Senate and House Judiciary Committees Approve Bills to Curtail Patent Trolls

June 25, 2015

Magnifying glass over "patent"The U.S. Senate and House of Representatives Judiciary Committees have approved similar bills to curtail frivolous patent lawsuits.  The legislation is supported by the American Institute of CPAs (AICPA).  The Senate Judiciary Committee approved S. 1137 on June 4 by a vote of 16 to 4.  The House Judiciary Committee approved H.R. 9 on June 11 with a vote of 24 to 8.  The actions by the House and Senate Judiciary Committees pave the way for consideration of the legislation in the full House and Senate.

So-called patent “trolls” or “patent assertion entities” purchase patents for the express purpose of filing patent infringement lawsuits against companies to get licensing fees or a legal settlement without actually making any goods or providing any services.  The AICPA and the state CPA societies last Congress advocated strongly for swift Congressional action on patent litigation reform.  The AICPA developed guiding principles for patent reform and had several of its recommendations included in the House and Senate patent troll bills.  

S. 1137, the bipartisan bill sponsored by Senators Charles Grassley (R-Iowa), John Cornyn (R-Texas), Pat Leahy (D-Vt.) and Chuck Schumer (D-N.Y.), would:

  • Require judges to award attorneys’ fees to defendants in patent disputes if the judge determines that the plaintiff’s case was not reasonable;
  • Increase the amount of detail required of plaintiffs in their initial pleadings to the court and delay the expensive discovery process until the judge has had an opportunity to hear a motion to dismiss the case;
  • Set rules governing the demand letters that patent holders sometimes send to alleged infringers demanding settlements or licensing fees, requiring that they provide more information about the alleged infringement, while allowing the Federal Trade Commission to police violations; and
  • Require patent holders to sue manufacturers of alleged infringing technology before going after companies that merely use patented technology, such as CPA firms, retailers, restaurants and hoteliers.

H.R. 9 was introduced by Rep. Bob Goodlatte (R-Va.) with 19 bipartisan co-sponsors and now has 27 co-sponsors.  Last Congress, the House passed patent troll legislation by the overwhelming margin of 325 to 91.  While the House and Senate bills are similar, the House version would go much farther to limit patent litigation suits.