Sen. Hatch Introduces Patent Litigation Integrity Act Aimed at 'Patent Trolls'

On October 30, US Senator Orrin Hatch (R-UT), chair of the Senate Judiciary Committee, introduced the Patent Litigation Integrity Act of 2013, which follows the introduction in the House of the Innovation Act (HR 3309) by Rep. Bob Goodlatte (R-VA), chair of the House Judiciary Committee. In a statement released with the legislation (click here), Sen. Hatch indicated that legislation will “address the growing threat of so-called ‘patent trolls.’ Patent trolls purchase existing broad patents and then threaten businesses of infringing on those patents, in search of a financial settlement or litigation.”
 
Sen. Hatch’s legislation differs from the bill recently introduced by Rep. Goodlatte in that Hatch’s proposal includes a mandatory fee shifting provision and provides for a discretionary bonding provision. Both elements are aimed at certain patent litigants. The legislation suggests provisions aimed at protecting good-faith plaintiffs from being unfairly burdened by a bond requirement, which criteria a judge must consider before granting the defendant’s motion. Excluded from the bonding provision would be research universities and non-profit technology transfer organizations as well as plaintiffs that are the named inventor or original assignee of the asserted patent or companies that are manufacturing or selling products related to the asserted patent.  
 
The discretionary bonding provision allows a judge, on motion by the defendant, to require the plaintiff to post a bond sufficient to cover the cost of the defendant’s reasonable fees and costs. In explaining his rationale for including this bonding provision, Sen. Hatch stated, “Fee shifting without the option to seek a bond is like writing a check on an empty account, and that’s why it’s important to include both in any legislation dealing with patent trolls.” 
 
If passed, the legislation could, among other things, dramatically increase the costs of litigation for some class of plaintiffs, which as of this moment are not sufficiently defined. There is uncertainty with respect to the definition of impacted plaintiffs and particularly which companies may be required to engage in fee shifting. Given that federal judges currently possess and exercise discretion with respect to fees, the impact of such a provision is unknown. Further, fee shifting and posting bonds in patent cases may impact negatively the number of matters resolved short of full-blown litigation. Indeed, the problem sought to be addressed is complex, which suggests that the solution must be considered thoroughly to avert the creation of more significant barriers to intellectual property protection.
 
Arent Fox will continue to monitor the progress of this and related legislation through Congress.  For further information, please contact Pamela M. Deese.