States, entering the United States temporarily or accidentally, shall not constitute infringement of any patent, if the invention is used exclusively for the needs of the vessel, aircraft or vehicle and is not sold in or used for the manufacture of anything to be sold in or exported from the United States.

Sec.

Chapter 29-Remedies for Infringement of Patent, and Other Actions

281. Remedy for infringement of patent.

282. Presumption of validity; defenses.

283. Injunction.

284. Damages.

285. Attorney fees.

286. Time limitation on damages.

287. Limitation on damages; marking and notice.

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

289. Additional remedy for infringement of design patent.

290. Notice of patent suits.

291. Priority of invention between patentees.

292. False marking.

293. Nonresident patentee, service and notice.

294. Arbitration.

Section 281.-Remedy for infringement of patent

A patentee shall have remedy by civil action for infringement of his patent. Section 282.-Presumption of validity; defenses

(a) A patent shall be presumed valid. Each claim of a patent (whether in independent or dependent form) shall be presumed valid independently of the validity of other claims; dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity. A party challenging the validity of a patent under this title has the burden of establishing invalidity of the claimed invention by clear and convincing evidence.

(b) The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

(1) Noninfringement, absence of liability for infringement or unenforceability,

(2) Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability: Provided, however, That the validity of a patent may not be questioned solely because of the existence of two or more patents where said patents will expire on the same date as a result of filing on the same date or as a result of a terminal disclaimer pursuant to section 253 of this title so long as the right to sue for infringement of said patents is maintained in the same legal entity,

(3) Invalidity of the patent or any claim in suit for failure to comply with any requirement of sections 112 or 251 of this title,

(4) Any other fact or act made a defense by this title.

(c) In actions involving the validity or infringement of a patent the party asserting invaldity or noninfringement shall give notice in the pleadings or otherwise in writing to the adverse party at least thirty days before the trial, of the country, number, date, and name of the patentee of any patent, the title, date, and page numbers of any publication to be relied upon as anticipation of the patent in suit or as showing the state of the art, and the name and address of any person who may be relied upon as the prior inventor or as having prior knowledge of or as having previously used or offered for sale the invention of the patent in suit. In the absence of such notice proof of the said matters may not be made at the trial except on such terms as the court requires.

Section 283.-Injunction

The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.

Section 284.-Damages

(a) Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

(b) When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed.

(c) The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

Section 285.-Attorney fees

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

Section 286.-Time limitation on damages

(a) Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.

(b) In the case of claims against the United States Government for use of a patented invention, the period before bringing suit, up to six years, between the date of receipt of a written claim for compensation by the department or agency of the Government having authority to settle such claim, and the date of mailing by the Government of a notice to the claimant that his claim has been denied shall not be counted as part of the period referred to in the preceding paragraph (a).

Section 287.-Limitation on damages; marking and notice

Patentees, and persons making or selling any patented article for or under them, may give notice to the public that the same is patented, either by fixing thereon the word "patent" or the abbreviation "pat.", together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

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

Whenever, without deceptive intention, a claim of a patent is invalid, an action may be maintained for the infringement of a claim of the patent which may be valid.

Section 289.-Additional remedy for infringement of design patent

(a) Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

(b) Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement. Section 290.-Notice of patent suits

The clerks of the courts of the United States, within one month after the filing of an action under this title shall give notice thereof in writing to the Commissioner, setting forth so far as known the names and addresses of the parties, name of the inventor, and the designating number of the patent upon which the action has been brought. If any other patent is subsequently included in the action he shall give like notice thereof. Within one month after the decision is rendered or a judgment issued the clerk of the court shall

give notice thereof to the Commissioner. The Commissioner shall, on receipt of such notices, enter the same in the file of such patent.

Section 291.-Priority of invention between patentees

(a) Whenever there are two patents naming different inventors and claiming the same or substantially the same subject matter, the owner of one of the patents may have relief against the owner of the other by civil action and the court may adjudge the question of the validity of any of such patents, in whole or in part. A final judgment in such action adverse to a patentee from which no appeal or other review has been or can be taken or had shall constitute cancellation of the claims involved from the patent, and notice thereof shall be endorsed on copies of the patent thereafter and distributed by the Patent Office.

(b) Such suit may be instituted against the party in interest as shown by the records of the Patent Office, but any party in interest may become a party to the action. If there be adverse parties residing in a plurality of districts not embraced within the same state, or an adverse party residing in a foreign country, the United States District Court for the District of Columbia shall have jurisdiction and may issue summons against the adverse parties directed to the marshal of any district in which any adverse party resides. Summons against adverse parties residing in foreign countries may be served by publication or otherwise as the court directs. The Commissioner shall not be made a party but he shall be notified of the filing of the suit by the clerk of the court in which it is filed and shall have the right to intervene. Section 292.-False marking

(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, or sold by him, the name or any imitation of the name of the patentee, the patent number, or the words "patent", "patentee", or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made or sold by or with the consent of the patentee; or

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent" or any word or numberr importing that the same is patented, for the purpose of deceiving the public; or

Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words "patent applied for," "patent pending", or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public

Shall be fined not more than $500 for every such offense.

(b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

Section 293.—Nonresident patentee; service and notice

Every patentee not residing in the United States may file in the Patent Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court. Section 294.-Arbitration

A written provision in any agreement or contract to settle by arbitration any controversy thereafter arising out of such contract or agreement in respect to the infringement or validity of any patent involved in said contract or agreement, or an agreement in writing to settle by arbitration an existing controversy in respect to the infringement or validity of any patent, shall be valid, irrevocable, and enforceable, except for any grounds as exist at law or in equity for the revocation of any contract. Arbitration of such controversies, awards, and confirmation of awards shall be governed by Title 9, United States Code. In any such arbitration, the defenses provided for under Section 282 of this title shall be considered by the arbitrator.

Chapter 30-Preservation of Other Rights

Section 301.-Preservation of other rights; non-preemption

This title shall not be construed to preempt rights or obligations not arising by operation of this title whether arising by operation of State or Federal law of contracts, of confidential or proprietary information, of trade secrets, of unfair competition.

STATEMENT OF C. MARSHALL DANN, PRESIDENT, AMERICAN PATENT LAW ASSOCIATION; ACCOMPANIED BY JOHN T. KELTON, PRESIDENT-ELECT, AMERICAN PATENT LAW ASSOCIATION

Mr. DANN. We are pleased to have this chance to comment on these provisions of S. 1321.

Our association has not recently taken a position expressly on any of the five topics that these hearings are directed to, but in approving this proposed version of a general patent revision bill, we obviously have expressed preferences, and in that sense we can be said to have taken positions.

Of the five subjects, we have expressed ourselves in favor of a limited adversary examination proceeding. In the other four topics, our preferences have been the other way, that is, they are not in accord with S. 1321.

We feel very strongly that the incentives of the patent system are badly needed to help solve some of the nation's most critical problems. Anything that makes it more burdensome and more costly to obtain patents is going to reduce the incentives to invent, to disclose, to develop inventions and to commercialize them, and in our opinion, the Nation will be the loser. This goes both for individual inventors and for inventions made by corporate employees.

So this is our basic criterion for judging any proposed changes in the patent laws; what will they do to the incentives that the system is supposed to provide?

Now to the individual topics, first, adversary proceedings during examination. In our proposed bill we have not provided for any opposition or reexamination prior to the issue of a patent, but we have included provision for reexamination after issuance. We very definitely favor providing an opportunity for members of the public to come in with prior art or other information that may show that the invention is not patentable. We are in favor of weeding out undeserving patents. On the other hand, it seems to us that a minimum of chances for harassment of inventors will occur if this is deferred until after the patent has issued.

Our concern with the procedures set forth in section 135 of S. 1321 includes the added expense that will be involved in printing first the application and then the issued patent.

Another concern is what seems to us a very considerable exposure of the applicant to harassment with extensive discovery and fullblown interpartes proceedings, particularly if this occurs before there has been any sort of an examination that gives the applicant a reasonable prospect that his application will materialize into a patent. Then we also are concerned about the lengthy delays in issuance which could occur if a number of persons chose to come in and intervene or oppose prior to issuance.

If it is decided to adopt adversary examination proceedings prior to issue, we would strongly urge that this not take place until there has been an indication of allowability; also that the term of the patent should not be shortened as a result of the time used during the adversary proceeding, which could be lengthy.

It seems to us desirable to defer the re-examination at least that long, both from the standpoint of the inventor and also from the standpoint of the public. I think the public is not well served by having a flood of applications published which have not been sifted or winnowed in any way, to get them down to the scope that may ultimately emerge as a patent.

It occurs to us that if there is to be re-examination it would be quite desirable to have it performed by some person other than the original examiner. It seems to us that this might give extra objectivity.

Now, turning to the proposal of have a public counsel, we readily agree that patents should not be issued on unpatentable inventions, but we do have some problem in seeing just how the public counsel would materially affect this.

I want to stress that our problem is with the practicality of the proposal rather than the principle. If the public counsel is to do a thorough, independent job of checking the allowability of applications, he is obviously going to need a large staff which would more or less duplicate that of the regular examining corps. Also, some of the duties that are given the public counsel in S. 1321 are already performed by someone in the Patent Office. Thus, the Patent Office solicitor and the law examiner represent the Patent Office in all appeals and contested cases. The commissioner already carries on a quality control program, which could be more effective if he had more funds available for this purpose.

We do not quite see how the public counsel and his staff would know when to intervene in a pending application. There would seem to be the possibility that the regular examining corps would feel somewhat downgraded, and perhaps have its morale affected by what in essence is a new and different supervisory examining

corps.

So overall we tend to think that more could be accomplished by expending the money that the public counsel would use in strengthening the examining staff and the present quality control program.

Now turning to deferred examination, we have not made any provision in our bill for this, although obviously it would be worthwhile not having to examine applications which are clearly unpatentable, or that are of no interest to the applicant. But we think there are distinct disadvantages to deferred examination. One of the critical features of it is the necessity to publish the application at an early stage before there has been any indication that it may be allowable. We think this tends to be unfair to the applicant, and will make some inventors keep their inventions secret rather than file on them.

Also, I think there would be an adverse effect on people in industry who might use these inventions. During the period of deferral, there is obviously uncertainty as to what patents may finally be issued and what scope of claims they may have. It seems to us more desirable to proceed expeditiously with examination so that everyone knows what is patented and what is not.