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Another Act Against the Trolls

Beware, patent trolls!
Innovation Act passes,
Patent law to change?

The US House of Representatives has passed House Resolution 3309, known as the “Innovation Act,” by a margin of 325 to 91.

The bill, sponsored by Congressman Bob Goodlatte, was designed to prevent “abusive patent litigation” and was directed, in large part, against patent trolls (aka “non-practicing entities” (NPEs) or “patent assertion entities” (PAEs)).

The bill changes the presumption that attorney’s fees and costs will not be awarded to a prevailing party in a patent action unless the other party commits some abuse of the patent system (such as engaging in inequitable conduct before the patent office or willful infringement of a patent).

Now, the presumption is that a court:

…shall award, to a prevailing party, reasonable fees and other expenses incurred by that party . . . unless the court finds that the position and conduct of the non-prevailing party or parties were reasonably justified in law and fact.

If the non-prevailing party is unable to pay, then “interested third parties” can be compelled to pay the costs. An assignee of the patent, a person or entity with “a right, including a contingent right, to enforce or sublicense the patent or patents at issue,” or someone who “has a direct financial interest in the patent or patents at issue” can be joined as a party in the action for fees.

However, law firms that enforce patents on a contingent fee basis would not be liable for costs and fees.

The bill increases the specificity required for pleading patent infringement. Pleadings would need to include:

…a clear and concise statement of [] where each element of each [asserted claim] is found in the accused instrumentality; and with detailed specificity, how each [asserted] claim is met by the accused instrumentality…

The bill also requires plaintiffs to disclose the identities of people and entities with financial interests underlying the patent being litigated.

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