I
104TH CONGRESS
1ST SESSION
H. R. 2419
To amend part I of title 35, United States Code, to provide for the protection
of inventors contracting for invention development services.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 28, 1995
Mr. MOORHEAD (for himself and Mrs. SCHROEDER) introduced the following
bill; which was referred to the Committee on the Judiciary
A BILL
To amend part I of title 35, United States Code, to provide
for the protection of inventors contracting for invention
development services.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Inventor Protection
Act of 1995’’.
SEC. 2. INVENTION DEVELOPMENT SERVICES.
Part I of title 35, United States Code, is amended
by adding after chapter 4 the following new chapter:
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‘‘CHAPTER 5—INVENTION DEVELOPMENT
SERVICES
‘‘Sec.
‘‘51. Definitions.
‘‘52. Contracting requirements.
‘‘53. Standard provisions for cover notice.
‘‘54. Reports to customer required.
‘‘55. Mandatory contract terms.
‘‘56. Remedies.
‘‘57. Enrollment of invention developers.
‘‘58. Records of complaints.
‘‘59. Enrollment fee.
‘‘60. Suspension or exclusion from enrollment.
‘‘61. Unenrolled representation as invention developer.
‘‘62. Rule of construction.
‘‘§ 51. Definitions
‘‘For purposes of this chapter, the term—
‘‘(1) ‘contract for invention development serv-
ices’ means a contract by which an invention devel-
oper undertakes invention development services for a
customer;
‘‘(2) ‘customer’ means any person, firm, part-
nership, corporation, or other entity who enters into
a contract for invention development services;
‘‘(3) ‘invention developer’ means any person,
firm, partnership or corporation, who offers to per-
form or performs for a customer any act described
under paragraph (4), except—
‘‘(A) any department or agency of the Fed-
eral, State, or local government;
‘‘(B) any nonprofit, charitable, scientific,
or educational organization, qualified under ap-
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plicable State law or described under section
170(b)(1)(A) of the Internal Revenue Code of
1986; or
‘‘(C) any person duly registered and in
good standing before the United States Patent
and Trademark Office acting within the scope
of that person’s registration to practice before
the United States Patent and Trademark Of-
fice; and
‘‘(4) ‘invention development services’ means,
with respect to an invention submitted by a cus-
tomer, any act involved in—
‘‘(A) evaluating the invention to determine
its protectability as some form of intellectual
property;
‘‘(B) evaluating the invention to determine
its commercial potential; or
‘‘(C) marketing, brokering, licensing, sell-
ing, or promoting the invention or a product or
service in which the invention is incorporated or
used.
‘‘§ 52. Contracting requirements
‘‘(a)(1) Every contract for invention development
services shall be in writing and shall be subject to the pro-
visions of this chapter. A copy of the signed written con-
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tract shall be given to the customer at the time the cus-
tomer enters into the contract.
‘‘(2) If a contract is entered into for the benefit of
a third party, such party shall be considered a customer
for the purposes of this chapter.
‘‘(b) The invention developer shall—
‘‘(1) state in a written document, at the time
a customer enters into a contract for invention de-
velopment services, whether the usual business prac-
tice of the invention developer is to—
‘‘(A) seek more than 1 contract in connec-
tion with an invention; or
‘‘(B) seek to perform services in connection
with an invention in 1 or more phases, with the
performance of each phase covered in 1 or more
subsequent contracts; and
‘‘(2) supply to the customer a copy of the writ-
ten document together with a written summary of
the usual business practices of the invention devel-
oper including—
‘‘(A) the usual business terms of contracts;
and
‘‘(B) the approximate amount of the usual
fees of the invention developer or other consid-
eration, that may be required from the cus-
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tomer for each of the services provided by the
developer.
‘‘(c)(1) Notwithstanding any contractual provision to
the contrary, no payment for invention development serv-
ices shall be required, accepted, or received until the expi-
ration of a period of 5 business days beginning on the
date on which the customer receives a copy of the contract
for invention development services signed by the invention
developer and the customer.
‘‘(2) Delivery of a promissory note, check, bill of ex-
change, or negotiable instrument of any kind to the inven-
tion developer or to a third party for the benefit of the
invention developer, irrespective of the date or dates ap-
pearing in such instrument, shall be deemed payment re-
ceived by the invention developer on the date received for
the purpose of this section.
‘‘(d)(1) Until 5 business days after the payment de-
scribed under subsection (c) is made, the parties shall have
the option to refuse to enter into the contract as provided
under paragraphs (2) and (3).
‘‘(2) The customer may exercise the option by—
‘‘(A) refraining from making payment to the in-
vention developer; or
‘‘(B) providing written notice of the refusal to
the invention developer.
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‘‘(3) The invention developer may exercise the option
by giving to the customer a written notice of the exercise
of the option. The written notice shall become effective
upon receipt by the customer.
‘‘§ 53. Standard provisions for cover notice
‘‘(a) Every contract for invention development serv-
ices shall have a conspicuous and legible cover sheet at-
tached with the following notice imprinted thereon in bold-
face type of not less than 12-point size:
‘‘ ‘YOU ARE NOT REQUIRED TO MAKE
ANY PAYMENTS UNDER THIS CONTRACT
UNTIL FIVE (5) BUSINESS DAYS AFTER YOU
SIGN THIS CONTRACT AND RECEIVE A COM-
PLETED COPY OF IT.
‘‘ ‘THE TOTAL NUMBER OF INVENTIONS
EVALUATED BY THE INVENTION DEVEL-
OPER FOR COMMERCIAL POTENTIAL IN
THE PAST FIVE (5) YEARS IS lllll. OF
THAT NUMBER, lllll RECEIVED POSI-
TIVE EVALUATIONS AND lllll RE-
CEIVED NEGATIVE EVALUATIONS.
‘‘ ‘IF YOU ASSIGN EVEN A PARTIAL IN-
TEREST IN THE INVENTION TO THE IN-
VENTION DEVELOPER, THE INVENTION DE-
VELOPER MAY HAVE THE RIGHT TO SELL
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OR DISPOSE OF THE INVENTION WITHOUT
YOUR CONSENT AND MAY NOT HAVE TO
SHARE THE PROFITS WITH YOU.
‘‘ ‘THE TOTAL NUMBER OF CUSTOMERS
WHO HAVE CONTRACTED WITH THE IN-
VENTION DEVELOPER IN THE PAST FIVE
(5) YEARS IS lllll. THE TOTAL NUM-
BER OF CUSTOMERS KNOWN BY THIS IN-
VENTION DEVELOPER TO HAVE RECEIVED,
BY VIRTUE OF THIS INVENTION DEVEL-
OPER’S PERFORMANCE, AN AMOUNT OF
MONEY IN EXCESS OF THE AMOUNT PAID
BY THE CUSTOMER TO THIS INVENTION
DEVELOPER IS lllllll. THE NAMES
AND ADDRESSES OF SUCH CUSTOMERS, IF
ANY, SHALL BE PROVIDED TO ANY PERSON
REQUESTING IT.
‘‘ ‘THE OFFICERS OF THIS INVENTION
DEVELOPER HAVE COLLECTIVELY OR INDI-
VIDUALLY BEEN AFFILIATED IN THE LAST
TEN (10) YEARS WITH THE FOLLOWING IN-
VENTION 
DEVELOPMENT 
COMPANIES:
(LIST THE NAMES AND ADDRESSES OF ALL
PREVIOUS INVENTION DEVELOPMENT COM-
PANIES WITH WHICH THE PRINCIPAL OFFI-
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CERS HAVE BEEN AFFILIATED AS OWNERS,
AGENTS, OR EMPLOYEES). YOU ARE EN-
COURAGED TO CHECK WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE,
THE FEDERAL TRADE COMMISSION, YOUR
STATE ATTORNEY GENERAL’S OFFICE, AND
THE BETTER BUSINESS BUREAU FOR ANY
COMPLAINTS 
FILED 
AGAINST 
ANY 
OF
THESE COMPANIES.
‘‘ ‘YOU ARE ENCOURAGED TO CONSULT
WITH AN ATTORNEY OF YOUR OWN CHOOS-
ING BEFORE SIGNING THIS CONTRACT. BY
PROCEEDING WITHOUT THE ADVICE OF A
QUALIFIED ATTORNEY, YOU COULD LOSE
ANY RIGHTS YOU MIGHT HAVE IN YOUR
IDEA OR INVENTION.’.
‘‘(b)(1) In addition to the requirements of subsection
(a), every contract for invention development services shall
contain the appropriate matter under paragraph (2) or
(3).
‘‘(2) For invention developers who are enrolled the
contract shall contain the following:
‘‘ ‘(NAME OF INVENTION DEVELOPER)
IS ENROLLED WITH THE COMMISSIONER
OF 
PATENTS 
AND 
TRADEMARKS 
AND
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BEARS ENROLLMENT NUMBER ll. THE
FACT THAT AN INVENTION DEVELOPER IS
ENROLLED WITH THE COMMISSIONER OF
PATENTS AND TRADEMARKS AS REQUIRED
BY LAW IS NOT AN ENDORSEMENT OF THE
INVENTION DEVELOPER NOR IS IT AN INDI-
CATOR THAT THEY ARE AUTHORIZED BY
THE COMMISSIONER TO REPRESENT APPLI-
CANTS OR OTHER PARTIES BEFORE THE
PATENT AND TRADEMARK OFFICE IN PAT-
ENT, TRADEMARK, OR OTHER MATTERS.’.
‘‘(3) For invention developers who are not enrolled
the contract shall contain the following:
‘‘ ‘(NAME OF INVENTION DEVELOPER)
IS NOT ENROLLED WITH THE COMMIS-
SIONER OF PATENTS AND TRADEMARKS AS
AN INVENTION DEVELOPER. BY NOT SO
ENROLLING, (NAME OF INVENTION DEVEL-
OPER) HAS INDICATED THAT IT WILL NOT
OFFER TO PERFORM OR PERFORM FOR A
CUSTOMER ANY ACT INVOLVED IN FILING
FOR AND OBTAINING PATENT, TRADE-
MARK, OF DESIGN PROTECTION.’ ’’.
‘‘(c) The cover notice shall contain the items required
under subsections (a) and (b) and the name, primary of-
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‘‘(7)(A) the name and address of the custodian
of all records and correspondence relating to the
contracted for invention development services, and a
statement that the invention developer is required to
maintain all records and correspondence relating to
performance of the invention development services
for that customer for a period of not less than 2
years after expiration of the term of the contract for
invention development services; and
‘‘(B) a statement that before destruction or dis-
posal of the records and correspondence, the inven-
tion developer is required to notify the customer and
make such records and correspondence available to
the customer at a reasonable cost; and
‘‘(8) a statement setting forth a time schedule
for performance of the invention development serv-
ices, including an estimated date by which perform-
ance of the invention development services is ex-
pected to be completed.
‘‘(b) To the extent that the description of the specific
acts or services affords discretion to the invention devel-
oper as to what specific acts or services shall be per-
formed, the invention developer shall be deemed a fidu-
ciary.
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‘‘(c) Records and correspondence described under
subsection (a)(7) shall be made available to the customer
or the representative of the customer for review and copy-
ing at the customer’s reasonable expense on the invention
developer’s premises during normal business hours upon
7 days written notice.
‘‘§ 56. Remedies
‘‘(a)(1) Any contract for invention development serv-
ices that does not comply with the applicable provisions
of this chapter shall be voidable at the option of the cus-
tomer.
‘‘(2) Any contract for invention development services
entered into in reliance upon any false, fraudulent, or mis-
leading information, representation, notice, or advertise-
ment of the invention developer (or any agent, employee,
officer, director, partner or independent contractor of such
invention developer) shall be voidable at the option of the
customer.
‘‘(3) Any waiver by the customer of any provision of
this chapter shall be deemed contrary to public policy and
shall be void and unenforceable.
‘‘(4) Any contract for invention development services
made by an unenrolled invention developer, as provided
under section 57, shall be voidable at the option of the
customer.
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‘‘(b)(1) Any customer who is injured by a violation
of this chapter by an invention developer or by any false
or fraudulent statement, representation, or omission of
material fact by an invention developer (or any agent, em-
ployee, director, officer, partner or independent contractor
of such invention developer) or by failure of an invention
developer to make all the disclosures required under this
chapter, may recover in a civil action against the invention
developer (or the officers, directors, or partners of such
invention developer) in addition to reasonable costs and
attorneys’ fees, the greater of—
‘‘(A) $5,000; or
‘‘(B) the amount of actual damages sustained
by the customer.
‘‘(2) Notwithstanding paragraph (1), the court may
increase damages up to 3 times the amount awarded.
‘‘(c) For the purpose of this section, substantial viola-
tion of any provision of this chapter by an invention devel-
oper or execution by the customer of a contract for inven-
tion development services in reliance on any false or fraud-
ulent statements, representations, or material omissions
shall establish a rebuttable presumption of injury.
‘‘§ 57. Enrollment of invention developers
‘‘(a) The Commissioner of Patents and Trademarks
shall require invention developers that offer to perform or
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perform for a customer any act involved in filing for and
obtaining utility, design, or plant patent or trademark pro-
tection to enroll annually with the Patent and Trademark
Office. Invention developers that offer to perform or per-
form such acts through an agent, employee, officer, part-
ner, or independent contractor shall also enroll.
‘‘(b) The enrollment required under subsection (a)
shall include disclosure of—
‘‘(1)(A) the names and addresses of all prin-
cipal officers of the invention developer; and
‘‘(B) the names and principal place of business
of all invention developers with which the principal
officers have been affiliated during the 10-year pe-
riod before the date of enrollment; and
‘‘(2) require disclosure of any administrative,
civil, or criminal action taken against the invention
developer (or any officer, director, or partner of such
invention developer) by any agent of Federal, State,
or local government.
‘‘(c) Subject to the approval of the Secretary of Com-
merce, the Commissioner may prescribe regulations that—
‘‘(1) govern the conduct of invention developers
and may require an invention developer, before en-
rollment, to demonstrate good reputation and nec-
essary qualifications to render to customers or other
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persons valuable service, advice, and assistance in
the invention development process;
‘‘(2) provide which agents, employees, officers,
partners, independent contractors or other individ-
uals of an invention developer are required to enroll
under subsection (a); and
‘‘(3) provide—
‘‘(A) what information and records held or
retained by the invention developer shall be re-
quired to be made available to the Commis-
sioner; and
‘‘(B) the conditions under which such in-
formation and records shall be made available.
‘‘§ 58. Records of complaints
‘‘(a) The Commissioner shall make all complaints re-
ceived by the Patent and Trademark Office involving in-
vention developers publicly available.
‘‘(b) The Commissioner may request complaints re-
lating to invention development services from any Federal
or State agency and include such complaints in the records
maintained under subsection (a).
‘‘§ 59. Enrollment fee
‘‘The Commissioner may establish reasonable fees to
cover all costs and expenses to carry out the provisions
of this chapter.
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‘‘§ 60. Suspension or exclusion from enrollment
‘‘(a) The Commissioner may, after notice and oppor-
tunity for a hearing, suspend or exclude, either generally
or in any particular case, from enrollment as an invention
developer, any person, firm, partnership, or corporation—
‘‘(1) demonstrated to be—
‘‘(A) incompetent;
‘‘(B) disreputable;
‘‘(C) liable for gross misconduct; or
‘‘(D) not in compliance with the regula-
tions established under this chapter; or
‘‘(2) who shall in any manner deceive, mislead,
defraud, or threaten any customer.
‘‘(b) The reasons for any such suspension or exclu-
sion shall be duly recorded.
‘‘(c) The United States District Court for the District
of Columbia under such conditions and upon such proceed-
ings as by rule determined by such court, may review the
action of the Commissioner upon the petition of the inven-
tion developer so suspended or excluded.
‘‘§ 61. Unenrolled representation as invention devel-
oper
‘‘Whoever, not being enrolled as an invention devel-
oper with the Patent and Trademark Office, holds himself
out or permits himself to be held out as so enrolled, or
as being qualified to provide invention development serv-
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ices, or provides invention development services shall be
guilty of a misdemeanor and fined not more than $10,000
for each offense.
‘‘§ 62. Rule of construction
‘‘Except as expressly provided in this chapter, no pro-
vision of this chapter shall be construed to affect any obli-
gation, right, or remedy provided under any other Federal
or State law.’’.
SEC. 3. TECHNICAL AND CONFORMING AMENDMENT.
The table of chapters for part I of title 35, United
States Code, is amended by adding after the item relating
to chapter 4 the following:
‘‘5. Invention development services ...........................................
51’’.
SEC. 4. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), this Act and the amendments made by this Act shall
take effect 60 days after the date of the enactment of this
Act.
(b) CERTAIN REQUIREMENTS.—The provisions of
sections 53(b), 56(a)(4), 57, 59, 60, and 61 of title 35,
United States Code (as added by section 2 of this Act)
shall take effect 1 year after the date of the enactment
of this Act.
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