Bill Text: MI SB0289 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Civil procedure; other; claims of patent infringement made in bad faith; prohibit, and provide remedies for. Creates new act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2016-12-30 - Assigned Pa 0550'16 [SB0289 Detail]
Download: Michigan-2015-SB0289-Introduced.html
SENATE BILL No. 289
April 22, 2015, Introduced by Senator O'BRIEN and referred to the Committee on Judiciary.
A bill to prohibit the bad-faith assertion of patent
infringements; to provide remedies for the bad-faith assertion of
patent infringements; to provide for the powers and duties of the
attorney general; and to authorize the promulgation of rules.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "bad-
faith patent infringement claims act".
Sec. 2. The legislature finds all of the following:
(a) This state is striving to build an entrepreneurial and
knowledge-based economy. Attracting and nurturing small- and
medium-sized knowledge-based companies is an important part of this
effort and will be beneficial to this state's future.
(b) Patents are essential to encouraging innovation,
especially in information technology and knowledge-based fields.
The protections afforded by the federal patent system create an
incentive to invest in research and innovation, which spurs
economic growth. Patent holders have every right to enforce their
patents when they are infringed, and patent enforcement litigation
is necessary to protect intellectual property.
(c) The legislature does not wish to interfere with the good-
faith enforcement of patents or good-faith patent litigation. The
legislature also recognizes that this state is preempted from
passing any law that conflicts with federal patent law.
(d) Patent litigation can be technical, complex, and
expensive. The expense of patent litigation, which may cost
hundreds of thousands of dollars or more, can be a significant
burden on small- and medium-sized companies. The legislature wishes
to help its businesses avoid these costs by encouraging the most
efficient resolution of patent infringement claims without
conflicting with federal law.
(e) Abusive patent litigation, and especially the assertion of
bad-faith infringement claims, can harm companies in this state. A
business that receives a letter asserting such a claim faces the
threat of expensive and protracted litigation and may feel that it
has no choice but to settle and to pay a licensing fee, even if the
claim is meritless. This is especially so for small and medium
companies and nonprofits that lack the resources to investigate and
defend themselves against infringement claims.
(f) Through this narrowly focused act, the legislature seeks
to facilitate the efficient and prompt resolution of patent
infringement claims, protect businesses in this state from abusive
and bad-faith assertions of patent infringement, and build this
state's economy, while at the same time respecting federal law and
being careful not to interfere with legitimate patent enforcement
actions.
Sec. 3. As used in this act:
(a) "Demand letter" means a letter, electronic mail, or other
communication that asserts or claims that the target has engaged in
patent infringement.
(b) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(c) "Target" means a person to which 1 or more of the
following apply:
(i) The person has received a demand letter or an assertion or
allegation of patent infringement has been made against the person.
(ii) The person has been threatened with litigation or a
lawsuit has been filed against the person alleging patent
infringement.
(iii) The person's customers have received a demand letter
asserting that the person's product, service, or technology has
infringed a patent.
Sec. 5. (1) A person shall not make a bad-faith assertion of
patent infringement.
(2) A court may consider the following factors as evidence
that a person has made a bad-faith assertion of patent
infringement:
(a) A demand letter sent by the person did not contain all of
the following information:
(i) The patent number.
(ii) The name and address of the patent owner or owners and
assignee or assignees, if any.
(iii) Factual allegations concerning the specific areas in which
the target's products, services, and technology infringed the
patent or were covered by the claims in the patent.
(b) Before sending a demand letter, the person failed to
conduct an analysis comparing the claims in the patent to the
target's products, services, and technology, or such an analysis
was done but did not identify specific areas in which the products,
services, and technology were covered by the claims in the patent.
(c) A demand letter sent by the person lacked the information
described in subdivision (a), the target requested the information,
and the person failed to provide the information within a
reasonable time.
(d) A demand letter sent by the person demanded payment of a
license fee or response within an unreasonably short period of
time.
(e) The person offered to license the patent for an amount
that was not based on a reasonable estimate of the value of the
license.
(f) The claim or assertion of patent infringement was
meritless, and the person knew, or should have known, that the
claim or assertion was meritless.
(g) The claim or assertion of patent infringement was
deceptive.
(h) The person or any of its subsidiaries or affiliates has
previously filed or threatened to file 1 or more lawsuits based on
the same or similar claim of patent infringement and 1 or both of
the following apply:
(i) The threats or lawsuits lacked the information described in
subdivision (a).
(ii) The person attempted to enforce the claim of patent
infringement in litigation and a court found the claim to be
meritless.
(i) Any other factor the court finds relevant.
(3) A court may consider the following factors as evidence
that a person has not made a bad-faith assertion of patent
infringement:
(a) A demand letter sent by the person contains the
information described in subsection (2)(a).
(b) If a demand letter sent by the person lacked the
information described in subsection (2)(a) and the target requested
the information, the person provided the information within a
reasonable time.
(c) The person engaged in a good-faith effort to establish
that the target infringed the patent and to negotiate an
appropriate remedy.
(d) The person made a substantial investment in the use of the
patent or in the production or sale of a product or item covered by
the patent.
(e) The person is 1 of the following:
(i) The inventor or joint inventor of the patent or, for a
patent filed by and awarded to an assignee of the original inventor
or joint inventor, the original assignee.
(ii) An institution of higher education or a technology
transfer organization owned or affiliated with an institution of
higher education.
(f) The person has done either of the following:
(i) Demonstrated good-faith business practices in previous
efforts to enforce the patent, or a substantially similar patent.
(ii) Successfully enforced the patent, or a substantially
similar patent, through litigation.
(g) Any other factor the court finds relevant.
(4) This act does not apply to a demand letter or assertion of
a patent infringement that includes a claim for relief arising
under 35 USC 271(e)(2).
Sec. 7. (1) On motion by a target and a finding by the court
that the target has established a reasonable likelihood that a
person has made a bad-faith assertion of patent infringement in
violation of this act, the court shall require the person to post a
bond in an amount equal to a good-faith estimate of the target's
costs to litigate the claim and an amount reasonably likely to be
recovered under section 9(2), conditioned on payment of any amount
finally determined to be due to the target. The court shall not
order a bond to be posted under this section that exceeds
$250,000.00.
(2) A court may waive the bond requirement under this section
if it finds the person alleged to have made a bad-faith assertion
of patent infringement in violation of this chapter has available
assets equal to the amount of the proposed bond or for other good
cause shown.
Sec. 9. (1) The attorney general has the same authority under
this act to make rules, conduct civil investigations, bring civil
actions, and enter into assurances of discontinuance as provided
under the Michigan consumer protection act, 1976 PA 331, MCL
445.901 to 445.922. In an action brought by the attorney general
under this act, the court may award or impose any relief available
under the Michigan consumer protection act, 1976 PA 331, MCL
445.901 to 445.922.
(2) A target or a person aggrieved by a violation of this act
or rules promulgated under this act may bring an action in the
circuit court. The court may award the following remedies to a
plaintiff that prevails in an action brought under this subsection:
(a) Equitable relief.
(b) Damages.
(c) Costs and fees, including reasonable attorney fees.
(d) Exemplary damages in an amount equal to $50,000.00 or 3
times the total of actual damages, costs, and fees, whichever is
greater.
(3) This act does not limit rights and remedies available to
this state or to any person under any other law and does not alter
or restrict the attorney general's authority under the Michigan
consumer protection act, 1976 PA 331, MCL 445.901 to 445.922, with
regard to conduct involving assertions of patent infringement.
