US Congress promises death to patent trolls in bipartisan law scribbling

Joint press conference promises to finally pass law

A new bill that will bring about the end of patent trolls will be introduced to US Congress today (Wednesday). Its backers are confident it will be signed into law "in six months or less."

At a press conference launching the Patent Act earlier today, senior leaders from both parties spoke strongly in favor of introducing new rules that will protect the patent system while removing the "abusive litigation processes."

And by abusive processes, they mean the endless legal fights in which American companies pay out millions of dollars to organizations that exist solely to accuse others of infringing their wide-ranging patents.

"A single lawsuit can cost million of dollars," explained Senate Judiciary Committee Chairman Chuck Grassley (R-IA). "This forces companies to settle even when they have a strong defense."

The result is less innovation, fewer jobs, and a higher cost to shoppers. And the impact is felt "by all sectors, from startups to Main Street business to Wall Street to Silicon Valley," Grassley warned. "Patent trolls prey on business owners by filing frivolous lawsuits and employing heavy handed and deceptive tactics."

The bill [PDF] [summary] will take "concrete steps" and "prevent bad actors from further undermining the patent system." The "commonsense reforms" introduced will improve transparency around patents, deter frivolous claims, hold bad actors responsible, establish clear, uniform pleading standards, tackle demand letters and put reasonable limitations on discovery, we're told.

R, D, R, D

Republican and Democratic senators together reiterated the problem – and, more importantly, they assured people that support was bipartisan, and that the bill would pass both houses (a previous effort to pass patent reform passed in the House but fell in the Senate).

"If we can hold together this bipartisanship, we can get this passed," said Senator Leahy (D-VT). "We've had more meetings with more stakeholders for this bill that anything I can remember and I've been for 40 years."

"This is as close you get to legislative shock-and-awe," said Senator Cornyn (R-TX), again highlighting the cross-party work on the bill. "This is a strong bill and we expect that the majority leader will take prompt action on it."

Senator Chuck Schumer (D-NY) chimed in: "This is the year we will finally pass patent reform. Patent trolls have perverted the system for too long." He did not however that "there will be special interests that will oppose this but for the good of America, we will pass it."

Senator Orrin Hatch (R-UT) noted "in six months from now, we will all be at the White House as President Obama signs the bill."

"Or less," muttered the other politicians behind him. "Yes, or less."

Details

A one-pager [PDF] on the Patent Act (tortured from the phrase "Protecting American Talent and Entrepreneurship") was published at the same time, providing a summary of the changes. Key provisions are:

Clarifies Pleading Standards. The bill would establish clear, uniform standards for pleading in patent infringement suits to give defendants real notice of the claims against them, and keep meritless lawsuits from clogging federal court dockets. It also increases transparency by requiring early disclosures about the patent-in-suit.

Protects End Users. The bill protect customers who are targeted for patent infringement based on a product they simply purchased from a manufacturer or off the shelf by allowing the stay of an infringement case against an end user of a product while the manufacturer of the product litigates the alleged infringement.

Reasonably Limits Early Discovery. The legislation protects litigants from the threat of expensive discovery by requiring a court to stay discovery while it resolves key early motions in the case, including motions to dismiss and transfer venue. The bill also directs the Judicial Conference to develop rules about how much a party should bear the cost of discovery beyond what is core for the case.

Creates Risk for Bad Actors. In order to deter plaintiffs and defendants from engaging in abusive and dilatory litigation practices, the bill provides that reasonable attorney fees will be awarded if the winner proves and a court rules that the losing party was not “objectively reasonable.” The legislation provides a process to recover fees where the abusive litigant is hiding behind a shell company.

Curbs Abusive Demand Letters. The legislation adds requirements that demand letters contain meaningful information so they cannot be used merely to scare recipients into early settlements. The bill also heightens penalties for those found to violate the FTC Act by sending misleading demand letters.

Increases Transparency. The bill requires the PTO to keep information about patent ownership in order to Increases Transparency. The bill requires the PTO to keep information about patent ownership in order to provide a resource about patents being asserted in a demand letter or lawsuit. ®

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