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Law360: New Anti-Troll Bill Would Raise Patent Pleading Standard

Law360, New York (July 11, 2013, 6:42 PM ET) — Two congressmen introduced legislation Wednesday that would heighten pleading requirements for patent suits and restrict discovery, the latest bill in a slew of proposals aimed at cracking down on so-called patent trolls.

The Patent Litigation and Innovation Act, or H.R. 2639, was introduced by Reps. Hakeem Jeffries, D-N.Y., and Blake Farenthold, R-Texas. It is the sixth piece of legislation unveiled this year dealing with concerns about patent trolls, and features some provisions that were included in the earlier bills.

Jeffries said in a statement that Congress must act to keep the patent system from being abused by “the explosion of patent troll activity” that “diverts resources away from research and development, hinders innovation, and stifles entrepreneurship.”

“The solutions proposed in this bill will deter patent trolls without impeding the rights of responsible intellectual property holders,” Farenthold said.

The bill lays out new pleading standards for patent complaints designed to address concerns that suits by nonpracticing entities include vague infringement allegations. It calls for a requirement to identify specific products that allegedly infringe and provide “detailed specificity” as to how the asserted claims correspond to the accused functionality.

To address allegations that nonpracticing entities seek to leverage settlements by driving up discovery costs for defendants, the bill would require courts to stay discovery in any patent suit until it has ruled on a motion to dismiss or transfer or has issued a claim construction ruling.

The bill would also require courts to stay infringement suits against companies that purchase and use allegedly infringing products pending the outcome of a suit against the manufacturer of the product. The provision is related to complaints that nonpracticing entities have increasingly filed infringement suits against businesses like coffee shops and hotels because they offer Wi-Fi and other services using products purchased off the shelf.

The new bill would also require courts to conduct a review “upon final adjudication” of a patent suit of whether any conduct during the litigation merits sanctions, such as bringing the suit to harass or needlessly increasing the cost of litigation. The lawmakers said the increased scrutiny would “discourage frivolous matters from being commenced.”

The heightened pleading standards and stay of litigation against end users were also included in a discussion draft of possible patent troll litigation floated by House Judiciary Committee Chairman Bob Goodlatte, R-Va., in May. Some of the other proposals are included in the Patent Abuse Reduction Act, introduced in the Senate in May, and a package of proposed patent reforms unveiled by President Barack Obama in June. 

The bill by Jeffries and Farenthold won quick praise from the Consumer Electronics Association, a technology industry trade group, which said it includes “smart, common-sense reforms.”

The bill “focuses like a laser beam on the important issue of frivolous lawsuits brought by patent trolls,” the group said in a statement Thursday. “It is Congress' job to ensure that the patent system promotes innovation and is not used as a vehicle for legalized extortion.”

The rush of patent legislation aimed at nonpracticing entities may not be over yet. Senate Judiciary Committee Chairman  Patrick Leahy, D-Vt. has said he is working on his own bill and plans to introduce it soon.