Senate Proposes Its Bill on Patent Litigation Changes

Last week, Senate Judiciary Chairman Orrin Hatch (D. UT) introduced the Patent Litigation Integrity Act, S. 1612. The Senate bill follows the introduction of a bill proposed by House Judiciary Committee Chairman Bob Goodlatte (R. VA), H.R. 3309, entitled “Innovation Act,” which also proposes a number of significant changes to patent litigation procedures.

The Senate bill, like its House counterpart, proposes changes to 35 U.S.C. § 285, aimed at shifting litigation fees and expenses from the prevailing party to the non-prevailing party, unless the loser’s conduct was “substantially justified,” or under other circumstances that would make fee shifting unjust. The Senate bill differs somewhat from the House provision in this regard, insofar as it specifies that “reasonable fees and expenses” explicitly include attorney fees.

In addition, the two bills also diverge on the accountability of paying these fees. The Senate bill provides for the potential bonding by the plaintiff, at the Court’s discretion, “to ensure payment of the accused infringer’s reasonable fees and other expenses, including attorney fees,” and sets forth seven factors that the Court must consider in determining whether a bond requirement is unreasonable or unnecessary. These are: 1) whether the bond will burden the ability of the party alleging infringement to pursue activities unrelated to patent licensing and litigation; 2) whether the party alleging infringement is an institution of higher education or a non-profit technology transfer organization; 3) whether the licensee conducts further research or development on the subject matter to make it more licensable; 4) whether the party alleging infringement is a named inventor or an original assignee; 5) whether the party alleging infringement makes or sells a product related to the subject matter in the patent; 6) whether the party alleging infringement can pay the accused infringer’s fees and other expenses; and 7) whether any party will agree to pay the accused infringer’s shifted fees and other expenses.

In contrast, the House bill allows for recovery against “any interested party joined pursuant to section 299(d),” which allows a defending party to join an interested party if “such defending party shows that the party alleging infringement has no substantial interest in the patent or patents at issue other than asserting such patent claim in litigation.” The House bill provides that the Court may deny joining an interested party if the interested party was not subject to service of process, or if joiner would deny the Court of subject matter jurisdiction or make venue improper. The House bill also defines an interested party as an assignee of the patent (or patent-at-issue) that has a right to enforce or sublicense the patent or has a direct financial interest in the patent.

The two bills will likely engender significant debate as legislators attempt to reconcile the two. Gibbons will continue to monitor developments with these pending bills, and other IP law news.

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