Bill Text: TX HB3176 | 2015-2016 | 84th Legislature | Introduced


Bill Title: Relating to claims of patent infringement; providing civil penalties; imposing fees.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2015-05-05 - Left pending in committee [HB3176 Detail]

Download: Texas-2015-HB3176-Introduced.html
  84R8773 DDT-D
 
  By: Smithee H.B. No. 3176
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to claims of patent infringement; providing civil
  penalties; imposing fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The heading to Title 99, Business & Commerce
  Code, is amended to read as follows:
  TITLE 99. MISCELLANEOUS [COMMERCIAL] PROVISIONS
         SECTION 2.  Title 99, Business & Commerce Code, is amended by
  adding Chapter 2005 to read as follows:
  CHAPTER 2005.  CLAIMS OF PATENT INFRINGEMENT
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2005.001.  DEFINITIONS. In this chapter:
               (1)  "Affiliate" means an entity that, directly or
  indirectly, owns or controls, is owned or controlled by, or is under
  common ownership or control with a registrant under Section
  2005.101.
               (2)  "Control" means to exercise substantial influence
  over the policies and actions of another.
               (3)  "Demand letter" means a letter, e-mail, or other
  written communication, including a series of written
  communications, that is sent to a target, a target's attorney or
  other representative, or a target's customers and that claims that
  the target has engaged in patent infringement.
               (4)  "Target" means a Texas resident:
                     (A)  who has received a demand letter or against
  whom an allegation of patent infringement has been made;
                     (B)  who has been threatened with litigation or
  against whom a lawsuit has been filed alleging patent infringement;
                     (C)  whose attorney or other representative has
  received a demand letter claiming that the person's product,
  service, or technology has infringed a patent; or
                     (D)  whose customers have received a demand letter
  claiming that the person's product, service, or technology has
  infringed a patent.
               (5)  "Texas resident" means a person who resides in
  this state or is doing business in this state.
  SUBCHAPTER B. BAD FAITH CLAIMS OF PATENT INFRINGEMENT
         Sec. 2005.051.  BAD FAITH CLAIMS OF PATENT INFRINGEMENT
  PROHIBITED. (a) A person may not send a demand letter making, in
  bad faith, a claim of patent infringement against a Texas resident,
  and in connection with the claim:
               (1)  file a lawsuit alleging patent infringement;
               (2)  threaten to file a lawsuit if the alleged patent
  infringement is not resolved; or
               (3)  make a demand for compensation or damages or
  payment of a license fee based on the alleged patent infringement.
         (b)  For purposes of Subsection (a), a person makes a claim
  of patent infringement in bad faith if:
               (1)  the claim is objectively baseless, meaning that no
  reasonable litigant could reasonably expect success on the merits;
  and
               (2)  the person making the claim knows or should have
  known that the claim is objectively baseless.
         (c)  A claim of patent infringement is presumed to have been
  made in good faith if the claim:
               (1)  is made by a person who holds a certificate of
  authority issued under Section 2005.151; or
               (2)  is a claim for relief arising under 35 U.S.C.
  Section 271(e)(2) or 42 U.S.C. Section 262.
         (d)  This section does not apply to a communication between
  parties to the same federal lawsuit.
         Sec. 2005.052.  ENFORCEMENT BY ATTORNEY GENERAL; INJUNCTION
  AND CIVIL PENALTY. (a) If the attorney general believes that a
  person has violated Section 2005.051, the attorney general may
  bring an action on behalf of the state to enjoin the person from any
  conduct constituting a continuing violation of that section with
  respect to a demand letter already sent or future conduct that would
  violate that section.
         (b)  In addition to seeking an injunction under Subsection
  (a), the attorney general may request and the court may order any
  other relief that may be in the public interest, including:
               (1)  the imposition of a civil penalty in an amount not
  to exceed $50,000 for each violation of Section 2005.051, except as
  provided by Subsection (c);
               (2)  an order requiring reimbursement to this state for
  the reasonable value of investigating and prosecuting a violation
  of Section 2005.051; and
               (3)  an order requiring reimbursement of a target for
  legal, professional, and technical expenses related to evaluating
  or preparing to defend against the claim.
         (c)  If the trier of fact finds that the person described by
  Subsection (a) falsely claimed to a target or a target's attorney or
  other representative that the person received a certificate of
  authority under Section 2005.151, the court may increase the amount
  of the civil penalty to an amount not to exceed $150,000 for each
  violation of Section 2005.051.
         (d)  If the amount of money recovered after final judgment is
  insufficient to satisfy the civil penalty, the state's
  investigation and prosecution costs, and the target's or targets'
  evaluation and preparation costs, the money must be paid toward
  each on a pro rata basis.
         Sec. 2005.053.  COMPLAINTS. (a)  A target or a target's
  attorney or other representative who receives a demand letter from
  a person located anywhere in the United States and who believes that
  the person violated Section 2005.051 in connection with the letter
  may file a written complaint with the attorney general.
         (b)  A target whose customers receive a demand letter from a
  person located anywhere in the United States may also file a
  complaint with the attorney general if the target believes that the
  sender of the demand letter violated Section 2005.051 in connection
  with the letter.
         (c)  A complaint filed with the attorney general under this
  section must include a copy of the demand letter.
         Sec. 2005.054.  NO PRIVATE CAUSE OF ACTION.  This subchapter
  does not create a private cause of action for a violation of Section
  2005.051.
         Sec. 2005.055.  CONSTRUCTION OF SUBCHAPTER; EFFECT ON
  ATTORNEY GENERAL AUTHORITY. This subchapter may not be construed
  to limit rights and remedies available to the state or to any person
  under any other law and may not alter or restrict the attorney
  general's authority under law with regard to conduct involving
  assertions of patent infringement.
  SUBCHAPTER C. REGISTRATION AND DISCLOSURE REQUIREMENTS; DATABASES
         Sec. 2005.101.  REGISTRATION AND DISCLOSURE REQUIREMENT FOR
  CERTAIN PATENT INFRINGEMENT CLAIMS; DATABASE. (a) A person who
  sends 10 or more demand letters per calendar year from anywhere in
  the United States and who has an ownership interest in a patent
  associated with the demand letters or a person on whose behalf the
  letters are sent from anywhere in the United States and who has an
  ownership interest in a patent associated with the demand letters
  shall, not later than the 30th day after the date the 10th demand
  letter is sent:
               (1)  register with the secretary of state;
               (2)  provide the information required under Subsection
  (b); and
               (3)  pay a registration fee in the amount established
  under Section 2005.104.
         (b)  The secretary of state shall establish and maintain a
  database of persons required to register under Subsection (a). The
  database must include:
               (1)  a summary of information from each demand letter
  sent to a Texas resident by or on behalf of the registrant during
  the two-year period preceding the date the 10th demand letter was
  sent, including the name of the sender, the date of the letter, the
  person to whom the letter was sent, the patent number associated
  with the letter, and any other information the secretary of state
  considers relevant;
               (2)  in the case of a registrant who is a business
  entity:
                     (A)  the names and addresses of the registrant's
  top five executive officers, if applicable;
                     (B)  the name and address of each individual who
  has an ownership interest in the registrant of more than five
  percent; and
                     (C)  the name and address of each affiliate of the
  registrant; and
               (3)  the name and address of each person who has made an
  investment in or a loan to the registrant in an amount of $1 million
  or more during the 12-month period preceding the date the 10th
  demand letter was sent by or on behalf of the registrant.
         (c)  This section does not apply to:
               (1)  a demand letter sent by or on behalf of a person
  who holds a certificate of authority issued under Section 2005.151;
  or
               (2)  a demand letter that includes a claim for relief
  arising under 35 U.S.C. Section 271(e)(2) or 42 U.S.C. Section 262.
         Sec. 2005.102.  DEMAND LETTER DATABASE; NOTIFICATION. (a) A
  target or a target's attorney or other representative who receives
  a demand letter sent from anywhere in the United States may notify
  the secretary of state of the person's receipt of the demand letter
  and provide the secretary of state with a copy of the letter and, if
  not contained in the letter:
               (1)  the target's name and address;
               (2)  the name and address of the person who claims to
  own or claims to have a right to license the patent that the letter
  claims the target has infringed; and
               (3)  the patent number of each patent that the person
  sending the demand letter claims the target has infringed.
         (b)  The secretary of state shall establish and maintain a
  database of demand letters and other information about which the
  secretary of state has received notification under Subsection (a).
  The database must include:
               (1)  the names and addresses of the persons described
  by Subsection (a)(2) and targets against whom an allegation of
  patent infringement has been made; and
               (2)  the patent number of each patent that the targets
  have allegedly infringed.
         (c)  The secretary of state shall notify the sender of a
  demand letter of the registration requirements of Section 2005.101
  if the secretary of state has reason to believe the sender or other
  person on whose behalf the letter was sent is required to but has
  failed to register under that section. The secretary of state must
  send the notification at least 30 days before the date the attorney
  general brings an action under Section 2005.105.
         Sec. 2005.103.  LIMITED ACCESS TO DATABASES;
  CONFIDENTIALITY. (a)  Except as provided by Subsection (b) or (c),
  information contained in the databases established under Sections
  2005.101 and 2005.102 is confidential and not subject to disclosure
  under Chapter 552, Government Code.
         (b)  The secretary of state shall establish a procedure to
  allow only the following persons to have online access to
  information contained in the databases established under Sections
  2005.101 and 2005.102:
               (1)  a target or a target's attorney or other
  representative who provides a demand letter under Section 2005.102
  that includes a patent number and evidence of a demand for
  compensation or damages or payment of a license fee based on the
  alleged patent infringement; and
               (2)  a person who holds a certificate of authority
  under Section 2005.151.
         (c)  Information in the databases may be disclosed to a court
  or to the attorney general to take enforcement action with respect
  to a violation of Section 2005.051 or 2005.101.
         Sec. 2005.104.  FEES. To cover the costs of administering
  this subchapter, the secretary of state by rule shall establish:
               (1)  a registration fee to be paid by persons required
  to register under Section 2005.101; and
               (2)  a database access fee to be charged to a person
  permitted by Section 2005.103(b) to access the databases
  established under Sections 2005.101 and 2005.102.
         Sec. 2005.105.  CIVIL PENALTY. (a)  Except as provided by
  Subsection (b), a person who violates Section 2005.101(a) and does
  not come into compliance with that section on or before the 30th day
  after the date the secretary of state sends notice of the
  registration requirements of that section as required by Section
  2005.102(c) is liable to the state for a civil penalty in an amount
  not to exceed $10,000 for each day the violation continues.
         (b)  If the trier of fact finds that the person described by
  Subsection (a) falsely claimed to a target or a target's attorney or
  other representative that the person received a certificate of
  authority under Section 2005.151, the court may increase the amount
  of the civil penalty to an amount not to exceed $30,000 for each day
  the violation of Section 2005.101(a) continues.
         (c)  The attorney general may bring suit to recover the civil
  penalty imposed under this section. For purposes of the notice
  requirement under Section 2005.102(c), the attorney general shall
  notify the secretary of state before bringing a suit under this
  section and allow time for that notice to be timely made.
         (d)  The attorney general may recover reasonable expenses
  incurred in recovering the civil penalty, including court costs and
  reasonable attorney's fees.
         Sec. 2005.106.  RULES.  The secretary of state may establish
  procedures and shall adopt rules to implement this subchapter.
  SUBCHAPTER D.  CERTIFICATE OF AUTHORITY
         Sec. 2005.151.  CERTIFICATE OF AUTHORITY FOR CERTAIN
  BUSINESSES. (a) A person may apply to the attorney general for a
  certificate of authority for purposes of establishing a presumption
  under Section 2005.051(c)(1) or asserting an exemption under
  Section 2005.101(c)(1).
         (b)  Subject to Subsection (c), the attorney general by rule
  shall adopt eligibility criteria for the issuance by the attorney
  general of a certificate of authority under this section.
         (c)  The attorney general shall issue a certificate of
  authority to an applicant who:
               (1)  owns at least 1,000 patents;
               (2)  generates $5 billion or more in annual sales; and
               (3)  employs at least 5,000 persons.
         (d)  The attorney general by rule shall establish a procedure
  by which a person may apply for and receive a certificate of
  authority under this section.
         (e)  The attorney general may charge an application fee to
  recover the costs of administering this section.
         (f)  A person denied a certificate of authority under this
  section may appeal that determination to a district court.
         SECTION 3.  (a) Not later than January 1, 2016, the secretary
  of state shall establish the databases required by Sections
  2005.101 and 2005.102, Business & Commerce Code, as added by this
  Act.
         (b)  Not later than January 1, 2016, the secretary of state
  shall adopt the rules necessary to implement Subchapter C, Chapter
  2005, Business & Commerce Code, as added by this Act.
         (c)  Notwithstanding Section 2005.101, Business & Commerce
  Code, as added by this Act, a person is not required to register
  under that section before January 1, 2016.
         SECTION 4.  Not later than October 1, 2015, the attorney
  general shall adopt the rules necessary to implement Section
  2005.151, Business & Commerce Code, as added by this Act.
         SECTION 5.  This Act takes effect September 1, 2015.
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