Legislation to address patent litigation abuses took a significant leap forward with the introduction of the Protecting American Talent and Entrepreneurship Act (PATENT Act) into the Senate on April 29. The bipartisan measure is similar to the Innovation Act (H.R. 9), which is currently progressing in the House.
“Congress has talked about addressing the problem of patent trolls since 2005, when Senator [Patrick] Leahy (D-VT) and I first began work on what is now the America Invents Act,” said Sen. Charles Grassley (R-IA), chairman of the Judiciary Committee and one of the bill’s seven cosponsors. “I’m pleased that after a decade of serious policy discussions there is now strong bipartisan support for legislation to combat abusive patent lawsuits and safeguard American innovation.”
The PATENT Act closely tracks the Innovation Act on two key provisions. It establishes uniform standards for pleading in patent infringement suits to give defendants real notice of the claims against them, and it allows for the stay of an infringement case against an end user of a product while the manufacturer of the product litigates the alleged infringement. The latter provision is intended to protect customers who are targeted for patent infringement based on a product they simply purchased from a manufacturer or off the shelf.
“Patent trolls are taking a system meant to drive innovation and instead using it to stifle job-creating businesses around the country,” said Sen. Charles Schumer (D-NY), a cosponsor of the legislation. “This bipartisan bill shifts the legal burden back onto those who would abuse the patent system in order to make a quick buck at the expense of businesses that are playing by the rules.”
The House and Senate bills differ in a couple of noteworthy ways. While both bills encourage judges to be more willing to award attorneys' fees to the prevailing party, the Senate version includes no explicit shifting of the burden to the losing party to defend its original case. Also, unlike the House version, the Senate bill addresses the pre-litigation “demand letter” problem attributed to so-called patent trolls. However, separate legislation (H.R. 2045) to address abusive patent demand letters was approved by the House Energy and Commerce Committee on April 29.
The Senate Judiciary Committee held a hearing on the PATENT Act on May 7, at which Sen. Grassley stated his intention to move the measure quickly to the full Senate before Memorial Day. If passed by both the Senate and House, the legislation is expected to be signed by the president.
“Those who abuse the patent system jeopardize its integrity and value, and their actions can prevent actual innovators – particularly entrepreneurs and small businesses – from bringing their products and services to market,” Secretary of Commerce Penny Pritzker said in a statement expressing support for the Senate bill. “For these reasons President Obama has called for legislation to finish the job that we began with the America Invents Act, and continued through the President's executive actions two years ago.”