S.F. _____ H.F. _____ Section 1. NEW SECTION . 714I.1 Definitions. 1 1. “Alleged infringer” means a person who is a resident of 2 this state and for whom any of the following is true: 3 a. An assertion or allegation of patent infringement has 4 been made against the person or the person has received a 5 demand letter. 6 b. A lawsuit has been filed against the person alleging 7 patent infringement or the person has been threatened with 8 litigation. 9 c. The person’s customers have received a demand letter 10 asserting that the person’s product, service, or technology has 11 infringed upon a patent. 12 2. “Demand letter” means a letter, electronic mail, or other 13 communication asserting or claiming that the alleged infringer 14 has engaged in patent infringement. 15 3. “Person” means the same as defined in section 714.16. 16 Sec. 2. NEW SECTION . 714I.2 Bad-faith assertion of patent 17 infringement. 18 1. A person shall not make a bad-faith assertion of patent 19 infringement. 20 2. A court may consider any of the following factors as 21 evidence that a person has made a bad-faith assertion of patent 22 infringement: 23 a. The demand letter does not contain all of the following: 24 (1) The patent number. 25 (2) The name and address of the patent owner or owners and 26 of the assignee or assignees of the patent, if any. 27 (3) Factual allegations concerning the specific areas in 28 which the alleged infringer’s product, service, or technology 29 infringes upon the patent or is covered by the claims in the 30 patent. 31 b. The demand letter does not include all of the information 32 described in paragraph “a” , the alleged infringer requests the 33 information, and the person fails to provide the information 34 within a reasonable period of time. 35 -1- LSB 1297DP (3) 86 jh/nh 1/ 5

S.F. _____ H.F. _____ c. Prior to sending the demand letter, the person fails to 1 conduct an analysis comparing the claims in the patent to the 2 alleged infringer’s product, service, or technology, or such an 3 analysis was done but does not identify specific areas in which 4 the product, service, or technology is covered by the claims 5 in the patent. 6 d. The demand letter demands the payment of a license fee or 7 a response within an unreasonably short period of time. 8 e. The person offers to license the patent for an amount 9 that is not based on a reasonable estimate of the value of the 10 license. 11 f. The claim or assertion of patent infringement is 12 meritless, and the person knew, or should have known, that the 13 claim or assertion is meritless. 14 g. The claim or assertion of patent infringement is 15 deceptive. 16 h. The person or a subsidiary or affiliate of the person has 17 previously filed or threatened to file a lawsuit based on the 18 same or a similar claim of patent infringement and any of the 19 following is true: 20 (1) The lawsuit or threat does not include all of the 21 information described in paragraph “a” . 22 (2) The person attempted to enforce the claim of patent 23 infringement in litigation and a court found the claim to be 24 meritless. 25 i. Any other factor the court finds relevant. 26 3. A court may consider any of the following factors as 27 evidence that a person has not made a bad-faith assertion of 28 patent infringement: 29 a. The demand letter contains the information described in 30 subsection 2, paragraph “a” . 31 b. Where the demand letter does not contain all of the 32 information described in subsection 2, paragraph “a” , and the 33 alleged infringer requests the information, the person provides 34 the information within a reasonable period of time. 35 -2- LSB 1297DP (3) 86 jh/nh 2/ 5

S.F. _____ H.F. _____ c. The person engages in a good-faith effort to establish 1 that the alleged infringer has infringed upon the patent and to 2 negotiate an appropriate remedy. 3 d. The person makes a substantial investment in the use of 4 the patent or in the production or sale of a product or item 5 covered by the patent. 6 e. The person is any of the following: 7 (1) The inventor or joint inventor of the patent or, in the 8 case of a patent filed by and awarded to an assignee of the 9 original inventor or joint inventor, the original assignee. 10 (2) An institution of higher education or a technology 11 transfer organization owned or affiliated with an institution 12 of higher education. 13 f. The person has done any of the following: 14 (1) Demonstrated good-faith business practices in previous 15 efforts to enforce the patent, or a substantially similar 16 patent. 17 (2) Successfully enforced the patent, or a substantially 18 similar patent, through litigation. 19 g. Any other factor the court finds relevant. 20 Sec. 3. NEW SECTION . 714I.3 Bond requirement. 21 Upon motion by an alleged infringer and a finding by the 22 court that the alleged infringer has established a reasonable 23 likelihood that a person has made a bad-faith assertion of 24 patent infringement in violation of this chapter, the court 25 shall require the person to post a bond in an amount equal 26 to a good-faith estimate of the alleged infringer’s costs 27 to litigate the claim and amounts reasonably likely to be 28 recovered under section 714I.4, conditioned upon payment of any 29 amounts finally determined to be due to the alleged infringer. 30 A hearing regarding the posting of such bond shall be held if 31 either party so requests. A bond ordered pursuant to this 32 section shall not exceed two hundred fifty thousand dollars. 33 The court may waive the bond requirement if it finds the person 34 has available assets equal to the amount of the proposed bond 35 -3- LSB 1297DP (3) 86 jh/nh 3/ 5

S.F. _____ H.F. _____ or for other good cause shown. 1 Sec. 4. NEW SECTION . 714I.4 Enforcement and remedies. 2 1. A violation of this chapter is an unlawful practice 3 pursuant to section 714.16, and all the remedies under section 4 714.16 are available for such an action. This chapter shall 5 not be construed to limit rights and remedies available to the 6 state or to any person under any other law and shall not be 7 construed to in any way limit the authority of the attorney 8 general under section 714.16 with regard to conduct involving 9 assertions of patent infringement. 10 2. A person who is the target of conduct involving an 11 assertion of patent infringement, or a person aggrieved by a 12 violation of this chapter, may bring an action in district 13 court. A court may award any of the following remedies to a 14 plaintiff who prevails in an action brought pursuant to this 15 subsection: 16 a. Equitable relief. 17 b. Damages. 18 c. Costs and fees, including reasonable attorney fees. 19 d. Exemplary damages in an amount equal to fifty thousand 20 dollars or three times the total amount of damages, costs, and 21 fees, whichever is greater. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 This bill creates a private right of action for bad-faith 26 assertions of patent infringement. The bill prohibits a person 27 from making a bad-faith assertion of patent infringement, and 28 provides lists of factors that a court may consider as evidence 29 that a person’s assertion of patent infringement was either 30 made or not made in bad faith. The bill further provides 31 that a violation of the Code chapter is an unlawful practice 32 under Code section 714.16, and that the attorney general’s 33 rights and remedies under Code section 714.16 are not in any 34 way limited by the creation of the private right of action. 35 -4- LSB 1297DP (3) 86 jh/nh 4/ 5

S.F. _____ H.F. _____ Under Code section 714.16, with regard to unlawful practices, 1 the attorney general has the authority to issue subpoenas, 2 hold hearings, adopt administrative rules, and file lawsuits 3 to obtain temporary and permanent injunctive relief, consumer 4 reimbursement, costs and attorney fees, and civil penalties up 5 to $40,000 per violation. 6 A person against whom an allegation of patent infringement 7 has been made, who has received a demand letter asserting that 8 the person has engaged in patent infringement, against whom 9 a lawsuit alleging patent infringement has been filed or who 10 has been threatened by such a lawsuit, or whose customers have 11 received a demand letter asserting that the person has engaged 12 in patent infringement, may bring an action in district court 13 alleging that the assertion was made in bad faith. During the 14 proceeding, the court may order the person who alleged patent 15 infringement to post a bond upon a finding by the court that 16 there is a reasonable likelihood that the patent infringement 17 claim was made in bad faith. If the court finds that the 18 assertion of patent infringement was made in bad faith, the 19 court may award equitable relief, damages, costs and fees, 20 including reasonable attorney fees, or exemplary damages. 21 Exemplary damages are the greater of $50,000 or three times the 22 total of damages, costs, and fees. 23 -5- LSB 1297DP (3) 86 jh/nh 5/ 5