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Innovation Act: Congress To Stand Up to Patent Trolls?

Patent law in the U.S. might change once again: as of February 2015, Congress is reconsidering the "Innovation Act," a bill that could implement several changes, including making it difficult for non-practicing entities (also known as "patent trolls") to claim their patents have been infringed upon. Patent trolls usually buy up patents and then use them against unsuspecting businesses, without contributing anything to the economy themselves. Often, defendants will simply settle the case as a way to avoid further costly litigation. It is easy to see, then, why many argue that patent trolls engage in abusive litigation tactics, which harms the economy and wastes resources.

The Innovation Act would create a number of changes to the existing framework. For instance, the Act would force patent trolls to meet a heightened pleading requirement. That is, if a patent holder alleged that someone else infringed on a claim, the patent holder would need to include a set of "infringement charts" that would show how each accused product infringed on each asserted patent. There would also be certain exceptions to this specific pleading requirement. For example, pharmaceutical companies would not need to comply.

Another change would be a "presumption" of attorney fees. The current rule is that attorney fees are available only for "exceptional" cases. A court would be required to award attorney fees and other expenses to the prevailing party unless a judge finds that the position and conduct of the non-prevailing party was reasonably justified or that there were special circumstances that would make the award unjust. For instance, if an inventor loses a patent challenge and shows evidence of economic hardship if she is forced to pay attorney fees, a court would take this information into consideration.

The Act would also limit fact discovery until after a claim construction ruling is issued, if one is necessary. The benefit to this change is that it can limit costs, because the claim construction could be dispositive (thus narrowing the scope of the case). If the case is smaller, less discovery is needed. When the case nears its conclusion, parties begin thinking of damages. Under the Act, another change is that treble damages would be available only in limited circumstances. The patent owner would need to send a pre-suit demand letter that identified the patent in question, the parent entity that owns the patent, the accused (infringing) products, and how the product infringes at least one claim of the patent. This is the only format of a pre-suit demand letter that could potentially apply as evidence of willful infringement.

For more information on how this law, and other legislation, could affect your business, contact the experienced attorneys at MYBE Law today.

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