Bill Text: MI SB0289 | 2015-2016 | 98th Legislature | Engrossed
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-Engrossed.html
SB-0289, As Passed House, December 15, 2016
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 289
A bill to prohibit the bad-faith assertion of patent
infringement; 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. 3. As used in this act:
(a) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(b) "Target" means a person that purchases, rents, leases, or
otherwise obtains a product or service in the commercial market
that is not for resale in the commercial market and that is, or
later becomes, the subject of the patent infringement allegation.
Sec. 5. It is an unlawful practice under this act for a
person, in connection with the assertion of a United States patent,
to send or cause another person to send a written communication,
including an electronic communication, that states in bad faith
that the target is infringing or has infringed a patent and bears
liability or owes compensation to another person, if 1 or more of
the following apply:
(a) The communication falsely states that an action seeking
administrative or judicial relief has been filed against the target
or an affiliated person.
(b) The assertions contained in the communication lack a
reasonable basis in fact or law because 1 or more of the following
are true:
(i) The person asserting the patent does not have the current
right, and does not represent a person that has the current right,
to license the patent to or enforce the patent against the target
or an affiliated person.
(ii) The communication seeks compensation for a patent that
has been held to be invalid or unenforceable in a final,
unappealable or unappealed judicial or administrative decision.
(iii) The communication seeks compensation because of
activities undertaken after the patent has expired.
(c) The communication does not contain all of the following
information necessary to inform the target or an affiliated person
about the patent assertion:
(i) The identity of the person asserting a right to license
the patent to or enforce the patent against the target or an
affiliated person.
(ii) The number of the patent issued by the United States
Patent and Trademark Office alleged to have been infringed.
(iii) The factual allegations concerning the specific areas in
which the products or services obtained by the target or an
affiliated person infringed the patent.
Sec. 9. (1) The attorney general may do all of the following
related to unlawful practice under this act:
(a) Conduct a civil investigation as provided in section 9a.
(b) Enter into an assurance of discontinuance under section
9b.
(c) Bring a civil action as provided in section 9c.
(d) Promulgate rules under the administrative procedures act
of 1969, 1969 PA 306, MCL 24.201 to 24.328.
(2) A target or an affiliated person aggrieved by a violation
of 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) An injunction prohibiting any further written
communication related to the unlawful practice giving rise to the
action.
(b) Actual damages.
(c) Costs and fees, including reasonable attorney fees.
(d) Exemplary damages in an amount equal to 3 times the actual
damages.
(3) On a motion by the plaintiff and a finding by the court
that there is a reasonable likelihood that the defendant in an
action under subsection (2) violated this act, the court may
require the defendant to post a bond in an amount equal to a good-
faith estimate of the plaintiff's costs to litigate the claim and
an amount reasonably likely to be awarded under subsection (2),
conditioned on payment of any amount finally determined to be due
to the plaintiff. The court shall not order a bond to be posted
under this subsection that exceeds $250,000.00. A court may waive
the bond requirement under this subsection if it finds the
defendant has available assets equal to the amount of the proposed
bond or for other good cause shown.
Sec. 9a. (1) On the ex parte application of the attorney
general to the circuit court in the county where the defendant is
established or conducts business or, if the defendant is not
established in this state, in Ingham County, the circuit court, if
it finds probable cause to believe a person has engaged, is
engaging, or is about to engage in an unlawful practice under this
act, may, after an ex parte hearing, issue a subpoena compelling an
individual to appear before the attorney general and answer under
oath questions relating to an alleged violation of this act. An
individual served with a subpoena may be accompanied by counsel
when he or she appears before the attorney general. The subpoena
may compel the individual to produce the books, records, papers,
documents, or things relating to the alleged violation of this act.
During the examination of documents and things under the subpoena,
the court may require an individual who has knowledge of the
documents and things or the matters contained in the documents and
things to attend and give testimony under oath or acknowledgment
with respect to the documents and things.
(2) A subpoena issued under this section must include notice
of the time, place, and cause for the taking of testimony, the
examination, or the attendance and must allow not less than 10 days
before the date of the taking of testimony or examination, unless
for good cause shown the court shortens that time.
(3) A subpoena issued under this section must be served in the
manner provided and subject to the provisions that apply to service
of process on a defendant in a civil action commenced in the
circuit court.
(4) A subpoena issued under this section must include all of
the following:
(a) The time and place for the taking of testimony or the
examination and the name and address of the individual to be
examined. If the name is not known, the subpoena must give a
general description sufficient to identify the individual or the
particular class or group to which the individual belongs.
(b) A reference to this section and the general subject matter
under investigation.
(c) A description of any documents or things to be produced
with reasonable specificity so as to indicate fairly what is
demanded.
(d) A return date within which any documents or things must be
produced.
(e) Identification of the members of the attorney general's
staff to whom any documents and things must be made available for
inspection and copying.
(5) At any time before the date specified in a subpoena issued
under this section, on motion for good cause shown, the court may
extend the reporting date or modify or set aside the subpoena.
(6) Documents, things, or other information obtained by the
attorney general under an investigation under this section are
confidential records of the office of the attorney general and are
exempt from disclosure under section 13 of the freedom of
information act, 1976 PA 442, MCL 15.243. The attorney general
shall not make the documents, things, or other information
available for public inspection or copying or divulge them to any
person except as provided in this section. The attorney general may
disclose documents, things, or other information as follows:
(a) To other law enforcement officials.
(b) In connection with an enforcement action brought under
this act.
(c) On order of the court, to a party in a private action
brought under this act.
(7) An individual who knowingly discloses information
designated confidential by this section, except as permitted by
subsection (6) or under court order, is guilty of a misdemeanor and
may be imprisoned for not more than 1 year or fined not more than
$2,500.00, or both.
(8) An individual on whom a subpoena is served under this
section shall comply with the terms of the subpoena unless
otherwise provided by the order of the circuit court.
(9) An individual who does any of the following is subject to
a civil fine of not more than $10,000.00.
(a) Knowingly without good cause fails to appear after being
served with a subpoena.
(b) Knowingly avoids, evades, or prevents compliance, in whole
or in part, with an investigation, including by removing from any
place, concealing, destroying, mutilating, altering, or falsifying
any documents or things in the possession, custody, or control of a
person subject to the subpoena.
(c) Knowingly conceals relevant information.
(10) The attorney general may file a petition in the circuit
court of the county in which the individual subpoenaed is
established or conducts business or, if the individual is not
established in this state, in the circuit court of Ingham County
for an order to enforce compliance with a subpoena or this section.
A person that violates a final order entered under this section is
subject to punishment for civil contempt.
Sec. 9b. (1) If the attorney general has authority to
institute an action under section 9c, the attorney general may
accept an assurance of discontinuance of a practice that is alleged
to be unlawful under section 5 from the person that is alleged to
have engaged, be engaging, or be about to engage in the practice.
An assurance under this section does not constitute an admission of
guilt and is not admissible in any other proceeding. The assurance
may include a stipulation for 1 or more of the following:
(a) The voluntary payment by the person of the costs of
investigation.
(b) An amount to be held in escrow pending the outcome of an
action.
(c) An amount for restitution to an aggrieved person.
(2) An assurance of discontinuance under this section must be
in writing and may be filed with the circuit court of Ingham
County. The clerk of the court shall maintain a record of filings
under this section. Unless rescinded by the parties or voided by a
court for good cause, the assurance may be enforced in the circuit
court by the parties to the assurance. The assurance may be
modified by the parties or by a court for good cause.
Sec. 9c. (1) If the attorney general has probable cause to
believe that a person has engaged, is engaging, or is about to
engage in an unlawful practice as described in section 5 and gives
notice as provided in this section, the attorney general may bring
an action to restrain the person by temporary or permanent
injunction from engaging in the practice. The action may be brought
in the circuit court of the county where the person is established
or conducts business or, if the person is not established in this
state, in the circuit court for Ingham County.
(2) Unless notice is waived by the court on good cause shown
not less than 10 days before the commencement of an action under
this section, the attorney general shall notify the person against
whom the attorney general intends to bring an action of the
intended action and give the person an opportunity to cease and
desist from the alleged unlawful practice or to confer with the
attorney general in person, by counsel, or by other representative
as to the proposed action before the proposed filing date. The
notice may be given to the person by first-class mail, postage
prepaid, to his or her usual place of business or, if the person
does not have a usual place of business, to his or her last known
address, or, if the person is a corporation, only to a resident
agent who is designated to receive service of process or to an
officer of the corporation.
(3) In an action brought under this section, the court may
award investigation and enforcement costs.
(4) In an action brought under this section, the court may
assess the defendant a civil fine of not more than $50,000.00.
(5) A person that knowingly violates the terms of an
injunction or judgment issued under this section is subject to a
civil fine of not more than $5,000.00 for each violation.
(6) On the petition of the attorney general, the circuit court
may enjoin a person from doing business in this state if the person
persistently and knowingly evades or prevents compliance with an
injunction issued under this act.
Sec. 11. (1) Subject to section 5, this act does not make it
an unlawful practice for a person that owns or has the right to
license or enforce a patent to do any of the following:
(a) Advise others of that ownership or right of license or
enforcement.
(b) Communicate to others that the patent is available for
license or sale.
(c) Notify another of the infringement of the patent.
(d) Seek compensation because of past or present infringement
or for a license to the patent.
(2) 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.
(3) This act does not apply to a written or electronic
communication sent by any of the following:
(a) An owner or licensee of a patent that is using the
patented invention in connection with research, development,
production, manufacturing, processing, or delivery of products or
materials.
(b) An institution of higher education as that term is defined
in section 101 of the higher education act of 1965, 20 USC 1001.
(c) A technology transfer organization whose primary purpose
is to facilitate the commercialization of technology developed by
an institution of higher education, not-for-profit research
institute, or health system.
(d) A person seeking a claim for relief arising under 21 USC
355, 35 USC 271(e)(2), or 42 USC 262.
Sec. 13. This act takes effect October 1, 2017.
