the court said "Bolar's intended 'experimental' use is solely

for business reasons and not for amusement, to satisfy

curiosity, or for strictly philosophical inquiry" and found that Bolar had infringed the Roche patent.

One of the most fundamental principles of patent law is that "whoever without authority makes, uses, or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent." (35 USC 271(a)). We oppose compromising this important principle without a demonstrated compelling reason to do so. We recognize that this is one part of a bill where circumstances require that Congress balance the equities of a number of competing interests. If the Subcommittee determines that an exception to the principles of patent infringement must be made, we would urge that any such amendment be very carefully considered and drafted.

H.R. 4526

This bill corrects two anomolies in the patent law which weaken the ability of American patent owners to compete in international markets. While these two amendments have implications involving export and import trade, both only affect domestic patent rights. U. S. patents only confer rights within the United States.

Process Patent Rights

Many U. S. patents cover processes for making a product. Under those patents, the patentee has the right to exclude

others from using the patented process in the U. S. A process patent owner can benefit from his invention by using it himself to make and sell a product or by licensing others to do so.

If a patent owner could obtain a patent on the product produced by a process, the protection afforded by this bill would be unnecessary because the patent owner could then sue for infringement of the product claims of the patent.

However,

in many cases, particularly involving chemicals, a patent cannot be obtained on the chemical or product as such because the product or chemical occurs in nature or is otherwise old and therefore is not patentable under 35 U.S.C. $102. However, the naturally occurring or old product is frequently not economically obtainable or it cannot be practically or competitively made using old processes.

For that reason, the

process which is new and patentable is the only practical and competitive way to make the product available to the public. Therefore, the process patent protects a new practical way to obtain the product so that the product is available to the public on a commercial basis.

To evade the process patent owner's rights, unscrupulous persons may now use the protected process outside of the U. S. and import the resulting product into this country. This practice unfairly undercuts American inventors' rights and promotes unfair foreign competition in domestic U. S. markets.

This activity now constitutes an unfair method of competition within the scope of the Tariff Act [19 U.S.C. $1337 (a)). However this cause of action before the International Trade Commission is of limited use to aggrieved process patent owners. Not only must patent infringement be proved, but also the Commission must determine that the importation tends to "destroy or substantially injure an industry in the United States" (19 U.S.C. $1337).

In

Also, an Executive Order of exclusion must be obtained. addition, the patent owner can only obtain this order of exclusion, and cannot obtain damages for past infringement.

The patent laws of the other industrialized countries do not permit this type of evasion of process patent owner's rights. Foreign manufacturers are protected and American manufacturers are not. Finally, we note that this change in U. S. law was recommended by President Johnson's Commission on the Patent System in 1966.

We recommend that two amendments be made to H.R. 4526 regarding process patent rights. The first amendment is to insert on page one, line 7 of the bill, after the words "United States" the words "during the term of the patent therefor" and strike out the words beginning on line 8 ", if the product is made during the term of such process patent". The infringing acts in this new section are the importing into or sale or use within the United States of a product made by the process patented in the U. s. The amendment makes clear

that the infringing acts must occur in the U. S. during the

term of the U. S. patent being infringed.

The second amendment is to strike Section 2 of the bill

and insert the following:

Sec. 2. Section 287 of title 35, United States Code is amended by adding at the end thereof the following new subsection:

"(b) No damages shall be recovered by the patentee for infringment under section 271(e) of this title from an infringer who did not use the patented process except on proof that such 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."

This new language does not change the effect of existing Section 2 of the bill but rather clarifies it. Section 286 of title 35 provides that damages for patent infringement may be recovered for a period of six years prior to filing of the complaint or counterclaim for infringement. The law in Section 287 provides a means for giving notice to the public that a product is protected by a patent. This form of public notice is met by affixing the word "patent" or "pat." and the patent number to the product, its package, or its label. If the patentee fails to mark, damages for infringement may be recovered only after the infringing party has received actual notice of infringement. Damages are limited to infringing activity occurring after the notice. However, the law is equally clear that failure to mark does not limit damages for infringement of a process patent. The amendment we propose

takes into account these two principles and will have the following effect. If the party manufacturing the product abroad by use of the patented U. S. process is also the importer, seller, or user of the product within the U. S., no limitation on liability for infringement will apply. That party is treated as to notice in the same way as the party would be if the process was infringed by the party within the United States. However, if a party is committing the infringing acts and is dealing at arm's length with the manu

facturer of the product, it would be unfair not to limit liability for infringement.

Such a party must be put "on

notice" and liability for damages will attach only after the date of notice. The notice required will be actual notice according to the terms and interpretations of existing Section 287 in a nonmarking situation.

Product Patent Rights

The Supreme Court in a 5 to 4 decision in Deepsouth Packing v. Laitram Corporation, 406 U.S. 518 (1972) created what amounts to a "loophole" in the patent law, which the Court said must be corrected by Congress. While many legal commentators believe the case was wrongly decided [e.g.,

"Operable Versus Substantial Assembly of Patented Combinations: A Critique of Deepsouth v. Laitram," Charles Kerr, 26 Stanford Law Review 893 (1974)], the precedent stands.