This document is from the collections at the Dole Archives, University of Kansas http://dolearchives.ku.edu United States Senate COMMITTEE ON THE JUDICIARY WASHINGTON, DC 20510 STROM THURMOND, SOUTH CAROLINA, CHAIRMAN CHARLES McC. MATHIAS, JR., MARYLAND PAUL LAXALT, NEVADA ORRIN G. HATCH, UTAH ALAN K. SIMPSON, WYOMING JOHN P. EAST, NORTH CAROLINA CHARLES E. GRASSLEY, IOWA JEREMIAH DENTON, ALABAMA ARLEN SPECTER, PENNSYLVANIA MITCH MCCONNELL, KENTUCKY JOSEPH R. BIDEN, JR., DELAWARE EDWARD M. KENNEDY, MASSACHUSETTS ROBERT C. BYRD, WEST VIRGINIA HOWARD M. METZENBAUM, OHIO DENNIS DECONCINI, ARIZONA PATRICK J. LEAHY, VERMONT HOWELL HEFLIN, ALABAMA PAUL SIMON, ILLINOIS DENNIS W. SHEDD, CHIEF COUNSEL AND STAFF DIRECTOR DEBORAH K. OWEN, GENERAL COUNSEL DEBORAH G. BERNSTEIN, CHIEF CLERK MARK H. GITENSTEIN, MINORITY CHIEF COUNSEL SUBCOMMITTEE ON PATENTS, COPYRIGHTS AND TRADEMARKS CHARLES McC. MATHIAS, JR., MARYLAND, CHAIRMAN PAUL LAXALT, NEVADA ORRIN G. HATCH, UTAH ALAN K. SIMPSON, WYOMING PATRICK J. LEAHY, VERMONT HOWARD M. METZENBAUM, OHIO DENNIS DECONCINI, ARIZONA RALPH OMAN, CHIEF COUNSEL STEVEN J. METALITZ, STAFF DIRECTOR June 25, 1985 (handwritten) John G. Dear Senator: Shortly after the July 4th recess, we plan to introduce a bill to help protect U.S. inventors from unfair competition by copycats overseas. It would plug a loophole that now allows a foreign company to pirate certain types of American patents and then sell its product in the United States. The patent laws allow inventors to stop other people from using their patented inventions and to receive damages for any economic harm caused by infringement. This limited exclusivity is the primary incentive we provide to inventors, and, in the words of Lincoln, it " ... adds the fuel of interest to the fire of genius." Today, inventors can obtain two basic kinds of patents: product patents and process patents. The first protects a product, like a machine, an electronic device, or a pharmaceutical drug. The second kind of patent protects a process by which a product is made, usually a complex biotechnological, chemical or industrial process. However, current patent law only provides a remedy when unauthorized manufacture, use or sale of a patented invention occurs in the United States. When a U.S. patented product is copied abroad, patent infringement occurs when the product is used or sold in the United States. When a U.S. patented process is copied abroad, infringement under U.S. law never occurs, even if the resulting product is used or sold in the United States. Our bill would make it a violation of U.S. patent law to import into, or to use or sell in the United States a product made overseas using a U.S. patented process. The bill would bring U.S. law into line with that of our major industrial trading partners. Recently, the President's Commission on Industrial Competitive- ness included process patent reform high on its list of legislative proposals. Maintaining the U.S. edge in world technology-based industries depends on maintaining protection against the pirating of U.S. inventions. In 1982, the International Trade Commission estimated that infringement of U.S. intellectual property cost the nation's businesses $5.5 billion in annual sales, and cost Americans 131,000 jobs in just five selected industrial sectors. lead_223_006_001_A1b.pdf Page 1 of 4 This document is from the collections at the Dole Archives, University of Kansas http://dolearchives.ku.edu Process Patents June 25, 1985 Page Two A provision similar to our process patent bill was included in the Patent Law Reform bill, which the Senate Judiciary Committee favorably reported last year without a dissenting vote. Process patent provisions also were part of the companion House bill, H.R. 6286, which passed the House overwhelmingly. Our legislation is supported by the Intellectual Property Owners, the Industrial Biotechnology Association, the Pharmaceutical Manufacturers Association, the Electronics Industries Association, the American Flint Glass Workers Union, and many other organizations. The only concerns raised about the bill that we are aware of have been those of the generic pharmaceutical industry. The industry, which relies upon foreign suppliers for some of its drug ingredients, fears that improved process patent protection might cause these sources of supply to dry up. We have given these concerns careful consideration. While we stand by the principle that manufacturers should be responsible for determining whether their suppliers violate U.S. process patents, we have made an effort in the bill to minimize the disruption of ongoing businesses. We have drafted the bill to apply only to products made with U.S. patented processes that are imported after the date of enactment. We also have included a provision that would grandfather certain existing supply arrangements for the duration of the contract. Therefore, certain of the raw materials that the generic companies now import under current contracts can continue to come into this country, even if made with the U.S. patented process. Finally, to make sure this change in the law has no unforeseen adverse effect, the bill would require the Department of Commerce to submit annual reports to Congress examining the impact of the bill on the supplies of affected domestic industries. These provisions should address legitimate concerns without undermining the effort to cure a significant weakness in U.S. intellectual property right protection. We enclose a draft of the bill that we will introduce next month. Please let us know if you would like to cosponsor. For further information, feel free to call us or have a member of your staff call Ralph Oman at 224-5617 or Mitchel Ostrer at 224-9713. With best wishes, Sincerely, [signature] Frank R. Lautenberg United States Senator [signature] Charles McC. Mathias, Jr. United States Senator lead_223_006_001_A1b.pdf Page 2 of 4 This document is from the collections at the Dole Archives, University of Kansas http://dolearchives.ku.edu 1st SESSION S. (blank) ber, and reference of bill.) 6/21/85 DRAFT IN THE SENATE OF THE UNITED STATES Mr. MATHIAS (for himself, Mr. LAUTENBERG, etc.) introduced the following bill; which was read twice and referred to the Committee on (blank) A BILL To protect patent owners from importation into the United States of goods made overseas by use of a United States patented process. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Process Patent Amendment of 1985". 3 SEC. 2. (a) Section 154 of title 35, United States Code, 4 is amended by inserting after "United States, " the following: 5 "and, if the invention is a process, of the right to exclude 6 others from using or selling products produced thereby 7 throughout, or importing products produced thereby into, the 8 United States,". 9 (b) Section 271 of title 35, United States Code, is 10 amended by- 11 (1) inserting "(1)" after "(a)"; 12 (2) adding at the end of subsection (a), the follow- 13 ing: 14 "(2) If the patented invention is a process, whoever 15 without authority uses or sells within, or imports into, the 16 United States during the term of the patent therefor a prod- 17 uct produced by such process infringes the patent."; and lead_223_006_001_A1b.pdf Page 3 of 4 This document is from the collections at the Dole Archives, University of Kansas http://dolearchives.ku.edu DRAFT 1 (c) Section 287 of title 35, United States Code, is 2 amended by- 3 (1) inserting "(a)" before "Patentees,"; and 4 (2) adding a the end thereof the following new 5 subsection: 6 "(b) No damages shall be recovered by the patentee for 7 infringement under section 271(a)(2) of this title from an 8 infringer who did not use the patented process except on proof 9 that such infringer knew of or was notified of the infringe- 10 ment and continued to infringe thereafter, in which event 11 damages may be recovered only for infringement occurring 12 after such knowledge or notice. Filing of an action for in- 13 fringement shall constitute such notice.". 14. SEC. 3. This Act shall apply only to products produced 15. or imported after the date of enactment. This Act shall 16. not abridge or affect the right of any persons or their 17. successors in business to continue to make, use, sell or 18. import any specific product already in substantial and 18. continuous commercial production on July , 1985, [dt. of intro.] 19. or for which substantial preparation for production was made 20. before that date, to the extent equitable for the protection 21. of investments made or business commenced before that date. 22. This Act shall not deprive a patent owner of any other 23. remedies available under 35 U.S.C. 271, 19 U.S.C. 1337, or 24. any other statutory provision. 25. SEC. 4 For five years after the date of enactment, the 26. Department of Commerce shall report annually to Congress 27. on the effect of this Act on the importation of ingredients 28. to be used for manufacturing products in the United States 29. in those domestic industries that submit formal complaints 30. to the Department alleging that their legitimate sources 31. of supply have been adversely affected. lead_223_006_001_A1b.pdf Page 4 of 4