PRINTER'S NO. 2403
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1775
Session of
2017
INTRODUCED BY STEPHENS, MILLARD, CHARLTON, MENTZER, JOZWIAK,
SCHLOSSBERG, CORR, NEILSON, WATSON, GROVE, ROZZI AND
WHEELAND, SEPTEMBER 12, 2017
REFERRED TO COMMITTEE ON JUDICIARY, SEPTEMBER 12, 2017
AN ACT
Providing for prevention of abuse of patents, for notifications
concerning the assertion of rights under a patent or pending
patent and for enforcement and remedies.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Patent Troll
Prevention Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Institution of higher education." A postsecondary
educational institution that is incorporated under the laws of
and has its principle place of business located in this
Commonwealth.
"Patent notification." A letter, email or other written
communication attempting in any manner to enforce or assert
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rights in connection with a patent or pending patent.
"Target." A person:
(1) who has received a patent notification or is the
subject of an assertion of allegation of patent infringement;
(2) who has been threatened with litigation or is a
defendant in a filed lawsuit alleging patent infringement; or
(3) whose customers have received a patent notification
asserting that the person's product, service or technology
has infringed a patent.
Section 3. Patent notification requirements.
(a) General rule.--It is unlawful for a person to make a bad
faith assertion of patent infringement.
(b) Evidence of bad faith.--A court may consider the
following factors as evidence that a person has made a bad faith
assertion of patent infringement:
(1) The patent notification does not contain all of the
following information:
(i) The patent application number or patent number.
(ii) The name and address of the patent owner or
owners and assignee or assignees, if any.
(iii) Factual allegations concerning the specific
areas in which the target's products, services and
technology infringe the patent or are covered by
specific, identified claims in the patent.
(iv) If the United States Patent and Trademark
Office's assignment system does not identify the person
asserting the patent as the owner, an explanation of the
standing of the person making the assertion to enforce or
assert rights in connection with a patent or pending
patent.
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(2) Prior to sending the patent notification, the person
failed to conduct an analysis comparing the claims in the
patent to the target's products, services and technology or,
if the analysis was conducted, the analysis does not identify
specific areas in which the products, services and technology
are covered by the claims in the patent.
(3) The patent notification lacks the information
described in paragraph (1), the target requests the
information and the person fails to provide the information
within a reasonable period of time.
(4) The person demands payment of a license fee or
response within an unreasonably short period of time.
(5) The person offers to license the patent for an
amount that is not based on a reasonable estimate of the
value of the license or the person offers to license the
patent for an amount that is based on the cost of defending a
potential or actual lawsuit.
(6) Either:
(i) the claim or assertion of patent infringement is
meritless and the person knew or should have known that
the claim or assertion is meritless; or
(ii) the claim or assertion relies on an
interpretation of the patent that was disclaimed during
prosecution and the person making the claim or assertion
knows or should have known about the disclaimer or would
have known about the disclaimer if the person reviewed
the patent's prosecution history.
(7) The claim or assertion of patent infringement is
deceptive.
(8) The person or subsidiaries or affiliates of the
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person have previously or concurrently filed or threatened to
file one or more lawsuits based on the same or similar claim
of patent infringement and:
(i) those threats or lawsuits lacked the information
described in paragraph (1); or
(ii) the person attempted to enforce the claim of
patent infringement in litigation and a court found the
claim to be meritless.
(9) The person making the claim or assertion sent the
same patent notification or substantially the same patent
notification to multiple recipients and made assertions
against a wide variety of products and systems without
reflecting those differences in a reasonable manner in the
patent notifications.
(10) The person making the claim or assertion is aware
of, but does not disclose, any final, nonfinal or preliminary
postgrant finding of invalidity or unpatentability involving
the patent.
(11) The person making the claim or assertion seeks an
injunction when that is objectively unreasonable under the
law.
(12) Any other factor the court finds relevant.
(c) Evidence of no bad faith.--A court may consider the
following factors as evidence that a person has not made a bad
faith assertion of patent infringement:
(1) The patent notification contains the information
described in subsection (a)(1).
(2) Where the patent notification lacks the information
described in subsection (a)(1) and the target requests the
information, the person provides the information within a
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reasonable period of time.
(3) The person engages in a good faith effort to
establish that the target has infringed the patent and to
negotiate an appropriate remedy.
(4) The person makes a substantial investment in the use
of the patent or in the production or sale of a product or
item that the person reasonably believes is covered by the
patent. As used in this paragraph, the term "use of the
patent" means actual practice of the patent and does not
include licensing without actual practice.
(5) The person is:
(i) the inventor or joint inventor of the patent or,
in the case of a patent filed by and awarded to an
assignee of the original inventor or joint inventor, is
the original assignee; or
(ii) an institution of higher education or a
technology transfer organization owned or affiliated with
an institution of higher education.
(6) The person has:
(i) demonstrated good faith business practices in
previous efforts to enforce the patent or a substantially
similar patent; or
(ii) successfully enforced the patent, or a
substantially similar patent, through litigation.
(7) Any other factor the court finds relevant.
Section 4. Bond.
(a) General rule.--Upon motion by a target and a finding by
the court that a target has established a reasonable likelihood
that a person has made a bad faith assertion of patent
infringement in violation of this act, the court shall require
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the person to post a bond in an amount equal to a good faith
estimate of the target's fees and costs to litigate the claim
and amounts reasonably likely to be recovered under section 5,
conditioned upon payment of any amounts finally determined to be
due to the target. A hearing shall be held if either party so
requests. A bond ordered pursuant to this section shall not
exceed $500,000.
(b) Waiver.--The court may waive the bond requirement of
subsection (a) if the court finds the person has available
assets equal to the amount of the proposed bond or for other
good cause shown.
(c) Failure to pay fee or cost.--If the person asserting
patent infringement fails within 30 days to pay a fee or cost
ordered by a court in a matter related to the asserted patent
infringement, the amount not paid shall be paid out of the bond
posted under subsection (a) without affecting the obligation of
the person asserting patent infringement to pay any remainder of
the fees or costs not paid out of the bond.
Section 5. Enforcement and remedies.
(a) Enforcement.--The Attorney General shall have the same
authority under this act to promulgate regulations, conduct
civil investigations, bring civil actions and enter into
assurances of discontinuance. In an action brought by the
Attorney General pursuant to this section, the court may award
or impose any relief available under this act.
(b) Remedy.--A target or a person aggrieved by a violation
of this act or by a violation of a regulation promulgated under
this act may bring an action in a court of competent
jurisdiction against a person who has made a bad faith assertion
of patent infringement. A court may award to a plaintiff who
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prevails in an action brought pursuant to this subsection any of
the following remedies:
(1) Equitable relief.
(2) Damages.
(3) Costs and fees, including reasonable attorney fees.
(4) Exemplary damages in an amount equal to $50,000 or
three times the total of damages, costs and fees, whichever
is greater.
(c) Award of costs and fees.--A court may award to a
defendant who prevails in an action brought pursuant to this
section costs and fees, including reasonable attorney fees, if
the court finds the action was not well-grounded in fact and
warranted by existing law or was interposed for any improper
purpose, such as to harass or to cause unnecessary delay or
needless increase in the cost of litigation.
(d) Joinder of interested parties.--In an action arising
under subsection (a) or (b), the court shall grant a motion by
the Attorney General or a target to join an interested party if
the moving party shows that the party alleging infringement has
no substantial interest in the patent or patents at issue other
than making demands or asserting the patent claim in litigation.
(e) Basis for jurisdiction.--In an action arising under
subsection (a) or (b), any person who has delivered or sent, or
caused another to deliver or send, a demand to a target in this
Commonwealth is deemed to have purposefully availed himself of
the privileges of conducting business in this Commonwealth and
shall be subject to suit in this Commonwealth, whether or not
the person is transacting or has transacted any other business
in this Commonwealth.
(f) Joint and several liability.--If a party is unable to
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pay an amount awarded by the court pursuant to subsection (a) or
(b), the court may find any interested party joined pursuant to
subsection (c) jointly and severally liable for the abusive
patent assertion and make the award recoverable against any or
all of the joined interested parties.
(g) Construction.--This act shall not be construed to limit
rights and remedies available to the Commonwealth or to any
person under any other law and shall not alter or restrict the
Attorney General's authority under this act with regard to
conduct involving assertions of patent infringement.
Section 6. Exemptions.
This act does not apply to any of the following:
(1) A patent notification that includes a claim for
relief arising under 35 U.S.C. § 271(e)(2) (relating to
infringement of patent).
(2) A patent notification that includes a claim for
relief arising under section 351 of the Public Health Service
Act (58 Stat. 682, 42 U.S.C. § 262).
(3) A patent notification by or on behalf of an
institution of higher education or a technology transfer
organization that is owned by or affiliated with the
institution of higher education.
Section 7. Effective date.
This act shall take effect in 60 days.
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