By Dennis Crouch
If it exists, the patent heat in Congress right now is focused on “curbing abusive patent litigation.” A variety of bills have been introduced, including the SHIELD Act that would introduce a one-way fee shifting system that would require losing plaintiffs to pay the attorney fees of successful defendants. H.R. 845. The Bill also requires that the patentee plaintiff (or DJ Defendant) post a bond early in the lawsuit to ensure that the fees will be paid. Under its current structure, the bill is limited to cases where (1) the party asserting the patent is not the original inventor or original assignee; (2) the party asserting the patent is not exploiting the patent “through production or sale of an item covered by the patent” and (3) the party asserting the patent is not a University or the US Government. If the patentee meets any one of those prongs then they escape the fee shifting. At the conclusion of the case if the patentee loses then the court must award the prevailing party “full costs … including reasonable attorney’s fees.”
Senator Cornyn this week introduced another bill – the Patent Abuse Reduction Act of 2013 (S.1013). According to Cornyn’s press release, the bill “would require plaintiffs to disclose the substance of their claim and reveal their identities when they file their lawsuit; allow defendants to hale into court interested parties; bring fairness to the discovery process; and shift responsibility for the cost of litigation to the losing party.”
Transparency In Enforcement: S.1013 proposes that the initial complaint must also “the identity of any person with a direct financial interest in the outcome of the action, including a right to receive proceeds, or any fixed or variable portion thereof; and a description of any agreement or other legal basis for [the] financial interest.”
Presumption of Attorney Fees: As with the SHIELD Act, S.1013 would more readily shift attorney fees. This time, however, the fees would be balanced and awarded to the prevailing parties regardless of whether that be a plaintiff or defendant. However, no attorney fees would be awarded when the non-prevailing party’s “position and conduct … were objectively reasonable and substantially justified” or where the exceptional circumstances make the award unjust. If the patent plaintiff cannot pay the attorney fees, the bill would allow for those fees to be paid by others with an interest in the litigation. Defendants would also be permitted to join interested parties into the litigation.
Heightened Pleading Requirements: S.1013 proposes that a complaint must draw a link between particular asserted patent claims and any accused products if such a link “is known.” In addition, the bill would require a complaint to include “detailed specificity” as to “how the terms in each asserted claim[s] … correspond to the functionality of the accused instrumentality.” The Bill would also require the Supreme Court to review model complaint Form 18 to ensure that it conforms with the law.
Discovery After Claim Construction: S.1013 proposes to limit discovery until after claim construction has been complete.
Additional Major Limits on Discovery: Perhaps the most dramatic changes proposed in the bill would be statutory limits on discovery and a cost-shifting regime.
It will be interesting to see how these develop moving forward.