Protecting American Talent and Entrepreneurship (PATENT) Act

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

The PATENT Act was introduced on April 29, 2015 by Senator Chuck Grassley (R-IA) and referred to the Senate Committee on the Judiciary. On September 8, 2015, the bill was placed on the Senate Legislative Calendar under General Orders. Currently the bill has 6 cosponsors (3 Republicans and 3 Democrats).

The full title of the bill is "A bill to amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections, and for other purposes." GovTrack predicts the PATENT Act has a 36% chance of being enacted. The bill is currently bipartisan with 3 Republican and 3 Democrat sponsors.

The House Innovation Act and Senate Patent Act are very similar. Both acts address abusive litigation. Members of the Senate Judiciary Committee want to reduce frivolous lawsuits, eliminate vague demand letters, and prevent extortion by passing the Patent Act. The act focuses on the following areas :

• Increasing transparency on patent information and claims.
• Reducing litigation costs.
• Discouraging abusive litigation practices.

Feedback on the PATENT Act has been varied. The PATENT Act is strongly supported by Microsoft (Microsoft) and the National Retail Federation. (NRF) Organizations like the Innovation Alliance (IA) and National Venture Capital Association (NVCA) have spoken out against various provisions of the bill. The NVCA states that the PATENT Act, as well as the Innovation Act (H.R.9), will increase the risk of patent litigation for startups by creating an overly broad fee shifting system that gives large companies and large patent trolls with huge financial resources an advantage against smaller startups.

Provisions

Pleading and early disclosure

The PATENT Act requires patent owners to identify each claim of each patent allegedly infringed and which products or processes are infringing. If the details are not available, the patent owner must explain why.

Customer stay

The act allows cases against consumers to be stayed while the manufacturer litigates the alleged patent infringement, if the manufacturer is involved in a similar case in the United States. This stay is only for consumers at the end of the supply chain who are using the product in its final form without material modifications.

Discovery limits

The PATENT Act requires a court to stay expensive discovery pending the resolution of preliminary motions, such as the dismissal of a case, a change of venue, or severance of accused infringers.

Fees and recovery

The act provides that reasonable attorney fees will be awarded if the court finds that the non-prevailing party was not objectively reasonable. This prevents patent trolls from extorting their targets into settling for thousands of dollars rather than spending millions of dollars in legal battles. Universities are exempt from this fee-recovery provision. In the case that an entity is unable to pay the fee, fees may be recovered from third parties that have a "substantial financial interest" in the patent.

Disclosure of patent ownership

The PATENT Act requires patent holders to disclose to the Patent and Trademark Office (PTO) whenever there is an assignment of interest in the patent that results in a change of ultimate parent entity. This transparency allows defendants to who has a stake in the case, as well as if the patent has been litigated before.

Small Businesses

The act directs the PTO to develop educational resources for businesses targeted by patent suits and to create a list of pending patent cases on its website.