PATENT Act

S.1137: Protecting American Talent and Entrepreneurship (PATENT) Act (2015) (Congress)

Summary

• Pleading and early disclosure: must identify each claim of each patent allegedly infringed and which products or processes are infringing
• Discovery limits: requires a court to stay expensive discovery pending resolution of preliminary motions
• Fees and recovery: provides that reasonable attorney fees will be awarded if the court finds that the non-prevailing party was not objectively reasonable
• Disclosure of patent ownership: 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
• Small business provisions: directs PTO to develop educational resources for businesses targeted by patent suits and to create a list of pending patent cases on its website

GovTrack predicts the PATENT Act has a 36% chance of being enacted.

The House Innovation Act and Senate Patent Act are very similar; both acts address abusive litigation through “increased transparency, more limited discovery, heightened pleading standards, and ‘loser pays’ fee shifting”. However, there has been a delay in the passing of the bills because of controversy surrounging the shifting of attorney fees. Fee shifting was originally suggested as a way to incentivize small firms and businesses that were being unfairly accused of patent infringement to bring the case to court, so that they would not have to pay their attorney fees. However, there have been arguments stating that fee shifting would actually increase the settlement rate of small businesses being accused of patent infringement, because they don’t want to take the risk of losing and paying for the winner’s attorneys’ fees, in addition to their own. (Bloomberg BNA)