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S 2031 IS

To restore Federal remedies for infringements of intellectual property by States, and for other purposes.

March 19, 2002

Mr. LEAHY (for himself and Mr. BROWNBACK) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

To restore Federal remedies for infringements of intellectual property by States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES.

(a) SHORT TITLE- This Act may be cited as the `Intellectual Property Protection Restoration Act of 2002'.

(b) REFERENCES- Any reference in this Act to the Trademark Act of 1946 shall be a reference to the Act entitled `An Act to provide for the registration and protection of trade-marks used in commerce, to carry out the provisions of certain international conventions, and for other purposes', approved July 5, 1946 (15 U.S.C. 1051 et seq.).

SEC. 2. PURPOSES.

The purposes of this Act are to--

(1) help eliminate the unfair commercial advantage that States and their instrumentalities now hold in the Federal intellectual property system because of their ability to obtain protection under the United States patent, copyright, and trademark laws while remaining exempt from liability for infringing the rights of others;

(2) promote technological innovation and artistic creation in furtherance of the policies underlying Federal laws and international treaties relating to intellectual property;

(3) reaffirm the availability of prospective relief against State officials who are violating or who threaten to violate Federal intellectual property laws; and

(4) abrogate State sovereign immunity in cases where States or their instrumentalities, officers, or employees violate the United States Constitution by infringing Federal intellectual property.

SEC. 3. INTELLECTUAL PROPERTY REMEDIES EQUALIZATION.

(a) AMENDMENT TO PATENT LAW- Section 287 of title 35, United States Code, is amended by adding at the end the following:

`(d)(1) No remedies under section 284 or 289 shall be awarded in any civil action brought under this title for infringement of a patent issued on or after January 1, 2002, if a State or State instrumentality is or was at any time the legal or beneficial owner of such patent, except upon proof that--

`(A) on or before the date the infringement commenced or January 1, 2004, whichever is later, the State has waived its immunity, under the eleventh amendment of the United States Constitution and under any other doctrine of sovereign immunity, from suit in Federal court brought against the State or any of its instrumentalities, for any infringement of intellectual property protected under Federal law; and

`(B) such waiver was made in accordance with the constitution and laws of the State, and remains effective.

`(2) The limitation on remedies under paragraph (1) shall not apply with respect to a patent if--

`(A) the limitation would materially and adversely affect a legitimate contract-based expectation in existence before January 1, 2002; or

`(B) the party seeking remedies was a bona fide purchaser for value of the patent, and, at the time of the purchase, did not know and was reasonably without cause to believe that a State or State instrumentality was once the legal or beneficial owner of the patent.

`(3) The limitation on remedies under paragraph (1) may be raised at any point in a proceeding, through the conclusion of the action. If raised before January 1, 2004, the court may stay the proceeding for a reasonable time, but not later than January 1, 2004, to afford the State an opportunity to waive its immunity as provided in paragraph (1).'.

(b) AMENDMENT TO COPYRIGHT LAW- Section 504 of title 17, United States Code, is amended by adding at the end the following:

`(e) LIMITATION ON REMEDIES IN CERTAIN CASES-

`(1) No remedies under this section shall be awarded in any civil action brought under this title for infringement of an exclusive right in a work created on or after January 1, 2002, if a State or State

instrumentality is or was at any time the legal or beneficial owner of such right, except upon proof that--

`(A) on or before the date the infringement commenced or January 1, 2004, whichever is later, the State has waived its immunity, under the eleventh amendment of the United States Constitution and under any other doctrine of sovereign immunity, from suit in Federal court brought against the State or any of its instrumentalities, for any infringement of intellectual property protected under Federal law; and

`(B) such waiver was made in accordance with the constitution and laws of the State, and remains effective.

`(2) The limitation on remedies under paragraph (1) shall not apply with respect to an exclusive right if--

`(A) the limitation would materially and adversely affect a legitimate contract-based expectation in existence before January 1, 2002; or

`(B) the party seeking remedies was a bona fide purchaser for value of the exclusive

right, and, at the time of the purchase, did not know and was reasonably without cause to believe that a State or State instrumentality was once the legal or beneficial owner of the right.

`(3) The limitation on remedies under paragraph (1) may be raised at any point in a proceeding, through the conclusion of the action. If raised before January 1, 2004, the court may stay the proceeding for a reasonable time, but not later than January 1, 2004, to afford the State an opportunity to waive its immunity as provided in paragraph (1).'.

(c) AMENDMENT TO TRADEMARK LAW- Section 35 of the Trademark Act of 1946 (15 U.S.C. 1117) is amended by adding at the end the following:

`(e) LIMITATION ON REMEDIES IN CERTAIN CASES-

`(1) No remedies under this section shall be awarded in any civil action arising under this Act for a violation of any right of the registrant of a mark registered in the Patent and Trademark Office on or after January 1, 2002, or any right of the owner of a mark first used in commerce on or after January 1, 2002, if a State or State instrumentality is or was at any time the legal or beneficial owner of such right, except upon proof that--

`(A) on or before the date the violation commenced or January 1, 2004, whichever is later, the State has waived its immunity, under the eleventh amendment of the United States Constitution and under any other doctrine of sovereign immunity, from suit in Federal court brought against the State or any of its instrumentalities, for any infringement of intellectual property protected under Federal law; and

`(B) such waiver was made in accordance with the constitution and laws of the State, and remains effective.

`(2) The limitation on remedies under paragraph (1) shall not apply with respect to a right of the registrant or owner of a mark if--

`(A) the limitation would materially and adversely affect a legitimate contract-based expectation in existence before January 1, 2002; or

`(B) the party seeking remedies was a bona fide purchaser for value of the right, and, at the time of the purchase, did not know and was reasonably without cause to believe that a State or State instrumentality was once the legal or beneficial owner of the right.

`(3) The limitation on remedies under paragraph (1) may be raised at any point in a proceeding, through the conclusion of the action. If raised before January 1, 2004, the court may stay the proceeding for a reasonable time, but not later than January 1, 2004, to afford the State an opportunity to waive its immunity as provided in paragraph (1).'.

(d) TECHNICAL AND CONFORMING AMENDMENTS-

(1) AMENDMENTS TO PATENT LAW-

(A) IN GENERAL- Section 296 of title 35, United States Code, is repealed.

(B) TABLE OF SECTIONS- The table of sections for chapter 29 of title 35, United States Code, is amended by striking the item relating to section 296.

(2) AMENDMENTS TO COPYRIGHT LAW-

(A) IN GENERAL- Section 511 of title 17, United States Code, is repealed.

(B) TABLE OF SECTIONS- The table of sections for chapter 5 of title 17, United States Code, is amended by striking the item relating to section 511.

(3) AMENDMENTS TO TRADEMARK LAW- Section 40 of the Trademark Act of 1946 (15 U.S.C. 1122) is amended--

(A) by striking subsection (b);

(B) in subsection (c), by striking `or (b)' after `subsection (a)'; and

(C) by redesignating subsection (c) as subsection (b).

SEC. 4. CLARIFICATION OF REMEDIES AVAILABLE FOR STATUTORY VIOLATIONS BY STATE OFFICERS AND EMPLOYEES.

In any action against an officer or employee of a State or State instrumentality for any violation of any of the provisions of title 17 or 35, United States Code, the Trademark Act of 1946, or the Plant Variety Protection Act (7 U.S.C. 2321 et seq.), remedies shall be available against the officer or employee in the same manner and to the same extent as such remedies are available in an action against a private individual under like circumstances. Such remedies may include monetary damages assessed against the officer or employee, declaratory and injunctive relief, costs, attorney fees, and destruction of infringing articles, as provided under the applicable Federal statute.

SEC. 5. LIABILITY OF STATES FOR CONSTITUTIONAL VIOLATIONS INVOLVING INTELLECTUAL PROPERTY.

(a) DUE PROCESS VIOLATIONS- Any State or State instrumentality that violates any of the exclusive rights of a patent owner under title 35, United States Code, of a copyright owner, author, or owner of a mask work or original design under title 17, United States Code, of an owner or registrant of a mark used in commerce or registered in the Patent and Trademark Office under the Trademark Act of 1946, or of an owner of a protected plant variety under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.), in a manner that deprives any person of property in violation of the fourteenth amendment of the United States Constitution, shall be liable to the party injured in a civil action in Federal court for compensation for the harm caused by such violation.

(b) TAKINGS VIOLATIONS-

(1) IN GENERAL- Any State or State instrumentality that violates any of the exclusive rights of a patent owner under title 35, United States Code, of a copyright owner, author, or owner of a mask work or original design under title 17, United States Code, of an owner or registrant of a mark used in commerce or registered in the Patent and Trademark Office under the Trademark Act of 1946, or of an owner of a protected plant variety under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.), in a manner that takes property in violation of the fifth and fourteenth amendments of the United States Constitution, shall be liable to the party injured in a civil action in Federal court for compensation for the harm caused by such violation.

(2) EFFECT ON OTHER RELIEF- Nothing in this subsection shall prevent or affect the ability of a party to obtain declaratory or injunctive relief under section 4 of this Act or otherwise.

(c) COMPENSATION- Compensation under subsection (a) or (b)--

(1) may include actual damages, profits, statutory damages, interest, costs, expert witness fees, and attorney fees, as set forth in the appropriate provisions of title 17 or 35, United States Code, the Trademark Act of 1946, and the Plant Variety Protection Act; and

(2) may not include an award of treble or enhanced damages under section 284 of title 35, United States Code, section 504(d) of title 17, United States Code, section 35(b) of the Trademark Act of 1946 (15 U.S.C. 1117 (b)), and section 124(b) of the Plant Variety Protection Act (7 U.S.C. 2564(b)).

(d) BURDEN OF PROOF- In any action under subsection (a) or (b)--

(1) with respect to any matter that would have to be proved if the action were an action for infringement brought under the applicable Federal statute, the burden of proof shall be the same as if the action were brought under such statute; and

(2) with respect to all other matters, including whether the State provides an adequate remedy for any deprivation of property proved by the injured party under subsection (a), the burden of proof shall be upon the State or State instrumentality.

(e) EFFECTIVE DATE- This section shall apply to violations that occur on or after the date of enactment of this Act.

SEC. 6. RULES OF CONSTRUCTION.

(a) JURISDICTION- The district courts shall have original jurisdiction of any action arising under this Act under section 1338 of title 28, United States Code.

(b) BROAD CONSTRUCTION- This Act shall be construed in favor of a broad protection of intellectual property, to the maximum extent permitted by the United States Constitution.

(c) SEVERABILITY- If any provision of this Act or any application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this Act and the application of the provision to any other person or circumstance shall not be affected.

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