Jessica M. Karmasek Jan. 9, 2014, 10:32am
WASHINGTON (Legal Newsline) – The head of a national bar association made up primarily of intellectual property lawyers says a Senate version of a measure aimed at curbing abusive patent litigation is the “better approach.”
“The Leahy bill, in our opinion, seeks to try to deal with real troll problems,” he said, referring to so-called patent trolls.
Patent trolls are companies that purchase groups of patents without an intent to market or develop a product. The companies then target other businesses with lawsuits alleging infringement of the patents they bought.
Leahy’s measure, also referred to as Senate Bill 1720, is considered by some to be a “less ambitious” version of the House’s Innovation Act.
The Innovation Act, or House of Representatives Bill 3309, was approved in an overwhelming bipartisan vote of 325-91 last month and has since been sent to the Senate.
Similar to the Innovation Act, Leahy’s bill would increase transparency in patent ownership.
In particular, the person or organization that holds the patent and files an action in federal court would have to disclose any and all persons that have a financial interest in the proceedings, or that could be affected by the outcome.
And like the Innovation Act, the Leahy measure targets the widespread sending of frivolous demand letters.
More specifically, the Senate bill would empower the Federal Trade Commission to consider such letters an “unfair and deceptive act or practice.”
S. 1720 also allows cases against customers who are sued for patent infringement to be stayed while the manufacturer litigates the lawsuit.
Leahy’s bill also would provide additional resources for small business that are targeted in patent infringement lawsuits, and it calls for various studies to be done by the U.S. Patent and Trademark Office, among others.
“America’s patent system is the envy of the world, but unfortunately some bad actors are misusing the system to sue unsuspecting consumers or extort monetary settlements by making misleading demands,” Leahy said in November.
“When small businesses in Vermont and across the country are threatened with lawsuits for offering wi-fi to their customers or using document scanners in their offices, we can all agree the system is not being used as intended.”
The biggest difference between Leahy’s proposed legislation and the House version is that S. 1720 does not include the provisions that would force patent infringement case management rules on the district courts or procedures as to pleading, discovery timing and limits, cost-shifting related to discovery or loser-pays fee shifting.
Dickinson, who served as the director of the PTO from 1999 to 2001 and recently testified on Capitol Hill about patent troll abuse, said such provisions can be problematic in the long run.
“The problem is, if you stay all discovery while waiting for a hearing, you’re basically delaying the eventual discovery,” he explained.
“You’re going to have to do it anyway. Now, instead of doing it in parallel, you’re going to hold things up.”
S. 1720 was assigned to a congressional committee on Nov. 18. It must be considered before it is possibly sent on to the House or Senate as a whole.
From Legal Newsline: Reach Jessica Karmasek at email@example.com.