Senate Study Bill 1028 - IntroducedA Bill ForAn Act 1creating a private right of action for bad-faith
2assertions of patent infringement, and providing remedies
3and penalties.
1   Section 1.  NEW SECTION.  714I.1  Definitions.
   21.  “Alleged infringer” means a person who is a resident of
3this state and for whom any of the following is true:
   4a.  An assertion or allegation of patent infringement has
5been made against the person or the person has received a
6demand letter.
   7b.  A lawsuit has been filed against the person alleging
8patent infringement or the person has been threatened with
   10c.  The person’s customers have received a demand letter
11asserting that the person’s product, service, or technology has
12infringed upon a patent.
   132.  “Demand letter” means a letter, electronic mail, or other
14communication asserting or claiming that the alleged infringer
15has engaged in patent infringement.
   163.  “Person” means the same as defined in section 714.16.
17   Sec. 2.  NEW SECTION.  714I.2  Bad-faith assertion of patent
   191.  A person shall not make a bad-faith assertion of patent
   212.  A court may consider any of the following factors as
22evidence that a person has made a bad-faith assertion of patent
   24a.  The demand letter does not contain all of the following:
   25(1)  The patent number.
   26(2)  The name and address of the patent owner or owners and
27of the assignee or assignees of the patent, if any.
   28(3)  Factual allegations concerning the specific areas in
29which the alleged infringer’s product, service, or technology
30infringes upon the patent or is covered by the claims in the
   32b.  The demand letter does not include all of the information
33described in paragraph “a”, the alleged infringer requests the
34information, and the person fails to provide the information
35within a reasonable period of time.
   1c.  Prior to sending the demand letter, the person fails to
2conduct an analysis comparing the claims in the patent to the
3alleged infringer’s product, service, or technology, or such an
4analysis was done but does not identify specific areas in which
5the product, service, or technology is covered by the claims
6in the patent.
   7d.  The demand letter demands the payment of a license fee or
8a response within an unreasonably short period of time.
   9e.  The person offers to license the patent for an amount
10that is not based on a reasonable estimate of the value of the
   12f.  The claim or assertion of patent infringement is
13meritless, and the person knew, or should have known, that the
14claim or assertion is meritless.
   15g.  The claim or assertion of patent infringement is
   17h.  The person or a subsidiary or affiliate of the person has
18previously filed or threatened to file a lawsuit based on the
19same or a similar claim of patent infringement and any of the
20following is true:
   21(1)  The lawsuit or threat does not include all of the
22information described in paragraph “a”.
   23(2)  The person attempted to enforce the claim of patent
24infringement in litigation and a court found the claim to be
   26i.  Any other factor the court finds relevant.
   273.  A court may consider any of the following factors as
28evidence that a person has not made a bad-faith assertion of
29patent infringement:
   30a.  The demand letter contains the information described in
31subsection 2, paragraph “a”.
   32b.  Where the demand letter does not contain all of the
33information described in subsection 2, paragraph “a”, and the
34alleged infringer requests the information, the person provides
35the information within a reasonable period of time.
   1c.  The person engages in a good-faith effort to establish
2that the alleged infringer has infringed upon the patent and to
3negotiate an appropriate remedy.
   4d.  The person makes a substantial investment in the use of
5the patent or in the production or sale of a product or item
6covered by the patent.
   7e.  The person is any of the following:
   8(1)  The inventor or joint inventor of the patent or, in the
9case of a patent filed by and awarded to an assignee of the
10original inventor or joint inventor, the original assignee.
   11(2)  An institution of higher education or a technology
12transfer organization owned or affiliated with an institution
13of higher education.
   14f.  The person has done any of the following:
   15(1)  Demonstrated good-faith business practices in previous
16efforts to enforce the patent, or a substantially similar
   18(2)  Successfully enforced the patent, or a substantially
19similar patent, through litigation.
   20g.  Any other factor the court finds relevant.
21   Sec. 3.  NEW SECTION.  714I.3  Bond requirement.
   22Upon motion by an alleged infringer and a finding by the
23court that the alleged infringer has established a reasonable
24likelihood that a person has made a bad-faith assertion of
25patent infringement in violation of this chapter, the court
26shall require the person to post a bond in an amount equal
27to a good-faith estimate of the alleged infringer’s costs
28to litigate the claim and amounts reasonably likely to be
29recovered under section 714I.4, conditioned upon payment of any
30amounts finally determined to be due to the alleged infringer.
31A hearing regarding the posting of such bond shall be held if
32either party so requests. A bond ordered pursuant to this
33section shall not exceed two hundred fifty thousand dollars.
34The court may waive the bond requirement if it finds the person
35has available assets equal to the amount of the proposed bond
-3-1or for other good cause shown.
2   Sec. 4.  NEW SECTION.  714I.4  Enforcement and remedies.
   31.  A violation of this chapter is an unlawful practice
4pursuant to section 714.16, and all the remedies under section
5714.16 are available for such an action. This chapter shall
6not be construed to limit rights and remedies available to the
7state or to any person under any other law and shall not be
8construed to in any way limit the authority of the attorney
9general under section 714.16 with regard to conduct involving
10assertions of patent infringement.
   112.  A person who is the target of conduct involving an
12assertion of patent infringement, or a person aggrieved by a
13violation of this chapter, may bring an action in district
14court. A court may award any of the following remedies to a
15plaintiff who prevails in an action brought pursuant to this
   17a.  Equitable relief.
   18b.  Damages.
   19c.  Costs and fees, including reasonable attorney fees.
   20d.  Exemplary damages in an amount equal to fifty thousand
21dollars or three times the total amount of damages, costs, and
22fees, whichever is greater.
24The inclusion of this explanation does not constitute agreement with
25the explanation’s substance by the members of the general assembly.
   26This bill creates a private right of action for bad-faith
27assertions of patent infringement. The bill prohibits a person
28from making a bad-faith assertion of patent infringement, and
29provides lists of factors that a court may consider as evidence
30that a person’s assertion of patent infringement was either
31made or not made in bad faith. The bill further provides
32that a violation of the Code chapter is an unlawful practice
33under Code section 714.16, and that the attorney general’s
34rights and remedies under Code section 714.16 are not in any
35way limited by the creation of the private right of action.
-4-1Under Code section 714.16, with regard to unlawful practices,
2the attorney general has the authority to issue subpoenas,
3hold hearings, adopt administrative rules, and file lawsuits
4to obtain temporary and permanent injunctive relief, consumer
5reimbursement, costs and attorney fees, and civil penalties up
6to $40,000 per violation.
   7A person against whom an allegation of patent infringement
8has been made, who has received a demand letter asserting that
9the person has engaged in patent infringement, against whom
10a lawsuit alleging patent infringement has been filed or who
11has been threatened by such a lawsuit, or whose customers have
12received a demand letter asserting that the person has engaged
13in patent infringement, may bring an action in district court
14alleging that the assertion was made in bad faith. During the
15proceeding, the court may order the person who alleged patent
16infringement to post a bond upon a finding by the court that
17there is a reasonable likelihood that the patent infringement
18claim was made in bad faith. If the court finds that the
19assertion of patent infringement was made in bad faith, the
20court may award equitable relief, damages, costs and fees,
21including reasonable attorney fees, or exemplary damages.
22Exemplary damages are the greater of $50,000 or three times the
23total of damages, costs, and fees.