Earlier today, Senator Grassley (R-Iowa) introduced the bipartisan Protecting American Talent and Entrepreneurship Act of 2015 (PATENT) Act. The PATENT Act is a revised version of prior proposed legislation that addresses some of the most severe criticisms of those proposals. It’s also well situated to move forward, as it’s supported by leaders from both parties. From the bill’s summarv (Sec. 1 is the title and table of contents; Sec. 2 are definitions; if the formatting is messed up, click the link for the original source):
SEC. 3. PLEADING AND EARLY DISCLOSURE REQUIREMENTS: Form 18 is
eliminated. Plaintiffs must identify each patent and claim allegedly infringed,
which products or processes are infringing, and describe the alleged infringement.
Allows plaintiffs to describe information in general terms if it is not accessible to
them. Clarifies that pleadings can be amended and allows for confidential
information to be filed under seal. Exempts 271(e) (Hatch-Waxman and biosimilars)
proceedings. Requires plaintiffs to make additional disclosures to the court and the
PTO about the plaintiff and the asserted patents shortly after filing.
SEC. 4. CUSTOMER STAY: Allows a case against a customer to be stayed while
the manufacturer litigates the alleged infringement, provided that the
manufacturer is involved in a lawsuit in the US involving the same issues. The
customer stay is available only to those at the end of the supply chain, who are
selling or using a technology that they acquired from a manufacturer, without
materially modifying it. Allows for a stay to be lifted where it would cause undue
prejudice or be manifestly unjust.
SEC. 5. DISCOVERY LIMITS: Requires a court to stay expensive discovery
pending resolution of preliminary motions—specifically motions to dismiss, transfer
venue, and sever accused infringers. Gives a court discretion to allow limited
discovery necessary to resolve these motions or a motion for a preliminary
injunction, or if it finds that additional discovery is necessary to preserve evidence
or otherwise prevent specific prejudice to a party. Allows parties to consent to be
excluded from discovery limitations. Exempts Section 271(e) (Hatch-Waxman and
biosimilars) cases. Clarifies that timelines for responsive pleadings provided by the
Federal Rules of Civil Procedure are not altered, and nothing prohibits a court from
ordering or local rules from requiring the exchange of contentions.
SEC. 6. JUDICIAL CONFERENCE DISCOVERY REFORMS: Requires the
Judicial Conference to develop rules or procedures to address additional issues
involving discovery in patent cases. These include to what extent each party is
entitled to “core documentary evidence” and if they should be responsible for the
costs of production, and other issues involving discovery sequence and scope. Asks
the Judicial Conference to implement case management procedures for patent
SEC. 7. FEES AND RECOVERY: Provides that reasonable attorney fees will be
awarded if a court determines the position or conduct of the non-prevailing party
(plaintiff or defendant) was not objectively reasonable, unless special circumstances
make an award unjust. The winner must show that the non-prevailing party’s
position was not objectively reasonable and the judge must make a ruling for fees to shift – this is not a presumptive fee shifting rule. Fee shifting extends to cases
where a party attempts to unilaterally withdraw from a case on the eve of a trial.
Keeps 271(e) (Hatch-Waxman and biosimilars) proceedings under current law.
Fee Recovery: Requires a plaintiff to identify interested parties in the litigation,
and provides a process for a court to recover fees where the abusive litigant is
judgement-proof. If a plaintiff cannot certify it has sufficient funds to satisfy a fee
award, it must notify interested parties, who can opt out of their interest. Permits a
court to exempt institutions of higher education and qualifying parties in the
interest of justice.
SEC. 8. PRE-SUIT NOTICE/DEMAND LETTERS: Prevents vague patent
infringement demand letters from being preludes to litigation by requiring that
certain information be included in order for the letter to be considered evidence that
subsequent infringement was “willful”. If the required information is not in the
written notice, the recipient’s time to respond to a later complaint is extended by 30
SEC. 9. ABUSIVE DEMAND LETTERS: Provides that, if someone violates Section
5 of the FTC Act in connection with patent assertion and has engaged in
widespread demand letters abuse, civil penalties for FTC rule violations will attach.
The provision does not impinge on legitimate licensing activity or expand the
authority of the FTC.
SEC. 10. TRANSPARENCY: Requires patent holders to disclose to the PTO
whenever there is an assignment of interest in the patent that results in a change of
ultimate parent entity. If a patent holder fails to disclose, it will not be able to
recover increased damages of attorney fees (unless this would be manifestly unjust).
SEC. 11. IP LICENSES IN BANKRUPTCY: Makes clear that as a matter of public
policy, US courts will not recognize the action of a foreign court to unilaterally
cancel a license to a US patent or trademark if the licensor goes bankrupt. Extends
current protection of licensees of US patents in bankruptcy to trademarks.
SECTION 12. SMALL BUSINESS PROVISIONS: Directs the PTO to develop
educational resources for small businesses targeted in patent suits and to provide
support to companies named in infringement actions. Instructs PTO to create a
section on its website that will list pending patent cases, so that recipients of
demand letters and defendants in lawsuits can more easily identify ongoing
litigation that may relate to their case.
SEC. 13. STUDIES: Provides for three studies on 1) the secondary market for
patents; 2) the possibility of a pilot program for a patent small claims program: and
3) business method patent quality.
SEC. 14. TECHNICAL CORRECTIONS: Technical corrections and improvements
to the AIA.
SEC. 15. EFFECTIVE DATE: Date of enactment except as otherwise provided.
SEC 16. SEVERABILITY: Should any portion of the law be held invalid, this
provision allows the rest to stand.
The full text of the bill is available here: http://www.judiciary.senate.gov/imo/media/doc/PATENT%20Act.pdf
(Entirely unrelated but also in Sen. Grassley’s Instagram feed: a few hours later he met with my Dean and the Deans of the University of Iowa College of Engineering and Division of Continuing Education.)