIN OR LOSS.

20 ‘‘(a) GENERAL RULE.—

21 ‘‘(1) INDEXED BASIS SUBSTITUTED FOR AD22 JUSTED BASIS.—Except as provided in paragraph

23 (2), if an indexed asset which has been held for
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1 more than 1 year is sold or otherwise disposed of,

2 for purposes of this title the indexed basis of the

3 asset shall be substituted for its adjusted basis.

4 ‘‘(2) EXCEPTION FOR DEPRECIATION, ETC.—

5 The deduction for depreciation, depletion, and amor6 tization shall be determined without regard to the

7 application of paragraph (1) to the taxpayer or any

8 other person.

9 ‘‘(b) INDEXED ASSET.—

10 ‘‘(1) IN GENERAL.—For purposes of this sec11 tion, the term ‘indexed asset’ means—

12 ‘‘(A) stock in a corporation, and

13 ‘‘(B) tangible property (or any interest

14 therein), which is a capital asset or property

15 used in the trade or business (as defined in sec16 tion 1231(b)).

17 ‘‘(2) CERTAIN PROPERTY EXCLUDED.—For

18 purposes of this section, the term ‘indexed asset’

19 does not include stock in a foreign corporation.

20 ‘‘(c) INDEXED BASIS.—For purposes of this sec21 tion—

22 ‘‘(1) INDEXED BASIS.—The indexed basis for

23 any asset is—

24 ‘‘(A) the adjusted basis of the asset, multi25 plied by
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1 ‘‘(B) the applicable inflation ratio.

2 ‘‘(2) APPLICABLE INFLATION RATIO.—The ap3 plicable inflation ratio for any asset is the percent4 age arrived at by dividing—

5 ‘‘(A) the gross national product deflator

6 the calendar quarter in which the disposition

7 takes place, by

8 ‘‘(B) the gross national product deflator

9 for the calendar quarter in which the asset was

10 acquired by the taxpayer (or, if later, the cal11 endar quarter ending December 31, 1991).

12 The applicable inflation ratio shall not be taken into

13 account unless it is greater than 1. The applicable

14 inflation ratio for any asset shall be rounded to the

15 nearest one-tenth of 1 percent.

16 ‘‘(3) GROSS NATIONAL PRODUCT DEFLATOR.—

17 The gross national product deflator for any calendar

18 quarter is the implicit price deflator for the gross

19 national product for such quarter (as shown in the

20 first revision thereof).

21 ‘‘(d) SPECIAL RULES.—For purposes of this sec22 tion—

23 ‘‘(1) TREATMENT AS SEPARATE ASSET.—In the

24 case of any asset, the following shall be treated as

25 a separate asset:
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1 ‘‘(A) a substantial improvement to prop2 erty,

3 ‘‘(B) in the case of stock of a corporation,

4 a substantial contribution to capital, and

5 ‘‘(C) any other portion of an asset to the

6 extent that separate treatment of such portion

7 is appropriate to carry out the purposes of this

8 section.

9 ‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS

10 THROUGHOUT HOLDING PERIOD.—

11 ‘‘(A) IN GENERAL.—The applicable infla12 tion ratio shall be appropriately reduced for cal13 endar months at any time during which the

14 asset was not an indexed asset.

15 ‘‘(B) CERTAIN SHORT SALES.—For pur16 poses of applying subparagraph (A), an asset

17 shall be treated as not an indexed asset for any

18 short sale period during which the taxpayer or

19 the taxpayer’s spouse sells short property sub20 stantially identical to the asset. For purposes of

21 the preceding sentence, the short sale period be22 gins on the day after the substantially identical

23 property is sold and ends on the closing date

24 for the sale.
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1 ‘‘(3) ACQUISITION DATE WHERE THERE HAS

2 BEEN PRIOR APPLICATION OF SUBSECTION (a)(1)

3 WITH RESPECT TO THE TAXPAYER.—If there has

4 been a prior application of subsection (a)(1) to an

5 asset while such asset was held by the taxpayer, the

6 date of acquisition of such asset by the taxpayer

7 shall be treated as not earlier than the date of the

8 most recent such prior application.

9 ‘‘(e) CERTAIN CONDUIT ENTITIES.—

10 ‘‘(1) REGULATED INVESTMENT COMPANIES;

11 REAL ESTATE INVESTMENT TRUSTS; COMMON TRUST

12 FUNDS.—

13 ‘‘(A) IN GENERAL.—Stock in a qualified

14 investment entity shall be an indexed asset for

15 any calendar month in the same ratio as the

16 fair market value of the assets held by such en17 tity at the close of such month which are in18 dexed assets bears to the fair market value of

19 all assets of such entity at the close of such

20 month.

21 ‘‘(B) RATIO OF 90 PERCENT OR MORE.—If

22 the ratio for any calendar month determined

23 under subparagraph (A) would (but for this

24 subparagraph) be 90 percent or more, such

25 ratio for such month shall be 100 percent.
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1 ‘‘(C) RATIO OF 10 PERCENT OR LESS.—If

2 the ratio for any calendar month determined

3 under subparagraph (A) would (but for this

4 subparagraph) be 10 percent or less, such ratio

5 for such month shall be zero.

6 ‘‘(D) VALUATION OF ASSETS IN CASE OF

7 REAL ESTATE INVESTMENT TRUSTS.—Nothing

8 in this paragraph shall require a real estate in9 vestment trust to value its assets more fre10 quently than once each 36 months (except

11 where such trust ceases to exist). The ratio

12 under subparagraph (A) for any calendar

13 month for which there is no valuation shall be

14 the trustee’s good faith judgment as to such

15 valuation.

16 ‘‘(E) QUALIFIED INVESTMENT ENTITY.—

17 For purposes of this paragraph, the term

18 ‘qualified investment entity’ means—

19 ‘‘(i) a regulated investment company

20 (within the meaning of section 851),

21 ‘‘(ii) a real estate investment trust

22 (within the meaning of section 856), and

23 ‘‘(iii) a common trust fund (within the

24 meaning of section 584).
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1 ‘‘(2) PARTNERSHIPS.—In the case of a partner2 ship, the adjustment made under subsection (a) at

3 the partnership level shall be passed through to the

4 partners.

5 ‘‘(f) DISPOSITIONS BETWEEN RELATED PERSONS.—

6 ‘‘(1) IN GENERAL.—This section shall not apply

7 to any sale or other disposition of property between

8 related persons except to the extent that the basis

9 of such property in the hands of the transferee is a

10 substituted basis.

11 ‘‘(2) RELATED PERSONS DEFINED.—For pur12 poses of this section, the term ‘related persons’

13 means—

14 ‘‘(A) persons bearing a relationship set

15 forth in section 267(b), and

16 ‘‘(B) persons treated as single employer

17 under subsection (b) or (c) of section 414.

18 ‘‘(g) TRANSFERS TO INCREASE INDEXING ADJUST19 MENT.—If any person transfers cash, debt, or any other

20 property to another person and the principal purpose of

21 such transfer is to secure or increase an adjustment under

22 subsection (a), the Secretary may disallow part or all of

23 such adjustment or increase.

24 ‘‘(h) DEFINITION OF STOCK.—For purposes of this

25 section, the term ‘stock in a corporation’ includes any in-
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1 terest in a common trust fund (as defined in section

2 584(a)).

3 ‘‘(i) REGULATIONS.—The Secretary shall prescribe

4 such regulations as may be necessary or appropriate to

5 carry out the purposes of this section.’’

6 (b) CONFORMING AMENDMENTS.—

7 (1) Subsection (f) of section 312 of such Code

8 is amended by adding at the end the following new

9 paragraph:

10 ‘‘(3) EFFECT ON EARNINGS AND PROFITS OF

11 INDEXED BASIS.—

For substitution of indexed basis for adjusted

basis in the case of the disposition of certain assets,

see section 1022(a)(1).’’

12 (2) The table of sections for part II of sub13 chapter O of chapter 1 of such Code is amended by

14 inserting after the item relating to section 1021 the

15 following new item:

‘‘Sec. 1022. Indexing of certain assets for purposes of determining

gain or loss.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to dispositions after the date of

18 the enactment of this Act.

19 SEC. 206. CORPORATE DEBT-EQUITY EQUALIZATION.

20 (a) IN GENERAL.—Section 243 of the Internal Reve21 nue Code of 1986 (relating to dividends received by cor22 porations) is amended to read as follows:
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1 ‘‘SEC. 243. DIVIDENDS PAID BY DOMESTIC CORPORATIONS.

2 ‘‘(a) GENERAL RULE.—In the case of a domestic cor3 poration which is subject to taxation under this chapter,

4 there shall be allowed as a deduction for the taxable year

5 an amount equal to the dividends paid by such corporation

6 during the taxable year.

7 ‘‘(b) DIVIDENDS.—For purposes of this section, the

8 term ‘dividend’ means any dividend (as defined in section

9 316) to which section 301 applies.

10 ‘‘(c) CERTAIN CORPORATIONS NOT ELIGIBLE.—No

11 deduction shall be allowed under this section with respect

12 to dividends paid by any corporation which is—

13 ‘‘(1) an S corporation (as defined in section

14 1361(a)(1)),

15 ‘‘(2) a regulated investment company (as de16 fined in section 851(a)),

17 ‘‘(3) a real estate investment trust (as defined

18 in section 856(a)), or

19 ‘‘(4) a personal holding company (as defined in

20 section 542).

21 ‘‘(d) SPECIAL RULES FOR CERTAIN DISTRIBUTIONS

22 OF MUTUAL SAVINGS BANKS, ETC.—For purposes of this

23 section, any amount allowed as a deduction under section

24 591 (relating to deduction for dividends paid by mutual

25 savings banks, etc.) shall not be treated as a dividend.’’
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1 (b) REPEAL OF CERTAIN DEDUCTIONS FOR DIVI2 DENDS RECEIVED.—Sections 244 (relating to dividends

3 received on certain preferred stock) and 247 (relating to

4 dividends paid on certain preferred stock of public utili5 ties) of such Code are hereby repealed.

6 (c) CONFORMING AMENDMENTS.—

7 (1) Paragraph (5) of section 172(d) of such

8 Code is amended to read as follows:

9 ‘‘(5) COMPUTATION OF DEDUCTION FOR DIVI10 DENDS RECEIVED FROM CERTAIN FOREIGN COR11 PORATIONS.—The deduction allowed by section 245

12 (relating to dividends received from certain foreign

13 corporations) shall be computed without regard to

14 section 246(b) (relating to limitation on aggregate

15 amount of deductions).’’

16 (2) The table of sections for part VIII of sub17 chapter B of chapter 1 of such Code is amended by

18 striking the items relating to sections 243, 244, and

19 247 and inserting after the item relating to section

20 241 the following:

‘‘Sec. 243. Dividends paid by domestic corporations.’’

21 (3) Paragraph (1) of section 245(a) of such

22 Code (relating generally to dividends received from

23 10-percent owned foreign corporations) is amended

24 by striking ‘‘the percent (specified in section 243 for

25 the taxable year)’’ and inserting ‘‘85 percent (100
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1 percent in the case of a small business investment

2 company operating under the Small Business Invest3 ment Act of 1958 (15 U.S.C. 661 et seq.))’’.

4 (4)(A) Subsection (a) of section 246 of such

5 Code (relating to disallowance of deduction for divi6 dends from certain corporations) is amended—

7 (i) in paragraph (1), by striking ‘‘sections

8 243, 244, and 245’’ and inserting ‘‘section

9 245’’, and

10 (ii) by striking paragraph (2).

11 (B) Subsection (b) of section 246 of such Code

12 (relating to limitation on aggregate amount of de13 ductions) is amended to read as follows:

14 ‘‘(b) LIMITATION ON AGGREGATE AMOUNT OF DE15 DUCTION.—

16 ‘‘(1) IN GENERAL.—Except as provided by

17 paragraph (2), the aggregate amount of the deduc18 tions allowed by subsections (a) and (b) of section

19 245 shall not exceed 80 percent of the taxable in20 come computed without regard to—

21 ‘‘(A) the deductions allowed by section

22 172,

23 ‘‘(B) any adjustment under section 1059,

24 and
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1 ‘‘(C) any capital loss carryback to the tax2 able year under section 1212(a)(1).

3 ‘‘(2) EFFECT OF NET OPERATING LOSS.—Para4 graph (1) shall not apply for any taxable year for

5 which there is a net operating loss (as determined

6 under section 172).’’

7 (C) Paragraph (1) of section 246(c) of such

8 Code (relating to exclusion of certain dividends) is

9 amended by striking ‘‘243, 244, or’’.

10 (D) Section 246 of such Code (relating to rules

11 applying to deductions for dividends received) is

12 amended by striking subsections (d) and (e).

13 (5)(A) Subsection (a) of section 246A of such

14 Code (relating to general rule) is amended—

15 (i) in the matter preceding paragraph

16 (1), by striking ‘‘243, 244, or’’, and

17 (ii) in paragraph (1), by striking ‘‘(80

18 percent in the case of any dividend from a

19 20-percent owned corporation as defined in

20 section 243(c)(2)’’.

21 (B) Subsection (b) of section 246A of such

22 Code (relating to inapplicability to dividends for

23 which 100 percent dividends received deduction al24 lowable) is amended to read as follows:
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1 ‘‘(b) SECTION NOT TO APPLY TO DIVIDENDS FOR

2 WHICH 100 PERCENT DIVIDENDS RECEIVED DEDUCTION

3 ALLOWABLE.—Subsection (a) shall not apply to dividends

4 received by a small business investment company operat5 ing under the Small Business Investment Act of 1958.’’

6 (C) Subsection (e) of section 246A of such

7 Code (relating to reduction in dividends received de8 duction not to exceed allowable interest) is amended

9 by striking ‘‘243, 244, or’’.

10 (6) Section 596 of such Code (relating to limi11 tation on dividends received deduction) is amended

12 by striking ‘‘sections 243, 244, and 245’’ and insert13 ing ‘‘section 245’’.

14 (d) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to distributions made after the

16 date of the enactment of this Act.

17 SEC. 207. CHARITABLE DEDUCTION FOR CORPORATE CON18 TRIBUTIONS OF EMPLOYEE SERVICES TO

19 EDUCATIONAL ORGANIZATIONS.

20 (a) IN GENERAL.—Section 170 of the Internal Reve21 nue Code of 1986 (relating to deduction for charitable

22 contributions) is amended by redesignating subsection (m)

23 as subsection (n) and by inserting after subsection (l) the

24 following new subsection:
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1 ‘‘(m) CORPORATE CONTRIBUTIONS OF EMPLOYEE

2 SERVICES TO EDUCATIONAL ORGANIZATIONS.—

3 ‘‘(1) IN GENERAL.—There shall be allowed as a

4 deduction under this section any charitable contribu5 tion by a corporation of employee volunteer services

6 to an educational organization (within the meaning

7 of subsection (b)(1)(A)(ii)).

8 ‘‘(2) VALUATION.—The value of a contribution

9 under paragraph (1) shall be 50 percent of the

10 amount paid or incurred by the corporation for sal11 ary, wages, and benefits for the employee for the

12 time during which the employee provides employee

13 volunteer services.

14 ‘‘(3) EMPLOYEE VOLUNTEER SERVICES.—For

15 purposes of this subsection, the term ‘employee vol16 unteer services’ means teaching, tutoring, or other

17 assistance provided without charge or reimburse18 ment by an employee during the regular working

19 hours of the employer.

20 ‘‘(4) COORDINATION WITH DEDUCTION FOR

21 BUSINESS EXPENSES.—A deduction allowed under

22 this subsection for any expense shall be in addition

23 to any deduction allowed for the same expense under

24 section 162.’’
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to contributions made after the

3 date of the enactment of this Act.

4 SEC. 208. INVESTMENT CREDIT FOR NEW MANUFACTURING

5 AND OTHER PRODUCTION EQUIPMENT.

6 (a) ALLOWANCE OF CREDIT.—Section 46 of the In7 ternal Revenue Code of 1986 (relating to amount of in8 vestment credit) is amended by striking ‘‘and’’ at the end

9 of paragraph (2), by striking the period at the end of para10 graph (3) and inserting ‘‘, and’’, and by adding at the

11 end thereof the following new paragraph:

12 ‘‘(4) the manufacturing and other productive

13 equipment credit.’’

14 (b) AMOUNT OF CREDIT.—Section 48 of such Code

15 is amended by adding at the end thereof the following new

16 subsection:

17 ‘‘(c) MANUFACTURING AND OTHER PRODUCTIVE

18 EQUIPMENT CREDIT.—

19 ‘‘(1) IN GENERAL.—For purposes of section 46,

20 the manufacturing and other productive equipment

21 credit for any taxable year is the applicable percent22 age of the basis of each qualified manufacturing and

23 productive equipment property placed in service dur24 ing such taxable year.
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1 ‘‘(2) QUALIFIED MANUFACTURING AND PRO2 DUCTIVE EQUIPMENT PROPERTY.—For purposes of

3 this subsection—

4 ‘‘(A) IN GENERAL.—The term ‘qualified

5 manufacturing and productive equipment prop6 erty’ means any property—

7 ‘‘(i) which is used as an integral part

8 of the manufacture or production of tan9 gible personal property,

10 ‘‘(ii) which is tangible property to

11 which section 168 applies,

12 ‘‘(iii) which is section 1245 property

13 (as defined in section 1245(a)(3)), and

14 ‘‘(iv)(I) the construction, reconstruc15 tion, or erection of which is completed by

16 the taxpayer, or

17 ‘‘(II) which is acquired by the tax18 payer if the original use of such property

19 commences with the taxpayer.

20 ‘‘(B) TREATMENT OF CERTAIN SOFT21 WARE.—In the case of any computer software

22 which is used to control or monitor a manufac23 turing or production process and with respect

24 to which depreciation (or amortization in lieu of

25 depreciation) is allowable—
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1 ‘‘(i) such software shall be treated as

2 qualified manufacturing and productive

3 equipment property, and

4 ‘‘(ii) paragraph (3)(C) shall not apply.

5 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes

6 of this subsection—

7 ‘‘(A) IN GENERAL.—In the case of quali8 fied manufacturing and productive equipment

9 property, the applicable percentage is the sum

10 of—

11 ‘‘(i) 10 percent, plus

12 ‘‘(ii) 1/10th of the efficiency improve13 ment percentage (if any) determined with

14 respect to such property.

15 In no event shall the applicable percentage ex16 ceed 20 percent.

17 ‘‘(B) EFFICIENCY IMPROVEMENT PER18 CENTAGE.—For purposes of subparagraph (A),

19 the term ‘efficiency improvement percentage’

20 means, with respect to any property, the per21 centage efficiency increase established by the

22 taxpayer as resulting from the use of such

23 property. For purposes of the preceding sen24 tence, percentage efficiency increase shall be de25 termined on the basis of the relationship of the
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1 amount of goods manufactured or produced to

2 the cost of manufacture or production.

3 ‘‘(C) SPECIAL RULE FOR 3-YEAR PROP4 ERTY.—In the case of any qualified manufac5 turing and productive equipment property

6 which is 3-year property (within the meaning of

7 section 168(e)), the applicable percentage shall

8 be 60 percent of the amount otherwise deter9 mined under this paragraph.

10 ‘‘(4) COORDINATION WITH OTHER CREDITS.—

11 This subsection shall not apply to any property to

12 which the energy credit or rehabilitation credit

13 would apply unless the taxpayer elects to waive the

14 application of such credits to such property.

15 ‘‘(5) CERTAIN PROGRESS EXPENDITURE RULES

16 MADE APPLICABLE.—Rules similar to rules of sub17 section (c)(4) and (d) of section 46 (as in effect on

18 the day before the date of the enactment of the Rev19 enue Reconciliation Act of 1990) shall apply for pur20 poses of this subsection.’’

21 (c) TECHNICAL AMENDMENTS.—

22 (1) Clause (ii) of section 49(a)(1)(C) of such

23 Code is amended by inserting ‘‘or qualified manufac24 turing and productive equipment property’’ after

25 ‘‘energy property’’.
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1 (2) Subparagraph (E) of section 50(a)(2) of

2 such Code is amended by inserting ‘‘or 48(c)(5)’’ be3 fore the period at the end thereof.

4 (3) Paragraph (5) of section 50(a) of such Code

5 is amended by adding at the end thereof the follow6 ing new subparagraph:

7 ‘‘(D) SPECIAL RULES FOR CERTAIN PROP8 ERTY.—In the case of any qualified manufac9 turing and productive equipment property

10 which is 3-year property (within the meaning of

11 section 168(e))—

12 ‘‘(i) the percentage set forth in clause

13 (ii) of the table contained in paragraph

14 (1)(B) shall be 66 percent,

15 ‘‘(ii) the percentage set forth in clause

16 (iii) of such table shall be 33 percent, and

17 ‘‘(iii) clauses (iv) and (v) of such table

18 shall not apply.’’

19 (4)(A) The section heading for section 48 of

20 such Code is amended to read as follows:

21 ‘‘SEC. 48. OTHER CREDITS.’’

22 (B) The table of sections for subpart E of part

23 IV of subchapter A of chapter 1 of such Code is

24 amended by striking the item relating to section 45

25 and inserting the following:

‘‘Sec. 45. Other credits.’’
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to—

3 (1) property acquired by the taxpayer after the

4 date of the enactment of this Act, and

5 (2) property the construction, reconstruction, or

6 erection of which is completed by the taxpayer after

7 the date of the enactment of this Act, but to the ex8 tent of the basis thereof attributable to construction,

9 reconstruction, or erection after such date.

10 SEC. 209. INCREASE IN LIMITATION BASED ON AMOUNT OF

11 TAX.

12 (a) IN GENERAL.—Subparagraph (B) of section

13 38(c)(1) of the Internal Revenue Code of 1986 is amended

14 by striking ‘‘$25,000’’ and inserting ‘‘$50,000’’.

15 (b) CONFORMING AMENDMENTS.—Paragraph (2) of

16 section 38(c) of such Code is amended—

17 (1) by striking ‘‘$25,000’’ each place it appears

18 and inserting ‘‘$50,000’’, and

19 (2) by inserting ‘‘$12,500’’ in subparagraph (A)

20 and inserting ‘‘$25,000’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 the date of the enactment of this Act.
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1 SEC. 210. SPECIAL TREATMENT FOR LOSSES ON INVEST2 MENT IN MANUFACTURING FACILITIES.

3 (a) IN GENERAL.—Subsection (a) of section 1244 of

4 the Internal Revenue Code of 1986 is amended to read

5 as follows:

6 ‘‘(a) GENERAL RULE.—In the case of an individual,

7 any loss on—

8 ‘‘(1) section 1244 stock issued to such individ9 ual or to a partnership, or

10 ‘‘(2) qualified manufacturing stock,

11 which would (but for this section) be treated as a loss from

12 the sale or exchange of a capital asset shall, to the extent

13 provided in this section, be treated as an ordinary loss.’’

14 (b) QUALIFIED MANUFACTURING STOCK.—Sub15 section (c) of section 1244 of such Code is amended by

16 adding at the end thereof the following new paragraph:

17 ‘‘(4) QUALIFIED MANUFACTURING STOCK.—For

18 purposes of this section, the term ‘qualified manu19 facturing stock’ means stock in any domestic cor20 poration if, as of the time such stock was acquired

21 by the taxpayer, substantially all of the activities of

22 such corporation involved the manufacture of tan23 gible personal property in the United States. For

24 purposes of this paragraph, the term ‘manufacture’

25 shall not include importation. Rules similar to the
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1 rules of paragraphs (1) and (2) of subsection (d)

2 shall apply to qualified manufacturing stock.’’

3 (c) CLERICAL AMENDMENTS.—

4 (1) The section heading for section 1244 of

5 such Code is amended by inserting before the period

6 at the end thereof the following: ‘‘OR STOCK IN

7 MANUFACTURING COMPANIES’’.

8 (2) The table of sections for part IV of sub9 chapter P of chapter 1 of such Code is amended by

10 inserting before the period at the end of the item re11 lating to section 1244 the following: ‘‘or stock in

12 manufacturing companies’’.

13 (d) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to stock acquired after the date

15 of the enactment of this Act.

16 SEC. 211. EXEMPTION OF CERTAIN INTEREST AND DIVI17 DEND INCOME FROM TAX.

18 (a) IN GENERAL.—Part III of subchapter B of chap19 ter 1 of the Internal Revenue Code of 1986 (relating to

20 amounts specifically excluded from gross income) is

21 amended by inserting after section 115 the following new

22 section:
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1 ‘‘SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTER2 EST RECEIVED BY INDIVIDUALS.

3 ‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in4 come does not include the sum of the amounts received

5 during the taxable year by an individual as—

6 ‘‘(1) dividends from domestic corporations, or

7 ‘‘(2) interest.

8 ‘‘(b) LIMITATIONS.—

9 ‘‘(1) MAXIMUM AMOUNT.—The aggregate

10 amount excluded under subsection (a) for any tax11 able year shall not exceed $2,500 ($5,000 in the

12 case of a joint return under section 6013).

13 ‘‘(2) CERTAIN DIVIDENDS EXCLUDED.—Sub14 section (a)(1) shall not apply to any dividend from

15 a corporation which, for the taxable year of the cor16 poration in which the distribution is made, or for the

17 next preceding taxable year of the corporation, is a

18 corporation exempt from tax under section 501 (re19 lating to certain charitable, etc., organizations) or

20 section 521 (relating to farmers’ cooperative associa21 tions).

22 ‘‘(c) SPECIAL RULES.—For purposes of this sec23 tion—

24 ‘‘(1) DISTRIBUTIONS FROM REGULATED IN25 VESTMENT COMPANIES AND REAL ESTATE INVEST-
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1 MENT TRUSTS.—Subsection (a) shall apply with re2 spect to distributions by—

3 ‘‘(A) regulated investment companies to

4 the extent provided in section 854(c), and

5 ‘‘(B) real estate investment trusts to the

6 extent provided in section 857(c).

7 ‘‘(2) DISTRIBUTIONS BY A TRUST.—For pur8 poses of subsection (a), the amount of dividends and

9 interest properly allocable to a beneficiary under sec10 tion 652 or 662 shall be deemed to have been re11 ceived by the beneficiary ratably on the same date

12 that the dividends and interest were received by the

13 estate or trust.

14 ‘‘(3) CERTAIN NONRESIDENT ALIENS INELI15 GIBLE FOR EXCLUSION.—In the case of a non16 resident alien individual, subsection (a) shall apply

17 only—

18 ‘‘(A) in determining the tax imposed for

19 the taxable year pursuant to section 871(b)(1)

20 and only in respect of dividends and interest

21 which are effectively connected with the conduct

22 of a trade or business within the United States,

23 or

24 ‘‘(B) in determining the tax imposed for

25 the taxable year pursuant to section 877(b).’’
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1 (b) CLERICAL AND CONFORMING AMENDMENTS.—

2 (1) The table of sections for part III of sub3 chapter B of chapter 1 of such Code is amended by

4 inserting after the item relating to section 115 the

5 following new item:

‘‘Sec. 116. Partial exclusion of dividends and interest received by

individuals.’’

6 (2) The first sentence of paragraph (2) of sec7 tion 265(a) of such Code is amended by inserting

8 before the period at the end thereof the following: ‘‘,

9 or to purchase or carry obligations or shares, or to

10 make deposits, to the extent the interest thereon is

11 excludable from gross income under section 116’’.

12 (3) Subsection (c) of section 584 of such Code

13 is amended by adding at the end thereof the follow14 ing new sentence:

15 ‘‘The proportionate share of each participant in the

16 amount of dividends or interest received by the common

17 trust fund and to which section 116 applies shall be con18 sidered for purposes of such section as having been re19 ceived by such participant.’’

20 (4) Subsection (a) of section 643(a) of such

21 Code is amended by inserting after paragraph (6)

22 the following new paragraph:
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1 ‘‘(7) DIVIDENDS OR INTEREST.—There shall be

2 included the amount of any dividends or interest ex3 cluded from gross income pursuant to section 116.’’

4 (5) Section 854 of such Code is amended by

5 adding at the end thereof the following new sub6 section:

7 ‘‘(c) TREATMENT UNDER SECTION 116.—

8 ‘‘(1) IN GENERAL.—For purposes of section

9 116, in the case of any dividend (other than a divi10 dend described in subsection (a)) received from a

11 regulated investment company which meets the re12 quirements of section 852 for the taxable year in

13 which it paid the dividend—

14 ‘‘(A) the entire amount of such dividend

15 shall be treated as a dividend if the aggregate

16 dividends and interest received by such com17 pany during the taxable year equal or exceed 75

18 percent of its gross income, or

19 ‘‘(B) if subparagraph (A) does not apply,

20 a portion of such dividend shall be treated as

21 a dividend (and a portion of such dividend shall

22 be treated as interest) based on the portion of

23 the company’s gross income which consists of

24 aggregate dividends or aggregate interest, as

25 the case may be.
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1 For purposes of the preceding sentence, gross in2 come and aggregate interest received shall each be

3 reduced by so much of the deduction allowable by

4 section 163 for the taxable year as does not exceed

5 aggregate interest received for the taxable year.

6 ‘‘(2) NOTICE TO SHAREHOLDERS.—The amount

7 of any distribution by a regulated investment com8 pany which may be taken into account as a dividend

9 for purposes of the exclusion under section 116 shall

10 not exceed the amount so designated by the com11 pany in a written notice to its shareholders mailed

12 not later than 45 days after the close of its taxable

13 year.

14 ‘‘(3) DEFINITIONS.—For purposes of this sub15 section—

16 ‘‘(A) The term ‘gross income’ does not in17 clude gain from the sale or other disposition of

18 stock or securities.

19 ‘‘(B) The term ‘aggregate dividends re20 ceived’ includes only dividends received from do21 mestic corporations other than dividends de22 scribed in section 116(b)(2). In determining the

23 amount of any dividend for purposes of this

24 subparagraph, the rules provided in section
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1 116(c)(1) (relating to certain distributions)

2 shall apply.’’

3 (6) Subsection (c) of section 857 of such Code

4 is amended to read as follows:

5 ‘‘(c) LIMITATIONS APPLICABLE TO DIVIDENDS RE6 CEIVED FROM REAL ESTATE INVESTMENT TRUSTS.—

7 ‘‘(1) IN GENERAL.—For purposes of section

8 116 (relating to an exclusion for dividends and inter9 est received by individuals) and section 243 (relating

10 to deductions for dividends received by corpora11 tions), a dividend received from a real estate invest12 ment trust which meets the requirements of this

13 part shall not be considered as a dividend.

14 ‘‘(2) TREATMENT AS INTEREST.—In the case of

15 a dividend (other than a capital gain dividend, as de16 fined in subsection (b)(3)(C)) received from a real

17 estate investment trust which meets the require18 ments of this part for the taxable year in which it

19 paid the dividend—

20 ‘‘(A) such dividend shall be treated as in21 terest if the aggregate interest received by the

22 real estate investment trust for the taxable year

23 equals or exceeds 75 percent of its gross in24 come, or
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1 ‘‘(B) if subparagraph (A) does not apply,

2 the portion of such dividend which bears the

3 same ratio to the amount of such dividend as

4 the aggregate interest received bears to gross

5 income shall be treated as interest.

6 ‘‘(3) ADJUSTMENTS TO GROSS INCOME AND AG7 GREGATE INTEREST RECEIVED.—For purposes of

8 paragraph (2)—

9 ‘‘(A) gross income does not include the net

10 capital gain,

11 ‘‘(B) gross income and aggregate interest

12 received shall each be reduced by so much of

13 the deduction allowable by section 163 for the

14 taxable year (other than for interest on mort15 gages on real property owned by the real estate

16 investment trust) as does not exceed aggregate

17 interest received by the taxable year, and

18 ‘‘(C) gross income shall be reduced by the

19 sum of the taxes imposed by paragraphs (4),

20 (5), and (6) of section 857(b).

21 ‘‘(4) NOTICE TO SHAREHOLDERS.—The amount

22 of any distribution by a real estate investment trust

23 which may be taken into account as interest for pur24 poses of the exclusion under section 116 shall not

25 exceed the amount so designated by the trust in a
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1 written notice to its shareholders mailed not later

2 than 45 days after the close of its taxable year.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to taxable years begin5 ning after the date of the enactment of this Act.

6 SEC. 212. ORDINARY-LOSS TREATMENT FOR LOSSES ON IN7 VESTMENTS IN STARTUP COMPANIES.

8 (a) IN GENERAL.—Subparagraph (A) of section

9 1244(c)(1) of the Internal Revenue Code of 1986 (defin10 ing section 1244 stock) is amended by inserting before the

11 comma at the end the following: ‘‘or was a qualified start12 up company’’.

13 (b) QUALIFIED STARTUP COMPANY.—Subsection (c)

14 of section 1244 of such Code is amended by adding at

15 the end the following new paragraph:

16 ‘‘(4) QUALIFIED STARTUP COMPANY.—

17 ‘‘(A) IN GENERAL.—For purposes of this

18 section, the term ‘qualified startup company’

19 means any domestic corporation if—

20 ‘‘(i) as of the time of the issuance of

21 the stock involved, substantially all of the

22 activities of the corporation involved the

23 manufacture of tangible personal property

24 in the United States,
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1 ‘‘(ii) as of the time of the issuance of

2 the stock involved, no substantial part of

3 the business activities of the corporation

4 involved a business acquired from another

5 person, and

6 ‘‘(iii) the corporation had not been in

7 existence for more than 1 taxable year as

8 of the time of the issuance of the stock in9 volved.

10 ‘‘(B) IMPORTATION EXCLUDED.—For pur11 poses of subparagraph (A), the term ‘manufac12 ture’ does not include importation.’’

13 (c) CONFORMING AMENDMENT.—The last sentence

14 of section 1244(d)(2) of such Code is amended by striking

15 ‘‘paragraphs (1)(C) and (3)(A)’’ and inserting ‘‘para16 graphs (1)(C), (3)(A), and (4)’’.

17 (d) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to stock issued after the date of

19 the enactment of this Act.

20 TITLE III—COOPERATIVE

21 ENTERPRISE

22 SEC. 301. FINDINGS.

23 The Congress finds that—
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1 (1) the globalization of the economy makes

2 antitrust law much less relevant today, and even

3 counterproductive, than when it was developed;

4 (2) rapid technological change makes the cre5 ation of monopolies unlikely as the pace of product

6 and process innovation accelerates;

7 (3) cooperative efforts in today’s world are pre8 dominantly pro-competitive rather than anticompeti9 tive; and

10 (4) changing the United States antitrust laws

11 to mirror the realities of the way in which other

12 countries enforce anticompetitive statutes would

13 make United States industries more competitive

14 internationally.

15 SEC. 302. MERGER ANALYSIS.

16 Section 7 of the Clayton Act (15 U.S.C. 18) is

17 amended—

18 (1) in the first paragraph by striking ‘‘the ef19 fect of such acquisition may be substantially to less20 en competition, or to tend to create a monopoly’’

21 and inserting in lieu thereof ‘‘there is a significant

22 probability that such acquisition will substantially

23 increase the ability to exercise market power’’;

24 (2) in the second paragraph—
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1 (A) by striking ‘‘the effect of’’ and insert2 ing in lieu thereof ‘‘there is a significant prob3 ability that’’; and

4 (B) by striking ‘‘may be substantially to

5 lessen competition, or to tend to create a mo6 nopoly’’ and inserting in lieu thereof ‘‘will sub7 stantially increase the ability to exercise market

8 power’’;

9 (3) in the third paragraph—

10 (A) by striking ‘‘the substantial lessening

11 of competition’’ in the first sentence and insert12 ing in lieu thereof ‘‘a substantial increase in the

13 ability to exercise market power’’; and

14 (B) by striking ‘‘lessen competition’’ in the

15 second sentence and inserting in lieu thereof

16 ‘‘increase the ability to exercise market power’’;

17 and

18 (4) by inserting after the third paragraph the

19 following new paragraph:

20 ‘‘For purposes of this section, the ability to exercise

21 market power is defined as the ability of one or more firms

22 profitably to maintain prices above competitive levels for

23 a significant period of time. In determining whether there

24 is a significant probability that any acquisition will sub25 stantially increase the ability to exercise market power, the
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1 court shall duly consider all economic factors relevant to

2 the effect of the acquisition in the affected markets, in3 cluding (i) the number and size distribution of firms and

4 the effect of the acquisition thereon; (ii) ease or difficulty

5 of entry by foreign or domestic firms; (iii) the ability of

6 smaller firms in the market to increase production in re7 sponse to an attempt to exercise market power; (iv) the

8 nature of the product and terms of sale; (v) conduct of

9 firms in the market; (vi) efficiencies deriving from the ac10 quisition; and (vii) any other evidence indicating whether

11 the acquisition will or will not substantially increase the

12 ability, unilaterally or collectively, to exercise market

13 power.’’.

14 SEC. 303. JOINT PRODUCTION.

15 The National Cooperative Research Act of 1984 (15

16 U.S.C. 4301 et seq.) is amended—

17 (1) in section 1, by striking ‘‘National Coopera18 tive Research Act of 1984’’ and inserting in lieu

19 thereof ‘‘National Cooperative Research, Develop20 ment, and Production Act’’;

21 (2) by striking ‘‘joint research and development

22 venture’’ each place it appears and inserting in lieu

23 thereof ‘‘joint research, development, or production

24 venture’’;

25 (3) in section 2(a)(6)—
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1 (A) by striking ‘‘or’’ in subparagraph (D);

2 (B) by striking subparagraph (E) and in3 serting in lieu thereof the following:

4 ‘‘(E) the production of any product, proc5 ess, or service, or

6 ‘‘(F) any combination of the purposes

7 specified in subparagraphs (A), (B), (C), (D),

8 and (E),’’; and

9 (C) by inserting ‘‘development, or produc10 tion,’’ after ‘‘the conducting of research,’’;

11 (4) in section 2(b)(1), by striking ‘‘conduct the

12 research and development that is’’ and inserting in

13 lieu thereof ‘‘carry out’’;

14 (5) by striking sections 2(b)(2) and 2(b)(3) and

15 inserting in lieu thereof the following:

16 ‘‘(2) entering into any agreement or engaging

17 in any other conduct restricting, requiring, or other18 wise involving the marketing by such venture or by

19 any person who is a party to such venture of any

20 product, process, or service developed through or

21 produced by such venture, other than—

22 ‘‘(A) the marketing by such venture of any

23 product, process, or service to any person who

24 is a party to such venture; or
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1 ‘‘(B) the marketing of proprietary informa2 tion, such as patents, rights in mask works pro3 tected under title 17 of the United States Code,

4 know-how, and trade secrets; and

5 ‘‘(3) entering into any agreement or engaging

6 in any other conduct—

7 ‘‘(A) to restrict or require the sale, licens8 ing, or sharing by any person who is a party to

9 such venture of inventions, developments, prod10 ucts, processes, or services not developed

11 through or produced by such venture; or

12 ‘‘(B) to restrict or require participation by

13 such a party in other unilateral or joint re14 search, development, or production activities,

15 that is not reasonably required to prevent misappro16 priation of proprietary information contributed by

17 any person who is a party to such venture or of the

18 results of such venture.’’;

19 (6) in section 3, by striking ‘‘research and de20 velopment markets’’ and inserting in lieu thereof

21 ‘‘research, development, product, process, or service

22 markets’’;

23 (7) in the heading to section 6, by striking

24 ‘‘JOINT RESEARCH AND DEVELOPMENT VENTURE’’
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1 and inserting in lieu thereof ‘‘JOINT RESEARCH, DE2 VELOPMENT, OR PRODUCTION VENTURE’’; and

3 (8) in section 6(a) by inserting ‘‘(or, with re4 spect to a venture involving the production of any

5 product, process, or service, not later than 90 days

6 after the effective date of the Fundamental Competi7 tiveness Act of 1993)’’ after ‘‘enactment of this

8 Act’’.

9 TITLE IV—BUSINESS LIABILITY

10 REFORM

11 Subtitle A—Findings

12 SEC. 401. FINDINGS.

13 The Congress finds that—

14 (1) the increasing amount of litigation in our

15 society causes the wasteful use of time, money, and

16 energy which could be better allocated to research,

17 development, production, economic growth, and com18 petitiveness;

19 (2) the multitude of professional and product li20 ability suits has undermined the incentive and ability

21 of businesses to bring new products to the market

22 and has led professionals to be overly cautious in

23 providing services to the community;

24 (3) the excessive number of law suits and the

25 plethora of legal standards in the areas of profes-
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1 sional and product liability for each State has led to

2 exorbitant compliance costs for manufacturers and

3 service providers;

4 (4) encouraging alternative dispute mechanisms

5 to resolve both professional and product liability

6 suits would reduce inordinate litigation cost and free

7 capital for more productive enterprises; and

8 (5) providing uniform legal standards for both

9 professional and product liability would eliminate

10 costly litigation, promote professional and product

11 innovation, reduce regulatory compliance costs, and

12 make the United States more competitive inter13 nationally.

14 Subtitle B—Professionals’ Liability

15 Reform

16 SEC. 411. SHORT TITLE.

17 This subtitle may be cited as ‘‘Professionals’ Liability

18 Reform Act of 1993’’.

19 SEC. 412. PURPOSE.

20 The purpose of this subtitle is to establish uniform

21 standards of liability for professionals who provide profes22 sional service—

23 (1) to promote greater uniformity and predict24 ability with respect to liability arising out of such

25 services;
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1 (2) to facilitate the provision of such services

2 through interstate commerce;

3 (3) to foster innovation by reducing the uncer4 tainty of risk to professionals who provide profes5 sional services; and

6 (4) to encourage the States to support alter7 native methods for resolving professional liability

8 disputes in order to reduce the costs of such dis9 putes to professionals and their clients.

10 SEC. 413. SCOPE AND PREEMPTION.

11 (a) IN GENERAL.—(1) This subtitle governs any pro12 fessional liability action brought in any Federal or State

13 court against a professional.

14 (2) This subtitle shall preempt and supersede any

15 State law to the extent that such law is inconsistent with

16 this subtitle. This subtitle shall not preempt or supersede

17 any State law that provides to professionals limitations of

18 liability or defenses which are additional to limitations or

19 defenses contained in this subtitle.

20 (b) HARM REQUIRED.—A claimant is not entitled to

21 recover damages in a professional liability action except

22 for damages which constitute harm as defined in section

23 416(4).

24 (c) CONSTRUCTION OF PROVISIONS.—Nothing in this

25 subtitle shall be construed—
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1 (1) to waive or affect any defense of sovereign

2 immunity asserted by any State under any law;

3 (2) to waive or affect any defense of sovereign

4 immunity asserted by the United States;

5 (3) to affect the applicability of the Foreign

6 Services Immunities Act of 1976 (28 U.S.C. 1602 et

7 seq.);

8 (4) to preempt State choice-of-law rules with re9 spect to claims brought by a foreign nation or a citi10 zen of a foreign nation; or

11 (5) to affect the right of any court to transfer

12 venue or to apply the law of a foreign nation or to

13 dismiss a claim of a foreign nation or of a citizen

14 of a foreign nation on the ground of inconvenient

15 forum.

16 (d) ALTERNATIVE PROCEDURES, STANDARDS, AND

17 SYSTEMS.—Nothing in this subtitle shall prohibit States

18 from developing or implementing alternative procedures,

19 standards, or systems, which are not inconsistent with this

20 subtitle, for—

21 (1) expediting the adjudication of professional

22 liability claims,

23 (2) resolving professional liability disputes, and

24 (3) compensating harm caused by professional

25 services.
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1 (e) LIMITATION OF ACTIONS.—No professional liabil2 ity action shall be maintained unless commenced within

3 3 years after the claimant discovered, or in the exercise

4 of reasonable diligence should have discovered, that such

5 claimant had suffered harm from professional services.

6 SEC. 414. DESCRIPTION OF PROFESSIONAL LIABILITY

7 STANDARDS.

8 (a) LIABILITY IN GENERAL.—A professional shall

9 not be liable for damages in any professional liability ac10 tion unless the claimant establishes in addition to any

11 other necessary elements of proof required by law—

12 (1) except as provided in subsection (b), that

13 such professional negligently rendered professional

14 services and such negligence was the proximate

15 cause of harm to the claimant; or

16 (2) in the case of a claim for economic injury,

17 that such professional negligently rendered profes18 sional services to or for the direct and intended ben19 efit of the claimant, and such services were the prox20 imate cause of the harm to the claimant.

21 (b) EXISTENCE OF CERTAIN SCIENTIFIC, MEDICAL,

22 LEGAL, OR TECHNICAL INFORMATION.—A professional

23 shall not be liable in a professional liability action for

24 harm caused by professional services rendered by such

25 professional unless the claimant establishes that, at the
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1 time such services were rendered, knowledge of the cir2 cumstances that caused the harm and a practical means

3 to eliminate such circumstances were reasonably available

4 in light of scientific, medical, legal, or technical informa5 tion existing at the time the professional services were ren6 dered.

7 (c) ADDITIONAL LIMITATIONS ON LIABILITY.—(1) A

8 professional shall not be liable in a professional liability

9 action in which—

10 (A) the professional’s services were rendered to

11 an agency of the Federal Government or of any

12 State;

13 (B) the Federal Government or the State estab14 lished or approved reasonably precise contract speci15 fications material to the claim made against the pro16 fessional; and

17 (C) the services rendered by the professional

18 conformed to such specifications in all respects ma19 terial to the claim.

20 (2) A determination by an agency of the Federal Gov21 ernment or the State that the services rendered by the

22 professional are in compliance with contract specifications

23 shall serve as conclusive evidence of such conformity.

24 (d) PERIODIC PAYMENTS.—(1) In any professional li25 ability action in which the award of future damages ex-
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1 ceeds $100,000, no person may be required to pay for fu2 ture loss in a single payment, but such person shall be

3 permitted to make such payments periodically based on

4 a projection of when damages are likely to occur.

5 (2) The court may require such person to purchase

6 an annuity making such periodic payments, if the court

7 finds a reasonable basis for concluding that the person

8 may not make the periodic payments.

9 (3) The judgment of the court awarding such periodic

10 payments may not be reopened at any time to contest,

11 amend, or modify the schedule or amount of the payments

12 in the absence of fraud.

13 (4) This subsection shall not be construed to preclude

14 a settlement providing for a single payment.

15 (f) COLLATERAL SOURCE BENEFITS.—(1) Any

16 award of damages to a claimant in a professional liability

17 action shall be reduced by any other past or future pay18 ment or benefit covered by this subsection which the per19 son has received or for which the person is eligible on ac20 count of the harm for which damages are awarded.

21 (2) As used in this subsection, the term ‘‘payment

22 or benefit covered by this subsection’’ means—

23 (A) any payment or benefit by or paid, in whole

24 or in part, by any agency or instrumentality of the

25 United States, a State, or local government; and
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1 (B) any payment or benefit by a worker’s com2 pensation system, a health insurance program, or in3 come replacement program.

4 (3) This subsection shall not preempt or supersede

5 any State law which provides that damage awards may

6 be reduced by payments or benefits other than those cov7 ered by this section.

8 (4) This subsection shall not apply to any payments

9 or benefits received before judgment if the application of

10 this subsection would reduce the amount of income that

11 would otherwise be considered under section 402(a)(17)

12 of the Social Security Act.

13 (5) The amount by which an award of damages to

14 an individual for an injury shall be reduced under para15 graph (1) shall be an amount equal to the difference be16 tween—

17 (A) the total amount of the payments (other

18 than such award) which have been made or which

19 will be made to such individual to compensate such

20 individual for such injury, minus

21 (B) the amount paid by such individual (or by

22 the spouse or parent of such individual) to secure

23 the payments described in subparagraphs (A) and

24 (B) of paragraph (2).
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1 (g) LIMITATION ON ATTORNEYS’ FEES.—(1) Except

2 as provided in paragraph (2), in any professional liability

3 action in which claimant receives settlement proceeds or

4 an award of damages, the amount of payments to such

5 individual’s attorney shall not exceed—

(A) 331 6 ⁄3 percent of the first $250,000 recov7 ered,

8 (B) 25 percent of the next $250,000 recovered,

9 and

10 (C) 20 percent of any amount recovered in ex11 cess of $500,000.

12 (2) In any civil action to which paragraph (1) applies,

13 the court may, after receiving a petition from the attorney

14 representing the individual who receives settlement pro15 ceeds or an award of damages, permit such attorney to

16 be paid an amount of fees in excess of the amount speci17 fied by such paragraph if the court determines that the

18 petition has adduced evidence justifying such additional

19 fees.

20 (h) LIABILITY OF CODEFENDANTS.—(1) Except as

21 provided in paragraph (2), in a professional liability ac22 tion, the trier of fact shall determine, with respect to each

23 person responsible for the harm, the percentage of that

24 person’s responsibility for the harm for which the action

25 was brought. If damages are awarded to the claimant in
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1 such action, a professional shall be liable, if otherwise lia2 ble to the claimant for damages, only for the percentage

3 of the damages which equals the percentage of that profes4 sional’s responsibility for the harm for which the action

5 was brought.

6 (2) Paragraph (1) shall not apply with respect to per7 sons engaged in concerted action which proximately

8 caused the harm complained of by the claimant. For pur9 poses of this subsection, the term ‘‘concerted action’’

10 means the participation in joint conduct by 2 or more per11 sons who consciously and deliberately agreed to jointly

12 participate in such conduct with actual knowledge of the

13 wrongfulness of the conduct.

14 (i) PUNITIVE DAMAGES.—(1) Punitive damages may,

15 if otherwise permitted by applicable law, be awarded to

16 any claimant who establishes, by clear and convincing evi17 dence, that the harm suffered was the result of conduct—

18 (A) manifesting a professional’s malicious and

19 reckless disregard of those persons who might be

20 harmed as a result of the performance of profes21 sional service; and

22 (B) constituting an extreme departure from ac23 cepted standard of conduct.

24 (2) A failure to exercise reasonable care in choosing

25 among alternative types of services, designs, formulations,
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1 instructions, or warnings does not, in and of itself, con2 stitute the conduct described in paragraph (1).

3 (3) Punitive damages may not be awarded in the ab4 sence of a compensatory award.

5 (4) Punitive damages may not be awarded for the

6 negligent provision of professional services.

7 (5) In determining whether punitive damages are to

8 be awarded, the trier of fact shall consider—

9 (A) the likelihood at the relevant time that seri10 ous harm would arise from the professional’s con11 duct described in paragraph (1),

12 (B) the degree of the professional’s awareness

13 of that likelihood,

14 (C) the duration of the conduct and any con15 cealment of it by the professional,

16 (D) the attitude and action of the professional

17 upon discovery of the conduct and whether the con18 duct has been terminated, and

19 (E) whether the harm suffered by the claimant

20 was also the result of the claimant’s—

21 (i) disregard for personal safety;

22 (ii) failure to provide the professional with

23 all material information or other matters rel24 evant to the rendering of professional services;

25 or
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1 (iii) disregard for the consequences of any

2 action taken by the claimant in reliance on pro3 fessional services.

4 (6) At the request of the professional, the trier of

5 fact shall consider in a separate proceeding whether puni6 tive damages are to be awarded. If a separate proceeding

7 is requested, evidence relevant only to the claim of punitive

8 damages, as determined by applicable State law, shall be

9 inadmissible in any proceeding to determine whether com10 pensatory damages are to be awarded.

11 (7) If the trier of fact determines that a professional

12 has engaged in conduct described under paragraph (1),

13 the court may award punitive damages. In determining the

14 amount of such damages, the court shall consider—

15 (A) the factors described in paragraph (4),

16 (B) the profitability to the professional of the

17 conduct for which punitive damages are to be

18 awarded,

19 (C) the total effect of other punishment im20 posed or likely to be imposed upon the professional

21 as a result of the conduct, including punitive damage

22 awards to persons similarly situated to the claimant

23 and the severity of civil or criminal penalties to

24 which the professional has been or may be subjected.
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1 (8)(A) A claimant’s actual recovery of punitive dam2 ages awarded under paragraph (5) may not exceed 3 times

3 the amount of compensatory damages awarded to such

4 claimant.

5 (B) Any punitive damages awarded by the court in

6 excess of the amount referred to in subparagraph (A) shall

7 be paid—

8 (i) to the State in which the case is litigated,

9 if the case is litigated in State court; or

10 (ii) to the Federal Government, if the case is

11 litigated in Federal court.

12 (C) Notwithstanding subparagraph (B), the court

13 may award attorneys’ fees from such damages to the

14 claimant’s attorney as compensation for work attributable

15 to obtaining an award of such damages.

16 (j) COUNSEL’S LIABILITY FOR FRIVOLOUS SUITS.—

17 If the court finds in any professional liability action that

18 such action was commenced—

19 (1) without a good faith belief by the attorney

20 representing the claimant that there was a reason21 able basis in law and in fact for recovery of the relief

22 requested, or

23 (2) by such attorney merely for purposes of

24 achieving a monetary settlement where there was no

25 reasonable prospect for an award of damages,
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1 the attorney shall be liable for costs, fees, and expenses,

2 including attorney fees, reasonably incurred by the defend3 ant.

4 SEC. 415. FORMATION OF RISK MANAGEMENT PROGRAMS.

5 (a) IN GENERAL.—Each State should encourage pro6 fessional organizations, whose membership includes pro7 fessionals who practice within the State, to put into effect

8 risk management programs including peer review of pro9 fessional office policies and practices, organization, and

10 quality of performance.

11 (b) RECORDS INADMISSIBLE AS EVIDENCE.—

12 Records of the implementation of and conclusions reached

13 by such risk management programs, including peer review

14 of professional office policies and practices, organization,

15 and quality of performance, shall not be admissible in evi16 dence against any professional who is the subject of such

17 records.

18 SEC. 416. DEFINITIONS.

19 For purposes of this subtitle—

20 (1) the term ‘‘professional’’ means—

21 (A) any person engaged in work (i) pre22 dominantly intellectual and varied in character

23 as opposed to routine mental, manual, mechani24 cal, or physical work; (ii) involving the consist25 ent exercise of discretion and judgment in its
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1 performance; (iii) of such a character that the

2 output produced or the result accomplished can3 not be standardized in relation to a given period

4 of time; and (iv) requiring knowledge of an ad5 vanced type in a field of science or learning cus6 tomarily acquired by a prolonged course of spe7 cialized intellectual instruction and study in an

8 institution of higher learning or a hospital, as

9 distinguished from a general academic edu10 cation or from an apprenticeship or from train11 ing in the performance of routine mental, man12 ual, or physical processes; or

13 (B) any person, who (i) has completed the

14 courses of specialized intellectual instruction

15 and study described in clause (iv) of subpara16 graph (A), and (ii) is performing related work

17 under the supervision of a professional to qual18 ify himself or herself to become a professional

19 as defined in subparagraph (A);

20 (2) the term ‘‘State’’ means any State of the

21 United States, the District of Columbia, the Com22 monwealth of Puerto Rico, the Commonwealth of the

23 Northern Mariana Islands, the Virgin Islands,

24 Guam, American Samoa, and any other territory or
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1 possession of the United States, or any political sub2 division thereof;

3 (3) the term ‘‘claimant’’ means any person—

4 (A) who has suffered harm from the provi5 sion of professional services and who brings a

6 professional liability action, or

7 (B) who brings such an action on behalf of

8 any person who has suffered harm from the

9 provision of professional services or who brings

10 such an action because a person suffered harm

11 from such services;

12 (4) the term ‘‘harm’’ means—

13 (A) illness, bodily injury, or the death of

14 the claimant,

15 (B) mental anguish of, or emotional harm

16 to, the claimant caused by the claimant’s illness

17 or bodily injury,

18 (C) physical damage to property, or

19 (D) economic injury; and

20 (5) the term ‘‘professional liability action’’

21 means a civil action brought against a professional

22 for personal injury, property damage, or harm suf23 fered by the claimant because of the provision of

24 professional services.
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1 Subtitle C—Product Liability

2 Fairness

3 PART I—GENERAL PROVISIONS

4 SEC. 421. SHORT TITLE.

5 This subtitle may be cited as the ‘‘Product Liability

6 Fairness Act’’.

7 SEC. 422. DEFINITIONS.

8 As used in this subtitle, the term—

9 (1) ‘‘claimant’’ means any person who brings a

10 civil action pursuant to this subtitle, and any person

11 on whose behalf such an action is brought; if such

12 an action is brought through or on behalf of an es13 tate, the term includes the claimant’s decedent, or if

14 it is brought through or on behalf of a minor or in15 competent, the term includes the claimant’s parent

16 or guardian;

17 (2) ‘‘clear and convincing evidence’’ is that

18 measure or degree of proof that will produce in the

19 mind of the trier of fact a firm belief or conviction

20 as to the truth of the allegations sought to be estab21 lished; the level of proof required to satisfy such

22 standard is more than that required under prepon23 derance of the evidence, but less than that required

24 for proof beyond a reasonable doubt;
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1 (3) ‘‘collateral benefits’’ means all benefits and

2 advantages received or entitled to be received (re3 gardless of any right any other person has or is enti4 tled to assert for recoupment through subrogation,

5 trust agreement, lien, or otherwise) by any claimant

6 harmed by a product or by any other person as re7 imbursement of loss because of harm to person or

8 property payable or required to be paid to the claim9 ant, under—

10 (A) any Federal law or the laws of any

11 State (other than through a claim for breach of

12 an obligation or duty); or

13 (B) any life, health, or accident insurance

14 or plan, wage or salary continuation plan, or

15 disability income or replacement service insur16 ance, or any benefit received or to be received

17 as a result of participation in any pre-paid med18 ical plan or health maintenance organization;

19 (4) ‘‘commerce’’ means trade, traffic, com20 merce, or transportation (A) between a place in a

21 State and any place outside of that State; or (B)

22 which affects trade, traffic, commerce, or transpor23 tation described in clause (A);

24 (5) ‘‘commercial loss’’ means economic injury,

25 whether direct, incidental, or consequential, includ-
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1 ing property damage and damage to the product it2 self;

3 (6) ‘‘economic loss’’ means any pecuniary loss

4 resulting from harm which is allowed under State

5 law;

6 (7) ‘‘exercise of reasonable care’’ means conduct

7 of a person of ordinary prudence and intelligence

8 using the attention, precaution, and judgment that

9 society expects of its members for the protection of

10 their own interests and the interests of others;

11 (8) ‘‘harm’’ means any harm recognized under

12 the law of the State in which the civil action is

13 maintained, other than—

14 (A) loss or damage caused to a product it15 self; and

16 (B) commercial loss;

17 (9) ‘‘manufacturer’’ means (A) any person who

18 is engaged in a business to produce, create, make,

19 or construct any product (or component part of a

20 product) and who designs or formulates the product

21 (or component part of the product) or has engaged

22 another person to design or formulate the product

23 (or component part of the product); (B) a product

24 seller with respect to all aspects of a product (or

25 component part of a product) which are created or
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1 affected when, before placing the product in the

2 stream of commerce, the product seller produces,

3 creates, makes, or constructs and designs or formu4 lates, or has engaged another person to design or

5 formulate, an aspect of a product (or component

6 part of a product) made by another; or (C) any

7 product seller not described in clause (B) which

8 holds itself out as a manufacturer to the user of a

9 product;

10 (10) ‘‘noneconomic loss’’ means loss caused by

11 a product other than economic loss or commercial

12 loss;

13 (11) ‘‘person’’ means any individual, corpora14 tion, company, association, firm, partnership, soci15 ety, joint stock company, or any other entity (includ16 ing any governmental entity);

17 (12) ‘‘preponderance of the evidence’’ is that

18 measure or degree of proof which, by the weight,

19 credit, and value of the aggregate evidence on either

20 side, establishes that it is more probable than not

21 that a fact occurred or did not occur;

22 (13) ‘‘product’’ means any object, substance,

23 mixture, or raw material in a gaseous, liquid, or

24 solid state (A) which is capable of delivery itself or

25 as an assembled whole, in a mixed or combined
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1 state, or as a component part or ingredient; (B)

2 which is produced for introduction into trade or

3 commerce; (C) which has intrinsic economic value;

4 and (D) which is intended for sale or lease to per5 sons for commercial or personal use; the term does

6 not include human tissue, blood and blood products,

7 or organs unless specifically recognized as a product

8 pursuant to State law;

9 (14) ‘‘product seller’’ means a person who, in

10 the course of a business conducted for that purpose,

11 sells, distributes, leases, prepares, blends, packages,

12 labels, or otherwise is involved in placing a product

13 in the stream of commerce, or who installs, repairs,

14 or maintains the harm-causing aspect of a product;

15 the term does not include—

16 (A) a seller or lessor of real property;

17 (B) a provider of professional services in

18 any case in which the sale or use of a product

19 is incidental to the transaction and the essence

20 of the transaction is the furnishing of judg21 ment, skill, or services; or

22 (C) any person who—

23 (i) acts in only a financial capacity

24 with respect to the sale of a product; and
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1 (ii) leases a product under a lease ar2 rangement in which the selection, posses3 sion, maintenance, and operation of the

4 product are controlled by a person other

5 than the lessor; and

6 (15) ‘‘State’’ means any State of the United

7 States, the District of Columbia, the Commonwealth

8 of Puerto Rico, the Commonwealth of the Northern

9 Mariana Islands, the Virgin Islands, Guam, Amer10 ican Samoa, and any other territory or possession of

11 the United States, or any political subdivision

12 thereof.

13 SEC. 423. PREEMPTION.

14 (a) This subtitle governs any civil action brought

15 against a manufacturer or product seller, on any theory,

16 for harm caused by a product. A civil action brought

17 against a manufacturer or product seller for loss or dam18 age to a product itself or for commercial loss is not subject

19 to this subtitle.

20 (b) This subtitle supersedes any State law regarding

21 recovery for harm caused by a product only to the extent

22 that this subtitle establishes a rule of law applicable to

23 any such recovery. Any issue arising under this subtitle

24 that is not governed by any such rule of law shall be gov25 erned by applicable State or Federal law.
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1 (c) Nothing in this subtitle act shall be construed

2 to—

3 (1) waive or affect any defense of sovereign im4 munity asserted by any State under any provision of

5 law;

6 (2) supersede any Federal law, except the Fed7 eral Employees Compensation Act and the Long8 shoremen’s and Harbor Workers’ Compensation Act;

9 (3) waive or affect any defense of sovereign im10 munity asserted by the United States;

11 (4) affect the applicability of any provision of

12 chapter 97 of title 28, United States Code;

13 (5) preempt State choice-of-law rules with re14 spect to claims brought by a foreign nation or a citi15 zen of a foreign nation;

16 (6) affect the right of any court to transfer

17 venue or to apply the law of a foreign nation or to

18 dismiss a claim of a foreign nation or of a citizen

19 of a foreign nation on the ground of inconvenient

20 forum; or

21 (7) supersede any statutory or common law, in22 cluding an action to abate a nuisance, that author23 izes a State or person to institute an action for civil

24 damages or civil penalties, cleanup costs, injunc25 tions, restitution, cost recovery, punitive damages, or
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1 any other form of relief resulting from contamina2 tion or pollution of the environment, or the threat of

3 such contamination or pollution.

4 (d) As used in this section, the term ‘‘environment’’

5 has the meaning given to such term in section 101(8) of

6 the Comprehensive Environmental Response, Compensa7 tion, and Liability Act of 1980 (42 U.S.C. 9601(8)).

8 (e) This subtitle shall be construed and applied after

9 consideration of its legislative history to promote uniform10 ity of law in the various jurisdictions.

11 SEC. 424. JURISDICTION OF FEDERAL COURTS.

12 The district courts of the United States shall not

13 have jurisdiction over any civil action pursuant to this sub14 title, based on section 1331 or 1337 of title 28, United

15 States Code.

16 SEC. 425. EFFECTIVE DATE.

17 (a) This subtitle shall take effect on the date of its

18 enactment and shall apply to all civil actions pursuant to

19 this subtitle commenced on or after such date, including

20 any action in which the harm or the conduct which caused

21 the harm occurred before the effective date of this subtitle.

22 (b) If any provision of this subtitle would shorten the

23 period during which a manufacturer or product seller

24 would otherwise be exposed to liability, the claimant may,

25 notwithstanding the otherwise applicable time period,
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1 bring any civil action pursuant to this subtitle within one

2 year after the effective date of this subtitle.

3 PART II—OUT OF COURT PROCEDURES

4 SEC. 431. EXPEDITED PRODUCT LIABILITY SETTLEMENTS.

5 (a) Any claimant may bring a civil action for damages

6 against a person for harm caused by a product pursuant

7 to applicable State law, except to the extent such law is

8 superseded by this part.

9 (b) Any claimant may, in addition to any claim for

10 relief made in accordance with State law, include in such

11 claimant’s complaint an offer of settlement for a specific

12 dollar amount.

13 (c) The defendant may make an offer of settlement

14 for a specific dollar amount within sixty days after service

15 of the claimant’s complaint or within the time permitted

16 pursuant to State law for a responsive pleading, whichever

17 is longer, except that if such pleading includes a motion

18 to dismiss in accordance with applicable law, the defend19 ant may tender such relief to the claimant within ten days

20 after the court’s determination regarding such motion.

21 (d) In any case in which an offer of settlement is

22 made pursuant to subsection (b) or (c) of this section, the

23 court may, upon motion made prior to the expiration of

24 the applicable period for response, enter an order extend25 ing such period. Any such order shall contain a schedule
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1 for discovery of evidence material to the issue of the ap2 propriate amount of relief, and shall not extend such pe3 riod for more than sixty days. Any such motion shall be

4 accompanied by a supporting affidavit of the moving party

5 setting forth the reasons why such extension is necessary

6 to promote the interests of justice and stating that the

7 information likely to be discovered is material, and is not,

8 after reasonable inquiry, otherwise available to the moving

9 party.

10 (e) If the defendant, as offeree, does not accept the

11 offer of settlement made by a claimant in accordance with

12 subsection (b) of this section within the time permitted

13 pursuant to State law for a responsive pleading or, if such

14 pleading includes a motion to dismiss in accordance with

15 applicable law, within thirty days after the court’s deter16 mination regarding such motion, and a verdict is entered

17 in such action equal to or greater than the specific dollar

18 amount of such offer of settlement, the court shall enter

19 judgment against the defendant and shall include in such

20 judgment an amount for the claimant’s reasonable attor21 ney’s fees and costs. Such fees shall be offset against any

22 fees owed by the claimant to the claimant’s attorney by

23 reason of the verdict.

24 (f) If the claimant, as offeree, does not accept the

25 offer of settlement made by a defendant in accordance
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1 with subsection (c) of this section within thirty days after

2 the date on which such offer is made and a verdict is en3 tered in such action equal to or less than the specific dollar

4 amount of such offer of settlement, the court shall reduce

5 the amount of the verdict in such action by an amount

6 equal to the reasonable attorney’s fees and costs owed by

7 the defendant to the defendant’s attorney by reason of the

8 verdict, except that the amount of such reduction shall not

9 exceed that portion of the verdict which is allocable to non10 economic loss and economic loss for which the claimant

11 has received or will receive collateral benefits.

12 (g) For purposes of this section, attorney’s fees shall

13 be calculated on the basis of an hourly rate which should

14 not exceed that which is considered acceptable in the com15 munity in which the attorney practices, considering the at16 torney’s qualifications and experience and the complexity

17 of the case.

18 SEC. 432. ALTERNATIVE DISPUTE RESOLUTION PROCE19 DURES.

20 (a) In lieu of or in addition to making an offer of

21 settlement under section 431 of this part, a claimant or

22 defendant may, within the time permitted for the making

23 of such an offer under section 431 of this part, offer to

24 proceed pursuant to any voluntary alternative dispute res25 olution procedure established or recognized under the law
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1 of the State in which the civil action for damages for harm

2 caused by a product is brought or under the rules of the

3 court in which such action is maintained.

4 (b) If the offeree refuses to proceed pursuant to such

5 alternative dispute resolution procedure and the court de6 termines that such refusal was unreasonable or not in

7 good faith, the court shall assess reasonable attorney’s

8 fees and costs against the offeree.

9 (c) For the purposes of this section, there shall be

10 created a rebuttable presumption that a refusal by an

11 offeree to proceed pursuant to such alternative dispute

12 resolution procedure was unreasonable or not in good

13 faith, if a verdict is rendered in favor of the offeror.

14 PART III—COURT PROCEDURES

15 SEC. 441. CIVIL ACTIONS.

16 A person seeking to recover for harm caused by a

17 product may bring a civil action against the product’s

18 manufacturer or product seller pursuant to applicable

19 State or Federal law, except to the extent such law is su20 perseded by this subtitle.

21 SEC. 442. UNIFORM STANDARDS OF PRODUCT SELLER LI22 ABILITY.

23 (a) Notwithstanding the provisions of section 441 of

24 this part, in any civil action for harm caused by a product,

25 a product seller other than a manufacturer is liable to a
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1 claimant, only if the claimant establishes by a preponder2 ance of the evidence that—

3 (1)(A) the individual product unit which alleg4 edly caused the harm complained of was sold by the

5 defendant;

6 (B) the product seller failed to exercise reason7 able care with respect to the product; and

8 (C) such failure to exercise reasonable care was

9 a proximate cause of the claimant’s harm; or

10 (2)(A) the product seller made an express war11 ranty, independent of any express warranty made by

12 a manufacturer as to the same product;

13 (B) the product failed to conform to the war14 ranty; and

15 (C) the failure of the product to conform to the

16 warranty caused the claimant’s harm.

17 (b)(1) In determining whether a product seller is sub18 ject to liability under subsection (a)(1) of this section, the

19 trier of fact may consider the effect of the conduct of the

20 product seller with respect to the construction, inspection,

21 or condition of the product, and any failure of the product

22 seller to pass on adequate warnings or instructions from

23 the product’s manufacturer about the dangers and proper

24 use of the product.
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1 (2) A product seller shall not be liable in a civil action

2 subject to this part based upon an alleged failure to pro3 vide warnings or instructions unless the claimant estab4 lishes that, when the product left the possession and con5 trol of the product seller, the product seller failed—

6 (A) to provide to the person to whom the prod7 uct seller relinquished possession and control of the

8 product any pamphlets, booklets, labels, inserts, or

9 other written warnings or instructions received while

10 the product was in the product seller’s possession

11 and control; or

12 (B) to make reasonable efforts to provide users

13 with those warnings and instructions which it re14 ceived after the product left its possession and con15 trol.

16 (3) A product seller shall not be liable in a civil action

17 subject to this part except for breach of express warranty

18 where there was no reasonable opportunity to inspect the

19 product in a manner which would or should, in the exercise

20 of reasonable care, have revealed the aspect of the product

21 which allegedly caused the claimant’s harm.

22 (c) Notwithstanding subsection (b), a product seller

23 shall be treated as the manufacturer of a product and

24 shall be liable for harm to the claimant caused by a prod25 uct as if it were the manufacturer of the product if—
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1 (1) the manufacturer is not subject to service of

2 process under the laws of any State in which the ac3 tion might have been brought; or

4 (2) the court determines that the claimant

5 would be unable to enforce a judgment against the

6 manufacturer.

7 SEC. 443. UNIFORM STANDARDS FOR AWARD OF PUNITIVE

8 DAMAGES.

9 (a) Punitive damages may, if otherwise permitted by

10 applicable law, be awarded in any civil action subject to

11 this part to any claimant who establishes by clear and con12 vincing evidence that the harm suffered was the result of

13 conduct manifesting a manufacturer’s or product seller’s

14 conscious, flagrant indifference to the safety of those per15 sons who might be harmed by a product. A failure to exer16 cise reasonable care in choosing among alternative product

17 designs, formulations, instructions, or warnings is not of

18 itself such conduct. Except as provided in subsection (b)

19 of this section, punitive damages may not be awarded in

20 the absence of a compensatory award.

21 (b) In any civil action in which the alleged harm to

22 the claimant is death and the applicable State law pro23 vides, or has been construed to provide, for damages only

24 punitive in nature, a defendant may be liable for any such

25 damages regardless of whether a claim is asserted under
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1 this section. The recovery of any such damages shall not

2 bar a claim under this section.

3 (c)(1) Punitive damages shall not be awarded pursu4 ant to this section against a manufacturer or product sell5 er of a drug (as defined in section 201(g)(1) of the Fed6 eral Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1))

7 or medical device (as defined under section 201(h) of the

8 Federal Food, Drug, and Cosmetic Act (21 U.S.C.

9 321(h)) which caused the claimant’s harm where—

10 (A) such drug or device was subject to pre-mar11 ket approval by the Food and Drug Administration

12 with respect to the safety of the formulation or per13 formance of the aspect of such drug or device which

14 caused the claimant’s harm or the adequacy of the

15 packaging or labeling of such drug or device, and

16 such drug was approved by the Food and Drug Ad17 ministration; or

18 (B) the drug is generally recognized as safe and

19 effective pursuant to conditions established by the

20 Food and Drug Administration and applicable regu21 lations, including packaging and labeling regulations.

22 The provisions of this paragraph shall not apply (i)

23 in any case in which the defendant withheld from or

24 misrepresented to the Food and Drug Administra25 tion or any other agency or official of the Federal
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1 Government information that is material and rel2 evant to the performance of such drug or device, or

3 (ii) in any case in which the defendant made an ille4 gal payment to an official of the Food and Drug Ad5 ministration for the purpose of securing approval of

6 such drug or device.

7 (2) Punitive damages shall not be awarded pursuant

8 to this section against a manufacturer of an aircraft which

9 caused the claimant’s harm where—

10 (A) such aircraft was subject to pare-market

11 certification by the Federal Aviation Administration

12 with respect to the safety of the design or perform13 ance of the aspect of such aircraft which caused the

14 claimant’s harm or the adequacy of the warnings re15 garding the operation or maintenance of such air16 craft;

17 (B) the aircraft was certified by the Federal

18 Aviation Administration under the Federal Aviation

19 Act of 1958 (49 App. U.S.C. 1301 et seq.); and

20 (C) the manufacturer of the aircraft complied,

21 after delivery of the aircraft to a user, with Federal

22 Aviation Administration requirements and obliga23 tions with respect to continuing airworthiness, in24 cluding the requirement to provide maintenance and

25 service information related to airworthiness whether
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1 or not such information is used by the Federal Avia2 tion Administration in the preparation of mandatory

3 maintenance, inspection, or repair directives.

4 The provisions of this paragraph shall not apply in any

5 case in which the defendant withheld from or misrepre6 sented to the Federal Aviation Administration information

7 that is material and relevant to the performance or the

8 maintenance or operation of such aircraft.

9 (d) At the request of the manufacturer or product

10 seller, the trier of fact shall consider in a separate proceed11 ing (1) whether punitive damages are to be awarded and

12 the amount of such award, or (2) the amount of punitive

13 damages following a determination of punitive liability. If

14 a separate proceeding is requested, evidence relevant only

15 to the claim of punitive damages, as determined by appli16 cable State law, shall be inadmissible in any proceeding

17 to determine whether compensatory damages are to be

18 awarded.

19 (e) In determining the amount of punitive damages,

20 the trier of fact shall consider all relevant evidence, includ21 ing—

22 (1) the financial condition of the manufacturer

23 or product seller;

24 (2) the severity of the harm caused by the con25 duct of the manufacturer or product seller;
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1 (3) the duration of the conduct or any conceal2 ment of it by manufacturer or product seller;

3 (4) the profitability of the conduct to the manu4 facturer or product seller;

5 (5) the number of products sold by the manu6 facturer or product seller of the kind causing the

7 harm complained of by the claimant;

8 (6) awards of punitive of exemplary damages to

9 persons similarly situated to the claimant;

10 (7) prospective awards of compensatory dam11 ages to persons similarly situated to the claimant;

12 (8) any criminal penalties imposed on the man13 ufacturer or product seller as a result of the conduct

14 complained of by the claimant; and

15 (9) the amount of any civil fines assessed

16 against the defendant as a result of the conduct

17 complained of by the claimant.

18 SEC. 444. UNIFORM TIME LIMITATIONS ON LIABILITY.

19 (a) Any civil action subject to this part shall be

20 barred unless the complaint is filed within two years of

21 the time the claimant discovered or, in the exercise of rea22 sonable care, should have discovered the harm and its

23 cause, except that any such action of a person under legal

24 disability may be filed within two years after the disability

25 ceases. If the commencement of such an action is stayed
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1 or enjoined, the running of the statute of limitations under

2 this section shall be suspended for the period of the stay

3 or injunction.

4 (b)(1) Any civil action subject to this part shall be

5 barred if a product which is a capital good is alleged to

6 have caused harm which is not a toxic harm unless the

7 complaint is served and filed within twenty-five years after

8 the time of delivery of the product. This subsection shall

9 apply only if the court determines that the claimant has

10 received or would be eligible to receive compensation under

11 any State or Federal workers’ compensation law for harm

12 caused by the product.

13 (2) A motor vehicle, vessel, aircraft, or railroad used

14 primarily to transport passengers for hire shall not be sub15 ject to the provisions of this subsection.

16 (3) As used in this section, the term—

17 (A) ‘‘time of delivery’’ means the time when a

18 product is delivered to its first purchaser or lessee

19 who was not involved in the business of manufactur20 ing or selling such product or using it as a compo21 nent part of another product to be sold;

22 (B) ‘‘capital good’’ means any product, or any

23 component of any such product, which is of a char24 acter subject to allowance for depreciation under the

25 Internal Revenue Code of 1986, and which was—
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1 (i) used in a trade or business;

2 (ii) held for the production of income; or

3 (iii) sold or donated to a governmental or

4 private entity for the production of goods, for

5 training, for demonstration, or for other similar

6 purposes; and

7 (C) ‘‘toxic harm’’ means harm which is func8 tional impairment, illness, or death of a human

9 being resulting from exposure to an object, sub10 stance, mixture, raw material, or physical agent of

11 particular chemical composition.

12 (c) Nothing in this section shall affect the right of

13 any person who is subject to liability for harm under this

14 subtitle to seek and obtain contribution or indemnity from

15 any other person who is responsible for such harm.

16 SEC. 445. UNIFORM STANDARDS FOR OFFSET OF WORKERS’

17 COMPENSATION BENEFITS.

18 (a) In any civil action subject to this part in which

19 damages are sought for harm for which the person injured

20 is or would have been entitled to receive compensation

21 under any State or Federal workers’ compensation law,

22 any damages awarded shall be reduced by the sum of the

23 amount paid as workers’ compensation benefits for such

24 harm and the present value of all workers’ compensation

25 benefits to which the employee is or would be entitled for
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1 such harm. The determination of workers’ compensation

2 benefits by the trier of fact in a civil action subject to

3 this part shall have no binding effect on and shall not be

4 used as evidence in any other proceeding.

5 (b) A claimant in a civil action subject to this part

6 who is or may be eligible to receive compensation under

7 any State or Federal workers’ compensation law must pro8 vide written notice of the filing of the civil action to the

9 claimant’s employer within 30 days of the filing. The writ10 ten notice shall include information regarding the date and

11 court in which the civil action was filed, the names and

12 addresses of all plaintiffs and defendants appearing on the

13 complaint, the court docket number if available, and a

14 copy of the complaint which was filed in the civil action.

15 A copy of such written notice shall be filed with the court

16 and served upon all parties to the action. A claimant’s fail17 ure to comply with the requirements of this subsection

18 shall suspend the deadlines for filing responsive pleadings

19 and commencing discovery in the civil action, until the

20 claimant complies with the requirements of this sub21 section.

22 (c) In any civil action subject to this part in which

23 damages are sought for harm for which the person injured

24 is entitled to receive compensation under any State or

25 Federal workers’ compensation law, the action shall, on
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1 application of the claimant made at claimant’s sole discre2 tion, be stayed until such time as the full amount payable

3 as workers’ compensation benefits has been finally deter4 mined under such workers’ compensation law.

5 (d)(1) Except as provided in paragraph (2) of this

6 subsection, unless the manufacturer or product seller has

7 expressly agreed to indemnify or hold an employer harm8 less for harm to an employee caused by a product, neither

9 the employer nor the workers’ compensation insurance

10 carrier of the employer shall have a right of subrogation,

11 contribution or implied indemnity against the manufac12 turer or product seller or a lien against the claimant’s re13 covery from the manufacturer or product seller if the harm

14 is one for which a civil action for harm caused by a prod15 uct may be brought pursuant to this subtitle.

16 (2) Paragraph (1) of this subsection shall not apply

17 if the employer or the workers’ compensation insurer of

18 the employer establishes, and the trier of fact determines,

19 that the claimant’s harm was not in any way caused by

20 the fault of the claimant’s employer or coemployees. In

21 order to establish this fact an employer or the workers’

22 compensation insurer of the employer may intervene in a

23 civil action filed by an employee at any time after the filing

24 of a complaint. In the event that the civil action is resolved

25 prior to obtaining a verdict by the trier of fact, any resolu-
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1 tion of the action by settlement or other means shall af2 ford the employer or the workers’ compensation insurer

3 of the employer an opportunity to participate and to assert

4 a right of subrogation, contribution, or implied indemnity

5 if the claimant’s harm was not in any way caused by the

6 fault of the claimant’s employer or coemployees.

7 (e)(1) Except as provided in subsection (f), in any

8 civil action subject to this part in which damages are

9 sought for harm for which the person injured is or would

10 have been entitled to receive compensation under any

11 State or Federal workers’ compensation law, no third12 party tortfeasor may maintain any action for implied in13 demnity or contribution against the employer, any

14 coemployee, or the exclusive representative of the person

15 who was injured.

16 (2) Nothing in this subtitle shall be construed to af17 fect any provision of a State or Federal workers’ com18 pensation law which prohibits a person who is or would

19 have been entitled to receive compensation under any such

20 law, or any other person whose claim is or would have

21 been derivative from such a claim, from recovering for

22 harm caused by a product in any action other than a work23 ers’ compensation claim against a present or former em24 ployer or workers’ compensation insurer of the employer,

25 any coemployee, or the exclusive representative of the per-
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1 son who was injured. Any action other than such a work2 ers’ compensation claim shall be prohibited, except that

3 nothing in this subtitle shall be construed to affect any

4 State or Federal workers’ compensation law which permits

5 recovery based on a claim of an intentional tort by the

6 employer or coemployee, where the claimant’s harm was

7 caused by such an intentional tort.

8 (f) Subsection (e) shall not apply and applicable State

9 law shall control if the employer or the workers’ compensa10 tion insurer of the employer, in a civil action subject to

11 this part, asserts or attempts to assert, because of sub12 section (d), a right of subrogation, contribution, or implied

13 indemnity against the manufacturer or product seller or

14 a lien against the claimant’s recovery from the manufac15 turer or product seller.

16 SEC. 446. SEVERAL LIABILITY FOR NONECONOMIC DAM17 AGES.

18 (a) In any product liability action, the liability of each

19 defendant for noneconomic damages shall be several only

20 and shall not be joint. Each defendant shall be liable only

21 for the amount of noneconomic damages allocated to such

22 defendant in direct proportion to such defendant’s per23 centage of responsibility as determined under subsection

24 (b) of this section. A separate judgment shall be rendered

25 against such defendant for that amount.
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1 (b) For purposes of this section, the trier of fact shall

2 determine the proportion of responsibility of each party

3 for the claimant’s harm.

4 (c) As used in this section, the term—

5 (1) ‘‘noneconomic damages’’ means subjective,

6 nonmonetary losses including, but not limited to,

7 pain, suffering, inconvenience, mental suffering,

8 emotional distress, loss of society and companion9 ship, loss of consortium, injury to reputation and

10 humiliation; the term does not include objectively

11 verifiable monetary losses including, but not limited

12 to, medical expenses, loss of earnings, burial costs,

13 loss of use of property, costs of repair or replace14 ment, costs of obtaining substitute domestic services,

15 rehabilitation and training expenses, loss of employ16 ment, or loss of business or employment opportuni17 ties; and

18 (2) ‘‘product liability action’’ includes any ac19 tion involving a claim, third-party claim, cross-claim,

20 counterclaim, or contribution claim in a civil action

21 in which a manufacturer or product seller is found

22 liable for harm caused by a product.
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1 SEC. 447. DEFENSES INVOLVING INTOXICATING ALCOHOL

2 OR DRUGS.

3 (a) In any civil action subject to this subtitle in which

4 all defendants are manufacturers or product sellers, it

5 shall be a complete defense to such action that the claim6 ant was intoxicated or was under the influence of intoxi7 cating alcohol or any drug and that as a result of such

8 intoxication or the influence of the alcohol or drug the

9 claimant was more than 50 percent responsible for the ac10 cident or event which resulted in such claimant’s harm.

11 (b) In any civil action subject to this subtitle in which

12 not all defendants are manufacturers or product sellers

13 and the trier of fact determines that no liability exists

14 against those defendants who are not manufacturers or

15 product sellers, the court shall enter a judgment notwith16 standing the verdict in favor of any defendant which is

17 a manufacturer or product seller if it is proved that the

18 claimant was intoxicated or was under the influence of in19 toxicating alcohol or any drug and that as a result of such

20 intoxication or the influence of the alcohol or drug the

21 claimant was more than 50 percent responsible for the ac22 cident or event which resulted in such claimant’s harm.

23 (c)(1) For purposes of this section, the determination

24 of whether a person was intoxicated or was under the in25 fluence of intoxicating alcohol or any drug shall be made

26 pursuant to applicable State law.
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1 (2) As used in this section, the term ‘‘drug’’ means

2 any non-over-the-counter drug which has not been pre3 scribed by a physician for use by the claimant.

4 TITLE V—REGULATORY REVIEW

5 SEC. 501. FINDINGS.

6 The Congress finds that—

7 (1) administrative action is too frequently pro8 pelled by a concern with politically visible results, at

9 the expense of less apparent impacts;

10 (2) traditional regulatory cost-benefit analysis

11 frequently fails to examine the effect of restrictive

12 regulations on overall human welfare in terms of re13 duced health and safety, reduced consumer choice,

14 substitution effects, and impeded technological ad15 vancement;

16 (3) in promulgating regulations, agencies often

17 fail to examine the risk that their suppositions are

18 erroneous, or to compare the risks of acting on

19 faulty suppositions with the risks of inaction; and

20 (4) in analyzing new and existing regulations,

21 there is a need for agencies to move beyond tradi22 tional cost-benefit analysis to risk-risk analysis

23 which examines the factors described in paragraph

24 (2).
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1 SEC. 502. COMPETITIVENESS RISK ASSESSMENT.

2 No agency shall propose or promulgate a regulation

3 without first analyzing its effects on the health and safety

4 of consumers and workers, both directly and indirectly, in5 cluding effects due to wage and job losses, price increases,

6 product restrictions, technological delays, and substitution

7 effects. In any such analysis, health and safety effects

8 shall be expressed both in monetary terms and in terms

9 of lives lost and injuries occurred. Such analysis shall also

10 examine related distributional effects, describing any eco11 nomic and social groups who will be disproportionately af12 fected.

13 TITLE VI—TOTAL QUALITY

14 MANAGEMENT

15 SEC. 601. FORMATION AND USE OF QUALITY CIRCLES AND

16 JOINT PRODUCTION TEAMS.

17 (a) IN GENERAL.—Section 8(a)(2) of the National

18 Labor Relations Act (29 U.S.C. 158(a)(2)) is amended by

19 inserting before the semicolon at the end the following:

20 ‘‘: Provided further, That nothing in this paragraph shall

21 prohibit the formation or operation of quality circles or

22 joint production teams composed of labor and manage23 ment, with or without the participation of representatives

24 of labor organizations’’.

25 (b) EFFECTIVE DATE.—The amendment made by

26 this section shall apply to the formation or operation of
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1 quality circles or joint production teams after the date of

2 the enactment of this Act.

3 TITLE VII—LONG-TERM

4 INVESTMENT

5 SEC. 701. SHORT TITLE.

6 This title may be cited as the ‘‘Long-Term Invest7 ment Promotion Act of 1993’’.

8 SEC. 702. FINDINGS.

9 The Congress finds that—

10 (1) there is an urgent need to extend the time

11 horizons of industry in the United States and there

12 is too much pressure to maximize short-term profits

13 and shareholder value, often at the expense of long14 term competitive viability;

15 (2) a fundamental cause of United States in16 dustry’s preoccupation with short-term performance

17 is the Securities and Exchange Commission’s re18 quirement for publicly-held corporations to report

19 their financial status on a quarterly basis;

20 (3) a large and growing share of the capital of

21 United States firms is owned by mutual funds and

22 pension funds, and the managers of these funds are

23 under constant pressure to maximize the current

24 value of their portfolios since this is the principal

25 criteria by which their performance is judged;
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1 (4) because portfolio managers and stockholders

2 evaluate a company’s performance on the basis of

3 quarterly financial reports, managers tend to empha4 size short-term profits even when it raises possible

5 conflicts with longer term investment;

6 (5) short-term business horizons can lead to

7 underinvestment in technology development, human

8 resources, total quality, and capital assets;

9 (6) a preoccupation with short-term business

10 horizons worked before when America dominated the

11 world economy but such an antiinvestment and

12 antimodernization approach seems ill-suited to a

13 world characterized by rapid technological change,

14 global competition based on quality and a constant

15 need for bringing innovation into the marketplace;

16 (7) achievement of continuously improved tech17 nology and quality requires long-term investment in

18 research, development, commercialization, and acqui19 sition of new capital equipment; and

20 (8) in contrast to the short-term preoccupation

21 in the United States, in Japan and Germany firms

22 report their financial results on an annual rather

23 than quarterly basis and this factor contributes to

24 significantly longer time horizons, in some instances

25 spanning many decades, for business decisions.
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1 SEC. 703. ELIMINATION OF QUARTERLY REPORTS.

2 Section 13(a)(2) of the Securities Exchange Act of

3 1934 (15 U.S.C. 78m(a)(2)) is amended by striking ‘‘, and

4 such quarterly reports (and such copies thereof),’’.

5 TITLE VIII—AMENDMENTS TO

6 THE STEVENSON-WYDLER

7 TECHNOLOGY INNOVATION

8 ACT OF 1980

9 SEC. 801. AMENDMENT TO THE STEVENSON-WYDLER TECH10 NOLOGY INNOVATION ACT OF 1980.

11 Section 12(a) of the Stevenson-Wydler Technology

12 Innovation Act of 1980 (15 U.S.C. 3710a(a)) is amended

13 by striking ‘‘may permit’’ and inserting in lieu thereof

14 ‘‘shall permit, under authority of this or any other appro15 priate Act,’’.

16 SEC. 802. COPYRIGHT FOR SOFTWARE.

17 (a) Section 12 of the Stevenson-Wydler Technology

18 Innovation Act of 1980 (15 U.S.C. 3710a) is amended by

19 adding at the end the following new subsection:

20 ‘‘(h) COPYRIGHT OF COMPUTER SOFTWARE.—Each

21 Federal agency may secure copyright on behalf of the

22 United States as author or proprietor in any computer

23 software prepared in whole or in part by employees of the

24 United States Government in the course of work under

25 a cooperative research and development agreement entered

26 into under the authority of subsection (a)(1) of this sec-
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1 tion, or under any other equivalent authority, notwith2 standing the limitations contained in section 105 of title

3 17, United States Code; and may grant or agree to grant

4 in advance to a collaborating party, licenses or assign5 ments for such copyrights, or options thereto, retaining

6 a nonexclusive, nontransferable, irrevocable, paid-up li7 cense to reproduce, adapt, translate, distribute, and pub8 licly perform or display the computer software throughout

9 the world by or on behalf of the Government and such

10 other rights as the Federal agency deems appropriate.’’.

11 (b) Section 4 of the Stevenson-Wydler Technology In12 novation Act of 1980 (15 U.S.C. 3703) is amended by

13 adding at the end the following new paragraph:

14 ‘‘(14) ‘Computer software’ means a computer

15 program, as defined in section 101 of title 17, Unit16 ed States Code, and any associated documentation,

17 supporting materials, or user instructions.’’.

18 SEC. 803. ROYALTY PAYMENTS TO AUTHORS.

19 SEC. 3. (a) Section 14(a) (1)(A), (2), and (3) of the

20 Stevenson-Wydler Technology Innovation Act of 1980 (15

21 U.S.C. 3710c(a) (1)(A), (2), and (3)) is amended—

22 (1) by inserting ‘‘or computer software’’ after

23 ‘‘inventions’’ each place it appears;

24 (2) by inserting ‘‘or computer software’’ after

25 ‘‘invention’’ each place it appears;
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1 (3) by inserting ‘‘or author’’ after ‘‘inventor’’

2 each place it appears;

3 (4) by inserting ‘‘or co-author’’ after ‘‘co-inven4 tor’’ each place it appears;

5 (5) by inserting ‘‘or authors’’ after ‘‘inventors’’

6 each place it appears;

7 (6) by inserting ‘‘or co-authors’’ after ‘‘co-in8 ventors’’ each place it appears; and

9 (7) by inserting ‘‘or author’s’’ after ‘‘inven10 tor’s’’ each place it appears.

11 (b) Section 14(a)(1)(B) of the Stevenson-Wydler

12 Technology Innovation Act of 1980 (15 U.S.C.

13 3710c(a)(1)(B)) is amended—

14 (1) by inserting ‘‘or computer software’’ after

15 ‘‘income from any invention’’;

16 (2) by inserting ‘‘or computer software was de17 veloped’’ after ‘‘the invention occurred’’;

18 (3) by inserting ‘‘or computer software’’ after

19 ‘‘licensing of inventions’’ in clause (i);

20 (4) by inserting ‘‘or computer software which

21 was developed’’ after ‘‘with respect to inventions’’ in

22 clause (i); and

23 (5) by inserting ‘‘or computer software’’ after

24 ‘‘organizations for invention’’ in clause (i).
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1 (c) Section 14(c) of the Stevenson-Wydler Technology

2 Innovation Act of 1980 (15 U.S.C. 3710c(c)) is amended

3 by inserting ‘‘or author’’ after ‘‘including inventor’’.

4 SEC. 804. TECHNICAL AND CONFORMING AMENDMENTS.

5 Section 12(c) of the Stevenson-Wydler Technology

6 Innovation Act of 1980 (15 U.S.C. 3710a(c)), is amended

7 by inserting ‘‘or computer software’’ after ‘‘inventions’’

8 each place it appears.

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