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What is House Bill H.R. 9?

This bill aims to support intellectual property rights and prevent patent infringement by changing the administrative and judicial processes for patents.

When people (or companies) want to claim that another person (or company) has violated their exclusive rights to an invention, they would be suing for patent infringement. This bill creates new requirements for bringing forward a legal challenge.

The bill also aims to make the process more transparent and cut down on frivolous lawsuits filed by "patent trolls". Brush up on your knowledge of patent lawsuits and patent trolls with this podcast from This American Life.

Procedures used by the Patent and Trademark Office (PTO) to examine patent applications, award patents, and determine the validity of granted patents would be changed to require the use of methods already used in district courts in patent cases. The PTO would also develop databases that make information about patent ownership and litigation available on its website.

Courts would be required to assess whether a patent is valid or invalid early in the litigation process to prevent meritless cases from dragging on indefinitely. This protects businesses from having to settle otherwise invalid claims because cases have taken such a long time that they’d rather not continue to pay legal fees.

Judges would be required to stay the discovery process in cases where a motion to dismiss or transfer has been filed. This helps victims of frivolous lawsuits avoid incurring costs during discovery, which can help patent trolls leverage quick settlements.

After a case that has no reasonable basis is decided, the parties that brought the case would be required to pay the legal fees of the victims of the frivolous lawsuit, and applies to both plaintiffs and defendants who file frivolous claims. Judges could waive this award in special circumstances.

The judicial processes used in patent infringement cases would be modified to require plaintiffs who make accusations to disclose the following information about the patent to the court and adverse parties:

The identity of the party assigned the patent;
Any entity with a right to sublicense or enforce the patent;
Entities the plaintiff knows to have a specified financial interest in the patent or the plaintiff;
The ultimate parent entity of any identified assignee or entity.

Impact

Patent holders and those accused of infringing patent rights, patent trolls, administrative and judicial courts, and the Supreme Court.

Cost of House Bill H.R. 9

$3.00 Million

The CBO estimates that this bill would cost $3 million over the 2016-2020 period — which would have been closer to $7 million if the cost weren’t offset by increased fee receipts to the PTO.

More Information

In-Depth: The lead sponsor of this legislation — Rep. Bob Goodlatte (R-VA) — cited an “exponential increase in the use of weak or poorly granted patents by patent trolls to file numerous patent infringement lawsuits” as the problem his bill seeks to solve. Rep. Goodlatte believes:

“The tens of billions of dollars squandered on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital — capital that could have been used to create new jobs, fund research and development, and create new innovations and technologies.”

Critics of this bill point out that there have been recent Supreme Court cases which were decided in ways that will suppress limit the ability of patent trolls to file abusive claims. Others, like the Biotechnology Industry Organization, have cautioned that the changes may have the unintended effect of weakening the ability of legitimate patent owners to protect their rights through the legal process.

The House Judiciary Committee approved this bill by a vote of 24 to 8, and currently has the bipartisan support of 12 Democratic and 15 Republican cosponsors.

A previous version of this legislation passed the House of Representatives by a vote of 325 to 91, but stalled in committee in the Senate. That version of the bill had the support of a wide variety of trade associations, academics, and businesses both large and small representing nearly all sectors of the economy. Supporters included Apple, AT&T, the Consumer Electronics Association, Ford, Google, the National Grocers Association, and the U.S. Chamber of Commerce.

Other provisions of this bill include:

After the initial identification, plaintiffs and subsequent owners of the patent would be directed to provide updates to the identification information.

A voluntary process would be made available to small businesses that allows them to postpone expensive patent lawsuits while their larger sellers complete patent lawsuits against the same plaintiffs. This protects customers that may have simply purchased a product off-the-shelf from having to deal with a patent lawsuit which could be easily settled or dropped if proven meritless.

The Supreme Court would be required to eliminate the model patent infringement complaint form that is currently used, and could develop a new model that would notify alleged patent infringers of specific information about patent claims.

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