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Executive Summary

PROCESS PATENT LEGISLATION NEEDED TO PROVIDE MONETARY AWARDS to U.S. patent owners whose processes are used overseas to manufacture products imported into the U.S., Intellectual Property Owners Inc. President Donald Banner testified at an April 26 hearing before the House Judiciary/Courts Subcmte. "Although the Tariff Act already makes it a potential unfair method of competition to import a product made abroad by a patented process, the Tariff Act's remedies are limited" in that the law "does not give monetary relief, but only exclusion orders preventing importation," Banner said. "Patent owners may incur millions of dollars in damages from unfair imports before an exclusion order may be obtained," he explained. Three bills pending in the House -- HR 3577, HR 4526, and HR 4816 -- "eliminate loopholes in existing patent law" by making "it infringement to market in the U.S. a product manufactured abroad using a process patented in the U.S.," Banner noted. A similar provision is contained in a Senate bill, Sen. Mathias' (R-Md.) S 1535. "The remedies available to the patent owner through this provision would strengthen the patent system for the benefit of U.S. patent owners" and are "in the best interest of U.S. mfrs. and U.S. workers." The bills "would put a stop to foreign mfrs.' taking a free ride on the R&D expeditures of U.S. companies [and] would be helpful in providing employment in this country," he said. The "Patent Invention Protection Act" (HR 4814), the most recent process patent bill, was introduced by Rep. Albosta (D-Mich.) in February ("The Pink Sheet" March 5, T&G-4). Banner noted that the U.S. Trade Representative "has expressed concern" that the three pending bills might violate the General Agreement on Tariffs and Trade by discriminating against foreign made products. This concern could be addressed by "broadening of the legislation to cover use or sale of products manufactured in the U.S. by a process patent," he suggested. He added that HR 4814 could mollify the Trade Representative's concern simply "by deleting the phrase "in another country.'"

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