Working from the Tyler office today meeting and conferring and reviewing, but I wanted to note that while we're on the subject of patent demand letters this week, Senator John Cornyn of Texas with several of his colleagues has introduced the PATENT Act, which addresses a number of area pertaining to patent litigation, including demand letters. The bill text can be found here. According to the bill summary, the legislatioon does the following:
- Clarifies Pleading Standards. The bill would establish clear, uniform standards for pleading in patent infringement suits to give defendants real notice of the claims against them, and keep meritless lawsuits from clogging federal court dockets. It also increases transparency by requiring early disclosures about the patent-in-suit.
- Protects End Users. The bill protects customers who are targeted for patent infringement based on a product they simply purchased from a manufacturer or off the shelf by allowing the stay of an infringement case against an end user of a product while the manufacturer of the product litigates the alleged infringement.
- Reasonably Limits Early Discovery. The legislation protects litigants from the threat of expensive discovery by requiring a court to stay discovery while it resolves key early motions in the case, including motions to dismiss and transfer venue. The bill also directs the Judicial Conference to develop rules about how much a party should bear the cost of discovery beyond what is core for the case.
- Creates Risk for Bad Actors. In order to deter plaintiffs and defendants from engaging in abusive and dilatory litigation practices, the bill provides that reasonable attorney fees will be awarded if the winner proves and a court rules that the losing party was not “objectively reasonable.” The legislation provides a process to recover fees where the abusive litigant is hiding behind a shell company.
- Curbs Abusive Demand Letters. The legislation adds requirements that demand letters contain meaningful information so they cannot be used merely to scare recipients into early settlements. The bill also heightens penalties for those found to violate the FTC Act by sending misleading demand letters.
- Increases Transparency. The bill requires the PTO to keep information about patent ownership in order to provide a resource about patents being asserted in a demand letter or lawsuit.
Patently-O has an analysis of the legislation here.
The reason that I point the legislation out in the context of demand letters is that the legislation's section addressed to demand letters is not dissimilar in scope or intent from the provisions contained in Texas Sen. Nichols' bill which was approved last week by the Texas Senate, and which defined "bad faith" to include objective statements as the prohibited deceptive trade practices, as opposed to a more subjective test contained in other legislation.