[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1450 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 1450
To promote the competitiveness of American businesses by reducing the
national debt to lower the cost of capital, providing tax incentives to
further enhance private capital formation, modernizing antitrust law to
remove barriers to cooperative enterprise, instituting civil justice
reform to reduce litigious burdens, and reviewing new Federal
regulations to prevent unintended effects, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 24, 1993
Mr. Walker (for himself, Mr. Gingrich, Mr. Armey, Mr. McCollum, Mr.
DeLay, Mr. Hyde, Mr. Hunter, Mr. Paxon, Mr. Burton of Indiana, Mr.
Lewis of Florida, Mr. Sensenbrenner, Mr. Henry, Mr. Fawell, Mr.
Rohrabacher, Mr. Barton of Texas, Mr. Zimmer, Mr. Sam Johnson of Texas,
Mr. Calvert, Mr. Hoke, Mr. Smith of Michigan, Mr. Royce, Mr. Grams, Mr.
Linder, Mr. Blute, Ms. Dunn, Mr. Baker of California, and Mr. Bartlett
of Maryland) introduced the following bill; which was referred jointly
to the Committees on Ways and Means, the Judiciary, Energy and
Commerce, Science, Space, and Technology, Education and Labor, and
Government Operations
_______________________________________________________________________
A BILL
To promote the competitiveness of American businesses by reducing the
national debt to lower the cost of capital, providing tax incentives to
further enhance private capital formation, modernizing antitrust law to
remove barriers to cooperative enterprise, instituting civil justice
reform to reduce litigious burdens, and reviewing new Federal
regulations to prevent unintended effects, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Fundamental
Competitiveness Act of 1993''.
(b) Table of Contents.--
Sec. 1. Short title.
Sec. 2. Findings.
TITLE I--PUBLIC DEBT REDUCTION
Sec. 101. Designation of amounts for reduction of public debt.
Sec. 102. Public debt reduction trust fund.
Sec. 103. Taxpayer-generated sequestration of Federal spending to
reduce the public debt.
TITLE II--CAPITAL FORMATION
Sec. 201. Findings.
Sec. 202. Research credit improvement.
Sec. 203. Variable capital gains.
Sec. 204. Capital gains exclusion for startup business stock.
Sec. 205. Indexing of certain capital assets.
Sec. 206. Corporate debt-equity equalization.
Sec. 207. Charitable deduction for corporate contributions of employee
services to educational organizations.
Sec. 208. Investment credit for new manufacturing and other production
equipment.
Sec. 209. Increase in limitation based on amount of tax.
Sec. 210. Special treatment for losses on investment in manufacturing
facilities.
Sec. 211. Exemption of certain interest and dividend income from tax.
Sec. 212. Ordinary-loss treatment for losses on investments in startup
companies.
TITLE III--COOPERATIVE ENTERPRISE
Sec. 301. Findings.
Sec. 302. Merger analysis.
Sec. 303. Joint production.
TITLE IV--BUSINESS LIABILITY REFORM
Subtitle A--Findings
Sec. 401. Findings.
Subtitle B--Professionals' Liability Reform
Sec. 411. Short title.
Sec. 412. Purpose.
Sec. 413. Scope and preemption.
Sec. 414. Description of professional liability standards.
Sec. 415. Formation of risk management programs.
Sec. 416. Definitions.
Subtitle C--Product Liability Fairness
Part I--General Provisions
Sec. 421. Short title.
Sec. 422. Definitions.
Sec. 423. Preemption.
Sec. 424. Jurisdiction of Federal courts.
Sec. 425. Effective date.
Part II--Out of Court Procedures
Sec. 431. Expedited product liability settlements.
Sec. 432. Alternative dispute resolution procedures.
Part III--Court Procedures
Sec. 441. Civil actions.
Sec. 442. Uniform standards of product seller liability.
Sec. 443. Uniform standards for award of punitive damages.
Sec. 444. Uniform time limitations on liability.
Sec. 445. Uniform standards for offset of workers' compensation
benefits.
Sec. 446. Several liability for noneconomic damages.
Sec. 447. Defenses involving intoxicating alcohol or drugs.
TITLE V--REGULATORY REVIEW
Sec. 501. Findings.
Sec. 502. Competitiveness risk assessment.
TITLE VI--TOTAL QUALITY MANAGEMENT
Sec. 601. Formation and use of quality circles and joint production
teams.
TITLE VII--LONG-TERM INVESTMENT
Sec. 701. Short title.
Sec. 702. Findings.
Sec. 703. Elimination of quarterly reports.
TITLE VIII--AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION
ACT OF 1980
Sec. 801. Amendment to Stevenson-Wydler Technology Innovation Act of
1980.
Sec. 802. Copyright for software.
Sec. 803. Royalty payments to authors.
Sec. 804. Technical and conforming amendments.
SEC. 2. FINDINGS.
The Congress finds that--
(1) the ability of United States companies to develop,
produce, and market new products and services is second to none
when on an equal footing with the competition;
(2) however, United States companies are not on such a
footing due in large part to competitive disadvantages imposed
by government;
(3) therefore, the Federal Government should fuel the
engine of the United States private sector by freeing it from
the tax, regulatory, and other legal burdens imposed on it;
(4) the Federal Government should focus on long-term
competitiveness and job creation by reexamining those
provisions of law and regulation which are anticompetitive in
nature;
(5) the Federal Government can best promote United States
competitiveness by fostering a healthy business climate and by
reducing the Federal budget deficit which will free up capital
for private use and reduce its cost;
(6) targeting large sums of taxpayer money to aid specific
United States industries will further erode our competitiveness
by increasing our national debt and removing the inherent
efficiency of the marketplace; and
(7) our main economic competitors spend few government
resources to aid specific sectors of their economies, but
instead remove barriers and disincentives to savings,
investment, production, and economic activity.
TITLE I--PUBLIC DEBT REDUCTION
SEC. 101. DESIGNATION OF AMOUNTS FOR REDUCTION OF PUBLIC DEBT.
(a) In General.--Subchapter A of chapter 61 of the Internal Revenue
Code of 1986 (relating to returns and records) is amended by adding at
the end the following new part:
``PART IX--DESIGNATION FOR REDUCTION OF PUBLIC DEBT.
``Sec. 6097. Designation.
``SEC. 6097. DESIGNATION.
``(a) In General.--Every individual with adjusted income tax
liability for any taxable year may designate that a portion of such
liability (not to exceed 10 percent thereof) shall be used to reduce
the public debt.
``(b) Manner and Time of Designation.--A designation under
subsection (a) may be made with respect to any taxable year only at the
time of filing the return of tax imposed by chapter 1 for the taxable
year. The designation shall be made on the first page of the return or
on the page bearing the taxpayer's signature.
``(c) Adjusted Income Tax Liability.--For purposes of this section,
the term `adjusted income tax liability' means income tax liability (as
defined in section 6096(b)) reduced by any amount designated under
section 6096 (relating to designation of income tax payments to
Presidential Election Campaign Fund).''
(b) Clerical Amendment.--The table of parts for such subchapter A
is amended by adding at the end the following new item:
``Part IX. Designation for reduction of
public debt.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 102. PUBLIC DEBT REDUCTION TRUST FUND.
(a) In General.--Subchapter A of chapter 98 of the Internal Revenue
Code of 1986 (relating to trust fund code) is amended by adding at the
end the following section:
``SEC. 9512. PUBLIC DEBT REDUCTION TRUST FUND.
``(a) Creation of Trust Fund.--There is established in the Treasury
of the United States a trust fund to be known as the `Public Debt
Reduction Trust Fund', consisting of any amount appropriated or
credited to the Trust Fund as provided in this section or section
9602(b).
``(b) Transfers to Trust Fund.--There are hereby appropriated to
the Public Debt Reduction Trust Fund amounts equivalent to the amounts
designated under section 6097 (relating to designation for public debt
reduction).
``(c) Expenditures.--Amounts in the Public Debt Reduction Trust
Fund shall be available only for purposes of paying at maturity, or to
redeem or buy before maturity, any obligation of the Federal Government
included in the public debt. Any obligation which is paid, redeemed, or
bought with amounts from such Trust Fund shall be canceled and retired
and may not be reissued.''
(b) Clerical Amendment.--The table of sections for such subchapter
is amended by adding at the end the following new item:
``Sec. 9512. Public Debt Reduction Trust
Fund.''
(c) Effective Date.--The amendments made by this section shall
apply to amounts received after the date of the enactment of this Act.
SEC. 103. TAXPAYER-GENERATED SEQUESTRATION OF FEDERAL SPENDING TO
REDUCE THE PUBLIC DEBT.
(a) Sequestration To Reduce the Public Debt.--Part C of the
Balanced Budget and Emergency Deficit Control Act of 1985 is amended by
adding after section 253 the following new section:
``SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC DEBT.
``(a) Sequestration.--Notwithstanding sections 255 and 256, within
15 days after Congress adjourns to end a session, and on the same day
as sequestration (if any) under sections 251, 252, and 253, but after
any sequestration required by those sections, there shall be a
sequestration equivalent to the estimated aggregate amount designated
under section 6097 of the Internal Revenue Code of 1986 for the last
taxable year ending before the beginning of that session of Congress,
as estimated by the Department of the Treasury on May 1 and as modified
by the total of (1) any amounts by which net discretionary spending is
reduced by legislation below the discretionary spending limits (or, in
the absence of such limits, any net deficit change from the baseline
amount calculated under section 257, except that such baseline for
fiscal year 1996 and thereafter shall be based upon fiscal year 1995
enacted appropriations less any 1995 sequesters) and (2) the net
deficit change that has resulted from direct spending legislation.
``(b) Applicability.--
``(1) In general.--Except as provided by paragraph (2),
each account of the United States shall be reduced by a dollar
amount calculated by multiplying the level of budgetary
resources in that account at that time by the uniform
percentage necessary to carry out subsection (a). All
obligational authority reduced under this section shall be done
in a manner that makes such reductions permanent.
``(2) Exempt accounts.--No order issued under this part
may--
``(A) reduce benefits payable the old-age,
survivors, and disability insurance program established
under title II of the Social Security Act;
``(B) reduce payments for net interest (all of
major functional category 900); or
``(C) make any reduction in the following accounts:
``Federal Deposit Insurance Corporation,
Bank Insurance Fund;
``Federal Deposit Insurance Corporation,
FSLIC Resolution Fund;
``Federal Deposit Insurance Corporation,
Savings Association Insurance Fund;
``National Credit Union Administration,
credit union share insurance fund; or
``Resolution Trust Corporation.''.
(b) Reports.--Section 254 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended--
(1) in subsection (a), by inserting before the item
relating to August 10 the following:
``May 1. . . Department of Treasury report to Congress estimating
amount of income tax designated pursuant to section 6097 of the
Internal Revenue Code of 1986.'';
(2) in subsection (d)(1), by inserting ``, and
sequestration to reduce the public debt,'';
(3) in subsection (d), by redesignating paragraph (5) as
paragraph (6) and by inserting after paragraph (4) the
following new paragraph:
``(5) Sequestration to reduce the public debt reports.--The
preview reports shall set forth for the budget year estimates
for each of the following:
``(A) The aggregate amount designated under section
6097 of the Internal Revenue Code of 1986 for the last
taxable year ending before the budget year.
``(B) The amount of reductions required under
section 253A and the deficit remaining after those
reductions have been made.
``(C) The sequestration percentage necessary to
achieve the required reduction in accounts under
section 253A(b).''; and
(4) in subsection (g), by redesignating paragraphs (4) and
(5) as paragraphs (5) and (6), respectively, and by inserting
after paragraph (3) the following new paragraph:
``(4) Sequestration to reduce the public debt reports.--The
final reports shall contain all of the information contained in
the public debt taxation designation report required on May
1.''.
(c) Effective Date.--Notwithstanding section 275(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985, the expiration date
set forth in that section shall not apply to the amendments made by
this section. The amendments made by this section shall cease to have
any effect after the first fiscal year during which there is no public
debt.
TITLE II--CAPITAL FORMATION
SEC. 201. FINDINGS.
The Congress finds that--
(1) competitiveness studies consistently show that the
United States business sector needs to have access to greater
amounts of capital at low cost;
(2) capital formation is a goal that should be fostered by
the United States Government;
(3) our main economic competitors encourage capital
formation by low rates of taxation on capital gains and savings
and investment; and
(4) lowering tax rates in the United States on capital
gains and savings and investment will make our country more
competitive internationally.
SEC. 202. RESEARCH CREDIT IMPROVEMENT.
(a) Alternative Credit Calculation Based on Aggregate Research
Expenses.--
(1) In general.--Subsection (a) of section 41 of the
Internal Revenue Code of 1986 (relating to general rule) is
amended to read as follows:
``(a) General Rule.--For purposes of section 38, the research
credit determined under this section for the taxable year shall be an
amount equal to 1 of the following amounts (as elected by the taxpayer
for the taxable year):
``(1) 25 percent of increased research expenses.--The sum
of--
``(A) 25 percent of the excess (if any) of--
``(i) the qualified research expenses, over
``(ii) the base amount, and
``(B) 25 percent of the basic research payments,
determined under subsection (e)(1)(A).
``(2) 5 percent of aggregate research expenses.--The sum
of--
``(A) 5 percent of the qualified research expenses,
determined by substituting `100 percent' for `65
percent' in subsection (b)(3)(A), and
``(B) 5 percent of the basic research payments,
determined under subsection (e)(2).''
(2) Conforming amendments.--
(A) Paragraph (1) of section 41(e) of such Code
(relating to basic research credit) is amended--
(i) by striking ``subsection (a)(2)'' and
inserting ``subsection (a)(1)(B)'', and
(ii) by striking ``subsection (a)(1)'' and
inserting ``subsection (a)(1)(A)''.
(B) Subparagraph (C) of section 41(e)(7) of such
Code (relating to definitions and special rules) is
amended--
(i) by striking ``incremental'' in the
subparagraph caption and inserting ``other'',
(ii) by striking ``subsection (a)(1)'' and
inserting ``paragraph (1)(A) or (2)(A) of
subsection (a)'',
(iii) by striking ``subsection (a)(2)'' and
inserting ``paragraph (1)(B) or (2)(B) of such
subsection'',
(iv) by striking ``subsection (a)(1)(A)''
and inserting ``paragraph (1)(A)(i) or (2)(A)
of such subsection'', and
(v) by striking ``subsection (a)(1)(B)''
and inserting ``paragraph (1)(A)(ii) of such
subsection''.
(C) Subparagraph (A) of section 280C(c)(2) of such
Code (relating to disallowance of deduction for
expenses for which research credit taken) is amended by
striking ``section 41(a)(1)'' and inserting ``paragraph
(1)(A) or (2)(A) of section 41(a)''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(b) Permanent Extension of Credit.--
(1) In general.--Section 41 of such Code is amended by
striking subsection (h) (relating to termination).
(2) Conforming amendment.--Paragraph (1) of section 28(b)
of such Code (relating to qualified clinical testing expenses)
is amended by striking subparagraph (D).
SEC. 203. VARIABLE CAPITAL GAINS.
(a) In General.--Part I of subchapter P of chapter 1 of the
Internal Revenue Code of 1986 (relating to treatment of capital gains)
is amended by adding at the end thereof the following new section:
``SEC. 1202. VARIABLE CAPITAL GAINS DEDUCTION.
``(a) Deduction Allowed.--If for any taxable year a taxpayer other
than a corporation has a net capital gain, there shall be allowed as a
deduction from gross income an amount equal to the sum of--
``(1) 100 percent of the qualified 10-year net capital
gain,
``(2) 90 percent of the qualified 9-year net capital gain,
``(3) 80 percent of the qualified 8-year net capital gain,
``(4) 70 percent of the qualified 7-year net capital gain,
``(5) 60 percent of the qualified 6-year net capital gain,
``(6) 50 percent of the qualified 5-year net capital gain,
``(7) 40 percent of the qualified 4-year net capital gain,
``(8) 30 percent of the qualified 3-year net capital gain,
``(9) 20 percent of the qualified 2-year net capital gain,
plus
``(10) 10 percent of the qualified 1-year net capital gain.
``(b) Qualified Net Capital Gain.--For purposes of subsection (a)--
``(1) Qualified 10-year net capital gain.--The term
`qualified 10-year net capital gain' means the amount of net
long-term capital gain which would be computed for the taxable
year if only capital assets held by the taxpayer for at least
10 years at the time of the sale or exchange were taken into
account. Such term shall not exceed the amount of the net
capital gain for such taxable year.
``(2) Qualified 9-year net capital gain.--The term
`qualified 9-year net capital gain' means the amount of net
long-term capital gain which would be computed for the taxable
year if only capital assets held by the taxpayer for at least 9
years but less than 10 years at the time of the sale or
exchange were taken into account. Such term shall not exceed
the amount of the net capital gain for such taxable year
reduced by the amount of the qualified 10-year net capital
gain.
``(3) Other definitions.--The amount of the qualified 8-
year net capital gain, 7-year net capital gain, 6-year net
capital gain, 5-year net capital gain, 4-year net capital gain,
3-year net capital gain, qualified 2-year net capital gain, and
qualified 1-year net capital gain shall be determined under the
principles of paragraphs (1) and (2).
``(c) Estate and Trusts.--In the case of an estate or trust, the
deduction shall be computed by excluding the portion (if any) of the
gains for the taxable year from sales or exchanges of capital assets
which, under sections 652 and 662 (relating to inclusions of amounts in
gross income of beneficiaries of trusts), is includible by the income
beneficiaries as gain derived from the sale or exchange of capital
assets.''
(b) Treatment of Collectibles.--
(1) In general.--Section 1222 of such Code is amended by
inserting after paragraph (11) the following new paragraph:
``(12) Special rule for collectibles.--
``(A) In general.--Any gain or loss from the sale
or exchange of a collectible shall be treated as a
short-term capital gain or loss (as the case may be),
without regard to the period such asset was held. The
preceding sentence shall apply only to the extent the
gain or loss is taken into account in computing taxable
income.
``(B) Treatment of certain sales of interest in
partnership, etc.--For purposes of subparagraph (A),
any gain from the sale or exchange of an interest in a
partnership, S corporation, or trust which is
attributable to unrealized appreciation in the value of
collectibles held by such entity shall be treated as
gain from the sale or exchange of a collectible. Rules
similar to the rules of section 751(f) shall apply for
purposes of the preceding sentence.
``(C) Collectible.--For purposes of this paragraph,
the term `collectible' means any capital asset which is
a collectible (as defined in section 408(m) without
regard to paragraph (3) thereof).''
(2) Charitable deduction not affected.--
(A) Paragraph (1) of section 170(e) of such Code is
amended by adding at the end thereof the following new
sentence: ``For purposes of this paragraph, section
1222 shall be applied without regard to paragraph (12)
thereof (relating to special rule for collectibles).''
(B) Clause (iv) of section 170(b)(1)(C) of such
Code is amended by inserting before the period at the
end thereof the following: ``and section 1222 shall be
applied without regard to paragraph (12) thereof
(relating to special rule for collectibles)''.
(c) Conforming Amendments.--
(1) Section 1 of such Code is amended by striking
subsection (h).
(2) Subsection (a) of section 62 of such Code is amended by
inserting after paragraph (13) the following new paragraph:
``(14) Long-term capital gains.--In the case of a taxpayer
other than a corporation, the deduction allowed by section
1202.''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 204. CAPITAL GAINS EXCLUSION FOR STARTUP BUSINESS STOCK.
(a) Taxpayers Other Than Corporations.--Part I of subchapter P of
chapter 1 of the Internal Revenue Code of 1986 (relating to treatment
of capital gains) is amended by adding at the end the following new
section:
``SEC. 1203. DEDUCTION FOR CAPITAL GAINS ON CERTAIN BUSINESS STOCK HELD
FOR MORE THAN 2 YEARS.
``(a) General Rule.--If for any taxable year a taxpayer other than
a corporation has a qualified business net capital gain, there shall be
allowed as a deduction from gross income an amount equal to 50 percent
of the qualified business net capital gain.
``(b) Qualified Business Net Capital Gain.--For purposes of this
section--
``(1) In general.--The term `qualified business net capital
gain' means the lesser of--
``(A) the net capital gain for the taxable year, or
``(B) the net capital gain for the taxable year
determined by taking into account only gain or loss
from qualified business stock with a holding period of
at least 2 years at the time of the disposition.
``(2) Qualified business stock.--
``(A) In general.--The term `qualified business
stock' means stock which--
``(i) is first acquired (whether directly
or through an underwriter) from the issuer by
the taxpayer, and
``(ii) is not issued in redemption of (or
otherwise exchanged for) stock.
``(B) Exception for personal service
corporations.--The term `qualified business stock' does
not include stock issued by a personal service
corporation (within the meaning of section 269A(b)(1)).
``(c) Estates and Trusts.--In the case of an estate or trust, the
deduction under subsection (a) shall be computed by excluding the
portion (if any) of the gains for the taxable year from sales or
exchanges of capital assets which, under sections 652 and 662 (relating
to inclusions of amounts in gross income of beneficiaries of trusts),
is includible by the income beneficiaries as gain derived from the sale
or exchange of capital assets.''
(b) Corporations.--Section 1201 of such Code (relating to
alternative tax for corporations) is amended by redesignating
subsection (b) as subsection (c) and by inserting after subsection (a)
the following new subsection:
``(b) Deduction for Gain on Qualified Business Stock.--
``(1) In general.--If for any taxable year a corporation
has a qualified business net capital gain, there shall be
allowed as a deduction from gross income an amount equal to 50
percent of the qualified business net capital gain.
``(2) Qualified business net capital gain.--For purposes of
this subsection, the term `qualified business net capital gain'
has the meaning given such term in section 1203(b).''
(c) Conforming Amendments.--
(1) Subsection (a) of section 1201 of such Code is amended
by inserting after ``net capital gain'' each place it appears
the following: ``(other than qualified business net capital
gain (within the meaning of section 1203(b))''.
(2) Subsection (a) of section 62 of such Code is amended by
adding at the end the following new paragraph:
``(15) Qualified business stock capital gains.--The
deduction allowed by section 1203.''
(3)(A) The heading for section 1201 of such Code is amended
to read as follows:
``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS; DEDUCTION FOR GAIN ON
QUALIFIED BUSINESS STOCK.''
(B) The item relating to section 1201 in the table of
sections for part I of subchapter P of chapter 1 of such Code
is amended to read as follows:
``Sec. 1201. Alternative tax for
corporations; deduction for
gain on qualified business
stock.''
(4) The table of sections for part I of subchapter P of
chapter 1 of such Code is amended by adding at the end the
following new item:
``Sec. 1203. Deduction for capital gains
on certain business stock held
for more than 2 years.''
(d) Effective Date.--The amendments made by this section shall
apply to stock issued after the date of the enactment of this Act.
SEC. 205. INDEXING OF CERTAIN CAPITAL ASSETS.
(a) In General.--Part II of subchapter O of chapter 1 of the
Internal Revenue Code of 1986 (relating to basis rules of general
application) is amended by inserting after section 1021 the following
new section:
``SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING
GAIN OR LOSS.
``(a) General Rule.--
``(1) Indexed basis substituted for adjusted basis.--Except
as provided in paragraph (2), if an indexed asset which has
been held for more than 1 year is sold or otherwise disposed
of, for purposes of this title the indexed basis of the asset
shall be substituted for its adjusted basis.
``(2) Exception for depreciation, etc.--The deduction for
depreciation, depletion, and amortization shall be determined
without regard to the application of paragraph (1) to the
taxpayer or any other person.
``(b) Indexed Asset.--
``(1) In general.--For purposes of this section, the term
`indexed asset' means--
``(A) stock in a corporation, and
``(B) tangible property (or any interest therein),
which is a capital asset or property used in the trade
or business (as defined in section 1231(b)).
``(2) Certain property excluded.--For purposes of this
section, the term `indexed asset' does not include stock in a
foreign corporation.
``(c) Indexed Basis.--For purposes of this section--
``(1) Indexed basis.--The indexed basis for any asset is--
``(A) the adjusted basis of the asset, multiplied
by
``(B) the applicable inflation ratio.
``(2) Applicable inflation ratio.--The applicable inflation
ratio for any asset is the percentage arrived at by dividing--
``(A) the gross national product deflator the
calendar quarter in which the disposition takes place,
by
``(B) the gross national product deflator for the
calendar quarter in which the asset was acquired by the
taxpayer (or, if later, the calendar quarter ending
December 31, 1991).
The applicable inflation ratio shall not be taken into account
unless it is greater than 1. The applicable inflation ratio for
any asset shall be rounded to the nearest one-tenth of 1
percent.
``(3) Gross national product deflator.--The gross national
product deflator for any calendar quarter is the implicit price
deflator for the gross national product for such quarter (as
shown in the first revision thereof).
``(d) Special Rules.--For purposes of this section--
``(1) Treatment as separate asset.--In the case of any
asset, the following shall be treated as a separate asset:
``(A) a substantial improvement to property,
``(B) in the case of stock of a corporation, a
substantial contribution to capital, and
``(C) any other portion of an asset to the extent
that separate treatment of such portion is appropriate
to carry out the purposes of this section.
``(2) Assets which are not indexed assets throughout
holding period.--
``(A) In general.--The applicable inflation ratio
shall be appropriately reduced for calendar months at
any time during which the asset was not an indexed
asset.
``(B) Certain short sales.--For purposes of
applying subparagraph (A), an asset shall be treated as
not an indexed asset for any short sale period during
which the taxpayer or the taxpayer's spouse sells short
property substantially identical to the asset. For
purposes of the preceding sentence, the short sale
period begins on the day after the substantially
identical property is sold and ends on the closing date
for the sale.
``(3) Acquisition date where there has been prior
application of subsection (a)(1) with respect to the
taxpayer.--If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer,
the date of acquisition of such asset by the taxpayer shall be
treated as not earlier than the date of the most recent such
prior application.
``(e) Certain Conduit Entities.--
``(1) Regulated investment companies; real estate
investment trusts; common trust funds.--
``(A) In general.--Stock in a qualified investment
entity shall be an indexed asset for any calendar month
in the same ratio as the fair market value of the
assets held by such entity at the close of such month
which are indexed assets bears to the fair market value
of all assets of such entity at the close of such
month.
``(B) Ratio of 90 percent or more.--If the ratio
for any calendar month determined under subparagraph
(A) would (but for this subparagraph) be 90 percent or
more, such ratio for such month shall be 100 percent.
``(C) Ratio of 10 percent or less.--If the ratio
for any calendar month determined under subparagraph
(A) would (but for this subparagraph) be 10 percent or
less, such ratio for such month shall be zero.
``(D) Valuation of assets in case of real estate
investment trusts.--Nothing in this paragraph shall
require a real estate investment trust to value its
assets more frequently than once each 36 months (except
where such trust ceases to exist). The ratio under
subparagraph (A) for any calendar month for which there
is no valuation shall be the trustee's good faith
judgment as to such valuation.
``(E) Qualified investment entity.--For purposes of
this paragraph, the term `qualified investment entity'
means--
``(i) a regulated investment company
(within the meaning of section 851),
``(ii) a real estate investment trust
(within the meaning of section 856), and
``(iii) a common trust fund (within the
meaning of section 584).
``(2) Partnerships.--In the case of a partnership, the
adjustment made under subsection (a) at the partnership level
shall be passed through to the partners.
``(f) Dispositions Between Related Persons.--
``(1) In general.--This section shall not apply to any sale
or other disposition of property between related persons except
to the extent that the basis of such property in the hands of
the transferee is a substituted basis.
``(2) Related persons defined.--For purposes of this
section, the term `related persons' means--
``(A) persons bearing a relationship set forth in
section 267(b), and
``(B) persons treated as single employer under
subsection (b) or (c) of section 414.
``(g) Transfers To Increase Indexing Adjustment.--If any person
transfers cash, debt, or any other property to another person and the
principal purpose of such transfer is to secure or increase an
adjustment under subsection (a), the Secretary may disallow part or all
of such adjustment or increase.
``(h) Definition of Stock.--For purposes of this section, the term
`stock in a corporation' includes any interest in a common trust fund
(as defined in section 584(a)).
``(i) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''
(b) Conforming Amendments.--
(1) Subsection (f) of section 312 of such Code is amended
by adding at the end the following new paragraph:
``(3) Effect on earnings and profits of indexed basis.--
For substitution of indexed basis for
adjusted basis in the case of the disposition of certain assets, see
section 1022(a)(1).''
(2) The table of sections for part II of subchapter O of
chapter 1 of such Code is amended by inserting after the item
relating to section 1021 the following new item:
``Sec. 1022. Indexing of certain assets
for purposes of determining
gain or loss.''
(c) Effective Date.--The amendments made by this section shall
apply to dispositions after the date of the enactment of this Act.
SEC. 206. CORPORATE DEBT-EQUITY EQUALIZATION.
(a) In General.--Section 243 of the Internal Revenue Code of 1986
(relating to dividends received by corporations) is amended to read as
follows:
``SEC. 243. DIVIDENDS PAID BY DOMESTIC CORPORATIONS.
``(a) General Rule.--In the case of a domestic corporation which is
subject to taxation under this chapter, there shall be allowed as a
deduction for the taxable year an amount equal to the dividends paid by
such corporation during the taxable year.
``(b) Dividends.--For purposes of this section, the term `dividend'
means any dividend (as defined in section 316) to which section 301
applies.
``(c) Certain Corporations Not Eligible.--No deduction shall be
allowed under this section with respect to dividends paid by any
corporation which is--
``(1) an S corporation (as defined in section 1361(a)(1)),
``(2) a regulated investment company (as defined in section
851(a)),
``(3) a real estate investment trust (as defined in section
856(a)), or
``(4) a personal holding company (as defined in section
542).
``(d) Special Rules for Certain Distributions of Mutual Savings
Banks, Etc.--For purposes of this section, any amount allowed as a
deduction under section 591 (relating to deduction for dividends paid
by mutual savings banks, etc.) shall not be treated as a dividend.''
(b) Repeal of Certain Deductions for Dividends Received.--Sections
244 (relating to dividends received on certain preferred stock) and 247
(relating to dividends paid on certain preferred stock of public
utilities) of such Code are hereby repealed.
(c) Conforming Amendments.--
(1) Paragraph (5) of section 172(d) of such Code is amended
to read as follows:
``(5) Computation of deduction for dividends received from
certain foreign corporations.--The deduction allowed by section
245 (relating to dividends received from certain foreign
corporations) shall be computed without regard to section
246(b) (relating to limitation on aggregate amount of
deductions).''
(2) The table of sections for part VIII of subchapter B of
chapter 1 of such Code is amended by striking the items
relating to sections 243, 244, and 247 and inserting after the
item relating to section 241 the following:
``Sec. 243. Dividends paid by domestic
corporations.''
(3) Paragraph (1) of section 245(a) of such Code (relating
generally to dividends received from 10-percent owned foreign
corporations) is amended by striking ``the percent (specified
in section 243 for the taxable year)'' and inserting ``85
percent (100 percent in the case of a small business investment
company operating under the Small Business Investment Act of
1958 (15 U.S.C. 661 et seq.))''.
(4)(A) Subsection (a) of section 246 of such Code (relating
to disallowance of deduction for dividends from certain
corporations) is amended--
(i) in paragraph (1), by striking ``sections 243,
244, and 245'' and inserting ``section 245'', and
(ii) by striking paragraph (2).
(B) Subsection (b) of section 246 of such Code (relating to
limitation on aggregate amount of deductions) is amended to
read as follows:
``(b) Limitation on Aggregate Amount of Deduction.--
``(1) In general.--Except as provided by paragraph (2), the
aggregate amount of the deductions allowed by subsections (a)
and (b) of section 245 shall not exceed 80 percent of the
taxable income computed without regard to--
``(A) the deductions allowed by section 172,
``(B) any adjustment under section 1059, and
``(C) any capital loss carryback to the taxable
year under section 1212(a)(1).
``(2) Effect of net operating loss.--Paragraph (1) shall
not apply for any taxable year for which there is a net
operating loss (as determined under section 172).''
(C) Paragraph (1) of section 246(c) of such Code (relating
to exclusion of certain dividends) is amended by striking
``243, 244, or''.
(D) Section 246 of such Code (relating to rules applying to
deductions for dividends received) is amended by striking
subsections (d) and (e).
(5)(A) Subsection (a) of section 246A of such Code
(relating to general rule) is amended--
(i) in the matter preceding paragraph (1),
by striking ``243, 244, or'', and
(ii) in paragraph (1), by striking ``(80
percent in the case of any dividend from a 20-
percent owned corporation as defined in section
243(c)(2)''.
(B) Subsection (b) of section 246A of such Code (relating
to inapplicability to dividends for which 100 percent dividends
received deduction allowable) is amended to read as follows:
``(b) Section Not to Apply to Dividends for Which 100 Percent
Dividends Received Deduction Allowable.--Subsection (a) shall not apply
to dividends received by a small business investment company operating
under the Small Business Investment Act of 1958.''
(C) Subsection (e) of section 246A of such Code (relating
to reduction in dividends received deduction not to exceed
allowable interest) is amended by striking ``243, 244, or''.
(6) Section 596 of such Code (relating to limitation on
dividends received deduction) is amended by striking ``sections
243, 244, and 245'' and inserting ``section 245''.
(d) Effective Date.--The amendments made by this section shall
apply to distributions made after the date of the enactment of this
Act.
SEC. 207. CHARITABLE DEDUCTION FOR CORPORATE CONTRIBUTIONS OF EMPLOYEE
SERVICES TO EDUCATIONAL ORGANIZATIONS.
(a) In General.--Section 170 of the Internal Revenue Code of 1986
(relating to deduction for charitable contributions) is amended by
redesignating subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Corporate Contributions of Employee Services to Educational
Organizations.--
``(1) In general.--There shall be allowed as a deduction
under this section any charitable contribution by a corporation
of employee volunteer services to an educational organization
(within the meaning of subsection (b)(1)(A)(ii)).
``(2) Valuation.--The value of a contribution under
paragraph (1) shall be 50 percent of the amount paid or
incurred by the corporation for salary, wages, and benefits for
the employee for the time during which the employee provides
employee volunteer services.
``(3) Employee volunteer services.--For purposes of this
subsection, the term `employee volunteer services' means
teaching, tutoring, or other assistance provided without charge
or reimbursement by an employee during the regular working
hours of the employer.
``(4) Coordination with deduction for business expenses.--A
deduction allowed under this subsection for any expense shall
be in addition to any deduction allowed for the same expense
under section 162.''
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after the date of the enactment of this Act.
SEC. 208. INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER PRODUCTION
EQUIPMENT.
(a) Allowance of Credit.--Section 46 of the Internal Revenue Code
of 1986 (relating to amount of investment credit) is amended by
striking ``and'' at the end of paragraph (2), by striking the period at
the end of paragraph (3) and inserting ``, and'', and by adding at the
end thereof the following new paragraph:
``(4) the manufacturing and other productive equipment
credit.''
(b) Amount of Credit.--Section 48 of such Code is amended by adding
at the end thereof the following new subsection:
``(c) Manufacturing and Other Productive Equipment Credit.--
``(1) In general.--For purposes of section 46, the
manufacturing and other productive equipment credit for any
taxable year is the applicable percentage of the basis of each
qualified manufacturing and productive equipment property
placed in service during such taxable year.
``(2) Qualified manufacturing and productive equipment
property.--For purposes of this subsection--
``(A) In general.--The term `qualified
manufacturing and productive equipment property' means
any property--
``(i) which is used as an integral part of
the manufacture or production of tangible
personal property,
``(ii) which is tangible property to which
section 168 applies,
``(iii) which is section 1245 property (as
defined in section 1245(a)(3)), and
``(iv)(I) the construction, reconstruction,
or erection of which is completed by the
taxpayer, or
``(II) which is acquired by the taxpayer if
the original use of such property commences
with the taxpayer.
``(B) Treatment of certain software.--In the case
of any computer software which is used to control or
monitor a manufacturing or production process and with
respect to which depreciation (or amortization in lieu
of depreciation) is allowable--
``(i) such software shall be treated as
qualified manufacturing and productive
equipment property, and
``(ii) paragraph (3)(C) shall not apply.
``(3) Applicable percentage.--For purposes of this
subsection--
``(A) In general.--In the case of qualified
manufacturing and productive equipment property, the
applicable percentage is the sum of--
``(i) 10 percent, plus
``(ii) 1/10th of the efficiency improvement
percentage (if any) determined with respect to
such property.
In no event shall the applicable percentage exceed 20
percent.
``(B) Efficiency improvement percentage.--For
purposes of subparagraph (A), the term `efficiency
improvement percentage' means, with respect to any
property, the percentage efficiency increase
established by the taxpayer as resulting from the use
of such property. For purposes of the preceding
sentence, percentage efficiency increase shall be
determined on the basis of the relationship of the
amount of goods manufactured or produced to the cost of
manufacture or production.
``(C) Special rule for 3-year property.--In the
case of any qualified manufacturing and productive
equipment property which is 3-year property (within the
meaning of section 168(e)), the applicable percentage
shall be 60 percent of the amount otherwise determined
under this paragraph.
``(4) Coordination with other credits.--This subsection
shall not apply to any property to which the energy credit or
rehabilitation credit would apply unless the taxpayer elects to
waive the application of such credits to such property.
``(5) Certain progress expenditure rules made applicable.--
Rules similar to rules of subsection (c)(4) and (d) of section
46 (as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990) shall apply for
purposes of this subsection.''
(c) Technical Amendments.--
(1) Clause (ii) of section 49(a)(1)(C) of such Code is
amended by inserting ``or qualified manufacturing and
productive equipment property'' after ``energy property''.
(2) Subparagraph (E) of section 50(a)(2) of such Code is
amended by inserting ``or 48(c)(5)'' before the period at the
end thereof.
(3) Paragraph (5) of section 50(a) of such Code is amended
by adding at the end thereof the following new subparagraph:
``(D) Special rules for certain property.--In the
case of any qualified manufacturing and productive
equipment property which is 3-year property (within the
meaning of section 168(e))--
``(i) the percentage set forth in clause
(ii) of the table contained in paragraph (1)(B)
shall be 66 percent,
``(ii) the percentage set forth in clause
(iii) of such table shall be 33 percent, and
``(iii) clauses (iv) and (v) of such table
shall not apply.''
(4)(A) The section heading for section 48 of such Code is
amended to read as follows:
``SEC. 48. OTHER CREDITS.''
(B) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by striking
the item relating to section 45 and inserting the following:
``Sec. 45. Other credits.''
(d) Effective Date.--The amendments made by this section shall
apply to--
(1) property acquired by the taxpayer after the date of the
enactment of this Act, and
(2) property the construction, reconstruction, or erection
of which is completed by the taxpayer after the date of the
enactment of this Act, but to the extent of the basis thereof
attributable to construction, reconstruction, or erection after
such date.
SEC. 209. INCREASE IN LIMITATION BASED ON AMOUNT OF TAX.
(a) In General.--Subparagraph (B) of section 38(c)(1) of the
Internal Revenue Code of 1986 is amended by striking ``$25,000'' and
inserting ``$50,000''.
(b) Conforming Amendments.--Paragraph (2) of section 38(c) of such
Code is amended--
(1) by striking ``$25,000'' each place it appears and
inserting ``$50,000'', and
(2) by inserting ``$12,500'' in subparagraph (A) and
inserting ``$25,000''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 210. SPECIAL TREATMENT FOR LOSSES ON INVESTMENT IN MANUFACTURING
FACILITIES.
(a) In General.--Subsection (a) of section 1244 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(a) General Rule.--In the case of an individual, any loss on--
``(1) section 1244 stock issued to such individual or to a
partnership, or
``(2) qualified manufacturing stock,
which would (but for this section) be treated as a loss from the sale
or exchange of a capital asset shall, to the extent provided in this
section, be treated as an ordinary loss.''
(b) Qualified Manufacturing Stock.--Subsection (c) of section 1244
of such Code is amended by adding at the end thereof the following new
paragraph:
``(4) Qualified manufacturing stock.--For purposes of this
section, the term `qualified manufacturing stock' means stock
in any domestic corporation if, as of the time such stock was
acquired by the taxpayer, substantially all of the activities
of such corporation involved the manufacture of tangible
personal property in the United States. For purposes of this
paragraph, the term `manufacture' shall not include
importation. Rules similar to the rules of paragraphs (1) and
(2) of subsection (d) shall apply to qualified manufacturing
stock.''
(c) Clerical Amendments.--
(1) The section heading for section 1244 of such Code is
amended by inserting before the period at the end thereof the
following: ``or stock in manufacturing companies''.
(2) The table of sections for part IV of subchapter P of
chapter 1 of such Code is amended by inserting before the
period at the end of the item relating to section 1244 the
following: ``or stock in manufacturing companies''.
(d) Effective Date.--The amendments made by this section shall
apply to stock acquired after the date of the enactment of this Act.
SEC. 211. EXEMPTION OF CERTAIN INTEREST AND DIVIDEND INCOME FROM TAX.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to amounts specifically
excluded from gross income) is amended by inserting after section 115
the following new section:
``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST RECEIVED BY
INDIVIDUALS.
``(a) Exclusion From Gross Income.--Gross income does not include
the sum of the amounts received during the taxable year by an
individual as--
``(1) dividends from domestic corporations, or
``(2) interest.
``(b) Limitations.--
``(1) Maximum amount.--The aggregate amount excluded under
subsection (a) for any taxable year shall not exceed $2,500
($5,000 in the case of a joint return under section 6013).
``(2) Certain dividends excluded.--Subsection (a)(1) shall
not apply to any dividend from a corporation which, for the
taxable year of the corporation in which the distribution is
made, or for the next preceding taxable year of the
corporation, is a corporation exempt from tax under section 501
(relating to certain charitable, etc., organizations) or
section 521 (relating to farmers' cooperative associations).
``(c) Special Rules.--For purposes of this section--
``(1) Distributions from regulated investment companies and
real estate investment trusts.--Subsection (a) shall apply with
respect to distributions by--
``(A) regulated investment companies to the extent
provided in section 854(c), and
``(B) real estate investment trusts to the extent
provided in section 857(c).
``(2) Distributions by a trust.--For purposes of subsection
(a), the amount of dividends and interest properly allocable to
a beneficiary under section 652 or 662 shall be deemed to have
been received by the beneficiary ratably on the same date that
the dividends and interest were received by the estate or
trust.
``(3) Certain nonresident aliens ineligible for
exclusion.--In the case of a nonresident alien individual,
subsection (a) shall apply only--
``(A) in determining the tax imposed for the
taxable year pursuant to section 871(b)(1) and only in
respect of dividends and interest which are effectively
connected with the conduct of a trade or business
within the United States, or
``(B) in determining the tax imposed for the
taxable year pursuant to section 877(b).''
(b) Clerical and Conforming Amendments.--
(1) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by inserting after the item
relating to section 115 the following new item:
``Sec. 116. Partial exclusion of
dividends and interest received
by individuals.''
(2) The first sentence of paragraph (2) of section 265(a)
of such Code is amended by inserting before the period at the
end thereof the following: ``, or to purchase or carry
obligations or shares, or to make deposits, to the extent the
interest thereon is excludable from gross income under section
116''.
(3) Subsection (c) of section 584 of such Code is amended
by adding at the end thereof the following new sentence:
``The proportionate share of each participant in the amount of
dividends or interest received by the common trust fund and to which
section 116 applies shall be considered for purposes of such section as
having been received by such participant.''
(4) Subsection (a) of section 643(a) of such Code is
amended by inserting after paragraph (6) the following new
paragraph:
``(7) Dividends or interest.--There shall be included the
amount of any dividends or interest excluded from gross income
pursuant to section 116.''
(5) Section 854 of such Code is amended by adding at the
end thereof the following new subsection:
``(c) Treatment Under Section 116.--
``(1) In general.--For purposes of section 116, in the case
of any dividend (other than a dividend described in subsection
(a)) received from a regulated investment company which meets
the requirements of section 852 for the taxable year in which
it paid the dividend--
``(A) the entire amount of such dividend shall be
treated as a dividend if the aggregate dividends and
interest received by such company during the taxable
year equal or exceed 75 percent of its gross income, or
``(B) if subparagraph (A) does not apply, a portion
of such dividend shall be treated as a dividend (and a
portion of such dividend shall be treated as interest)
based on the portion of the company's gross income
which consists of aggregate dividends or aggregate
interest, as the case may be.
For purposes of the preceding sentence, gross income and
aggregate interest received shall each be reduced by so much of
the deduction allowable by section 163 for the taxable year as
does not exceed aggregate interest received for the taxable
year.
``(2) Notice to shareholders.--The amount of any
distribution by a regulated investment company which may be
taken into account as a dividend for purposes of the exclusion
under section 116 shall not exceed the amount so designated by
the company in a written notice to its shareholders mailed not
later than 45 days after the close of its taxable year.
``(3) Definitions.--For purposes of this subsection--
``(A) The term `gross income' does not include gain
from the sale or other disposition of stock or
securities.
``(B) The term `aggregate dividends received'
includes only dividends received from domestic
corporations other than dividends described in section
116(b)(2). In determining the amount of any dividend
for purposes of this subparagraph, the rules provided
in section 116(c)(1) (relating to certain
distributions) shall apply.''
(6) Subsection (c) of section 857 of such Code is amended
to read as follows:
``(c) Limitations Applicable to Dividends Received From Real Estate
Investment Trusts.--
``(1) In general.--For purposes of section 116 (relating to
an exclusion for dividends and interest received by
individuals) and section 243 (relating to deductions for
dividends received by corporations), a dividend received from a
real estate investment trust which meets the requirements of
this part shall not be considered as a dividend.
``(2) Treatment as interest.--In the case of a dividend
(other than a capital gain dividend, as defined in subsection
(b)(3)(C)) received from a real estate investment trust which
meets the requirements of this part for the taxable year in
which it paid the dividend--
``(A) such dividend shall be treated as interest if
the aggregate interest received by the real estate
investment trust for the taxable year equals or exceeds
75 percent of its gross income, or
``(B) if subparagraph (A) does not apply, the
portion of such dividend which bears the same ratio to
the amount of such dividend as the aggregate interest
received bears to gross income shall be treated as
interest.
``(3) Adjustments to gross income and aggregate interest
received.--For purposes of paragraph (2)--
``(A) gross income does not include the net capital
gain,
``(B) gross income and aggregate interest received
shall each be reduced by so much of the deduction
allowable by section 163 for the taxable year (other
than for interest on mortgages on real property owned
by the real estate investment trust) as does not exceed
aggregate interest received by the taxable year, and
``(C) gross income shall be reduced by the sum of
the taxes imposed by paragraphs (4), (5), and (6) of
section 857(b).
``(4) Notice to shareholders.--The amount of any
distribution by a real estate investment trust which may be
taken into account as interest for purposes of the exclusion
under section 116 shall not exceed the amount so designated by
the trust in a written notice to its shareholders mailed not
later than 45 days after the close of its taxable year.''
(c) Effective Date.--The amendments made by this section shall
apply with respect to taxable years beginning after the date of the
enactment of this Act.
SEC. 212. ORDINARY-LOSS TREATMENT FOR LOSSES ON INVESTMENTS IN STARTUP
COMPANIES.
(a) In General.--Subparagraph (A) of section 1244(c)(1) of the
Internal Revenue Code of 1986 (defining section 1244 stock) is amended
by inserting before the comma at the end the following: ``or was a
qualified startup company''.
(b) Qualified Startup Company.--Subsection (c) of section 1244 of
such Code is amended by adding at the end the following new paragraph:
``(4) Qualified startup company.--
``(A) In general.--For purposes of this section,
the term `qualified startup company' means any domestic
corporation if--
``(i) as of the time of the issuance of the
stock involved, substantially all of the
activities of the corporation involved the
manufacture of tangible personal property in
the United States,
``(ii) as of the time of the issuance of
the stock involved, no substantial part of the
business activities of the corporation involved
a business acquired from another person, and
``(iii) the corporation had not been in
existence for more than 1 taxable year as of
the time of the issuance of the stock involved.
``(B) Importation excluded.--For purposes of
subparagraph (A), the term `manufacture' does not
include importation.''
(c) Conforming Amendment.--The last sentence of section 1244(d)(2)
of such Code is amended by striking ``paragraphs (1)(C) and (3)(A)''
and inserting ``paragraphs (1)(C), (3)(A), and (4)''.
(d) Effective Date.--The amendments made by this section shall
apply to stock issued after the date of the enactment of this Act.
TITLE III--COOPERATIVE ENTERPRISE
SEC. 301. FINDINGS.
The Congress finds that--
(1) the globalization of the economy makes antitrust law
much less relevant today, and even counterproductive, than when
it was developed;
(2) rapid technological change makes the creation of
monopolies unlikely as the pace of product and process
innovation accelerates;
(3) cooperative efforts in today's world are predominantly
pro-competitive rather than anticompetitive; and
(4) changing the United States antitrust laws to mirror the
realities of the way in which other countries enforce
anticompetitive statutes would make United States industries
more competitive internationally.
SEC. 302. MERGER ANALYSIS.
Section 7 of the Clayton Act (15 U.S.C. 18) is amended--
(1) in the first paragraph by striking ``the effect of such
acquisition may be substantially to lessen competition, or to
tend to create a monopoly'' and inserting in lieu thereof
``there is a significant probability that such acquisition will
substantially increase the ability to exercise market power'';
(2) in the second paragraph--
(A) by striking ``the effect of'' and inserting in
lieu thereof ``there is a significant probability
that''; and
(B) by striking ``may be substantially to lessen
competition, or to tend to create a monopoly'' and
inserting in lieu thereof ``will substantially increase
the ability to exercise market power'';
(3) in the third paragraph--
(A) by striking ``the substantial lessening of
competition'' in the first sentence and inserting in
lieu thereof ``a substantial increase in the ability to
exercise market power''; and
(B) by striking ``lessen competition'' in the
second sentence and inserting in lieu thereof
``increase the ability to exercise market power''; and
(4) by inserting after the third paragraph the following
new paragraph:
``For purposes of this section, the ability to exercise market
power is defined as the ability of one or more firms profitably to
maintain prices above competitive levels for a significant period of
time. In determining whether there is a significant probability that
any acquisition will substantially increase the ability to exercise
market power, the court shall duly consider all economic factors
relevant to the effect of the acquisition in the affected markets,
including (i) the number and size distribution of firms and the effect
of the acquisition thereon; (ii) ease or difficulty of entry by foreign
or domestic firms; (iii) the ability of smaller firms in the market to
increase production in response to an attempt to exercise market power;
(iv) the nature of the product and terms of sale; (v) conduct of firms
in the market; (vi) efficiencies deriving from the acquisition; and
(vii) any other evidence indicating whether the acquisition will or
will not substantially increase the ability, unilaterally or
collectively, to exercise market power.''.
SEC. 303. JOINT PRODUCTION.
The National Cooperative Research Act of 1984 (15 U.S.C. 4301 et
seq.) is amended--
(1) in section 1, by striking ``National Cooperative
Research Act of 1984'' and inserting in lieu thereof ``National
Cooperative Research, Development, and Production Act'';
(2) by striking ``joint research and development venture''
each place it appears and inserting in lieu thereof ``joint
research, development, or production venture'';
(3) in section 2(a)(6)--
(A) by striking ``or'' in subparagraph (D);
(B) by striking subparagraph (E) and inserting in
lieu thereof the following:
``(E) the production of any product, process, or
service, or
``(F) any combination of the purposes specified in
subparagraphs (A), (B), (C), (D), and (E),''; and
(C) by inserting ``development, or production,''
after ``the conducting of research,'';
(4) in section 2(b)(1), by striking ``conduct the research
and development that is'' and inserting in lieu thereof ``carry
out'';
(5) by striking sections 2(b)(2) and 2(b)(3) and inserting
in lieu thereof the following:
``(2) entering into any agreement or engaging in any other
conduct restricting, requiring, or otherwise involving the
marketing by such venture or by any person who is a party to
such venture of any product, process, or service developed
through or produced by such venture, other than--
``(A) the marketing by such venture of any product,
process, or service to any person who is a party to
such venture; or
``(B) the marketing of proprietary information,
such as patents, rights in mask works protected under
title 17 of the United States Code, know-how, and trade
secrets; and
``(3) entering into any agreement or engaging in any other
conduct--
``(A) to restrict or require the sale, licensing,
or sharing by any person who is a party to such venture
of inventions, developments, products, processes, or
services not developed through or produced by such
venture; or
``(B) to restrict or require participation by such
a party in other unilateral or joint research,
development, or production activities,
that is not reasonably required to prevent misappropriation of
proprietary information contributed by any person who is a
party to such venture or of the results of such venture.'';
(6) in section 3, by striking ``research and development
markets'' and inserting in lieu thereof ``research,
development, product, process, or service markets'';
(7) in the heading to section 6, by striking ``Joint
research and development venture'' and inserting in lieu
thereof ``Joint research, development, or production venture'';
and
(8) in section 6(a) by inserting ``(or, with respect to a
venture involving the production of any product, process, or
service, not later than 90 days after the effective date of the
Fundamental Competitiveness Act of 1993)'' after ``enactment of
this Act''.
TITLE IV--BUSINESS LIABILITY REFORM
Subtitle A--Findings
SEC. 401. FINDINGS.
The Congress finds that--
(1) the increasing amount of litigation in our society
causes the wasteful use of time, money, and energy which could
be better allocated to research, development, production,
economic growth, and competitiveness;
(2) the multitude of professional and product liability
suits has undermined the incentive and ability of businesses to
bring new products to the market and has led professionals to
be overly cautious in providing services to the community;
(3) the excessive number of law suits and the plethora of
legal standards in the areas of professional and product
liability for each State has led to exorbitant compliance costs
for manufacturers and service providers;
(4) encouraging alternative dispute mechanisms to resolve
both professional and product liability suits would reduce
inordinate litigation cost and free capital for more productive
enterprises; and
(5) providing uniform legal standards for both professional
and product liability would eliminate costly litigation,
promote professional and product innovation, reduce regulatory
compliance costs, and make the United States more competitive
internationally.
Subtitle B--Professionals' Liability Reform
SEC. 411. SHORT TITLE.
This subtitle may be cited as ``Professionals' Liability Reform Act
of 1993''.
SEC. 412. PURPOSE.
The purpose of this subtitle is to establish uniform standards of
liability for professionals who provide professional service--
(1) to promote greater uniformity and predictability with
respect to liability arising out of such services;
(2) to facilitate the provision of such services through
interstate commerce;
(3) to foster innovation by reducing the uncertainty of
risk to professionals who provide professional services; and
(4) to encourage the States to support alternative methods
for resolving professional liability disputes in order to
reduce the costs of such disputes to professionals and their
clients.
SEC. 413. SCOPE AND PREEMPTION.
(a) In General.--(1) This subtitle governs any professional
liability action brought in any Federal or State court against a
professional.
(2) This subtitle shall preempt and supersede any State law to the
extent that such law is inconsistent with this subtitle. This subtitle
shall not preempt or supersede any State law that provides to
professionals limitations of liability or defenses which are additional
to limitations or defenses contained in this subtitle.
(b) Harm Required.--A claimant is not entitled to recover damages
in a professional liability action except for damages which constitute
harm as defined in section 416(4).
(c) Construction of Provisions.--Nothing in this subtitle shall be
construed--
(1) to waive or affect any defense of sovereign immunity
asserted by any State under any law;
(2) to waive or affect any defense of sovereign immunity
asserted by the United States;
(3) to affect the applicability of the Foreign Services
Immunities Act of 1976 (28 U.S.C. 1602 et seq.);
(4) to preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) to affect the right of any court to transfer venue or
to apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
(d) Alternative Procedures, Standards, and Systems.--Nothing in
this subtitle shall prohibit States from developing or implementing
alternative procedures, standards, or systems, which are not
inconsistent with this subtitle, for--
(1) expediting the adjudication of professional liability
claims,
(2) resolving professional liability disputes, and
(3) compensating harm caused by professional services.
(e) Limitation of Actions.--No professional liability action shall
be maintained unless commenced within 3 years after the claimant
discovered, or in the exercise of reasonable diligence should have
discovered, that such claimant had suffered harm from professional
services.
SEC. 414. DESCRIPTION OF PROFESSIONAL LIABILITY STANDARDS.
(a) Liability in General.--A professional shall not be liable for
damages in any professional liability action unless the claimant
establishes in addition to any other necessary elements of proof
required by law--
(1) except as provided in subsection (b), that such
professional negligently rendered professional services and
such negligence was the proximate cause of harm to the
claimant; or
(2) in the case of a claim for economic injury, that such
professional negligently rendered professional services to or
for the direct and intended benefit of the claimant, and such
services were the proximate cause of the harm to the claimant.
(b) Existence of Certain Scientific, Medical, Legal, or Technical
Information.--A professional shall not be liable in a professional
liability action for harm caused by professional services rendered by
such professional unless the claimant establishes that, at the time
such services were rendered, knowledge of the circumstances that caused
the harm and a practical means to eliminate such circumstances were
reasonably available in light of scientific, medical, legal, or
technical information existing at the time the professional services
were rendered.
(c) Additional Limitations on Liability.--(1) A professional shall
not be liable in a professional liability action in which--
(A) the professional's services were rendered to an agency
of the Federal Government or of any State;
(B) the Federal Government or the State established or
approved reasonably precise contract specifications material to
the claim made against the professional; and
(C) the services rendered by the professional conformed to
such specifications in all respects material to the claim.
(2) A determination by an agency of the Federal Government or the
State that the services rendered by the professional are in compliance
with contract specifications shall serve as conclusive evidence of such
conformity.
(d) Periodic Payments.--(1) In any professional liability action in
which the award of future damages exceeds $100,000, no person may be
required to pay for future loss in a single payment, but such person
shall be permitted to make such payments periodically based on a
projection of when damages are likely to occur.
(2) The court may require such person to purchase an annuity making
such periodic payments, if the court finds a reasonable basis for
concluding that the person may not make the periodic payments.
(3) The judgment of the court awarding such periodic payments may
not be reopened at any time to contest, amend, or modify the schedule
or amount of the payments in the absence of fraud.
(4) This subsection shall not be construed to preclude a settlement
providing for a single payment.
(f) Collateral Source Benefits.--(1) Any award of damages to a
claimant in a professional liability action shall be reduced by any
other past or future payment or benefit covered by this subsection
which the person has received or for which the person is eligible on
account of the harm for which damages are awarded.
(2) As used in this subsection, the term ``payment or benefit
covered by this subsection'' means--
(A) any payment or benefit by or paid, in whole or in part,
by any agency or instrumentality of the United States, a State,
or local government; and
(B) any payment or benefit by a worker's compensation
system, a health insurance program, or income replacement
program.
(3) This subsection shall not preempt or supersede any State law
which provides that damage awards may be reduced by payments or
benefits other than those covered by this section.
(4) This subsection shall not apply to any payments or benefits
received before judgment if the application of this subsection would
reduce the amount of income that would otherwise be considered under
section 402(a)(17) of the Social Security Act.
(5) The amount by which an award of damages to an individual for an
injury shall be reduced under paragraph (1) shall be an amount equal to
the difference between--
(A) the total amount of the payments (other than such
award) which have been made or which will be made to such
individual to compensate such individual for such injury, minus
(B) the amount paid by such individual (or by the spouse or
parent of such individual) to secure the payments described in
subparagraphs (A) and (B) of paragraph (2).
(g) Limitation on Attorneys' Fees.--(1) Except as provided in
paragraph (2), in any professional liability action in which claimant
receives settlement proceeds or an award of damages, the amount of
payments to such individual's attorney shall not exceed--
(A) 33\1/3\ percent of the first $250,000 recovered,
(B) 25 percent of the next $250,000 recovered, and
(C) 20 percent of any amount recovered in excess of
$500,000.
(2) In any civil action to which paragraph (1) applies, the court
may, after receiving a petition from the attorney representing the
individual who receives settlement proceeds or an award of damages,
permit such attorney to be paid an amount of fees in excess of the
amount specified by such paragraph if the court determines that the
petition has adduced evidence justifying such additional fees.
(h) Liability of Codefendants.--(1) Except as provided in paragraph
(2), in a professional liability action, the trier of fact shall
determine, with respect to each person responsible for the harm, the
percentage of that person's responsibility for the harm for which the
action was brought. If damages are awarded to the claimant in such
action, a professional shall be liable, if otherwise liable to the
claimant for damages, only for the percentage of the damages which
equals the percentage of that professional's responsibility for the
harm for which the action was brought.
(2) Paragraph (1) shall not apply with respect to persons engaged
in concerted action which proximately caused the harm complained of by
the claimant. For purposes of this subsection, the term ``concerted
action'' means the participation in joint conduct by 2 or more persons
who consciously and deliberately agreed to jointly participate in such
conduct with actual knowledge of the wrongfulness of the conduct.
(i) Punitive Damages.--(1) Punitive damages may, if otherwise
permitted by applicable law, be awarded to any claimant who
establishes, by clear and convincing evidence, that the harm suffered
was the result of conduct--
(A) manifesting a professional's malicious and reckless
disregard of those persons who might be harmed as a result of
the performance of professional service; and
(B) constituting an extreme departure from accepted
standard of conduct.
(2) A failure to exercise reasonable care in choosing among
alternative types of services, designs, formulations, instructions, or
warnings does not, in and of itself, constitute the conduct described
in paragraph (1).
(3) Punitive damages may not be awarded in the absence of a
compensatory award.
(4) Punitive damages may not be awarded for the negligent provision
of professional services.
(5) In determining whether punitive damages are to be awarded, the
trier of fact shall consider--
(A) the likelihood at the relevant time that serious harm
would arise from the professional's conduct described in
paragraph (1),
(B) the degree of the professional's awareness of that
likelihood,
(C) the duration of the conduct and any concealment of it
by the professional,
(D) the attitude and action of the professional upon
discovery of the conduct and whether the conduct has been
terminated, and
(E) whether the harm suffered by the claimant was also the
result of the claimant's--
(i) disregard for personal safety;
(ii) failure to provide the professional with all
material information or other matters relevant to the
rendering of professional services; or
(iii) disregard for the consequences of any action
taken by the claimant in reliance on professional
services.
(6) At the request of the professional, the trier of fact shall
consider in a separate proceeding whether punitive damages are to be
awarded. If a separate proceeding is requested, evidence relevant only
to the claim of punitive damages, as determined by applicable State
law, shall be inadmissible in any proceeding to determine whether
compensatory damages are to be awarded.
(7) If the trier of fact determines that a professional has engaged
in conduct described under paragraph (1), the court may award punitive
damages. In determining the amount of such damages, the court shall
consider--
(A) the factors described in paragraph (4),
(B) the profitability to the professional of the conduct
for which punitive damages are to be awarded,
(C) the total effect of other punishment imposed or likely
to be imposed upon the professional as a result of the conduct,
including punitive damage awards to persons similarly situated
to the claimant and the severity of civil or criminal penalties
to which the professional has been or may be subjected.
(8)(A) A claimant's actual recovery of punitive damages awarded
under paragraph (5) may not exceed 3 times the amount of compensatory
damages awarded to such claimant.
(B) Any punitive damages awarded by the court in excess of the
amount referred to in subparagraph (A) shall be paid--
(i) to the State in which the case is litigated, if the
case is litigated in State court; or
(ii) to the Federal Government, if the case is litigated in
Federal court.
(C) Notwithstanding subparagraph (B), the court may award
attorneys' fees from such damages to the claimant's attorney as
compensation for work attributable to obtaining an award of such
damages.
(j) Counsel's Liability for Frivolous Suits.--If the court finds in
any professional liability action that such action was commenced--
(1) without a good faith belief by the attorney
representing the claimant that there was a reasonable basis in
law and in fact for recovery of the relief requested, or
(2) by such attorney merely for purposes of achieving a
monetary settlement where there was no reasonable prospect for
an award of damages,
the attorney shall be liable for costs, fees, and expenses, including
attorney fees, reasonably incurred by the defendant.
SEC. 415. FORMATION OF RISK MANAGEMENT PROGRAMS.
(a) In General.--Each State should encourage professional
organizations, whose membership includes professionals who practice
within the State, to put into effect risk management programs including
peer review of professional office policies and practices,
organization, and quality of performance.
(b) Records Inadmissible as Evidence.--Records of the
implementation of and conclusions reached by such risk management
programs, including peer review of professional office policies and
practices, organization, and quality of performance, shall not be
admissible in evidence against any professional who is the subject of
such records.
SEC. 416. DEFINITIONS.
For purposes of this subtitle--
(1) the term ``professional'' means--
(A) any person engaged in work (i) predominantly
intellectual and varied in character as opposed to
routine mental, manual, mechanical, or physical work;
(ii) involving the consistent exercise of discretion
and judgment in its performance; (iii) of such a
character that the output produced or the result
accomplished cannot be standardized in relation to a
given period of time; and (iv) requiring knowledge of
an advanced type in a field of science or learning
customarily acquired by a prolonged course of
specialized intellectual instruction and study in an
institution of higher learning or a hospital, as
distinguished from a general academic education or from
an apprenticeship or from training in the performance
of routine mental, manual, or physical processes; or
(B) any person, who (i) has completed the courses
of specialized intellectual instruction and study
described in clause (iv) of subparagraph (A), and (ii)
is performing related work under the supervision of a
professional to qualify himself or herself to become a
professional as defined in subparagraph (A);
(2) the term ``State'' means any State of the United
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, the
Virgin Islands, Guam, American Samoa, and any other territory
or possession of the United States, or any political
subdivision thereof;
(3) the term ``claimant'' means any person--
(A) who has suffered harm from the provision of
professional services and who brings a professional
liability action, or
(B) who brings such an action on behalf of any
person who has suffered harm from the provision of
professional services or who brings such an action
because a person suffered harm from such services;
(4) the term ``harm'' means--
(A) illness, bodily injury, or the death of the
claimant,
(B) mental anguish of, or emotional harm to, the
claimant caused by the claimant's illness or bodily
injury,
(C) physical damage to property, or
(D) economic injury; and
(5) the term ``professional liability action'' means a
civil action brought against a professional for personal
injury, property damage, or harm suffered by the claimant
because of the provision of professional services.
Subtitle C--Product Liability Fairness
PART I--GENERAL PROVISIONS
SEC. 421. SHORT TITLE.
This subtitle may be cited as the ``Product Liability Fairness
Act''.
SEC. 422. DEFINITIONS.
As used in this subtitle, the term--
(1) ``claimant'' means any person who brings a civil action
pursuant to this subtitle, and any person on whose behalf such
an action is brought; if such an action is brought through or
on behalf of an estate, the term includes the claimant's
decedent, or if it is brought through or on behalf of a minor
or incompetent, the term includes the claimant's parent or
guardian;
(2) ``clear and convincing evidence'' is that measure or
degree of proof that will produce in the mind of the trier of
fact a firm belief or conviction as to the truth of the
allegations sought to be established; the level of proof
required to satisfy such standard is more than that required
under preponderance of the evidence, but less than that
required for proof beyond a reasonable doubt;
(3) ``collateral benefits'' means all benefits and
advantages received or entitled to be received (regardless of
any right any other person has or is entitled to assert for
recoupment through subrogation, trust agreement, lien, or
otherwise) by any claimant harmed by a product or by any other
person as reimbursement of loss because of harm to person or
property payable or required to be paid to the claimant,
under--
(A) any Federal law or the laws of any State (other
than through a claim for breach of an obligation or
duty); or
(B) any life, health, or accident insurance or
plan, wage or salary continuation plan, or disability
income or replacement service insurance, or any benefit
received or to be received as a result of participation
in any pre-paid medical plan or health maintenance
organization;
(4) ``commerce'' means trade, traffic, commerce, or
transportation (A) between a place in a State and any place
outside of that State; or (B) which affects trade, traffic,
commerce, or transportation described in clause (A);
(5) ``commercial loss'' means economic injury, whether
direct, incidental, or consequential, including property damage
and damage to the product itself;
(6) ``economic loss'' means any pecuniary loss resulting
from harm which is allowed under State law;
(7) ``exercise of reasonable care'' means conduct of a
person of ordinary prudence and intelligence using the
attention, precaution, and judgment that society expects of its
members for the protection of their own interests and the
interests of others;
(8) ``harm'' means any harm recognized under the law of the
State in which the civil action is maintained, other than--
(A) loss or damage caused to a product itself; and
(B) commercial loss;
(9) ``manufacturer'' means (A) any person who is engaged in
a business to produce, create, make, or construct any product
(or component part of a product) and who designs or formulates
the product (or component part of the product) or has engaged
another person to design or formulate the product (or component
part of the product); (B) a product seller with respect to all
aspects of a product (or component part of a product) which are
created or affected when, before placing the product in the
stream of commerce, the product seller produces, creates,
makes, or constructs and designs or formulates, or has engaged
another person to design or formulate, an aspect of a product
(or component part of a product) made by another; or (C) any
product seller not described in clause (B) which holds itself
out as a manufacturer to the user of a product;
(10) ``noneconomic loss'' means loss caused by a product
other than economic loss or commercial loss;
(11) ``person'' means any individual, corporation, company,
association, firm, partnership, society, joint stock company,
or any other entity (including any governmental entity);
(12) ``preponderance of the evidence'' is that measure or
degree of proof which, by the weight, credit, and value of the
aggregate evidence on either side, establishes that it is more
probable than not that a fact occurred or did not occur;
(13) ``product'' means any object, substance, mixture, or
raw material in a gaseous, liquid, or solid state (A) which is
capable of delivery itself or as an assembled whole, in a mixed
or combined state, or as a component part or ingredient; (B)
which is produced for introduction into trade or commerce; (C)
which has intrinsic economic value; and (D) which is intended
for sale or lease to persons for commercial or personal use;
the term does not include human tissue, blood and blood
products, or organs unless specifically recognized as a product
pursuant to State law;
(14) ``product seller'' means a person who, in the course
of a business conducted for that purpose, sells, distributes,
leases, prepares, blends, packages, labels, or otherwise is
involved in placing a product in the stream of commerce, or who
installs, repairs, or maintains the harm-causing aspect of a
product; the term does not include--
(A) a seller or lessor of real property;
(B) a provider of professional services in any case
in which the sale or use of a product is incidental to
the transaction and the essence of the transaction is
the furnishing of judgment, skill, or services; or
(C) any person who--
(i) acts in only a financial capacity with
respect to the sale of a product; and
(ii) leases a product under a lease
arrangement in which the selection, possession,
maintenance, and operation of the product are
controlled by a person other than the lessor;
and
(15) ``State'' means any State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin
Islands, Guam, American Samoa, and any other territory or
possession of the United States, or any political subdivision
thereof.
SEC. 423. PREEMPTION.
(a) This subtitle governs any civil action brought against a
manufacturer or product seller, on any theory, for harm caused by a
product. A civil action brought against a manufacturer or product
seller for loss or damage to a product itself or for commercial loss is
not subject to this subtitle.
(b) This subtitle supersedes any State law regarding recovery for
harm caused by a product only to the extent that this subtitle
establishes a rule of law applicable to any such recovery. Any issue
arising under this subtitle that is not governed by any such rule of
law shall be governed by applicable State or Federal law.
(c) Nothing in this subtitle act shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) supersede any Federal law, except the Federal Employees
Compensation Act and the Longshoremen's and Harbor Workers'
Compensation Act;
(3) waive or affect any defense of sovereign immunity
asserted by the United States;
(4) affect the applicability of any provision of chapter 97
of title 28, United States Code;
(5) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation;
(6) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum; or
(7) supersede any statutory or common law, including an
action to abate a nuisance, that authorizes a State or person
to institute an action for civil damages or civil penalties,
cleanup costs, injunctions, restitution, cost recovery,
punitive damages, or any other form of relief resulting from
contamination or pollution of the environment, or the threat of
such contamination or pollution.
(d) As used in this section, the term ``environment'' has the
meaning given to such term in section 101(8) of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. 9601(8)).
(e) This subtitle shall be construed and applied after
consideration of its legislative history to promote uniformity of law
in the various jurisdictions.
SEC. 424. JURISDICTION OF FEDERAL COURTS.
The district courts of the United States shall not have
jurisdiction over any civil action pursuant to this subtitle, based on
section 1331 or 1337 of title 28, United States Code.
SEC. 425. EFFECTIVE DATE.
(a) This subtitle shall take effect on the date of its enactment
and shall apply to all civil actions pursuant to this subtitle
commenced on or after such date, including any action in which the harm
or the conduct which caused the harm occurred before the effective date
of this subtitle.
(b) If any provision of this subtitle would shorten the period
during which a manufacturer or product seller would otherwise be
exposed to liability, the claimant may, notwithstanding the otherwise
applicable time period, bring any civil action pursuant to this
subtitle within one year after the effective date of this subtitle.
PART II--OUT OF COURT PROCEDURES
SEC. 431. EXPEDITED PRODUCT LIABILITY SETTLEMENTS.
(a) Any claimant may bring a civil action for damages against a
person for harm caused by a product pursuant to applicable State law,
except to the extent such law is superseded by this part.
(b) Any claimant may, in addition to any claim for relief made in
accordance with State law, include in such claimant's complaint an
offer of settlement for a specific dollar amount.
(c) The defendant may make an offer of settlement for a specific
dollar amount within sixty days after service of the claimant's
complaint or within the time permitted pursuant to State law for a
responsive pleading, whichever is longer, except that if such pleading
includes a motion to dismiss in accordance with applicable law, the
defendant may tender such relief to the claimant within ten days after
the court's determination regarding such motion.
(d) In any case in which an offer of settlement is made pursuant to
subsection (b) or (c) of this section, the court may, upon motion made
prior to the expiration of the applicable period for response, enter an
order extending such period. Any such order shall contain a schedule
for discovery of evidence material to the issue of the appropriate
amount of relief, and shall not extend such period for more than sixty
days. Any such motion shall be accompanied by a supporting affidavit of
the moving party setting forth the reasons why such extension is
necessary to promote the interests of justice and stating that the
information likely to be discovered is material, and is not, after
reasonable inquiry, otherwise available to the moving party.
(e) If the defendant, as offeree, does not accept the offer of
settlement made by a claimant in accordance with subsection (b) of this
section within the time permitted pursuant to State law for a
responsive pleading or, if such pleading includes a motion to dismiss
in accordance with applicable law, within thirty days after the court's
determination regarding such motion, and a verdict is entered in such
action equal to or greater than the specific dollar amount of such
offer of settlement, the court shall enter judgment against the
defendant and shall include in such judgment an amount for the
claimant's reasonable attorney's fees and costs. Such fees shall be
offset against any fees owed by the claimant to the claimant's attorney
by reason of the verdict.
(f) If the claimant, as offeree, does not accept the offer of
settlement made by a defendant in accordance with subsection (c) of
this section within thirty days after the date on which such offer is
made and a verdict is entered in such action equal to or less than the
specific dollar amount of such offer of settlement, the court shall
reduce the amount of the verdict in such action by an amount equal to
the reasonable attorney's fees and costs owed by the defendant to the
defendant's attorney by reason of the verdict, except that the amount
of such reduction shall not exceed that portion of the verdict which is
allocable to noneconomic loss and economic loss for which the claimant
has received or will receive collateral benefits.
(g) For purposes of this section, attorney's fees shall be
calculated on the basis of an hourly rate which should not exceed that
which is considered acceptable in the community in which the attorney
practices, considering the attorney's qualifications and experience and
the complexity of the case.
SEC. 432. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.
(a) In lieu of or in addition to making an offer of settlement
under section 431 of this part, a claimant or defendant may, within the
time permitted for the making of such an offer under section 431 of
this part, offer to proceed pursuant to any voluntary alternative
dispute resolution procedure established or recognized under the law of
the State in which the civil action for damages for harm caused by a
product is brought or under the rules of the court in which such action
is maintained.
(b) If the offeree refuses to proceed pursuant to such alternative
dispute resolution procedure and the court determines that such refusal
was unreasonable or not in good faith, the court shall assess
reasonable attorney's fees and costs against the offeree.
(c) For the purposes of this section, there shall be created a
rebuttable presumption that a refusal by an offeree to proceed pursuant
to such alternative dispute resolution procedure was unreasonable or
not in good faith, if a verdict is rendered in favor of the offeror.
PART III--COURT PROCEDURES
SEC. 441. CIVIL ACTIONS.
A person seeking to recover for harm caused by a product may bring
a civil action against the product's manufacturer or product seller
pursuant to applicable State or Federal law, except to the extent such
law is superseded by this subtitle.
SEC. 442. UNIFORM STANDARDS OF PRODUCT SELLER LIABILITY.
(a) Notwithstanding the provisions of section 441 of this part, in
any civil action for harm caused by a product, a product seller other
than a manufacturer is liable to a claimant, only if the claimant
establishes by a preponderance of the evidence that--
(1)(A) the individual product unit which allegedly caused
the harm complained of was sold by the defendant;
(B) the product seller failed to exercise reasonable care
with respect to the product; and
(C) such failure to exercise reasonable care was a
proximate cause of the claimant's harm; or
(2)(A) the product seller made an express warranty,
independent of any express warranty made by a manufacturer as
to the same product;
(B) the product failed to conform to the warranty; and
(C) the failure of the product to conform to the warranty
caused the claimant's harm.
(b)(1) In determining whether a product seller is subject to
liability under subsection (a)(1) of this section, the trier of fact
may consider the effect of the conduct of the product seller with
respect to the construction, inspection, or condition of the product,
and any failure of the product seller to pass on adequate warnings or
instructions from the product's manufacturer about the dangers and
proper use of the product.
(2) A product seller shall not be liable in a civil action subject
to this part based upon an alleged failure to provide warnings or
instructions unless the claimant establishes that, when the product
left the possession and control of the product seller, the product
seller failed--
(A) to provide to the person to whom the product seller
relinquished possession and control of the product any
pamphlets, booklets, labels, inserts, or other written warnings
or instructions received while the product was in the product
seller's possession and control; or
(B) to make reasonable efforts to provide users with those
warnings and instructions which it received after the product
left its possession and control.
(3) A product seller shall not be liable in a civil action subject
to this part except for breach of express warranty where there was no
reasonable opportunity to inspect the product in a manner which would
or should, in the exercise of reasonable care, have revealed the aspect
of the product which allegedly caused the claimant's harm.
(c) Notwithstanding subsection (b), a product seller shall be
treated as the manufacturer of a product and shall be liable for harm
to the claimant caused by a product as if it were the manufacturer of
the product if--
(1) the manufacturer is not subject to service of process
under the laws of any State in which the action might have been
brought; or
(2) the court determines that the claimant would be unable
to enforce a judgment against the manufacturer.
SEC. 443. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.
(a) Punitive damages may, if otherwise permitted by applicable law,
be awarded in any civil action subject to this part to any claimant who
establishes by clear and convincing evidence that the harm suffered was
the result of conduct manifesting a manufacturer's or product seller's
conscious, flagrant indifference to the safety of those persons who
might be harmed by a product. A failure to exercise reasonable care in
choosing among alternative product designs, formulations, instructions,
or warnings is not of itself such conduct. Except as provided in
subsection (b) of this section, punitive damages may not be awarded in
the absence of a compensatory award.
(b) In any civil action in which the alleged harm to the claimant
is death and the applicable State law provides, or has been construed
to provide, for damages only punitive in nature, a defendant may be
liable for any such damages regardless of whether a claim is asserted
under this section. The recovery of any such damages shall not bar a
claim under this section.
(c)(1) Punitive damages shall not be awarded pursuant to this
section against a manufacturer or product seller of a drug (as defined
in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 321(g)(1)) or medical device (as defined under section 201(h) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) which
caused the claimant's harm where--
(A) such drug or device was subject to pre-market approval
by the Food and Drug Administration with respect to the safety
of the formulation or performance of the aspect of such drug or
device which caused the claimant's harm or the adequacy of the
packaging or labeling of such drug or device, and such drug was
approved by the Food and Drug Administration; or
(B) the drug is generally recognized as safe and effective
pursuant to conditions established by the Food and Drug
Administration and applicable regulations, including packaging
and labeling regulations. The provisions of this paragraph
shall not apply (i) in any case in which the defendant withheld
from or misrepresented to the Food and Drug Administration or
any other agency or official of the Federal Government
information that is material and relevant to the performance of
such drug or device, or (ii) in any case in which the defendant
made an illegal payment to an official of the Food and Drug
Administration for the purpose of securing approval of such
drug or device.
(2) Punitive damages shall not be awarded pursuant to this section
against a manufacturer of an aircraft which caused the claimant's harm
where--
(A) such aircraft was subject to pare-market certification
by the Federal Aviation Administration with respect to the
safety of the design or performance of the aspect of such
aircraft which caused the claimant's harm or the adequacy of
the warnings regarding the operation or maintenance of such
aircraft;
(B) the aircraft was certified by the Federal Aviation
Administration under the Federal Aviation Act of 1958 (49 App.
U.S.C. 1301 et seq.); and
(C) the manufacturer of the aircraft complied, after
delivery of the aircraft to a user, with Federal Aviation
Administration requirements and obligations with respect to
continuing airworthiness, including the requirement to provide
maintenance and service information related to airworthiness
whether or not such information is used by the Federal Aviation
Administration in the preparation of mandatory maintenance,
inspection, or repair directives.
The provisions of this paragraph shall not apply in any case in which
the defendant withheld from or misrepresented to the Federal Aviation
Administration information that is material and relevant to the
performance or the maintenance or operation of such aircraft.
(d) At the request of the manufacturer or product seller, the trier
of fact shall consider in a separate proceeding (1) whether punitive
damages are to be awarded and the amount of such award, or (2) the
amount of punitive damages following a determination of punitive
liability. If a separate proceeding is requested, evidence relevant
only to the claim of punitive damages, as determined by applicable
State law, shall be inadmissible in any proceeding to determine whether
compensatory damages are to be awarded.
(e) In determining the amount of punitive damages, the trier of
fact shall consider all relevant evidence, including--
(1) the financial condition of the manufacturer or product
seller;
(2) the severity of the harm caused by the conduct of the
manufacturer or product seller;
(3) the duration of the conduct or any concealment of it by
manufacturer or product seller;
(4) the profitability of the conduct to the manufacturer or
product seller;
(5) the number of products sold by the manufacturer or
product seller of the kind causing the harm complained of by
the claimant;
(6) awards of punitive of exemplary damages to persons
similarly situated to the claimant;
(7) prospective awards of compensatory damages to persons
similarly situated to the claimant;
(8) any criminal penalties imposed on the manufacturer or
product seller as a result of the conduct complained of by the
claimant; and
(9) the amount of any civil fines assessed against the
defendant as a result of the conduct complained of by the
claimant.
SEC. 444. UNIFORM TIME LIMITATIONS ON LIABILITY.
(a) Any civil action subject to this part shall be barred unless
the complaint is filed within two years of the time the claimant
discovered or, in the exercise of reasonable care, should have
discovered the harm and its cause, except that any such action of a
person under legal disability may be filed within two years after the
disability ceases. If the commencement of such an action is stayed or
enjoined, the running of the statute of limitations under this section
shall be suspended for the period of the stay or injunction.
(b)(1) Any civil action subject to this part shall be barred if a
product which is a capital good is alleged to have caused harm which is
not a toxic harm unless the complaint is served and filed within
twenty-five years after the time of delivery of the product. This
subsection shall apply only if the court determines that the claimant
has received or would be eligible to receive compensation under any
State or Federal workers' compensation law for harm caused by the
product.
(2) A motor vehicle, vessel, aircraft, or railroad used primarily
to transport passengers for hire shall not be subject to the provisions
of this subsection.
(3) As used in this section, the term--
(A) ``time of delivery'' means the time when a product is
delivered to its first purchaser or lessee who was not involved
in the business of manufacturing or selling such product or
using it as a component part of another product to be sold;
(B) ``capital good'' means any product, or any component of
any such product, which is of a character subject to allowance
for depreciation under the Internal Revenue Code of 1986, and
which was--
(i) used in a trade or business;
(ii) held for the production of income; or
(iii) sold or donated to a governmental or private
entity for the production of goods, for training, for
demonstration, or for other similar purposes; and
(C) ``toxic harm'' means harm which is functional
impairment, illness, or death of a human being resulting from
exposure to an object, substance, mixture, raw material, or
physical agent of particular chemical composition.
(c) Nothing in this section shall affect the right of any person
who is subject to liability for harm under this subtitle to seek and
obtain contribution or indemnity from any other person who is
responsible for such harm.
SEC. 445. UNIFORM STANDARDS FOR OFFSET OF WORKERS' COMPENSATION
BENEFITS.
(a) In any civil action subject to this part in which damages are
sought for harm for which the person injured is or would have been
entitled to receive compensation under any State or Federal workers'
compensation law, any damages awarded shall be reduced by the sum of
the amount paid as workers' compensation benefits for such harm and the
present value of all workers' compensation benefits to which the
employee is or would be entitled for such harm. The determination of
workers' compensation benefits by the trier of fact in a civil action
subject to this part shall have no binding effect on and shall not be
used as evidence in any other proceeding.
(b) A claimant in a civil action subject to this part who is or may
be eligible to receive compensation under any State or Federal workers'
compensation law must provide written notice of the filing of the civil
action to the claimant's employer within 30 days of the filing. The
written notice shall include information regarding the date and court
in which the civil action was filed, the names and addresses of all
plaintiffs and defendants appearing on the complaint, the court docket
number if available, and a copy of the complaint which was filed in the
civil action. A copy of such written notice shall be filed with the
court and served upon all parties to the action. A claimant's failure
to comply with the requirements of this subsection shall suspend the
deadlines for filing responsive pleadings and commencing discovery in
the civil action, until the claimant complies with the requirements of
this subsection.
(c) In any civil action subject to this part in which damages are
sought for harm for which the person injured is entitled to receive
compensation under any State or Federal workers' compensation law, the
action shall, on application of the claimant made at claimant's sole
discretion, be stayed until such time as the full amount payable as
workers' compensation benefits has been finally determined under such
workers' compensation law.
(d)(1) Except as provided in paragraph (2) of this subsection,
unless the manufacturer or product seller has expressly agreed to
indemnify or hold an employer harmless for harm to an employee caused
by a product, neither the employer nor the workers' compensation
insurance carrier of the employer shall have a right of subrogation,
contribution or implied indemnity against the manufacturer or product
seller or a lien against the claimant's recovery from the manufacturer
or product seller if the harm is one for which a civil action for harm
caused by a product may be brought pursuant to this subtitle.
(2) Paragraph (1) of this subsection shall not apply if the
employer or the workers' compensation insurer of the employer
establishes, and the trier of fact determines, that the claimant's harm
was not in any way caused by the fault of the claimant's employer or
coemployees. In order to establish this fact an employer or the
workers' compensation insurer of the employer may intervene in a civil
action filed by an employee at any time after the filing of a
complaint. In the event that the civil action is resolved prior to
obtaining a verdict by the trier of fact, any resolution of the action
by settlement or other means shall afford the employer or the workers'
compensation insurer of the employer an opportunity to participate and
to assert a right of subrogation, contribution, or implied indemnity if
the claimant's harm was not in any way caused by the fault of the
claimant's employer or coemployees.
(e)(1) Except as provided in subsection (f), in any civil action
subject to this part in which damages are sought for harm for which the
person injured is or would have been entitled to receive compensation
under any State or Federal workers' compensation law, no third-party
tortfeasor may maintain any action for implied indemnity or
contribution against the employer, any coemployee, or the exclusive
representative of the person who was injured.
(2) Nothing in this subtitle shall be construed to affect any
provision of a State or Federal workers' compensation law which
prohibits a person who is or would have been entitled to receive
compensation under any such law, or any other person whose claim is or
would have been derivative from such a claim, from recovering for harm
caused by a product in any action other than a workers' compensation
claim against a present or former employer or workers' compensation
insurer of the employer, any coemployee, or the exclusive
representative of the person who was injured. Any action other than
such a workers' compensation claim shall be prohibited, except that
nothing in this subtitle shall be construed to affect any State or
Federal workers' compensation law which permits recovery based on a
claim of an intentional tort by the employer or coemployee, where the
claimant's harm was caused by such an intentional tort.
(f) Subsection (e) shall not apply and applicable State law shall
control if the employer or the workers' compensation insurer of the
employer, in a civil action subject to this part, asserts or attempts
to assert, because of subsection (d), a right of subrogation,
contribution, or implied indemnity against the manufacturer or product
seller or a lien against the claimant's recovery from the manufacturer
or product seller.
SEC. 446. SEVERAL LIABILITY FOR NONECONOMIC DAMAGES.
(a) In any product liability action, the liability of each
defendant for noneconomic damages shall be several only and shall not
be joint. Each defendant shall be liable only for the amount of
noneconomic damages allocated to such defendant in direct proportion to
such defendant's percentage of responsibility as determined under
subsection (b) of this section. A separate judgment shall be rendered
against such defendant for that amount.
(b) For purposes of this section, the trier of fact shall determine
the proportion of responsibility of each party for the claimant's harm.
(c) As used in this section, the term--
(1) ``noneconomic damages'' means subjective, nonmonetary
losses including, but not limited to, pain, suffering,
inconvenience, mental suffering, emotional distress, loss of
society and companionship, loss of consortium, injury to
reputation and humiliation; the term does not include
objectively verifiable monetary losses including, but not
limited to, medical expenses, loss of earnings, burial costs,
loss of use of property, costs of repair or replacement, costs
of obtaining substitute domestic services, rehabilitation and
training expenses, loss of employment, or loss of business or
employment opportunities; and
(2) ``product liability action'' includes any action
involving a claim, third-party claim, cross-claim,
counterclaim, or contribution claim in a civil action in which
a manufacturer or product seller is found liable for harm
caused by a product.
SEC. 447. DEFENSES INVOLVING INTOXICATING ALCOHOL OR DRUGS.
(a) In any civil action subject to this subtitle in which all
defendants are manufacturers or product sellers, it shall be a complete
defense to such action that the claimant was intoxicated or was under
the influence of intoxicating alcohol or any drug and that as a result
of such intoxication or the influence of the alcohol or drug the
claimant was more than 50 percent responsible for the accident or event
which resulted in such claimant's harm.
(b) In any civil action subject to this subtitle in which not all
defendants are manufacturers or product sellers and the trier of fact
determines that no liability exists against those defendants who are
not manufacturers or product sellers, the court shall enter a judgment
notwithstanding the verdict in favor of any defendant which is a
manufacturer or product seller if it is proved that the claimant was
intoxicated or was under the influence of intoxicating alcohol or any
drug and that as a result of such intoxication or the influence of the
alcohol or drug the claimant was more than 50 percent responsible for
the accident or event which resulted in such claimant's harm.
(c)(1) For purposes of this section, the determination of whether a
person was intoxicated or was under the influence of intoxicating
alcohol or any drug shall be made pursuant to applicable State law.
(2) As used in this section, the term ``drug'' means any non-over-
the-counter drug which has not been prescribed by a physician for use
by the claimant.
TITLE V--REGULATORY REVIEW
SEC. 501. FINDINGS.
The Congress finds that--
(1) administrative action is too frequently propelled by a
concern with politically visible results, at the expense of
less apparent impacts;
(2) traditional regulatory cost-benefit analysis frequently
fails to examine the effect of restrictive regulations on
overall human welfare in terms of reduced health and safety,
reduced consumer choice, substitution effects, and impeded
technological advancement;
(3) in promulgating regulations, agencies often fail to
examine the risk that their suppositions are erroneous, or to
compare the risks of acting on faulty suppositions with the
risks of inaction; and
(4) in analyzing new and existing regulations, there is a
need for agencies to move beyond traditional cost-benefit
analysis to risk-risk analysis which examines the factors
described in paragraph (2).
SEC. 502. COMPETITIVENESS RISK ASSESSMENT.
No agency shall propose or promulgate a regulation without first
analyzing its effects on the health and safety of consumers and
workers, both directly and indirectly, including effects due to wage
and job losses, price increases, product restrictions, technological
delays, and substitution effects. In any such analysis, health and
safety effects shall be expressed both in monetary terms and in terms
of lives lost and injuries occurred. Such analysis shall also examine
related distributional effects, describing any economic and social
groups who will be disproportionately affected.
TITLE VI--TOTAL QUALITY MANAGEMENT
SEC. 601. FORMATION AND USE OF QUALITY CIRCLES AND JOINT PRODUCTION
TEAMS.
(a) In General.--Section 8(a)(2) of the National Labor Relations
Act (29 U.S.C. 158(a)(2)) is amended by inserting before the semicolon
at the end the following: ``: Provided further, That nothing in this
paragraph shall prohibit the formation or operation of quality circles
or joint production teams composed of labor and management, with or
without the participation of representatives of labor organizations''.
(b) Effective Date.--The amendment made by this section shall apply
to the formation or operation of quality circles or joint production
teams after the date of the enactment of this Act.
TITLE VII--LONG-TERM INVESTMENT
SEC. 701. SHORT TITLE.
This title may be cited as the ``Long-Term Investment Promotion Act
of 1993''.
SEC. 702. FINDINGS.
The Congress finds that--
(1) there is an urgent need to extend the time horizons of
industry in the United States and there is too much pressure to
maximize short-term profits and shareholder value, often at the
expense of long-term competitive viability;
(2) a fundamental cause of United States industry's
preoccupation with short-term performance is the Securities and
Exchange Commission's requirement for publicly-held
corporations to report their financial status on a quarterly
basis;
(3) a large and growing share of the capital of United
States firms is owned by mutual funds and pension funds, and
the managers of these funds are under constant pressure to
maximize the current value of their portfolios since this is
the principal criteria by which their performance is judged;
(4) because portfolio managers and stockholders evaluate a
company's performance on the basis of quarterly financial
reports, managers tend to emphasize short-term profits even
when it raises possible conflicts with longer term investment;
(5) short-term business horizons can lead to
underinvestment in technology development, human resources,
total quality, and capital assets;
(6) a preoccupation with short-term business horizons
worked before when America dominated the world economy but such
an antiinvestment and antimodernization approach seems ill-
suited to a world characterized by rapid technological change,
global competition based on quality and a constant need for
bringing innovation into the marketplace;
(7) achievement of continuously improved technology and
quality requires long-term investment in research, development,
commercialization, and acquisition of new capital equipment;
and
(8) in contrast to the short-term preoccupation in the
United States, in Japan and Germany firms report their
financial results on an annual rather than quarterly basis and
this factor contributes to significantly longer time horizons,
in some instances spanning many decades, for business
decisions.
SEC. 703. ELIMINATION OF QUARTERLY REPORTS.
Section 13(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a)(2)) is amended by striking ``, and such quarterly reports (and
such copies thereof),''.
TITLE VIII--AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION
ACT OF 1980
SEC. 801. AMENDMENT TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION ACT
OF 1980.
Section 12(a) of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3710a(a)) is amended by striking ``may permit'' and
inserting in lieu thereof ``shall permit, under authority of this or
any other appropriate Act,''.
SEC. 802. COPYRIGHT FOR SOFTWARE.
(a) Section 12 of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3710a) is amended by adding at the end the following
new subsection:
``(h) Copyright of Computer Software.--Each Federal agency may
secure copyright on behalf of the United States as author or proprietor
in any computer software prepared in whole or in part by employees of
the United States Government in the course of work under a cooperative
research and development agreement entered into under the authority of
subsection (a)(1) of this section, or under any other equivalent
authority, notwithstanding the limitations contained in section 105 of
title 17, United States Code; and may grant or agree to grant in
advance to a collaborating party, licenses or assignments for such
copyrights, or options thereto, retaining a nonexclusive,
nontransferable, irrevocable, paid-up license to reproduce, adapt,
translate, distribute, and publicly perform or display the computer
software throughout the world by or on behalf of the Government and
such other rights as the Federal agency deems appropriate.''.
(b) Section 4 of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3703) is amended by adding at the end the following new
paragraph:
``(14) `Computer software' means a computer program, as
defined in section 101 of title 17, United States Code, and any
associated documentation, supporting materials, or user
instructions.''.
SEC. 803. ROYALTY PAYMENTS TO AUTHORS.
Sec. 3. (a) Section 14(a) (1)(A), (2), and (3) of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710c(a) (1)(A),
(2), and (3)) is amended--
(1) by inserting ``or computer software'' after
``inventions'' each place it appears;
(2) by inserting ``or computer software'' after
``invention'' each place it appears;
(3) by inserting ``or author'' after ``inventor'' each
place it appears;
(4) by inserting ``or co-author'' after ``co-inventor''
each place it appears;
(5) by inserting ``or authors'' after ``inventors'' each
place it appears;
(6) by inserting ``or co-authors'' after ``co-inventors''
each place it appears; and
(7) by inserting ``or author's'' after ``inventor's'' each
place it appears.
(b) Section 14(a)(1)(B) of the Stevenson-Wydler Technology
Innovation Act of 1980 (15 U.S.C. 3710c(a)(1)(B)) is amended--
(1) by inserting ``or computer software'' after ``income
from any invention'';
(2) by inserting ``or computer software was developed''
after ``the invention occurred'';
(3) by inserting ``or computer software'' after ``licensing
of inventions'' in clause (i);
(4) by inserting ``or computer software which was
developed'' after ``with respect to inventions'' in clause (i);
and
(5) by inserting ``or computer software'' after
``organizations for invention'' in clause (i).
(c) Section 14(c) of the Stevenson-Wydler Technology Innovation Act
of 1980 (15 U.S.C. 3710c(c)) is amended by inserting ``or author''
after ``including inventor''.
SEC. 804. TECHNICAL AND CONFORMING AMENDMENTS.
Section 12(c) of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3710a(c)), is amended by inserting ``or computer
software'' after ``inventions'' each place it appears.
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