IB
Union Calendar No. 423
104TH CONGRESS
2D SESSION
H. R. 3460
[Report No. 104–784]
To establish the Patent and Trademark Office as a Government corporation,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 15, 1996
Mr. MOORHEAD (for himself, Mrs. SCHROEDER, Mr. CONYERS, Mr. SENSEN-
BRENNER, Mr. COBLE, Mr. GOODLATTE, Mr. BERMAN, Mr. BOUCHER,
Mr. GALLEGLY, Mr. HOKE, Mr. NADLER, and Ms. LOFGREN) introduced
the following bill; which was referred to the Committee on the Judiciary
SEPTEMBER 12, 1996
Additional sponsors: Ms. SLAUGHTER, Mr. HEINEMAN, Mr. GEKAS, Mr.
FROST, Mr. DREIER, Mr. HYDE, Mr. JOHNSTON of Florida, Mr.
MCHALE, Mr. LAHOOD, and Mr. PICKETT
SEPTEMBER 12, 1996
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on May 15, 1996]
A BILL
To establish the Patent and Trademark Office as a
Government corporation, and for other purposes.
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 ‘‘Moorhead-Schroeder
Patent Reform Act’’.
SEC. 2. TABLE OF CONTENTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I—PATENT AND TRADEMARK OFFICE GOVERNMENT
CORPORATION
Sec. 101. Short title.
Subtitle A—United States Patent and Trademark Office
Sec. 111. Establishment of Patent and Trademark Office as a Government cor-
poration.
Sec. 112. Powers and duties.
Sec. 113. Organization and management.
Sec. 114. Management Advisory Board.
Sec. 115. Conforming amendments.
Sec. 116. Trademark Trial and Appeal Board.
Sec. 117. Board of Patent Appeals and Interferences.
Sec. 118. Suits by and against the Office.
Sec. 119. Annual report of Commissioner.
Sec. 120. Suspension or exclusion from practice.
Sec. 121. Funding.
Sec. 122. Audits.
Sec. 123. Transfers.
Subtitle B—Effective Date; Technical Amendments
Sec. 131. Effective date.
Sec. 132. Technical and conforming amendments.
Subtitle C—Miscellaneous Provisions
Sec. 141. References.
Sec. 142. Exercise of authorities.
Sec. 143. Savings provisions.
Sec. 144. Transfer of assets.
Sec. 145. Delegation and assignment.
Sec. 146. Authority of Director of the Office of Management and Budget with re-
spect to functions transferred.
Sec. 147. Certain vesting of functions considered transfers.
Sec. 148. Availability of existing funds.
Sec. 149. Definitions.
TITLE II—EARLY PUBLICATION OF PATENT APPLICATIONS
Sec. 201. Short title.
Sec. 202. Early publication.
Sec. 203. Time for claiming benefit of earlier filing date.
Sec. 204. Provisional rights.
Sec. 205. Prior art effect of published applications.
Sec. 206. Cost recovery for publication.
Sec. 207. Conforming changes.
Sec. 208. Patent term extension authority.
Sec. 209. Examining procedure improvements; further limited reexamination of
patent applications.
Sec. 210. Last day of pendency of provisional application.
Sec. 211. Reporting requirement.
Sec. 212. Effective date.
TITLE III—PRIOR DOMESTIC COMMERCIAL USE
Sec. 301. Short title.
Sec. 302. Defense to patent infringement based on prior domestic commercial use.
Sec. 303. Effective date and applicability.
TITLE IV—INVENTOR PROTECTION
Sec. 401. Short title.
Sec. 402. Invention development services.
Sec. 403. Technical and conforming amendment.
Sec. 404. Effective date.
TITLE V—PATENT REEXAMINATION REFORM
Sec. 501. Short title.
Sec. 502. Definitions.
Sec. 503. Reexamination procedures.
Sec. 504. Conforming amendments.
Sec. 505. Effective date.
TITLE VI—MISCELLANEOUS PATENT PROVISIONS
Sec. 601. Provisional applications.
Sec. 602. International applications.
Sec. 603. Plant patents.
Sec. 604. Just compensation for United States Government use of patents.
Sec. 605. Electronic filing.
TITLE I—PATENT AND TRADE-
MARK OFFICE GOVERNMENT
CORPORATION
SEC. 101. SHORT TITLE.
This title may be cited as the ‘‘Patent and Trademark
Office Government Corporation Act of 1996’’.
Subtitle A—United States Patent
and Trademark Office
SEC. 111. ESTABLISHMENT OF PATENT AND TRADEMARK
OFFICE AS A GOVERNMENT CORPORATION.
Section 1 of title 35, United States Code, is amended
to read as follows:
‘‘§ 1. Establishment
‘‘(a) ESTABLISHMENT.—The United States Patent and
Trademark Office is established as a wholly owned Govern-
ment corporation subject to chapter 91 of title 31, and shall
be an agency of the United States under the policy direction
of the Secretary of Commerce, except as otherwise provided
in this title. For purposes of internal management, the
United States Patent and Trademark Office shall be a cor-
porate body not subject to supervision by any department,
except as otherwise provided in this title.
‘‘(b) OFFICES.—The United States Patent and Trade-
mark Office shall maintain an office in the District of Co-
lumbia, or the metropolitan area thereof, for the service of
process and papers and shall be deemed, for purposes of
venue in civil actions, to be a resident of the district in
which its principal office is located. The United States Pat-
ent and Trademark Office may establish offices in such
other places as it considers necessary or appropriate in the
conduct of its business.
‘‘(c) REFERENCE.—For purposes of this title, the
United States Patent and Trademark Office shall also be
referred to as the ‘Office’ and the ‘Patent and Trademark
Office’.’’.
SEC. 112. POWERS AND DUTIES.
Section 2 of title 35, United States Code, is amended
to read as follows:
‘‘§ 2. Powers and Duties
‘‘(a) IN GENERAL.—The United States Patent and
Trademark Office shall be responsible for—
‘‘(1) the granting and issuing of patents and the
registration of trademarks;
‘‘(2) conducting studies, programs, or exchanges
of items or services regarding domestic and inter-
national patent and trademark law, the administra-
tion of the Office, or any other function vested in the
Office by law, including programs to recognize, iden-
tify, assess, and forecast the technology of patented in-
ventions and their utility to industry;
‘‘(3)(A) authorizing or conducting studies and
programs cooperatively with foreign patent and
trademark offices and international organizations, in
connection with the granting and issuing of patents
and the registration of trademarks; and
‘‘(B) with the concurrence of the Secretary of
State, authorizing the transfer of not to exceed
$100,000 in any year to the Department of State for
the purpose of making special payments to inter-
national intergovernmental organizations for studies
and programs for advancing international coopera-
tion concerning patents, trademarks, and related mat-
ters; and
‘‘(4) disseminating to the public information
with respect to patents and trademarks.
The special payments under paragraph (3)(B) shall be in
addition to any other payments or contributions to inter-
national organizations described in paragraph (3)(B) and
shall not be subject to any limitations imposed by law on
the amounts of such other payments or contributions by the
United States Government.
‘‘(b) SPECIFIC POWERS.—The Office—
‘‘(1) shall have perpetual succession;
‘‘(2) shall adopt and use a corporate seal, which
shall be judicially noticed and with which letters pat-
ent, certificates of trademark registrations, and pa-
pers issued by the Office shall be authenticated;
‘‘(3) may sue and be sued in its corporate name
and be represented by its own attorneys in all judi-
cial and administrative proceedings, subject to the
provisions of section 7;
‘‘(4) may indemnify the Commissioner of Pat-
ents and Trademarks, and other officers, attorneys,
agents, and employees (including members of the
Management Advisory Board established in section 5)
of the Office for liabilities and expenses incurred
within the scope of their employment;
‘‘(5) may adopt, amend, and repeal bylaws,
rules, regulations, and determinations, which—
‘‘(A) shall govern the manner in which its
business will be conducted and the powers grant-
ed to it by law will be exercised;
‘‘(B) shall be made after notice and oppor-
tunity for full participation by interested public
and private parties;
‘‘(C) shall facilitate and expedite the proc-
essing of patent applications, particularly those
which can be filed, stored, processed, searched,
and retrieved electronically, subject to the provi-
sions of section 122 relating to the confidential
status of applications; and
‘‘(D) may govern the recognition and con-
duct of agents, attorneys, or other persons rep-
resenting applicants or other parties before the
Office, and may require them, before being recog-
nized as representatives of applicants or other
persons, to show that they are of good moral
character and reputation and are possessed of
the necessary qualifications to render to appli-
cants or other persons valuable service, advice,
and assistance in the presentation or prosecution
of their applications or other business before the
Office;
‘‘(6) may acquire, construct, purchase, lease,
hold, manage, operate, improve, alter, and renovate
any real, personal, or mixed property, or any interest
therein, as it considers necessary to carry out its
functions;
‘‘(7)(A) may make such purchases, contracts for
the construction, maintenance, or management and
operation of facilities, and contracts for supplies or
services, without regard to the provisions of the Fed-
eral Property and Administrative Services Act of
1949 (40 U.S.C. 471 and following), the Public
Buildings Act (40 U.S.C. 601 and following), and the
Stewart B. McKinney Homeless Assistance Act (42
U.S.C. 11301 and following); and
‘‘(B) may enter into and perform such purchases
and contracts for printing services, including the
process of composition, platemaking, presswork, silk
screen processes, binding, microform, and the products
of such processes, as it considers necessary to carry
out the functions of the Office, without regard to sec-
tions 501 through 517 and 1101 through 1123 of title
44;
‘‘(8) may use, with their consent, services, equip-
ment, personnel, and facilities of other departments,
agencies, and instrumentalities of the Federal Govern-
ment, on a reimbursable basis, and cooperate with
such other departments, agencies, and instrumental-
ities in the establishment and use of services, equip-
ment, and facilities of the Office;
‘‘(9) may obtain from the Administrator of Gen-
eral Services such services as the Administrator is au-
thorized to provide to other agencies of the United
States, on the same basis as those services are pro-
vided to other agencies of the United States;
‘‘(10) may use, with the consent of the United
States and the agency, government, or international
organization concerned, the services, records, facilities,
or personnel of any State or local government agency
or instrumentality or foreign government or inter-
national organization to perform functions on its be-
half;
‘‘(11) may determine the character of and the ne-
cessity for its obligations and expenditures and the
manner in which they shall be incurred, allowed, and
paid, subject to the provisions of this title and the Act
of July 5, 1946 (commonly referred to as the ‘Trade-
mark Act of 1946’);
‘‘(12) may retain and use all of its revenues and
receipts, including revenues from the sale, lease, or
disposal of any real, personal, or mixed property, or
any interest therein, of the Office, including for re-
search and development and capital investment, sub-
ject to the provisions of section 10101 of the Omnibus
Budget Reconciliation Act of 1990 (35 U.S.C. 41
note);
‘‘(13) shall have the priority of the United States
with respect to the payment of debts from bankrupt,
insolvent, and decedents’ estates;
‘‘(14) may accept monetary gifts or donations of
services, or of real, personal, or mixed property, in
order to carry out the functions of the Office;
‘‘(15) may execute, in accordance with its by-
laws, rules, and regulations, all instruments necessary
and appropriate in the exercise of any of its powers;
‘‘(16) may provide for liability insurance and
insurance against any loss in connection with its
property, other assets, or operations either by contract
or by self-insurance; and
‘‘(17) shall pay any settlement or judgment en-
tered against it from the funds of the Office and not
from amounts available under section 1304 of title
31.’’.
SEC. 113. ORGANIZATION AND MANAGEMENT.
Section 3 of title 35, United States Code, is amended
to read as follows:
‘‘§ 3. Officers and employees
‘‘(a) COMMISSIONER.—
‘‘(1) IN
GENERAL.—The management of the
United States Patent and Trademark Office shall be
vested in a Commissioner of Patents and Trademarks
(hereafter in this title referred to as the ‘Commis-
sioner’), who shall be a citizen of the United States
and who shall be appointed by the President, by and
with the advice and consent of the Senate. The Com-
missioner shall be a person who, by reason of profes-
sional background and experience in patent or trade-
mark law, is especially qualified to manage the Of-
fice.
‘‘(2) DUTIES.—
‘‘(A) IN GENERAL.—The Commissioner shall
be responsible for the management and direction
of the Office, including the issuance of patents
and the registration of trademarks, and shall
perform these duties in a fair, impartial, and
equitable manner.
‘‘(B) 
ADVISING
THE
PRESIDENT.—The
Commissioner shall advise the President, through
the Secretary of Commerce, of all activities of the
Office undertaken in response to obligations of
the United States under treaties and executive
agreements, or which relate to cooperative pro-
grams with those authorities of foreign govern-
ments that are responsible for granting patents
or registering trademarks. The Commissioner
shall also recommend to the President, through
the Secretary of Commerce, changes in law or
policy which may improve the ability of United
States citizens to secure and enforce patent
rights or trademark rights in the United States
or in foreign countries.
‘‘(C) CONSULTING WITH THE MANAGEMENT
ADVISORY BOARD.—The Commissioner shall con-
sult with the Management Advisory Board estab-
lished in section 5 on a regular basis on matters
relating to the operation of the Office, and shall
consult with the Board before submitting budg-
etary proposals to the Office of Management and
Budget or changing or proposing to change pat-
ent or trademark user fees or patent or trade-
mark regulations.
‘‘(D) SECURITY
CLEARANCES.—The Com-
missioner, in consultation with the Director of
the Office of Personnel Management, shall main-
tain a program for identifying national security
positions and providing for appropriate security
clearances.
‘‘(3) TERM.—The Commissioner shall serve a
term of 5 years, and may continue to serve after the
expiration of the Commissioner’s term until a suc-
cessor is appointed and assumes office. The Commis-
sioner may be reappointed to subsequent terms.
‘‘(4) OATH.—The Commissioner shall, before tak-
ing office, take an oath to discharge faithfully the du-
ties of the Office.
‘‘(5) COMPENSATION.—The Commissioner shall
receive compensation at the rate of pay in effect for
level II of the Executive Schedule under section 5313
of title 5.
‘‘(6) REMOVAL.—The Commissioner may be re-
moved from office by the President only for cause.
‘‘(7) DESIGNEE OF COMMISSIONER.—The Com-
missioner shall designate an officer of the Office who
shall be vested with the authority to act in the capac-
ity of the Commissioner in the event of the absence or
incapacity of the Commissioner.
‘‘(b) OFFICERS AND EMPLOYEES OF THE OFFICE.—
‘‘(1) DEPUTY
COMMISSIONERS.—The Commis-
sioner shall appoint a Deputy Commissioner for Pat-
ents and a Deputy Commissioner for Trademarks for
terms that shall expire on the date on which the Com-
missioner’s term expires. The Deputy Commissioner
for Patents shall be a person with demonstrated expe-
rience in patent law and the Deputy Commissioner
for Trademarks shall be a person with demonstrated
experience in trademark law. The Deputy Commis-
sioner for Patents and the Deputy Commissioner for
Trademarks shall be the principal policy and man-
agement advisors to the Commissioner on all aspects
of the activities of the Office that affect the adminis-
tration of patent and trademark operations, respec-
tively.
‘‘(2) OTHER OFFICERS AND EMPLOYEES.—The
Commissioner shall—
‘‘(A) appoint an Inspector General and
such other officers, employees (including attor-
neys), and agents of the Office as the Commis-
sioner considers necessary to carry out its func-
tions;
‘‘(B) fix the compensation of such officers
and employees, except as otherwise provided in
this section; and
‘‘(C) define the authority and duties of such
officers and employees and delegate to them such
of the powers vested in the Office as the Commis-
sioner may determine.
The Office shall not be subject to any administra-
tively or statutorily imposed limitation on positions
or personnel, and no positions or personnel of the Of-
fice shall be taken into account for purposes of apply-
ing any such limitation.
‘‘(c) LIMITS ON COMPENSATION.—Except as otherwise
provided by law, the annual rate of basic pay of an officer
or employee of the Office may not be fixed at a rate that
exceeds, and total compensation payable to any such officer
or employee for any year may not exceed, the annual rate
of basic pay in effect for the Commissioner for the year in-
volved. The Commissioner shall prescribe such regulations
as may be necessary to carry out this subsection.
‘‘(d) INAPPLICABILITY OF TITLE 5 GENERALLY.—Ex-
cept as otherwise provided in this section, officers and em-
ployees of the Office shall not be subject to the provisions
of title 5 relating to Federal employees.
‘‘(e) CONTINUED APPLICABILITY OF CERTAIN PROVI-
SION OF TITLE 5.—
‘‘(1) IN GENERAL.—The following provisions of
title 5 shall apply to the Office and its officers and
employees:
‘‘(A) Section 3110 (relating to employment
of relatives; restrictions).
‘‘(B) Subchapter II of chapter 55 (relating
to withholding pay).
‘‘(C) Subchapters II and III of chapter 73
(relating to employment limitations and polit-
ical activities, respectively).
‘‘(D) Chapter 71 (relating to labor-manage-
ment relations), subject to paragraph (2) and
subsection (g).
‘‘(E) Section 3303 (relating to political rec-
ommendations).
‘‘(F) Subchapter II of chapter 61 (relating
to flexible and compressed work schedules).
‘‘(2) COMPENSATION
SUBJECT
TO
COLLECTIVE
BARGAINING.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law, for purposes of applying
chapter 71 of title 5 pursuant to paragraph
(1)(D), basic pay and other forms of compensa-
tion shall be considered to be among the matters
as to which the duty to bargain in good faith
extends under such chapter.
‘‘(B) EXCEPTIONS.—The duty to bargain in
good faith shall not, by reason of subparagraph
(A), be considered to extend to any benefit under
title 5 which is afforded by paragraph (1), (2),
(3), or (4) of subsection (f).
‘‘(C) LIMITATIONS APPLY.—Nothing in this
subsection shall be considered to allow any limi-
tation under subsection (c) to be exceeded.
‘‘(f) PROVISIONS OF TITLE 5 THAT CONTINUE TO
APPLY, SUBJECT TO CERTAIN REQUIREMENTS.—
‘‘(1) RETIREMENT.—(A) The provisions of sub-
chapter III of chapter 83 and chapter 84 of title 5
shall apply to the Office and its officers and employ-
ees, subject to subparagraph (B).
‘‘(B)(i) The amount required of the Office under
the second sentence of section 8334(a)(1) of title 5
with respect to any particular individual shall, in-
stead of the amount which would otherwise apply, be
equal to the normal-cost percentage (determined with
respect to officers and employees of the Office using
dynamic assumptions, as defined by section 8401(9)
of such title) of the individual’s basic pay, minus the
amount required to be withheld from such pay under
such section 8334(a)(1).
‘‘(ii) The amount required of the Office under
section 8334(k)(1)(B) of title 5 with respect to any
particular individual shall be equal to an amount
computed in a manner similar to that specified in
clause (i), as determined in accordance with clause
(iii).
‘‘(iii) Any regulations necessary to carry out this
subparagraph shall be prescribed by the Office of Per-
sonnel Management.
‘‘(C) The United States Patent and Trademark
Office may supplement the benefits provided under
the preceding provisions of this paragraph.
‘‘(2) HEALTH BENEFITS.—(A) The provisions of
chapter 89 of title 5 shall apply to the Office and its
officers and employees, subject to subparagraph (B).
‘‘(B)(i) With respect to any individual who be-
comes an officer or employee of the Office pursuant to
subsection (h), the eligibility of such individual to
participate in such program as an annuitant (or of
any other person to participate in such program as
an annuitant based on the death of such individual)
shall be determined by disregarding the requirements
of section 8905(b) of title 5. The preceding sentence
shall not apply if the individual ceases to be an offi-
cer or employee of the Office for any period of time
after becoming an officer or employee of the Office
pursuant to subsection (h) and before separation.
‘‘(ii) The Government contributions authorized
by section 8906 for health benefits for anyone partici-
pating in the health benefits program pursuant to
this subparagraph shall be made by the Office in the
same manner as provided under section 8906(g)(2) of
title 5 with respect to the United States Postal Serv-
ice for individuals associated therewith.
‘‘(iii) For purposes of this subparagraph, the
term ‘annuitant’ has the meaning given such term by
section 8901(3) of title 5.
‘‘(C) The Office may supplement the benefits pro-
vided under the preceding provisions of this para-
graph.
‘‘(3) LIFE INSURANCE.—(A) The provisions of
chapter 87 of title 5 shall apply to the Office and its
officers and employees, subject to subparagraph (B).
‘‘(B)(i) Eligibility for life insurance coverage
after retirement or while in receipt of compensation
under subchapter I of chapter 81 of title 5 shall be
determined, in the case of any individual who be-
comes an officer or employee of the Office pursuant to
subsection (h), without regard to the requirements of
section 8706(b) (1) or (2), but subject to the condition
specified in the last sentence of paragraph (2)(B)(i)
of this subsection.
‘‘(ii) Government contributions under section
8708(d) on behalf of any such individual shall be
made by the Office in the same manner as provided
under paragraph (3) thereof with respect to the
United States Postal Service for individuals associ-
ated therewith.
‘‘(C) The Office may supplement the benefits pro-
vided under the preceding provisions of this para-
graph.
‘‘(4) EMPLOYEES’ COMPENSATION
FUND.—(A)
Officers and employees of the Office shall not become
ineligible to participate in the program under chapter
81 of title 5, relating to compensation for work inju-
ries, by reason of subsection (d).
‘‘(B) The Office shall remain responsible for re-
imbursing the Employees’ Compensation Fund, pur-
suant to section 8147 of title 5, for compensation paid
or payable after the effective date of the Patent and
Trademark Office Government Corporation Act of
1996 in accordance with chapter 81 of title 5 with re-
gard to any injury, disability, or death due to events
arising before such date, whether or not a claim has
been filed or is final on such date.
‘‘(g) LABOR-MANAGEMENT RELATIONS.—
‘‘(1) LABOR RELATIONS AND EMPLOYEE RELA-
TIONS PROGRAMS.—The Office shall develop labor re-
lations and employee relations programs with the ob-
jective of improving productivity and efficiency, in-
corporating the following principles:
‘‘(A) Such programs shall be consistent with
the merit principles in section 2301(b) of title 5.
‘‘(B) Such programs shall provide veterans
preference protections equivalent to those estab-
lished by sections 2108, 3308–3318, and 3320 of
title 5.
‘‘(C)(i) The right to work shall not be sub-
ject to undue restraint or coercion. The right to
work shall not be infringed or restricted in any
way based on membership in, affiliation with, or
financial support of a labor organization.
‘‘(ii) No person shall be required, as a con-
dition 
of 
employment 
or 
continuation 
of
employment—
‘‘(I) 
to 
resign 
or 
refrain 
from
voluntary membership in, voluntary affili-
ation with, or voluntary financial support
of a labor organization;
‘‘(II) to become or remain a member of
a labor organization;
‘‘(III) to pay any dues, fees, assess-
ments, or other charges of any kind or
amount to a labor organization;
‘‘(IV) to pay to any charity or other
third party, in lieu of such payments, any
amount equivalent to or a pro-rata portion
of dues, fees, assessments, or other charges
regularly required of members of a labor or-
ganization; or
‘‘(V) to be recommended, approved, re-
ferred, or cleared by or through a labor or-
ganization.
‘‘(iii) This subparagraph shall not apply to
a person described in section 7103(a)(2)(v) of
title 5 or a ‘supervisor’, ‘management official’, or
‘confidential employee’ as those terms are defined
in 7103(a) (10), (11), and (13) of such title.
‘‘(iv) Any labor organization recognized by
the Office as the exclusive representative of a
unit of employees of the Office shall represent the
interests of all employees in that unit without
discrimination and without regard to labor orga-
nization membership.
‘‘(2) ADOPTION
OF
EXISTING
LABOR
AGREE-
MENTS.—The Office shall adopt all labor agreements
which are in effect, as of the day before the effective
date of the Patent and Trademark Office Government
Corporation Act of 1996, with respect to such Office
(as then in effect).
‘‘(h) CARRYOVER OF PERSONNEL.—
‘‘(1) FROM
PTO.—Effective as of the effective
date of the Patent and Trademark Office Government
Corporation Act of 1996, all officers and employees of
the Patent and Trademark Office on the day before
such effective date shall become officers and employees
of the Office, without a break in service.
‘‘(2) OTHER PERSONNEL.—Any individual who,
on the day before the effective date of the Patent and
Trademark Office Government Corporation Act of
1996, is an officer or employee of the Department of
Commerce (other than an officer or employee under
paragraph (1)) shall be transferred to the Office if—
‘‘(A) such individual serves in a position
for which a major function is the performance of
work reimbursed by the Patent and Trademark
Office, as determined by the Secretary of Com-
merce;
‘‘(B) such individual serves in a position
that performed work in support of the Patent
and Trademark Office during at least half of the
incumbent’s work time, as determined by the
Secretary of Commerce; or
‘‘(C) such transfer would be in the interest
of the Office, as determined by the Secretary of
Commerce in consultation with the Commis-
sioner of Patents and Trademarks.
Any transfer under this paragraph shall be effective
as of the same effective date as referred to in para-
graph (1), and shall be made without a break in serv-
ice.
‘‘(3) ACCUMULATED LEAVE.—The amount of sick
and annual leave and compensatory time accumu-
lated under title 5 before the effective date described
in paragraph (1), by those becoming officers or em-
ployees of the Office pursuant to this subsection, are
obligations of the Office.
‘‘(4) TERMINATION RIGHTS.—Any employee re-
ferred to in paragraph (1) or (2) of this subsection
whose employment with the Office is terminated dur-
ing the 2-year period beginning on the effective date
of the Patent and Trademark Office Government Cor-
poration Act of 1996 shall be entitled to rights and
benefits, to be afforded by the Office, similar to those
such employee would have had under Federal law if
termination had occurred immediately before such
date. An employee who would have been entitled to
appeal any such termination to the Merit Systems
Protection Board, if such termination had occurred
immediately before such effective date, may appeal
any such termination occurring within this 2-year
period to the Board under such procedures as it may
prescribe.
‘‘(5) CONTINUATION IN OFFICE OF CERTAIN OFFI-
CERS.—(A) The individual serving as the Commis-
sioner of Patents and Trademarks on the day before
the effective date of the Patent and Trademark Office
Government Corporation Act of 1996 may serve as
the Commissioner until the date on which a Commis-
sioner is appointed under subsection (a).
‘‘(B) The individual serving as the Assistant
Commissioner for Patents on the day before the effec-
tive date of the Patent and Trademark Office Govern-
ment Corporation Act of 1996 may serve as the Dep-
uty Commissioner for Patents until the date on which
United States, shall continue to apply to officers and
employees of the Office, until changed in accordance
with this section (whether by action of the Commis-
sioner or otherwise).
‘‘(2) PROVISIONS SPECIFIC TO BASIC PAY.—With
respect to any individual who becomes an officer or
employee of the Office pursuant to subsection (h), the
rate of basic pay for such officer or employee may
not, on or after the effective date of the Patent and
Trademark Office Government Corporation Act of
1996, be less than the rate in effect immediately before
such effective date, except—
‘‘(A) pursuant to a collective-bargaining
agreement entered into under this section; or
‘‘(B) for inefficiency, neglect of duty, or
misconduct, on the part of such individual.
For purposes of this subparagraph, the term ‘basic
pay’ includes any amount considered to be part of
basic pay for purposes of subchapter III of chapter 83
or chapter 84 of title 5.
‘‘(k) REMOVAL OF QUASI-JUDICIAL EXAMINERS.—The
Office may remove a patent examiner or examiner-in-chief,
or a trademark examiner or member of a Trademark Trial
and Appeal Board, only for such cause as will promote the
efficiency of the Office.’’.
SEC. 114. MANAGEMENT ADVISORY BOARD.
Chapter 1 of part I of title 35, United States Code,
is amended by inserting after section 4 the following:
‘‘§ 5. Patent and Trademark Office Management Advi-
sory Board
‘‘(a) ESTABLISHMENT
OF MANAGEMENT ADVISORY
BOARD.—
‘‘(1) APPOINTMENT.—The United States Patent
and Trademark Office shall have a Management Ad-
visory Board (hereafter in this title referred to as the
‘Board’) of 12 members, 4 of whom shall be appointed
by the President, 4 of whom shall be appointed by the
Speaker of the House of Representatives, and 4 of
whom shall be appointed by the President pro tem-
pore of the Senate. Not more than 3 of the 4 members
appointed by each appointing authority shall be
members of the same political party.
‘‘(2) TERMS.—Members of the Board shall be ap-
pointed for a term of 4 years each, except that of the
members first appointed by each appointing author-
ity, 1 shall be for a term of 1 year, 1 shall be for a
term of 2 years, and 1 shall be for a term of 3 years.
No member may serve more than 1 term.
‘‘(3) CHAIR.—The President shall designate the
chair of the Board, whose term as chair shall be for
3 years.
‘‘(4) TIMING
OF
APPOINTMENTS.—Initial ap-
pointments to the Board shall be made within 3
months after the effective date of the Patent and
Trademark Office Government Corporation Act of
1996, and vacancies shall be filled within 3 months
after they occur.
‘‘(5) VACANCIES.—Vacancies shall be filled in the
manner in which the original appointment was made
under this subsection. Members appointed to fill a va-
cancy occurring before the expiration of the term for
which the member’s predecessor was appointed shall
be appointed only for the remainder of that term. A
member may serve after the expiration of that mem-
ber’s term until a successor is appointed.
‘‘(6) COMMITTEES.—The Chair shall designate
members of the Board to serve on a committee on pat-
ent operations and on a committee on trademark op-
erations to perform the duties set forth in subsection
(e) as they relate specifically to the Office’s patent op-
erations, and the Office’s trademark operations, re-
spectively.
‘‘(b) BASIS
FOR APPOINTMENTS.—Members of the
Board shall be citizens of the United States who shall be
chosen so as to represent the interests of diverse users of
the United States Patent and Trademark Office, and shall
include individuals with substantial background and
achievement in corporate finance and management.
‘‘(c) APPLICABILITY
OF CERTAIN ETHICS LAWS.—
Members of the Board shall be special Government employ-
ees within the meaning of section 202 of title 18.
‘‘(d) MEETINGS.—The Board shall meet at the call of
the chair to consider an agenda set by the chair.
‘‘(e) DUTIES.—The Board shall—
‘‘(1) review the policies, goals, performance,
budget, and user fees of the United States Patent and
Trademark Office, and advise the Commissioner on
these matters; and
‘‘(2) within 60 days after the end of each fiscal
year, prepare an annual report on the matters re-
ferred to in paragraph (1), transmit the report to the
President and the Committees on the Judiciary of the
Senate and the House of Representatives, and publish
the report in the Patent and Trademark Office Offi-
cial Gazette.
‘‘(f) COMPENSATION.—Members of the Board shall be
compensated for each day (including travel time) during
which they are attending meetings or conferences of the
Board or otherwise engaged in the business of the Board,
at the rate which is the daily equivalent of the annual rate
of basic pay in effect for level III of the Executive Schedule
under section 5314 of title 5, and while away from their
homes or regular places of business they may be allowed
travel expenses, including per diem in lieu of subsistence,
as authorized by section 5703 of title 5.
‘‘(g) ACCESS TO INFORMATION.—Members of the Board
shall be provided access to records and information in the
United States Patent and Trademark Office, except for per-
sonnel or other privileged information and information con-
cerning patent applications required to be kept in con-
fidence by section 122.’’.
SEC. 115. CONFORMING AMENDMENTS.
(a) DUTIES OF COMMISSIONER.—Chapter 1 of title 35,
United States Code, is amended by striking section 6.
(b) REGULATIONS FOR AGENTS AND ATTORNEYS.—
Section 31 of title 35, United States Code, and the item
relating to such section in the table of sections for chapter
3 of title 35, United States Code, are repealed.
SEC. 116. TRADEMARK TRIAL AND APPEAL BOARD.
Section 17 of the Act of July 5, 1946 (commonly re-
ferred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C. 1067)
is amended to read as follows:
‘‘SEC. 17. (a) In every case of interference, opposition
to registration, application to register as a lawful concur-
rent user, or application to cancel the registration of a
mark, the Commissioner shall give notice to all parties and
shall direct a Trademark Trial and Appeal Board to deter-
mine and decide the respective rights of registration.
‘‘(b) The Trademark Trial and Appeal Board shall in-
clude the Commissioner, the Deputy Commissioner for Pat-
ents, the Deputy Commissioner for Trademarks, and mem-
bers competent in trademark law who are appointed by the
Commissioner.’’.
SEC. 
117. 
BOARD 
OF 
PATENT 
APPEALS 
AND 
INTER-
FERENCES.
Chapter 1 of title 35, United States Code, is amended
by striking section 7 and inserting after section 5 the fol-
lowing:
‘‘§ 6. Board of Patent Appeals and Interferences
‘‘(a) ESTABLISHMENT AND COMPOSITION.—There shall
be in the United States Patent and Trademark Office a
Board of Patent Appeals and Interferences. The Commis-
sioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and the examiners-in-chief
shall constitute the Board. The examiners-in-chief shall be
persons of competent legal knowledge and scientific ability.
‘‘(b) DUTIES.—The Board of Patent Appeals and
Interferences shall, on written appeal of an applicant, re-
view adverse decisions of examiners upon applications for
patents and shall determine priority and patentability of
invention in interferences declared under section 135(a).
Each appeal and interference shall be heard by at least 3
members of the Board, who shall be designated by the Com-
missioner. Only the Board of Patent Appeals and Inter-
ferences may grant rehearings.’’.
SEC. 118. SUITS BY AND AGAINST THE OFFICE.
Chapter 1 of part I of title 35, United States Code,
is amended by inserting after section 6 the following new
section:
‘‘§ 7. Suits by and against the Office
‘‘(a) IN GENERAL.—
‘‘(1) ACTIONS
UNDER
UNITED
STATES
LAW.—
Any civil action or proceeding to which the United
States Patent and Trademark Office is a party is
deemed to arise under the laws of the United States.
The Federal courts shall have exclusive jurisdiction
over all civil actions by or against the Office.
‘‘(2) CONTRACT
CLAIMS.—Any action or pro-
ceeding against the Office in which any claim is cog-
nizable under the Contract Disputes Act of 1978 (41
U.S.C. 601 and following) shall be subject to that Act.
For purposes of that Act, the Commissioner shall be
deemed to be the agency head with respect to contract
claims arising with respect to the Office. Any other
action or proceeding against the Office founded upon
contract may be brought in an appropriate district
court, notwithstanding any provision of title 28.
‘‘(3) TORT
CLAIMS.—(A) Any action or pro-
ceeding against the Office in which any claim is cog-
nizable under the provisions of section 1346(b) and
chapter 171 of title 28, shall be governed by those pro-
visions.
‘‘(B) Any other action or proceeding against the
Office founded upon tort may be brought in an ap-
propriate district court without regard to the provi-
sions of section 1346(b) and chapter 171 of title 28.
‘‘(4) PROHIBITION
ON
ATTACHMENT, 
LIENS,
ETC.—No attachment, garnishment, lien, or similar
process, intermediate or final, in law or equity, may
be issued against property of the Office.
‘‘(5) SUBSTITUTION OF OFFICE AS PARTY.—The
Office shall be substituted as defendant in any civil
action or proceeding against an officer or employee of
the Office, if the Office determines that the officer or
employee was acting within the scope of his or her
employment with the Office. If the Office refuses to
certify scope of employment, the officer or employee
may at any time before trial petition the court to find
and certify that the officer or employee was acting
within the scope of his or her employment. Upon cer-
tification by the court, the Office shall be substituted
as the party defendant. A copy of the petition shall
be served upon the Office. In any such civil action or
proceeding to which paragraph (3)(A) applies, the
provisions of section 1346(b) and chapter 171 of title
28 shall apply in lieu of this paragraph.
‘‘(b) RELATIONSHIP WITH JUSTICE DEPARTMENT.—
‘‘(1) EXERCISE BY OFFICE OF ATTORNEY GEN-
ERAL’S
AUTHORITIES.—Except as provided in this
section, with respect to any action or proceeding in
which the Office is a party or an officer or employee
thereof is a party in his or her official capacity, the
Office, officer, or employee may exercise, without
prior authorization from the Attorney General, the
authorities and duties that otherwise would be exer-
cised by the Attorney General on behalf of the Office,
officer, or employee under title 28 or other laws.
‘‘(2) APPEARANCES BY ATTORNEY GENERAL.—
Notwithstanding paragraph (1), at any time the At-
torney General may, in any action or proceeding de-
scribed in paragraph (1), file an appearance on be-
half of the Office or the officer or employee involved,
without the consent of the Office or the officer or em-
ployee. Upon such filing, the Attorney General shall
represent the Office or such officer or employee with
exclusive authority in the conduct, settlement, or com-
promise of that action or proceeding.
‘‘(3) CONSULTATIONS WITH AND ASSISTANCE BY
ATTORNEY GENERAL.—The Office may consult with
the Attorney General concerning any legal matter,
and the Attorney General shall provide advice and as-
sistance to the Office, including representing the Of-
fice in litigation, if requested by the Office.
‘‘(4) 
REPRESENTATION
BEFORE
SUPREME
COURT.—The Attorney General shall represent the Of-
fice in all cases before the United States Supreme
Court.
‘‘(5) QUALIFICATIONS OF ATTORNEYS.—An attor-
ney admitted to practice to the bar of the highest
court of at least one State in the United States or the
District of Columbia and employed by the Office may
represent the Office in any legal proceeding in which
the Office or an officer or employee of the Office is a
party or interested, regardless of whether the attorney
is a resident of the jurisdiction in which the pro-
ceeding is held and notwithstanding any other pre-
requisites of qualification or appearance required by
the court or administrative body before which the pro-
ceeding is conducted.’’.
SEC. 119. ANNUAL REPORT OF COMMISSIONER.
Section 14 of title 35, United States Code, is amended
to read as follows:
‘‘§ 14. Annual report to Congress
‘‘The Commissioner shall report to the Congress, not
later than 180 days after the end of each fiscal year, the
moneys received and expended by the Office, the purposes
for which the moneys were spent, the quality and quantity
of the work of the Office, and other information relating
to the Office. The report under this section shall also meet
the requirements of section 9106 of title 31, to the extent
that such requirements are not inconsistent with the pre-
ceding sentence. The report required under this section shall
be deemed to be the report of the United States Patent and
Trademark Office under section 9106 of title 31, and the
Commissioner shall not file a separate report under such
section.’’.
SEC. 120. SUSPENSION OR EXCLUSION FROM PRACTICE.
Section 32 of title 35, United States Code, is amended
by inserting before the last sentence the following: ‘‘The
Commissioner shall have the discretion to designate any at-
torney who is an officer or employee of the United States
Patent and Trademark Office to conduct the hearing re-
quired by this section.’’.
SEC. 121. FUNDING.
Section 42 of title 35, United States Code, is amended
to read as follows:
‘‘§ 42. Patent and Trademark Office funding
‘‘(a) FEES PAYABLE TO THE OFFICE.—All fees for
services performed by or materials furnished by the United
States Patent and Trademark Office shall be payable to the
Office.
‘‘(b) USE OF MONEYS.—Moneys from fees shall be
available to the United States Patent and Trademark Office
to carry out, to the extent provided in appropriations Acts,
the functions of the Office. Moneys of the Office not other-
wise used to carry out the functions of the Office shall be
kept in cash on hand or on deposit, or invested in obliga-
tions of the United States or guaranteed by the United
States, or in obligations or other instruments which are
lawful investments for fiduciary, trust, or public funds. Fees
available to the Office under this title shall be used for the
processing of patent applications and for other services and
materials relating to patents. Fees available to the Office
under section 31 of the Act of July 5, 1946 (commonly re-
ferred to as the ‘Trademark Act of 1946’; 15 U.S.C. 1113),
shall be used for the processing of trademark registrations
and for other services and materials relating to trademarks.
‘‘(c) BORROWING AUTHORITY.—The United States
Patent and Trademark Office is authorized to issue from
time to time for purchase by the Secretary of the Treasury
its debentures, bonds, notes, and other evidences of indebted-
ness (hereafter in this subsection referred to as ‘obligations’)
to assist in financing its activities. Borrowing under this
subsection shall be subject to prior approval in appropria-
tions Acts. Such borrowing shall not exceed amounts ap-
proved in appropriations Acts. Any borrowing under this
subsection shall be repaid only from fees paid to the Office
and surcharges appropriated by the Congress. Such obliga-
tions shall be redeemable at the option of the Office before
maturity in the manner stipulated in such obligations and
shall have such maturity as is determined by the Office with
the approval of the Secretary of the Treasury. Each such
obligation issued to the Treasury shall bear interest at a
rate not less than the current yield on outstanding market-
able obligations of the United States of comparable matu-
rity during the month preceding the issuance of the obliga-
tion as determined by the Secretary of the Treasury. The
Secretary of the Treasury shall purchase any obligations
of the Office issued under this subsection and for such pur-
pose the Secretary of the Treasury is authorized to use as
a public-debt transaction the proceeds of any securities
issued under chapter 31 of title 31, and the purposes for
which securities may be issued under that chapter are ex-
tended to include such purpose. Payment under this sub-
section of the purchase price of such obligations of the
United States Patent and Trademark Office shall be treated
as public debt transactions of the United States.’’.
SEC. 122. AUDITS.
Chapter 4 of part I of title 35, United States Code,
is amended by adding at the end the following new section:
‘‘§ 43. Audits
‘‘(a) IN
GENERAL.—Financial statements of the
United States Patent and Trademark Office shall be pre-
pared on an annual basis in accordance with generally ac-
cepted accounting principles. Such statements shall be au-
dited by an independent certified public accountant chosen
by the Commissioner. The audit shall be conducted in ac-
cordance with standards that are consistent with generally
accepted Government auditing standards and other stand-
ards established by the Comptroller General, and with the
generally accepted auditing standards of the private sector,
to the extent feasible. The Commissioner shall transmit to
the Committees on the Judiciary of the House of Represent-
atives and the Senate the results of each audit under this
subsection.
‘‘(b) REVIEW
BY
COMPTROLLER
GENERAL.—The
Comptroller General may review any audit of the financial
statement of the Patent and Trademark Office that is con-
ducted under subsection (a). The Comptroller General shall
report to the Congress and the Office the results of any such
review and shall include in such report appropriate rec-
ommendations.
‘‘(c) AUDIT BY COMPTROLLER GENERAL.—The Comp-
troller General may audit the financial statements of the
Office and such audit shall be in lieu of the audit required
by subsection (a). The Office shall reimburse the Comp-
troller General for the cost of any audit conducted under
this subsection.
‘‘(d) ACCESS TO OFFICE RECORDS.—All books, finan-
cial records, report files, memoranda, and other property
that the Comptroller General deems necessary for the per-
formance of any audit shall be made available to the Comp-
troller General.
‘‘(e) APPLICABILITY IN LIEU OF TITLE 31 PROVI-
SIONS.—This section applies to the Office in lieu of the pro-
visions of section 9105 of title 31.’’.
SEC. 123. TRANSFERS.
(a) TRANSFER OF FUNCTIONS.—Except as otherwise
provided in this title, there are transferred to, and vested
in, the United States Patent and Trademark Office all func-
tions, powers, and duties vested by law in the Secretary
of Commerce or the Department of Commerce or in the offi-
cers or components in the Department of Commerce with
respect to the authority to grant patents and register trade-
marks, and in the Patent and Trademark Office, as in effect
on the day before the effective date of this title, and in the
officers and components of such Office.
(b) TRANSFER OF FUNDS AND PROPERTY.—The Sec-
retary of Commerce shall transfer to the United States Pat-
ent and Trademark Office, on the effective date of this title,
so much of the assets, liabilities, contracts, property,
records, and unexpended and unobligated balances of ap-
propriations, authorizations, allocations, and other funds
employed, held, used, arising from, available to, or to be
made available to the Department of Commerce, including
funds set aside for accounts receivable which are related to
functions, powers, and duties which are vested in the Patent
and Trademark Office by this title.
Subtitle B—Effective Date;
Technical Amendments
SEC. 131. EFFECTIVE DATE.
This title and the amendments made by this title shall
take effect 4 months after the date of the enactment of this
Act.
SEC. 132. TECHNICAL AND CONFORMING AMENDMENTS.
(a) AMENDMENTS TO TITLE 35.—
(1) The item relating to part I in the table of
parts for chapter 35, United States Code, is amended
to read as follows:
‘‘I. United States Patent and Trademark Office ..............
1’’.
(2) The heading for part I of title 35, United
States Code, is amended to read as follows:
‘‘PART I—UNITED STATES PATENT AND
TRADEMARK OFFICE’’.
(3) The table of chapters for part I of title 35,
United States Code, is amended by amending the
item relating to chapter 1 to read as follows:
‘‘1. Establishment, Officers and Employees, Functions ........
1’’.
(4) The table of sections for chapter 1 of title 35,
United States Code, is amended to read as follows:
‘‘CHAPTER 1—ESTABLISHMENT, OFFICERS
AND EMPLOYEES, FUNCTIONS
‘‘Sec.
‘‘1.
Establishment.
‘‘2.
Powers and duties.
‘‘3.
Officers and employees.
‘‘4.
Restrictions on officers and employees as to interest in patents.
‘‘5.
Patent and Trademark Office Management Advisory Board.
‘‘6.
Board of Patent Appeals and Interferences.
‘‘7.
Suits by and against the Office.
‘‘8.
Library.
‘‘9.
Classification of patents.
‘‘10. Certified copies of records.
‘‘11. Publications.
‘‘12. Exchange of copies of patents with foreign countries.
‘‘13. Copies of patents for public libraries.
‘‘14. Annual report to Congress.’’.
(5) The table of sections for chapter 4 of part I
of title 35, United States Code, is amended by adding
at the end the following new item:
‘‘43. Audits.’’.
(b) OTHER PROVISIONS OF LAW.—
(1) Section 9101(3) of title 31, United States
Code, is amended by adding at the end the following:
‘‘(R) the United States Patent and Trade-
mark Office.’’.
(2) Section 500(e) of title 5, United States Code,
is amended by striking ‘‘Patent Office’’ and inserting
‘‘United States Patent and Trademark Office’’.
(3) Section 5102(c)(23) of title 5, United States
Code, is amended by striking ‘‘Patent and Trademark
Office, Department of Commerce’’ and inserting
‘‘United States Patent and Trademark Office’’.
(4) Section 5316 of title 5, United States Code
(5 U.S.C. 5316) is amended by striking ‘‘Commis-
sioner of Patents, Department of Commerce.’’, ‘‘Dep-
uty Commissioner of Patents and Trademarks.’’, ‘‘As-
sistant Commissioner for Patents.’’, and ‘‘Assistant
Commissioner for Trademarks.’’.
(5) Section 12 of the Act of February 14, 1903
(15 U.S.C. 1511) is amended by striking ‘‘(d) Patent
and Trademark Office;’’ and redesignating subsections
(a) through (g) as paragraphs (1) through (6), respec-
tively.
(6) The Act of April 12, 1892 (27 Stat. 395; 20
U.S.C. 91) is amended by striking ‘‘Patent Office’’
and inserting ‘‘United States Patent and Trademark
Office’’.
(7) Sections 505(m) and 512(o) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(m) and
360b(o)) are each amended by striking ‘‘Patent and
Trademark Office of the Department of Commerce’’
and inserting ‘‘United States Patent and Trademark
Office’’.
(8) Section 105(e) of the Federal Alcohol Admin-
istration Act (27 U.S.C. 205(e)) is amended by strik-
ing ‘‘United States Patent Office’’ and inserting
‘‘United States Patent and Trademark Office’’.
(9) Section 1744 of title 28, United States Code
is amended—
(A) by striking ‘‘Patent Office’’ each place
it appears in the text and section heading and
inserting ‘‘United States Patent and Trademark
Office’’; and
(B) by striking ‘‘Commissioner of Patents’’
and inserting ‘‘Commissioner of Patents and
Trademarks’’.
(10) Section 1745 of title 28, United States
Code, is amended by striking ‘‘United States Patent
Office’’ and inserting ‘‘United States Patent and
Trademark Office’’.
(11) Section 1928 of title 28, United States
Code, is amended by striking ‘‘Patent Office’’ and in-
serting ‘‘United States Patent and Trademark Of-
fice’’.
(12) Section 160 of the Atomic Energy Act of
1954 (42 U.S.C. 2190) is amended—
(A) by striking ‘‘United States Patent Of-
fice’’ and inserting ‘‘United States Patent and
Trademark Office’’; and
(B) by striking ‘‘Commissioner of Patents’’
and inserting ‘‘Commissioner of Patents and
Trademarks’’.
(13) Section 305(c) of the National Aeronautics
and Space Act of 1958 (42 U.S.C. 2457(c)) is amend-
ed by striking ‘‘Commissioner of Patents’’ and insert-
ing ‘‘Commissioner of Patents and Trademarks’’.
(14) Section 12(a) of the Solar Heating and
Cooling Demonstration Act of 1974 (42 U.S.C.
5510(a)) is amended by striking ‘‘Commissioner of
the Patent Office’’ and inserting ‘‘Commissioner of
Patents and Trademarks’’.
(15) Section 1111 of title 44, United States
Code, is amended by striking ‘‘the Commissioner of
Patents,’’.
(16) Section 1114 of title 44, United States
Code, is amended by striking ‘‘the Commissioner of
Patents,’’.
(17) Section 1123 of title 44, United States
Code, is amended by striking ‘‘the Patent Office,’’.
(18) Sections 1337 and 1338 of title 44, United
States Code, and the items relating to those sections
in the table of contents for chapter 13 of such title,
are repealed.
(19) Section 10(i) of the Trading With the
Enemy Act (50 U.S.C. App. 10(i)) is amended by
striking ‘‘Commissioner of Patents’’ and inserting
‘‘Commissioner of Patents and Trademarks’’.
(20) Section 8G(a)(2) of the Inspector General
Act of 1978 (5 U.S.C. App.) is amended by inserting
‘‘the United States Patent and Trademark Office,’’
after ‘‘the United States International Trade Com-
mission,’’.
Subtitle C—Miscellaneous
Provisions
SEC. 141. REFERENCES.
Any reference in any other Federal law, Executive
order, rule, regulation, or delegation of authority, or any
document of or pertaining to a department or office from
which a function is transferred by this title—
(1) to the head of such department or office is
deemed to refer to the head of the department or office
to which such function is transferred; or
(2) to such department or office is deemed to
refer to the department or office to which such func-
tion is transferred.
SEC. 142. EXERCISE OF AUTHORITIES.
Except as otherwise provided by law, a Federal official
to whom a function is transferred by this title may, for
purposes of performing the function, exercise all authorities
under any other provision of law that were available with
respect to the performance of that function to the official
responsible for the performance of the function immediately
before the effective date of the transfer of the function under
this title.
SEC. 143. SAVINGS PROVISIONS.
(a) LEGAL DOCUMENTS.—All orders, determinations,
rules, regulations, permits, grants, loans, contracts, agree-
ments, certificates, licenses, and privileges—
(1) that have been issued, made, granted, or al-
lowed to become effective by the President, the Sec-
retary of Commerce, any officer or employee of any
office transferred by this title, or any other Govern-
ment official, or by a court of competent jurisdiction,
in the performance of any function that is transferred
by this title, and
(2) that are in effect on the effective date of such
transfer (or become effective after such date pursuant
to their terms as in effect on such effective date),
shall continue in effect according to their terms until modi-
fied, terminated, superseded, set aside, or revoked in accord-
ance with law by the President, any other authorized offi-
cial, a court of competent jurisdiction, or operation of law.
(b) PROCEEDINGS.—This title shall not affect any pro-
ceedings or any application for any benefits, service, license,
permit, certificate, or financial assistance pending on the
effective date of this title before an office transferred by this
title, but such proceedings and applications shall be contin-
ued. Orders shall be issued in such proceedings, appeals
shall be taken therefrom, and payments shall be made pur-
suant to such orders, as if this title had not been enacted,
and orders issued in any such proceeding shall continue in
effect until modified, terminated, superseded, or revoked by
a duly authorized official, by a court of competent jurisdic-
tion, or by operation of law. Nothing in this subsection shall
be considered to prohibit the discontinuance or modification
of any such proceeding under the same terms and condi-
tions and to the same extent that such proceeding could have
been discontinued or modified if this title had not been en-
acted.
(c) SUITS.—This title shall not affect suits commenced
before the effective date of this title, and in all such suits,
proceedings shall be had, appeals taken, and judgments ren-
dered in the same manner and with the same effect as if
this title had not been enacted.
(d) NONABATEMENT OF ACTIONS.—No suit, action, or
other proceeding commenced by or against the Department
of Commerce or the Secretary of Commerce, or by or against
any individual in the official capacity of such individual
as an officer or employee of an office transferred by this
title, shall abate by reason of the enactment of this title.
(e) CONTINUANCE OF SUITS.—If any Government offi-
cer in the official capacity of such officer is party to a suit
with respect to a function of the officer, and under this title
such function is transferred to any other officer or office,
then such suit shall be continued with the other officer or
the head of such other office, as applicable, substituted or
added as a party.
(f) ADMINISTRATIVE PROCEDURE AND JUDICIAL RE-
VIEW.—Except as otherwise provided by this title, any stat-
utory requirements relating to notice, hearings, action upon
the record, or administrative or judicial review that apply
to any function transferred by this title shall apply to the
exercise of such function by the head of the Federal agency,
and other officers of the agency, to which such function is
transferred by this title.
SEC. 144. TRANSFER OF ASSETS.
Except as otherwise provided in this title, so much of
the personnel, property, records, and unexpended balances
of appropriations, allocations, and other funds employed,
used, held, available, or to be made available in connection
with a function transferred to an official or agency by this
title shall be available to the official or the head of that
agency, respectively, at such time or times as the Director
of the Office of Management and Budget directs for use in
connection with the functions transferred.
SEC. 145. DELEGATION AND ASSIGNMENT.
Except as otherwise expressly prohibited by law or oth-
erwise provided in this title, an official to whom functions
are transferred under this title (including the head of any
office to which functions are transferred under this title)
may delegate any of the functions so transferred to such
officers and employees of the office of the official as the offi-
cial may designate, and may authorize successive redelega-
tions of such functions as may be necessary or appropriate.
No delegation of functions under this section or under any
other provision of this title shall relieve the official to whom
a function is transferred under this title of responsibility
for the administration of the function.
SEC. 146. AUTHORITY OF DIRECTOR OF THE OFFICE OF
MANAGEMENT AND BUDGET WITH RESPECT
TO FUNCTIONS TRANSFERRED.
(a) DETERMINATIONS.—If necessary, the Director of
the Office of Management and Budget shall make any deter-
mination of the functions that are transferred under this
title.
(b) INCIDENTAL TRANSFERS.—The Director of the Of-
fice of Management and Budget, at such time or times as
the Director shall provide, may make such determinations
as may be necessary with regard to the functions transferred
by this title, and to make such additional incidental dis-
positions of personnel, assets, liabilities, grants, contracts,
property, records, and unexpended balances of appropria-
tions, authorizations, allocations, and other funds held,
used, arising from, available to, or to be made available
in connection with such functions, as may be necessary to
carry out the provisions of this title. The Director shall pro-
vide for the termination of the affairs of all entities termi-
nated by this title and for such further measures and dis-
positions as may be necessary to effectuate the purposes of
this title.
SEC. 147. CERTAIN VESTING OF FUNCTIONS CONSIDERED
TRANSFERS.
For purposes of this title, the vesting of a function in
a department or office pursuant to reestablishment of an
office shall be considered to be the transfer of the function.
SEC. 148. AVAILABILITY OF EXISTING FUNDS.
Existing appropriations and funds available for the
performance of functions, programs, and activities termi-
nated pursuant to this title shall remain available, for the
duration of their period of availability, for necessary ex-
penses in connection with the termination and resolution
of such functions, programs, and activities.
SEC. 149. DEFINITIONS.
For purposes of this title—
(1) the term ‘‘function’’ includes any duty, obli-
gation, power, authority, responsibility, right, privi-
lege, activity, or program; and
(2) the term ‘‘office’’ includes any office, admin-
istration, agency, bureau, institute, council, unit, or-
ganizational entity, or component thereof.
TITLE II—EARLY PUBLICATION
OF PATENT APPLICATIONS
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Patent Application
Publication Act of 1996’’.
SEC. 202. EARLY PUBLICATION.
Section 122 of title 35, United States Code, is amended
to read as follows:
‘‘§ 122. Confidential status of applications; publica-
tion of patent applications
‘‘(a) CONFIDENTIALITY.—Except as provided in sub-
section (b), applications for patents shall be kept in con-
fidence by the Patent and Trademark Office and no infor-
mation concerning the same given without authority of the
applicant or owner unless necessary to carry out the provi-
sions of an Act of Congress or in such special circumstances
as may be determined by the Commissioner.
‘‘(b) PUBLICATION.—
‘‘(1) IN
GENERAL.—(A) Subject to paragraph
(2), each application for patent, except applications
for design patents filed under chapter 16 of this title
and provisional applications filed under section
111(b) of this title, shall be published, in accordance
with procedures determined by the Commissioner, as
soon as possible after the expiration of a period of 18
months from the earliest filing date for which a ben-
efit is sought under this title. At the request of the ap-
plicant, an application may be published earlier than
the end of such 18-month period.
‘‘(B) No information concerning published pat-
ent applications shall be made available to the public
except as the Commissioner determines.
‘‘(C) Notwithstanding any other provision of
law, a determination by the Commissioner to release
or not to release information concerning a published
patent application shall be final and nonreviewable.
‘‘(2) EXCEPTIONS.—(A) An application that is
no longer pending shall not be published.
‘‘(B) An application that is subject to a secrecy
order pursuant to section 181 of this title shall not
be published.
‘‘(C)(i) Upon the request of the applicant at the
time of filing, the application shall not be published
in accordance with paragraph (1) until 3 months
after the Commissioner makes a notification to the
applicant under section 132 of this title.
‘‘(ii) Applications filed pursuant to section 363
of this title, applications asserting priority under sec-
tion 119 or 365(a) of this title, and applications as-
serting the benefit of an earlier application under sec-
tion 120, 121, or 365(c) of this title shall not be eligi-
ble for a request pursuant to this subparagraph.
‘‘(iii) In a request under this subparagraph, the
applicant shall certify that the invention disclosed in
the application was not and will not be the subject of
an application filed in a foreign country.
‘‘(iv) A request under this subparagraph shall
only be available to an applicant who has been ac-
corded the status of independent inventor under sec-
tion 41(h) of this title.
‘‘(v) The Commissioner may establish appro-
priate procedures and fees for making a request under
this subparagraph.
‘‘(c) PRE-ISSUANCE OPPOSITION.—The provisions of
this section shall not operate to create any new opportunity
for pre-issuance opposition. The Commissioner may estab-
lish appropriate procedures to ensure that this section does
not create any new opportunity for pre-issuance opposi-
tion.’’.
SEC. 203. TIME FOR CLAIMING BENEFIT OF EARLIER FILING
DATE.
(a) IN A FOREIGN COUNTRY.—Section 119(b) of title
35, United States Code, is amended to read as follows:
‘‘(b)(1) No application for patent shall be entitled to
this right of priority unless a claim, identifying the foreign
application by specifying its application number, country,
and the day, month, and year of its filing, is filed in the
Patent and Trademark Office at such time during the pend-
ency of the application as required by the Commissioner.
‘‘(2) The Commissioner may consider the failure of the
applicant to file a timely claim for priority as a waiver
of any such claim, and may require the payment of a sur-
charge as a condition of accepting an untimely claim dur-
ing the pendency of the application.
‘‘(3) The Commissioner may require a certified copy
of the original foreign application, specification, and draw-
ings upon which it is based, a translation if not in the
English language, and such other information as the Com-
missioner considers necessary. Any such certification shall
be made by the patent office of the foreign country in which
the foreign application was filed and show the date of the
application and of the filing of the specification and other
papers.’’.
(b) IN THE UNITED STATES.—Section 120 of title 35,
United States Code, is amended by adding at the end the
following: ‘‘The Commissioner may determine the time pe-
riod during the pendency of the application within which
an amendment containing the specific reference to the ear-
lier filed application is submitted. The Commissioner may
consider the failure to submit such an amendment within
that time period as a waiver of any benefit under this sec-
tion. The Commissioner may establish procedures, includ-
ing the payment of a surcharge, to accept unavoidably late
submissions of amendments under this section.’’.
SEC. 204. PROVISIONAL RIGHTS.
Section 154 of title 35, United States Code, is
amended—
(1) in the section caption by inserting ‘‘; provi-
sional rights’’ after ‘‘patent’’; and
(2) by adding at the end the following new sub-
section:
‘‘(d) PROVISIONAL RIGHTS.—
‘‘(1) IN GENERAL.—In addition to other rights
provided by this section, a patent shall include the
right to obtain a reasonable royalty from any person
who, during the period beginning on the date of pub-
lication of the application for such patent pursuant
to section 122(b) of this title, or in the case of an
international application designating the United
States, the date of international publication of the ap-
plication, and ending on the date the patent is
issued—
‘‘(A)(i) makes, uses, offers for sale, or sells
in the United States the invention as claimed in
the published patent application or imports such
an invention into the United States; or
‘‘(ii) if the invention as claimed in the pub-
lished patent application is a process, uses, offers
for sale, or sells in the United States or imports
into the United States products made by that
process as claimed in the published patent appli-
cation; and
‘‘(B) had actual notice of the published pat-
ent application and where the right arising
under this paragraph is based upon an inter-
national application designating the United
States that is published in a language other than
English, a translation of the international appli-
cation into the English language.
‘‘(2) RIGHT
BASED
ON
SUBSTANTIALLY
IDEN-
TICAL INVENTIONS.—The right under paragraph (1)
to obtain a reasonable royalty shall not be available
under this subsection unless the invention as claimed
in the patent is substantially identical to the inven-
tion as claimed in the published patent application.
‘‘(3) TIME LIMITATION ON OBTAINING A REASON-
ABLE ROYALTY.—The right under paragraph (1) to
obtain a reasonable royalty shall be available only in
an action brought not later than 6 years after the
patent is issued. The right under paragraph (1) to ob-
tain a reasonable royalty shall not be affected by the
duration of the period described in paragraph (1).
‘‘(4) REQUIREMENTS FOR INTERNATIONAL APPLI-
CATIONS.—The right under paragraph (1) to obtain
a reasonable royalty based upon the publication
under the treaty of an international application des-
ignating the United States shall commence from the
date that the Patent and Trademark Office receives a
copy of the publication under the treaty of the inter-
national application, or, if the publication under the
treaty of the international application is in a lan-
guage other than English, from the date that the Pat-
ent and Trademark Office receives a translation of the
international application in the English language.
The Commissioner may require the applicant to pro-
vide a copy of the international publication of the
international application and a translation thereof.’’.
SEC. 205. PRIOR ART EFFECT OF PUBLISHED APPLICA-
TIONS.
Section 102(e) of title 35, United States Code, is
amended to read as follows:
‘‘(e) the invention was described in—
‘‘(1) an application for patent, published pursu-
ant to section 122(b) of this title, by another filed in
the United States before the invention by the appli-
cant for patent, except that an international applica-
tion filed under the treaty defined in section 351(a)
of this title shall have the effect under this subsection
of a national application published under section
122(b) of this title only if the international applica-
tion designating the United States was published
under Article 21(2)(a) of such treaty in the English
language, or
‘‘(2) a patent granted on an application for pat-
ent by another filed in the United States before the
invention by the applicant for patent, except that a
patent granted on an international application filed
under the treaty defined in section 351(a) of this title
shall have the effect under this subsection of a patent
granted on a national application only if the inter-
national application was published under Article
21(2)(a) of such treaty in the English language, or’’.
SEC. 206. COST RECOVERY FOR PUBLICATION.
The Commissioner shall recover the cost of early publi-
cation required by the amendment made by section 202 by
adjusting the filing, issue, and maintenance fees under title
35, United States Code, by charging a separate publication
fee, or by any combination of these methods.
SEC. 207. CONFORMING CHANGES.
The following provisions of title 35, United States
Code, are amended:
(1) Section 11 is amended in paragraph 1 of
subsection (a) by inserting ‘‘and published applica-
tions for patents’’ after ‘‘Patents’’.
(2) Section 12 is amended—
(A) in the section caption by inserting
‘‘and applications’’ after ‘‘patents’’; and
(B) by inserting ‘‘and published applica-
tions for patents’’ after ‘‘patents’’.
(3) Section 13 is amended—
(A) in the section caption by inserting
‘‘and applications’’ after ‘‘patents’’; and
(B) by inserting ‘‘and published applica-
tions for patents’’ after ‘‘patents’’.
(4) The items relating to sections 12 and 13 in
the table of sections for chapter 1 are each amended
by inserting ‘‘and applications’’ after ‘‘patents’’.
(5) The item relating to section 122 in the table
of sections for chapter 11 is amended by inserting ‘‘;
publication of patent applications’’ after ‘‘applica-
tions’’.
(6) The item relating to section 154 in the table
of sections for chapter 14 is amended by inserting ‘‘;
provisional rights’’ after ‘‘patent’’.
(7) Section 181 is amended—
(A) in the first paragraph—
(i) by inserting ‘‘by the publication of
an application or’’ after ‘‘disclosure’’; and
(ii) by inserting ‘‘the publication of the
application or’’ after ‘‘withhold’’;
(B) in the second paragraph by inserting
‘‘by the publication of an application or’’ after
‘‘disclosure of an invention’’;
(C) in the third paragraph—
(i) by inserting ‘‘by the publication of
the application or’’ after ‘‘disclosure of the
invention’’; and
(ii) by inserting ‘‘the publication of the
application or’’ after ‘‘withhold’’; and
(D) in the fourth paragraph by inserting
‘‘the publication of an application or’’ after
‘‘and’’ in the first sentence.
(8) Section 252 is amended in the first para-
graph by inserting ‘‘substantially’’ before ‘‘identical’’
each place it appears.
(9) Section 284 is amended by adding at the end
of the second paragraph the following: ‘‘Increased
damages under this paragraph shall not apply to pro-
visional rights under section 154(d) of this title.’’.
(10) Section 374 is amended to read as follows:
‘‘§ 374. Publication of international application: Ef-
fect
‘‘The publication under the treaty, defined in section
351(a) of this title, of an international application desig-
nating the United States shall confer the same rights and
shall have the same effect under this title as an application
for patent published under section 122(b), except as pro-
vided in sections 102(e) and 154(d) of this title.’’.
SEC. 208. PATENT TERM EXTENSION AUTHORITY.
Section 154(b) of title 35, United States Code, is
amended to read as follows:
‘‘(b) TERM EXTENSION.—
‘‘(1) BASIS FOR PATENT TERM EXTENSION.—
‘‘(A) DELAY.—Subject to the limitations set
forth in paragraph (2), if the issue of an origi-
nal patent is delayed due to—
‘‘(i) a proceeding under section 135(a)
of this title,
‘‘(ii) the imposition of an order pursu-
ant to section 181 of this title,
‘‘(iii) appellate review by the Board of
Patent Appeals and Interferences or by a
Federal court where the patent was issued
pursuant to a decision in the review revers-
ing an adverse determination of patent-
ability, or
‘‘(iv) an unusual administrative delay
by the Patent and Trademark Office in is-
suing the patent,
the term of the patent shall be extended for the
period of delay.
‘‘(B) ADMINISTRATIVE
DELAY.—For pur-
poses of subparagraph (A)(iv), an unusual ad-
ministrative delay by the Patent and Trademark
office is the failure to—
‘‘(i) make a notification of the rejection
of any claim for a patent or any objection
or argument under section 132 of this title
or give or mail a written notice of allow-
ance under section 151 of this title not later
than 14 months after the date on which the
application was filed;
‘‘(ii) respond to a reply under section
132 of this title or to an appeal taken under
section 134 of this title not later than 4
months after the date on which the reply
was filed or the appeal was taken;
‘‘(iii) act on an application not later
than 4 months after the date of a decision
by the Board of Patent Appeals and Inter-
ferences under section 134 or 135 of this
title or a decision by a Federal court under
section 141, 145, or 146 of this title where
allowable claims remain in an application;
or
‘‘(iv) issue a patent not later than 4
months after the date on which the issue fee
was paid under section 151 of this title and
all outstanding requirements were satisfied.
‘‘(2) LIMITATIONS.—(A) The total duration of
any extensions granted pursuant to either clause (iii)
or (iv) of paragraph (1)(A) or both such clauses shall
not exceed 10 years. To the extent that periods of
delay attributable to grounds specified in paragraph
(1) overlap, the period of any extension granted under
this subsection shall not exceed the actual number of
days the issuance of the patent was delayed.
‘‘(B) The period of extension of the term of a
patent under this subsection shall be reduced by a pe-
riod equal to the time in which the applicant failed
to engage in reasonable efforts to conclude prosecution
of the application. The Commissioner shall prescribe
regulations establishing the circumstances that con-
stitute a failure of an applicant to engage in reason-
able efforts to conclude processing or examination of
an application.
‘‘(C) No patent the term of which has been dis-
claimed beyond a specified date may be extended
under this section beyond the expiration date specified
in the disclaimer.
‘‘(3) PROCEDURES.—The Commissioner shall
prescribe regulations establishing procedures for the
notification of patent term extensions under this sub-
section and procedures for contesting patent term ex-
tensions under this subsection.’’.
SEC. 209. EXAMINING PROCEDURE IMPROVEMENTS; FUR-
THER LIMITED REEXAMINATION OF PATENT
APPLICATIONS.
The Commissioner of Patents and Trademarks shall
prescribe regulations to provide for the further limited reex-
amination of applications for patent. The Commissioner
may establish appropriate fees for such further limited reex-
amination and shall be authorized to provide a 50 percent
reduction on such fees for small entities that qualify for re-
duced fees under section 41(h)(1) of title 35, United States
Code.
SEC. 210. LAST DAY OF PENDENCY OF PROVISIONAL APPLI-
CATION.
Section 119(e) of title 35, United States Code, is
amended by adding at the end the following:
‘‘(3) If the day that is 12 months after the filing date
of a provisional application falls on a Saturday, Sunday,
or legal holiday as defined in rule 6(a) of the Federal Rules
of Civil Procedure, the period of pendency of the provisional
application shall be extended to the next succeeding business
day.’’.
SEC. 211. REPORTING REQUIREMENT.
The Commissioner of Patents and Trademarks shall
report to the Congress not later than April 1, 2000, and
not later than April 1 of each year thereafter, regarding
the impact of publication on the patent applications filed
by an applicant who has been accorded the status of inde-
pendent inventor under section 41(h) of title 35, United
States Code. The report shall include information con-
cerning the frequency and number of initial and continuing
patent applications, pendency, interferences, reexamina-
tions, rejection, abandonment rates, fees, other expenses, and
other relevant information related to the prosecution of pat-
ent applications.
SEC. 212. EFFECTIVE DATE.
(a) SECTIONS 202 THROUGH 207.—Sections 202
through 207, and the amendments made by such sections,
shall take effect on April 1, 1997, and shall apply to all
applications filed under section 111 of title 35, United
States Code, on or after that date, and all international
applications designating the United States that are filed
on or after that date.
(b) SECTIONS 208 THROUGH 210.—The amendments
made by sections 208 through 210 shall take effect on the
date of the enactment of this Act and, except for a design
patent application filed under chapter 16 of title 35, United
States Code, shall apply to any application filed on or after
June 8, 1995.
TITLE III—PRIOR DOMESTIC
COMMERCIAL USE
SEC. 301. SHORT TITLE.
This title may be cited as the ‘‘Prior Domestic Com-
mercial Use Act of 1996’’.
SEC. 302. DEFENSE TO PATENT INFRINGEMENT BASED ON
PRIOR DOMESTIC COMMERCIAL USE.
(a) DEFENSE.—Chapter 28 of title 35, United States
Code, is amended by adding at the end the following new
section:
‘‘§ 273. Prior domestic commercial use; defense to in-
fringement
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) the terms ‘commercially used’, ‘commer-
cially use’, and ‘commercial use’ mean the use in the
United States in commerce or the use in the design,
testing, or production in the United States of a prod-
uct or service which is used in commerce, whether or
not the subject matter at issue is accessible to or oth-
erwise known to the public;
‘‘(2) the terms ‘used in commerce’, and ‘use in
commerce’ mean that there has been an actual sale or
other commercial transfer of the subject matter at
issue or that there has been an actual sale or other
commercial transfer of a product or service resulting
from the use of the subject matter at issue; and
‘‘(3) the ‘effective filing date’ of a patent is the
earlier of the actual filing date of the application for
the patent or the filing date of any earlier United
States, foreign, or international application to which
the subject matter at issue is entitled under section
119, 120, or 365 of this title.
‘‘(b) DEFENSE TO INFRINGEMENT.—(1) A person shall
not be liable as an infringer under section 271 of this title
with respect to any subject matter that would otherwise in-
fringe one or more claims in the patent being asserted
against such person, if such person had, acting in good
faith, commercially used the subject matter before the effec-
tive filing date of such patent.
‘‘(2) The sale or other disposition of the subject matter
of a patent by a person entitled to assert a defense under
this section with respect to that subject matter shall exhaust
the patent owner’s rights under the patent to the extent such
rights would have been exhausted had such sale or other dis-
position been made by the patent owner.
‘‘(c) LIMITATIONS
AND
QUALIFICATIONS
OF
DE-
FENSE.—The defense to infringement under this section is
subject to the following:
‘‘(1) DERIVATION.—A person may not assert the
defense under this section if the subject matter on
which the defense is based was derived from the pat-
entee or persons in privity with the patentee.
‘‘(2) NOT A GENERAL LICENSE.—The defense as-
serted by a person under this section is not a general
license under all claims of the patent at issue, but ex-
tends only to the subject matter claimed in the patent
with respect to which the person can assert a defense
under this chapter, except that the defense shall also
extend to variations in the quantity or volume of use
of the claimed subject matter, and to improvements in
the claimed subject matter that do not infringe addi-
tional specifically claimed subject matter of the pat-
ent.
‘‘(3) EFFECTIVE AND SERIOUS PREPARATION.—
With respect to subject matter that cannot be commer-
cialized without a significant investment of time,
money, and effort, a person shall be deemed to have
commercially used the subject matter if—
‘‘(A) before the effective filing date of the
patent, the person reduced the subject matter to
practice in the United States, completed a sig-
nificant portion of the total investment necessary
to commercially use the subject matter, and
made a commercial transaction in the United
States in connection with the preparation to use
the subject matter; and
‘‘(B) thereafter the person diligently com-
pleted the remainder of the activities and invest-
ments necessary to commercially use the subject
matter, and promptly began commercial use of
the subject matter, even if such activities were
conducted after the effective filing date of the
patent.
‘‘(4) BURDEN OF PROOF.—A person asserting the
defense under this section shall have the burden of es-
tablishing the defense.
‘‘(5) ABANDONMENT OF USE.—A person who has
abandoned commercial use of subject matter may not
rely on activities performed before the date of such
abandonment in establishing a defense under sub-
section (b) with respect to actions taken after the date
of such abandonment.
‘‘(6) PERSONAL
DEFENSE.—The defense under
this section may only be asserted by the person who
performed the acts necessary to establish the defense
and, except for any transfer to the patent owner, the
right to assert the defense shall not be licensed or as-
signed or transferred to another person except in con-
nection with the good faith assignment or transfer of
the entire enterprise or line of business to which the
defense relates.
‘‘(7) ONE-YEAR LIMITATION.—A person may not
assert a defense under this section unless the subject
matter on which the defense is based had been com-
mercially used or reduced to practice more than one
year prior to the effective filing date of the patent by
the person asserting the defense or someone in privity
with that person.
‘‘(d) UNSUCCESSFUL ASSERTION OF DEFENSE.—If the
defense under this section is pleaded by a person who is
found to infringe the patent and who subsequently fails to
demonstrate a reasonable basis for asserting the defense, the
court shall find the case exceptional for the purpose of
awarding attorney’s fees under section 285 of this title.
‘‘(e) INVALIDITY.—A patent shall not be deemed to be
invalid under section 102 or 103 of this title solely because
a defense is established under this section.’’.
(b) CONFORMING AMENDMENT.—The table of sections
at the beginning of chapter 28 of title 35, United States
Code, is amended by adding at the end the following new
item:
‘‘273. Prior domestic commercial use; defense to infringement.’’.
SEC. 303. EFFECTIVE DATE AND APPLICABILITY.
This title and the amendments made by this title shall
take effect on the date of the enactment of this Act, but shall
not apply to any action for infringement that is pending
on such date of enactment or with respect to any subject
matter for which an adjudication of infringement, includ-
ing a consent judgment, has been made before such date of
enactment.
TITLE IV—INVENTOR
PROTECTION
SEC. 401. SHORT TITLE.
This title may be cited as the ‘‘Inventor Protection Act
of 1996’’.
SEC. 402. INVENTION DEVELOPMENT SERVICES.
Part I of title 35, United States Code, is amended by
adding after chapter 4 the following new chapter:
‘‘CHAPTER 5—INVENTION DEVELOPMENT
SERVICES
‘‘Sec.
‘‘51. Definitions.
‘‘52. Contracting requirements.
‘‘53. Standard provisions for cover notice.
‘‘54. Reports to customer required.
‘‘55. Mandatory contract terms.
‘‘56. Remedies.
‘‘57. Records of complaints.
‘‘58. Fraudulent representation by an invention developer.
‘‘59. Rule of construction.
‘‘§ 51. Definitions
‘‘For purposes of this chapter—
‘‘(1) the term ‘contract for invention development
services’ means a contract by which an invention de-
veloper undertakes invention development services for
a customer;
‘‘(2) the term ‘customer’ means any person, firm,
partnership, corporation, or other entity who is solic-
ited by, seeks the services of, or enters into a contract
with an invention promoter for invention promotion
services;
‘‘(3) the term ‘invention promoter’ means any
person, firm, partnership, corporation, or other entity
who offers to perform or performs for, or on behalf of,
a customer any act described under paragraph (4),
but does not include—
‘‘(A) any department or agency of the Fed-
eral Government or of a State or local govern-
ment;
‘‘(B) any nonprofit, charitable, scientific, or
educational organization, qualified under appli-
cable State law or described under section
170(b)(1)(A) of the Internal Revenue Code of
1986; or
‘‘(C) any person duly registered and in
good standing before the Patent and Trademark
Office acting within the scope of that person’s
registration to practice before the Patent and
Trademark Office; and
‘‘(4) the term ‘invention development services’
means, with respect to an invention by a customer,
any act involved in—
‘‘(A) evaluating the invention to determine
its protectability as some form of intellectual
property, other than evaluation by a person li-
censed by a State to practice law who is acting
solely within the scope of that person’s profes-
sional license;
‘‘(B) evaluating the invention to determine
its commercial potential by any person for pur-
poses other than providing venture capital; or
‘‘(C) marketing, brokering, licensing, sell-
ing, or promoting the invention or a product or
service in which the invention is incorporated or
used, except that the display only of an inven-
tion at a trade show or exhibit shall not be con-
sidered to be invention development services.
‘‘§ 52. Contracting requirements
‘‘(a) IN GENERAL.—(1) Every contract for invention
development services shall be in writing and shall be subject
to the provisions of this chapter. A copy of the signed writ-
ten contract shall be given to the customer at the time the
customer enters into the contract.
‘‘(2) If a contract is entered into for the benefit of a
third party, such party shall be considered a customer for
purposes of this chapter.
‘‘(b) REQUIREMENTS OF INVENTION DEVELOPER.—
The invention developer shall—
‘‘(1) state in a written document, at the time a
customer enters into a contract for invention develop-
ment services, whether the usual business practice 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 written
document together with a written summary of the
usual business practices of the invention developer,
including—
‘‘(A) the usual business terms of contracts;
and
‘‘(B) the approximate amount of the usual
fees or other consideration that may be required
from the customer for each of the services pro-
vided by the developer.
‘‘(c) RIGHT OF CUSTOMER TO CANCEL CONTRACT.—
(1) Notwithstanding any contractual provision to the con-
trary, a customer shall have the right to terminate a con-
tract for invention development services by sending a writ-
ten letter to the invention developer stating the customer’s
intent to cancel the contract. The letter of termination must
be deposited with the United States Postal Service on or
before 5 business days after the date upon which the cus-
tomer or the invention developer executes the contract,
whichever is later.
‘‘(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 in-
vention developer, without regard to the date or dates ap-
pearing in such instrument, shall be deemed payment re-
ceived by the invention developer on the date received for
purposes of this section.
‘‘§ 53. Standard provisions for cover notice
‘‘(a) CONTENTS.—Every contract for invention devel-
opment services shall have a conspicuous and legible cover
sheet attached with the following notice imprinted in bold-
face type of not less than 12-point size:
‘‘ ‘YOU HAVE THE RIGHT TO TERMINATE
THIS CONTRACT. TO TERMINATE THIS CON-
TRACT, YOU MUST SEND A WRITTEN LETTER
TO THE COMPANY STATING YOUR INTENT TO
CANCEL THIS CONTRACT. THE LETTER OF
TERMINATION MUST BE DEPOSITED WITH
THE UNITED STATES POSTAL SERVICE ON
OR BEFORE FIVE (5) BUSINESS DAYS AFTER
THE DATE ON WHICH YOU OR THE COMPANY
EXECUTE THE CONTRACT, WHICHEVER IS
LATER.
‘‘ ‘THE TOTAL NUMBER OF INVENTIONS
EVALUATED BY THE INVENTION DEVELOPER
FOR COMMERCIAL POTENTIAL IN THE PAST
FIVE (5) YEARS IS lllll. OF THAT NUM-
BER, lllll RECEIVED POSITIVE EVAL-
UATIONS AND lllll RECEIVED NEGA-
TIVE EVALUATIONS.
‘‘ ‘IF YOU ASSIGN EVEN A PARTIAL IN-
TEREST IN THE INVENTION TO THE INVEN-
TION DEVELOPER, THE INVENTION DEVEL-
OPER MAY HAVE THE RIGHT TO SELL OR
DISPOSE OF THE INVENTION WITHOUT YOUR
CONSENT AND MAY NOT HAVE TO SHARE
THE PROFITS WITH YOU.
‘‘ ‘THE TOTAL NUMBER OF CUSTOMERS
WHO HAVE CONTRACTED WITH THE INVEN-
TION DEVELOPER IN THE PAST FIVE (5)
YEARS IS lllll. THE TOTAL NUMBER
OF CUSTOMERS KNOWN BY THIS INVENTION
DEVELOPER TO HAVE RECEIVED, BY VIRTUE
OF THIS INVENTION DEVELOPER’S PER-
FORMANCE, AN AMOUNT OF MONEY IN EX-
CESS OF THE AMOUNT PAID BY THE CUS-
TOMER TO THIS INVENTION DEVELOPER IS
lllllll.
‘‘ ‘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 PRE-
VIOUS INVENTION DEVELOPMENT COMPA-
NIES WITH WHICH THE PRINCIPAL OFFI-
CERS HAVE BEEN AFFILIATED AS OWNERS,
AGENTS, OR EMPLOYEES). YOU ARE ENCOUR-
AGED TO CHECK WITH THE UNITED STATES
PATENT AND TRADEMARK OFFICE, THE FED-
ERAL TRADE COMMISSION, YOUR STATE AT-
TORNEY GENERAL’S OFFICE, AND THE BET-
TER BUSINESS BUREAU FOR ANY COM-
PLAINTS 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 AN
ATTORNEY REGISTERED TO PRACTICE BE-
FORE THE PATENT AND TRADEMARK OF-
FICE, YOU COULD LOSE ANY RIGHTS YOU
MIGHT HAVE IN YOUR IDEA OR INVENTION.’.
‘‘(b) OTHER REQUIREMENTS FOR COVER NOTICE.—
The cover notice shall contain the items required under sub-
section (a) and the name, primary office address, and local
office address of the invention developer, and may contain
no other matter.
‘‘(c) DISCLOSURE OF CERTAIN CUSTOMERS NOT RE-
QUIRED.—The requirement in the notice set forth in sub-
section (a) to include the ‘TOTAL NUMBER OF CUS-
TOMERS WHO HAVE CONTRACTED WITH THE IN-
VENTION DEVELOPER IN THE PAST FIVE (5)
YEARS’ need not include information with respect to cus-
tomers who have purchased trade show services, research,
advertising, or other nonmarketing services from the inven-
tion developer, nor with respect to customers who have de-
faulted in their payments to the invention developer.
‘‘§ 54. Reports to customer required
‘‘With respect to every contract for invention develop-
ment services, the invention developer shall deliver to the
customer at the address specified in the contract, at least
once every 3 months throughout the term of the contract,
a written report that identifies the contract and includes—
‘‘(1) a full, clear, and concise description of the
services performed to the date of the report and of the
services yet to be performed and names of all persons
who it is known will perform the services; and
‘‘(2) the name and address of each person, firm,
corporation, or other entity to whom the subject mat-
ter of the contract has been disclosed, the reason for
each such disclosure, the nature of the disclosure, and
complete and accurate summaries of all responses re-
ceived as a result of those disclosures.
‘‘§ 55. Mandatory contract terms
‘‘(a) MANDATORY TERMS.—Each contract for inven-
tion development services shall include in boldface type of
not less than 12-point size—